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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-KSB

|     |  |                                                                                     
|---- |  | ------------------------------------------------------------------------------------
|[
ü] |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2002

OR

|     |  |                                                                                         
|---- |  | ----------------------------------------------------------------------------------------
|[  ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from       to

Commission File Number 0-27574

PowerCerv Corporation

(Name of small business issuer as specified in its charter)


|                                |  |                    
|------------------------------- |  | -------------------
|Florida                         |  | 59-3350778         
|(State or other jurisdiction of |  | (I.R.S. Employer   
|incorporation or organization)  |  | Identification No.)

400 North Ashley Drive, Suite 2675 Tampa, Florida 33602
(Address of principal executive offices, including zip code)

(813) 226-2600
(Issuers telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: none
Securities registered pursuant to Section 12(g) of the Act: common stock, par value $.001 per share

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 [ü] 
No [  ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not be contained, to the
best of the registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10- KSB. [   ]

The revenue of the registrant for the fiscal year ended December 31, 2002 was
$2,368,016.

The aggregate market value of the registrants voting stock held by
non-affiliates as of   April 7, 2003 was approximately
$ 24,984. There were 1,313,000 shares of the registrants common stock, par
value $.001 per share, outstanding on April 7, 2003.





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TABLE OF CONTENTS



|                                      |                                                                                                                         |  |  |  |  |  |  | 
|------------------------------------- | ----------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                               
|                                      | Item 1. Description of Business                                                                                        
|                                      | Item 2. Description of Property                                                                                        
|                                      | Item 3. Legal Proceedings                                                                                              
|                                      | Item 4. Submission of Matters to a Vote of Security Holders                                                            
|PART II                              
|                                      | Item 5. Market For Common Equity and Related Stockholder Matters                                                       
|                                      | Item 6. Managements Discussion and Analysis or Plan of Operation                                                      
|                                      | Item 7. Financial Statements                                                                                           
|                                      | Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                           
|PART III                             
|                                      | Item 9. Directors, Executive Officers, Promoters and Control Persons, Compliance with Section 16(a) of the Exchange Act
|                                      | Item 10. Executive Compensation                                                                                        
|                                      | Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                
|                                      | Item 12. Certain Relationships and Related Transactions                                                                
|                                      | Item 13. Exhibits and Reports on Form 8-K                                                                              
|                                      | Item 14. Controls and Procedures                                                                                       
|SIGNATURES                           
|Ex-23.1 Consent of Grant Thornton LLP
|EX-99.1 CEO Certification            



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POWERCERV CORPORATION

Form 10-KSB Annual Report

TABLE OF CONTENTS

|           |         |  |                                                                                                                  |             | 
|---------- | ------- |  | ---------------------------------------------------------------------------------------------------------------- | ----------- | 
|           |         |  |                                                                                                                  | Page Number
|           |         |  |                                                                                                                  |            
|PART I     |         |  |                                                                                                                  |            
|           | Item 1  |  | Description of Business                                                                                          | 3           | 
|           | Item 2  |  | Description of Property                                                                                          | 8           | 
|           | Item 3  |  | Legal Proceedings                                                                                                | 8           | 
|           | Item 4  |  | Submission of Matters to a Vote of Security Holders                                                              | 8           | 
|PART II    |         |  |                                                                                                                  |            
|           | Item 5  |  | Market For Common Equity and Related Stockholder Matters                                                         | 9           | 
|           | Item 6  |  | Managements Discussion and Analysis or Plan of Operation                                                        | 10          | 
|           | Item 7  |  | Financial Statements                                                                                             | 15          | 
|           | Item 8  |  | Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure                             | 15          | 
|PART III   |         |  |                                                                                                                  |            
|           | Item 9  |  | Directors, Executive Officers, Promoters and Control Persons, Compliance with
Section 16 (a) of the Exchange Act | 16          | 
|           | Item 10 |  | Executive Compensation                                                                                           | 17          | 
|           | Item 11 |  | Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters                   | 19          | 
|           | Item 12 |  | Certain Relationships and Related Transactions                                                                   | 20          | 
|           | Item 13 |  | Exhibits and Reports on Form 8-K                                                                                 | 21          | 
|           | Item 14 |  | Controls and Procedures                                                                                          | 21          | 
|Signatures |         |  | 41                                                                                                               |            

2



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PART I




This Annual Report on Form 10-KSB and the documents incorporated herein by
reference contain forward-looking statements that have been made pursuant to
the provisions of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are based on current expectations, estimates and
projections about PowerCerv Corporations (the Company, as further defined
below) industry, managements beliefs and certain assumptions made by the
Companys management as discussed in Managements Discussion and Analysis or
Plan of Operations. It is important to note that the Companys actual results
could differ materially from those in such forward-looking statements.

Item 1. Description of Business




General

On December 1, 2002, the Company completed the sale of substantially all
of its operating assets to PCV Acquisition Inc., a subsidiary of ASA
International, Ltd ,a holding company of Vertical Enterprise Software Solutions
based in Framingham, Massachusetts (collectively referred to as ASA). This
transaction was approved by the Companys shareholders on November 26, 2002.
As a result of this transaction, the Company has no current operations.
Following the closing, the Company has used its best efforts to settle its
remaining liabilities with the transaction proceeds and certain other
receivables. The Company plans to continue as a separate public entity, seek
to merge with another operating business and not compete in its former line of
business; however, there can be no assurance that these plans will be
successfully implemented.

Prior to December 1, 2002, the Company was focused on delivering
enterprise commerce management solutions to small and medium size discrete
manufacturing companies. The Company utilized its own direct sales and
professional service organization to serve customers in North America, while
using distributors and channel partners to sell and support its products
internationally. The Companys application products consisted of front-office
Customer Relationship Management (CRM) software (SFA
Plusand Support
Plus) and back-office Enterprise Resource Planning (ERP) solutions
(Financials Plus, Distribution Plus and Manufacturing Plus) that
are integrated with PowerCervs e-business applications (eSeries). The Company
referred to its full suite of integrated application software products as ERP
Plus.

The Company also provided professional technical and business consulting
services, including application analysis, design, development, modification,
integration programming, training and deployment for its application products.

The Company was incorporated in Florida in January 1995 as a holding
company for its operating subsidiary, which was incorporated in Florida in
April 1992. Unless otherwise specified, references herein to PowerCerv and
the Company mean PowerCerv Corporation and its subsidiary.

Products

Products and Services

Prior to December 1, 2002, the Company promoted and licensed its
enterprise application products and provided professional consulting services
that allowed the Companys licensed customers to maximize the benefits of its
application products. The Company also offered education and training services
on its enterprise application products that provided licensed customers with
formalized programs to assist them in using the products in an efficient and
cost effective manner. The Company also provided technical support and
maintenance on its enterprise application products.

The following table summarizes certain information about the Companys
products prior to December 1, 2002:

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|                     |  |                                                                                                                                                                                                                                                                                                                               
|-------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|PRODUCT              |  | PRODUCT DESCRIPTION                                                                                                                                                                                                                                                                                                           
|                     |  |                                                                                                                                                                                                                                                                                                                               
|PowerCerv Enterprise |  |                                                                                                                                                                                                                                                                                                                               
|Application Products |  |                                                                                                                                                                                                                                                                                                                               
|                     |  |                                                                                                                                                                                                                                                                                                                               
|ERP Plus             |  | A comprehensive suite of CRM and ERP
applications. ERP Plus consists of SFA
Plus, Support Plus, Manufacturing Plus,
Distribution Plus and Financials Plus  all
developed by PowerCerv for a consistent
look-and-feel and enhanced implementation
and maintenance.                                                            
|                     |  |                                                                                                                                                                                                                                                                                                                               
|Manufacturing Plus   |  | Multiple modules that address manufacturing
resource planning, scheduling, purchasing,
shop floor control, configuration
management and performance management.                                                                                                                                                               
|                     |  |                                                                                                                                                                                                                                                                                                                               
|Distribution Plus    |  | Multiple modules that address order
processing, returned goods processing,
quotation processing, customer profiling,
marketing and sales, pricing, shipping,
freight, invoicing and inventory/warehouse
management.                                                                                                           
|                     |  |                                                                                                                                                                                                                                                                                                                               
|Financials Plus      |  | Multiple modules that address accounting,
financial and business management needs
including general ledger, accounts payable,
accounts receivable, project accounting,
order processing and inventory.                                                                                                                        
|                     |  |                                                                                                                                                                                                                                                                                                                               
|SFA Plus             |  | SFA Plus provides marketing campaign
management, sales activity planning and
management, quoting and pipeline management
as well as comprehensive contact
management.                                                                                                                                                         
|                     |  |                                                                                                                                                                                                                                                                                                                               
|Support Plus         |  | Support Plus provides case management, item
registration, serial/lot tracking of
registered products, repair information,
warranty tracking, diagnostic tracking,
problem management, case logs, case
history, repair history, returned material
authorization processing and tracking, and
depot repair.                     
|                     |  |                                                                                                                                                                                                                                                                                                                               
|PowerCerv eSeries    |  | eSeries consists of eView, eOrder, eCRM,
eDashboard and eConfigure, which are
self-service Web-based applications that
help companies touch their virtual supply
chains in a variety of methods. These new
modules deliver benefits to online
customers by increasing the number of
touch-points and adding value via the Web.
|                     |  |                                                                                                                                                                                                                                                                                                                               
|eView                |  | eView is designed to allow users to
remotely view the status of an item in the
value chain, anytime from remote computers.                                                                                                                                                                                                    
|                     |  |                                                                                                                                                                                                                                                                                                                               
|eOrder               |  | eOrder is designed to deliver online
business-to-business (B2B) order taking and
processing capabilities.                                                                                                                                                                                                                     
|                     |  |                                                                                                                                                                                                                                                                                                                               
|eCRM                 |  | eCRM is designed to allow companies to
initiate B2B CRM activities such as lead
capture, campaign management, case entry,
case diagnostics and case tracking via the
Web.                                                                                                                                                     
|                     |  |                                                                                                                                                                                                                                                                                                                               
|eDashboard           |  | eDashboard is designed to deliver critical
business performance and status information
to executive-level personnel via the Web.                                                                                                                                                                                              
|                     |  |                                                                                                                                                                                                                                                                                                                               
|eConfigure           |  | eConfigure, which was released in 2001,
extends PowerCervs existing e-business
offerings to include integrated Web-based
product configuration. It is designed to
enable users to configure items over the
Web or from within the ERP                                                                                        

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|                       |  |                                                                                                                                                                                                                                                                                                                                                        
|---------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                       |  | Plus
Distribution Order Entry and Quote
processes.                                                                                                                                                                                                                                                                                                     
|                       |  |                                                                                                                                                                                                                                                                                                                                                        
|PowerCerv
Intelligence |  | PowerCerv Intelligence provides the tools
necessary to turn all the data in your
enterprise application into useful business
information. Comprehensive report writing
as well as on line analytical processing
(OLAP) reporting and integrated internet
reporting and distribution utilizing both
push and pull technology.                           
|                       |  |                                                                                                                                                                                                                                                                                                                                                        
|PowerCerv Vision       |  | Comprised of four distinct components

Business Processes, Implementation
Methodology, Total Enterprise Training and
Data Migration  PowerCerv Vision helps
companies document their internal
processes, facilitates faster system
installations and teaches users how to
maximize the potential of their PowerCerv
enterprise application solutions.

Services

Prior to December 1, 2002, the Companys services consisted of the
following:

Consulting
Services. The Company provided professional, technical and
business consulting services to licensed customers regarding the Companys ERP
Plus and web enabled application products. These services included application
analysis, detailed pre-implementation consulting, project management,
application customization and modification, integration programming, system
implementation and deployment, and application education and training services.
PowerCerv consulting services were separate from or in addition to its
software licensing fees.

The Companys services were provided to customers pursuant to written
service agreements and statements of work. These agreements detailed the
scope of the consulting services to be provided and the applicable hourly
billing rates and the payment and warranty terms. Separately executed change
orders were required for any statement of work., identify project management
personnel responsible, and require weekly and/or monthly status meetings
between PowerCerv and its customers. PowerCerv consulting services were
generally billed on a time and materials basis. Additionally, travel and
living expenses incurred as a result of the consulting were billed separately.

Education
Services. Education services consisted of end-user education to
licensed customers on the Companys enterprise application software products.
These services included providing education and training classes on the use of
the PowerCerv application products in an efficient and cost-effective manner.
Some classes were offered on a per-student basis and other classes were offered
on a negotiated fixed-fee basis.

Maintenance
Services. Maintenance services were generally provided
pursuant to maintenance agreements between the Company and its customers.
These agreements entitled customers to hotline telephone support during
extended business hours, notification of product enhancements and upgrades, the
enhancements and upgrades, functional releases and maintenance releases,
technical bulletins, replacement of damaged products and access to the
Companys World Wide Web site (http://www.powercerv.com) and electronic
bulletin board. The Company typically charged a percentage of its then current
product license fee for renewable one-year maintenance agreements. Maintenance
fees are generally billed annually in advance.

ASA assumed all of the Companys outstanding service obligations as part
of the sale.

Marketing, Sales and Distribution

Prior to December 1, 2002, the Companys application products were sold
through a direct sales force and through a select network of Value Added
Resellers (VARs), distributors and partners who generally served in their
respective capacities on a nonexclusive basis. The strategy of the Companys
direct sales force was to identify companies in the target market and engage
those accounts in a sales campaign once a target company has acknowledged its
interest in the Companys enterprise software solutions and identify resell
opportunities with the Companys existing customer base. The Companys sales
force used a structured sales methodology to maximize the efficiency of its
sales resources and maximize its competitiveness. In the United States and to
a lesser extent,

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the Company also utilized select indirect channels. These
indirect channels consisted of strategic implementation partners, VARs and affiliate channel partners. Strategic implementation
partners are consulting organizations that generally do not sell software but
may assist organizations with selection criteria and possibly provide
implementation assistance. VARs are authorized channel partners who generally
sell the Companys application products to manufacturing companies (generally
with annual revenues below $25 million) or into other market segments on which
the Company does not directly focus. Affiliate channel partners generally
identify qualified sales opportunities for the Companys direct sales
organization to address and close, but generally do not directly participate in
the sales process. Internationally, the Company occasionally utilized
distributors and channel partners to sell and support its products. VARs,
distributors and channel partners typically have expertise in particular
vertical markets and geographic ties to their target markets.

Prior to December 1, 2002, the Company employed application consultants to
assist the direct sales force as may have been necessary in competitive sales
opportunities, though these consultants primary functions were to provide
customers with implementation services related to installing, customizing,
supporting and maintaining its products. The Company employed application
consultants who were experienced professionals with in-depth knowledge of
particular fields of expertise.

Prior to December 1, 2002, products were generally shipped as orders were
received and, accordingly, the Company has historically operated with little or
no backlog. Because of the generally short cycle between order and shipment,
the Company did not believe that its backlog as of any particular
date was
meaningful.

Product Development

During 2002, the Company made investments in internal research and
development as well as technology advancements. The Companys product
development efforts were focused primarily on continued enhancement of its ERP
Plus and eSeries application products to meet the needs and requirements of
mid-size companies. Research and development expenses consist primarily of
salaries for employees in the product development group and a portion of the
related overhead. Research and development expenses were charged to operations
as incurred. Research and development expenditures were approximately $.7
million in 2002 and $2.0 million in 2001.

In
April 2001, the Company released version 9.0.02 of its ERPPlus
application products on schedule and as planned. The new release added
features to the Companys application products. Version 9.0.02 also included
the newest addition to the eSeries suite of eBusiness applications

eConfigure. Technology upgrades to the latest versions of operating systems,
development tools, and database platforms were also included in Version 9.0.02
of the Companys ERP Plus application products.

Strategic Alliances

Prior to December 1, 2002, an element of the Companys strategy was the
continued creation and development of strategic alliances with notable industry
participants. The Companys goals in establishing these relationships were to
create marketing alliances that would endorse and promote the Companys
products to a larger potential customer base than could be reached through the
Companys direct marketing efforts, to assist the Company in developing a
supply of aftermarket service providers who would train personnel to implement
the Companys products, thereby leveraging the Companys resources and reach,
and to enhance the underlying products. Generally, these agreements outlining
the Companys alliances did not impose significant financial obligations or
liabilities on either party and had terms no longer than one year.

Prior to December 1, 2002, the Companys significant alliances included
the following organizations:



| |  | Microsoft Corporation. The
Company had an agreement with
Microsoft that encouraged the Company to integrate Microsoft products
and technologies into the Companys solutions. This designated the
Company as a Microsoft Solution Provider.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | IBM Corporation. In the past, the Company participated in
marketing alliances and activities with International Business
Machines Corp.                                                                                                      

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| |  | Sybase, Inc. The Company had entered into a strategic marketing
relationship with Sybase. The relationship included joint marketing
activities, press releases announcing the availability and performance
of the Companys products on Sybase platforms, publications of joint
success stories and other items of a similar nature. The Companys
products utilize the Sybase Adaptive Server Enterprise as the
foundation RDBMS of its ERP Plus product suite. The Companys ERP
Plus products utilize Sybase PowerBuilder as the foundation
application development tool.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Best Software, Inc. 
The Company had an agreement with
Best Software, a wholly owned subsidiary of The Sage Group PLC, where
the Company has agreed to re-sell the Best! Imperativ Fixed Assets
product as a solution for customers that need fixed assets as part of
their financial solution. The Company has integrated the product into
the Companys Financials Plus solution for customers.                                                                                                                                                                          
| 
| |  | Brio Technology, Inc.
 The Company had an agreement
whereby the Company private labels the BRIO product suite as the basis
for its PowerCerv Intelligence. The Company has added functionality
to these products to integrate them into the Companys ERP Plus
product suite.                                                                                                                                                                                                                                                                                              
| 
| |  | The COBRE Group  The
Company had an agreement whereby
the Company private labeled Helpmate 2.0 as the basis for its PowerCerv
Vision product.                                                                                                                                                                                                                                                                                                                                                                                                                              
| 
| |  | Kewill E Commerce 
The Company had an agreement with Kewill E
Commerce, Inc. Under the agreement, PowerCerv offered Clippership
32®, Kewills award-winning, shipment processing software for
Windows, as an integrated optional module in its PowerCerv ERP Plus
product.                                                                                                                                                                                                                                                                                                 
| 
| |  | Sterling Commerce The
Company had an agreement with
Sterling, a subsidiary of SBC Communications, Inc., where the Company
resold and implemented Sterling Commerces GENTRAN business process
integration software as part of its ERP solution, PowerCerv ERP Plus.                                                                                                                                                                                                                                                                                                         
| 
| |  | Taylor Manufacturing System,
Inc.  The Company had entered into a
strategic marketing relationship with Taylor Manufacturing Systems
where the Company has integrated the Taylor TESS Advanced Planning &
Scheduling product into the Companys ERP Plus product suite.                                                                                                                                                                                                                                                                                                    

Competition

The market for enterprise software application and e-commerce products and
services is intensely competitive, rapidly changing and significantly affected
by new product offerings and other market activities. Prior to December 1,
2002, a number of companies offered products similar to the Companys products
and services, which were targeted at mid-size companies.

