UNITED STATESSECURITIES AND EXCHANGE
COMMISSIONWASHINGTON, DC 20549FORM 10-QSB

| | [X] | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
      SECURITIESEXCHANGE ACT OF 1934
| | --- | --------------------------------------------------------------------------------------

For the quarterly period ended September 30, 2001OR

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

For the transition period from _____________ to
_________________Commission file number: 0-20995

EDGE TECHNOLOGY GROUP, INC.(Exact name of small business
issuer as specified in its charter)

| | DELAWARE                       |  | 13-3778895          | 
| | ------------------------------ |  | ------------------- | 
| | (State or other jurisdiction   |  | (IRS Employer       | 
| | incorporation or organization) |  | Identification No.) | 

6611 HILLCREST AVENUE #223 DALLAS, TEXAS 75205(Address of
principal executive offices)

(214) 999-2245(Issuer’s telephone number)

901 YAMATO ROAD, SUITE 175, BOCA RATON, FLORIDA 33431(Former
name, former address and former fiscal year, if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the issuer was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.

|Yes [ ] | No [X]
|------- | ------

State the number of shares outstanding of each of the issuer’s classes of
common equity, as of the latest practicable date.

As of November 12, 2001, the issuer had 16,385,143 shares of Common Stock
outstanding.

<PAGE>

EDGE TECHNOLOGY GROUP, INC.TABLE OF CONTENTS



|PART I FINANCIAL INFORMATION                                                          | Page No.
|------------------------------------------------------------------------------------- | --------
|ITEM 1. Financial Statements:                                                         |         
|                                                                                      |         
|Balance Sheets as of
      September 30, 2001 (unaudited) and December
    31,   2000 | 2       
|Unaudited
      Statements of Operations for the                                      |         
|Three and Nine
      Months Ended September 30, 2001 and 2000                         | 3       
|Unaudited
      Statements of Cash Flows for the                                      |         
|Nine Months
      Ended September 30, 2001 and 2000                                   | 4       
|Notes to
      Unaudited Interim Financial Statements                                 | 5       
|                                                                                      |         
|ITEM 2.  Management’s Discussion and
      Analysis or Plan of Operations             | 11      
|                                                                                      |         
|PART II OTHER INFORMATION                                                             |         
|                                                                                      |         
|ITEM 1. Legal Proceedings                                                             | 17      
|                                                                                      |         
|ITEM 2. Changes in Securities and Use of
      Proceeds                               | 17      
|                                                                                      |         
|ITEM 3. Defaults Upon Senior Securities                                               | 17      
|                                                                                      |         
|ITEM 4. Submission of Matters to a Vote of
      Security Holders                     | 17      
|                                                                                      |         
|ITEM 5. Other Information                                                             | 18      
|                                                                                      |         
|ITEM 6. Exhibits and Reports on Form 8-K                                              | 26      
|                                                                                      |         
|Signatures                                                                            | 27      

1

<PAGE>

EDGE TECHNOLOGY GROUP, INC.BALANCE SHEETS

|                                                                                                                                                                                                                                                   | December 31,                               | September 30,                      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | -----------------------------------
|                                                                                                                                                                                                                                                   | 2000      
          --------------------- | 2001          ---------------------
|ASSETS                                                                                                                                                                                                                                             |                                            | (unaudited)                        
|Current Assets:                                                                                                                                                                                                                                    |                                            |                                    
|Cash and cash
      equivalents                                                                                                                                                                                                                    | $   169,846                                | $    98,828                        
|Accounts
      receivable                                                                                                                                                                                                                          | 13,504                                     | --                                 
|Other receivables
      – related party                                                                                                                                                                                                            | --                                         | 135,624                            
|Inventories                                                                                                                                                                                                                                        | 9,096                                      | --                                 
|Prepaid expenses
      - advance royalties                                                                                                                                                                                                         | 5,024                                      | --                                 
|Other current
      assets                                                                                                                                                                                                                         | 85,390                                     | 30,652                             
|                                                                                                                                                                                                                                                   | ---------------                            | ---------------                    
|Total
      current assets                                                                                                                                                                                                                         | 282,860                                    | 265,104                            
|                                                                                                                                                                                                                                                   |                                            |                                    
|Fixed assets,
    net                                                                                                                                                                                                                              | 67,394                                     | 82,602                             
|Investment - related party                                                                                                                                                                                                                         | 4,587,262                                  | 2,280,000                          
|Note
receivable                                                                                                                                                                                                                                    | 1,400,000                                  | 1,400,000                          
|                                                                                                                                                                                                                                                   | ---------------                            | --------------                     
|Total
      Assets                                                                                                                                                                                                                                 | $ 6,337,516                                | $  4,027,706                       
|                                                                                                                                                                                                                                                   | =========                                  | =========                          
|                                                                                                                                                                                                                                                   |                                            |                                    
|LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                                                                                               |                                            |                                    
|Current Liabilities:                                                                                                                                                                                                                               |                                            |                                    
|Accounts payable                                                                                                                                                                                                                                   | $    390,991                               | $   440,986                        
|Accrued
    expenses                                                                                                                                                                                                                               | 345,011                                    | 229,890                            
|Other current
      liabilities                                                                                                                                                                                                                    | 73,496                                     | --                                 
|Notes
      payable-related parties                                                                                                                                                                                                                | --                                         | 1,239,000                          
|                                                                                                                                                                                                                                                   | ----------------                           | ---------------                    
|Total
      Current Liabilities                                                                                                                                                                                                                    | 809,498                                    | 1,909,876                          
|Notes
      payable-related parties                                                                                                                                                                                                                | 839,000                                    | --                                 
|                                                                                                                                                                                                                                                   | ----------------                           | ---------------                    
|Total
      Liabilities                                                                                                                                                                                                                            | $  1,648,498                               | $  1,909,87                        
|                                                                                                                                                                                                                                                   | ----------------                           | ---------------                    
|                                                                                                                                                                                                                                                   |                                            |                                    
|Stockholders’ Equity:                                                                                                                                                                                                                              |                                            |                                    
|Common Stock,
      $.01 par value, 22,500,000
      shares     authorized, 16,016,335 shares
      issued and      outstanding at December 31,
      2000 and 16,385,143     shares issued
      and outstanding at September 30,
           2001 | 160,163                                    | 163,851                            
|                                                                                                                                                                                                                                                   |                                            |                                    
|Additional paid
      in capital                                                                                                                                                                                                                   | 37,978,720                                 | 42,502,866                         
|Deferred stock
      option compensation                                                                                                                                                                                                           | (316,696)                                  | --                                 
|Deferred offering
      costs                                                                                                                                                                                                                      | --                                         | (2,766,666)                        
|Accumulated
      deficit                                                                                                                                                                                                                          | (33,133,169)                               | (37,782,221)                       
|                                                                                                                                                                                                                                                   | ----------------                           | ----------------                   
|Total
      Stockholders’ Equity                                                                                                                                                                                                                   | 4,689,018-----------------                 | 2,117,830-----------------         
|Total
      Liabilities and Stockholder’s
                 Equity                                                                                                                                                                                  | $   6,337,516                              | $ 4,027,706                        
|                                                                                                                                                                                                                                                   | ==========                                 | ==========                         

2

<PAGE>

The accompanying notes are an integral part of these financial
statements.EDGE TECHNOLOGY GROUP, INC.

