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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, 2001

                                         OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
     FOR THE TRANSITION PERIOD FROM _________ TO ________

                         Commission File Number 33-30743
                            EMERGISOFT HOLDING, INC.
           (Name of small business issuer as specified in its charter)

                     Nevada                                 84-1121360
(State or other jurisdiction of incorporation       (IRS Employer Identification
or organization)                                     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, 2001 were
$350,081.

The aggregate market value of the registrant's voting common stock held by
non-affiliates, based on the closing bid price of $0.20, as reported on the NASD
Bulletin Board system on March 26, 2002 was $5,989,725. 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 stock are considered to be affiliates. This determination of
affiliates is not necessarily a conclusive determination for other purposes.

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As of March 26, 2002, 199,097,069 shares of the registrant's $.001 par value
common stock were outstanding. On March 13, 2002, we 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 remainder of this report.

Documents incorporated by reference: Proxy statement of Emerigsoft Holding,
Inc. relating to the annual meeting of stockholders to be held on June 21,
2002, which is incorporated into Part III of this Form 10-KSB.

Transitional Small Business Disclosure Format
(check one)
Yes [ ] No [X]

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<TABLE>
<CAPTION>
                                   INDEX TO
ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

                                    Part I
<S>                                                                                                  <C>
ITEM 1.   Description of Business.....................................................................4
ITEM 2.   Description of Property... .................................................................9
ITEM 3.   Legal Proceedings.......... ...............................................................10
ITEM 4.   Submission of Matters to a Vote of Security Holders........................................10

                                    Part II

ITEM 5.   Market for Common Equity and Related Stockholder Matters...................................11
ITEM 6.   Management's Discussion and Analysis or Plan of Operations. ...............................12
ITEM 7.   Consolidated Financial Statements.........  ................ ..............................21
ITEM 8.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosures......39

                                    Part III

ITEM 9.   Directors and Executive Officers, Promoters and Control Persons............................39
ITEM 10.  Executive Compensation.....................................................................39
ITEM 11.  Security Ownership of Certain Beneficial Owners and Management.............................39
ITEM 12.  Certain relationships and related transactions.............................................39
ITEM 13.  Exhibits and Reports on Form 8-K...........................................................40
</TABLE>

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                                    PART I

ITEM 1. DESCRIPTION OF BUSINESS

Overview

     On March 13, 2002, we 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.

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

     In May 2001, we changed our name from Pierce International Discovery, Inc.
to Emergisoft Holding, Inc. In addition, on May 25, 2001, EMS Acquisition
Corp., a Delaware corporation and our wholly-owned subsidiary, merged with and
into Emergisoft Holding, Inc., a Delaware corporation. In accordance with an
Agreement and Plan of Merger, we issued one share of our 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 us, Emergisoft and Robert Kropf, our primary
stockholder prior to the merger, 1,168,236 of his shares were canceled
effective upon the consummation of the merger.

     As a result of the Merger, we are now a holding company with Emergisoft
as a wholly-owned subsidiary. Emergisoft also has a wholly-owned subsidiary,
Emergisoft Corporation, a Delaware corporation. We and our direct and indirect
subsidiaries operate from our principal offices in Arlington, Texas. In the
remainder of this document the terms "we," "our," and "us" refer to Emergisoft
Holding, Inc., a Nevada corporation, and, where appropriate, to our direct and
indirect subsidiaries. The term "Emergisoft" refers to Emergisoft Holding, Inc.,
a Delaware corporation and its direct subsidiary.

Forward-Looking Statements

     This document contains forward-looking statements. Forward-looking
statements include statements concerning plans, objectives, goals, strategies,
future events or performance and underlying assumptions and other statements
that are other than statements of historical facts.

     Words such as, "expects," "anticipates," "estimates," "believes" and
similar expressions are intended to identify forward-looking statements. Such
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those projected. Such risks and uncertainties
are set forth below.

     Our expectations, beliefs and projections are expressed in good faith and
are believed to have a reasonable basis, including, without limitation, our
examination of historical operating trends, data contained in our records and
other data available from third parties, but there can be no assurance that our
expectations, beliefs or projections will result, be achieved or be
accomplished.

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     In addition to other factors and matters discussed elsewhere in this
document, the following are important factors that, in our view, could have
material adverse effects on our financial condition and results of operations:
the risk factors discussed in this document; general economic, market or
business conditions; changes in laws or regulations; acceptance of our principal
software product, CareLyncED/TM/, by the marketplace; competition from
developers of software products which perform functions similar to the functions
performed by CareLyncED/TM/; the successful implementation of CareLyncED/TM/ in
hospital emergency rooms who choose to utilize it; and our ability to raise
capital in sufficient amounts and on acceptable terms.

Business of Emergisoft

     Emergisoft develops and markets software products directly to hospitals
and physicians in the United States. Additionally, Emergisoft offers various
consulting services to hospitals regarding significant process structure. We
have recently introduced two new products SearchLyncPF/TM/ and EnterLync/TM/ to
the suite of healthcare information data solutions. SearchLyncPF/TM/ is a web
based, real-time, online patient demographic and insurance eligibility
verification tool and EnterLync/TM/ is an interactive patient registration
solution. Both SearchLyncPF/TM/ and EnterLync/TM/ will be marketed to
hospitals, physicians, and third party insurance claims processors.

     Our core product, CareLyncED/TM/, automates the antiquated pen and
paper-based process of moving patients through the emergency department (ED).
The software is intuitive and is designed by physicians and clinicians to
emulate the systems currently in use. Additionally, it is designed to be faster,
reduce medical errors, increase hospital revenue through improved reimbursement
and improve patient care due to more accurate charting.

     Emergisoft's CareLyncED/TM/ product has been under continuous development
for a decade, and has replaced Emergisoft's proprietary data base product with
an Oracle platform. It is the only product on the market that originated as a
full-function electronic medical record (EMR), with its ancillary system
functions, such as triage, patient tracking and discharge processing being
derived from the EMR. In contrast, the majority of the vendors in this arena
today originated as single ED process solution products (e.g., triage, tracking
or discharge) and are currently engaged in attempting to reverse engineer
themselves into full-function EMRs. We believe this distinction between
CareLyncED/TM/ and other products offered by competitors is most evident in the
sophistication and cross-integration of the database structure, the embedded
Health Care Finance Administration (HCFA) documentation criteria rules-driven
clinical data collection prompting, the workability of the user interface and
the robustness of CareLyncED/TM/'s management information reporting.

     The CareLyncED/TM/ system is based upon a state of the art full-function,
fully relational EMR database. It is configured to use with a stylus pen at the
bedside on a wireless notebook size hand-held computer. Patient care data
collection is driven whenever possible by templates or documentation guides
(DGs). The amount and complexity of the data now required for high quality
patient care processes and optimum reimbursement is such that the best possible
approach in our opinion is one that prompts the provider for the specific pieces
of information needed for the patient in question. It is specifically the lack
of prompting that makes voice dictation a relatively poor ED documentation
solution even in the face of its top dollar cost. For example, within the
CareLyncED/TM/ system, when a patient presents with the complaint of chest pain,
most of the nursing questions that are prompted are tailored to the issues of
chest pain. The physician in turn follows a DG that is tailored to the
information that needs to be recorded in the case of a patient with chest pain,
as are the patient orders, the test interpretation notes, the procedure notes
and all other areas of the patient's clinical record. Other DGs can be accessed
when there are multiple problems, but it is the prompting of complete
information that is the core competency of the system.

