<PAGE>

===============================================================================

                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 No. 0-7100

                             BASE TEN SYSTEMS, INC.
               (Exact name of Company as specified in its charter)

                  New Jersey                               22-1804206
        (State or other jurisdiction of                 (I.R.S. Employer
        incorporation or organization)                 Identification No.)

     535 East County Line Road - Suite 16
             Lakewood, New Jersey                             08701
   (Address of principal executive offices)                (Zip Code)

         Company's telephone number, including area code: (732) 370-6895

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

        Title of each class                 Outstanding at February 28, 2002

       Class A Common Stock                             5,338,812
       Class B Common Stock                              12,667

Indicate by check mark whether the Company (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Company was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K under the Securities Exchange Act of 1934 is not contained
herein, and will not be contained, to the best of the Company's knowledge, in
definitive proxy or information statements incorporated in Part III of this Form
10-KSB or any amendments to this Form 10-KSB [X].

State issuer's revenues for its most recent fiscal year. $0.

As of February 28, 2002, there were 5,338,812 shares of Class A Common Stock and
12,667 shares of Class B Common Stock outstanding, and the aggregate market
value of shares held by unaffiliated shareholders was approximately $99,000 and
$1,000, respectively.

                    DOCUMENTS INCORPORATED BY REFERENCE: None

Transitional Small Business Disclosure Format: Yes [  ]   No [x]

===============================================================================
<PAGE>

                                     PART I

Item 1.  Business

Overview

         Base Ten Systems, Inc. (the "Company" or "Base Ten") is a software
developer currently undergoing its second major business redirection. We
specialized for our first 25 years in developing safety critical software
products for defense and aerospace markets. With the decline in defense spending
in the mid-1990s, we sought to leverage our know how by developing software
applications for the pharmaceutical manufacturing, medical device and other
regulated industries with similar safety requirements. We ultimately established
separate divisions for our government technology ("GTD") and medical technology
("MTD") operations to address distinct challenges in those sectors. The
inability to meet those challenges with the limited resources available for
these operations prompted a series of asset sales and downsizing initiatives,
culminating in a pending business combination designed to redirect our remaining
resources to more penetrable markets in the healthcare information sector.

Contraction of Business

         Since 1996, the Company incurred substantial losses as declining GTD
sales were increasingly outpaced by MTD product development and marketing
expenses. In 1997, we sold all of our GTD assets to Strategic Technology
Systems, Inc. ("STS"). We also initiated a related management realignment as
part of a strategy to concentrate primarily on manufacturing execution systems
("MES") for pharmaceutical markets, where we saw an opportunity to address
increasing cost containment and compliance pressures. We later identified the
clinical drug trials market as an additional target of opportunity for our core
technology, ultimately developing clinical trials management software ("Clinical
Software") to support supplies management and traceability compliance. In 1999,
we acquired two complementary clinical trials management software suites from
Almedica International, Inc. ("Almedica").

         Despite the commercial potential of our MTD offerings, we encountered
unanticipated difficulties introducing both our MES and Clinical Software
products. Obstacles in bringing these products to market contributed to
operating losses aggregating $48.5 million from 1998 through 2000. Lacking the
resources to overcome these impediments, we sold our MES assets to ABB
Automation Inc. ("ABB") in October 2000. Later that month, we announced plans to
discontinue our Clinical Software operations and pursue revenue generating or
strategic opportunities in sectors requiring less capital resources,
technological development and time to market uncertainties (the "Business
Redirection"). We also realigned our board of directors and revamped our
management team to implement the Business Redirection. See "Directors and
Executive Officers."

         In March 2001, we entered into an agreement (the "LLC Agreement") with
Almedica and Almedica Advanced Technology, LLC ("Almedica LLC") for the sale and
deployment of our Clinical Software business. The LLC Agreement provides for the
contribution of our Clinical Software assets to Almedica LLC for $75,000 in cash
plus a 20% interest in Almedica LLC. The sale of the Clinical Software assets is
subject to various conditions, including approval by our shareholders. Other
than our continuing interest in this business, our remaining assets at December
31, 2001 were primarily cash and cash equivalents of $1.2 million.

Business Redirection

         Beginning in November 2000, we concentrated on identifying
opportunities for a business combination meeting the criteria for the Business
Redirection. We ultimately focused these efforts on exploring a potential
business combination with ConvergenceHealth.com, Inc., a privately held Nevada
corporation that has developed interactive web-based resources designed to
assist people make healthy lifestyle decisions informed by exposure to
alternative and preventative as well as traditional healthcare options
("Convergence"). Although Convergence has generated only marginal revenues and
has incurred substantial losses to date, its initial offering promises to
address major priorities of corporate sponsors by encouraging employees
participating in their health plans to adopt wellness lifestyles that can
increase productivity and reduce healthcare costs. Based on that prospect, we
entered into a merger agreement with Convergence in January 2002 and plan to
seek shareholder approval for the merger (the "Convergence Merger") and related
initiatives after completing regulatory review procedures for clearance of our
solicitation materials.

                                       1
<PAGE>

         To reduce administrative costs following the Convergence Merger, the
agreement covering the transaction provides for us to terminate our reporting
obligations as a publicly held small business company by completing a
1-for-1,000 reverse split of our common stock and repurchasing fractional shares
for cash at their market price immediately prior to the Convergence Merger (the
"Share Combination"). If the Convergence Merger is approved by the parties'
shareholders and other closing conditions are satisfied, our subsidiary will
merge into Convergence, which will survive the transaction as a wholly owned
subsidiary of Base Ten. At the time of the Convergence Merger, the outstanding
capital stock of Convergence will be converted into the right to receive newly
issued shares of our Class A common stock that will represent 75% of our common
shares to be outstanding after our repurchase of fractional shares in the Share
Combination.

         Our operations after the Convergence Merger will be conducted solely
through Convergence. The business plan for Convergence contemplates substantial
capital expenditures to fund its ongoing operations without any assurance of
deriving revenues from operations. We anticipate that the costs for Convergence
to refine, market and deploy its services will contribute to recurring losses at
the rate of approximately $50,000 per month following the Convergence Merger.
Our ability to achieve profitable operations through the Convergence subsidiary
could be adversely affected by delays or inefficiencies in the development
cycle, inadequate marketing resources, lack of sponsor or consumer acceptance of
its products, competition and changing technology.

Discontinued Operations

         MES Products. Beginning in 1996, we concentrated our resources on MTD
operations in an effort to develop comprehensive software solutions for
regulated manufacturing industries in the healthcare sector. We initially
focused on MES solutions as a means to address the increasing pressure on
healthcare industry participants to manage costs. The pharmaceutical industry in
particular presented a compelling market for MES products that could contain the
costs of complying with Food and Drug Administration ("FDA") regulations as well
as reducing paperwork, human error and the time required to review, approve and
analyze batch processing records.

         Our first MES product was designed and initially marketed as a standard
application to provide electronic controls and monitors for pharmaceutical
production. Despite success in meeting that objective, we encountered
difficulties in satisfying the equally important but more complex goal of
standardizing the product to interface with the wide variety of legacy computer
systems deployed in pharmaceutical manufacturing facilities. To address this
challenge, we devoted substantial resources to refine the product for operation
on a standard PC-based network. We also sought to expand our offerings to work a
variety of operating systems.

         Our efforts to provide a migration path for our MES offerings failed to
solve all of the intricacies of product integration with customer legacy
systems. As a result of technological complexities requiring substantial
interface customization for one of our major MES customers, we were unable to
meet delivery deadlines under a major development contract, resulting in the
customer's termination of the project during the first quarter of 2000. Although
we reallocated resources to other projects requiring less substantial
customization, problems encountered in MES integration with customer legacy
systems proved not only inherent in the pharmaceutical manufacturing environment
but also highly unpredictable in degree.

         In October 2000, we sold our MES assets to ABB for $2.0 million. The
assets included patents, copyrights trademarks and tradenames, contracts,
accounts receivable, equipment and software deployed in our MES business. ABB
also agreed to employ the members of our MES staff and assumed our unsatisfied
commitments under MES related license agreements.

         Clinical Software Products. During 1997, we identified the Clinical
Software market as a potential fit for our core technology. Late in 1998, we
introduced a clinical supplies and materials management system designed for use
in high volume clinical trials for new medicines or medical devices. Because the
effective management of patient pack supply is required for satisfying FDA
requirements as well as meeting time to market goals, the product was expected
to achieve significant penetration by ensuring that a secure, steady flow of
clinical trial product would be available for distribution. The software
addressed that objective by facilitating rapid fulfillment of requests and
supporting procedural compliance with FDA traceability requirements. It also
facilitated ready access to historical operating data for clinical trials to
support new drug application procedures, real-time production analyses and
timely scale-up to commercial production.

                                       2
<PAGE>

         In 1999, we diversified our suite of Clinical Software offerings with
the purchase of Almedica Technology Group Inc., a wholly-owned subsidiary of
Almedica. The acquisition added two complementary software suites, one designed
as an intuitive application for clinical trial design, randomization and
labeling, and the other to facilitate clinical trials distribution management.
Although both products required additional refinement, we relied on their
potential for increasing throughput and quality while decreasing the costs of
designing and implementing clinical trials as a means for achieving the critical
mass required to penetrate this market.

         Despite the perceived potential of our internally developed and
acquired Clinical Software products, we encountered various technological and
marketing difficulties in our introduction of these offerings, which generated
only marginal sales. We had limited financial, technical and marketing resources
available to develop a market for this software. In view of these limitations,
we concluded that our Clinical Software business, if retained, would continue to
operate at a loss.

         In March 2001, we entered into the LLC Agreement with Almedica for the
contribution of our Clinical Software assets to Almedica LLC for $75,000 in cash
plus a 20% interest in the venture. Almedica LLC was formed for the purpose of
this transaction. It has no operating history or current financing commitments
from Almedica, Base Ten or any third party. If Almedica LLC is unable to
successfully commercialize the acquired assets, our equity interest will have no
value.

         To save the costs of multiple shareholder solicitations for the
election of directors, approval of the Clinical Software sale and approval of
the Convergence Merger, we elected to defer meetings of our shareholders during
2001. Almedica agreed to defer the closing under the LLC Agreement until a
single shareholder solicitation was completed for both the Clinical Software
sale and the Convergence Merger. In December 2001, to accommodate its
development schedule pending the closing under our LLC Agreement, we granted
Almedica LLC a ten-year worldwide license covering the Clinical Software (the
"Almedica License"). The Almedica License is exclusive for the first year and
non-exclusive for the balance of term. It provides for a royalty of $75,000
payable either upon the closing under the LLC Agreement or, if shareholder
approval for the sale of our Clinical Software business is not obtained, in
installments commencing in December 2002.

Sales and Marketing

         Prior to the sale of our MES business, our marketing operations for MTD
offerings were conducted primarily through a direct sales force at our former
corporate headquarters in New Jersey, and abroad in England, France and Belgium.
The sales force also conducted presentations and demonstrations to management
and end users at the customer site as part of the direct sales effort. These
operations were supplemented with a variety of marketing initiatives, including
public relations activities and advertising in industry periodicals, trade
shows, industry symposiums and workshops, as well as user group conferences. We
also developed a website as a sales and marketing tool. Our sales and marketing
operations for MTD products ceased in October 2000, when the MES business was
sold to ABB and the decision was made to dispose of the Clinical Software
business. Prior to that time, we staffed these operations with up to ten
salesmen and support personnel.

Research and Development

         Our research and development efforts were suspended in October 2000
following the sale of our MES business, and no research and development expenses
were incurred during 2001. During 2000, we recorded research and development
expenses of $1.6 million, primarily in efforts to modify our MES and Clinical
Software products for web-based platforms. Prior to the MES sale, our
development staff consisted of up to 15 software engineers supported by test,
project, quality assurance and administrative staff.

