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

                                    FORM 10-K

             CHAPTER A FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
           SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)

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

      For the fiscal year ended December 31, 2001

                                       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 0-25297
                              Ecometry Corporation
             (Exact name of registrant as specified in its charter)

                   Florida                                   65-0090038
       (State or Other Jurisdiction of                    (I.R.S. Employer
       Incorporation or Organization)                    Identification No.)

         1615 South Congress Avenue,                         33445-6368
            Delray Beach, Florida                            (Zip Code)
  (Address of Principal Executive Offices)

       (Registrant telephone number, including area code): (561) 265-2700

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

                                      None

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

         Common Stock, $.01 Par Value Per Share (Nasdaq National Market)
                              (Title of each Class)

      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|X| No|_|

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

      As of February 19, 2002, the aggregate market value of the voting stock
held by non-affiliates of the registrant was approximately $34,658,702 based on
the closing price on that date of $2.79 per share. As of that date, there were
12,422,474 shares of the registrant's Common Stock outstanding.

                       Documents Incorporated By Reference

      The information required by Items 10, 11, 12 and 13 of Part III of this
Form 10-K is incorporated by reference to the Definitive Proxy Statement of the
Company relating to the 2001 Annual Meeting of Shareholders.

      Certain exhibits listed in Part IV of this Form 10-K are incorporated by
reference from prior filings made by the registrant under the Securities Act of
1933, as amended.

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                      ECOMETRY CORPORATION AND SUBSIDIARIES

                           ANNUAL REPORT ON FORM 10-K

                                      INDEX

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                                                                           Page
                                                                          Number
                                                                          ------
                                     PART I
<S>      <C>                                                                 <C>
Item 1.  Business..........................................................    1

Item 2.  Properties........................................................   20

Item 3.  Legal Proceedings.................................................   20

Item 4.  Submission of Matters to a Vote of Security Holders...............   21

                                     PART II

Item 5.  Market for Registrant's Common Equity and Related
         Stockholder Matters...............................................   21

Item 6.  Selected Financial Data...........................................   22

Item 7.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations.........................................   25

Item 7A. Quantitative and Qualitative Disclosures About Market Risk........   35

Item 8.  Financial Statements and Supplementary Data.......................   35

Item 9.  Changes in and Disagreements with Accountants on Accounting
         and Financial Disclosure..........................................   35

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K...   35
</TABLE>

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                                     PART I

      This report contains or incorporates by reference forward-looking
statements that are subject to risks and uncertainties. Forward-looking
statements include information concerning the financial condition, results of
operations, plans, objectives, future performance and business of Ecometry
Corporation and its subsidiaries (the "Company" or "Ecometry Corporation"),
formerly known as Smith-Gardner & Associates, Inc. The Company changed its name
to Ecometry Corporation in December 2000. The Company includes forward-looking
statements in descriptions of future earnings and cash flows, anticipated
capital expenditures and management's strategies, plans and objectives.
Statements preceded by, followed by or that include the words "believes,"
"expects," "anticipates" or similar expressions are generally considered to be
forward-looking statements. Forward-looking statements involve both known and
unknown risks and uncertainties and actual results or performance may therefore
differ materially from the expected results or performance expressed or implied
by the forward-looking statements. See "Risk Factors" for a discussion of
important factors that could cause actual results to differ materially from
those expressed in or implied by such forward-looking statements.

Item 1. Business

General

      The Company is a provider of enterprise software solutions and services to
the multi-channel commerce industry. The Company's clients include direct
marketing and catalog companies, retailers and manufacturers with significant
direct sales channels, Internet-only companies and fulfillment houses. The
Company's family of software products ("Ecometry Retail Enterprise" or
"Ecometry") is designed to automate multi-channel commerce activities, including
marketing, advertising analysis, sales, telemarketing, ordering, customer
services, merchandising, procurement, electronic and Internet commerce, supply
chain management, warehousing, shipping, accounting and systems operation.
Ecometry Retail Enterprise also provides managers and sales personnel with
real-time operations, inventory and customer data to improve both management
decision making and customer service.

      Since its inception in 1988, management of the Company has concentrated on
providing software-based systems and services to direct marketing companies and
to retailers and manufacturers with significant direct sales channels. By
focusing on this market, management believes that the Company has been able to
develop significant industry expertise that has been incorporated in the
functionality of the Company's products and services. The Ecometry system offers
over 3,000 functional options, the ability to process up to 400,000 transactions
per day and is used primarily by companies with high-volume direct sales
operations. Ecometry Retail Enterprise, the Company's end-to-end retail commerce
solution, is a highly scalable system that enables real-time interactive
customer ordering and customer services, and automates the processing of front
and back-office functions for companies selling products through all direct
sales channels.

      The Company's Ecometry Retail Enterprise Solution has been sold to more
than 300 clients located primarily in North America and Europe. Ecometry
Corporation's client base includes companies such as Nordstrom, RedEnvelope.com,
Lego, Nine West, Brookstone, Levenger, KBkids.com, Hickory Farms, Wine
Enthusiast, QVC Network and Time Life.

      The Company was incorporated as a Florida corporation in 1988. The
Company's principal offices are located at 1615 South Congress Avenue, Delray
Beach, Florida 33445-6368 and the telephone number at that location is (561)
265-2700.

Industry Background

      Prior to the emergence of the multi-channel commerce industry, the direct
sales industry principally consisted of companies engaged in marketing and
selling their products and services through traditional direct marketing
channels, such as catalogs, direct mailings, print ads, telemarketing,
television or radio. Typically, the selling process involved marketers
contacting and soliciting potential customers through these traditional direct
marketing channels. Those customers ordered their products by mail, paid by
check and received purchased products by carrier thereafter. This process
normally took four to six weeks due to lengthy processing times and slow
delivery via postal service. As the direct sales industry matured, the sales
process evolved to include toll-free telephone numbers for ordering and customer
service, faster delivery methods and customers'


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increasing preference to pay by credit card. Until the mid 1980s, the direct
sales industry remained dominated by companies selling exclusively through
traditional direct marketing channels.

      In the 1990's, many companies selling exclusively through traditional
direct marketing channels achieved significant success due to their ability to
address growing customer demand for greater convenience and more personalized
service. As a result, many retailers who had previously sold only through retail
outlets entered the direct sales industry. Examples of such retailers include
Macy's, Bloomingdale's, Nordstrom and Saks Fifth Avenue, which market and sell
their products through retail outlets as well as catalogs and direct mailings.
The advantages of direct sales for retailers include an increased ability to
target existing clients, provide better customer service and decrease their
costs of operations.

      With the emergence and acceptance of the Internet as a
business-to-business and business-to-consumer sales channel and the rapid growth
in interactive Internet commerce, the direct sales industry has expanded to
include a much broader range of companies. In addition to traditional direct
marketing efforts, direct sales over the Internet have become a new, important
sales channel for a wide range of companies who traditionally relied
predominantly on in-store sales, large in-house direct sales organizations,
independent distributors, or person-to-person solicitation. The growth in
interactive Internet commerce coupled with increasing competition among
retailers and marketers have significantly increased the use of direct marketing
and sales strategies and have greatly expanded the range of marketers and
retailers deploying such strategies. This new multi-thronged sales approach to
retailing, referred to as multi-channel commerce, is being quickly adopted by
companies who have previously sold through single channels.

The Multi-Channel Commerce Industry Today

      The multi-channel commerce industry encompasses companies selling products
to customers through direct channels, such as catalogs, direct mail, TV
infomercials, radio, print ads, outbound telemarketing, the Internet and other
direct sales based channels, in addition to traditional in-store sales.
According to the Direct Marketing Association ("DMA"), U.S. sales revenue
attributable to direct sales via several channels, i.e. catalog, outbound
telemarketing, broadcast, web, was estimated to reach in the trillions for
annual sales for the year 2001, with the greatest growth in online or internet
sales. Both business to business and consumer sales via the internet are
expected to grow through 2005, with business to business at 41.5% per year
(forecast to reach $90.8 billion) and business to consumer at 43.4% per year
(forecast to reach $54.0 billion).

      According to the most recent DMA State of the Industry Interactive
E-Commerce Marketing Report, dated January 2001, 50% of companies have
integrated Catalog, Retail, and Web operations, with 55% of companies investing
in technology enhancements and spending more on the development of online
marketing than on marketing and promoting their websites.

The Multi-Channel Commerce Software Market

      As a result of the growth in Internet commerce and the increased use of
other direct sales channels, many marketers are expanding to a multi-channel
sales strategy and need to enhance their information technology solutions to
accommodate the direct sales business model. The Company believes that such
companies seek information technology solutions that can help them effectively
manage their customer database, order flow from web pages and other sales
channels while simultaneously centralizing and automating their front and
back-office operations and managing all aspects of their multi-channel sales
operations. These solutions must be able to integrate seamlessly with the other
systems or applications that these companies currently use, and must enable
real-time information flow to help managers target potential customers, analyze
sales and product strategies, enhance and access customer service records and
synchronize key data. Multi-channel retailers require systems that are flexible
and that support innovative new marketing initiatives and methods of operation,
which may be implemented in the future. Since certain direct sales segments,
particularly the Internet commerce segment, are growing rapidly, multi-channel
commerce systems must also be highly scalable and efficient.

      Current technology alternatives for companies with multi-channel commerce
operations are typically comprised of general purpose or retail-oriented
enterprise resource planning ("ERP") software and electronic commerce add-on
applications without real-time access to enterprise databases. This technology
solution is prevalent among companies that traditionally sell through
wholesalers, distributors, in-house sales forces or retail outlets. Another
common technology alternative consists of point solutions targeted to Internet
commerce, but with limited breadth and depth of functionality. These point
solutions tend to be


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difficult to use and do not help managers access and leverage the enterprise
knowledge residing in company databases. In-house technology solutions are also
common in the multi-channel commerce industry, especially among larger
companies. These in-house solutions are typically expensive to develop, modify
and maintain and require a sophisticated in-house software development staff.
Also, technology development is typically not the core strength of the company,
and in-house software often lacks the vision and perspective to keep up with
technological change. As a result, management of the Company believes that a
significant opportunity exists for third-party technology providers to offer
enterprise-wide, best-of-breed software solutions designed specifically for
multi-channel commerce.

The Ecometry Solution

      The Company's cornerstone software solution is Ecometry Retail Enterprise,
a fully integrated, enterprise-wide, mission-critical, multi-channel commerce
software suite that includes its award-winning systems previously known as MACS
and WebOrder. The software suite helps managers of multi-channel commerce
companies operate their businesses more effectively and efficiently by
automating operations and making available real-time information relating to
nearly every facet of these companies' operations. The solution incorporates
analytical tools, best-of-breed methodologies, in-depth functionality and
enterprise-wide information flow. The Company also provides extensive customer
support services, custom development and integration services as well as web
design, consulting, installation and training.

      Ecometry Online (previously known as WebOrder) provides a real-time
interactive Internet commerce solution within the Ecometry suite. Ecometry
Online, first installed in November 1997, positions the Company to benefit from
the strong growth in the Internet commerce segment of the multi-channel commerce
industry. Ecometry Online provides real-time customer access to inventory
availability, order status and customer service functions. Ecometry Online
enables Internet marketers to effectively manage order flow from Web pages and
other direct sales channels while simultaneously integrating marketing, sales
and back-office operations.

The Company's solutions are designed to provide its clients with the following
benefits:

            Fully Integrated and Highly Functional Solutions. Ecometry supports
      all of the major areas of multi-channel commerce including marketing,
      advertising analysis, merchandising, sales, purchasing, accounting,
      telemarketing, ordering, customer service, electronic and Internet
      commerce, supply chain management, warehousing, shipping, production and
      systems operation. The solution enables real-time information flow that
      supports marketing and database analytics and sophisticated management
      reports. Ecometry also eliminates potential errors arising from the
      maintenance of multiple unsynchronized databases. In addition to
      approximately 3,000 standard features, the Company's software solutions
      offer approximately 1,500 customization options and enable its users to
      tailor this solution to their changing business needs and processes
      without disrupting the underlying data model and interrupting the
      business.

            Versatility and Open Technology Environment. The Ecometry solutions
      use open technology and readily integrate with many third-party systems
      and software applications. Ecometry's N-tier architecture utilizes COM
      objects and is based on relational databases, such as Oracle. Ecometry has
      been successfully integrated with software solutions provided by
      third-party vendors such as Island Pacific, Manhattan Associates,
      PeopleSoft and Great Plains. We believe the entire multi-channel commerce
      market can be addressed by Ecometry's present platforms.

            High Volume Internet Commerce Capability. Ecometry Online provides
      an Internet commerce solution, which incorporates the scalability and
      functionality of its proven back office application suite and can
      accommodate the Internet commerce requirements of very large retailers.
      Ecometry Online enables traditional retailers, manufacturers, and
      catalogers to add a high volume Internet commerce channel to their
      marketing and sales activities.

            Processing Scalability and Reduced Operating Costs. Ecometry enables
      companies to process up to 400,000 orders per day, minimize overhead
      costs, enhance decision support and data analytics, improve the efficiency
      and quality of customer services and streamline overall operations.
      Ecometry can also reduce the operating costs that would otherwise be
      associated with the ongoing maintenance and updating of legacy, batch and
      mainframe systems.


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Strategy

      The Company's objective is to become the world's leading provider of
software solutions to the multi-channel commerce industry. The Company's
strategies to achieve this objective include the following:

            Capitalize on Multi-Channel Commerce Growth. The Company intends to
      continue to expand its marketing and sales of Ecometry Retail Enterprise
      to traditional retailers and manufacturers as well as direct marketing and
      catalog companies who are selling to their customers across multiple touch
      points, such as websites, mobile wireless devices, stores, call centers
      and online trading exchanges. Ecometry offers a sophisticated, highly
      scalable technology solution for multi-channel commerce activities
      providing a single view of the customer across each customer interaction
      channel. With the emergence of the Internet as the fastest growing sales
      and service medium of the retail industry and the growing need for
      retailers to be more competitive, companies are rapidly adopting
      multi-channel sales and service strategies.

            Develop New Product Offerings. The Company is enhancing its product
      line with a full view functionality interface ("FVF"). FVF is an Ecometry
      design standard that incorporates within a single screen all the
      information required to perform a particular task. Users have the ability
      to quickly access a wealth of information about the customer, the order,
      the product or the promotion without having to launch multiple
      applications. Through the use of tabs, the single screen leads to a
      multitude of data, all specific to the module in use. Currently, FVF is
      available for Order Entry and Customer Service as well as for Point of
      Sale.

            Deploy Product Offerings Across New Platforms. The Company completed
      development of its Ecometry solutions on the Unix platform as well as the
      NT platform and is presently focused on deploying these versions at client
      sites. All the features and functions of the HP e3000-based product have
      been incorporated into the Unix and NT versions. The company believes that
      with HP's phase-out of the MPe platform, it will be able to address this
      market.

            Extend Product Offerings With Strategic Alliances. The Company seeks
      to increase its business development activities and further extend its
      product line through partnerships with companies offering best of breed
      solutions. The Company established a formal Business Alliance Program in
      2000 targeted at identifying new strategic technology and service partners
      to maximize lead generation opportunities and to further enhance Ecometry
      software and services. The program launched in early 2001 and is known as
      the Ecometry Alliance Network, offering three levels of partnership.

            Increase Sales to Existing Clients. The Company's sales team intends
      to continue to sell optional product modules to its existing clients,
      including Predictive Response, Computer Telephony Integration (CTI),
      Inventory Forecasting, and E-Mail Executive, and to upgrade clients to
      modules that offer the Full View Functionality interface.

            Expand Service Offerings. The Company's consulting and service
      offerings are critical components of its client-driven solution. The
      Company intends to continue to market its comprehensive consulting and
      client support services to facilitate the timely installation,
      implementation and effective utilization of its products.

Products

      The Ecometry family of products offers an integrated, flexible, modular
solution for front and back-office operations, decision support analytics,
Internet commerce marketing and transaction processing functionality. The first
version of the Ecometry Retail Enterprise (previously known as MACS) was
installed in 1990. In 1997, the Company released a new Internet-based solution
called Ecometry Online (previously known as WebOrder). Today's versions of MACS
and WebOrder make up the Ecometry suite of applications.

      Ecometry Retail Enterprise is available on multiple platforms, depending
on the needs of the individual business: Unix, running on the HP9000 accessing
an Oracle database, Windows 2000 (NT) accessing an Oracle database, MPE/iX,
running on the HP e3000 accessing an Image database. The system is suitable
either for small companies with 15 user connections or for large organizations
with mainframe class configurations of 2000 plus users.


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      In November of 2001, Hewlett Packard ("HP") announced it would be
discontinuing sales of the HP e3000 as of November 1, 2003. HP will continue its
support of this platform until January 1, 2007. This will provide time to
transition customers running Ecometry Retail Enterprise MPE/iX to another
operating system platform such as Unix or NT. Ecometry customers who decide to
transition to an NT or Unix platform will receive financial credits from HP for
the upgrades. HP will provide customers who have the newer A or N class servers
with conversions to HP9000 systems free of charge. The Company's inability to
successfully deliver its Ecometry Retail Enterprise family of products on
alternate operating system platforms such as Unix and NT could have a material
adverse effect on the Company's business, financial condition or results of
operations.

      Every application within Ecometry Retail Enterprise incorporates
technological excellence. Graphic techniques are utilized to instantly display
real-time management information throughout the company, from marketing to
warehousing. The combination of a high-speed database and sophisticated indexing
software provides the functionality of a relational database without the
performance penalties that normally accompany such tools. On the front end, the
solution offers an unparalleled shopping cart system and utilizes open
technology such as XML (extensible mark-up language), CGI (common gateway
interface) and COM (component object module) Objects for system integration. To
meet enterprise Web requirements, Ecometry utilizes J2EE (Java 2 Enterprise
Edition) as its standard environment, ensuring platform independence,
reliability, security and scalability.

      Ecometry recognizes that every company is unique and offers the ability to
customize the system to fit specific business needs. Utilizing XML as the
standard interface, the built-in flexibility of the original design allows ease
of integration with other third party or in-house developed technologies without
compromising the basic integrity of the Ecometry system. Ecometry Optional
Modules, for example, include interfaces into third party Financial Systems,
Retail Management Systems and Warehouse Management Systems:

      Additionally, hundreds of control switches allow users to create
operational models that are best suited to their individual businesses,
including management of multiple companies and multiple divisions within one
system.

      The prices for Ecometry Retail Enterprise including third party software
and hardware, range from $80,000 to more than $2 million, depending on the
number of users and CPUs required.

Products and functionality available with Ecometry Retail Enterprise are:

      Accounting

      Ecometry Accounting provides a robust, built-in accounting module that
      handles all accounts receivable, accounts payable and general ledger
      activities. The module easily supports the accounting structure for
      multi-companies, multi-divisions and multi-departments. Instant financial
      reporting is available and the system can be interfaced to most major
      accounting packages. The system supports foreign currencies, gift
      certificates, coupons, and cyber cash.

      Online Customer Service

      Ecometry Online Customer Service offers an array of features that simplify
      the process of interacting with customers. Functions include instant
      order, inventory and shipping status, modification of orders that have
      already been placed, cancellation or substitution for backorders, return
      authorization requests, access to complete purchase history, live text
      chat, live voice chat and more.

      Online Shopping

      Ecometry Online Shopping provides its own universal shopping cart system
      and online order taking functions, including multiple ship-to's, gift
      wrapping and gift boxing, order commenting, ship methods by item,
      automatic reorders, real-time stock availability, instant order
      confirmations, and online credit card authorization. This module offers a
      variety of payment options: open accounts, purchase orders, traditional
      checks, debit cards, multiple credit cards and installment billing, gift
      certificates, coupons and Internet pay methods.

      Order Management and Processing

      Ecometry Order Management provides every feature needed to manage customer
      orders from any source: Internet,


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      mail, telephone and fax. Functions include cross-sell and upsell routines,
      credit card processing with built-in fraud control security checks,
      multiple ship to's, customer account information and automated customer
      service correspondence. Tax is calculated automatically for the consumer
      based on the tax nexus of each company. Shipping and handling fees can be
      set or tiered and can also vary by offer. Order processing is handled on a
      FIFO (first in, first out) basis with real-time inventory allocation and
      costing. Backorder logic includes automated FTC compliance notification.

      Shipping

      The Shipping module facilitates automatic shipping and EDI manifesting
      with every major shipping service. Ecometry shipping also enables "best
      way" shipping, allowing retailers to control how packages are shipped
      based on pre-defined variables such as least cost, proximity, fastest
      service, etc.

      Warehousing

      Ecometry Warehousing incorporates multi-warehousing, bar coding, auto
      package checking, auto shipping, multiple manifests and sophisticated
      picking algorithms, restocking routines, returns management, cycle counts
      and stock adjustment reports--all the key aspects required to operate
      either a large or small operation efficiently. Automated click-through
      shipment tracking is available for customers ordering through the
      Internet. There are a number of optional modules available to Ecometry
      clients. Pricing for these optional modules is based on individual user
      requirements and needs.

      Assembly

      Aimed at integrating light manufacturing with a retail operation, the
      Ecometry Assembly module provides the capabilities to buy and stock raw
      material, create bills of material to describe the assembly process, track
      costs for assembly (including labor and machine time) and predict demand
      for raw materials from the sales of finished goods.

      Computer Telephony Integration

      Enhanced customer service and lower operating costs are attained through
      the synchronization of telephone and computer systems in a distributed
      call environment. Screen pops provide relevant customer data, allowing a
      service representative to personalize each call. Customer profile
      information is instantly available for order entry, reducing operator talk
      time and input error rates. Time efficiencies can be rededicated to upsell
      and cross-sell activities.

      Contact Relationship Manager

      Focused on promoting additional sales and/or driving collection revenues,
      Ecometry Contact Relationship Manager allows a company to select criteria
      for the outbound campaign and track call results. A database can be
      divided or assigned to specific telemarketers for optimum results and
      sales commissions can be automatically tracked and recorded.

      Continuity

      For businesses marketing goods through clubs such as books, CDs, and
      videos, Ecometry Continuity module includes "club processing"
      functionality, installment billing and a variety of other features
      specifically designed to handle this type of fulfillment.

      E-Mail Executive

      E-Mail Executive is a personalized automated e-mail response system that
      receives e-mail messages from customers and categorizes them based on
      predetermined keywords. The module enables instant sorting and routing to
      appropriate departments so that a prompt and personalized response can be
      generated either manually or automatically.

      Financial Interface

      Ecometry's standard interface to external General Ledger and Accounts
      Payable Systems allows financial transactions that are recorded in
      Ecometry Retail Enterprise to be exported to third party financial systems
      immediately upon readiness for posting.


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      Gift Registry/Wish List

      This module offers online customers the ability to create gift registries,
      such as those in the traditional retail arena, as well as personal wish
      lists, allowing shoppers to choose and store items that interest them for
      later purchase.

      Installment Billing

      The Ecometry Installment Billing module processes the billing of
      customers' credit cards in two or more equal installments, and the entire
      allied inventory and shipping functions associated with installment
      payments.

      Inventory Forecast Manager

      This decision support module uses a subset of data from Ecometry Retail
      Enterprise and projects sales for items in specified offers based on
      projection curves. If seasonality affects a business, this intelligent
      tool factors in all relevant data to accurately forecast inventory levels
      and help control costs.

      Predictive Response

      Predictive Response facilitates one to one merchandising and website
      personalization by using clickstream data, behavioral profiles, order
      transaction history and rules based logic to anticipate customer product
      preferences. The module enhances service to online customers by offering
      products tailored to individual interests and increases the likelihood
      that browsers will become buyers.

      Retail Interface

      Ecometry Retail Enterprise can accomplish the exchange of information
      utilizing tools to interface to various points within a Retail Management
      System. Although this module is still in development, available tools
      presently include:

            o     Item Creation and Maintenance - providing the ability to
                  create and maintain items to be sold across channels within
                  the RMS and then add or modify them within Ecometry
            o     Purchase Orders - allowing the creation of PO's within the RMS
                  and the receipts of the resulting inventory within Ecometry
            o     Inventory Maintenance - allowing inventory to be maintained in
                  the RMS and allocated to Ecometry for sale to traditional
                  Ecometry channels.
            o     Financial Order Information - providing the ability for
                  financial transactions resulting from activity in Ecometry to
                  be extracted and reported to a RMS

      Retail Point of Sale

      For catalog and e-commerce companies with fewer than 36 retail
      stores/outlets, Ecometry Point of Sale (POS) interfaces with Ecometry
      Retail Enterprise for customer and product data and allows for separate
      store inventories, cash register management and optional drop shipping of
      items not available in the store.