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     We believe pen or stylus-based systems like CareLyncED/TM/ have a
significant edge over all other input approaches currently in use. Studies have
indicated that the average current productivity of voice-activated input is
approximately 65 words per minute, free form dictation 170 words per minute and
pen-based systems 300 words per minute. The CareLyncED/TM/ system takes this
measure of productivity to a new level by utilizing an innovative graphic
interface for text capture that dramatically reduces the number of system
interactions required to generate a given amount of textual (medical record)
information.  If, for example, the user wants to say that there is a 2.5
centimeter laceration on the left upper anterior forearm, most systems would
require the user to separately specify the number of centimeters, the
information that this is a laceration versus an abrasion or something else,
that it is located on the left as opposed to the right forearm, that the
location is on the upper versus the lower part of the left forearm, that the
location is anterior as opposed to posterior, and that the user is finished
with his input - a minimum of six keystrokes. In the CareLyncED/TM/ system the
same task is accomplished by selecting an icon whose meaning is laceration and
using it to draw the injury on the appropriate part of the body that is
depicted in a graphic image. As the user drags and draws the laceration, the
system automatically calculates the length of the laceration in centimeters and
captures the text behind the graphic image that indicates that the laceration
is on the left upper anterior forearm. Thus, the user accomplishes in two
keystrokes what takes six in most other systems, and in CareLyncED/TM/ the user
also has a permanent drawing of the actual location and extent of the wound. We
believe that no other system vendor has anything approaching this kind of
technological breakthrough.

     With all of the patient's clinical information in a single interactive
database it becomes easy to overlay many other functions that are impossible
with a paper record. Examples of this are automatic coding, alerts and cross
checks for medical error prevention and highly sophisticated provider practice
profiling reports.

     It is likely that the complexity of ED medical practice will continue to
become more complex. While voice activated technology is being touted by some
as the ultimate ED documentation solution, we do not believe that it is,
primarily because of the lack of prompting. We believe voice activated
technology will continue to fall short of its promise and will likely never
work well in the noisy chaotic environment that is the ED most of the time. At
this point we see no new technology on the horizon that will materially alter
the possible solutions to the unique problems addressed by CareLyncED/TM/.

The Market

     There are roughly 5,000 EDs in the United States and approximately the same
number of convenience care/urgent care facilities. Whereas the former are
almost all hospital-based, the latter are primarily located at some distance
from the hospital and many are designed to function as feeder facilities
through some type of loose hospital affiliation. The similarities in these two
types of facilities primarily center on the unscheduled, episodic nature of
their patients' problems, while they differ in that convenience care/urgent
care facilities typically take no true emergencies or ambulance cases.

     Of these 10,000 facilities nationwide, fewer than one hundred currently
operate with anything approaching comprehensive computerization of the ED/urgent
care medical care process. Most of these one hundred have developed their own
proprietary systems over years of effort and at significant institutional cost.
No commercially available product yet has won the support of a significant
number of these facilities.

                                      6

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     Any ED or convenience care/urgent care facility seeing 15,000 or more
patients per year is a prime candidate to benefit from the CareLyncED/TM/ legacy
system. Legacy system means a client-server system wherein the primary server is
co-located with the facility using it. There are presently 5,000 EDs and
convenience care/urgent care facilities with patient volumes in excess of 25,000
per year, and these represent the primary market for CareLyncED/TM/.

Industry Trends

     The release of CareLyncED/TM/ was timed to enter the market at the
intersection of eight major healthcare industry trends. Whereas ED practice
information and management systems may have been viewed as optional in the past,
we believe that the eight trends will mandate such a system for the future.
These eight trends are the following:

          .  All-time record ED patient volumes. ED resources are increasingly
             becoming overwhelmed by all-time record patient demand. To our
             knowledge, never before has there been greater pressure to
             accomplish more with less. We believe CareLyncED/TM/ can provide
             the robust management information reporting that is necessary to
             bring greater efficiency to the operation of all EDs.

          .  Hospital and physician document driven reimbursement. With the
             advent of federal healthcare program outpatient prospective
             payment via Ambulatory Payer Classifications (APC) in August of
             2000, reimbursement for hospital outpatient services (such as
             those in the ED) is determined by the content of the medical
             record. Emergency physicians have confronted this reality since
             1995 when the HCFA instituted its Resource Based Relative Value
             System (RBRVS) for managing physician reimbursement. This new
             alignment of interests centered on the content of the medical
             record is expected to make it much easier to sell the value of the
             CareLyncED/TM/ system to both the hospital and the physicians
             engaged in the delivery of ED services.

          .  Cost reduction over revenue enhancement. The net effect of both
             the movement toward managed care and the government's outpatient
             prospective payment system is to further fix the revenue side of
             the ED profitability equation. When the revenue per visit is
             relatively fixed, cost reduction management efforts are more
             immediate in their effect and of much greater value than would be
             similar efforts aimed at revenue enhancement strategies.
             Relatively fixed revenues are currently one of the biggest
             challenges confronting EDs.

          .  The need for evidence-based medical decision-making. Medical
             decision-making has historically been unstructured, leaving the
             majority of spending decisions in the hands of each individual
             practitioner to practice his art as he sees fit. Increasingly,
             however, studies in this area have indicated that many spending
             decisions are made based upon incomplete data, individual
             misunderstanding or perceived risk. Evidence-based medical
             decision-making reduces spending by interposing a standard
             decision-making methodology between the provider's decision to
             order a given medical test or therapy and the actual spending
             action itself. These standard decision-making methodologies are
             increasingly evident in the medical literature and they often
             carry the added bonus of some degree of malpractice liability
             protection due to their general acceptance as practice standards.
             CareLyncED/TM/ can provide the real-time interactivity with the
             provider's actions to interpose a decision-making standard prior
             to the execution of spending decision orders.

                                      7

<PAGE>

          .  The increasing complexity of the reimbursement system. The average
             ED interacts with more than seventy different payers, each of
             whom have multiple medical plan products. Paper-based systems
             have been overwhelmed for some time now in trying to cope with
             this degree of complexity. CareLyncED/TM/ facilitates improved
             management of the profusion of information. Many managed care
             plans are willing to pay a bonus or premium for high quality
             care, but only if the hospital's systems can measure it and
             report it.

          .  Rule-based diagnosis and procedure coding. With the advent of APC
             there is now a plethora of rules governing how the hospital and
             the physician group is to code for the resources they expend on
             the care of each patient. In an electronic medical record
             environment these rules can be arithmetically expressed and the
             proper codes derived automatically. We believe CareLyncED/TM/
             provides the added advantage of a continuous compliance audit
             trail so there is never a question of billing fraud and abuse
             exposure.

