<PAGE>   1
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-Q/A
                                AMENDMENT NO. 1
                           (Amending Items 1 and 2)

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

                      For the Quarter Ended March 31, 2001

                 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
                               OF THE EXCHANGE ACT

              For the transition period from         to
                                            ---------  ---------

                         Commission file number 0-22190

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

                            VERSO TECHNOLOGIES, INC.
             (Exact name of Registrant as specified in its charter)


         MINNESOTA                                      41-1484525
   (State or other jurisdiction             (I.R.S. Employer Identification No.)
of incorporation or organization)


               400 Galleria Parkway, Suite 300, Atlanta, GA 30339
                    (Address of principal executive offices)

                                 (678) 589-3500
                           (Issuer's telephone number)

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

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

Shares of the Registrant's Common Stock, par value $.01 per share, outstanding
as of May 11, 2001: 51,257,418.
<PAGE>   2


                            VERSO TECHNOLOGIES, INC.
                                  FORM 10-Q/A
                                AMENDMENT NO. 1

                                      INDEX


Part I.  FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                                                                   Page No.
                                                                                                   --------
   <S>                                                                                             <C>
   Item 1.

            Condensed Consolidated Balance Sheets as of March 31, 2001 and
              December 31, 2000....................................................................   2

            Condensed Consolidated Statements of Operations for the three months
              ended March 31, 2001 and 2000........................................................   3

            Condensed Consolidated Statements of Cash Flows for the three months
              ended March 31, 2001 and 2000........................................................   4

            Notes to the Condensed Consolidated Financial Statements...............................   6

   Item 2.  Management's Discussion and Analysis of Financial Condition and
            Results of Operations..................................................................  13

   Signature Page..................................................................................  19
</TABLE>

<PAGE>   3
                               EXPLANATORY NOTE


This Report on Form 10-Q/A amends and restates in their entirety Items 1 and 2
of the Quarterly Report on Form 10-Q of Verso Technologies, Inc., a Minnesota
corporation ("Verso" or the "Company"), for the quarter ended March 31,
2001.


                PART I-ITEM 1: FINANCIAL STATEMENTS

                      VERSO TECHNOLOGIES, INC.

               CONDENSED CONSOLIDATED BALANCE SHEETS
                            (Unaudited)
<TABLE>
<CAPTION>
                                                                            MARCH 31,              DECEMBER 31,
                                                                               2001                   2000
                                                                           -----------            ------------
<S>                                                                        <C>                    <C>
ASSETS:
Current assets:
    Cash and cash equivalents                                            $   8,475,074            $ 10,958,815
    Accounts receivable, net                                                11,131,903              15,203,759
    Inventories, principally finished goods                                  1,154,678               1,162,178
    Other current assets                                                     3,008,775               2,886,583
    Net assets of discontinued operations                                            -               7,066,273
                                                                         -------------           -------------
       Total current assets                                                 23,770,430              37,277,608



Property and equipment, net                                                  9,124,830               9,044,959
Intangibles, net                                                           109,478,561             120,540,845
                                                                         -------------           -------------
         Total assets                                                    $ 142,373,821           $ 166,863,412
                                                                         =============           =============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
    Line of credit                                                                 $ -                     $ -
    Current portion of convertible subordinated debentures,
      net of discount                                                          938,748               6,348,236
    Accounts payable                                                         4,580,822               6,557,173
    Accrued compensation                                                     1,396,379               2,829,283
    Accrued expenses                                                         4,165,921               5,216,625
    Unearned revenue and customer deposits                                   3,753,114               3,716,110
                                                                         -------------           -------------
       Total current liabilities                                            14,834,984              24,667,427

Convertible subordinated debentures, net of current portion
  and discount                                                               3,221,746               3,152,940
                                                                         -------------           -------------
       Total liabilities                                                    18,056,730              27,820,367
                                                                         -------------           -------------
Shareholders' equity:
    Common stock, $.01 par value, 100,000,000 shares authorized;
       50,829,842 and 49,615,133 shares issued and outstanding                 508,299                 496,152
    Additional paid-in capital                                             252,002,049             249,339,879
    Accumulated deficit                                                   (122,524,370)           (104,516,038)
    Deferred compensation                                                   (5,668,887)             (6,276,948)
                                                                         -------------           -------------
       Total shareholders' equity                                          124,317,091             139,043,045
                                                                         -------------           -------------
         Total liabilities and shareholders' equity                      $ 142,373,821           $ 166,863,412
                                                                         =============           =============
</TABLE>

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

                                       2

<PAGE>   4


                            VERSO TECHNOLOGIES, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                     FOR THE THREE MONTHS ENDED MARCH 31,
                                                                        2001                    2000
                                                                     -----------             -----------
<S>                                                                  <C>                     <C>
Revenue:
  Services                                                           $ 7,648,893             $ 7,408,400
  Products                                                             2,872,084              10,660,126
                                                                     -----------             -----------
    Total revenue                                                     10,520,977              18,068,526

Cost of revenue:
  Services                                                             5,660,266               4,176,852
  Products                                                             2,319,024               9,267,659
                                                                     -----------             -----------
    Total cost of revenue                                              7,979,290              13,444,511

Gross profit:
  Services                                                             1,988,627               3,231,548
  Products                                                               553,060               1,392,467
                                                                     -----------             -----------
    Gross profit                                                       2,541,687               4,624,015

Operating expenses:
  Sales, general and administrative                                    6,308,857               7,972,854
  Depreciation                                                           688,793                 244,283
  Amortization of intangibles                                         11,062,284                 350,942
  Amortization of deferred compensation                                  608,061                       -
                                                                     -----------             -----------

