<PAGE>

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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-KSB

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

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001
                         COMMISSION FILE NUMBER 1-11922

                                  AVIDYN, INC.
                 (Name of small business issuer in its charter)

<Table>
<S>                                                 <C>
                    DELAWARE                                           75-2297429
(State or other jurisdiction of incorporation or                    (I.R.S. Employer
                  organization)                                  Identification Number)

        16980 DALLAS PARKWAY, SUITE 120,                                  75248
                  DALLAS TEXAS                                         (Zip Code)
    (Address of principal executive offices)
</Table>

                           ISSUER'S TELEPHONE NUMBER:
                                 (972) 447-6447

      SECURITIES REGISTERED UNDER SECTION 12(B) OF THE EXCHANGE ACT: NONE.

         SECURITIES REGISTERED UNDER SECTION 12(G) OF THE EXCHANGE ACT:

                                 TITLE OF CLASS

                          COMMON STOCK, $.01 PAR VALUE

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such
shorter period that the 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 there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B 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 10-KSB.  [X]

     State issuer's revenues for its most recent fiscal year: $5,930,545.

     State the aggregate market value of the voting stock held by non-affiliates
of the Registrant: As of March 22, 2002: $4,071,703*

     State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 3,620,092 shares of Common
Stock, $.01 par value as of March 22, 2002.

                      DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the Proxy Statement for 2002 Annual Meeting of Shareholders of
AVIDYN, Inc. are incorporated by reference into Part III of this Form 10-KSB.

     Transitional Small Business Disclosure Format:  Yes [ ]  No [X]
---------------

* The aggregate market value was determined by multiplying the number of
  outstanding shares (excluding those shares held of record by officers,
  directors and greater than five percent shareholders) by $2.92, the last sales
  price of the Registrant's common stock as of March 22, 2002, such date being
  within 60 days prior to the date of filing.
--------------------------------------------------------------------------------
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<PAGE>

       CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS
            OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

     The Company desires to take advantage of the "safe harbor" provisions
contained in Section 27A of the Private Securities Litigation Reform Act and is
including this statement in its Annual Report on Form 10-KSB in order to do so.
From time to time the Company's management may wish to make forward-looking
statements based upon management expectations to inform more fully existing and
potential shareholders regarding various matters, including without limitation,
projections regarding future income, completion of networks, future growth,
future products and plans, as well as predictions as to the timing and success
of specific projects. Such forward looking statements are generally accompanied
by words such as "believes," "anticipates," "estimate," "predict" or "expect"
and similar expressions that convey the uncertainty of future events or
outcomes.

     The factors identified in this Form 10-KSB under "Risk Factors" are
believed to be important factors (but not necessarily all of the important
factors) that could cause actual results to differ materially from those
expressed in any forward-looking statement made by or on behalf of the Company.
Such statements are subject to certain risks and uncertainties, over which the
Company has no control, which could cause actual results to differ materially
from those projected. Such forward looking information could be affected by
changes in laws and regulations, interest rates, liquidity issues, the rate of
sales growth, price and product competition, new product introduction and social
and economic conditions, such as increased competition in the managed care or
healthcare industry and the amount, type and cost of financing available to the
Company. Unpredictable or unknown factors not discussed herein could also have
material adverse effects on forward-looking projections. Readers are cautioned
not to place undue reliance on these forward-looking statements that speak only
as of the date hereof. The Company undertakes no obligation to republish revised
forward-looking statements to reflect events or circumstances after the date
thereof or to reflect the occurrence of unanticipated events. Readers are also
urged to carefully review and consider the various disclosures made by the
Company, in this report, as well as the Company's periodic reports on Forms
10-QSB and 8-K filed with the Securities and Exchange Commission.

                               TABLE OF CONTENTS

<Table>
<Caption>
                                                                        PAGE
                                                                        NO.
                                                                        ----
<S>      <C>                                                            <C>
                                   PART I
Item 1   Description of Business.....................................     2
Item 2   Description of Property.....................................    13
Item 3   Legal Proceedings...........................................    13
Item 4   Submission of Matters to a Vote of Security Holders.........    14

                                  PART II
Item 5   Market for the Registrant's Common Equity and Related
         Stockholder Matters.........................................    14
Item 6   Management's Discussion and Analysis or Plan of Operation...    15
Item 7   Financial Statements........................................    17
Item 8   Changes in and Disagreements with Accountants on Accounting
         and Financial Disclosure....................................    17

                                  PART III
Item 9   Directors, Executive Officers, Promoters and Control
         Persons;
         Compliance with Section 16(a) of the Exchange Act...........    17
Item 10  Executive Compensation......................................    17
Item 11  Security Ownership of Certain Beneficial Owners and
         Management..................................................    17
Item 12  Certain Relationships and Related Transactions..............    17

                                  PART IV
Item 13  Exhibits and Reports on Form 8-K............................    18
</Table>

     AVIDYN(TM) is a trademark of AVIDYN, Inc. ppoONE(TM) is a trademark of
ppoONE, Inc. ValueCHECK(R) is a trademark of ValueCHECK, Inc. All other
trademarks or trade names referred to in this Annual Report are the property of
their respective owners.

                                        1
<PAGE>

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

     AVIDYN, Inc. ("AVIDYN" or the "Company") is a healthcare information
services company. AVIDYN conducts its business through two operating companies
serving the healthcare industry. The Company's two operating subsidiaries are
ppoONE, Inc. ("ppoONE"), providing Application Service Provider ("ASP") eHealth
solutions for preferred provider organizations ("PPOs") and payers, and
ValueCHECK, Inc. ("ValueCHECK"), providing utilization review and case
management for third party administrators ("TPAs"), payers and PPOs. Each
operating subsidiary is accounted for as a separate segment of the Company. For
financial information on each segment, see Note 4 to the Consolidated Financial
Statements.

     In the first quarter of 2001, the Company sold MedicalControl Network
Solutions, Inc. ("MNS"), providing managed care services primarily through its
preferred provider networks, and Diversified Group Administrators, Inc. ("DGA"),
providing TPA services. Accordingly, the historical operating results of MNS and
DGA are reported as discontinued operations.

     ppoONE, using its proprietary application software, database structures and
reports, is an Internet-based ASP delivering enterprise software solutions for
PPOs, insurance companies and other healthcare provider network organizations.
ppoONE enables such entities and their clients to manage provider data, contract
data and client data, to reprice healthcare claims to reflect negotiated rates
and to produce data analyses.

     ValueCHECK, a utilization review and case management company, began doing
business January 1, 1999. Its primary target market is the self-insured
employer. ValueCHECK's services are primarily distributed through TPAs and PPOs.
ValueCHECK sells its services on a stand-alone basis. As of January 1, 2002,
ValueCHECK was providing service to over 800 employer clients representing
nearly 1,000,000 covered lives.

     The Company was incorporated in October 1989 as a Delaware corporation.
Unless the context otherwise requires, the term the "Company" refers to AVIDYN,
Inc. and its current wholly owned subsidiaries. The Company's executive offices
are located at 16980 Dallas Parkway, Suite 120, Dallas Texas 75248 and its
telephone number is (972) 447-6447.

APPLICATION SERVICE PROVIDER AND PPO ENTERPRISE SOFTWARE SERVICES -- PPOONE

     Industry.  ppoONE's target PPO market reprices more than 500 million
healthcare claims annually. Historically, many PPOs have developed specialized
in-house software applications to reprice claims and maintain provider data.
Such systems are typically expensive, costly to support and maintain, and do not
offer flexible and enterprise-wide access to data. Most of these systems are not
designed to meet the need for real-time information or actions. The widespread
adoption of distributed Internet computing has provided organizations with a
much greater ability to access and manipulate stored information but also has
created the need for third-party vendors of packaged software solutions that
provide better functionality and reliability than traditional in-house
applications.

     Products and Services.  ppoONE is dedicated to providing PPOs and
healthcare payers with an enterprise solution that encompasses software for PPO
administration and claims repricing and Internet data center services. ppoONE
provides an ASP enterprise software solution for each member client and, if
applicable, their payer clients, accessible via the Internet or direct telephone
connection. ppoONE's solutions provide PPOs the capability to support
payer-clients with Internet access, marketing, distribution and repricing
services.

     Currently, ppoONE offers the following four products:

     - WebCR is an industry-tailored Internet claims repricing solution. WebCR
       offers both semi-automated and completely automated processing of both
       paper and EDI claims; customizable, modular logic to

                                        2
<PAGE>

       administer all types of code and text fee schedule arrangements; flexible
       stop-loss and exclusion logic; as well as complete claims tracking
       features.

     - WebCRX is an industry-tailored client-server based Internet claims
       repricing solution. Designed for PPOs and Payers that need high volume
       extended productivity. WebCRX can be used interchangeably with WebCR.

     - WebDM is a PPO enterprise data management application, permitting
       administration and entry of client, provider, credentialing, fee schedule
       and contract data for both direct and affiliate contracts.

     - GetData is a web enabled Internet data extract engine that allows PPOs
       and their clients to download custom and standard PPO data via the
       Internet.

     These products and services comprise ppoONE's solution for claims repricing
and PPO data management. ppoONE also offers an extensive reporting function, and
a tool to assist clients in loading eligibility, code fee schedule and affiliate
data.

     Product Benefits.  The benefits of ppoONE's ASP solutions for Internet
claims repricing and PPO data management are:

     - Superior Services and Options:  ppoONE's products provide convenience,
       simple administration, reduced PPO and payer costs, superior repricing
       services and excellent claims turnaround.

     - Simplified Administration and Payer Service:  PPO enterprise clients are
       able to load, update and maintain all network provider demographic and
       fee schedule data on ppoONE's Internet Data Center -- once.  This can
       eliminate the requirement of PPOs to distribute and support "n" payers
       with "n" instances of initial provider and fee schedule data loads and
       monthly/quarterly updates.

     - Latest Technology/System Support:  Clients access the benefits of the
       latest technology through ppoONE's Internet-based administration and
       repricing system. This permits the client to focus on core competencies
       such as marketing, network development, provider relations and customer
       service.

     - Reduction of Technology and Systems Overhead:  ppoONE's ASP model reduces
       or eliminates clients' requirement to purchase and maintain PPO
       administration and repricing software, hardware and a complex internal
       telecommunications network. Through ppoONE, member clients gain
       information systems, claims outsourcing options and the ability to
       deliver exceptional customer service.

     - Reduction of Claims Department Costs:  Clients reduce operating costs
       through ppoONE's repricing and data management systems, while achieving
       high rates of accuracy and productivity. Additionally, where affiliate
       networks are ppoONE clients, the work associated with the maintenance of
       affiliate network provider data and fee schedules can be minimized.

     - Customer Service:  The system also has the ability to track claims status
       for improved customer service.

     ppoONE's PPO claims repricing and data management software is a
comprehensive PPO enterprise solution. The software is Internet-based and
utilizes an n-tiered, scaleable, redundant and distributed architecture that can
support virtually unlimited capacity and growth. It employs an Oracle(TM)
relational database. ppoONE's technology allows clients to reprice claims,
perform customer service and manage enterprise PPO data via Internet access or
dedicated connection to ppoONE's data center.

     Among many other features, ppoONE allows the electronic transmission and
receipt of healthcare provider claims. ppoONE is well positioned to assist
clients in complying with the Health Insurance Portability and Accountability
Act of 1996 ("HIPAA") and the Health Care Financing Administration ("HCFA")
regulations. ppoONE can receive and transmit electronic claims from facilities
and physicians, which reduces the costs associated with manual input of claims
data. Once ppoONE receives the claims data electronically, certain claims can be
automatically repriced without human intervention, again reducing manual input
costs.

                                        3
<PAGE>

     Market, Market Size and Revenue Sources.  Target markets for ppoONE
products are PPOs, medical provider groups, insurance carriers, third party
administrators and other managed care companies offering or utilizing healthcare
provider networks. There are over 1,000 PPOs in the U.S. today. PPOs are rapidly
growing segment of the managed care industry, outpacing growth in HMOs as a
viable alternative to the restricted choice imposed by the HMO model. Given that
a company or a group of affiliated companies many times own several PPOs and
many PPOs are owned by large insurance conglomerates that are unlikely
candidates for ppoONE's product, approximately 350 PPO groups are in ppoONE's
target market. There are approximately 430 TPAs in the self-insured market and
200 health insurance carriers in the U.S.

     ppoONE derives its primary and recurring revenues from claims repricing
transaction fees. Additional revenues are earned through the sale of optional
services including customized reports, implementation fees and custom
programming. The current annual market for ppoONE's product solution exceeds
$100 million for claims repricing alone, not inclusive of outsource service
fees, based upon ppoONE's target PPO market, which accounts for 500 million
annual claims repricing transactions.

