<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                 FORM 10-KSB/ A

         (Mark One)

         [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)

         For the fiscal year ended              DECEMBER 31, 2000
                                  ----------------------------------------------

                                       Or

         [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EX-CHANGE ACT OF 1934 ( NO FEE REQUIRED)

         For the transition period from
                                       -----------------------------------------

                          COMMISSION FILE NUMBER 0-2401

                              E-SYNC NETWORKS, INC.
                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

           DELAWARE                                          06-0625999
(STATE OR OTHER JURISDICTION OF                           (I.R.S. EMPLOYER
 INCORPORATION OR ORGANIZATION)                           IDENTIFICATION NO.)

    35 NUTMEG DRIVE, TRUMBULL, CT                               06611
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                     (ZIP CODE)

                                 (203) 601-3000
                         (REGISTRANT'S TELEPHONE NUMBER)
           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

                                                    NAME OF EACH EXCHANGE ON
       TITLE OF EACH CLASS                              WHICH REGISTERED
       -------------------                              ----------------
             NONE                                             NONE


           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                          COMMON STOCK, PAR VALUE $0.01
                                (TITLE OF CLASS)

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

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

       The issuer's revenue for its most recent fiscal year was $9,757,000


The aggregate market value of the voting stock held by non-affiliates of the
registrant as of April 10, 2001 was:

                                   $2,115,570

                    THE ISSUER WAS NOT INVOLVED IN BANKRUPTCY
                     PROCEEDINGS DURING THE PAST FIVE YEARS

         As of April 10, 2001 there were 7,406,420 shares of Common Stock, Par
Value $0.01, outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

   Information with respect to Directors, Management Remuneration and Security
   Ownership of Certain Beneficial Owners and Management are contained in the
   Company's Proxy Statement for the 2000 Annual Meeting of Stockholders and
                     incorporated by reference in Part III.
<PAGE>   2
The accompanying 10-KSB/A is an amendment to the 10-KSB as of December 31, 2000
filed by E-Sync Networks, Inc. (the "Company ") on April 17, 2001. This
amendment is to reclassify the reporting for the issuance of 3,000,000
preference shares made by the Company's UK subsidiary. In the fourth quarter of
1999, in connection with the issuance of Series B Convertible Preferred Stock,
the Company's U.K. subsidiary issued 3,000,000 preference shares. These
preference shares were exchanged by the holder thereof for 681,818 additional
shares of the Company's Series B Preferred Stock on July 17, 2001. For financial
statement presentation purposes, at December 31, 1999 through March 31, 2001,
these securities had been reported on the Company's stockholders' equity section
of the Balance Sheet as if the 681,818 shares of Series B Preferred Stock
underlying the preference shares were sold in lieu of the preference shares. In
June 2001 it was determined that, because these preference shares contain a
redemption provision, which is subject to the satisfaction of certain
conditions, these securities should not have been classified as equity on the
Company's Balance Sheet. The impact of this misclassification overstated the
Company's stockholders' equity by $3 million at December 31, 1999 through March
31, 2001. However, on July 17, 2001, as indicated above, the holder of the
preference shares exchanged these shares into shares of Series B Preferred
Stock. Although the preference shares were subsequently exchanged, the amounts
have been reclassified in the accompanying Balance Sheet at December 31, 2000,
in accordance with the applicable accounting literature.

                                     PART 1

ITEM 1.  BUSINESS

BACKGROUND

E-Sync Networks, Inc. ("E-Sync" or the "Company"), is a Delaware corporation
which was incorporated in 1999. The Company's principal offices are located at
35 Nutmeg Drive, Trumbull, CT 06611. E-Sync Networks (UK) Ltd. ("E-Sync U.K.")
is a wholly owned subsidiary of the Company, and was organized in England in
1983 to provide E-Sync's services to international users. E-Sync U.K. is located
at 2 Apple Walk, Swindon, England.

Effective as of the open of business on July 28, 1999, Wiltek, Inc., a
Connecticut corporation ("Wiltek"), was merged with and into its wholly-owned
subsidiary, E-Sync Networks, Inc., a Delaware corporation, pursuant to an
Agreement and Plan of Merger dated as of July 15, 1999, by and between Wiltek
and E-Sync (the "Merger Agreement"). Pursuant to the terms of the Merger
Agreement, E-Sync is the surviving corporation (the "Surviving Corporation").
Pursuant to the Merger Agreement, each share of Wiltek common stock, no par
value per share, was converted into one fully paid and nonassessable share of
common stock of the Surviving Corporation, $.01 par value per share, and each
share of Wiltek Series A Preferred Stock, no par value per share (the only
Series of Preferred Stock then outstanding), was converted into one fully paid
and nonassessable share of the Surviving Corporation's Series A Preferred Stock,
$.01 par value per share. The Certificate of Incorporation of E-Sync became the
Certificate of Incorporation of the Surviving Corporation, and the By-laws of
E-Sync became the By-laws of the Surviving Corporation.

On November 8, 1999, the Company acquired 100% of the outstanding stock of
Braincraft Learning Technologies, Inc. ("Braincraft") for a total purchase price
of $3.8 million. The Acquisition was accounted for as a purchase business
combination. During the fourth quarter of 2000, the company committed to a plan
to discontinue the operations of its web design consulting, which was the
principal activity of Braincraft. The Company expects the shut down to be
completed during the second quarter of 2001.

OVERVIEW

E-Sync is an e-commerce enabler, providing global messaging solutions for
Fortune 1000 companies. The Company offers a suite of enterprise communication
infrastructure capabilities that facilitate secure and reliable information
exchange. These services include secure online messaging, outsourced e-mail
services, directory and fax services, hosted communications, network design and
integration, messaging integration and message platform migration. The Company's
strategy is to leverage its relationships with key channel partners to extend
its core messaging solutions into vertical solution frameworks initially for the
insurance and healthcare markets.


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INDUSTRY BACKGROUND

The widespread adoption of the Internet as a business communications platform
has created a foundation for B2B e-commerce that has already enabled customers
to tap new revenue streams, streamline cumbersome processes, lower costs and
improve productivity. According to Forrester Research, the B2B e-commerce market
grew from $43 billion in 1998 to $109 billion in 1999 and is estimated to reach
$1.3 trillion by the year 2003, at an annual rate of 86%. B2B e-commerce is
expected to account for 90+% of U.S. e-commerce transactions by 2003, and the
key to these transactions will be e-mail communication. Enterprises that intend
to migrate towards becoming an e-business need to ensure secure electronic
communications with their customers and suppliers. However, while necessary, the
medium of Internet alone is not sufficient to drive and support the projected
growth of e-commerce. Managed services and professional services are critical
elements to successful implementations of enterprise e-commerce strategies.

There are a number of trends that are driving demand for messaging,
collaboration and hosting solutions generally. Email has broadened from a simple
messaging tool to a widely accepted form of communication. In addition,
customers are increasingly demanding reliable and scalable service and enhanced
product offerings. At the same time, the complexity of individual messages and
the scale of the supporting applications and hardware are growing dramatically,
forcing businesses to dedicate significant resources to the operation and
maintenance of their messaging systems. Many companies do not have the
appropriate resources or expertise internally to manage their internal messaging
systems and are looking to adopt more effective approaches to the management of
their messaging, collaboration and hosting needs, and outsourcing is becoming a
more viable alternative to solving these problems. In fact, the Radicatti Group
estimates the market size for outsourced messaging will exceed $6 billion in
2003.

