SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                               ------------------

                                   FORM 10-KSB

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

                   For the fiscal year ended December 31, 2002

                                       or
            Transition Report Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                  For the Transition period from _____ to _____

                         Commission file number 0-14039

                                 eNUCLEUS, INC.
                  --------------------------------------------
                 (Name of small business issuer in its charter)

                 Delaware                               11-2714721
          ----------------------             ----------------------------------
         (State of incorporation)           (I.R.S. Employer Identification No.)

           15545 S. 71st Court
         Orland Park, Illinois                            60462
 -------------------------------------                   --------
(Address of principal executive offices)                (Zip Code)

                                 (708) 444-7300
                ------------------------------------------------
               (Registrant telephone number, including area code)

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

           Securities registered pursuant to Section 12(g) of the Act:

                          Common Stock, $.001 par value

     Check whether the issuer (l) 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 periods that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
                                  Yes  X  No
                                     -----  -----

     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-
KSB or any amendment to this Form 10-KSB. [ ]

    The issuer's revenues were $290,000 for the year ended December 31, 2002.

     As of March 28, 2003, the market value of the issuer's common stock held by
non-affiliates was approximately $1,000,000.

     Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes  X  No
                                                 -----  -----

     As of March 28, 2003, the number of common stock shares outstanding is
approximately 32,262,000 shares.

                   DOCUMENTS INCORPORATED BY REFERENCE--None.

    Transitional Small Business Disclosure Format (check one) Yes     No  X
                                                                 -----  -----

<PAGE>


                                 eNUCLEUS, INC.

                                   FORM 10-KSB

                                TABLE OF CONTENTS

                                                                           Page
ITEM 1  DESCRIPTION OF BUSINESS............................................  2

ITEM 2  DESCRIPTION OF PROPERTIES..........................................  6

ITEM 3  LEGAL PROCEEDINGS..................................................  6

ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................  6

ITEM 5  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS..........  7

ITEM 6  MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
        AND RESULTS OF OPERATIONS.......................................... 10

ITEM 7  FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA......................... 20

ITEM 8  CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
        AND FINANCIAL DISCLOSURE........................................... 20

ITEM 9  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS,
        COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.................. 20

ITEM 10 EXECUTIVE COMPENSATION............................................. 21

ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.................... 22

ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................... 23

ITEM 13 EXHIBITS AND REPORTS ON FORM 8-K................................... 24

ITEM 14 CONTROLS AND PROCEDURES............................................

SIGNATURES................................................................. 25

CERTIFICATION PURSUANT TO RULE 13A-14 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.................................................... 26

INDEX TO FINANCIAL STATEMENTS.............................................. F-1

EXHIBIT INDEX.............................................................. 27

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

          Some of the statements contained in this Form 10-KSB under the
captions "Business" and "Management Discussion and Analysis of Financial
Condition and Results of Operations" and in other places are "forward-looking
statements." Forward-looking statements include statements that relate to our
beliefs or expectations as to future events and statements that are not
historical facts. In some cases, you can identify these statements by
forward-looking words such as "may", "might", "will", "should", "expects",
"plans", "anticipate", "believe", "estimate", "intend", the negative of these
terms and other comparable terminology. Because forward-looking statements
involve this risk and uncertainty, there are important factors that could cause
actual results, level of activity, performance or achievements to differ
materially and adversely from those expressed or implied by the forward-looking
statements. These factors, which should be carefully considered by you, include,
among other things:

          o    general effects of our restructuring and emergence from Chapter
               11 reorganization,

          o    the availability and terms of capital to finance our operations,
               and

          o    continuing development of our products and solutions,

          o    successful build out of out distribution channels,

          o    general economic and business condition, both nationally and
               regionally,

          o    competition from others in the industry, whether existing or new,

          o    the experience level of our management team,

          o    changes in our business strategy or growth plans,

          o    our ability to attract and retain qualified personnel,

          o    other factors discussed under "Management Discussion and Analysis
               of Financial Condition and Results of Operations-- Factors
               Affecting Future Operations."

                                       ii

<PAGE>


PART I

ITEM 1        DESCRIPTION OF BUSINESS

General

          eNucleus is a next generation business process hosting company that
delivers software solutions from its application delivery platform. Our core
product offerings include application delivery, managed hosting, high-speed
Internet access and data storage. Together, these offerings provide our
customers with a scaleable platform for the development of their ebusiness
initiatives without the extensive capital outlay otherwise required.

Strategy

          Our goal is to become a recognized leader in application delivery and
managed IT services industry. eNucleus' business strategy is to offer ebusiness
solutions through the acquisition of leading software companies in specific
vertical markets that enjoy strong customer loyalty with applications that can
be enabled for delivery over the Internet for a recurring monthly fee. By
spreading the network infrastructure costs over multiple companies and other
economies of scale, our business strategy can increase overall profitability
while reducing risk associated with owning a single application or targeting a
single market segment.

          In pursuit of this goal eNucleus generally follows the following
strategic operating principles:

     o    Acquire best-of-breed applications - Our focus is on acquiring niche
          software applications that serve defined market segments that serve
          defined market segments, enjoy widespread industry support and can be
          readily enabled for deployment over the Internet through our software
          application network.

     o    Acquire well-managed and profitable companies - eNucleus concentrates
          on acquiring a controlling interest in well-managed and profitable
          organizations that demonstrate a potential for significant cash flow
          growth as a result of product enhancements and improved marketing. Our
          strategy is to oversee already existing, strong management teams and
          to enhance those acquired companies with capital, national presence,
          consolidated operating costs, strategic marketing and the technical
          expertise for migrating their products to an Internet-based delivery
          system.

     o    Leverage operating costs - Each software acquisition presents an
          opportunity for creating operating savings through the consolidation
          of duplicate business functions. Labor costs can be further reduced by
          bringing a seasoned programming team with proven methodology to each
          newly acquired software application. This experienced team skill set
          should result in quicker times to market when enabling new software
          applications for delivery over the Internet than could be achieved by
          less experienced service providers.

     o    Recurring monthly revenue streams - eNucleus employs pricing
          strategies that focus on developing long-term recurring monthly
          revenue streams rather than high upfront purchase prices. Lower
          upfront costs makes it easier for customers to transition into a new
          business model. As their future needs grow with business demand, we
          believe that customers which have transferred critical business
          operations into the eNucleus network are more like to maintain their
          services with eNucleus.

     o    Nationwide Operations - Through its strategic partnership with Switch
          and Data, eNucleus can develop a presence in 30 US cities. This
          position in the marketplace allows eNucleus to attract Global 5000 and
          high-growth middle market companies who require support for outsourced
          business processes from multiple geographic regions. This national
          footprint will also allow our applications and services to be
          delivered more efficiently across the Internet from our nearest data
          center presence.

     o    Local Presence - Although we will have a national presence, local
          sellers of eNucleus products and services present a "local company"
          sales approach to their existing client base. This sales approach is

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          often critical in closing sales with potential customers who are leery
          of their critical business operations or equipment being shipped to
          distant cities under managed hosting contracts.

     o    World Class Customer Service - eNucleus supports its products and
          services by world-class customer care personnel who monitor, manage
          and deploy our services 24X7X365 from our state-of-the-art Network
          Operations Center.

Market Environment

          Software industry experts have most recently stated that they
anticipate Internet-based models of software delivery will be the migration path
for most software applications in the foreseeable future due to the cost savings
and broader accessibility of critical business information that these methods
provide. The convergence of these factors suggests that the next major shift in
how computer based technology is utilized in business will focus on the
reduction of capital expenditures on costly internal IT infrastructure in favor
of accessing critical applications and essential business processes solely
through the Internet. As a next generation business process hosting company with
a scalable nationwide infrastructure available, we believe eNucleus is
positioned to provide critical Internet based business processes to companies
that want to reduce their IT infrastructure.

          This current market environment would appear to have created
opportunities within the software industry in which numerous software products
currently enjoy market favor and a loyal customer base; however, many previously
successful applications are not presently delivered over the Internet and many
vendors lack the technical skill set or necessary Internet network
infrastructure to enable and deliver their software applications in this manner.
Their situation is further complicated by the limited availability of
development monies within today's capital markets. This has resulting in
software companies being forced to delay product conversions to web-based
platforms or to re-invest their earnings into efforts to re-tool for the
Internet--with neither being an attractive alternative for companies trying to
protect their bottom line in today's economy.

Products and Services

          Our products and services include:

               o    Application Delivery - We deliver and manage applications
                    and computer services from a centralized location to
                    multiple users over the Internet and/or a private network.
                    This provides our customers with the ability to access
                    software applications anywhere, anytime via the Internet.
                    Applications are accessed just as if they were installed on
                    the local system. Within this environment, we provide our
                    customers with the ability to access their applications as
                    well as our products: "FusionMail" - a multi-layered virus
                    protection and email management tool and "Office ASPx" - our
                    Microsoft Office and Exchange Mail Internet-based
                    application system. This provides our customers with a
                    cost-effective solution to the demands of ownership,
                    maintenance and upgrades.

               o    Managed hosting-- We deliver full service solutions for
                    establishing and maintaining the complex infrastructure
                    necessary for a business to support ebusiness applications
                    and delivery. State-of-the-art servers provide a solid
                    platform for hosting client's mission critical applications
                    and data. eNucleus support provided by our managed hosting
                    services include 24x7 network monitoring and support, system
                    administration, server monitoring and testing, usage
                    reporting, security services and protection. All the while,
                    customers can still maintain control over the software and
                    solutions housed on the servers, including their customized
                    installed software and proprietary solutions.

               o    Data Storage - Our data storage services include high
                    performance network backup and storage to cost-effective
                    specific data tape backup services, offsite storage and data
                    vaulting

               o    Internet access and high-speed routing - eNucleus delivers
                    high speed and burstable Internet access to its client's
                    premise and hosting environments.

                                       3

<PAGE>


               o    Process mapping -- proprietary process mapping services
                    allows customers to map current business processes as well
                    as the transitional processes that will be required to
                    implement software acquired from eNucleus

Sales and Marketing

          Our sales and marketing efforts are dedicated to increasing the
awareness of our Internet-based solution opportunity and the eNucleus brand. We
are implementing a brand development program designed to portray us as a
national company with a local presence.

          Our sales and marketing group consists of sales professionals and
technicians teamed within our regional operations. We intend to add sales and
marketing personnel.

          We intend to use a mix of programs to deliver our message and create a
demand for our products and services. Marketing programs will include:

          o    Focused Marketing -- eNucleus focuses its direct marketing
               efforts on prospects within its identified market verticals.

          o    Cross-selling strategies - eNucleus intends to capitalize on
               cross-selling opportunities generated by its acquisitions.

          o    Personal Contact - eNucleus direct sales staff concentrates its
               efforts on contacting potential customers within each market
               vertical that have had no previous experience with earlier
               software releases or web-enabled software in general.

          o    Industry Specific Advertising - eNucleus complements each
               application division's sales efforts with general advertising in
               trade publications of specific industry verticals that eNucleus
               or its subsidiaries service.

Competition

          The market for Internet-based technology solutions is intensely
competitive, rapidly evolving and subject to rapid technological change. We
expect competition to persist, intensify and increase in the future. We believe
that the principal competitive factors in our market are single source,
strategic expertise, technical knowledge, best of breed products and services,
reliability, client service and price. Most of our current and potential
competitors have longer operating histories, larger installed client bases,
longer relationships with customers and significantly greater financial,
technical, marketing and public relations resources than us that could decide at
any time to increase their resource commitments to our market. In addition, the
market for Internet solutions is relatively new and subject to continuing
definition, and, as a result, the core business of certain of our competitors
may better position them to compete in this market as it matures. Competition of
the type described above could materially adversely affect our ability to
realize our goals.

There are relatively low barriers to entry into our business. There can be no
assurance that existing or future competitors will not develop or offer services
that provide significant performance, price, creative or other advantages over
those offered by us, which could have a material adverse effect on our business,
results of operations and financial condition.

History

          eNucleus began business operations in 1984 in Colorado Springs,
Colorado, as a provider of computer systems and componentry. We adopted the name
Nucleus, Inc. in December 1998 and reorganized in April 1999 when Nucleus merged
with Nucleus Holding Corporation, a privately held Illinois corporation based in
Chicago, Illinois. In July, 2000 our shareholders approved our re-incorporation
into Delaware from Nevada and changing our name to eNucleus, Inc. from Nucleus,
Inc. Our old common stock was traded on the electronic bulletin board of the
"over the counter" market under the symbol ENCS. Our stock is now traded under
the symbol ENCU.

                                       4

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          Beginning in December, 1999, we engaged Roth Capital Partners
(formerly Cruttenden Roth Incorporated) to provide financing by privately
placing short term bridge notes of $3 million to $5 million, to consummate our
pending acquisitions and initiate a private placement of approximately $15 - $25
million of securities and a follow-on public offering of approximately $50
million. To help facilitate our growth strategy and to consummate pending
acquisitions, we raised the bridge financing facility limit and closed the
bridge financing at $6.1 million in March 2000.

          During 1999, we acquired four computer systems and service companies
(Comp-Pro Computers, Inc. and Young Data Systems, Inc. both operating in
Illinois, Innovative Technology Solutions, Inc. operating in Seattle,
Washington, and Telos Distributing, Inc. operating in Denver, Colorado). In
2000, we acquired one company (Webnet.com, Inc. operating in Atlanta, Georgia),
whose operations primarily focused on providing dedicated Internet access and
hosting solutions to middle market companies.

          In August 2000, due to the inability of Roth Capital to complete the
private placement and the Internet industry suffering a dramatic and precipitous
valuation collapse, the Company decided to strategically focus on only the
Internet infrastructure offerings of our business plan (including co-location,
connectivity and email services) and elected to discontinue offering non-related
computer equipment and supplies sales and associated professional services. As
part of this decision, we closed our Seattle and Denver offices as well as
discontinued certain operations of our Chicago and Atlanta offices. Revenue from
these discontinued operations were approximately $7.2 million for the year ended
December 31, 2000.

          On May 10, 2001, as a result of dramatic changes in the Internet
industry and financing markets, delays in reaching accord with our short term
note holders and other creditors in restructuring our debts and our inability to
cure defaults under our data center lease and the landlord's attempts to seize
Company assets, we filed a voluntary petition for reorganization under Chapter
11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the
Northern District of Illinois, Eastern Division. We continued to operate as a
debtor-in-possession under the supervision of the Bankruptcy Court. On November
6, 2001, the Company's Plan of Reorganization was confirmed thereby enabling the
Company to successfully emerge from its Chapter 11 reorganization. Pursuant to
the confirmed Plan of Reorganization, among other things, holders of certain
allowed claims received 1 share of common stock for every $3.00 of debt. Also
pursuant to the Plan, the Company's common stock has undergone a 1 for 6 reverse
stock split resulting in current stockholders receiving 1 share of new common
stock for every 6 shares of old common stock currently owned.

          As a result of the confirmation of the Company's Plan of
Reorganization on November 6, 2001, we adopted fresh-start reporting as required
by Statement of Position 90-7 "Financial Reporting by Entities in Reorganization
under the Bankruptcy Code" ("SOP 90-7"). Under fresh-start reporting, the
Company's assets and liabilities were adjusted to fair values and a
reorganization value for the entity was determined by the Company based upon the
estimated fair value of the enterprise before considering values allocated to
debt to be settled in the reorganization. The portion of the reorganization
value which could not be attributed to specific tangible or identified
intangible assets for the Reorganized Company is referred to as reorganization
value in excess of amounts allocable to identifiable assets and is reported as
"Goodwill" in the financial statements. Fresh-start reporting resulted in the
creation of a new reporting entity for accounting purposes (the "Company" or the
"Reorganized Company") with no accumulated deficit as of November 1, 2001. As a
result of adopting SFAS No. 142 (see "Recent Accounting Pronouncements"), the
goodwill recognized in fresh-start reporting will not be amortized, but will be
reviewed annually for impairment.

         The reorganization value of the Company was based upon the
consideration of many factors and various valuation methods, including
discounted cash flow analysis using projected financial information, selected
publicly traded company market multiples and other applicable ratios and
valuation techniques that we believe to be representative of our business and
industry. The valuation was based upon a number of estimates and assumptions,
which are inherently subject to significant uncertainties and contingencies
beyond our control. Accordingly, there can be no assurance that the values
reflected in the valuation will be realized, and actual results could vary
materially. Moreover, the value of our New Common Stock, as traded on the
national exchange, may differ materially from the reorganization valuation.

                                       5

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          The financial statements for the Company for the periods subsequent to
October 31, 2001 and are not comparable to those for the periods prior to
October 31, 2001 which are referred to as the "Predecessor Company."

