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

                                    FORM 10-Q

          [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

                                      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

   Item 3.  Quantitative and Qualitative Disclosures about Market Risk.............................  19

PART II.  OTHER INFORMATION

   Item 1.  Legal Proceedings......................................................................  20

   Item 2.  Changes in Securities and Use of Proceeds..............................................  20

   Item 6.  Exhibits and Reports on Form 8-K.......................................................  20

   Signature Page..................................................................................  22

   Exhibit Index...................................................................................  23
</TABLE>

<PAGE>   3


                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, Inc., 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.


                                       10
<PAGE>   12

                            VERSO TECHNOLOGIES, INC.

      NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

                                 March 31, 2001

5.       CONVERTIBLE SUBORDINATED DEBENTURES, Continued

         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, 2000. The cost of the April 2001
         conversion totaled approximately $120,000.

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.


                                       11
<PAGE>   13

                            VERSO TECHNOLOGIES, INC.

      NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

                                 March 31, 2001

6.       SUBSEQUENT EVENTS, Continued

         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.

 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.

GENERAL

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 disposal of HSG.
Accordingly, HSG is reported as a discontinued operation and the condensed
consolidated financial statements have been reclassified to segregate the net
assets and operating results of this business segment. During the second half of
the year ended December 31, 2000, the Company 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 2000, the Company acquired two businesses in transactions accounted for as
purchases. On September 29, 2000, The Company acquired Cereus in a merger
transaction, and on November 22, 2000, the company acquired MessageClick in a
merger transaction. Accordingly, the results of operations of Cereus and
MessageClick are included in the Company's results of operations from their
respective dates of acquisition.

In the second quarter of 2000, the Company announced a reorganization as a part
of its effort to improve operational efficiencies and financial performance and
eliminated 100 positions held by employees. As a result of the reorganization,
the Company recorded reorganization costs of $1.5 million in the second quarter
of 2000. The Company expects the reduction in workforce, along with other cost
reduction initiatives implemented, will result in approximately $12.0 million in
annualized cash savings.

The Company believes that foregoing events significantly affect the
comparability of the Company's results of operations from year to year. You
should read the following discussion of the Company's results of operations and
financial condition in conjunction with the Company's consolidated financial
statements and related notes thereto included in Item 14 of the Company's Annual
report on Form 10-K for the year ended December 31, 2000.


                                       14
<PAGE>   16
RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2001, COMPARED TO THREE MONTHS ENDED MARCH 31, 2000

For the three months ended March 31, 2001, the Company's net loss totaled $18.0
million, or $.36 per share, compared with 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.

Continuing Operations

For the three months ended March 31, 2001, the Company'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. 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. 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. The lower margin in services was
due primarily to the under-utilization of available consultants during 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 the Company not to pursue low margin hardware sales.
Hardware sales totaled $375,000 and $5.0 million in the three month ended March
31, 2001 and 2000, respectively.


                                       15
<PAGE>   17

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
primarily from the reorganization the Company announced in the second quarter of
2000. 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

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, 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. 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.

Extraordinary Item

In January 2001, the Company modified the terms of the $7.0 million outstanding
balance of its 5% convertible subordinated debentures as follows: the Company
repurchased $4.5 million, converted $1.5 million into the Company'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 the
Company'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.


                                       16

<PAGE>   18

LIQUIDITY AND CAPITAL RESOURCES

Summary

Liquidity is the measurement of the Company'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, the
Company 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, the Company 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. The
Company'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 the Company's $10.0 million
credit facility with PNC Bank, National Association (the "PNC Facility") at
March 31, 2001 and December 31, 2000.

Cash Flow

Cash used in the Company'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. The Company'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 the Company'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.

The Company 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. The Company 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, the Company received net proceeds from sale of
discontinued operations totaling $8.2 million for the sale of its restaurant
solutions business. For discontinued operations, the Company 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.


                                       17
<PAGE>   19
At March 31, 2001, the Company had no borrowings under its PNC Facility. The PNC
Facility is secured by substantially all of the assets of the Company. The
availability under the PNC Facility at March 31, 2001 was approximately $3.0
million.

For 2001, the Company 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 merger with
Telemate, expected in the third quarter of 2001. The PNC Facility, however,
contains certain financial covenants and limitations on the Company's ability to
access funds under the PNC Facility. If the Company is in violation of the PNC
Facility, or does not have sufficient eligible accounts receivable to support
the level of borrowings it may need, the Company may be unable to draw on the
PNC Facility to the extent necessary. To the extent the Company does not have
borrowing availability under the PNC Facility, the Company 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 the
Company is unable to obtain additional capital, sell assets, obtain an amendment
to the PNC Facility or otherwise restructure its outstanding indebtedness, the
Company may not be able to meet its obligations. In addition, the merger with
Telemate is not guaranteed, however the Company believes that the merger will be
completed in the third quarter of 2001. The Company believes it will have
sufficient liquidity from these sources to meet its current financial
obligations through 2001.