      Standing Order

      Ecometry Standing Order is a set of functions that automates periodic
      replenishment of a particular product or product category. A necessity for
      consumables or virtually any type of merchandise that can produce repeat
      sales, this option handles all the complex details involved in instituting
      and implementing this type of program.

      WMS Interface

      This module provides a real-time interface from Ecometry Retail Enterprise
      to a third party Warehouse Management System, allowing split second
      communication between the two applications. The module sends item and
      purchase order data to the WMS on an as needed basis, and passes processed
      orders, stop shipment requests, and returns as they occur. The interface
      allows Ecometry to accept real-time inventory and billing data, including
      stock adjustments, stock movements, purchase order receipts, return
      receipts, physical inventory counts, short shipments, cancels, and ship
      confirmations. Such updated transaction data enables CSRs to always
      provide customers with detailed, real-time information.

      Wireless Warehouse

      Wireless Warehouse provides for wireless real-time inventory updates
      between warehouse personnel and Ecometry Retail Enterprise. It improves
      accuracy and productivity by gathering input data through barcodes and
      scanners.


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      This module supports receiving, pallet building for receiving or stock
      moving, pallet depletion, single stock movements, stock adjustments, cycle
      counting, and physical inventory counting.

Products Under Development

      Ecometry Retail Enterprise for Unix and NT

      In light of Hewlett Packard's announcement to discontinue the HP e3000,
      the Company is continuing to focus on enhancements and new functionality
      for Ecometry's solutions currently available on the Unix and NT operating
      systems.

      Bridal Registry

      The Bridal Registry module offers customers the ability to create and
      maintain bridal registries, which then other customers can then access at
      the retail site, via online shopping site or through a retailer's call
      center.

      Call Center Services

      Ecometry Call Center provides Customer Service Representatives with
      superior order taking functionality as well as customer service
      capabilities, and enables them to modify costs for special customers,
      create future orders, change shipping addresses, and respond to other
      service requests. The module also includes a customer service tracking
      function that captures the reasons for incoming customer service issues,
      such as order status, product availability, late delivery, damaged
      merchandise and return authorization.

      Campaign Manager

      Ecometry Campaign Manager personalizes the shopping experience for the
      online customer, enabling companies to interact with and sell to each
      customer on an individual basis. This module facilitates custom web offers
      and website personalization by utilizing customer clickstream data, order
      transaction history and customer profile data. Companies have the ability
      to create an unlimited number of outbound Internet campaign programs to
      acquire new customers and increase the lifetime value of existing
      customers.

      Content Manager

      Ecometry Content Manager manages the product master file, including its
      associated content, product attributes and purchasing functions such as
      price, cost, vendor/manufacturing data, style matrices, personalization,
      monogramming, product bundles or kits, product pictures, customer
      testimonials, vendor specifications, upsell/cross-sell copy, return
      policies and more.

      Parallel WebShopper

      Ecometry Parallel WebShopper offers a high availability option for web
      shopping, significantly increasing performance and scalability. The module
      enables order functions to operate continuously, ensuring the integrity of
      incoming orders 24 hours per day, 7 days per week ("24/7"), even if the
      back end commerce engine is disabled for any reason.

      The Replicated Reporting Database

      The Replicated Reporting Database, which will be offered through a third
      party, provides a repository for collecting, storing and analyzing
      customer data outside of the production system. Through the use of
      Ecometry's high-speed data replication utility, all customer and order
      transaction data is available in near real time, producing analyses, which
      can execute events to drive sales and service. This database stores and
      provides information from all sales channels, recognizes the customer, the
      channel the customer has come through, the value of that customer, and the
      corresponding action that should be taken.

      Retail Interface

      Ecometry Retail Enterprise can accomplish the exchange of information
      utilizing tools to interface to various points within a Retail Management
      System. Although certain of these tools are presently available,
      additional functionality is being contemplated.

      FVF


                                       8
<PAGE>

      The Company is enhancing its product line with a full view functionality
      interface. FVF is an Ecometry design standard that incorporates within a
      single screen all the information required to perform a particular task.
      Users have the ability to quickly access a wealth of information about the
      customer, the order, the product or the promotion without having to launch
      multiple applications. Through the use of tabs, the single screen leads to
      a multitude of data, all specific to the module in use. Currently, FVF is
      available for Order Entry and Customer Service as well as for Point of
      Sale.

Clients

      The Company's clients include traditional direct marketing and catalog
companies, brick and mortar retailers and manufacturing companies, Internet-only
based retailers, and fulfillment houses. The Company generally targets
multi-channel commerce companies in their respective industry segments. The
Company has sold its products to more than 320 clients. The following is a
representative list of the Company's clients as of December 31, 2001, generally
categorized by industry segment:

<TABLE>
<CAPTION>

<S>                                    <C>
APPAREL/SHOES                          GENERAL MERCHANDISE GIFTS

Coldwater Creek, Inc                   RedEnvelope.com
dELiA*s                                KBkids.com
Nine West Group                        Brookstone, Inc.
Nordstrom, Inc.                        Hammacher Schlemmer
                                       Lego Systems, Inc.

COMPUTER SOFTWARE/HARDWARE             TV HOME SHOPPING

Club Mac                               The Shopping Channel
Softmart                               Antena 3 Directo
Cyberguys                              QVC Network, Inc.
PC Mall

EDUCATIONAL SUPPLIES/BOOKS             HEALTH & ENVIRONMENT

ClassroomDirect.com                    Fruitful Yield
Childcraft Education                   Gaiam, Inc.
Earlychildhood.com                     Indiana Botanic Gardens
Educational Experience                 Pure Encapsulations
Time Life, Inc.

FOOD AND BEVERAGE                      OTHERS

Ethel M. Chocolates                    JC Penney Logistics, Inc.
Hickory Farms, Inc.                    Zomax
Wine Enthusiast                        United Methodist Publishing House
Savory Foods                           Hot Topic
Republic of Tea                        Asset Marketing
</TABLE>

      None of the Company's clients accounted for more than 10% of the Company's
revenue in 2001, 2000, 1999 or 1998. For the year ended December 31, 1998, the
Company's two largest clients, United States Mint and Multiple Zones, in the
aggregate accounted for 16.8% of the Company's revenue. In 1997, the Company's
three largest clients, Genesis Direct, Inc., dELiA*s and KAO Infosystems Co., in
the aggregate accounted for 18.6% of the Company's revenue.

Client Services

Client Support

      The Company believes that a high level of service and support is critical
to its success and an important competitive


                                       9
<PAGE>

advantage. The Company's installation teams consist of a project manager, a
technical lead, two support analysts and as many installers or trainers as are
required for a given installation. The installation team assists clients in
configuring the system to meet their business requirements. They also train the
client's executives, managers, and trainers on the application. Clients will
stay in the installation support team for a period of three to six months after
they begin processing orders through the system. Thereafter, the Company
transitions the client to one of its levels of support services.

      The Company's client support function is responsible for servicing its
clients after the initial implementation project is complete. The Company
supports approximately 225 clients in over 6 countries. These operations enable
the Company to respond more quickly and effectively to the needs of its
multinational and international clients. Approximately 75% of current Ecometry
users participate in the Company's support services program.

      The Company believes that a close and active service and support
relationship is important to client satisfaction and also provides the Company
with information regarding evolving client requirements. For example, the
Company assigns an Account Manager to all clients. The Company offers three
levels of support: Bronze, Silver and Gold. The Company provides telephone
support from 8:00 a.m. to 9:00 p.m. (EST) weekdays, 24/7 support for production
stopping issues, and uses electronic bulletin boards and other forms of
electronic distribution to provide clients with the latest information regarding
the Company's products.

      The Company's Bronze support services provide complete, full time
technical support. Each Account Manager handles multiple clients and has a
dedicated team of Support Analysts to ensure that issues are resolved in an
expedient manner. When a client calls the Company with a question or issue, it
is initially reviewed by the Account Manager and then assigned to a team member
for resolution. More complex issues can then be referred to the Company's
technical support team and, if necessary, to the Company's programming unit. The
Company provides its clients with telephone support to give timely responses to
systems issues. The Company continually communicates with its clients through
seminars, and Account Managers provide weekly reports and conference calls to
each client detailing the status of the account. Event schedules, product
enhancement requests and electronic mail are available to clients on the
Company's Internet web site as well. In addition, this Internet support site
contains a knowledge database where searches can be done based on key-words, a
section for frequently asked questions and how-to's, an archive of release notes
for current and prior upgrades, as well as a complete set of on-line user
documentation. Depending on the services delivered, support services typically
are priced at 18% of the total license fee per year and include, without charge,
any new version releases of software.

      The next level of support the Company offers is Silver Level, which
provides services to those clients interested in sharing an Account Manager. The
ratio is 2-3 clients per manager, combined with an additional support team
consisting of a backup Account Manager, an accounting tech, and a Business
Manager. A copy of the client's production account is also maintained for
replication of issues and management meets weekly to report on the status of the
accounts. Pricing is based on user licenses plus an additional monthly fee,
subject to a minimum.

      The Company's Gold support services provide premier technical service for
its larger clients through the assignment of a dedicated Account Manager and a
team of support personnel. For these clients, the Company maintains a copy of
their production software environment on the Company's client support system to
enable the Account Manager to expedite the resolution of all client issues. The
Company believes that such services build a strong, strategic relationship,
which enhances the future business prospects of the Company. Support contracts
are typically service agreements pursuant to which clients pay a monthly fee
based on a percentage of the total software license fee. Installation and
training are either included in the initial license fee or invoiced separately
as services revenue. Gold level services are typically priced based on the level
of support services provided and number of CPU's.

      The Company's Client Services department has specialized groups to assist
clients with technical and hardware issues. The department also contains a
separate specialized group for web design, support and installation of Ecometry
Online. This group is responsible for assisting the customers with the
implementation of the Ecometry Online software feature, and the resolution of
all related issues. The web design group will work with clients to design a
quality E-commerce site that is fully integrated to the Ecometry application
suite.


                                       10
<PAGE>

      As of December 31, 2001, the Company employed 117 Client Support Services
personnel, consisting of 29 Implementation, 49 Standard Support, 21 Major
Account support, 6 Web Implementation and support and 12 Technical and Hardware
support personnel.

Consulting and Customization

      The Company's consultants conduct site examinations and assist clients in
developing and implementing advanced Ecometry strategies. With significant
experience in the direct commerce industry, the Company's consultants provide
practical and proven direction in developing strategies, which apply
best-practice Ecometry methodologies that meet the client's requirements.
Depending on the client's needs, the Company offers:

      o     Requirements analysis and Ecometry software evaluation services;

      o     Advanced Ecometry methodology consulting;

      o     Benchmarking and other advanced strategy workshops involving clients
            and industry experts;

      o     Integration services and technical consulting in areas such as data
            conversion, system interfaces and database/network tuning;

      o     Project management services intended to lead the client through the
            implementation activities required to achieve successfully the
            client's business objectives; and

      o     Custom programming for system enhancements and system interfacing.

      Consulting and customization services are delivered directly by the
Company but are also delivered in conjunction with third-party service providers
such as systems integrators and specialist consulting firms.

Training and Education

      The Company offers a variety of standard and customized training and
education services at client sites, at the Company's headquarters in Delray
Beach, Florida, and at selected regional sites throughout the country. Upon the
installation of Ecometry Retail Enterprise, the Company provides a two-week
training course for each client's staff. The training curriculum is delivered by
specialists who utilize proven education techniques and advanced technology. The
Company also offers 14 standard courses at various times throughout the year as
well as customized on-site courses for training in the application of its
Ecometry products through the Ecometry Corporation Academy. The Company also
offers a "train the trainer" program in which the Company trains client
employees designated as trainers within their organization. These trainers are
educated in both training techniques and the optimal use of the Company's
products. The Company believes its "train-the-trainer" methodology is a crucial
element in the success of its implementations, which often span multiple
departments, plants and countries. Continuing education and training is
delivered through standard courses with package prices or can be contracted for
on a time and materials basis.

Sales and Marketing

      The Company markets and sells its products and services to new prospects
and existing clients primarily through its direct sales force. These personnel
are trained in the Company's products and service offerings and in the
operations of the Company's clients. The Company's personnel use a
"consultative" selling approach, because the sales process requires an
understanding of the multi-channel commerce industry as well as comprehensive
computer and systems expertise.

      The Company's sales force is supported by marketing personnel who generate
and qualify leads through advertising and marketing campaigns, produce product
literature, direct mail campaigns, and display advertising, coordinate
participation at trade shows and conventions, conduct media and industry analyst
outreach, and manage the corporate website. The marketing


                                       11
<PAGE>

department also supports the sales force with appropriate documentation or
presentation and demonstration materials for use during the sales process.
Additionally, the Company supports its direct sales and marketing force with a
group of systems engineering professionals, many of whom also possess vertical
market and practical Ecometry expertise.

      As of December 31, 2001, the Company employed 29 sales and marketing
personnel, consisting of 9 sales representatives and 20 marketing and other
support personnel.

      The Company's method of marketing and selling to a new prospect consists
of identifying the prospect, qualifying the prospect, conducting product
demonstrations and preparing and presenting a sales proposal. The prospecting
process includes advertising in trade publications, outbound telemarketing from
within the established database and newly acquired lists, monthly direct mail
campaigns, and participating in trade shows to generate leads for the direct
sales force. Once a prospect is qualified, direct sales personnel visit the
prospect to understand the specific requirements. This process usually results
in the preparation of a written proposal describing the hardware, software and
services that meet the prospect's requirements. While the Company's sales
personnel usually make the initial sales contact, large and complex
installations generally involve the use of the Company's professional services
group. This group works closely with the sales team to identify the optimal
configuration of Ecometry required for such prospects. This sales cycle
typically ranges from three to six months.

      The Company has executed hardware resale agreements with Client Systems,
Inc., a distributor of HP e3000 products and Avnet (Hallmark), a distributor of
HP 9000 (Unix) products. The Company also has a strategic relationship with
Hewlett-Packard consisting of cooperative marketing and sales activities in the
multi-channel commerce industry.

      The Ecometry user community and the Company have organized an
international users' group whose advisory committee plays an important role in
helping the Company develop and refine its Ecometry products and services
strategies. In addition, the Company hosts an annual World Conference, which
includes presentations by the Company, industry consultants and clients
concerning the features and capabilities of the Company's products. These
conferences include workshops, round table discussions and special sessions
devoted to products, technologies and Ecometry methodologies. Approximately 400
attendees participated in the Company's World Conference and Expo 2001 held in
Boca Raton, Florida.

Research and Development

      The Company's business analysis, programming, quality assurance and
advanced technologies teams perform the Company's research and development
function. The business analysis group performs the functional and technical
requirements for the enhancements that are requested either from the Company's
clients or internal product management group. The programming group is
responsible for the Ecometry software maintenance and enhancement process. The
Company uses a version and patch approach to software release control and
uniformly maintains a current version of each of its products, which is not
subject to enhancements, and a development version, which is enhanced twice per
annum. The Company releases monthly patch updates of its current versions upon
code corrections and believes that this process maximizes the stability of its
products, which is critical to the day-to-day operations of a direct commerce
company. The quality assurance group tests the software each time it passes
through the business and programming groups and performs regression testing
prior to the release of any patch updates or new releases. The advanced
technologies group is responsible for the identification and initial development
of new technology opportunities.

      The Company follows a structured development methodology to ensure the
timely and cost-effective production of high-quality software. The Company has a
formal process through which clients may have input as to modifications of the
Company's products and believes that this input helps it deliver a solution to
its current and prospective clients.

      As of December 31, 2001, the research and development staff consisted of
65 employees. From time to time, the Company has also engaged outside
consultants in its product development efforts. Total expenses for research and
development in the fiscal years ended December 31, 1999, 2000 and 2001 were
approximately $3.4 million, $4.4 million and $4.8 million, respectively. No
software development costs were capitalized in fiscal 1999, 2000 or 2001. In
accordance with Statement of Financial Accounting Standards No. 86, software
development costs are expensed as incurred until technological feasibility of
the software is established, after which any additional costs are capitalized.
To date, the Company has expensed all software development costs because
development costs incurred subsequent to the establishment of technological
feasibility have been


                                       12
<PAGE>

minimal. The Company anticipates that it will continue to commit substantial
resources to product development and enhancements in the future.

Competition

      The market for multi-channel commerce software is competitive, rapidly
evolving and highly sensitive to new product introductions and marketing efforts
by industry participants. This market is also highly fragmented and served by
ERP software providers, electronic commerce software providers, consulting firms
and point solution providers targeting the multi-channel commerce industry. The
Company's largest competitors include companies such as Commercialware,
SigmaMicro, Page Digital JDA Software, Retek, Oracle, PeopleSoft, BroadVision.
The Company's products also compete with information systems developed and
serviced internally by in-house MIS departments. Although the Company believes
that none of its competitors currently compete against the Company in all
industry segments, there can be no assurance that such competitors will not
compete against the Company in the future in additional industry segments. Many
of the Company's potential future competitors may have significantly greater
financial, technical and marketing resources, generate higher revenues and may
have greater name recognition than does the Company. In addition, as the Company
expands into new segments of the multi-channel commerce industry, it will face
competition from other software companies, MIS departments and unforeseen
sources. Compared with the Company, these competitors may have greater
resources, operating experience, credibility and relationships in such new
segments. Although the Company believes that it currently competes favorably in
all industry segments and against all competitors, there can be no assurance
that it will do so in the future.

Proprietary Rights and Licenses

      The Company primarily relies on a combination of copyright, trademark and
trade secret laws, unpatented proprietary know-how, license agreements,
non-disclosure and other contractual provisions and technical measures to
protect its proprietary rights in its products and technology. The Company
typically distributes its software products under software license agreements,
which contain, among other things, provisions limiting the use, copying and
transfer of the licensed program. The Company has obtained a United States
copyright registration for the source code of certain of its Ecometry software.

      The Company currently operates in the United States, and clients in over
17 countries license its products for use. The Company has registered MACS,
MACSII, MACSIII, EUROMACS, THE MACSIMUM, MACSACCESS, the "SG" logo, the
SMITH-GARDNER name, ECOMETRY, the "ECOMETRY" logo and ECOMETRY RETAIL ENTERPRISE
and PREDICTIVE RESPONSE as trademarks in the United States. The Company also has
applied for the registration as trademarks in the United States of STOREROUTER
and ECOMETRY STOREROUTER. The Company believes that international protection and
enforcement of intellectual property rights for software products in particular
may be more limited than in the United States. Specifically, intellectual
property laws in certain countries may not protect software companies from the
loss of intellectual property rights through reverse engineering.

      In November 2001, the Company sold the shares of Smith-Gardner &
Associates Ltd ("SGA Ltd."). At that time a distribution agreement was executed
with Anthony C. Glover, the former managing director of SGA Ltd., pursuant to
which the Company will receive royalties for the sale of its software. SGA Ltd.
and G2 Solutions Ltd., of which Mr. Glover is a shareholder, are guarantors
under the distribution agreement. The Company retained intellectual property
rights to all products to be sold.

      The Company has entered into several agreements regarding the integration
of the intellectual property of third parties into its products. Parties to such
agreements include Robelle, Bradmark, Cognos, GTS, DISC, Oracle and Fujitsu.

      The Company generally enters into confidentiality agreements with
employees and clients, which limit rights and access to, and distribution of,
any proprietary or confidential information. Furthermore, employees execute
agreements requiring disclosure and assignment to the Company of all of the
intellectual property rights associated with any ideas, concepts, techniques,
inventions, processes, or works of authorship relating to the business of the
Company and developed or created during the course of performing work for the
Company or its clients.

      The Company does not believe that any of its products infringe the
proprietary rights of third parties. There can be no assurance that the steps
taken by the Company to protect its proprietary rights will be adequate to
prevent misappropriation of its


                                       13
<PAGE>

technology or development by others of similar technology. Because the software
development industry is characterized by rapid technological change, however,
the Company believes that factors such as the technological and creative skills
of its personnel, new product developments, frequent product enhancements,
industry reputation and client support are more important to establishing and
maintaining a leadership position than the various legal protections available
for its technology.

Mergers

      On October 25, 2001, the Company entered into a merger agreement (the SG
"Merger Agreement") with SG Merger Corp. ("SG Merger"), a newly formed company
organized by Wilburn W. Smith and Allan J. Gardner, officers and board members
of the Company. SG Merger will be merged with and into the Company, with the
Company as the surviving corporation (the "Merger"). Pursuant to the terms and
subject to the conditions of the SG Merger Agreement, each share of common
stock, $0.01 par value per share, of the Company ("Common Stock") outstanding at
the effective time of the Merger (other than shares held by SG Merger and Messrs
Smith and Gardner) will be converted into the right to receive $2.70 in cash.
The transaction is subject to a number of conditions, including approval of the
Merger by holders of a majority of the common stock of the Company not held by
SG Merger and Messrs. Smith and Gardner, and other customary conditions.

      On January 25, 2002, the Company and Citrus Merger Corp., a Florida
corporation ("Acquisition Sub"), Syngistix, Inc., a Delaware corporation
("Parent"), and for limited purposes only, Core Technology Fund IV, LLC, entered
into an Agreement and Plan of Merger (the "Syngistix Merger Agreement") pursuant
to which Acquisition Sub will be merged with and into the Company, with the
Company as the surviving corporation (the "Syngistix Merger"). Pursuant to the
terms and subject to the conditions of the Syngistix Merger Agreement, each
share of Common Stock, outstanding at the effective time of the Syngistix Merger
(other than shares held by the Company, its Subsidiary, Parent or Acquisition
Sub) will be converted into the right to receive $2.90 in cash. The transaction
is subject to a number of conditions, including approval of the Syngistix Merger
by holders of a majority of the outstanding Company Common Stock and the
consummation of the financing arrangements with Core Technology Fund IV, LLC and
The Roser Partnership III, SBIC LP for $10 million (the commitment for which has
been obtained), and other customary conditions.

      In order to induce Parent to make an offer to acquire the Company, SG
Merger, the Company, Wilburn W. Smith and Allan J. Gardner entered into an
Amendment and Waiver to Agreement and Plan of Merger dated as of January 25,
2002 (the "Amendment"). The Amendment amends the SG Merger Agreement. The
Amendment provides, among other items, that the Company's entering into the
Syngistix Merger Agreement shall not constitute a breach of the SG Merger
Agreement and shall not give SG the right to terminate the SG Merger Agreement
or to collect the termination fee provided for in the SG Merger Agreement, other
than the Company shall pay to SG Merger its reasonably documented fees and
expenses incurred to date in connection with the SG Merger Agreement. Any such
fees and expenses shall be deducted from any termination fee payable to SG
Merger upon consummation of the Syngistix merger.

      The Amendment further provides that the SG Merger Agreement will terminate
immediately prior to the consummation by the Company of a merger with Syngistix
and any portion of the termination fee not previously paid to SG Merger as
described above shall become due and payable immediately thereafter. If,
however, the Syngistix Merger Agreement is terminated for any reason other than
the closing of the transactions contemplated by the Syngistix Merger Agreement,
the SG Merger Agreement would remain in effect and SG would not be entitled to
the remaining portion of the termination fee if the merger with SG was
consummated. In addition, the Amendment amends the SG Merger Agreement by
extending the date by which the merger with SG must be consummated from February
28, 2002 to July 31, 2002.

      Pursuant to the Amendment, Messrs. Smith and Gardner have agreed that at
any meeting of stockholders of the Company, or any solicitation of written
consents, during the period from January 25, 2002 through May 31, 2002, they
will vote in favor of, or consent to, the approval of the Syngistix Merger
Agreement and the approval of the Merger, and in favor of each of the other
actions contemplated by the Syngistix Merger Agreement.

Risk Factors


                                       14
<PAGE>

      In addition to the other information contained in this Form 10-K,
investors should consider the following factors carefully as this report
contains "forward-looking statements" relating to, without limitation, future
performance and plans and objectives of management for future operations that
are based on the beliefs of, assumptions made by and information currently
available to the Company's management. The cautionary statements set forth in
this "Risk Factors" section and elsewhere in this Form 10-K identify important
factors with respect to such forward-looking statements, including certain risks
and uncertainties, that could cause actual results to differ materially from
those expressed in or implied by such forward-looking statements.

      Declining Revenue. The Company's revenue and long-term growth are largely
dependent on the sale of its systems to new and existing clients, which are
impacted by the economy and market conditions affecting the Company and our
industry as a whole, including but not limited to, the drastic decline of the
technology sector during the last year, the outmoded software used by the
Company in comparison to new products offered in the technology sector, the
overall decline in the economy and the extreme impact the events of September
11, 2001 have had on the economy, all of which have lead to a decrease in sales
to our customers, including, but not limited to, those customers dependent on
e-commerce sales.