          .  The need for a real-time practice information system to
             significantly impact medical error prevention. The recent
             Institute of Medicine report alleging over 100,000 patient deaths
             per year due to medical errors has received wide press coverage.
             The public is demanding action. At the same time, most ED
             practitioners know that little progress is possible in this area
             without harnessing the decision support and continuous error
             checking powers of a computerized system.  Paper-based systems
             are overwhelmed and fraught with deficiencies that no amount of
             management intensity can possibly correct.

          .  The increasing computer literacy of healthcare professionals. As
             recently as five years ago a majority of healthcare professionals
             were unfamiliar with computers. With the advent of the web,
             e-mail and various other advances, this is no longer true today.
             We believe healthcare professionals now are more open than ever
             before to the power of computers and to the possibility that they
             might improve the quality of their medical practice.

Competition

     While there are perhaps thirty competitors offering ED products that deal
with some aspect of the ED medical care process, in our opinion there are no
more than a handful of vendors attempting to field a full-function system such
as CareLyncED/TM/. IBEX has perhaps thirty installations of its system but
currently lacks as robust a physician documentation capability. EmStat has
approximately fifty customers and is in the process of beta testing some parts
of its physician documentation solution. Our current market intelligence shows
that no one has more full-function installations than does Emergisoft/TM/ with
its original legacy product. The field remains wide open for an industry
standard setter.

     Emergisoft currently has installations of its original legacy product at
several high profile and prestigious hospitals, such as: Mt. Sinai and St.
Vincent's in New York City; The Oakwood System in Detroit; and The Riverside
System in Newport News.

Physician Advisory Committee

     Emergisoft has an established physician advisory committee. This committee
of well-known, respected national doctors will assist Emergisoft in future
product development, offering the perspectives of ED physicians across the
country.

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Government Regulation

     The healthcare industry is highly regulated and is subject to changing
political, economic and regulatory influences. For example, the recently issued
rules under the Health Information Portability and Accountability Act of 1996
(HIPAA) will have a direct impact on the healthcare industry by requiring
identifiers and standardized transactions/code sets and necessary security and
privacy measures in order to ensure the protection of patient health
information. These factors affect the purchasing practices and operation of
healthcare organizations. Federal and state legislatures have periodically
considered programs to reform or amend the U.S. healthcare system at both the
federal and state level and to change healthcare financing and reimbursement
systems. These programs may contain proposals to increase governmental
involvement in healthcare, lower reimbursement rates or otherwise change the
environment in which healthcare industry participants operate. Healthcare
industry participants may respond by reducing their investments or postponing
investment decisions, including investments in Emergisoft's 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.

Intellectual Property

     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. We protect our software primarily through reliance on copyright law
and trade secret protection. Generally, we distribute our software in a form
that does not permit the software code to be altered by the user.

Employees

     Emergisoft currently employs twenty six full-time and three part-time
individuals. The majority of the employees perform their functions from the
corporate headquarters, except for our regional sales staff. Administration is
made up of five full-time employees. Sales and marketing currently has eight
full-time employees. Client service includes the clinical support and help-desk
staff and is made up of four full-time and three part-time employees. Technical
services and development, which includes all technical engineers, is comprised
of nine people.

ITEM 2. DESCRIPTION OF PROPERTY

     We occupy a 10,000 square-foot facility built in 1988 located in Arlington,
Texas, where Emergisoft has been located since October 31, 1998. We have
entered into a triple net lease that controls our costs for the next two years.
The current rate is $11,666 per month plus common area maintenance, tax and
insurance charges that are estimated to be approximately $2,831 per month.  The
facility has approximately 3,000 square-feet of space devoted to training
facilities. The training facilities provide clients with the advantage of
interfacing in person with our key employees while they are on site.

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ITEM 3. LEGAL PROCEEDINGS

     In December 1999, a stockholder and former officer of the Company filed
suit in federal court alleging that the Company was infringing on a copyright of
the ICUS database and tool set (ICUS) that was allegedly owned personally by the
stockholder. Final Judgment was entered in favor of the Company in February
2001, and the Court entered an order requiring the stockholder to pay $50,000 of
the Company's attorney's fees. The federal judgment is now on appeal in the
United States Court of Appeals for the Fifth Circuit.

     The former officer has also made the Company a party in his divorce action,
which is pending in Tarrant County District Court. Many of the claims asserted
in this action are the same or essentially the same as those that were
adjudicated by the federal court. The Company has sought summary judgment on
those claims based on res judicata and will contest the remainder of the
plaintiff's claims vigorously.

     In August 1998, the Company entered into a settlement agreement with a
customer involving a claim for refund of license fees received. The settlement
provided for an initial payment of $20,000 and payments of $36,556 annually,
beginning on August 31, 1999, until the obligation is paid in full on or before
August 31, 2002. The Company expects to make its final payment of $36,556 on
August 31, 2002.

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

     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

                                      11

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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 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. While currently substantially all of our shares are
subject to legal or contractual resale restrictions, 2,311,754 shares held by
the former Emergisoft stockholders will become eligible for sale, subject to
the volume limitations, manner of sale and notice requirements of Securities
and Exchange Commission Rule 144, on May 25, 2002. Also, upon the expiration of
a lock-up agreement with us on May 25, 2002, an additional 81,786 shares of
common stock held by our primary stockholder prior to the merger with
Emergisoft, will become eligible for sale without regard to the volume
limitations and manner of sale and notice requirements of Rule 144.

     As of March 26, 2002, we have 210 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.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

                            CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     Emergisoft's financial statements are based on the selection and
application of significant accounting policies, which require management to make
significant estimates and assumptions. The Company believes that the following
are some of the more critical judgment areas in the application of accounting
policies that currently affect Emergisoft's financial condition and results of
operations.

Bad Debt

     The Company maintains allowances for doubtful accounts for estimated
losses resulting from the inability of its customers to make required payments.
If the financial condition of Emergisoft's 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 the Company's equipment and fixtures,
the Company must make assumptions regarding estimated future cash flows and
other factors to determine the fair value of the respective assets. If these
estimates or their related assumptions change in the future, the Company may be
required to record impairment charges not previously recorded for these assets.
At December 31, 2001, the Company had investments of $442,152 in equipment and
fixtures, net of accumulated depreciation. During the year ended December 31,
2001, the Company did not record any impairment losses related to equipment and
fixtures. On January 1, 2002, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." See "Other Matters" in "Management's Discussion
and Analysis of Financial Condition

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and Results of Operations" and Note 3 to the Consolidated Financial Statements
for a discussion of the impact of these standards on the Company's financial
condition and results of operations, including the possibility of future
impairment charges.

Revenue recognition

     Most 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

     Emergisoft records a valuation allowance to reduce its deferred tax assets
to the amount that is more likely than not to be recognized. While Emergisoft
has considered future taxable income and ongoing prudent and feasible tax
planning strategies in assessing the need for the valuation allowance, in the
event Emergisoft were to determine that it would be able to realize its
deferred tax assets in the future in excess of its 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, 2001 Compared to the Year
Ended December 31, 2000

     Revenues

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

     During 2001, our revenues were generated by, deferred license fees,
maintenance fees and equipment sales related to our ICUS based product. We have
replaced the ICUS based product called Emergisoft with a newly developed product
called CareLyncED/TM/ and no longer sell the ICUS based product. We continue to
provide software support to our existing customer base using the ICUS based
product. In 2002 we expect to generate revenue primarily through the sale and
support of CareLyncED/TM/, SearchLyncPF/TM/ and EnterLync/TM/. There can be no
assurances that we will be successful in our efforts to sell CareLyncED/TM/,
SearchLyncPF/TM/ or EnterLync/TM/.