Prior to December 1, 2002, the Company competed in the enterprise
application and e-commerce software and services market on the following
merits: A focus on the mid-size U.S. companies; product functionality;
integrated CRM, ERP and eSeries application software solutions. In addition,
the Company competed on its application software customization capabilities,
single-source implementation solution, quicker time to benefit, open and
industry standard technology platforms, professional services and total cost of
ownership. The Company competed primarily with (i) other vendors of software
focused on the specific needs of mid-size U.S. companies, which included QAD,
Epicor, Mapics and Made2Manage. In addition, customers who have a large
installed base of legacy systems may resist committing the time and resources
necessary to convert to an open system, client/server-based software suite of
products.

Intellectual Property and Other Proprietary Technology

The Company regarded its products as proprietary trade secrets and
confidential information. The Company relied on a combination of copyright,
trademark and trade secrets laws, employee and third-party nondisclosure
agreements and other industry standard methods for protecting ownership of its
products. The Company has no patents.

7



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Prior to December 1, 2002 the Company licensed its application products to
customers under non-transferable, non-exclusive negotiated license agreements.
The standard form license agreement allowed customers to use the Companys
products solely for internal purposes and specified the maximum number of
servers and concurrent users that may use the products. In some cases, the
Company licensed product source code to enable its customers to customize the
software to meet particular requirements. The Companys standard license contained
confidentiality provisions protecting the products. In the event of
termination of the license, the end-user customer remained responsible for any
unpaid license fees and the confidentiality obligations.

The Company assigned its license agreements and intellectual property to
ASA as part of the sale.

Employees

On December 1, 2002, the Companys employees were transferred to ASA as
part of the sale, with the exception of 2 administrative positions that were
eliminated. Thus as of December 1, 2002, the Company had no employees. As of
November 30, 2002, the Company had 22 full-time employees. These employees
included 4 individuals in sales, marketing and related activities, 5
individuals in research and development, 8 individuals in customer support,
training, and consulting services, and 5 individuals in information technology,
finance, administration and human resources.

Item 2. Description of Property




The Companys corporate headquarters are located in Tampa, Florida, in a
5,220 square foot facility, occupied under a lease expiring in May 2003. This
lease was assigned to ASA as part of the asset purchase.

Item 3. Legal Proceedings




Lifsey
v. Ross, et. al.: A complaint was filed on July 24, 1997, in the
United States District Court for the Middle District of Florida, captioned J.
Conrad Lifsey vs. Harold R. Ross, Gerald R. Wicker, Marc J. Fratello, Roy E.
Crippen, III, Donald B. Hebb, Jr., Thomas S. Roberts, PowerCerv Corporation,
Alex Brown & Sons, Inc., Robertson, Stephens & Company, ABS Capital Partners,
L.P., Summit Investors II, L.P., and Summit Ventures III, L.P. The complaint
purports to be a class action on behalf of those persons who purchased shares
of the Companys common stock from March 1, 1996 (the date of the Companys
initial public offering of its common stock (IPO)) through July 24, 1996.
The complaint alleges, among other things, that the defendants violated the
Securities Act of 1933 and the Securities Exchange Act of 1934 in connection
with the Companys IPO and in its subsequent securities filings, press releases
and other public statements. The parties have agreed to a settlement that was
approved by the Court. A judgment dismissing the action with prejudice was
entered by the Court on December 16, 2002.

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




The Company held its Annual Meeting of Shareholders on November 26, 2002
(2002 Annual Meeting). At the 2002 Annual Meeting, the shareholders voted to
elect Marc J. Fratello, John S. McMullen, Roy E. Crippen, III and O.G. Greene
as directors of the Company, to hold office until the Companys 2003 Annual
Meeting and

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until their successors are elected and qualified or earlier
resignation, removal from office or death. The shareholders also voted to
ratify the appointment of the Companys independent auditor, Grant Thornton
LLP, for the year ending December 31, 2002. The shareholders also voted on the approval of an asset
purchase agreement between the Company and ASA International, Ltd.

The total number of shares of the Companys common stock, $.001 par value
(Common Stock), issued, outstanding and entitled to vote at the 2002 Annual
Meeting was 1,312,316 shares, of which 1,226,027 shares of Common Stock were
present in person or by proxy. Additionally, the total number of shares of the
Companys Preferred Stock, $.001 par value (Preferred Stock), issued,
outstanding and entitled to vote at the 2002 Annual Meeting was 1,022,222
shares, of which 922,222 shares of Preferred Stock were present in person or by
proxy. The following list indicates the total number of combined Common Stock
and Preferred Stock votes received by each of the nominees for the Companys
Board of Directors:

|                    |  |           |           |               |  |  |        | 
|------------------- |  | --------- | --------- | ------------- |  |  | ------ | 
|Name                |  | Votes For |           | Votes Against
|                    |  |           |           |              
|Marc J. Fratello    |  |           | 2,090,492 |               |  |  | 57,757 | 
|Roy E. Crippen, III |  |           | 2,090,492 |               |  |  | 57,757 | 
|O.G. Greene         |  |           | 2,090,492 |               |  |  | 57,757 | 

The appointment of Grant Thornton LLP as the Companys independent
auditors was approved by a majority of the shareholders present and entitled to
vote at the 2002 Annual Shareholders Meeting. Specifically, of the shares of
Common and Preferred Stock present in person or by proxy, a total of 2,092,358
shares voted in favor of this proposal, 5,455 shares voted against, and 50,436
shares abstained from voting.

The asset purchase agreement, pursuant to which a subsidiary of ASA
International, Ltd. would purchase substantially all of the assets used by the
Company in the conduct of its business was approved by a majority of the
shareholders present and entitled to vote at the 2002 Annual Shareholders
Meeting. Specifically, of the shares of Common and Preferred Stock present in
person or by proxy, a total of 1,486,657 shares voted in favor of this
proposal, 109,609 shares voted against, and 551,983 shares abstained from
voting.

PART II




Item 5. Market For Common Equity and Related Stockholder Matters




The Companys common stock had been listed on the Nasdaq SmallCap Market
until August 2001, when it was delisted for failure to meet the continued
listing requirements. Therefore the Companys common stock now trades in the
over-the-counter market on the OTC Bulletin Board or through the pink sheets.
The Companys shareholders may find it more difficult to obtain a price
quotation for or sell the Companys common stock. The delisting of the
Companys common stock from the Nasdaq SmallCap Market therefore may have an
adverse impact on the market price and liquidity of the Companys common stock.

The following table sets forth the range of high and low sales prices on
the National Market for the Common Stock during the two previous years. Such
quotations represent inter-dealer prices without retail markup, markdown or
commission and may not necessarily represent actual transactions.

|            |  |      |      |     |  |   |      | 
|----------- |  | ---- | ---- | --- |  | - | ---- | 
|2001        |  | High |      | Low
|            |  |      |      |    
|1st Quarter |  | $    | 9.00 |     |  | $ | 1.69 | 
|2nd Quarter |  |      | 3.51 |     |  |   | 1.00 | 
|3rd Quarter |  |      | 3.45 |     |  |   | .60  | 
|4th Quarter |  |      | 1.28 |     |  |   | .60  | 

|            |  |      |      |     |  |   |     | 
|----------- |  | ---- | ---- | --- |  | - | --- | 
|2002        |  | High |      | Low
|            |  |      |      |    
|1st Quarter |  | $    | 1.01 |     |  | $ | .56 | 
|2nd Quarter |  |      | 1.05 |     |  |   | .15 | 

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|            |  |      |     |     |  |  |     | 
|----------- |  | ---- | --- | --- |  |  | --- | 
|2002        |  | High |     | Low
|            |  |      |     |    
|3rd Quarter |  |      | .51 |     |  |  | .01 | 
|4th Quarter |  |      | .03 |     |  |  | .01 | 

As of December 31, 2002, the Company had approximately 149 shareholders of
record, and the Company believes there are more than approximately
 2,700
beneficial shareholders. The Company declared no dividends in respect of its
Common Stock in 2002 and 2001.

Securities Authorized for Issuance Under Equity
Compensation Plans:

|                       |  |                         |         |                     |  |                      |       |  |  |  |         | 
|---------------------- |  | ----------------------- | ------- | ------------------- |  | -------------------- | ----- |  |  |  | ------- | 
|                       |  | Number of
securities to |         | Weighted-average    |  | Number of
securities
|                       |  | be issued
upon exercise |         | exercise
price of   |  | remaining
available 
|Plan Category          |  | of
outstanding options  |         | outstanding
options |  | for
future issuance 
|                       |  |                         |         |                     |  |                     
|1995
Stock Option Plan |  |                         | 583,594 |                     |  | $                    | 8.13  |  |  |  |        | 
|Other
Options          |  |                         | 23,889  |                     |  | $                    | 24.75 |  |  |  | 177,777 | 

Management is in the process of fully evaluating the
status of all stock options based on the terminated status of all
employees. The above table does not reflect any adjustments for
cancellations or forfeitures that may be required as of
December 31, 2002, based on the change of employment status.

Item 6. Managements Discussion and Analysis or Plan of Operation




Overview

On December 1, 2002, the Company completed the sale of substantially all
of its operating assets to PCV Acquisition, Inc., a subsidiary of ASA
International, Ltd (collectively referred to as ASA). This transaction was
approved by the Companys shareholders on November 26, 2002. Prior to
completing the sale, the Company had entered into a definitive asset purchase
agreement with ASA on October 1, 2002. Pursuant to this agreement the Company
sold substantially all of its assets to ASA and ASA assumed certain of the
Companys liabilities related to ongoing operations. The Company sold to ASA
assets with a net book value of $470,509 consisting primarily of accounts
receivable and ASA assumed liabilities with a net book value of $454,785
consisting primarily of accounts payable and accrued expenses resulting in a
purchase price adjustment payable to the Company by ASA of $15,724. The
Company also sold its software and intangible assets to ASA having a net book
value of $200,237 and ASA also assumed the Companys deferred maintenance
revenue liability of $787,179. However, per the agreement, no value was
assigned to these items for purposes of determining an adjustment to the
purchase price. In addition to ASA assuming certain liabilities, at closing,
ASA paid the Company $500,000 in cash and issued a $90,000 promissory note due
six months after the closing date. In order to assist the Company in meeting
its cash flow needs, ASA advanced the Company the sum of $100,000 evidenced by
a 7% promissory note due on demand after November 2, 2002 or on the earlier of
closing of the transaction or termination of the purchase agreement. The
repayment of the note was deducted from the $500,000 cash payment made to the
Company at closing. The Company recognized a net gain associated with the
sale to ASA of $792,745. The Company incurred $85,000 in transaction costs and
in addition, the Company agreed to make a $75,000 severance payment to its
former Chief Executive Office. The Company also agreed to pay one of its board
members $60,000 representing a termination fee on an existing consulting
agreement with the Company. These payments were made in 2003 and both
individuals agreed to stay on the Board of Directors and assist with the
ongoing business of the Company after the completion of the sale.

Prior to entering into the asset purchase agreement with ASA, the Company
attempted to improve cash flow by instituting flexible work arrangements,
reduced work weeks, uniform salary reductions, workforce reductions,
elimination of non-critical costs and accelerated cash conversion of
receivables. Although these measures resulted in lower expenses, it
significantly reduced the Companys personnel and its ability to generate
revenue. The uncertainty of the Companys solvency materially affected its
sales efforts.

Prior to December 1, 2002 the Company focused its resources, including
product development, marketing and sales efforts, on the needs and requirements
of small and medium size discrete manufacturing companies. The Companys
revenues consisted primarily of software license fees and fees for services,
primarily relating to the Companys applications, including consulting,
education and maintenance and support. License fees represent revenue from
licensing the Companys application products and royalties earned on the
Companys application products and related intellectual properties. Service
fees represent revenue from implementing the Companys Integrated Enterprise
Response Solutions application products, consulting services, education
services and maintenance and support services. Service fees were the Companys
largest single revenue source.

On March 31, 1999, the Company sold its general consulting and general
education business (consulting and education services other than its
application-related services) to a related party. Consideration totaled
approximately $10 million and consisted of a combination of cash, PowerCerv
common stock and notes. The gain associated with the note receivable that
matures in 2004 and has an interest rate of 4.56% was deferred at the time of
sale. In 2000, the Company recognized this gain of $827,500. Management
believes that based upon events occurring in 2000 (the buyers merger with
another business and establishment of a stronger management team) the
collectibility of the note was reasonably assured. During 2002, the Company
received discounted payments on this related party note receivable of $262,482,
representing a discount of $42,018. The Company accepted

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discounted payments
in an effort to improve its cash flow. As of December 31, 2002, the balance of
this note receivable was approximately $135,931.

During 2001, the Company issued 1,022,222 shares of convertible Preferred
Stock. The Preferred Stock is convertible to Common Stock at a conversion rate
of one share of Common Stock for each share of Preferred Stock being converted.
The Preferred Stock carries no dividend or coupons and will be redeemable at
the option of the Company after five years. In consideration for the Preferred
Stock, the Company received cash of $600,000, notes receivable of $200,000
($100,000 from a director of the Company) and 222,222 shares of its Common
Stock valued at $222,222. The Company incurred financing costs of
approximately $38,000. The 222,222 shares of Common Stock were formerly owned
by a past director and were sold to a current director under the condition that
they could be exchanged for preferred stock on a one for one basis. During
2002, the Company received payment on one of the notes at a discounted rate of
$85,000. The remaining note receivable is included as a reduction of
shareholders equity at year-end.

New
Accounting Pronouncements

On July 20, 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) 141, Business Combinations,
and SFAS 142, Goodwill and Intangible Assets. SFAS 141 is effective for all
business combinations completed after June 30, 2001. SFAS 142 is effective for
the year beginning January 1, 2002; however certain provisions of the Statement
apply to goodwill and other intangible assets acquired between July 1, 2001 and
the effective date of SFAS 142. The adoption of this statement did not have a
significant effect on the Companys results of operations or financial
position. The Company recognized $6,225 of goodwill amortization expense in
2001. As of December 31, 2002, goodwill amounted to $0.

In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. This statement addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets and supersedes FASB Statement No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. The provisions
of the statement are effective for financial statements issued for fiscal years
beginning after December 15, 2001. The adoption of this statement on January
1, 2002 did not have a significant effect on the Companys results of
operations or financial position.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities. This Statement addresses
financial accounting and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3,
Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring). The provisions of this Statement are effective for exit or
disposal activities that are initiated after December 31, 2002, with early
application encouraged. Management does not believe that adoption of this
pronouncement will have a material effect on the Companys financial position
or results of operations.

In
December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure, which
(i) amends SFAS 123, Accounting
for Stock-Based Compensation, to provide alternative methods of transition for
an entity that voluntarily changes to the fair value based method of accounting
for stock-based employee compensation (ii) amends the disclosure provisions of
SFAS 123 to require prominent disclosure about the effects on reported net
income of an entitys accounting policy decisions with respect to stock-based
employee compensation and (iii) requires disclosure about those effects in
interim financial information. Items (ii) and (iii) of the new requirements in
SFAS 148 are effective for financial statements for fiscal years ending after
December 15, 2002. The Company has adopted the reporting requirements of item
(ii) and will include the reporting requirements of item (iii) beginning in its
first interim period after December 15, 2002.

In
November 2002, the FASB issued FASB Interpretation No. 45 Guarantors
Accounting and Disclosure Requirements for Guarantors, including Indirect
Guarantors of Indebtedness to Others (FIN 45). FIN 45 creates new disclosure
and liability recognition requirements for certain guarantees, including
obligations to stand ready to perform. The initial recognition and measurement
requirements of FIN 45 are effective prospectively for guarantees issued or
modified after December 31, 2002, and the disclosure requirements are effective
for financial periods ending after December 31, 2002. In accordance with FIN
45, the Company has disclosed guarantee information.

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##### Table of Contents



Critical Estimates and
Judgments

The Companys Managements Discussion and Analysis or Plan of Operations
section discusses its consolidated financial statements, which have been
prepared in accordance with accounting principles generally
accepted in the United States of America. The preparation of these financial
statements requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Management evaluates its estimates and judgments, including
those related to receivables and accrued expenses. Management bases its
estimates and judgments on historical experience and on various other factors
that are believed to be reasonable based on the circumstances. Actual results
may differ from these estimates under different assumptions or conditions. The
most significant accounting estimates inherent in the preparation of the
Companys financial statements include estimates as to the appropriate carrying
value of certain assets and liabilities that are not readily attainable from
other sources. These accounting policies are described at relevant sections in
this discussion and analysis and in the notes to the consolidated financial
statements included in the Companys Annual Report on Form 10-KSB for the fiscal year
ended December 31, 2002.

The discussion in this report contains forward-looking statements that
involve risks and uncertainties. The Companys future actual results may
differ materially from the results discussed herein, including those in the
forward-looking statements.

