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UNITED STATES

SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549



Form 10-KSB



(MARK ONE)

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

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002



OR



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

FOR THE TRANSITION PERIOD FROM              TO
            .



Commission File Number 33-30743



Emergisoft Holding, Inc.

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



|Nevada                                                         |  | 84-1121360                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification Number)



|2225 Avenue J, Arlington, Texas          |  | 76006     
|---------------------------------------- |  | ----------
|(Address of principal executive offices) |  | (Zip Code)



Issuers telephone number, including area code: (817) 633-6665



Securities Registered Pursuant to Section 12(b) of the Act: None



Securities Registered Pursuant to Section 12(g) of the Act: Common Stock, par value $.001



Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes x No ̈



Check if disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10KSB. ̈



Registrants revenues for the fiscal year
ended December 31, 2002 were $308,273.



The aggregate market
value of the registrants voting common stock held by non-affiliates, based on the closing bid price of $0.37, as reported on the NASD Bulletin Board system on March 25, 2003 was $394,473. Solely for the purposes of this calculation, all
executive officers and directors of the registrant and all shareholders reporting beneficial ownership of more than five percent of the registrants common



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stock are considered to be affiliates. This determination of affiliates is not necessarily a conclusive
determination for other purposes.



As of March 25, 2003,
24,475,658 shares of the registrants $.001 par value common stock were outstanding. On March 13, 2002, the Company declared a 20 for 1 reverse stock split effective March 31, 2002. The effect of this reverse stock split has been retroactively
reflected throughout this report.



Transitional Small Business
Disclosure Format

(check one)

Yes x No ̈





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INDEX TO

ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002



|        
|--------
|Part I  
|        
|ITEM 1. 
|        
|ITEM 2. 
|        
|ITEM 3. 
|        
|ITEM 4  
|        
|Part II 
|        
|ITEM 5. 
|        
|ITEM 6. 
|        
|ITEM 7. 
|        
|ITEM 8. 
|        
|Part III
|        
|ITEM 9. 
|        
|ITEM 10.
|        
|ITEM 11.
|        
|ITEM 12.
|        
|ITEM 13.
|        
|ITEM 14.



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Part I



ITEM 1. Description of Business



CORPORATE BACKGROUND



Emergisoft Corporation, our operating subsidiary, began operations in 1992 and was incorporated in 1998 in Delaware. Our principal executive office is located at 2225 Avenue J, Arlington, Texas and our telephone number is
1-800-682-7729. When we refer to we, our, or Emergisoft in this report, we mean Emergisoft Holding, Inc. a Nevada Corporation and its subsidiaries, including Emergisoft Corporation, our operating subsidiary.



CAUTION REGARDING FORWARD-LOOKING STATEMENTS



Throughout this report, there are
forward-looking statements that are based upon our current expectations, estimates and projections about our industry and that reflect the beliefs and assumptions based upon information available to us at the date of this report. In some cases, you
can identify these statements by words such as may, might, will, should, expects, plans, anticipates, believes, estimates,
predicts, potential, or continue, and other similar terms. These forward-looking statements include, among other things, projections of our future financial performance, our anticipated growth, our strategies and
trends we anticipate in our business and the markets in which we operate and the competitive nature and anticipated growth of those markets.



We caution investors that forward-looking statements are only predictions, based upon our current expectations about future events. These
forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Our actual results, performance or achievements could differ materially from those expressed
or implied by the forward-looking statements. Some of the important factors that could cause our results to differ are discussed later in this section in Risk Factors. We encourage you to read this section carefully. You should carefully
consider those risks, in addition to other information in this report and in our other filings with the SEC, before deciding to invest in our stock or to maintain or change your investment. We caution investors not to rely on these forward-looking
statements, which reflect managements analysis only as of the date of this report. We undertake no obligation to revise or update any forward-looking statement for any reason.



BUSINESS OVERVIEW



Emergisofts Mission: To provide clinicians and administrators the most comprehensive, functional and efficient
clinical information systems that enhance and improve the delivery and documentation of patient care.



Our goal is to design and implement information systems so profound our customers wouldnt dream of going back to their old ways of
paper documentation in the clinical setting. Emergisoft is committed to automating the workflow processes of the Emergency Department, commonly referred to as the ED, Emergency Room or ER.



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Emergisoft is
a designer and developer of a comprehensive Emergency Department Information System, or EDIS, software applications that allows clinicians to:



| |  |  | electronically collect complete patient data at the point of care;
| | - |  | ------------------------------------------------------------------

| |  |  | time and date stamp workflow processes of ED nurses and physicians;
| | - |  | -------------------------------------------------------------------

| |  |  | produce department management reports; and
| | - |  | ------------------------------------------

| |  |  | monitor trends, including but not limited to, department bottlenecks, patient wait times, and syndromic surveillance.
| | - |  | ---------------------------------------------------------------------------------------------------------------------



Our principal products and services include:



| |  |  | EmergisoftEDa
comprehensive, full-interface EDIS;
| | - |  | --------------------------------------------------

| |  |  | training for Emergisoft applications;
| | - |  | -------------------------------------

| |  |  | implementation and interfacing of Emergisoft applications with legacy systems; and
| | - |  | ----------------------------------------------------------------------------------

| |  |  | maintenance and service of Emergisoft applications.
| | - |  | ---------------------------------------------------



Details about our products and services are provided in Products and Services below.



Company Growth Strategy



Emergisoft has a goal to provide successful customer-driven
innovation, using technology to address complex customer problems and develop solutions to make clinical documentation and workflow easier. By applying strategic and operational rigor to this foundation, we believe we can accelerate our
customer-driven innovation, and deliver stronger revenue and profit potential.



There are three key fundamentals that support our growth strategy:



| |  |  | We deliberately choose to be in business where we believe we can achieve the strategic and durable advantage to produce long-term profitable growth.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | We believe we have targeted a large, underserved portion of the healthcare information technology market, and strive to deliver customer-driven, innovative solutions
to address these unmet customer needs.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | By applying strategic and operational rigor, we believe we can execute well to capitalize on a large growth opportunity.
| | - |  | ------------------------------------------------------------------------------------------------------------------------



By being both disciplined and innovative, we seek to improve
execution and deliver more  for example, we believe that by tightening development cycles, we can introduce products and product enhancements faster.



PRODUCTS AND SERVICES



Emergisoft offers products in one primary healthcare segment, the Emergency Department. We believe EmergisoftEDis one of the first truly user friendly, fully integrated software packages to encompass all record keeping
functionally required to manage the Emergency Department and ensure patient safety and privacy.



Emergency Department Information Systems



EmergisoftEDis our EDIS. We believe



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EmergisoftEDbrings comprehensive electronic clinical and management documentation capabilities to hospital emergency departments. EmergisoftEDgathers, distributes, displays, prints and archives patient data while following the natural thought process and work flow of the provider.



EmergisoftEDprovides an inclusive EDIS based on a state of the art, full-function, fully relational template driven electronic medical record
foundation with an Oracle®database platform. EmergisoftEDis centered around physician and nursing documentation that includes triage, tracking, charting, order entry, syndromic surveillance reporting,
workflow management reporting, prescription writer, and discharge instructions.



EDIS Implementation and Interface Services



Emergisoft offers a framework incorporating enterprise technologies that allow administrators and clinicians to deploy end-to-end emergency department solutions. We believe that we can successfully build and integrate
interfaces providing full management capabilities within single and multi-site hospital enterprise systems. Emergisofts programming and implementation team is comprised of experienced people that take pride in their ability to fully integrate
and implement in a complete, effective and efficient manner. A regional account manager, knowledgeable of Emergisoft products and committed to the project through system live date and customer acceptance, accompanies Emergisofts programming
and installation team.



Emergisoft Application Training
Services



Emergisoft application training
services are offered to customer appointed system administrators. Training classes are held by our clinical systems educator on site, or in our corporate headquarters. Classes are tailored to meet the needs of our clients focusing on educating the
users with regard to the utilization and maintenance of the system. Hands-on education incorporating real-life scenarios is utilized to assist team members in mastering the application so that they can assist their colleagues effectively and
efficiently.



Emergisoft also provides its
customers with consulting resources to improve their patient management efficiencies and revenue enhancement. These services include data analysis and recommendations, physician and nurse ED efficiency experts, and more.



Emergisoft Maintenance and Support Services



Emergisoft has developed a comprehensive client satisfaction
system that is focused on pro-active and ongoing communication and collaboration. All of our clients enter into software maintenance agreements which normally provide for a fixed monthly fee for specific services and the use of new releases of the
Emergisoft products. At the core of our client satisfaction system is our customer service team located at Emergisofts corporate headquarters. Each Emergisoft client is assigned a customer care manager whose mission is to ensure client
satisfaction and success with our systems. Emergisoft provides customers the services and immediate support of our highly trained clinical/technical team 24-hours per day, 7-days a week.



SOFTWARE DEVELOPMENT



During recent years, we have devoted significant resources to developing a second generation EDIS,
EmergisoftED. This product began as an outsourced development initiative but, over time, it was determined
that the product needed to be developed in-house by Emergisoft software developers. By mid



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2002, the majority of all software development for EmergisoftEDwas conducted in-house through the hiring of senior level software engineers, all of who are full time employees of Emergisoft. The development of
complex mission critical point of care clinical information systems presents a unique challenge because of the demanding development cycles required to incorporate numerous clinical workflow and clinical documentation processes. For these reasons
and because of the need to provide the best possible customer service and technical support, Emergisoft now maintains a complete development staff consisting of eight full time employees.



EmergisoftEDhas been completed and is currently being marketed, however we continue to devote significant resources to improving the product. Our ongoing development efforts focus on enhancements that make for an
easier end-to-end user experience; advancements for improved performance; advancements for improved accessibility; and improvements for improved data collection and reporting. We also incorporate technology in our products to address customer
concerns about privacy and security while minimizing their impact on performance and ease of use.



In the past year, we have made a number of improvements to our product development process. We team technical support and product
personnel, so that we can anticipate feature usability and support issues early in the development process. We have made other changes such as implementing software tools and additional hardware that allow us to shorten the development cycle. We
believe these changes will enable us to launch new enhancements sooner.



SALES AND MARKETING



Sales



Our executive marketing management is
located in our Dallas, Texas area headquarters, while sales, sales support and account management representatives, currently consisting of six full time employees, are located in Ohio, Massachusetts, Pennsylvania and Texas. Our customers, and
prospective customers, are hospitals that maintain an Emergency Department. These hospitals can include for-profit, not-for-profit, single site hospitals or multi system independent delivery networks, or IDNs.



Marketing



We continue to enhance the products and services that we offer in our target market. Historically, our market
consisted of hospitals in the early-adopter phase of information system use in the Emergency Department. As we learned from our experiences in the marketplace, and as peers of our client base began learning about the benefits of fully
automated electronic EDIS, we began investing significant resources to create a second generation EDIS. This second generation system, EmergisoftEDis now finding a home in a market that is educated about the benefits, and in many cases, the need for an EDIS.



Today, there are approximately 4,400 emergency rooms in the United States. Less than 10% of these emergency
rooms have acquired or installed an EDIS as of the date of this report. Emergency Department Information Systems fall in a price range of $250,000 to $1,000,000 and above, depending on numerous factors including: patient volume; interface needs; and
other factors unique to each sale. The sale of an EDIS takes approximately six to fourteen months, from the time of initial contact, to the signing of a contract.



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COMPETITION



We face competition in the development,
design, sale and implementation of our flagship product, EmergisoftED. Some of our existing competitors have
significantly greater financial, technical and marketing resources than we do. The competitive landscape can shift rapidly as new companies enter this market in which we compete.



As to our EmergisoftEDproduct, we believe the most important competitive factors are: personnel (technical and clinical expertise offered to the client), product
features, ease of use, ability to integrate well with a customers existing hospital information systems, quality of installed customer base, brand name recognition, price, long-term existence in the space, and product support quality. We
believe we compete effectively on most of these factors.



Competition for our EDIS offerings primarily includes Cerner Corporation, A4 Health Systems, and Ibex Healthdata Systems. However, as less than 90% of U.S. hospital emergency rooms are fully automated with an EDIS, the primary
competitive alternatives for potential customers are manual tools and processes, or modular software applications that offer portions of the deliverables of EmergisoftED.EmergisoftED,a comprehensive EDIS, can be used in part or in full based on the current needs of the hospitals ED. Due to the fact that the EDIS market is far from mature, a significant portion of our new customers are expected to
be hospitals who have used paper and pen for patient documentation, rather than competitors software and services to perform documentation and management reporting tasks. The majority of Emergency Departments today utilize a wall mounted
marker board to track patients in the ED and use paper and pen to create medical records which include hand written nurse and physician documentation.