STATEMENTS OF OPERATIONS

(UNAUDITED)

|                                                                                                                | For the Three Months Ended                                      | For the Nine Months Ended                                          
|--------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------- | -------------------------------------------------------------------
|                                                                                                                | September 30,                                                   | September 30,                                                      
|                                                                                                                | 2000
      -----------                                          | 2001
      -----------                                             
|                                                                                                                |                                                                 |                                                                    
|Sales                                                                                                           | $0                                                              | $0                                                                 
|General and administrative
      expenses                                                                       |                                                                 | (717,213)
      -----------                                        
|Operating Loss                                                                                                  |                                                                 | (717,213)                                                          
|Interest income                                                                                                 |                                                                 | 793                                                                
|Interest expense                                                                                                |                                                                 | (24,780)                                                           
|Financing fees                                                                                                  |                                                                 | (2,519)                                                            
|Impairment of assets                                                                                            |                                                                 | --                                                                 
|                                                                                                                | ------------                                                    | ------------                                                       
|Loss from continuing operations                                                                                 |                                                                 | (743,719)                                                          
|Loss from discontinued
      operations                                                                         | (5,531,687)-------------                                        | (583,871)-------------                                             
|                                                                                                                |                                                                 |                                                                    
|Net loss to common stockholders                                                                                 | $(5,531,687)                                                    | $(1,327,590)                                                       
|                                                                                                                | ========                                                        | ========                                                           
|                                                                                                                |                                                                 |                                                                    
|Net loss per share, basic and
      diluted
      From continuing operations
      From discontinued operations | $0.00
      $ (0.71)
      -------------
      $ (0.71)======== | $ (0.04)
      $ (0.04)
      -------------
      $ (0.08) ========
|                                                                                                                |                                                                 |                                                                    
|Weighted average common shares
      outstanding                                                                | 7,825,084 ========                                              | 16,385,143 ========                                                

3

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

<PAGE>

EDGE TECHNOLOGY GROUP, INC.STATEMENTS OF CASH
FLOWS(UNAUDITED)

|                                                                              | For the Nine Months                    
|----------------------------------------------------------------------------- | ---------------------------------------
|                                                                              | Ended                                  
|                                                                              | September 30,--------------------------
|                                                                              | 2000----------                         
|Operating Activities:                                                         |                                        
|Net cash used in
      operating activities                                   | (296,356)-------------                 
|                                                                              |                                        
|Investing Activities:                                                         |                                        
|Capital
      expenditures                                                    | (37,781)                               
|Purchase of convertible long term
      note receivable                       | (1,400,000)                            
|Proceeds from the sale of fixed
      assets     Proceeds from sale of assets | 126,519 --                             
|Loan to
      related party                                                   | --                                     
|                                                                              | --------------                         
|Net cash
      provided by (used in) investing activities                     | (1,311,262)                            
|                                                                              |                                        
|Financing Activities:                                                         |                                        
|Equity
      contributions                                                    | 2,187,999                              
|Borrowings on short-term notes
      payable, net                             | -- --------------                      
|Net cash
      provided by financing activities                               | 2,187,999                              
|                                                                              | --------------                         
|Net change in
      cash and cash equivalents                                 | 580,381
      --------------           
|Cash and cash equivalents at
      beginning of period                        | 19,724                                 
|                                                                              | --------------                         
|Cash and cash equivalents at end of
      period                              | $    600,105 =========                 
|                                                                              |                                        
|Supplemental disclosure of cash flow
      information:                       |                                        
|Cash
      paid for interest                                                  | $      4,308
    =========             

4

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

<PAGE>

EDGE TECHNOLOGY GROUP, INC.NOTES TO FINANCIAL
STATEMENTS(UNAUDITED)

(1)     Basis of Presentation

The financial statements included
herein have been prepared by Edge Technology Group, Inc. ("Edge" or the
"Company") without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted pursuant to such rules and regulations. In the opinion of
management, the accompanying unaudited financial statements include all
necessary adjustments (consisting only of normal recurring adjustments)
necessary to present fairly the financial position, results of operations and
cash flows of the Company. The results of operations and cash flows for the nine
months ended September 30, 2001 are not necessarily indicative of the results of
operations or cash flows that may be reported for the year ended December 31,
2001. The unaudited financial statements included herein should be read in
conjunction with the audited financial statements and the notes thereto included
in the Company’s Form 10-KSB for the year ended December 31, 2000.

In July 2001, the Financial
Accounting Standards Board issued SFAS No. 141, "Business Combinations" and SFAS
142, "Goodwill and Other Intangible Assets." The new standards require that all
business combinations initiated after June 30, 2001 must be accounted for under
the purchase method. In addition, all intangible assets acquired that are
obtained through contractual or legal right, or are capable of being separately
sold, transferred, licensed, rented or exchanged shall be recognized as an asset
apart from goodwill. Goodwill and intangibles with indefinite lives will no
longer be subject to amortization, but will be subject to at least an annual
assessment for impairment by applying a fair value based test. The Company will
be required to adopt these standards as of January 1, 2002. As the Company does
not have any recorded intangible assets, the adoption of these standards is not
expected to have an impact on the Company’s operations.

(2) Sale of Certain Assets - Discontinued Operations

On September 10, 2001, the Company closed the previously announced sale of
assets related to its One-on-One business to a newly formed entity Visual Edge,
Inc. Visual Edge is not a related party; however, the President of Visual Edge,
Ronald Seale, is a former CEO of the Company.

In the sale, the Company received (a) an initial cash payment of$300,000 (offset by $53,000 by Visual Edge for One-on-One Business expenses
paid); (b) a promissory note in the amount of $250,000 payable October 24, 2001,
and bearing an interest rate of 8% per annum, secured by all of the assets of
Visual Edge; and (c) future royalties not to exceed $3,000,000, payable as an
increasing percentage of revenues.

5

<PAGE>

The results of operations of the sold One-on-One business have been presented
in the statement of operations as "discontinued operations" because the business
represented a separate segment of the business. The presentation also presents
the reader with a more meaningful understanding of the financial aspects of the
remaining Company.