    Total operating expenses                                          18,667,995               8,568,079

                                                                     -----------             -----------
  Operating loss from continuing operations                          (16,126,308)             (3,944,064)

Interest expense, net, including $236,991 and $16,200 of
  amortization of loan fees and discount on convertible
  subordinated debentures in 2001 and 2000.                              242,176                  93,701
                                                                     -----------             -----------
Loss from continuing operations before income taxes
  and extraordinary item                                             (16,368,484)             (4,037,765)

Income taxes                                                                   -                       -
                                                                     -----------             -----------
Loss from continuing operations before extraordinary item            (16,368,484)             (4,037,765)
Loss from discontinued operations, net of income taxes                         -              (1,200,549)
                                                                     -----------             -----------
Loss before extraordinary item                                       (16,368,484)             (5,238,314)
Extraordinary item - loss from debt conversion                         1,639,848                       -
                                                                     -----------            ------------
  Net loss                                                          $(18,008,332)           $ (5,238,314)
                                                                    ============            ============
Net loss per common share - basic and diluted:
  Loss before discontinued operations and extraordinary item             $ (0.33)                $ (0.17)
  Loss from discontinued operations                                            -                   (0.05)
                                                                    ------------            ------------
  Loss before extraordinary item                                           (0.33)                  (0.22)
  Extraordinary item - loss from debt conversion                           (0.03)                      -
                                                                    ------------            ------------
Net loss per common share- basic and diluted                        $      (0.36)           $      (0.22)
                                                                    ============            ============
Weighted average shares outstanding - basic and diluted               50,522,369              24,067,893
                                                                    ============            ============
</Table>
The accompanying notes are an integral part of these condensed consolidated
financial statements.


                                        3
<PAGE>   5
                            VERSO TECHNOLOGIES, INC.

                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    (Unaudited)

<TABLE>
<CAPTION>
                                                                                       FOR THE THREE MONTHS ENDED MARCH 31,
                                                                                          2001                       2000
                                                                                     -------------               -------------
<S>                                                                                  <C>                         <C>
Operating Activities:
    Continuing operations:
       Net loss from continuing operations                                             $ (18,008,332)          $ (4,037,765)
       Adjustments to reconcile net loss from continuing operations to net
         cash used in continuing operating activities:
           Extraordinary item - loss on debt conversion                                    1,639,848                      -
           Amortization of intangibles                                                    11,062,284                350,942
           Depreciation                                                                      688,793                244,283
           Amortization of deferred compensation                                             608,061                      -
           Provision for doubtful accounts                                                   691,405                 37,500
           Amortization of loan fees and discount on convertible subordinated
             debentures                                                                      236,991                 16,200
           Other                                                                              (2,210)                 6,000
           Changes in current operating items:
             Accounts receivable, net                                                      3,380,451               (646,121)
             Inventories, net                                                                  7,500             (2,674,191)
             Other current assets                                                           (407,461)              (423,654)
             Accounts payable                                                             (2,001,352)               776,381
             Accrued compensation                                                         (1,432,904)               546,218
             Accrued expenses                                                             (1,480,111)               (16,937)
             Unearned revenue and customer deposits                                           37,004             (1,091,448)
                                                                                          ----------             ----------
           Net cash used in continuing operating activities                               (4,980,033)            (6,912,592)
                                                                                          ----------             ----------
    Discontinued operations:
       Loss from discontinued operations                                                           -             (1,200,549)
       Adjustment to reconcile loss from discontinued operations
         to net cash (used in) provided by discontinued operating activities                (572,240)             1,607,521
                                                                                          ----------             ----------
           Net cash (used in) provided by discontinued operating activities                 (572,240)               406,972
                                                                                          ----------             ----------
           Net cash used in operating activities                                          (5,552,273)            (6,505,620)
                                                                                          ----------             ----------

INVESTING ACTIVITIES:

    Continuing operations:
       Net cash used in investing activities for continuing operations -
         Purchases of property and equipment, net                                           (766,454)            (1,555,408)
                                                                                          ----------             ----------
           Net cash used in investing activities for continuing operations                  (766,454)            (1,555,408)

    Discontinued operations:
       Software development costs capitalized, net                                                 -               (808,973)
       Purchases of property and equipment, net                                                    -                (87,011)
       Net proceeds from sale of discontinued operations                                   8,201,975                      -
                                                                                          ----------             ----------
         Net cash provided by (used in) investing activities for
           discontinued operations                                                         8,201,975               (895,984)
                                                                                          ----------             ----------
         Net cash provided by (used in) investing activities                               7,435,521             (2,451,392)
                                                                                          ----------             ----------
           Net cash provided by (used in) operating and investing activities,
            carried forward                                                                1,883,248             (8,957,012)
                                                                                          ----------             ----------

</TABLE>


                                        4
<PAGE>   6
                             VERSO TECHNOLOGIES, INC.