      Dependence on HP e3000. In November of 2001, Hewlett Packard ("HP")
announced it would be discontinuing sales of the HP e3000, which uses the MPE/ix
operating system, as of November 1, 2003. HP will continue its support of this
platform until January 1, 2007. This will provide time to transition customers
running Ecometry Retail Enterprise MPE/iX to another platform such as UNIX or
NT. Ecometry customers who decide to transition to an NT or Unix platform will
receive financial credits from HP for the upgrades. HP will provide customers
who have the newer A or N class servers with conversions to HP9000 systems free
of charge. The Company's inability to successfully deliver its Ecometry Retail
Enterprise family of products on alternate operating system platforms such as
Unix and NT, could have a material adverse effect on the Company's business,
financial condition or results of operations.

      Dependence on Principal Product Line. The Company currently derives
substantially all of its revenue from sales of its Ecometry Retail Enterprise
family of products and related services and hardware. The Company expects to
continue to focus on providing software-based systems and services to leading
direct marketing companies, retailers, manufacturers with significant direct
sales channels, Internet-only companies and fulfillment houses. Any factor
adversely affecting the Company's target client market in general, or the
Company's products in particular, could adversely affect the Company's business,
financial condition or results of operations. The Company's future performance
will depend in large part on the continued acceptance of its current product
line as well as successful development, introduction and client acceptance of
new and enhanced versions of Ecometry Retail Enterprise. There can be no
assurance that the Company will be successful in marketing and selling Ecometry
Retail Enterprise or in developing and introducing new or enhanced versions of
the Company's software solution. Any factor adversely affecting the sale of the
Company's Ecometry family of products or other new products, including delays in
development, software flaws, incompatibility with industry-leading hardware
platforms or operating systems, or negative ratings of the Company's products
could have a material adverse effect on the Company's business, financial
condition or results of operations.

      Class Action Litigation. Between June 22, 2000 and August 14, 2000, four
purported class-action complaints were filed against the Company and several of
its officers. All four complaints are substantially similar and allege, among
other things, that the Company made material misrepresentations and omissions
regarding the Company's future revenues, growth and expenditures, and whether
its reserve for doubtful accounts complied with Generally Accepted Accounting
Principles. On February 5, 2002, a United States Magistrate Judge issued a
Report and Recommendation recommending that the amended complaint be dismissed,
without prejudice. On February 15, 2002, the plaintiffs filed an objection to
the Report and Recommendation. The District Court has not yet acted on the
Report and Recommendation. Discovery in this action has not yet commenced, and
is stayed pursuant to statutes based on the filing of the motion to dismiss,
which stay would be lifted in the event that the Court denies such motion to
dismiss. Management believes these actions are without merit and intends to
defend them vigorously. There can be no assurance that the Company will be
successful in defending this claim. An unfavorable outcome could have a material
adverse affect on the Company's business, financial condition or results of
operation. At this time, the Company cannot reasonably estimate the ultimate
loss, if any, or predict the outcome related to these actions and, therefore,
the Company has not recorded an accrual for loss as of December 31, 2001.

      On November 15, 2001, a class-action complaint was filed against the
Company and its board of directors. The complaint alleged among other things
that the proposed transaction between SG Merger and the Company is unfair to the
Company's shareholders. On February 11, 2002, the parties reached a settlement
in principle, subject to court approval, that


                                       15
<PAGE>

provides for payment of $100,000 in fees to the plaintiffs, and a release of all
claims. In the event the court does not approve the settlement, management
intends to defend this action vigorously. There can be no assurance the Company
will be successful in defending this claim. An unfavorable outcome could have a
material adverse affect on the Company's business, financial condition or
results of operation. At this time, the Company cannot reasonably estimate the
ultimate loss, if any, or predict the outcome related to this action. The
Company has recorded an accrual in the amount of $100,000 as of December 31,
2001.

      On December 11, 2001, the investment banking firm of Raymond James &
Associates ("Raymond James"), Inc. filed a demand for arbitration against the
company with the American Arbitration Association claiming breach of contract.
Raymond James claims that is owed $750,000 in connection with services it
believes it should have been retained to perform in connection with the
company's proposed merger transaction with SG Merger. The Company believes that
Raymond James' claims are without merit an intends to defend the proceeding
vigorously. Among other things, the company believes that it had no obligation
under its agreement with Raymond James to retain Raymond James for the
transaction with SG Merger, that the agreement between Ecometry and Raymond
James was terminated and that the agreement is otherwise void and unenforceable
as a matter of law.

      Dependence on Product Development. The market for the Company's products
and services is characterized by rapidly changing technology, evolving industry
standards and new product introductions. The core of the Company's primary
product was written in COBOL, an outmoded computer programming language that is
difficult to maintain. The Company's future success will depend in part upon its
ability to enhance its existing products and services and to develop and
introduce new products and services to meet changing industry and client
requirements. There can be no assurance that the Company will be able to avoid
the possible obsolescence of its products due to rapid technological change and
evolving industry standards. The process of developing software products such as
those offered by the Company is extremely complex and is expected to become
increasingly complex and expensive in the future. The Company is currently
developing a number of new software products including, among others, Ecometry
Parallel WebShopper, Ecometry Content Manager, Ecometry Campaign Manager, and
Retail Interface. There can be no assurance that the Company will successfully
complete the development of such new products in a timely fashion or that the
Company's current or future products will satisfy the needs of the targeted
client industry. The Company's continued growth is highly dependent on the
success of such products, and a failure of any one of such products to achieve
market acceptance could have a material adverse effect on the Company's
business, financial condition or results of operations. In addition, certain of
the Company's clients request customization of the Company's software products
to address unique characteristics of their businesses or computing environments.
The Company's commitment to customization could delay the delivery or
installation of products, which, in turn, could materially adversely affect the
Company's relationship with significant clients or otherwise materially
adversely affect its business, financial condition or results of operations.

      The Company's ability to remain competitive and respond to technological
change is also dependent, to a lesser degree, upon the Omnidex software, which
the Company licenses from Dynamic Information System Corporation ("DISC"), the
SuprTool software, which the Company licenses from Robelle Solutions Technology,
Inc. ("Robelle"), the Oracle database, which the Company licenses from Oracle
Corporation ("Oracle"), and the SQL Server database, which the Company licenses
from Microsoft Corporation ("Microsoft"), all of which are incorporated in the
Ecometry Retail Enterprise Solution. In the event that Omnidex, SuprTool,
Oracle, SQL Server or other products from similar such vendors have design
defects or flaws, or if such products are unexpectedly delayed in their
introduction or become obsolete subsequent to release, the Company's business,
financial condition or operating results could be materially adversely affected.
Such material adverse effects could diminish the Company's reputation,
credibility and relationships with its current and prospective clients. There
can also be no assurance that products or services developed by others will not
adversely affect the Company's competitive position or render its products
noncompetitive or obsolete.

      Dependence on the Multi-Channel Commerce Software Market. The Company
currently derives substantially all of its revenue from licensing its
applications software, selling related software, hardware, support, consulting
and training services to companies in the multi-channel Commerce Software
market. As a result of the growth in Internet commerce and the increased use of
other direct sales channels, many marketers are expanding to a multi-channel
sales strategy and need to enhance their information technology solutions to
accommodate the direct sales business model. The Company's clients include a
range of organizations in the multi-channel commerce target market. The success
of the Company's clients is directly related to general economic conditions
affecting consumer purchases from multi-channel commerce target market. In
addition, because of the


                                       16
<PAGE>

capital expenditures required in connection with an investment in the Company's
products and services, the Company believes that demand for its products could
be disproportionately affected by fluctuations, disruptions, instability or
downturns in the non-store marketing industry and general economic conditions in
the United States and Europe, which may cause clients and potential clients to
delay, cancel or reduce any planned expenditures for the Company's software
products and services as the Company has seen demonstrated in the past year with
the weakened economy. Any resulting decline in demand for the Company's products
and services could have a material adverse effect on the Company's business,
financial condition or results of operations.

      Dependence on Proprietary Technology. The Company's success and ability to
compete are dependent largely upon its proprietary technology. The Company
relies on a combination of trade secret, copyright and trademark law,
nondisclosure agreements and technical measures to protect its proprietary
technology. The Company enters into confidentiality agreements with all of its
employees, as well as with its clients and potential clients seeking proprietary
information, and limits access to and distribution of its software,
documentation and other proprietary information. There can be no assurance that
the steps taken by the Company in this regard will be adequate to deter
misappropriation or independent third-party development of its technology. In
addition, the laws of some foreign countries do not protect proprietary
technology rights to the same extent, as do the laws of the United States. There
can be no assurance that third parties will not assert infringement claims in
the future or, if infringement claims are asserted, that such claims will be
resolved in the Company's favor. Any infringement claims resolved against the
Company could have a material adverse effect on the Company's business,
financial condition or results of operations.

      Fluctuations in Quarterly Performance; Seasonality. The Company's revenue
and operating results have varied substantially from quarter to quarter. The
Company's quarterly operating results may continue to fluctuate due to a number
of factors, including: (i) the timing, size and nature of the Company's
individual license and hardware transactions; (ii) the timing of the
introduction and the market acceptance, if any, of new products or product
enhancements by the Company or its competitors; (iii) the timeliness of such
product introductions relative to any announced timetable; (iv) the size and
timing of individual orders; (v) the deferral of orders by clients in
anticipation of new products or product upgrades; (vi) technological changes in
the operating systems upon which the Company's products run; (vii) changes in
the Internet adversely affecting Internet commerce; (viii) the relative
proportions of revenue derived from license fees, hardware, maintenance,
consulting, professional services, and other recurring revenue; (ix) the
hardware/software revenue mix; (x) the ability to procure and deliver hardware
system components within a required time period; (xi) changes in the Company's
operating expenses; (xii) the timing and magnitude of software upgrades, if any,
by the Company's clients; (xiii) price changes in the Company's products; (xiv)
personnel changes; and (xv) fluctuations in economic and financial market
conditions, which may determine the ability of a client to obtain time-critical
financing, or impact the Company's ability to collect its outstanding
receivables. Fluctuations in operating results may also occur as a result of the
Company's business strategy to focus on developing and selling customized
applications to larger customers to meet such customers' specific requirements.

      The Company believes it will be difficult to predict the timing of these
sales because they involve both designing the solution to meet the client's
needs and convincing the client to purchase the products, and other risks over
which the Company has little or no control. The Company is generally unable to
adjust its spending quickly enough to compensate for unexpected shortfalls in
revenue. Consequently, a significant shortfall in revenue in any quarter could
adversely impact the Company's operating results for that quarter. As a result,
the Company believes that period-to-period comparisons of its operating results
will not necessarily be meaningful and should not be relied upon as an
indication of future performance.

      The timing, size and nature of individual license transactions are also
important factors in the Company's quarterly operating results. Many such
license transactions involve large dollar amounts, and the sales cycles for
these transactions are often lengthy and unpredictable. There can be no
assurance that the Company will be successful in closing large license
transactions on a timely basis or at all. The Company generally has realized
lower revenue in the fourth calendar quarter of the year than in the other
quarters. The Company believes that this has been due primarily to the tendency
of many of the Company's clients to avoid implementing a new system or an
upgrade of an existing system during the holiday season, typically the busiest
time of year for substantially all of the Company's clients. Due to all of the
foregoing factors, the Company believes that period-to-period comparisons of its
operating results are not necessarily meaningful and that such comparisons
cannot be relied upon as indicators of future performance. There can be no
assurance that the Company will be profitable in the future, that future revenue
and operating results will not vary substantially or that the Company's
operating results will not be below the expectations of public market analysts
and investors. In either case, the price of the Common Stock could be materially
adversely affected by fluctuations in the Company's quarterly performance or
future losses of the Company.


                                       17
<PAGE>

      Management of Growth. The potential growth in the size and complexity of
the Company's business as well as its client base would be expected to place a
significant strain on the Company's management, operations and resources. The
Company anticipates that future growth, if any, will require it to recruit, hire
and retain a substantial number of new research and development, managerial,
finance, sales, marketing and support personnel. There can be no assurance that
the Company will be successful in recruiting, hiring or retaining such
personnel. The Company's ability to compete effectively and to manage future
growth, if any, will depend on its ability to implement and improve operational,
financial and management information systems on a timely basis and to expand,
train, motivate and manage its work force. There can be no assurance that the
Company's personnel, systems, procedures and controls will be adequate to
support the Company's operations. Furthermore, one element of the Company's
growth strategy is to seek acquisitions of businesses, products and technologies
that are complementary to those of the Company. There can be no assurance that
the Company will be able to fully integrate any such acquired businesses with
the Company's existing operations, operate any such businesses profitably or
otherwise implement its growth strategy. If the Company's management is unable
to manage growth effectively, the Company's business, financial condition or
results of operations could be materially adversely affected.

      Expansion into New Markets. As the multi-channel commerce continues to
evolve, it is expected that there will be an increase in the number of marketers
utilizing marketing functions in which automation plays a key role in the sales
process. With the rapid growth of Internet commerce and the continued growth of
the non-store marketing industry in general, the Company expects to target
clients to whom it has not previously sold its products and who sell their
products in markets in which the Company has not previously participated. There
can be no assurance that the Company will be able to sell products to these new
market participants. In addition, some of the Company's existing clients will
expand their activities into markets in which the Company has limited or no
experience. There can be no assurance that the Company will be able to
successfully expand its business with these existing clients. If the Company is
unable to sell products to these new market participants and develop its
business with its existing clients entering new markets, the Company's growth
plans would be curtailed which could have a materially adverse effect on the
Company's business, financial condition or results of operations.

      Dependence on Third Parties. The development and implementation of the
Company's Ecometry Retail Enterprise software depends on proprietary technology
licensed from third parties. The implementation of Ecometry Retail Enterprise
Solution is dependent on Omnidex by DISC, and other imbedded software from
Robelle, Oracle and Microsoft. The introduction and increased market acceptance
of other operating systems that are incompatible with the Company's products, or
the discontinuance of the Hewlett-Packard ("HP") MPE/iX operating system, could
materially adversely affect the market for the Company's products. Ecometry
Retail Enterprise Solution also relies on certain proprietary features of the
IMAGE database management system developed by HP. Ecometry Retail Enterprise
Solution for Unix and Ecometry Retail Enterprise Solution for NT, are dependent
on the Oracle and SQL Server databases. The introduction and increased market
acceptance of database management systems that are incompatible with the
Company's products, the announced discontinuance of HP e3000 products, or the
Company's inability to procure HP e3000 products, could adversely affect the
market for the Company's products.

      Dependence on Third Party Software and Hardware Sales. In conjunction with
the licensing of Ecometry products, the Company resells a variety of hardware
developed and manufactured by third parties in order to provide the Company's
clients with an integrated solution. The Company obtains its HP e3000 hardware
pursuant to a distribution agreement with Client Systems, Inc., an HP
distributor; and HP Unix hardware from Hallmark. Revenue from such hardware
sales can amount to a significant portion of the Company's total revenue in any
period. For the fiscal years ended December 31, 2001, 2000 and 1999, revenue
derived from the sale of third party software and hardware amounted to 21.5%,
34.0% and 32.9%, respectively, of the Company's total revenue. With the
announcement of the discontinuance of the HP e3000, the Company may generate
lower revenues from the sale of hardware until such time as the Company can
migrate its client base to other database platforms such as Unix and NT. The
markets for Unix and NT hardware are much more competitive and the Company's
clients may choose to purchase such hardware directly from the manufacturers or
distributors of such products, with a resulting decrease in the Company's
revenue and profits derived from the sales of such products.

      Competition. The market for multi-channel commerce software is
competitive, rapidly evolving and highly sensitive to new product introductions
and marketing efforts by industry participants. This market is also highly
fragmented and served by ERP software providers, electronic commerce software
providers, consulting firms and point solution providers targeting the
multi-channel commerce industry. The Company's largest competitors include
companies such as Commercialware, SigmaMicro, Page Digital JDA Software, Retek,
Oracle, PeopleSoft, BroadVision. The Company's products also compete with


                                       18
<PAGE>

information systems developed and serviced internally by in-house MIS
departments. Although the Company believes that none of its competitors
currently compete against the Company in all industry segments, there can be no
assurance that such competitors will not compete against the Company in the
future in additional industry segments. Many of the Company's potential future
competitors may have significantly greater financial, technical and marketing
resources, generate higher revenues and may have greater name recognition than
does the Company. In addition, as the Company expands into new segments of the
multi-channel commerce industry, such as Internet commerce, it will face
competition from other software companies, MIS departments and unforeseen
sources. Compared with the Company, these competitors may have greater
resources, operating experience, credibility and relationships in such new
segments. Although the Company believes that it currently competes favorably in
all industry segments and against all competitors, there can be no assurance
that it will do so in the future. There can be no assurance that the Company's
competitors will not develop products comparable or superior to those developed
by the Company or adapt more quickly than the Company to new technologies,
evolving industry trends or changing client requirements. It is also possible
that alliances among competitors may emerge and rapidly acquire significant
market share. Increased competition may result in price reductions, reduced
gross margins and loss of market share, any of which could materially adversely
affect the Company's business, financial condition or results of operations.
There can be no assurance that the Company will be able to compete effectively
against current and future competitors

      Product Defects and Product Liability. The Company's software products are
highly complex and sophisticated and could from time to time contain design
defects or software errors that could be difficult to detect and correct.
Errors, bugs or viruses may result in loss of or delay in market acceptance or
loss of client data as well as diminish the Company's reputation, credibility
and relationships with its current clients and any prospective clients. There
can be no assurance that, despite testing by the Company and its clients, errors
will not be found in the Company's products, which errors could result in a
delay in or the prevention of the applicable software product from attaining
broad market acceptance and thus could have a material adverse effect upon the
Company's business, financial condition or results of operations. The Company's
products are frequently used by its clients to perform mission-critical
functions. Therefore, design defects, software errors, misuse of the Company's
products, incorrect data from external sources or other potential problems
within or outside of the Company's control that may arise from the use of the
Company's products could result in financial or other damage to the Company's
clients. Although the Company's license agreements with its clients typically
contain provisions designed to limit the Company's exposure to such potential
claims, the provisions may not effectively protect the Company against such
claims and the liability and costs associated therewith. Although the Company
maintains general liability insurance coverage, including coverage for errors or
omissions, there can be no assurance that such coverage will continue to be
available on reasonable terms or will be available in sufficient amounts to
cover one or more large claims, or that the insurer will not disclaim coverage
as to any future claim. Accordingly, any such claim could have a material
adverse effect upon the Company's business, financial condition or results of
operations.

      Dependence on Key Personnel. The Company's business involves the delivery
of services and is labor intensive. The Company's success will depend in large
part upon its ability to attract, recruit, hire, retain and motivate highly
skilled employees. There is significant competition for employees with the
skills required to perform the services offered by the Company. There can be no
assurance that the Company will be able to attract and retain sufficient numbers
of highly skilled employees in the future. The loss of Wilburn W. Smith, the
Company's Chairman and Executive Vice President--Sales and Allan J. Gardner, the
Company's Chief Technology Officer, or a significant number of the Company's
highly skilled employees, could have a material adverse effect on the Company's
business, financial condition or results of operations, including its ability to
attract employees, obtain new clients and perform installations. The Company
does not hold a key person insurance policy on the lives of any of its executive
officers or directors and has not entered into employment agreements with any of
its executive officers.

      Risks Associated with International Operations. The Company opened
satellite offices in Fenstanton, England ("SGA Ltd.") and Sydney, Australia
("SGA Pty.") in June 1997 and September 1997, respectively. These entities were
separately incorporated and wholly owned subsidiaries of the Company. In
November 2001, the Company sold the shares of SGA Ltd. for one pound sterling.
At that time a distribution agreement was executed with Anthony C. Glover, the
former managing director of SGA Ltd., pursuant to which the Company will receive
royalties for the sale of its software in the UK and Europe. SGA Ltd. and G2
Solutions Ltd., of which Mr. Glover is a shareholder, are guarantors under the
distribution agreement. The Company retained intellectual property rights to all
products to be sold. There can be no assurance that there will be future sales
of the Company's products pursuant to the distribution agreement for which the
Company will receive royalties. SGA Pty., which ceased operations in the second
quarter of 2001, was liquidated on December 21, 2001. Also, there can be no
assurance that the Company will be able to maintain or increase international
market demand for the Company's products. In addition, the Company's potential
international business may be subject to a variety of risks, including
difficulties in collecting international


                                       19
<PAGE>

accounts receivable or obtaining U.S. export licenses, potentially longer
payment cycles, increased costs associated with maintaining international
marketing efforts, the introduction of non-tariff barriers and higher duty rates
and difficulties in enforcement of contractual obligations and intellectual
property rights and risks associated with the Company's non-use of any hedging
instruments to protect against possible currency fluctuations. There can be no
assurance that such factors will not have a material adverse effect on the
Company's future international sales. The Company does not anticipate
international sales to represent a significant portion of its revenues in the
future, and consequently, fluctuations are not expected to have a material
adverse effect on the Company's business, financial condition or results of
operations.

      In light of these risks and uncertainties, the forward-looking events
discussed in this report might not occur. The Company undertakes no obligation
to publicly update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise.

Employees

      As of December 31, 2001, the Company had a total of 266 full-time
employees. Of the 266 employees, 65 in product development and research and
development, 29 in sales and marketing, 31 in training and professional
services, 117 in client support services and 24 in management, administration
and finance. None of the Company's employees are subject to a collective
bargaining agreement, and the Company has not experienced any work stoppages.
The Company believes that its employee relations are good.

Item 2. Properties

      The Company is headquartered in Delray Beach, Florida, where it leases
approximately 73,000 square feet of office space pursuant to a lease that
expires in December 2006. The annual rent expense under such lease is
approximately $1.0 million. The Company also leases office space in California,
Texas and Missouri for certain of its marketing and sales activities. The annual
rent under such leases is approximately $9,300, $8,500, and $9,700,
respectively. The lease for the office space in Missouri will expire at the end
of March 2002 and will not be renewed. The aggregate annual facility lease
payments of the Company during the fiscal year ended December 31, 2001 was
approximately $860,000. In addition to base rent payments, the Company paid
approximately $500,000 for common area maintenance fees, which include real
estate taxes, utilities, and other customary charges.

Item 3. Legal Proceedings

      Between June 22, 2000 and August 14, 2000, four purported class-action
complaints were filed against the Company and Messrs. Martin K. Weinbaum, Allan
Gardner and Wilburn Smith, officers of the Company, and Mr. Gary G. Hegna, a
former officer and director of the Company in the United States District Court
for the Southern District of Florida.

      All four complaints were substantially similar and alleged, among other
things that the Company made material misrepresentations and omissions regarding
the Company's future revenues, growth, expenditures, and that the Company failed
to disclose adverse information regarding the collectibility of amounts owed by
a client. The complaints alleged that the defendants violated Section 10(b) of
the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 there
under by making untrue statements or omitting to state material facts in
connection with purchases of Company common stock by the plaintiffs and others
in the purported class from October 27, 1999 through June 16, 2000, and that the
defendants violated Section 20(a) of the Exchange Act through the same conduct
by virtue of their allegedly being "controlling persons" of the Company. The
Complaints generally sought, among other things, certification as a class and an
award of damages in an amount to be determined at trial.

      On September 11, 2000 the court consolidated all four actions, and
appointed four individuals to serve as "lead plaintiffs." The plaintiffs filed
their Consolidated Amended Complaint on November 20, 2000. On January 4, 2001
the defendants filed a motion to dismiss the consolidated complaint. The
plaintiffs filed an opposition to the defendants' motion to dismiss on February
20, 2001. The Company's reply in support of the motion to dismiss was filed on
March 21, 2001 and oral argument was held on April 2, 2001.


                                       20
<PAGE>

      On February 5, 2002, a United States Magistrate Judge issued a Report and
Recommendation recommending that the amended complaint be dismissed, without
prejudice. On February 15, 2002, the plaintiffs filed an objection to the Report
and Recommendation. The District Court has not yet acted on the Report and
Recommendation. Discovery in this action has not yet commenced, and is stayed
pursuant to statutes based on the filing of the motion to dismiss, which stay
would be lifted in the event that the Court denies such motion to dismiss.
Management believes these actions are without merit and intends to defend them
vigorously. There can be no assurance that the Company will be successful in
defending this claim.