|Discontinued Operations                       |                            |                           |               |              
|--------------------------------------------- | -------------------------- | ------------------------- | ------------- | -------------
|                                              | For the Three Months Ended | For the Nine Months Ended
|                                              | September 30,              | September 30,            
|                                              | 2000                       | 2001                      | 2000          | 2001         
|                                              | -----------                | -----------               | ------------- | -------------
|Sales                                         | $337,572                   | $139,229                  | $983,468      | $403,526     
|Cost of Sales                                 | 328,817                    | 56,975                    | 886,215       | 131,373      
|                                              | -------------              | -----------               | ------------- | -------------
|Gross Profit                                  | 8,755                      | 82,254                    | 97,253        | 272,153      
|                                              | -------------              | -----------               | ------------  | -------------
|Operating Expenses:                           |                            |                           |               |              
|General and administrative                    | 352,681                    | 12,115                    | 1,044,872     | 746,052      
|Selling and marketing                         | 91,594                     | 83,723                    | 317,233       | 141,973      
|                                              | -------------              | -----------               | ------------- | ------------ 
|Total operating expenses                      | 444,275                    | 95,838                    | 1,362,105     | 888,025      
|                                              | -------------              | -----------               | ------------  | ------------ 
|Operating loss                                | (435,520)                  | (13,584)                  | (1,264,852)   | (615,872)    
|                                              | ------------               | -----------               | ------------  | ------------ 
|Other income (expense):                       |                            |                           |               |              
|Interest income                               | 6,448                      |                           | 8,848         |              
|Interest expense                              | (48,811)                   |                           | (355,004)     |              
|Amortization of deferred
      financing fees | --                         | --                        | (85,866)      | --           
|State income tax                              | (4,377)                    | --                        | (6,820)       | --           
|Loss on sale of One-on-One
      business     | --                         | (570,287)                 | --            | (570,287)    
|Loss on sale of fixed
    assets              | (17,536)                   | --                        | (44,256)      | (362)        
|Financing fees                                | (3,527)                    |                           | (8,751)       |              
|Loss on conversion of
    debt                | (4,796,404)                | --                        | (4,796,404)   | --           
|Unusual and non-recurring
      expenses      | (100,770)                  | --                        | (277,325)     | (64,437)     
|Impairment of assets                          | --                         | --                        | --            |              
|                                              | ------------               | -----------               | ------------  | ------------ 
|Total other income
      (expense)            | (4,964,977)                | (583,871)                 | (5,565,578)   | (635,086)    
|                                              | -------------              | -----------               | ------------  | ------------ 
|Provision for Preferred
      Stock Dividends | (131,190)                  | 0                         | (524,760)     | 0            
|                                              |                            |                           |               |              
|Net loss from Discontinued
      Operations   | $(5,531,687)               | $ (396,101)               | $ (7,355,190) | $(1,250,958) 

6

<PAGE>

As of October 24, 2001, the promissory note and royalty payments were in
default and being renegotiated to extend payment terms. Given the uncertainty
surrounding its ultimate collection, the note has been written off in its
entirety and is recorded as part of the loss on sale. The failure to restructure
the note and royalty payments is not expected to have a significant negative
impact on the Company’s business or its liquidity.

(3)     Uncertainty of Proposed Plan of
Operation

The Company has suffered
recurring losses from operations and has an accumulated deficit of approximately
$37.8 million at September 30, 2001.

The Company’s recent change
in focus to acquiring information technology consulting services, business
process software applications and application services is a new business concept
for the Company and the Company cannot predict the nature and extent of demand
for its anticipated products and services.

In order to implement its new
business plan it will be necessary to secure additional financing, and there can
be no assurance that any additional financing will be available on acceptable
terms. Should Edge be unable to obtain additional financing, it would be unable
to acquire technology companies or continue operations.

(4)     Investment - Related Party

In September 2000, the
Company issued 2,644,841 shares of its common stock to PurchasePooling
Investment Fund in return for 9,593,824 shares of Series A Convertible Preferred
Stock of PurchasePooling Solutions, Inc. ("PurchasePooling"). In December 2000,
the Company invested an additional $620,000 with PurchasePooling in return for
2,214,285 shares of Series C Convertible Preferred Stock. As a result, the
Company now has an approximately 18% ownership interest in PurchasePooling, a
Web-based demand aggregator enabling government and educational entities to save
significantly on large-ticket capital items by combining their purchasing power
nationwide and globally. The Company is accounting for this investment under the
cost method of accounting. The Company’s President and CEO is also the interim
CEO of PurchasePooling. In 2000, the Company entered into an agreement to
acquire from Odyssey Ventures Online S.A. 975,000 shares of Series A Convertible
Preferred Stock of PurchasePooling in exchange for 268,808 shares of the
Company’s common stock. In April 2001, the agreement was finalized and the
shares of common stock were issued. PurchasePooling is in its development stage
and is not generating any cash flow. Should PurchasePooling be unable to
generate sufficient future revenue and cash flow, it could have a negative
impact on the Company’s operations. Based on valuation obtained on
PurchasePooling in July 2001, the Company determined that the investment was
impaired. Accordingly, the Company recorded an impairment charge of $ 2,495,954
which is included in impairment of assets in the Statement of Operations.

In October 2001, the Company
participated to the amount of $400,000 in a syndicated loan to PurchasePooling
in the amount of $1,600,000. The loan, structured as Convertible Note with
Warrants, bears interest at 15% per annum, and if not converted earlier, matures
in October 2003.

7

<PAGE>

The Company has entered into
a management agreement with PurchasePooling in which PurchasePooling pays the
Company a management fee of $20,000 per month in return for the services
provided by the Company’s President and other employees of Edge. During the
three-month and nine-month periods ended September 30, 2001, the Company accrued
$60,000 and received $120,000, respectively, of management fees from
PurchasePooling which is reflected as a reduction in general and administrative
expenses in the statement of operations. As of September 30, 2001, the Company
has a receivable of $60,000 related to accrued management fees and a loan in the
amount of $75,000 to PurchasePooling. Both amounts were collected in October
2001.

(5)     Loss per Share

The Company follows SFAS No.
128, "Earnings Per Share." SFAS No. 128 establishes standards for computing and
presenting basic and diluted earnings per share. Basic loss per share is
calculated by dividing loss attributed to common stockholders by the weighted
average number of shares of common stock outstanding during each period. For all
periods presented basic and diluted net loss per share are the same.

As of September 30, 2000 and
2001, due to the Company’s net losses, shares of common stock issuable upon
conversion of convertible debt and the exercise of outstanding options and
warrants have been excluded from the computation of diluted loss per share in
the accompanying statements of operations as their impact would be
anti-dilutive.

(6)     Note Receivable

In September 2000, the
Company loaned $1.4 million to Hencie, Inc. ("Hencie") in the form of a
Promissory Note (the "Note"). The Note accrues interest at a rate of 8% per
annum and the principal and interest is due on or before November 21, 2001. The
Note was convertible into 885,543 shares of Hencie’s common stock through
November 22, 2000, however, the Company did not exercise the conversion option.
The Note is unsecured and guaranteed by Hencie’s President. Should Hencie be
unable to generate sufficient future revenue and cash flow, it could have a
negative impact on the Company’s operations. As the Company expects to defer the
collection of the Note past the original due date, the value of the Note is
classified as long-term at September 30, 2001.

(7)     Financings

| | a. | Infinity Loans
| | -- | --------------

In 2000, Infinity Investors
Limited, a related party, made certain loans to the Company for working capital
purposes. These loans totaled $219,000. As part of the reorganization of the
Company effective September 1, 2000, Infinity Investors Limited became entitled
to the repayment of these loans. In April 2001, the loan agreement was
renegotiated to extend the payment date to January 31, 2002.

8

<PAGE>

| | b. | Catalyst Loans
| | -- | --------------

In December 2000, the Company
entered into a loan agreement with Catalyst Master Fund, L.P. (the "Catalyst
Loan"), a related party, to borrow $620,000. The Catalyst Loan was originally
due on June 30, 2001 and bears interest at a rate equal to eight percent (8%)
per annum. The Company used the proceeds of the Catalyst Loan to purchase
2,214,285 shares of Series C Convertible Preferred Stock of PurchasePooling.
Catalyst Master Fund is a shareholder of the Company and certain of the
Company’s directors are also officers of an entity that manages Catalyst Master
Fund. The Catalyst Loan is convertible at the option of the holder into the
Company’s common stock at a conversion price of $1.50 per share. The Catalyst
Loan is also secured by a pledge of substantially all of Edge’s assets.