Plan of Operation

The Company plans to use its best efforts to settle its remaining
liabilities with the transaction proceeds and future cashflows from certain
other receivables. The Company plans to continue as a separate public entity,
seek to merge with another operating business and not compete in its former
line of business; however, there can be no assurance that these plans will be
successfully implemented. As a result of these matters, the Report of
Independent Certified Public Accountants includes an explanatory paragraph for
going concern matters.

Results of Operations

The following table sets forth, for the periods indicated, certain
financial data regarding the Companys revenues derived from license fees and
service fees:

|                            |  |                                  |       |        |  |      |     |    |  |   |       |  
|--------------------------- |  | -------------------------------- | ----- | ------ |  | ---- | --- | -- |  | - | ----- | -
|Revenue:                    |  | For the years ended December 31,
|                            |  |                                 
|                            |  | ($ in thousands)                
|                            |  | 2002                             |       | Change |  | 2001
|                            |  |                                  |       |        |  |     
|License fees                |  | $                                | 376   |        |  |      | (69 | %) |  | $ | 1,232 |  
|Percentage of total revenue |  |                                  | 16    | %      |  |      |     |    |  |   | 20    | %
|                            |  |                                  |       |        |  |      |     |    |  |   |       |  
|Service fees                |  | $                                | 1,992 |        |  |      | (59 | %) |  | $ | 4,875 |  
|Percentage of total revenue |  |                                  | 84    | %      |  |      |     |    |  |   | 80    | %
|                            |  |                                  |       |        |  |      |     |    |  |   |       |  

License
Fees. Prior to December 1, 2002, the Companys license fees were
derived from licensing the Companys application products. In addition, any
royalty fees earned were included in license fees. The Company established its
licensing fees using a tiered pricing approach based on the number of
concurrent servers and users. Source code licenses were available at an
additional cost.

License fees decreased 69% from 2001 to 2002. The decrease was
principally due to substantially fewer new customers in the current year. The
Company reduced its sales and marketing staff significantly in an effort to
reduce costs. As a result, the Company was unable to identify and pursue the
same level of possible sales targets as in 2001. Prior to the ASA sale, the
Company had a total of 4 employees in the sales and marketing departments.
These employees were terminated by the Company on November 30, 2002 and hired
by ASA.

Service
Fees. Prior to December 1, 2002, the Companys service fees
consisted of revenue from consulting, education and support and maintenance
services for the Companys application software licenses. Consulting services
were primarily provided on a time and materials basis, education services were
generally priced on a per-student basis and annual support and maintenance were
based on a percentage of related license fees.

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Service fees decreased 59% from 2001 to 2002. Management believes that the
decrease in service revenue was due to fewer new license deals closed in 2002
as compared to 2001 as a result of the reduction in sales force.

Costs and expenses

The following table sets forth, for the periods indicated, certain
financial data regarding the Companys costs associated with its license fees
and services:

|                        |  |                                  |     |        |  |      |     |    |  |   |       |  
|----------------------- |  | -------------------------------- | --- | ------ |  | ---- | --- | -- |  | - | ----- | -
|Cost of revenue:        |  | For the years ended December 31,
|                        |  |                                 
|                        |  | ($ in thousands)                
|                        |  | 2002                             |     | Change |  | 2001
|                        |  |                                  |     |        |  |     
|Cost of licenses        |  | $                                | 204 |        |  |      | (23 | %) |  | $ | 266   |  
|Gross profit percentage |  |                                  | 46  | %      |  |      |     |    |  |   | 78    | %
|                        |  |                                  |     |        |  |      |     |    |  |   |       |  
|Cost of services        |  | $                                | 813 |        |  |      | (76 | %) |  | $ | 3,466 |  
|Gross profit percentage |  |                                  | 59  | %      |  |      |     |    |  |   | 29    | %
|                        |  |                                  |     |        |  |      |     |    |  |   |       |  

Cost
of Licenses. The cost of licenses consists primarily of production
costs, royalties associated with certain modules of the Companys application
products and the amortization of intangible assets. The cost of license
decreased 23% from 2001 to 2002 resulting from lower license revenue in the
current year and fewer third party fees. The gross profit margin decreased in
the current year due to the fixed costs associated with amortization on
intangible assets.

Cost
of Services. The cost of services consists primarily of compensation
and travel costs associated with providing consulting, product support and
maintenance, technical services and education. The cost of services decreased
76% from 2001 to 2002 primarily due to lower compensation expenses and
operating costs for the periods. During 2001 and the first quarter of 2002,
the Company implemented several work force reductions and cost cutting measures
which significantly reduced the Companys services revenue capacity.
Management believes that these reductions and the use of billable research and
development personnel resulted in increased utilization of remaining personnel
thereby increasing the gross profit margin percentage in the current year.
Prior to the ASA sale, the Company had a total of 8 services employees.
These employees were terminated by the Company on November 30, 2002 and hired by
ASA.

The following table sets forth, for the periods indicated, certain
financial data regarding the Companys operating expenses:

|                                   |  |                                  |       |        |  |      |     |    |  |   |       |  
|---------------------------------- |  | -------------------------------- | ----- | ------ |  | ---- | --- | -- |  | - | ----- | -
|Operating expenses                 |  | For the years ended December 31,
|                                   |  |                                 
|                                   |  | ($ in thousands)                
|                                   |  | 2002                             |       | Change |  | 2001
|                                   |  |                                  |       |        |  |     
|General and administrative         |  | $                                | 1,237 |        |  |      | (53 | %) |  | $ | 2,580 |  
|Percentage of total revenue        |  |                                  | 52    | %      |  |      |     |    |  |   | 42    | %
|                                   |  |                                  |       |        |  |      |     |    |  |   |       |  
|Sales and marketing                |  | $                                | 448   |        |  |      | (74 | %) |  | $ | 1,712 |  
|Percentage of total revenue        |  |                                  | 19    | %      |  |      |     |    |  |   | 28    | %
|                                   |  |                                  |       |        |  |      |     |    |  |   |       |  
|Research and development           |  | $                                | 673   |        |  |      | (66 | %) |  | $ | 1,963 |  
|Percentage of license fees revenue |  |                                  | 179   | %      |  |      |     |    |  |   | 159   | %
|                                   |  |                                  |       |        |  |      |     |    |  |   |       |  

General
and Administrative (G&A). G&A expenses include general
compensation, communications, accounting, human resources, legal and related
facilities expenses. The decrease in G&A expenses from 2001 to 2002 primarily
resulted from lower compensation and other operating costs resulting from
significant cost cutting measures implemented by management in 2001 and 2002.
G&A costs as a percentage of total revenue increased from 42% in 2001 to 52% in
2002 due to significantly lower license and services revenue for the current
year and the fixed nature of certain costs. Prior to the ASA sale, the Company
had a total of 5 G&A employees. These employees were terminated by the
Company on November 30, 2002 and with the exception of 2 executives, were hired
by ASA.

Sales
and Marketing. Prior to December 1, 2002, sales and marketing
expenses primarily consisted of compensation paid to sales and marketing
personnel; costs of marketing, including direct mail and telemarketing
activities; and related communications costs. Sales and marketing expense
decreased 74% from 2001 to 2002

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primarily as a result of lower compensation,
operating costs and marketing expenses in the current year. During late 2001
and early 2002, the Company continued to reduce its sales and marketing staff
resulting in the elimination of 8 positions. Further, certain non-critical
costs were discontinued. Sales and marketing expense as a percentage of total
revenue ecreased due to substantial cost cutting measures implemented by the
Company
in 2001 and 2002. Prior to the ASA sale, the Company had a total of 4 sales
and marketing employees. These employees were terminated by the Company on
November 30, 2002 and were hired by ASA.

Research
and Development (R&D). Prior to December 1, 2002, R&D costs
consisted primarily of compensation and related facilities expenses, software
and equipment costs associated with developing, maintaining and enhancing the
Companys products. Historically, the Company did not capitalize any internal
R&D costs as the costs incurred during the period between the point in time
that technological feasibility is established and a product is released to the
market were insignificant. R&D costs decreased 66% from 2001 to 2002 primarily
due to decreased personnel costs and operating expenses. During 2001, the
Company eliminated approximately 19 R&D positions and in November 2001, closed
its R&D facility relocating its R&D operations to its corporate headquarters.
During 2002, the Company further eliminated 2 R&D positions. The increase in
R&D costs as a percentage of license fees was due to significantly lower
license fee revenue in 2002. Prior to the ASA sale, the Company had a total of
5 R&D employees. These employees were terminated by the Company on November
30, 2002 and were hired by ASA.

Work Force Reduction and Other Charges

During 2002, the Company completed 2 work force reductions. The Company
recorded a restructuring charge of $30,000 related to the severance costs of 5
employees (2 non-senior level services employees and 3 non-senior level R&D
employees) and relocation costs. As of December 31, 2002, these costs were
paid. Additionally, the Company terminated the employment of 2 G&A employees
as a result of the sale to ASA.

During 2001, the Company completed several workforce reductions in order
to attempt to improve its financial condition. These actions resulted in the
elimination of approximately 58 positions throughout the Company. As of
December 31, 2002, approximately $5,000 remains in accrued liabilities for
severance payments in connection with these restructurings.

Income Tax Expense (Benefit)

The Companys federal income tax returns for the years ended December 31,
1996 and 1995 were subject to a routine examination by the Internal Revenue
Service (IRS) that resulted in an assessment of approximately $66,000 of
federal tax. The Company recorded a charge for estimated federal and state
income tax and related interest costs upon receiving the notice of assessment
in 2000. During October 2002, the Company settled this matter with the IRS by
agreeing to pay an additional income tax liability of $63,000 plus applicable
interest through the date of payment. During April 2003, the Company received
a Statement of Adjustment from the IRS regarding the assessment totaling
$183,000. This settlement amount is consistent with the amount provided for
federal taxes and interest in an earlier period. The Company plans to continue
addressing this matter with the IRS in an effort to obtain a reduction in the
balance due; however there can be no assurance that the Company will be
successful.

Liquidity and Capital Resources

At December 31, 2002 and 2001, the Company had available cash and cash
equivalents of $0.2 million and $0.6 million, respectively, and working capital
(deficit) of $(0.1) million and $(0.8) million, respectively.

Net cash used in operating activities for the years ended December 31,
2002 and 2001 was $(1.3) million and $(2.3) million, respectively. The cash
used in 2002 and 2001 was principally the result of the operating losses in
those years.

Net cash provided by investing activities for the years ended December 31,
2002 and 2001 totaled $0.8 million and $0.2 million, respectively. In 2002,
the net cash provided included $0.5 million received as proceeds

14



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##### Table of Contents



in the asset sale to ASA and $0.3 million received as payments on notes receivable. In
2001, the net cash provided included $0.2 million received as payments on notes
receivable.

Net cash provided by financing activities for the years ended December 31,
2002 and 2001 totaled $0.1 million and $0.6 million, respectively. The amounts
generated in 2002 and 2001 relate to a private equity offering of preferred
stock.

To date, inflation has not had a material effect on the Companys
financial results. There can be no assurance, however, that inflation may not
adversely affect the Companys financial results in the future.

Item 7. Financial Statements




The Companys Consolidated Financial Statements and Notes thereto and the
report of Grant Thornton LLP, the Companys independent certified public
accountants, are set forth on the pages indicated in Item 13.

Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure




Not
Applicable.

15



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##### Table of Contents



PART III




Item 9. Directors, Executive Officers, Promoters and Control Persons, Compliance with Section 16(a) of the Exchange Act




Set forth below is certain information as of December 31, 2002, concerning
PowerCervs executive officers and directors.

|                   |  |                                                       |  |     |    |          |  |  |      | 
|------------------ |  | ----------------------------------------------------- |  | --- | -- | -------- |  |  | ---- | 
|Name               |  | Position(s)                                           |  | Age |    | Director
|                   |  |                                                       |  |     |    |         
|Marc J. Fratello   |  | Chairman, Director and former Chief Executive Officer |  |     | 44 |          |  |  | 1992 | 
|John S. McMullen   |  | Vice Chairman and Director                            |  |     | 58 |          |  |  | 2001 | 
|Roy E. Crippen III |  | Director                                              |  |     | 42 |          |  |  | 1992 | 
|O.G. Greene        |  | Director                                              |  |     | 60 |          |  |  | 1996 | 

MARC J. FRATELLO has served as a director of PowerCerv since its inception
in 1992 and as President from PowerCervs inception until March 1998. Mr.
Fratello also served as PowerCervs Chief Operating Officer from December 1995 until December 1997, as Chief Executive Officer from January 1998 to January
2000 and from July 2000 to November 2002 and as Chairman since January 1, 1998.
Before founding PowerCerv in 1992, Mr. Fratello spent 10 years at Unisys
Corporation. The last position Mr. Fratello held with Unisys was Director,
CASE/4GL Products. Mr. Fratello earned a Bachelor of Science degree from
Franklin and Marshall College and a Masters degree in Business Administration
from the University of Pennsylvanias Wharton School.

JOHN S. MCMULLEN has served as Vice Chairman and director of PowerCerv
since September 2001. Mr. McMullen is also the director of publicly-held
Insurance Management Solutions Group, Inc. and both treasurer and director of
Merchants Association of Florida, Inc. Mr. McMullen served as President and
CEO of Florida Bank from April 1992 to March 1999, when he retired.

ROY E. CRIPPEN, III has served as a director of PowerCerv since its
inception in 1992. In April 1999, Mr. Crippen became the President, Chief
Operating Officer and a director of digital fusion, inc. (formerly known as
R.O.I. Consulting, Inc.), a privately-held consulting services company which,
on March 31, 1999, purchased the net assets of PowerCervs general consulting
and general education businesses. On March 2, 2000, IBS Interactive Inc., a
provider of internet and information technology services, acquired all of the
outstanding capital stock of digital fusion pursuant to a merger. Mr. Crippen
has served as Chief Operating Officer of IBS Interactive since the consummation
of the merger and as its President since October 2000. From April 1992 to March
1999, Mr. Crippen served in various executive management roles with PowerCerv
including Executive Vice President (1992  1998), Chief Technology Officer
(1992  1999), Acting President and Chief Operating Officer (1998), and Vice
Chairman (1998  1999). In accordance with Mr. Crippens Termination Agreement
with PowerCerv, Mr. Crippen shall be nominated for election to PowerCervs
board of directors as long as Mr. Crippen holds at least 2.89% of PowerCervs
common stock.

O. G. GREENE has served as a director of PowerCerv since October 1996. Mr.
Greene has served as the CEO of Skylight Financial Inc since August 2001. Mr.
Greene served as the Chief Executive Officer of Speer Communications, a
Nashville, Tennessee provider of information and media services on an
out-source basis, from March 1998 to April 1999. From June 1995 to March 1998,
Mr. Greene served as President and Chief Executive Officer of GridNet
International LLC, an enhanced service provider in the telecommunications
industry located in Atlanta, Georgia. From May 1992 to June 1995, Mr. Greene
was the Executive Vice President and Chief Operating Officer of First Financial
Management Corporation, a firm providing payment systems services to the credit
card, check and health care industries in Atlanta. From February 1991 to May
1992, Mr. Greene was the President and CEO of National Data Corporation, a firm
providing payment systems services to the credit card, check and health care
industries in Atlanta. Mr. Greene also is on the board of directors of digital
fusion in Tampa, Florida and PreSolutions Inc in Atlanta, GA.

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##### Table of Contents



Item 10. Executive Compensation




The following table presents certain information concerning the total
compensation earned by or paid during the three fiscal years ended December 31,
2002 to: (1) the former Chief Executive Officer of PowerCerv (2) two other
former executive officers who would have been among the most highly compensated
executive officer if they had been as such at the end of the last fiscal year
(collectively, the Named Executive Officers).

SUMMARY COMPENSATION TABLE(1)

|                     |                    |      |      |            |  |           |                     |              |           |         |        |              |  |              |        |            |  |           |        |        |  |   |        |       | 
|-------------------- | ------------------ | ---- | ---- | ---------- |  | --------- | ------------------- | ------------ | --------- | ------- | ------ | ------------ |  | ------------ | ------ | ---------- |  | --------- | ------ | ------ |  | - | ------ | ----- | 
|                     |                    |      |      |            |  |           | Annual Compensation |              | Long Term |         |        |              | 
|                     |                    |      |      |            |  |           |                     |              |           |         |        |              | 
|Name and Principal   |                    |      |      |            |  |           |                     |              |           |         |        |              |  | Other Annual |        | Underlying |  | All Other
|Position             |                    | Year |      | Salary (2) |  | Bonus (3) |                     | Compensation |           | Options |        | Compensation
|                     |                    |      |      |            |  |           |                     |              |           |         |        |             
|Marc J. Fratello (4) |                    |      | 2002 |            |  | $         | 109,900             |              |           |         | 0      |              |  | $            | 30,000 |            |  |           | 30,000 |        |  | $ | 75,000 | (5)  
|                     | Chairman and Chief |      |      | 2001       |  |           |                     | 144,667      |           |         |        | 0            |  |              |        | 0          |  |           |        | 11,111 |  |   |        | 0     | 
|                     | Executive Officer  |      |      | 2000       |  |           |                     | 215,625      |           |         | $      | 20,000       |  |              |        | 0          |  |           |        | 5,556  |  |   | $      | 1,140 | 
|Scott Galloway (4)   |                    |      | 2002 |            |  |           | 95,526              |              |           |         | 12,500 |              |  |              | 0      |            |  |           | 25,000 |        |  |   | 0      |      
|                     |                    |      |      | 2001       |  |           |                     | 114,500      |           |         |        | 17,114       |  |              |        | 0          |  |           |        | 6,888  |  |   |        | 0     | 
|Richard L. Poggi (4) |                    |      | 2002 |            |  |           | 101,654             |              |           |         | 0      |              |  |              | 0      |            |  |           | 23,000 |        |  |   | 0      |      
|                     |                    |      |      | 2001       |  |           |                     | 130,617      |           |         |        | 17,114       |  |              |        | 0          |  |           |        | 8,667  |  |   |        | 0     | 



---

(1)      The aggregate amount of other personal benefits, if any, did not exceed
the lesser of $50,000 or 10% of the total amount of annual salary and bonus beyond for
each Named Executive Officer and has therefore been omitted.