STRATEGY

CULTIVATE EXPERTISE IN TARGETED VERTICAL MARKETS THROUGH STRATEGIC PARTNERS.
E-Sync's growth strategy calls for the company to leverage its core enterprise
messaging assets and world class customer base, migrate the managed services and
professional services into a single business unit positioned as a leading
provider of secure messaging products and services and to extend those
capabilities into vertical solution frameworks in conjunction with strategic
partners.

Existing enterprise customers are already using several of the company's
messaging products and services to address industry specific business problems
that have broad applicability to other companies. E-Sync has also collaborated
with IVANS, a large services provider to the insurance market, to develop and
introduce messaging solutions that solve specific business problems of insurance
carriers. These solutions are marketed by IVANS through their channel
relationships and hosted by E-Sync. By consistently demonstrating how our core
capabilities can be incorporated into workflow-oriented solutions that can be
marketed to their customer base, this relationship has shifted over time from
that of a technology provider to a strategic business partner.

Based on the success that has been achieved within the insurance vertical,
E-Sync has started to deepen the relationships with channel partners by
collaborating more broadly than in the past and expanding on the vertical
solution concept with additional products and services wrapped around our hosted
capabilities. Additional opportunities may be available to extend this model for
developing messaging and communications solutions into the healthcare market
through existing channel partner relationships with TRW and other organizations.

BUILD A NETWORK OF STRATEGIC ALLIANCES. The Company intends to expand and seek
additional strategic relationships with both professional services consulting
firms and software application vendors in order to create new opportunities to
leverage our managed services capabilities and also to help penetrate our stated
target markets.

ACQUIRE OR INVEST IN COMPLEMENTARY BUSINESSES, PRODUCTS AND TECHNOLOGIES. E-Sync
may make targeted acquisitions or investments to enhance or broaden its product
offerings, capabilities and technologies as our liquidity situation permits.


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PRODUCTS AND SERVICES

MANAGED SERVICES

E-Sync has developed a range of services, which allow customers to:

-        Connect dissimilar computer-based electronic mail -- generally these
         systems operate within different divisions of the same company or in
         the customers' trading partner facilities;

-        Communicate with public e-mail services to allow users of host-based
         and client/server systems to correspond with e-mail users outside of
         their company; and

-        Send to facsimile devices located throughout the world utilizing the
         Company's broadcast and customized facsimile delivery service based in
         the U.S. and U.K.

Within the realm of messaging based technologies, use of messaging (e-mail, fax
and directory services) has become a standard operating procedure for successful
large and medium organizations. This trend should continue during 2001 as
technology costs continue to decline and technology ease-of-use increases. This
will lead to use and acceptance of collaborative computing technologies across a
much wider business market. E-Sync, by way of its experience and expertise, is
positioned solidly in the middle of these growth markets.

TOTALMAIL

TotalMail is E-Sync's complete messaging solution for Information Exchange
Service. TotalMail offers a range of available options, outsourced and
web-based, including the integration of e-mail with voice mail, paging,
telephony, calendaring, public and private folders, directory services,
distribution lists, and virus scanning. With the addition of SmartCard,
TotalMail provides portable access and security with unique cardholder data to
Information Exchange Services.

HOSTING SERVICES

WEB HOSTING SERVICES. E-Sync can design and implement a customized web
infrastructure to host a site that can be expanded into a high quality,
sophisticated Internet presence. This removes the requirement of a client to
purchase, configure, maintain or administer hardware, software, and Internet
connectivity.

APPLICATION HOSTING SERVICES. This service provides the ability for clients to
rent applications via an online link to E-Sync's Information Exchange Data
Center. The benefits to the client are fixed predictable costs, no upgrading
because the latest version is always available, and no file exchange. The
Company's Information Exchange Data Center maintains server hardware, security,
redundancy, and data backup to ensure that applications run efficiently and
effectively with 100% uptime. The Company also provides administrative services
and remote access to the applications via its Internet connections using
integrated digital certificate security.

MAILCONNECT

MailConnect increases clients' productivity by providing a common set of tools
and interfaces to create, send, and manage messages such as e-mail, fax, voice
mail, and pages. Through the MailConnect service, E-Sync leverages its
specialized expertise in legacy, LAN, and client/server-based mail systems to
standardize an organization's messaging infrastructure. This allows users of any
of a client's systems to send messages and attachments and to reply to messages
sent from any messaging platform within or outside that organization.


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<PAGE>   5
FAX SERVICES

Any organization that regularly faxes information such as purchase orders,
billing invoices, order acknowledgments, newsletters, marketing updates, and
product promotions is ideally suited to E-Sync's Fax Service. Customers can
easily send faxes from any e-mail client or host application. With unlimited
scalability and numerous custom features, E-Sync's automated fax services
eliminate the need for manual faxes, saving time and money while increasing
productivity. The Company's Help Desk is available 24/7, as is the Company's
Data Center that provides extensive redundancy and proactive monitoring of
system-level events. Fax Services include conversion, encryption and delivery of
faxes to e-mail or e-mail to faxes without any additional hardware or software
required.

-        APPLICATION TO FAX.
         Application to Fax is a flexible, low-cost way to deliver a high volume
         of system-generated files from computer applications to any fax device
         worldwide. Application to Fax can be customized to meet an
         organization's requirements and supports mainframe, minicomputer, and
         personal computer-based applications over a number of protocols,
         including TCP/IP and SNA.

-        MAILFAX.
         MailFax is an enterprise service that allows clients with e-mail
         capability to send domestic and international faxes automatically from
         their desktop without additional hardware or software. As an optional
         feature of MailFax, the Company offers Inbound Fax, which allows
         customers to receive faxes as e-mail messages. The Secure Fax option
         can be added to ensure that fax messages are not intercepted during
         transmission across public networks and to verify the identity of the
         sender.

DIRECTORY SERVICES

E-Sync's directory synchronization services enable customers' multiple-messaging
systems to have all user address information presented in a complete, native
format to all participating systems. This service feature also allows external
trading partner systems to participate in the directory synchronization process.
As an enhancement, messaging integration, which connects users of disparate
messaging applications (Lotus Notes, cc:Mail, Profs, etc.) within an
organization can be implemented over intranets, extranets, and virtual private
networks (VPNs). E-Sync offers outsourced Directory Services in the following
areas:

-        DIRECTORY SYNCHRONIZATION.
         Directory Synchronization provides full directory synchronization
         between disparate systems and standards, enabling the communication of
         e-mail and directory information among various incompatible
         standards-based systems. For separate lists of users in e-mail,
         file-server, human resources, accounting, sales, and other databases,
         Directory Synchronization assures that all changes, such as adding a
         user, in the directory service flow to all other resources.

-        METADIRECTORY SERVICES.
         When different parts of an organization have different naming schemes,
         a metadirectory can synchronize two or more directory services,
         allowing a single entry point for information to be shared by multiple
         platforms. E-Sync's Metadirectory Services will review an
         organization's information holdings and determine the requirements of a
         client's metadirectory. The Company can then develop a customized
         metadirectory or work with the client's staff to develop, enhance, or
         maintain an existing metadirectory.