Effective April 16, 2001, the
Company entered into an amended loan agreement with Catalyst that increased the
borrowings available under the original loan agreement from $620,000 to a total
of $2,120,000. Under the amended loan agreement, the Company can draw down
amounts under the loan agreement as the Company has need for funds, subject to
the Company being in compliance with the covenants contained in that loan
agreement. The amended loan agreement bears interest at eight percent (8%) per
annum and is due March 31, 2002. The additional amount available under the
amended loan agreement is also convertible into the Company’s common stock at a
conversion price of $1.50 per share and is secured by a pledge of substantially
all of the Company’s assets. As of September 30, 2001, the total amount
outstanding under this loan agreement is $1,020,000.

In October 2001, the Company
borrowed an additional $400,000 under the Catalyst Loan to make an additional
investment in PurchasePooling described above in (4) "Investment - Related
Party."

| | c. | Infinity Option
| | -- | ---------------

On May 31, 2001, Edge
issued to Infinity Investors Limited an option to put to Edge a certain secured
note of Aura Systems, Inc. totaling approximately $10 million (the "Aura Note")
held by Infinity (the "Infinity Option"). Pursuant to the Infinity Option,
Infinity may elect on May 31, 2002 to exercise its option to put the Aura
Noteto Edge in exchange for 3,333,333 shares of Edge common stock. As
consideration for the Infinity Option, Infinity is obligated to pay to Edge cash
consideration of $1 million, consisting of $200,000 due every three months
beginning May 31, 2001 through May 5, 2002. If Infinity exercises the
Infinity Option, Infinity is obligated to transfer the Aura Note and related
security agreements to the Company, and pay to the Company any cash payments of
the Current Principal Amount (as defined in the operative documents) received by
Infinity after May 31, 2001, and prior to exercise of the Infinity Option. The
Company received $200,000 and $400,000 during the three and nine month periods
ended September 30, 2001, respectively. As a result of

9

<PAGE>

issuing this option, the Company recorded deferred offering expense of
$3,166,666 related to the fair value of the option. The deferred offering
expense will be reduced as an offset to the proceeds from Infinity as they are
received. As of September 30, 2001, the remaining deferred offering
expenses is $2,766,666, which is reflected as a contra equity amount in the
September 30, 2001 Balance Sheet.

(8)     Common Stock

| | a. | Reverse Stock Split
| | -- | -------------------

During September 2000, Edge
affected a four (4) for one (1) reverse stock split. All share and per share
amounts have been restated accordingly.

| | b. | Investment in
PurchasePooling
| | -- | -----------------------------

In September 2000, the Company
issued 2,644,841 shares of its common stock to PurchasePooling Investment Fund
in return for 9,593,824 shares of Series A Convertible Preferred Stock of
Purchase Pooling. In December 2000, the Company invested an additional $620,000
with PurchasePooling in return for 2,214,285 shares of Series C Convertible
Preferred Stock. As a result, the Company now has an approximate 18% ownership
interest in PurchasePooling. The Company’s President and CEO is also the interim
CEO of PurchasePooling. In 2000, the Company entered into an agreement to
acquire from Odyssey Ventures Online S.A. 975,000 shares of Series A Convertible
Preferred Stock of PurchasePooling in exchange for 268,808 shares of the
Company’s common stock. In April 2001, the agreement was finalized and the
shares of common stock were issued.

(9)     Stock Options

In July 2000, the Company
granted 1,275,000 options to purchase the Company’s common stock, 225,000 to an
employee and 850,000 to a consultant of the Company at an exercise price of
$2.31 per share. Later in July 2000, the Company granted 82,000 options to
purchase the Company’s common stock to employees of the Company at an exercise
price of $2.32 per share. In both instances, the grants were made with exercise
prices equal to the fair market value of the Company’s stock at the time of the
grant. For the 850,000 options to a consultant, the fair value of the options
were $1,343,000, of which $223,833 was recorded as expense in 2000 and an
additional $223,833 was recorded through June 30, 2001. In July 2001, in
connection with the sale of the assets of the One-on-One Business, the Company’s
relationship with the consultant was terminated. Accordingly, the remaining
$895,334 of expense was recorded as a part of the loss on sale.

10

<PAGE>

(10)     Proceedings with Former Officers and
Directors

In September 1999, former
officers of the Company filed suit against Edge and certain other parties,
asserting claims for breach of contract and other matters. In October 1999, the
Company counter-sued the former officers for, among other items, breach of
fiduciary duty and breach of employment agreements. In April 2001, the Company,
the former officers, and the other individuals and entities named in the
lawsuits, entered into a settlement agreement whereby Edge agreed to issue
100,000 shares of restricted common stock and pay a cash amount of $30,000 to
the former officers in satisfaction of any outstanding claims or claims to
options. Accordingly, the Company recorded an expense of $84,000 related to this
settlement. The Company subsequently paid the settlement amount and issued the
shares in accordance with the agreement.

(11)    Employment Agreements

The Company has entered into
employment agreements with several of its executive officers for periods ranging
from three to four years. The agreements provide the employees with salary,
bonuses and the right to terminate their agreements and receive certain lump sum
payments of compensation if there is a change of control of the Company. In
connection with two of the employment agreements, in January 2001, the Company
granted stock options to certain executive officers to purchase up to 2,250,000
shares of the Company’s common stock at an exercise price of $1.50 per share. Of
these options, 25% are exercisable upon grant and an additional 18.75% vest
annually each anniversary date. The options expire 10 years from the date of
grant. The Company will not be required to record any compensation expense in
2001 as a result of the grant of these options.

|ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATIONS
|------- | ----------------------------------------------------------------

The following discussion and
analysis should be read in conjunction with the financial statements and notes
thereto. This discussion and analysis contains certain forward-looking
statements that involve risks and uncertainties. Edge’s actual results and the
timing of certain events could differ materially from those discussed in the
forward-looking statements as a result of certain factors including those set
forth in Edge’s filings with the Securities and Exchange Commission,
specifically including the risk factors set forth below.

Impairment of Assets

PurchasePooling is in its
development stage and is not generating any cash flow. Should PurchasePooling be
unable to generate sufficient future revenue and cash flow, it could have a
negative impact on the Company’s operations. Based on valuation obtained on
PurchasePooling in July 2001, the Company determined that the investment was
impaired. Accordingly, the Company recorded an impairment charge of $ 2,495,954
which is included in impairment of assets in the Statement of Operations.

Plan of Operations

Although the Company has had
revenues from operations in each of the last two fiscal years, due to the
discontinuance of the One-on-One business, the reader should focus on the plan
of operations presented in Item 5 hereof as well as the issues reflected in
LIQUIDITY AND CAPITAL RESOURCES and RISK FACTORS below.

11

<PAGE>

GENERAL

Recent Developments

Sale of Certain Assets--Discontinued Operations

On September 10, 2001, the
Company closed the previously announced sale of assets related to its One-on-One
business to a newly formed entity Visual Edge, Inc. Visual Edge is not a related
party; however, the President of Visual Edge, Ronald Seale, is a former CEO of
the Company.