(2)      Includes any amount deferred by the Named Executive Officers pursuant to
PowerCervs 401(k) Plan.

(3)      Bonuses are reported in the year earned, even if actually paid in a
subsequent year.

(4)      Mr. Fratellos,
Mr. Galloways and Mr. Poggis employment with the Company
terminated as of November 30, 2002. Effective December 1, 2002, they became
employees of ASA.

(5)      Mr. Fratello received from the Company a sum of $75,000 as a severance
payment. Mr. Fratello received these funds during 2003.

Option Grants During Fiscal Year 2002

The following table sets forth certain information concerning grants of
stock options to each of the Named Executive Officers of PowerCerv during the
fiscal year ended December 31, 2002.

Stock Option Grants in Last Fiscal Year

|                 |  |                     |        |                 |  |           |      |                 |  |   |        |  |  |  |            | 
|---------------- |  | ------------------- | ------ | --------------- |  | --------- | ---- | --------------- |  | - | ------ |  |  |  | ---------- | 
|                 |  | Number of Shares of |        | % of Total      |  |           |      |                 |  |   |        | 
|                 |  | Common Stock        |        | Options Granted |  | Exercise  |      |                 |  |  
|                 |  | Underlying Options  |        | to Employees in |  | Price per |      |                 |  |  
|Name             |  | Granted (1)         |        | Fiscal Year     |  | Shares    |      | Expiration Date
|                 |  |                     |        |                 |  |           |      |                
|Marc J. Fratello |  |                     | 30,000 |                 |  |           | 10.7 |                 |  | $ | 0.6000 |  |  |  | 02/04/2012 | 
|Scott Galloway   |  |                     | 25,000 |                 |  |           | 8.9  |                 |  |   | 0.6000 |  |  |  | 02/04/2012 | 
|Richard L. Poggi |  |                     | 23,000 |                 |  |           | 8.2  |                 |  |   | 0.6000 |  |  |  | 02/04/2012 | 



---

|(1) |  | All options granted to the named executive officers were granted in 2002
pursuant to the Stock Option Plan (as defined herein) and are subject to
the terms of such plan.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

17



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##### Table of Contents



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

The following table sets forth certain information concerning the exercise
of options during the fiscal year ended December 31, 2002, and the aggregate
value of unexercised options at December 31, 2002, for each of the Named
Executive Officers.

|                 |  |              |   |                  |  |                   |   |                   |  |               |        |          |  |  |       |                 |  |    |  |   
|---------------- |  | ------------ | - | ---------------- |  | ----------------- | - | ----------------- |  | ------------- | ------ | -------- |  |  | ----- | --------------- |  | -- |  | --
|                 |  |              |   |                  |  | Number of         |   |                   |  |               |        |          |  |  |       | In-the-Money at
|                 |  |              |   |                  |  | Securities        |   | Unexercised       |  | Unexercised   |        | December
|                 |  | Shares       |   | Underlying Value |  | Options           |   | Options           |  | 31,2001(2)   
|                 |  | Acquired on  |   | Realized         |  | December 31, 2002 |   | December 31, 2002 |  | Exercisable /
|Name             |  | Exercise (1) |   | ($) (2)          |  | Exercisable       |   | Unexercisable     |  | Unexercisable
|                 |  |              |   |                  |  |                   |   |                   |  |              
|Marc J. Fratello |  |              | 0 |                  |  |                   | 0 |                   |  |               | 36,111 |          |  |  | 0     |                 |  | $0 |  | $0
|Scott Galloway   |  |              | 0 |                  |  |                   | 0 |                   |  |               | 20,984 |          |  |  | 1,965 |                 |  | 0  |  | 0 
|Richard L. Poggi |  |              | 0 |                  |  |                   | 0 |                   |  |               | 18,721 |          |  |  | 2,223 |                 |  | 0  |  | 0 



---

|(1) |  | The closing price for PowerCervs common stock as reported on the OTC
Market on December 31, 2002 was $0.03.                                                                                                                             
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Value realized is calculated based on the difference between the option
exercise price and the closing market price of PowerCervs common stock on
the date of exercise multiplied by the number of shares to which the
exercise relates.

Employment Agreements

Effective April 10, 1997, Marc J. Fratello entered into an employment
agreement with PowerCerv. This agreement was for one year plus renewable
one-year extensions subject to either PowerCervs or Mr. Fratellos right of
cancellation. This agreement also provided certain piggyback registration
rights to Mr. Fratello. In addition, PowerCerv agreed to pay Mr. Fratello 24
months of severance pay at $12,500 per month for a total of $300,000, if his
employment is terminated (1) by mutual agreement of Mr. Fratello and PowerCerv,
(2) by either party after the agreements twelve month term has elapsed, (3) by
PowerCerv following a disability determination of Mr. Fratello, or following
PowerCervs early termination of the agreement on certain notice or (4) by Mr.
Fratello if PowerCerv breached the agreement, upon certain changes of control
of PowerCerv, or following Mr. Fratellos formal notice of termination after
April 1998. This agreement also contained a one-year non-compete provision
following its expiration or earlier termination. In January 1999, the
Compensation Committee established Mr. Fratellos base salary at $250,000, his
target annual bonus up to $150,000 and granted him options for 125,000 shares
of Common Stock under the Stock Option Plan, which were vested on December 31,
2001. In return for agreeing to stay on with ASA for one year and for
voluntarily relinquishing his employment agreement with PowerCerv, Mr. Fratello
received from the Company a sum of $75,000 as a severance payment. Mr.
Fratello received these funds during 2003. Should there be $400,000 or more
available for distribution to the Companys stockholders, Mr. Fratello will
receive another $25,000.

Effective April 7, 1998, Ira Herman entered into an employment agreement
with PowerCerv. Mr. Hermans employment agreement automatically renewed on
April 30, 1999 for a term expiring on December 31, 2000. As of December 31,
2000, Mr. Hermans employment agreement automatically renewed for successive
one-year terms unless terminated by either party. The agreement provided for
an annual base salary of $125,000, subject to review on an annual basis by
PowerCervs Compensation Committee, and an annual target bonus of up to
$125,000 based on PowerCerv achieving certain revenue and operating income
targets, which were set by PowerCervs board and certain other subjective
criteria. Mr. Hermans employment agreement also provided for the grant of
non-qualified options to purchase up to 215,000 shares of PowerCervs common
stock on the effective date of his employment agreement, subject to vesting
schedules described in the agreement. In addition, PowerCerv agreed to make a
payment to Mr. Herman equal to his annual base salary (payable in twelve
monthly installments) and to vest certain stock options as follows: (a) if
PowerCerv is merged, consolidated, acquired, sold, liquidated or disposes of
substantially all of its business or assets and Mr. Herman is not offered at
least a comparable position with similar or better pay, (b) if
PowerCerv
terminated Mr. Herman without cause or (c) if Mr. Herman terminated the
agreement because PowerCerv has materially reduced his title or
responsibilities, provided that he is not in breach and did not subsequently
breach certain provisions of his employment agreement,

18



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##### Table of Contents



including a non-compete
agreement, which survived for one year following his termination. Mr. Hermans
employment agreement expired on its own terms on December 31, 2001.

Compensation of Directors

The Board voted to suspend payments to directors in October 2001 until further
notice. No director of PowerCerv received compensation related to board
meetings in 2002.During 2002, John S. McMullen received $5,000 in consulting fees and $6,750 in
salary compensation for his role as Vice Chairman. McMullen had a consulting
contract with PowerCerv whereby he was entitled to an amount of $4,000 per
month ($3,000 to Mr. McMullen and $1,000 to a consulting company owned by him)
for a period of not less than 24 months. Mr. McMullen still had nearly 1.5
years left on that agreement but Mr. McMullen agreed to take a significant
discount based upon his agreement to be paid $60,000, which payment was made in
January 2003. McMullen has also agreed to stay on the Board of Directors and
assist with the ongoing business of PowerCerv after the transaction has closed.

Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters




The following table sets forth certain information regarding the beneficial
ownership of PowerCervs capital stock as of December 31, 2002 by each person
known by PowerCerv who beneficially owns more than 5% of the outstanding shares
of common stock, each director and executive officer of PowerCerv, and all
directors and executive officers of PowerCerv as a group.

|                                                    |  |                      |           |                    |  |  |       |  
|--------------------------------------------------- |  | -------------------- | --------- | ------------------ |  |  | ----- | -
|Total Voting                                        |  | Amount and Nature of |           | Percent of        
|Name and Address (1)                                |  | Beneficial Ownership |           | Total Voting Power
|                                                    |  |                      |           |                   
|Directors and Executive Officers:                   |  |                      |           |                    |  |  |       |  
|Marc Fratello (2)                                   |  |                      | 467,573   |                    |  |  | 19.72 | %
|Scott Galloway (3)                                  |  |                      | 22,393    |                    |  |  | *     |  
|Richard Poggi (4)                                   |  |                      | 20,388    |                    |  |  | *     |  
|Roy Crippen III (5)                                 |  |                      | 195,972   |                    |  |  | 8.32  | %
|John S. McMullen (6)                                |  |                      | 522,222   |                    |  |  | 22.37 | %
|O. G. Greene (7)                                    |  |                      | 6,334     |                    |  |  | *     |  
|All directors and executive officers as a group (8) |  |                      | 1,234,882 |                    |  |  | 50.57 | %



---

*      Less than 1%

(1)      The business address for Messrs. Fratello, Galloway, Poggi, Crippen,
McMullen and Greene is c/o PowerCerv, 400 North Ashley Drive, Suite 2675,
Tampa, Florida 33602.

(2)      Includes 331,462 shares held by M.J.F. Limited Partnership, a Nevada
limited partnership in which Mr. Fratello is the limited partner and a Nevada
corporation, of which he is the sole shareholder and director, is the general
partner, 36,111 shares of PowerCerv common stock issuable upon the exercise of
stock options, and 100,000 shares of PowerCerv common stock issuable upon the
conversion of preferred stock.

(3)      Includes 22,393 shares of PowerCerv common stock issuable upon the exercise
of stock options.

(4)      Includes 20,388 shares of PowerCerv common stock issuable upon the exercise
of stock options.

19



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##### Table of Contents



|(5)          Includes 148,750 shares held by R.C.F. Company Limited Partnership, a
Nevada limited partnership in which Mr. Crippen is the limited partner and a
Nevada corporation, of which he is the sole shareholder and director, is the
general partner, and 22,222 of PowerCerv common stock issuable upon the
exercise of stock options, and 25,000 shares of PowerCerv common stock issuable
upon the conversion of preferred stock.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(6)                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(7)                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(8)                                                                                                                                                                                                                                                                                                                                                                                                                                         

The common stock votes together with the preferred stock as a single class on
all matters, and as required by law and with respect to the election of
directors, where holders of preferred stock are entitled to elect one director
voting as a class and the holders of common stock are entitled to elect the
remaining directors voting as a class. The common stock and preferred stock
both entitle the holder to one vote per share.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires PowerCervs
directors, executive officers and holders of more than 10% of PowerCervs
common stock to file reports of beneficial ownership and changes in ownership
of PowerCervs common stock with the SEC. These persons are required to
furnish PowerCerv with copies of all Section 16(a) forms they file.

Based solely on its review of the copies of such forms, PowerCerv believes
that, with respect to fiscal 2002, all filing requirements applicable to its
directors, executive officers and greater than 10% of beneficial owners were
complied with.

Item 12. Certain Relationships and Related Transactions




On December 1, 2002, Marc Fratello became the President of the ASA
International subsidiary that acquired the assets of the Company. Mr. Fratello
will receive an annual salary of $150,000, certain stock options in ASA
International and a minority equity interest in the ASA International
subsidiary. In addition, as an incentive to stay on with ASA International
(which ASA International made as a requirement for the proposed transaction),
PowerCervs Board of Directors authorized that Mr. Fratello would receive
$75,000 from PowerCerv as a severance payment. Additionally, Mr. Fratello will
receive an additional $25,000 should the amount of cash for distribution to
PowerCerv shareholders exceed $400,000. Mr. Fratello agreed to voluntarily
relinquish his employment agreement, which would have paid him $300,000 upon a
trigger event such as a change of control of PowerCerv and/or by his
resignation. Mr. Fratello will stay on the PowerCerv Board of Directors and
assist with the ongoing business of PowerCerv after the transaction has closed.

Mr. McMullen had a consulting agreement with the Company whereby he was
entitled to an amount of $4,000 per month ($3,000 to McMullen and $1,000 to a
consulting company owned by him) for a period of not less than 24 months.
McMullen still had nearly 1.5 years left on that agreement but Mr. McMullen
agreed to take a significant discount based upon his agreement to be paid
$60,000, which payment was made in January 2003. Mr. McMullen has also agreed
to stay on the Board of Directors and help with the ongoing business of
PowerCerv after the transaction closed.

On March 31, 1999, pursuant to an asset purchase agreement dated March 30,
1999, PowerCerv sold the net assets of its general consulting group and general
education group to Digital Fusion, Inc. (formerly known as ROI Consulting,
Inc.). Digital Fusion paid part of the purchase price under the asset purchase
agreement in the form of a promissory note in the principal amount of $827,500
payable in equal, quarterly installments beginning December 31, 2000 and
bearing interest at a rate of 4.56% per year. On March 2, 2000, IBS
Interactive, Inc. acquired all of the outstanding capital stock of Digital
Fusion pursuant to a merger. During 2002 and 2001, payments to the Company on
the note equaled approximately $262,482 and $250,120, respectively. Mr.
Crippen, who served as director, Vice Chairman and Chief Technology Officer of
PowerCerv from 1992 until his resignation as Vice Chairman and Chief Technology
Officer of PowerCerv on March 31, 1999, serves as President and Chief Operating
Officer of IBS Interactive. Mr. Crippen remains a director of the Company.

20



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##### Table of Contents



On September 30, 1999, PowerCerv entered into an amendment to an OEM
Agreement with Digital Fusion, dated March 31, 1999, whereby Digital Fusion,
Inc. is obligated to pay PowerCerv a nonrefundable license fee for the use of
certain of PowerCervs software. The amount of the license fee pursuant to the
amendment is $350,000, which is to be paid as follows: $50, 000 on or before
November 30, 1999; $10,000 on or before March 31, 2000; $100,000 on or
before June 30, 2000 and $100,000 on or before September 30, 2000. On
September 29, 2000, the Company entered into a second amendment with Digital
Fusion, Inc. to the OEM Agreement described above whereby Digital Fusion, Inc.
licensed additional software. Pursuant to that second amendment, Digital
Fusion, Inc. shall pay PowerCerv a nonrefundable license fee of $350,000
payable as follows: $140,000 at the time of execution of the amendment,
$105,000 by December 31, 2000, and $105,000 by March 31, 2001. The second
amendment terminated any further royalty due PowerCerv for the sale of software
licensed to Digital Fusion, Inc. pursuant to the amendment dated September 30,
1999.

Item 13. Exhibits and Reports on Form 8-K




(a)  The following documents are filed as part of this Report:

1. Financial Statements

|                                                                                                                              |  |      |    | 
|----------------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                                              |  | PAGE
|                                                                                                                              |  |     
|Report of Independent Certified Public Accountants
- Grant Thornton LLP                                                       |  |      | 22 | 
|Consolidated Balance Sheets as of December 31, 2002 and 2001                                                                  |  |      | 23 | 
|Consolidated Statements of Operations for each of the years in the
two-year period ended December 31, 2002                    |  |      | 24 | 
|Consolidated Statement of Shareholders Equity (Deficit) for each of
the years in the two-year period ended December 31, 2002 |  |      | 25 | 
|Consolidated Statements of Cash Flows for each of the years in the
two-year period ended December 31, 2002                    |  |      | 26 | 
|Notes to Consolidated Financial Statements                                                                                    |  |      | 27 | 

2.
Exhibits  See Index to Exhibits included elsewhere in this document.

(b) Reports on Form 8-K

On December 16, 2002, the Company filed a report on Form 8-K to report the
sale of substantially all of the Companys operating assets to ASA.

Item 14. Controls and Procedures




An evaluation was performed under the supervision and with the
participation of management, of the effectiveness of the design and operation
of disclosure controls and procedures within 90 days before the filing date of
this annual report. Based on that evaluation, management concluded that
PowerCervs disclosure controls and procedures were effective.

21



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##### Table of Contents



REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors and Stockholders
PowerCerv Corporation

We have audited the accompanying consolidated balance sheets of PowerCerv
Corporation as of December 31, 2002 and 2001, and the related consolidated
statements of operations, shareholders equity (deficit), and cash flows for
each of the years then ended. These financial statements are the responsibility
of the Companys management. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
PowerCerv Corporation at December 31, 2002 and 2001, and the consolidated
results of its operations and its cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States
of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3, the Company
sold substantially all of its assets on December 1, 2002 and incurred a net
loss during the year ended December 31, 2002, and, as of that date, the
Companys current liabilities exceeded its current assets. These factors,
among others, as discussed in Note 3 to the financial statements, raise
substantial doubt about the Companys ability to continue as a going concern.
Managements plans in regard to these matters are also described in Note 3.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.