      On November 15, 2001, a shareholder class action lawsuit was filed against
Ecometry and certain Ecometry officers and directors alleging that the proposed
transaction between SG Merger and Ecometry is unfair to Ecometry's common
shareholders. The lawsuit was filed in the Circuit Court for Palm Beach County,
FL and is docketed as Wilson v. Ecometry Corp. et al., Case No. CA 01-11707 AF.
Among other things, the complaint alleged that the defendants breached duties
owed to the common shareholders to maximize the value received by the
shareholders. The complaint sought a court order stopping the SG Merger from
going forward and requiring the company to follow other procedures allegedly
designed to elicit other potential bidders and obtain the highest possible price
for the company. Because, among other things, the SG Merger had been negotiated
by the special committee, and because the special committee had bargained for
and obtained from SG a variety of shareholder protections that, among other
things, enabled the special committee to negotiate and consummate a transaction
superior to the SG Merger if one or more other parties expressed interest in
acquiring the company after public announcement of the SG Merger.

         On February 11, 2002, the parties reached a settlement in principle,
subject to court approval, that provides for payment of $100,000 in fees to the
plaintiffs, and a release of all claims. In the event the court does not approve
the settlement, management intends to defend this action vigorously. There can
be no assurance the Company will be successful in defending this claim. An
unfavorable outcome could have a material adverse affect on the Company's
business, financial condition or results of operation. The Company has recorded
an accrual for loss in the amount of $100,000 as of December 31, 2001.

      On December 11, 2001, the investment banking firm of Raymond James &
Associates ("Raymond James"), Inc. filed a demand for arbitration against the
company with the American Arbitration Association claiming breach of contract.
Raymond James claims that is owed $750,000 in connection with services it
believes it should have been retained to perform in connection with the
company's proposed merger transaction with SG Merger. The Company believes that
Raymond James' claims are without merit an intends to defend the proceeding
vigorously. Among other things, the company believes that it had no obligation
under its agreement with Raymond James to retain Raymond James for the
transaction with SG Merger, that the agreement between Ecometry and Raymond
James was terminated and that the agreement is otherwise void and unenforceable
as a matter of law.

      From time to time, the Company is involved in other legal proceedings
incidental to the conduct of its business. The Company believes that this other
litigation, individually or in the aggregate, to which it is currently a party
is not likely to have a material adverse effect on the Company's business,
financial condition or results of operations.

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

      None.

                                     PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

      The Company's Common Stock began trading in the NASDAQ National Market
under the symbol "SGAI" on January 29, 1999. On December 4, 2000 the Company
changed its name from Smith-Gardner & Associates to Ecometry Corporation and
continued trading in the NASDAQ National Market under the new symbol of "ECOM".
Market price information is not available prior to January 1999. The following
table sets forth the range of high and low bid prices for the Company's common
stock for the period from January 2000 through December 2001, as reported by
NASDAQ. The quotes represent "Inter-dealer" prices without retail markups,
markdowns or commissions and may not necessarily represent actual transactions.

<TABLE>
<CAPTION>
                                                           High          Low
                                                           ----          ---
<S>                                                     <C>          <C>
Year Ended December 31, 2000
         First Quarter...............................   $  23.375    $  15.875
         Second Quarter..............................   $  18.000    $   3.688
         Third Quarter...............................   $   5.938    $   2.750
         Fourth Quarter..............................   $   4.047    $   1.375
Year Ended December 31, 2001
         First Quarter...............................   $   3.750    $   1.531
         Second Quarter..............................   $   2.040    $   1.188
         Third Quarter...............................   $   1.790    $   1.200
         Fourth Quarter..............................   $   2.640    $   1.300
</TABLE>


                                       21
<PAGE>

      As of February 19, 2002, there were 12,422,474 shares of Common Stock
outstanding, held by 55 stockholders of record. The Company believes that
certain holders of record hold a substantial number of shares of Common Stock as
nominees for a significant number of beneficial owners. The closing price for
the Company's Common Stock on February 19, 2002 was $2.79 per share.

      The payment of dividends is within the discretion of the Board of
Directors. It is the present intention of the Board of Directors to retain all
future earnings for use in the Company's business operations and, accordingly,
the Board does not anticipate declaring any dividends in the foreseeable future.

Use of Proceeds From Registered Securities

      In connection with the Company's initial public offering, the Company's
Registration Statement on Form S-1 (No. 333-63125) (the "Registration
Statement") was declared effective on January 28, 1999. Pursuant to such
Registration Statement, on February 3, 1999, the Company and certain selling
shareholders sold 4,000,000 and 410,000 shares of Common Stock, respectively, at
a price of $12 per share. The managing underwriters for this sale of Common
Stock were BT Alex. Brown Incorporated and SoundView Technology Group
(collectively, the "Underwriters"). On March 3, 1999, pursuant to the
Underwriters' over-allotment option, the Company sold an additional 661,500
shares of Common Stock at a price of $12 per share. All of the securities
offered by the Registration Statement were sold in the Offering and thereafter
the Offering terminated. The aggregate gross proceeds to the Company in
connection with the Offering were approximately $55.9 million. The total
expenses incurred in connection with the Offering, including underwriting
discounts and commissions, and fees for registration, legal, accounting,
transfer agent, printing and other miscellaneous fees, were approximately $5.1
million, resulting in net offering proceeds of approximately $50.8 million to
the Company.

      As of February 19, 2002, the net proceeds of the Offering have been used
as follows: (i) $12.0 million to redeem all of the 12,000 shares of redeemable
preferred stock, par value $.01 per share and $1,000 per share preference value
(the "Redeemable Preferred Stock"), issued to certain lenders (Advent VII L.P.,
Advent Atlantic and Pacific II L.P., Advent Industrial II L.P., Advent New York
L.P., Chestnut Capital International III Limited Partnership and TA Venture
Investors Limited Partners (each a "Lender" and collectively the "Lenders"))
upon the conversion of the Convertible Debentures, (ii) approximately $4.7
million to pay accrued interest due and payable on the Convertible Debentures,
and (iii) approximately $835,000 in the form of a distribution to Wilburn Smith,
Allan J. Gardner and Thomas Quigley, who were the Company's sole shareholders
prior to the Offering, in the aggregate amount representing the individual
income tax liability of each of such shareholders for the period beginning
January 1, 1998 and ending on December 31, 1998, the date immediately preceding
the Company's voluntary S Corporation revocation. The remaining net proceeds are
being used for working capital, capital expenditures and for general corporate
purposes.

Item 6. Selected Financial Data

      The selected consolidated financial data set forth below as of December
31, 2001 and 2000 and for each of the years in the five-year period ended
December 31, 2001 are derived from the Consolidated Financial Statements of the
Company which have been audited by KPMG LLP, independent public accountants. The
Company's consolidated balance sheets as of December 31, 2001 and 2000, and
consolidated statements of operations for each of the years in the three year
period ended December 31, 2001 appear elsewhere in this report. The following
data should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and the Consolidated Financial
Statements and Notes thereto, included elsewhere in this report.


                                       22
<PAGE>

<TABLE>
<CAPTION>
                                                           2001         2000           1999          1998          1997
                                                           ----         ----           ----          ----          ----
                                                                      (In thousands, except per share data)
<S>                                                      <C>           <C>           <C>           <C>           <C>
Statement of Operations Data:
Revenue:
   License fees ....................................     $  5,670      $ 15,201      $ 19,393      $ 11,536      $  5,247
   Third party software and hardware ...............        5,646        15,530        15,307        13,264         7,981
   Support .........................................       11,231         9,696         7,630         5,335         4,100
   Services ........................................        3,718         5,189         4,268         3,567         1,324
                                                         --------      --------      --------      --------      --------
        Total revenue ..............................       26,265        45,616        46,598        33,702        18,652
Cost of revenue:
   License fees ....................................        1,954         3,372         3,095         2,501         1,667
   Third party software and hardware ...............        4,434        12,306        11,234         9,786         5,847
   Support .........................................        6,211         6,098         5,050         3,222         3,271
   Services ........................................        2,365         3,525         3,165         2,271         1,104
                                                         --------      --------      --------      --------      --------
        Total cost of revenue ......................       14,964        25,301        22,544        17,780        11,889
                                                         --------      --------      --------      --------      --------
Gross profit .......................................       11,301        20,315        24,054        15,922         6,763
Operating expenses:
   General and administrative ......................       10,958        11,559         8,061         6,538         4,567
   Sales and marketing .............................        5,843         7,825         5,585         2,430         1,482
   Research and development ........................        4,770         4,439         3,421         2,254         2,011
                                                         --------      --------      --------      --------      --------
        Total operating expenses ...................       21,571        23,823        17,067        11,222         8,060
                                                         --------      --------      --------      --------      --------
(Loss) income from operations ......................      (10,270)       (3,508)        6,987         4,700        (1,297)
Other income (expense):
Interest expense:
   Interest on outstanding debt ....................           --            --          (165)       (1,800)       (1,500)
   Amortization of original issue discount (1) .....           --            --            --            --          (680)
Loss on disposal of assets .........................           --          (114)           --            --            --
Loss on disposal and sale of subsidiaries ..........         (514)           --            --            --            --
Interest income ....................................        1,621         2,413         1,749           102           109
                                                         --------      --------      --------      --------      --------
        Total other income (expense), net ..........        1,107         2,299         1,584        (1,698)       (2,071)
                                                         --------      --------      --------      --------      --------
(Loss) Income before provision for income taxes ....       (9,163)       (1,209)        8,571         3,002        (3,368)
Benefit (provision) for income taxes ...............        1,651          (375)       (3,048)           --            --
                                                         --------      --------      --------      --------      --------
Net (loss) income ..................................     $ (7,512)     $ (1,584)     $  5,523      $  3,002      $ (3,368)
                                                         ========      ========      ========      ========      ========
Net (loss) income per share:
   Basic ...........................................     $  (0.61)     $  (0.13)     $   0.48      $   0.57      $  (0.64)
                                                         ========      ========      ========      ========      ========
   Diluted .........................................     $  (0.61)     $  (0.13)     $   0.44      $   0.50      $  (0.64)
                                                         ========      ========      ========      ========      ========
Weighted average shares used in
   calculating net (loss) income per share:
   Basic ...........................................       12,395        12,372        11,622         5,263         5,263
                                                         ========      ========      ========      ========      ========
   Diluted .........................................       12,395        12,372        12,426         8,131         5,263
                                                         ========      ========      ========      ========      ========
Pro forma data (unaudited):
   (Loss) income before income tax (expense) benefit                                 $  8,571      $  3,003      $ (3,368)
Pro forma income tax (expense) benefit (2) .........                                   (3,378)       (1,215)          948
                                                                                     --------      --------      --------
Pro forma net income (loss) (2) ....................                                 $  5,193      $  1,788      $ (2,420)
                                                                                     ========      ========      ========

Balance Sheet Data:
   Cash and cash equivalents .......................     $ 35,755      $ 36,827      $ 39,246      $  1,577      $    169
   Working capital .................................       35,084        42,016        43,335         3,904            16
   Total assets ....................................       41,839        50,566        51,468         9,470         3,135
   Convertible debt and accrued interest (1) .......           --            --            --        16,500        14,700
   Stockholders' equity (deficit) (1) ..............       37,501        44,756        45,162       (10,951)      (13,918)
</TABLE>


                                       23
<PAGE>

(1)   The fair value of the conversion features of the Convertible Debentures
      was determined to be $3.5 million based on the difference between the
      stated interest rates and the estimated market rate of such Convertible
      Debentures on the date of issuance. The amount is included in additional
      paid-in capital in the accompanying consolidated balance sheet, with the
      resulting Original Issue Discount ("OID") on the convertible debt being
      amortized from the date of issuance (December 19, 1994) to the date the
      security first became convertible (June 30, 1997). This interest expense
      is a non-cash item.

(2)   Prior to completing its initial public offering of Common Stock and as a
      result of its election to be treated as an S Corporation for income tax
      purposes, the Company was not subject to federal or certain state income
      taxes. Upon the Company's voluntary revocation of its S Corporation status
      effective January 1, 1999, the Company is subject to federal and certain
      state income taxes at applicable rates for a C Corporation. The unaudited
      pro forma income tax (expense) benefit presented in the consolidated
      statements of operations represents the estimated taxes that would have
      been recorded had the Company been a C Corporation for income tax purposes
      for each of the periods presented.


                                       24
<PAGE>

Item 7. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

      THE FOLLOWING SHOULD BE READ IN CONJUNCTION WITH THE COMPANY'S
CONSOLIDATED FINANCIAL STATEMENTS AND THE RELATED NOTES THERETO INCLUDED
ELSEWHERE HEREIN.

Overview

      The Company is a provider of enterprise software solutions and services to
the multi-channel commerce industry. The Company's clients include direct
marketing and catalog companies, retailers and manufacturers with significant
direct sales channels, Internet-only companies and fulfillment houses. The
Company's Ecometry family of software products is designed to automate
multi-channel commerce activities, including marketing, advertising analysis,
sales, telemarketing, ordering, customer services, merchandising, procurement,
electronic and Internet commerce, supply chain management, warehousing,
shipping, accounting and systems operation. Ecometry Retail Enterprise also
provides managers and sales personnel with real-time operations, inventory and
customer data to improve both management decision making and customer service.

      Since its inception in 1988, management of the Company has concentrated on
providing software-based systems and services to direct marketing companies and
to retailers and manufacturers with significant direct sales channels. By
focusing on this market, management believes that the Company has been able to
develop significant industry expertise that has been incorporated in the
functionality of the Company's products and services. The Ecometry Commerce
Engine offers over 3,000 functional options, the ability to process up to
400,000 transactions per day and is used primarily by companies with high-volume
direct sales operations. Ecometry Retail Enterprise, the Company's end-to-end
retail commerce solution, is a highly scalable system that enables real-time
interactive customer ordering and customer services, and automates the
processing of front and back-office functions for companies selling products
through all direct sales channels.

      The Company opened satellite offices in Fenstanton, England ("SGA Ltd.")
and Sydney, Australia ("SGA Pty.") in June 1997 and September 1997, respectively
to expand its presence abroad. These offices were separately incorporated and
wholly owned subsidiaries of the Company. The Company, through its wholly owned
subsidiary, NewHaven Software Corporation ("NewHaven"), which was incorporated
in September 2000, purchased intellectual property and customer databases from
Haven Corporation in November 2000. In November 2001, the Company sold the
shares of SGA Ltd for one pound sterling. At that time a distribution agreement
was executed with Anthony C. Glover, the former managing director of SGA Ltd.,
pursuant to which the Company will receive royalties for the sale of its
software in the UK and Europe. SGA Ltd. and G2 Solutions Ltd., of which Mr.
Glover is a shareholder, are guarantors under the distribution agreement. The
Company retained intellectual property rights to all products to be sold. There
can be no assurance that there will be future sales of the Company's products
pursuant to the distribution agreement for which the Company will receive
royalties. SGA Pty., which ceased operations in the second quarter of 2001, was
liquidated on December 21, 2001.

      Also in November 2001, the Company sold the assets of NewHaven in exchange
for a promissory note in the amount of $200,000. The note is to be paid together
with interest in quarterly installments over four years, commencing July 1,
2002.

      The sale and discontinuance of the operations of Smith-Gardner &
Associates, Ltd., Smith-Gardner & Associates, Pty., Ltd. and NewHaven Software
Corporation increased the Company's net loss for the year ended December 31,
2001 by $514,397.

      On October 25, 2001, the Company entered into a merger agreement with SG
Merger, a newly formed company organized by Wilburn W. Smith and Allan J.
Gardner, officers and board members of Ecometry Corporation. SG Merger will be
merged with and into the Company, with the Company as the surviving corporation.
Pursuant to the terms and subject to the conditions of the Merger Agreement,
each share of Common Stock outstanding at the effective time of the Merger
(other than shares held by SG Merger and Messrs Smith and Gardner) will be
converted into the right to receive $2.70 in cash. The transaction is subject to
a number of conditions, including approval of the Merger by holders of a
majority of the Common Stock of the Company not held by SG Merger and Messrs.
Smith and Gardner, and other customary conditions. If consummated, the merger
will be financed from the Company's cash on hand.

      On January 25, 2002, the Company and Acquisition Sub, Parent, and for
limited purposes only, Core Technology Fund IV, LLC, entered into the Syngistix
Merger Agreement pursuant to which Acquisition Sub will be merged with and


                                       25
<PAGE>

into the Company, with the Company as the surviving corporation. Pursuant to the
terms and subject to the conditions of the Syngistix Merger Agreement, each
share of Common Stock outstanding at the effective time of the Merger (other
than shares held by the Company, its Subsidiary, Parent or Acquisition Sub) will
be converted into the right to receive $2.90 in cash. The transaction is subject
to a number of conditions, including approval of the Merger by holders of a
majority of the outstanding Company Common Stock and the consummation of the
financing arrangements with Core Technology Fund IV, LLC and The Roser
Partnership III, SBIC LP for $10 million (the commitment for which has been
obtained), and other customary conditions.

      In order to induce Parent to make an offer to acquire the Company, SG
Merger, the Company, Wilburn W. Smith and Allan J. Gardner entered into the
Amendment. The Amendment amends the SG Merger Agreement. The Amendment provides,
among other items, that the Company's entering into the Syngistix Merger
Agreement shall not constitute a breach of the SG Merger Agreement and shall not
give SG Merger the right to terminate the SG Merger Agreement or to collect the
termination fee provided for in the SG Merger Agreement, other than the Company
shall pay to SG Merger its reasonably documented fees and expenses incurred to
date in connection with the SG Merger Agreement. Any such fees and expenses
shall be deducted from any termination fee payable to SG Merger upon
consummation of the Syngistix merger.

      The Amendment further provides that the SG Merger Agreement will terminate
immediately prior to the consummation by the Company of a merger with Parent and
any portion of the termination fee not previously paid to SG Merger as described
above shall become due and payable immediately thereafter. If, however, the
Syngistix Merger Agreement is terminated for any reason other than the closing
of the transactions contemplated by the Syngistix Merger Agreement, the SG
Merger Agreement would remain in effect and SG Merger would not be entitled to
the remaining portion of the termination fee if the merger with SG Merger was
consummated. In addition, the Amendment amends the SG Merger Agreement by
extending the date by which the merger with SG Merger must be consummated from
February 28, 2002 to July 31, 2002.

      Pursuant to the Amendment, Messrs. Smith and Gardner have agreed that at
any meeting of shareholders of the Company, or any solicitation of written
consents, during the period from January 25, 2002 through May 31, 2002, they
will vote in favor of, or consent to, the approval of the Syngistix Merger
Agreement and the approval of the Merger, and in favor of each of the other
actions contemplated by the Syngistix Merger Agreement.

      The Company generates revenue from four principal sources: (i) proprietary
software license fees; (ii) sales of related third party software and hardware
components; (iii) software support; and (iv) services consisting of consulting,
training, custom programming, and web design. System revenue, which includes
license fees and third party software and hardware components, is generated by
sales to new and existing clients.

      The Company's revenue and long-term growth are largely dependent on the
sale of its systems to new and existing clients, which are impacted by the
economy and market conditions affecting the Company and our industry as a whole,
including but not limited to, the drastic decline of the technology sector
during the last year, the outmoded software used by the Company in comparison to
new products offered in the technology sector, the overall decline in the
economy and the extreme impact the events of September 11, 2001 have had on the
economy, all of which have lead to a decrease in sales to our customers,
including, but not limited to, those customers dependent on e-commerce sales.

      In November of 2001, Hewlett Packard ("HP") announced it would be
discontinuing sales of the HP e3000 as of November 1, 2003. HP will continue its
support of this platform until January 1, 2007. This will provide time to
transition customers running Ecometry Retail Enterprise MPE/iX to another
platform such as Unix or NT. Ecometry customers who decide to transition to an
NT or Unix platform will receive financial credits from HP for the upgrades. HP
will provide customers who have the newer A or N class servers with conversions
to HP9000 systems free of charge. The Company's inability to successfully
deliver its Ecometry Retail Enterprise family of products on alternate operating
system platforms such as Unix and NT, could have a material adverse effect on
the Company's business, financial condition or results of operations.

      System sales to new clients represented 21.5% of total revenue during the
year ended December 31, 2001, a decrease of 54.8% from the year ended December
31, 2000. The current year's decrease in sales resulted from a general slowdown
in the


                                       26
<PAGE>

economy, which resulted in a lower demand for the Company's products and
services. System sales to new clients represented 27.4% of total revenue during
the year ended December 31, 2000, a decrease of 18.4% from the year ended
December 31, 1999.

      System upgrades represented 21.6% of total revenue for the year ended
December 31, 2001 compared to 40.0% and 41.6% for the years ended December 31,
2000 and 1999, respectively. System upgrades consist primarily of additional
proprietary software user license fees, third party software license fees,
central processing unit ("CPU") upgrades and additional hardware components for
its existing clients. The Company believes that upgrades are dictated solely by
the business requirements of individual clients and, therefore, the Company is
unable to accurately predict or explain the actual mix between software and
hardware upgrades.

      The Company recognizes revenue in accordance with Statement of Position
("SOP") 97-2, Software Revenue Recognition. Under this provision, hardware and
software license fees for new systems are recognized as revenue when the
hardware and software has been delivered and installed, the fee is fixed and
determinable and the collectibility is probable. Revenue relating to system
upgrades is recognized upon installation, provided that all significant
obligations have been met. The Company recognizes revenue from hardware and
software upgrades upon receipt by the client.

      Each new client executes a contract, which identifies the number of
licensed Ecometry users, hardware configuration, pricing for third party
software licenses and pricing for consulting and support services. The contract
also contains pricing provisions for supplemental software user licenses. The
Company typically receives a deposit equal to 25% of the system selling price
upon contract signing and the remaining balance is payable in accordance with
the system implementation schedule. The differences between amounts received and
amounts recognized are recorded as deferred revenue.

      Support services are billed monthly, in advance, and revenue from such
services is recognized ratably over the contract term. The Company's software
support agreements typically have one-year terms, are automatically renewed
annually and may be terminated at the discretion of the client. Historically,
more than 75% of all clients utilizing the Company's software have renewed their
support agreements.

      Training and consulting services are performed on a time-and-materials
basis and revenue is recognized as the services are completed. Contract
programming and web design services are generally short-term in nature and
performed on a fixed-fee basis. When performed in conjunction with a sale to a
new client, contract programming revenue is recognized upon delivery and receipt
of a signed client acknowledgment.

      In accordance with Statement of Financial Accounting Standards No. 86,
software development costs are expensed as incurred until technological
feasibility of the software is established, after which any additional costs are
capitalized. To date, the Company has expensed all software development costs
because development costs incurred subsequent to the establishment of
technological feasibility have been minimal.

Critical Accounting Policies and Estimates

      The Company's discussion and analysis of its financial condition and
results of operations are based upon the Company's 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 the Company to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses, and
related disclosure of contingent liabilities. On an on-going basis, the Company
evaluates its estimates, including those related to revenue recognition, bad
debts, income taxes, and contingencies and litigation. The Company bases its
estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.

      The Company believes the following critical accounting policies affect its
more significant judgments and estimates used in the preparation of its
consolidated financial statements. The revenue allocated to hardware and
software products generally is recognized when the hardware and software have
been delivered and installed, the fee is fixed and determinable and the
collectibility is probable. The revenue allocated to post contract customer
support is consistent with fees charged for renewals and is recognized ratably
over the term of the support. Revenue allocated to service elements is
recognized as the services are


                                       27
<PAGE>

performed. Amounts paid in advance but not recognized are classified as deferred
revenue in the Company's financial statements. The Company maintains an
allowance for doubtful accounts for estimated losses resulting from the
inability of its customers to make required payments. If the financial condition
of the Company's customers was to deteriorate, resulting in an impairment of
their ability to make payments, additional allowances may be required. The
Company records a valuation allowance to reduce its deferred tax assets to the
amount that is more likely than not to be realized. A valuation allowance for
the full amount of the related tax benefit has been established in 2001 due
primarily to the uncertainties associated with the realization of these benefits
in future periods. The Company has available a net operating loss carryforward
for federal income tax purposes, which will expire in the year 2021.