Competition

         The MES and Clinical Software business is highly competitive and
fragmented. The major sources of competition that we faced prior to
discontinuing these operations were vendors of paper-based systems, software
firms specializing pharmaceutical manufacturing applications and in-house
software development departments. Many of these competitors were larger
organizations with substantially greater resources than Base Ten.

                                       3
<PAGE>

         If the Convergence Merger is completed, we will enter the healthcare
information industry, which is intensely competitive and fragmented. Principal
competitors of Convergence currently include national and regional firms
offering information systems and platforms through established internet sites or
proprietary networks. In addition, many educational organizations provide a
broad range of medical information data base resources without charge. Most of
these competitors have substantially greater financial, technical, marketing and
deployment resources than we will have after the Convergence Merger. Many have
the added advantage of offering a greater diversity of products with a
substantial installed customer base.

Regulation

         Our MES and Clinical Software products did not require pre-marketing
FDA clearance or approval. Because those products were intended to facilitate
customer compliance with applicable FDA regulations, we maintained a continuous
program to ensure that our products accomplished that objective.

Employees

         At December 31, 1999, we employed a total work force of 71 persons,
including 45 engineers. None of those employees were covered by collective
bargaining agreements, and we experienced no labor disruptions or work
stoppages. The sale of our MES business to ABB in October 2000 included
employment commitments by ABB covering all MTD engineering, marketing and
support staff for MES operations. Most of our technical, marketing and support
staff remaining after the MES sale were re-employed or released by the end of
2000 in view of our decision to discontinue Clinical Software operations. During
2001, we employed four persons in executive or administrative capacities, one on
a full-time basis and three part time. We consider relations with our
transitional staff to be good.

Foreign Operations

         We sold or terminated all of our international operations during 2000.
We currently maintain no staff or operations outside of the United States.

Item 2.  Properties

         United States. Prior to January 2001, our principal office in the
United States was located in Trenton, New Jersey in a facility housing our
corporate headquarters and development and support activities. We occupied
approximately 42,000 square feet of the facility under a lease that was
scheduled to expire in October 2009. The remaining 40,000 square feet of the
facility was occupied by STS, the acquirer of our GTD assets, under a five-year
sublease scheduled to expire in 2002. During 2000, we received payments of
approximately $240,000 under the STS sublease. In January 2001, we were released
from our remaining obligations under the Trenton lease totaling $5,808,000 in
exchange for a payment of $75,000 and the assignment of our rights under the STS
sublease to the landlord. During 2000, we were also released from our
obligations totaling $894,000 for office space in Parsippany, New Jersey and
Santa Clara, California.

         Our principal office is currently located in Lakewood, New Jersey,
where we lease a 800 square foot facility for our corporate headquarters and
administrative support activities. The lease for the facility expires in
September 2002. Upon completion of the Convergence Merger, we expect to
reincorporate in Nevada and relocate to the principal executive offices of
Convergence at 774 Mays Boulevard, Suite 386, Incline Village, Nevada 89451. As
part of the reincorporation, we expect to change our corporate name at the time
of the Convergence Merger to "Convergence Systems, Inc." both for corporate
identity purposes and for compliance with the agreement covering the October
2000 sale of our MES assets to ABB.

         Foreign. In November 2000, we were released from our obligations under
a lease for office space in Mechelen, Belgium in exchange for our interest in
Base Ten Systems NV, which had no operations and assets limited to office
equipment and automobiles. We vacated office facilities in Camberley, England
and Saint Etienne, France upon the expiration of those leases in August 2000 and
October 2000, respectively.

                                       4
<PAGE>

Item 3.  Legal Proceedings

         Prior to our Business Redirection, we were involved from time to time
in various legal proceedings including customer and employee claims in the
normal course of business. Under our agreement with ABB for the sale of our MES
business, we retained responsibility under various customer agreements
containing damage or penalty provisions for non-delivery or delays beyond
certain dates. Those provisions vary by customer, with some specifying a fixed
amount of damages per day or per week and others providing no specific
limitations on the aggregate amount of potential damage payments. We have not
been subjected to any claims under these provisions.

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

         No matters were submitted to a vote of the security holders during the
fourth quarter of 2001.


                                     PART II

Item 5.  Market for the Company's Common Stock and Related Shareholder Matters

Trading Markets

         In September 1999, our Class A common stock was transferred from the
Nasdaq National Market System to the Nasdaq SmallCap Market. Later that month,
we completed a 1-for-5 reverse stock split of our Class A common stock in an
effort to regain compliance with the Nasdaq's $1.00 minimum bid price
requirements for continuing SmallCap Market listing. The effort proved
unsuccessful and, on December 12, 2000, the Class A common stock was delisted
from the Nasdaq SmallCap Market for that reason, with trading limited thereafter
to the OTC bulletin board. The trading symbol for the Class A common stock has
remained "BASEA."

         The Company's Class B common stock was delisted from the Nasdaq
SmallCap Market in the second quarter of 1998. A one-for-five reverse stock
split of the Class B common stock was completed in September 1999 to retain
proportionality with the Class A common stock.

         The table below shows the high and low bid prices for our Class A
common stock, as reported by Nasdaq for the periods indicated, after adjustment
for the one-for-five reverse stock split and rounded to the nearest penny.
Prices after December 12, 2000 are OTC market quotations, which reflect
inter-dealer prices, retail mark-up, mark-down or commission and may not
necessarily represent actual transactions.

                                                      Market Prices
                                                  --------------------
                                                  High             Low
                                                  ----             ---
       2000:

       First quarter..........................   $ 6.56         $  2.38
       Second quarter.........................     3.13            0.88
       Third quarter..........................     1.13            0.50
       Fourth quarter.........................     0.56            0.31

       2001:

       First quarter..........................   $ 0.16         $  0.05
       Second quarter.........................     0.08            0.05
       Third quarter..........................     0.09            0.05
       Fourth quarter.........................     0.11            0.05


Security Holders

          As of February 28, 2002, there were approximately 1,000 record holders
of our Class A common stock and 100 record holders of the Class B common stock.

                                       5
<PAGE>

Dividends

          We have not paid cash dividends on our common stock since 1985.
Following the Convergence Merger, any future earnings could be expected to be
retained to provide for future growth.

Penny Stock Rules

          As a result of current trading prices, our common stock is subject to
the penny stock rules under the Securities Exchange Act of 1934 (the "Exchange
Act"). In the absence of an exemption from those rules, broker-dealers making a
market in our common stock are required to provide disclosure to their customers
on the risks associated with its ownership, its investment suitability for the
customer, information on its bid and ask prices and information about any
compensation the broker-dealer will receive for a transaction in the common
stock. The application of these rules generally reduces market making activities
and presumably has limited the liquidity of our common stock.

Prospective Termination of Exchange Act Registration

          In view of the limited market for our common stock following its
delisting from the Nasdaq SmallCap Market in December 2000, we believe the
advantages usually associated with a public company franchise have been
substantially undercut by the downturn in our business and the resulting loss of
market value and liquidity in our common stock. If our shareholders approve the
Convergence Merger and related proposals, our purchase of fractional shares
resulting from the Share Combination can be expected to reduce the record
holders of our Class A common stock below 300, enabling us to terminate our
reporting obligations as a publicly held small business company under the
Exchange Act. In proposing the Share Combination in connection with the
Convergence Merger, we determined that any remaining advantages from our public
company franchise are overwhelmingly outweighed by our Exchange Act reporting
costs.

Item 6.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations

Forward Looking Statements

          This Report includes forward looking statements within the meaning of
Section 21E of the Exchange Act relating to our business prospects, developments
and anticipated operations from the Business Redirection. Actual performance,
prospects, developments and results may differ materially from anticipated
results due to economic conditions, unanticipated circumstances and other risks,
including uncertain market acceptance and demand for our products or services,
performance risks, competition, potential infringement of proprietary rights and
uncertainties in the availability and cost of capital. Words like "anticipate,"
"expect," "intend," "plan" and similar expressions are intended to identify
forward looking statements, all of which are subject to these risks and
uncertainties.

General

         We were engaged for our first quarter century in software development
and contract manufacturing for defense and aerospace markets. In response to
declines in defense spending during the early 1990s, we sought ways to apply our
know how in safety critical software for defense markets to commercial
applications for other regulated industries. We ultimately established a
separate MTD division to develop comprehensive software solutions for regulated
manufacturing industries in the healthcare sector, initially focusing on MES
solutions for pharmaceutical manufacturers as a means to address the increasing
pressure on healthcare industry participants to manage costs. We later
identified the clinical trials market as an additional opportunity to apply our
core technology through Clinical Software designed to support supplies
management and compliance with traceability requirements.

Contraction of Business

         GTD Sale. In 1997, we opted to concentrate on building our MTD product
base both though internal development and acquisitions. At year end, as part of
that strategy, we sold our GTD assets for $1.1 million and implemented a related
management restructuring.

                                       6
<PAGE>

         MES Sale. After the GTD sale, we marshaled our limited resources to
refine, expand and deploy our MTD offerings. These efforts were hindered by
unanticipated difficulties integrating our MES software with the wide variety of
legacy computer systems deployed in pharmaceutical manufacturing facilities. Our
inability to overcome those obstacles by standardizing our MES products and
providing migration paths resulted in project termination by a major customer
during the first quarter of 2000. Although we reallocated resources to other
projects requiring less substantial customization, we continued to encounter
problems integrating our MES products with customer legacy systems. As a result,
we sold our MES assets to ABB in October 2000 for $2.0 million. ABB also agreed
to employ the members of our MES staff and assumed our unsatisfied commitments
under MES related license agreements. See "Business - Discontinued Operations -
MES Products."

         Pending Clinical Software Sale. We also encountered various
technological and marketing difficulties in the introduction of our Clinical
Software offerings, including two software suites added by acquisition from
Almedica in June 1999. Our combined Clinical Software offerings generated only
marginal sales, while associated development and marketing expenses contributed
to operating losses aggregating $48.5 million from 1998 through 2000. In view of
our limited financial, technical and marketing resources available to develop a
market for these products, we concluded that our Clinical Software business, if
retained, would continue to operate at a loss.

         In October 2000, we determined to dispose of our Clinical Software
assets and redirect our business to pursue revenue generating or strategic
opportunities in sectors requiring less capital resources, technological
development and time to market uncertainties. As part of this strategy, we
realigned our board of directors and revamped our management team to implement
the planned Business Redirection. In March 2001, we entered into an agreement
for the contribution of our Clinical Software assets to Almedica LLC in exchange
for a cash payment of $75,000 and a 20% interest in the venture. Completion of
the transaction is subject to various conditions, including approval by our
shareholders. In view of our decision to consolidate that proposal with
subsequent initiatives requiring a vote of our shareholders, we granted Almedica
LLC a ten-year worldwide license covering the Clinical Software in December 2001
to accommodate its development schedule for the contributed assets pending the
closing under our LLC Agreement. See "Business - Discontinued Operations -
Clinical Software Products."

         When we originally acquired the Clinical Software products from
Almedica, we recorded the associated assets and liabilities based on the market
value of the 790,000 shares of common stock we issued in the acquisition. In
October 2000, based on the decision by our board of directors to dispose of this
business, we recorded a loss on the disposition of discontinued operations in
the amount of $1.9 million. Following our sale of this business, our balance
sheet will reflect nominal value for our 20% interest in Almedica LLC.