Goodwill

The Company 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 the Company'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 the
Company's future strategic business direction and if estimated future operating
cash flows for previously acquired operations are not achieved.


                                       18
<PAGE>   20
ITEM 2:  Quantitative and Qualitative Disclosures about Market Risk

Market Risk

The Company is exposed to various market risks, including changes in interest
rates. Market risk is the potential loss arising from adverse changes in market
rates and prices, such as interest rates. The Company does not enter into
derivatives or other financial instruments for trading or speculative purposes.
The Company has also not entered into financial instruments to manage and reduce
the impact of changes in interest rates. The Company may enter into such
transactions in the future.

Interest Rate Risks

The Company's debt at March 31, 2001, primarily carries interest rates which are
fixed, and, therefore, the Company does not expect to have material exposure to
interest rate risk in the near term.


                                       19
<PAGE>   21
                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings
         -----------------

         The Company is not a party to any legal proceedings other than ordinary
         routine proceedings incidental to its business. The Company does not
         expect these legal proceedings, either individually or in the
         aggregate, to have a material adverse effect on the Company's business,
         results of operations or liquidity.

Item 2.  Changes in Securities
         ---------------------

         In connection with the January 2001 repurchase of $4.5 million of the
         Company's $7.0 million 5% convertible subordinated debentures and the
         execution of that certain Purchase Agreement dated as of January 18,
         2001, as amended, the Company issued warrants to two purchasers that
         permit each such purchaser to purchase up to 472,689 shares of the
         Company's common stock for an initial exercise price of $2.00 per
         share. The warrants are exercisable until January 30, 2006.

         In addition, on January 30, 2001, the Company issued a warrant to its
         principal lender, PNC Bank, National Association, that permits such
         lender to purchase up to 83,334 shares of the Company's common stock at
         an initial exercise price of $1.50 share. The warrant is exercisable
         until January 30, 2006.

         All of the warrants issued by the Company during the three months ended
         March 31, 2001, were issued without registration under the Securities
         Act of 1933, as amended, in reliance upon the exemption afforded by
         Section 4(2) thereof.

Item 3.  Defaults Upon Senior Securities
         -------------------------------

         None.

Item 4.  Submission of Matters to a Vote of Security Holders
         ---------------------------------------------------

         None.

Item 5.  Other Information
         -----------------

         None.

Item 6.  Exhibits and Reports on Form 8-K
         --------------------------------

(a)      Exhibits:

         2.1      Agreement and Plan of Merger dated as of January 10, 2001 by
                  and among SS & Co., Inc., a Florida corporation, Senercomm,
                  Inc., a Florida corporation and the Registrant. (Exhibits to
                  this agreement have been omitted; the Registrant agrees to
                  furnish supplementally to the Commission, upon request, a copy
                  of these exhibits.)

         4.1      Warrant dated January 30, 2001 to purchase 83,334 shares of
                  the Registrant's common stock granted to PNC Bank, National
                  Association.


                                       20
<PAGE>   22

         4.2      Warrant dated January 30, 2001 to purchase 472,689 shares of
                  the Registrant's common stock granted to Strong River
                  Investments, Inc.

         4.3      Warrant dated January 30, 2001 to purchase 472,689 shares of
                  the Registrant's common stock granted to Bay Harbor
                  Investments, Inc.

         4.4      Convertible Debenture dated January 30, 2001 executed by the
                  Registrant in favor of Strong River Investments, Inc.

         4.5      Convertible Debenture dated January 30, 2001 executed by the
                  Registrant in favor of Bay Harbor Investments, Inc.

         10.1     Third Amendment to Revolving Credit and Security Agreement
                  dated as of March 23, 2001 by and among the Registrant, Eltrax
                  Technology Services Group, Inc., Eltrax ASP Group, LLC, Eltrax
                  Customer Care Group, Inc., Eltrax International, Inc., Eltrax
                  Hospitality Group, Inc. and Cereus Technology Partners, Inc.,
                  as Borrowers, and PNC Bank, National Association, as
                  collateral and administrative agent for Lenders.

         10.2     Purchase Agreement dated as of January 18, 2001 (the
                  "Debenture Purchase Agreement") by and between the Registrant,
                  Strong River Investments, Inc., and Bay Harbor Investments,
                  Inc. (Exhibits to this agreement have been omitted; the
                  Registrant agrees to furnish supplementally to the Commission,
                  upon request, a copy of these exhibits.)

         10.3     Registration Rights Agreement dated as of January 30, 3001
                  among the Registrant and Strong River Investments, Inc. and
                  Bay Harbor Investments, Inc.