Results of Operations

      The following table sets forth, for the periods indicated, the percentage
relationship of certain statement of operations items to total revenue:

<TABLE>
<CAPTION>
                                                                                          Year Ended December 31,
                                                                                          -----------------------
                                                                                     2001           2000           1999
                                                                                     ----           ----           ----
<S>                                                                                 <C>             <C>             <C>
Revenue:
   License fees ....................................................                 21.6%           33.3%           41.6%
   Third party software and hardware ...............................                 21.5            34.0            32.8
   Support .........................................................                 42.8            21.3            16.4
   Services ........................................................                 14.1            11.4             9.2
                                                                                    -----           -----           -----
       Total revenue ...............................................                100.0           100.0           100.0
Cost of revenue:
   License fees ....................................................                  7.4             7.4             6.7
   Third party software and hardware ...............................                 16.9            27.0            24.1
   Support .........................................................                 23.7            13.4            10.8
   Services ........................................................                  9.0             7.7             6.8
                                                                                    -----           -----           -----
   Total cost of revenue ...........................................                 57.0            55.5            48.4
                                                                                    -----           -----           -----
       Gross profit ................................................                 43.0            44.5            51.6
Operating expenses:
   General and administrative ......................................                 41.7            25.3            17.3
   Sales and marketing .............................................                 22.2            17.2            12.0
   Research and development ........................................                 18.2             9.7             7.3
                                                                                    -----           -----           -----
       Total operating expenses ....................................                 82.1            52.2            36.6
                                                                                    -----           -----           -----
       (Loss) income from operations ...............................                (39.1)           (7.7)           15.0
Other income (expense):

   Interest on outstanding debt ....................................                   --              --            (0.4)
   Loss on disposal of assets ......................................                   --            (0.3)             --
   Loss on disposal and sale of subsidiaries .......................                 (2.0)             --              --
   Interest income .................................................                  6.2             5.3             3.8
                                                                                    -----           -----           -----
       Total other income (expense), net ...........................                  4.2             5.0             3.4
                                                                                    -----           -----           -----
(Loss) income before tax benefit (provision) .......................                (34.9)           (2.7)           18.4
Benefit (provision) for income taxes ...............................                  6.3            (0.8)           (6.5)
                                                                                    -----           -----           -----
Net (loss) income ..................................................                (28.6)%          (3.5)%          11.9%
                                                                                    =====           =====           =====
</TABLE>


                                       28
<PAGE>

      The following table sets forth, for the periods indicated, the dollar and
percentage changes of statement of operations items. The numbers presented below
are in thousands, except for percentage amounts:

<TABLE>
<CAPTION>

                                                                                                Change                Change
                                                        Year Ended December 31,              2001 vs.2000         2000 vs. 1999
                                                        -----------------------              ------------         -------------
                                                     2001         2000         1999          $          %           $          %
                                                     ----         ----         ----          -          -           -          -
<S>                                                <C>          <C>          <C>         <C>          <C>       <C>        <C>
Revenue:
   License fees ...............................    $  5,670     $ 15,201     $ 19,393    $ (9,531)    (62.7)%   $ (4,192)   (21.6)%
   Third party software and hardware ..........       5,646       15,530       15,307      (9,884)    (63.7)         223      1.5
   Support ....................................      11,231        9,696        7,630       1,535      15.8        2,066     27.1
Services ......................................       3,718        5,189        4,268      (1,471)    (28.4)         921     21.6
                                                   --------     --------     --------    --------     -----     --------    ------
   Total Revenue ..............................      26,265       45,616       46,598     (19,351)    (42.4)        (982)    (2.1)
Cost of revenues
License fees ..................................       1,954        3,372        3,095      (1,418)    (42.1)         277      8.9
   Third party software and hardware ..........       4,434       12,306       11,234      (7,872)    (64.0)       1,072      9.5
   Support ....................................       6,211        6,098        5,050         113       1.9        1,048     20.8
   Services ...................................       2,365        3,525        3,165      (1,160)    (32.9)         360     11.4
                                                   --------     --------     --------    --------     -----     --------    ------
     Total cost of revenue ....................      14,964       25,301       22,544     (10,337)    (40.9)       2,757     12.2
                                                   --------     --------     --------    --------     -----     --------    ------
Gross Margin ..................................      11,301       20,315       24,054      (9,014)    (44.4)      (3,739)   (15.5)
Operating expenses:
   General and administrative .................      10,958       11,559        8,061        (601)     (5.2)       3,498     43.4
   Sales and marketing ........................       5,843        7,825        5,585      (1,982)    (25.3)       2,240     40.1
   Research and development ...................       4,770        4,439        3,421         331       7.4        1,018     29.8
                                                   --------     --------     --------    --------     -----     --------    ------
     Total operating expenses .................      21,571       23,823       17,067      (2,252)     (9.5)       6,756     39.6
                                                   --------     --------     --------    --------     -----     --------    ------
(Loss) income from operations .................     (10,270)      (3,508)       6,987       6,762     192.8      (10,495)  (150.2)
Total other income (expense), net .............       1,107        2,299        1,584      (1,192)    (51.8)         715     45.1
                                                   --------     --------     --------    --------     -----     --------    ------
(Loss) income before provision for income taxes      (9,163)      (1,209)       8,571       7,954     657.6       (9,780)  (114.1)
Benefit (provision) for income taxes ..........       1,651         (375)      (3,048)      2,026     540.9        2,673     87.7
                                                   --------     --------     --------    --------     -----     --------    ------
Net (loss) income .............................    $ (7,512)    $ (1,584)    $  5,523    $  5,928     374.3%    $ (7,107)  (128.7)%
                                                   ========     ========     ========    ========     =====     ========    ======
</TABLE>

The following table sets forth, for the periods indicated, the dollar and
percentage changes for new and existing client sales by system component. The
numbers presented below are in thousands, except for percentage amounts:

<TABLE>
<CAPTION>
                                                          Year Ended December 31,        Change 2001 v. 2000    Change 2000 v. 1999
                                                          -----------------------        -------------------    -------------------
                                                       2001      2000         1999          $             %          $          %
                                                       ----      ----         ----          -             -          -          -
<S>                                                  <C>        <C>         <C>         <C>            <C>       <C>        <C>
New client system sales:
   License fees                                      $2,924     $ 6,743     $ 8,342     $ (3,819)      (56.6)%   $(1,599)   (19.2)%
   Third party software and hardware                  2,724       5,757       6,972       (3,033)      (52.7)     (1,215)   (17.4)
                                                     ------     -------     -------     --------       -----     -------    -----
    Total new client system sales                    $5,648     $12,500     $15,314     $ (6,852)      (54.8)%   $(2,814)   (18.4)%
                                                     ======     =======     =======     ========       =====     =======    =====
Existing client system sales:
   License fees                                      $2,746     $ 8,458     $11,051     $ (5,712)      (67.5)%   $(2,593)   (23.5)%
   Third party software and hardware                  2,922       9,773       8,335       (6,851)      (70.1)      1,438     17.2
                                                     ------     -------     -------     --------       -----     -------    -----
    Total existing client system sales               $5,668     $18,231     $19,386     $(12,563)      (68.9)%   $(1,155)    (6.0)%
                                                     ======     =======     =======     ========       =====     =======    =====
</TABLE>

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

      Sales of License Fees. License fees consist of fees for the installation
of the Company's Ecometry software and related modules, and additional user
license fees for its existing clients. License fees are primarily based on the
number of users. The decrease in computer software license fees for the year
ended December 31, 2001 compared to the same period in 2000 resulted from lower
sales to both new and existing clients, which is attributable to a weak economy.
New client computer software sales decreased 56.6% for the year ended December
31, 2001 as compared to 2000 and existing customer sales decreased 67.5% for the
same period.


                                       29
<PAGE>

      Sales of Third Party Software and Hardware. Sales of third party software
and hardware consist of sales of licenses for third-party operating system
software, computer hardware systems and peripheral hardware components. The
decrease in third party software and hardware revenue for the year ended
December 31, 2001 compared to the same period in 2000 is a result of a weak
economy. Third Party Software and Hardware revenue relating to new client sales
decreased 52.7% for the year ended December 31, 2001 compared to year-end 2000,
and existing client sales for third party software and hardware decreased by
70.1% for the same period.

      Support. Support revenue consists of fees for technical support services
and updates for the Ecometry software, optional modules, and integrated
third-party software utilities. The increased support revenue of 15.8% resulted
from the addition of new clients during the years ended December 31, 2000 and
2001, offset by client attrition during the year ended December 31, 2001, as
well as support fee increases related to software user license upgrades.

      Services. Services revenue consists principally of revenue derived from
consulting, custom programming, training, implementation services and web
design. Services revenue decreased by 28.4% for the year ended December 31, 2001
compared to the same period in 2000 primarily due to lower consulting and
training services revenue. Due to weak economic conditions, there has been
reduced demand for the Company's services.

      Total Revenue. New client sales for the year ended December 31, 2001
decreased 54.8% from the same period in 2000 and sales to existing clients
decreased by 68.9% for the same period. This decrease is attributable to the
economic slowdown and associated decrease in technology purchases.

      Cost of License Fees. Cost of license fees, which consists of installation
and training salaries directly related to new software sales, subcontractor
fees, and third party software costs relating to sales of proprietary software
modules decreased 42.1% from the year ended December 31, 2000 as compared to the
same period in 2001. This decrease was a result of a reduction in personnel and
a shift in installation personnel from cost of license fees to cost of support.
Cost of license fees as a percentage of license fees revenue increased to 34.5%
for the year ended December 31, 2001 from 22.2% for the year ended December 31,
2000 due to lower software sales of proprietary software. This increase was due
to lower revenues for license fees combined with fixed salary costs.

      Cost of Third Party Software and Hardware. Cost of third party software
and hardware, which consists of license fees for third-party operating system
software, purchases of computer hardware systems and peripheral hardware
components decreased 64% from the year ended December 31, 2000 as compared to
the same period in 2001. The decrease in costs from the year ended December 31,
2000 to the year ended December 31, 2001 is due to lower sales of third party
software and hardware. Cost of third party software and hardware, as a
percentage of third party software and hardware sales was 78.5% and 79.2% for
the year ended December 31, 2001 and 2000, respectively. This decrease was due
to lower sales discounts given on computer hardware systems.

      Cost of Support. Cost of support consists primarily of personnel costs
associated with the support of the Company's software products and third-party
software utilities, and the cost of user documentation distributed to clients.
Cost of support increased slightly by 1.9% during the year ended December 31,
2001 compared to the same period in 2000 due to a shift in installation
personnel activities to support related duties, offset by a reduction in
personnel. Cost of support as a percentage of support revenue decreased 32.9% to
55.3% from 62.9% for the years ended December 31, 2001 and 2000, respectively.
This decrease is due to higher support revenue combined with increased
efficiencies.

      Cost of Services. Cost of services, which consists of salaries for
consulting employees and allocated salaries for training, programming and
implementation personnel, and payments to outside contractors, decreased 32.9%
from the year ended December 31, 2000 to the same period in 2001. This decrease
was due to lower personnel and outside contractor costs. Cost of services as a
percentage of services revenues increased to 63.6% from 67.9% for the years
ended December 31, 2001 and 2000, respectively. The increase in cost resulted
from lower demand for the Company's services combined with fixed salary costs.


                                       30
<PAGE>

      Total Cost of Revenue. Total cost of sales and services decreased by 40.9%
for the year ended December 31, 2001, compared to the same period in 2000. The
decrease in total cost of sales and services is primarily due to lower costs
related to system sales and lower personnel costs.

      General and Administrative. General and administrative expenses include
the cost of the Company's facility, finance, human resources, information
services, and administrative functions. General and administrative expenses
decreased 5.2% during the year ended December 31, 2001 compared to the same
period in 2000 as a result of a greater than historical bad debt expense
incurred during 2000 due to financial difficulties experienced by clients in the
e-commerce business sector. During the year ended December 31, 2000, the Company
had collectibility problems with many clients and one significant client,
Toytime.com. The write-off for Toytime represented approximately 50% of the bad
debt expense incurred during the year ended December 31, 2000. Also contributing
to the decrease in general and administrative expenses were reductions to
travel, communication, recruiting, relocation, and professional services costs,
offset by increases for merger related costs, consulting fees, insurance,
severance pay and rental expenses. General and administrative expenses as a
percentage of total revenue increased to 41.7% from 25.3% for the years ended
December 31, 2001 and 2000, respectively. This increase resulted primarily from
lower revenues. The Company is continuing to identify opportunities for cost
savings, provided such measures are not detrimental to the accomplishment of the
Company's goals. Due to the disposition and sale of the Company's three
subsidiaries in late 2001, the Company anticipates a corresponding reduction in
general and administrative expenses for the year ended December 31, 2002.

      Sales and Marketing. Sales and marketing expenses include personnel costs,
sales commissions related to sales and marketing of the Company's products and
services, and the cost of advertising, and participation in industry conferences
and trade shows. The decrease in sales and marketing expenses for the year ended
December 31, 2001 compared to the year ended December 31, 2000 resulted from
lower commissions on sales, personnel costs, advertising, trade show
expenditures and public relations expenses. Sales and marketing expenses as a
percentage of total revenue increased to 22.2% from 17.2% for the year ended
December 31, 2001 compared to the same period in 2000. The Company has reduced
its sales and marketing expenditures and will continue to identify opportunities
for cost savings, provided such measures are not detrimental to the
accomplishment of the Company's goals.

      Research and Development. Research and development expenses include costs
associated with the development of new products. Such expenses consist primarily
of employee salaries and benefits, consulting expenses (including amounts paid
to subcontractors for development work), and the cost of development software
and hardware. Research and development expenses increased by 7.4% during the
year ended December 31, 2001, compared to the year ended December 31, 2000
representing improvements to existing products and ongoing development of new
products. The increase was due to a greater portion of technical personnel
dedicated to research and development activities. The Company expects to
continue making significant investments in new and enhanced products in future
periods to ensure competitive positioning as economic conditions improve as well
as continuing to focus on new operating system platforms.

      Other Income (Expense), Net. Net other income, which includes interest
income on available cash, miscellaneous interest expense and the loss on
disposal and sale of the Company's subsidiaries, decreased 51.8% during the year
ended December 31, 2000 as compared to the same period in 2001. The decrease in
income was due to lower interest rates earned on available cash and the
Company's loss on the disposal and sale of its subsidiaries. See "Liquidity and
Capital Resources".

      Benefit (Provision) for Income Taxes. The benefit for income taxes was
approximately $1.7 million for the year ended December 31, 2001, compared to a
provision for income taxes of $375,000 for the year ended December 31, 2000. The
effective income tax rate differs from the federal statutory rates because of
the following: (i) the establishment of a full valuation allowance against
federal and state deferred tax assets, (ii) the effect of state income taxes,
(iii) the full valuation of net losses of foreign subsidiaries. Also effective
rates vary between periods because of the differing effects the net income and
losses of foreign subsidiaries have on the income before income taxes.

      Net Loss. As a result of the forgoing factors, the Company recorded a net
loss of $7.5 million for the year ended December 31, 2001 compared to a net loss
of $1.6 million for the same period in 2000.

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999


                                       31
<PAGE>

      Sales of License Fees. Computer software license fees decreased by 21.6%
in 2000 compared to 1999 as a result of lower sales to both new and existing
clients. New client computer software sales decreased 19.2% for the year ended
December 31, 1999 compared to the same period in 2000, and computer software
upgrades decreased 23.5% for the same periods.

      Sales of Third Party Software and Hardware. Computer hardware revenue
increased by 1.5% in 2000 compared to 1999 as a result of increased sales to
existing clients. Computer hardware revenue relating to new client sales
decreased 17.4% for the year ended December 31, 2000, compared the same period
in 1999 due to fewer new customer sales. Computer hardware upgrades increased by
17.2% for the year ended December 31, 2000, compared to the same period in 1999.

      Support. Support revenue increased by 27.1% in 2000 compared to 1999 due
to the addition of new clients during 1999 and 2000, and support fee increases
related to software user license upgrades.

      Services. Services revenue increased by 21.6% in 2000 compared to 1999
primarily due to an expanded client base and increased demand for consulting and
web design services.

      Total Revenue. Total revenue decreased by 2.1%, primarily due to lower new
client sales. New client sales for the year ended December 31, 2000 decreased
18.4% from the same period in 1999 due to fewer installations partially offset
by higher average revenue per installation. Revenue from client system and
component upgrades decreased by 6.0% in 2000 compared to 1999.

      Cost of License Fees. Cost of license fees increased by 8.9% during 2000
compared to 1999 as a result of higher personnel costs. Cost of computer
software as a percentage of software license fees increased to 22.2% from 16.0%
due to lower revenues from proprietary software and under-utilization of
personnel.

      Cost of Third Party Software and Hardware. Cost of third party software
and hardware increased by 5.85% from 1999 to 2000 due to the increase in third
party software and hardware revenue, and a change in the sales mix toward larger
clients, which generate lower margins. Also, in 1999, the Company recorded
hardware leasing transactions where there were no costs associated with the
sale.

      Cost of Support. Cost of support increased by 20.8% in 2000 compared to
1999 due to higher salary costs for support personnel.

      Cost of Services. Cost of services increased by 11.4% from 1999 to 2000
due to higher personnel costs and the greater use of outside contractors.

      Total Cost of Revenue. Total cost of sales and services increased by 12.2%
for the year ended December 31, 2000, compared to the same period in 1999. The
increase in total cost of sales and services is primarily due to an increase in
personnel costs offset by lower discounts given on third party software and
hardware components.

      General and Administrative. General and administrative expenses increased
by 43.4% during 2000 compared to 1999 as a result of the Company incurring
greater than historical bad debt expense during 2000 due to financial
difficulties experienced by clients in the e-commerce business sector. The
Company had collectibility problems with many clients and one significant
client, Toytime.com. The write-off for Toytime represented approximately 50% of
the bad debt expense incurred during 2000. Also contributing to the increased
cost for 2000 were continued investments to the Company's infrastructure and
higher professional fees. General and administrative expenses as a percentage of
total revenue increased to 25.3% from 17.3% for the years ended December 31,
2000 and 1999, respectively. This change was due to the increased expenses
combined with lower revenues.

      Sales and Marketing. The increase of 40.1% in sales and marketing expenses
during the year ended December 31, 2000 compared to the year ended December 31,
1999 resulted from the expansion of the sales force, higher sales commissions,
increased trade show expenses, expanded marketing and advertising programs,
public relations, including costs associated with the Company's name change, and
increased costs associated with the Company's user conference. Due to the above
mentioned


                                       32
<PAGE>

increases to sales and marketing expenses combined with lower revenues during
2000, sales and marketing expenses as a percentage of total revenue increased to
17.2% from 12.0% for the year ended December 31, 1999.

      Research and Development. Research and development expenses increased by
29.8% during the year ended December 31, 2000, compared to the year ended
December 31, 1999 as a result of improvements to existing products and ongoing
development of new products.

      Other Income (Expense), Net. Net other income, which includes interest
income on available cash and interest expense associated with the $12.0 million
aggregate principal amount of Convertible Debentures, increased from 1999 to
2000. The increase in income was due to higher interest rates earned on
available cash and the fact that the Company is no longer accruing interest on
the Convertible Debentures, which were converted on January 29, 1999, concurrent
with the closing of the Company's initial public offering. Interest expense for
1999 was $165,000. See "Liquidity and Capital Resources".

      Provision for Income Taxes. The provision for income taxes was
approximately $375,000 for the year ended December 31, 2000, compared to $3.0
million for 1999. The income tax provision as a percentage of taxable income for
the year ended December 31, 2000 was higher than 1999 as a result of: (i) an
increase in the valuation allowance by $631,000 in 2000 for deferred tax assets
attributed to losses from foreign operations, and (ii) a one-time tax benefit of
$330,000 in 1999 which resulted from the Company recording its beginning
deferred tax assets in connection with the Company becoming a C Corporation as
of January 1, 1999.

Seasonality

      The Company generally has realized lower revenue in the fourth quarter of
the year than in the other quarters. The Company believes that this has been due
primarily to the tendency of many of the Company's clients to avoid implementing
a new system or an upgrade of an existing system during the holiday season,
typically the busiest time of year for substantially all of the Company's
clients. Due to all of the foregoing factors, the Company believes that
period-to-period comparisons of its operating results are not necessarily
meaningful and that such comparisons cannot be relied upon as indicators of
future performance.

Liquidity and Capital Resources

      On February 3, 1999, the Company and selling shareholders sold 4,410,000
shares of its Common Stock in an initial public offering from which the Company
received proceeds of approximately $43.4 million net of underwriter commissions
and offering costs. At that time, the Debentures were converted into the
Convertible Preferred Stock and the Redeemable Preferred Stock. Contemporaneous
with the offering and pursuant to the terms of the Convertible Preferred Stock,
the Lenders converted the Convertible Preferred Stock into 2,255,614 shares of
Common Stock. On February 3, 1999, the Company redeemed in full the Redeemable
Preferred Stock for $12,000,000 and paid accrued interest in the amount of
$4,665,000.

      On February 26, 1999, the underwriters exercised their option to purchase
661,500 additional shares of the Company's common stock from which the Company
received proceeds of $7.4 million.

      For the years ended December 31, 2001 and 2000, the Company financed its
operations primarily through the use of remaining proceeds from its initial
public offering. At December 31, 2001, the Company's primary sources of
liquidity consisted of cash and cash equivalents totaling $ 35.8 million

      The Company's operating activities used cash for the year ended December
31, 2001, in the amount of $848,000 and $1.1 million for the same period in
2000, and provided cash in the amount of $64,850 for the year ended December 31,
1999. For the year ended December 31, 2001, the Company's operating cash was
used primarily by losses from operations offset by the collection of outstanding
account receivable balances. For the year ended December 31, 2000, the Company's
operating cash was used primarily by losses from operations and increased income
taxes receivable.

      Cash used by investing activities was approximately $480,000, $1.8
million, and $1.2 million, for the years ended December 31, 2001, 2000, and
1999, respectively. During 2001, this cash was used for capital expenditures in
the ordinary course of business, offset by proceeds from the sale of
subsidiaries. For 2000 and 1999, cash was used for capital expenditures


                                       33
<PAGE>

in the ordinary course of business. The Company's capital expenditures relate
primarily to purchases of computers, printers and software to support the
Company's operations, as well as furniture, fixtures and leasehold improvements.
As with all expenditures, the Company will continue to implement cost savings
measures as necessary, provided such measures are not detrimental to the
accomplishment of the Company's goals and to maintain its competitiveness within
its industry.

      For the year ended December 31, 2001 cash provided by financing activities
was $54,000, which consisted primarily of proceeds from sales of common stock
under the Company's employee stock purchase plan offset by capital lease
payments. For the year ended December 31, 2000, cash provided by financing
activities totaled $542,000, which consisted primarily of proceeds from employee
stock option exercises and the recovery of profits from certain beneficial
owners pursuant to Section 16(b) of the Securities Exchange Act of 1934. This
was slightly offset by the repurchase of 65,000 shares of the Company's common
stock during the third quarter of 2000. The shares were purchased at an average
price of $4.37 per share, for a total purchase price of $284,000. During 1999,
cash provided by financing activities totaled $38.8 million, which consisted
primarily of proceeds received from the Company's initial public offering and
the underwriters' option to purchase additional shares. This was offset by
repayment in full of the Convertible Debentures, payment of offering costs
related to the Company's initial public offering and distributions made to its
existing stockholders.

      As of December 31, 2001 the Company had working capital of approximately
$35.1 million as compared to approximately $42.0 million in 2000. The decrease
in working capital primarily resulted from a significant decrease in the
Company's accounts receivables balance.

      Net accounts receivable decreased by approximately $6.3 million from
December 31, 2000 to December 31, 2001 as a result of the 42% decrease in
revenues during 2001.

      In June 2000, the Company announced a stock repurchase plan, under which
it was authorized to purchase up to one million shares of its common stock. To
date the Company has repurchased 65,000 shares for a total cost of approximately
$284,000. The Company does not believe any purchases under the plan will affect
its ability to fund operations.

      As described elsewhere in this form 10-K under "Legal Proceedings," the
Company is party to various legal proceedings including class action lawsuits.
With respect to the class action lawsuits, management believes these class
actions are without merit and intends to defend these lawsuits vigorously. At
this time, the Company cannot reasonably estimate the ultimate loss, if any,
related to these class actions. However, the Company has recorded an accrual for
loss in the amount of $100,000 as of December 31, 2001 for the class action
complaint filed against the Company and its board of directors on November 13,
2001 based on a settlement in principle reached on February 11, 2002. A loss in
these proceedings may have a material adverse effect on the Company's results of
operations and financial condition.

      Based on its current available working capital, management believes there
is sufficient funding to meet its operating expenditures for the foreseeable
future.

      The Company may, in the future, acquire businesses or products
complementary to the Company's business, or otherwise obtain the right to use
complementary technologies, although there can be no assurance that any such
acquisitions will be made. The need for cash to finance additional working
capital or to make acquisitions may cause the Company to seek additional equity
or debt financing. There can be no assurance that such financing will be
available, or that the Company's need for higher levels of working capital will
not have a material adverse effect on the Company's business, financial
condition or results of operations.