                 CONSOLIDATED STATEMENTS OF CASH FLOWS, Continued
                                    (Unaudited)

<TABLE>
<CAPTION>
                                                                                         FOR THE THREE MONTHS ENDED MARCH 31,
                                                                                             2001                   2000
                                                                                         -----------            -------------
<S>                                                                                        <C>                   <C>
NET CASH PROVIDED BY (USED IN) OPERATING AND INVESTING ACTIVITIES, CARRIED FORWARD         1,883,248             (8,957,012)
                                                                                         -----------            -----------
FINANCING ACTIVITIES:

    Continuing operations:
       Payments on long-term debt                                                                  -               (133,799)
       Borrowings on credit line, net                                                              -              7,721,798
       Payments on convertible subordinated debentures                                    (4,500,000)                     -
       Proceeds from issuances of common stock, net                                          133,011             15,004,514
                                                                                         -----------            -----------
         Net cash (used in) provided by financing activities
           for continuing operations                                                      (4,366,989)            22,592,513
                                                                                         -----------            -----------
    Discontinued operations:
       Net cash used in financing activities for discontinued operations -
         Payments on long-term debt                                                                -                (45,000)
                                                                                         -----------            -----------
         Net cash (used in) provided by financing activities                              (4,366,989)            22,547,513
                                                                                         -----------            -----------
         (Decrease) increase in cash and cash equivalents                                 (2,483,741)            13,590,501

CASH AND CASH EQUIVALENTS:
Beginning of period                                                                       10,958,815                613,294
                                                                                         -----------            -----------
End of period                                                                            $ 8,475,074           $ 14,203,795
                                                                                         ===========           ============

CASH AND CASH EQUIVALENTS:
    Continuing operations                                                                $ 8,475,074           $ 13,239,472
    Discontinued operations                                                                        -                964,323
                                                                                         -----------            -----------
       Total cash and cash equivalents                                                   $ 8,475,074           $ 14,203,795
                                                                                         ===========           ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

    CASH PAYMENTS DURING THE PERIOD FOR:

       Interest                                                                              $ 5,185              $ 287,714
                                                                                         ===========           ============
       Income taxes                                                                         $ 14,010                $ 9,566
                                                                                         ===========           ============
    NON-CASH INVESTING AND FINANCING ACTIVITIES


       Common stock and compensatory
         options issued in reorganization                                                   $ 39,386                    $ -

       Conversion of subordinated debentures to common stock - issuance of 1,074,854
         shares of common stock and 945,378 common stock warrants                        $ 2,412,048                    $ -
                                                                                         ===========           ============
</TABLE>



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

                                        5
<PAGE>   7
                            VERSO TECHNOLOGIES, INC.

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                 March 31, 2001


1.       BASIS OF PRESENTATION

                  The accompanying unaudited condensed consolidated financial
         statements have been prepared by Verso Technologies, Inc., (formerly
         known as Eltrax Systems, Inc.) - (the "Company" or "Verso") in
         accordance with generally accepted accounting principles, pursuant to
         the rules and regulations of the Securities and Exchange Commission.
         Pursuant to such rules and regulations, certain financial information
         and footnote disclosures normally included in the financial statements
         have been condensed or omitted.

                  In the opinion of management, the accompanying unaudited
         condensed consolidated financial statements contain all necessary
         adjustments, consisting only of those of a recurring nature, and
         disclosures to present fairly the Company's financial position as of
         March 31, 2001, and its results of operations and cash flows for the
         periods ended March 31, 2001 and 2000.

                  The Company historically operated through two separate
         business units: the Technology Services Group and the Hospitality
         Services Group ("HSG"). On July 19, 2000, the Company's Board of
         Directors authorized the disposition of HSG and in the first quarter of
         2001 the sale of all of HSG was completed. HSG is reported as a
         discontinued operation and the consolidated financial statements have
         been reclassified to segregate the net assets and operating results of
         this business segment. Technology Services Group and corporate
         operations are reflected in continuing operations.

                  The condensed consolidated financial statements include the
         accounts of Verso Technologies, Inc. and its wholly-owned subsidiaries,
         including Cereus Technology Partners, Inc. ("Cereus") and its
         subsidiaries, which merged with the Company on September 29, 2000, and
         MessageClick, Inc. ("MessageClick"), which merged with the Company on
         November 22, 2000, each in transactions accounted for as purchases.
         Significant intercompany transactions have been eliminated. Certain
         prior year amounts in the consolidated financial statements and notes
         have been reclassified to conform with the current year presentation.
         These reclassifications had no effect on previously reported net income
         (loss) or shareholders' equity.

                  The year-end condensed consolidated balance sheet was derived
         primarily from audited consolidated financial statements, but does not
         include all disclosures required by generally accepted accounting
         principles. For further information, refer to the consolidated
         financial statements and footnotes thereto included in the Company's
         annual report on Form 10-K for the year ended December 31, 2000.


                                       6
<PAGE>   8
                            VERSO TECHNOLOGIES, INC.

      NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

                                 March 31, 2001

2.       MERGERS AND ACQUISITIONS

         MessageClick, Inc.

                  On November 22, 2000, the Company acquired MessageClick, Inc.
         The purchase consideration was approximately $4.2 million, consisting
         of 1,405,923 shares of the Company's common stock with a fair value of
         $3.2 million, warrants to acquire 181,901 shares of the Company's
         common stock with an exercise price of $4.03 per share (estimated fair
         value of $301,000 using the Black-Scholes option pricing model based on
         the following weighted-average assumptions: expected volatility - 88%;
         expected life - five years; risk-free interest rate - 5.5%; and
         expected dividend yield - 0%), cash of $5,000 and acquisition costs of
         approximately $637,000, of which $261,000 were paid at March 31, 2001.

                  The acquisition was treated as a purchase for accounting
         purposes, and accordingly, the assets and liabilities were recorded at
         their fair value at the date of the acquisition. The excess of the
         purchase price over the estimated fair value of net liabilities
         acquired totaled approximately $9.8 million and was allocated to
         goodwill. The goodwill is being amortized over three years.

                  Prior to the Company's mergers with Cereus (as described
         below) and MessageClick, Cereus purchased 3,000,000 shares of
         MessageClick's Series E Preferred Stock for an aggregate purchase price
         of $1,500,000.