     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. No assurances can be given that any of the marketing efforts
will result in revenue.

     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, 2001 were $350,081 compared to
$920,428 for the year ended December 31, 2000, a decrease of 62%. The decrease
was due primarily to a reduction in license fee revenue caused by a court order
prohibiting Emergisoft from the sale or marketing of its ICUS based product and
the delay in releasing CareLyncED/TM/. See "Legal Proceedings" above. Revenue in
2000 included license revenues of $645,075, which was deferred in 1999 pending
customer acceptance. Contracted maintenance and support revenue was $318,361 in
2001 compared to $262,949 in 2000. We currently have seven clients contracted
for support and maintenance of the ICUS based system. We

                                      13

<PAGE>

intend to "sunset" the ICUS based product within two years and migrate our
existing clients to CareLyncED/TM/. No assurances can be given that our
existing clients will choose to install CareLyncED/TM/.

     Cost of Revenues

     Costs of revenues in 2001 were $19,585 compared to $184,268 in 2000,
reflecting the reduced sales of our ICUS based product.

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

     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 $4,024,034 in 2001
from $6,390,406 in 2000. The difference is primarily due to stock-based
compensation expense recorded in 2000 of $2,643,288 related to common stock
issued to a shareholder for consulting. Offsetting the decrease in consulting
expenses were increases in 2001 of $47,476 in legal and professional fees, an
increase in salary and related payroll taxes of $145,453 and an increase in
insurance expenses of $131,787.

     Development Expenses

     Development expenses consist of costs primarily related to the
development and testing of our core product CareLyncED/TM/ and to a lesser
extent GroupLyncEM/TM/. The general release of CarelyncED was announced in July
2001. GroupLyncEM/TM/ has not been released pending additional development and
performance testing. There is no assurance that the general release of
GroupLyncEM/TM/ will occur. General release is dependent on satisfactory
completion of ongoing functionality and performance testing of the product.
Product development expenses increased in 2001 to $2,727,307 from $2,500,311 in
2000. The increase is due primarily to the increased salary costs and related
hiring fees offset by lower expenses incurred for outside contractors. In 2001
salary and related taxes allocated to development were $693,579. Hiring fees
related to new development staff were $71,855 in 2001. In contrast, there were
no salaries allocated to development in 2000 due to the full time use of an
outside contractor for the development of CareLyncED/TM/. Expenses for outside
contractors in 2001 were $1,858,824 compared to $2,500,311 in 2000 a decrease of
$641,487. We will continue to incur development costs related to enhancements to
our current products. We expect the trend toward reduced outside development
costs to continue in 2002.

                                      14

<PAGE>

     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 claims to own personally. Our current service
offering uses ICUS at all current customer sites. We believe we have an existing
license to use and sublicense ICUS.

     In January 2000, the court issued a preliminary injunction allowing us
to keep one copy of the ICUS source code for purposes of providing support to
our current customers, but prohibiting us from selling and/or marketing the
current ICUS-based product.

     On January 8, 2001, the federal court granted our motion for summary
judgment, dismissing all of the former officer's claims and dissolving the
preliminary injunction. The court is now reviewing the plaintiff's motion to set
aside that summary judgment and our motion for attorney's fees.

     The former officer also has made us a party in his divorce action, which is
pending in a Tarrant County, Texas district court. Many of the claims asserted
in this action are the same or essentially the same as the claims, which were
dismissed by the federal court. We will seek dismissal of those claims at the
appropriate time and contest the remainder of the plaintiff's claims vigorously.

     Liquidity and Capital Resources

     We have historically financed our operations primarily through private
placements of our common stock and advances from stockholders. In February of
2002, we issued 3,750,000 shares of common stock to one of our major
stockholders in exchange for $2,000,000. On October 24, 2001, we issued
3,750,000 shares of common stock to the same stockholder in exchange for
$2,000,000.

     In April of 2001, lines of credit totaling $1,500,000 were made available
to us by two of our stockholders. On August 7, 2001 we 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 we 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, 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.

     In 2000, we issued 1,021,862 shares of common stock in a private placement
for proceeds of approximately $6,900,000. In addition, we issued 65,719 shares
of common stock in exchange for conversion of related party notes and advances
totaling $341,862. In 2000, we also issued 344,024 shares

                                      15

<PAGE>

of common stock to a stockholder for anti-dilution protection granted in
connection with an investment the stockholder made in 1999. As of March 26,
2002 we had approximately $1,481,000 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 2001, we issued 35,435
shares of common stock and 3,400 options to acquire common stock to third party
vendors. In 2000, we issued 120,885 shares of common stock and options to
acquire 37,300 shares of common stock to third party vendors. Also in 2000, we
issued 343,750 shares of common stock to a shareholder in return for a
consulting agreement. We recorded charges totaling approximately $4.1 million
in 2000 related to stock for services transactions.

     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
$460,175 and $44,201 in 2001 and 2000 respectively. We repaid $182,711 and
$295,848 of our indebtedness in 2001 and 2000, respectively.

     We utilize significant capital to design, develop and commercialize our
products. During 2002, we will 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. This additional capital
financing 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.

     On March 28, 2002, a current shareholder of ours committed to provide
financing to us of up to $2,500,000. We may draw on the financing commitment in
whole or in part, from time to time and at any time prior to June 30, 2003, by
giving the shareholder five days advance written notice. Upon receipt of a draw
request from us, the shareholder will fund the request in exchange for an
issuance of our common stock at a per share price of $.533332. All shares
issued to the shareholder will be issued following a 20-for-1 reverse stock
split of our outstanding shares of common stock, which is to become effective
March 31, 2002. Shares issued to the shareholder under the financing commitment
will be subject to a right of repurchase at $2.40 per share for a period of one
year following the date of issuance. In consideration for the financing
commitment by the shareholder and a further commitment by the shareholder to
participate on a one-third basis with other third parties in a future financing
currently in the planning phase, we agreed to issue 1,000,000 post split shares
of our common stock to the shareholder on April 1, 2002 for $100,000.

The following table summarizes the Company's obligations and commitments to be
paid in 2002, 2003 and 2004:

Nature of Commitment                        2002            2003         2004

Operating Lease Payments               $ 194,341     $   123,750     $ 15,313
Long-term debt                           331,697       1,500,000         -
                                       ---------------------------------------
Total obligations and commitments      $ 526,038     $ 1,623,750     $ 15,313
                                       =======================================

At March 26, 2002, we had no material commitments for capital expenditures.

                                      16

<PAGE>

                                  OTHER MATTERS


     In August 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets,"
which addresses financial accounting and reporting for the impairment or
disposal of long-lived assets and supersedes SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,"
and the accounting and reporting provisions of Accounting Principles Board
Opinion No. 30, "Reporting the Results of Operations - Reporting The Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions." SFAS No. 144 is effective for fiscal years
beginning after December 15, 2001, with earlier application encouraged. The
Company adopted SFAS No. 144 as of January 1, 2002 and does not expect that the
adoption of the Statement will have a significant impact, if any, on the
Company's financial position or results of operations.