/s/ Grant Thornton LLP


Tampa, Florida
January 29, 2003,
Except for Note 8 as
to which the date is
April 11, 2003

22



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##### Table of Contents



POWERCERV CORPORATION

Consolidated Balance Sheets

December 31, 2002 and 2001

|                                                                      |                                                                              |                                                                           |                                                      |                      |       |         |         |             |       |           |           | 
|--------------------------------------------------------------------- | ---------------------------------------------------------------------------- | ------------------------------------------------------------------------- | ---------------------------------------------------- | -------------------- | ----- | ------- | ------- | ----------- | ----- | --------- | --------- | 
|                                                                      |                                                                              |                                                                           |                                                      |                      |       | 2002    |         | 2001       
|                                                                      |                                                                              |                                                                           |                                                      |                      |       |         |         |            
|                                                                      |                                                                              |                                                                           |                                                      | Assets               |       |         |         |             |       |           |           | 
|Current assets:                                                       |                                                                              |                                                                           |                                                      |                      |       |         |         |            
|Cash and cash equivalents                                             |                                                                              | $                                                                         | 245,072                                              |                      |       | $       | 635,007 |            
|Accounts receivable, net of allowance of $1,880,000 in 2001           |                                                                              |                                                                           |                                                     |                      |       |         | 934,272 |            
|                                                                      | Inventories                                                                  |                                                                           |                                                      |                     |       |         |         | 47,965      |      
|Other current assets                                                  |                                                                              |                                                                           | 276,123                                              |                      |       |         | 451,140 |            
|                                                                      |                                                                              |                                                                           |                                                      |                      |       |         |         |            
|                                                                      |                                                                              |                                                                           |                                                      | Total current assets |       |         | 521,195 |             |       |           | 2,068,384 | 
|Property and equipment, net                                           |                                                                              |                                                                           |                                                     |                      |       |         | 75,772  |            
|Software and intangible assets, net                                   |                                                                              |                                                                           |                                                     |                      |       |         | 374,521 |            
|Notes receivable, net of allowance of $0 in 2002 and $294,000 in 2001 |                                                                              |                                                                           | 135,931                                              |                      |       |         | 383,151 |            
|Deposits and other                                                    |                                                                              |                                                                           |                                                     |                      |       |         | 17,843  |            
|                                                                      |                                                                              |                                                                           |                                                      |                      |       |         |         |            
|                                                                      |                                                                              |                                                                           |                                                      | Total assets         |       | $       | 657,126 |             |       | $         | 2,919,671 | 
|                                                                      |                                                                              |                                                                           |                                                      |                      |       |         |         |            
|                                                                      |                                                                              |                                                                           | Liabilities and Shareholders Equity (deficit)       |                      |       |         |         |             |       |           |          
|Current liabilities:                                                  |                                                                              |                                                                           |                                                      |                      |       |         |         |            
|                                                                      | Accounts payable                                                             |                                                                           | $                                                    | 194,140              |       |         | $       | 580,566     |      
|                                                                      | Accrued expenses                                                             |                                                                           |                                                      | 472,420              |       |         |         | 1,371,094   |      
|                                                                      | Deferred revenue                                                             |                                                                           |                                                      |                     |       |         |         | 845,085     |      
|                                                                      |                                                                              |                                                                           |                                                      |                      |       |         |         |            
|                                                                      |                                                                              |                                                                           | Total current liabilities                            |                      |       | 666,560 |         |             |       | 2,796,745 |          
|Commitments and contingencies                                         |                                                                              |                                                                           |                                                     |                      |       |         |        |            
|Shareholders equity (deficit):                                       |                                                                              |                                                                           |                                                      |                      |       |         |         |            
|                                                                      | Preferred stock, $.001 par value, 5,000,000 shares authorized; 1,022,000     |                                                                           |                                                      |                      |       |         |         |             |      
|                                                                      |                                                                              | shares issued and outstanding at December 31, 2002 and 2001, respectively |                                                      |                      | 1,022 |         |         |             | 1,022 |          
|                                                                      | Common stock, $.001 par value, 5,000,000 shares authorized; 1,313,000 shares |                                                                           |                                                      |                      |       |         |         |             |      
|                                                                      |                                                                              | issued and outstanding at December 31, 2002 and 2001, respectively        |                                                      |                      | 1,313 |         |         |             | 1,313 |          
|                                                                      | Additional paid-in capital                                                   |                                                                           |                                                      | 51,704,944           |       |         |         | 51,704,944  |      
|                                                                      | Stock subscription receivable                                                |                                                                           |                                                      | (100,000             | )     |         |         | (100,000    | )    
|                                                                      | Accumulated deficit                                                          |                                                                           |                                                      | (51,616,713          | )     |         |         | (51,484,353 | )    
|                                                                      |                                                                              |                                                                           |                                                      |                      |       |         |         |            
|                                                                      |                                                                              |                                                                           | Total shareholders equity (deficit)                 |                      |       | (9,434  | )       |             |       | 122,926   |          
|                                                                      |                                                                              |                                                                           |                                                      |                      |       |         |         |            
|                                                                      |                                                                              |                                                                           | Total liabilities and shareholders equity (deficit) |                      | $     | 657,126 |         |             | $     | 2,919,671 |          
|                                                                      |                                                                              |                                                                           |                                                      |                      |       |         |         |            



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

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##### Table of Contents



POWERCERV CORPORATION
Consolidated Statements of Operations

Years ended December 31, 2002 and 2001

|                                             |                          |                                |                          |         |           |           |        |      |           |            |   | 
|-------------------------------------------- | ------------------------ | ------------------------------ | ------------------------ | ------- | --------- | --------- | ------ | ---- | --------- | ---------- | - | 
|                                             |                          |                                |                          |         |           | 2002      |        | 2001
|                                             |                          |                                |                          |         |           |           |        |     
|                                             | Revenue:                 |                                |                          |         |           |           |        |      |          
|                                             |                          | License fees                   |                          | $       | 375,807   |           |        | $    | 1,231,468 |           
|                                             |                          | Service fees                   |                          |         | 1,992,209 |           |        |      | 4,875,294 |           
|                                             |                          |                                |                          |         |           |           |        |     
|                                             |                          |                                | Total revenue            |         |           | 2,368,016 |        |      |           | 6,106,762  |  
|                                             |                          |                                |                          |         |           |           |        |     
|                                             | Costs and expenses:      |                                |                          |         |           |           |        |      |          
|                                             |                          | Cost of licenses               |                          |         | 204,318   |           |        |      | 266,454   |           
|                                             |                          | Cost of services               |                          |         | 813,239   |           |        |      | 3,465,959 |           
|                                             |                          | General and administrative     |                          |         | 1,237,019 |           |        |      | 2,580,296 |           
|                                             |                          | Sales and marketing            |                          |         | 447,667   |           |        |      | 1,711,422 |           
|                                             |                          | Research and development       |                          |         | 672,946   |           |        |      | 1,962,968 |           
|                                             |                          | Work force reduction and other |                          |         | (13,545   | )         |        |      | 326,195   |           
|                                             |                          |                                |                          |         |           |           |        |     
|                                             |                          |                                | Total costs and expenses |         |           | 3,361,644 |        |      |           | 10,313,294 |  
|                                             |                          |                                |                          |         |           |           |        |     
|                                             |                          |                                | Operating loss           |         |           | (993,628  | )      |      |           | (4,206,532 | )
|                                             |                          |                                |                          |         |           |           |        |     
|                                             | Other income (expense):  |                                |                          |         |           |           |        |      |          
|                                             |                          | Interest expense               |                          |         | (8,539    | )         |        |      |          |           
|                                             |                          | Interest income                |                          |         | 38,022    |           |        |      | 76,405    |           
|                                             |                          | Miscellaneous income (expense) |                          |         | 39,040    |           |        |      |          |           
|                                             |                          |                                |                          |         |           |           |        |     
|                                             |                          | Total other income             |                          |         | 68,523    |           |        |      | 76,405    |           
|                                             |                          |                                |                          |         |           |           |        |     
|                                             | Gain on sale of business |                                |                          | 792,745 |           |           |        |     |          
|                                             |                          |                                |                          |         |           |           |        |     
|                                             |                          |                                |                          |         |           |           |       |     
|                                             |                          |                                | Loss before income taxes |         |           | (132,360  | )      |      |           | (4,130,127 | )
|Income tax expense                           |                          |                                |                         |         |           |           | 10,341 |     
|                                             |                          |                                |                          |         |           |           |        |     
|                                             |                          |                                | Net loss                 |         | $         | (132,360  | )      |      | $         | (4,140,468 | )
|                                             |                          |                                |                          |         |           |           |        |     
|Net loss per share:                          |                          |                                |                          |         |           |           |        |     
|                                             |                          |                                | Basic                    |         | $         | (.10      | )      |      | $         | (2.80      | )
|                                             |                          |                                |                          |         |           |           |        |      |           |           
|                                             |                          |                                | Diluted                  |         | $         | (.10      | )      |      | $         | (2.80      | )
|                                             |                          |                                |                          |         |           |           |        |      |           |           
|Shares used in computing net loss per share: |                          |                                |                          |         |           |           |        |     
|                                             |                          |                                | Basic                    |         |           | 1,313,000 |        |      |           | 1,481,000  |  
|                                             |                          |                                |                          |         |           |           |        |     
|                                             |                          |                                | Diluted                  |         |           | 1,313,000 |        |      |           | 1,481,000  |  
|                                             |                          |                                |                          |         |           |           |        |     

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

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POWERCERV CORPORATION

Consolidated Statement of Shareholders Equity (Deficit)

Years ended December 31, 2002 and 2001

|                            |  |              |           |                 |  |            |       |       |  |         |           |         |  |            |       |             |  |              |            |               |  |   |             |   |  |   |          |   |  |   |            |  
|--------------------------- |  | ------------ | --------- | --------------- |  | ---------- | ----- | ----- |  | ------- | --------- | ------- |  | ---------- | ----- | ----------- |  | ------------ | ---------- | ------------- |  | - | ----------- | - |  | - | -------- | - |  | - | ---------- | -
|                            |  | Common Stock |           | Preferred Stock |  |            |       |       |  |         |           |         |  |           
|                            |  |              |           |                 |  | Additional |       |       |  |         |           | Stock   |  | Total     
|                            |  |              |           |                 |  | Par        |       |       |  |         |           | Par     |  | Paid-In    |       | Accumulated |  | Subscription |            | Shareholders'
|                            |  | Shares       |           | value           |  | Shares     |       | Value |  | Capital |           | Deficit |  | Receivable |       | Equity     
|                            |  |              |           |                 |  |            |       |       |  |         |           |         |  |            |       |            
|Balance,
December 31,
2000  |  |              | 1,535,000 |                 |  | $          | 1,535 |       |  |         |          |         |  | $          |      |             |  | $            | 50,958,957 |               |  | $ | (47,343,885 | ) |  | $ |         |   |  | $ | 3,616,607  |  
|Issuance of
preferred stock |  |              | (222,222  | )               |  |            | (222  | )     |  |         | 1,022,000 |         |  |            | 1,022 |             |  |              | 745,987    |               |  |   |            |   |  |   | (100,000 | ) |  |   | 646,787    |  
|Net loss                    |  |              |          |                 |  |            |      |       |  |         |          |         |  |            |      |             |  |              |           |               |  |   | (4,140,468  | ) |  |   |         |   |  |   | (4,140,468 | )
|                            |  |              |           |                 |  |            |       |       |  |         |           |         |  |            |       |             |  |              |            |               |  |   |             |   |  |   |          |   |  |   |            |  
|Balance,
December 31,
2001  |  |              | 1,312,778 |                 |  |            | 1,313 |       |  |         | 1,022,222 |         |  |            | 1,022 |             |  |              | 51,704,944 |               |  |   | (51,484,353 | ) |  |   | (100,000 | ) |  |   | 122,926    |  
|Net loss                    |  |              |          |                 |  |            |      |       |  |         |          |         |  |            |      |             |  |              |           |               |  |   | (132,360    | ) |  |   |         |   |  |   | (132,360   | )
|                            |  |              |           |                 |  |            |       |       |  |         |           |         |  |            |       |             |  |              |            |               |  |   |             |   |  |   |          |   |  |   |            |  
|Balance,
December 31,
2002  |  |              | 1,312,778 |                 |  | $          | 1,313 |       |  |         | 1,022,222 |         |  | $          | 1,022 |             |  | $            | 51,704,944 |               |  | $ | (51,616,713 | ) |  | $ | (100,000 | ) |  | $ | (9,434     | )
|                            |  |              |           |                 |  |            |       |       |  |         |           |         |  |            |       |             |  |              |            |               |  |   |             |   |  |   |          |   |  |   |            |  

The accompanying notes are an integral part of this consolidated financial
statement.

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POWERCERV CORPORATION

Consolidated Statements of Cash Flows

Years ended December 31, 2002 and 2001

|                                             |                                                                      |                                                                             |                                      |                                           |   |          |            |            |   |          |            |  
|-------------------------------------------- | -------------------------------------------------------------------- | --------------------------------------------------------------------------- | ------------------------------------ | ----------------------------------------- | - | -------- | ---------- | ---------- | - | -------- | ---------- | -
|                                             |                                                                      |                                                                             |                                      |                                           |   | 2002     |            | 2001      
|                                             |                                                                      |                                                                             |                                      |                                           |   |          |            |           
|Cash flows from operating activities:        |                                                                      |                                                                             |                                      |                                           |   |          |            |           
|                                             | Net loss                                                             |                                                                             | $                                    | (132,360                                  | ) |          | $          | (4,140,468 | )
|                                             |                                                                      | Adjustments to reconcile net loss to net cash used in operating activities: |                                      |                                           |   |          |            |            |   |         
|                                             |                                                                      |                                                                             | Depreciation and amortization        |                                           |   | 196,284  |            |            |   | 642,331  |           
|                                             |                                                                      |                                                                             | Gain on sale of fixed assets         |                                           |   | (17,453  | )          |            |   |         |           
|                                             |                                                                      |                                                                             | Gain on sale of business             |                                           |   | (792,745 | )          |            |   |         |           
|                                             |                                                                      |                                                                             | Deferred revenue                     |                                           |   | (30,335  | )          |            |   | (644,850 | )         
|                                             |                                                                      |                                                                             | Provision for uncollectible accounts |                                           |   | 417,121  |            |            |   | 213,500  |           
|                                             |                                                                      |                                                                             | Changes in assets and liabilities:   |                                           |   |          |            |            |   |          |           
|                                             |                                                                      |                                                                             |                                      | Accounts receivable                       |   |          | (143,758   | )          |   |          | 1,389,982  |  
|                                             |                                                                      |                                                                             |                                      | Inventories                               |   |          |           |            |   |          | 350        |  
|                                             |                                                                      |                                                                             |                                      | Deposits and other                        |   |          | 37,421     |            |   |          | 530,517    |  
|                                             |                                                                      |                                                                             |                                      | Accounts payable and accrued expenses     |   |          | (994,507   | )          |   |          | (275,641   | )
|                                             |                                                                      |                                                                             |                                      |                                           |   |          |            |           
|                                             |                                                                      |                                                                             |                                      | Net cash used in operating activities     |   |          | (1,260,332 | )          |   |          | (2,284,279 | )
|                                             |                                                                      |                                                                             |                                      |                                           |   |          |            |           
|Cash flows from investing activities:        |                                                                      |                                                                             |                                      |                                           |   |          |            |           
|                                             | Purchases of property and equipment, net                             |                                                                             |                                      |                                          |   |          |            | (16,658    | )
|                                             | Proceeds from sale of property and equipment                         |                                                                             |                                      | 17,453                                    |   |          |            |           |  
|                                             | Proceeds from ASA asset sale                                         |                                                                             |                                      | 500,000                                   |   |          |            |           |  
|                                             | Payments received on notes receivable                                |                                                                             |                                      | 267,944                                   |   |          |            | 238,521    |  
|                                             |                                                                      |                                                                             |                                      |                                           |   |          |            |           
|                                             |                                                                      |                                                                             |                                      | Net cash provided by investing activities |   |          | 785,397    |            |   |          | 221,863    |  
|                                             |                                                                      |                                                                             |                                      |                                           |   |          |            |           
|Cash flows from financing activities:        |                                                                      |                                                                             |                                      |                                           |   |          |            |           
|                                             | Net proceeds from issuance of preferred stock, net of offering costs |                                                                             |                                      | 85,000                                    |   |          |            | 561,787    |  
|                                             |                                                                      |                                                                             |                                      |                                           |   |          |            |           
|                                             |                                                                      |                                                                             |                                      | Net cash provided by financing activities |   |          | 85,000     |            |   |          | 561,787    |  
|                                             |                                                                      |                                                                             |                                      |                                           |   |          |            |           
|Net decrease in cash and cash equivalents    |                                                                      |                                                                             | (389,935                             | )                                         |   |          | (1,500,629 | )         
|Cash and cash equivalents, beginning of year |                                                                      |                                                                             | 635,007                              |                                           |   |          | 2,135,636  |           
|                                             |                                                                      |                                                                             |                                      |                                           |   |          |            |           
|Cash and cash equivalents, end of year       |                                                                      | $                                                                           | 245,072                              |                                           |   | $        | 635,007    |           
|                                             |                                                                      |                                                                             |                                      |                                           |   |          |            |           

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

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POWERCERV CORPORATION

Notes to Consolidated Financial Statements

December 31, 2002 and 2001



|(1) |  | Organization and Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | On December 1, 2002, the Company completed the sale of substantially all of
its operating assets to PCV Acquisition, Inc., a subsidiary of ASA
International, Ltd (collectively referred to as ASA), a holding company
of vertical enterprise software solutions based in Framingham,
Massachusetts. This transaction was approved by PowerCervs shareholders
on November 26, 2002. In the future, the Company may merge with another
operating company. Until such a merger transaction is effected, there will
be no significant expected operations of PowerCerv.                                                                                                                 
|   
|    |  | Prior to December 1, 2002 the Company focused its resources, including
product development, marketing and sales efforts, on the needs and
requirements of small and medium size discrete manufacturing companies
with annual revenues between $5 million and $250 million in this market.
In addition, PowerCerv provided professional and business consulting
services relating to its software applications. The Company marketed
its products and services throughout the United States and also marketed
its software products outside the United States through distributors.
PowerCerv Corporation and PowerCerv Technologies Corporation are herein
referred to as the Company.
|   
|(2) |  | Summary of Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              



| | (a) |  | Principles of Consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | The consolidated financial statements include accounts of PowerCerv
Corporation and its subsidiary. All significant intercompany balances
and transactions have been eliminated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | (b) |  | Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |     |  | The preparation of consolidated financial statements in conformity
with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates. To the extent managements
estimates prove to be incorrect, financial results for future
periods may be adversely affected. Significant estimates
contained in the accompanying consolidated financial statements
include managements estimate of the allowance for uncollectible
accounts receivable, the valuation allowance relating to deferred
tax assets, and the recoverability of long term assets, including
property and equipment and intangible assets.
|
| | (c) |  | Cash and Cash Equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |     |  | The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | (d) |  | Inventories                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