                                       7
<PAGE>   9

                            VERSO TECHNOLOGIES, INC.

      NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

                                 March 31, 2001

2.       MERGERS AND ACQUISITIONS, Continued

         Cereus Technology Partners, Inc.

                  On September 29, 2000, the Company acquired all of the
         outstanding capital stock of Cereus. The purchase consideration was
         approximately $134.1 million, consisting of 21,866,600 shares of the
         Company's common stock with a fair value of $106.6 million, assumed
         options and warrants to acquire 20,947,900 shares of the Company's
         common stock with exercise prices ranging from $.51 to $10.14 per share
         (estimated fair value of $35.8 million, net of $6.9 million of deferred
         compensation discussed in Note 9, using the Black-Scholes option
         pricing model based on the following weighted-average assumptions:
         expected volatility - 88%; expected life - five years; risk-free
         interest rate - 5.5%; and expected dividend yield - 0%) and acquisition
         costs of approximately $1.9 million, reduced by a $10.2 million bridge
         facility advanced to the Company by Cereus prior to closing. The bridge
         facility accrued interest at 2% over prime and the Company recorded
         interest expense, prior to the closing of the transaction, of
         approximately $261,000 during the third quarter of 2000.

                  The acquisition was treated as a purchase for accounting
         purposes, and accordingly, the assets and liabilities were recorded at
         their fair value at the date of the acquisition. The excess of the
         purchase price over the estimated fair value of net assets acquired
         totaled approximately $113.0 million and was allocated to goodwill. The
         goodwill is being amortized over three years.

         Pro Forma Effect of MessageClick and Cereus Transactions

                  The following unaudited pro forma information presents the
         results of continuing operations of the Company for the three months
         ended March 31, 2000, as if the acquisitions above had taken place on
         January 1, 2000, (in thousands, except per share amounts):

<TABLE>
                                <S>                                               <C>
                                Revenues                                          $   20,019
                                Loss from continuing operations                   $  (19,121)
                                Loss from continuing operations
                                  per common share
                                              -basic and diluted                  $     (.40)
                                Weighted average shares outstanding
                                              -basic and diluted                      47,340
</TABLE>


                                       8

<PAGE>   10

                            VERSO TECHNOLOGIES, INC.

      NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

                                 March 31, 2001

3.       DISCONTINUED OPERATIONS

                  On July 19, 2000, the Company's board of directors formally
         determined to dispose of HSG. In December 2000, the Company completed
         the sale of its domestic lodging business and international hospitality
         business for aggregate proceeds of $10.0 million. The Company sold its
         restaurant solutions business for aggregate proceeds of $8.5 million in
         January 2001. HSG is reported as a discontinued operation, and the
         consolidated financial statements have been reclassified to segregate
         the net assets and operating results of the business segment.

                  The loss on the sale of HSG totaled $11.0 million and was
         recorded in the third and fourth quarter of 2000. The loss included a
         reduction in asset values of approximately $4.3 million and a provision
         for anticipated closing costs and operating losses until disposal of
         approximately $6.7 million.

                  Summary operating results of the discontinued operations for
         the three months ended March 31, 2000 (in thousands) are as follows:

<TABLE>
                                  <S>                                   <C>
                                  Revenue                               $        12,826
                                  Gross profit                                    5,371
                                  Operating loss                                 (1,060)
                                  Interest expense                                 (131)
                                  Income tax expense                                (10)
                                                                       ----------------
                                  Loss from
                                    discontinued operations             $        (1,201)
                                                                       ================
</TABLE>

         Net assets held for sale at December 31, 2000 (in thousands) are as
follows:

<TABLE>
                       <S>                                                           <C>
                       Cash and cash equivalents                                     $            196
                       Other current assets                                                     9,543
                       Furniture and equipment, net                                               685
                       Capitalized software, net                                                4,532
                       Intangibles, net                                                         1,387
                       Current liabilities                                                     (3,694)
                       Reserve for loss on sale and operating losses                           (5,784)
                       Accumulated other comprehensive loss                                       201
                                                                                     ----------------
                         Net assets of discontinued operations                       $          7,066
                                                                                     ================
</TABLE>
                                       9
<PAGE>   11
                            VERSO TECHNOLOGIES, INC.

      NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

                                 March 31, 2001

4.       LOAN FACILITY WITH PNC BANK, NATIONAL ASSOCIATION

                  In March 2000, the Company obtained a $20.0 million revolving
         credit agreement (the "Credit Agreement") with PNC Bank, National
         Association (the "Bank"). The Credit Agreement is secured by
         substantially all of the assets of the Company. The Credit Agreement
         was amended in January 2001 to reduce the availability thereunder to
         $10.0 million and in March 2001 to adjust certain covenants, in
         connection with the sale of HSG. Interest is charged at .5% above the
         Bank's Base Rate (10% at March 31, 2001). As amended, the Credit
         Agreement provides for up to $3,000,000 in letters of credit. Advances
         are limited by a formula based on eligible receivables, certain cash
         balances, outstanding letters of credit and certain subjective
         limitations. Interest payments are due monthly, and the Credit
         Agreement, as amended, expires March 2003. The Credit Agreement, as
         amended, includes fees of 3% on outstanding letters of credit and .25%
         on unused available borrowings. The Company paid certain loan fees and
         attorney's fees totaling approximately $185,000 in connection with the
         Credit Agreement, which fees are being amortized to interest expense
         over the term of the Credit Agreement, as amended.