CUSTOMER SERVICE AND TECHNICAL SUPPORT



We provide customer service and technical support 24x7x365 by live, toll-free telephone. We have fourteen full-time employees who provide
all customer and technical support from our home office. We anticipate that our growth in customer base will require a simultaneous growth in the number of customer service and technical support staff. Currently, we do not anticipate outsourcing our
technical support and customer service operations. We believe direct customer service and technical support are critical to our ongoing efforts to provide the best possible service to our current and future customer base.



PRIVACY AND SECURITY OF PATIENT INFORMATION



Emergisoft products have been designed with
privacy and security compliance in mind. As of this date, we believe that Emergisoft products fully support the Health Insurance Portability and Accountability Act of 1996, or HIPPA. Emergisoft has an active internal HIPAA compliance program for its
employees, vendors and alliance partners. The compliance committee membership consists of Emergisoft department heads and is chaired by the director of clinical design. The compliance committee has a dual charge of assuring compliance with both
HIPAA and the Centers for Medicare and Medicaid Services, documentation criteria used in audits and Current Procedural Terminology, or CPT, charge coding functions of the EmergisoftEDapplication. As various interfaces are brought on-line, they will be designed and executed with HIPAA compliance as a fundamental feature of the
design process.



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EMPLOYEES



As of March 25, 2003 we had 34 full-time
employees, located primarily at our home office in the Dallas, Texas area. Emergisoft sales, sales support, and account management representatives are located in Ohio, Massachusetts, Pennsylvania and Texas. We believe our future success and growth
will depend on our ability to attract and retain qualified employees in all areas of our business. We do not currently have any collective bargaining agreements with our employees, and we believe employee relations are generally good. We believe we
offer competitive compensation and a good working environment. However, we face competition for qualified employees.



AVAILABLE INFORMATION



Emergisoft maintains its corporate Web site at www.emergisoft.com. Emergisoft makes available free of charge on www.emergisoft.com this
Annual Report on Form 10-KSB, its quarterly reports on Form 10-QSB, current reports on Form 8-K and amendments to those reports, all as filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as
reasonably practicable after the reports are electronically filed with or furnished to the Securities and Exchange Commission.



RISK FACTORS



Control by Existing Management and One Stockholder



Our major investor, Berlwood Five, Ltd., owns more than 95% of our issued and outstanding common stock as of the date of this report. As a
consequence, Berlwood Five, Ltd. exercises control over our affairs, controls the election of the entire Board of Directors and controls the disposition of any matter submitted to a vote of stockholders.



We have had a history of losses, we expect losses in the future, and there
can be no assurance that we will be profitable in the future.



For our fiscal year ended December 31, 2002, we incurred net losses of $6,036,864. We had net losses of $6,648,379 in 2001. As of December 31, 2002, we had an accumulated deficit of $26,135,456. Management expects these
losses to continue in 2003. If our revenues do not increase substantially, we may never become profitable. Even if we do achieve profitability, we may not sustain profitability on a quarterly or annual basis in the future.



We may require additional financing, but we may be unable to obtain it on
favorable terms or at all.



We may require
additional funding to continue operations beyond 2003. However, there can be no assurance that we will be successful in locating such sources.



Our ability to obtain additional financing will be subject to a number of factors, including our operating performance, the terms of
existing indebtedness, and general economic and market conditions. We cannot be certain that we will be able to obtain additional financing on acceptable terms, if at all. If we issue additional equity securities to raise capital, our stockholders
may experience significant dilution and the new securities may have rights, preferences or privileges greater than those of our existing stockholders. If we cannot obtain additional financing when needed, we may not be able to fund our operations or
to remain in business, which could result in a total loss of your investment.



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Dependence on Principal
Product



We expect to derive a significant
percentage of our revenue from sales of our core system, EmergisoftEDTM. As a result, any event adversely affecting
expected sales of the product could have a material adverse effect on our results of operations, financial condition or business. Revenue associated with EmergisoftEDTMcould fail to materialize as a result of several factors, including price competition and sales practices. There can be no assurance that we will be
successful in marketing our current products or any new or enhanced products.



Dependence on Proprietary Software



Our success is dependent to a significant extent on our ability to protect the proprietary and confidential aspects of our software technology. Our software technology is not patented and existing copyright laws offer only limited
practical protection. We rely on a combination of trade secret, copyright and trademark laws, license agreements, nondisclosure and other contractual provisions and technical measures to establish and protect our proprietary rights in our products.
There can be no assurance that the legal protections afforded to us or the steps taken by us will be adequate to prevent misappropriation of our technology. In addition, these protections do not prevent independent third-party development of
competitive products or services. We believe that our products, trademarks and other proprietary rights do not infringe upon the proprietary rights of third parties. There can be no assurance, however, that third parties will not assert infringement
claims against us in the future or that any such assertion will not require us to enter into a license agreement or royalty arrangement with the party asserting the claim. As competing healthcare information systems increase in complexity and
overall capabilities and the functionality of these systems further overlap, providers of such systems may become increasingly subject to infringement claims. Responding to and defending any such claims may distract the attention of our management
and otherwise have a material adverse effect on our results of operations, financial condition or business.



Risks Related to Technological Change and New Product Development



The market for our products is characterized by rapid change and technological advances requiring ongoing expenditures for research and
development and the timely introduction of new products and enhancements of existing products. Our future success will depend in part upon the ability to enhance our current products, to respond effectively to technological changes, to sell
additional products to our existing client base and to introduce new products and technologies that address the increasingly sophisticated needs of our clients. We will devote significant resources to the development of enhancements to our existing
products and the migration of existing products to new software platforms. There can be no assurance that we will successfully complete the development of new products or the migration of products to new platforms or that our current or future
products will satisfy the needs of the market for ED software systems. Further, there can be no assurance that products or technologies developed by others will not adversely affect our competitive position or render our products or technologies
noncompetitive or obsolete.



Quality Assurance and Product
Acceptance Concerns



Healthcare providers
demand the highest level of reliability and quality from their information systems. Although we devote substantial resources to meeting these demands, our products may, from time to time, contain errors. Such errors may result in loss of, or delay
in, market acceptance of our products. Delays or difficulties associated with new product introductions or product enhancements could have a material adverse effect on our results of operations, financial condition or business.



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Many
healthcare providers are consolidating to create integrated healthcare delivery systems with greater market power. These providers may try to use their market power to negotiate price reductions for our products and services. As the healthcare
industry consolidates, our client base could be eroded, competition for clients could become more intense and the importance of acquiring each client is likely to become greater.



Reliance on Third Party Vendors



We depend on third-party suppliers to provide data related to our online patient demographic and insurance
eligibility verification tool and hardware and software suppliers related to our other products. We cannot be sure that our suppliers will continue to sell or lease their products and services to us at commercially reasonable prices or at all.
Difficulties in developing alternative sources of supply, if required, could adversely affect our business.



We Depend on Protection of Our Proprietary Rights



We rely on a combination of copyright, trademark and trade secret laws to protect our proprietary rights. We cannot be certain that the
steps we have taken will be adequate to prevent the misappropriation of our technology or that third parties, including competitors, will not independently develop technologies that are substantially equivalent or superior to our proprietary
technology.



Risk of Product-Related Claims



Certain of our products provide applications that relate to
patient medical records and treatment plans. Any failure of the products to provide accurate, confidential and timely information could result in product liability or breach of contract claims against us by our clients, their patients or others. We
intend to maintain insurance to protect against claims associated with the use of our products, but there can be no assurance that such insurance coverage will be available at a reasonable cost or, if available, will adequately cover any claim
asserted against us. A successful claim brought against us in excess of our insurance coverage could have a material adverse effect on our results of operations, financial condition or business. Even unsuccessful claims could result in the
expenditure of funds in litigation, as well as diversion of management time and resources. There can be no assurance that we will not be subject to product liability or breach of contract claims, that such claims will not result in liability in
excess of our insurance coverage, that our insurance will cover such claims or that appropriate insurance will continue to be available to us in the future at commercially reasonable rates. Emergisoft has had actual claims related to the premature
release of its Windows based product in 1997. These claims have currently been settled; however, we can give no assurance that we will not have similar or other product related claims, or that we could settle other similar product related claims.



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Risks Associated with
Government Regulation



The healthcare
industry in the United States is subject to changing political, economic and regulatory influences that may affect the procurement practices and operations of healthcare organizations. During the past several years, the healthcare industry has been
subject to increasing levels of government regulation of, among other things, reimbursement rates and certain capital expenditures. From time to time, certain proposals to reform the healthcare system have been considered by Congress. These
proposals, if enacted, may increase government involvement in healthcare, lower reimbursement rates and otherwise change the operating environment for our clients. Healthcare organizations may react to these proposals and the uncertainty surrounding
such proposals by curtailing or deferring investments, including those for our products and services. We cannot predict with any certainty what impact, if any, such proposals or healthcare reforms might have on our results of operations, financial
condition or business.



Reliance on Management and Key
Personnel



Management decisions of our
business will be made exclusively by our directors and officers. Our stockholders will have no right or power to take part in management other than their right to vote for the election of our directors. Our operations are dependent on the continued
efforts of our executive officers and senior management. Furthermore, we will likely be dependent on the senior management of any businesses acquired in the future. If any of these persons becomes unable or unwilling to continue in his or her role
with us, or if we are unable to attract and retain other qualified employees, our business or prospects could be adversely affected. There can be no assurance that any individual will continue in his present capacity with us for any particular
period of time. Our success is also dependent to a significant degree on our ability to attract, motivate and retain highly skilled sales, marketing and technical personnel, including software programmers and systems architects skilled in the
computer language with which our products operate. The loss of key personnel or the inability to hire or retain qualified personnel could have a material adverse effect on our results of operations, financial condition or business. Although we have
been successful to date in attracting and retaining skilled personnel, there can be no assurance that we will continue to be successful in attracting and retaining the personnel we require to successfully develop new and enhanced products and to
continue to grow and operate profitably.



Possible Volatility
of Stock Price



The market price of our
common stock may be subject to significant fluctuations in response to numerous factors, including variations in our annual or quarterly financial results or our competitors, changes by financial research analysts in their estimates of our earnings,
conditions in the economy in general or in the healthcare or technology sectors in particular, announcements of technological innovations or new products or services by us or our competitors, proprietary rights development, unfavorable publicity or
changes in applicable laws and regulations (or judicial or administrative interpretations thereof) affecting us or the healthcare or technology sectors. Moreover, from time to time, the stock market experiences significant price and volume
volatility that may affect the market price of the common stock for reasons unrelated to our performance.



Competition



We experience significant competition in conducting our business, and we expect such competition to continue to increase. A number of our competitors offer a broader variety of services and products and may
have done so for longer periods of time. Our current and prospective competitors include large companies, some of which may be better known than us and may have greater financial, technical and marketing resources than we do.



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As a result of
increased competition in our industry, we expect to encounter significant pricing pressure. We cannot be certain that we will be able to offset the effects of any required price reductions through an increase in the volume of our sales, higher
revenues from other business services, cost reduction or otherwise, or that we will have the resources to continue to compete successfully. You should read Description of Business; Competition for further discussion of the competitors in
our industry and competing products.



ITEM 2.
Description of Properties



Our principal offices and corporate headquarters are located in Arlington, Texas. Our Arlington facilities consist of approximately 10,000 square feet under a lease that has an expiration date of October 31, 2003. We also maintain a
separate lease for an offsite data center facility that expires in December 2004.



ITEM 3.
Legal Proceedings



In
December 1999, a stockholder and former officer of Emergisoft filed suit in federal court alleging that we were infringing on a copyright for the ICUS database and tool set that he claimed to own personally. Our previous ICUS-based product offering,
now replaced by our EmergisoftEDproduct offering, used ICUS, a proprietary database. On January 8, 2001, the
court granted our motion for summary judgment, dismissing all of the former officers claims. The case was appealed and on March 20, 2003, the United States 5thCircuit Court of Appeals ruled in our favor.



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



None



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Part II



ITEM 5.
Market for Common Equity and Related Stockholder Matters



Market Information



There is no significant trading market for our common stock, which subjects the market price of our common stock to a high level of volatility.