          In December 2002, we acquired a company located in Illinois (Strategic
Business Group). This company specializes in a proprietary methodology for
critical process mapping, which allows customers to map current business
processes as well as the transitional processes that will be required to
implement software solutions acquired from eNucleus. Additionally, they have
extensive experience in software selection, implementation and process
improvement consulting. Consideration paid was through the assumption of certain
net liabilities of approximately $100,000 and a stock earn-out over the
subsequent twenty-four month period equal to 50% of the net earnings of the
acquired asset operations.

          In December, we decided to close our data center facility in Atlanta
and more fully capitalize on our strategic relationship with our collocation
facility partner. As a result of this decision, we recorded a restructuring
charge of approximately $4.5 million, including the buyout of our lease,
write-off of fixed assets associated with the build-out of the datacenter and a
charge for the impairment of intangible assets.

Employees

          As of March 28, 2003 we employed 11 full time personnel . We also
contract with several outside parties to provide certain engineering, sales and
administrative services on an as needed basis. Our employees are not subject to
collective bargaining agreements and we consider our relationships with our
employees to be good.

ITEM 2        DESCRIPTION OF PROPERTIES

          eNucleus' maintains its executive office at 15545 S. 71st Court,
Orland Park, IL 60462. We also lease certain operating facilities and data
center space as part of our operating procedures. The various leases for our
facilities expire during 2003 with options for renewals. We are currently
evaluating our options on existing and new office space.

ITEM 3        LEGAL PROCEEDINGS

          On May 10, 2001, as a result of dramatic changes in the Internet
industry and financing markets, delays in reaching accord with our short term
note holders and other creditors in restructuring our debts and our inability to
cure defaults under our data center lease and the landlord's attempts to seize
Company assets, we filed a voluntary petition for reorganization under Chapter
11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the
Northern District of Illinois, Eastern Division. We continued to operate as a
debtor-in-possession under the supervision of the Bankruptcy Court. On November
6, 2001, the Company's Plan of Reorganization was confirmed thereby enabling the
Company to successfully emerge from its Chapter 11 reorganization. Pursuant to
the confirmed Plan of Reorganization, among other things, holders of certain
allowed claims received 1 share of common stock for every $3.00 of debt. Also
pursuant to the Plan, the Company's common stock has undergone a 1 for 6 reverse
stock split resulting in current stockholders receiving 1 share of new common
stock for every 6 shares of old common stock currently owned.

          We are from time to time a party to various legal actions arising in
the normal course of business. Prior to our filing for protection under
bankruptcy, we were a party to several creditor collection actions. However, as
a result of our bankruptcy filing, these matters and many other threatening
proceedings have been resolved and terminated. We believe that there is no
proceeding threatened or pending against us which, if determined adversely,
would have a material adverse effect on the financial condition or results of
operations of eNucleus.

ITEM 4        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          No matters were submitted to a vote of security holders during the
fourth quarter of 2002.

                                       6

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PART II

ITEM 5        MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS

          Our common stock is traded on the NASDAQ OTC Bulletin Board (OTCBB)
under the symbol ENCU. Prior to July 26, 2002, our stock was traded under the
symbol ENCS. As yet, our common stock has experienced limited trading activity.
A public trading market having the characteristics of depth, liquidity and
orderliness depends upon the existence of market makers as well as the presence
of willing buyers and sellers, which are circumstances over which we do not have
control. The following table sets forth, for the periods indicated, the range of
high and low bid quotations per share of common stock as reported by NASD on the
OTC Bulletin Board.

                                                     Common Stock
                                                     ------------
              Period                                 Low Bid      High Bid
              ------                                 -------      --------

              2003
                1st Quarter through March 24, 2003    $0.02         $0.12

                2002
                4th Quarter                           $0.03         $0.18
                3rd Quarter                           $0.02         $0.35
                2nd Quarter                           $0.01         $0.60
                1st Quarter                           $0.01         $0.30

                2001
                4th Quarter                           $0.01         $0.18
                3rd Quarter                           $0.01         $0.42
                2nd Quarter                           $0.01         $1.08
                1st Quarter                           $0.78         $1.38

          The approximate number of record holders of our common stock on March
28, 2003 was 200, as shown on the records of our transfer agent and registrar of
the common stock. Since many shares may be held by investors in nominee names,
such as the name of their broker or their broker's nominee, the number of record
holders often bears little relationship to the number of beneficial owners of
our common stock.

          Pursuant to the Plan of Reorganization, we filed an Amended and
Restated Certificate of Incorporation with the Delaware Secretary of State. In
accordance with the Plan, all outstanding shares of old common stock (ENCS) and
warrants and options to purchase old common stock were cancelled. As part of the
distribution of the New Common Stock under the Plan of Reorganization,
shareholders were to tender their Old Common Stock to the Reorganized Company's
designated Stock Transfer Agent no later than October 15, 2002, in accordance
with written instructions provided to such holders, and in exchange would
receive one share of new common stock for every six shares of old common stock
previously owned. Any shareholder who did not submit its certificates for
exchange prior to October 15, 2002 had its claim or interest and its
distribution pursuant to the Plan of Reorganization on account of such Old
Common Stock discharged and shall be forever barred from asserting any such
claim or interest against the Reorganized Company or their respective property.
Approximately 1.8 million shares of new common stock were issued under this
exchange. Additionally, approximately 2.8 million shares were issued in exchange
for holders of certain allowed claims under the Plan of Reorganization. Such
holders of allowed claims received 1 share of common stock for every $3.00 of
debt claim approved. Any creditor who did not submit its appropriate paperwork
for the stock exchange prior to December 23, 2002 had its claim or interest and
its distribution pursuant to the Plan of Reorganization on account of such claim
discharged and shall be forever barred from asserting any such claim or interest
against the Reorganized Company or their respective property.

          We have paid no dividends on our common stock. There are no
contractual restrictions on our ability to pay dividends. We have not had
earnings that indicate an ability to pay cash dividends. We do not expect to pay
dividends in the foreseeable future.

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          We have a Stock Purchase Plan for non-qualified options and an
Incentive Stock Option Plan for incentive stock options. Under the plans, all
our employees, together with other persons who perform substantial services for
us or on our behalf, will be eligible to receive incentive and non-statutory
options to purchase eNucleus common stock. The plans are administered by the
Board of Directors. Under the plans, the exercise price at which the shares of
eNucleus common stock covered by each grant may be purchased will be determined
on the date of grant by the committee, but can be no less than the par value of
such shares and, in the case of incentive stock options, may not be less than
the fair market value of such shares on the date of grant. The number of shares
covered under the options granted under the plans are subject to adjustments for
stock splits, mergers, consolidations, combinations of shares, reorganizations
and other recapitalizations. As of December 31, 2002, there are no securities
authorized for issuance under any equity compensation plans to employees or
directors.

          In accordance with the Plan of Reorganization, we agreed to issue
warrants to purchase 1 million shares of common stock to certain unsecured
creditors (those creditors who appropriately completed and submitted the
required paperwork for the exchange of stock for their debt in accordance with
the Plan of Reorganization) pro rata in accordance with the amount of their
allowed claims. The Warrants give the holders thereof the right to purchase, at
any time for a period of seven years from the date of issuance (i.e., the
effective date of the Plan), one share of the New Common Stock at a price of
Twenty Cents ($0.20) per share. The Warrants also contain a "Cashless Exercise"
provision which provide that in the event the stock has traded at an average
price in excess of $2.00 per share for at least 30 days preceding an exercise of
any warrants, the holders thereof may elect to exercise the Warrants in whole or
in part and instruct the Company to withhold from the securities issuable upon
exercise, a number of securities, valued at the current fair market value on the
date of exercise, as the payment of the exercise price. The Company has not yet
issued these warrants.

          Associated with certain post-petition administrative claims
conversions are clauses that could result in additional shares being issued to
the creditors or shares being returned to us, based upon certain future stock
prices and/or the eventual liquidation prices achieved by the shareholders in
relation to their cost basis. Due to the nature of these agreements, we are
currently not able to estimate the number of potential shares that may be issued
under these arrangements. As of this date, no additional shares have been issued
pursuant to these clauses.

          We have also entered into several investment banking, acquisition
consulting, legal services, public communication and investor relations
agreements whereby we may pay certain monthly retainer fees in cash or stock, at
the discretion of the Company. Due to the nature of these agreements, we are
currently not able to estimate the number of potential shares that may be issued
under these arrangements. As of year-end, no shares had been issued pursuant to
these agreements.

          Recent Sales of Unregistered Securities.

     We made the following sales of unregistered securities during the years
ended December 31, 2002 and 2001:

     In the first quarter 2001, we issued 165,000 shares of our common stock in
exchange for services rendered and amounts due to various creditors.

     On February 23, 2001, we issued 550,000 shares of common stock to two
ex-employees per conditions of their employment agreements and other matters. We
recorded additional compensation expense of approximately $82,000 associated
with this grant.

     On May 11, 2001, we entered into agreements with certain employees of the
Company whereby the individuals would agree to be employed by the Company and
provide their best efforts in assisting the Company through the reorganization
process. The individuals also agreed to a substantially reduced salary during
such period and other certain terms and conditions including a period of
non-compete. Under these agreements, the Company provided a stock grant to each
of the participants for the purposes of managing the reorganization, a reduction
in salary, a non-compete agreement and other matters. The agreements also
contained a claw-back feature pursuant to which certain shares of common stock
would be forfeited if the participant did not continue employment through March
31, 2002. The agreements also contain a provision whereby the Company, at its
sole discretion may buy back the shares for $0.10 per share prior to June 30,
2002. A total of 2.4 million shares of common stock have been issued under these
agreements.

                                       8

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     In March, 2002, upon the expiration of the above mentioned employment
agreements the Company granted options to purchase up to 2.5 million shares of
restricted common stock to our two officers, respectively, at a price equal to
the market price on date of grant. Such options were granted for the
consideration and incentive to continue employment and at a substantially
reduced salary through the remainder of 2002 and until such time the Company
provides positive cash flow operating earnings. As of December 31, 2002, these
options were fully exercised and the respective shares have been issued. The
securities issued were exempt from registration under Section 4(2) of the
Securities Act.

     Pursuant to the our Plan of Reorganization, 1.8 million shares of new
common stock were issued to stockholders of Old Common Stock tendered for
exchange and 2.8 million shares were issued in exchange for holders of certain
allowed claims under the Plan of Reorganization.

     In accordance with the Plan of Reorganization, we granted options to
purchase up to 2 million shares of New Common Stock to key employees and
management. Such options vested on the confirmation date (November 6, 2001) with
an exercise price equal to the price of the common stock at that date and have a
ten-year life. These options were fully exercised and the respective shares have
been issued.

     In October 2001, we entered into a collocation/lease agreement with Sunami
Ventures, LLC ("Sunami") (a limited liability company managed and controlled by
Mr. Henry Paulsen, John Paulsen's father), for approximately 5,000 sq ft. in
Roswell, Georgia serving as our branch office and data center/operating facility
in Atlanta, Georgia. The lease provides for monthly payments of approximately
$20,000 and expires in 2008. Associated with this agreement, we were required to
provide a $100,000 security deposit, which has been financed under the Sunami
borrowing facility and 1.0 million shares of common stock.. The securities
issued were exempt from registration under Section 4(2) of the Securities Act.

          As part of our Plan of Reorganization, we entered into a borrowing
facility with Sunami. In accordance with the Plan of Reorganization, Sunami (or
others who shall provided post-petition financing) shall receive on account of
the borrowings, five shares of New Common Stock for every dollar loaned and a
Senior Secured Note for the amount of the borrowings. As of December 31, 2002,
eNucleus has received approximately $896,000 under this facility the proceeds of
which have been used to satisfy certain petitions resulting from the bankruptcy
and post-petition operating requirements. Pursuant to the Sunami financing
agreement, in December, 2001, we also entered into a three-year $545,000 secured
demand loan agreement with Capital Equity Group. The note agreement is secured
by certain of our assets, guaranteed by John Paulsen, our CEO and bears interest
at the rate of 16%. During the second quarter Capital Equity Group notified us
that they would not be able to satisfy the lending requirements of the facility
(eNucleus received approximately $212,000 under this facility). The Company is
currently pursuing the formal cancellation of the note and security agreement
granted as part of the facility and is exploring its legal rights and remedies
arising from Capital Equity Group's inability to complete the transaction. In
accordance with the provisions of the Plan of Reorganization, the Company has
issued approximately 5.5 million shares of common stock on account of the
borrowings to date.

          At various times during the year, certain holders of debts outstanding
agreed to convert amounts outstanding into new common stock. A total of $2.6
million of obligations agreed to conversion, including $900,000 of our future
lease obligations under the termination of our data center lease, $700,000 of
financing provided through Sunami and $1 million of post-petition administrative
claims. Approximately 12.0 million shares were issued in conjunction with these
conversions. Associated with the post-petition administrative claims conversions
are certain clauses that could result in additional shares being issued to the
creditors or shares being returned to us, based upon certain future stock prices
and/or the eventual liquidation prices achieved by the shareholders in relation
to their cost basis. As of this date, no additional shares have been issued
pursuant to these clauses.

          During the year, we issued 500,000 shares to a market making
organization to sponsor eNucleus on the OTC Bulletin Board and 200,000 shares to
an organization for assistance with investor relations and corporate
communication services. The securities issued were exempt from registration
under Section 4(2) of the Securities Act.

                                       9

<PAGE>


          On December 2, 2002 we issued 50,000 shares of common stock in
connection with our acquisition of Strategic Business Group, Inc. ("SBG").
Additionally, the principal shareholder of SBG will be entitled to a stock earn
out over the subsequent twenty-four month period equal to 50% of the net
earnings of the acquired asset operations. The securities issued were exempt
from registration under Section 4(2) of the Securities Act.

          The Common Stock distributed pursuant to the Plan of Reorganization in
exchange for a claim against, an interest in or a claim for an administrative
expense in the bankruptcy case concerning the Company; or principally in
exchange for financing, service or property while under jurisdiction of the
court has been issued pursuant to an exemption from registration under federal,
state or local securities laws provided by Section 1145(a)(I) of the Bankruptcy
Code. Unless otherwise provided for above, we believe that the common stock
issued in the above transactions qualifies for the exemption provided under
Section 1145(a)(I) of the Bankruptcy Code. Recipients of securities considered
exempt from registration under Section 4(2) of the Securities Act represented
their intentions to acquire the securities for investment only and not with a
view to or for sale in connection with any distribution thereof. In each
instance, offers and sales were made without any public solicitation. No
underwriter or broker-dealer was involved in the transactions and no commission
was paid. All recipients had adequate access to information about eNucleus.

          Subsequent to year end, we have issued approximately 4.7 million
shares of common stock, including 1 million shares subject to an investment
banking and acquisition support consulting agreement, 2 million shares pursuant
to a financing arrangement, 1.2 million for investor relations and marketing
support and 500,000 to certain employees of our recent acquisition pursuant to
their employment agreements.


ITEM 6        MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

          The following discussion should be read in conjunction with the
financial statements of eNucleus appearing later in this Form 10-KSB. This
discussion and analysis contains forward-looking statements that involve risks,
uncertainties and assumptions. Our actual results may differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including, but not limited to, those set forth under the caption "--
Factors Affecting Future Results."

          eNucleus is a next generation business process hosting company that
delivers software solutions from its national application delivery platform. Our
core product offerings include application delivery, managed hosting, high-speed
Internet access and data storage. Together, this offering provides our customers
with a scaleable platform for the development of their ebusiness initiatives
without the extensive capital outlay otherwise required.

          In December 2002, we acquired a company located in Illinois (Strategic
Business Group). This company specializes in a proprietary methodology for
critical process mapping, which allows customers to map current business
processes as well as the transitional processes that will be required to
implement software solutions acquired from eNucleus. Additionally, they have
extensive experience in software selection, implementation and process
improvement consulting. We are continuing to evaluate additional acquisition
opportunities.

          We presently earn revenues from the following product and service
offerings: application delivery, process mapping, Internet transport, data
storage, monitoring, email services and set up fees. We recognize revenue for
set up fees over the contract terms. Customers are billed for the services over
the course of an engagement at a measured rate or on a recurring fixed-price
basis. Operating expenses consist primarily of direct labor and benefits,
subcontracted labor or other outside services, commissions, sales and support
personnel and advertising costs. Depreciation and amortization expense consists
primarily of the depreciation of our fixed assets. We expect these expenses to
increase in the future due to the growth of the company.