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| |     |  | Inventories are valued at the lower of cost (first-in, first-out
method) or market, and consist of third party products and
educational materials. There were no remaining inventories at
December 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (e) |  | Property and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |     |  | Property and equipment are recorded at cost. Depreciation and
amortization are calculated on a straight-line basis over the
estimated useful lives of the respective assets. Upon retirement
or sale, cost and accumulated depreciation or amortization on such
assets are removed from the accounts and any gains or losses are
reflected in the consolidated statement of operations.
Maintenance and repairs are charged to expense as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |     |  | The Company periodically reviews the carrying value of its
property and equipment costs and the remaining life to determine
if impairment has occurred. This review and assessment is done by
comparing the net book value of the property and equipment assets
to the undiscounted net cash flows of the related assets. An
impairment loss is recognized to the extent that the sum of
discounted estimated future cash flows using an estimated
borrowing rate and asset life that is expected to result from the
use of the asset, is less than the carrying value. During 2002,
the Company wrote off $53,772 in leasehold improvements in
connection with the sale to ASA. This amount was recorded as a
reduction of the gain recognized by the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | (f) |  | Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |     |  | The Company recognizes revenue in accordance with the American
Institute of Certified Public Accountants (AICPA) Statement of
Position 97-2, Software Revenue Recognition (SOP 97-2), as
amended by Statement of Position 98-4 (SOP 98-4), Deferral of
the Effective Date of a Provision of SOP 97-2. Revenue is
recognized from licenses of the Companys software products when
the contract has been executed, the product(s) has been shipped,
collectibility is probable and the software license fees are fixed
or determinable. In the event that the contract provides for
multiple elements (e.g., software products, post-contract customer
support, consulting services), the total fee is allocated to these
elements based on vendor-specific objective evidence of fair
value. If any portion of the license fees is subject to
forfeiture, refund or other contractual contingencies, the Company
will postpone revenue recognition until these contingencies have
been removed. The Company generally accounts for consulting and
education services separate from software license fees for those
multi-element arrangements where services are a separate element
and are not essential to the customers functionality requirements
and there is vendor-specific objective evidence of fair value
for these services. If any portion of the license fees is subject
to forfeiture, refund or other contractual contingencies, the
Company will postpone revenue recognition until these
contingencies have been removed. Historically, product returns
and allowances have been immaterial. Consulting and education
revenue, including related billable expenses of $64,843 and
$451,864 in 2002 and 2001, respectively, is recognized as the
services are performed. Revenue from support and maintenance
activities is recognized ratably over the term of the maintenance
period and the unrecognized portion is recorded as deferred
revenue.
|
| | (g) |  | Software Development
Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |     |  | Software development costs are accounted for in accordance with
Statement of Financial Accounting Standards No. 86,Accounting for
the Costs of Computer Software to be Sold, Leased, or Otherwise
Marketed. Costs associated with the planning and design phase of
software development, including coding and testing activities
necessary to establish technological feasibility, are classified
as research and development and expensed as incurred. Once                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

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| |  |  | technological feasibility has been determined, additional costs
incurred in development, including coding, testing, and product
quality assurance, are capitalized when material.                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | During 1999, the Company entered into an agreement with a related
party for the conversion of certain existing software from one
architecture to another. During 2000, the Company capitalized
$550,000 in fees paid to the related party. The Company began
amortizing these costs in 2001 over a three-year period. The Company considers this product as an
add-on to its main product line and regularly offers this product
to potential new customers as part of its sales approach. This
software was included in the sale to ASA.                                                                                               
|
|
| |  |  | The Company periodically reviews the carrying value of its
software development costs and the remaining life to determine if
impairment has occurred. This review and assessment is done by
comparing the net book value of the intangible assets to the
undiscounted net cash flows of the related assets. An impairment
loss is recognized to the extent that the sum of discounted
estimated future cash flows using an estimated borrowing rate and
asset life that is expected to result from the use of the asset,
is less than the carrying value. All of the Companys propriety
technology was sold to ASA on December 1, 2002.
|
| |  |  | Acquired software technology and its amortization are summarized
as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

|     |  |      |           |         |  |              |         |             |  |  |           | 
|---- |  | ---- | --------- | ------- |  | ------------ | ------- | ----------- |  |  | --------- | 
|     |  |      |           |         |  | Amortization |         | Accumulated
|Year |  | Cost |           | expense |  | amortization
|     |  |      |           |         |  |             
|2001 |  | $    | 3,457,000 |         |  |              | 183,000 |             |  |  | 3,090,000 | 



| |     |  | Amortization expense in 2002 amounted to $168,000 prior to the
December 1, 2002 sale referred to above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (h) |  | Goodwill and Other
Intangible Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |     |  | The Company periodically reviews the value of goodwill and other
intangible assets and their remaining life to determine if
impairment has occurred. This review and assessment compares the
net book value of the intangible assets to the undiscounted future
net cash flows of the related assets. In the event that
undiscounted future net cash flows are less than the net book
value of the intangible assets, the Company recognizes an
impairment loss for the difference between discounted cash flows
using an estimated borrowing rate and the net book value of the
intangible assets. The Companys goodwill and other intangible
assets were included in the sale to ASA. Goodwill of $8,000 was
written off by the Company in connection with the sale to ASA.
|
| |     |  | Goodwill and other intangible assets and amortization amounts are
summarized as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

|     |  |      |         |         |  |              |       |             |  |  |         | 
|---- |  | ---- | ------- | ------- |  | ------------ | ----- | ----------- |  |  | ------- | 
|     |  |      |         |         |  | Amortization |       | Accumulated
|Year |  | Cost |         | expense |  | amortization
|     |  |      |         |         |  |             
|2002 |  | $    | 0       |         |  |              | 0     |             |  |  | 0       | 
|2001 |  |      | 569,000 |         |  |              | 7,000 |             |  |  | 561,000 | 



| | (i) |  | Income Taxes                                                                                                                                                                 
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | The Company provides for income taxes in accordance with the
Statement of Financial Accounting Standards No. 109,Accounting
for Income Taxes (Statement 109). Statement 109

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| |     |  | requires the
use of the asset and liability method of accounting for income
taxes. Under this method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or
settled. Under Statement 109, the effect on deferred tax assets
and liabilities of a change in tax rates is recognized in
operations in the period that includes the enactment date.
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (j) |  | Concentrations of Credit Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |     |  | Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist principally of accounts
receivable from customers. This risk, however, is limited due to
the large number of customers comprising the Companys customer
base and their dispersion.                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | (k) |  | Stock Based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |     |  | The Company follows Statement of Financial Accounting Standards
(SFA) No. 123, Accounting for Stock-Based Compensation (SFAS 123),
which establishes a fair value based method of accounting for
stock-based employee compensation plans; however, the Company has
elected to account for its employee stock compensation plans using
the intrinsic value method under Accounting Principles Board
Opinion No. 25 with pro forma disclosures of net earnings and
earnings per share, as if the fair value based method of
accounting defined in SFAS 123 had been applied.                                                                                                                                                  
|
| |     |  | Had compensation cost for the Companys stock option plan been
determined on the fair value at the grant dates for stock-based
employee compensation arrangements consistent with the method
required by SFAS 123, the Companys net loss and net loss per
common share would have been the pro forma amounts indicated below
(see Note 12 ):                                                                                                                                                                                                                                                                                                                                                                               

|                                                                                                           |  |      |           |          |  |      |       |          |  |   |            |   |  |   |       |  
|---------------------------------------------------------------------------------------------------------- |  | ---- | --------- | -------- |  | ---- | ----- | -------- |  | - | ---------- | - |  | - | ----- | -
|                                                                                                           |  | 2002 |           | 2001    
|                                                                                                           |  |      |           |         
|                                                                                                           |  |      |           | Net      |  |      |       | Net     
|                                                                                                           |  | Net  |           | loss per |  | Net  |       | loss per
|                                                                                                           |  | loss |           | share    |  | loss |       | share   
|                                                                                                           |  |      |           |          |  |      |       |         
|Net loss, as reported                                                                                      |  | $    | (132,360  | )        |  | $    | (0.10 | )        |  | $ | (4,140,468 | ) |  | $ | (2.80 | )
|Less: stock-based employee
Compensation cost under the
Fair value based method, net of
Related tax effects |  |      | (824,387  | )        |  |      | (0.63 | )        |  |   | (2,472,772 | ) |  |   | (1.67 | )
|                                                                                                           |  |      |           |          |  |      |       |          |  |   |            |   |  |   |       |  
|Pro forma net loss                                                                                         |  | $    | ( 956,747 | )        |  | $    | (0.73 | )        |  | $ | (6,613,240 | ) |  | $ | (4.47 | )
|                                                                                                           |  |      |           |          |  |      |       |          |  |   |            |   |  |   |       |  



| | (l) |  | Net Loss Per Share                                                                                                                                                                                                                               
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | The Company computes net loss per share based upon Statement of
Financial Accounting Standards No. 128, Earnings Per
Share. The
following table sets forth the computation of basic and diluted
loss per share (EPS) for the periods indicated:

30



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|            |                                                                          |   |              |           |      |   |       |            |  
|----------- | ------------------------------------------------------------------------ | - | ------------ | --------- | ---- | - | ----- | ---------- | -
|            |                                                                          |   | December 31,
|            |                                                                          |   |             
|            |                                                                          |   | 2002         |           | 2001
|            |                                                                          |   |              |           |     
|Basic:      |                                                                          |   |              |           |      |   |       |           
|            | Net loss                                                                 |   | $            | (132,360  | )    |   | $     | (4,140,468 | )
|            |                                                                          |   |              |           |      |   |       |            |  
|            | Average shares outstanding                                               |   |              | 1,313,000 |      |   |       | 1,481,000  |  
|            |                                                                          |   |              |           |      |   |       |            |  
|Basic EPS   |                                                                          | $ | (.10         | )         |      | $ | (2.80 | )         
|            |                                                                          |   |              |           |      |   |       |            |  
|Diluted:    |                                                                          |   |              |           |      |   |       |           
|            | Net loss                                                                 |   | $            | (132,360  | )    |   | $     | (4,140,468 | )
|            |                                                                          |   |              |           |      |   |       |            |  
|            | Average shares outstanding                                               |   |              | 1,313,000 |      |   |       | 1,481,000  |  
|            | Net effect of dilutive stock options
based on the treasury stock method |   |              |          |      |   |       |           |  
|            |                                                                          |   |              |           |      |   |       |            |  
|            | Totals                                                                   |   |              | 1,313,000 |      |   |       | 1,481,000  |  
|            |                                                                          |   |              |           |      |   |       |            |  
|Diluted EPS |                                                                          | $ | (.10         | )         |      | $ | (2.80 | )         
|            |                                                                          |   |              |           |      |   |       |            |  



| |     |  | Common stock equivalents in the years ended December 31, 2002 and
2001 were anti-dilutive due to the market price being less than
the exercise price for common stock options outstanding and the
net losses sustained by the Company during these years, thus the
diluted net loss per share in these years is the same as the basic
net loss per share. Other common stock equivalents include
1,022,222 shares of Preferred Stock convertible on a one for one
basis into common stock.                                                                                                                                                                                                     
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (m) |  | Fair Value of Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |     |  | Cash, accounts receivable, accounts payable and accrued liabilities are
reflected in the financial statements at their carrying amount which
approximates fair value because of the short-term maturity of those
instruments. The carrying amount of notes receivable is assumed to
approximate fair value because there have not been any significant
changes in market conditions or specific circumstances since the
instrument was recorded at fair value. Accounts and notes receivable
are evaluated for delinquency status (i.e. when not paid within
specified term) and collectibility and are written off when a
determination has been made that such amounts will not be collected.
|
| | (n) |  | Supplemental Cash Flow Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |     |  | The Company considers all highly liquid investments with maturity dates
of three months or less at the time of purchase to be cash equivalents.
At December 31, 2002 and 2001, cash equivalents totaled approximately
$0 and $105,000, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |     |  | Cash paid for income taxes was $10,341 in 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |     |  | During 2001, $200,000 of notes were received in exchange for
200,000 shares of preferred stock. During 2001, the Company issued
222,222 shares of Preferred Stock in exchange for 222,222 shares of
its Common Stock valued at $222,222.                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |     |  | Cash paid for interest was $3,359 in 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |     |  | During 2002, the Company received development and consulting
services valued at $59,500 in lieu of cash payments on a note
receivable from a related party.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

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| | (o) |  | New Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | On July 20, 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) 141, Business
Combinations, and SFAS 142, Goodwill and Intangible Assets. SFAS 141 is
effective for all business combinations completed after June 30, 2001.
SFAS 142 is effective for the year beginning January 1, 2002; however
certain provisions of the Statement apply to goodwill and other
intangible assets acquired between July 1, 2001 and the effective date of
SFAS 142. The adoption of this statement did not have a significant
effect on the Companys results of operations or financial position. The
Company recognized $6,792 of goodwill amortization expense in 2001. As
of December 31, 2002, goodwill amounted to $0.                                                                                                                                                                                                                                          
|
| |     |  | In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. This statement addresses
financial accounting and reporting for the impairment or disposal of
long-lived assets and supersedes FASB Statement No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of. The provisions of the statement are effective for financial
statements issued for fiscal years beginning after December 15, 2001.
The adoption of this statement on January 1, 2002 did not have a
significant effect on the Companys results of operations or financial
position.                                                                                                                                                                                                                                                                                                                                                             
|
| |     |  | In June 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities. This Statement addresses
financial accounting and reporting for costs associated with exit or
disposal activities and nullifies Emerging Issues Task Force (EITF) Issue
No. 94-3, Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs
Incurred in a Restructuring). The provisions of this Statement are
effective for exit or disposal activities that are initiated after
December 31, 2002, with early application encouraged. Management does not
believe that adoption of this pronouncement will have a material effect
on the Companys financial position or results of operations.                                                                                                                                                                                                                                 
|
| |     |  | In December 2002, the FASB issued SFAS No. 148, Accounting for
Stock-Based Compensation  Transition and Disclosure, which (i) amends
SFAS 123, Accounting for Stock-Based Compensation, to provide alternative
methods of transition for an entity that voluntarily changes to the fair
value based method of accounting for stock-based employee compensation
(ii) amends the disclosure provisions of SFAS 123 to require prominent
disclosure about the effects on reported net income of an entitys
accounting policy decisions with respect to stock-based employee
compensation and (iii) requires disclosure about those effects in interim
financial information. Items (ii) and (iii) of the new requirements in
SFAS 148 are effective for financial statements for fiscal years ending
after December 15, 2002. The Company has adopted the reporting
requirements of item (ii) and will include the reporting requirements of
item (iii) beginning in its first interim period after December 15, 2002.
|
| |     |  | In November 2002, the FASB issued FASB Interpretation No. 45 Guarantors
Accounting and Disclosure Requirements for Guarantors, including Indirect
Guarantors of Indebtedness to Others (FIN 45). FIN 45 creates new
disclosure and liability recognition requirements for certain guarantees,
including obligations to stand ready to perform. The initial recognition
and measurement requirements of FIN 45 are effective prospectively for
guarantees issued or modified after December 31, 2002, and the disclosure
requirements are effective for financial periods ending after December
31, 2002. In accordance with FIN 45, the Company has disclosed guarantee
information.                                                                                                                                                                                                                                                                                                                                 



|(3) |  | ASA Transaction and Plan of Operations                                                                                                                                                                                                                                                                                                                                                                                         
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | On December 1, 2002, the Company completed the sale of substantially all of
its operating assets to ASA. This transaction was approved by PowerCervs
shareholders on November 26, 2002. Prior to completing the sale, the
Company had entered into a definitive asset purchase agreement with ASA on
October 1, 2002. Pursuant to this agreement PowerCerv sold substantially
all of its assets to ASA and ASA assumed certain