Our common stock is not eligible for trading on any national or regional exchange. Our common stock is currently trading on the NASDAQ
Over-the-Counter Bulletin Board Trading System pursuant to Rule 15c2-11 of the Securities Exchange Act of 1934. This market tends to be highly illiquid, in part because there is no national quotation system by which potential investors can trace the
market price of shares except through information received or generated by a limited number of broker-dealers that make a market in that particular stock. There are currently no plans, proposals, arrangements or understandings with any person with
regard to the development of a trading market in our common stock. We are not certain that an active trading market in our common stock will develop, or if such a market develops, that it will be sustained. In addition, there is a greater chance for
market volatility for securities that trade on the NASDAQ Over-the-Counter Bulletin Board Trading System as opposed to a national exchange or quotation system. This volatility may be caused by a variety of factors, including:



| |  |  | the lack of readily available price quotations;
| | - |  | -----------------------------------------------



| |  |  | the absence of consistent administrative supervision of bid and ask quotations;
| | - |  | -----------------------------------------------------------------------------------



| |  |  | lower trading volume; and
| | - |  | -------------------------



| |  |  | market conditions.
| | - |  | ------------------



In addition, business events may cause a decline in the price of our common stock. These events could include, but are not limited to:



| |  |  | announcements concerning our business or competitors;
| | - |  | -----------------------------------------------------



| |  |  | technological innovations;
| | - |  | --------------------------



| |  |  | loss of key personnel; and
| | - |  | --------------------------



| |  |  | government regulation.
| | - |  | ----------------------



In a volatile market, we may experience wide fluctuations in the market price of our securities. These fluctuations may have an extremely
negative effect on the market price of our securities and may prevent a stockholder from obtaining a market price equal to his purchase price when he attempts to sell our securities in the open market. In these situations, a stockholder may be
required to either sell our securities at a market price which is lower than his purchase price, or to hold his investment in our securities for a longer period of time than he planned to hold this investment. A sharp decline in the price of our
common stock could also result in securities class action litigation against us. Such litigation could



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be very costly and divert managements attention and resources, which may have a material adverse
effect on our business, financial condition and results of operations.



The following table sets forth the quarterly high and low bid information for our common stock for the periods indicated below.



|               |  | High  |  | Low  
|-------------- |  | ----- |  | -----
|2002           |  |       |  |      
|Fourth Quarter |  | 1.05  |  | .15  
|Third Quarter  |  | .55   |  | .15  
|Second Quarter |  | 9.00  |  | .25  
|First Quarter  |  | 5.00  |  | 2.00 
|              
|2001           |  |       |  |      
|Fourth Quarter |  | 11.00 |  | 2.60 
|Third Quarter  |  | 60.00 |  | 7.00 
|Second Quarter |  | 55.00 |  | 33.76
|First Quarter  |  | 5.00  |  | 5.00 



The
over-the-counter quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.



The market price of shares of our common stock may be adversely affected by the sale, or availability for sale, of substantial amounts of
the common stock in the public market.



Stockholders



As of March 25, 2003, we have approximately
566 holders of record.



Dividends



We have not paid, and do not currently intend to pay cash
dividends on our common stock in the foreseeable future. The current policy of our Board of Directors is for us to retain all earnings, if any, to provide funds for operation and expansion of our business. The declaration of dividends, if any, will
be subject to the discretion of the Board of Directors, which may consider such factors as our results of operations, financial condition, capital needs and acquisition strategy.



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Equity Compensation Plan
Information as of March 25, 2003



|Plan Category                                              |  | Number of securities tobe issued upon exerciseof outstanding
options,warrants and rights |  | Weighted-averageexercise price ofoutstanding options,warrants and
rights |  | Number of securitiesremaining available forfuture issuance underequity
compensationplans (excludingsecurities reflected incolumn (a))
|---------------------------------------------------------- |  | ---------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------
|Equity compensation plans approved by security holders     |  | 915,000                                                                                  |  | $1.69                                                                    |  |                                                                                                                                     
|                                                          
|Equity compensation plans not approved by security holders |  | 728,238                                                                                  |  | .76                                                                      |  | 1,481,762                                                                                                                            
|                                                           |  |                                                                                          |  |                                                                          |  |                                                                                                                                      
|Total                                                      |  | 1,643,238                                                                                |  | $1.28                                                                    |  | 1,481,762                                                                                                                            
|                                                           |  |                                                                                          |  |                                                                          |  |                                                                                                                                      



Recent Sales of
Unregistered Securities



On December 23,
2002, we issued 937,503 shares of common stock in exchange for $500,000 in accordance with the terms of a $5,000,000 financing commitment provided by Berlwood Five, Ltd. (Berlwood), our major stockholder. This issuance was deemed exempt from
registration under the Securities Act in reliance on Section 4(2) of the Securities Act, as a transaction not involving any public offering.



ITEM 6.
Managements Discussion and Analysis or Plan of Operations



CRITICAL ACCOUNTING POLICIES AND ESTIMATES



Our financial statements are based on the selection and application of significant accounting policies, which require management to make
significant estimates and assumptions. We believe that the following are some of the more critical judgment areas in the application of accounting policies that currently affect our financial condition and results of operations. Due to the limited
size of our staff, there is inherently a lack of segregation of duties related to the authorization, recording, processing and reporting of transactions. We periodically assess the cost versus benefit of adding the resources that would remedy this
situation and currently, with the concurrence of the board of directors, do not consider the benefits to outweigh the costs of adding additional staff in light of the limited number of transactions related to our operations.



Bad Debt



We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our
customers to make required payments. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.



Impairment of Equipment and Fixtures



In assessing the recoverability of our equipment and
fixtures, we must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets.



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If these estimates or their related assumptions change in the future, we may be required to record
impairment charges not previously recorded for these assets. At December 31, 2002, we had investments of $465,539 in equipment and fixtures, net of accumulated depreciation. During the year ended December 31, 2002, we did not record any impairment
losses related to equipment and fixtures. On January 1, 2002, we adopted Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.



Revenue Recognition



The majority of our sales are generated from multiple element
arrangements, which require significant revenue recognition judgments, particularly in the areas of customer acceptance, installation and collectibility.



Deferred Taxes



We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be recognized. While we
have considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance, in the event we were to determine that we would be able to realize our deferred tax assets in the
future in excess of the net recorded amount, an adjustment to the deferred tax asset would increase income in the period in which such determination was made.



RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2002 COMPARED TO

THE YEAR ENDED DECEMBER 31, 2001



Revenues



We recognize software license revenues consistent with Financial Accounting Standards Board (FASB) Statement of Position 97-2, SOFTWARE REVENUE RECOGNITIONand Staff Accounting Bulletin 101, REVENUE RECOGNITION IN FINANCIAL
STATEMENTS. These statements provide guidance on applying generally accepted accounting principles in recognizing revenue.



During 2002, our revenues were generated by maintenance fees related to our ICUS based product. We have replaced the ICUS based product
called Emergisoft with a newly developed product called EmergisoftEDand no longer sell the ICUS based
product. As of December 31, 2002, we have sunset the ICUS based product. We are currently installing EmergisoftEDin our existing client base and marketing it to new customers. In 2003 we expect to generate revenue primarily through the sale and support of EmergisoftED. There can be no assurances that we will be successful in our efforts to sell EmerigisoftED.



We plan to aggressively market our products through direct sales utilizing our sales staff, advertising campaigns and attendance at
tradeshows for emergency department physicians, nurses and hospital information technology professionals.



We have insignificant revenues under contract and no assurances can be given that our revenues will increase to a level that would allow
us to achieve profitability.



Revenues for the
year ended December 31, 2002 were $308,273 compared to $350,081 for the year ended December 31, 2001, a decrease of 12%. The decrease was due primarily to a reduction in



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maintenance fee revenues during the installation process of our new system EmergisoftEDat two of our existing customer sites during the third and fourth quarter of 2002. Contracted maintenance and
support revenue was $297,845 in 2002 compared to $318,361 in 2001. We currently have six clients that have signed contracts for installation of EmerigisoftEDand the continued support and maintenance of the system. These six client contracts require installation in a total of nine hospital locations. We have not recognized license revenue for any of these
contracts and will not recognize revenue until the installation is complete and customer acceptance has been obtained.



Cost of Revenues



Costs of revenues in 2002 were $24,096 compared to $19,585 in 2001.



In the future, we expect additional costs of revenue related to client support and maintenance agreements as
we build a customer base using our products. Most of these costs will be related to increased headcount to staff customer support and technical positions, as well as, installation costs related to sales of EmergisoftED.



General and Administrative Expenses



General and administrative expenses include salaries and benefits, professional services fees, facilities costs, advertising, and other expenses related to operations of our executive, sales and
financial functions.



Our general and
administrative expenses decreased to $3,985,813 in 2002 from $4,024,034 in 2001. The decrease of $38,221 is primarily due to increases in travel expenses of $201,468, advertising expenses of $167,661, utilities of $87,577 and costs related to
transfer agent and shareholder communications of $22,808, offset by a decrease in stock based compensation expense of $528,587.



Development Expenses



Development expenses consist of costs primarily related to the development and testing of our core product EmergisoftED. Product development expenses decreased in 2002 to $1,348,544 from $2,727,307 in 2001. The decrease of $1,378,763
is due primarily to the decreased outside consulting fees of $1,612,399 offset by increased salary and related taxes of $183,716 and expenses related to our offsite data center of $64,000. During 2001, we were completing the development of
EmergisoftEDwith the use of outside contractors. We have completed our initial development of
EmergisoftEDand are now involved in modifications and enhancements of EmerigisoftEDand are focusing our efforts on installations.



Income Taxes



We have provided a valuation allowance of approximately $8.3 million to fully reserve the net deferred tax assets at December 31,
2002, as it is more likely than not that some portion or all of the deferred tax assets will not be realized.



Legal Proceedings



In December 1999, a stockholder and former officer of Emergisoft filed suit in federal court alleging that we were infringing on a copyright for the ICUS database and tool set that he claimed to own personally. Our previous
ICUS-based product offering, now replaced by our EmergisoftEDproduct offering, used ICUS, a proprietary
database. On January 8, 2001, the court granted our motion for summary judgment, dismissing all of the former officers claims. The case was appealed and on March 20, 2003, the United States 5thCircuit Court of Appeals ruled in our favor.



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LIQUIDITY
AND CAPITAL RESOURCES



We have historically
financed our operations primarily through private placements of our common stock and advances from stockholders. At various times since January 1, 2002 through the date of this report, we have issued a total of 18,812,536 common shares in exchange
for $9,600,000 in financing provided by Berlwood Five, Ltd. (Berlwood). On October 24, 2001, we issued 3,750,000 shares of common stock to Berlwood in exchange for $2,000,000 in financing.



In 2001, lines of credit totaling $1,500,000 were made available to us by two of our stockholders. Throughout
2001, we requested and received advances totaling $1,500,000 against the lines of credit. In connection with these advances, warrants were issued allowing the stockholders to purchase in total 300,000 shares of our common stock at prices ranging
from $15 to $30 per share. These warrants terminate on dates ranging from April 30, 2006 to August 3, 2011. The warrants contain a cashless exercise feature and the warrant holders have registration rights. Under the terms of the promissory notes,
all outstanding principal and interest was originally due on April 30, 2002. On October 24, 2001, the two stockholders agreed to extend the maturity on the $1,500,000 indebtedness one year to April 30, 2003. In consideration for the extension, we
reduced the exercise price per share on the warrants issued in connection with the advances from a weighted average exercise price of $18.00 to $0.534. On February 28, 2003, $750,000 of the indebtedness, warrants covering 173,118 shares, and 541,732
shares of our common stock, were repurchased by us for a total of $741,693 in accordance with a Securities Purchase Agreement approved by our Board of Directors. On March 19, 2003, the maturity on the remaining $750,000 indebtedness was extended to
April 30, 2004.



On November 13, 2002 Berlwood
committed to provide additional financing to us of up to $5,000,000. As of March 25, 2003, Berlwood has provided the entire commitment to us.



As of March 26, 2003, we had approximately $3,222,000 in cash and cash equivalents.



We have also historically issued common stock and stock
options to vendors as consideration for goods and services received. In 2002, we issued 50,000 options to acquire common stock to third party vendors. In 2001, we issued to third party vendors, 35,435 shares of common stock and options for 3,400
shares of common stock.



Other than funding our
ongoing operations, including the development of our software products, our primary uses of cash have been to acquire fixed assets and repay our indebtedness. We acquired fixed assets in the amount of $127,715 and $460,175 in 2002 and 2001
respectively. We repaid $210,417 and $182,710 of our indebtedness in 2002 and 2001, respectively.



We utilize significant capital to design, develop and commercialize our products. During 2003, we may need additional capital to further
develop or enhance our current planned product offerings, introduce new products and services, and to address unanticipated competitive threats, technical problems, economic conditions or for other requirements. In addition, we may enter into
discussions to merge with or acquire other companies. Additional financing, if any, may include the issuance of convertible debt, convertible preferred stock, common stock or other equity securities in exchange for a cash investment in us. There can
be no assurance that any such additional financing will be available to us on acceptable terms, or at all. Additional equity financing may involve substantial dilution to our then existing stockholders. In the event we are unable to raise additional
capital, we may be required to substantially reduce or curtail our activities. We believe that our current cash funds of approximately $3,222,000 as of March 26, 2003, plus our cash from projected revenues should be sufficient for the Company to
continue as a going concern for the near term.