     Customer Service.  Management believes that ppoONE has the systems and
personnel in place to deliver the high level of customer support necessary to
maintain long-term customer relationships. ppoONE's service desk provides a wide
range of customer support functions. The account manager assigned to each client
is responsible for proactively monitoring customer satisfaction, exposing
customers to additional training and process improvement opportunities, and
coordinating issue resolutions. ppoONE has functional and technical support
personnel who work directly with the account management team and customers to
resolve technical, operational and application problems or questions. ppoONE's
product development team coordinated all changes to computer software. New
versions of software, containing updates and enhancements, are released on a
regular basis following strict testing and with controls that ensure the
software functions correctly in the client environment.

UTILIZATION REVIEW AND CASE MANAGEMENT SERVICES -- ValueCHECK

     Industry Overview.  There are over 100 million lives enrolled in PPO health
plans in America. Payers and health plan sponsors spend over $1.1 billon
annually on managed care services that include utilization review and case
management. These services, in effect, help manage the utilization and,
therefore the cost, of healthcare. Utilization review and case management
services are either handled internally by health insurance companies, PPOs and
TPAs, or outsourced to companies specializing in these services. There are 225
companies providing these services, of which 80 are independent from HMOs or
large insurance companies and are focused on the group health segment. Within
this segment, the market for utilization review and case management for the
self-insured employer is approximately $200 million annually.

     Products and Services.  ValueCHECK began providing utilization review and
case management as of January 1, 1999. Management believes that ValueCHECK
serves an unmet market need for efficient, basic and cost-effective utilization
review and case management services.

     ValueCHECK's products and services are delivered telephonically in a
"virtual office" model that supports and serves clients located anywhere in the
United States. Through the virtual office model, ValueCHECK has the ability to
private label its services for those clients who wish to outsource this product
but retain brand identity or visibility with their clients, the self-insured
employers, and the enrollees in those employers' health plans.

     ValueCHECK's basic utilization review program combines review of medical
necessity and the appropriateness of an inpatient setting. High-risk medical
cases are identified for special tracking, called case management, because such
cases have the greatest potential for financial impact. According to data
derived from more than 500,000 hospital admissions, more than 50% of all
inpatient admissions generally follow a consistent treatment course, therefore,
outcomes are not significantly influenced by aggressive utilization review.
ValueCHECK monitors these medically uncomplicated cases, from pre-certification
through patient discharge, to ensure they do not become complicated or deviate
from their expected treatment course. However, in cases where treatments and
outcomes are not consistent, ValueCHECK employs intensive case management
techniques to optimize patient outcomes and maximize cost savings.
                                        4
<PAGE>

     ValueCHECK incorporates three components to its utilization review process:
review of procedure and medical necessity, length-of-stay determination and
negotiation of the treatment plan and alternative care. Throughout the
utilization review process, ValueCHECK nurses review the medical necessity of an
inpatient stay using nationally accepted medical guidelines. In instances where
the treating physician requests days that are unsupported by these guidelines, a
ValueCHECK physician advisor will review and discuss the case with the treating
physician. This process continues until the patient is discharged or until
medical guidelines are no longer met by the patient's condition or treatment
plan. ValueCHECK's review specialists maintain on-going contact with the
treating physician to ensure the patient stay in an acute care setting lasts
only as long as medically necessary.

     ValueCHECK uses a range of medical guidelines to support the utilization
review process. These guidelines are designed to promote discussion and
negotiation with the patient's treating physician, ensure consistent case
reviews, enhance review nurses' cross-discipline clinical knowledge and
establish proactive information exchange and negotiation capabilities. These
guidelines are screening tools used by ValueCHECK's review specialists that
allow consistent evaluation of the appropriate level of care and treatment
planning. The use of such guidelines does not, however, replace the expertise
and important contribution of ValueCHECK's nurses or physicians.

     ValueCHECK is licensed in each state that requires a license or
certification in which it does business. ValueCHECK is in the process of
applying for licensure in all other states that require utilization review
licensure or certification. ValueCHECK is accredited for Health Utilization
Management Standards by Utilization Review Accreditation Commission ("URAC").

     ValueCHECK's case management program targets cases requiring more
attention, which can result in better medical outcomes for patients and greater
cost savings for plan sponsors. ValueCHECK's early identification of and
intervention in case management candidates gives ValueCHECK the greatest
opportunity to impact outcomes. ValueCHECK's criteria and systems are
specifically designed not only to identify catastrophic and chronic illness or
injury cases, but also to prompt our reviewer to ask questions about seemingly
routine, uncomplicated cases that may reveal additional factors indicating
increased risk. Once cases are identified, ValueCHECK matches the level and
method of case management services to the intensity of the case to improve
outcomes in the most cost-efficient manner possible.

     Case managers identify, coordinate, and negotiate alternative treatment
plans and related costs. Nurses help expedite discharge from costly inpatient
settings to a patient's home or outpatient care facility, placing the patient in
the most appropriate setting possible. Nurses interface with the patient,
family, treating providers, and facilities in addition to a variety of ancillary
vendors such as home health aid and local support groups to coordinate
patient-focused, caring treatment plans that incorporate effective use of
benefit dollars.

     ValueCHECK's case managers will direct patients to network providers
whenever possible. If the patient does not participate in a PPO plan or there is
not a network provider available, the case manager will negotiate a discounted
fee with the service provider with the goal of securing high quality, lower cost
outpatient and home healthcare services.

     Product Benefits.  The benefits of ValueCHECK's utilization review and case
management serves are:

     - ValueCHECK represents clients' reputation and interests while providing
       the health plan's participants with pleasant, efficient utilization
       review and case management experiences. ValueCHECK understands that the
       health plan achieves maximum savings when its participants receive
       appropriate and timely care.

     - ValueCHECK produces results without compromising the quality of patient
       care and customer service.

     - ValueCHECK strives to provide the best patient-focused utilization review
       and case management programs in the industry, using a combination of
       "best practices," nationally recognized guidelines and strong industry
       experience to negotiate the right treatment plans at the right price.
       ValueCHECK also uses state-of-the-art software to provide timely and
       consistent review recommendations.

                                        5
<PAGE>

     - ValueCHECK offers compassionate reviews, reliable recommendations, timely
       reports, cost-effective answers, and the advice of skilled nurses and
       experienced physician advisors.

     Market, Market Size and Revenue Sources.  ValueCHECK focuses on the
self-insured employer segment of the healthcare market. ValueCHECK markets its
services through a sales executive, healthcare consultants and third parties
such as TPAs, PPOs, stop loss carriers and insurance companies. ValueCHECK
places its greatest emphasis on marketing to TPAs and other third parties that,
in turn, market ValueCHECK's services to their clients. The market segment of
utilization review and case management for the self-insured employer, as
distributed by approximately 430 TPAs, is approximately $200 million. The market
is driven in part by the stop-loss industry that encourages, through the cost of
its premiums, adequate utilization review by its clients in order to identify
cases that will result in high dollar claims.

     Various companies provide utilization review and case management services,
including companies that specialize solely in these services as well as PPOs,
TPAs and insurance companies that perform the services as a complement to their
other products. There are approximately 225 URAC accredited utilization
management firms, of which 80 are in ValueCHECK's group health/TPA segment and
are independent from HMOs or large insurance companies.

     ValueCHECK's recurring revenues are from its utilization review services,
which are provided on the basis of a set charge per member per month. Case
management services are typically fee-based professional services, and are
variable. ValueCHECK provides marketing services through its corporate office in
Dallas, Texas.

     Customer Service.  Management believes that ValueCHECK has the systems and
personnel required to deliver the high level of customer support necessary to
maintain long-term customer relationships. ValueCHECK employs 26 registered
nurses, who provide utilization review and case management services and 10
customer services representatives. Under the direction of its Medical Director,
a network of over 400 physician advisors provides reviews in specific medical
specialties. ValueCHECK's professional personnel are supported by a technology
platform that provides its customers efficient access to services and reporting,
and promotes operating cost efficiencies.

GOVERNMENT REGULATION

     Patient's Records; HIPAA.  The confidentiality of patient records and the
circumstances under which such information may be used or released are subject
to substantial regulation by state and federal laws and regulations. Regulations
governing electronic health data transmissions are evolving rapidly and are
often unclear and difficult to apply.

     HIPAA required the Secretary of the Department of Health and Human
Services, referred to as the Secretary, to promulgate national standards to
facilitate the electronic exchange of health information and to ensure the
confidentiality and security of such information.

     A substantial part of our activities involves the receipt or delivery of
confidential health information as our system reprices healthcare claims and we
provide utilization review and case management services. On December 28, 2000,
the Secretary published a final rule setting standards to limit the permissible
use and disclosure of individually identifiable health information by health
care providers, health plans and health care clearinghouses, known collectively
as "covered entities". Certain requirements of the rule extend to "business
associates" of the covered entities. The covered entities are required to enter
into agreements with their business associates, extending applicable provisions
of the rule to those business associates. The covered entities are responsible
for enforcing those contractual provisions. The rule took effect on April 14,
2001, and all covered entities (except small health plans with annual receipts
of $5 million or less) are required to be in compliance with this rule as of
April 14, 2003.

     Because of the broad definition of "business associates" under the final
privacy rule, ValueCHECK and ppoONE would be, at a minimum, considered to be
business associates of covered entities. The rule establishes a complex
regulatory framework on a variety of subjects, including (1) disclosure and use
of health information, (2) individuals' rights to access and amend their health
information, (3) individuals' rights to an
                                        6
<PAGE>

accounting of disclosures and (4) administrative, technical and physical
safeguards required of covered entities that maintain or transmit protected
health information. The rule generally prohibits any disclosure or use of
protected health information except as authorized either by the rule or by the
patient under standards set by the final rule. On March 22, 2002 the Department
of Health and Human Services released an advance copy of the proposed changes to
the HIPAA privacy regulations that would ease current regulations regarding
patient consents and incidental disclosure of

     In addition to the federal privacy rule described above, most states have
enacted patient confidentiality laws, which prohibit the disclosure of
confidential medical information. The federal privacy rule establishes minimum
standards and preempts conflicting state laws, less restrictive than HIPAA
regarding health information privacy. But it does not preempt conflicting state
laws more restrictive than HIPAA. The rule promulgated by the Secretary may
require substantial changes to our applications and services, policies and
procedures.

     In addition to the federal privacy rule, on August 12, 1998 the Secretary
issued proposed regulations addressing security standards regarding the
transmission of health information data under HIPAA. The security standards
address various areas, including, administrative procedures, physical
safeguards, technical security services and technical security mechanisms.
Security standards may require us to enter into agreements with certain of our
customers restricting the dissemination of health information and requiring
implementation of specified security measures. Final regulations are expected at
an undetermined date and will require compliance two years after the effective
date of the final rule. There can be no assurance that final security
regulations will not require additional modifications to our applications,
policies and procedures.

     Lastly, the Secretary published the final transactions and code sets rule
in August 2000, which took effect on October 16, 2000. Its purpose is to create
uniformity in electronic data interchange (EDI) standards, which allow computers
to exchange information without human involvement. Compliance with this rule is
mandatory for most covered entities that engage in the eight transactions
covered in the rule, by October 16, 2002. However, the recently enacted
Administrative Simplification Compliance Act allows covered entities to apply
for a one-year extension of such date if the entity submits a plan to the
Secretary by October 15, 2002. We intend to comply with any rule, which is
determined to be applicable to us.

     Healthcare.  The Company anticipates that federal and state legislatures
will continue to review and consider alternative healthcare solutions and
payment methods. The Company is unable to determine to what extent its products
will be affected by any managed care initiatives of the federal and state
governments or private sector initiatives, as there is increasing emphasis on
market-driven modifications. Also, the Company is unable to determine the
favorable or unfavorable impact, if any, such initiatives would have on its
operations.

     Utilization Review and Case Management.  Each state's government regulates
the utilization review and case management industry and regulations vary from
state to state. ValueCHECK is licensed in each state that requires a license or
certification in which it does business. ValueCHECK is in the process of
applying for licensure in all other states that require utilization review
licensure or certification.