New Accounting Pronouncements

      In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141 "Business Combinations" ("SFAS 141") and
Statement of Financial Accounting Standards No. 142 "Goodwill and Other
Intangible Assets" ("SFAS 142"). SFAS 141 requires that the purchase method of
accounting be used for all business combinations initiated after June 30, 2001
as well as all purchase method business combinations completed after June 30,
2001. SFAS 142 will require that goodwill and intangible assets with indefinite
useful lives no longer be amortized, but instead tested for impairment at least
annually. SFAS 141 is effective immediately, except with regard to business
combinations initiated prior to July 1, 2001 and SFAS 142 is effective January
1, 2002. We do not expect the adoption of these standards to have an effect


                                       34
<PAGE>

on the Company's consolidated financial statements.

      In June 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS 143, "Accounting for Asset Retirement Obligations." This statement
addresses the diverse accounting practices for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. We plan to adopt this standard on June 1, 2002. We do not expect the
adoption of this standard to have an effect on the Company's consolidated
financial statements.

      In August 2001, FASB issued SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets." This Statement establishes a single
accounting model for the impairment or disposal of long-lived assets. As
required by SFAS No. 144, the Company will adopt this new accounting standard on
July 1, 2002. The Company believes the adoption of SFAS No. 144 will not have an
impact on its financial statements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

      Management believes the risk of loss arising from adverse changes in
interest rates, foreign currency exchange rates, commodity prices and other
relevant market rates and prices, such as equity prices, if any, is not expected
to have a material impact on its financial statements.

Item 8. Financial Statements and Supplementary Data

      The Company's consolidated financial statements as of December 31, 2001
and 2000 and for each of the years in the three-year period ended December 31,
2001, and the respective notes thereto, are set forth elsewhere in this report.
An index of these financial statements appears in Item 14.

Item 9. Changes in and Disagreements With Accounts on Accounting and Financial
Disclosure

      None.

                                    PART III

The information required by Items 10, 11, 12 and 13 of Part III of Form 10-K
will be set forth in the definitive Proxy Statement of the Company relating to
the 2001 Annual Meeting of Shareholders and is incorporated herein by reference.
The Proxy Statement will be filed within 120 days of the fiscal year ended
December 31, 2001.

                                    PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

      (a)(1) The following consolidated financial statements are filed as part
             of this Form 10-K:

      Ecometry Corporation and Subsidiaries Consolidated Financial Statements:

            Independent Auditors' Report

            Consolidated Balance Sheets at December 31, 2001 and 2000

            Consolidated Statements of Operations for each of the years in the
            three-year period ended December 31, 2001

            Consolidated Statements of Redeemable Preferred Stock and
            Stockholders' Equity for each of the years in the three-year period
            ended December 31, 2001

            Consolidated Statements of Cash Flows for each of the years in the
            three-year period ended December 31, 2001


                                       35
<PAGE>

            Notes to Consolidated Financial Statements.

      (2)   The following financial statement schedule is filed as part of this
            Form 10-K:

                Schedule II of Valuation and Qualifying Accounts.

      (3)   See Exhibit Index included elsewhere herein.

      (b)   Reports on Form 8-K:

      The Company filed a Report on Form 8-K dated October 25, 2001, which
disclosed that the Company entered into an agreement and plan of merger with SG
Merger Corp. ("SG Merger") and with respect to Section 5.2 (c.) only, Wilburn W.
Smith and Allan J. Gardner pursuant to which SG Merger will be merged with and
into the Company, with the Company as the surviving corporation (the "Merger").
SG Merger is a newly formed company organized by Wilburn W. Smith and Allan J.
Gardner. Pursuant to the terms and subject to the conditions of the Merger
Agreement, each share of common stock, $0.01 par value per share, of the Company
("Common Stock") outstanding at the effective time of the Merger (other than
shares held by SG Merger and Messrs Smith and Gardner) will be converted into
the right to receive $2.70 in cash. The transaction is subject to a number of
conditions, including approval of the Merger by holders of a majority of the
common stock of the Company not held by SG Merger and Messrs. Smith and Gardner,
and other customary conditions. If consummated, the merger will be financed from
the Company's cash on hand.


                                       36
<PAGE>


                      ECOMETRY CORPORATION AND SUBSIDIARIES
                   (formerly Smith-Gardner & Associates, Inc.)

                        Consolidated Financial Statements

                           December 31, 2001 and 2000

                   (With Independent Auditors' Report Thereon)
<PAGE>

                      ECOMETRY CORPORATION AND SUBSIDIARIES
                   (Formerly Smith-Gardner & Associates, Inc.)

                          Independent Auditors' Report

The Board of Directors
Ecometry Corporation
(formerly Smith-Gardner & Associates, Inc.):

We have audited the accompanying consolidated balance sheets of Ecometry
Corporation and subsidiaries (formerly Smith-Gardner & Associates, Inc.) as of
December 31, 2001 and 2000, and the related consolidated statements of
operations, redeemable preferred stock, stockholders' equity (deficit) and
comprehensive loss, and cash flows for each of the years in the three-year
period ended December 31, 2001. In connection with our audits of the
consolidated financial statements, we have also audited the financial statement
schedule for each of the years in the three-year period ended December 31, 2001,
as listed in item 14(a)2 of the Company's 2001 Annual Report on Form 10-K. These
consolidated financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and financial statement
schedule 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 financial position of Ecometry Corporation
and subsidiaries (formerly Smith-Gardner & Associates, Inc.) as of December 31,
2001 and 2000, and the results of their operations and their cash flows for each
of the years in the three-year period ended December 31, 2001 in conformity with
accounting principles generally accepted in the United States of America. Also,
in our opinion, the related financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.

/s/ KPMG LLP

Miami, Florida
January 25, 2002, except as to Note 12,
which is as of February 15, 2002


                                      F-2
<PAGE>

                      ECOMETRY CORPORATION AND SUBSIDIARIES
                  (formerly Smith-Gardner & Associates, Inc.)

                           Consolidated Balance Sheets

                           December 31, 2001 and 2000

<TABLE>
<CAPTION>
                                    Assets                                     2001             2000
                                                                           ------------      -----------
<S>                                                                        <C>                <C>
Current assets:
    Cash and cash equivalents                                              $ 35,754,598       36,826,743
    Accounts receivable, net of allowance for doubtful accounts
       of $1,191,518 in 2001 and $901,028 in 2000                               801,331        7,054,624
    Income tax receivable                                                     2,402,385        1,994,535
    Inventory                                                                   103,383          313,568
    Prepaid expenses and other current assets                                   278,101          534,424
    Deferred taxes                                                                   --          819,503
                                                                           ------------      -----------
            Total current assets                                             39,339,798       47,543,397
Property and equipment, net                                                   2,271,203        2,811,851
Other assets                                                                    228,000          210,733
                                                                           ------------      -----------
                                                                           $ 41,839,001       50,565,981
                                                                           ============      ===========

                      Liabilities and Stockholders' Equity

Current liabilities:
    Accounts payable                                                       $    663,981        2,009,778
    Accrued expenses                                                          2,821,048        2,757,711
    Deferred revenue                                                            735,730          728,977
    Current installments of obligations under capital leases                     35,098           31,271
                                                                           ------------      -----------
            Total current liabilities                                         4,255,857        5,527,737
Obligations under capital leases, excluding current installments                 82,471          114,823
Deferred taxes                                                                       --          167,471
                                                                           ------------      -----------
            Total liabilities                                                 4,338,328        5,810,031
Commitments and contingencies (note 12)                                              --               --
                                                                           ------------      -----------
Stockholders' equity:
    Common stock, $0.01 par value.  Authorized 50,000,000
       shares; issued and outstanding 12,487,438 and 12,424,027 shares
       as of December 31, 2001 and 2000, respectively                           124,874          124,240
    Preferred stock, $.01 par value.  Authorized 10,000,000 shares;
       none issued and outstanding                                                   --               --
    Additional paid-in capital                                               56,587,772       56,506,192
    Accumulated deficit                                                     (18,927,786)     (11,415,891)
    Accumulated other comprehensive loss                                             --         (174,404)
    Treasury stock, at cost (65,000 shares in 2001 and 2000)                   (284,187)        (284,187)
                                                                           ------------      -----------
            Total stockholders' equity                                       37,500,673       44,755,950
                                                                           ------------      -----------
                                                                           $ 41,839,001       50,565,981
                                                                           ============      ===========
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-3
<PAGE>

                      ECOMETRY CORPORATION AND SUBSIDIARIES
                  (formerly Smith-Gardner & Associates, Inc.)

                      Consolidated Statements of Operations

     For each of the years in the three-year period ended December 31, 2001

<TABLE>
<CAPTION>
                                                                              2001              2000             1999
                                                                          ------------      -----------      -----------
<S>                                                                       <C>               <C>              <C>
Revenue:
    License fees                                                          $  5,670,317       15,200,599       19,392,723
    Third party hardware and software                                        5,645,732       15,530,398       15,307,597
    Support                                                                 11,231,308        9,696,364        7,629,486
    Services                                                                 3,717,493        5,188,420        4,267,864
                                                                          ------------      -----------      -----------
            Total revenue                                                   26,264,850       45,615,781       46,597,670
                                                                          ------------      -----------      -----------
Cost of sales and services:
    License fees                                                             1,953,962        3,371,705        3,094,991
    Third party hardware and software                                        4,434,412       12,306,239       11,234,305
    Support                                                                  6,211,475        6,097,512        5,049,726
    Services                                                                 2,364,633        3,525,181        3,164,593
                                                                          ------------      -----------      -----------
            Total cost of sales and services                                14,964,482       25,300,637       22,543,615
                                                                          ------------      -----------      -----------
            Gross profit                                                    11,300,368       20,315,144       24,054,055
Operating expenses:
    General and administrative                                              10,957,595       11,558,377        8,061,036
    Sales and marketing                                                      5,843,012        7,824,764        5,584,798
    Research and development                                                 4,769,708        4,439,466        3,420,772
                                                                          ------------      -----------      -----------
            Total operating expenses                                        21,570,315       23,822,607       17,066,606
                                                                          ------------      -----------      -----------
            (Loss) income from operations                                  (10,269,947)      (3,507,463)       6,987,449
Other (expense) income:
    Interest on outstanding debt                                                    --               --         (165,000)
    Interest income                                                          1,621,278        2,411,674        1,748,428
    Loss on sale and disposal of subsidiaries                                 (514,397)              --               --
    Loss on disposal of property and equipment                                      --         (113,636)              --
                                                                          ------------      -----------      -----------
            (Loss) income before benefit (provision) for income taxes     $ (9,163,066)      (1,209,425)       8,570,877

Benefit (provision) for income taxes                                         1,651,171         (374,523)      (3,048,446)
                                                                          ------------      -----------      -----------
Net (loss) income                                                         $ (7,511,895)      (1,583,948)       5,522,431
                                                                          ============      ===========      ===========
Net (loss) income per share:
    Basic                                                                 $      (0.61)           (0.13)            0.48
                                                                          ============      ===========      ===========
    Diluted                                                               $      (0.61)           (0.13)            0.44
                                                                          ============      ===========      ===========
Weighted average shares used in calculating net (loss) income
    per share:
       Basic                                                                12,394,933       12,371,771       11,621,598
                                                                          ============      ===========      ===========
       Diluted                                                              12,394,933       12,371,771       12,426,427
                                                                          ============      ===========      ===========
Pro forma data (unaudited):
    Income before income tax expense                                                                           8,570,877
    Pro forma provision for income tax expense                                                                (3,377,446)
                                                                                                             -----------
    Pro forma net income                                                                                       5,193,431
                                                                                                             ===========
    Pro forma net income per share:
       Basic                                                                                                        0.45
                                                                                                             ===========
       Diluted                                                                                                      0.41
                                                                                                             ===========
Weighted average shares outstanding used in calculating
    pro forma net income per share (unaudited):
       Basic                                                                                                  11,621,598
                                                                                                             ===========
       Diluted                                                                                                12,426,427
                                                                                                             ===========
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-4
<PAGE>

                      ECOMETRY CORPORATION AND SUBSIDIARIES
                  (formerly Smith-Gardner & Associates, Inc.)

      Consolidated Statements of Redeemable Preferred Stock, Stockholders'
                         Equity and Comprehensive Loss

     For each of the years in the three-year period ended December 31, 2001

<TABLE>
<CAPTION>
                                              Redeemable Preferred Stock           Stockholders' Equity (Deficit)
                                              --------------------------    ----------------------------------------


                                                                                Common stock
                                                                            --------------------       Additional
                                                Shares         Amount         Shares      Amount     paid-in capital
                                              ----------    ------------    ----------   --------    ---------------
<S>                                           <C>           <C>             <C>          <C>          <C>
Balance, December 31, 1998                            --    $         --     5,263,100   $ 52,631        3,516,258

    Issuance of redeemable convertible
       participating preferred stock              22,556             226            --         --               --

    Issuance of redeemable participating
       preferred stock                            12,000      12,000,000            --         --               --

    Issuance of common stock in initial
       public offering, net of expenses               --              --     4,661,500     46,615       50,789,857

    Conversion of redeemable participating
       preferred stock                           (22,556)           (226)    2,255,614     22,556          (22,556)

    Redemption of redeemable participating
       preferred stock                           (12,000)    (12,000,000)           --         --               --

    Exercise of stock options                         --              --        96,364        964          243,007

    Non-cash compensation expense                     --              --            --         --           41,588

    Stockholder distributions                         --              --            --         --               --

    Tax benefit on exercise of options                --              --            --         --          303,163

    Net income                                        --              --            --         --               --
                                              ----------    ------------    ----------   --------     ------------
Balance, December 31, 1999                            --              --    12,276,578    122,766       54,871,317

    Exercise of stock options                         --              --       147,449      1,474          454,017

    Non-cash compensation expense                     --              --            --         --           25,800

    Tax benefit on exercise of options                --              --            --         --          751,000

    Repayment of shareholder gain                     --              --            --         --          404,058

    Purchase of treasury stock                        --              --            --         --               --

    Net loss                                          --              --            --         --               --

    Cumulative foreign currency
       translation adjustment                         --              --            --         --               --

          Total comprehensive loss
                                              ----------    ------------    ----------   --------     ------------
Balance, December 31, 2000                            --              --    12,424,027    124,240       56,506,192

    Issuance of common stock purchased
       through employee stock purchase plan           --              --        63,411        634           81,580

    Net loss                                          --              --            --         --               --

    Cumulative foreign currency
       translation adjustment                         --              --            --         --               --
                                              ----------    ------------    ----------   --------     ------------
Balance, December 31, 2001                            --    $         --    12,487,438   $124,874     $ 56,587,772
                                              ==========    ============    ==========   ========     ============

<CAPTION>
                                                   Stockholders' Equity (Deficit)
                                              ---------------------------------------------------------
                                                            Accumulated
                                                                other                         Total
                                               Accumulated  comprehensive    Treasury     stockholders'
                                                (deficit)        loss          stock         equity
                                              ------------  --------------   ---------    -------------
<S>                                           <C>             <C>            <C>          <C>
Balance, December 31, 1998                     (14,519,631)          --             --     (10,950,742)

    Issuance of redeemable convertible
       participating preferred stock                    --           --             --              --

    Issuance of redeemable participating
       preferred stock                                  --           --             --              --

    Issuance of common stock in initial
       public offering, net of expenses                 --           --             --      50,836,472

    Conversion of redeemable participating
       preferred stock                                  --           --             --              --

    Redemption of redeemable participating
       preferred stock                                  --           --             --              --

    Exercise of stock options                           --           --             --         243,971

    Non-cash compensation expense                       --           --             --          41,588

    Stockholder distributions                     (834,743)          --             --        (834,743)

    Tax benefit on exercise of options                  --           --             --         303,163

    Net income                                   5,522,431           --             --       5,522,431
                                              ------------    ---------      ---------    ------------
Balance, December 31, 1999                      (9,831,943)          --             --      45,162,140

    Exercise of stock options                           --           --             --         455,491

    Non-cash compensation expense                       --           --             --          25,800

    Tax benefit on exercise of options                  --           --             --         751,000

    Repayment of shareholder gain                       --           --             --         404,058

    Purchase of treasury stock                          --           --       (284,187)       (284,187)

    Net loss                                    (1,583,948)          --             --      (1,583,948)

    Cumulative foreign currency
       translation adjustment                           --     (174,404)            --        (174,404)
                                                                                          ------------
          Total comprehensive loss                                                          (1,758,352)
                                              ------------    ---------      ---------    ------------
Balance, December 31, 2000                     (11,415,891)    (174,404)      (284,187)     44,755,950

    Issuance of common stock purchased
       through employee stock purchase plan             --           --             --          82,214

    Net loss                                    (7,511,895)          --             --      (7,511,895)

    Cumulative foreign currency
       translation adjustment                           --      174,404             --         174,404
                                              ------------    ---------      ---------    ------------
Balance, December 31, 2001                    $(18,927,786)   $      --      $(284,187)   $ 37,500,673
                                              ============    =========      =========    ============
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-5
<PAGE>

                      ECOMETRY CORPORATION AND SUBSIDIARIES
                  (formerly Smith-Gardner & Associates, Inc.)

                      Consolidated Statements of Cash Flows

     For each of the years in the three-year period ended December 31, 2001

<TABLE>
<CAPTION>
                                                                              2001            2000           1999
                                                                          ------------    -----------    -----------
<S>                                                                       <C>              <C>            <C>
Cash flows provided by operating activities, excluding effects
       of sale of subsidiaries:
    Net (loss) income                                                     $ (7,511,895)    (1,583,948)     5,522,431
    Adjustments to reconcile net (loss) income to net cash
       (used in) provided by operating activities:
          Depreciation and amortization                                        855,986        737,490        478,361
          Loss on sale and disposition of subsidiaries                         514,397             --             --
          Loss on disposal of property and equipment                                --        113,636             --
          Deferred taxes, net                                                  652,034       (136,639)      (515,393)
          Non-cash compensation expense                                             --         25,800         41,588
          Bad debt expense                                                     600,621      1,751,036        251,293
          Change in assets and liabilities:
            Accounts receivable                                              5,627,874       (506,671)    (2,821,385)
            Income tax receivable                                             (407,850)    (1,611,073)      (382,246)
            Inventory                                                          210,184        (38,546)       (77,557)
            Prepaid expenses and other current assets                          (42,327)        60,077       (402,012)
            Other assets                                                       (95,670)      (103,993)          (636)
            Accrued interest payable                                                --             --     (4,500,000)
            Accounts payable                                                (1,332,559)      (476,485)     1,274,783
            Accrued expenses                                                    70,859       (198,840)     1,398,756
            Deferred revenue                                                    10,470         81,419       (506,296)
            Tax benefit related to exercise of stock options                        --        751,000        303,163
                                                                          ------------    -----------    -----------
                   Net cash (used in) provided by operating activities        (847,876)    (1,135,737)        64,850
                                                                          ------------    -----------    -----------
Cash flows used in investing activities:
    Capital expenditures                                                      (479,503)    (1,811,564)    (1,193,516)
                                                                          ------------    -----------    -----------
                   Net cash used in investing activities                      (479,503)    (1,811,564)    (1,193,516)
                                                                          ------------    -----------    -----------
Cash flows provided by (used in) financing activities:
    Payment of capital lease                                                   (28,525)       (32,959)            --
    Redemption of preferred stock                                                   --             --    (12,000,000)
    Distributions to stockholders                                                   --             --       (834,743)
    Proceeds from public offering of common stock, net                              --             --     51,388,418
    Proceeds from issuance of common stock                                      82,214        455,491        243,971
    Repurchase of Company stock                                                     --       (284,187)            --
    Repayment of shareholder gain                                                   --        404,058             --
                                                                          ------------    -----------    -----------
                   Net cash provided by financing activities                    53,689        542,403     38,797,646
                                                                          ------------    -----------    -----------
                   Effect of foreign currency exchange rate changes
                     on cash and cash equivalents                              201,545        (14,143)            --
                   Net (decrease) increase in cash and cash equivalents     (1,072,145)    (2,419,041)    37,668,980
Cash and cash equivalents at beginning of year                              36,826,743     39,245,784      1,576,804
                                                                          ------------    -----------    -----------
Cash and cash equivalents at end of year                                  $ 35,754,598     36,826,743     39,245,784
                                                                          ============    ===========    ===========
Supplemental cash flow information:
    Cash paid during the year for interest                                $         --             --      4,665,000
                                                                          ============    ===========    ===========
    Cash paid for income taxes                                            $      8,200      1,372,451      3,430,692
                                                                          ============    ===========    ===========
Supplemental disclosure of non-cash investing and financing
    information:
       Note receivable from sale of subsidiary                            $    200,000             --             --
                                                                          ============    ===========    ===========
       Capital lease additions                                            $         --             --        179,053
                                                                          ============    ===========    ===========
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-6
<PAGE>
                      ECOMETRY CORPORATION AND SUBSIDIARIES
                   (formerly Smith-Gardner & Associates, Inc.)

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000


(1)   Summary of Significant Accounting Policies

      (a)   Description of Business

            Ecometry Corporation (formerly Smith-Gardner & Associates, Inc.),
            (the "Company") was incorporated on December 13, 1988 under the laws
            of the state of Florida. The Company primarily licenses a computer
            software package it designed and developed for companies that sell
            products through catalogs, the internet, media advertisement, direct
            mail or broadcast advertisements. The Company also sells third party
            hardware and software required to operate the Company's software. In
            addition, the Company provides consulting, training, programming and
            technical support services.

            The Company opened satellite offices in Fenstanton, England ("SGA
            Ltd.") and Sydney, Australia ("SGA Pty.") in June 1997 and September
            1997, respectively. These offices were separately incorporated and
            wholly owned subsidiaries of the Company. The Company, through its
            wholly owned subsidiary, NewHaven Software Corporation ("NewHaven")
            which was incorporated in September 2000, purchased intellectual
            property and customer databases from Haven Corporation in November
            2000.

            The consolidated financial statements include the accounts of the
            Company and its three wholly owned subsidiaries, SGA Pty., SGA Ltd.
            and NewHaven. In November 2001, the Company sold the shares of SGA
            Ltd. for one pound Sterling. At that time a distribution agreement
            was executed with Anthony C. Glover, the former managing director of
            SGA Ltd., pursuant to which the Company will receive royalties for
            the sale of its software. SGA Ltd. and G2 Solutions Ltd., of which
            Mr. Glover is a shareholder, are guarantors under the distribution
            agreement. The Company retained intellectual property rights to all
            products to be sold.

            Also in November 2001, the Company sold the assets of NewHaven in
            exchange for a promissory note in the amount of $200,000. The note
            is to be paid together with interest in quarterly installments over
            four years, commencing July 1, 2002.

            SGA Pty., which ceased operations in the second quarter of 2001, was
            liquidated on December 21, 2001. All significant intercompany
            balances and transactions have been eliminated in consolidation.

            In November of 2001, Hewlett Packard ("HP") announced it would be
            discontinuing sales of the HP e3000, which uses the MPE/ix operating
            system, as of November 1, 2003. HP will continue its support of this
            platform until January 1, 2007. This will provide time to transition
            customers running Ecometry Retail Enterprise MPE/iX to another
            operating system platform such as Unix or NT. The Company's
            inability to successfully deliver its Ecometry Retail Enterprise
            family of products on alternate operating system platforms such as
            Unix and NT, could have a material adverse effect on the Company's
            business, financial condition or results of operations.


                                      F-7
<PAGE>
                      ECOMETRY CORPORATION AND SUBSIDIARIES
                   (formerly Smith-Gardner & Associates, Inc.)

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000

      (b)   Cash and Cash Equivalents

            The Company considers all highly liquid investments purchased with
            original maturities of three months or less to be cash equivalents.

      (c)   Inventory

            Inventory consists of computer hardware and software held for
            resale. It is stated at the lower of cost, as determined on a
            specific identification basis, or market.

      (d)   Property and Equipment

            Property and equipment are stated at cost and are depreciated on the
            straight-line basis over the estimated useful lives of the assets,
            which range from three to seven years. Leasehold improvements are
            amortized on the straight-line basis over the shorter of the lease
            term or estimated useful life of the asset.

            The Company accounts for long-lived assets in accordance with the
            provisions of SFAS No. 121, "Accounting for the Impairment of
            Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." This
            Statement requires that long-lived assets and certain identifiable
            intangibles be reviewed for impairment whenever events or changes in
            circumstances indicate that the carrying amount of an asset may not
            be recoverable. Recoverability of assets to be held and used is
            measured by a comparison of the carrying amount of an asset to
            future net cash flows expected to be generated by the asset. If such
            assets are considered to be impaired, the impairment to be
            recognized is measured by the amount by which the carrying amount of
            the assets exceeds the fair value of the assets. Assets to be
            disposed of are reported at the lower of the carrying amount or fair
            value less costs to sell.