In the sale, the Company
received (a) an initial cash payment of$300,000 (offset by $53,000 by
Visual Edge for One-on-One Business expenses paid); (b) a promissory note in the
amount of $250,000 payable October 24, 2001, and bearing an interest rate of 8%
per annum, secured by all of the assets of Visual Edge; and (c) future royalties
not to exceed $3,000,000, payable as an increasing percentage of revenues.

The results of operations of
the sold One-on-One business have been presented in the statement of operations
as "discontinued operations" because the business represented a separate segment
of the business. The presentation also presents the reader with a more
meaningful understanding of the financial aspects of the remaining Company.

As of October 24, 2001, the
promissory note and royalty payments were in default and being renegotiated to
extend payment terms. Given the uncertainty surrounding its ultimate collection,
the note has been written off in its entirety and is recorded as part of the
loss on sale. The failure to restructure the note and royalty payments is not
expected to have a significant negative impact on the Company’s business or its
liquidity.

New Business Plan

As a result of our
reorganization in September 2000, our business strategy is changing. Our
business model focuses on acquiring technology related business including
professional services firms, process software applications and delivery vehicles
including application service providers. To implement this new business plan
will require significant amounts of capital. We will be entirely dependent on
raising additional capital through public or private offerings of our debt or
equity securities. We can give no assurance that we will be able to raise any
additional capital to implement the plan.

Acquisition of Media Resolutions

On October 25, 2001, the
Company announced it had signed a Letter of Intent to acquire Media Resolutions,
Inc., an application service provider and provider of custom applications and
content. The acquisition price consists of $300,000 cash (paid over time) and
500,000 shares of Edge common stock. The initial cash portion will be financed
out of currently available funding. Closing of the transaction is conditioned
upon completion of due diligence.

12

<PAGE>

RESULTS OF OPERATIONS

The results of operations of
the sold One-on-One business have been presented in the statement of operations
as "discontinued operations" in order to provide the reader with a meaningful
understanding of the financial aspects of the remaining Company. As those
operations are discontinued, a period-over-period analysis is not
meaningful.

LIQUIDITY AND CAPITAL RESOURCES

The Company’s prospects are
largely dependent upon the Company’s ability to successfully implement its new
business plan and strategy. Although implementation of the new plan is
progressing, there can be no assurance that the Company will be able to continue
to fully implement its new business plan. Failure to implement its business plan
would have a material adverse effect on the Company.

The Company’s sale of the
One-on-One Business will help reduce the consistent losses incurred by the
business operations related to the golf product. However, the Company’s new
business focus on information technology consulting services, business process
software applications and application services is a new business concept for the
Company and the Company cannot predict the nature and extent of demand for its
services.

Edge does not currently
maintain a bank credit facility. Edge has historically financed its operations
primarily through the sale of equity securities or instruments convertible into
equity securities.

Edge has entered into an
Amended Loan Agreement with Catalyst Master Fund L.P., a related party, for
borrowings up to $2,120,000. Under the Amended Loan Agreement, Edge can draw
down amounts as Edge has needs for funds, subject to Edge being in compliance
with the covenants contained in the Amended Loan Agreement. The loan bears
interest at 8.0% per annum and is due March 31, 2002. Further, the loan is
convertible into Edge common stock at a conversion price of $1.50 per share and
is secured by a pledge of substantially all of Edge’s assets. As of November 1,
2001, Edge has approximately $700,000 available under the Amended Loan
Agreement. Edge believes this facility, along with other sources of funding
described below, will be adequate to fund Edge’s needs through the due date of
the Catalyst Loan (March 31, 2002), although additional financing for
acquisitions as part of Edge’s business plan will be necessary.

In addition, Edge owes
$219,000 of principal as of September 30, 2001 to Infinity Investors Limited
("Infinity"), a related party, as a result of loans that were not repaid in our
September 2000 reorganization. These loans are due January 31, 2002.

On May 31, 2001, Edge
issued to Infinity an option to put to Edge a certain secured note of Aura
Systems, Inc. totaling approximately $10 million (the "Aura Note") held by
Infinity (the "Infinity Option"). Pursuant to the Infinity Option, Infinity may
elect on May 31, 2002 to exercise its option to put the Aura Noteto
Edge in exchange for 3,333,333 shares of Edge common stock. As consideration for
the Infinity Option, Infinity is obligated to pay Edge cash consideration of $1
million, consisting of $200,000 due every three months beginning May 31,
2001 through May 5, 2002. If Infinity exercises the

13

<PAGE>

Infinity Option, Infinity is obligated to transfer the Aura Note and related
security agreements to Edge, and pay to Edge any cash payments of the Current
Principal Amount (as defined in the operative documents) received by Infinity
after May 31, 2001 and prior to exercise of the Infinity Option. Edge received
$200,000 and $400,000 during the three-month and nine-month periods ended
September 30, 2001, respectively.

Edge expects to meet future
liquidity requirements through (i) cash reserves, (ii) receipts from the
Infinity Option, (iii) utilization of its Amended Loan Agreement and (iv)
collection of the management fee from PurchasePooling. The Company is currently
expending cash at a rate of approximately $250,000 to $300,000 per quarter.

During the past two years
Edge has experienced declining sales and increasing operating losses resulting
from the One-on-One Business. The Company’s sale of the One-on-One Business will
help reduce the consistent losses incurred by the business operations related to
the golf product. To implement its new business strategy, it will be necessary
to secure additional financing to continue operations. There can be no assurance
that any additional financing will be available on acceptable terms. Should Edge
be unable to obtain additional financing, it would be unable to acquire
technology companies or continue operations.

SEASONALITY

With the sale of the
One-on-One Business, Edge does not anticipate a seasonal component to its
business.

THIRD-PARTY REPORTS AND PRESS RELEASES

Edge does not make financial
forecasts or projections nor does Edge endorse the financial forecasts or
projections of third parties or comment on the accuracy of third-party reports.
Edge does not participate in the preparation of the reports or the estimates
given by analysts. Analysts who issue financial reports are not privy to
non-public financial information. Any purchase of our securities based on
financial estimates provided by analysts or third parties is done entirely at
the risk of the purchaser.

Edge periodically issues
press releases to update shareholders on new developments relating to Edge and
our business. These releases may contain certain statements of a forward-looking
nature relating to future events or the future financial performance of Edge
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, and which are
intended to be covered by the safe harbors created thereby.

Readers are cautioned that
such statements are only predictions and that actual events or results may
materially differ with those statements. In evaluating such statements, readers
should specifically consider the various risk factors identified which could
cause actual results to differ materially from those indicated by such
forward-looking statements.

14

<PAGE>

RISK FACTORS

Readers of this report or any of
our press releases should carefully consider the following risk factors, in
addition to the other information contained herein. This report and our press
releases contain statements of a forward-looking nature relating to future
events or the future financial performance of Edge within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, and which are intended to be covered by the
safe harbors created thereby. Only risk factors that have materially changed
from those contained in our Form 10-KSB for the fiscal year ended December 31,
2000 are included below, and readers are encouraged to read the following risk
factors in conjunction with those in the Form 10-KSB for the fiscal year ended
December 31, 2000. Readers are cautioned that such statements are only
predictions and that actual events or results may differ substantially. In
evaluating those statements, readers should specifically consider the various
factors identified in this quarterly report, as well as our filings with the
Securities and Exchange Commission, including our Form 10-KSB for the fiscal
year ended December 31, 2000 including the matters set forth below, which could
cause actual results to differ substantially from those indicated by those
forward-looking statements.