INTELLECTUAL PROPERTY AND OTHER PROPRIETARY RIGHTS

     The Company relies on a combination of copyright, trademark and trade
secret laws and confidentiality procedures to protect its proprietary rights.
The Company holds no patents and has no patent applications pending. There can
be no assurance that patents will be issued with respect to potential future
patent applications or that the Company's potential future patents will be
upheld as valid or will prevent the development of competitive products. The
Company seeks to protect its software, documentation and other written materials
under trade secret and copyright laws, which afford only limited protection. As
part of its confidentiality procedures, the Company generally enters into
ownership acknowledgements and non-disclosure agreements with its employees and
independent contractors and nondisclosure agreements with its distributors,
corporate partners and licensees, and limits access to and distribution of its
software, documentation and other proprietary information. Despite these
precautions, it may be possible for a third party to copy or otherwise to obtain
and use the Company's products or technology without authorization, or to
develop similar technology independently. The Company has placed certain source
code into escrow in case it ceases to
                                        7
<PAGE>

operate, which may increase the likelihood of misappropriation or other misuse
of the Company's intellectual property.

     As the number of software products increases and the functionality of these
products further overlap, the Company believes that software developers may
become increasingly subject to infringement claims. Any such claims, with or
without merit, can be time consuming and expensive to defend and could
materially and adversely affect the Company's business, financial condition and
results of operations.

     During 2001 and 2000, the Company incurred approximately $490,000 and
$590,000 of software development costs, respectively, for continuing operations.
All of which were expensed as incurred.

CUSTOMERS

     Excluding revenue from discontinued operations, for the fiscal years ended
December 31, 2001 and 2000 the following companies comprised more than 10% of
consolidated revenues:

<Table>
<Caption>
                                                              PERCENTAGE OF
                                                               CONSOLIDATED
                                                                 REVENUES
                                                              --------------
COMPANY NAME                                                  2001     2000
------------                                                  -----   ------
<S>                                                           <C>     <C>
Preferred CommunityChoice PPO, Inc. ........................     *     23.4%
American Medical Securities, Inc. ..........................     *     14.6%
ppoNEXT, Inc. ..............................................  11.2%       *
</Table>

---------------

 *  less than 10%

EMPLOYEES

     As of December 31, 2001, the Company and its wholly owned subsidiaries had
70 full-time employees and 4 part-time employees. In February 2002, ppoONE
reduced its staff by 8 full-time employees. The Company believes that it has a
good relationship with its employees. None of the Company's employees are
covered by collective bargaining agreements.

                                        8
<PAGE>

                                  RISK FACTORS

     We caution you that we have used forward-looking statements in this report
that involve risks and uncertainties. These forward-looking statements can be
identified by the use of predictive, future tense or forward-looking
terminology, such as "believes," "anticipates," "expects," "estimates," "may,"
"will" or similar terms. Forward-looking statements also include projections of
financial performance, statements regarding management's plans, statements
regarding new products and objectives and statements concerning any assumptions
relating to the foregoing. AVIDYN's actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including those set forth in the following risk factors and elsewhere
in this Form 10-KSB. See "Cautionary Statement Regarding For Purposes of the
"Safe Harbor" Provisions of the Private Securities Litigation Reform Act of
1995."

AVIDYN MAY NOT BE ABLE TO ACHIEVE OR MAINTAIN PROFITABILITY IN THE FUTURE

     AVIDYN's loss from continuing operations was $1,969,000 for the year ended
December 31, 2001 and $1,621,000 for the year ended December 31, 2000. We cannot
assure you that the revenues of ppoONE and ValueCHECK will ever result in
revenues sufficient to absorb operational expenses and corporate overhead in
order for us to be profitable. ppoONE has never been profitable. While ppoONE
has made significant investments in establishing its ASP technology, there can
be no assurance as to its future prospects. ppoONE did not sign any new client
contracts in 2001.

THE PURCHASE AGREEMENTS WILL EXPOSE AVIDYN TO CONTINGENT LIABILITIES

     Under each of the MNS and DGA purchase agreements, AVIDYN or a subsidiary
of AVIDYN that directly owned MNS and DGA agreed to indemnify the buyer for
breach of our representations and warranties contained in the applicable
purchase agreement. Significant indemnification claims by the buyer of either
the PPO or TPA businesses could materially and adversely affect our financial
condition and results of operations.

DEPENDENCE ON KEY CLIENTS; LOSS OF REVENUES

     We have contracts with several key clients that account for a substantial
portion of our total revenues. Based on revenues, our largest clients, excluding
discontinued operations, accounted for a significant portion of our revenues for
2001 and 2000, as follows:

<Table>
<Caption>
                                                                PERCENT OF REVENUE FROM
                                                               OUR THREE LARGEST CLIENTS
                                                               -------------------------
<S>                                                            <C>
2001........................................................      11.2%, 8.1% and 4.9%
2000........................................................     23.4%, 14.6% and 5.2%
</Table>

     The loss of any principal customer could have a material adverse effect on
our operating results.

COMPETITION

     ppoONE.  The market for network software solutions is competitive and
subject to rapid change. Competitors, many of which have substantially greater
financial resources than ppoONE, vary in size and in the scope of the products
and services they offer. ppoONE encounters competition from a number of sources
including other application software providers, PPO and TPA software vendors and
management information systems departments of customers and potential customers.
ppoONE expects to experience additional competition from other established and
emerging companies. Increased competition, whether from other products or new
technologies, could result in price reductions, fewer customer orders, reduced
gross margins and loss of market share, any of which could materially adversely
affect our business, financial condition and results of operations. ppoONE
expects that it will face increased pricing pressures from its current
competitors and new market entrants. Current major competitors include, but are
not limited to, NetworX, MCOnline, Health Network Systems, LLC, Outsourced
Administrative Systems, Inc., Plan Vista Solutions, MCS-ppo.com, and Computer
Sciences Corp. Price competition could adversely affect ppoONE's ability to
obtain new long-term contracts and renewals of existing long-term contracts on
terms favorable to ppoONE. Any

                                        9
<PAGE>

reduction in the price of ppoONE's products could materially adversely affect
AVIDYN's business, financial condition and results of operations. Some of
ppoONE's current competitors and many of ppoONE's potential competitors have
significantly greater financial, technical, marketing and other resources than
ppoONE and broader integrated product lines. As a result, they may have
competitive advantages over ppoONE including:

          (1) the ability to respond more quickly than ppoONE to new or emerging
     technologies and changes in customer requirements; and

          (2) the ability to devote greater resources to the development,
     promotion and sale of their products.

     New competitors or alliances among competitors may emerge and rapidly gain
significant market share. ppoONE's customers, most of which have significantly
greater financial and marketing resources than ppoONE, may compete with ppoONE
in the future or otherwise discontinue their relationships with or support of
ppoONE. ppoONE may not be able to compete successfully against current and
future competitors, and competitive pressures faced by ppoONE may have a
material adverse effect on its business, financial condition and results of
operations.

     ValueCHECK.  There are over 100 million lives enrolled in PPO plans in the
United States today, and 95% of those covered lives are required to comply with
utilization review procedures as defined in their benefit plan. This mature
market is dominated by a handful of national firms that together control about
40% of the market. The remaining market is fragmented among over 200 smaller
competitors, 80 of which focus on the group health segment. Most of the larger
national firms have built products for the high-end Fortune 500 company market,
and product design tends to feature a great deal of customization, product
enhancements, ad hoc reporting capabilities, and corresponding premium pricing.
Smaller vendors fall into several categories including software vendors, disease
and demand management specialty boutiques that have entered the utilization
review business, and turnkey consultants. ValueCHECK's target markets are TPAs,
Taft-Hartley plans, associations and select self-insured employers who value
customer service and early identification of high dollar claims at a lower
price. We cannot assure you that ValueCHECK's approach to this market will be
successful and will be able to be sustained.

     As ValueCHECK's services become more of a commodity, the price advantage
that ValueCHECK currently enjoys may be eroded. This market is in the early
stages of consolidation, with smaller firms beginning to be purchased by the
larger firms. As competitors become larger, there is potential for the prices to
decrease.

THE SALES CYCLE FOR ppoONE PRODUCTS IS LENGTHY AND UNPREDICTABLE

     Due in part to the business-critical nature of ppoONE's applications,
potential customers perceive high risk in connection with adoption of ppoONE's
products. As a result, customers have been cautious in making decisions to
acquire ppoONE's products. In addition, because the purchase of ppoONE's
products typically involves a conversion of the customer's data and a redesign
of key business processes, delays in completing sales can arise while customers
complete their internal procedures to approve, test and accept new technologies
that affect key operations. For these and other reasons, the sales cycle
associated with the purchase of ppoONE's products is typically lengthy,
unpredictable and subject to a number of significant risks over which ppoONE has
little or no control, including customers' budgetary constraints and internal
acceptance reviews. The sales cycle associated with the licensing of ppoONE's
products typically ranges from 120 days to 18 months. As a result of the length
of the sales cycle and the typical size of customers' orders, ppoONE's ability
to forecast the timing and amount of specific sales is limited.

ppoONE'S NEW PRODUCTS MAY NOT ACHIEVE MARKET ACCEPTANCE

     The market for Internet-based software solutions is still emerging. The
rate at which businesses have adopted ppoONE's type products has varied
significantly, and ppoONE expects to continue to experience such variations with
respect to its products in the future. Although businesses in ppoONE's target
markets have recognized the advantages of using Internet-based software
solutions to automate their processes, many have developed systems internally
rather than licensing them from outside vendors. The markets for ppoONE's

                                        10
<PAGE>

products may not continue to develop, and ppoONE's products may not be accepted.
If the markets for ppoONE's current or proposed products fail to develop, or
develop more slowly than anticipated, ppoONE's sales would be negatively
impacted, which would have a material adverse effect on our business, financial
condition and results of operations.

ppoONE MUST KEEP PACE WITH RAPIDLY CHANGING TECHNOLOGIES

     In the markets served by ppoONE, technology changes rapidly, and computer
hardware, network operating systems, programming tools, programming languages,
operating systems and database technology are constantly being improved.
ppoONE's success will depend upon its ability to continue to develop and
maintain competitive technologies, enhance its current products and develop, in
a timely and cost-effective manner, new products that meet changing market
conditions. In particular, ppoONE must respond to evolving customer needs, new
competitive product offerings, emerging industry standards and changing
technology. Any significant delay in the completion of new products, or the
failure of such products, if and when installed, to achieve any significant
degree of market acceptance, would have a material adverse effect on AVIDYN's
business, financial condition and results of operations. Any failure by ppoONE
to anticipate or to respond adequately to changing technologies, or any
significant delays in product development or introduction, could cause customers
to delay or decide against purchases of ppoONE's products and would have a
material adverse effect on AVIDYN's business, financial condition and results of
operations.

ppoONE MUST PROTECT ITS INTELLECTUAL PROPERTY

     ppoONE relies on a combination of copyright, trademark and trade secret
laws and confidentiality procedures to protect its proprietary rights. ppoONE
also seeks to protect its software, documentation and other written materials
under trade secret and copyright laws, which afford only limited protection.
Despite ppoONE's measures to protect confidentiality of intellectual property,
it may be possible for a third party to copy or otherwise to obtain and use
ppoONE's products or technology without authorization, or to develop similar
technology independently. We hold no patents and no patents applications are
pending. Patents may not be issued with respect to ppoONE's future patent
applications, and ppoONE's future patents may not be upheld as valid or prevent
the development of competitive products. ppoONE also places certain source code
into escrow, which may increase the likelihood of misappropriation or other
misuse of ppoONE's intellectual property.