Business Redirection

         Beginning in November 2000, we concentrated on identifying
opportunities for a business combination meeting the criteria for the Business
Redirection. These efforts were focused for most of 2001 on negotiations for the
Convergence Merger. If the Convergence Merger and related initiatives are
approved by our shareholders and consummated, Base Ten will become the parent
company of Convergence and will be privately owned 25% by our existing
shareholders and 75% by the Convergence shareholders. Our remaining assets,
consisting primarily of cash and cash equivalents of $1.2 million at December
31, 2001, will be used to help commercialize interactive web-based resources
developed by Convergence to assist people make healthy lifestyle decisions
informed by exposure to alternative and preventative as well as traditional
healthcare options. Although Convergence has generated only marginal revenues
and has incurred substantial losses to date, its initial offering promises to
address major priorities of corporate sponsors by encouraging employees
participating in their health plans to adopt wellness lifestyles that can
increase productivity and reduce healthcare costs.

         To provide Convergence with working capital pending completion of the
Convergence Merger, we purchased 1 million shares of its preferred stock for
$250,000. A portion of the acquired shares are subject to limited put and call
options if the Convergence Merger is not completed for specified reasons. Our
operations after the Convergence Merger will be conducted solely through
Convergence. The business plan for Convergence contemplates substantial capital
expenditures to fund its ongoing operations without any assurance of deriving
revenues from operations. We anticipate that operating costs for Convergence to
refine, market and deploy its services will contribute to recurring losses at
the rate of approximately $50,000 per month following the Convergence Merger.
Our ability to achieve profitable operations through the Convergence subsidiary
could be adversely affected by delays or inefficiencies in the development
cycle, inadequate marketing resources, lack of sponsor or consumer acceptance of
its products, competition and changing technology.

                                       7
<PAGE>

Cost Reduction Measures

         Since the time of our Clinical Software acquisition from Almedica in
June 1999, which included the addition of associated technical personnel, our
work force was been reduced through a staff reduction plan, attrition and the
sale of our MES business from 120 employees to an executive and administrative
staff of one full-time and two part-time employees at December 31, 2001. Most of
our technical, marketing and support staff remaining after the MES sale were
re-employed or released by the end of 2000 in view of the decision to
discontinue the Clinical Software business. In addition, as part of the
contraction of our operations and planned Business Redirection, we have sold or
closed our operations in Trenton and Parsippany, New Jersey, California, England
and Belgium. These measures resulted in the elimination of annual rent
obligations aggregating approximately $831,000.

Selected Financial Data

         The following table presents selected financial data for Base Ten and
its consolidated subsidiaries. The selected consolidated financial data for the
year ended December 31, 2001 and 2000 has been derived from our audited
consolidated financial statements included at the end of this Report and should
be read in conjunction with those statements and related notes. The selected
consolidated financial data for year ended December 31, 1998, the two months
ended December 31, 1997 and the fiscal year ended October 31, 1997 have been
derived from our audited consolidated financial statements included in its prior
annual reports, as adjusted to reflect the effects of operations discontinued in
2000.




                                       8
<PAGE>

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

                     BASE TEN SYSTEMS, INC. AND SUBSIDIARIES

-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                           (In thousands except per share data)

                                                                                            Two Months   Fiscal Year
                                                      Year Ended Dec. 31,                      Ended        Ended
                                        ------------------------------------------------     Dec. 31,     Oct. 31,
                                          2001          2000         1999         1998         1997         1997
                                        ---------    ---------    ---------     --------     --------     ---------
<S>                                      <C>         <C>          <C>           <C>          <C>          <C>
Summary of Operations:

Net loss from continuing operations......$   (727)     $(3,433)    $ (8,800)    $ (6,853)    $ (1,273)    $  (6,367)

Net loss from discontinued operations....      --       (5,831)     (11,440)     (12,167)      (2,663)      (15,640)

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

Net loss.................................$   (727)     $(9,264)    $(20,240)    $(19,020)    $ (3,936)    $ (22,007)

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

Net earnings (loss) per common
   share from:(1)

     Continuing operations...............$  (0.14)     $ (0.66)    $  (3.37)   $   (3.77)    $  (0.77)    $   (4.03)

     Gain on redemption of redeemable
      convertible preferred stock........      --         2.25          --           --           --           --

     Discontinued operations.............      --        (1.12)       (2.47)       (6.68)       (1.61)        (9.91)

Net earnings (loss) per share............$  (0.14)     $  0.47     $  (5.84)   $  (10.45)    $  (2.38)    $  (13.94)

-------------------------------------------------------------------------------------------------------------------
<CAPTION>
                                                       As of December 31                       As of        As of
                                        ------------------------------------------------     Dec. 31,     Oct. 31,
                                          2001          2000         1999         1998         1997         1997
                                        ---------    ---------    ---------     --------     --------     ---------
<S>                                      <C>         <C>          <C>           <C>          <C>          <C>
Summary Balance Sheet:

Working capital(2).......................$  1,072    $   1,675    $   3,827     $ 15,482     $  6,080     $   2,671
Total assets.............................   1,414        2,794       19,077       33,821       24,413        21,217
Long term debt, net of current
 maturities .............................      --           --        3,204       13,341       18,916        18,925
Redeemable preferred stock...............      --           --       19,004       12,914        6,155           --
Shareholders' equity (deficit)...........   1,085        1,790       (7,019)       2,372       (6,054)       (4,982)

--------------------------------------------------------------------------------------------------------------------
</TABLE>
     (1) Adjusted for 1998 and 1997 to reflect the one-for-five reverse stock
split during 1999.
     (2) Included as of December 31, 1997 is the reclassification of the assets
and liabilities of GTD as net assets held for sale. Included as of December 31,
2000 are the assets and liabilities of the Clinical Software business classified
as net current assets of discontinued operations.

                                       9
<PAGE>

Results of Discontinued Operations

         General. Our consolidated financial statements included in this Report
account for our MTD business as discontinued operations in view of the October
2000 sale of our MES assets and contemporaneous decision to dispose of our
Clinical Software assets. Accordingly, all items of income and expense
attributable to our software operations for all periods presented in the
consolidated financial statements are aggregated and identified on a net basis
as gain or loss from discontinued operations. Individual items of income and
expense from discontinued operations are set forth in Note N to the consolidated
financial statements at the end of this Report and are summarized below.

         Gain from GTD Sale. Our GTD assets were sold to STS on December 31,
1997. See "Business - Contraction of Business." Accordingly, the results of GTD
operations are not included in results of operations for 1999. During 1999, STS
was sold to a defense industry competitor, resulting in a formula payment that
year of approximately $1.1 million. The payment is reflected in our consolidated
financial statements as a gain from sale of discontinued operations.

         2001 and 2000. We recognized no gain or loss from discontinued
operations for 2001, compared to a loss of $5.8 million from discontinued
operations in 2000. The prior year loss was attributable to $0.5 million in
costs of revenues, $1.6 million in research and development costs, $3.0 million
in selling and marketing expenses and $1.2 million in general and administrative
charges, together with a $1.9 million loss recognized from disposition of our
MES business in the fourth quarter of the year. These expenses were partially
offset by revenue of $2.3 million and other income of $121,000.

Results of Continuing Operations

         General. In view of our determination in October 2000 to dispose of our
Clinical Software business and pursue the Business Redirection, our consolidated
financial statements included in this Report account separately for continuing
operations comprised of general overhead, rent and other infrastructure costs
not attributable to discontinued operations.

         2001 and 2000. We incurred losses from continuing operations
aggregating $727,000 in 2001 and $3.4 million in 2000. The losses were primarily
from general and administrative expenses allocable to continuing operations,
which decreased substantially in 2001 from drastic staff reductions, office
lease terminations and lower professional service fees. Results of continuing
operations also reflect other income of $114,000 in 2001 versus $88,000 of other
expenses in 2000, primarily from foreign exchange losses and interest on capital
leases.

Liquidity and Capital Resources

         General. Our consolidated financial statements have been prepared on
the basis that current operations will be discontinued. We incurred significant
operating losses and negative cash flows in recent years. In view of our
determination in October 2000 to dispose of our Clinical Software business and
pursue the Business Redirection, the consolidated financial statements account
for the assets and liabilities associated with our software operations based on
their net realizable value upon disposition. The recorded value of our Clinical
Software business reflects the terms of the LLC Agreement but attributes no
value to our interest in Almedica LLC. See "Business - Discontinued Operations."

         Liquidity. Our working capital decreased from $1.7 million at December
31, 2000 to $1.0 million at December 31, 2001. Our cash position decreased from
$2.3 million at December 31, 2000 to $1.2 million at December 31, 2001,
primarily reflecting the use of cash in operations totaling $1.1 million.

         Capital Resources. In May 2000, the Nasdaq inquired about our ability
to meet the Nasdaq SmallCap Market continuing listing requirements for $2.0
million of net tangible assets, $35.0 million in market capitalization and $0.5
million of net income. To facilitate the Nasdaq's review, we submitted its plan
for achieving and sustaining compliance. Although the tangible net asset
requirement was satisfied upon cancellation of the Series B preferred stock, our
Class A common stock was delisted from the Nasdaq SmallCap Market in December
2000 for failure to meet its $1.00 minimum bid requirement. See "Market for the
Company's Common Stock and Related Shareholder Matters." In addition to reduced
liquidity in the outstanding common stock and related risks to our shareholders,
this has impaired our ability to implement a Business Redirection through equity
transactions requiring an established trading market for the shares issuable in
the transaction.

                                       10
<PAGE>

Income Taxes

         At December 31, 2001, we had net operating loss ("NOL") carryforwards
for federal income tax purposes of approximately $78.0 million, expiring in
increments from 2005 through 2020. We also had research and development
carryforwards of $0.2 million expiring in increments from 2002 through 2006. If
we undergo certain changes in ownership, including the change of control
associated with the Convergence Merger, we could be subject to annual
limitations on the use of our NOL carryforwards and credits. Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes ("FAS 109"),
requires that a valuation allowance be created and offset against the deferred
tax assets if, based on existing facts and circumstances, it is more likely than
not that some portion or all of the deferred tax asset will not be realized. The
valuation allowance will be adjusted when the credits are realized or when, in
the opinion of management, there is sufficient additional positive evidence on
the likelihood of their realization. Any reductions will be reflected as a
component of income tax expense.

Item 7.  Financial Statements and Supplementary Data

                          Index to Financial Statements
                                                                         Page
                                                                         ----
Independent Auditors' Report.......................................       F-1
Consolidated Balance Sheet - December 31, 2001.....................       F-2
Consolidated Statements of Operations - Years ended
   December 31, 2001 and 2000......................................       F-3
Consolidated Statements of Common Stock and Other
   Shareholders' Equity (Deficit) - Years ended
   December 31, 2001and 2000.......................................       F-4
Consolidated Statements of Cash Flows - Years ended
   December 31, 2001 and 2000......................................       F-5
Notes to Consolidated Financial Statements.........................       F-6

Item 8.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

         On October 31, 2000, we dismissed PricewaterhouseCoopers LLP ("PWC") as
our independent accountants. The dismissal was approved by the Audit Committee
of our board of directors. The reports of PWC on our financial statements for
the years ended December 1999 and 1998 contained no adverse opinion or
disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principles, except that the reports contained an
explanatory paragraph expressing substantial doubt regarding our ability to
continue as a going concern. In connection with its audits for those fiscal
years and through October 31, 2000, (1) we had no disagreements with PWC on any
matter of accounting principles or practices, financial statement disclosure or
auditing scope or procedure that would have required references by PWC in its
reports on our financial statements for those years if not resolved to the
satisfaction of PWC, and (2) PWC did not advise us of any "reportable events" as
defined in Item 304(a)(1)(v) of Regulation S-K under the Exchange Act.

         On November 3, 2000, we engaged Amper, Politziner & Mattia PA ("APM")
as our new independent accountants. During our two most recent fiscal years, we
did not consult with APM on any accounting, auditing, financial reporting or any
other matters relating to our business.