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<PAGE>   6
-        ACTIVE DIRECTORY IMPLEMENTATION.
         As a Microsoft Solutions Provider Partner, E-Sync can implement Windows
         2000 Active Directory, Microsoft's answer to unite and organize diverse
         server hierarchies. Active Directory provides a unified view of
         networks, uniting and organizing diverse server hierarchies, thereby
         significantly reducing the number of directories with which network
         administrators and users must manage.

SECURITY

E-Sync uses its relationship with E-Certify, a leading provider of PKI-based
Internet security and encryption technology, to ensure that its clients can
exchange sensitive documents and private information with improved confidence
and reliability. The Company first analyzes the existing network infrastructure
and its security components and then makes recommendations that will provide the
client with the appropriate level of security for the network. Clients using any
of the Company's Managed Services can benefit from E-Certify's expertise. By
adding PKI encryption to TotalMail, a message is signed with a digital
certificate and encrypted before it is transmitted, thereby enhancing the
security of electronic communications. The recipient can identify the sender of
the message and ensure that the message has not been intercepted, viewed, or
altered. TotalMail Smart Card provides the added security of a smart card,
containing a digital ID, which is issued to authorized users only. Directory
Synchronization can be implemented with full PKI security, and smart cards and
other hardware tokens can also be installed for an additional level of security.
The Company also offers Secure Messaging, a cryptographic solution for secure
communications, and Secure Fax, an enhancement to the Company's Fax Services
which offers greater security when sending and receiving faxes using e-mail. As
part of the Company's Hosting Services, it provides administration services and
remote access to applications via Internet connections using integrated digital
certificate security. E-Sync's anti-virus protection can be developed and
adapted to specific network configuration, operating systems, and resources. In
addition, E-Sync can filter suspect e-mail messages and automatically scan
messages and their attachments for viruses. The Company offers a total,
fully-integrated solution that will protect applications, data, messaging, and
user systems and that can be deployed enterprise-wide without disrupting
day-to-day operations.

PROFESSIONAL SERVICES

A key element in supporting E-Sync's clients and our managed services
capabilities are directly related professional services. These services include
messaging design, architecture and implementation, as well as a broad range of
additional services including network design and integration, systems
management, security planning and training.

MICROSOFT BACKOFFICE(R) CONSULTING

E-Sync is a unique Microsoft Solutions Provider Partner that specializes in
Microsoft BackOffice(R) architecture, design, and implementation services. Its
knowledge of electronic messaging infrastructure, application developments, and
project management techniques provides clients with customized, efficient
solutions that work. The Company's Microsoft Certified Professionals, Systems
Engineers, and Trainers offer a complete BackOffice(R) solution, including
assessing system requirements, installing, configuring, and training.

NETWORK DESIGN AND INTEGRATION

In the NETWORK DESIGN AND INTEGRATION area, the Company provides expert
resources for all network design and integration needs. E-Sync assesses
information, messaging, and connectivity needs, evaluates existing
infrastructure architecture for adaptability to change, defines and tests
migration processes, executes and documents phased migration procedures for
disparate messaging platforms, and prepares enterprise-wide implementation
plans. E-Sync also offers numerous services in application development and
support and in workflow automation. E-Sync can install a Virtual Private Network
(VPN) to ensure that only authorized users can access a client's network and
that data cannot be intercepted.

EXECUTIVE BRIEFING CENTER

E-Sync opened its Executive Briefing Center in May, 1999. Sponsored in part by
Compaq Computers, this state-of-the art facility showcases Microsoft's latest
technology offerings in a simulated working environment as presented by E-Sync's
team of professional services representatives.

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BUSINESS PROCESS ASSESSMENT

E-Sync's professionals assist clients in evaluating their IT needs, from
specialized applications to database and web servers, hardware, networks,
switches, firewalls, security, and storage technology. The Company also assesses
applicable business rules and processes for clients' messaging infrastructure
needs.

SECURITY SOLUTIONS

E-Sync's SECURITY SOLUTIONS area provides the ability to exchange sensitive
documents and private information securely with confidence and reliability.
E-Sync uses public key infrastructure (PKI) technology to deliver digital
certificates, encryption keys, and SmartCards for optimum secure messaging. With
large-scale anti-virus protection capabilities and e-mail anti-virus filtering,
E-Sync can provide full protection for applications, data, messaging, and user
systems across entire networks. E-Sync's Security Solutions evaluates the costs
and benefits of ID/password pairs, challenge/response tokens, smart cards,
biometrics, or other devices that provide unique profiles. Once a user's
identity is established, PKI can confirm that identity to all available
resources. E-Sync can also provide recognized digital certificates to
authenticate business documents, place orders, transfer funds, and perform other
e-business transactions.

SALES AND MARKETING

The Company focuses its marketing efforts toward educating its target market,
generating new sales opportunities, and creating awareness for its
business-to-business electronic commerce solutions. E-Sync conducts a variety of
marketing programs to educate its target market. The Company has engaged in
marketing activities such as business seminars, trade shows, press relations and
industry analyst programs and advisory councils.

E-Sync's marketing organization also serves an integral role in acquiring,
organizing and prioritizing customer and industry feedback in order to help
provide product direction to the Company's development organizations. The
Company has traditionally targeted large multi-national companies that are
likely to have dissimilar computer systems and applications in multiple
locations. Such companies have been plagued with inter-divisional communication
problems because their computing strategies often differed from division to
division, resulting in computing systems that communicate ineffectively with
each other. E-Sync's customer list contains over 50 large corporations, most of
which are Fortune 500 companies.

CUSTOMERS

E-Sync provides Fortune 1000 clients with messaging and infrastructure solutions
and services. E-Sync's customers include the following:

-     American Standard, Inc.
-     Ameritech
-     AT&T
-     Briggs & Stratton Corporation
-     Crum & Forster Insurance
-     ESPN
-     DaimlerChrysler
-     First Data Resources
-     Ford Motor Company
-     GE Capital
-     IVANS, Inc.
-     Johnson & Johnson
-     Metromedia International Telecommunications, Inc.
-     Otis Elevator
-     Pepsi Cola
-     Ralston Purina
-     St. Paul Fire & Marine Insurance Company
-     Travelers Insurance

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<PAGE>   8
STRATEGIC RELATIONSHIPS

E-Sync has a variety of relationships with leading information technology
providers, enabling it to offer its clients a choice of the best technologies
not offered by a sole technology source.

MICROSOFT

E-Sync is a Microsoft Solutions Provider Partner, uniquely qualifying the
Company to conduct application analysis and to develop migration planning and
implementation. The Company also provides support for Windows 2000 Active
Directory, Windows NT, MS Exchange, Systems Management Server (SMS), SNA Server,
and Internet/intranet deployment.

IVANS, INC. partners with E-Sync to provide messaging, fax and application
hosting services to the insurance and healthcare industry.

TRW

E-Sync works with TRW and mutual customers to provide professional services for
messaging projects and related hosted or managed services.

E-CERTIFY is a leading provider of PKI-based Internet security and encryption
technology. With this technology, E-Sync's clients can take advantage of a new
level of secure B2B e-commerce. Many of E-Sync's Managed Services, including
Total Mail, Fax Services, MailConnect, Directory Services, and Hosting Services,
benefit from E-Certify's expertise.

In addition, the Company's products and services leverage off of the products
and services of the following companies:

COMPAQ sponsors E-Sync's Information Exchange Data Center and its Executive
Briefing Center.