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OBLIGATIONS
AND COMMITMENTS



The following table summarizes the
Companys obligations and commitments to be paid in 2003, 2004 and 2005:



|Nature of Commitment              |  | 2003 |         | 2004 |   | 2005   
|--------------------------------- |  | ---- | ------- | ---- | - | -------
|Operating Lease Payments          |  | $    | 397,380 |      | $ | 194,228
|Short Term Debt (See Note 12)     |  |      | 414,862 |      |   |       
|Long Term Debt (See Note 12)      |  |      |        |      |   | 750,000
|                                  |  |      |         |      |   |        
|Total obligations and commitments |  | $    | 812,242 |      | $ | 944,228
|                                  |  |      |         |      |   |        



This table reflects the
subsequent activity described in Note 12 (Subsequent Events) to the Consolidated Financial Statements.



At March 25, 2003, we had no material commitments for capital expenditures.



OTHER MATTERS



In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based Compensation-Transition and Disclosurean
Amendment of FASB Statement No. 123. This standard amends SFAS No. 123, Accounting for Stock-Based Compensation to provide alternative methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation and amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results. This statement is effective for financial statements with fiscal years ending after December 15, 2002 and is effective for financial reports containing condensed financial
statements for interim periods beginning after December 15, 2002 with earlier application permitted. We have adopted the disclosure-only provisions of SFAS No. 148. We plan to begin recording compensation expense for stock options once accounting
standard-setting bodies have issued final accounting standards.



ITEM 7.
Consolidated Financial Statements



Index to Consolidated Financial Statements



Report of Independent Auditors



Consolidated
Balance Sheet



Consolidated Statements of Operations



Consolidated Statements of Changes in Stockholders Equity
(Deficit)



Consolidated Statements of Cash Flows



Notes to Consolidated Financial Statements



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##### Table of Contents



Report of
Independent Auditors



The Board of Directors

Emergisoft Holding, Inc.



We have audited the accompanying consolidated balance sheet of Emergisoft Holding, Inc. and subsidiary as of December 31, 2002, and the related
consolidated statements of operations, stockholders equity (deficit), and cash flows for each of the two years in the period ended December 31, 2002. These financial statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on our audits.



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



In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Emergisoft Holding, Inc. and subsidiary at December 31, 2002, and the consolidated results of their operations and their cash flows for each of the two years in the period ended December
31, 2002, in conformity with accounting principles generally accepted in the United States.



/s/ Ernst & Young LLP



Dallas, Texas

March 27, 2003



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##### Table of Contents



Emergisoft
Holding, Inc. and Subsidiary

Consolidated Balance Sheet



|                                                                                                                    |  | December 31, 2002 |            
|------------------------------------------------------------------------------------------------------------------- |  | ----------------- | -----------
|Assets                                                                                                              |  |                   |            
|Current assets:                                                                                                     |  |                   |            
|                                                                                                                   
|Cash and cash equivalents                                                                                           |  | $                 | 427,331    
|Trade accounts receivable                                                                                           |  |                   | 158,579    
|Prepaid expenses                                                                                                    |  |                   | 103,966    
|Employee advances                                                                                                   |  |                   | 43,000     
|                                                                                                                    |  |                   |            
|Total current assets                                                                                                |  |                   | 732,876    
|                                                                                                                   
|Equipment and fixtures, net                                                                                         |  |                   | 465,539    
|Other assets                                                                                                        |  |                   | 35,221     
|                                                                                                                    |  |                   |            
|Total assets                                                                                                        |  | $                 | 1,233,636  
|                                                                                                                    |  |                   |            
|                                                                                                                   
|Liabilities and Stockholders Equity                                                                                |  |                   |            
|                                                                                                                   
|Current liabilities:                                                                                                |  |                   |            
|                                                                                                                   
|Accounts payable and accrued expenses                                                                               |  | $                 | 539,232    
|Deferred revenue, net of deferred costs                                                                             |  |                   | 106,957    
|Notes payable                                                                                                       |  |                   | 113,990    
|Notes payable with Related Parties, net of discounts                                                                |  |                   | 615,221    
|                                                                                                                    |  |                   |            
|Total current liabilities                                                                                           |  |                   | 1,375,400  
|                                                                                                                   
|Notes payable with Related Parties  long term, net of discounts                                                    |  |                   | 615,222    
|                                                                                                                   
|Commitments and contingencies                                                                                       |  |                   |            
|                                                                                                                   
|Stockholders deficit:                                                                                              |  |                   |            
|Common Stock, $.001 par value, 37,500,000 shares authorized, 16,579,870 issued and
outstanding at December 31, 2002 |  |                   | 16,580     
|Additional capital                                                                                                  |  |                   | 25,388,138 
|Deferred compensation                                                                                               |  |                   | (26,248    
|Accumulated deficit                                                                                                 |  |                   | (26,135,456
|                                                                                                                    |  |                   |            
|Total stockholders deficit                                                                                         |  |                   | (756,986   
|                                                                                                                    |  |                   |            
|Total liabilities and stockholders deficit                                                                         |  | $                 | 1,233,636  
|                                                                                                                    |  |                   |            



See accompanying
notes



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##### Table of Contents



Emergisoft
Holding, Inc. and Subsidiary

Consolidated Statements of Operations



|                                                                             |  | Year Ended December 31 |           
|---------------------------------------------------------------------------- |  | ---------------------- | ----------
|                                                                             |  | 2002                   |           
|                                                                            
|Revenue                                                                      |  | $                      | 308,273   
|                                                                            
|Cost of revenue                                                              |  |                        | 24,096    
|General and administrative                                                   |  |                        | 3,985,813 
|Development                                                                  |  |                        | 1,348,544 
|                                                                             |  |                        |           
|Total operating expenses                                                     |  |                        | 5,358,453 
|                                                                             |  |                        |           
|                                                                            
|Loss from operations                                                         |  |                        | (5,050,180
|Interest income                                                              |  |                        | (10,309   
|Interest expense                                                             |  |                        | 999,318   
|                                                                             |  |                        |           
|                                                                            
|Loss before extraordinary items                                              |  |                        | (6,039,189
|Gain on disposal of asset                                                    |  |                        | (2,325    
|Gain on extinguishment of debt                                               |  |                        |          
|                                                                             |  |                        |           
|Net loss                                                                     |  | $                      | (6,036,864
|                                                                             |  |                        |           
|                                                                            
|Basic and diluted net loss per share                                         |  | $                      | (.51      
|                                                                             |  |                        |           
|Weighted average shares used to compute basic and diluted net loss per
share |  |                        | 11,834,645
|                                                                             |  |                        |           



See accompanying
notes



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##### Table of Contents



Emergisoft
Holding, Inc. and Subsidiary

Consolidated Statements of Changes in Stockholders (Deficit)



|                                                             |  | Common Stock |  | Additional Capital |        |  | Deferred Compensation |            |   | Accumulated Deficit |   |            | Total | 
|------------------------------------------------------------ |  | ------------ |  | ------------------ | ------ |  | --------------------- | ---------- | - | ------------------- | - | ---------- | ----- | 
|                                                             |  | Shares       |  | Par Value          |        |  |                       |           
|Balance at December 31, 2000                                 |  | 2,401,257    |  | $                  | 2,401  |  | $                     | 16,779,594 |   |                     | $ | (1,106,344 | )     | 
|Common stock issued in private placement                     |  | 3,750,000    |  |                    | 3,750  |  |                       | 1,996,250  |   |                     |   |           |       | 
|Common stock issued to vendor for services                   |  | 35,435       |  |                    | 36     |  |                       | 198,718    |   |                     |   |           |       | 
|Common stock issued upon exercise of employee options        |  | 5,063        |  |                    | 5      |  |                       | 6,594      |   |                     |   |           |       | 
|Common stock issued upon conversion of convertible notes     |  | 2,136        |  |                    | 2      |  |                       | 8,543      |   |                     |   |           |       | 
|Value of warrants issued in connection with shareholder loan |  |             |  |                    |       |  |                       | 1,500,000  |   |                     |   |           |       | 
|Stock options issued to vendors for services                 |  |             |  |                    |       |  |                       | 19,757     |   |                     |   |           |       | 
|Deferred compensation related to stock options               |  |             |  |                    |       |  |                       | 6,277      |   |                     |   | (6,277     | )     | 
|Amortization of deferred compensation                        |  |             |  |                    |       |  |                       |           |   |                     |   | 684,001    |       | 
|Net loss                                                     |  |             |  |                    |       |  |                       |           |   |                     |   |           |       | 
|                                                             |  |              |  |                    |        |  |                       |            |   |                     |   |            |       | 
|Balance at December 31, 2001                                 |  | 6,193,891    |  |                    | 6,194  |  |                       | 20,515,733 |   |                     |   | (428,620   | )     | 
|                                                             |  |              |  |                    |        |  |                       |            |   |                     |   |            |       | 
|Common stock issued in private placement                     |  | 10,375,016   |  |                    | 10,375 |  |                       | 5,089,625  |   |                     |   |           |       | 
|Common stock issued upon conversion of convertible notes     |  | 10,963       |  |                    | 11     |  |                       | 7,280      |   |                     |   |           |       | 
|Stock options issued to vendors for services                 |  |             |  |                    |       |  |                       | 45,500     |   |                     |   |           |       | 
|Amortization of deferred compensation                        |  |             |  |                    |       |  |                       | (270,000   | ) |                     |   | 402,372    |       | 
|Net loss                                                     |  |             |  |                    |       |  |                       |           |   |                     |   |           |       | 
|                                                             |  |              |  |                    |        |  |                       |            |   |                     |   |            |       | 
|Balance at December 31, 2002                                 |  | 16,579,870   |  | $                  | 16,580 |  | $                     | 25,388,138 |   |                     | $ | (26,248    | )     | 
|                                                             |  |              |  |                    |        |  |                       |            |   |                     |   |            |       | 



See accompanying
notes



24



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##### Table of Contents



Emergisoft
Holding, Inc. and Subsidiary

Consolidated Statements of Cash Flows



|                                                                                                    |  | 2002 |            |   | 2001 |  
|--------------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | -
|Operating Activities                                                                                |  |      |            |   |      |  
|Net loss                                                                                            |  | $    | (6,036,864 | ) |      | $
|Adjustments to reconcile net loss to net cash used in operating
activities:                         |  |      |            |   |      |  
|Depreciation                                                                                        |  |      | 104,328    |   |      |  
|Amortization of debt discount                                                                       |  |      | 823,041    |   |      |  
|Amortization of deferred compensation                                                               |  |      | 132,372    |   |      |  
|Stock-based expenses for equity issued to vendors for services                                      |  |      | 45,500     |   |      |  
|Gain on extinguishment of debt                                                                      |  |      |           |   |      |  
|Changes in assets and liabilities:                                                                  |  |      |            |   |      |  
|Accounts receivable                                                                                 |  |      | (53,699    | ) |      |  
|Prepaid expenses, employee advances and other assets                                                |  |      | (139,770   | ) |      |  
|Deferred revenue                                                                                    |  |      | (46,846    | ) |      |  
|Accounts payable and accrued expenses                                                               |  |      | 175,892    |   |      |  
|                                                                                                    |  |      |            |   |      |  
|Net cash used in operating activities                                                               |  |      | (4,996,046 | ) |      |  
|                                                                                                   
|Investing Activity                                                                                  |  |      |            |   |      |  
|Purchase of equipment and fixtures                                                                  |  |      | (127,715   | ) |      |  
|                                                                                                    |  |      |            |   |      |  
|Cash used in investing activity                                                                     |  |      | (127,715   | ) |      |  
|                                                                                                   
|Financing Activities                                                                                |  |      |            |   |      |  
|Proceeds from notes payable with Related Parties                                                    |  |      |           |   |      |  
|Proceeds from notes payable                                                                         |  |      |           |   |      |  
|Repayment of notes payable and line of credit                                                       |  |      | (210,417   | ) |      |  
|Proceeds from issuance of common stock and exercise of options                                      |  |      | 5,100,000  |   |      |  
|                                                                                                    |  |      |            |   |      |  
|Net cash provided by financing activities                                                           |  |      | 4,889,583  |   |      |  
|                                                                                                    |  |      |            |   |      |  
|Net decrease in cash and cash equivalents                                                           |  |      | (234,178   | ) |      |  
|Cash and cash equivalents, beginning of year                                                        |  |      | 661,509    |   |      |  
|                                                                                                    |  |      |            |   |      |  
|Cash and cash equivalents, end of year                                                              |  | $    | 427,331    |   |      | $
|                                                                                                    |  |      |            |   |      |  
|                                                                                                   
|Supplemental cash flow information:                                                                 |  |      |            |   |      |  
|Cash paid for interest                                                                              |  | $    | 13,113     |   |      | $
|                                                                                                   
|Non-cash activities:                                                                                |  |      |            |   |      |  
|Deferred stock-based compensation                                                                   |  | $    |           |   |      | $
|Additional capital recorded for fair value of warrants issued to related party note
payable holders |  |      |           |   |      |  
|Stock-based expenses for equity issued to vendors for services                                      |  |      | 45,500     |   |      |  
|Exchange of common stock for note payable                                                           |  |      | 7,291      |   |      |  



See accompanying
notes



25



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##### Table of Contents



Emergisoft
Holding, Inc. and Subsidiary

Notes to Consolidated Financial Statements



Note 1. Basis of Presentation, Organization, Operations, Liquidity and
Reverse Merger



The Company was incorporated
under the laws of the State of Colorado in 1989 but became inactive in July 1997. In 2001, the Company created and later merged with a Nevada subsidiary and became a Nevada corporation.