                  The Company had no borrowings under the Credit Agreement, as
         amended, as of March 31, 2001. The availability under the Credit
         Agreement, as amended, at March 31, 2001 was approximately $3.0
         million. Under the terms of the Credit Agreement, as amended, the
         Company is required to meet increasing quarterly cash flow
         requirements, cannot declare dividends or incur any additional
         indebtedness and has annual capital expenditure limits. The Company was
         in compliance with these covenants as of March 31, 2001.

5.       CONVERTIBLE SUBORDINATED DEBENTURES

                  In connection with the purchase of MessageClick, the Company
         issued to certain investors of MessageClick $4.5 million of its 7.5%
         convertible subordinated debentures. The debentures carry warrants to
         purchase 1,000,000 shares of the Company's common stock at an exercise
         price of $7.39 per share. The debentures are convertible into the
         Company's common stock at a conversion price of $4.45. The convertible
         subordinated debentures are due November 22, 2005. The debentures have
         been discounted to reflect the fair value of the warrants issued,
         totaling approximately $1.4 million, using the Black-Scholes option
         pricing method based on the following weighted-average assumptions:
         expected volatility -- 88%; expected life -- five years; risk-free
         interest rate -- 5.5%; and expected dividend yield -- 0%. The
         unamortized discount totaled approximately $1.3 million at March 31,
         2001. In addition, the Company paid certain private placement fees and
         attorney's fees in connection with the sale of the debentures totaling
         $50,000. The fees are being amortized to interest expense over the term
         of the debentures.

                  The Company issued $7.0 million of its 5% convertible
         subordinated debentures during the year ended December 31, 2000. The
         convertible subordinated debentures were issued with warrants to
         purchase 364,584 shares of the Company's common stock at an exercise
         price of $5.03 per share. The debentures have been discounted to
         reflect the fair value of the warrants issued, totaling approximately
         $1.0 million, using the Black-Scholes option pricing method based on
         the following weighted-average assumptions: expected volatility -- 88%;
         expected life -- five years; risk-free interest rate -- 5.5%; and
         expected dividend yield -- 0%. The unamortized discount totaled
         approximately $61,300 at March 31, 2001. In addition, the Company paid
         certain private placement fees (including 88,712 shares of the
         Company's common stock with a fair value at the date of issuance
         totaling $350,000) and attorney's fees in connection with the sale of
         the debentures totaling $454,000. The fees are being amortized to
         interest expense over the term of the debentures.

                  In January 2001, the Company modified the terms of its 5%
         convertible subordinated debentures. According to the modified terms of
         the agreement, the Company repurchased $4.5 million of the outstanding
         $7.0 million of its 5% convertible subordinated debentures. Of the
         remaining $2.5 million in outstanding 5% convertible subordinated
         debentures, $1.5 million were converted by the investors into the
         Company's common stock at a price of $1.40 per share. The remaining
         $1.0 million of 5% convertible subordinated debentures (due October 5,
         2001) is convertible at $1.19 per share. In April 2001, $500,000 of the
         Company's 5% convertible subordinated debentures were converted at
         $1.19 per share, see Note 6. The Company may re-borrow up to $3.5
         million at its option, subject to the satisfaction of certain
         conditions, through the issuance of new 5% convertible debentures,
         which will have a fixed conversion price determined at the time of
         issuance. In connection with this modification, the Company issued
         warrants to purchase 945,378 shares of the Company's common stock at an
         exercise price of $2.00 per share. The fair value of the warrants
         issued, totaled approximately $977,000, using the Black-Scholes option
         pricing method based on the following weighted-average assumptions:
         expected volatility -- 91%; expected life -- five years; risk-free
         interest rate -- 5.5%; and expected dividend yield -- 0%. The cost of
         conversion, including the warrants issued, totaled $1.6 million in the
         three months ended March 31, 2001.

         The cost of conversion consisted of the following:

        <Table>
                 <S>                                       <C>
                 Fair value of warrants issued .........   $  976,666
                 Write off of related discount .........      365,307
                 Write off of related loan fees ........      165,390
                 Beneficial conversion .................      107,485
                 Legal and other costs .................       25,000
                                                           ----------
                                                           $1,639,848
                                                           ==========
</Table>

                                       10
<PAGE>   12

                            VERSO TECHNOLOGIES, INC.

      NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

                                 March 31, 2001

6.       SUBSEQUENT EVENTS

                  On April 27, 2001, $500,000 of the Company's 5% convertible
         subordinated debentures were converted by the investors into the
         Company's common stock at a price of $1.19 per share. The cost of
         conversion, including attorney's fees, totaled approximately $120,000.

                  In the second quarter of 2001, the Company announced that as
         part of its effort to improve operational efficiencies and financial
         performance, it had eliminated approximately 50 positions held by
         employees and reorganized its MessageClick unified messaging
         operations. The Company has decided to discontinue offering its
         MessageClick ASP service and refocus the development of this
         proprietary application to be offered as a licensed software product.
         As a result of these actions, the Company will record restructuring
         costs of approximately $2.5 million to $3.0 million during the three
         months ended June 30, 2001. Annualized savings beginning in the third
         quarter of 2001 are expected to be approximately $8.0 million.

                  On May 4, 2001, the Company signed a definitive merger
         agreement for the acquisition of Telemate.Net Software, Inc.
         ("Telemate"). In the merger, the Telemate security holders will be
         entitled to receive a number of shares of the Company's common stock
         valued at approximately $30.0 million, subject to adjustment if
         Telemate's cash is less than $20.0 million and certain other
         adjustments.

                  The Telemate acquisition will be accounted for as a purchase,
         and the expected closing in the third quarter of 2001 is subject to the
         receipt of the approval of the shareholders of Telemate and the
         Company, filing of Form S-4 and other customary closing conditions.