         10.4     Amendment to the Debenture Purchase Agreement dated January
                  23, 2001.

         10.5     Amendment to the Debenture Purchase Agreement dated January
                  25, 2001.

     (b) Reports on Form 8-K.

         The Company filed three reports on Form 8-K during the quarter ended
March 31, 2001.

         1.       Form 8-K/A dated January 22, 2001, which amended the
                  Registrant's Form 8-K dated December 29, 2000 in which the
                  Registrant reported under Item 2 (Acquisition or Disposal of
                  Assets) to set forth certain financial information related to
                  the sale of certain assets.

         2.       Form 8-K dated January 25, 2001 in which the Registrant
                  reported under Item 2 (Acquisition or Disposal of Assets)
                  certain pro forma financial information related to the sale of
                  certain assets.

         3.       Form 8-K/A dated February 2, 2001, which amended the
                  Registrant's Form 8-K dated December 6, 2000, and in which the
                  Registrant reported under Item 2 (Acquisition or Disposal of
                  Assets) the acquisition of MessageClick, Inc to set forth
                  certain financial information related to such acquisition.


                                       21
<PAGE>   23

                                   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: May 14, 2001      /s/ Juliet M. Reising
                        --------------------------------------------------------
                            Executive Vice President and Chief Financial Officer
                            (duly authorized signatory and
                            Principal Financial and Accounting Officer)



                                       22
<PAGE>   24
                                 EXHIBIT INDEX
                                 -------------

<TABLE>
<CAPTION>
    EXHIBIT NUMBER                                        ITEM                                     METHOD OF FILING
----------------------------------------------------------------------------------------------------------------------
<S>                      <C>                                                                      <C>
2.1                      Agreement  and Plan of Merger dated as of January 10, 2001 by and among  Filed herewith
                         SS & Co.,  Inc.,  a Florida  corporation,  Senercomm,  Inc.,  a Florida
                         corporation and the  Registrant.  (Exhibits to this agreement have been
                         omitted;  the  Registrant  agrees  to  furnish  supplementally  to  the
                         Commission, upon request, a copy of these exhibits.)
----------------------------------------------------------------------------------------------------------------------
4.1                      Warrant dated January 30, 2001 to purchase 83,334 shares of the          Filed herewith
                         Registrant's common stock granted to PNC Bank, National Association.
----------------------------------------------------------------------------------------------------------------------
4.2                      Warrant dated January 30, 2001 to purchase 472,689 shares of the         Filed herewith
                         Registrant's common stock granted to Strong River Investments, Inc.
----------------------------------------------------------------------------------------------------------------------
4.3                      Warrant dated January 30, 2001 to purchase 472,689
                         shares of the Filed herewith Registrant's common stock
                         granted to Bay Harbor Investments, Inc.
----------------------------------------------------------------------------------------------------------------------
4.4                      Convertible Debenture dated January 30, 2001 executed by the             Filed herewith
                         Registrant in favor of Strong River Investments, Inc.
----------------------------------------------------------------------------------------------------------------------
4.5                      Convertible Debenture dated January 30, 2001 executed by the             Filed herewith
                         Registrant in favor of Bay Harbor Investments, Inc.
----------------------------------------------------------------------------------------------------------------------
10.1                     Third Amendment to Revolving Credit and Security Agreement dated as of   Filed herewith
                         March 23, 2001 by and among the Registrant, Eltrax Technology Services
                         Group, Inc., Eltrax ASP Group, LLC, Eltrax Customer Care Group, Inc.,
                         Eltrax International, Inc., Eltrax Hospitality Group, Inc. and Cereus
                         Technology Partners, Inc., as Borrowers, and PNC Bank, National
                         Association, as collateral and administrative agent for Lenders.
----------------------------------------------------------------------------------------------------------------------
10.2                     Purchase  Agreement  dated  as of  January  18,  2001  (the  "Debenture  Filed herewith
                         Purchase  Agreement")  by and  between  the  Registrant,  Strong  River
                         Investments,  Inc., and Bay Harbor Investments,  Inc. (Exhibits to this
                         agreement  have  been  omitted;   the  Registrant   agrees  to  furnish
                         supplementally  to  the  Commission,  upon  request,  a copy  of  these
                         exhibits.)
----------------------------------------------------------------------------------------------------------------------
10.3                     Registration Rights Agreement dated as of January 30, 3001 among the     Filed herewith
                         Registrant and Strong River Investments, Inc. and Bay Harbor
                         Investments, Inc.
----------------------------------------------------------------------------------------------------------------------
10.4                     Amendment to the Debenture Purchase Agreement dated January 23, 2001.    Filed herewith
----------------------------------------------------------------------------------------------------------------------
10.5                     Amendment to the Debenture Purchase Agreement dated January 25, 2001.    Filed herewith
----------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       23