32



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|    |  | of the Companys liabilities related to ongoing operations. The Company sold
to ASA assets with a net book value of $470,509 consisting primarily of
accounts receivable and ASA assumed liabilities with a net book value of
$454,785 consisting primarily of accounts payable and accrued expenses
resulting in a purchase price adjustment payable to the Company by ASA of
$15,724. The Company also sold its software and intangible assets to ASA
having a net book value of $200,237 and ASA also assumed the Companys
deferred maintenance revenue liability of $787,179. However, per the
agreement, no value was assigned to these items for purposes of determining
the adjustment to the purchase price. In addition to ASA assuming certain
liabilities, at closing, ASA paid PowerCerv $500,000 in cash and issued a
$90,000 promissory note due six months after the closing date. In order to
assist the Company in meeting its cash flow needs, ASA advanced PowerCerv
the sum of $100,000 evidenced by a 7% promissory note due on demand after
November 2, 2002 or on the earlier of closing of the transaction or
termination of the purchase agreement. The repayment of the note was
deducted from the $500,000 cash payment made to the Company at closing.
The Company recognized a net gain associated with the sale to ASA of
$787,565. The Company incurred $85,000 in transaction costs that reduced
the gain recognized. In addition, the Company agreed to make a $75,000
severance payment to its former Chief Executive Office. The Company also
agreed to pay one of its board members $60,000 representing a termination
fee on an existing consulting agreement with the Company. These payments
were made in 2003 and both individuals agreed to stay on the Board of
Directors and help with the ongoing business of the Company after the
completion of the sale.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Prior to entering into the asset purchase agreement with ASA, the Company
attempted to improve cash flow by instituting flexible work arrangements,
reduced work weeks, uniform salary reductions, workforce reductions,
elimination of non-critical costs and accelerated cash conversion of
receivables. Although these measures resulted in lower expenses, it
significantly reduced the Companys personnel and its ability to generate
revenue. The uncertainty of the Companys solvency materially affected its
sales efforts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|    |  | Plan of Operation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|    |  | The Company plans to use its best efforts to settle its remaining
liabilities with the transaction proceeds and certain other receivables.
The Company plans to continue as a separate public entity, seek to merge
with another operating business and not compete in its former line of
business; however, there can be no assurance that these plans will be
successfully implemented.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|    |  | Prior to the sale, the Company incurred net losses in 2002 and 2001 and
while management took steps that it believed would improve net losses, the
Company continued to incur a net loss from operations. Among the steps
taken to improve the overall operations and financial condition were
restructuring initiatives throughout 2001 and 2002. In 2002, the Company
implemented flexible work arrangements with certain employees that
transformed otherwise fixed costs into variable costs. Management reduced
overall wages through uniform salary adjustment initiatives and through
workforce reductions. The Company used its best efforts to accelerate cash
conversion of notes receivable and accounts receivable to maximize its
working capital and available cash. The uncertainty of the Companys
solvency materially affected its sales efforts. Had the asset sale
discussed above not been completed, the Company would likely have had to
consider bankruptcy and liquidation alternatives.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|(4) |  | Work Force Reduction and Other Charge                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|    |  | During 2002, the Company completed 2 work force reductions. The Company
recorded a restructuring charge of $30,000 related to the severance costs
of 5 employees (2 non-senior level services employees and 3 non-senior
level R&D employees) and relocation costs. As of December 31, 2002, these
costs were paid. Additionally, the Company terminated the employment of 2
G&A employees as a result of the sale to ASA.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|    |  | During 2001, the Company completed several workforce reductions in order to
attempt to improve its financial condition. These actions resulted in the
elimination of approximately 58 positions throughout the Company. As of
December 31, 2002, approximately $5,000 remains in accrued liabilities for
severance payments in connection with these restructurings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

33



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|(5) |  | Property and Equipment                                                         
|--- |  | -------------------------------------------------------------------------------
|   
|    |  | Property and equipment consists of the following at December 31, 2002 and
2001:

|                                               |  |      |   |      |  |         |           |  |  |              |       |  
|---------------------------------------------- |  | ---- | - | ---- |  | ------- | --------- |  |  | ------------ | ----- | -
|                                               |  |      |   |      |  |         |           |  |  | Estimated   
|                                               |  |      |   |      |  |         |           |  |  | useful lives
|                                               |  | 2002 |   | 2001 |  | (years)
|                                               |  |      |   |      |  |        
|Leasehold improvements                         |  | $    |  |      |  | $       | 443,192   |  |  |              | 3  5 | *
|Furniture and fixtures                         |  |      |  |      |  |         | 662,399   |  |  |              | 5  7 |  
|Computer equipment                             |  |      |  |      |  |         | 3,437,486 |  |  |              | 2  7 |  
|Equipment                                      |  |      |  |      |  |         | 534,992   |  |  |              | 3  7 |  
|                                               |  |      |   |      |  |         |           |  |  |              |       |  
|                                               |  |      |  |      |  |         | 5,078,069 |  |  |              |       |  
|Less accumulated depreciation
and amortization |  |      |  |      |  |         | 5,002,297 |  |  |              |       |  
|                                               |  |      |   |      |  |         |           |  |  |              |       |  
|                                               |  |      |   |      |  | $       | 75,772    |  |  |              |       |  
|                                               |  |      |   |      |  |         |           |  |  |              |       |  



| |                                                 
| | ------------------------------------------------
| | *Or the remaining term of the lease, if shorter.



|    |  | Depreciation and amortization expense totaled approximately
$22,000 and $452,204 during the years ended December 31, 2002 and
2001. During 2002, the Company wrote off $53,772 in leasehold
improvements in connection with the sale to ASA. This amount was
recorded as a reduction to the gain recognized by the Company.
The Companys remaining property and equipment was fully
depreciated and included in the sale to ASA.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(6) |  | Other Assets                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|    |  | Other assets consist of the following at December 31, 2002 and 2001:                                                                                                                                                                                                                                                                                                                                                             

|                                      |  |      |         |      |  |   |         | 
|------------------------------------- |  | ---- | ------- | ---- |  | - | ------- | 
|                                      |  | 2002 |         | 2001
|                                      |  |      |         |     
|Notes receivable and related interest |  | $    | 124,200 |      |  | $ | 310,585 | 
|Prepaid expenses                      |  |      | 30,064  |      |  |   | 140,555 | 
|ASA transaction receivables           |  |      | 105,724 |      |  |   |        | 
|Other receivables                     |  |      | 16,135  |      |  |   |        | 
|                                      |  |      |         |      |  |   |         | 
|                                      |  | $    | 276,123 |      |  | $ | 451,140 | 
|                                      |  |      |         |      |  |   |         | 



|(7) |  | Accrued Expenses
|--- |  | ----------------

Accrued expenses consist of the following at December 31, 2002 and 2001:

|                            |  |      |         |      |  |   |           | 
|--------------------------- |  | ---- | ------- | ---- |  | - | --------- | 
|                            |  | 2002 |         | 2001
|                            |  |      |         |     
|Compensation                |  | $    | 6,864   |      |  | $ | 269,479   | 
|Severance and related costs |  |      | 5,000   |      |  |   | 240,998   | 
|Income tax assessment       |  |      | 410,296 |      |  |   | 410,296   | 
|Other                       |  |      | 50,260  |      |  |   | 450,321   | 
|                            |  |      |         |      |  |   |           | 
|                            |  | $    | 472,420 |      |  | $ | 1,371,094 | 
|                            |  |      |         |      |  |   |           | 

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|(8) |  | Income Taxes
|--- |  | ------------



| |                                                                                             
| | --------------------------------------------------------------------------------------------
| | Income tax expense for the years ended December 31, 2002 and 2001 consists
of the following:

|                         |         |   |      |   |      |   |        |        | 
|------------------------ | ------- | - | ---- | - | ---- | - | ------ | ------ | 
|                         |         |   | 2002 |   | 2001
|                         |         |   |      |   |     
|Current:                 |         |   |      |   |      |   |        |       
|Federal                  |         | $ |     |   |      |   |       |       
|                         | State   |   |      |  |      |   |        | 10,341 | 
|                         |         |   |      |   |      |   |        |       
|                         |         |   |      |   |      |   | 10,341 |       
|                         |         |   |      |   |      |   |        |       
|Deferred:                |         |   |      |   |      |   |        |       
|                         | Federal |   |      |  |      |   |        |       | 
|                         | State   |   |      |  |      |   |        |       | 
|                         |         |   |      |   |      |   |        |       
|                         |         |   |     |   |      |   |       |       
|                         |         |   |      |   |      |   |        |       
|Total income tax expense |         | $ |     |   |      | $ | 10,341 |       
|                         |         |   |      |   |      |   |        |       



| |  | Income tax expense for the years ended December 31, 2002 and 2001 differed
from the amount computed by applying the U.S. federal income tax rate of 34
percent to income (loss) before income taxes as a result of the following:
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                          |  |   |          |   |      |   |            |   | 
|--------------------------------------------------------- |  | - | -------- | - | ---- | - | ---------- | - | 
|                                                          |  |   | 2002     |   | 2001
|                                                          |  |   |          |   |     
|Expected income tax benefit                             |  | $ | (45,002  | ) |      | $ | (1,382,259 | )
|State, net of federal benefit                             |  |   | (5,294   | ) |      |   | (162,619   | )
|Change in the valuation allowance
for deferred tax assets |  |   | 73,422   |   |      |   | 1,540,975  |  
|Nondeductible Items                                       |  |   | 1,446    |   |      |   | 9,344      |  
|Other, net                                                |  |   | (24,572) |   |      |   | 4,900      |  
|                                                          |  |   |          |   |      |   |            |  
|                                                          |  | $ |         |   |      | $ | 10,341     |  
|                                                          |  |   |          |   |      |   |            |  



| |  | The tax effects of temporary differences that give rise to significant
components of the deferred tax assets and deferred tax liabilities at
December 31, 2002 and 2001 are presented below:
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                     |                                                                  |                                 |   |            |             |      |   |            |             |  
|-------------------- | ---------------------------------------------------------------- | ------------------------------- | - | ---------- | ----------- | ---- | - | ---------- | ----------- | -
|                     |                                                                  |                                 |   | 2002       |             | 2001
|                     |                                                                  |                                 |   |            |             |     
|Deferred tax assets: |                                                                  |                                 |   |            |             |      |   |           
|                     | Provision for uncollectible accounts                             |                                 | $ |           |             |      | $ | 826,217    |            
|                     | Accrued expenses and work force reduction                        |                                 |   |           |             |      |   |           |            
|                     | Depreciation and amortization property of property
and equipment |                                 |   |           |             |      |   | 16,116     |            
|                     | Operating losses                                                 |                                 |   | 12,750,274 |             |      |   | 10,675,124 |            
|                     | Intangible assets                                                |                                 |   | 1,232,019  |             |      |   | 2,469,137  |            
|                     |                                                                  |                                 |   |            |             |      |   |           
|                     |                                                                  | Total gross deferred tax assets |   |            | 13,982,293  |      |   |            | 13,986,594  |  
|                     |                                                                  | Less valuation allowance        |   |            | (13,949,405 | )    |   |            | (13,875,983 | )
|                     |                                                                  |                                 |   |            |             |      |   |           

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|                          |                                                         |                                |        |      |        |      |         |   |         | 
|------------------------- | ------------------------------------------------------- | ------------------------------ | ------ | ---- | ------ | ---- | ------- | - | ------- | 
|                          |                                                         |                                |        | 2002 |        | 2001
|                          |                                                         |                                |        |      |        |     
|                          |                                                         | Net deferred tax assets        |        |      | 32,888 |      |         |   | 110,611 | 
|                          |                                                         |                                |        |      |        |      |         |  
|Deferred tax liabilities: |                                                         |                                |        |      |        |      |         |  
|                          | Depreciation and amortization of property and equipment |                                |        |      |        |      |         |  |        
|Deferred gain on sale     |                                                         |                                | 32,888 |      |        |      | 110,611 |  
|                          |                                                         |                                |        |      |        |      |         |  
|                          |                                                         | Gross deferred tax liabilities |        |      | 32,888 |      |         |   | 110,611 | 
|                          |                                                         |                                |        |      |        |      |         |  
|                          | Total net deferred tax assets                           |                                | $      |     |        |      | $       |  |        
|                          |                                                         |                                |        |      |        |      |         |  



|    |  | The Company increased its deferred income tax asset valuation allowance by
$73,422 and $1,540,975 during the year ended December 31, 2002 and 2001,
respectively. The decision to continue to fully reserve the deferred
income tax asset was primarily the result of the Companys sale of its
operating assets. At December 31, 2002 and 2001, the Company has net
operating loss carry forwards of approximately $34,000,000 and $28,000,000,
respectively for federal income tax purposes that expire at various times
from years 2010 to 2021.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The Companys federal income tax returns for the years ended December 31,
1996 and 1995 were subject to a routine examination by the Internal Revenue
Service that resulted in an assessment of $66,000 of federal tax. The
Company recorded a charge for the estimated federal and state income tax
and related interest costs upon receiving the notice of assessment in 2000.
During October 2002, the Company settled this matter with the IRS by
agreeing to pay an additional income tax liability of $63,000 plus
applicable interest through the date of payment. During April 2003, the
Company received a Statement of Adjustment from the IRS regarding the
assessment totaling $183,000. This settlement amount is consistent with
the amount provided for federal taxes and interest in an earlier period.
The Company plans to continue addressing this matter with the IRS in an
effort to obtain a reduction in the balance due; however there can be no
assurance that the Company will be successful. Management does not believe
that the effect of any potential claims in other tax jurisdictions will
have a material effect on the Companys financial condition or its results
of operations. Interest costs will continue to accrue until the obligation
is satisfied.                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(9) |  | Shareholders Equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|    |  | The Companys Articles of Incorporation authorize and permit the Companys
Board of Directors to issue up to 5,000,000 shares of preferred stock (par
value of $.001 per share) in one or more series, and to fix the relative
rights, preferences and limitations of each series. During 2001, the
Company issued 1,022,222 shares of convertible Preferred Stock. The
Preferred Stock is convertible to Common Stock at a conversion rate of one
share of Common Stock for each share of Preferred Stock being converted.
The Preferred Stock carries no dividend or coupons and will be redeemable
at the option of the Company after five years. In consideration for the
Preferred Stock, the Company received cash of $600,000, notes receivable of
$200,000 ($100,000 from a director of the Company) and 222,222 of its
Common Stock valued at $222,222. The Company incurred financing costs of
approximately $38,000. The 222,222 shares of Common Stock were formerly
owned by a past director and were sold to a current director under the
condition that they could be exchanged for Preferred Stock on a one for one
basis. During 2002, the Company received payment on one of the notes at a
discounted rate of $85,000. The remaining note receivable is included as a
reduction of shareholders equity at year-end. Shares totaling 425,000 were
sold to officers and directors of the Company. In connection with the sale
of these securities, warrants to purchase 222,222 shares of Preferred Stock
at an exercise price of $1.00 per share were granted. These warrants
expired, unexercised in August 2002. The fair value of these warrants was
considered in the cost of the Preferred Stock issued.
|   
|    |  | PowerCerv has entered into agreements with holders of 772,222 shares of its
preferred stock pursuant to which they agreed to vote their shares of
preferred stock and common stock, if any, in favor of the sale transaction
to ASA. In addition, the shareholders had the right to convert their
shares of preferred stock into common stock following the transaction in
accordance with the terms of the preferred stock. Upon                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

36



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|     |  | conversion,
PowerCerv agreed that the holders of the preferred stock would receive 90%
of any distribution to shareholders with the remaining 10% distributed to
holders of the common stock. Subsequent to the sale transaction, no
preferred shares have been converted to common and no distributions have
occurred.
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(10) |  | Comprehensive Income (Loss)                                                                                                                                                                                                                                                                                            
|    
|     |  | For the years ended December 31, 2002 and 2001, the Company did not have
any comprehensive income (loss) other than the net income (loss) reported
on the Consolidated Statements of Operations.                                                                                                                       
|    
|(11) |  | Commitments and Contingencies                                                                                                                                                                                                                                                                                          



| | (a) |  | Leases                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | The Company conducts its operations in leased facilities. The
lease terms range from one month to five years. Rental expenses
under operating leases approximated $113,000 and $402,000 during
the years ended December 31, 2002 and 2001, respectively. The
Company assigned its lease to ASA as part of the asset sale. The
Company has no other lease obligations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | (b) |  | Litigation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |     |  | Lifsey v. Ross, et. al.: A complaint was filed on July 24,
1997, in the United States District Court for the Middle
District of Florida, captioned J. Conrad Lifsey vs. Harold R.
Ross, Gerald R. Wicker, Marc J. Fratello, Roy E. Crippen, III,
Donald B. Hebb, Jr., Thomas S. Roberts, PowerCerv Corporation,
Alex Brown & Sons, Inc., Robertson, Stephens & Company, ABS
Capital Partners, L.P., Summit Investors II, L.P., and Summit
Ventures III, L.P. The complaint purports to be a class action
on behalf of those persons who purchased shares of the
Companys common stock from March 1, 1996 (the date of the
Companys initial public offering of its common stock (IPO))
through July 24, 1996. The complaint alleges, among other
things, that the defendants violated the Securities Act of 1933
and the Securities Exchange Act of 1934 in connection with the
Companys IPO and in its subsequent securities filings, press
releases and other public statements. The parties have agreed
to a settlement (for which the Company is insured) that was
approved by the Court. A judgment dismissing the action with
prejudice was entered by the Court on December 16, 2002. .
|
| |     |  | The Company, in the normal course of business, may also be
subject to miscellaneous legal proceedings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | (c) |  | Employment Agreements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |     |  | The Company has entered into employment agreements with certain of its
executive officers. Information regarding these agreements is
available in the 2001 Annual Report and Form 10-KSB/A.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |     |  | The Chief Executive Officers (CEO) employment agreement with the
Company was verbally modified and the Companys Board of Directors
authorized that the CEO would receive $75,000 as a severance payment
in connection with the CEOs termination on November 30, 2002.
Additionally, the CEO would receive an additional $25,000 should the
amount of cash for distribution to the Companys shareholders exceed
$400,000. The CEO agreed to voluntarily relinquish his employment
agreement, which would have paid the CEO $300,000 upon a trigger event
such as a change of control of the Company and/or by the CEOs
resignation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | (d) |  | Indemnifications                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |     |  | The Company indemnified its officers and directors against costs and
expenses related to shareholder and other claims (i.e. only actions
taken in their capacity as officers and directors) that are not                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