ISOCOR is E-Sync's partner for messaging platforms, providing messaging
integration for disparate mail systems, as well as technology for Directory
Synchronization.

NETIQ CORPORATION provides technology for E-Sync's Remote Management Services.

CISCO SYSTEMS, INC. provides E-Sync with network solutions to enhance its
product and service offerings.

MAJOR VENDORS

The Company relies on various suppliers for equipment and services to provide
its services to its customers. Among them are standard computer servers and
hardware, standard telecom services, and proprietary software. While the Company
currently relies on Compaq and Cisco equipment purchased through resellers for
its computer hardware, and Qwest and AT&T for its telecom services, the Company
believes that alternate suppliers would be readily available should one of its
current suppliers become unavailable.

The Company currently uses proprietary software, requiring proprietary hardware,
to provide its Managed Services offerings. While there are several sources of
this hardware, there is currently only one manufacturer. Should this hardware
become unavailable, the Company believes it could find alternate solutions to
enable it to continue to provide its services. However, identifying and
implementing alternate solutions could take an undetermined amount of time and
could have a negative impact on the Company's service offerings. In addition,
there are no guarantees that if an alternate solution is found, that it could be
implemented in a cost-effective manner, or provide the same functionality as the
Company's current system.


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NET SALES BACKLOG

Management believes that sales backlog is not a meaningful indication of future
revenue because most of its revenue is derived from short-term contracts for
both Managed Services and Professional Services which are generally initiated
within 90 days of receipt of an order.

PRODUCT DEVELOPMENT

The Company's research and development activities in 1999 and 2000 were
principally directed toward the development of web supply chain system
integration technology and software as well as enhancing existing services.
During fiscal years 2000 and 1999 E-Sync spent $1.3 million on research and
development.

EMPLOYEES

As of December 31, 2000, the Company had 75 full-time employees, including 4
primarily engaged in research and development activities and 7 engaged in sales
and marketing activities. The Company's future success depends in significant
part upon the continued service of its key technical and senior management
personnel and its continuing ability to attract and retain highly qualified
technical and managerial personnel. Competition for such personnel is intense
and there can be no assurance that the Company can retain its key managerial and
technical employees or that it can attract, assimilate or retain other highly
qualified technical and managerial personnel in the future. None of the
Company's employees are represented by collective bargaining units and the
Company has never experienced a work stoppage. The Company believes that its
employee relations are good.

COMPETITION

The market for the Company's Managed Services and Professional Services
offerings is intensely competitive, evolving and subject to rapid technological
change. The Company has encountered competition with respect to different
aspects of its existing offerings from a variety of vendors including Critical
Path for its Managed Services, and Andersen Consulting, IBM and others for our
Professional Services.

Many of the Company's competitors have longer operating histories, significantly
greater financial, technical, marketing and other resources, greater name
recognition, a broader range of products to offer and a larger installed base of
customers than the Company, each of which could provide them with a significant
competitive advantage over the Company. In addition, the Company expects to
experience increasing price competition as the Company and its competitors
compete for market share. There can be no assurance that the Company will be
able to compete successfully with existing or new competitors or that
competition will not have a material adverse effect on the Company's business,
operating results and financial condition.

INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS

To protect its proprietary rights, the Company relies on a combination of
copyright, trade secret and trademark laws, and nondisclosure and other
contractual restrictions. As part of its confidentiality procedures, the Company
generally enters into nondisclosure agreements with its employees, consultants,
and strategic partners and limits access to and distribution of its designs,
software and other proprietary items as it deems appropriate.

ITEM 2.  PROPERTIES

The Company's headquarters, which includes executive management, operations,
sales, marketing, research and development, and administration, are located in
Trumbull, Connecticut. At the same location is the Company's state-of-the-art
high security data center enabling E-Sync to offer clients reliable, cost
effective and efficient services such as network monitoring, applications
support, and a help desk. The Company also has a secure data center located in
the United Kingdom. E-Sync currently has 75 employees serving clients around the
globe.


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<PAGE>   10
The Company occupies a portion of a three-story building at 35 Nutmeg Drive,
Trumbull, Connecticut, as a tenant under a lease expiring December 31, 2014. The
space consists of approximately 20,555 rentable square feet and is utilized for
offices and a computer center. The Company also has 2,500 rentable square feet
at 627 Broadway, New York, New York under a lease expiring October 31, 2001.
Additionally, the Company is leasing approximately 3,500 square feet in Swindon,
England for the E-Sync U.K. computer center under a lease which expires February
1, 2004.

ITEM 3.  LEGAL PROCEEDINGS

The Company is involved in various legal proceedings, none of which are believed
to involve a claim for damages exceeding 10% of the current assets of the
Company. Although it is not feasible to predict the outcome of any such
proceedings, or any claims made against the Company, the Company does not
anticipate that the ultimate liability, if any, will materially affect the
Company's financial position, results of operations or liquidity/cash flows.

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

There were no matters submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report through the solicitation of
proxies or otherwise.

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS

(a) The Company's Common Stock is traded on the NASDAQ SmallCap Market under the
ticker symbol "ESNI". The following table shows the range of high and low
closing prices for the Common Stock, as reported by the NASDAQ. The quotations
represent prices between dealers in securities, do not include retail mark-up,
mark-down or commission and do not necessarily represent actual transactions.
<TABLE>
<CAPTION>
                                         Prices
                                         ------
    2000                          High              Low
    ----                          ----              ---
<S>                             <C>               <C>
First Quarter                   16 1/16           8 1/25
Second Quarter                  12 1/8            5 1/16
Third Quarter                    6 9/16           2 13/16
Fourth Quarter                   4 1/2              25/32
</TABLE>

<TABLE>
<CAPTION>
                                         Prices
                                         ------
    1999                          High              Low
    ----                          ----              ---
<S>                              <C>               <C>
First Quarter                    2 7/16              9/16
Second Quarter                   5 31/32           2 9/16
Third Quarter                    6 1/16            3 3/16
Fourth Quarter                  14 1/4             4
</TABLE>



                                       10
<PAGE>   11
(b) Approximate number of holders of the Company's common equity:
<TABLE>
<CAPTION>
                                                                      Approximate Number of
                                                                      Record Holders as of
           Title of Class                                                April 10, 2001
           --------------                                                --------------
<S>                                                                   <C>
Common Stock, par value $0.01                                                  553
Series A Preferred Stock, par value $0.01                                        2
Series B Preferred Stock, par value $0.01                                       14
</TABLE>


(c) Dividends

The Company has never paid cash dividends on its Common Stock. The Company plans
to reinvest its cash flow in its business and does not anticipate payment of
cash dividends in the foreseeable future.

(d) Issuances of Securities

During November 2000 the Company received $1,000,000 from the sale of 540,541
shares of the Company's common stock to an individual accredited investor, as
defined in rule 501(a) of the Securities Act of 1933, as amended. The Company
believes that these issuances of securities are exempt from the registration
requirements of the Securities Act of 1933 as amended (the "Securities Act"), by
virture of the exemption set forth in section 4(2) of the Act.

During December 2000, the Company received $850,000 in connection with the
issuance of a subordinated term note to CE Capital Partnership, L.P. the
beneficial owner of more than 10% of the Company's common stock due on May 31,
2001. The note bears an interest rate of 10% per annum. The principal balance is
payable at maturity, however, in the event the Company receives proceeds in
excess of $3,500,000 from the sale of securities, the note is automatically
convertible into securities issued under the same terms of such sale. In the
event the note is not automatically converted and the note is not repaid prior
to May 31, 2001, the holder may convert a portion of the note into common stock
at $0.25 per share, not to exceed 600,000 shares.