WE HAVE EXPERIENCED SIGNIFICANT AND CONTINUING LOSSES.

As of September 30, 2001, we
had an accumulated deficit of approximately $37.8 million. For the nine months
ended September 30, 2001, we recorded a net loss of $4,649,052. For each of the
five years ended December 31, 2000, we have recorded an operating loss; in
certain cases, a substantial operating loss. We incurred a net loss of
$8,959,625 for the year ended December 31, 2000. We believe that we will
continue to incur losses until we are able to generate sufficient revenues to
offset the operating costs associated with implementing the revised business
model.

These losses could limit our ability to grow and to raise new funds and could
ultimately jeopardize our ability to remain in business.

WE ARE AT A RELATIVELY EARLY STAGE WITH OUR REVISED BUSINESS MODEL AND
THEREFORE OUR BUSINESS AND PROSPECTS ARE DIFFICULT TO EVALUATE.

Our corporate reorganization
and related shift in our business strategy commenced in September 2000 and is
ongoing. Since that time, we have been engaged principally in (1) assembling our
senior management team, (2) managing our existing portfolio companies, (3)
developing our revised business plan, including the sale of the One-on-One
Business, and (4) attending to various capital raising activities. We do not
have any meaningful operating history on which to base an evaluation of our
business and prospects. Our prospects must be considered in light of the many
risks, uncertainties, expenses, delays, and difficulties frequently encountered
by companies in their early states of development, particularly companies
participating in new and rapidly evolving markets. Some of the risks and
difficulties we expect to encounter include our ability to:

15

<PAGE>

| | * | adapt and successfully execute our revised
      business plan;                                            
| | - | -----------------------------------------------------------------------------------------------------------
| | * | overcome the negative market stigma associated
      with certain over-the-counter technology companies;   
| | * | manage and adapt to changing and expanding
      operations;                                               
| | * | implement and improve operational, financial
      and management systems and processes;                   
| | * | locate, negotiate with, close and ultimately
      integrate additional attractive portfolio investments;  
| | * | attract, retain and motivate qualified
      personnel; and                                                
| | * | numerous other risks and difficulties generally
      experienced by early stage business models generally.

Because of our recent
reorganization and our sale of the One-on-One Business, we may have limited
insight into trends and conditions that may exist or might emerge and affect our
business. We cannot be certain that our revised business strategy will be
successful or that we will successfully address these risks. As a result of our
continuing losses, the low market price of our common stock and the delisting of
our common stock from the NASDAQ SmallCap Market, we believe that it will be
very difficult, if not impossible, for Edge to raise additional capital in the
future. As of September 30, 2001, Edge had a total of cash and cash equivalents
of $98,828. Edge is unlikely to become profitable in the reasonably foreseeable
future. Accordingly, if Edge cannot raise new funds, Edge may exhaust its cash
resources and be unable to continue in business.

16

<PAGE>

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Unchanged since originally
reported in our Annual Report on Form 10-KSB for the year ended December 31,
2000.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

17

<PAGE>

ITEM 5. OTHER INFORMATION

In order to provide our stockholders with a meaningful understanding of the
Company’s future business strategy, included hereafter is the executive summary
portion of the Company’s current business plan.

EDGE TECHNOLOGY GROUP,
INC.

BUSINESS PLANEXECUTIVE SUMMARY

November 2001

Mr. Graham C. Beachum IIPresident, CEO
and DirectorEdge Technology Group, Inc.6611 Hillcrest Avenue, Suite
223Dallas, TX 75205-1301214.999.2245 Telephone214.720.1612
Facsimile

18

<PAGE>

"Safe Harbor" Statement

This plan contains
"forward-looking statements" made under the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995.  These
forward-looking statements are based on the beliefs of the Company's management
as well as assumptions made by and information currently available to the
Company's management.  When used in this report the words "anticipate"
"believe," "expect" and words or phrases of similar import, as they relate to
the Company or Company management, are intended to identify forward-looking
statements.  Such statements reflect the current view of the Company
with respect to future events and are subject to certain risks, uncertainties
and assumptions related to certain factors including, without limitation, the
ability to:

| | * | adapt and successfully execute our revised
      business plan;                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------
| | * | overcome the negative market stigma associated
      with certain over-the-counter technology companies;             
| | * | manage and adapt to changing and expanding
      operations;                                                         
| | * | implement and improve operational, financial
      and management systems and processes;                             
| | * | locate, negotiate with, close and ultimately
      integrate additional attractive portfolio investments;            
| | * | attract, retain and motivate qualified
      personnel; and                                                          
| | * | overcome numerous other risks and difficulties
      generally experienced by early stage business models
  generally

and other factors detailed in this report under "Risk Factors." Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations will
prove to have been correct.  Based upon changing conditions, should
any one or more of these risks or uncertainties materialize, or should any
underlying assumptions prove incorrect, actual results may vary materially from
those described herein. The Company expressly undertakes no obligation to update
these forward-looking statements.  Except as required by federal
securities laws, Edge undertakes no obligation to publicly update or revise any
written or oral forward-looking statements, whether as a result of new
information, future events, changed circumstances or any other reason after the
date of this report.  All subsequent written and oral forward-looking
statements attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by the applicable cautionary
statements.

19

<PAGE>

Business
Concept

Edge Technology Group, Inc. ("Edge" or the "Enterprise")
is a publicly traded company (OTC Bulletin Board: EDGE) that is currently
pursuing acquisitions of several related technology companies. The acquisitions
are the foundation for the Edge model, an organization that would utilize the
strengths of its eight operating business units (OBUs) to offer products and
services to improve utilization of business information for middle market
companies, initially within the United States. The Enterprise anticipates that
client organizations would benefit from integrated business process applications
that are delivered on a fully outsourced basis through portal technology or, if
needed, as traditional licensed products. The technology companies targeted for
acquisition are those that operate within the following business sectors: (1)
Information Technology (IT) consulting and integration, (2) application services
and management and (3) independent software vendors (ISVs). Acquired companies
would fall into the following model:

Edge Business Model
(chart)

Initial development of the Edge model involves the
acquisition of IT professional service firms that have existing relationships
with numerous middle market clients. Subsequent acquisition rounds would target
software products with common data structures (Microsoft and Oracle), and
designed for the application service delivery channel. The Enterprise
anticipates that synergistic relationships would be established between each of
the acquired OBUs, and funding for OBU-specific projects would be provided
through public and private offerings of Edge securities. It is anticipated that
nearly all operations will continue within each OBU while a small corporate
staff would interface with the capital markets, formulate and manage the
Enterprise’s overall strategic objectives and oversee all mergers and
acquisitions.