          On May 10, 2001, as a result of dramatic changes in the Internet
industry and financing markets, delays in reaching accord with our short term
note holders and other creditors in restructuring our debts and our inability to
cure defaults under our data center lease and the landlord's attempts to seize
Company assets, we filed a voluntary petition for reorganization under Chapter

                                       10

<PAGE>
<TABLE>
<CAPTION>


11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the
Northern District of Illinois, Eastern Division. We continued to operate as a
debtor-in-possession under the supervision of the Bankruptcy Court. On November
6, 2001, the Company's Plan of Reorganization was confirmed thereby enabling the
Company to successfully emerge from its Chapter 11 reorganization

          As a result of the confirmation of the Company's Plan of
Reorganization on November 6, 2001, . Pursuant to the confirmed Plan of
Reorganization, among other things, holders of certain allowed claims were
entitled to receive 1 share of common stock for every $3.00 of allowed claim and
stockholders were entitled to receive 1 share of new common stock for every 6
shares of old common stock previously owned. We also adopted fresh-start
reporting as required by Statement of Position 90-7 "Financial Reporting by
Entities in Reorganization under the Bankruptcy Code" ("SOP 90-7"). Under
fresh-start reporting, the Company's assets and liabilities were adjusted to
fair values and a reorganization value for the entity was determined by the
Company based upon the estimated fair value of the enterprise before considering
values allocated to debt to be settled in the reorganization. The portion of the
reorganization value which could not be attributed to specific tangible or
identified intangible assets for the Reorganized Company is referred to as
reorganization value in excess of amounts allocable to identifiable assets and
is reported as "Goodwill" in the financial statements. Fresh-start reporting
resulted in the creation of a new reporting entity for accounting purposes (the
"Company" or the "Reorganized Company") with no accumulated deficit as of
November 1, 2001. As a result of adopting SFAS No. 142 (see "Recent Accounting
Pronouncements"), the goodwill recognized in fresh-start reporting will not be
amortized, but will be reviewed annually for impairment.

          In December, we decided to close our data center facility in Atlanta
and more fully capitalize on our strategic relationship with our collocation
facility partner. As a result of this decision, we recorded a restructuring
charge of approximately $4.5 million, including the buyout of our lease,
write-off of fixed assets associated with the build-out of the datacenter and a
charge for the impairment of intangible assets.

Business Strategy

          Our business strategy is to offer ebusiness solutions through the
acquisition of leading software companies in specific vertical markets that
enjoy strong customer loyalty with applications that can be enabled for delivery
over the Internet for a recurring monthly fee. By spreading the network
infrastructure costs over multiple companies and other economies of scale, our
business strategy can increase overall profitability while reducing risk
associated with owning a single application or targeting a single market segment

Operating Results 2002 to 2001

          The financial statements after the Confirmation Date are those of a
new reporting entity (the "Reorganized Company") and are not comparable to the
pre-confirmation periods of the old reporting entity (the "Predecessor Company".
The following table sets forth our results of operations for the periods
indicated.

                                                Year Ending                Two Months                 Ten Months
                                                                             Ending                     Ending
                                                Dec 31, 2002    Percent   Dec. 31, 2001   Percent    Oct. 31, 2001    Percent
                                                ------------    -------  ---------------  -------    -------------    -------
<S>                                            <C>              <C>       <C>              <C>        <C>             <C>
 Revenue                                       $    285,687     100.0%    $    26,981      100.0%     $   398,056     100.0%


 Operating expenses                               1,153,272      403.7        159,970       592.9       1,284,178      322.6

 Stock based compensation expense                      --          --            --         --             82,500       20.7

 Net reorganization expense                       4,517,579    1,581.3           --         --          3,268,326      821.1

 Depreciation and amortization expense              375,621      131.5         62,564       231.9         432,700      108.7
                                               -----------------------------------------------------------------------------
 Operating loss                                  (5,760,785)  (2,016.5)      (195,553)     (724.8)     (4,669,648)  (1,173.1)


 Interest and other income (expense)                  3,157        1.1        (6,841)      (25.3)       (486,605)     (122.3)

 Income tax expense                                    --          --            --         --              --          --
                                               -----------------------------------------------------------------------------
 Net loss                                      $ (5,757,628)  (2,015.4)   $ (202,394)    (750.1)      $ (5,156,253) (1,295.4)
                                               =============================================================================

                                                              11
</TABLE>

<PAGE>


For the year ended December 31, 2002

          Revenues. Revenues were $286,000 in 2002 representing operations from
our managed services and one month's operations of our acquired company, SBG.

          Operating expenses. Operating expenses were $1.2 million in 2002.
Operating expenses consist primarily of direct labor and benefits of our
technicians and administration, subcontracted labor or other outside services,
commissions, sales and support personnel and advertising costs.

          Net reorganization expenses. Reorganization costs recognized during
2002 include $900,000 related to the buyout of our lease, write-off of $1.1
million of fixed assets associated with the build-out of the data center and a
$2.5 million charge for the impairment of intangible assets.

          Depreciation and amortization expense. Depreciation and amortization
expense was $376,000 in 2002 primarily resulting from depreciation expense
associated with the build-out assets of the Atlanta Data Center prior to
discontinuance.

          Interest and Other Expense. Interest expense was $84,000 in 2002,
offset by $87,000 of miscellaneous income related to the restructuring of a note
outstanding.

Two Months Ending December 31, 2001

          Revenues and cost of revenues. Revenues were $27,000 for the two
months ending December 31, 2001 representing operations from our managed
services. Due to our delays in financing, we have not been able to fully
implement our sales and marketing strategy.

          Operating expenses. Operating expenses were $160,000 for two months
ending December 31, 2001. Operating expenses included salaries and benefits,
facility rentals, utility costs, professional fees as well as costs related to
our marketing and business development activities and costs associated with our
brand and product offering.

          Depreciation and amortization expense. Depreciation and amortization
expense was $63,000 for the two months ending December 31, 2001. As part of
adopting fresh-start reporting, the fixed assets were recorded at their fair
values and depreciation was captured based upon their estimated remaining useful
lives of 3-7 years.

          Interest and Other Expense. Interest expense was $7,000 representing
accrued but unpaid interest on our post petition financings.

Ten Months Ending October 31, 2001 (Predecessor Company)

          Revenues and cost of revenues. Revenues were $398,000 for the ten
months ending October 31, 2001 representing operations from our managed
services.

          Operating expenses. Operating expenses were $1.3 million for the ten
months ending October 31, 2001. Operating expenses included salaries and
benefits, facility rentals, utility costs, professional fees as well as costs
related to our marketing and business development activities and costs
associated with our brand and product offering.

          Stock based compensation expense. Stock based compensation expense was
$82,500 for the ten months ending October 31, 2001. We grant stock warrants to
attract and retain employees, directors and consultants. The majority of these
options and warrants vest over a three-year period. As of May 10, 2001 as a
result of our bankruptcy, all options and warrants outstanding were cancelled.

                                       12

<PAGE>


          Net reorganization expenses. Reorganization costs recognized during
the ten months ending October 31, 2001 include liabilities for rejected
contracts and lease agreements, professional fees, fees paid to the Unites
States Trustee's Office, fresh-start adjustments and other expenses associated
with the Chapter 11 proceedings.

          Depreciation and amortization expense. Depreciation and amortization
expense was $433,000 . Depreciation and amortization expense included
approximately $389,000 in depreciation expense associated with the build-out of
the Atlanta Data Center.

          Interest and Other Expense. Interest expense was $487,000. Effective
May 10, 2001 as a result of our filing for bankruptcy protection, interest and
other expense charges for pre-petition matters were stayed. Included in interest
expense is approximately $5,000 of expense associated with post-petition
financing.

Liquidity and Capital Resources

          We continued to operate as a debtor-in-possession under the
supervision of the Bankruptcy Court. On November 6, 2001, the Company's Plan of
Reorganization was confirmed thereby enabling the Company to successfully emerge
from its Chapter 11 reorganization. Pursuant to the confirmed Plan of
Reorganization, among other things, holders of certain allowed claims will
receive 1 share of common stock for every $3.00 of debt. Also pursuant to the
Plan, the Company's common stock has undergone a 1 for 6 reverse stock split
resulting in current stockholders receiving 1 share of new common stock for
every 6 shares of old common stock currently owned.

          Although the Plan resulted in a substantial reduction in debt, further
improvements in our liquidity position will be subject to the success of
initiatives we are undertaking to increase sales, reduce operating expenses and
the effects on our liquidity of market conditions in the industry. Our uses of
capital are expected to include working capital for operating expenses and
satisfaction of current liabilities, capital expenditures and payments on
outstanding debt facilities.

          As shown in our results of operations, we incurred a net loss of $5.8
million during the year ending December 31, 2002, of which $4.5 million was
related to our restructuring and closing of our data center. During 2002, net
cash used in continuing operating activities totaled $596,000 and was primarily
the result of operating losses. Cash flow from financing activities provided
$600,000 in cash, primarily as a result of our borrowing under the post petition
financing arrangements.

          As part of our Plan of Reorganization, we entered into a borrowing
facility with Sunami Ventures, LLC ("Sunami") (a related party). Sunami shall
receive on account of the borrowings, five shares of New Common Stock for every
dollar loaned and a Senior Secured Note for the amount of the borrowings. As of
December 31, 2001, eNucleus has received approximately $896,000 under this
facility the proceeds of which have been used to satisfy certain petitions
resulting from the bankruptcy and post-petition operating requirements. Whether
we will be able to draw down additional financing under this facility is
presently unknown. We are aggressively pursuing additional sources of funds.

          The Company's continued existence is dependent on its ability to
achieve future profitable operations and its ability to obtain financial
support. The satisfaction of the Company's cash requirements hereafter will
depend in large part on its ability to successfully generate revenues from
operations and raise capital to fund operations. There can, however, be no
assurance that sufficient cash will be generated from operations or that
unanticipated events requiring the expenditure of funds within its existing
operations will not occur. Management is aggressively pursuing additional
sources of funds, the form of which will vary depending upon prevailing market
and other conditions and may include high-yield financing vehicles, short or
long-term borrowings or the issuance of equity securities. There can be no
assurances that management's efforts in these regards will be successful. Under
any of these scenarios, management believes that the Company's common stock
would likely be subject to substantial dilution to existing shareholders. The
uncertainty related to these matters and the Company's bankruptcy status raise
substantial doubt about its ability to continue as a going concern. The
financial statements do not include adjustments that might result from the
outcome of this uncertainty.

          Management believes that, despite the financial hurdles and funding
uncertainties going forward, it has under development a business plan that, if
successfully funded and executed, can significantly improve operating results.
The support of the Company's vendors, customers, lenders, stockholders and
employees will continue to be key to the Company's future success.

                                       13

<PAGE>


Recent Accounting Pronouncements

          In July 2001, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 141, "Business Combinations," and SFAS No.142, "Goodwill
and Other Intangible Assets." SFAS 141 requires that the purchase method of
accounting be used for all business combinations initiated after June 30, 2001.
SFAS 141 also specifies criteria that intangible assets must meet in order to be
recognized and reported separately from goodwill. SFAS 142 requires that
goodwill and intangible assets with indefinite useful lives will no longer be
amortized to expense, but instead will be tested for impairment at least
annually. Intangible assets with definite useful lives will be amortized to
expense. In accordance with SOP 90-7 and the application of fresh-start
reporting, we adopted SFAS No. 141 and SFAS No. 142. The adoption of SFAS No.
141 had no impact on our financial statements as we had no recorded goodwill or
intangible assets at adoption. The adoption of SFAS No. 142 results in the
classification of the reorganization intangible recognized in fresh-start
reporting as goodwill with an indefinite life. As a result, the goodwill will
not be amortized, but will be reviewed annually for impairment.

          In August 2001, the Financial Accounting Standards Board issued
Statement No. 143, Accounting for Asset Retirement Obligations, (SFAS No. 143).
SFAS No. 143 addresses financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and the associated
asset retirement costs. SFAS No. 143 is effective for fiscal years beginning
after June 14, 2002. The Company has reviewed the provisions of SFAS No. 143,
and believes that upon adoption on January 1, 2003, it will not have a material
impact on its financial position, results of operations or cash flow.

          In July 2002, the Financial Accounting Standards Board issued
Statement No. 146, Accounting for Costs Associated with Exit or Disposal
Activities, (SFAS No. 146). This statement addresses financial accounting and
reporting for costs associated with exit or disposal activities and nullifies
EITF Issue No. 94-3, "Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (Including Certain Costs Incurred
in a Restructuring)" ("EITF No. 94-3"). SFAS No. 146 requires that a liability
be recognized for those costs only when the liability is incurred. In contrast,
under EITF No. 94-3, a company recognized a liability for an exit cost when it
committed to an exit plan. SFAS No. 146 also establishes fair value as the
objective for initial measurement of liabilities related to exit or disposal
activities. SFAS No. 146 is effective for exit or disposal activities that are
initiated after December 31, 2002. Management believes that upon adoption of
this new standard, it will not have a material impact on its financial position,
results of operations or cash flow.

          In December 2002, the Financial Accounting Standards Board issued
Statement No. 148, Accounting for Stock-Based Compensation - Transition and
Disclosure, (SFAS No. 148). SFAS No. 148 amends SFAS No. 123, Accounting for
Stock-Based Compensation, to provide alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
employee compensation. SFAS No 148 will also require improved disclosure of
comparable information on accounting methods used to value such compensation.
SFAS No. 148 is effective for fiscal years beginning after December 15, 2002.
The Company has reviewed the provisions of SFAS No. 148 and believes that its
adoption will not have a material impact on its financial position, results of
operations or cash flow.

Quantitative and Qualitative Disclosures about Market Risk

          The Company does not have significant exposure to changing interest
rates. The Company does not undertake any specific actions to cover its exposure
to interest rate risk and the Company is not party to any interest rate risk
management transactions. The Company does not purchase or hold any derivative
financial instruments.

                                       14

<PAGE>


Factors Affecting Future Results

General effects of a bankruptcy filing

          The filing of our bankruptcy petition, and the publicity attendant
thereto, may adversely affect our business. Our competitive advantage may also
be hindered because of the taint and stigma associated with a bankruptcy
petition filing. We believe that such taint and stigma is especially true for
companies providing ebusiness infrastructure, including application delivery and
managed IT services, because of the fear from potential customer that the
company will go out of business and not be able to provide the valuable
services. Additionally, although we believe that we have good relationships with
our suppliers and vendors, there can be no assurance that such suppliers and
vendors will continue to provide such goods and services to us due to the
concerns regarding credit worthiness resulting from the chapter 11 proceeding.
Also it may be difficult for us to obtain financing (whether debt or equity) as
we may require to fund operations and/or growth. Due to delays in our financing,
we will need to negotiate payment terms with some of our administrative claim
holders. There can be no assurance that we will reach agreement with these
parties or be able to satisfy their indebtedness in a timely manner acceptable
to them.

          We have been sustaining losses and our independent auditors have
expressed doubt about our ability to continue as a going concern.

          Our revenue to date has not been sufficient to offset the expenses
incurred in our business activities. We cannot assure you that we will ever
achieve profitability. In their report dated March 28, 2003, our independent
auditors stated that our financial statements for the year ended December 31,
2002 were prepared assuming that we would continue as a going concern. Our
ability to continue as a going concern is an issue raised as a result of
continued operating losses and is subject to our ability to generate profits
and/or obtain necessary funding from outside sources, included obtaining funding
from the sale of our securities or obtaining loans from various financial
sources. The going concern qualification increases the difficulty in meeting
such goals and there can be no assurances that such methods will prove
successful.

We will need to raise additional funds in the future to finance our operations.

          We have always relied heavily on external financing to fund
operations. We will need to raise additional funds to finance continuing
operations until cash flows from operations are sufficient. We may seek such
funding by offerings of our equity securities, offerings of debt securities or
obtaining financing through a bank or other entity. We have not established a
limit as to the amount of debt we may incur nor have we adopted a ratio of our
equity to a debt allowance. There is no assurance that financing will be
available from any source, that it will be available on terms acceptable to us,
or that any future offering of securities will be successful. If additional
funds are raised through the issuance of equity securities, there may be a
significant dilution in the value of our outstanding common stock. We could
suffer adverse consequences if we are unable to obtain additional capital when
needed.

We are uncertain as to sources of the additional financing we will need

          We may use our common stock to fully or partially finance future
acquisitions. In the event that our common stock does not maintain a sufficient
market value, or potential acquisition candidates are otherwise unwilling to
accept our common stock as part of the consideration for the sale of their
businesses, we may be required to utilize our cash resources, if available, in
order to pursue acquisitions. If we do not have sufficient cash resources, our
growth may be limited unless we are able to obtain additional capital through
debt or equity financings. We presently do not have any immediate source of
cash. We may be unable to obtain a working capital line of credit or other
financing we may need for acquisitions or to keep operating. If our financial
resources are inadequate, we may be unable to successfully implement our
business strategy.

We may be unable to manage our growth effectively

          To manage our anticipated growth, we must be able to implement and
improve our operational and financial systems and train and manage an expanding
employee base. Further, we must be able to manage multiple relationships among
various financial institutions, investors, suppliers, strategic partners,
technology distributors and other third parties. Our systems, procedures, and
controls are not currently sufficient to support current or future operations.

                                       15

<PAGE>


Our management team may be unable to deal with this expansion to achieve the
rapid execution necessary to fully exploit the opportunities we see in our
targeted market. We also cannot assure you that we will be able to successfully
compete with the more extensive and well-funded operations of our competitors.
We may be unable to manage growth, integrate operations effectively or achieve
the rapid expansion necessary to fully exploit the market window for our
services in a timely and cost-effective manner.