                                    PART III

Item 9.  Directors and Executive Officers

Board Reconstitution

         Our board of directors (the "Board") was realigned twice during 2000.
In the second quarter of 2000, the Board memberships held by Clark L. Bullock
since June 1999 and by Alan S. Poole since May 1994 were relinquished to Edward
J. Klinsport, who had served as a member of our senior management for twelve
years prior to the sale of our GTD business. In the fourth quarter of 2000,
following the sale of our MES business, the Board announced its plan for the
Business Redirection. To implement the Business Redirection, the Board appointed
Mr. Klinsport as its Chairman, in place of Stephen Cloughley, and Andrew G.
Sycoff joined the Board in place of Robert Hurwitz.

                                       11
<PAGE>

Incumbent Directors and Officers

         Our current directors and executive officers are as follows:
<TABLE>
<CAPTION>
                                                                                                     Officer of
                                                                                                      Base Ten
         Name                   Age                           Position                                  Since
         ----                   ---                           --------                                  -----
<S>                             <C>         <C>                                                         <C>
         Edward J. Klinsport    54          Chairman of the Board, President, Chief
                                            Executive Officer and a Director                            2000

         John C. Rheinberger    57          Director                                                    1999

         Andrew G. Sycoff       35          Director                                                    2000

         Kenneth W. Riley       38          Chief Financial Officer, Treasurer and
                                            Secretary                                                   2000
</TABLE>

         A summary of the business experience and background of our incumbent
directors and executive officers is set forth below.

         Edward J. Klinsport was appointed to the Board in June 2000. In October
2000, Mr. Klinsport was appointed Chairman of the Board, Chief Executive Officer
and President of Base Ten in connection with the Board's decision to implement
the Business Redirection and related management realignment. Mr. Klinsport also
serves as Chairman of the Board, Chief Executive Officer and President of
Paragon Industries Corp., a electronics contract manufacturer that he co-founded
in 1999. He was the founder, Chief Executive Officer and President of STS, which
purchased our GTD business in 1997. Prior to that transaction, he served as a
director of Base Ten, commencing in 1985, and as a member of our senior
management, commencing in 1978, most recently as its Executive Vice President
and Chief Financial Officer as well as General Manager of GTD operations.

         John C. Rhineberger was appointed to the Board in May 1999. Since 1997,
he has been employed as President of The Rhineberger Organization, Inc., a
provider of sales, marketing and product development consulting services to the
home center and related industries. From 1996 to August 1997, Mr. Rhineberger
was a Vice President of Shaw Industries, Inc., a carpet manufacturer, with
responsibility for retail operations. He previously held positions as a
merchandising executive for Home Depot, President and Chief Executive Officer of
Post Tool Retail Stores and Sun Flooring Distribution, each a subsidiary of West
Union Company, President and General Manager of Sherwin Williams Floor World, a
floor covering retail business, and various executive positions, including
President and Chief Operating Officer, at Color Tile, a retail store chain.

         Andrew G. Sycoff was appointed to the Board in October 2000. He has
also served since 1999 on the board of directors of Paragon Industries Corp.
Since 1992, Mr. Sycoff has been President, Chief Executive Officer and Chairman
of the Board of Andrew Garrett Inc., an investment bank and full service
brokerage firm located in New York City, as well as Chief Executive Officer and
Co-Chairman of the Board of Andrew Garrett Trading, Inc., a trading and Nasdaq
market making firm. He previously held branch manager positions with Shamrock
Partners and Paulson Securities. Mr. Sycoff has also held senior management and
consulting positions within the real estate industry.

         Kenneth W. Riley joined Base Ten as Controller in May 1999. In October
2000, he was named Chief Financial Officer, Treasurer and Secretary. Prior to
joining Base Ten, Mr. Riley was the Chief Financial Officer of Ocean Computer
Group from 1998 to 1999 and the Vice President - Finance and Administration of
Decision Technology, Inc. from 1989 to 1998. Mr. Riley also served on the audit
staff of Ernst & Young and is licensed as a certified public accountant.

                                       12
<PAGE>

Actions by the Board in 2001

         During 2001, the Board took formal action, either at meetings or by
consent, on two occasions. No director attended or participated in fewer than
75% of the meetings or actions by consent while serving on the Board during
2001.

Committees and Committee Meetings

         The Board has an Audit Committee and a Compensation Committee. The
Audit Committee is responsible for monitoring and reviewing the financial
affairs and financial statements of the Company and performing related internal
financial review procedures. The Compensation Committee is responsible for
evaluating salary and bonus arrangements for all officers and key employees and
for administering the Company's employee benefit plans.

         The Audit Committee and Compensation Committee were chaired by Alan S.
Poole prior to his resignation from the Board in June 2000, when his role on
both Committees was assumed by Mr. Rhineberger. Since October 2000, Mr. Sycoff
has served on both Committees. Each of these Committees held one meeting during
2001.

Compensation of Directors

         No fees were paid to directors of the Company during 2001.

Beneficial Ownership Reporting

         Based on a review of forms filed with the Securities and Exchange
Commission to report changes in their beneficial ownership of our common stock,
none of our officers or directors failed to file any required reports on a
timely basis during 2001.

Item 10.  Executive Compensation

Compensation of Executive Officers

         The following table sets forth the total remuneration paid by the
Company during the last three years to its Chief Executive Officer ("CEO") and
all other executive officers who earned over $100,000 in any of those years
(collectively with the CEO, the "Named Officers"). The information includes base
salaries, bonus awards and long-term incentive plan payouts, as well as the
number of stock options and stock appreciation rights ("SARs") granted and any
other compensation, whether paid or deferred.



                                       13
<PAGE>

                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
                                           Annual Compensation          Long Term Compensation
Name and 2000                           ---------------------------     ----------------------         All Other
Principal Position           Year        Salary     Bonus  Other(1)      Option/SAR Awards (#)       Compensation
------------------          -------     ---------   -----  -----         ---------------------       ------------
<S>                          <C>       <C>          <C>    <C>            <C>                         <C>
Edward J. Klinsport          2001......$  100,000        --   --                   --                        --
CEO after 10/29/00           2000......    13,461        --   --               10,000                        --

Kenneth W. Riley             2001......   147,500        --   --                   --                        --
CFO                          2000......    86,146        --   --               14,500                        --
                             1999......    48,125        --   --                1,000                        --

Stephen A. Cloughley(2)      2000......   155,769        --   --                   --                  $ 97,962
CEO until 10/29/00           1999......    74,923        --   --               55,000                    71,524

William F. Hackett(3)        2000......   151,442        --   --                   --                    90,000
SVP and CFO                  1999......   174,808        --   --                   --                        --
</TABLE>
--------------------
     (1) Perquisites and other benefits did not exceed 10% of any named
officer's total annual salary.
     (2) Other compensation received by Mr. Cloughley consisted of severance
payments, forgiveness of an employee loan and compensation deferred from 1999.
His employment terminated on October 29, 2000. See "Termination Agreements"
below.
     (3) Other compensation received by Mr. Hackett consisted of severance
payments. His employment terminated on October 27, 2000. See "Termination
Agreements" below.

Stock Options

         During 2001, no stock options or SARs were granted or exercised by the
Named Officers.

Termination Agreements

         We entered into a termination agreement with William F. Hackett in
connection with his resignation as Chief Financial Officer, Senior Vice
President, Secretary and Treasurer on October 27, 2000. The agreement provided
for a contemporaneous severance payment of $90,000 plus a contingent payment of
$85,000 based on satisfactory resolution of various matters, including
obligations under our Trenton, New Jersey office lease, a breach of contract
claim by a former customer and the windup of subsidiary operations in Mechelen,
Belgium. In February 2001, Mr. Hackett agreed to accept $20,000 and an
assignment of a country club membership maintained by the Company in lieu of the
stipulated contingent payment.

         We entered into a termination agreement with Stephen A. Cloughley in
connection with his resignation as President and Chief Executive Officer on
October 29, 2000. The agreement provided for a contemporaneous severance payment
of $72,000, consulting fees totaling $22,500 for transitional services through
year end and contingent compensation estimated at $7,500 upon sale of our
Clinical Software business.

Compensation Committee Interlocks and Insider Participation

         The Compensation Committee is chaired by Mr. Rhineberger, who has
served on the Committee since 1999. Mr. Klinsport was appointed to the Committee
upon his election to the Board in June 2000 and served in that capacity until
being named President and Chief Executive Officer in October 2000. At that
point, Mr. Sycoff was added as the second member of the Committee. Neither Mr.
Rhineberger nor Mr. Sycoff have ever served as an officer of the Company or had
any related party transactions with the Company other than consulting
arrangements with a firm owned by Mr. Rhineberger. See "Certain Relationships
and Related Transactions."

                                       14
<PAGE>

Compensation Committee Report on Executive Compensation

         Compensation Policy. Historically, our executive compensation program
was designed to remunerate executives fairly and provide additional incentive
for them to remain with the Company and maximize their performance on its
behalf. The compensation program consisted of base salary, annual incentive
bonus and periodic grants of stock options. The Board's objective, reflected in
recommendations by the Compensation Committee, was to integrate these
compensation components with our annual and long term performance as well as the
achievements and contributions of the individual executives. In this way, the
compensation program was structures to balance the relationship between
compensation and performance in the best interests of our shareholders. Since
the Board's adoption of the Business Redirection strategy in October 2000 and
related management realignment, our two incumbent executive officers agreed to
limit their compensation to a base salary reflecting our limited financial
resources.

         Base Salary. Base salaries for 2001 were established at the beginning
of the year based on the Compensation Committee's assessment of each Named
Officer's (1) overall performance, (2) position and responsibilities, (3)
contribution, experience and relative importance to the enterprise, (4) prior
year's compensation in comparison with salaries for similarly situated
executives at comparable companies and (5) the Company's financial condition,
prior year's financial performance and success or failure in meeting strategic
objectives for the prior year. In making its recommendations, the Compensation
Committee did not assign any specific weight to any particular factor or attempt
to correlate base salaries in relation to any group of comparable companies.
Instead, it considered the entire mix of factors in the aggregate and made
subjective determinations to arrive at recommendations it considered
appropriate.

         Conclusion. The Committee believes that the executive compensation
policies implemented through its recommendations serve the interests of Base
Ten's shareholders and the long range goals of the Company.

This report has been approved by the following
members of the Compensation Committee:   JOHN C. RHINEBERGER    ANDREW G. SYCOFF

Performance Graph

         The following graph compares the yearly percentage change in the
Company's cumulative total shareholder return with the cumulative return
(assuming reinvestment of dividends) of (1) the Nasdaq Market Index and (2) the
MG Industry Group 821, Application Software, Information Technology and
Services, Media General Financial Services, P.O. Box 85333, Richmond, Virginia
23293 (accessible through Industriscope, Dialog and Dow Jones News Retrieval).
MG Industry Group 821 includes both the Company's Class A and Class B common
stock.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
                          10/31/96   10/31/97   12/31/97  12/31/98   12/31/99    12/31/00    12/31/00
------------------------------------------------------------------------------------------------------
<S>                        <C>        <C>         <C>       <C>         <C>         <C>         <C>
Base Ten - Class A         100.00     136.47      97.06     30.59       4.47        0.19        0.16
------------------------------------------------------------------------------------------------------
MG Industry Group 821      100.00     149.73     142.86    251.08     480.40      262.55      250.18
------------------------------------------------------------------------------------------------------
NASDAQ Market Index        100.00     131.06     129.44    182.57     322.00      202.39      161.33
------------------------------------------------------------------------------------------------------
</TABLE>

                                       15
<PAGE>

Item 11.  Security Ownership by Principal Shareholders and Management

         The following table shows the number of shares of common stock
beneficially owned as of February 28, 2002 by:

     o each person known to beneficially own more than 5% of the common stock
     o each current director
     o each incumbent Named Officer
     o the current directors and executive officers as a group

<TABLE>
<CAPTION>
                                                      Class A                Class B
                                                    Common Stock           Common Stock
                                                    Beneficially           Beneficially         Percentage
5% Shareholders                                         Owned                 Owned              of Class
---------------                                    -------------           -------------      --------------
<S>                                                  <C>                     <C>                    <C>
Jesse Upchurch(1)................................     2,432,303                 --                   40.6%
Almedica International, Inc.(2)..................       633,700                 --                   10.7

Executive Officers and Directors

Edward J. Klinsport(3)...........................        10,000                 --                      *
Andrew Sycoff(3).................................        88,666                 --                    1.5
John C. Rhineberger(3)...........................        10,200                 --                      *
Kenneth W. Riley(3)..............................        14,603                 --                      *
Current directors and executive officers(3)
   as a group (4 persons)........................       108,866                 --                    1.8%
-----------------------------------------------------------------------------------------------------------
</TABLE>

     * Less than 1% of class.
     (1) The address of Mr. Upchurch is 500 Main Street, Fort Worth, TX 76102.
Represents (a) 1,528,573 shares held directly by Mr. Upchurch, (b) 703,730
shares held directly by the Constance J. Upchurch Family Trust (the "Trust"), of
which Mr. Upchurch is the executor and beneficiary, and (c) 200,000 shares
issuable upon the exercise of warrants. The Trust also owns 50,000 shares of
Convergence Series A-3 preferred stock.
     (2) The address of Almedica International, Inc. is 75 Commerce Drive,
Allendale, NJ 07401.