     Our business, financial condition and results of operations would be
materially and adversely affected by infringement of our intellectual property
rights. As the number of software products increases and the functionality of
these products further overlap, ppoONE believes that software developers may
become increasingly subject to infringement claims. Any such claims, with or
without merit, can be time consuming and expensive to defend and could
materially and adversely affect AVIDYN's business, financial condition and
results of operations.

ppoONE'S PRODUCTS ARE SUBJECT TO PRODUCT LIABILITY CLAIMS

     Software products as complex as those offered by ppoONE often contain
undetected errors or failures when first introduced or as new versions are
released. As ppoONE develops new products the possibility for program errors and
failures may increase due to factors such as the use of new technologies or the
need for more rapid product development that is characteristic of the Internet
market. Despite pre-release testing by ppoONE and by current and potential
customers, there still may be errors in new products, even after post-testing
distribution. The occurrence of errors could result in a delay in, or failure to
achieve, market acceptance of ppoONE's products, which could have a material
adverse effect on our business, financial condition and results of operations.
Although ppoONE's license agreements with its customers typically contain
provisions designed to limit ppoONE's exposure to potential product liability
claims, it is possible that such limitation of liability provisions may not be
effective as a result of existing or future laws or judicial decisions. Because
ppoONE's products are used in business-critical applications, any errors or
failures in such products may give rise to substantial product liability claims,
which could have a material adverse effect on our business, financial condition
and results of operations.
                                        11
<PAGE>

BREACHES OF OUR NETWORK SECURITY AND INTERNET SLOWDOWNS COULD RESULT IN
LIABILITY AND DAMAGE TO OUR BUSINESS REPUTATION

     The ppoONE products involve the storage of confidential customer and
patient information at our data centers and the transmission of this data over
private and public networks, including the Internet. Despite the implementation
of network security measures by us, our servers are vulnerable to computer
viruses, physical or electronic break-ins and similar disruptions, which could
lead to interruptions, delays, loss of data or the inability to provide our
products to our clients. Security breaches could result in legal liability and
damage to our business reputation. In the event of such a security breach,
proprietary and confidential information could be misappropriated or our
operations could be interrupted. Such a security breach or interruption of our
operations could damage our reputation and cause us to lose customers. In
addition, any costs or imposition of liability that is not covered by insurance
or is in excess of insurance coverage could have a material adverse effect on
our business, financial condition and results of operations.

     Any reduction in performance or disruption in the Internet or our
telecommunications provider could have a material adverse effect on our
business, operating results and financial condition.

CHANGES IN GOVERNMENT REGULATION OF THE HEALTHCARE INDUSTRY COULD ADVERSELY
AFFECT OUR BUSINESS

     The confidentiality of patient records and the circumstances under which
such information may be used or released are subject to substantial regulation
by state and federal laws and regulations. HIPAA and other regulations governing
privacy and electronic health data transmissions are evolving rapidly and are
often unclear and difficult to apply. There can be no assurance that final or
new regulations will not require additional modifications to our applications,
policies and procedures.

     The Company anticipates that federal and state legislatures will continue
to review and consider alternative healthcare solutions and payment methods. The
Company is unable to determine to what extent its products will be affected by
any managed care initiatives of the federal and state governments or private
sector initiatives, as there is increasing emphasis on market-driven
modifications. Also, the Company is unable to determine the favorable or
unfavorable impact, if any, such initiatives would have on its operations.

CHANGES IN GOVERNMENT REGULATION PERTAINING TO THE INTERNET COULD ADVERSELY
AFFECT OUR BUSINESS

     There are increasing numbers of laws and regulations pertaining to the
Internet. In addition, a number of legislative and regulatory proposals are
under consideration by federal, state, and local governments and agencies. Laws
or regulations may be adopted with respect to the Internet relating to liability
for information retrieved from or transmitted over the Internet, on-line content
regulation, user privacy, taxation and quality of products and services.
Moreover, it may take years to determine whether and how existing laws apply to
the Internet such as those governing issues such as intellectual property
ownership and infringement, privacy, libel, copyright, trademark, trade secret,
personal privacy, taxation, regulation of professional services, and the
regulation of the sale of other specified services. The requirement to comply
with any new legislation or regulation, or any unanticipated application or
interpretation of existing laws, may decrease the growth in the use of the
Internet, which could in turn decrease the demand for ppoONE's services,
increase the cost of doing business or otherwise have a material adverse effect
on ppoONE's business, financial condition and results of operations.

     A number of legislative proposals have been made at the federal, state and
local level, and by foreign governments, that would impose additional taxes on
the sale of goods and services over the Internet and certain states have taken
measures to tax Internet-related activities. Such legislation or other attempts
at regulating commerce over the Internet may substantially impair the growth of
commerce on the Internet and, as a result, adversely affect our opportunity to
derive financial benefit from such activities.

MISSION CRITICAL THIRD PARTY SOFTWARE

     ValueCHECK licenses the MedAdvice 2001 utilization review and case
management software. While this software has been efficient and reliable in the
past we cannot assure you that it will continue to be so.

                                        12
<PAGE>

ValueCHECK plans to continue licensing third party software to support our
day-to-day processes, review decisions, vital documentation and customer
reporting.

POSSIBLE ANTI-TAKEOVER EFFECTS OF CERTAIN CERTIFICATE OF INCORPORATION AND BYLAW
PROVISIONS

     Our Certificate of Incorporation and Bylaws contain provisions that may
discourage acquisition bids for AVIDYN. We have substantial authorized but
unissued capital stock available for issuance. Our Certificate of Incorporation
contains provisions that authorize the Board of Directors, without the consent
of stockholders, to issue additional shares of Common Stock and issue shares of
Preferred Stock in series, and grant authority to the Board to amend our Bylaws.
Additionally, our Bylaws empower the Board to increase or decrease the number of
directors, subject to certain limitations, and specify that directors will
generally hold office until the next annual meeting of stockholders. Preferred
Stock could have dividend, liquidation, conversion, voting or other rights that
could adversely affect the voting power or other rights of the holders of the
Common Stock. These provisions may have the effect, either alone or in
combination with each other, of (1) limiting the price that certain investors
might be willing to pay in the future for the Common Stock, (2) delaying,
deferring or otherwise discouraging an acquisition or change in control of
AVIDYN deemed undesirable by the Board of Directors or (3) adversely affecting
the voting power of stockholders who own Common Stock.

THE PUBLIC MARKET FOR OUR COMMON STOCK IS THINLY TRADED AND LACKS LIQUIDITY,
WHICH MAY MAKE IT MORE DIFFICULT FOR INVESTORS TO SELL THEIR SHARES AND MAY HAVE
AN ADVERSE EFFECT OF THE STOCK PRICE

     Our common stock is traded under the symbol "ADYN" on the Nasdaq SmallCap
Market. During the last six months of 2001, the average daily trading volume for
our common stock was less than 4,000 shares and our common stock did not trade
any shares on 32 trading days. A purchaser of shares may, therefore, be unable
to resell any common stock when they desire to do so.

     Our Chairman of the Board, Mr. J. Ward Hunt, has pledged 1,000,000 shares
of his stock in the Company as collateral on a loan from a bank. Any inability
or failure of Mr. Hunt to comply with the terms of loans and pledge agreements
may result in the secured party foreclosing on the pledged shares of common
stock, which the secured party may be required to sell under current federal
banking regulations. Any future sales of substantial amounts of Common Stock in
the open market or the availability of such shares could adversely affect the
market for the Common Stock.

SHARES ELIGIBLE FOR FUTURE SALE

     All of the 1,565,807 shares of Common Stock owned by Mr. Hunt and a related
partnership are eligible for sale under the Securities Act and Rule 144
promulgated thereunder. Any future sales of substantial amounts of Common Stock
in the open market or the availability of such shares could adversely affect the
market for the Common Stock.

ITEM 2.  DESCRIPTION OF PROPERTY

     The Company leases a total of 21,300 square feet in two locations in
Dallas, Texas.

     The Company does not invest in, and has not adopted any policy with respect
to investments in, real estate or interests in real estate, real estate
mortgages or securities of or interests in persons primarily engaged in real
estate activities. It is not the Company's policy to acquire assets primarily
for possible capital gain or primarily for income.

ITEM 3.  LEGAL PROCEEDINGS

     There are no material pending legal proceedings to which the Company is a
party or of which any of its property is the subject, and no such proceedings
are known by the Company to be contemplated.

                                        13
<PAGE>

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

     No matter was submitted during the fourth quarter of the fiscal year
covered by this report to a vote of security holders, through the solicitation
of proxies or otherwise.

                                    PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     (a) The Common Stock is traded in the over-the-counter market and is quoted
on The NASDAQ SmallCap Market under the symbol "ADYN." The following table sets
forth the high and low bid prices of the Common Stock for the last two fiscal
years as reported to the Company by the National Association of Securities
Dealers, Inc.:

<Table>
<Caption>
                                                              HIGH     LOW
QUARTER ENDED                                                  BID     BID
-------------                                                 -----   -----
<S>                                                           <C>     <C>
March 31, 2001..............................................  $6.06   $2.81
June 30, 2001...............................................  $7.25   $4.75
September 30, 2001..........................................  $7.22   $3.90
December 31, 2001...........................................  $4.48   $2.90
March 31, 2000..............................................  $8.50   $7.13
June 30, 2000...............................................  $7.50   $5.50
September 30, 2000..........................................  $6.81   $5.00
December 31, 2000...........................................  $8.63   $3.00
</Table>

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

     (b) As of March 21, 2002, there were approximately 590 record and
beneficial holders of the Company's Common Stock.

     (c) The Company has not paid cash dividends on its Common Stock in the last
two years and in any subsequent interim period.

                                        14
<PAGE>

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS

OPERATING RESULTS

  FISCAL YEAR ENDED DECEMBER 31, 2001, COMPARED TO DECEMBER 31, 2000

  General

     On January 22, 2001, the Company completed the sale of DGA, its TPA
subsidiary, and on February 1, 2001, it completed the sale of MNS, its PPO
subsidiary. See Note 3 to the Consolidated Financial Statements. Therefore,
historical financial information for these two segments has been reported as
discontinued operations. Continuing operations consist of ppoONE and ValueCHECK.

  Operating Results

     Revenues from continuing operations increased approximately $3,781,000 to
$5,931,000 from $2,150,000 in 2000. Approximately $2,038,000 of the increase was
from ValueCHECK, which commenced operations January 1, 1999, and steadily added
customers. In addition, approximately $205,000 of the revenue increase resulted
from the purchase of substantially all of the assets of Medical Review, LLC dba
PROMED on October 1, 2001. See Note 12 to Consolidated Financial Statements.
ppoONE revenue increased $1,255,000 in 2001 primarily from contracts signed in
late 2000 that were implemented in the Spring of 2001. Although, ppoONE has not
signed any new contracts in 2001, they have continued to receive new business
from existing customers. The ppoONE revenue in 2001 included approximately
$42,000 in intercompany revenues for services provided to the discontinued
operations as compared to $529,000 in 2000. These revenues were eliminated in
consolidation.

     The Company reported a loss from continuing operations of $1,969,000 or
$0.44 per share for 2001 compared with a loss of $1,621,000, $0.35 per share, in
2000. The ppoONE operating loss of $2,072,000 in 2001 was an increase of
$799,000 over the 2000 operating loss of $1,273,000. These losses reflect
management decisions in 2000 to accelerate spending on software development as
well as marketing. In October 2001 and February 2002, ppoONE reduced its
personnel by one third. ppoONE is focusing on its existing client base with
development expenditures directed on client requirements verses new product
offerings and in achieving positive operating income in 2002. ValueCHECK had
operating income in 2001 of $335,000 verses a loss of $32,000 for 2000.
Approximately half of the ValueCHECK income from operations is from new
customers through existing marketing efforts and the remainder from the PROMED
acquisition. Corporate overhead expenses increased $843,000 to $2,131,000 in
2001 due to increased marketing and branding expense, primarily due to the name
change to AVIDYN, moving the corporate headquarters in order to consolidate
operations, and increased salaries and wages, partly as the severance payments
made to individuals being terminated after the sales of the discontinued
operations and new personnel hired to direct the expanding ppoONE and ValueCHECK
operations. Approximately 30% of these expenses in 2001 are non-recurring.

     The Company recorded an after-tax gain of $4,326,000, or $0.99 per share,
from the sales of discontinued operations in 2001. In addition, there was
operating income from discontinued operations of $95,000, or $0.02 per share,
for one month in the 2001 period compared with income of $1,215,000, or $0.26
per share in 2000. Net income was $2,453,000, or $0.55 per share for the year
ended December 31, 2001. In 2000, the Company had a net loss of $406,000 and
loss per share was $0.09.

     Salaries and wages increased $2,921,000 in 2001 over 2000. Other operating
expenses increased $2,018,000 in 2001 over 2000. These increases reflect the new
business in both ppoONE and ValueCHECK, the acceleration of the development of
ppoONE's product offerings and related marketing and sale efforts and the
additional corporate expenses discussed above. Depreciation and amortization
increased $119,000 to $195,000 in 2001 due to expanded hardware and software
requirements for the additional revenue.