      (e)   Software Development Costs

            The Company accounts for software development costs under Statement
            of Financial Accounting Standards No. 86, "Accounting for Costs of
            Computer Software to Be Sold, Leased or Otherwise Marketed" ("SFAS
            No. 86"). Under SFAS No. 86, the costs associated with software
            development are required to be capitalized after technological
            feasibility has been established. The Company considers
            technological feasibility to be established when the product design
            and working model of the software product are completed and
            confirmed by testing the software product. Costs incurred by the
            Company subsequent to the establishment of technological feasibility
            have been insignificant and, as a result, the Company has not
            capitalized any development costs.

      (f)   Revenue Recognition

            The Company recognizes revenue in accordance with the provisions of
            Statement of Position 97-2, Software Revenue Recognition ("SOP
            97-2"). SOP 97-2 generally requires revenue earned on software
            arrangements involving multiple elements to be allocated to each
            element based on vendor specific objective evidence ("VSOE") of the
            relative fair values of the elements. VSOE is determined by the
            price charged when the element is sold separately. The revenue
            allocated to hardware and software products generally is recognized
            when the hardware and software have been delivered and installed,
            the fee is fixed and determinable and the collectibility is
            probable. The revenue allocated to post contract customer support is
            consistent with fees charged for renewals and


                                      F-8
<PAGE>
                      ECOMETRY CORPORATION AND SUBSIDIARIES
                   (formerly Smith-Gardner & Associates, Inc.)

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000

            is recognized ratably over the term of the support. Revenue
            allocated to service elements is recognized as the services are
            performed.

            In March 1999, the Company adopted SOP 98-9, Modification of SOP
            97-2, Software Revenue Recognition, With Respect to Certain
            Transactions ("SOP 98-9"). SOP 98-9 amends SOP 97-2 to require
            recognition of revenue using the "residual method" when (1) there is
            VSOE of the fair values of all undelivered elements in a
            multiple-element arrangement that is not accounted for using
            long-term contract accounting, (2) VSOE of fair value does not exist
            for one or more of the delivered elements in the arrangement, and
            (3) all revenue recognition criteria in SOP 97-2 other than the
            requirement for VSOE of the fair value of each delivered element of
            the arrangement are satisfied. Under the residual method, the
            arrangement fee is recognized as follows: (1) the total fair value
            of the undelivered elements, as indicated by VSOE, is deferred and
            subsequently recognized in accordance with the relevant sections of
            SOP 97-2 and (2) the difference between the total arrangement fee
            and the amount deferred for the undelivered elements is recognized
            as revenue related to the delivered elements. The adoption of SOP
            98-9 did not have a material impact on results of operations.

            At December 31, 2001 and 2000, the Company had deferred revenue
            related to computer hardware and software sales, customer support
            and services paid in advance.

      (g)   Fair Value of Financial Instruments

            Statement of Financial Accounting Standards No. 107 ("SFAS No.
            107"), "Disclosures About Fair Value of Financial Instruments,"
            requires disclosure of fair value of certain financial instruments.
            Cash and cash equivalents, accounts receivable, inventory, prepaid
            expenses and other current assets, as well as accounts payable,
            accrued expenses and other current liabilities, as reflected in the
            consolidated financial statements, approximate fair value because of
            the short-term maturity of these instruments.

            Fair value estimates are made at a specific point in time, based on
            relevant market information and information about the financial
            instrument. These estimates are subjective in nature and involve
            uncertainties and matters of significant judgment and therefore
            cannot be determined with precision. Changes in assumptions could
            significantly affect the estimates.

      (h)   Income Taxes

            The Company records income taxes in accordance with Statement of
            Financial Accounting Standards No. 109 ("SFAS No. 109"), "Accounting
            for Income Taxes." 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.
            The effect on deferred tax assets and liabilities of a change in tax
            rates is recognized as a change in income in the period that
            includes the enactment date.

            The pro forma provisions for income tax expense presented on the
            consolidated statement of operations for the year ended December 31,
            1999 represents the historical income tax expense for the


                                      F-9
<PAGE>

                      ECOMETRY CORPORATION AND SUBSIDIARIES
                   (formerly Smith-Gardner & Associates, Inc.)

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000

            year ended December 31, 1999 less a one-time benefit resulting from
            the conversion of the S corporation to C corporation.

            The Company's S corporation status was terminated in connection with
            the initial public offering. The Company, pursuant to an agreement
            with the existing shareholders, made a distribution of $834,743,
            which represented the shareholders' individual income tax
            liabilities for the period beginning January 1, 1998 and ending on
            December 31, 1998.

      (i)   Basic and Diluted Net Income per Share

            Basic net income per share was computed by dividing net income by
            the weighted average number of shares of common stock outstanding
            for each period presented. Diluted net income per share for the year
            ended December 31, 1999 was computed by giving effect to common
            stock equivalents. Incremental shares are determined using the
            treasury stock methods as follows:

<TABLE>
<CAPTION>
                                                                           1999

<S>                                                                    <C>
                  Net income                                           $ 5,522,431
                                                                       ===========

                  Weighted average shares outstanding                   11,621,598

                  Common stock equivalents:
                      Incremental shares using treasury stock method       804,829
                                                                       -----------

                                                                        12,426,427
                                                                       ===========

                  Basic net income per share                           $      0.48
                                                                       ===========
                  Diluted net income per share                         $      0.44
                                                                       ===========
</TABLE>

            As of December 31, 2001 and 2000, the only potential common shares
            are the options outstanding at the end of the year (see note 7).
            These potential common shares have been excluded from the
            computation of diluted net loss per share for the years ended
            December 31, 2001 and 2000, because their effect would have been
            antidilutive.

      (j)   Pro Forma Net Income and Pro Forma Net Income Per Share Computations
            (Unaudited)

            The pro forma net income presented in the consolidated statements of
            operations reflects the pro forma effects for income taxes as if the
            Company had been a taxable entity for the period presented. In
            addition, the pro forma net income for the year ended December 31,
            1999 excludes a one-time tax benefit resulting from conversion of
            the S corporation to C corporation. Pro forma basic and diluted net
            income per share for the year ended December 31, 1999 was computed
            by dividing pro forma net income by the weighted average number of
            shares of common stock outstanding.


                                      F-10
<PAGE>

                      ECOMETRY CORPORATION AND SUBSIDIARIES
                   (formerly Smith-Gardner & Associates, Inc.)

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000

            For the years ended December 31, 2000 and 2001, there is no pro
            forma presentation since the Company was a C corporation for each
            full fiscal year.

      (k)   Foreign Currency Translation

            The functional currencies of the Company's foreign subsidiaries are
            their respective local currencies. The translation of the applicable
            foreign currencies into U.S. dollars is performed for balance sheet
            accounts using current exchange rates in effect at the balance sheet
            date and for revenue and expense accounts using average rates
            prevailing during the year. Resulting translation adjustments are
            accumulated as a component of stockholders' equity and comprehensive
            loss.

            The Company enters into transactions based on the Company's local
            currency, which results in limited foreign currency risk. The
            Company does not utilize derivative instruments.

      (l)   Use of Estimates

            The Company's management has made a number of estimates and
            assumptions relating to the reporting of assets and liabilities and
            the disclosure of contingent assets and liabilities to prepare these
            consolidated financial statements in conformity with accounting
            principles generally accepted in the United States of America.
            Actual results could differ from those estimates.

      (m)   Comprehensive Income

            Comprehensive income is defined as a change in equity during the
            financial reporting period of a business enterprise resulting from
            non-owner sources. The only component of accumulated other
            comprehensive loss is related to the Company's foreign currency
            translation adjustment in 2000. The balance as of December 31, 2001
            is $0 due to the sale and disposition of the Company's foreign
            subsidiaries in 2001.

      (n)   Segment Reporting

            Operating segments are defined as components of an enterprise about
            which separate financial information is available that is evaluated
            regularly by the chief operating decision maker in deciding how to
            allocate resources and in assessing performance. The Company
            operates in one segment, for management reporting purposes.

      (o)   Reclassifications

            Certain prior year balances have been reclassified to conform to
            the current presentation.

(2)   Initial Public Offering

      On February 3, 1999, the Company and certain selling shareholders sold
      4,410,000 shares of its common stock in an initial public offering from
      which the Company received proceeds of $43,454,132, net of underwriter
      commissions and offering costs. At that time, the Company's $12 million
      outstanding convertible debentures (the "Convertible Debentures") were
      converted into redeemable convertible preferred stock and redeemable
      participating preferred stock. Contemporaneous with the offering, the
      redeemable convertible preferred stock was converted into 2,255,614 shares
      of common stock.

      On February 3, 1999, the Company redeemed in full the redeemable
      participating preferred stock for $12,000,000 and paid accrued interest in
      the amount of $4,665,000. On February 26, 1999, the


                                      F-11
<PAGE>

                      ECOMETRY CORPORATION AND SUBSIDIARIES
                   (formerly Smith-Gardner & Associates, Inc.)

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000

      underwriters of the Company's initial public offering exercised their
      option to purchase 661,500 additional shares of the Company's common stock
      from which the Company received net proceeds of $7,382,340.

(3)   Property and Equipment, Net

      Property and equipment, net of accumulated depreciation and amortization
      consists of the following:

<TABLE>
<CAPTION>
                                                            December 31,
                                                         2001          2000
                                                     -----------    ----------
<S>                                                  <C>             <C>
            Office equipment                         $ 2,580,376     2,631,942
            Office furnishings and fixtures              930,718       922,062
            Leasehold improvements                       467,873       500,795
                                                     -----------    ----------

                                                       3,978,967     4,054,799
            Less accumulated depreciation             (1,707,764)   (1,242,948)
                                                     -----------    ----------

                                                     $ 2,271,203     2,811,851
                                                     ===========    ==========
</TABLE>

      Depreciation expense for the years ended December 31, 2001, 2000 and 1999
      was $825,838, $737,490 and $478,361, respectively.

(4)   Leases

      The Company entered into an agreement to lease office facilities under a
      non-cancelable operating lease commencing January 1995 and expiring
      December 2001 with an option to renew for one five-year term. The lease
      contained certain incentives including rent abatements, rent discounts,
      leasehold improvement reimbursements, cash allowances and scheduled base
      rent increases over the term of the lease. In December 1999, the Company
      entered into an agreement to lease additional office facilities and extend
      the lease for existing facilities under a non-cancelable operating lease
      commencing December 1999 and expiring December 2006. Accounting principles
      generally accepted in the United States require that the full costs of a
      lease be recognized ratably over the term of the lease. Accordingly, the
      Company has recorded deferred credits of $1,091,991 and $939,610 at
      December 31, 2001 and 2000, respectively, to reflect the excess of rent
      expense over the incentives received. The deferred credit is included in
      accrued expenses in the accompanying consolidated balance sheets. In
      addition to the base rent payment, the Company pays a monthly allocation
      of the building's operating expenses.


                                      F-12
<PAGE>

                      ECOMETRY CORPORATION AND SUBSIDIARIES
                   (formerly Smith-Gardner & Associates, Inc.)

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000

      Future minimum lease payments under noncancelable facility leases as well
      as equipment leases and future minimum capital lease payments as of
      December 31, 2001 are as follows:

<TABLE>
<CAPTION>
                                                                    Capital      Operating
                   Year ending December 31,                         Leases         Leases
            --------------------------------------                ---------      ----------
<S>                                                               <C>            <C>
                              2002                                $  50,474      1,067,062
                              2003                                   46,591      1,109,549
                              2004                                   42,708      1,154,068
                              2005                                       --      1,200,152
                              2006                                       --      1,248,349
                                                                  ---------      ---------

                  Total minimum lease payments                    $ 139,773      5,779,180
                                                                                 =========

            Less amount representing interest (at a
                 rate of 9.65%)                                     (22,204)
                                                                  ---------

                  Present value of net minimum
                     capital lease payments                         117,569

             Less current installments of
                obligations under capital leases                    (35,098)
                                                                  ---------

                   Obligations under capital leases,
                      excluding current installments              $  82,471
                                                                  =========
</TABLE>

      Total rent expense, including common area maintenance charges associated
      with operating leases was $2,332,489, $2,211,395 and $1,344,496 during
      2001, 2000 and 1999, respectively.

(5)   Line of Credit

      The Company had a $7.5 million line of credit with a financial
      institution. The interest rate was LIBOR plus 1.25%. There were no
      borrowings under the line of credit during 2000 or 2001. The line of
      credit expired on August 30, 2001.


                                      F-13
<PAGE>

                      ECOMETRY CORPORATION AND SUBSIDIARIES
                   (formerly Smith-Gardner & Associates, Inc.)

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000

(6)   Accrued Expenses

      Accrued expenses consist of the following:

<TABLE>
<CAPTION>
                                                    December 31,
                                               2001              2000
<S>                                        <C>               <C>
            Deferred rent                  $1,091,991           939,610
            Accrued payroll                    62,783           452,117
            Accrued legal                     374,246           160,000
            Accrued vacation                  418,368           334,107
            Accrued commissions                19,245           101,766
            Sales tax                         380,562           380,562
            Merger related costs              250,000                --
            Other                             223,853           389,549
                                           ----------        ----------

                                           $2,821,048        $2,757,711
                                           ==========        ==========
</TABLE>

(7)   Employee Benefit and Stock Option Plans

      The Company maintains an employee retirement savings plan (the "Plan")
      under Internal Revenue Code Section 401(k). The Plan is available to all
      full-time employees over 21 years of age with more than three months of
      employment with the Company. The Company provides matching contributions
      which vest to the employees immediately and range from 10% to 35%,
      depending on years of service. Matching is applied to the deferrals of
      each participant entitled to matching contributions, not to exceed 2.8% of
      the participant's compensation. There was $189,029, $162,523 and $160,278
      provided by the Company in matching contributions for the years ended
      December 31, 2001, 2000 and 1999, respectively.

      SGA Ltd. maintained an employee benefit plan (the "Ltd. Plan"). This was
      an employee-directed plan which allowed the employees to set aside from 1%
      to 5% of their salary to be deposited to a fund of their choice. SGA Ltd.
      matched each employee's contribution from 1% to 5% of their salary. There
      was $41,988, $56,916 and $36,437 provided by SGA Ltd. in matching
      contributions for the years ended December 31, 2001, 2000 and 1999,
      respectively.

      On April 1, 1996 the Company adopted a stock option plan. Under this plan,
      the Company may grant options for up to 850,000 shares of common stock. An
      option's maximum term is ten years. Each option vests as follows: 25% one
      year after the date of grant and the balance in successive equal quarterly
      installments of 6.25% each, at the end of each of the next 12 calendar
      quarters. At December 31, 2001, the Company has granted 638,582 options
      under this stock option plan at exercise prices ranging from $2.53 to
      $15.78 per share. Included in these granted options, on April 1, 1996,
      under the stock option plan 494,120 options to purchase common stock were
      granted to an executive officer of the Company. The options vest as
      follows: 82,353 shares one year after the grant date; 20,588 shares at the
      end of each of the next 12 calendar quarters subsequent to the vesting
      commencement date; 82,355 shares upon the date the aggregate market value
      of the Company's outstanding common stock has equaled or exceeded $100
      million for 30


                                      F-14
<PAGE>

                      ECOMETRY CORPORATION AND SUBSIDIARIES
                   (formerly Smith-Gardner & Associates, Inc.)

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000

      days (June 8, 1999); and the remaining 82,356 shares upon the earlier to
      occur of (a) March 21, 2006 or (b) the market value of the Company's
      outstanding common stock has equaled or exceeded $150 million for 30 days.
      Of the 494,120 of options granted, 394,120 options are exercisable and
      100,000 options have been exercised as of December 31, 2001.

      At June 30, 1998, the Company established an additional stock option plan
      ("1998 Stock Option Plan"). Under this plan the Company may grant options
      for up to 1,500,000 shares of common stock. On May 16, 2000, the 1998
      Stock Option Plan was amended to increase the number of options authorized
      for issuance to 2,250,000. At December 31, 2001, the Company has granted
      1,896,559 options under the 1998 Stock Option Plan at exercise prices
      ranging from $1.75 to $17.35 per share. Each option vests 25% one year
      after the date of grant (the "vesting date') and an additional 25% on each
      of the next three anniversaries of the vesting date.

      The Company applies APB Opinion No. 25 in accounting for its stock option
      plan. Stock compensation expense is recognized over the vesting period
      when the exercise price is lower than fair market value at the date of
      grant. Stock compensation expense for the years ended December 31, 2001,
      2000 and 1999 was $0, $25,800 and $41,588, respectively. Had the Company
      determined compensation cost based on fair value at the grant date for its
      stock options under Statement No. 123, the Company's net (loss) income and
      net (loss) income per share for each of the years in the three-year period
      ended December 31, 2001 would have changed to pro forma amounts indicated
      below:

<TABLE>
<CAPTION>
          Pro forma disclosures                     2001                2000               1999
      ------------------------------------     -------------         ----------         ---------
<S>                                            <C>                   <C>                <C>
      Net (loss) income:
          As reported                          $  (7,511,895)        (1,583,948)        5,522,431
          Pro forma                               (8,805,857)        (3,188,759)        3,832,838

      Basic net (loss) income per share:
          As reported                                  (0.61)             (0.13)             0.48
          Pro forma                                    (0.71)             (0.26)             0.33

      Diluted net (loss) income per share:
          As reported                                  (0.61)             (0.13)             0.44
          Pro forma                                    (0.71)             (0.26)             0.31
</TABLE>

      The weighted-average fair market value per share of options granted to
      employees was estimated at $2.45, $12.42 and $10.65, for the years ended
      December 31, 2001, 2000 and 1999, respectively. The fair value of each
      option was estimated at the date of grant using the Black-Scholes model
      with the following assumptions used:

<TABLE>
<CAPTION>
                                                 2001               2000             1999
                                               -------            -------           -------
<S>                                            <C>                <C>               <C>
      Expected life                            6 years            6 years           6 years
      Dividends                                None               None              None
      Risk-free interest rate                  5.09%              5.24%             6.28%
      Volatility                               59%                56%               50%
</TABLE>


                                      F-15
<PAGE>

                      ECOMETRY CORPORATION AND SUBSIDIARIES
                   (formerly Smith-Gardner & Associates, Inc.)

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000

      The following table summarizes information about stock options outstanding
      under the Plans as of December 31, 2001:

<TABLE>
<CAPTION>
                                                   Weighted
                                                    average          Weighted                         Weighted
                                                   remaining         average          Number          average
             Exercise                Number       contractual        exercise       of shares         exercise
               price              outstanding     life (years)        price        exercisable         price
      ------------------------    -------------   -------------    -------------   -------------    -------------
<S>                               <C>                  <C>         <C>               <C>            <C>
      $1.75 to $3.75                481,639            4.41        $     2.54        451,194        $    2.54
      $4.00 to $8.69                362,500            8.25              7.04        145,000             7.65
      $9.31 to $12.00               222,892            6.66             11.83        141,718            11.94
      $12.56 to $17.35              331,358            8.25             15.50         82,250            15.31
                                  ---------                                          -------

                                  1,398,389                                          820,162
                                  =========                                          =======
</TABLE>

      Option activity for the Plans is summarized as follows:

<TABLE>
<CAPTION>
                                                                               Weighted
                                                                               average
                                                                               exercise
                                                              Number of       price per
                                                                Shares          share
                                                              ---------      ----------
<S>                                                           <C>            <C>
            Balance outstanding at December 31, 1998          1,413,454      $     6.80

            Options granted                                     454,500           10.52
            Options exercised                                   (96,364)           2.53
            Options forfeited                                   (62,892)           9.60
                                                              ---------

            Balance outstanding at December 31, 1999          1,708,698
                                                              =========

            Options granted                                     886,000           12.42
            Options exercised                                  (147,449)           3.12
            Options forfeited                                  (172,112)          12.10
                                                              ---------

            Balance at December 31, 2000                      2,275,137            9.80
                                                              =========

            Options granted                                      25,000            2.45
            Options exercised                                        --              --
            Options forfeited                                  (901,748)          11.75
                                                              ---------

            Balance at December 31, 2001                      1,398,389            8.21
                                                              =========

            Exercisable at December 31, 2001                    820,162            6.29
                                                              =========
</TABLE>


                                      F-16
<PAGE>

                      ECOMETRY CORPORATION AND SUBSIDIARIES
                   (formerly Smith-Gardner & Associates, Inc.)

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000

(8)   Income Taxes

      Pretax (loss) income is derived from the following sources:

<TABLE>
<CAPTION>
                                        2001            2000             1999
                                    -----------      ----------      ----------
<S>                                 <C>                 <C>           <C>
            Domestic                $(8,003,552)        848,183       8,720,007
            Foreign                  (1,159,514)     (2,057,608)       (149,130)
                                    -----------      ----------      ----------

                          Total     $(9,163,066)     (1,209,425)      8,570,877
                                    ===========      ==========      ==========
</TABLE>

      The significant components of the (benefit) provision for income taxes are
      as follows:

<TABLE>
<CAPTION>
                                                                       2001           2000           1999
                                                                   -----------      --------      ----------
<S>                                                                <C>               <C>           <C>
            Current:
                Federal                                            $(2,308,793)      375,060       2,967,293
                State                                                    5,588       136,102         596,027
                                                                   -----------      --------      ----------
                          Total current                             (2,303,205)      511,162       3,563,320

            Deferred:
                Federal                                                830,556       (68,381)       (486,379)
                State                                                 (178,522)      (68,258)        (28,495)
                                                                   -----------      --------      ----------
                          Total deferred                               652,034      (136,639)       (514,874)
                                                                   -----------      --------      ----------

                          Total income tax (benefit) provision     $(1,651,171)      374,523       3,048,446
                                                                   ===========      ========      ==========
</TABLE>

      Current tax benefits of $751,000 and $303,163 related to the exercise of
      vested nonqualified stock options were credited directly to additional
      paid-in capital in 2000 and 1999, respectively. No tax benefits for
      options exercised during 2001 were recorded to additional paid-in capital.


                                      F-17
<PAGE>

                      ECOMETRY CORPORATION AND SUBSIDIARIES
                   (formerly Smith-Gardner & Associates, Inc.)

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000

      For the years ended December 31, 2001, 2000 and 1999, the reconciliation
      below represents the difference between the provision for income taxes
      calculated using the statutory federal income tax rate of 34% and the
      actual income tax:

<TABLE>
<CAPTION>
                                                       2001           2000           1999
                                                   -----------      --------      ----------
<S>                                                <C>              <C>            <C>
Income tax (benefit) provision using statutory
    tax rate                                       $(3,115,442)     (411,205)      2,914,185
State income tax (benefit) provision, net of
    federal income tax                                (697,311)       44,777         343,873
Change in valuation allowance for state and
    federal income tax                               3,615,362       631,531          60,857
Effect of change to C corporation from S
    Corporation                                             --            --        (329,519)
Difference between US and non-US tax rates             (73,837)       68,361         (10,153)
Loss on disposition of foreign operations           (1,384,340)           --              --
Other, net                                               4,397        41,059          69,203
                                                   -----------      --------      ----------

(Benefit) provision for income tax                 $(1,651,171)      374,523       3,048,446
                                                   ===========      ========      ==========
</TABLE>

      The tax effects of temporary differences that give rise to significant
      portions of the deferred tax assets and deferred tax liabilities at
      December 31, 2001 and 2000 are as follows:

<TABLE>
<CAPTION>
                                                                 2001           2000
                                                             -----------      --------
<S>                                                            <C>           <C>
            Deferred tax assets:
                Accrued expenses                             $   333,669       368,073
                Allowance for doubtful accounts                  460,164       370,733
                Net operating loss carryforward                3,299,756       539,256
                Alternative minimum tax credit carryover         162,638            --
                Other                                            144,830       172,972
                                                             -----------      --------

                          Total deferred tax asset             4,401,057     1,451,034

            Valuation allowance                               (4,246,893)     (631,531)
                                                             -----------      --------

                          Net deferred tax assets                154,164       819,503
                                                             -----------      --------

            Deferred tax liabilities:
                Depreciation and amortization                    125,348       110,623
                Other                                             28,816        56,848
                                                             -----------      --------

                          Total deferred tax liabilities         154,164       167,471
                                                             -----------      --------

                          Net deferred tax asset             $        --       652,032
                                                             ===========      ========
</TABLE>


                                      F-18
<PAGE>

                      ECOMETRY CORPORATION AND SUBSIDIARIES
                   (formerly Smith-Gardner & Associates, Inc.)