                                       16
<PAGE>

     (3) Includes options or warrants exercisable within 60 days by (a) Messrs.
Rhineberger and Klinsport for 10,000 shares each, (b) Mr. Sycoff for 79,000
shares, (c) Mr. Riley for 14,500 shares and (d) all current directors and
executive officers as a group for 113,500 shares.

Item 12.  Certain Relationships and Related Transactions

         A firm owned by John C. Rhineberger, a member of our Board and its
Compensation and Audit Committees since May 1999, served as a consultant to Base
Ten for strategic advice in connection with the disposition of its software
operations. Under the consulting contract, which continued for one year through
October 2001, Mr. Rhineberger received total payments of $100,000.

         Andrew Sycoff, a member of our Board and its Compensation and Audit
Committees since October 2000, will receive warrants exercisable for 1,136
shares of our Class A common stock (adjusted for the Share Combination) for
introducing the parties to the pending Convergence Merger and assisting in
structuring the transaction. The warrants will be exercisable for five years at
$.01 per share.

         Mr. Sycoff also assisted Convergence obtain the participation of the
Constance J. Upchurch Family Trust in a convertible debt offering by Convergence
in October 2001. He received a fee from Convergence in the form of 50,000 shares
of its common stock for his services in connection with the transaction.

         It is the policy of our Board to structure any transactions with
related parties only on terms that are no less favorable to Base Ten than could
be obtained on an arm's length basis from unrelated parties.

Item 13.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

     (a) Financial Statements and Schedules:

         1. Financial Statements: The Financial Statements listed in the Index
under Item 7 are included in this Report at the pages indicated.

         2. Financial Statement Schedules: The financial statement schedules for
which provision is made in Regulation SB have been omitted because the required
information is either presented in the Financial Statements or the Notes thereto
or is not applicable.

         3. Exhibits:

     Exhibit
     Number:    Exhibit
     -------    -------
      3(a)      Restated Certificate of Incorporation, as amended, of Company
                (incorporated by reference to Exhibit 4(a) to Amendment No. 1 to
                Company's Registration Statement on Form S-8 (File No. 2-84451)
                filed on July 31, 1990).

      3(b)      Certificate of Amendment of the Restated Certificate of
                Incorporation dated September 1, 1992 (incorporated by reference
                to Exhibit 4(b)(2) to Amendment No. 3 to Company's Registration
                Statement on Form S-1 (File No. 33-48404) filed on September 3,
                1992).

      3(c)      Certificate of Amendment of Restated Certificate of
                Incorporation filed December 2, 1997, (incorporated by reference
                to Exhibit 99.3 of Company's Current Report on Form 8-K (File
                No. 0-7100) dated October 27, 1997).

      3(d)      Amendment to Certificate of Incorporation filed on March 31,
                1998 (incorporated by reference to Exhibit 3(d) to Company's
                Current Report on Form 8-K (File No. 0-7100) dated April 23,
                1998).

      3(e)      Amendment to Certificate of Incorporation filed on April 21,
                1998 (incorporated by reference to Exhibit 3(e) to Company's
                Current Report on Form 8-K (File No. 0-7100) dated April 23,
                1998).

                                       17
<PAGE>

      3(f)      Certificate of Amendment of Certificate of Incorporation dated
                June 30, 1998 filed with the Treasurer of the State of New
                Jersey on July 9, 1998 (incorporated by reference to Exhibit
                3(g) to Company's Current Report on Form 8-K (File No. 0-7100)
                dated January 13, 1999).

      3(g)      Certificate of Amendment of Certificate of Incorporation dated
                September 30, 1998 filed with the Treasurer of the State of New
                Jersey on October 13, 1998 (incorporated by reference to Exhibit
                3(h) to Company's Current Report on Form 8-K (File No. 0-7100)
                dated January 13, 1999).

      3(h)      Certificate of Amendment of Certificate of Incorporation dated
                November 18, 1998 filed with the Treasurer of the State of new
                Jersey on November 19, 1998 (incorporated by reference to
                Exhibit 3(i) to Company's Current Report on Form 8-K (File No.
                0-7100) dated January 13, 1999).

      3(I)      Certificate of Amendment of Certificate of Incorporation dated
                January 11, 1999 filed with the Treasurer of the State of New
                Jersey on January 11, 1999 (incorporated by reference to Exhibit
                3(j) to Company's Current Report on Form 8-K (File No. 0-7100)
                dated January 13, 1999).

      3(j)      Form of Certificate of Amendment of Restated Certificate of
                Incorporation providing for designation, preferences and rights
                of the Convertible Preferred Shares, Series B (Exhibit A to the
                Exchange Agreement dated as of December 31, 1998) (incorporated
                by reference to Exhibit 10(yy) to Company's Current Report on
                Form 8-K (File No. 0-7100) dated January 13, 1999).

      3(k)      Certificate of Amendment of Certificate of Incorporation dated
                March 3, 1999 filed with the Treasurer of New Jersey on March 4,
                1999 (incorporated by reference to Exhibit 3 (m) to Company's
                Annual Report on Form 10-K (File No. 0-7100) dated April 11,
                2000).

      3(l)      Certificate of Correction to the Certificate of Amendment of
                Restated Certificate of Incorporation providing for designation,
                preferences and rights of the Convertible Preferred Shares,
                Series B, filed with the Treasurer of the State of New Jersey on
                March 18, 1999 (incorporated by reference to Exhibit 3 (m) to
                Company's Annual Report on Form 10-K (File No. 0-7100) dated
                April 11, 2000).

      3(m)      Amended By-Laws of the Company dated October 13, 1997 (
                incorporated by reference to Exhibit 10(ee) to Company's Annual
                Report on Form 10-K (File No. 0-7100) for the fiscal year ended
                October 31, 1997).

      3(n)      Form of Certificate of Amendment of Restated Certificate of
                Incorporation providing for designation, preferences and rights
                of the Convertible preferred Shares, Series B (Exhibit A to the
                Exchange Agreement dated as of December 31, 1998) (incorporated
                by reference to Exhibit 10(yy) to Company's Current Report on
                Form 8-K (File No. 0-7100) dated January 13, 1999).

      3(o)      Amended By-Laws of the Company (incorporated by reference to
                Exhibit 4(d)(2) to Company's Registration Statement on Form S-8
                (File No. 33-60454) filed on April 1, 1993).

      10(a)     Operating Agreement between the Company and Jesse L. Upchurch
                dated May 1, 1997 (incorporated by reference to Exhibit (u) of
                Company's Current Report on Form 8-K (File No. 0-7100) dated May
                1, 1997).

      10(b)     Employment Termination Agreement between the Company and Thomas
                E. Gardner dated October 28, 1999 (incorporated by reference to
                Company's Current Report on Form 8-K (File No. 0-7100) dated
                April 12, 2000).

      10(c)     Limited Liability Company Agreement dated as of March 29, 2001
                between the Company and Almedica International, Inc.
                (incorporated by reference to Company's Current Report on Form
                8-K.

      10(d)     License Agreement dated as of December 1, 2001 between the
                Company and Almedica Advanced Technology, LLC.

                                       18
<PAGE>

      10(e)     Amended and Restated Agreement and Plan of Merger dated as of
                January 18, 2002 among the Company, ConvergenceHealth.com, Inc.
                ("Convergence") and Newco B10, Inc. (incorporated by reference
                to Company's Current Report on Form 8-K (File No. 0-7100) dated
                March 14, 2002).

      10(f)     Amendment No. 1 dated as of March 12, 2002 to Amended and
                Restated Agreement and Plan of Merger dated as of January 18,
                2002 among the Company, ConvergenceHealth.com, Inc.
                ("Convergence") and Newco B10, Inc. (incorporated by reference
                to Company's Current Report on Form 8-K (File No. 0-7100) dated
                March 14, 2002).

      10(g)     Stock Purchase Agreement dated as of January 18, 2002 between
                the Company and Convergence (incorporated by reference to
                Company's Current Report on Form 8-K (File No. 0-7100) dated
                January 30, 2002).

      10(h)     Letter Agreement dated as of January 18, 2002 between the
                Company and Byron Gehring (incorporated by reference to
                Company's Current Report on Form 8-K (File No. 0-7100) dated
                January 30, 2002).

      10(i)     Stock Purchase Agreement dated as of March 12, 2002 between the
                Company and Convergence (incorporated by reference to Company's
                Current Report on Form 8-K (File No. 0-7100) dated March 14,
                2002).

      21(a)     Subsidiaries of the Company (incorporated by reference to
                Company's Annual Report on Form 10-KSB (File No. 0-7100) for the
                year ended December 31, 2000).

      24(a)     Power of Attorney.

(b) Reports on Form 8-K:

         1. On January 30, 2002, the Company filed a Current Report on Form 8-K
announcing the execution of the agreement governing the proposed Convergence
Merger, together with an agreement for a related stock purchase transaction.

         2. On March 14, 2002, the Company filed a Current Report on Form 8-K
announcing the execution of an amended and restated agreement governing the
proposed Convergence Merger, together with a subsequent amendment and agreement
for a related stock purchase transaction.

                                       19
<PAGE>

                                   Signatures


         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, this 29th day of
March, 2002.

                             BASE TEN SYSTEMS, INC.


<TABLE>
<S>                                     <C>                                     <C>
By:    /s/ Edward J. Klinsport          By:     /s/ Kenneth W. Riley            By:    /s/ Kenneth W. Riley
   ---------------------------------       --------------------------------        --------------------------------
         Edward J. Klinsport                      Kenneth W. Riley                       Kenneth W. Riley
       Chief Executive Officer                 Chief Financial Officer             Principal Accounting Officer
</TABLE>

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

<TABLE>
<CAPTION>
                                                               Title                               Date
                                                               -----                               ----
<S>                                                          <C>                               <C>
                                                             Directors
Edward J. Klinsport
John C. Rhineberger
Andrew G. Sycoff




By:             /s/ Kenneth W. Riley                                                          March 29, 2002
     ----------------------------------------
     Kenneth W. Riley, as attorney-in-fact
</TABLE>








                                       20
<PAGE>

Independent Auditors' Report


To the Board of Directors and Shareholders
Base Ten Systems, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheet of Base Ten Systems,
Inc. as of December 31, 2001, and the related consolidated statements of
operations, common stock and other shareholders' equity, and cash flows for the
years ended December 31, 2001 and 2000. 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 audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

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

The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note A to the
financial statements, the Company had incurred significant operating losses and
negative cash flows in recent years and has decided to discontinue its only
operating business. These conditions raise substantial doubt about the Company's
ability to continue as a going concern. Management's plan in regards to these
matters are also described in Note A. The financial statements do not include
any adjustments that might result from the outcome of these uncertainties.