     Investment income was up substantially in the 2001 periods as the result of
interest earned on the proceeds from the sales of DGA and MNS. Other income for
the year ended December 31, 2001 consists of $433,000 of deferred gain on the
sale of real estate option (see Note 9 to the Consolidated Financial Statements)
which was recognized when the purchaser of MNS assumed the lease on 20,000
square feet (out

                                        15
<PAGE>

of a total of 28,000 square feet) in the building which was the real estate
covered by the option and the refund of $150,000 of life insurance premiums
previously paid by the Company. (see Note 13 to the Consolidated Financial
Statements)

LIQUIDITY AND CAPITAL REQUIREMENTS

     The Company had net working capital of $5,492,000 at December 31, 2001,
compared with $960,000 at December 31, 2000. Cash and cash equivalents and
short-term investments were $4,132,000 at December 31, 2001, whereas, at
December 31, 2000, all cash was in the discontinued operations. Cash used in
operations in 2001 was $2,947,000 as compared to $1,650,000 in 2000. Although
cash used in operations increased over prior year, the amount of cash used in
operating activities in the fourth quarter declined $198,000 over the second
quarter of 2001 and is expected to further decline in 2002 due to reduced
personnel of ppoONE and increased profitability at ValueCHECK as it continues to
add new customers and the benefit of a full year of revenue from the PROMED
acquisition.

     Capital expenditures for the purchase of tangible property and equipment
were approximately $931,000 for 2001. These expenditures were primarily for
furniture and fixtures and leasehold improvements related to the consolidation
and relocation of the corporate offices at the ppoONE location; furniture and
fixtures located in the premises occupied by MNS, which are being leased to MNS,
and data processing equipment and peripherals for ppoONE. Capital expenditures
in the subsequent year are expected to be significantly reduced since the
operating infrastructure has been substantially completed.

     As further discussed in Note 12 to the Consolidated Financial Statements,
on October 1, the Company purchased substantially all of the assets of PROMED
for $508,000 in cash. The purchase agreement also provides for an additional
cash payment of $127,000, on November 1, 2002 if revenues of the acquired
business equals or exceeds certain specified levels. In addition, as further
discussed in Note 13 to the Consolidated Financial Statements, the Company
entered into an agreement with J. Ward Hunt, majority shareholder and chairman
of the Company's Board of Directors, and certain related entities to purchase
1,100,000 shares of the Company's stock for $3.60 per share. Under the
agreement, a cash payment of $2,500,000 was made on October 15, 2001, the
effective date of the agreement and $1,460,000 plus interest of $3,184 was paid
on November 5, 2001 upon the maturity of one of the Company's short-term
investments.

     Management believes that cash flows from operations, cash on hand and
invested and the Company's borrowing capacity will be sufficient to fund
liquidity needs and capital requirements for the fiscal year 2002 and thereafter
for the foreseeable future. The Company has not paid dividends in the past and
does not anticipate the payment of such in the future.

                                        16
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS

                         AVIDYN, INC. AND SUBSIDIARIES

                         INDEX TO FINANCIAL STATEMENTS

                        HISTORICAL FINANCIAL STATEMENTS

                         AVIDYN, INC. AND SUBSIDIARIES

<Table>
<Caption>
                                                               PAGE
                                                               ----
<S>                                                            <C>
Report of Independent Certified Public Accountants..........   F-1
Consolidated Balance Sheets as of December 31, 2001 and
  2000......................................................   F-2
Consolidated Statements of Operations for the years ended
  December 31, 2001 and 2000................................   F-3
Consolidated Statements of Changes in Stockholders' Equity
  for the years ended December 31, 2001 and 2000............   F-4
Consolidated Statements of Cash Flows for the years ended
  December 31, 2001 and 2000................................   F-5
Notes to Consolidated Financial Statements..................   F-6
</Table>

The Financial Statements are located after the signature page.

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

     None.

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

     The information called for by this Item is incorporated by reference from
the Company's definitive Proxy Statement, which involves, among other things,
the election of the Board of Directors, to be filed pursuant to Regulation 14A
and which the Company intends to file with the Securities and Exchange
Commission not later than 120 days after December 31, 2001, the end of the year
covered by this Form 10-KSB.

ITEM 10.  EXECUTIVE COMPENSATION

     The information called for by this Item is incorporated by reference from
the Company's definitive Proxy Statement, which involves, among other things,
the election of the Board of Directors, to be filed pursuant to Regulation 14A
and which the Company intends to file with the Securities and Exchange
Commission not later than 120 days after December 31, 2001, the end of the year
covered by this Form 10-KSB.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information called for by this Item is incorporated by reference from
the Company's definitive Proxy Statement, which involves, among other things,
the election of the Board of Directors, to be filed pursuant to Regulation 14A
and which the Company intends to file with the Securities and Exchange
Commission not later than 120 days after December 31, 2001, the end of the year
covered by this Form 10-KSB.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information called for by this Item is incorporated by reference from
the Company's definitive Proxy Statement, which involves, among other things,
the election of the Board of Directors, to be filed pursuant to Regulation 14A
and which the Company intends to file with the Securities and Exchange
Commission not later than 120 days after December 31, 2001, the end of the year
covered by this Form 10-KSB.

                                        17
<PAGE>

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits

<Table>
<C>      <C>   <S>
 3.1       --  Restated Certificate of Incorporation of the Company, as
               amended.
 3.2       --  Amended and Restated Corporate Bylaws of the Company.
10.1       --  Form of Agreement by and between the Company and each of its
               directors and officers -- incorporated by reference to the
               Company's Annual Report on Form 10-KSB for the year ended
               December 31, 1996.
10.2       --  Asset Purchase Agreement dated July 30, 1999, by and between
               Diversified Group Administrators, Inc. and Group Resources,
               Inc. -- incorporated by reference to the Company's Quarterly
               Report on Form 10-QSB for the quarter ended September 30,
               1999.
10.3       --  Non-Employee Director Stock Compensation
               Plan -- incorporated by reference to the Company's Annual
               Report on Form 10-KSB for the year ended December 31, 1999.
10.4       --  Employment Agreement dated as of March 5, 2001, by and
               between AVIDYN, Inc. and Joseph A. Hensley, as amended.
10.5       --  Stock Purchase Agreement dated as of October 18, 2000,
               between MedicalControl, Inc., MedicalControl Holdings, Inc.,
               MedicalControl Network Solutions, Inc. and Beyond Benefits,
               Inc. (all schedules and exhibits have been omitted and will
               be provided to the Commission upon request.) -- incorporated
               by reference to the Company's definitive Proxy Statement for
               it Special Meeting held January 22, 2001.
10.6       --  Stock Purchase Agreement dated as of November 19, 2000,
               between MedicalControl Holdings, Inc., Diversified Group
               Administration, Inc., Diversified Group Insurance Agency of
               PA, Inc. and HealthASPex, Inc. (all schedules and exhibits
               have been omitted and will be provided to the Commission
               upon request.) -- incorporated by reference to the Company's
               definitive Proxy Statement for it Special Meeting held
               January 22, 2001.
10.7       --  Letter Agreement, dated June 18, 2001, by and among AVIDYN,
               Inc., Tatum CFO Partners, LLP and Randall D. Kurtz
               . -- incorporated by reference to the Company's Quarterly
               Report on Form 10-QSB for the quarter ended September 30,
               2001.
10.8       --  Employment Agreement dated December 3, 2001, by and between
               AVIDYN, Inc. and Stephanie L. McVay.
10.9       --  Securities Purchase Agreement, dated as of September 28,
               2001, by and among AVIDYN, Inc., The Answer Partnership,
               Ltd., the Essential Endowment Trust and J. Ward
               Hunt -- incorporated by reference to the Company's Current
               Report on Form 8-K filed October 23, 2001.
10.10      --  Amendment to Securities Purchase Agreement, dated as of
               October 9, 2001, by and among AVIDYN, Inc., The Answer
               Partnership, Ltd., The Essential Endowment Trust and J. Ward
               Hunt -- incorporated by reference to the Company's Current
               Report on Form 8-K filed October 23, 2001.
10.11      --  Agreement to Cancel Stock Option Agreement, dated as of
               October 15, 2001, by and between AVIDYN, Inc. and J. Ward
               Hunt. -- incorporated by reference to the Company's
               Quarterly Report on Form 10-QSB for the quarter ended June
               30, 2001.
10.12      --  Agreement dated as of March 27, 2001, by and between J. Ward
               Hunt, Lynn S. Hunt, The Ward Hunt Trust for Lynn Hunt,
               AVIDYN Holdings, Inc., and AVIDYN, Inc. -- incorporated by
               reference to the Company's Annual Report on Form 10-KSB for
               the year ended December 31, 2000.
10.13      --  ValueCHECK, Inc. 2002 Incentive Bonus Plan -- John Weymer.
10.14      --  AVIDYN, Inc. Calendar Year 2002 Bonus Plan for Joe Hensley
               and Randy Kurtz.
10.15      --  Employment Agreement dated as of March 23, 1998, be and
               between John D. Weymer and MedicalControl Network Solutions,
               Inc. -- incorporated by reference to the Company's Annual
               Report on Form 10-KSB for the year ended December 31, 2000.
10.16      --  Form of Agreement to Cancel by and between the Company and
               certain of its officers and directors.
21         --  Subsidiaries of the Company -- incorporated by reference to
               the Company's Annual Report on Form 10-KSB for the year
               ended December 31, 1998.
23.1       --  Consent of Grant Thornton LLP, independent certified public
               accountants.
</Table>

     (b) Reports on Form 8-K.  The Company did not file a Current Report Form
         8-K during the fourth quarter 2001.

                                        18
<PAGE>

                                   SIGNATURES

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

                                          Registrant:
                                          AVIDYN, Inc.

                                          By:     /s/ JOSEPH A. HENSLEY
                                            ------------------------------------
                                                     Joseph A. Hensley,
                                                         President

Date: March 28, 2002

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

<Table>
<Caption>
                       NAME                                        TITLE                       DATE
                       ----                                        -----                       ----
<S>     <C>                                          <C>                                  <C>

              /s/ JOSEPH A. HENSLEY                    President (principal executive     March 28, 2002
 ------------------------------------------------                 officer)
                Joseph A. Hensley


               /s/ RANDALL D. KURTZ                  Chief Financial Officer (principal   March 28, 2002
 ------------------------------------------------           accounting officer)
                 Randall D. Kurtz


                /s/ JOHN WARD HUNT                   Chairman of the Board of Directors   March 28, 2002
 ------------------------------------------------
                  John Ward Hunt


             /s/ FRANK M. BURKE, JR.                              Director                March 28, 2002
 ------------------------------------------------
               Frank M. Burke, Jr.


         /s/ WILLIAM L. AMOS, JR., M. D.                          Director                March 28, 2002
 ------------------------------------------------
            William L. Amos, Jr., M.D.


              /s/ DAVID SAMUEL COATS                              Director                March 28, 2002
 ------------------------------------------------
                David Samuel Coats
</Table>

                                        19
<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
AVIDYN, Inc.

     We have audited the accompanying consolidated balance sheets of AVIDYN,
Inc. as of December 31, 2001 and 2000, and the related consolidated statements
of operations, changes in stockholders' equity, and cash flows for the years
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of AVIDYN, Inc. as
of December 31, 2001 and 2000, and the consolidated results of its operations
and its consolidated cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.

                                          GRANT THORNTON LLP

Dallas, Texas
February 8, 2002

                                       F-1
<PAGE>

                                  AVIDYN, INC.