In connection with the issuance of this note, the Company issued warrants to
purchase 108,600 shares of the Company's common stock at an exercise price of
$0.75 per share. The warrants are transferable and expire on December 22, 2005.
The Company believes that these issuances of securities are exempt from the
registration requirements of the Securities Act of 1933 as amended (the
"Securities Act"), by virture of the exemption set forth in section 4(2) of the
Act.

Proceeds received were used for general working capital purposes.


                                       11
<PAGE>   12
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

E-Sync (NASDAQ: ESNI) is an e-commerce enabler, providing global messaging
solutions for Fortune 1000 companies. The Company offers a suite of enterprise
communication infrastructure capabilities that facilitate secure and reliable
information exchange. The company's managed services include secure online
messaging, outsourced e-mail services, directory and fax services and hosted
communications. In addition, the Company has a highly qualified professional
services organization, which directs its efforts towards providing network
design and integration, messaging integration and message platform migration
services.

The Company's strategy, which was adopted subsequent to the departure of the
Company's former Chief Executive Officer in 2000, is to leverage its
relationships with key channel partners to extend its core messaging solutions
into vertical solution frameworks initially for the insurance and healthcare
markets. Previously, the company had focused much of its efforts towards the
development of supply chain management software, which efforts were discontinued
during 2000 reprioritization of capital resources towards core messaging
activities that comprise the majority of the company's business and revenue.

TWELVE MONTHS ENDED DECEMBER 31, 2000 COMPARED TO THE TWELVE MONTHS ENDED
DECEMBER 31, 1999

The Company's revenues consist of fees for Professional Services provided to its
customers in the form of web development, messaging infrastructure and other
consulting services, and Managed Services in the form of hosting and messaging
services. Professional Services, including services provided by the Company's
Braincraft subsidiary, are normally billed on a time and material basis with
contracts typically ranging from 1 to 12 months. Managed Services consist of
both fixed charges, billed in advance, and usage based charges billed at the end
of the month. Contracts for Managed Services are typically for a one-year
period. The Company recognizes revenue in the period the services are performed.

Managed Services revenues increased by 10.6% and Professional Services revenues
increased by 48.7% in the year ended December 31, 2000. Managed Services
revenues increased primarily due to new product offerings and increases in
customer volume offset by the impact of discontinued older technology product
offerings. The increase in Professional Services revenue is primarily due to the
acquisition and consolidation of Braincraft Learning Technologies, Inc.
("Braincraft") in November of 1999. Net of the effect of the consolidation of
Braincraft, Professional Services revenue increased by 19.2% over the period
principally due to an increase in the volume of professional services provided.

The Company recognized a gross margin of 1.9% or $188,000 for the year ended
December 31, 2000 compared to a gross margin of 10.1% or $754,000 for the same
period in 1999. Managed Services earned a gross margin of 2.0% or $79,000 for
the year ended December 31, 2000 compared to a negative gross margin of (0.2%)
or ($6,000) for the same period in 1999. The increase is due to an increase in
volume. Professional Services recognized a gross margin of 1.9% or $109,000 for
the year ended December 31, 2000 compared to a gross margin of 19.6% or $760,000
for the same period in 1999. The decrease in professional service gross margin
was principally due to a negative gross margin of (55.0%) or ($938,000) at the
Company's Braincraft subsidiary.

Sales and marketing expenses decreased $274,000, or 10.6%, in the current year,
and as a percent of total revenues decreased to 23.6% in the year ended December
31, 2000 from 34.5% in the same period in 1999. The decrease is a result of
lower recruiting, advertising and promotion expenses. Management expects the
level of such expenses to remain consistent in 2001.

The Company's general and administrative expenses were $342,000 or 9.7% higher
for the year ended December 31, 2000, then for the same period in 1999. As a
percent of total revenues, general & administrative expenses decreased from 46.
9% to 39.5% over the periods. The increase versus the prior year is primarily
due to increases in general, sales and operations management, increases in
professional fees, offset by lower recruiting costs. Management expects the
level of such expenses to remain consistent in 2001.

                                       12
<PAGE>   13
Research and development expenditures were $1,258,000 and $1,291,000 for the
years ended December 31, 2000 and 1999, respectively. The decrease in expense
for the year ended December 31, 2000 was mainly due to a decrease in outside
consultants offset by an increase in the number of research and development
personnel. To date, all development costs have been expensed in the period
incurred.

Amortization of Goodwill and other intangible assets of $910,000 is principally
the amortization of goodwill recorded in connection with the acquisition of
Braincraft in November 1999.

During the fourth quarter of 2000, the company committed to a plan to
discontinue operations related to its web design consulting services. The web
design consulting services were the principal operations conducted by our
Braincraft subsidiary. As a result, the Company recorded an asset impairment
charge in the amount of $3.5 million to write off the remaining balance of
Braincraft goodwill acquired. In addition, the Company recorded a charge of
$225,000 principally for minimum lease payments due and payable April 30, 2001,
when the shut down of the discontinued activity is expected to be completed, as
well as other costs to shut down these operations.

In December 1999, the Company issued options to purchase 40,000 shares of common
stock, at an exercise price of $4.20 per share, to a consultant in connection
with acting as a technical advisor for the Company's U.K. operations for three
years. The Company issued an additional 35,000 options to this consultant at
exercise prices ranging from $6.375 to $11.125 in the quarter ended June 30,
2000. During the quarter ended September 30, 2000, the consulting agreement was
terminated and the options were cancelled. As a result, the company reversed
approximately $337,000 of deferred compensation. During 2000, the Company issued
options to purchase 4,000 shares of common stock to a consultant in exchange for
providing certain investor relation services. These options have an exercise
price of $15.00 per share, are exercisable for a period of ten years, and vest
ratably over the consultant's period of service. The Company accounts for these
options in accordance with Emerging Issue Task Force Abstract No. 96-18,
"Accounting for Equity Instruments That are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling Goods or Services." Pursuant to EITF
96-18, the Company values the options using a Black-Scholes pricing model. The
value ascribed to these options is adjusted at each intervening balance sheet
date to the then-current market value. The cost is being amortized over the
applicable vesting periods. The Company has amortized approximately $97,000 and
$14,000 of the deferred compensation during the years ended December 31, 2000
and 1999, respectively. Such amounts are included in non-cash compensation in
the consolidated statements of operations.

Also during 2000, the Company issued fully vested options to purchase 48,000
shares of common stock, at exercise prices from $0.01 to 1.8125 per share, to
various consultants in exchange for providing various operational advice. These
options are exercisable for a period of ten years. The Company valued these
options using the Black-Scholes pricing model and these options are being
amortized over the applicable service periods. The Company amortized
approximately $77,000 during the year ended December 31, 2000. Such amount is
included in non-cash compensation in the consolidated statements of operations.

During May 2000, the Company issued fully vested options to purchase 50,000
shares of common stock, at an exercise price of $4.20 per share, to a consultant
for services performed. These options are exercisable for a period of ten years.
The Company valued these options using the Black-Scholes pricing model. For the
year ended December 31, 2000, the $318,000 ascribed to these options is included
in non-cash compensation in the consolidated statements of operations.