                                       AMPER, POLITZINER & MATTIA P.A.

February 28, 2002
Princeton, New Jersey



                                      F-1
<PAGE>

                     Base Ten Systems, Inc. and Subsidiaries
                           Consolidated Balance Sheet
                    (dollars in thousands, except par value)

<TABLE>
<CAPTION>
                                     Assets
                                                                                      December 31, 2001
                                                                                      -------------------
<S>                                                                                    <C>
Current Assets:
   Cash and cash equivalents....................................................        $     1,173
   Other current assets.........................................................                153
   Current assets of discontinued operations....................................                 75
                                                                                      -------------------
        Total Current Assets....................................................              1,401

Equipment, net..................................................................                  3
Other assets....................................................................                 10
                                                                                      -------------------
        Total Assets............................................................        $     1,414
                                                                                      ===================

            Liabilities, Common Stock and Other Shareholders' Equity

Current Liabilities:
   Accounts payable.............................................................        $        22
   Accrued expenses.............................................................                307
                                                                                      -------------------
        Total Current Liabilities...............................................                329
                                                                                      -------------------
Commitments and Contingencies - (Notes A and I) Redeemable Convertible Preferred
Stock:
   Series B Preferred Stock, $1.00 par value, 994,201 shares authorized, 0
      shares issued and outstanding                                                              --
Common Stock and Other Shareholders' Equity (Deficit):
   Class A Common Stock, $5.00 par value, 27,000,000 shares authorized;
      5,358,812 shares issued and 5,338,812 shares outstanding..................             26,794
   Class B Common Stock, $5.00 par value, 400,000 shares authorized; 12,667
      shares issued and outstanding.............................................                 63
   Additional paid-in capital...................................................             68,481
   Accumulated Deficit..........................................................            (94,028)
                                                                                      -------------------
                                                                                              1,310

   Accumulated other comprehensive income.......................................                 56
   Treasury Stock, 20,000 Class A Common Shares, at cost........................               (281)
                                                                                      -------------------
        Total Common Stock and Other Shareholders' Equity.......................              1,085
                                                                                      -------------------
        Total Liabilities, and Common Stock and Other Shareholders' Equity  ....        $     1,414
                                                                                      ===================
</TABLE>

        See notes to the Consolidated Financial Statements.



                                      F-2
<PAGE>

                     Base Ten Systems, Inc. and Subsidiaries
                      Consolidated Statements of Operations
                  (dollars in thousands, except per share data)

<TABLE>
<CAPTION>
                                                               Year ended           Year ended
                                                            December 31, 2001   December 31, 2000
                                                          -----------------------------------------
<S>                                                           <C>                  <C>
 General and administrative expenses...............           $       841          $     3,345
 Other (income) expense, net.......................                  (114)                  88
                                                          -----------------------------------------
Net loss from continuing operations................                  (727)              (3,433)

 Discontinued operations:
 Loss from disposition of software operations......                    --               (1,864)
 Loss from discontinued operations.................                    --               (3,967)
                                                          -----------------------------------------
 Net loss from discontinued operations.............                    --               (5,831)
                                                          -----------------------------------------
 Net loss..........................................           $      (727)         $    (9,264)
                                                          -----------------------------------------

Plus:  Gain on redemption of Redeemable Convertible
       Preferred Stock.............................                    --               11,717
                                                          -----------------------------------------
 Net income (loss) available for common shareholders          $      (727)         $     2,453
                                                          =========================================

 Basic and diluted income (loss) per share:
 Continuing operations.............................           $    (0.14)          $    (0.66)
 Gain on redemption of Redeemable Convertible
   Preferred Stock.................................                    --                2.25
 Discontinued operations...........................                    --               (1.12)
                                                          -----------------------------------------
 Net income (loss) per share.......................           $    (0.14)          $     0.47
                                                          -----------------------------------------
 Weighted average common shares outstanding - basic
   and diluted.....................................             5,351,000            5,188,000
                                                          -----------------------------------------
</TABLE>
        See notes to the Consolidated Financial Statements.




                                      F-3
<PAGE>

                     Base Ten Systems, Inc. and Subsidiaries
Consolidated Statements of Common Stock and Other Shareholders' Equity (Deficit)
                             (dollars in thousands)

<TABLE>
<CAPTION>
                             Class A             Class B                            Accumulated
                            Common Stock      Common Stock  Additional                 Other        Treasury Stock      Total
                                                             Paid-In   Accumulated  Comprehensive                    Shareholders'
                        Shares   Amount   Shares   Amount    Capital     Deficit    Income (Loss)   Shares   Amount Equity (Deficit)
-----------------------------------------------------------------------------------------------------------------------------------
<S>                  <C>       <C>       <C>      <C>       <C>         <C>           <C>         <C>       <C>        <C>
Balance at
December 31, 1999     5,102,096  $25,510   14,225   $   71    $63,527     $(95,754)     $   (92)    (20,000)  $ (281)    $(7,019)
===================================================================================================================================
Conversions:
   Common B to
   Common A               2,341       12   (1,558)      (8)       (4)          --            --          --       --          --
   Preferred B to
   Common A             250,000    1,250       --       --     5,000           --            --          --       --       6,250
Issuance of
Common Stock:
   Purchase of Warrants      --       --       --       --       (27)          --            --          --       --         (27)
   Employee stock
   purchase plan          4,375       22       --       --       (15)          --            --          --       --           7
-----------------------------------------------------------------------------------------------------------------------------------
Comprehensive
Income (Loss):
   Net loss                  --       --       --       --        --       (9,264)           --          --       --      (9,264)
   Effect on disposition
   of foreign operations     --       --       --       --        --           --           123          --       --         123
   Unrealized gain on
   securities available
   for sale                  --       --       --       --        --           --             3          --       --           3
   Gain on redemption
   of Series B
   Preferred Stock           --       --       --       --        --       11,717            --          --       --      11,717
                     --------------------------------------------------------------------------------------------------------------
Total Comprehensive
Income (Loss)                --       --       --       --        --        2,453           126          --       --       2,579
-----------------------------------------------------------------------------------------------------------------------------------
Balance at
December 31, 2000     5,358,812  $26,794   12,667   $   63    $68,481     $(93,301)     $    34     (20,000)  $ (281)    $ 1,790
===================================================================================================================================
Comprehensive
Income (Loss):
   Net loss                  --       --       --       --        --         (727)           --          --       --        (727)
   Unrealized gain on
   securities available
   for sale                  --       --       --       --        --           --            22          --       --          22
                     --------------------------------------------------------------------------------------------------------------
Total Comprehensive
Income (Loss)                --       --       --       --        --         (727)           22          --       --        (705)
-----------------------------------------------------------------------------------------------------------------------------------
Balance at
December 31, 2001     5,358,812  $26,794   12,667   $   63    $68,481     $(94,028)     $    56     (20,000)  $ (281)    $ 1,085
===================================================================================================================================
</TABLE>
See notes to the Consolidated Financial Statements.

                                      F-4
<PAGE>

                     Base Ten Systems, Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                              Year Ended       Year Ended
                                                             December 31,     December 31,
                                                                 2001             2000
---------------------------------------------------------------------------------------------
<S>                                                          <C>              <C>
Cash Flows from Operating Activities:
    Net loss .........................................       $       (727)    $     (9,264)
Adjustments to Reconcile Net Loss to Net Cash Used in
Operating Activities of Continuing Operations:
    Net loss from discontinued operations.............                 --            3,967
    Loss on disposition of discontinued operations....                 --            1,864
    Depreciation and amortization.....................                  6                4
    Deferred gain on sale of building.................                 --              (24)
    Loss on disposition of assets.....................                 34               --
Changes in operating assets and liabilities,
excluding effects of discontinued business:
    Other current assets..............................                231               --
    Other assets......................................                 --               42
    Accounts payable, accrued expenses and deferred
    revenue...........................................               (675)          (1,186)
---------------------------------------------------------------------------------------------
Net Cash Used in Operations...........................             (1,131)          (4,597)
=============================================================================================
Cash Flows from Investing Activities:
    Proceeds from sale of equipment...................                 --               47
    Proceeds from note receivable.....................                 --            1,975
    Additions to property, plant and equipment .......                 --             (106)
---------------------------------------------------------------------------------------------
Net Cash Provided from Investing Activities...........                 --            1,916
=============================================================================================
Cash Flows from Financing Activities:
    Repayment of amounts borrowed.....................                 --             (136)
    Proceeds from issuance of common stock............                 --                6
    Conversion and repurchase of Series B preferred stock              --           (1,063)
---------------------------------------------------------------------------------------------
Net Cash Used in Financing Activities                                  --           (1,193)
=============================================================================================
Cash Flows from Discontinued Operations:
    Net cash used in operating activities.............                 --           (1,665)
    Proceeds from sale of discontinued business.......                 --            2,000
---------------------------------------------------------------------------------------------
Net Cash Provided from Discontinued Operations:                        --              335
=============================================================================================
Net Decrease In Cash and Cash Equivalents.............             (1,131)          (3,539)
Cash and Cash Equivalents, beginning of year..........              2,304            5,843
---------------------------------------------------------------------------------------------
Cash and Cash Equivalents, end of year................       $      1,173     $      2,304
=============================================================================================
Supplemental Disclosures of Cash Flow Information:
    Cash paid during the year for interest............       $         --     $        483
</TABLE>

See notes to the Consolidated Financial Statements.

                                      F-5
<PAGE>

                     Base Ten Systems, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
               Years Ended December 31, 2001 and December 31, 2000

A.       Basis of Presentation and Liquidity

     The financial statements of Base Ten Systems, Inc. and Subsidiaries (the
"Company" or "Base Ten") have been prepared on the basis that its current
operations are limited to administrative matters pending implementation of its
strategy for redirection of its business within the electronics or other
technology sectors. The Company has incurred significant operating losses and
negative cash flows in recent years. In October 2000, Base Ten sold part of its
software business and announced its decision to dispose of its remaining
software operations, with a view to pursuing alternative revenue generating or
strategic opportunities. See Note N below. The assets and liabilities associated
with the Company's software operations have been adjusted to reflect their net
realizable value upon disposition.

B.       Description of Business

     Base Ten was founded in 1966 and became publicly traded in 1968.
Historically, the Company focused on designing and producing safety critical
products for defense and space programs. In response to declines in defense
spending during the early 1990s, Base Ten sought to apply its know how in safety
critical technology to develop commercial lines of business. The Company
ultimately established separate divisions for its government technology ("GTD")
and medical technology ("MTD") operations to address distinct challenges in
those sectors. The GTD was sold to Strategic Technology Systems, Inc. in 1997.

     In October 2000, the Company sold its manufacturing execution software
("MES") business to ABB Automation, Inc. ("ABB") for $2.0 million and announced
its intention to dispose of its clinical software ("Clinical Software")
business. In March 2001, Base Ten entered into an agreement for the sale of the
Clinical Software business to Almedica Advanced Technology LLC ("AAT"), a
subsidiary of Almedica International, Inc. ("Almedica"). See Notes C and N
below.

     The Company owns a minority interest in uPACs LLC ("uPACs"), which
developed an ultrasound archiving communications system to digitize, record and
store images on CD-ROM media as an alternative to film and video storage.
Efforts to commercialize uPACs ceased in the first quarter of 2000, and the
accompanying financial statements reflect no value for the investment.

C.       Summary of Significant Accounting Policies

1.   Principles of Consolidation - The consolidated financial statements include
     the accounts of Base Ten and its wholly owned subsidiaries. All significant
     inter-company accounts, transactions and profits have been eliminated.