Goals and
Objectives

Edge’s management team has established the following
goals and objectives for the successful development and growth of the Edge model
and the Enterprise:

| | 1 | Define, develop and
      maintain a clear focus on the middle market business customer
      segment;                                                                                                                                                                                                                                                                                                         
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2 | Acquire an initial group of
      companies to build the model and to fulfill several key tactical elements
      of Edge’s foundation. Early acquisition targets include one or more IT
      professional services companies, one or more Application Service Providers
      (ASPs) and two or more ISVs;                                                                                                   
| | 3 | Develop, create and grow a
      premier end-to-end, cross-industry business solution for middle market
      customers by acquiring or developing enterprise software components that
      include elements such as customer relationship management, enterprise
      resource planning (ERP), accounting and budgeting, human resources,
      procurement, inventory and various other business functions;
| | 4 | Successfully assemble the
      divergent cultures of the acquired companies into several cohesive and
      productive operating business units;                                                                                                                                                                                                                                                              
| | 5 | Become a leading market
      participant among cross-industry business software vendors;                                                                                                                                                                                                                                                                                                                      
| | 6 | Adequately capitalize each
      acquired company in order to meet the business objectives of the overall
      Edge model; and                                                                                                                                                                                                                                                                                
| | 7 | Maximize value of Edge
      shareholders.                                                                                                                                                                                                                                                                                                                                                                     

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<PAGE>

Management
and Advisors

Edge Corporation has recently retained the services of a
highly experienced management team. The team is currently working together to
develop and execute the Company’s business plan and includes the following key
members:

Graham C. Beachum II –President, Chief
Executive Officer and Director: Mr. Beachum has been the President and
Chief Executive Officer of Edge since January 2001. From January 2000 to
December 2000, Mr. Beachum was a private investor. From September 1996 to
January 2000, Mr. Beachum was the Chairman and Chief Executive Officer of Axtive
Corporation, a maker of customer relationship management software which was sold
to Remedy Corporation in 2000. From March 1991 to September 1996, Mr. Beachum
was a private investor. On May 28, 1998 Mr. Beachum filed a voluntary petition
under Chapter 7 of the Federal Bankruptcy Code and was discharged in September
1998 from certain tax liens arising from business interests during the time from
1991 to 1996 in which he was primarily a private investor. From 1988 to 1991,
Mr. Beachum was an executive officer of or consultant to personal computer
start-up companies such as Wang Microsystems, Northgate Computers, Gateway 2000
and Digital Equipment. From 1985 to 1988, Mr. Beachum was Executive Vice
President of Sales and Operations for PC's Limited and its successor Dell
Computer Systems. From 1984 to 1985, Mr. Beachum was the Vice President and
General Manager of the Business Products Division of Tandy Corporation. From
1968 to 1984, Mr. Beachum held a variety of positions with International
Business Machines Corporation including his final position as Director of
Worldwide Sales and Marketing for the personal computer division of
IBM.

David N. Pilotte –Executive Vice President
andChief Financial Officer. Mr. Pilotte’s business
and consulting career spans more than 20 years of successful financial
management. From 1984 to 1992, Mr. Pilotte held senior audit positions with
Arthur Andersen & Company and Rockwell International. From 1992 to 1996, Mr.
Pilotte had Treasurer responsibilities for Baldor Electric Company. From 1997 to
1998 he served as Corporate Controller for Cyrix, and from 1998 to 2000 was Vice
President and Corporate Controller of American Pad & Paper Company. In 1996,
Mr. Pilotte founded a successful consulting practice assisting small and
middle-market companies to raise private financing and effect financial and
operational restructurings. Throughout his career, Mr. Pilotte has had extensive
experience working with public companies and has played key roles in M&A
transactions, both public and private. Mr. Pilotte holds a BS in Finance from
the University of Florida, an MBA with concentrations in Accounting and
Management from the University of Houston and earned the accreditation of
Certified Public Accountant in Texas.

G.C. "Scooter" Beachum III –Vice President
and General Manager: Mr. Beachum began his career as the founder of
"StreetSmart," a technology product and pricing report that provided competitive
intelligence to Dell Computer Corporation, IBM Corporation, Digital Equipment
Corporation and other personal computer companies. In 1993 he sold his first
entrepreneurial venture and founded Axtive Software Corporation, which developed
the "ART" and "e.Monogram" software titles before its sale to Remedy Corporation
in 2000. ART is an embedded customer relationship solution that captures
customer registration data and initiates ongoing licensing, marketing and
service relationships for client organizations, including IBM and Lotus
Development. e.Monogram is an E-business personalization application for
business-to-business enterprises. Mr. Beachum earned a BS in

21

<PAGE>

MIS and a BS in Marketing from Southern Methodist
University and a MBA from the McLaren Business School at the University of San
Francisco.



Industry
Overview

IT professional services sector is currently experiencing
a period of significant change which may create immense opportunity for
proactive entrepreneurial companies. After experiencing a multi-year period of
record-setting sales, the sector is currently projected to continue growing, but
at a slower pace. Many participants were not prepared for decelerating growth
and a changing environment. In addition, the financial markets have reacted by
demanding near-term profitability, forcing major corrections in the valuations
of technology companies and providing limited access to private venture capital
and public market financing.

Edge plans to specifically serve the needs of middle
market businesses, initially within the United Sates. Middle market companies
are defined as those that generate between $10 million and $2 billion in annual
revenue and typically employ between 100 and 10,000 persons. As of 1997, of the
3 million middle market companies in the United States, there were approximately
150,000 companies that Edge would target. The removal of industries such as
agriculture account for the reduction to 150,000 companies.

Segment Information
(chart)

Information Technology Professional Services are
estimated to generate $300 billion of global revenues(1), of which Edge management estimates that
U.S. middle market companies consume $62 billion. Such services consist of
implementation, integration and development of custom technology applications.
International Data Corporation (IDC) projects a 12% annual growth rate through
2005(2). Some
industry forecasters such as Gartner Dataquest use a broader definition of "IT
services" to account for $670 billion of 2000 revenue from 15,000 competitors.
This is a highly fragmented market with industry leader IBM Global Services
controlling less than 5%, the ten largest market participants controlling less
than 20%, the top 400 global corporations controlling less than 50% and over
14,600 small to medium sized firms controlling the remaining 50+% market
share(3). Edge has
retained an outside consulting firm to conduct independent interviews, and a
mid-level executive at one potential competitor commented that, "the middle
market buys through local IT service organizations that they know and trust;
they do not use Big Five consulting firms."(4) Thus, thousands of medium sized market
participants are both the Enterprise’s potential competitors and acquisition
targets.

Application Service Providers (ASPs) are a
relatively new type of business that deploy, host and manage access to software
applications for multiple parties from a centrally managed facility. Mercer
Management Consulting counted over 500 ASPs that quickly emerged by the end of
2000,(5) although
several early business models are already experiencing a shakeout. Gartner
Dataquest recently reduced its global market size estimate to $12 billion by
2004 (less than half of its earlier $25 billion estimate), which continues to
represent respectable growth from the industry’s $1.4 billion of U.S. revenue in
_______________________

|1)  | Consulting
      Reincarnation, Chief Executive Magazine, June 2001.                                              
|--- | ------------------------------------------------------------------------------------------------------------------
|(2) | Can Compaq Escape
      from Hardware Hell?, Business Week, July 9, 2001.                                         
|(3) | Gartner Dataquest
      Says IT Services Market Remained Fragmented in 2000, press release,
      August 20, 2001.
|(4) | Edge competitor
      interviews, Marek Thompson Advisors, LLC, August 14,
  2001.                                
|(5) | Application Service
      Providers: Where are the real profit zones?, Mercer Management
      Consulting, 2001.  