RISK FACTORS

     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, 2001, we incurred net losses of
$6,648,379. We had net losses of $8,405,545 in 2000. As of December 31, 2001,
we had an accumulated deficit of $20,098,592. Management expects these losses
to continue in 2002. 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 will require additional financing, but we may be unable to obtain it on
favorable terms or at all.
We will require additional funding to continue operations through 2002. Beyond
2002 we may continue to require additional financing to fund our operations. We
are maintaining an on-going effort to locate sources of additional financing.
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.

     Dependence on Principal Product

     We will expect to derive a significant percentage of our revenue from
sales of our core system, CareLyncED/TM/. 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 CareLyncED/TM/ could 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.

                                      17

<PAGE>

     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.

     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.

                                      18

<PAGE>

     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.

     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.

                                      19

<PAGE>

     Control by Existing Management and Stockholders

     Our directors, executive officers and holders of more than 5% of our
shares beneficially own approximately 92% of the outstanding shares of our
common stock. An agreement or understanding to act in concert would allow them
to continue to exercise control over our affairs, to elect the entire Board of
Directors and to control the disposition of any matter submitted to a vote of
stockholders.

     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. Although we have entered
into an employment agreement, which includes confidentiality and non-compete
provisions, with each of our key executive officers, 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.

                                      20

<PAGE>

     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 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

                                      21

<PAGE>

                         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, 2001, 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, 2001. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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, 2001, and the consolidated results
of their operations and their cash flows for each of the two years in the period
ended December 31, 2001, in conformity with accounting principles generally
accepted in the United States.

                                                    /S/ Ernst & Young LLP

Dallas, Texas
March 31, 2002

                                      22

<PAGE>

                    Emergisoft Holding, Inc. and Subsidiary
                           Consolidated Balance Sheet

                                                             December 31, 2001

Assets

Current assets:

  Cash and cash equivalents                                         $   661,509

  Trade accounts receivable, net of allowance for
    doubtful accounts of $26,000                                        104,880
                                                                 ---------------
Total current assets                                                    766,389

Equipment and fixtures, net                                             442,152
Other assets                                                             42,417
                                                                 ---------------
Total assets                                                        $ 1,250,958
                                                                 ===============

Liabilities and Stockholders' Equity

Current liabilities:

  Accounts payable and accrued expenses                             $   363,340
  Notes payable - current, net of discounts                             328,564
  Deferred revenue                                                      153,803
                                                                 ---------------
Total current liabilities                                               845,707

  Notes payable with Related Parties - long-term, net of
    discounts                                                           410,536
                                                                 ---------------
Total liabilities                                                     1,256,243

Commitments and contingencies                                                 -

Stockholders' equity (deficit):
  Common Stock, $.001 par value, 37,500,00 shares
    authorized, 6,193,891 issued and outstanding at
    December 31, 2001.                                                    6,194
  Additional capital                                                 20,515,733
  Deferred compensation                                                (428,620)
  Accumulated deficit                                               (20,098,592)
                                                                 ---------------
Total stockholders' deficit                                              (5,285)
                                                                 ---------------
Total liabilities and stockholders' equity                          $ 1,250,958
                                                                 ===============

See accompanying notes

                                      23

<PAGE>

                    Emergisoft Holding, Inc. and Subsidiary
                      Consolidated Statements of Operations



                                                  Year Ended December 31
                                                 2001                 2000
                                                 ----                 ----

Revenue                                      $     350,081       $    920,428

Cost of revenue                                     19,585            184,268
General and administrative                       4,024,034          6,390,406
Development                                      2,727,307          2,500,311
                                           ----------------------------------
Total operating expenses                         6,770,926          9,074,985
                                           ----------------------------------

Loss from operations                            (6,420,845)        (8,154,557)
Interest income                                    (50,762)                 -
Interest expense                                   474,428            250,988
                                           ----------------------------------

Loss before extraordinary gain on               (6,844,511)        (8,405,545)
  extinguishment of debt
Gain on extinguishment of debt                    (196,132)                 -
                                           ----------------------------------
Net loss                                     $  (6,648,379)      $ (8,405,545)
                                           ==================================
Basic and diluted net loss per share         $       (2.12)      $      (7.29)
                                           ----------------------------------
Weighted average shares used to compute          3,134,090          1,153,131
  basic and diluted net loss per share     ==================================

See accompanying notes

                                      24

<PAGE>

                    Emergisoft Holding, Inc. and Subsidiary
      Consolidated Statements of Changes in Stockholders' Equity (Deficit)

<TABLE>
<CAPTION>
                                              Common Stock          Additional       Deferred    Accumulated
                                          ----------------------
                                           Shares      Par Value      Capital     Compensation     Deficit         Total
                                          ------------------------------------------------------------------------------------

                                          ------------------------------------------------------------------------------------
<S>                                       <C>            <C>        <C>            <C>           <C>              <C>
Balance at January 1, 2000                  494,187      $   494       3,634,105      (453,853)    (5,044,668)     (1,863,922)
  Common stock issued in private
    placements                            1,021,862        1,022       6,919,510             -              -       6,920,532
  Common stock issued to vendors for
    goods and services                      464,635          464       4,182,047             -              -       4,182,511
  Common stock issued to related party
    pursuant to antidilution protection     344,024          344            (344)            -              -               -
  Common stock issued upon
    conversion of convertible notes
    and advances from stockholders           65,719           66         341,796             -              -         341,862
  Value of warrants granted with
    convertible note                              -            -          54,942             -              -          54,942
  Stock options issued to vendors for
    services                                      -            -          42,294             -              -          42,294
  Common stock issued for exercise of
    preemptive rights                        10,830           11         142,973             -              -         142,984
  Deferred compensation related to
    stock options                                 -            -       1,462,271    (1,462,271)             -               -
  Amortization of deferred
    compensation                                  -            -               -       809,780              -         809,780
  Net loss                                        -            -               -             -     (8,405,545)     (8,405,545)
                                          ------------------------------------------------------------------------------------
Balance at December 31, 2000              2,401,257      $ 2,401    $ 16,779,594   $(1,106,344)  $(13,450,213)    $ 2,225,438

  Common stock issued in private
    placement                             3,750,000        3,750       1,996,250             -              -       2,000,000
  Common stock issued to vendor for
    services                                 35,435           36         198,718             -              -         198,754
  Common stock issued upon exercise
    of employee options                       5,063            5           6,594             -              -           6,599
  Common stock issued upon
    conversion of convertible notes           2,136            2           8,543             -              -           8,545
  Value of warrants issued in
    connection with shareholder loan              -            -       1,500,000             -              -       1,500,000
  Stock options issued to vendors for
    services                                      -            -          19,757             -              -          19,757
  Deferred compensation related to
    stock options                                 -            -           6,277        (6,277)             -               -
  Amortization of deferred
    compensation                                  -            -               -       684,001              -         684,001
  Net loss                                        -            -               -             -     (6,648,379)     (6,648,379)
                                          ------------------------------------------------------------------------------------
Balance at December 31, 2001              6,193,891      $ 6,194    $ 20,515,733   $  (428,620)  $(20,098,592)    $    (5,285)
                                          ------------------------------------------------------------------------------------
</TABLE>