In 1999, the Company issued 75,000 non-refundable shares of its common stock to
an advisor for services to be performed over two years. The $422,000 value
ascribed to the 75,000 shares is recorded as an other asset and is being ratably
amortized over two years, with $211,000 and $141,000 of such amortization
expensed during the years ended December 31, 2000 and 1999, respectively.

During the year ended December 31, 2000, the Company granted options to
employees to purchase approximately 965,135 shares, of common stock at prices
ranging from $0.20 to 0.46. These options are fully vested and are exercisable
for a ten year period. The Company has recognized an expense for the difference
between the exercise price and the fair market value of the stock at the grant
date totaling approximately $683,000 during the year ended December 31, 2000. In
addition, the company has accrued an expense for


                                       13
<PAGE>   14
pending stock option awards to employees relating to bonus compensation earned
in the fourth quarter of 2000. These amounts are included in non-cash
compensation in the consolidated statement of operations.

Interest expense, was $158,000 in the year ended December 31, 2000, as compared
to $56,300 in the year ended December 31, 1999. The increase is due to the
increase in borrowings during 2000.

Interest income was $175,000 in the year ended December 31, 2000, as compared to
$62,000 in the year ended December 31, 1999. The change was mainly due to the
increase in available funds invested during 2000.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents decreased by $5.4 million during the twelve months
ended December 31, 2000 from $7.2 million at December 31, 1999. The Company
raised $2.9 million through financing activities, primarily from the issuance of
notes payable and common stock. The Company invested approximately $1.0 million
in capital purchases related to the Company's headquarters and data center. At
December 31, 2000, the Company had a working capital deficit (current assets
minus current liabilities) of approximately $1.3 million.

Net cash used in operating activities was $7.3 million for the year ended
December 31, 2000. Net cash flows used in operating activities in the period
reflect increased net losses of $13.4 million, offset principally part by non
cash expenses of approximately $7.0 million.

Net cash provided by financing activities was $2.9 million for the year ended
December 31, 2000, consisting of approximately $1.0 million from the sale of
common stock and approximately $0.9 million from subordinated convertible notes
payable.

As of December 31, 2000, the Company had $1,767,000 of cash and cash
equivalents. The Company has incurred a net loss attributable to common
stockholders of $13.4 million for the year ended December 31, 2000 and had an
accumulated deficit of $25.2 million as of December 31, 2000.

The Company continues to incur substantial net losses and negative operating
cash flow. The Company will need additional financing to meet current operating
cash requirements. If we are unable to raise additional financing or generate
sufficient cash flow, we may be unable to continue as a going concern. Even if
the Company is successful in obtaining funding to meet current operating
expenses, the Company will need to substantially increase its revenues or its
losses will continue indefinitely. Even if the Company's efforts to increase
revenue are successful, there will be a delay in making this revenue available
to fund operating expenses. The Company will need to raise additional funds to
maintain current operating expenses and those expenses needed to support efforts
to increase revenue. If the Company is not successful in securing additional
funding the Company's business will be seriously harmed. Our principal
commitments consist of subordinated convertible notes, notes payable,
obligations under capital and operating leases and accounts payable. We have
received a report from our independent auditors containing an explanatory
paragraph stating that we have recurring losses from operations, have a working
capital deficiency and an accumulated deficit that raise substantial doubt about
our ability to continue as a going concern.

Our consolidated financial statements do not include any adjustments relating to
the recoverability and classification of recorded asset amounts or the amounts
and classification of liabilities that might be necessary should we be unable to
continue as a going concern. We believe our ability to continue as a going
concern is dependent upon our ability to obtain additional financing to generate
sufficient cash flow to meet our obligations on a timely basis as may be
required and ultimately to achieve profitable operations. Management is
implementing internal actions to improve our operations and liquidity including
a reduction of our workforce and closure of some of our businesses operating
with negative cash flows. The internal actions to date to reduce operating
expenses will not be sufficient to reach positive cash flow. In addition to
these internal actions, Management is considering external financing options,
such as strategic alliances, debt, or equity offerings. There can be no
guarantee that these efforts will be successful. Such offerings can have a
dilutive effect on the Company's shareholders.


                                       14
<PAGE>   15
FORWARD LOOKING STATEMENTS

The statements in this annual report on Form 10-KSB that are not historical fact
constitute "forward-looking statements." Said forward-looking statements involve
risks and uncertainties that may cause the actual results, performance or
achievements of the Company and its subsidiaries to be materially different from
any future results, performance or achievements, express or implied by such
forward-looking statements. These forward-looking statements are identified by
their use of forms of such terms and phrases as "expects", "intends", "goals",
"estimates", "projects", "plans", "anticipates", "should", "future", "believes",
and, "scheduled".

The variables which may cause differences include, but are not limited to, the
following general economic and business conditions: competition; success of
operating initiatives; operating costs; advertising and promotional efforts; the
existence or absence of adverse publicity; changes in business strategy or
development plans; the ability to retain management; availability, terms and
deployment of capital; business abilities and judgment of personnel;
availability of qualified personnel; labor and employee benefit costs;
availability and cost of raw materials and supplies; and changes in, or failure
to comply with, government regulations. Although the Company believes that the
assumptions underlying the forward-looking statements contained herein are
reasonable, any of the assumptions could be inaccurate, and therefore, there can
be no assurance that the forward-looking statements included in this filing will
prove to be accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by the Company or any other person
that the objectives and exceptions of the Company will be achieved.

In addition, there can be no assurance that the Company will be successful in
developing any new products, that the Company will not experience difficulties
that could delay or prevent successful development, introduction and sales of
these products, or that its new products and enhancements will adequately meet
the requirements of the marketplace and achieve market acceptance. Management
cannot be sure that existing and future development efforts will be completed
within the anticipated schedules or that, if completed, they will have the
features or quality necessary to make them successful in the marketplace.
Further, despite testing by the Company and by current and potential customers,
errors could be found in the Company's products. E-Sync may not be able to
successfully correct these errors in a timely and cost effective manner. If the
Company is not able to develop new products or enhancements to existing products
or corrections on a timely and cost-effective basis, or if these new products or
enhancements do not have the features or quality necessary to make them
successful in the marketplace, the Company's business will be seriously harmed.

Management expects that most of the Company's enhancements to existing and
future products will be developed internally. However, the Company currently
licenses certain externally developed technologies and will continue to evaluate
externally developed technologies to integrate with its solutions. These
externally developed technologies, if suffering from defects, quality issues or
the lack of product functionality required to make the Company's solutions
successful in the marketplace, may seriously impact and harm the Company's
business. In addition, the Company must attract and retain highly qualified
employees to further its research and development efforts. The Company's
business could be seriously harmed if it is not able to hire and retain a
sufficient number of these individuals.


                                       15
<PAGE>   16
ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                              E-SYNC NETWORKS, INC.