                          CONSOLIDATED BALANCE SHEETS

<Table>
<Caption>
                                                                    DECEMBER 31,
                                                              ------------------------
                                                                 2001         2000
                                                              ----------   -----------
<S>                                                           <C>          <C>
                                        ASSETS

Current assets
  Cash and cash equivalents.................................  $3,131,952   $        --
  Short term investments....................................   1,000,000            --
  Accounts receivable -- trade, net of allowance for
     doubtful accounts of $85,495 and $23,000 at December
     31, 2001 and 2000, respectively........................     951,119       560,051
  Prepaid expenses and other current assets.................     481,165       290,305
  Net current assets of discontinued operations.............          --     1,132,111
  Income tax refundable.....................................     378,973            --
  Deferred income taxes.....................................     144,826       187,946
                                                              ----------   -----------
          Total current assets..............................   6,088,035     2,170,413
Note receivable -- officer, including accrued interest......          --       479,089
Property and equipment, net.................................   1,152,187       445,341
Noncurrent receivables......................................          --       144,670
Net noncurrent assets of discontinued operations............          --     6,692,890
Deferred income taxes.......................................      13,332       367,037
Goodwill....................................................     493,336            --
                                                              ----------   -----------
          Total assets......................................  $7,746,890   $10,299,440
                                                              ==========   ===========

                         LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
  Accounts payable -- trade.................................  $   70,815   $   328,694
  Accrued liabilities.......................................     525,414       610,621
  Borrowings under bank line of credit......................          --       271,436
                                                              ----------   -----------
          Total current liabilities.........................     596,229     1,210,751
Deferred gain on sale of real estate option.................     149,382       607,417
Commitments and contingencies...............................          --            --
Stockholders' equity
  Preferred stock -- $0.10 par; 4,000,000 shares authorized,
     no shares issued or outstanding........................          --            --
  Common stock -- $0.01 par; 8,000,000 shares authorized,
     3,620,092 and 4,712,492 issued and outstanding in 2001
     and 2000, respectively.................................      36,201        47,125
  Additional paid-in capital................................   4,740,955     8,662,702
  Retained earnings (deficit)...............................   2,224,123      (228,555)
                                                              ----------   -----------
     Total stockholders' equity.............................   7,001,279     8,481,272
                                                              ----------   -----------
          Total liabilities & stockholders' equity..........  $7,746,890   $10,299,440
                                                              ==========   ===========
</Table>

        The accompanying notes are an integral part of these statements.

                                       F-2
<PAGE>

                                  AVIDYN, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<Table>
<Caption>
                                                              YEARS ENDED DECEMBER 31,
                                                              -------------------------
                                                                 2001          2000
                                                              -----------   -----------
<S>                                                           <C>           <C>
Revenues....................................................  $ 5,930,545   $ 2,149,921
Operating expenses
  Salaries and wages........................................    6,060,238     3,139,254
  Other operating expenses..................................    3,543,830     1,525,967
  Depreciation and amortization.............................      195,134        76,454
                                                              -----------   -----------
          Total operating expenses..........................    9,799,202     4,741,675
                                                              -----------   -----------
Loss from operations........................................   (3,868,657)   (2,591,754)
                                                              -----------   -----------
Other income (expense)
  Interest expense..........................................      (11,422)      (25,283)
  Investment income.........................................      399,036        30,168
  Other income..............................................      609,129            --
                                                              -----------   -----------
          Total other income (expense)......................      996,743         4,885
                                                              -----------   -----------
Loss from continuing operations before income taxes.........   (2,871,914)   (2,586,869)
Income tax benefit..........................................     (902,896)     (965,616)
                                                              -----------   -----------
Loss from continuing operations.............................   (1,969,018)   (1,621,253)
Discontinued operations
  Gain from sales of discontinued operations, net of tax
     expense of $2,297,813 in 2001..........................    4,326,371            --
  Income from discontinued operations, net of tax expense of
     $53,620 in 2001 and $986,552 in 2000...................       95,325     1,215,009
                                                              -----------   -----------
Net income (loss)...........................................  $ 2,452,678   $  (406,244)
                                                              ===========   ===========
Basic and diluted income (loss) per share
  Continuing operations.....................................  $     (0.44)  $     (0.35)
  Discontinued operations...................................          .99          0.26
                                                              -----------   -----------
Net income (loss)...........................................  $      0.55   $     (0.09)
                                                              ===========   ===========
Weighted average common shares outstanding..................    4,488,212     4,683,056
                                                              ===========   ===========
</Table>

        The accompanying notes are an integral part of these statements.
                                       F-3
<PAGE>

                                  AVIDYN, INC.

           CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

<Table>
<Caption>
                                               YEARS ENDED DECEMBER 31, 2001 AND 2000
                                  -----------------------------------------------------------------
                                       COMMON STOCK
                                  ----------------------   ADDITIONAL     RETAINED        TOTAL
                                    SHARES                   PAID-IN      EARNINGS    STOCKHOLDERS'
                                  OUTSTANDING    AMOUNT      CAPITAL     (DEFICIT)       EQUITY
                                  -----------   --------   -----------   ----------   -------------
<S>                               <C>           <C>        <C>           <C>          <C>
Balance at January 1, 2000......   4,625,579    $ 46,256   $ 8,225,281   $  177,689    $ 8,449,226
  Exercise of stock options.....      86,913         869       353,580           --        354,449
  Tax benefit of stock option
     exercise...................          --          --        83,841           --         83,841
  Net loss......................          --          --            --     (406,244)      (406,244)
                                  ----------    --------   -----------   ----------    -----------
Balance at December 31, 2000....   4,712,492      47,125     8,662,702     (228,555)     8,481,272
  Acquisition of common stock...  (1,101,100)    (11,011)   (3,954,764)          --     (3,965,775)
  Exercise of stock options.....       8,700          87        29,319           --         29,406
  Tax benefit of stock option
     exercise...................          --          --         3,698           --          3,698
  Net income....................          --          --            --    2,452,678      2,452,678
                                  ----------    --------   -----------   ----------    -----------
Balance at December 31, 2001....   3,620,092    $ 36,201   $ 4,740,955   $2,224,123    $ 7,001,279
                                  ==========    ========   ===========   ==========    ===========
</Table>

        The accompanying notes are an integral part of these statements.

                                       F-4
<PAGE>

                                  AVIDYN, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                              YEARS ENDED DECEMBER 31,
                                                              -------------------------
                                                                 2001          2000
                                                              -----------   -----------
<S>                                                           <C>           <C>
Cash flows related to operating activities
  Net income (loss).........................................  $ 2,452,678   $  (406,244)
  Adjustments to reconcile net income (loss) to net cash
     provided by (used in) continuing operations
     Gain from sales of discontinued operations.............   (4,326,371)           --
     Income from discontinued operations....................      (95,325)   (1,215,009)
     Depreciation and amortization..........................      195,134        76,454
     Loss on disposal of assets.............................       29,000            --
     Amortization of deferred gain on real estate
      transaction...........................................     (458,035)      (91,000)
     Deferred income taxes..................................      400,523        65,051
     Net changes in operating assets and liabilities
       Accounts receivable -- trade.........................     (391,068)     (471,176)
       Income tax refundable................................     (378,973)      300,093
       Prepaid expenses and other current assets............      (31,526)     (154,804)
       Accounts payable -- trade............................     (257,879)       82,872
       Accrued expenses.....................................      (85,207)      163,875
                                                              -----------   -----------
Net cash used in operating activities -- continuing
  operations................................................   (2,947,049)   (1,649,888)
Cash flows related to investing activities
  Proceeds from sale of discontinued operations.............   16,355,504            --
  PROMED acquisition........................................     (508,000)           --
  Purchase of short term investments........................   (1,000,000)           --
  Purchases of property and equipment.......................     (930,980)     (146,132)
                                                              -----------   -----------
Net cash provided by (used in) investing activities.........   13,916,524      (146,132)
Cash flows related to financing activities
  Repayment of loan to officer, including accrued
     interest...............................................      479,089            --
  Net (repayments) on revolving line of credit..............     (271,436)     (123,825)
  Acquisition and cancellation of common stock..............   (3,965,775)           --
  Proceeds from issuance of common stock....................       29,406       354,449
                                                              -----------   -----------
Net cash provided by (used in) financing activities.........   (3,728,716)      230,624
                                                              -----------   -----------
Net cash provided by (used in) continuing operations........    7,240,759    (1,565,396)
Net cash provided by (used in) discontinued operations......   (4,108,807)    1,565,396
                                                              -----------   -----------
Net increase in cash and cash equivalents...................    3,131,952            --
Cash and cash equivalents at beginning of period............           --            --
                                                              -----------   -----------
Cash and cash equivalents at end of period..................  $ 3,131,952   $        --
                                                              ===========   ===========
Supplemental cash flow disclosures
  Interest paid.............................................  $     9,033   $    25,283
                                                              ===========   ===========
  Income taxes paid (refunded)..............................  $ 1,250,000   $  (237,837)
                                                              ===========   ===========
</Table>

        The accompanying notes are an integral part of these statements.

                                       F-5
<PAGE>

                                  AVIDYN, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000

NOTE 1 -- BACKGROUND AND ORGANIZATION

     AVIDYN, Inc. ("Company"), a Delaware corporation, is a holding company of
healthcare information services companies. The Company's name was changed from
MedicalControl, Inc. on January 26, 2001. At December 31, 2000, the Company was
comprised of four operating subsidiaries: ppoONE, Inc. (formerly ppoONE.com,
inc.), providing Application Service Provider ("ASP") eHealth solutions for
preferred provider organizations ("PPO") and payers; ValueCHECK, Inc.
("ValueCHECK"), providing utilization review and case management for third party
administrators ("TPA"); MedicalControl Network Solutions, Inc. ("MNS"),
providing managed care services, primarily through its PPO networks; and
Diversified Group Administrators, Inc. ("DGA"), providing TPA services.

     On October 26, 2000 the Company signed a definitive agreement to sell MNS
for $13.5 million cash and on November 14, 2000, the Company signed a definitive
agreement to sell DGA for $2.5 million cash. The sale of DGA was completed on
January 22, 2001, and the sale of MNS was completed on February 1, 2001.
Accordingly, the operations of these sold companies are reflected in the
accompanying financial statements as "Discontinued Operations" (see Note 3).

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United States of America and
include the accounts of the Company and its wholly-owned subsidiaries. All
significant intercompany balances and transactions have been eliminated.

  ACCOUNTS RECEIVABLE -- TRADE

     In the normal course of business, the Company extends unsecured credit to
virtually all of its customers. Because of the credit risk involved, management
has provided an allowance for doubtful accounts, which reflects its estimate of
amounts that will eventually become uncollectible.

  PROPERTY AND EQUIPMENT

     Property and equipment are recorded at cost and are depreciated on a
straight-line basis, over their estimated useful lives (generally 3 to 7 years).
Major additions and betterments are capitalized and depreciated over the
remaining estimated useful lives of the related assets. Maintenance, repairs and
minor improvements are expensed as incurred.

  CASH AND CASH EQUIVALENTS

     The Company considers all highly liquid investments with an initial
maturity of three months or less to be cash equivalents.

  SHORT TERM INVESTMENTS

     Short term investments represent highly liquid investments with maturities
of greater than three months and less than one year.

  INCOME TAXES

     Deferred income taxes are provided for temporary differences between the
tax bases of assets and liabilities and their financial reporting amounts.
Deferred taxes are recorded for temporary differences based upon enacted tax
rates anticipated to be in effect when the temporary differences are expected to
reverse.

                                       F-6
<PAGE>
                                  AVIDYN, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  REVENUE RECOGNITION

     ppoONE generates revenue principally from transaction fees for repricing
medical insurance claims. Additional revenues are earned from custom programming
and implementation fees. Transaction fees are recognized as claims are
processed. Implementation fees are recognized pro rata over the implementation
period, which is generally three to six months. Revenues from custom programming
are recognized as the services are performed.

     ValueCHECK earns revenue by providing utilization review and case
management services primarily to self-insured employers. Fees are recognized as
the services are performed.

     During 2001, one customer accounted for 11% of the revenues of the Company.
During 2000, two customers accounted for 23% and 15% of the revenues of the
Company, respectively

  EARNINGS (LOSS) PER SHARE

     Basic earnings (loss) per share are computed by dividing net income (loss)
by the weighted average common shares outstanding during the period. Diluted
earnings per share are computed by dividing net income by the weighted average
common shares and dilutive shares outstanding during the period. There was no
impact from dilutive common equivalent shares since losses from continuing
operations were reported in both 2001 and 2000.

  USE OF ESTIMATES

     Preparation of the consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make certain estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent assets
and liabilities and the reported amounts of revenues and expenses. Actual
results could differ from these estimates.

  FAIR VALUE OF FINANCIAL INVESTMENTS

     The carrying amounts reported in the consolidated balance sheets for cash
and cash equivalents, short term investments, accounts receivable, accounts
payable and accrued expenses approximate fair value because of the immediate or
short term maturity of these financial instruments.