In May 2001, the Company changed its name from Pierce International Discovery, Inc. to Emergisoft Holding,
Inc. In addition, on May 25, 2001, EMS Acquisition Corp., a Delaware corporation and the Companys wholly-owned subsidiary, merged with and into Emergisoft Holding, Inc., a Delaware corporation. In accordance with an Agreement and Plan of
Merger, the Company issued one share of its common stock in exchange for each one share of Emergisoft common stock outstanding immediately prior to the closing of the transaction. Pursuant to a Share Cancellation Agreement by and between the
Company, Emergisoft and Robert Kropf, the Companys primary stockholder prior to the merger, 1,168,236 of his shares were canceled effective upon the consummation of the merger.



The accompanying consolidated financial statements include the accounts of the Company and its wholly owned
subsidiaries. All significant inter-company transactions and accounts have been eliminated.



On March 13, 2002, the Company declared a 20 for 1 reverse stock split effective March 31, 2002. The effect of this reverse stock split has been retroactively reflected throughout the financial
statements.



Emergisoft develops and markets
software products directly to hospitals and physicians in the United States. Additionally, Emergisoft offers various consulting services to hospitals. The Company has sustained losses for each of the two years in the period ended December 31, 2002,
and has an accumulated deficit of approximately $26.1 million at December 31, 2002.



The Company utilizes significant capital to design, develop and commercialize its products. During 2003, the Company intends to fund the marketing of its products and related operational activities by
utilizing equity lines provided by its major investor Berlwood Five, Ltd. (Berlwood) and cash contributed from operations. On November 13, 2002, Berlwood committed to provide additional financing to the Company of up to $5,000,000. As of March 25,
2003 Berlwood has provided the entire commitment to the Company and the Company has approximately $3,222,000 in cash and cash equivalents at March 26, 2003. As of March 28, 2003 the shareholder owns approximately 95% of the common stock of the
Company and is considered the parent. The Company may need additional capital to further develop or enhance its current planned product offerings, introduce new products and services, and to address unanticipated competitive threats, technical
problems, economic conditions or for other requirements. The Company anticipates that if additional capital is required such financing may include the issuance of convertible debt, convertible preferred stock, common stock or other equity securities
in exchange for a cash investment in the Company. There can be no assurance that any such additional financing will be available to the Company on acceptable terms, or at all. Additional equity financing may involve substantial dilution to the
Companys then existing stockholders. In the event the Company is unable to raise additional capital, the Company may be required to substantially reduce or curtail its activities. The Company believes that its current cash funds of
approximately $3,222,000 as of March 26, 2003, plus its cash from projected revenues should be sufficient for the Company to continue as a going concern for the near term.



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Note 2. Summary of
Significant Accounting Policies



Cash Equivalents



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



Risk Concentration



Financial instruments, which potentially subject the Company to concentrations of credit risk, are primarily cash and cash
equivalents and accounts receivable. The Company places its cash investments in investment-grade, short-term debt securities. The Companys customers consist primarily of large hospitals located throughout the United States. Ongoing credit
evaluations are performed on customers and generally collateral is not required. Reserves are provided for potential credit losses; however; such losses have not been significant and have been within managements expectations.



Equipment and Fixtures



Equipment and fixtures are recorded at cost with depreciation
and amortization provided on a straight-line basis over the estimated useful lives of the assets.



Expenditures for maintenance and repairs, as well as minor renewals, are charged to operations as incurred. Upon retirement or sale of the
asset, the cost of the asset and the related accumulated depreciation are removed from the respective accounts and any resulting gain or loss is included in operations.



Revenue Recognition



Revenues since the Companys inception have been derived from the sale of software licenses, installation of software products,
maintenance fees, and sales of computer hardware.



Revenue for software sales is recognized in accordance with the provisions of American Institute of Certified Public Accountants Statement of Position (SOP) 97-2, Software Revenue Recognition. Under SOP 97-2, software
sales are recognized upon execution of a contract and delivery of software, provided that the license fee is fixed and determinable, no significant production modification or customization of the software is required, and collection is considered
probable by management. In the event that the Company has been contracted to install a combination of hardware and software, revenue for hardware and software sales is deferred until installation is complete. The costs of the hardware installed are
also deferred until installation is complete. The Company provides maintenance services in the form of telephone customer and technical support and software upgrades on its software products as an accommodation to purchasers of these products and as
a means of fostering customer satisfaction. Maintenance revenue is recognized over the term of the maintenance contract, generally four years.



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Deferred Revenue



Deferred revenue represents amounts billed
to customers under terms specified in software licensing, hardware, and maintenance contracts for which completion of contractual terms, delivery or installation of the software has not occurred.



Product Development Costs



Product development costs are expensed as incurred and relate
primarily to the development of new products and the ongoing maintenance of existing products. Software development costs are expensed as incurred until technological feasibility has been established, at which time such costs are capitalized until
the point at which the product is available for general release to customers. Since the Companys inception, the establishment of technological feasibility of products, and the general release of such software have substantially coincided. As a
result, software development costs qualifying for capitalization have been insignificant and, therefore, the Company has historically expensed all software development costs as the costs are incurred.



General and Administrative Expenses



General and administrative expenses represent all corporate
and general support costs, including personnel, outside vendor services, and other overhead costs.



Advertising



Advertising expense is comprised of media, agency, and production expenses. Advertising costs are expensed as incurred and totaled approximately $258,000 and $91,000 for the years ended December 31, 2002 and 2001,
respectively.



Federal Income Taxes



The Company records deferred taxes for the tax effect of
differences between the financial reporting bases and the income tax bases of the Companys assets and liabilities. A valuation allowance is provided for a portion or all of the deferred tax assets when it is more likely than not that some
portion or all of the deferred tax assets will not be realized.



Stock-Based Compensation



The Company accounts for employee stock options in accordance with Accounting Principles Board Opinion No. 25 (APB 25), Accounting for Stock Issued to Employeesand Financial Accounting Standards Board Interpretation No.
44, Accounting for Certain Transactions involving Stock Compensation, an interpretation of APB Opinion No. 25. Under APB 25, the Company recognizes no compensation expense related to employee or director stock options when options are
granted with exercise process at the fair value of the stock on the date of grant.



The Company has adopted the disclosure-only provisions of Statement of Financial Accounting Standards No. 123 (FAS 123), Accounting for Stock-Based Compensation and Statement of Financial
Accounting Standards No. 148 (FAS 148), Accounting for Stock-Based-Compensation  Transition and DisclosureAn Amendment of FASB Statement No. 123.Under the provisions of FAS 123, compensation expense is recognized based on the
fair value of options on the grant date.



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The following table
illustrates the effect on net loss if the Company had applied the fair value recognition provisions of FAS 123 to stock based compensation:



|                                                                                                |  | 2002 |            |   | 2001 |  
|----------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | -
|Net loss, as reported                                                                           |  | $    | (6,036,864 | ) |      | $
|                                                                                               
|Less: Stock based compensation expense determined under the fair-value based method, net
of tax |  |      | (108,070   | ) |      |  
|                                                                                                |  |      |            |   |      |  
|Net loss, pro forma                                                                             |  | $    | (6,144,934 | ) |      | $
|                                                                                                |  |      |            |   |      |  
|Basic and diluted loss per share, as reported                                                   |  | $    | (.51       | ) |      | $
|                                                                                                |  |      |            |   |      |  
|                                                                                               
|Basic and diluted loss per share, pro forma                                                     |  | $    | (.52       | ) |      | $
|                                                                                                |  |      |            |   |      |  



Because options vest
over a period of several years and additional awards are generally made each year, the pro forma information presented above is not necessarily indicative of the effects on reported or pro forma net earnings or losses for future years.



The Company follows the provisions of FAS 123 and Emerging Issues Task Force
No. 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring or in Connection with Selling Goods or Services, for equity instruments granted to non-employees. The Company expenses the fair value of these
equity instruments over the respective vesting term. The Company recorded charges of $177,872 and $902,512 for the years ended December 31, 2002 and December 31, 2001, respectively, relating to equity issued to vendors for services, equity issued to
employees below fair market value, and the amortization of deferred compensation for options granted to employees. In 2002 and 2001, all charges are included in general and administrative expense in the accompanying statements of operations.



Use of Estimates



The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes thereto. Actual results may differ from those estimates.





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Note 3. Equipment and
Fixtures



Equipment and fixtures consists of the following
at December 31, 2002:



|                                                |  | Depreciable Life |  |  
|----------------------------------------------- |  | ---------------- |  | -
|Office computer equipment                       |  | 5 years          |  | $
|Furniture, fixtures, and other office equipment |  | 5  7 years      |  |  
|Leasehold improvements                          |  | 3 years          |  |  
|                                                |  |                  |  |  
|                                                |  |                  |  |  
|                                               
|Less accumulated depreciation and amortization  |  |                  |  |  
|                                                |  |                  |  |  
|Equipment and fixtures, net                     |  |                  |  | $
|                                                |  |                  |  |  



Note 4. Convertible
Debt



In 2002, convertible note holders converted $7,291 in
convertible notes to 10,963 shares of common stock. In 2001, convertible note holders converted $8,545 in convertible notes to 2,136 shares of common stock.



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Note 5. Notes Payable



The Companys notes payable consist of the following
at December 31, 2002:



|Notes payable provided by two shareholders bearing interest at 10%, principal and
interest due April 30, 2003              |  | $ | 1,500,000
|-------------------------------------------------------------------------------------------------------------------------- |  | - | ---------
|Term note payable for asset purchase, bearing interest at 10% per annum and requiring
scheduled payments through July 2003 |  |   | 113,990  
|                                                                                                                           |  |   |          
|                                                                                                                           |  |   | 1,613,990
|                                                                                                                          
|Less:                                                                                                                      |  |   |          
|Unamortized discounts on notes payable                                                                                     |  |   | 269,557  
|Current portion                                                                                                            |  |   | 729,211  
|                                                                                                                           |  |   |          
|Long term portion                                                                                                          |  | $ | 615,222  
|                                                                                                                           |  |   |          



In March
2003, the Company repurchased one of the notes payable with a shareholder and extended the maturity date of the other note payable with a shareholder from April 2003 to April 2004. See Note 12.



Note 6. Stockholders Equity



Common Stock



During 2002, Berlwood Five, Ltd. (Berlwood), a current
shareholder, made additional equity investments in exchange for common stock. At various times, throughout 2002, Berlwood invested a total of $5,100,000 in exchange for 10,375,016 shares of common stock.



On October 24, 2001, Berlwood, a current shareholder, made an
additional $2,000,000 equity investment in exchange for common stock. Berlwood received 3,750,000 newly issued shares of our common stock in the transaction.



In 2002, the Company issued options to purchase 50,000 shares of common stock to certain consultants. In connection with this issuance of
options, the Company recorded charges of $45,500 for the year ended December 31, 2002.



In 2001, the Company issued 35,435 shares of common stock and options to purchase 3,400 shares of common stock to certain vendors and consultants. In connection with these issuances of common stock and
options, the Company recorded charges of $198,754 for the year ended December 31, 2001.