See accompanying notes

                                      25

<PAGE>

                    Emergisoft Holding, Inc. and Subsidiary
                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                  2001             2000
                                                            ------------------------------------
<S>                                                          <C>               <C>
Operating Activities
Net loss                                                     $   (6,648,379)   $   (8,405,545)
Adjustments to reconcile net loss to net cash used in
  operating activities:
    Depreciation                                                     42,663           126,942
    Amortization of debt discount                                   438,909           204,553
    Amortization of deferred compensation                           684,001           809,780
    Stock-based expenses for equity issued to
      vendors for services                                          218,511         4,087,266
    Gain on extinguishment of debt                                 (196,132)                -
Changes in assets and liabilities:
    Accounts receivable                                              (4,041)           82,406
    Other assets                                                    (10,290)           (9,846)
    Deferred revenue                                                 42,086          (644,108)
    Accounts payable and accrued expenses                          (469,503)          333,254
                                                           ------------------------------------
Net cash used in operating activities                            (5,902,175)       (3,415,298)

Investing Activity
Purchase of equipment and fixtures                                 (460,175)          (44,201)
                                                           ------------------------------------
Cash used in investing activity                                    (460,175)          (44,201)
Financing Activities
Proceeds from notes payable with Related Parties                  1,500,000                 -
Proceeds from notes payable                                         284,930           100,000
Repayment of notes payable and line of credit                      (182,710)         (295,848)
Proceeds from issuance of common stock and exercise of
  options                                                         2,006,599         7,063,516
                                                           ------------------------------------
Net cash provided by financing activities                         3,608,819         6,867,668
                                                           ------------------------------------

Net (decrease) increase in cash and cash equivalents             (2,753,531)        3,408,169
Cash and cash equivalents, beginning of year                      3,415,040             6,871
                                                           ------------------------------------
Cash and cash equivalents, end of year                       $      661,509    $    3,415,040
                                                           ====================================

Supplemental cash flow information:
  Cash paid for interest                                     $        1,141    $       22,730

  Non-cash activities:
    Exchange of common stock for advances from
      stockholders                                                       -            156,920
    Deferred stock-based compensation                                 6,277         1,462,271
    Additional capital recorded for fair value of
      warrants issued to convertible note holders                       -              54,942
    Additional capital recorded for fair value of
      warrants issued to promissory note holders                  1,500,000                 -
    Exchange of common stock for account payable to
      officer                                                             -           137,539
    Stock-based expenses for equity issued to vendors for
      services                                                      218,511         4,087,266
    Exchange of common stock for note payable                         8,545           184,942
</TABLE>

See accompanying notes

                                      26

<PAGE>

                    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 our 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.

     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, 2001, and has an accumulated
deficit of approximately $20.1 million at December 31, 2001.

     The Company utilizes significant capital to design, develop and
commercialize its products. During 2002, the Company intends to fund the
marketing of its products and related operational activities by utilizing our
lines of credit and cash contributed from operations. 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.

     On March 28, 2002, a current shareholder of ours committed to provide
financing to us of up to $2,500,000. We may draw on the financing commitment in
whole or in part, from time to time and at any time prior to June 30, 2003, by
giving the shareholder five days advance written notice. Upon receipt of a draw
request from us, the shareholder will fund the request in exchange for an
issuance of our common stock at a per share price of $.533332. All shares
issued to the shareholder will be issued following a 20-for-1 reverse stock
split of our outstanding shares of common stock, which is to become effective
March 31, 2002. Shares issued to the shareholder under the financing commitment
will be subject to a right of repurchase at $2.40 per share for a period of one
year following the date of issuance. In consideration for the financing
commitment by the shareholder and a further commitment by the shareholder to
participate on a one-third basis with other third parties in a future financing
currently in the planning phase, we agreed to issue 1,000,000 post split shares
of our common stock to the shareholder on April 1, 2002 for $100,000. As of
March 28, 2002 the shareholder owns approximately 83% of the Company and is
considered the parent.

                                      27

<PAGE>

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.

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, 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.

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.

                                      28

<PAGE>

NOTE 2. Continued

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
$91,000 and $61,000 for the years ended December 31, 2001 and 2000,
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 realization is not reasonably assured.

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 Employees. Under APB 25, the Company recognizes no compensation
expense related to employee stock options unless such options have been granted
with exercise prices at less than the fair market value of the stock on the
date of grant. The Company provides the supplemental disclosures required by
Financial Accounting Standard No. 123 (FAS 123), Accounting for Stock-Based
Compensation, which assumes the recognition of compensation expense based on
the fair value of options on the grant date. 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 recorded charges of $902,512 and $4,897,046 for the
years ended December 31, 2001 and 2000, 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 2001, all charges are included in general and administrative. For the 2000
charges, $4,502,220 is included in general and administrative expense and
$394,826 is included in product development expense.

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.

                                      29

<PAGE>

NOTE 3:  RECENTLY ISSUED ACCOUNTING STANDARDS

      In August 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets,"
which addresses financial accounting and reporting for the impairment or
disposal of long-lived assets and supersedes SFAS No. 121 and the accounting
and reporting provisions of Accounting Principles Board Opinion No. 30,
"Reporting the Results of Operations - Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions." SFAS No. 144 is effective for fiscal years beginning
after December 15, 2001, with earlier application encouraged. The Company
adopted SFAS No. 144 as of January 1, 2002 and does not expect that the
adoption of the Statement will have a significant impact, if any, on the
Company's financial position or results of operations.

NOTE 4.  EQUIPMENT AND FIXTURES

Equipment and fixtures consisted of the following at December 31, 2001:

                                                 Depreciable Life
                                               --------------------

Office computer equipment                             5 years       $ 1,245,502
Furniture, fixtures, and other office equipment    5 - 7 years           65,077
Vehicles                                              5 years            27,941
Leasehold improvements                                3 years            19,540
                                                                   -------------
                                                                      1,358,060
Less accumulated depreciation and
  amortization
                                                                        915,908
                                                                   -------------
Equipment and fixtures, net                                         $   442,152
                                                                   =============
NOTE 5.  CONVERTIBLE DEBT
In 2001, convertible note holders converted $8,545 in convertible notes to 2,136
shares of common stock.

                                      30

<PAGE>

NOTE 6.   NOTES PAYABLE

The Company's notes payable consist of the following at December 31,
2001:

<TABLE>
<S>                                                                                          <C>
Notes payable provided by two shareholders bearing interest at 10%, principal
  and interest due April 30, 2003. (See Note 11)                                             $ 1,500,000
Term note payable for asset purchase, bearing interest at 10% per annum and requiring
  scheduled payments through September 2002                                                      284,930
Term note payable for legal settlement, interest imputed at 9% per annum, payments of
  $36,556 due annually on August 31 through 2002.                                                 36,556

Note payable to stockholders, bearing interest at 10% per annum and due December
  2002, convertible to common stock at a conversion price of $4.00
  per share (see Note 7).                                                                          7,290

Note payable bearing interest at 9.5% and requiring monthly payments of $313
  through 2002; collateralized by equipment.                                                       2,921
                                                                                         ------------------
                                                                                               1,831,697
Less:
  Unamortized discounts on notes payable                                                       1,092,597
  Current portion                                                                                328,564
                                                                                         ------------------
Long term portion                                                                            $   410,536
                                                                                         ==================
</TABLE>

NOTE 7.   STOCKHOLDERS' EQUITY

COMMON STOCK

     On October 24, 2001 Berlwood Five, Ltd., a current shareholder of ours,
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. 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.