2.   Discontinued Operations - As discussed in Note B and Note N to the
     Consolidated Financial Statements, the results of operations of the
     Company's MES business and clinical software business have been reported
     separately as discontinued operations. In addition, the impact of the
     Company's investment in uPACs has been reported as discontinued operations.
     Base Ten disposed of the assets of the MES in October 2000. The assets and
     liabilities of the clinical software business are recorded at December 31,
     2001 at $75,000, their net realizable value based upon the March 2001
     agreement with Almedica. The investment in uPACs was written off and has
     no estimated realizable value at December 31, 2000.

3.   Risks and Uncertainties - The Company has operated for several years in the
     software industry, which is highly competitive and rapidly changing. The
     Company incurred significant losses from these operations and has
     determined to redirect its business to pursue alternative revenue
     generating or strategic opportunities in the electronics or other
     technology sectors. The redirected business will be subject to all of the
     risks inherent in a technology business, including the potential for
     significant technological changes in the industry or in customer
     requirements, claims by current and former customers for contractual or
     other unfulfilled commitments, ability to attract and retain qualified
     employees, limited financial, technical and managerial resources,
     protection of intellectual property rights and potentially long sales and
     implementation cycles.

                                      F-6
<PAGE>

4.   Reliance on Estimates - The preparation of financial statements in
     accordance with generally accepted accounting standards requires management
     to make estimates and assumptions that affect the amounts reported in the
     financial statements and accompanying notes. Significant estimates include
     the value of its investments in Clinical Software assets and uPACs,
     reserves for claims by customers and vendors for contractual or other
     unfulfilled commitments, deferred tax asset valuation reserves and the
     value of assets and liabilities to be disposed of, all of which could
     differ from actual values.

5.   Cash and Cash Equivalents - The Company considers all investments with an
     original maturity of three months or less at date of acquisition to be cash
     equivalents. These balances are in excess of the $100,000 insured by the
     Federal Deposit Insurance Corporation (FDIC).

6.   Earnings Per Share - The Company calculates earnings per share in
     accordance with the provisions of Statement of Financial Accounting
     Standard No. 128, "Earnings Per Share" ("FAS 128"). FAS 128 requires the
     Company to present Basic Earnings Per Share which excludes dilution and
     Diluted Earnings Per Share which includes potential dilution.

7.   Fair Value of Financial Instruments - The fair value of certain financial
     instruments, including cash, accounts payable, and other accrued
     liabilities, approximates the amount recorded in the balance sheet because
     of the relatively current maturities of these financial instruments.

8.   Income Taxes - Deferred income taxes are determined based on the tax effect
     of the differences between the financial statement and tax bases of assets
     and liabilities. Deferred tax assets and liabilities are classified as
     either current or noncurrent based generally on the classification of the
     related asset or liability.

9.   Investments - The Company accounts for its investments using Statement of
     Financial Accounting Standard No. 115, "Accounting for Certain Investments
     in Debt and Equity Securities"("FAS 115"). This standard requires that
     certain debt and equity securities be adjusted to market value at the end
     of each accounting period. Unrealized market value gains and losses are
     charged to earnings if the securities are traded for short-term profit.
     Otherwise, such unrealized gains and losses are charged or credited to a
     separate component of shareholders' equity.

     Management determines the proper classifications of investments in
     obligations with fixed maturities and marketable equity securities at the
     time of purchase and reevaluates such designations as of each balance sheet
     date. At December 31, 2001 and December 31, 2000, all securities covered by
     FAS 115 were designated as available for sale. Accordingly, these
     securities are stated at fair value, with unrealized gains and losses
     reported in a separate component of shareholders' equity. Securities
     available for sale at December 31, 2001 and December 31, 2000, consisted of
     common stock with a cost basis of $50,000 for each year and are included in
     other current assets. Differences between cost and market of $56,000 and
     $34,000 were included as a component of "accumulated other comprehensive
     income" in shareholders' equity, as of December 31, 2001 and December 31,
     2000, respectively.

10.  Reclassifications  - Certain reclassifications have been made to prior year
     financial statements to conform to the current year presentation.

D.   Other Current Assets

     Other current assets at December 31, 2001 includes the following amounts
     (dollars in thousands):

              --------------------------------------------------
                                                   December 31,
                                                       2001
              --------------------------------------------------
              Marketable securities                 $  106
              Prepaid expenses                          43
              Other                                      4
              --------------------------------------------------
                                                    $  153
              --------------------------------------------------

                                      F-7
<PAGE>

E.   Accrued Expenses

     Accrued expenses at December 31, 2001 includes the following amounts
     (dollars in thousands):

           ---------------------------------------------------------
                                                     December 31,
                                                         2001
           ---------------------------------------------------------
           Accrued payroll costs                        $ 151
           Accrued professional services                   94
           Accrued vendor claims                           28
           Accrued operating leases                        26
           Deferred compensation for former officers        8
           ---------------------------------------------------------
                                                        $ 307
           ---------------------------------------------------------

F.   Income Taxes

     The provision (benefit) for income taxes includes the following
     (dollars in thousands):

-----------------------------------------------------------------------------
                                    Year Ended             Year Ended
                                 December 31, 2001      December 31, 2000
-----------------------------------------------------------------------------
Current:
    Federal                        $      --              $      --
    State                                 --                     --
    Foreign                               --                     --
-----------------------------------------------------------------------------
Total Current                      $      --              $      --
-----------------------------------------------------------------------------
Deferred:
    Federal                        $     (81)             $  (2,996)
    State                                (14)                  (529)
    Foreign                               --                     --
-----------------------------------------------------------------------------
Total Deferred                           (95)                (3,525)
-----------------------------------------------------------------------------
Valuation Allowance                       95                  3,525
-----------------------------------------------------------------------------
Net                                $      --              $      --
-----------------------------------------------------------------------------


     A reconciliation of the Company's effective rate to the U.S. statutory rate
is as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
                                                               Percentage of Pre-Tax Earnings
------------------------------------------------------------------------------------------------
                                                                Year Ended         Year Ended
                                                                December 31,       December 31,
                                                                   2001               2000
                                                                --------------------------------
<S>                                                                <C>               <C>
Federal tax (benefit)/provisions at applicable statutory rates     (34.0%)           (34.0%)
Increases (decreases) in income taxes resulting from:
    State tax benefit, net of Federal tax effect                    (6.0)             (6.0)
    Valuation allowances                                            40.0              40.0
                                                                --------------------------------
                                                                     --                --
------------------------------------------------------------------------------------------------
</TABLE>

                                      F-8
<PAGE>

     The components of the deferred tax assets and liabilities are as follows
(dollars in thousands):

         -----------------------------------------------------------------
                                                    December 31,
                                                       2001
         -----------------------------------------------------------------
         Current
           Other                                   $       48
                                                   --------------
         Total current assets                              48
                                                   ==============
         Noncurrent
           Net operating loss carryforward         $   31,200
           Research and development carryforward          195
                                                   -------------
              Total non-current assets                 31,395
                                                   -------------
           Valuation allowance                        (31,443)
                                                   -------------
                   Net deferred tax assets         $       --
         -----------------------------------------------------------------

     At December 31, 2001, the Company had incurred net operating loss ("NOL")
carryforwards for federal income tax purposes of approximately $78.0 million,
which expire in the years 2005 through 2020. Research and development
carryforwards of $0.2 million expire in the years 2002 to 2006. As certain
changes in the Company's ownership occur there is a limitation on the annual
amount of such NOL carryforwards and credits which can be utilized. Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes" ("FAS 109")
requires that a valuation allowance be created and offset against the deferred
tax assets if, based on existing facts and circumstances, it is more likely than
not that some portion or all of the deferred tax asset will not be realized. The
valuation allowance will be adjusted when the credits are realized or when, in
the opinion of management, sufficient additional positive evidence exists
regarding the likelihood of their realization. The reductions, if any, will be
reflected as a component of income tax expense.

G.   Segment Information

     The Company is organized and operates as a single segment. The following
tabulation details the Company's identifiable assets in different geographic
areas at December 31, 2001 (dollars in thousands):
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
   Identifiable Assets         United States              Europe               Eliminations             Consolidated
---------------------------------------------------------------------------------------------------------------------------
<S>                         <C>                     <C>                     <C>                     <C>
December 31, 2001           $       1,414           $          --           $          --           $       1,414
---------------------------------------------------------------------------------------------------------------------------
</TABLE>

H.   Commitments and Contingencies

Financing Obligation and Capital Lease

     The Company entered into a sale and leaseback arrangement on October 28,
1994. The buyer/lessor of the building was a partnership in which two of the
partners are former officers and directors of the Company. Under the
arrangement, the Company sold its main building in Trenton, New Jersey and
agreed to lease it back for a period of 15 years under terms that qualify the
arrangement. The Company also has an option to purchase the building at the end
of the lease and, accordingly, has accounted for this sale leaseback as a
financing transaction. Interest is calculated under the effective interest
method and depreciation is taken using the straight-line method.

     In 1997, the Company sub-leased a portion of the building in connection
with the sale of the GTD to STS (the "STS Sublease"). Rental payments received
in conjunction with the STS Sublease were approximately $240,000 in 2000.

     In 2001, the Company was released of its remaining obligations totaling
$5,808,000, including interest, under the lease. Under the lease termination
agreement, the Company paid $75,000 in 2001 and assigned its rights under the
STS Sublease to the landlord.

Operating Leases

     The Company was in default of certain leases for office equipment. The
total obligation of $26,000 under these leases was accrued at December 31, 2001.

                                      F-9
<PAGE>

I.   Redeemable Convertible Preferred Stock

     On December 4, 1997, the Company entered into a securities purchase
agreement to sell 19,000 of Series A Convertible Preferred Stock, $1.00 par
value, ("Series A Preferred Stock") and common stock warrants for gross proceeds
of $19,000,000. During 1998, 5,798 shares of Series A Preferred Stock were
converted into 1,917,806 shares of Class A Common Stock (383,561 after
adjustment for the September 1999 reverse stock split) and 1,740 shares of
Series A Preferred Stock were issued as dividends resulting in 14,942 shares of
Series A Preferred Stock outstanding at December 31, 1998.

     On March 5, 1999, the outstanding Series A Preferred Stock and warrants
were exchanged for Series B Convertible Preferred Stock, $1.00 par value
("Series B Preferred Stock"). As a result, approximately 15,203 shares of Series
B Preferred Stock, with a principal amount of approximately $15,203,000 were
exchanged for the outstanding shares of Series A Preferred Stock. In addition,
632,000 new warrants (126,400 after adjustment for the reverse stock split) were
issued to Series B Preferred Stockholders, and 720,000 warrants (144,000 after
adjustment for the reverse stock split) were issued to replace certain original
warrants issued in December 1997.

     In July 2000, the holders of the Series B Preferred Stock converted 5,000
of their shares into 250,000 shares of Class A Common Stock. In addition, the
Company purchased the remaining shares of Series B Preferred Stock, as well as
269,560 warrants to purchase Class A Common Stock, for approximately $1.1
million. As a result of these transactions, the Series B Preferred Stock was
eliminated, the Shareholders' Equity section of the Company's balance sheet
increased by approximately $17.9 million and a gain of $11.7 million on the
redemption of Series B Preferred Stock was recorded.

J.   Equity Transactions


Common Stock

     On September 10, 1999, the listing of Base Ten's common stock was
transferred from NASDAQ National Market System to the NASDAQ SmallCap Market
System due to the Company's failure to meet continued listing criteria. On
August 7, 2000, the NASD notified the Company that it also failed to maintain a
minimum bid price of $1.00 as required for continued listing on the NASDAQ
SmallCap Market System. In December 2000, after a hearing before a NASDAQ
Listing Qualifications Panel to appeal the NASD's determination to delist the
Company's Class A Common Stock from the NASDAQ SmallCap Market System, Base
Ten's common stock was transferred to the Over the Counter Bulletin Board.