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At December
31, 2002, common stock reserved for future issuance is as follows:



|                                            |  | Shares   
|------------------------------------------- |  | ---------
|Options outstanding and available for grant |  | 3,167,498
|Warrants (see Note 12)                      |  | 324,821  
|                                            |  |          
|Total                                       |  | 3,492,319
|                                            |  |          



Stock Option Plan



During 2002 and 2001, the Company granted
stock options to employees pursuant to its 1998 Incentive Stock Option Plan (the Plan). The Plan, as amended, permits the Company to grant a maximum of 3,125,000 shares of common stock to employees and directors under various stock awards, including
options, at exercise prices not less than the fair market value of the stock at the date of grant as determined by the Companys Board of Directors.





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Stock options
may be exercised over a period not to exceed ten years and generally vest ratably for five years from the date of grant. The changes in all outstanding options are as follows:



|                             |  | Shares Under Option |   |  | Weighted Average Exercise Price Per Share
|---------------------------- |  | ------------------- | - |  | -----------------------------------------
|Balance at December 31, 2000 |  | 352,156             |   |  | $                                        
|Granted                      |  | 21,219              |   |  |                                          
|Exercised                    |  | (2,062              | ) |  |                                          
|Canceled                     |  | (109,613            | ) |  |                                          
|                             |  |                     |   |  |                                          
|Balance at December 31, 2001 |  | 261,700             |   |  |                                          
|Granted                      |  | 1,833,538           |   |  |                                          
|Canceled                     |  | (409,502            | ) |  |                                          
|                             |  |                     |   |  |                                          
|Balance at December 31, 2002 |  | 1,685,736           |   |  | $                                        
|                             |  |                     |   |  |                                          



Options
to purchase 572,056 shares were exercisable as of December 31, 2002, with a weighted average exercise price of $1.41. Options to purchase 153,797 shares were exercisable as of December 31, 2001, with a weighted average exercise price of $6.60.



The following table summarizes the number of
options, the exercise prices, and the weighted average remaining life of all options outstanding at December 31, 2002:



|Exercise Price |  | Number of Options Outstanding |  | Weighted Average Remaining Life
|-------------- |  | ----------------------------- |  | -------------------------------
|$    .76       |  | 1,510,000                     |  | 9.6 years                      
|1.20           |  | 44,075                        |  | 6.2 years                      
|2.90           |  | 74,250                        |  | 9.1 years                      
|8.00           |  | 4,788                         |  | 7.0 years                      
|12.80          |  | 49,498                        |  | 7.7 years                      
|16.00          |  | 3,125                         |  | 7.1 years                      
|               |  |                               |  |                                
|               |  | 1,685,736                     |  |                                
|               |  |                               |  |                                



Certain
employees and consultants of the Company have been granted options under the Plan to purchase shares of the Companys common stock at less than fair value. Options to acquire 50,000 and 900 shares of common stock were issued in 2002 and 2001,
respectively, with exercise prices less than the fair market value at the date of grant. In February 1999, the exercise price for all previously issued options was reduced from $8.00 to $1.20. Options to acquire 9,375 shares of stock were exercised
immediately. Options to acquire 1,939 shares of common stock remain outstanding at December 31, 2002 and are subject to variable accounting as a result of the re-pricing activity. The Company recorded deferred stock compensation related to options
issued to employees of $0 and $6,277 for the years ended December 31, 2002 and 2001, respectively, for the difference between the exercise price and the fair market value of the Companys common stock underlying certain options granted. The
deferred stock compensation recorded in 2002 and 2001 includes the effects of adjusting the re-priced options to fair market value as of the earlier of the date of exercise or the respective year-end. Deferred stock compensation is being amortized
over the vesting period for the individual options, which range from immediate to five years. The amortization of deferred compensation for options issued to employees



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totaled $132,372 and $684,001 for the years ended December 31, 2002 and 2001, respectively. The Company
also recorded charges of $45,500 and $16,723 for the years ended December 31, 2002 and 2001, respectively, relating to options issued to non-employees for goods and services. The options issued to non-employees were fully vested at the date of
grant.



Pro forma information regarding net loss
and loss per share has been determined as if the Company had accounted for its employee stock options under the fair value method of SFAS No. 123, Accounting for Stock-Based Compensation. The fair value of those options was
estimated at the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions for 2002 and 2001, respectively: risk-free interest rates of 5% and 6%, respectively; dividend yields of 0%; volatility factors
of the expected market prices of the Companys common stock of .80 and weighted average expected lives of options of approximately five years.



See Note 2 for the pro forma effects on net loss and net loss per share of SFAS No. 123 for the years 2002 and 2001.



In December 2001, the Emergisoft Board of Directors approved
the 2001 Non-Employee Director Stock Option Plan and the 2001 Employee Stock Option Plan. These two new option pools made a total of 1,025,000 options to purchase common stock available for grant.



On July 19, 2002, the Emergisoft Board of Directors approved
an increase in the number of registered shares available for issuance under the 2001 Employee Stock Option Plan from 900,000 shares to 3,000,000 common shares. This increase of 2,100,000 shares is subject to shareholder approval.



Note 7. Net Loss Per Common Share  Basic and Diluted



Basic and diluted net loss per share is
computed by dividing net loss by the weighted average number of common shares outstanding during the period.



|                                           |  | Year Ended December 31, |           
|------------------------------------------ |  | ----------------------- | ----------
|                                           |  | 2002                    |           
|Net loss                                   |  | $                       | (6,036,864
|Basic and diluted:                         |  |                         |           
|Weighted average common shares outstanding |  |                         | 11,834,635
|                                           |  |                         |           
|Basic and diluted net loss per share       |  | $                       | (.51      
|                                           |  |                         |           



The
Company has excluded the impact of all warrants for common stock and outstanding stock options from the calculation of diluted loss per common share because all such securities are anti-dilutive for all periods presented.



Note 8. Commitments and Contingencies



Leases



The Company rents and leases its facilities and certain computer hardware. Certain leases include options for
renewal or purchase and contain clauses for payment of real estate taxes and insurance. In most cases, management believes that, in the normal course of business, leases will be renewed or



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replaced by other leases. Rental expense was approximately $174,377 and $169,498 for the years ended
December 31, 2002 and 2001, respectively.



The
following are the minimum lease payments under non-cancelable operating leases as of December 31, 2002:



|2003 |  | $ | 397,380
|---- |  | - | -------
|2004 |  |   | 194,228
|2005 |  |   | 100,564
|     |  |   |        
|     |  | $ | 692,172
|     |  |   |        



Legal Proceedings



In December 1999, a stockholder and former
officer of Emergisoft filed suit in federal court alleging that we were infringing on a copyright for the ICUS database and tool set that he claimed to own personally. Our previous ICUS-based product offering, now replaced by our EmergisoftEDproduct offering, used ICUS, a proprietary database. On January 8, 2001, the court granted our motion for summary
judgment, dismissing all of the former officers claims. The case was appealed and on March 20, 2003, the United States 5thCircuit Court of Appeals ruled in our favor.



Note 9. Income Taxes



The
differences between the actual income tax benefit and the amount computed by applying the statutory federal tax rate to the loss before income taxes are as follows:



|                                           |  | Years Ended December 31 |           
|------------------------------------------ |  | ----------------------- | ----------
|                                           |  | 2002                    |           
|Benefit computed at federal statutory rate |  | $                       | (2,052,534
|Permanent differences                      |  |                         | 8,346     
|Other                                      |  |                         |          
|Increase in valuation allowance            |  |                         | 2,044,188 
|                                           |  |                         |           
|Total                                      |  | $                       |          
|                                           |  |                         |           



The Companys
deferred tax assets and liabilities as of December 31, 2002, are as follows:



|Deferred tax assets:                            |  |   |            |  
|----------------------------------------------- |  | - | ---------- | -
|Change in accounting method                     |  | $ | 98,128     |  
|Deferred compensation expense                   |  |   | 2,174,407  |  
|Other                                           |  |   | 8,804      |  
|Net operating loss carryforwards                |  |   | 5,983,127  |  
|                                                |  |   |            |  
|Total deferred tax assets                       |  |   | 8,264,466  |  
|Valuation allowance for deferred tax assets     |  |   | (8,264,466 | )
|                                                |  |   |            |  
|Deferred tax assets, net of valuation allowance |  | $ |           |  
|                                                |  |   |            |  



At
December 31, 2002 the Company has approximately $17.6 million of federal net operating loss carryforwards that begin to expire in 2018.



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At December
31, 2002, the Company has recorded a valuation allowance against its net deferred tax assets because management believes that, after considering all the available objective evidence, the realization of the assets is not reasonably assured. To the
extent that net operating loss carryforwards, when realized, relate to stock option deductions, the resulting benefits will be credited to stockholders equity. In addition, in connection with the equity transactions that have taken place since
January 1, 1998, the Company has experienced a change in control pursuant to Internal Revenue Code Section 382. As such, the net operating loss carryforward will be limited as to its possible use in future periods.



Note 10. Related Party Transactions



In October of 2002, the Company paid a director $10,000 in
exchange for consulting services.



In April of
2001, lines of credit totaling $1,500,000 were made available to the Company by two of its stockholders. On August 7, 2001 the Company requested and received advances totaling $300,000 against the lines of credit. In connection with these advances,
warrants were issued allowing the stockholders to purchase in total 60,000 shares of common stock at $30.00 per share. These warrants terminate on August 3, 2011. Throughout the remainder of the third quarter of 2001, the Company requested and
received advances against the lines of credit totaling $1,050,000. In connection with these advances, warrants were issued allowing the stockholders to purchase in total 210,000 shares of common stock at $15.00 per share. These warrants have a
termination date of April 30, 2006. The warrants contain a cashless exercise feature and the warrant holders have registration rights. Under the terms of the promissory notes all outstanding principal and interest was to be due on April 30, 2002.
The remaining available credit of $150,000 was advanced in October of 2001. The advance in October 2001 brought the total due in connection with the promissory notes to $1,500,000 and the total number of shares subject to warrants issued in
connection with the lines of credit to 300,000.



On October 24, 2001 the two stockholders agreed to extend the maturity on the $1,500,000 indebtedness one year to April 30, 2003. In consideration for the extension, the Company reduced the exercise price per share on the warrants
issued in connection with the advances from a weighted average exercise price of $18.00 to $0.534. The fair value of the warrants of $1,500,000 was determined using the Black-Scholes method and was recorded as a credit to additional capital and is
being recognized as additional interest expense over the term of the notes payable.



In March 2003, the Company repurchased one of the notes payable with a shareholder and extended the maturity date of the other note payable with a shareholder from April 2003 to April 2004. See Note
12.



Note 11. Gain on Extinguishment of Debt



In February 1999, a settlement agreement was entered into
with a customer involving a claim for refund of license fees paid to Emergisoft whereby Emergisoft agreed to pay the customer a total of $342,000 plus interest of 6%. At December 31, 2000 the outstanding balance of the note payable was $283,312 plus
accrued interest. On June 12, 2001, the Company and the former customer signed an agreement to mutually release all claims in consideration for $54,000 to be paid by Emergisoft to the former customer. As a result, a gain on extinguishment of debt of
$196,132 was recorded in 2001.



Note 12. Subsequent Events



On March 25, 2003, the Company issued
5,531,388 shares of common stock in exchange for $2,950,000 in accordance with the November 13, 2002 financing commitment provided by Berlwood.



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On March 19,
2003, Berlwood agreed to extend the maturity dates of its notes payable totaling $750,000 from April 30, 2003 to April 30, 2004. In exchange, the Company agreed to cause each of its subsidiaries, Emergisoft Holding, Inc., a Delaware corporation, and
Emergisoft Corporation, a Delaware corporation, to guarantee the payment of the notes payable and to pledge all of their assets as security for the notes payable.



On March 11, 2003, the Company issued 281,251 shares of common stock in exchange for $150,000 in accordance
with the November 13, 2002 financing commitment provided by Berlwood.



On February 24, 2003, the Company entered into a Securities Purchase Agreement with four holders of its securities. Under that agreement:



| |  |  | The Company purchased from one holder of our securities, for a total consideration of $105,000: a warrant to purchase common stock that entitled the holder to
purchase up to 30,000 shares of the Companys common stock; a warrant to purchase common stock that entitled the holder to purchase up to 23,118 shares of the Companys common stock; and a note payable representing $150,000 in principal
amount of indebtedness, plus accrued and unpaid interest, owed to the holder;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Company purchased from another holder of our securities, for a total consideration of $420,000: a warrant to purchase common stock that entitled the holder to
buy 120,000 shares of the Companys common stock; and a note payable representing $600,000 in principal amount of indebtedness, plus accrued and unpaid interest, owed to the holder; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Company purchased from the other two holders, for a total consideration of $216,693, 541,732 of its shares of common stock.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------



To finance the repurchase of these securities under the
Securities Purchase Agreement and to obtain additional working capital, the Company issued 1,875,005 shares of its common stock to Berlwood for $1,000,000, or a per share purchase price of approximately $0.53.