  NEW ACCOUNTING STANDARDS

     In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 141, Business Combinations
("SFAS 141"), and Statement of Financial Accountings Standards No. 142, Goodwill
and Other Intangible Assets ("SFAS 142"). SFAS 141 requires all business
combinations initiated after June 30, 2001 be accounted for under the purchase
method. SFAS 141 supercedes APB Opinion No. 16, Business Combinations, and
Statement of Financial Accounting Standards No. 38, Accounting for
Preacquisition Contingencies of Purchased Enterprises, and is effective for all
business combinations initiated after June 30, 2001. SFAS 142 addresses the
financial accounting and reporting for acquired goodwill and other intangible
assets. Under the new rules, a company is no longer required to amortize
goodwill and other intangible assets with indefinite lives, but will be subject
to periodic testing for impairment. SFAS 142 supercedes APB Opinion No. 17,
Intangible Assets and is effective January 1, 2002.

     In August and September 2001, the FASB issued Statement of Financial
Accounting Standards No. 143, Accounting for Obligations Associated with the
Retirement of Long-Lived Assets ("SFAS 143"), and Statement of Financial
Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-
Lived Assets ("SFAS 144"). SFAS 143 establishes accounting standards for the
recognition and measurement of an asset retirement obligation and its associated
retirement cost. It also provides accounting guidance

                                       F-7
<PAGE>
                                  AVIDYN, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

for legal options associated with the retirement of tangible long-lived assets.
SFAS 144 established a single accounting model for the impairment or disposal of
long-lived assets, including discontinued operations. The Company plans to adopt
these statements as of their effective dates and does not expect that the
adoption will have a material impact on its consolidated results of operations
or financial position.

  STOCK BASED COMPENSATION

     The Company accounts for stock-based compensation to employees using the
intrinsic value method. Compensation cost for stock options to employees is
measured as the excess, if any, of the quoted market price of the Company's
common stock at the date of the grant over the amount an employee must pay to
acquire the stock. The Company's pro forma disclosure as if the fair value
method was used can be found in Note 11 to the consolidated financial
statements.

NOTE 3 -- DISCONTINUED OPERATIONS

     As discussed in Note 1, the Company sold DGA in January 2001 and MNS in
February 2001. The accompanying financial statements have been reclassified to
reflect the assets, liabilities and results of operations of these companies as
"discontinued operations."

     Operating results were as follows:

<Table>
<Caption>
                                                                2001        2000
                                                              --------   ----------
<S>                                                           <C>        <C>
Revenues
  MNS.......................................................  $717,389   $8,613,268
  DGA.......................................................        --    5,215,199
                                                              --------   ----------
                                                               717,389   13,828,467

Income before taxes.........................................   148,945    2,201,561
Income tax expense..........................................    53,620      986,552
Income from discontinued operations.........................    95,325    1,215,009
</Table>

     The net assets of MNS and DGA at December 31, 2000 were as follows:

<Table>
<S>                                                           <C>
Cash........................................................  $ 1,005,828
Accounts receivable, net....................................    1,386,957
Prepaid expenses and other current assets...................      459,272
Trade accounts payable......................................   (1,082,018)
Other current liabilities...................................     (637,928)
                                                              -----------
          Net current assets of discontinued operations.....  $ 1,132,111
                                                              ===========
Property and equipment......................................  $ 1,000,510
Other assets................................................    5,874,958
Long-term debt..............................................     (182,578)
                                                              -----------
          Net noncurrent assets of discontinued
           operations.......................................  $ 6,692,890
                                                              ===========
</Table>

NOTE 4 -- BUSINESS SEGMENT REPORTING

     The Company manages its business segments primarily on a products and
services basis. The Company's reportable segments are comprised of eHealth
solutions to the PPO and healthcare payer industry offered through ppoONE, Inc.
and utilization review and case management services performed by ValueCHECK.

                                       F-8
<PAGE>
                                  AVIDYN, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The Company evaluates the performance of its business units based on
segment operating profit or loss. Segment operating profit (loss) includes
personnel, sales and marketing expenses and other operating expenses directly
attributable to the segment and excludes certain expenses that are managed
outside the segment. Costs excluded from the segment operating profit consist of
corporate expenses, income taxes, interest income and interest expense.
Corporate expenses are comprised primarily of executive compensation and other
general and administrative expenses that are separately managed. Corporate
assets are not included in segment assets and consist primarily of cash, short
term investments, property and equipment, receivables and deferred income taxes.

     Summary information by segment as of and for the years ended December 31,
2001 and 2000, are as follows:

<Table>
<Caption>
                                                                 2001         2000
                                                              ----------   ----------
<S>                                                           <C>          <C>
ppoONE, Inc. Segment:
  Revenues..................................................  $2,967,852   $1,712,755
  Operating expenses........................................   5,040,220    2,985,258
                                                              ----------   ----------
     Operating loss.........................................  (2,072,372)  (1,272,503)
  Depreciation..............................................      80,564       47,482
  Segment assets............................................   1,078,343      476,614
ValueCHECK Segment:
  Revenues..................................................  $3,004,234   $  966,563
  Operating expenses........................................   2,669,662      998,114
                                                              ----------   ----------
     Operating income (loss)................................     334,572      (31,551)
  Depreciation..............................................      36,813        8,316
  Segment assets............................................   1,235,834      479,730
</Table>

     A reconciliation of the Company's segment revenues, operating profit (loss)
and segment assets to the corresponding consolidated amounts as of and for the
years ended December 31, 2001 and 2000 are as follows:

<Table>
<Caption>
                                                                2001          2000
                                                             -----------   -----------
<S>                                                          <C>           <C>
Segment revenues...........................................  $ 5,972,086   $ 2,679,318
Intercompany revenues......................................      (41,539)     (529,397)
                                                             -----------   -----------
     Consolidated revenues.................................  $ 5,930,545   $ 2,149,921
                                                             ===========   ===========
Segment operating loss.....................................  $(1,737,800)  $(1,304,054)
Corporate expenses, net....................................   (2,130,857)   (1,287,700)
                                                             -----------   -----------
     Consolidated operating loss...........................  $(3,868,657)  $(2,591,754)
                                                             ===========   ===========
Segment assets.............................................  $ 2,314,177   $   956,344
Corporate assets...........................................    5,432,713     1,518,095
Discontinued assets........................................           --     7,825,001
                                                             -----------   -----------
     Consolidated assets...................................  $ 7,746,890   $10,299,440
                                                             ===========   ===========
</Table>

                                       F-9
<PAGE>
                                  AVIDYN, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 5 -- PROPERTY AND EQUIPMENT, NET

     Property and equipment at December 31, 2001 and 2000, consisted of the
following:

<Table>
<Caption>
                                                      ESTIMATED
                                                     USEFUL LIFE      2001        2000
                                                     -----------   ----------   --------
<S>                                                  <C>           <C>          <C>
Furniture and fixtures.............................   5-7 years    $  605,821   $298,653
Data processing equipment..........................   3-6 years       680,494    435,117
Computer software..................................     5 years       281,612     93,088
Leasehold improvements.............................     7 years       203,303     42,396
                                                                   ----------   --------
                                                                    1,771,230    869,254
Less accumulated depreciation......................                  (619,043)  (423,913)
                                                                   ----------   --------
Property and equipment, net........................                $1,152,187   $445,341
                                                                   ==========   ========
</Table>

NOTE 6 -- LINE OF CREDIT

     In November 2000, the Company entered into a line of credit agreement with
a bank. The agreement provides for a maximum line of credit of $750,000. The
initial proceeds of the line of credit were used to repay the indebtedness of
the Company. Direct borrowings bore interest at the prime rate plus 1%.
Borrowings were collateralized by accounts receivable, and were limited to 80%
of eligible accounts receivable. Borrowings under the line of credit were repaid
with a portion of the proceeds from the sale of DGA on January 22, 2001. The
line of credit expired in November 2001.

NOTE 7 -- BENEFIT PLAN

     The Company has a 401(k) profit sharing plan that covers all employees of
the Company who have one year of service, as defined, and have reached age 21.
Company contributions are discretionary based upon determinations made by the
plan trustees. Employees become 100% vested in employer contributions after 5
years of service (accruing 20% per year of service, as defined). The Company
recorded expense of $68,559 and $31,120 for plan contributions for the years
ended December 31, 2001 and 2000, respectively.

NOTE 8 -- INCOME TAXES

     The income tax benefit attributable to continuing operations for the years
ended December 31, 2001 and 2000, consisted of the following:

<Table>
<Caption>
                                                                 2001         2000
                                                              -----------   ---------
<S>                                                           <C>           <C>
Current:
  Federal...................................................  $(1,121,366)  $(883,029)
  State.....................................................           --    (116,871)
Deferred:
  Federal...................................................      218,470      30,276
  State.....................................................           --       4,008
                                                              -----------   ---------
       Total................................................  $  (902,896)  $(965,616)
                                                              ===========   =========
</Table>

                                       F-10
<PAGE>
                                  AVIDYN, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The differences between the statutory federal income tax rate and the
Company's effective income tax rate are as follows:

<Table>
<Caption>
                                                              2001    2000
                                                              -----   -----
<S>                                                           <C>     <C>
Statutory federal income tax rate...........................  (34.0)% (34.0)%
State income taxes, net of federal benefit..................     --    (2.9)
Nondeductible expenses......................................    0.4     0.7
Other.......................................................    2.2    (1.1)
                                                              -----   -----
     Total..................................................  (31.4)% (37.3)%
                                                              =====   =====
</Table>

     The components of net deferred tax assets (liabilities) of continuing
operations as of December 31, 2001 and 2000, are as follows:

<Table>
<Caption>
                                                                2001       2000
                                                              --------   --------
<S>                                                           <C>        <C>
Current deferred taxes:
  Assets:
     Nondeductible reserves.................................  $ 68,694   $ 57,640
     Deferred revenue.......................................    76,132    130,306
                                                              --------   --------
                                                               144,826    187,946
Noncurrent deferred taxes:
  Assets:
     Deferred gain from sale of option on real estate.......    50,790    233,856
     Net operating loss carryforward........................        --    176,526
     Other..................................................        --      1,740
  Liabilities:
     Property and equipment.................................   (37,458)   (45,085)
                                                              --------   --------
Noncurrent deferred taxes, net..............................    13,332    367,037
                                                              --------   --------
Total deferred taxes........................................  $158,158   $554,983
                                                              ========   ========
</Table>

NOTE 9 -- DEFERRED GAIN ON SALE OF OPTION ON REAL ESTATE

     In connection with the Company's relocation of its corporate offices and
principal operations in January 1997, management secured a purchase option on
their new office facility. During September 1997, the Company sold this option
for $910,000 cash to a third party, who subsequently exercised the option.
Concurrent with the sale, the Company executed a ten-year lease extension. The
gain from that transaction was being recognized on a straight-line basis over
the life of the lease extension and was reflected as a deferred gain on the
accompanying balance sheet.

     In 2001, the purchaser of MNS assumed the lease on 20,000 square feet (out
of a total of 28,000 square feet) in the building which was the real estate
covered by the option. Accordingly, a prorata portion ($433,000) of the deferred
gain was recognized as other income. The remaining deferred gain continues to be
amortized over the extended lease. The amount of gain amortization for each of
the years ended December 31, 2001 and 2000 was $24,000 and $91,000,
respectively.

                                       F-11
<PAGE>
                                  AVIDYN, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 10 -- COMMITMENTS AND CONTINGENCIES

  LEASES

     The Company leases certain office space, furniture, and equipment under
noncancelable operating leases that expire at various dates through 2007.

     At December 31, 2001, scheduled future minimum payments for operating
leases with initial terms in excess of one year are as follows:

<Table>
<Caption>
YEAR ENDED DECEMBER 31,
-----------------------
<S>                                                           <C>
2002........................................................  $  875,625
2003........................................................     699,965
2004........................................................     519,631
2005........................................................     100,985
2006........................................................      92,724
2007........................................................      65,680
                                                              ----------
                                                              $2,354,610
                                                              ==========
</Table>

     Rental expense for all operating leases for the years ended December 31,
2001 and 2000, was $904,190 and $474,442, respectively.

  LEASE AGREEMENT

     The Company is a party to a lease agreement under which the majority of the
lease space has been assigned to an unrelated third party. The assigned lease
expires in November, 2007 and the third party is directly responsible for the
monthly payments of approximately $19,500. If the third party ceases to fulfill
its obligation under the lease, the Company has full legal recourse to insure
the third party's compliance.