K.   Earnings Per Share

     The following is a reconciliation of the numerators and denominators used
to calculate net income (loss) per share in the Consolidated Statements of
Operations (dollars in thousands, except per share data):

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
                                                                      Year Ended           Year Ended
                                                                   December 31, 2001   December 31, 2000
----------------------------------------------------------------------------------------------------------
<S>                                                                  <C>                   <C>
Net Income (Loss) per common share-basic:
Net loss                                                             $     (727)           $   (9,264)
Plus: Gain on redemption of Preferred Stock                                  --                11,717
----------------------------------------------------------------------------------------------------------
Net income (loss) to common shareholders (numerator)                 $     (727)           $    2,453
----------------------------------------------------------------------------------------------------------
Weighted average shares - basic (denominator)                         5,351,000             5,188,000
----------------------------------------------------------------------------------------------------------
            Net income (loss) per common share-basic                 $    (0.14)           $     0.47
----------------------------------------------------------------------------------------------------------
Net Income (Loss) per common share- diluted:
Net loss                                                             $     (727)           $   (9,264)
Plus: Gain on redemption of Preferred Stock                                  --                11,717
----------------------------------------------------------------------------------------------------------
Net income (loss) to common shareholders (numerator)                 $     (727)           $    2,453
----------------------------------------------------------------------------------------------------------
Weighted average shares - basic (denominator)                         5,351,000             5,188,000
Effect of dilutive options / warrants                                        --                    --
----------------------------------------------------------------------------------------------------------
Weighted average shares- diluted (denominator)                        5,351,000             5,188,000
----------------------------------------------------------------------------------------------------------
           Net income (loss) per common share-diluted                $    (0.14)           $     0.47
----------------------------------------------------------------------------------------------------------
</TABLE>
                                      F-10
<PAGE>

     Stock options, warrants and rights would have an anti-dilutive effect on
earnings per share for the years ended December 31, 2001 and 2000 and,
therefore, were not included in the calculation of diluted earnings per share.

L.   Stock Option Plans, Warrants and Rights

     The Company's 1998 Stock Option and Stock Award Plan reserves 642,409
shares (after adjustment for the reverse stock split) of Class A Common Stock
for purchase upon the exercise of options. Options may not be granted at less
than fair market value as of the date of grant and are exercisable over a period
not to exceed ten years. This plan allows for the re-issuance of any canceled or
expired options. Approximately 497,000 options remain available for grant under
this plan.

     A summary of the status of the Company's aforementioned stock option plans
as of December 31, 2000 and 2001 and changes during the periods ending on those
dates is presented below:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
                                                   Class A                             Class B
                                       -----------------------------------------------------------------------
                                                           Weighted -                         Weighted -          Total
                                          Number of          Average      Number of Shares      Average      Number of Shares
                                           Shares        Exercise Price                      Exercise Price
------------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>                  <C>         <C>              <C>                <C>
Outstanding at December 31, 1999              491,460              22.27              --              --             491,460
------------------------------------------------------------------------------------------------------------------------------
Granted                                       143,000               1.41              --              --             143,000
Exercised                                          --                --               --              --                  --
Canceled                                     (483,600)             19.31              --              --            (483,600)
------------------------------------------------------------------------------------------------------------------------------
Outstanding at December 31, 2000              150,860              11.99              --              --             150,860
------------------------------------------------------------------------------------------------------------------------------
Granted                                            --                --               --              --                  --
Exercised                                          --                --               --              --                  --
Canceled                                       (4,860)             19.31              --              --              (4,860)
------------------------------------------------------------------------------------------------------------------------------
Outstanding at December 31, 2001              146,000              12.27              --              --             146,000
------------------------------------------------------------------------------------------------------------------------------
Exercisable at December 31, 2001              145,500          $   12.30              --           $  --             145,500
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

     The following tables summarizes information about the stock options
outstanding at December 31, 2001:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
                                           Options Outstanding                       Options Exercisable
                              -----------------------------------------------  --------------------------------
                                             Weighted-Average
                                  Number        Remaining                          Number
                               Outstanding     Contractual   Weighted-Average  Exercisable at  Weighted-Average
                               at December   Life (in years) Exercise Price     December 31,   Exercise Price
  Range of Exercise Prices       31, 2001                                           2001
---------------------------------------------------------------------------------------------------------------
<S>                             <C>             <C>            <C>               <C>             <C>
      $1.13    -    $5.00          17,500          8.12           $ 2.81            17,000          $ 2.74
     $10.00    -   $17.50         100,400          6.71          $ 10.01           100,400         $ 10.01
     $25.63    -   $54.38          28,100          6.24          $ 26.24            28,100         $ 26.24
---------------------------------------------------------------------------------------------------------------
</TABLE>

     The Company's 1998 Employee Stock Purchase Program authorizes the issuance
of up to 200,000 shares of Class A Common Stock for purchase by Company
employees. Shares are purchased at 85% of the fair market value on standard
quarterly purchase dates as defined in the plan. Approximately 170,000 shares
were available for issuance and purchase at December 31, 2001.

     At December 31, 2001, the Company has outstanding 447,680 warrants and
16,100 options previously granted in 1999 and earlier to consultants and
non-management directors at prices ranging from $3.906 to $90.00, expiring from
2002 to 2009. In 2001, 88,000 options and warrants expired. The options and
warrants were issued at fair market value at the date of grant.

     The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123 "Accounting for Stock-Based Compensation"
("FAS 123") for its stock options plans for employees. All options granted to
date under the stock option plans for employees have an exercise price equal to
the market price of the Company's stock on the grant date. The lowest exercise
price of all outstanding options was more than ten times greater than the
Company's closing stock price on December 31, 2001. Accordingly, the probability
of any of the outstanding options ever being exercised is low. Accordingly,
there would have been no material effect on the Company's Financial Statements
had compensation cost for these plans been determined under FAS 123.

                                      F-11
<PAGE>

M.   Employee Benefit Plan

     The Company's 401(k) plan, which allowed all eligible employees to defer up
to 17% of their pre-tax income through contributions to the plan, was terminated
effective December 31, 2000. The plan allowed for a 1% base annual salary
Company matching contribution for each eligible employee. The Company's
contribution was $17,000 for fiscal year 2000. The Company discontinued the
contribution to the 401(k) plan in the fourth quarter of 2000.

N.   Discontinued Operations


Sale of MES Software to ABB

     On October 10, 2000, the Company entered into an Asset Purchase Agreement
(the "Agreement") with ABB Automation Inc. ("ABB"). Under the terms of the
Agreement, ABB purchased the assets relating to the Company's BASE10(R)ME,
BASE10(R)CS and BASE10(R)FS product lines for $2.0 million. Assets transferred
to ABB as part of the transaction include patents, copyrights, trademarks and
tradenames, data, contracts, accounts receivable, employees, equipment and
software deployed in the Company's MES business.


Sale of Base Ten Systems NV to Kris Adriaenssens

     The Company entered into an agreement, effective on November 1, 2000, with
Kris Adriaenssens, a consultant to the Company. Under the terms of the
agreement, Mr. Adriaenssens received 100% of the shares of Base Ten Systems NV
(the "NV"), the Company's Belgian subsidiary, in exchange for consulting
services. At the time of the transaction, the NV had no operations or employees.
The assets of the NV at the sale date consisted primarily of office equipment
and automobiles, while its liabilities primarily included leases of office
space, equipment and automobiles.

Sale of Clinical Software to Almedica Advanced Technology LLC

     On October 27, 2000, the Company announced that it will pursue a new
business direction as a contract manufacturer to various industries. In March
2001, Base Ten signed an agreement, which is subject to shareholder approval, to
sell its clinical software business to Almedica Advanced Technology LLC
("Almedica Advanced Technology"), a wholly-owned subsidiary of Almedica
International, Inc. Under the terms of the agreement, Base Ten shall receive
$75,000 and a 20% ownership interest in Almedica Advanced Technology if the
transaction is approved by the shareholders of Base Ten. The $75,000 payment
from Almedica Advanced Technology was held in escrow and recorded as current
assets of discontinued operations as of the balance sheet date.

     As a result of the decision to dispose of the software operations, the
Company recorded in 2000 a loss on the disposition of discontinued operations of
$1,864,000. The following is the Company's results of operations for its
discontinued product lines for the year ended December 31, 2001 and 2000:

                                                Year ended      Year ended
                                                December 31,    December 31,
                                                   2001             2000
                                              --------------------------------

 License and related revenue..............        $  --      $    158
 Services and related revenue.............           --         2,174
                                              --------------------------------
                                                     --         2,332
                                              --------------------------------

 Cost of revenues.........................           --           532
 Research and development.................           --         1,617
 Selling and marketing....................           --         3,046
 General and administrative...............           --         1,225
 Other (income) expense...................           --          (121)
                                              --------------------------------
                                                     --         6,299

                                              --------------------------------
 Loss from discontinued operations........        $  --      $ (3,967)
                                              --------------------------------

                                      F-12
<PAGE>

O.   Comprehensive Income (Loss)

     The accumulated balances for each classification of comprehensive income
(loss) are as follows (dollars in thousands):
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
                                                                  Unrealized       Accumulated Other
                                         Foreign Currency       Gains (Loss) on      Comprehensive
                                              Items                Securities        Income (Loss)
----------------------------------------------------------------------------------------------------
<S>                                        <C>                     <C>                 <C>
Balance December 31, 1999                    $ (123)                 $  31               $  (92)
----------------------------------------------------------------------------------------------------
FY 2000 change                                  123                      3                  126
----------------------------------------------------------------------------------------------------
Balance December 31, 2000                    $   --                  $  34               $   34
----------------------------------------------------------------------------------------------------
FY 2001 change                                   --                     22                   22
----------------------------------------------------------------------------------------------------
Balance December 31, 2001                    $   --                  $  56               $   56
----------------------------------------------------------------------------------------------------
</TABLE>

P.   Related Party Transactions

     John Rhineberger, a member of the Company's Board of Directors, served as a
consultant to Base Ten during the disposition of the Company's software
operations. Mr. Rhineberger's consulting contract provided for payments totaling
$100,000 over one year ending October 31, 2001, of which $25,000 was paid in
2000 and the balance was paid in 2001.

Q.   Subsequent Events

     Subsequent to December 31, 2001, the Company entered into an Agreement and
Plan of Merger, as amended (the "Merger Agreement") among Base Ten, Newco B10,
Inc. ("Newco") and ConvergenceHealth.com ("Convergence"). Newco is a wholly
owned subsidiary of Base Ten formed specifically for the transaction with
Convergence. Convergence is a development stage company seeking to commercialize
its Personal Health Application, a proprietary data base resource for comparing
traditional with holistic and other alternative approaches to the treatment of
particular medical conditions.

     To provide Convergence with working capital needed prior to the merger, the
Company purchased 1,000,000 shares of its preferred stock for $250,000 upon
execution of the Merger Agreement. The acquired shares are subject to limited
put and call options if the Merger is not completed for specified reasons prior
to April 30, 2002. The merger is subject to numerous conditions, including
shareholder approval, delivery by Convergence of its Personal Health Application
to at least one unaffiliated sponsor at fair value and completion of a
1-for-1,000 reverse split of the Company's common stock and fractional share
repurchase (the "Share Combination"). The Share Combination is intended to save
administrative costs after the merger by reducing the Company's shareholder base
below 300, enabling it to terminate its reporting obligations as a publicly held
small business company.

     If the merger is approved by the parties' shareholders and the other
closing conditions are satisfied, the Newco will merge into Convergence, which
will survive the Merger as a wholly owned subsidiary of the Company. At the time
of the Merger, the outstanding capital stock of Convergence will be converted
into the right to receive Class A common stock of the Company representing 75%
of its common shares to be outstanding after its repurchase of fractional shares
in the Share Combination.


                                      F-13