Our quarterly operating results could vary dramatically

         Our revenues, gross profit, operating income and net income are likely
to vary in the future from quarter to quarter, perhaps substantially. Factors
that may affect this quarter-to-quarter variability include:

     o    disruption or degradation of our network infrastructure and data
          centers,
     o    the short-term nature of certain client commitments,
     o    fluctuations in Internet and IT spending and bandwidth used by
          customers,
     o    loss of a major client,
     o    seasonality that may accompany budget cycles,
     o    the timing, size and mix of service and product offerings,
     o    the timing and size of significant software sales,
     o    the timing and size of new projects,
     o    the timing and magnitude of required capital expenditures,
     o    pricing changes and increases in capital expenditures in response to
          various competitive factors,
     o    market factors affecting the availability of network interconnectivity
          and bandwidth for our customers and qualified technical personnel,
     o    timing and client acceptance of new service offerings,
     o    changes in the trends affecting the outsourcing of Internet-based IT
          services,
     o    additional selling, general and administrative expenses to acquire and
          support new business,
     o    increased levels of technological change in the industry, and
     o    general economic conditions.

          Our operating results will be affected by changes in our network
charges, Colocation charges and equipment costs.

Network and data center failures could lead to significant costs

          We must protect our network and data center infrastructure and
equipment against damage from human error, physical or electronic security
breaches, power loss and other facility failures, fire, earthquake, flood,
telecommunications failure, sabotage, vandalism and similar events. Despite
precautions, a natural disaster, security breach or other unanticipated problems
at one or more of our telecommunication switches, POP connections or data
centers could result in interruptions in our services or significant damage to
our equipment. In addition, failure of any of our telecommunication or data
providers, to provide consistent communications and data capacity could result
in interruptions in our services. Any damage to or failure of our systems or
service providers could result in reductions in, or terminations of, services
supplied to our customers, which could have a material adverse effect on our
business. We may experience interruptions in specific circuits within our
network resulting from events outside our control, which could lead to
short-term degradation in the level of performance of our network.

Client satisfaction with our services is critical to our success

          Our customers demand a very high level of service. Our customers
generally require service on a 24 hours per day, seven days per week basis. If
we incur significant service level commitment obligations in connection with
system downtime, our liability insurance may not be adequate to cover these
expenses. If we do not meet required service levels, we may have to provide
credits to our customers, which could significantly reduce our revenues. As
customers outsource more mission-critical operations to us, we are subject to
increased liability claims and client dissatisfaction if our systems fail or our
customers otherwise become unsatisfied. In the event of any resulting harm to
customers, we could be held liable for damages. Awards for such damages might
exceed our liability insurance by an unknown but significant amount and could
seriously harm our business.

                                       16

<PAGE>


Protection of our intellectual property and proprietary rights

Our ability to develop new technology and technology solutions will depend on
the continued innovation, technical expertise and know-how of our employees and
consultants. We intend to establish a policy of requiring our employees and
consultants to execute confidentiality agreements, however, there can be no
assurance that this procedure will be adequate to prevent misappropriation of
our technology nor can we be assured that our competitors will not independently
develop technologies that are substantially equivalent or superior to those of
ours.

Our ability to implement and expand our network is unproven and will require
substantial financial, operational and managerial resources

          To satisfy client requirements, we must implement, expand and adapt
our infrastructure. We are dependent on service providers for our network
capacity. The expansion and adaptation of our infrastructure will require
substantial financial, operational and management resources. Our ability to
connect and manage a substantially larger number of customers is unknown. We
have yet to prove our infrastructure's ability to be scaled up to higher client
levels while maintaining superior performance. Furthermore, it may be difficult
for us to increase quickly our network capacity in light of current necessary
lead times within the industry to purchase circuits and other critical items. If
we fail to achieve or maintain high capacity data transmission circuits, client
demand could diminish because of possible degradation of service. In addition,
as we upgrade our infrastructure to increase bandwidth available to our
customers, we expect to encounter equipment or software incompatibility which
may cause delays in implementation.

We depend on network interconnections provided by third parties that may raise
their fees or deny access

          We rely on a number of public and private network interconnections to
allow our customers to connect to other networks. If the networks with which we
interconnect were to discontinue their interconnections, our ability to exchange
traffic would be significantly constrained. Furthermore, our business will be
harmed if these networks do not add more bandwidth to accommodate increased
traffic. Many of the companies with which we maintain interconnections are our
competitors. There is nothing to prevent any networks, many of which are
significantly larger than we are, from charging high usage fees or denying
access. In the future, networks could refuse to continue to interconnect
directly with us, might impose significant costs on us or limit our customers'
access to their networks. In this event, we may not be able to access
alternative networks to exchange our customers' traffic on a cost-effective
basis. In addition, we may not be able to pass through to our customers any
additional costs of utilizing these networks. In these cases, our business could
be harmed.

If we are unable to continue to receive cost-effective service from our
providers, we may not be able to provide our services on profitable terms

          In delivering our services, we rely on network and services, which are
built and operated by others. In order to be able to provide optimal routing to
our customers through our infrastructure facilities, we must purchase
connections from several providers. We cannot assure you that these providers
will continue to provide service to us on a cost-effective basis, if at all, or
that these providers will provide us with additional capacity to adequately meet
client demand.

Our brand is relatively new, and failure to develop brand recognition could hurt
our ability to compete effectively

          To successfully execute our strategy, we must create and strengthen
our brand awareness. If we do not build our brand awareness, our ability to
realize our strategic and financial objectives could be hurt. Many of our
competitors have well-established brands associated with the provision of
Internet network services. In order to build our brand awareness, we intend to
significantly increase our marketing efforts, which may not be successful, and
we must continue to provide high quality services. As part of our brand building
efforts, we expect to increase our marketing budget substantially as well as our
marketing activities, including advertising, tradeshows, direct response
programs and new switch and POP site launch events.

                                       17

<PAGE>


The work we perform for customers may expose us to liability

          The nature of the services and products we offer expose us to risks.
Many of our engagements involve projects that are critical to the operations of
our customers' businesses. Our failure or inability to meet a client's needs or
to do so in the time frame required by such customers could result in a claim
for substantial damages against us, regardless of our responsibility for such
failure. Although we intend to obtain general liability and errors and omissions
insurance coverage, there can be no assurance that such coverage will be
available on reasonable terms or in sufficient amounts to cover one or more
large claims, or that the insurer will not disclaim coverage as to any future
claim. The successful assertion of one or more large claims against us that
exceed available insurance coverage or results in changes to our insurance
policies, including premium increases or the imposition of large deductible or
co-insurance requirements, could have a material adverse effect on our business.

We depend on our suppliers

          Although we have not experienced significant problems with our
suppliers of services, hardware, software and componentry, there can be no
assurance that such relationships will continue or that, in the event of a
termination of our relationships with any given supplier, we would be able to
obtain alternative sources of supply without a material disruption in our
ability to provide products and services to our customers.

We are uncertain as to sources of the additional financing we will need

          We may use our common stock to fully or partially finance future
acquisitions. In the event that our common stock does not maintain a sufficient
market value, or potential acquisition candidates are otherwise unwilling to
accept our common stock as part of the consideration for the sale of their
businesses, we may be required to utilize our cash resources, if available, in
order to pursue acquisitions. If we do not have sufficient cash resources, our
growth may be limited unless we are able to obtain additional capital through
debt or equity financings. We presently do not have any immediate source of
cash. We may be unable to obtain a working capital line of credit or other
financing we may need for acquisitions or to keep operating. If our financial
resources are inadequate, we may be unable to successfully implement our
business strategy.

We are dependent on our management team

          We are dependent on the continued efforts of our executive officers,
in particular John C. Paulsen, our President and Chief Executive Officer. We do
not maintain key person life insurance on any of our executive officers. If any
of these people become unable to continue in his or her role with us, or if we
are unable to attract and retain other qualified employees, our financial
performance and business prospects will probably be negatively impacted.

We could be subject to claims of infringement by third parties

          We rely upon a combination of nondisclosure and other contractual
arrangements and trade secret, copyright and trademark laws to protect our
proprietary rights and the proprietary rights of third parties from whom we
license intellectual property. We enter into confidentiality agreements with our
employees and limit distribution of proprietary information. There can be no
assurance that these steps will be adequate to deter misappropriation of
proprietary information or that we will be able to detect unauthorized use and
take appropriate steps to enforce our intellectual property rights.

          We believe that our services do not infringe on the intellectual
property rights of others and that we have all rights necessary to utilize the
intellectual property employed in our business. However, we are subject to the
risk of claims alleging infringement of third-party intellectual property
rights. Any such claims could require us to spend significant sums in
litigation, pay damages, develop non-infringing intellectual property or acquire
licenses to the intellectual property that is the subject of asserted
infringement.

                                       18

<PAGE>


We operate in a relatively new and evolving market with uncertain prospects for
growth

          The market for Internet networks and related services has only
recently begun to develop and is evolving rapidly. Although certain industry
analysts project significant growth for this market, their projections may not
be realized. Our future growth, if any, will depend on the continued trend of
businesses migrating toward use of the Internet and our ability to market our
services effectively. There can be no assurance that the market for our services
will grow, that our services will be adopted, or that businesses will use these
Internet-based services to the degree or in the manner that we expect. If we are
unable to react quickly to changes in the market, if the market fails to
develop, or develops more slowly than expected, or if our services do not
achieve market acceptance, then we are unlikely to become or remain profitable.

We face strong competition

          The market for the products and services we offer is highly
competitive. Our competitors vary in size and in the scope of the products and
new services that they offer. Primary competitors generally include:

     o    complete solution providers,
     o    ISPs (Internet service providers),
     o    web hosting firms,
     o    application hosting firms,
     o    strategic consulting firms,
     o    in-house IT departments of customers, and
     o    computer hardware and service vendors.

          Traditionally, the largest service providers have principally focused
on providing solutions to international Fortune 500 companies. A large number of
smaller service companies and a growing number of larger companies compete in
the middle market segment.

          There are relatively low barriers to entry into our target market. We
expect to face competition from established and new companies. Increased
competition may result in greater pricing pressure, which could adversely affect
our gross margins. In addition, many of our competitors have greater financial,
development, technical, marketing and sales resources than we do. As a result,
our competitors may be able to adapt more quickly to new or emerging
technologies and to changes in client requirements or to devote greater
resources than us for the development, promotion, sale and support of
Internet-based products and services. In addition, there is a risk that
customers may elect to increase their internal IT resources to satisfy their IT
solutions needs. We may also enter new markets and offer new services, and
expect to face intense competition from existing and new competitors,
particularly since barriers of entry in the IT service industry are relatively
low. We cannot assure you that we will continue to provide IT services and
products demanded by our target market or be able to compete successfully with
existing or new competitors. An inability to compete in our market effectively
would negatively impact our financial performance and business prospects.

We are dependent on hiring and retaining skilled personnel

          We must attract, hire and retain personnel who possess the skills and
experience necessary to operate our business and serve our customers.
Competition for individuals with proven skills is intense. In addition, the
Internet-based IT service industry in general experiences a high rate of
turnover. We compete for such individuals with Internet companies, systems
integrators, providers of outsourcing services, temporary personnel agencies,
computer systems consultants, customers and potential customers. Many large
competitors have extensive campaigns to hire additional technical personnel or
have full time recruiters on staff. Competition for quality technical personnel
has continued to intensify, resulting in increased personnel costs for many IT
service providers. There can be no assurance we will be able to recruit or
retain the technical personnel necessary to execute our strategy. Failure to do
so would have a material adverse effect on our financial performance and
business.

Our industry is changing rapidly and new solutions are constantly being
introduced

          The Internet-based IT service and e-commerce industries are
characterized by rapid technological change, evolving industry standards,
changing client preferences and new product and service introductions. Our

                                       19

<PAGE>


success will depend in part on our ability to develop Internet-based IT
solutions that keep pace with continuing changes in the IT service and
e-commerce industries. There can be no assurance that we will be successful in
adequately addressing these developments on a timely basis or that, if these
developments are addressed, we will be successful in the marketplace. In
addition, there can be no assurance that products or technologies developed by
others will not render our services non-competitive or obsolete. Our failure to
address these developments could have a negative impact on our financial
performance and business prospects.

Potential customers may not widely adopt Internet solutions, and, if they do,
may not outsource such projects

          The market for our products and services will depend upon the adoption
of Internet, intranet, extranet and web site solutions by customers. If
customers and potential customers choose not to implement such solutions, we
will address a smaller market and our revenues could be adversely affected. Some
critical unresolved issues concerning the use of Internet solutions are
security, reliability, cost, ease of deployment and administration and bandwidth
of the Internet itself. These issues may affect the use of such technologies to
solve business problems. Some entities would have to change significantly the
way they do business to adapt to the Internet. Even if these issues are
resolved, businesses might not elect to outsource the design, development and
maintenance of their Internet, intranet, extranet and web site solutions to
firms such as eNucleus.

ITEM 7        FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

          The following financial statements for eNucleus and independent
auditors' report as of December 31, 2002 and 2001 and for the year ended
December 31, 2002, the two months ended December 31, 2001 and ten months ended
October 31, 2001 are filed as part of this report on Form 10-KSB beginning on
page F-1.

          Report of Independent Public Accountants
          Balance Sheets as of December 31, 2002 and 2001
          Statements of Operations for the year ended December 31, 2002, two
              months ended December 31, 2001 and ten months ended October 31,
              2001
          Statements of Stockholders' Equity (Deficit) for the year ended
              December 31, 2002, two months ended December 31, 2001 and ten
              months ended October 31, 2001
          Statements of Cash Flows for the year ended December 31, 2002, two
              months ended December 31, 2001 and ten months ended October 31,
              2001
          Notes to the Financial Statements

ITEM 8        CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
              FINANCIAL DISCLOSURE

          NONE


PART III

ITEM 9        DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS,
              COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Directors and Executive Officers

          The following table contains certain information with respect to our
directors and executive officers:

Name                  Age      Position as of the year ended 12/31/01
----                  ---      --------------------------------------

John C. Paulsen       40       Chairman of the Board/Director, Chief Executive
                               Officer, Chief Financial Officer and Secretary

Scott Voss            44       President

                                       20

<PAGE>
<TABLE>
<CAPTION>


          John C. Paulsen has served as Chairman of the Board and Chief
Executive Officer of eNucleus since April 1999. Prior thereto, Mr. Paulsen
served as the President of Nucleus Holding Company. From 1995 to 1997 Mr.
Paulsen served as President and CEO of MetroLink Communications, Inc. a
long-distance carrier. From 1990 to 1995, Mr. Paulsen served as President and
CEO of American Teletronics Long Distance, Inc. a reseller of long-distance
telecommunications services.

          Scott Voss joined eNucleus following the bankruptcy petition. Prior
thereto, Mr. Voss served as an advisor to the company on various financing,
sales and marketing projects. Mr. Voss has extensive experience in developing
and growing marketing orientated organizations. Before joining eNucleus, Mr.
Voss was President of Sterling Press and Graphics which specialized in
collateral development and printing for high growth businesses.

          Board of Directors

          Currently, John Paulsen is the Company's sole director. As soon as
practicably, Mr. Paulsen, intends to fill the vacancies on the Board of
Directors resulting from the previous resignations of the Company's other
directors. Included in the Directors so appointed will be two representatives
from the creditor committee pursuant to the Company's Plan of Reorganization.

          Our last Annual Shareholder Meeting was held on July 14, 2000.
Subsequent to the shareholder meeting, and as a result or restructuring and
filing of the Chapter 11 petition, each of the directors previously elected to
serve (except Mr. John C. Paulsen) resigned from the Board of Directors. No new
directors have been elected.

          Section 16(A) Beneficial Ownership Reporting Compliance. Section 16(a)
of the Securities Exchange Act of 1934 requires our directors, executive
officers, and persons who own more than 10% of our equity securities, to file
initial reports of ownership and reports of changes in ownership of our common
stock and other equity securities with the Securities and Exchange Commission.
Executive officers, directors and 10% owners are required by SEC regulation to
furnish us with copies of all Section 16(a) forms they file. During the year, no
reporting was provided to eNucleus in accordance with this section.

ITEM 10       EXECUTIVE COMPENSATION

          The following table summarizes the compensation paid for the years
ended December 31, 2002, 2001 and 2000 to the individuals who served as our
chief executive officer during such periods and those serving as current
executive officers.