22

<PAGE>

2000.(6)artner also projects industry consolidation that will result in
approximately 20 enterprise-class and 100 single-function ASPs by
2004.(7) Edge
intends to participate in this consolidation trend by acquiring profitable ASPs.
The acquired ASPs are intended to merge into a single OBU, enhanced with
proprietary software applications (acquired separately), and integrated to work
seamlessly with ubiquitous database technologies from Microsoft and Oracle. The
Enterprise anticipates that its IT professional services OBU would implement,
integrate and customize the combined software and service package.

Independent Software Vendors (ISVs) develop,
publish and support specific software applications and suites of applications.
IDC projects that the global software market is growing at an average annual
growth rate (AAGR) of 14.5%, from under $140 billion in 1998 to over $270
billion by 2003. In a recent update, Merrill Lynch projected that the market had
rapidly grown to $190 billion by 2000, yet Merrill still anticipates more
moderate growth over the next two years.(8)Dunn and Bradstreet estimates that 25,641
ISVs compete within the U.S. market (SIC 7372--prepackaged software), including
a total of approximately 3,700 ISVs that generate greater than $1 million of
annual revenue and approximately 1,100 ISVs that generate greater than $10
million of annual revenue.(9) Edge intends to acquire ISVs or individual software applications
and to integrate these applications into its ASP offering. Management envisions
that acquired ISVs would fit into Edge’s application framework consisting of
Internet services, collaboration services, eBusiness applications, business
operations, business intelligence and content/knowledge management.

Acquisition
Strategy

Initial acquisitions are intended to provide the
Enterprise with its core infrastructure, initialize the Enterprise’s primary
revenue streams, bring value to future merger and acquisition targets and
provide an environment where organic growth can be guided towards the Edge
model. The first group of acquisitions has reached advanced negotiations. These
companies, along with other early acquisition targets, would create the
foundation for each of the Edge OBUs. The long-term targeted revenue mix for the
Enterprise is planned to be 40%-50% for products and delivery and 50%-60% for IT
professional services.

Business Development Strategy
(chart)

Management has developed both short and long-term plans
for the acquisition, integration and development of the Edge framework. The
acquisition strategy includes tasks that fit within four broad areas: business,
product, growth and consolidation.

| | Business.
      During late 2001 and early 2002, the "launch" acquisitions or mergers are
      planned to take place. Thereafter, the Enterprise plans to make
      approximately two or three new acquisitions every quarter while continuing
      to increase revenue and EBITDA organically. Future acquisitions are
      anticipated to complete the business platform for Edge’s proposed group of
      eight OBUs while increasing revenue and profitability.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

__________________

|(6) | New World Order,
      Interactive Week, June 25, 2001.                              
|--- | -------------------------------------------------------------------------------------
|(7) | When ASPs Go
      Sour, eWEEK, April 29, 2001.                                      
|(8) | Merrill Lynch
      Software. Global: The Hard News on Software, February 22,
  2001.
|(9) | Industry Report:
      Prepackaged Software, Zapdata.com / Dunn & Bradstreet,
  2001.

23

<PAGE>

| | Product.Acquired software products are intended to integrate into the Edge
      model including migration to the common Oracle/Microsoft data structure
      framework and modification application service delivery channel. New
      applications are planned to be deployed in relationship to Edge’s product
      roadmap and continuing acquisitions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Growth.Organic growth is planned as new versions of existing applications are
      developed and deployed. The Enterprise also plans to acquire additional
      functionality and industry specificity to integrate into existing
      products.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Consolidation.Consolidation of operational functions is intended to occur once
      companies have successfully migrated to the Edge model, and minimal risk
      exists of disrupting normal business operations. Because the source of
      Edge’s customer base will be the current customers of the acquired
      company, Edge runs the risk of spoiling an acquisition by requiring
      consolidation too quickly. It is anticipated that opportunities will
      eventually exist for the consolidation of sales strategies, service
      offerings, customer service, employee operations and other services. This
      final stage is intended to occur when each of the OBUs is generating
      self-sufficient revenues and earnings and is being managed by profit and
      loss. Executing this tactic too soon would create a lack of focus and
      would potentially allow for OBUs’ to be hindered by the lack of a
      dedicated resource base. Consolidation is anticipated to further enable
      Edge to offer complete, deployable, consolidated data structured suites of
      business process applications, products and services across all OBUs and
      thereby meet the needs of middle market
companies.

Current owners and managers of the acquisition targets
stand to realize several potential benefits through a business combination with
Edge, including improved access to growth capital, accelerated sales and profit
growth, access to broader markets for existing products and enhanced shareholder
value as part of a publicly traded company. As a general rule, Edge plans to
systematically value acquisition targets at conservative multiples of EBITDA and
/ or revenue, with a transaction structure of 20% cash and 80% stock. Initial
acquisitions are likely to be valued at the higher end of the above value range
to recognize partner organizations that make an early contribution to the Edge
model. Later acquisitions are expected to be valued at the lower end of the
above range which is more consistent with recent industry comparable
valuations.

Organizational Overview

Organizational
Overview

A small corporate management team plans to create, manage
and control the overall product roadmap for the Enterprise’s end-to-end business
process applications. Functional teams would oversee traditional corporate
functions including acquisition management/integration, corporate finance,
corporate accounting/control and investor relations.

Edge Corporate (org chart)

Edge plans to grow primarily through targeted
acquisitions in each of the eight OBU product or service areas. Each OBU will
align its business goals and operations with the overall goals of Edge, yet

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will retain a completely autonomous management team to
oversee all OBU-level product development, support, sales, marketing, operations
and accounting activities. General management will include Finance,
Administrative and Human Resources. Product Development includes product
strategy, architecture and application-planning. Customer Service and Support
will include value and quality management. Sales and Marketing will pertain to
brand, deliverables and quota creation and management. Product management will
include product, programs and promotion.

Operating Business Unit (org
chart)

Edge, formerly known as Visual Edge Systems Inc., was
incorporated in Delaware in 1994. The Enterprise changed its name to Edge
Technology Group, Inc. in September 2000, hired key members of the current
management team during the first half of 2001 and is implementing an entirely
new business plan (as described herein). Further historical information about
the Enterprise may be obtained by reviewing documents accessible through the
U.S. Securities and Exchange Commission’s Edgar database (www.sec.gov).

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<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

|(a) | Exhibits                                                                                                                                                                                                                                                                                                      
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                               
|    | None                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                               
|(b) | Reports on Form 8-K                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                               
|    | (1)  Edge filed a Form 8-K on
      September 24, 2001, announcing the closing of the previously announced
      sale of assets related to its One-on-One Business to Visual Edge, Inc.
      ("Visual Edge") under an Asset Purchase and Assignment and Assumption
      Agreement dated as of July 24, 2001.

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SIGNATURES

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

| |  | Edge Technology Group Inc.                                                      
| |  | --------------------------------------------------------------------------------
| |  |                                                                                 
| |  |                                                                                 
| |  | By:  /s/ David N.
      Pilotte    ---------------------------------------------
| |  | Executive Vice President and                                                    
| |  | Chief Financial Officer                                                         
| |  | (Principal Financial and Accounting
  Officer)                                  

November 19, 2001

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