On February 7, 2003, the Company issued 375,001 shares of its
common stock in exchange for $200,000 in accordance with the November 13, 2002 financing commitment provided by Berlwood.



On each of January 27, 2003 and January 29, 2003, the Company issued 187,500 shares of its common stock in exchange for $100,000 in
accordance with the November 13, 2002 financing commitment provided by Berlwood.



ITEM 8.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosures



None.



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Part III



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



DIRECTORS



The following table sets forth the names, ages as of December 31, 2002, and principal occupations of our directors, other directorships in
certain companies held by them and the date of their first service as a director of ours. Each such person has continuously served as a director since the date of his first service. Additional information concerning each director follows the table.



|Name              |  | Principal Occupation and Directorships                                 |  | Director Since |  | Age
|----------------- |  | ---------------------------------------------------------------------- |  | -------------- |  | ---
|                 
|Christopher Assif |  | CEO of Epigraph and Director                                           |  | 10/14/02       |  | 41 
|                 
|Ash Huzenlaub     |  | Chairman of the Board, President, Chief Executive Officer and Director |  | 5/29/02        |  | 27 
|                 
|Jeff McCurdy      |  | Attorney in Private Practice and Director                              |  | 8/29/01        |  | 29 
|                 
|Jim Ross          |  | Attorney in Private Practice and Director                              |  | 11/2/01        |  | 42 
|                 
|Jason Sear        |  | Financial Manager of Berlwood Five, Ltd. and Director                  |  | 5/25/01        |  | 35 



Each of
the directors has been engaged in the principal occupation set forth opposite his name for at least the past five years except as described below.



CHRISTOPHER ASSIF brings nineteen years of experience in enterprise software, clinical information systems, systems integration,
e-business services, and telecommunications along with significant industry knowledge in insurance, retail and healthcare to his role as one of our directors. Mr. Assif is currently the CEO of Epigraph, a leading provider of business ready
self service software helping organizations connect suppliers, partners, dealers and customers. During his career, Mr. Assif has held executive management, business development, product engineering, system implementation and sales/marketing
positions with several firms including two Fortune 30 companiesBaxter International (NYSE:BAX) and Ameritech, now a division of SBC Communications (NYSE:SBC). Immediately prior to his role with Epigraph, Mr. Assif was CEO and a member of the
board of directors of Dynamic Healthcare Technologies Inc., a NASDAQ listed clinical and diagnostic workflow solutions system provider. The company, which serviced more than 640 client sites worldwide, merged with Cerner Corporation (NASDAQ: CERN)
in December 2001



ASH HUZENLAUBjoined us
as our Chairman, President and CEO on May 29, 2002. Mr. Huzenlaub has been associated with us for the past two and a half years, most recently as an independent director. Prior to joining us, Mr. Huzenlaub was employed by Berlwood Five, Ltd., an
Arlington, Texas based investment group. Prior to his engagement by Berlwood, he was employed by Woodcrest Capital, L.L.C., a Fort Worth based investment company. Mr. Huzenlaub serves as an advisor to the Texas Christian University Neeley School of
Business and is past President and Chairman of the Texas Run To



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The Cross (2000-2002), a benefit for Texas youth projects. He is also a member of the National Eagle Scout
Association. Mr. Huzenlaub graduated in 1998 with a BBA in Finance and Marketing, with an emphasis in Entrepreneurship, from Texas Christian University. He was a four year distance runner for Texas Christian University Track & Field and a
Letterman. He completed the Leadership Studies program at Regents College, London, England, and attended the Caruth Entrepreneurship Center Certification program at Southern Methodist University.



JEFF MCCURDYis a representative of Berlwood
Five, Ltd. He graduated from Texas Christian University with a Bachelors of Science in 1997 and earned his Doctorate of Jurisprudence from Texas Wesleyan University in 2001. Mr. McCurdy is currently a partner in the law firm of McCurdy &
McCurdy. Mr. McCurdy is active in a number of other investments and is a resident of North Texas.



JIM ROSS is a former Marine with nearly 13 years of law enforcement experience at the local and federal levels. He is currently a
personal injury attorney in private practice in Arlington, Texas. He earned a Bachelor Degree from Dallas Baptist University and a Juris Doctor Degree from Texas Wesleyan University School of Law in 1998. He is a member of the American Bar
Association, American Trial Lawyers Association, Texas Trial Lawyers Association, College of the Texas State Bar and Tarrant County Bar Association.



JASON SEARa partner of Berlwood Five, Ltd., is involved in several local and nationwide business enterprises as an investor and
executive team member. Educated in economics at the University of St. Thomas, Mr. Sear sits on several boards of non-reporting companies and oversees the financial management of a variety of partnerships and corporations, primarily related to real
estate investment, corporate development and business finance.



EXECUTIVE OFFICERS



The
following information is provided with respect to our current executive officers.



|Name          |  | Age |  | Position(s) Held with Emergisoft                                      
|------------- |  | --- |  | ----------------------------------------------------------------------
|             
|Ash Huzenlaub |  | 27  |  | Chairman of the Board, President, Chief Executive Officer and Director
|             
|Ann Crossman  |  | 39  |  | Controller and Treasurer                                              



ANN
CROSSMAN joined us in August 2000 and is responsible for the management and compliance of our corporate accounting, financial reporting, and forecasting and planning functions. Prior to joining us, she served as the Controller of Adams
Laboratories, Inc., a privately held pharmaceutical manufacturer. Ms. Crossman has over 16 years of accounting experience, is a Certified Public Accountant (CPA) and holds a Bachelor of Business Administration degree in Accounting from Stephen F.
Austin State University.



FAMILY RELATIONSHIPS



Jeff McCurdy and Jason Sear are
brothers-in-law.



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SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE



Compliance with Section 16(a) of the 1934 Act requires our officers and directors, and persons who own more than ten percent of a registered class of our equity securities, to file reports of ownership and changes in ownership with
the Securities and Exchange Commission, or SEC. Officers, directors and greater than ten percent stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.



Based solely on a review of the copies of such forms furnished
to us during, and with respect to, fiscal 2002, we believe that during fiscal 2002 all Section 16(a) filing requirements applicable to our officers, directors and greater than ten percent beneficial owners were in compliance with Section 16(a) with
the exception of the following transactions:



| |  |  | On February 15, 2002, Berlwood Five, Ltd. purchased 3,750,000 shares of common stock and filed the applicable Form 4 one day late on March 11, 2002. Berlwood Three,
LLC also reported its indirect acquisition of these 3,750,000 shares a day late on March 11, 2002.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Berlwood Three, LLC failed to report its indirect acquisition, through Berlwood Five, Ltd., of 1,875,005 shares of common stock on September 19, 2002; 937,503 shares
of common stock on November 13, 2002; and 937,503 shares of common stock on December 23, 2002 on a Form 4 until December 30, 2002.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On March 1, 2002, John Flynn, who owned shares of common stock and options on shares of common stock, was elected an officer of the Company and failed to file a Form
3 until August 2, 2002.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On January 1, 2002, Cameron Ware, then a director of the Company, acquired an option to acquire 2,500 shares of common stock and this acquisition was not reported on
a Form 4 until May 16, 2002. On February 28, 2002, Mr. Wares term as officer of Infosphere Incorporated, a company that directly owned 2,386,048 shares of our common stock, ended. Mr. Ware failed to file a Form 4 reporting that he no longer
indirectly owned these 2,386,048 shares until March 11, 2002.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



ITEM 10.
Executive Compensation



The following Summary Compensation Table sets forth the annual and long-term compensation for our Chief Executive Officer and our two most highly compensated executive officers other than the Chief Executive Officer. No other
executive employed by the Company received salary and bonus in excess of $100,000 during 2002. The following table sets forth all plan and non-plan compensation awarded to, earned by, or paid to the indicated executive officers. No executive officer
received any form of compensation from the company or any third party during their employment with the company that is not described in the table below.



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Summary Compensation



|                                                                                  |  | Year           |            | Annual Compensation    |           | Long Term Compensation Awards |                               | All Other Compensation ($) |                            
|--------------------------------------------------------------------------------- |  | -------------- | ---------- | ---------------------- | --------- | ----------------------------- | ----------------------------- | -------------------------- | ---------------------------
|Name and Principal Position                                                       |  |                | Salary ($) |                        | Bonus ($) |                               | Other Annual Compensation ($) |                            | Restricted Stock Awards ($)
|                                                                                 
|Ash Huzenlaub (1)Chairman of the Board, Chief Executive Officer and President     |  | 2000 2001 2002 |            |   61,410             |           |                            |                               |                         |                            
|                                                                                 
|Dan Witte (2) Former Chairman of the Board, Chief Executive Officer and President |  | 2000 2001 2002 |            | 128,500 159,375 82,381 |           |                            |                               |                         |                            
|                                                                                 
|Jay Flynn (3) Vice President of National Sales                                    |  | 2000 2001 2002 |            |   120,000            |           |   125,000                   |                               |                         |                            

---

|(1) |  | Ash Huzenlaub was elected our Chief Executive Officer and President on May 29, 2002.
|--- |  | ------------------------------------------------------------------------------------

|(2) |  | Dan Witte was elected our Chief Executive Officer and President in November 2001 and served in this capacity until his resignation in May 2002.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | Jay Flynn was elected our Vice President of National Sales in February 2002 and served as our Vice President through December 2002. He is now employed as a Senior
Territory Director and, as of January 1, 2003, is no longer an officer of ours.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) |  | Mr. Witte received $48,750 in severance compensation upon his resignation in May 2002.
|--- |  | --------------------------------------------------------------------------------------



Stock Options Granted in 2002



The following table contains information concerning stock option grants made by us to the executive officers named in the
Summary Compensation Table appearing above during the fiscal year ended December 31, 2002. No stock appreciation rights were granted to individuals during 2002. Each option has a maximum term of either 5 or 10 years, as indicated, subject to earlier
termination in the event of the option holders cessation of employment with us.



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|Name              |  | Number of Securities Underlying Options Granted |  | % of Total Options Granted to Employees in 2002(1) |   |  | Exercise Price per Share ($) |  | Expiration Date
|----------------- |  | ----------------------------------------------- |  | -------------------------------------------------- | - |  | ---------------------------- |  | ---------------
|                 
|Ash Huzenlaub (2) |  | 650,000                                         |  | 37                                                 | % |  | .76                          |  | 8/1/07         
|                 
|Dan Witte (3)     |  |                                                |  |                                                   |   |  |                             |  |               
|                 
|Jay Flynn (4)     |  | 500,000                                         |  | 28                                                 | % |  | .76                          |  | 8/1/07         

---

|(1) |  | The aggregate number of options granted to employees in 2002 was 1,771,038.
|--- |  | ---------------------------------------------------------------------------

|(2) |  | The options vest as to 250,000 option shares on August 1, 2002, then 100,000 shares each year thereafter
|--- |  | --------------------------------------------------------------------------------------------------------

|(3) |  | Mr. Witte was not granted any stock options in 2002.
|--- |  | ----------------------------------------------------

|(4) |  | The options vest as to one-fifth of the option shares on each of August 1, 2002; August 1, 2003; August 1, 2004; August 1, 2005 and August 1, 2006.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------



Aggregated Option Exercises and Fiscal Year-End
Option Values



The following table contains
certain information concerning the value of unexercised options at December 31, 2002.



|
|

|              |  | Shares Acquired on Exercise (#) |  | Value Realized |  | Number of Securities Underlying Unexercised Options at December 31,
2002 |  | Value of Unexercised In-The-Money Options at December 31, 2002
(1)
|------------- |  | ------------------------------- |  | -------------- |  | ------------------------------------------------------------------------ |  | ------------------------------------------------------------------
|Name          |  |                                 |  | Exercisable    |  | Unexercisable                                                            |  | Exercisable ($)                                                   
|             
|Ash Huzenlaub |  |                                |  |               |  | 250,000                                                                  |  | 400,000                                                           
|             
|Dan Witte (2) |  |                                |  |               |  |                                                                         |  |                                                                  
|             
|Jay Flynn     |  |                                |  |               |  | 100,000                                                                  |  | 400,000                                                           

---

|(1) |  | The fair market value of the options does not exceed the exercise price of the options.
|--- |  | ---------------------------------------------------------------------------------------

|(2) |  | Mr. Wittes options were terminated upon his resignation as one of our officers.
|--- |  | --------------------------------------------------------------------------------