Summary Compensation Table

                                                                                 All Other
Name and Principal Position                    Year    Salary ($)    Bonus ($)   Compensation ($)
---------------------------                    ----    ----------    ---------   ----------------
<S>                                            <C>       <C>             <C>          <C>
John C. Paulsen, Chief Executive Officer,      2002      97,707          --           --
President and Secretary (1)                    2001     142,923          --           --
                                               2000     275,000          --          1,195(3)

Scott Voss, President (2)                      2002      35,905          --           --
                                               2001       6,382          --           --

(1)  President until May, 2001.
(2)  President beginning in May, 2001.
(3)  Consists of premiums paid for life insurance under which Mr. Paulsen is the
     beneficiary

                                       21
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


          The following table summarizes the individual grants of stock options
made during the most recent fiscal year to the individuals who served as our
named executive officers.

Summary Option Grants in Last Fiscal Year Table

                           Number of Securities       % of Total Options
                            Underlying Options       Granted to Employees      Exercise      Expiration
        Name                     Granted                in Fiscal Year        Price ($/Sh)      Date
        ----                     -------                -------------        ------------       ----
<S>                             <C>                          <C>                <C>          <C>
John C. Paulsen                 2,500,000                    50%                $0.006       March, 2003

Scott Voss                      2,500,000                    50%                $0.006       March, 2003

          In March, 2002, upon the expiration of their previous employment
agreements the Company granted options to purchase shares of restricted common
stock to our two officers, respectively, at a price equal to the market price on
date of grant. Such options were granted for the consideration and incentive to
continue employment and a substantially reduced salary through the remainder of
2002 and until such time the Company provides positive cash flow operating
earnings.

          The following table summarizes the exercise of stock options during
the most recent fiscal year by each of the named executive officers and the
fiscal year end value of unexercised options.

Aggregate Option Exercises in Last Fiscal Year and Fiscal Year End Option Values

                                                             Number of Securities          Value of Unexercised
                                                            Underlying Unexercised             In-the-Money
                      Shares Acquired on      Value          Options at FY-End (#)         Options at FY-end ($)
        Name             Exercise (#)      Realized ($)    Exercisable/Unexercisable     Exercisable/Unexercisable
        ----             ------------      ------------    -------------------------     -------------------------

John C. Paulsen           2,500,000            $ 0                   0 / 0                         0 / 0

Scott Voss                2,500,000            $ 0                   0 / 0                         0 / 0

Compensation of Directors

          Currently, John Paulsen is the Company's sole director. As soon as
practicably, Mr. Paulsen, intends to fill the vacancies on the Board of
Directors resulting from the previous resignations of the Company's other
directors. Mr. Paulsen was not compensated for serving as the Company's director
during the last fiscal year. Upon the reconstitution of the Board of Directors,
the Company anticipates compensatory arrangements to be made to those serving
and participating in the growth and development of the Company, including stock
based arrangements.

Employment Contracts

          The Company is currently in the process of entering into new
employment agreements with its executive officers.

ITEM 11       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

          Pursuant to the our Plan of Reorganization, we filed an Amended and
Restated Certificate of Incorporation with the Delaware Secretary of State. In
accordance with the Plan, all outstanding shares of old common stock (ENCS) and
warrants and options to purchase old common stock were cancelled. As part of the
distribution of the New Common Stock under the Plan of Reorganization,
shareholders were to tender their Old Common Stock to the Reorganized Company
designated Stock Transfer Agent no later than October 15, 2002, in accordance
with written instructions provided to such holders, and in exchange would
receive one share of new common stock for every six shares of old common stock
previously owned. Any shareholder who did not submit its certificates for
exchange prior to October 15, 2002 had its claim or interest and its
distribution pursuant to the Plan of Reorganization on account of such Old
Common Stock discharged and shall be forever barred from asserting any such
claim or interest against the Reorganized Company or their respective property.
Approximately 1.8 million shares of new common stock were issued under this

                                       22
</TABLE>

<PAGE>


exchange. Additionally, approximately 2.8 million shares were issued in exchange
for holders of certain allowed claims under the Plan of Reorganization. Such
holders of allowed claims received 1 share of common stock for every $3.00 of
debt claim approved. Any creditor who did not submit its appropriate paperwork
for the stock exchange prior to December 23, 2002 had its claim or interest and
its distribution pursuant to the Plan of Reorganization on account of such claim
discharged and shall be forever barred from asserting any such claim or interest
against the Reorganized Company or their respective property.

Security Ownership of Certain Beneficial Officers

          The following table sets forth the number of shares of common stock
beneficially owned as of March 28, 2003, by each person known by us to
beneficially own more than 5% of the common stock of eNucleus. A beneficial
owner of a security includes any person who has the power to vote or sell the
shares.

              Name of Beneficial Owner        Amount and Nature       Percent of
              ------------------------          of Beneficial           Class
                                                  Ownership             -----
                                                  ---------

              Sunami Ventures, LLC (1)            3,083,861              9.3%
              Artemis & Co (2)                    1,759,000              5.3%

              (1)  Mailing address is 6517 W. 127th Street, Palos Heights,
                   Illinois 60463.
              (2)  Mailing address is 9 Rue Verdaine, 1211 Geneva, Switzerland.

Security Ownership of Directors and Executive Officers

          The following table sets forth the number of shares of common stock
beneficially owned as of March 28, 2003 by (i) each of our directors, (ii) our
executive officers and (iii) all directors and executive officers as a group. A
beneficial owner of a security includes any person who has the power to vote or
sell the shares.

              Name of Beneficial Owner        Amount and Nature       Percent of
              ------------------------          of Beneficial           Class
                                                  Ownership             -----
                                                  ---------

              John C. Paulsen (1).                5,141,135 (2)         15.5%
              Scott Voss (1)                      5,486,265             16.5%
              All directors and executive
              officers, as a group               10,627,400             32.0%
              (2 persons)

              (1) Mailing address is 15545 S. 71st Court, Orland Park, Illinois
                  60462.
              (2) Includes shares held directly by Mr. Paulsen and indirectly
                  through a family trust for which Mr. Paulsen acts as
                  majority general partner


ITEM 12       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          As part of our Plan of Reorganization, we entered into a borrowing
facility with Sunami Ventures, LLC ("Sunami") (a limited liability company
managed and controlled by Mr. Henry Paulsen, John Paulsen's father). In
accordance with the Plan of Reorganization, Sunami (or other parties who shall
provide post-petition financing) shall each receive on account of the loans,
five shares of New Common Stock for every dollar loaned and a Senior Secured
Note for the amount of the borrowings. As of December 31, 2002, eNucleus has
received approximately $896,000 under this facility the proceeds of which have
been used to satisfy certain petitions resulting from the bankruptcy and
post-petition operating requirements. Pursuant to the Sunami financing
agreement, in December, 2001, we also entered into a three-year $545,000 secured
demand loan agreement with Capital Equity Group. The note agreement is secured
by certain of our assets, guaranteed by John Paulsen, our CEO and bears interest
at the rate of 16% per annum. During the second quarter Capital Equity Group
notified us that they would not be able to satisfy the lending requirements of
the facility (eNucleus received approximately $212,000 under this facility). The
Company is currently pursuing the formal cancellation of the note and security
agreement granted as part of the facility and is exploring its legal rights and
remedies arising from

                                       23

<PAGE>


Capital Equity Group's inability to fulfill its obligations under the
transaction. In accordance with the provisions of the Plan of Reorganization,
the Company has issued approximately 5.5 million shares of common stock on
account of the borrowings to date. During November and December, Sunami agreed
to convert approximately $700,000 of the outstanding financing and release the
Company from approximately $450,000 of other obligations for the consideration
of restricted common stock valued at $0.20 per share (approximately 5.8 million
shares were issued under these conversions).

          In October 2001, we entered into a collocation/lease agreement with
Sunami for approximately 5,000 sq ft. in Roswell, Georgia serving as our branch
office and data center/operating facility in Atlanta, Georgia. The lease
provided for monthly payments of approximately $20,000 and expired in 2008.
Associated with this agreement, we were required to provide a $100,000 security
deposit, which has been financed under the Sunami borrowing facility and 1.0
million shares of common stock. In conjunction with our restructuring in
December, we decided to close our data center facility in Atlanta and more fully
capitalize on our strategic partnership with Switch and Data (our collocation
facility partner). As a result of this decision, we issued approximately 4.5
million of restricted common stock as consideration for the release of $913,000
of remaining lease obligations as well as the relinquishment of our security
deposit and the rights and title to certain leasehold improvements made to the
facility.

          On May 11, 2001, we entered into agreements with John Paulsen, our CEO
and Scott Voss, our President whereby they would agree to be employed by the
Company and provide their best efforts in assisting the Company through the
reorganization process. The individuals also agreed to a substantially reduced
salary during such period and other certain terms and conditions including a
period of non-compete. Under these agreements, the Company provided a stock
grant of 850,000 shares to each for the purposes of managing the reorganization,
and each agreed to a reduction in salary, a non-compete agreement and other
matters. The agreements also contained a claw-back feature pursuant to which
certain shares of common stock would be forfeited if the individual did not
continue employment through March 31, 2002. The agreements also contain a
provision whereby the Company, at its sole discretion may buy back the shares
for $0.10 per share prior to June 30, 2002. In accordance with the Plan of
Reorganization, we granted options to purchase up to 500,000 shares of common
stock to Mr. Paulsen and Mr. Voss, each. Such options vested on the confirmation
date (November 6, 2001) with an exercise price equal to the price of the common
stock at that date and have a ten-year life. These options were fully exercised
and the respective shares have been issued. In March, 2002, upon the expiration
of the above mentioned employment agreements the Company granted options to
purchase up to 2.5 million shares of restricted common stock to Mr. Paulsen and
Mr. Voss, respectively, at a price equal to the market price on date of grant.
Such options were granted for the consideration and incentive to continue
employment and at a substantially reduced salary through the remainder of 2002
and until such time the Company provides positive cash flow operating earnings.
As of December 31, 2002, these options were fully exercised and the respective
shares have been issued.

          During the year, we issued 500,000 shares to a market-making
organization to sponsor eNucleus on the OTC Bulletin Board. In December, 2002 we
issued 200,000 shares to an organization for assistance with investor relations
and corporate communication services. The agreements also contain provisions
whereby we may pay certain monthly retainer fees in cash or stock, at the
discretion of the Company.

          We have also entered into investment banking, acquisition consulting
and legal services agreements, whereby we may pay certain monthly retainer fees
in cash or stock, in some cases at the discretion of the Company. Due to the
nature of these agreements, we are currently not able to estimate the number of
potential shares that may be issued under these arrangements. As of year-end, no
shares had been issued pursuant to these agreements

ITEM 13       EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibit Index

     See Exhibit Index beginning on page A-1.

(b)  Reports on Form 8-K

          On November 7, 2002, we filed a Current Report on Form 8-K relating to
the entering into an equity line financing arrangement with Cornell Capital,
LLC. On March 4, 2003 we filed a Current Report on Form 8-K relating to formal
termination of this agreement and the withdrawal of our SB-2 registration
statement associated with this agreement.

                                       24

<PAGE>


ITEM 14       CONTROLS AND PROCEDURES

         Within the 90 days prior to the date of this report, eNucleus
management (including our Chief Executive and Financial Officer, John Paulsen)
conducted an evaluation of the effectiveness of the design and operation of the
Company's disclosure controls and procedures as defined in the Exchange Act Rule
13a-14. Based on that evaluation, Mr. Paulsen concluded that the Company's
disclosure controls and procedures were effective as of the date of the
evaluation. There have been no significant changes in internal controls, or in
factors that could significantly affect internal controls, subsequent to the
date of the most recent evaluation.


          SIGNATURE


          In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed by the undersigned, thereunto duly
authorized.


Date:  March 28, 2003                       By:  /s/  John C. Paulsen
                                               --------------------------------
                                                      John C. Paulsen
                                                      Chief Executive Officer
                                                      and Principal Financial
                                                      Officer


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

Signature                 Title                                   Date
---------                 -----                                   ----

/s/  John C. Paulsen      Chief Executive Officer, Chairman    March 28, 2003
---------------------     of the Board and Principal
     John C. Paulsen      Financial and Accounting Officer

                                       25

<PAGE>


                   CERTIFICATION PURSUANT TO RULE 13A-14 UNDER
                 THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, John C. Paulsen, Chairman of the Board and Chief Executive Officer and
principal Financial Officer, certify that:

1. I have reviewed this annual report on Form 10-KSB of eNucleus, Inc.;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:

     a) designed such disclosure controls and procedures to ensure that material
     information relating to the registrant, including its consolidated
     subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this annual report is being
     prepared;

     b) evaluated the effectiveness of the registrant's disclosure controls and
     procedures as of a date within 90 days prior to the filing date of this
     annual report (the "Evaluation Date"); and

     c) presented in this annual report our conclusions about the effectiveness
     of the disclosure controls and procedures based on our evaluation as of the
     Evaluation Date;

5. I have disclosed, based on our most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors (or persons
performing the equivalent functions):

     a) all significant deficiencies in the design or operation of internal
     controls which could adversely affect the registrant's ability to record,
     process, summarize and report financial data and have identified for the
     registrant's auditors any material weaknesses in internal controls; and

     b) any fraud, whether or not material, that involves management or other
     employees who have a significant role in the registrant's internal
     controls; and

6. I have indicated in this annual report whether there were significant changes
in internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.

Date: March 28, 2003                        ENUCLEUS, INC.

                                            By:  /s/  JOHN C. PAULSEN
                                               --------------------------------
                                                      John C. Paulsen,
                                                      Chief Executive Officer
                                                      and Principal Financial
                                                      Officer

                                       26

<PAGE>


INDEX TO FINANCIAL STATEMENTS


Report of Bujan & Associates, Ltd, Independent Public Accountants           F-2

Consolidated Balance Sheets as of December 31, 2002 and 2001                F-3

Consolidated Statements of Operations for the Year Ended
     December 31, 2002, Two Month Period Ended December 31, 2001
     and Ten Month Period Ended October 31, 2001                            F-4

Consolidated Statements of Changes in Shareholders' Equity (Deficit)
     for the Year Ended December 31, 2002, Two Month Period Ended
     December 31, 2001and Ten Month Period Ended October 31, 2001           F-5

Consolidated Statements of Cash Flows for the Year Ended
     December 31, 2002, Two Month Period Ended December 31, 2001
     and Ten Month Period Ended October 31, 2001                            F-6

Notes to Consolidated Financial Statements                                  F-7


                                       F-1

<PAGE>


Report of Independent Public Accountants

To the Board of Directors and Stockholders of eNucleus, Inc.:

          We have audited the accompanying consolidated balance sheets of
eNucleus, Inc. (a Delaware corporation) (the Company) as of December 31, 2002
and 2001, and the related statements of operations, stockholders' (deficit)
equity, and cash flows for the year ended December 31, 2002, two month period
ended December 31, 2001and the ten month period ended October 31, 2001. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

          We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

          In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
eNucleus, Inc. as of December 31, 2002 and 2001 and the results of their
operations and cash flows for the year ended December 31, 2002, two month period
ended December 31, 2001and ten month period ended October 31, 2001, in
conformity with accounting principles generally accepted in the United States.

          The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As more fully
discussed in Note 2 to the financial statements, the Company continues to incur
operating losses and must continue to fund negative working capital needs.
Additionally, the Company will need to negotiate payment terms with some of its
administrative claim holders. There can be no assurance that the Company will
reach agreement with these parties or be able to satisfy their indebtedness in a
timely manner acceptable to them These conditions raise substantial doubt about
the Company's ability to continue as a going concern. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.

/s/  Bujan & Associates, Ltd
-----------------------------
     Bujan & Associates, Ltd


Palos Heights, Illinois
March 28, 2003

                                      F-2

<PAGE>
<TABLE>
<CAPTION>


                                 eNucleus, Inc.
                           Consolidated Balance Sheets
                               As of December 31,



                                                           2002          2001
                                                           ----          ----
ASSETS:

Current assets:
<S>                                                    <C>            <C>
Cash                                                   $     4,932    $       808
Accounts receivable                                         54,893         13,339
Other current assets                                        37,974         51,348
                                                       -----------    -----------

Total current assets                                        97,799         65,495
                                                       -----------    -----------


Property and equipment, net                                491,430      1,850,597
Goodwill and other intangibles, net                      1,771,274      4,186,554
Other assets                                                  --          100,000
                                                       -----------    -----------
Total assets                                           $ 2,360,503    $ 6,202,646
                                                       -----------    -----------



LIABILITIES & STOCKHOLDERS' EQUITY:

Current liabilities:
Notes payable                                          $   425,540    $   633,431
Accounts payable                                           272,798        188,405
Accrued expenses                                           452,161        639,201
                                                       -----------    -----------
Total current liabilities                                1,150,499      1,461,037
                                                       -----------    -----------


Long term liabilities                                      867,689      1,272,069
                                                       -----------    -----------

Total liabilities                                        2,018,188      2,733,106
                                                       -----------    -----------



                                                       -----------    -----------
Redeemable securities                                         --             --
                                                       -----------    -----------


STOCKHOLDERS' EQUITY:

Common stock, $0.001 par value, 100,000,000 shares          33,263           --
authorized, shares issued and outstanding 33,262,872
Additional paid-in capital                               6,269,074           --
New common equity - issuable                                     0      3,671,934
Accumulated deficit                                     (5,960,022)      (202,394)
                                                       -----------    -----------


Total stockholders' equity                                 342,315      3,469,540
                                                       -----------    -----------


Total liabilities and stockholders' equity             $ 2,360,503    $ 6,202,646
                                                       -----------    -----------


          See accompanying notes to Consolidated Financial Statements.