37



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##### Table of Contents





| |  |  | covered by the Companys directors and officers insurance policy.
This indemnification is ongoing and does not include a limit on the
maximum potential future payments, nor are there any recourse
provisions or collateral that may offset the cost. As of December 31,
2002, the Company has not recorded a liability for any obligations
arising as a result of these indemnifications.
| |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(12) |  | Employee Benefit Plans
|---- |  | ----------------------



| | (a) |  | Defined Contribution Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | The Company has a 401(k) plan covering employees who meet
established eligibility requirements. Under the plan provisions,
the Company may match participant contributions. During 2002 and
2001, the Company matched 30% of participant contributions to a
maximum matching amount of 6% of participant base compensation.
Total Company contributions were approximately $17,000 and $60,000
during the years ended December 31, 2002 and 2001, respectively.
During the years ended December 31, 2002 and 2001, this match
occurred in the form of Company common stock purchased in the open
market. During 2002 and 2001, Plan forfeitures funded a portion
of the Company matching amounts.
|
| | (b) |  | Stock Option Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |     |  | In June 1995, the Company established a stock option plan, which
provides for the granting of both incentive stock options and
non-statutory stock options. Only employees are eligible to
receive grants of incentive stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |     |  | Generally, options granted under this stock option plan expire 10
years after the date of grant, are exercisable at various times up
to four years from the date of grant and are granted at fair
market value on the date of the grant. A total of 519,444 shares
have been reserved for issuance under the plan.                                                                                                                                                                                                                                                                                                                                                                               
|
| |     |  | Management is in the process of
fully evaluating the status of all
outstanding stock options based on the terminated status of all
employees. The following tables do not reflect any adjustments
for cancellations or forfeitures that may be required as of
December 31, 2002, based on the change of employment status.                                                                                                                                                                                                                                                                                                                                                                       
|
| |     |  | Activity with respect to all stock options is summarized as
follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

|                             |                   |  |         |          |                     |   |       |       |                  |  | 
|---------------------------- | ----------------- |  | ------- | -------- | ------------------- | - | ----- | ----- | ---------------- |  | 
|                             |                   |  |         |          | Options outstanding
|                             |                   |  |         |          |                    
|                             |                   |  |         |          |                     |   |       |       | Weighted-average
|                             |                   |  |         |          |                     |   |       |       | option          
|                             |                   |  |         |          |                     |   |       |       | price per       
|                             |                   |  |         |          | Shares              |   | share
|                             |                   |  |         |          |                     |   |      
|Balance at December 31, 2000 |                   |  | 466,506 |          |                     | $ | 18.18 |      
|                             | Options granted   |  |         | 96,335   |                     |   | $     | 2.93  |                 
|                             | Options exercised |  |         |         |                     |   | $     |      |                 
|                             | Options canceled  |  |         | (235,858 | )                   |   | $     | 15.26 |                 
|                             |                   |  |         |          |                     |   |       |      
|Balance at December 31, 2001 |                   |  | 326,983 |          |                     | $ | 15.81 |      
|                             | Options granted   |  |         | 280,500  |                     |   | $     | .60   |                 
|                             | Options exercised |  |         |         |                     |   |       |      |                 
|                             | Options canceled  |  |         |         |                     |   |       |      |                 
|                             |                   |  |         |          |                     |   |       |      
|Balance at December 31, 2002 |                   |  | 607,483 |          |                     | $ | 8.57  |      
|                             |                   |  |         |          |                     |   |       |      

38



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##### Table of Contents





| |  |  | The range of exercise prices, shares, weighted-average contractual
lives and weighted-average exercise prices for the options
outstanding at December 31, 2002 is presented below:
| |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                |                 |        |       |                  |  |                  |         |                  |       |       |  |  | 
|--------------- | --------------- | ------ | ----- | ---------------- |  | ---------------- | ------- | ---------------- | ----- | ----- |  |  | 
|Range of        |                 |        |       |                  |  | Weighted-average |         | Weighted-average
|Exercise prices |                 | Shares |       | contractual life |  | exercise price  
|                |                 |        |       |                  |  |                 
|$               | 0.60
   13.78  |        |       | 437,298          |  |                  | 8 years |                  | $     | 2.44  | 
|                | 16.32    29.81 |        |       | 132,685          |  |                  | 4 years |                  |       | 21.27 | 
|                | 30.38    39.94 |        |       | 31,904           |  |                  | 2 years |                  |       | 36.10 | 
|                | 42.19  122.22  |        | 5,596 |                  |  | 4 years          |         |                  | 52.30 |      
|                | 0.60  122.22   |        |       | 607,483          |  |                  | 6 years |                  |       | 8.57  | 
|                |                 |        |       |                  |  |                  |         |                  |       |       |  | 



| |  |  | The range of exercise prices, shares and weighted-average exercise
prices for the options exercisable at December 31, 2002, are
presented below:
| |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------

|                |                 |             |       |                  |  |  |       |       | 
|--------------- | --------------- | ----------- | ----- | ---------------- |  |  | ----- | ----- | 
|Range of        |                 | Shares      |       | Weighted-average
|Exercise prices |                 | Exercisable |       | Exercise price  
|                |                 |             |       |                 
|$               | 0.60    13.78  |             |       | 430,842          |  |  | $     | 2.43  | 
|                | 16.32    29.81 |             |       | 129,262          |  |  |       | 21.18 | 
|                | 30.38    39.94 |             |       | 31,895           |  |  |       | 36.09 | 
|                | 42.19  122.22  |             | 5,040 |                  |  |  | 53.21 |      
|                |                 |             |       |                  |  |  |       |       | 
|                | 0.60  122.22   |             |       | 597,039          |  |  |       | 8.72  | 
|                |                 |             |       |                  |  |  |       |      



| |  |  | The per share weighted-average fair value of stock options granted
during 2002 and 2001 were $0.60 and $2.28, respectively, on the
dates of grant using the Black Scholes option-pricing model with
the following weighted-average assumptions: 2002  expected
dividend yield of 0%, risk free interest rate averaging 5.5%,
expected volatility rate of 168%, and an expected life of 2.0
years; 2001  expected dividend yield of 0%, risk free interest
rate averaging 5.5%, expected volatility rate of 168%, and an
expected life of 2.0 years. See Note A for the pro forma effect
if the Company had determined compensation cost consistent with
the method required by SFAS 123.
| |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(13) |  | Segment Reporting                                                                                                                                                                                                                                                                                                                                                                                                              
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     |  | The Company has identified its operating segments as its services and
license product segments. In 1998, the Company adopted Statement of
Financial Accounting Standards No. 131, Disclosures about Segments of an
Enterprise and Related Information. The services segment provides
consulting, education and maintenance services and the license product
segment provides application, tools and technology resale products.

|                                 |  |                                      |           |         |  |             |          |       |  |   |          |   |  |   |           |  
|-------------------------------- |  | ------------------------------------ | --------- | ------- |  | ----------- | -------- | ----- |  | - | -------- | - |  | - | --------- | -
|                                 |  | For the year ended December 31, 2002
|                                 |  |                                     
|                                 |  |                                      |           |         |  | License     |          |       |  |   |          |   |  |  
|                                 |  | Services                             |           | Product |  | Unallocated |          | Total
|                                 |  |                                      |           |         |  |             |          |      
|Revenues from
external customers |  | $                                    | 1,992,209 |         |  | $           | 375,807  |       |  | $ |         |   |  | $ | 2,368,016 |  
|Segment profit or (loss)         |  | $                                    | 1,178,970 |         |  | $           | (949,124 | )     |  | $ | (362,206 | ) |  | $ | (132,360  | )

|                                 |  |                                      |           |         |  |             |            |       |  |   |            |   |  |   |            |  
|-------------------------------- |  | ------------------------------------ | --------- | ------- |  | ----------- | ---------- | ----- |  | - | ---------- | - |  | - | ---------- | -
|                                 |  | For the year ended December 31, 2001
|                                 |  |                                     
|                                 |  |                                      |           |         |  | License     |            |       |  |   |            |   |  |  
|                                 |  | Services                             |           | Product |  | Unallocated |            | Total
|                                 |  |                                      |           |         |  |             |            |      
|Revenues from
external customers |  | $                                    | 4,875,294 |         |  | $           | 1,231,468  |       |  | $ |           |   |  | $ | 6,106,762  |  
|Segment profit or (loss)         |  | $                                    | 1,409,335 |         |  | $           | (2,709,376 | )     |  | $ | (2,840,427 | ) |  | $ | (4,140,468 | )

39



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##### Table of Contents



| |  | There were no transactions between segments. The unallocated amounts are
made up of the following items:
| |  | --------------------------------------------------------------------------------------------------------

|                                 |  |                                 |            |      |  |   |            |  
|-------------------------------- |  | ------------------------------- | ---------- | ---- |  | - | ---------- | -
|                                 |  | For the year ended December 31,
|                                 |  |                                
|                                 |  | 2002                            |            | 2001
|                                 |  |                                 |            |     
|General and administrative costs |  | $                               | (1,237,019 | )    |  | $ | (2,580,296 | )
|Work force reduction             |  |                                 | 13,545     |      |  |   | (326,195   | )
|Interest and other income        |  |                                 | 68,523     |      |  |   | 76,405     |  
|Gain on sale of business         |  |                                 | 792,745    |      |  |   |           |  
|Income tax expense               |  |                                 |           |      |  |   | (10,341    | )
|                                 |  |                                 |            |      |  |   |            |  
|                                 |  | $                               | (362,206   | )    |  | $ | (2,840,427 | )
|                                 |  |                                 |            |      |  |   |            |  



| |                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------
| | The Company does not use assets as a measure of the segments performance,
thus no assets are disclosed by segment in the table above.



|(14) |  | Related Party Transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     |  | Material related party transactions that have been entered into by the
Company that are not otherwise in these notes are summarized below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    
|     |  | During 2002, The Companys board of directors canceled notes receivable
from officers totaling $42,500. The receivables were written off and
recorded as compensation expense.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    
|     |  | On March 31, 1999, the Company sold its general consulting and general
education business (consulting and education services other than its
application-related services) to a related party. Consideration totaled
approximately $10 million and consisted of a combination of cash, PowerCerv
common stock and notes. The gain associated with the note receivable that
matures in 2004 and has an interest rate of 4.56% was deferred at the time
of sale. In 2000, the Company recognized this gain of $827,500.
Management believes that based upon events occurring in 2000 (the buyers
merger with another business and establishment of a stronger management
team) the collectibility of the note is reasonably assured. During 2002,
the Company received discounted payments on this note receivable of
$262,482, representing a discount of $42,018. The Company issued a
discount for advance payments in order to attempt to improve its cash flow.
As of December 31, 2002, the balance of this note receivable was
approximately $135,931.

40



---



##### Table of Contents



SIGNATURES




In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized on April 15, 2003.

| |  |  |                       |                                   
| |  |  | --------------------- | ----------------------------------
| |  |  | POWERCERV CORPORATION
| |  |  |                       |                                   
| |  |  | By:                   | /s/ Marc J. Fratello              
| |  |  |                       |                                   
| |  |  |                       | Marc J. Fratello                  
| |  |  |                       | President, Chief Executive Officer
| |  |  |                       | And Chairman of the Board         

In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of this registrant and in the capacities and on
the dates indicated.

|                                      |  |                                                                                                                         |  |                 
|------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------- |  | ----------------
|Signature                             |  | Title                                                                                                                   |  | Date            
|                                      |  |                                                                                                                         |  |                 
|                                      |  |                                                                                                                         |  |                 
|/s/ Marc J. Fratello
MARC J. FRATELLO |  | President, Chief Executive Officer,
Chairman of the Board,
Principal Financial Officer and
Principal Accounting Officer |  | April 15, 2003  
|                                      |  |                                                                                                                         |  |                 
|/s/ John S. McMullen
JOHN S. MCMULLEN |  | Director and Vice-Chairman                                                                                              |  | April 15, 2003  
|                                      |  |                                                                                                                         |  |                 
|ROY E. CRIPPEN, III                   |  | Director                                                                                                                |  | April     , 2003

41



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##### Table of Contents



Rider A

Certifications

I, Marc J. Fratello, certify that:

1. I have reviewed this annual report
on Form 10-KSB for the fiscal year ended December 31, 2002, of
the Registrant (the Report);

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

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

4. The Registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and have:



| |  | a) designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | b) evaluated the effectiveness of
the Registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
the Report (the Evaluation Date); and                                                                                                          
|
| |  | c) presented in the Report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                                

5. The Registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the Registrants auditors and the audit
committee of Registrants board of directors (or persons performing the
equivalent functions):



| |  | a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the Registrants ability to record,
process, summarize and report financial data and have identified for the
Registrants auditors any material weaknesses in internal controls; and
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrants internal
controls; and                                                                                                                                        

6. The Registrants other
certifying officers and I have indicated in the Report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|               |  |                                                                                                                                                  
|-------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------
|April 15, 2003 |  | /s/ Marc J. Fratello                                                                                                                             
|               |  |                                                                                                                                                  
|               |  | Name: Marc J. Fratello
Title:   Chief Executive Officer and Principal Financial
Officer
(Chief Executive Officer and Principal Financial Officer)

42



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EXHIBIT INDEX

|        |  |  |  |            
|------- |  |  |  | -----------
|Exhibit |  |  |  |            
|Number  |  |  |  | Description
|        |  |  |  |            

|      |  |   |  |                                                                                                                                                                                                                                                                                                                                                      
|----- |  | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1   |  |  |  | Articles of Incorporation of the Company effective as of January 1, 1996, as amended by the Articles of
Amendment dated as of January 9, 1996 (incorporated herein by reference to Exhibit Number 3.1 to the Companys
Registration Statement on Form S-1 (File No. 333-00250)).                                                                     
|      |  |   |  |                                                                                                                                                                                                                                                                                                                                                      
|3.2   |  |  |  | Bylaws of the Company (incorporated herein by reference to Exhibit Number 3.2 to the Companys Registration
Statement on Form S-1 (File No. 333-00250)).                                                                                                                                                                                             
|      |  |   |  |                                                                                                                                                                                                                                                                                                                                                      
|10.1  |  |  |  | Loan Agreement and related promissory note, security agreements and
guarantees, each dated October 31, 1996, among NationsBank, N.A.
(South) and the Company, for a $5,000,000 revolving line of credit
(incorporated herein by reference from Exhibit Number 10.3 to the
Companys Annual Report on Form 10-K for the year ended December 31,
1996).
|      |  |   |  |                                                                                                                                                                                                                                                                                                                                                      
|10.2  |  |  |  | NationsBank Commitment Letter dated October 9, 1997, and related
promissory note dated October 22, 1997, extending the maturity of the
Companys $5,000,000 revolving line of credit (incorporated herein by
reference from Exhibit Number 10.3 to the Companys Annual Report on
Form 10-K for the year ended December 31, 1997).                   
|      |  |   |  |                                                                                                                                                                                                                                                                                                                                                      
|10.3  |  |  |  | Amendment to Loan Agreement, dated January 26, 1998, among
NationsBank, N.A. and the Company, related to the Companys $5,000,000
revolving line of credit (incorporated herein by reference from Exhibit
Number 10.4 to the Companys Annual Report on Form 10-K for the year
ended December 31, 1997).                                             
|      |  |   |  |                                                                                                                                                                                                                                                                                                                                                      
|10.4  |  |  |  | Loan Agreement and related promissory note, dated March 29, 1999,
among NationsBank, N.A. and the Company, related to the Companys
$10,000,000 credit facility (incorporated herein by reference from
Exhibit Number 10.4 to the Companys Annual Report on Form 10-K for the
year ended December 31, 1998).                                        
|      |  |   |  |                                                                                                                                                                                                                                                                                                                                                      
|10.5* |  |  |  | Employment, Noncompetition, Development and Confidentiality
Agreement, dated April 10, 1997, between the Company and Marc J.
Fratello (incorporated herein by reference from Exhibit Number 10.2 to
the Companys Quarterly Report on Form 10-Q for the calendar quarter
ended March 31, 1997).                                                      
|      |  |   |  |                                                                                                                                                                                                                                                                                                                                                      
|10.6* |  |  |  | Employment, Noncompetition, Development and Confidentiality
Agreement, dated April 10, 1997, between the Company and Roy E. Crippen,
III (incorporated herein by reference from Exhibit Number 10.3 to the
Companys Quarterly Report on Form 10-Q for the calendar quarter ended
March 31, 1997).                                                   
|      |  |   |  |                                                                                                                                                                                                                                                                                                                                                      
|10.7* |  |  |  | Executive Employment Agreement, dated February 19, 1998, between the
Company and Michael J. Simmons (incorporated herein by reference from
Exhibit Number 10.2 to the Companys Quarterly Report on Form 10-Q for
the calendar quarter ended June 30, 1998).                                                                                         
|      |  |   |  |                                                                                                                                                                                                                                                                                                                                                      
|10.8  |  |  |  | Asset Purchase Agreement, dated March 30, 1999, by and between
the Company and R.O.I. Consulting, Inc. (incorporated herein by reference
from Exhibit Number 2 to the Companys Current Report on Form 8-K filed
on April 13, 1999).                                                                                                                 
|      |  |   |  |                                                                                                                                                                                                                                                                                                                                                      
|10.9* |  |  |  | Executive Termination Agreement, dated July 27, 2000, between the
Company and Michael J. Simmons (incorporated herein by reference from
Exhibit Number 10.2 to the Companys Quarterly Report on Form 10-Q for
the calendar quarter ended September 30, 2000).                                                                                       

43



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##### Table of Contents



|       |  |   |  |                                                                                                                                                                                                                                                                                       
|------ |  | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.10* |  |  |  | Executive Employment Agreement, dated March 23, 1998, between the
Company and John Montague (incorporated herein by reference from exhibit
10.10 to the Companys Annual Report on Form 10-K filed on April 17,
2001).                                                                
|       |  |   |  |                                                                                                                                                                                                                                                                                       
|10.11* |  |  |  | Executive Employment Agreement, dated April 7, 1998, between the
Company and Ira Herman (incorporated herein by reference from exhibit
10.11 to the Companys Annual Report on Form 10-K filed on April 17,2001).                                                                     
|      
|10.12  |  |  |  | Asset Purchase
Agreement dated as of October 1, 2002, by and among the Company;
PowerCerv Technologies Corporation; PCV Acquisition, Inc.; and ASA
International, Ltd. (incorporated by reference from Appendix C to the
Companys definitive Proxy Statement dated October 14,
2002).
|       |  |   |  |                                                                                                                                                                                                                                                                                       
|22     |  |  |  | Subsidiary of the Registrant (incorporated herein by
reference from Exhibit Number 21 to the Companys Registration
Statement on Form S-1 (File No. 333-00250)).                                                                                                                      
|       |  |   |  |                                                                                                                                                                                                                                                                                       
|23.1** |  |  |  | Consent of
Independent Certified Public Accountants  Grant Thornton LLP.                                                                                                                                                                                                             
|       |  |   |  |                                                                                                                                                                                                                                                                                       
|99.1** |  |  |  | Certification of
Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350.                                                                                                                                                                              



---

|*  |  | Management contract or compensatory plan, contract or arrangement.
|-- |  | ------------------------------------------------------------------
|  
|** |  | Filed herewith.                                                   

44