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



The following table sets forth certain information regarding beneficial ownership of common stock as of March 25, 2003 (unless otherwise
indicated) by:



| |  |  | each of our directors;
| | - |  | ----------------------

| |  |  | our Chief Executive Officer and our other most highly compensated executive officer;
| | - |  | ------------------------------------------------------------------------------------

| |  |  | all executive officers and directors as a group; and
| | - |  | ----------------------------------------------------

| |  |  | each person known by us to own beneficially five percent or more of our outstanding common stock.
| | - |  | -------------------------------------------------------------------------------------------------



|Directors, Executive Officers and 5% Shareholders |  | Beneficial Share Ownership | 
|------------------------------------------------- |  | -------------------------- | 
|Directors                                         |  | Number of Shares           | 
|                                                 
|Ash Huzenlaub (1)                                 |  | 308,602                    | 
|Christopher Assif (2)                             |  | 50,000                     | 
|Jeff McCurdy (3)                                  |  | 2,500                      | 
|Jim Ross (4)                                      |  | 2,500                      | 
|Jason Sear (5)                                    |  | 2,500                      | 
|                                                 
|Executive Officers not named above                |  |                            | 
|                                                 
|Jay Flynn (6)                                     |  | 103,000                    | 
|Ann Crossman (7)                                  |  | 4,250                      | 
|                                                 
|Directors and executive officers as a
group       |  | 392,019                    | 
|                                                 
|Holders of 5% or more not named above             |  |                            | 
|Berlwood Five, Ltd. (8)                           |  | 23,500,913                 | 
|Berlwood Three, L.L.C. (9)                        |  | 23,500,913                 | 

---

|* |  | Indicates less than 1%
|- |  | ----------------------

|(1) |  | Includes 250,000 shares of common stock issuable upon exercise of options.
|--- |  | --------------------------------------------------------------------------

|(2) |  | Includes 50,000 shares of common stock issuable upon exercise of options.
|--- |  | -------------------------------------------------------------------------

|(3) |  | Includes 2,500 shares of common stock issuable upon exercise of options.
|--- |  | ------------------------------------------------------------------------

|(4) |  | Includes 2,500 shares of common stock issuable upon exercise of options.
|--- |  | ------------------------------------------------------------------------

|(5) |  | Includes 2,500 shares of common stock issuable upon exercise of options.
|--- |  | ------------------------------------------------------------------------

|(6) |  | Includes 100,000 shares of common stock issuable upon exercise of options.
|--- |  | --------------------------------------------------------------------------

|(7) |  | Includes 4,250 shares of common stock issuable upon exercise of options.
|--- |  | ------------------------------------------------------------------------

|(8) |  | The address of Berlwood Five, Ltd. is 1201 North Watson Road, Suite 100, Arlington, Texas 76006. Includes 150,000 shares of common stock issuable upon exercise of
warrants.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) |  | The address of Berlwood Three, L.L.C. is 1201 North Watson Road, Suite 100, Arlington, Texas 76006. Includes 150,000 shares of common stock issuable upon exercise of
warrants. Berlwood Three, L.L.C. is the general partner of Berlwood Five, Ltd.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



ITEM 12.
Certain Relationships and Related Transactions



On August 3, 2001, Berlwood Five, Ltd. advanced $150,000 to us and received a promissory note and a warrant to purchase up to 30,000 shares of our common stock, at an exercise price of $30.00 per



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share, at any time on or before August 3, 2011. Under the terms of the promissory note, all outstanding
principal and interest was to become due on April 20, 2002.



On August 29, 2001, we requested advances from Berlwood and Berlwood agreed to advance $600,000 to us under a new promissory note secured by all or our assets. In addition, we delivered a warrant to Berlwood to purchase up to 120,000
shares of our common stock, at an exercise price of $15.00 per share, at any time on or before April 30, 2006.



On October 25, 2001, Berlwood made a $2,000,000 equity investment in us and received 3,750,000 newly issued shares of our common stock. We
had the right, but not the obligation, to repurchase all or any portion of the 3,750,000 shares at a repurchase price per share of $.06, exercisable at any time prior to October 25, 2002.



Also on October 25, 2001, Berlwood extended the maturity date on our indebtedness described above to April
30, 2003. In consideration for the extension, we reduced the exercise price per share on warrants issued to Berlwood to acquire up to a total of 150,000 shares of our common stock from a weighted average exercise price per share of $.90 to $.0267.



On February 15, 2002, Berlwood made an
additional $2,000,000 equity investment in us and received 3,750,000 newly issued shares of our common stock. We had the right, but not the obligation, to repurchase all or any portion of the 3,750,000 shares at any time prior to February 15, 2003.
The repurchase price was $1.20 per share if the shares were repurchased prior to October 24, 2002 and $2.40 if the shares were repurchased on or after October 24, 2002.



On March 31, 2002, we decreased the number of its authorized shares to 37,500,000 and effected a
twenty-for-one reverse stock split of its issued and outstanding shares of common stock.



On April 1, 2002, in consideration for a financing commitment by Berlwood made on March 28, 2002, we issued 1,000,000 shares of our common stock to Berlwood for $100,000.



On June 26, 2002, we issued 1,875,005 shares of our common
stock to Berlwood for $1,000,000.



On September
19, 2002, we issued 1,875,005 shares of our common stock to Berlwood for $1,000,000.



On November 13, 2002, we issued 937,503 shares of our common stock to Berlwood for $500,000



On December 23, 2002, we issued 937,503 shares of our common stock to Berlwood for $500,000.



In October 2002, we paid our director, Cris Assif, $10,000 in
business consulting fees.



ITEM 13.
Exhibits and Reports on Form 8-K



|(a) |  | The following documents are filed as part of this report:
|--- |  | ---------------------------------------------------------



| | 1. |  | Financial Statements:
| | -- |  | ---------------------



The following financial statements of Emergisoft and the Report of Emergisofts Independent Public Accountants are included on pages
20 through 25 of this Form 10-K.



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Index to Consolidated
Financial Statements



Report of Independent Auditors



Consolidated Balance Sheet



Consolidated Statements of Operations



Consolidated Statements of Changes in Stockholders Equity (Deficit)



Consolidated Statements of Cash Flows



| | 2. |  | Exhibits
| | -- |  | --------



|Exhibit No. |  | Sequential Description                                                                                                                                                                                                                                                                                                                    
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|           
|2.1         |  | Agreement and Plan of Merger, dated March 28, 2001, among Emergisoft Holding, Inc., a Nevada corporation (f/k/a Pierce
International Discovery, Inc.), EMS Acquisition Corp. and Emergisoft Holding, Inc., a Delaware corporation (filed as Exhibit 2.1 to Emergisofts Form 8-K filed June 4, 2001 and incorporated herein by reference).
|           
|3.1         |  | Articles of Incorporation of Emergisoft Holding, Inc. (filed as Exhibit 3.1 to Emergisofts Form 8K-A filed
August 2, 2001 and incorporated herein by reference).                                                                                                                                                                         
|           
|3.2         |  | Articles of Amendment to the Articles of Incorporation, dated May 9, 1999 (filed as Exhibit 3.2 to Emergisofts
Form 8K-A filed August 2, 2001 and incorporated herein by reference).                                                                                                                                                     
|           
|3.4         |  | Articles of Amendment to the Articles of Incorporation, dated January 17, 2001 (filed as Exhibit 3.4 to
Emergisofts Form 8K-A filed August 2, 2001 and incorporated herein by reference).                                                                                                                                                
|           
|3.5         |  | Bylaws of Emergisoft Holding, Inc. (filed as Exhibit 3.5 to Emergisofts Form 8K-A filed August 2, 2001 and
incorporated herein by reference).                                                                                                                                                                                            
|           
|4.1         |  | Investment Letter and Grant of Repurchase Right, dated October 24, 2001 (filed as Exhibit 4.1 to Emergisofts
Form 8-K filed November 8, 2001 and incorporated herein by reference).                                                                                                                                                      
|           
|4.2         |  | Letter Agreement between Berlwood Five, Ltd. and Emergisoft Holding, Inc., dated October 24, 2001 (filed as Exhibit
4.2 to Emergisofts Form 8-K filed November 8, 2001 and incorporated herein by reference).                                                                                                                            
|           
|4.3         |  | Letter Agreement between Woodcrest Capital LLC, Westpoint Investors Limited Partnership and Emergisoft Holding, Inc.,
dated October 24, 2001 (filed as Exhibit 4.3 to Emergisofts Form 8-K filed November 8, 2001 and incorporated herein by reference).                                                                                 
|           
|+10.1       |  | Emergisoft Holding, Inc. 2001 Stock Incentive Plan (filed as exhibit 10.1 to Emergisofts Form 10K-SB filed on
April 1, 2002 and incorporated herein by reference).                                                                                                                                                                       
|           
|+10.2       |  | Emergisoft Holding, Inc. 2001 Non-Employee Director Stock Option Plan (filed as exhibit 10.2 to Emergisofts Form
10K-SB filed on April 1, 2002 and incorporated herein by reference).                                                                                                                                                    
|           
|10.3        |  | Financing Commitment by Berlwood Five, Ltd., dated November 13, 2002 (filed as exhibit 10.3 to Emergisofts Form
10Q-SB filed on November 14, 2002 and incorporated herein by reference).                                                                                                                                                 



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|    
|----
|23.1
|    
|99.1
|    
|99.2

---

|+ |  | Identifies management contracts and compensatory plans or arrangements.
|- |  | -----------------------------------------------------------------------



|(b) |  | We filed the following reports on Form 8-K during the year ended December 31, 2002:
|--- |  | -----------------------------------------------------------------------------------



On February 15, 2002 we reported that Berlwood Five, Ltd., a current shareholder of ours, made an additional
$2,000,000 equity investment in us on February 15, 2002. Berlwood Five, Ltd. received 3,750,000 newly issued shares of our common stock in the transaction. It used private funds to pay the consideration for the shares. We have the right, but not the
obligation, to repurchase all or any portion of the 3,750,000 shares at a repurchase price per share of $1.20, exercisable at any time prior to October 24, 2002. On or after October 24, 2002, we have the right, but not the obligation, to repurchase
all or any portion of the 3,750,000 shares at a repurchase price per share of $2.40, exercisable at any time prior to February 15, 2003.



On April 8, 2002 we announced that on March 28, 2002, Berlwood Five, Ltd. agreed to a financing commitment of $2,500,000. In the same
report we announced our trading symbol changed due to the reverse split on March 31, 2002.



On July 10, 2002, we announced that Berlwood Five, Ltd. made an additional $1,000,000 investment in us on June 28, 2002. Berlwood received 1,875,005 shares of our common stock in the transaction.



On September 19, 2002 we announced that Berlwood
Five, Ltd. made an additional $1,000,000 investment in us on September 19, 2002. Berlwood received 1,875,005 shares of our common stock in the transaction.



ITEM 14.
Controls and Procedures



As required by new Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the Exchange Act) within 90 days prior to the date of filing this report, the Company carried out an evaluation, under the supervision
and with the participation of the Companys management, including the Companys Chief Executive Officer and Controller, of the effectiveness of the design and operation of the Companys disclosure controls and procedures. Based upon
that evaluation, the Chief Executive Officer concluded that the Companys disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange
Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commissions rules and forms. However, due to the limited size of the Companys staff, there is inherently a lack of
segregation of duties related to the authorization, recording, processing and reporting of transactions. We periodically assess the cost versus benefit of adding the resources that would remedy this situation and currently, with the concurrence of
the board of directors, do not consider the benefits to outweigh the costs of adding additional staff in light of the limited number of transactions related to the Companys operations.



There were no significant changes in our internal controls or
in other factors that could significantly affect these controls subsequent to the date of their evaluations.



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SIGNATURES



Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                     |  |  |  | Emergisoft Holding, Inc.
|-------------------- |  |  |  | ------------------------
|                    
|Date: March 31, 2003 |  |  |  | By:                     
|                     |  |  |  |                         



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



|SIGNATURE                                 |  | TITLE                                                        |  | DATE          
|----------------------------------------- |  | ------------------------------------------------------------ |  | --------------
|                                         
|/s/    Ash
HuzenlaubAsh Huzenlaub         |  | Chairman of the Board, President and Chief Executive Officer |  | March 31, 2003
|                                         
|/s/    Ann
CrossmanAnn Crossman           |  | Controller and Treasurer                                     |  | March 31, 2003
|                                         
|/s/    Christopher
AssifChristopher Assif |  | Director                                                     |  | March 31, 2003
|                                         
|/s/    Jeff
McCurdyJeff McCurdy           |  | Director                                                     |  | March 31, 2003
|                                         
|/s/    Jim
RossJim Ross                   |  | Director                                                     |  | March 31, 2003
|                                         
|/s/    Jason
SearJason Sear               |  | Director                                                     |  | March 31, 2003



47