                                      F-3
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                         eNucleus, Inc.
                              Consolidated Statements of Operations



                                                                                  (Predecessor
                                                                                     Company)
                                                                   Two Months       Ten Months
                                                  Year Ending        Ending          Ending
                                                  Dec 31, 2002    Dec. 31, 2001   Oct. 31, 2001
                                                  ------------    ------------    ------------
<S>                                               <C>             <C>             <C>
Revenue                                           $    285,687    $     26,981    $    398,056


Operating expenses                                   1,153,272         159,970       1,284,178

Stock based compensation expense                          --              --            82,500

Net reorganization expense                           4,517,579            --         3,268,326

Depreciation and amortization expense                  375,621          62,564         432,700
                                                  ------------    ------------    ------------
Operating loss                                      (5,760,785)       (195,553)     (4,669,648)



Interest and other income (expense)                      3,157          (6,841)       (486,605)

Income tax expense                                        --              --              --
                                                  ------------    ------------    ------------
Net loss                                          $ (5,757,628)   $   (202,394)   $ (5,156,253)
                                                  ------------    ------------    ------------



Basic and diluted net loss per common share       $      (0.25)   $      (0.01)   $      (0.38)
                                                  ============    ============    ============

Weighted average shares outstanding - basic and     23,006,248      20,009,898      13,507,307
 diluted                                          ============    ============    ============


                  See accompanying notes to Consolidated Financial Statements.

                                              F-4
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                       eNucleus, Inc.
                 Consolidated Statements of Changes in Stockholders' Equity



                                                                   New          Additional
                                       Common Stock               Equity         Paid in
                                  Shares          Amount         Issuable        Capital
                               ------------    ------------    ------------    ------------
<S>                            <C>             <C>             <C>             <C>
Balance, December 31, 2000
 (Predecessor)                   12,905,432    $     12,905    $       --        22,542,262
Issuance of common stock for
 services                           715,000             715            --           106,735
Accretion of Redeemable
 Common Stock                          --              --              --           (62,047)
Net loss
                                       --              --              --              --
Effect of reorganization and
 fresh-start reporting          (13,620,432)        (13,620)      3,671,934     (22,586,950)
                               ------------    ------------    ------------    ------------

Balance, October 31, 2001
 (Predecessor)                         --              --         3,671,934            --
Net loss
                                       --              --              --              --
                               ------------    ------------    ------------    ------------

Balance, December 31, 2001
                                       --              --         3,671,934            --
Issuance of common stock
 through the exchange of Old
 Common Stock (per Plan)          1,749,925           1,750        (874,963)        873,213
Issuance of common stock
 through the exchange of
 creditor claims (per Plan)       2,764,114           2,764      (1,382,057)      1,379,293
Contributed capital from the
 unexchanged stock and debt            --              --        (1,414,914)      1,414,914
Issuance of common stock in
 conjunction with debt
 financings                       5,542,400           5,542            --              --
Common stock issued upon
 conversion of debt              12,046,433          12,047            --         2,556,514
Common stock issued for
 employment services              2,400,000           2,400            --              --
Common stock issued upon
 exercise of options              7,000,000           7,000            --            25,000
Common stock issued for
 services provided                1,710,000           1,710            --            12,690
Issuance of common stock for
 acquisitions                        50,000              50            --             7,450
Net loss
                                       --              --              --              --

                               ------------    ------------    ------------    ------------
Balance, December 31, 2002       33,262,872    $     33,263    $       --      $  6,269,074
                               ============    ============    ============    ============


          See accompanying notes to Consolidated Financial Statements.

                                      F-5
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                       eNucleus, Inc.
                 Consolidated Statements of Changes in Stockholders' Equity
                                         (Continued)


                                  Stock          Treasury      Accumulated
                                 Warrants         Stock          Deficit          Total
                               ------------    ------------    ------------    ------------
<S>                            <C>             <C>             <C>             <C>
Balance, December 31, 2000
 (Predecessor)                      727,349    $   (651,838)    (33,924,689)   $(11,294,011)
Issuance of common stock for
 services                              --              --              --           107,450
Accretion of Redeemable
 Common Stock                          --              --              --           (62,047)
Net loss
                                       --              --        (5,156,253)     (5,156,253)
Effect of reorganization and
 fresh-start reporting             (727,349)        651,838      39,080,942      20,076,795
                               ------------    ------------    ------------    ------------

Balance, October 31, 2001
 (Predecessor)                         --              --              --         3,671,934
Net loss
                                       --              --          (202,394)       (202,394)
                               ------------    ------------    ------------    ------------

Balance, December 31, 2001
                                       --              --          (202,394)      3,469,540
Issuance of common stock
 through the exchange of Old
 Common Stock (per Plan)               --              --              --              --
Issuance of common stock
 through the exchange of
 creditor claims (per Plan)            --              --              --              --
Contributed capital from the
 unexchanged stock and debt            --              --              --              --
Issuance of common stock in
 conjunction with debt
 financings                            --              --              --             5,542
Common stock issued upon
 conversion of debt                    --              --              --         2,568,561
Common stock issued for
 employment services                   --              --              --             2,400
Common stock issued upon
 exercise of options                   --              --              --            32,000
Common stock issued for
 services provided                     --              --              --            14,400
Issuance of common stock for
 acquisitions                          --              --              --             7,500
Net loss
                                       --              --        (5,757,628)     (5,757,628)

                               ------------    ------------    ------------    ------------
Balance, December 31, 2002     $       --      $       --      $ (5,960,022)   $    342,315
                               ============    ============    ============    ============


                See accompanying notes to Consolidated Financial Statements.

                                        F-5 (Con't)
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                           eNucleus, Inc.
                                Consolidated Statements of Cash Flows



                                                                                       (Predecessor
                                                                                         Company)
                                                                         Two Months     Ten Months
                                                          Year Ending      Ending         Ending
                                                         Dec 31, 2002   Dec. 31, 2001  Oct. 31, 2001
                                                          -----------    -----------    -----------
Cash flows from operating activities:
<S>                                                       <C>            <C>            <C>
Net loss                                                  $(5,757,628)   $  (202,394)   $(5,156,253)
Adjustments to reconcile net loss to net cash provided
     by (used in) operating activities:
Net adjustment to assets & liabilities related to                --             --          258,302
Fresh-Start Reporting
Non-cash reorganization expense                             4,517,579           --        2,824,020
Depreciation and amortization                                 375,624         62,564        432,700
Compensation expense from issuance of equity securities          --             --           82,500
Amortization of deferred financial costs and debt                --             --             --
discount
Changes in operating assets and liabilities
  Changes in accounts receivables                              14,154         19,376         37,151
  Changes in other assets                                    (113,374)        (9,284)       117,776
  Changes in payables                                          48,028          9,790        178,615
  Changes in accrued expenses                                 320,013        32,895        606,305
                                                          -----------    -----------    -----------
Net cash in operating operations                             (595,604)       (87,053)      (618,884)
                                                          -----------    -----------    -----------

Cash flows from investing activities:
Capital expenditures                                             --             --          (65,597)
                                                          -----------    -----------    -----------
Net cash (used in)/provided by investing activities              --             --          (65,597)
                                                          -----------    -----------    -----------


Cash flows from financing activities:
Borrowings (repayments) on notes payable                      567,728         85,424        685,466
Proceeds from sale of common stock                             32,000           --             --
                                                          -----------    -----------    -----------
Net cash provided by financing activities                     599,728         85,424        685,466
                                                          -----------    -----------    -----------


Increase in cash                                                4,124         (1,629)           985
Cash, beginning of period                                         808          2,437          1,452
                                                          -----------    -----------    -----------
Cash, end of period                                       $     4,932    $       808    $     2,437
                                                          -----------    -----------    -----------



Non-cash investing and financing activities:
Debt converted to common stock                            $ 1,205,000    $      --      $      --
Stock issued to effect acquisitions                             7,500           --             --
                                                          -----------    -----------    -----------


                    See accompanying notes to Consolidated Financial Statements.

                                                F-6
</TABLE>

<PAGE>


                                 eNucleus, Inc.
                   Notes to Consolidated Financial Statements
                           December 31, 2002 and 2001

(1)       Description of the Business

          eNucleus (the Company) is a next generation business process hosting
company that delivers software solutions from its national application delivery
platform. Our core product offerings include application delivery, managed
hosting, high-speed Internet access and data storage. Together, this offering
provides our customers with a scaleable platform for the development of their
ebusiness initiatives without the extensive capital outlay otherwise required.

(2)       Financial Results and Liquidity

          On May 10, 2001, as a result of dramatic changes in the Internet
industry and financing markets, delays in reaching accord with short term note
holders and other creditors in restructuring their debts and the Company's
inability to cure defaults under its data center lease and the landlord's
attempts to seize Company assets, the Company filed a voluntary petition for
reorganization under Chapter 11 of the United States Bankruptcy Code in the U.S.
Bankruptcy Court for the Northern District of Illinois, Eastern Division. The
Company continued to operate as a debtor-in-possession under the supervision of
the Bankruptcy Court. On November 6, 2001, the Company's Plan of Reorganization
was confirmed thereby enabling the Company to successfully emerge from its
Chapter 11 reorganization.

          Pursuant to the our Plan of Reorganization, the Company filed an
Amended and Restated Certificate of Incorporation with the Delaware Secretary of
State. In accordance with the Plan, all outstanding shares of old common stock
(ENCS) and warrants and options to purchase old common stock were cancelled. As
part of the distribution of the New Common Stock under the Plan of
Reorganization, shareholders were to tender their Old Common Stock to the
Reorganized Company designated Stock Transfer Agent no later than October 15,
2002, in accordance with written instructions provided to such holders, and in
exchange would receive one share of new common stock for every six shares of old
common stock previously owned. Any shareholder who did not submit its
certificates for exchange prior to October 15, 2002 had its claim or interest
and its distribution pursuant to the Plan of Reorganization on account of such
Old Common Stock discharged and shall be forever barred from asserting any such
claim or interest against the Reorganized Company or their respective property.
Approximately 1.8 million shares of new common stock were issued under this
exchange. Additionally, approximately 2.8 million shares were issued in exchange
for holders of certain allowed claims under the Plan of Reorganization. Such
holders of allowed claims received 1 share of common stock for every $3.00 of
debt claim approved. Any creditor who did not submit its appropriate paperwork
for the stock exchange prior to December 23, 2002 had its claim or interest and
its distribution pursuant to the Plan of Reorganization on account of such claim
discharged and shall be forever barred from asserting any such claim or interest
against the Reorganized Company or their respective property.

          As a result of the confirmation of the Company's Plan of
Reorganization and the application of fresh-start reporting (see Note 3),
consolidated financial statements for the Company for the periods subsequent to
the Confirmation Date are referred to the "Reorganized Company" and are not
comparable to those for the periods prior to the Confirmation Date which are
referred to as the "Predecessor Company." Under fresh-start reporting, the
reorganization value of the Company was allocated to its assets, the majority of
the Company's unsecured creditors converted into common stock, accumulated
deficit was eliminated, old common stock was eliminated and new equity in the
Reorganized Company was recorded. For financial reporting purposes, the
effective date of the adoption of fresh-start reporting is considered to be
October 31, 2001, although the Company's confirmation date was November 6, 2001.
The results of operations from November 1 to November 6, 2001 were not
significant.

          As part of our Plan of Reorganization, we entered into a borrowing
facility with Sunami Ventures, LLC ("Sunami") (a limited liability company
managed and controlled by Mr. Henry Paulsen, John Paulsen's father). Sunami
shall receive on account of the borrowings, five shares of New Common Stock for
every dollar loaned and a Senior Secured Note for the amount of the borrowings.
As of December 31, 2001, eNucleus has received approximately $896,000 under this
facility the proceeds of which have been used to satisfy certain petitions
resulting from the bankruptcy and post-petition operating requirements. Whether
we will be able to draw down additional financing under this facility is
presently unknown. We are aggressively pursuing additional sources of funds.

                                      F-7

<PAGE>


          The Company's continued existence is dependent on its ability to
achieve future profitable operations and its ability to obtain financial
support. Additionally, the Company will need to negotiate payment terms with
some of its administrative claim holders. There can be no assurance that the
Company will reach agreement with these parties or be able to satisfy their
indebtedness in a time manner acceptable to them. The satisfaction of the
Company's cash requirements hereafter will depend in large part on its ability
to successfully generate revenues from operations and raise capital to fund
operations. There can, however, be no assurance that sufficient cash will be
generated from operations or that unanticipated events requiring the expenditure
of funds within its existing operations will not occur. Management is
aggressively pursuing additional sources of funds, the form of which will vary
depending upon prevailing market and other conditions and may include high-yield
financing vehicles, short or long-term borrowings or the issuance of equity
securities. There can be no assurances that management's efforts in these
regards will be successful. Under any of these scenarios, management believes
that the Company's common stock would likely be subject to substantial dilution
to existing shareholders. The uncertainty related to these matters and the
Company's bankruptcy status raise substantial doubt about its ability to
continue as a going concern. The financial statements do not include adjustments
that might result from the outcome of this uncertainty.

          Management believes that, despite the financial hurdles and funding
uncertainties going forward, it has under development a business plan that, if
successfully funded and executed, can significantly improve operating results.
The support of the Company's vendors, customers, lenders, stockholders and
employees will continue to be key to the Company's future success.

(3)       Fresh-Start Reporting

          In accordance with the provisions of Statement of Position 90-7
"Financial Reporting by Entities in Reorganization under the Bankruptcy Code"
("SOP 90-7"), the Company adopted fresh-start reporting upon confirmation of the
Company's Plan of Reorganization. The Company adopted fresh-start reporting
because, as a result of implementation of the Plan, holders of the Company's
existing common stock immediately before filing and confirmation of the Plan
retained less than 50% of the common stock of the emerging entity and the
Company's reorganization value at emergence was less than its post-petition
liabilities and allowed claims. Under fresh-start reporting, the Company's
assets and liabilities were adjusted to fair values and a reorganization value
for the entity was determined by the Company based upon the estimated fair value
of the enterprise before considering values allocated to debt to be settled in
the reorganization. The portion of the reorganization value which could not be
attributed to specific tangible or identified intangible assets for the
Reorganized Company is referred to as reorganization value in excess of amounts
allocable to identifiable assets and is reported as "Goodwill" in the financial
statements. The adjustment of assets and liabilities to fair values is included
in net reorganization expense in the financial statements.

          Fresh-start reporting resulted in the creation of a new reporting
entity (the "Company" or the "Reorganized Company") with no accumulated deficit
as of November 1, 2001. The goodwill recognized in fresh-start reporting will
not be amortized, but will be reviewed annually for impairment in accordance
with Statement of Financial Accounting Standards ("SFAS") No.142, "Goodwill and
Other Intangible Assets." The Company determined that the goodwill is not
impaired as of December 31, 2001, however future impairment of the recorded
goodwill may result if actual results of operations or changes in economic or
industry conditions differ significantly from assumptions used to derive the
reorganization value.

          For financial reporting purposes, the effective date of the adoption
of fresh-start reporting is considered to be October 31, 2001, although the
Company's confirmation date was November 6, 2001. The results of operations from
November 1 to November 6, 2001 were not significant. The financial statements
for the Company for the periods subsequent to October 31, 2001 are referred to
the "Reorganized Company" and are not comparable to those for the periods prior
to October 31, 2001 which are referred to as the "Predecessor Company."

          The reorganization value of the Company was based upon the
consideration of many factors and various valuation methods, including
discounted cash flow analysis using projected financial information, selected
publicly traded company market multiples and other applicable ratios and
valuation techniques that management believes to be representative of the
business and industry. Specifically, the Company considered the conversion price
of $16.6 million of creditor debt at $3.00 per share and utilized a net present
value cash flow analysis of the Company's three-year financial projections using
a discount rate of 16%. Based upon their assumptions and other analysis
performed, the Company concluded that a Reorganization Value as determined was
an appropriate value. The valuation was based upon a number of estimates and

                                      F-8

<PAGE>
<TABLE>
<CAPTION>


assumptions, which are inherently subject to significant uncertainties and
contingencies beyond the Company's control. Accordingly, there can be no
assurance that the values reflected in the valuation will be realized, and
actual results could vary materially. Moreover, the value of our New Common
Stock, as traded on the national exchange, may differ materially from the
reorganization valuation.