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
<S>                                                                                                            <C>
Report of Independent Auditors .....................................................................           17

Consolidated Balance Sheet at December 31, 2000 ....................................................           18

Consolidated Statements of Operations for the years ended December 31, 2000 and 1999................           19

Consolidated Statements of Stockholders Equity for the years ended December 31, 2000 and 1999.......           20

Consolidated Statements of Cash Flows for the years ended December 31, 2000 and 1999................           21

Notes to Consolidated Financial Statements..........................................................           22
</TABLE>







                                       16
<PAGE>   17
                          INDEPENDENT AUDITORS' REPORT





The Board of Directors and
Stockholders E-Sync Networks, Inc.:

We have audited the accompanying consolidated balance sheet of E-Sync Networks,
Inc. and subsidiaries (the "Company") as of December 31, 2000, and the related
statements of operations, stockholders' equity and cash flows for each of the
years in the two year period ended December 31, 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 audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of E-Sync Networks,
Inc. and subsidiaries as of December 31, 2000 and the results of its operations
and its cash flows for each of the years in the two year period ended December
31, 2000 in conformity with accounting principles generally accepted in the
United States of America.

The accompanying consolidated financial statements have been prepared assuming
that E-Sync Networks, Inc. will continue as a going concern. As discussed in
Note 1 to the consolidated financial statements, the Company has suffered
recurring losses from operations and has a working capital deficiency. These
factors raise substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

                                                   /s/ KPMG LLP
New York, New York                                 -----------------------------
April 11, 2001


                                       17
<PAGE>   18
                              E-SYNC NETWORKS, INC.
                           CONSOLIDATED BALANCE SHEET
                 (in thousands, except share and per share data)

<TABLE>
<CAPTION>
                                                                                   DECEMBER 31, 2000
                                                                                   -----------------
                                                                                     (Reclassified,
                                                                                       see Note 1)
                          ASSETS

Current Assets:
<S>                                                                                    <C>
     Cash and cash equivalents                                                         $  1,767
     Accounts receivable, less allowance for doubtful accounts of $197                    1,383
     Other current assets                                                                   170
                                                                                       --------
          Total current assets                                                            3,320

Equipment, net                                                                            3,760
Other assets                                                                                234
                                                                                       --------
          Total assets                                                                 $  7,314
                                                                                       ========

               LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
     Notes payable                                                                     $  1,716
     Obligations under capital leases, current portion                                       48
     Accounts payable                                                                     1,329
     Accrued expenses                                                                     1,234
     Medical benefits obligation, current portion                                            32
     Deferred revenue                                                                       267
                                                                                       --------
          Total current liabilities                                                       4,626

Obligations under capital leases, less current portion                                       10
Medical benefits obligation, less current portion                                           217
                                                                                       --------
Total liabilities                                                                         4,853

E-Sync Networks, (UK) LTD - Preference Shares                                             3,000

Stockholders' Equity:
Convertible preferred stock, par value $.01 per share, 10,000,000 shares
    authorized
     Series A - 1,000,000 shares issued and outstanding                                      10
     Series B - 2,352,727 shares issued and outstanding                                      23
Common stock, stated value $.01 per share,  50,000,000 shares authorized,
    8,356,355 shares issued and outstanding                                                  84
Additional paid in capital                                                               25,728
Deferred compensation                                                                       (13)
Accumulated deficit                                                                     (25,155)
Less treasury stock at cost, 992,565 shares                                              (1,216)
                                                                                       --------
          Total stockholders' deficit                                                      (539)
                                                                                       --------

Commitments and Contingencies

          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                   $  7,314
                                                                                       ========
</TABLE>



          See accompanying notes to consolidated financial statements.



                                       18
<PAGE>   19
                              E-SYNC NETWORKS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (in thousands, except share and per share data)

<TABLE>
<CAPTION>
                                                                 December 31,
                                                    -------------------------------------
                                                       2000                       1999
                                                       ----                       ----
REVENUES:
<S>                                                 <C>                       <C>
       Managed services                             $     4,004               $     3,620
       Professional services                              5,753                     3,870
                                                    -----------               -----------
          Total revenues                                  9,757                     7,490

COST OF SALES:
       Managed services                                   3,925                     3,626
       Professional services                              5,644                     3,110
                                                    -----------               -----------
          Total cost of sales                             9,569                     6,736

GROSS MARGIN:
       Managed services                                      79                        (6)
       Professional services                                109                       760
                                                    -----------               -----------
          Total gross margin                                188                       754

OPERATING EXPENSES:
       Sales and marketing                                2,309                     2,583
       General and administrative                         3,852                     3,510
       Product development                                1,258                     1,291
       Amortization of goodwill and
          other intangible assets                           910                       133
       Intangible impairment
             and restructuring charges                    3,734                        --
       Non-cash compensation                              1,557                       309
                                                    -----------               -----------
          Total operating expenses                       13,620                     7,826

       Loss from operations                             (13,432)                   (7,072)

OTHER INCOME (EXPENSE):
       Other expense, net                                   (17)                      (97)
       Interest expense                                    (158)                      (56)
       Interest income                                      175                        62
                                                    -----------               -----------
          Total other income (expense)                       --                       (91)


Net loss                                            $   (13,432)              $    (7,163)
                                                    ===========               ===========


Basic and diluted net loss per share                $     (1.96)              $     (1.51)
                                                    ===========               ===========

Weighted average number of shares                     6,852,790                 4,752,629
                                                    ===========               ===========
</TABLE>

           See accompanying notes to consolidated financial statements



                                       19
<PAGE>   20
                              E-SYNC NETWORKS, INC.
                        STATEMENT OF STOCKHOLDERS' EQUITY
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>



                                                                                                                       Additional
                                         Series A Preferred Stock  Series B Preferred Stock  Common Stock            Paid-In-Capital
                                         ------------------------  ------------------------  ------------            ---------------
                                         Shares            Amount  Shares            Amount     Shares      Amount
                                         -------------------------------------------------------------------------------------------
<S>                                      <C>               <C>     <C>               <C>     <C>            <C>      <C>
Balance at December 31, 1998 ..........         --             --         --             --     4,884,693     1,628        5,592
Par value adjustment ..................         --             --         --             --            --    (1,579)       1,579
Exercise of options ...................         --             --         --             --       443,800         4          188
Exercise of warrants ..................         --             --         --             --     1,500,000        15        1,485
Issuance of Series A preferred
    stock .............................  1,000,000             10         --             --            --        --        2,958
Issuance of Series B
  preferred stock (reclassified
  see note 1) .........................         --             --  1,590,909             23            --        --        6,962
Issuance of stock in lieu of
    payment for services ..............         --             --         --             --        75,000         1          421
Issuance of stock to an advisor .......         --             --         --             --        32,523        --          154
Issuance of stock options in lieu
    of payment for services ...........         --             --         --             --            --        --          519
Amortization of deferred
    compensation ......................         --             --         --             --            --        --           --
Issuance of Common stock to
    Braincraft ........................         --             --         --             --       671,676         7        3,390
Net loss ..............................         --             --         --             --            --        --           --
                                         -------------------------------------------------------------------------------------------
Balance at December 31, 1999
  (reclassified - see note 1)            1,000,000          $  10  1,590,909          $  23     7,607,692    $   76     $ 23,248
Exercise of options ...................         --             --         --             --       208,122         2          181
Issuance of Common Stock ..............         --             --         --             --       540,541         6          994
Issuance of Series B preferred
    stock .............................         --             --     80,000             --            --        --          352
Issuance of Common Stock Warrants .....         --             --         --             --            --        --          270
Issuance of stock options in lieu
    of payment for services ...........         --             --         --             --            --        --        1,355
Amortization of deferred
    compensation ......................         --             --         --             --            --        --           --
Cancelation Stock Options issued
    for services ......................         --             --         --             --            --        --         (337)
Revaluation stock options issued
    for services ......................         --             --         --             --            --        --         (335)
Net loss ..............................         --             --         --             --            --        --           --
                                         -------------------------------------------------------------------------------------------
Balance at December 31, 2000
  (reclassified - see note 1)            1,000,000          $  10  1,670,909          $  23     8,356,355    $   84     $ 25,728
                                         ===========================================================================================
</TABLE>