                                       11
<PAGE>   13


                            VERSO TECHNOLOGIES, INC.

      NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

                                 March 31, 2001

 7.      LITIGATION

                  The Company is involved in claims and proceedings, which are
         routine and which in the aggregate are not deemed material to the
         Company's business or financial affairs.


                                       12
<PAGE>   14

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

         Certain statements in this Form 10-Q and in future filings by the
Company with the Securities and Exchange Commission and in the Company's written
and oral statements that are not statements of historical facts are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. The words "believe," "expect," "anticipate,"
"intend," "will" and similar expressions are examples of words that identify
forward-looking statements. Forward-looking statements include, without
limitation, statements regarding our future financial position, business
strategy and expected cost savings. These forward-looking statements are based
on our current beliefs, as well as assumptions we have made based upon
information currently available to us.

         Each forward-looking statement reflects our current view of future
events and is subject to risks, uncertainties and other factors that could cause
actual results to differ materially from any results expressed or implied by our
forward-looking statements. Important factors that could cause actual results to
differ materially from the results expressed or implied by any forward-looking
statements include:

- our ability to meet our future working capital requirements;

- our ability to become cash flow positive in the future;

- acceptance and increased use of our new products and services;

- our ability to deliver our services depends on third parties providing us
  with key components of our infrastructure;

- our ability to efficiently integrate and operate acquired businesses;

- our ability to attract and retain qualified personnel;

- the markets we serve are highly competitive and many of our competitors have
  much greater resources;

- our ability to keep up with rapid technological developments and evolving
  industry standards;

- intellectual property infringement claims could require us to enter into
  costly licenses or deprive us of technology we require;

- our stock price has been volatile;

- our ability to fund continuing operating losses and capital requirements;

- general economic and business conditions; and

- other factors disclosed in our Form 10-K for the year ended December 31, 2000
  and in our other filings with the Securities and Exchange Commission.


                                       13
<PAGE>   15

         All subsequent forward-looking statements relating to the matters
described in this document and attributable to us or to persons acting on our
behalf are expressly qualified in their entirety by such factors. We have no
obligation to publicly update or revise these forward-looking statements to
reflect new information, future events, or otherwise, except as required by
applicable Federal securities laws, and we caution you not to place undue
reliance on these forward-looking statements.

OVERVIEW

         Verso historically operated through two separate business units: the
Technology Services Group ("TSG") and the Hospitality Services Group ("HSG"). On
July 19, 2000, Verso's board of directors determined that TSG, while sustaining
losses, represented the greatest opportunity for Verso. HSG was not generating
profits and it was believed that the technology deployed through this group had
been reaching maturity. In order to fund the growth opportunities believed to
exist in TSG, the board of directors authorized the sale of HSG's operating
units. Accordingly, HSG is reported as a discontinued operation and the
consolidated financial statements have been reclassified to segregate the net
assets and operating results of this business segment. During the year ended
December 31, 2000, Verso recorded an estimated loss on disposal of discontinued
operations of approximately $11.0 million, which included an estimate of future
operating losses of $4.3 million, in connection with the anticipated disposal of
HSG.

         In fiscal year 2000, Verso acquired two businesses in transactions
accounted for as purchases. On September 29, 2000, Verso acquired Cereus
Technology Partners, Inc. in a merger transaction, and on November 22, 2000,
Verso acquired MessageClick, Inc. also in a merger transaction. Accordingly, the
results of operations of Cereus and MessageClick are included in Verso's results
of operations from their respective dates of acquisition. Verso pursued the
merger with Cereus so that Verso would benefit from Cereus' financial resources
and experienced management team. The consideration given to the merits of
Cereus' services offerings was secondary in the transaction and the acquisition
of those services did not alter the portfolio of services that Verso had already
been providing nor did it change the target markets pursued by Verso. The merger
with MessageClick provided Verso with a proprietary unified communications
application focused on serving communication service providers, which Verso has
identified as a target market.

         Verso's focus beginning in the latter part of the fourth quarter of
1999 through the second quarter of 2000 had been to create the infrastructure
(establishing a headquarters, hiring additional personnel and implementing
systems) and whatever other appropriate steps necessary to significantly grow
revenue and move Verso into the Application Services Provider ("ASP") market.
This focus resulted in Verso selling products (especially hardware) at very low
margins and hiring a significant number of consultants (91 from January 2000
through June 2000) as well as ASP support personnel (50 from January 2000
through June 2000) in advance of the anticipated increase in professional
services and ASP revenue that did not materialize. Given the fact that the
revenues did not materialize, Verso decided to reduce its workforce. In the
second quarter of 2000, Verso announced a reorganization and eliminated 100
positions held by employees. As a result of the reorganization, Verso recorded
reorganization costs of $1.5 million in the second quarter of 2000. Verso
expects the reduction in workforce, along with other cost reduction initiatives
implemented, will result in approximately $12.0 million in annualized cash
savings.

         In fiscal year 1999, Verso acquired Sulcus Hospitality Technologies
Corp. ("Sulcus") (included in discontinued operations) and Windward Technology
Group, Inc. in transactions accounted for as poolings-of-interests and relocated
their headquarters to Atlanta, Georgia. The operations of Sulcus have been
combined with other division's operations in Verso's Hospitality Services Group
since March of 1999. The operations of Verso's Hospitality Services Group,
including all of Sulcus, were subsequently reported as discontinued operations
for the reasons previously discussed.

         Verso believes that the foregoing events significantly affect the
comparability of Verso's results of operations from year to year. You should
read the following discussion of Verso's results of operations and financial
condition in conjunction with Verso's consolidated financial statements and
related notes thereto included elsewhere in this joint proxy
statement/prospectus.