          The effect of the Plan and the implementation of Fresh-Start Reporting
on the Company's balance sheet as of October 31, 2001 were as follows:

                                      Predecessor    Reorganization    Fresh-start    Reorganized
                                        Company     Plan Adjustments   Adjustments       Company
                                     Oct. 31, 2001                                    Oct. 31, 2001

ASSETS:
<S>                                   <C>             <C>             <C>             <C>
Cash                                         2,437            --              --             2,437
Accounts receivable                         32,715            --              --            32,715
Other current assets                        42,063            --              --            42,063
                                      ------------    ------------    ------------    ------------
  Total current assets                      77,215            --              --            77,215
                                      ------------    ------------    ------------   ------------

Property and equipment, net              1,169,308            --           743,853 (a)   1,913,161
Other Assets                               100,000            --              --           100,000
Goodwill                                      --              --        15,202,356 (b)  15,202,356
                                      ------------    ------------    ------------    ------------
  Total assets                           1,346,523      15,946,209      17,292,732
                                      ============    ============    ============    ============

LIABILITIES & STOCKHOLDERS' EQUITY:

Notes payable                              608,630            --              --           608,630
Accounts payable                            95,842          82,773            --   (c)     178,615
Accrued expenses                           606,306            --              --           606,306
                                      ------------    ------------    ------------    ------------
  Total current liabilities              1,310,778          82,773            --         1,393,551
                                      ------------    ------------    ------------    ------------

Long term liabilities                         --         1,211,445            --   (d)   1,211,445
                                      ------------    ------------    ------------    ------------
  Total liabilities                      1,310,778       1,294,218            --         2,604,996
                                      ------------    ------------    ------------    ------------

                                      ------------    ------------    ------------    ------------
Liabilities subject to compromise       16,440,605     (16,440,605)           --   (e)        --
                                      ------------    ------------    ------------    ------------

STOCKHOLDERS' EQUITY:
Common stock                                13,620         (13,620)           --   (f)       --
Additional paid-in capital              22,586,950     (22,586,950)           --   (f)       --
Stock warrants                             727,349            --          (727,349)(f)       --
Treasury stock                            (651,838)           --           651,838 (f)       --
New common equity - issuable                  --        37,746,957     (23,059,221)(f) 14,687,736
Accumulated deficit                    (39,080,941)           --        39,080,941 (f)       --

                                      ------------    ------------    ------------    ------------
Total stockholders' equity
(deficit)                              (16,404,860)     15,146,387      15,946,209      14,687,736
                                      ------------    ------------    ------------    ------------
Total liabilities and
stockholders' equity                  $  1,346,523    $       --      $ 15,946,209    $ 17,292,732
                                      ============    ============    ============    ============


     (a)  Reflects the adjustment of property and equipment to fair value

     (b)  Reflects the establishment of Goodwill representing the excess of the
          reorganization value over the aggregate fair value of the Company's
          tangible and identifiable assets

     (c)  Reflects the reclassification of convenience class and employee class
          payments to be paid under the Plan (d) Reflects the reclassification
          of secured creditor debt, administrative and tax claims, which have
          been converted into long term notes payable.

     (e)  Reflects the conversion of the Company's prepetition unsecured
          creditors into common stock, less those claims under the convenience
          class or employee class which are included in payables and secured
          claims, administrative and tax claims which have been converted into
          long term notes.

     (f)  Reflects the cancellation of the Predecessor Company's common stock,
          warrants to purchase common stock, treasury stock, and the accumulated
          deficit as of October 31, 2001 and the issuance of approximately 7.4
          million shares to the shareholders and claimants of the Predecessor
          Company.

                                       F-9
</TABLE>

<PAGE>


(4)       Reorganization Charges

          In December 2002, the Company decided to close its data center
facility in Atlanta and more fully capitalize on its strategic relationship with
its collocation facility partner. As a result of this decision, the Company
recorded a charge for an impairment of goodwill of approximately $2.5 million
and a write-off of fixed assets of approximately $1.1 million. Reorganization
costs recognized during the ten months ending October 31, 2001 include
liabilities for rejected contracts and lease agreements, professional fees, fees
paid to the Unites States Trustee's Office, fresh-start adjustments and other
expenses associated with the Chapter 11 proceedings Charges incurred by the
predecessor company.


(5)       Summary of the Company's Significant Accounting Policies

Use of Estimates

          The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Revenue Recognition

          The Company recognizes revenue upon providing of service or delivery
to client. Billings made or payments received in advance of providing services
are deferred until the period these services are provided.

          Certain of the Company's contracts, include up-front charges for
installation services. The Company defers such revenue and recognizes revenue
ratably over the contract terms. .

          Certain contracts with customers may contain service level
commitments, which may required the Company to provide credits if required
service level commitments are not met. These amounts, if any, are accounted for
in cost of sales. To date, credits issued under these arrangements have been
immaterial.

Financial Instruments and Concentration of Credit Risk

          The carrying value of the Company's financial instruments, including
cash and cash equivalents, accounts receivable, bank borrowings and debt
approximates their fair market value. The Company's customer base is composed of
businesses throughout the United States. The Company performs ongoing credit
evaluations of its customers and maintains reserves for potential losses.

Property and Equipment

          Property and equipment are stated at cost and depreciated on a
straight-line basis over their respective estimated useful lives, which are
generally three to seven years. In accordance with the fresh-start reporting,
the value of the fixed assets was adjusted to fair market value. Equipment
utilized for specific client applications are depreciated over the life of that
customers contract. Leasehold improvements are amortized over the shorter of the
lease period or their estimated useful life using the straight-line method.
Maintenance and repairs are charged to expense as incurred, improvements are
capitalized.

Income Taxes

          The Company uses the asset and liability method of accounting for
income taxes. Under this method, deferred tax assets and liabilities are
determined based on the difference between the financial statement and tax bases
of assets and liabilities using enacted tax rates in effect for the year in
which the differences are expected to affect taxable income. Valuation
allowances are established when necessary to reduce deferred tax assets to the
amounts expected to be recovered.

                                      F-10

<PAGE>


Stock-Based Compensation

          The Company uses the intrinsic value-based method to account for its
employee stock-based compensation grants and provides pro forma disclosures of
net loss as if the fair value method had been applied in measuring compensation
expense. Expense associated with stock-based compensation is being amortized
over the vesting period of the individual options. Charges for non-employee,
stock-based compensation are measured using fair value-based methods.

Goodwill and Other Intangible Assets

          In July 2001, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 141, "Business Combinations," and SFAS No.142, "Goodwill
and Other Intangible Assets." SFAS 141 requires that the purchase method of
accounting be used for all business combinations initiated after June 30, 2001.
SFAS 141 also specifies criteria that intangible assets must meet in order to be
recognized and reported separately from goodwill. SFAS 142 requires that
goodwill and intangible assets with indefinite useful lives will no longer be
amortized to expense, but instead will be tested for impairment at least
annually. Intangible assets with definite useful lives will be amortized to
expense. In accordance with SOP 90-7 and the application of fresh-start
reporting, the Company adopted SFAS No. 141 and SFAS No. 142. The adoption of
SFAS No. 141 had no impact on our consolidated financial statements. The
adoption of SFAS No. 142 results in the classification of the reorganization
intangible recognized in fresh-start reporting as goodwill with an indefinite
life. As a result, the goodwill will not be amortized, but will be reviewed
annually for impairment.

          The Company evaluates its long-lived assets, including goodwill, for
impairment whenever events or change in circumstances indicate that the carrying
amount of such assets or intangibles may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying amount of
an asset to future net cash flows expected to be generated by the asset. If such
assets are considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the assets exceeds the
fair value of the assets. Assets to be disposed of are reported at the lower of
the carrying amount or fair value less costs to sell.

          In December 2002, the Company decided to close its data center
facility in Atlanta and more fully capitalize on its strategic relationship with
its collocation facility partner. As a result of this decision, the Company
recorded a charge for an impairment of goodwill of approximately $2.5 million
and a write-off of fixed assets of approximately $1.1 million.

Net Loss Per Share

          Basic and diluted net loss per share has been computed by dividing the
net loss attributable to common stockholders by the weighted-average number of
shares of common stock outstanding during the period. For purposes of computing
net loss per share for the two months ended December 31, 2001 and during 2002
until such time the shares were issued, the Company used the estimated number of
shares to be issued under the Plan of Reorganization, including those to be
issued to certain holders of unsecured creditor claims, those to the shareholder
of the Predecessor Company reflecting a 1 for 6 reverse split and other shares
issuable under terms of the Plan of Reorganization.

          Diluted net loss per share does not include the effect of the
following common equivalent shares as the effect of their inclusion is
antidilutive during each period:

                                                         Year Ended December 31,
                                                            2002        2001
                                                            ----        ----
              Shares issuable pursuant to warrants to
              purchase common stock (1)                   1,000,000   1,000,000

              (1) These warrants are issuable in accordance with the Plan of
              Reorganization, but have not yet been distributed.

(6)       Business Combinations

          During 2002, the company completed one acquisition, Strategic Business
Group ("SBG") a company specializing in a proprietary methodology for critical
process mapping, which allows customers to map current business processes as
well as the transitional processes that will be required to implement software
solutions acquired from eNucleus. Additionally, SBG has extensive experience in

                                      F-11

<PAGE>


software selection, implementation and process improvement consulting.
Consideration paid was through the assumption of certain net liabilities of
approximately $100,000 and a stock earn-out over the subsequent twenty-four
month period equal to 50% of the net earnings of the acquired asset operations.

(7)       Financial Statement Components

Accounts Receivable

Accounts receivables are shown net of the allowances for doubtful accounts of
$32,000 and $3,500 for 2002 and 2001, respectively.

Property and Equipment

          Property and equipment consisted of furniture, fixtures, and computer
equipment and are net of accumulated depreciation of $171,000 and $63,000 as of
December 31, 2002 and 2001, respectively.

Accrued Expenses

          Accrued expenses consisted of the following:

                                                    December 31,
                                                    2002             2001
           Accrued interest                      $  15,395        $   6,841
           Accrued payroll and commissions         143,656           63,062
           Tax liabilities                         208,934           94,262
           Professional fees                        53,500          388,768
           Other                                    30,676           86,268
                                                 ---------        ---------
                                                 $ 452,161        $ 639,201
                                                 ---------        ---------


(8)       Bank Borrowings and Debt

As of December 31, 2002 the Company's total long-term debt outstanding was as
follows:

                  Reorganized Company--
                      Senior Secured Notes Payable          235,551
                      Bank Note Payable                     646,231
                      Tax Claim Notes Payable               219,495
                      Other Notes Payable                   191,952
                                                         ----------

                                                          1,293,229
                  Less current maturities                  (425,540)
                                                         ----------

                                                         $  867,689
                                                         ==========




          Upon confirmation of the Company's Plan of Reorganization, all of the
outstanding indebtedness was restructured. Pursuant to the Plan, the following
notes payables are outstanding.

          As part of our Plan of Reorganization, the Company entered into a
borrowing facility with Sunami Ventures, LLC ("Sunami") (a related party) for
$1.5 million, of which $1.0 million of this facility is designated for the
purpose of financing equipment on behalf of customers. Sunami shall receive on
account of the borrowings, five shares of New Common Stock for every dollar
loaned and a Senior Secured Note for the amount of the borrowings. As of
December 31, 2001, eNucleus has received approximately $321,000 under this
facility the proceeds of which have been used to satisfy certain petitions
resulting from the bankruptcy and post-petition operating requirements. Pursuant
to the Sunami financing agreement, in December, 2001, the Company entered into a
three-year $545,000 secured demand loan agreement with Capital Equity Group. The

                                      F-12

<PAGE>


note agreement is secured by certain our assets, guaranteed by Mr. Paulsen and
bears interest at the rate of 16%. As of December 31, 2001, eNucleus has
received approximately $62,000 under this facility and subsequent to year-end
the Company have received an additional $145,000 through March 31, 2002.

          The Bank Note Payable of $500,000 plus accrued interest and attorney's
fees was restructured into a three year secured note in the amount of the total
allowed claim less $225,000 which is payable by the Company as soon as
reasonably practicable. To date, the Company has paid $50,000 toward the
$225,000 payment due and is currently in default of the restructure note. The
Company is in discussions with the bank on restructuring such remaining amounts
due. The note is secured by a first priority lien on all of the Company's
Litigation Claims and a second priority lien on all other assets of the Company.

          Holders of allowed tax claims, including the Internal Revenue Service
and certain state revenue agencies, received in full satisfaction, settlement of
and in exchange for its tax claim, a six year 6.5% promissory note in an amount
equal to the principal amount of its tax claims, payments of principal and
interest due monthly. The Company issued notes totaling approximately$330,000
for allowed tax claims. No payments have been made against these notes.

          Other notes payable include a 3-year note payable to a previous
landlord of the Company in the amount of its total allowed claim of
approximately $142,000. Monthly payments of $1,000 are due with the first
payment in each year due of $10,000. The final payment will include the
remaining outstanding principal plus accrued interest. No payments have been
made against this note. Also included in other notes payable is a note payable
to a unsecured claimant prior to the Company's filing of bankruptcy, who in
accordance with the Plan of Reorganization, elected to take a Junior Secured
Note on the portion of the unsecured claim. Such note accrues interest at 12%
per annum with principal and interest due in twenty-four months from the date of
issuance. No payments have been made against this note.

          The following discussion covers bank borrowings and other debt
outstanding of the Predecessor Company.

          On March 21, 2000, the Company issued senior bridge notes in the
aggregate principal amount of $6,104,000. The note investors also received
1,692,172 shares of common stock. As of the date of filing for bankruptcy, these
notes were outstanding in full.

          The Company entered into a $500,000 line of credit facility with a
bank, which is secured by the assets of the Company and personally guaranteed by
the Company's President. The line of credit bears interest at the rate of prime
plus one percent and was payable upon demand. This facility has been
restructured as a result of the reorganization and is currently due.

          In conjunction with an acquisition in 1999, the Company issued a
$1,000,000 subordinated note. The note bore interest at the rate of prime plus
one percent, and was secured by 400,000 shares of common stock of the Company's
majority shareholder. As of the date of filing for bankruptcy, approximately
$400,000 was outstanding under the note.

(9)       Stockholders' Equity

          Pursuant to the Plan of Reorganization, the Company filed an Amended
and Restated Certificate of Incorporation with the Delaware Secretary of State.
The Company's Certificate of Incorporation authorizes the issuance of
100,000,000 shares of common stock, par value $.001 per share, and 10,000,000
shares of preferred stock, par value $.001 per share.

          In accordance with the Plan, all outstanding shares of old common
stock (ENCS) and warrants and options to purchase old common stock were
cancelled. As part of the distribution of the New Common Stock under the Plan of
Reorganization, shareholders were to tender their Old Common Stock to the
Reorganized Company designated Stock Transfer Agent no later than October 15,
2002, in accordance with written instructions provided to such holders, and in
exchange would receive one share of new common stock for every six shares of old
common stock previously owned. Any shareholder who did not submit its
certificates for exchange prior to October 15, 2002 had its claim or interest
and its distribution pursuant to the Plan of Reorganization on account of such
Old Common Stock discharged and shall be forever barred from asserting any such
claim or interest against the Reorganized Company or their respective property.
Approximately 1.8 million shares of new common stock were issued under this
exchange. Additionally, approximately 2.8 million shares were issued in exchange
for holders of certain allowed claims under the Plan of Reorganization. Such
holders of allowed claims received 1 share of common stock for every $3.00 of
debt claim approved. Any creditor who did not submit its appropriate paperwork

                                      F-13

<PAGE>


for the stock exchange prior to December 23, 2002 had its claim or interest and
its distribution pursuant to the Plan of Reorganization on account of such claim
discharged and shall be forever barred from asserting any such claim or interest
against the Reorganized Company or their respective property.

          On May 11, 2001, the Company entered into agreements with certain
employees of the Company whereby the individuals would agree to be employed by
the Company and provide their best efforts in assisting the Company through the
reorganization process. The individuals also agreed to a substantially reduced
salary during such period and other certain terms and conditions including a
period of non-compete. Under these agreements, the Company would provide a stock
grant to manage the reorganization, reduction in salary, non-compete agreement
and other matters. The agreements contained a claw-back feature whereby if the
individual did not continue employment through March 31, 2002 certain shares of
common stock would be forfeited. The agreements also contain a provision whereby
the Company, at its sole discretion may buy back the shares for $0.10 per share
prior to June 30, 2002. A total of 2.4 million shares of common stock have been
issued under these agreements.

          In October 2001, the Company entered into a collocation/lease
agreement with Sunami Ventures, LLC ("Sunami") (a limited liability company
managed and controlled by Mr. Henry Paulsen, John Paulsen's father), for
approximately 5,000 sq ft. in Roswell, Georgia serving as our branch office and
data center/operating facility in Atlanta, Georgia. The lease provides for
monthly payments of approximately $20,000 and expires in 2008. Associated with
this agreement, the Company was required to provide a $100,000 security deposit,
which has been financed under the Sunami borrowing facility and 1.0 million
shares of common stock..