  LITIGATION

     The Company is involved in certain legal actions and claims arising in the
ordinary course of business. Management believes that such litigation and claims
will be resolved without material effect on the Company's financial position,
results of operations or cash flows.

NOTE 11 -- STOCK OPTIONS

     The Company has stock option plans adopted in 1992, 1993 and 2000 which
provide that options for shares of the Company common stock may be granted to
officers, directors and key employees of the Company at the fair market value on
the date of grant. The options expire 10 years from the date of grant (or
earlier if specified in the grant) and generally vest over a five year period.
Options granted under the 2000 plan contain accelerated vesting provisions that
provide for 25%, 50%, 75% and 100% vesting when the stock price increases over
the exercise price by such percentages. In October of 2000, options granted
prior to 2000 became fully vested when the Company entered into a definitive
agreement to sell MNS.

     As further explained in Note 13, in October 2001, the Company entered into
an agreement with the Company's chairman and majority shareholder, J. Ward Hunt,
("Hunt") to cancel an option agreement entitling Hunt to purchase 500,000 shares
of common stock for $8.75 per share. In consideration for canceling the option
agreement, Hunt was paid $5,000.

     In December 2001, the Board of Directors offered to pay option holders for
the cancellation of their option agreements. As of December 31, 2001 four option
holders cancelled their option agreements for $400,

                                       F-12
<PAGE>
                                  AVIDYN, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

which represented 16,500 shares. Subsequent to year end, sixteen additional
option holders cancelled their option agreements for $12,845 which represented
442,500 shares. As of February 8, 2002 there are options outstanding to purchase
91,000 shares.

     The following table sets forth summarized information regarding the plans:

<Table>
<Caption>
                                                                                WEIGHTED
                                                                                AVERAGE
                                                                                EXERCISE
                                                    SHARES     EXERCISE PRICE    PRICE
                                                   ---------   --------------   --------
<S>                                                <C>         <C>              <C>
Outstanding at January 1, 2000...................  1,264,502   $3.38 to $8.88    $7.35
  Granted........................................    198,500    5.00 to  7.13     6.69
  Exercised......................................    (86,913)   3.38 to  5.00     4.08
  Forfeited/cancelled............................    (37,689)   3.38 to  8.88     6.45
                                                   ---------   --------------    -----
Outstanding at December 31, 2000.................  1,338,400    3.38 to  8.88     7.51
  Granted........................................    148,000    4.63 to  5.75     5.08
  Exercised......................................     (8,700)            3.38     3.38
  Forfeited/cancelled............................   (944,200)   3.38 to  8.88     6.69
                                                   ---------   --------------    -----
Outstanding at December 31, 2001.................    533,500   $3.38 to $8.88    $6.41
                                                   =========   ==============    =====
Outstanding at February 8, 2002..................     91,000
                                                   =========
Exercisable options:
  December 31, 2000..............................  1,168,900
                                                   =========
  December 31, 2001..............................    360,250
                                                   =========
  February 8, 2002...............................     87,000
                                                   =========
Options available for future grants at December
  31, 2001.......................................  1,881,500
                                                   =========
  February 8, 2002...............................  2,324,000
                                                   =========
</Table>

     The weighted average fair value of options granted during 2001 and 2000 was
$2.32 and $3.37, respectively.

     Information about stock options outstanding at December 31, 2001 is
summarized as follows:

<Table>
<Caption>
                                            OPTIONS OUTSTANDING
                                    ------------------------------------    OPTIONS EXERCISABLE
                                                   WEIGHTED                ----------------------
                                                    AVERAGE     WEIGHTED                 WEIGHTED
                                                   REMAINING    AVERAGE                  AVERAGE
                                      NUMBER      CONTRACTUAL   EXERCISE     NUMBER      EXERCISE
RANGE OF EXERCISE PRICES            OUTSTANDING      LIFE        PRICE     EXERCISABLE    PRICE
------------------------            -----------   -----------   --------   -----------   --------
<S>                                 <C>           <C>           <C>        <C>           <C>
$3.38 to $5.00....................    126,500      7.3 years     $4.30       111,500      $4.42
$5.01 to $7.50....................    268,500      8.1 years      6.19       110,250       6.10
$7.51 to $8.88....................    138,500      7.2 years      8.15       138,500       8.16
                                      -------                                -------
                                      533,500                                360,250
                                      =======                                =======
</Table>

                                       F-13
<PAGE>
                                  AVIDYN, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Had compensation cost for the Company's stock options plans been determined
consistent with the fair value method of Statement of Financial Accounting
Standards (SFAS No. 123), the Company's net loss would have been increased to
the pro forma amounts shown below:

<Table>
<Caption>
                                                                 2001        2000
                                                              ----------   ---------
<S>                                                           <C>          <C>
Net income (loss):
  As reported...............................................  $2,452,678   $(406,244)
  Pro forma.................................................  $2,100,737   $(799,033)
Loss per share:
  As reported...............................................  $     0.55   $    (.09)
  Pro forma.................................................  $     0.47   $    (.17)
</Table>

     The fair value of each option grant was estimated on the grant date using
the Black-Scholes option pricing model with the following weighted average
assumptions:

<Table>
<Caption>
                                                              2001   2000
                                                              ----   ----
<S>                                                           <C>    <C>
Risk free interest rate.....................................  4.94%  6.33%
Expected dividend yield.....................................   0.0%   0.0%
Expected volatility.........................................    45%    48%
Expected term...............................................     5      5
</Table>

NOTE 12 -- PROMED ACQUISITION

     On October 1, 2001, the Company through its wholly-owned subsidiary,
ValueCHECK, Inc. purchased substantially all of the assets from Medical Review,
LLC dba PROMED in order to expand ValueCHECK's utilization review and case
management services. The Company paid cash of $508,000 at closing and is
obligated to pay up to $127,000 a year later if certain revenue levels are
maintained. The pro forma effect of the acquisition is not material to the
Company's operations. The acquisition was recorded under the newly issued
accounting standards for Business Combinations (SFAS No. 141) and for Goodwill
and Intangible Assets (SFAS No. 142). Consequently goodwill of $493,336 was
recorded representing the amount paid at closing less the value of identifiable
tangible assets acquired, consisting of accounts receivable. The goodwill is
expected to be deductible for tax purposes.

NOTE 13 -- RELATED PARTY TRANSACTIONS

     In October 1994, the Company loaned $300,000 to its chairman and majority
shareholder. The loan was secured by the pledge of 70,000 shares of the
Company's common stock held by the chairman and majority stockholder. The
principal and any unpaid interest were due in their entirety on March 30, 2001.

     On March 27, 2001, the Company's Board of Directors paid its chairman and
majority shareholder a bonus in the amount of $900,000 for services rendered in
connection with the sales of MNS and DGA, conditioned upon his repaying the
principal and interest ($486,136) on the loan described above, reimbursing the
Company for $150,000 of premiums paid on a life insurance policy to fund a
deferred compensation agreement and upon the cancellation of the deferred
compensation agreement.

     On October 15, 2001, the Company purchased 106,960 shares of its common
stock from The Answer Partnership, Ltd. and 993,040 shares of its common stock
from The Essential Endowment Trust for $3.60 per share. These shares were
beneficially owned by J. Ward Hunt ("Hunt"), the Company's chairman and majority
shareholder. Under the Agreement, a cash payment of $2,500,000 was made on
October 15, 2001 and the remaining payment of $1,460,000 plus $3,184 of interest
was made on November 5, 2001. As a condition of closing, Hunt agreed to reduce
his salary to be commensurate with the President of the Company and to

                                       F-14
<PAGE>
                                  AVIDYN, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

cancel an option agreement entitling Hunt to purchase 500,000 shares of the
Company's common stock for $8.75 per share. The Company paid Hunt $5,000 for the
cancellation of the option agreement. Subsequently the Company retired the
1,100,000 shares of its common stock purchased from the Partnership and the
Trust as well as 1,100 shares of its common stock held in treasury.

                                       F-15
<PAGE>

                               INDEX TO EXHIBITS

<Table>
<Caption>
EXHIBIT
NUMBER                                  DESCRIPTION
-------                                 -----------
<C>       <S>   <C>
 3.1      --    Restated Certificate of Incorporation of the Company, as
                amended.
 3.2      --    Amended and Restated Corporate Bylaws of the Company.
10.1      --    Form of Agreement by and between the Company and each of its
                directors and officers -- incorporated by reference to the
                Company's Annual Report on Form 10-KSB for the year ended
                December 31, 1996.
10.2      --    Asset Purchase Agreement dated July 30, 1999, by and between
                Diversified Group Administrators, Inc. and Group Resources,
                Inc. -- incorporated by reference to the Company's Quarterly
                Report on Form 10-QSB for the quarter ended September 30,
                1999.
10.3      --    Non-Employee Director Stock Compensation
                Plan -- incorporated by reference to the Company's Annual
                Report on Form 10-KSB for the year ended December 31, 1999.
10.4      --    Employment Agreement dated as of March 5, 2001, by and
                between AVIDYN, Inc. and Joseph A. Hensley, as amended.
10.5      --    Stock Purchase Agreement dated as of October 18, 2000,
                between MedicalControl, Inc., MedicalControl Holdings, Inc.,
                MedicalControl Network Solutions, Inc. and Beyond Benefits,
                Inc. (all schedules and exhibits have been omitted and will
                be provided to the Commission upon request.) -- incorporated
                by reference to the Company's definitive Proxy Statement for
                it Special Meeting held January 22, 2001.
10.6      --    Stock Purchase Agreement dated as of November 19, 2000,
                between MedicalControl Holdings, Inc., Diversified Group
                Administration, Inc., Diversified Group Insurance Agency of
                PA, Inc. and HealthASPex, Inc. (all schedules and exhibits
                have been omitted and will be provided to the Commission
                upon request.) -- incorporated by reference to the Company's
                definitive Proxy Statement for it Special Meeting held
                January 22, 2001.
10.7      --    Letter Agreement, dated June 18, 2001, by and among AVIDYN,
                Inc., Tatum CFO Partners, LLP and Randall D. Kurtz
                . -- incorporated by reference to the Company's Quarterly
                Report on Form 10-QSB for the quarter ended September 30,
                2001.
10.8      --    Employment Agreement dated December 3, 2001, by and between
                AVIDYN, Inc. and Stephanie L. McVay.
10.9      --    Securities Purchase Agreement, dated as of September 28,
                2001, by and among AVIDYN, Inc., The Answer Partnership,
                Ltd., the Essential Endowment Trust and J. Ward
                Hunt -- incorporated by reference to the Company's Current
                Report on Form 8-K filed October 23, 2001.
10.10     --    Amendment to Securities Purchase Agreement, dated as of
                October 9, 2001, by and among AVIDYN, Inc., The Answer
                Partnership, Ltd., The Essential Endowment Trust and J. Ward
                Hunt -- incorporated by reference to the Company's Current
                Report on Form 8-K filed October 23, 2001.
10.11     --    Agreement to Cancel Stock Option Agreement, dated as of
                October 15, 2001, by and between AVIDYN, Inc. and J. Ward
                Hunt. -- incorporated by reference to the Company's
                Quarterly Report on Form 10-QSB for the quarter ended June
                30, 2001.
10.12     --    Agreement dated as of March 27, 2001, by and between J. Ward
                Hunt, Lynn S. Hunt, The Ward Hunt Trust for Lynn Hunt,
                AVIDYN Holdings, Inc., and AVIDYN, Inc. -- incorporated by
                reference to the Company's Annual Report on Form 10-KSB for
                the year ended December 31, 2000.
10.13     --    ValueCHECK, Inc. 2002 Incentive Bonus Plan -- John Weymer.
10.14     --    AVIDYN, Inc. Calendar Year 2002 Bonus Plan for Joe Hensley
                and Randy Kurtz.
10.15     --    Employment Agreement dated as of March 23, 1998, be and
                between John D. Weymer and MedicalControl Network Solutions,
                Inc. -- incorporated by reference to the Company's Annual
                Report on Form 10-KSB for the year ended December 31, 2000.
10.16     --    Form of Agreement to Cancel by and between the Company and
                certain of its officers and directors.
21        --    Subsidiaries of the Company -- incorporated by reference to
                the Company's Annual Report on Form 10-KSB for the year
                ended December 31, 1998.
23.1      --    Consent of Grant Thornton LLP, independent certified public
                accountants.
</Table>