                                       14
<PAGE>   16

RESULTS OF OPERATIONS FOR THREE MONTHS ENDED MARCH 31, 2001 AND 2000

  Three Months Ended March 31, 2001 Compared to Three Months Ended March 31,
2000

     For the three months ended March 31, 2001, Verso's net loss totaled $18.0
million, or $.36 per share, compared with a net loss of $5.2 million, or $.22
per share, for the same period in 2000. The 2001 results included $11.1 million
in goodwill amortization, $608,000 in amortization of deferred compensation
primarily related to acquisitions during the third and fourth quarters of 2000
and an extraordinary item -- loss from debt conversion totaling $1.6 million.
The 2000 results included $351,000 in goodwill amortization and a $1.2 million
loss from discontinued operations.


                                       15
<PAGE>   17

  Continuing Operations

     For the three months ended March 31, 2001, Verso's net loss from continuing
operations before extraordinary item totaled $16.4 million, or $.33 per share,
compared with a net loss of $5.0 million, or $.17 per share, for the same period
in 2000. The 2001 results included $11.1 million in goodwill amortization and
$608,000 in amortization of deferred compensation primarily related to purchases
during the third and fourth quarters of 2000. The 2000 results included $351,000
in goodwill amortization.

     Total revenue was $10.5 million in the three months ended March 31, 2001,
reflecting a 41.8% decrease from the same period in 2000. Services revenue was
$7.6 million in the three months ended March 31, 2000, reflecting a 3.2%
increase from the same period in 2000. Products revenue was $2.9 million in the
three months ended March 31, 2001, reflecting a 73.1% decrease from the same
period in 2000. The modest increase in services revenue reflects the general
softness in the technology sector during the first quarter of 2001. Gross profit
decreased by $2.1 million in the three months ended March 31, 2001, and was
24.2% percent of revenue, compared with 25.6% of revenue in the same period in
2000. Hardware sales declined by $4.1 million due primarily to management's
decision in the third quarter of 2000 to only resell hardware if the margins
were above 20%. Software revenue declined by $3.7 million due to general
economic conditions. The decrease in the gross profit percentage in the three
months ended March 31, 2001, was attributable to lower margins in services
offset by slightly higher margins in products. Lower gross profit in services
was attributable to the negative margins from the ASP revenues, the revenue
acquired with Cereus merger (Business Applications) and revenue acquired with
MessageClick, the latter two affecting operating results beginning in the fourth
quarter of 2000. The loss in gross profit in the first quarter of 2001 from
these revenue services totaling $767,000 was $548,000 for the three months ended
March 31, 2001. The higher margin in products was due to an emphasis on higher
margin software sales in the three months ended March 31, 2001, and the decision
by Verso not to pursue low margin hardware sales beginning in the third quarter
of 2000. Hardware sales totaled $375,000 and $5.0 million in the three months
ended March 31, 2001 and 2000, respectively.

     Total operating expenses incurred in continuing operations for the three
months ended March 31, 2001, were $18.7 million, an increase of $10.1 million
compared to the same period in 2000. The increase is primarily attributable to
the following items: $444,000 increase in depreciation expense, $10.7 increase
in goodwill amortization and amortization of deferred compensation of $608,000
offset by a decrease in sales, general and administrative expenses of $1.7
million. The decrease in sales, general and administrative expenses resulted
from the reduced personnel costs as a result of the reorganization Verso
announced in the second quarter of 2000, which eliminated duplicate or
non-essential sales and administration positions. The increase in depreciation
expense is related to the purchase of furniture and equipment of approximately
$7.1 million during 2000 as well as the increased depreciation related to the
assets acquired in the Cereus and MessageClick acquisitions. Approximately $9.6
million of the increase in goodwill amortization and $608,000 in amortization of
deferred compensation related to the Cereus merger. As a percent of revenue,
operating expenses from continuing operations were 80.4% during the three months
ended March 31, 2001 (excluding the goodwill amortization and amortization of
deferred compensation related to purchases during 2000), up from 47.4% in the
same period in 2000.

  Discontinued Operations of HSG

     There was no loss or income from discontinued operations for the three
months ended March 31, 2001, as these losses had been recorded on an estimated
basis in 2000; loss from discontinued operations was $1.2 million for the same
period in 2000. In December 2000, Verso completed the sale of its domestic
lodging business and international hospitality business for aggregate proceeds
of $10.0 million. Verso sold its restaurant solutions business for aggregate
proceeds of $8.5 million in January 2001. Operating losses from discontinued
operations totaled approximately $8.2 million for the year ended December 31,
2000. Loss on disposal of the assets of the discontinued operations totaled
approximately $6.7 million. There are no material contingencies related to the
disposal of the assets of the discontinued operations.


                                       16
<PAGE>   18

  Extraordinary Item

     In January 2001, Verso modified the terms of the $7.0 million outstanding
balance of its 5% convertible subordinated debentures as follows: Verso
repurchased $4.5 million, converted $1.5 million into Verso's common stock at a
price of $1.40 per share, fixed the conversion rate at $1.19 per share for the
remaining $1.0 million and issued warrants to purchase 945,378 shares of Verso's
common stock at an exercise price of $2.00 per share. The cost of this
conversion and early retirement of debt totaled $1.6 million.

LIQUIDITY AND CAPITAL RESOURCES

  Summary

     Liquidity is the measurement of Verso's ability to have adequate cash or
access to cash at all times in order to meet financial obligations when due, as
well as to fund corporate expansion and other activities. Historically, Verso
has met its liquidity requirements through a combination of debt from third
party lenders, issuances of equity or equity-linked securities and sale of
discontinued businesses.