     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.

     In March 2000, the Company commenced a private offering of its securities.
During 2000, the Company issued 1,021,862 shares of its common stock (exclusive
of stock options) for net cash proceeds of approximately $6.9 million.

     In 2000, the Company issued 447,442 shares of common stock and options to
purchase 12,175 shares of common stock to certain vendors and consultants.  The
shares were primarily issued to a related party (see Note 10), the Company's
landlord in settlement of rent and to a related party for development of its
CareLyncED(TM) product offering. In connection with these issuances of common
stock and options, the Company recorded charges of $4,087,266 for the year
ended December 31, 2000.

                                      31

<PAGE>

NOTE 7.   CONTINUED

     In December 1999, the Company received an advance of $100,000 against a
$200,000 convertible note bearing interest of 10% per annum. The note was
convertible to common stock at a conversion rate of $8.00 per share; in certain
circumstances, the conversion price was to be reduced to $4.00 per share. In
January 2000, the Company received an additional $84,942 pursuant to the
convertible note and the conversion price was reduced to $4.00 per share for
the entire indebtedness. In connection with the transaction, the Company issued
a ten-year warrant to acquire 23,118 shares of common stock at an exercise
price of $8.00 per share. In 1999, the Company recorded a discount of
approximately $130,000 against the convertible note based on the fair value of
the warrant, which is being amortized over the two-year term of the note. In
2000, the Company recorded an additional discount of $54,942 to reflect the
reduction of the note's conversion price in January 2000. In December 2000, the
note was converted to 46,236 shares of common stock. In addition to the equity
granted in the transaction, the Company granted the stockholder anti-dilution
protection.  As a result of the anti-dilution protection, additional equity was
to be granted to the stockholder in the event of any future issuance of equity.
The additional equity was to be issued at no cost to the stockholder. The
Company issued 344,024 shares of common stock in 2000 as a result of the
anti-dilution provisions granted to the stockholder. The Company also entered
into a consulting agreement with its stockholder (see Note 11).

     The Company declared a 4-for-1 reverse stock split effective March 6,
2000. The Company declared a 20-for-1 reverse stock split effective March 31,
2002. The effects of these reverse stock splits have been retroactively
reflected throughout the financial statements.

At December 31, 2001, common stock reserved for future issuance is as follows:

                                         Shares
                                     -------------
Options outstanding and available
    for grant                           1,286,700
Warrants                                  324,821
                                     -------------
Total                                   1,611,521
                                     =============

                                      32

<PAGE>

NOTE 7.   CONTINUED

STOCK OPTION PLAN

     During 2001 and 2000, 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 500,000 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.

     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:

                                                            Weighted
                                         Shares             Average
                                         Under            Exercise Price
                                         Option            Per Share
                                   ------------------- -------------------
Balance at December 31, 1999              91,193              2.00
  Granted                                280,869              7.40
  Exercised                               (5,250)             4.20
  Canceled                               (14,656)             3.40
                                     ----------------
Balance at December 31, 2000             352,156              6.20
  Granted                                 21,219             12.40
  Exercised                               (2,062)            11.40
  Canceled                              (109,613)             6.80
                                     ----------------
Balance at December 31, 2001             261,700              6.40
                                     ================

     Options to purchase 153,797 shares were exercisable as of December 31,
2001, with a weighted average exercise price of $6.60. Options to purchase
128,081 shares were exercisable as of December 31, 2000, with a weighted
average exercise price of $3.80.

     The following table summarizes the number of options, the exercise prices,
and the weighted average remaining life of all options outstanding at December
31, 2001:

                        Number of Options         Weighted Average
Exercise Price            Outstanding              Remaining Life
------------------- ------------------------- ------------------------

  $   1.20                    68,575                 7.2 years
      2.00                    77,500                 8.9 years
      8.00                     7,100                 7.7 years
     12.80                   105,400                 8.8 years
     16.00                     3,125                 8.1 years
                       --------------------
                             261,700
                       ====================

                                      33

<PAGE>

NOTE 7.   CONTINUED

     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 900 and 131,800 shares of common stock were
issued in 2001 and 2000, 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 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 $6,277
and $1,462,271 for the years ended December 31, 2001 and 2000, 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 2001 and 2000 includes the effects of adjusting the
repriced 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 totaled $684,001 and $809,780 for the years ended December 31, 2001
and 2000, respectively. The Company also recorded charges of $16,723 and
$42,294 for the years ended December 31, 2001 and 2000, 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 net loss per share is
required by Statement of Financial Accounting Standards (SFAS) No. 123 and has
been determined as if the Company had accounted for its employee stock options
under the fair value method of that Statement. The fair value for these options
was estimated at the date of grant using a minimum value pricing model with the
following weighted average assumptions for 2001 and 2000: risk-free interest
rates of 5% and 6%, dividend yields of 0%, and a weighted average expected life
of the options of approximately five years. The weighted average fair value of
the options granted in 2001 and 2000 was not significant.

     For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting periods. Because the
options do not have a significant value using the minimum value method, there
is no material difference between the Company's net loss as reported and the
pro forma net loss considering the effect of SFAS 123.

     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 make available for grant a total of 1,025,000
options to purchase common stock available for grant.

                                      34

<PAGE>

NOTE 8.   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,
                                                      ----------------
                                                    2001           2000
Net loss                                        $(6,648,379)   $(8,405,545)
Basic and diluted:
Weighted average common shares
  outstanding                                     3,134,090      1,153,131
Basic and diluted net loss per share                 $(2.12)        $(7.29)
                                                     ======         ======

     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 9.   COMMITMENTS AND CONTINGENCIES

LEASES

     The Company rents and leases its facilities and some 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 replaced by
other leases. Rental expense was approximately $169,498 and $196,000 for the
years ended December 31, 2001 and 2000, respectively.

The following are the minimum lease payments under non-cancelable operating
leases as of December 31, 2001:

2002                                $  194,341
2003                                   123,750
2004                                    15,313
                                  ---------------
                                    $  333,404
                                  ===============

LEGAL PROCEEDINGS

     In December 1999, a stockholder and former officer of the Company filed
suit in federal court alleging that the Company was infringing on a copyright
of the ICUS database and tool set (ICUS) that was allegedly owned personally by
the stockholder. Final Judgment was entered in favor of the Company in February
2001, and the Court entered an order requiring the stockholder to pay $50,000
of the Company's attorney's fees. The federal judgment is now on appeal in the
United States Court of Appeals for the Fifth Circuit.