          As part of our Plan of Reorganization, the Company entered into a
borrowing facility with Sunami. In accordance with the Plan of Reorganization,
Sunami (or others who shall provided post-petition financing) shall receive on
account of the borrowings, five shares of New Common Stock for every dollar
loaned and a Senior Secured Note for the amount of the borrowings. As of
December 31, 2002, eNucleus has received approximately $896,000 under this
facility the proceeds of which have been used to satisfy certain petitions
resulting from the bankruptcy and post-petition operating requirements. Pursuant
to the Sunami financing agreement, in December, 2001, the Company also entered
into a three-year $545,000 secured demand loan agreement with Capital Equity
Group. The note agreement is secured by certain of our assets, guaranteed by
John Paulsen, our CEO and bears interest at the rate of 16%. During the second
quarter Capital Equity Group notified the Company that they would not be able to
satisfy the lending requirements of the facility (the Company received
approximately $212,000 under this facility). The Company is currently pursuing
the formal cancellation of the note and security agreement granted as part of
the facility and is exploring its legal rights and remedies arising from Capital
Equity Group's inability to complete the transaction. In accordance with the
provisions of the Plan of Reorganization, the Company has issued approximately
5.5 million shares of common stock on account of the borrowings to date.

          At various times during the year, certain holders of debts outstanding
agreed to convert amounts outstanding into new common stock. A total of $2.6
million of obligations agreed to conversion, including $900,000 of future lease
obligations under the termination of the data center lease, $700,000 of
financing provided through Sunami and $1 million of post-petition administrative
claims. Approximately 12.0 million shares were issued in conjunction with these
conversions. Associated with the post-petition administrative claims conversions
are certain clauses that could result in additional shares being issued to the
creditors or shares being returned to the Company, based upon certain future
stock prices and/or the eventual liquidation prices achieved by the shareholders
in relation to their cost basis. As of this date, no additional shares have been
issued pursuant to these clauses.

          During the year, the Company issued 500,000 shares to a market making
organization to sponsor them on the OTC Bulletin Board and 200,000 shares to an
organization for assistance with investor relations and corporate communication
services.

          On December 2, 2002 the Company issued 50,000 shares of common stock
in connection with its acquisition of Strategic Business Group, Inc. ("SBG").
Additionally, the principal shareholder of SBG will be entitled to a stock earn
out over the subsequent twenty-four month period equal to 50% of the net
earnings of the acquired asset operations.

          In the first quarter 2001, The Company issued 165,000 shares of our
common stock in exchange for services rendered and amounts due to various
creditors.

                                      F-14

<PAGE>


          On February 23, 2001, the Company issued 550,000 shares of common
stock to two ex-employees per conditions of their employment agreements and
other matters. The Company recorded additional compensation expense of
approximately $82,000 associated with this grant.

          Subsequent to year end, the Company has issued approximately 4.7
million shares of common stock, including 1 million shares subject to an
investment banking and acquisition support consulting agreement, 2 million
shares pursuant to a financing arrangement, 1.2 million for investor relations
and marketing support and 500,000 to certain employees of a recent acquisition
pursuant to their employment agreements.

(10)      Stock Options and Warrants

          In accordance with the Plan of Reorganization, all outstanding
warrants and options to purchase common stock at the time of filing for
bankruptcy protection were cancelled and the Company granted options to purchase
up to 2 million shares of New Common Stock to key employees and management. Such
options vested on the confirmation date (November 6, 2001) with an exercise
price equal to the price of the common stock at that date and have a ten-year
life. In March, 2002, upon the expiration of the employment agreements of Mr.
Paulsen and Mr. Voss, the Company granted options to purchase up to 2.5 million
shares of restricted common stock, respectively, at a price equal to the market
price on date of grant. Such options were granted for the consideration and
incentive to continue employment and at a substantially reduced salary through
the remainder of 2002 and until such time the Company provides positive cash
flow operating earnings.

          In accordance with the Plan of Reorganization, the Company agreed to
issue warrants to purchase 1 million shares of common stock to certain unsecured
creditors pro rata in accordance with the amount of their allowed claims. The
Warrants give the holders thereof the right to purchase, at any time for a
period of seven years from the date of issuance (i.e., the effective date of the
Plan), one share of the New Common Stock at a price of Twenty Cents ($0.20) per
share. The Warrants also contain a "Cashless Exercise" provision which provide
that in the event the stock has traded at an average price in excess of $2.00
per share for at least 30 days preceding an exercise of any warrants, the
holders thereof may elect to exercise the Warrants in whole or in part and
instruct the Company to withhold from the securities issuable upon exercise, a
number of securities, valued at the current fair market value on the date of
exercise, as the payment of the exercise price. The Company has not yet issued
these warrants.

Fair Value Disclosures

          The Company uses the intrinsic value method in accounting for its
employee stock-based compensation plans. Had compensation cost been determined
in accordance with SFAS No. 123 for all of the Company's employee stock-based
compensation plans, net loss and net loss per share would have been changed to
the amounts indicated below (in thousands, except per share data):


                                          Two Months     Ten Months
                                          Year Ended       Ended          Ended
                                           Dec. 31        Dec. 31        Oct. 31
                                            2002           2001           2001
                                            ----           ----           ----
               Net loss
               As reported               $(5,758)        $ (202)       $(5,156)
               Pro forma                  (5,758)          (202)        (5,161)
               Basic and diluted net
                 loss per share:
               As reported               $ (0.25)        $(0.01)       $ (0.38)
               Pro forma                   (0.25)         (0.01)         (0.38)

          The fair value of each stock option and warrant is estimated on the
date of grant using the Black-Scholes option pricing model with no expected
dividends, expected lives of the contractual term (generally 10 years),
risk-free interest rates of 4.2-6.5% and volatility of 260%.

                                      F-15

<PAGE>
<TABLE>
<CAPTION>


A summary of the Company's option activity for the years ended December 31, 2001
d 2000 are as follows:

                                                              2002                                 2001
                                                              ----                                 ----
                                                                                                     Weighted Average
                                                   Shares             Shares            Shares        Exercise Price
                                                   ------             ------            ------        --------------
<S>                                             <C>                     <C>          <C>                    <C>
Outstanding at beginning of year                          0              $0.00        3,932,000              $0.75
Granted                                           5,000,000               0.01        4,050,000               0.07
Forfeited/Cancelled                                       0               0.00        4,932,000               0.63
Exercised                                         5,000,000               0.01        3,050,000               0.03
                                                  ---------               ----        ---------               ----
Outstanding at the end of the year                        0               0.00                0               0.00
                                                          -               ----                -               ----

Exercisable at the end of the year                       --                 --               --                 --


The weighted average fair value of options granted during the years ended
December 31, 2002 and 2001 was $0.01.

  As of December 31, 2001, there were no outstanding options.

  A summary of the Company's warrant activity for the years ended December 31,
2002 and 2001 are as follows:


                                                                2002                                2001
                                                                ----                                ----
                                                                    Weighted Average                    Weighted Average
                                                      Shares         Exercise Price      Shares         Exercise Price
                                                      ------         --------------      ------         --------------
Outstanding at beginning of year                          0              $0.00          798,070              $2.14
Granted                                                   0                  0                0                  0
Forfeited                                                 0                  0          798,070               2.14
Exercised                                                 0                  0                0                  0
                                                        ---                ---              ---                ---
Outstanding at the end of the year                        0                  0                0                  0
                                                        ---                ---              ---                ---

Exercisable at the end of the year                        0                  0                0                  0
                                                        ---                ---              ---                ---


(11)      Commitments and Contingencies

Leases

          The Company's rent expense was $158,000, $28,000 and $196,000 for the
year ended December 31, 2002, two months ended December 31, 2001 and ten months
ended October 31, 2001, respectively. The Company leases currently expire during
2003 and is currently evaluating its

Contingencies

          The Company is engaged in certain legal actions arising in the
ordinary course of business. The Company believes that it has adequate legal
defenses and that the ultimate outcome of these actions will not have a material
effect on the Company's financial position and results of operations. Prior to
our filing for protection under bankruptcy, the Company was a party to several
creditor collection actions. However, as a result of our bankruptcy filing,
these matters and many other threatening proceedings have been resolved and
terminated. The Company believe that there is no proceeding threatened or
pending against us which, if determined adversely, would have a material adverse
effect on the financial condition or results of operations of eNucleus.

          As part of the bankruptcy filing, all executory contracts and
unexpired leases, which were not previously assumed or rejected by the Company
or otherwise not specifically assumed as part of the Plan of Reorganization,
were deemed rejected. Certain contract providers continued to provide services
to the Company, even though such contract was deemed terminated, and have
requested payments due for services rendered to the Company of approximately
$350,000. The Company has not recorded such liabilities in its financial
statements and expects to aggressively defend itself against such payments
requested.

                                      F-16
</TABLE>

<PAGE>


(12)      Related-party transactions.

          As part of our Plan of Reorganization, the Company entered into a
borrowing facility with Sunami Ventures, LLC ("Sunami") (a limited liability
company managed and controlled by Mr. Henry Paulsen, John Paulsen's father). In
accordance with the Plan of Reorganization, Sunami (or others who shall provided
post-petition financing) shall receive on account of the borrowings, five shares
of New Common Stock for every dollar loaned and a Senior Secured Note for the
amount of the borrowings. As of December 31, 2002, eNucleus has received
approximately $896,000 under this facility the proceeds of which have been used
to satisfy certain petitions resulting from the bankruptcy and post-petition
operating requirements. Pursuant to the Sunami financing agreement, in December,
2001, the Company also entered into a three-year $545,000 secured demand loan
agreement with Capital Equity Group. The note agreement is secured by certain of
our assets, guaranteed by John Paulsen, our CEO and bears interest at the rate
of 16%. During the second quarter Capital Equity Group notified the Company that
they would not be able to satisfy the lending requirements of the facility
(eNucleus received approximately $212,000 under this facility). The Company is
currently pursuing the formal cancellation of the note and security agreement
granted as part of the facility and is exploring its legal rights and remedies
arising from Capital Equity Group's inability to complete the transaction. In
accordance with the provisions of the Plan of Reorganization, the Company has
issued approximately 5.5 million shares of common stock on account of the
borrowings to date. During November and December, Sunami agreed to convert
approximately $700,000 of the outstanding financing and release the Company from
approximately $450,000 of other obligations for the consideration of restricted
common stock valued at $0.20 per share (approximately 5.8 million shares were
issued under these conversions).

          In October 2001, the Company entered into a collocation/lease
agreement with Sunami for approximately 5,000 sq ft. in Roswell, Georgia serving
as our branch office and data center/operating facility in Atlanta, Georgia. The
lease provided for monthly payments of approximately $20,000 and expired in
2008. Associated with this agreement, the Company was required to provide a
$100,000 security deposit, which has been financed under the Sunami borrowing
facility and 1.0 million shares of common stock. In conjunction with our
restructuring in December, the Company decided to close our data center facility
in Atlanta and more fully capitalize on our strategic partnership with Switch
and Data (our collocation facility partner). As a result of this decision, the
Company issued approximately 4.5 million of restricted common stock as
consideration for the release of $913,000 of remaining lease obligations as well
as the relinquishment of our security deposit and the rights and title to
certain leasehold improvements made to the facility.

          On May 11, 2001, the Company entered into agreements with John
Paulsen, CEO and Scott Voss, President whereby they would agree to be employed
by the Company and provide their best efforts in assisting the Company through
the reorganization process. The individuals also agreed to a substantially
reduced salary during such period and other certain terms and conditions
including a period of non-compete. Under these agreements, the Company would
provide a stock grant of 850,000 shares, each, to manage the reorganization,
reduction in salary, non-compete agreement and other matters. The agreements
contained a claw-back feature whereby if the individual did not continue
employment through March 31, 2002 certain shares of common stock would be
forfeited. The agreements also contain a provision whereby the Company, at its
sole discretion may buy back the shares for $0.10 per share prior to June 30,
2002. In accordance with the Plan of Reorganization, the Company granted options
to purchase up to 500,000 shares of common stock to Mr. Paulsen and Mr. Voss,
each. Such options vested on the confirmation date (November 6, 2001) with an
exercise price equal to the price of the common stock at that date and have a
ten-year life. These options were fully exercised and the respective shares have
been issued. In March, 2002, upon the expiration of the above mentioned
employment agreements the Company granted options to purchase up to 2.5 million
shares of restricted common stock to Mr. Paulsen and Mr. Voss, respectively, at
a price equal to the market price on date of grant. Such options were granted
for the consideration and incentive to continue employment and at a
substantially reduced salary through the remainder of 2002 and until such time
the Company provides positive cash flow operating earnings. As of December 31,
2002, these options were fully exercised and the respective shares have been
issued.


(13)      Income Taxes

          As part of the process of preparing the Company's financial
statements, management is required to estimate income taxes. This process
involves estimating the Company's actual current tax exposure together with

                                      F-17

<PAGE>
<TABLE>
<CAPTION>


assessing temporary differences resulting from differing treatment of items.
These differences result in deferred tax assets and liabilities. The Company
assesses the recoverability of its deferred tax assets in accordance with the
provisions of FAS 109. In accordance with that standard, the Company recorded a
full valuation allowance for its net deferred tax assets as of December 31,
2002. The Company intends to maintain a full valuation allowance for its net
deferred tax assets and net operating loss carryforwards until sufficient
positive evidence exists to support the reversal of the remaining reserve. Until
such time, except for minor state and local tax provisions, the Company will
have no reported tax provision, net of valuation allowance adjustments. In the
event the Company was to determine, based on the existence of sufficient
positive evidence, that it would be able to realize its deferred tax assets in
the future in excess of its net recorded amount, an adjustment to the valuation
allowance would increase income in the period such determination was made.

          As of December 31, 2000, the Company had generated net operating loss
carryforwards of approximately $32 million. The Company recorded a valuation
allowance for the full benefit of the loss carryforward. During 2001 the Company
filed for bankruptcy protection. As a result of the approved Plan of
Reorganization, there has been a substantial change in ownership resulting from
the creditors conversion into common stock and other matters. Federal and state
tax laws impose significant restrictions on the utilization of net operating
loss carryforwards in the event of a shift in the ownership of the Company,
which constitutes an "ownership change" as defined by Internal Revenue Code,
Section 382. However, there are certain exceptions related to bankruptcy.
Management has not yet determine the impact of the bankruptcy on its loss
carryforwards, however any amounts that would arise would be fully reserved
through a valuation allowance. Subsequent to the Reorganization, the Company has
generated net operating loss carryforwards of approximately $4 million. The
Company has recorded a valuation allowance for the full benefit of the loss
carryforward.

(14)      Segment Information

          The Company has no separately reportable segments in accordance with
SFAS No. 131 and therefore does not report operations, identify assets and/or
other resource related to business segments. The Company operates its business
and manages financial information collectively under managed services. Prior to
it's restructuring and discontinuance of operations, the Company reported
revenues, under enterprise-wide disclosure requirements of: reselling of long
distance telecommunications, professional services and sales of client premise
equipment.

(15)      VALUATION AND QUALIFYING ACCOUNTS

                                                        Balance at     Charges to                 Balance
                                                        Beginning      Operating    Accounts      at End
     Accounts receivable allowance activity             of Period       Expenses   Written-off   of Period
     --------------------------------------             ---------      --------    -----------   ---------
                 (in thousands)

<S>                                                      <C>            <C>           <C>          <C>
For the year ending December 31, 2002                     $   4          $  28         $  0         $ 32
For the two months ending December 31, 2001               $   0           $  4            $          $ 4
                                                                                          0
For the ten months ending October 31, 2001                $   0          $  22      $  (22)          $ 0


                                                   F-18
</TABLE>

<PAGE>


EXHIBIT INDEX


Exhibit No.         Description


2.1                 Plan of Reorganization of eNucleus, Inc. and Confirmation
                    Order by the U.S. Bankruptcy Court for the Northern District
                    of Illinois dated November 8, 2001 (Incorporated by
                    reference to the Company's 2000 Form 10-KSB filed on March
                    21, 2002)

3.1                 Certificate of Incorporation of eNucleus, Inc. (Incorporated
                    by reference to the Company's Definitive Proxy Statement
                    filed on May 12, 2000)

3.2                 By-Laws (Incorporated by reference to the Company's
                    Definitive Proxy Statement filed on May 12, 2000)

10.1                Incentive Stock Option Plan (Incorporated by reference to
                    the Company's 1999 Form 10-KSB filed on April 14, 2000)

10.2                Stock Purchase Plan (Incorporated by reference to the
                    Company's 1999 Form 10-KSB filed on April 14, 2000)

23.1                Consent of Bujan & Associates, Ltd.

99.1                Certification Pursuant to 18 U.S.A. Section 1350, as Adopted
                    Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

                                       27