     At March 31, 2001, Verso had a positive working capital position (excess of
current assets over current liabilities) of $8.9 million compared to a positive
working capital position of $12.6 million at December 31, 2000. Verso's cash and
cash equivalents totaled $8.5 million at March 31, 2001, and $11.0 million at
December 31, 2000. Total long-term debt, including current portion, net of
discount, was $4.2 million at March 31, 2001 and $9.5 million at December 31,
2000. There were no borrowings under Verso's $10.0 million credit facility with
PNC Bank, National Association (the "PNC Facility") at March 31, 2001, or
December 31, 2000.

  Cash Flow

     Cash used in Verso's continuing operations in the three months ended March
31, 2001, totaled approximately $5.0 million compared with cash used in
continuing operations of $6.9 million in the same period in 2000. Verso's use of
cash in continuing operations during the three months ended March 31, 2001,
resulted primarily from a net loss of $18.0 million and was offset by non-cash
charges totaling $14.9 million (including depreciation and amortization of $13.3
million and an extraordinary item -- loss on debt conversion of $1.6 million)
and cash used by changes in current operating items of approximately $1.9
million.

     Cash used in Verso's discontinued operations in the three months ended
March 31, 2001, totaled $572,000 compared with cash provided by discontinued
operations of $407,000 in the same period in 2000.

     Verso used cash in investing activities for continuing operations in the
three months ended March 31, 2001, of approximately $766,000, compared to $1.6
million in the same period in 2000. Verso only invested in property and
equipment in the first quarter of 2001 and the first quarter of 2000. Cash
provided by discontinued operations from investing activities totaled $8.2
million in the first quarter of 2001 compared with cash used by discontinued
operations for investing activities of $896,000 in the same period in 2000.
During the first quarter of 2001, Verso received net proceeds from sale of
discontinued operations totaling $8.2 million for the sale of its restaurant
solutions business. For discontinued operations, Verso spent approximately
$809,000 on software development costs and approximately $87,000 on purchases of
furniture and equipment during the first quarter of 2000.

     Cash used in financing activities from continuing operations totaled
approximately $4.4 million in the three months ended March 31, 2001, compared to
$22.5 million provided by financing activities in the same period in 2000.
Payments to repurchase convertible subordinated debentures totaling $4.5 million
were offset by proceeds from issuance of common stock of $133,000 in the first
quarter of 2001. Proceeds from the issuance of common stock totaling $15.0
million and borrowings under the PNC Facility of $7.7 million were offset by
payments on long term debt totaling $134,000 in the first quarter of 2000.

     At March 31, 2001, Verso had no borrowings under its PNC Facility. The PNC
Facility is secured by substantially all of the assets of Verso. The
availability under the PNC Facility at March 31, 2001, was approximately $3.0
million.


                                       17
<PAGE>   19

     For 2001, Verso expects that its primary sources of cash will be from cash
on hand, borrowings under the PNC Facility and other sources, including
issuances of equity or debt securities, as well as cash from the Telemate.Net
merger, which is expected to close in the third quarter of 2001. The PNC
Facility, however, contains financial covenants and limitations on Verso's
ability to access funds under the PNC Facility. If Verso is in violation of the
PNC Facility, or does not have sufficient eligible accounts receivable to
support the level of borrowings it may need, Verso may be unable to draw on the
PNC Facility to the extent necessary. To the extent Verso does not have
borrowing availability under the PNC Facility, Verso may be required to obtain
additional sources of capital, sell assets, obtain an amendment to the PNC
Facility or otherwise restructure its outstanding indebtedness. If Verso is
unable to obtain additional capital, sell assets, obtain an amendment to the PNC
Facility or otherwise restructure its outstanding indebtedness, Verso may not be
able to meet its obligations. In addition, the completion of the Telemate.Net
merger is not guaranteed, though Verso believes that the Telemate.Net merger
will be completed in the third quarter of 2001. Verso believes it will have
sufficient liquidity from these sources to meet its current financial
obligations through 2001.

     Verso's short-term cash needs are to cover the operating losses, which are
expected to continue until the end of the year, and to cover expenses related to
the pending acquisition of NACT and the merger with Telemate.Net, both of which
are expected to close in the third quarter of 2001. We expect to use our cash on
hand, borrowings under the PNC facility and the Telemate.Net available cash for
our short-term cash needs.

     Verso's long-term cash needs are related to the costs of growing its
current business as well as that of the businesses to be acquired, including
capital expenditures and working capital. These cash needs will be primarily met
through borrowings under the PNC facility and issuances of equity or debt
securities.

  Goodwill

     Verso continually assesses the recoverability of its intangible goodwill
assets by determining whether the amortization of the goodwill balance over its
remaining life can be recovered through undiscounted future operating cash flows
of the acquired operations. The amount of goodwill impairment, if any, is
measured based on projected discounted future operating cash flows using a
discount rate reflecting Verso's average costs of funds. The assessment of the
recoverability of previously recorded goodwill related to the merger of Cereus
and the acquisition of MessageClick will be impacted based on Verso's future
strategic business direction and if estimated future operating cash flows for
previously acquired operations are not achieved.


                                       18
<PAGE>   20

                                   SIGNATURES


In accordance with the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                  VERSO TECHNOLOGIES, INC.




Date: October 11, 2001     /s/ Juliet M. Reising
                              --------------------------------------------------
                              Executive Vice President and Chief Financial
                              Officer (duly authorized signatory and
                              Principal Financial and Accounting Officer)



                                       19