     The former officer has also made the Company a party in his divorce
action, which is pending in Tarrant County District Court. Many of the claims
asserted in this action are the same or essentially the same as those that were
adjudicated by the federal court. The Company has sought summary judgment on
those claims based on res judicata and will contest the remainder of the
plaintiff's claims vigorously.

                                      35

<PAGE>

NOTE 9.  Continued

     In August 1998, the Company entered into a settlement agreement with a
customer involving a claim for refund of license fees received. The settlement
provided for an initial payment of $20,000 and payments of $36,556 annually,
beginning on August 31, 1999, until the obligation is paid in full on or before
August 31, 2002. The Company expects to make its final payment of $36,556 on
August 31, 2002. (see Note 6).

NOTE 10.  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
                                                    2001             2000
                                                ------------------------------

Benefit computed at federal statutory rate       $ (2,260,449)   $ (2,857,885)
Permanent differences                                   4,639           5,248
Other                                                 591,169               -
Increase in valuation allowance                     1,664,641       2,852,637
                                                ------------------------------
Total                                            $          -    $          -
                                                ==============================

The Company's deferred tax assets and liabilities as of December 31, 2001, are
as follows:

Deferred tax assets:

  Change in accounting method                                    $    196,257
  Deferred compensation expense                                     2,129,401
  Other                                                                 8,803
  Net operating loss carryforwards                                  3,885,817
                                                                 -------------
Total deferred tax assets                                           6,220,278
Valuation allowance for deferred tax assets                        (6,220,278)
                                                                 -------------
Deferred tax assets, net of valuation allowance                  $          -
                                                                 =============

At December 31, 2001, the Company has approximately $11.4 million of federal net
operating loss carryforwards that begin to expire in 2018.

At December 31, 2001, 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.

                                      36

<PAGE>

NOTE 11.  RELATED PARTY TRANSACTIONS

     In April of 2001, lines of credit totaling $1,500,000 were made available
to us by two of our stockholders. On August 7, 2001 we 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 we 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, 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. 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 February 2000, a consulting agreement was entered into with a
stockholder to provide, among other things, assistance with the development and
implementation of a business plan and strategy, determination of management
organizational structure and staffing needs, identification of and recruitment
of qualified personnel for the Company's management, engagement and supervision
of professional advisors, and assessment of working capital needs and
assistance in arranging to finance those needs. The stockholder received
343,750 shares of common stock as consideration for the consulting agreement.
The Company recorded a charge of $2.8 million in the year ended December 31,
2000 for the fair value of the equity issued, which was to be amortized over
the two-year term of the consulting agreement. The consulting agreement was
terminated in December 2000 and, as a result, the Company recorded the full
charge in the year ended December 31, 2000.

     See Note 7 for discussion of sales of common stock by the Company to a
current stockholder.

NOTE 12.  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.

                                      37

<PAGE>

NOTE 13. SUBSEQUENT EVENT

     Berlwood Five, Ltd., a current shareholder of ours, made an additional
$2,000,000 equity investment in us on February 15, 2002. Berlwood received
3,750,000 newly issued shares of our common stock in the transaction. 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 March 28, 2002, a current shareholder of ours committed to provide
financing to us of up to $2,500,000. We may draw on the financing commitment in
whole or in part, from time to time and at any time prior to June 30, 2003, by
giving the shareholder five days advance written notice. Upon receipt of a draw
request from us, the shareholder will fund the request in exchange for an
issuance of our common stock at a per share price of $.533332. All shares
issued to the shareholder will be issued following a 20-for-1 reverse stock
split of our outstanding shares of common stock, which is to become effective
March 31, 2002. Shares issued to the shareholder under the financing commitment
will be subject to a right of repurchase at $2.40 per share for a period of one
year following the date of issuance. In consideration for the financing
commitment by the shareholder and a further commitment by the shareholder to
participate on a one-third basis with other third parties in a future financing
currently in the planning phase, we agreed to issue 1,000,000 post split shares
of our common stock to the shareholder on April 1, 2002 for $100,000.

     On March 13, 2002, we 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.

                                      38

<PAGE>

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES

NOT APPLICABLE

                                    PART III

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

     The information set forth under "Item I - Election of Directors" in the
Proxy Statement is incorporated herein by reference.

ITEM 10.  EXECUTIVE COMPENSATION

      The information set forth under "Executive Compensation" in the Proxy
Statement is incorporated herein by reference.


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The information set forth in "Security Ownership of Management and
Certain Stockholders" in the Proxy Statement is incorporated herein by
reference.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      The information set forth under "Transactions with Management and Certain
Stockholders" in the Proxy Statement is incorporated herein by reference.

                                      39

<PAGE>

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 23 through 36 of this Form
10-KSB.

                  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
     [ALL SCHEDULES ARE OMITTED BECAUSE THE REQUIRED INFORMATION IS
INAPPLICABLE OR THE INFORMATION IS PRESENTED IN THE FINANCIAL STATEMENTS OR THE
NOTES THERETO.]

     2.  Exhibits

<TABLE>
<CAPTION>
Exhibit No.       Sequential Description
<S>               <C>
   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.

   *+10.2         Emergisoft Holding, Inc. 2001 Non-Employee Director Stock Option Plan

   21.1           List of subsidiaries (filed as Exhibit 2.1 to Emergisoft's Form 8-KA filed August 2, 2001 and incorporated
                  herein by reference).

   *23.1          Consent of Ernst & Young LLP.
</TABLE>
                  *Filed herewith

                  +Identifies management contracts and compensatory plans or
                   arrangements

                                      40

<PAGE>

(b)  We filed the following reports on Form 8-K during the year ended December
31, 2001.

     On June 4, 2001 we reported that Emergisoft Holding, Inc., a Nevada
     Corporation acquired Emergisoft Corporation, a Delaware Corporation on May
     25, 2001. The acquisition was effectuated pursuant to an Agreement and
     Plan of Merger, dated March 28, 2001 (the "Merger Agreement"), by and
     among Emergisoft Nevada, EMS Acquisition Corp.

     On August 2, 2001 we reported interim financial results on Form 8-K/A and
     Form 10-SB Information

     On November 14, 2001 we reported Berlwood Five, Ltd., a current
     shareholder of ours, made an additional $2,000,000 equity investment in us
     on October 24, 2001 Additionally, we reported the resignation of James A.
     Ryffel from the Board of Directors effective November 1, 2001 and the
     election of Jim R. Ross to the Board of Directors effective November 2,
     2001.

                                  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: April 1, 2002                By: /s/ Dan Witte
                                       -------------
                                       Dan Witte
                                       Chairman of the Board and Chief Executive
                                       Officer (Principal Executive Officer)

                                       /s/ Ann Crossman
                                       ----------------
                                       Controller

                                       /s/ Kenna Bridgmon
                                       ------------------
                                       Director, VP - Product Design

                                       /s/ Ron Hellstern
                                       -----------------
                                       Director, VP - Medical Affairs

                                       /s/ Jason Sear
                                       --------------
                                       Director

                                       /s/ Jeff McCurdy
                                       ----------------
                                       Director

                                       /s/ Ash Huzenlaub
                                       -----------------
                                       Director

                                       /s/ Jim Ross
                                       -------------
                                       Director

                                       /s/ Cameron Ware
                                       ----------------
                                       Director

                                      41