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000

      The valuation allowance, which increased by $3,615,362, includes a
      decrease of $631,531 relating to the sale and disposal of the Company's
      foreign subsidiaries and an increase of $4,246,893, which represents 100%
      of the deferred tax asset relating to domestic operations at December 31,
      2001. A valuation allowance for the full amount of the related domestic
      tax benefit has been established in 2001 due primarily to the
      uncertainties associated with the realization of these benefits in future
      periods.

      The Company has a consolidated net operating loss carryforward of
      $7,588,150 for federal income tax purposes, which will expire in the year
      2021. The Company has a consolidated net operating loss carryforward of
      $15,580,000 for state income tax purposes, which will begin to expire
      in 2005.

(9)   Business and Credit Concentrations

      The Company currently derives substantially all of its revenue from sales
      of its Ecometry Online family of products and related services and
      hardware. Any factor adversely affecting the sale of the Company's
      Ecometry Online products or other new products could have a material
      affect on the Company's business, financial condition and results of
      operations.

      The Company sells its products primarily to customers located in the
      United States. For the years ended December 31, 2001, 2000 and 1999, the
      Company's sales to customers outside the United States were 8.5%, 7.3% and
      12.6% respectively.

      For the years ended December 31, 2001, 2000 and 1999, respectively, the
      Company purchased 88%, 86% and 84% of its computer hardware from Hewlett
      Packard distributors. The Company owed these suppliers $104,147, $726,167
      and $769,884 at December 31, 2001, 2000 and 1999, respectively.
      Accordingly, any adverse change in the product pricing or the operations
      of these distributors could significantly affect the operating results of
      the Company.

      There were accounts receivable from two customers at December 31, 2001
      that exceeded 10% of gross accounts receivable for approximately
      $1,048,238. At December 31, 2000, there were accounts receivable from
      three customers that exceeded 10% of total accounts receivable for
      approximately $2,972,000.

      The Company estimates an allowance for doubtful accounts based on an
      analysis of collections in prior years, the credit worthiness of its
      customers as well as general economic conditions. Consequently, an adverse
      change in those factors could affect the Company's estimate of its bad
      debts.

(10)  Employee Stock Purchase Plan

      In July 2000, the Company established an Employee Stock Purchase Plan
      (ESPP). Under the ESPP, the Company is authorized to grant up to 250,000
      shares of common stock to its employees. Stock is purchased at 85% of the
      lower price at the beginning or end of the offering period. Under the
      ESPP, purchases of stock during each offering period are limited to
      $25,000, 10% of compensation and 500 shares. Payroll deductions are made
      for participating employees during the offering period. Participants may
      cancel up to the last day of the offering period and withdraw all funds.
      The initial offering period began July 1, 2000 and ended on December 31,
      2000. On January 3, 2001, the Company issued 22,095 shares at $1.75 per
      share. During the offering period from January 1, 2001 to June 30, 2001,
      the Company issued 23,165 shares at $1.40 per share. During the offering
      period from July 1, 2001 to November 9, 2001, the Company issued 18,151
      shares at $1.41 per share. The Employee Stock Purchase plan was


                                      F-19
<PAGE>

                      ECOMETRY CORPORATION AND SUBSIDIARIES
                   (formerly Smith-Gardner & Associates, Inc.)

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000

      terminated on November 9, 2001 in accordance with provisions of the merger
      agreement executed by the Company and SG Merger Corp. on October 25, 2001.

(11)  Stock Repurchase Plan

      On June 28, 2000, the Company announced that its Board of Directors
      approved a stock repurchase plan. Under the plan, the Company is
      authorized to repurchase up to one million shares of its common stock. The
      extent to which the Company repurchases its shares and the timing of such
      purchases will depend upon market conditions and other corporate
      considerations. The Company repurchased 65,000 shares of the Company's
      common stock under the plan as of December 31, 2001. The shares were
      purchased at an average price of $4.37 per share, for a total purchase
      price of $284,187 and recorded as treasury stock.

(12)  Commitments and Contingencies

      Class Action Litigation

      Between June 22, 2000 and August 14, 2000, four purported class-action
      complaints were filed against the Company and several of its officers. All
      four complaints are substantially similar and allege, among other things,
      that the Company made material misrepresentations and omissions regarding
      the Company's future revenues, growth and expenditures, and whether its
      reserve for doubtful accounts complied with Generally Accepted Accounting
      Principles promulgated in the United States of America.

      On February 5, 2002, a United States Magistrate Judge issued a Report and
      Recommendation recommending that the amended complaint be dismissed,
      without prejudice. On February 15, 2002, the plaintiffs filed an objection
      to the Report and Recommendation. The District Court has not yet acted on
      the Report and Recommendation. Discovery in this action has not yet
      commenced, and is stayed pursuant to statutes based on the filing of the
      motion to dismiss, which stay would be lifted in the event that the Court
      denies such motion to dismiss.

      Management believes these actions are without merit and intends to defend
      them vigorously. There can be no assurance that the Company will be
      successful in defending this claim. An unfavorable outcome could have a
      material adverse affect on the Company's business, financial condition or
      results of operation. At this time, the Company cannot reasonably estimate
      the ultimate loss, if any, or predict the outcome related to these actions
      and, therefore, the Company has not recorded an accrual for loss as of
      December 31, 2001.

      Class Action Litigation

      On November 15, 2001, a class-action complaint was filed against the
      Company and its board of directors. The complaint alleged among other
      things that there was an unlawful scheme and plan by the Company and
      certain officers and directors of the Company to acquire the remaining
      ownership of the Company in a going-private transaction for grossly
      inadequate consideration and without full and complete disclosure of all
      material information, in breach of defendants' fiduciary duties.

      On February 11, 2002, the parties reached a settlement in principle,
      subject to court approval, that provides for payment of $100,000 in fees
      to the plaintiffs, and a release of all claims.


                                      F-20
<PAGE>

                      ECOMETRY CORPORATION AND SUBSIDIARIES
                   (formerly Smith-Gardner & Associates, Inc.)

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000

      In the event, the court does not approve the settlement, management
      intends to defend this action vigorously. There can be no assurance the
      Company will be successful in defending this claim. An unfavorable outcome
      could have a material adverse affect on the Company's business, financial
      condition or results of operation. The Company has recorded an accrual for
      loss in the amount of $100,000 as of December 31, 2001.

      Arbitration

      On December 11, 2001, the investment banking firm of Raymond James &
      Associates ("Raymond James"), Inc. filed a demand for arbitration against
      the company with the American Arbitration Association claiming breach of
      contract. Raymond James claims that it is owed $750,000 in connection
      with services it believes it should have been retained to perform in
      connection with the company's proposed merger transaction with SG Merger.
      The Company believes that Raymond James' claims are without merit and
      intends to defend the proceeding vigorously. Among other things, the
      company believes that it had no obligation under its agreement with
      Raymond James to retain Raymond James for the transaction with SG Merger,
      that the agreement between Ecometry and Raymond James was terminated and
      that the agreement is otherwise void and unenforceable as a matter of law.

      Creditor Bankruptcy

      In May 2000, one of the Company's clients discontinued its operations. On
      July 3, 2000, an involuntary bankruptcy petition for relief was commenced
      by certain creditors against the client. The Committee of Unsecured
      Creditors negotiated a settlement for the dismissal of the Involuntary
      Bankruptcy petition under which the Company's client would dedicate
      certain funds to be distributed to all of the holders of allowed,
      undisputed, uncontingent, and liquidated unsecured claims. The order
      approving the settlement was entered on November 2, 2000 and became final
      November 13, 2000. The Company received a settlement check in the amount
      of $172,578 in January 2001, which was reflected as a reduction in bad
      debt expense as of and for the year ended December 31, 2000.

      Other Legal Matters

      The Company is also involved in various claims and legal actions arising
      in the ordinary course of business. In the opinion of management, the
      ultimate disposition of these matters will not have a material adverse
      effect on the Company's consolidated financial position, results of
      operations or liquidity.

(13)  Short-Swing Profits

      During fiscal year 2000, it was discovered by the Company that beneficial
      owners (as defined by the Securities Exchange Act of 1934) had profited
      from sales and subsequent purchases of the Company's common stock that
      were made within six months ("short-swing profits"). Pursuant to Section
      16(b) of the Securities Exchange Act of 1934, the Company acted to recover
      these profits from the beneficial owners. As a result, the Company
      received $404,058, which has been credited to additional paid-in capital
      as a contribution to stockholders' equity.

(14)  Retention Agreements

      On November 8, 2001, the Company entered into retention agreements with
      two of its officers. Pursuant to the agreements, payments totaling
      $325,000, will be made in the event of a business reorganization involving
      a purchase, sale, merger, joint venture or otherwise, or in the event of
      termination of employment, other than for cause.

(15)  New Accounting Pronouncements

      In July 2001, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 141 "Business Combinations" ("SFAS
      141") and Statement of Financial Accounting Standards No. 142 "Goodwill
      and Other Intangible Assets" ("SFAS 142"). SFAS 141 requires that the
      purchase method of accounting be used for all business combinations
      initiated after June 30, 2001 as well as all purchase method business
      combinations completed after June 30, 2001. SFAS 142 will require that
      goodwill and intangible assets with indefinite useful lives no longer be
      amortized, but instead tested for


                                      F-21
<PAGE>

                      ECOMETRY CORPORATION AND SUBSIDIARIES
                   (formerly Smith-Gardner & Associates, Inc.)

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000

      impairment at least annually. SFAS 141 is effective immediately, except
      with regard to business combinations initiated prior to July 1, 2001 and
      SFAS 142 is effective January 1, 2002. We do not expect the adoption of
      these standards to have an effect on the Company's consolidated financial
      statements.

      In June 2001, the Financial Accounting Standards Board ("FASB") issued
      SFAS 143, "Accounting for Asset Retirement Obligations." This statement
      addresses the diverse accounting practices for obligations associated with
      the retirement of tangible long-lived assets and the associated asset
      retirement costs. We plan to adopt this standard on June 1, 2002. We do
      not expect the adoption of this standard to have an effect on the
      Company's consolidated financial statements.

      In August 2001, FASB issued SFAS No. 144, "Accounting for the Impairment
      or Disposal of Long-Lived Assets." This Statement establishes a single
      accounting model for the impairment or disposal of long-lived assets. As
      required by SFAS No. 144, the Company will adopt this new accounting
      standard on July 1, 2002. The Company believes the adoption of SFAS No.
      144 will not have an impact on its financial statements.

(16)  Proposed Mergers

      On October 25, 2001, the Company entered into a merger agreement with SG
      Merger Corp., a newly formed company organized by Wilburn W. Smith and
      Allan J. Gardner, officers and board members of the Company ("SG Merger
      Agreement"). SG Merger Corp. would be merged with and into the Company,
      with the Company as the surviving corporation. Pursuant to the terms and
      subject to the conditions of the SG Merger Agreement, each share of
      common stock, $0.01 par value per share, of the Company ("Common Stock")
      outstanding at the effective time of the merger (other than shares held
      by SG Merger Corp. and Messrs. Smith and Gardner) would be converted into
      the right to receive $2.70 in cash. This transaction is subject to a
      number of conditions, including approval of the merger by holders of a
      majority of the Common Stock of the Company not held by SG Merger Corp.
      and Messrs. Smith and Gardner, and other customary conditions.

      On January 25, 2002, the Company and Citrus Merger Corp., a Florida
      corporation ("Acquisition Sub"), Syngistix, Inc., a Delaware corporation
      ("Syngistix"), and for limited purposes only, Core Technology Fund IV,
      LLC, entered into an Agreement and Plan of Merger (the "Syngistix Merger
      Agreement") pursuant to which Acquisition Sub would be merged with and
      into the Company, with the Company as the surviving corporation. Pursuant
      to the terms and subject to the conditions of the Syngistix Merger
      Agreement, each share of Common Stock outstanding at the effective time
      of this merger (other than shares held by the Company, Syngistix or
      Acquisition Sub) would be converted into the right to receive $2.90 in
      cash. This transaction is subject to a number of conditions, including
      approval of the merger by holders of a majority of the Company's
      outstanding Common Stock and the consummation of the financing
      arrangements with Core Technology Fund IV, LLC and The Roser Partnership
      III, SBIC LP for $10 million (the commitment for which has been
      obtained), and other customary conditions.

      In order to induce Syngistix to make an offer to acquire the Company, SG
      Merger Corp., the Company, Wilburn W. Smith and Allan J. Gardner entered
      into an Amendment and Waiver to Agreement and Plan of Merger dated as of
      January 25, 2002 ("SG Amendment"). The SG Amendment amends the SG Merger
      Agreement. The SG Amendment provides, among other items, that the
      Company's entering into the Syngistix Merger Agreement shall not
      constitute a breach of the SG Merger Agreement and shall not give SG
      Merger Corp. the right to terminate the SG Merger Agreement or to collect
      the termination fee provided for in the SG Merger Agreement, other than
      the Company shall pay to SG Merger Corp. its reasonably documented fees
      and expenses incurred to date in connection with the SG Merger Agreement.
      Any such fees and expenses shall be deducted from any termination fee
      payable to SG Merger Corp. under consummation of the Syngistix merger in
      the amount of $1,679,100.

      The SG Amendment further provides that the SG Merger Agreement would
      terminate immediately prior to the consummation by the Company of the
      merger with Syngistix and the termination fee as described above, shall
      become due and payable immediately. If, however, the Syngistix Merger
      Agreement is terminated for any reason other than the closing of the
      transactions contemplated by the Syngistix Merger Agreement, the SG
      Merger Agreement would remain in effect and SG Merger Corp. would not be
      entitled to the termination fee if the merger with SG Merger Corp. was
      consummated. In addition, the SG Amendment amends the SG Merger Agreement
      by extending the date by which the merger with SG Merger Corp. must be
      consummated from February 28, 2002 to July 31, 2002.

                                      F-22
<PAGE>

                      ECOMETRY CORPORATION AND SUBSIDIARIES
                   (formerly Smith-Gardner & Associates, Inc.)

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000

      Pursuant to the SG Amendment, Messrs. Smith and Gardner have agreed that
      at any meeting of stockholders of the Company, or any solicitation of
      written consents, during the period from January 25, 2002 through May 31,
      2002 they will vote in favor of, or consent to, the approval of the
      Syngistix Merger Agreement and the approval of such merger, and in favor
      of each of the other actions contemplated by the Syngistix Merger
      Agreement.

(17)  Quarterly Financial Information (unaudited)

      The following tables summarize selected quarterly data of Ecometry
      Corporation for the years ended December 31, 2001 and 2000:

<TABLE>
<CAPTION>
                                                   First           Second           Third           Fourth
                      2001                        Quarter          Quarter         Quarter         Quarter
                                                -----------       ---------       ---------       ---------
<S>                                             <C>               <C>             <C>             <C>
      Net revenue                               $ 6,182,083       8,159,707       6,193,035       5,730,025
      Gross Margin                                2,100,490       4,195,883       2,792,425       2,211,570
      Net loss (1)                               (2,457,042)       (668,517)     (1,646,081)     (2,740,255)
      Basic and diluted net loss per share:
          Net loss                              $     (0.20)          (0.05)          (0.13)          (0.22)
</TABLE>


                                      F-23
<PAGE>

                      ECOMETRY CORPORATION AND SUBSIDIARIES
                   (formerly Smith-Gardner & Associates, Inc.)

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000

<TABLE>
<CAPTION>
                                              First          Second           Third          Fourth
                      2000                   Quarter         Quarter         Quarter         Quarter
                                           -----------      ----------      ----------      ---------
<S>                                        <C>              <C>             <C>             <C>
      Net revenue                          $12,944,352      10,241,746      14,104,978      8,324,706
      Gross Margin                           5,096,296       4,229,757       7,114,063      3,875,029
      Net income (loss)                        319,598      (1,276,149)        585,721     (1,213,118)

      Basic income (loss) per share:
          Net income (loss)                       0.03           (0.10)           0.05          (0.10)

      Diluted income (loss) per share:
          Net income (loss)                       0.02           (0.10)           0.05          (0.10)
</TABLE>

(1) Includes loss on sale and disposal of subsidiaries in the amount of $514,397
incurred in the fourth quarter of 2001.


                                      F-24
<PAGE>

                                                                     Schedule II

                      ECOMETRY CORPORATION AND SUBSIDIARIES
                 (formerly Smith Gardner and Associates, Inc.)

                        Valuation and Qualifying Accounts

  For each of the years in the three-year period ended December 31, 2001

<TABLE>
<CAPTION>
                                                  Balance at                                   Balance
                                                  beginning        (a)           (b)           at end
                                                   of year       Charges      Deductions       of year
                                                 ----------     ---------     ----------      ---------
<S>                                              <C>            <C>           <C>             <C>
Description:
    Reserves and allowances deducted from
       asset accounts:
         1999
            Allowance for doubtful accounts      $  459,000       251,293        (94,484)       615,809
                                                 ==========     =========     ==========      =========
Description:
    Reserves and allowances deducted from
       asset accounts:
         2000
            Allowances for doubtful accounts     $  615,809     1,751,036     (1,465,817)       901,028
                                                 ==========     =========     ==========      =========
Description:
    Reserves and allowances deducted from
       asset accounts:
         2001
            Allowances for doubtful accounts     $  901,028       600,621       (310,131)     1,191,518
                                                 ==========     =========     ==========      =========
</TABLE>

(a)   Charges to the reserve account represent increase in reserve levels and
      establishment of specific reserves.

(b)   Deductions to the reserve account represent write-offs and net of
      recoveries which occurred during the year.


                                      F-25
<PAGE>

                                   SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.

                                                   ECOMETRY CORPORATION
                                                          (Registrant)


                                                   By: /s/ WILBURN W. SMITH
                                                       -------------------------
                                                       Wilburn W. Smith
                                                       Chairman of the Board

Date: March 8, 2002

      Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf by the Registrant and
in the capacities and on the dates indicated.

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

 /s/  MARTIN K. WEINBAUM        Vice President--Finance, Chief     March 8, 2002
-----------------------------   Financial Officer, Secretary and
      Martin K. Weinbaum        Treasurer (Principal Financial
                                and Accounting Officer)


 /s/  ALLAN J. GARDNER          Chief Technology Officer and       March 8, 2002
-----------------------------   Director
      Allan J. Gardner


 /s/  WILBURN W. SMITH          Executive Vice President--Sales    March 8, 2002
-----------------------------   and Chairman
      Wilburn W. Smith


 /s/  FRANCIS H. ZENIE          Director                           March 8, 2002
-----------------------------
      Francis H. Zenie


 /s/  ROBERT C. KNEIP           Director                           March 8, 2002
-----------------------------
      Robert C. Kneip


 /s/  JAMES J. FELCYN, JR.      Director                           March 8, 2002
-----------------------------
      James J. Felcyn, Jr.

<PAGE>

                                  EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit                                  Description
-------                                  -----------
<S>            <C>
      2.1   -- Agreement and Plan of Merger dated as of October 25, 2001, among
               S.G. Merger, the Company and with respect to Section 5.2(c) only,
               Wilburn W. Smith and Allan J. Gardner(9).

      2.2   -- Agreement and Plan of Merger, dated as of January 25, 2002, among
               Ecometry Corporation, Citrus Merger Corp., Syngistix, Inc. and
               for purposes of Section 7.6(b)(i) only, Core Technology Fund IV,
               LLC(12).

      2.3   -- Amendment and Waiver to Agreement and Plan of Merger, dated as of
               January 25, 2002, by and among SG Merger, Ecometry Corporation,
               Wilburn W. Smith and Allan J. Gardner(13).

      3.1   -- Amended and Restated Articles of Incorporation of the Company, as
               amended(4).

      3.2   -- By-Laws of the Company, as amended(5).

      3.3   -- Amendment to Amended and Restated Articles of Incorporation of
               the Company*

      4.1   -- Form of Certificate of Common Stock(2).

      10.1  -- Ecometry Corporation's Stock Option Plan(1).+

      10.2  -- Form of Stock Option Agreement pursuant to Ecometry Corporation's
               Stock Option Plan(1). +

      10.24 -- Letter Agreement dated November 8, 2001 between John Marrah and
               Ecometry Corporation(10).

      10.25 -- Letter Agreement dated November 8, 2001 between Martin Weinbaum
               and Ecometry Corporation(11).

      10.3  -- Ecometry Corporation's Amended and Restated 1998 Stock Option
               Plan, as amended(8). +

      10.4  -- Form of Stock Option Agreement pursuant to Ecometry Corporation's
               1998 Stock Option Plan(1). +

      10.5  -- Ecometry Corporation's 401(k)/Profit Sharing Plan(2). +

      10.6  -- Debenture Purchase Agreement dated December 19, 1994(1).

      10.7  -- Form of Convertible Debenture Due 2000 issued to Advent VII
               L.P.(1).

      10.8  -- Form of Convertible Debenture Due 2000 issued to Advent Atlantic
               and Pacific II L.P.(1).

      10.9  -- Form of Convertible Debenture Due 2000 issued to Advent
               Industrial II L.P.(1).

      10.10 -- Form of Convertible Debenture Due 2000 issued to Advent New York
               L.P.(1).

      10.11 -- Form of Convertible Debenture Due 2000 issued to Chestnut Capital
               International.(1).

      10.12 -- Form of Convertible Debenture Due 2000 issued to TA Venture
               Investors Limited.(1).
</TABLE>

<PAGE>

<TABLE>

<S>            <C>
      10.13 -- Registration Rights Agreement dated December 19, 1994(1).

      10.14 -- Non-Competition Agreement by and between Ecometry Corporation &
               and Wilburn Smith(1).

      10.15 -- Non-Competition Agreement by and between Ecometry Corporation and
               Allan Gardner(1).

      10.16 -- Form of Non-Compete Agreement executed by Ecometry Corporation's
               key employees(1).

      10.17 -- Lease Agreement dated July 1, 1994, by and between Arbors
               Associates, Ltd. and Ecometry Corporation(2).

      10.18 -- Agreement dated March 17, 1998, by and between Client Systems,
               Inc. and Ecometry Corporation(1).

      10.19 -- Agreement dated February 8, 1994, by and between Cognos
               Corporation and Ecometry Corporation(1).

      10.20 -- Agreement dated December 29, 1989, by and between Dynamic
               Information Systems Corporation and Ecometry Corporation(1).

      10.21 -- Tax Indemnification Agreement(1).

      10.22 -- Second Amendment to Lease Agreement dated December 1, 1999, by
               and between Arbors Associates, Ltd and Ecometry Corporation(6).

      10.23 -- Ecometry Corporation's Employee Stock Purchase Plan(7) +

      21.1  -- Subsidiaries of Ecometry Corporation*

      23.1  -- Consent of KPMG LLP*
</TABLE>

----------

*     Filed herewith.

+     Compensatory plan or arrangement.

(1)   Incorporated by reference to the exhibit of like number to Amendment No. 1
      to Registrant's Registration Statement on Form S-1, File No. 333-63125,
      filed with the Commission on December 18, 1998.

(2)   Incorporated by reference to the exhibit of like number to Amendment No. 2
      to Registrant's Registration Statement on Form S-1, File No. 333-63125,
      filed with the Commission on January 11, 1999.

(3)   Incorporated by reference to the exhibit of like number to Amendment No. 3
      to Registrant's Registration Statement on Form S-1, File No. 333-63125,
      filed with the Commission on January 27, 1999.

(4)   Incorporated by reference to Exhibit 3.2 of the Amendment No. 2 to
      Registrant's Registration Statement on Form S-1, File No. 333-63125, filed
      with the Commission on January 11, 1999.

(5)   Incorporated by reference to Exhibit 3.4 of the Amendment No. 2 to
      Registrant's Registration Statement on Form S-1, File No. 333-63125, filed
      with the Commission on January 11, 1999.

(6)   Incorporated by reference to Exhibit 10.22 of the Annual Report on Form
      10-K filed with the Commission on March 29, 2000.
<PAGE>

(7)   Incorporated by reference to Annex A of the Company's Definitive Proxy
      Statement on Schedule 14A filed on April 12, 2000.

(8)   Incorporated by reference to Annex B of the Company's Definitive Proxy
      Statement on Schedule 14A filed on April 12, 2000.

(9)   Incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K
      filed with the Commission on October 26, 2001.

(10)  Incorporated by reference to Exhibit 99(D)(2) to Schedule 13E-3 filed with
      the Commission on November 15, 2001.

(11)  Incorporated by reference to Exhibit 99(D)(3) to Schedule 13E-3 filed with
      the Commission on November 15, 2001.

(12)  Incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K
      filed with the Commission on February 1, 2002.

(13)  Incorporated by reference to Exhibit 2.2 of the Current Report on Form 8-K
      filed with the Commission on February 1, 2002.