<TABLE>
<CAPTION>
                                                                                                              Total
                                                                                    Treasury Stock          Stockholders'
                                                Deferred          Accumulated   -----------------------       Equity
                                               Compensation        Deficit       Shares           Amount     (Deficit)
                                         -------------------------------------------------------------------------------
<S>                                            <C>                <C>           <C>               <C>       <C>
Balance at December 31, 1998.............               --         (4,560)      (992,565)         (1,216)      1,444
Par value adjustment.....................               --             --             --              --          --
Exercise of options......................               --             --             --              --         192
Exercise of warrants.....................               --             --             --              --       1,500
Issuance of Series A preferred
    stock................................               --             --             --              --       2,968
Issuance of Series B
  preferred stock (reclassified
  see note 1)............................               --             --             --              --       6,985
Issuance of stock in lieu of
    payment for services.................               --             --             --              --         422
Issuance of stock to an advisor..........               --             --             --              --         154
Issuance of stock options in lieu
    of payment for services..............             (519)            --             --              --          --
Amortization of deferred
    compensation.........................               14             --             --              --          14
Issuance of Common stock to
    Braincraft...........................               --             --             --              --       3,397
Net loss.................................               --         (7,163)            --              --      (7,163)
                                                 -------------------------------------------------------------------
Balance at December 31, 1999
  (reclassified - see note 1)                     $   (505)     $ (11,723)      (992,565)      $  (1,216) $    9,913
Exercise of options......................               --             --             --              --         183
Issuance of Common Stock.................               --             --             --              --       1,000
Issuance of Series B preferred
    stock................................               --             --             --              --         352
Issuance of Common Stock Warrants........               --             --             --              --         270
Issuance of stock options in lieu
    of payment for services..............             (355)            --             --              --       1,000
Amortization of deferred
    compensation.........................              175             --             --              --         175
Cancelation Stock Options issued
    for services.........................              337             --             --              --          --
Revaluation stock options issued
    for services                                       335             --             --              --          --
Net loss.................................               --        (13,432)            --              --     (13,432)
                                                 --------------------------------------------------------------------
Balance at December 31, 2000
  (reclassified - see note 1)                         ($13)     $ (25,155)      (992,565)      $  (1,216)   $   (539)
                                                 ====================================================================
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       20


<PAGE>   21

                              E-SYNC NETWORKS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 (in thousands, except share and per share data)

<TABLE>
<CAPTION>
                                                                 DECEMBER 31, 2000   DECEMBER 31, 1999
                                                                 -----------------   -----------------
<S>                                                              <C>                 <C>
Cash flows from operating activities:
    Net loss ...............................................          $(13,432)          $ (7,163)
    Adjustments to reconcile net loss to net cash used by
       operating activities:
         Depreciation ......................................               867                396
         Amortization of Goodwill ..........................               910                132
         Amortization Notes Payable Discount ...............                51                 --
         Increase in allowance for doubtful accounts .......                75                 77
         Loss on disposal of fixed assets ..................                --                 99
         Impairment of Goodwill ............................             3,509                 --
         Non-cash compensation .............................             1,557                309
         Changes in operating assets and liabilities: ......                --                 --
             Accounts receivable ...........................              (310)              (138)
             Other current assets ..........................                16               (204)
             Accounts payable and accrued expenses .........              (683)             1,639
             Deferred Revenue ..............................                96                (53)
                                                                      --------           --------
    Net cash used in operating activities ..................            (7,344)            (4,906)

Cash flows from investing activities:
    Acquisition of Braincraft, net of cash acquired ........                --               (518)
    Capital expenditures ...................................            (1,007)            (2,952)
                                                                      --------           --------
Net cash used in investing activities ......................            (1,007)            (3,470)
                                                                      --------           --------
Cash flows from financing activities:
    Proceeds from notes payable ............................             1,850                 --
    Payments on bank loan ..................................              (800)              (764)
    Proceeds from bank loan ................................               774                750
    Proceeds from issuance of common stock .................             1,000                 --
    Proceeds from exercise of stock options and warrants ...               183              1,692
    Proceeds from issuance of preferred stock and warrants .                --             12,953
    Advance payments on Series B preferred stock ...........                --                352
    Payments under capital lease obligations, net ..........               (71)              (222)
                                                                      --------           --------
Net cash provided by financing activities ..................             2,936             14,761
                                                                      --------           --------
Net (decrease)increase in cash and cash equivalents ........            (5,415)             6,385

Cash and cash equivalents at beginning of period ...........             7,182                797
                                                                      --------           --------
Cash and cash equivalents at end of period .................          $  1,767           $  7,182
                                                                      ========           ========
Supplemental disclosure of cash flow information:
    Cash paid during the period for:
         Interest ..........................................          $     44           $     67
                                                                      ========           ========
         Income Taxes ......................................          $     --           $      7
                                                                      ========           ========
    Non-cash investing activities:
         Capital lease obligations incurred for fixed asset
          acquisitions .....................................          $     --           $     74
                                                                      ========           ========
</TABLE>


          See accompanying notes to consolidated financial statements.




                                       21


<PAGE>   22
(1)      SUMMARY OF OPERATIONS

         (a) SUMMARY OF OPERATIONS

         E-Sync (NASDAQ: ESNI) is an e-commerce enabler, providing global
messaging solutions for Fortune 1000 companies. The Company offers a suite of
enterprise communication infrastructure capabilities that facilitate secure and
reliable information exchange. The company's managed services include secure
online messaging, outsourced e-mail services, directory and fax services and
hosted communications. In addition, the Company has a highly qualified
professional services organization, which directs its efforts towards providing
network design and integration, messaging integration and message platform
migration

         E-Sync, a subsidiary of Wiltek Inc., was formed in 1999. Also during
1999 Wiltek Inc. was merged with and into E-Sync Networks, Inc., with the effect
of (i) changing the name of the issuer, (ii) changing the state of incorporation
of the issuer and (iii) amending the Certificate of Incorporation and By-laws of
the issuer (such events, collectively, the "Reorganization") The Reorganization
was consummated on July 28, 1999. The financial statements discussed above,
represent the consolidated statements of operations and cash flows of Wiltek,
Inc. for the periods mentioned above; however, such financial statements have
been renamed to E-Sync Networks, Inc. to reflect the current name of the
Company.

         (b) LIQUIDITY

         The accompanying consolidated financial statements do not include any
adjustments relating to the recoverability and classification of recorded asset
amounts or the amounts and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern. Revenues have been
insufficient to cover costs of operations for the year ended December 31, 2000.
The Company has a working capital deficit of $1.3 million and an accumulated
deficit of $25 million. Management believes the Company's ability to continue as
a going concern is dependent upon its ability, to obtain additional financing
and to achieve increased revenue to generate sufficient cash flow to meet its
obligations on a timely basis.

         (c) RECLASSIFICATION

         In the fourth quarter of 1999, in connection with the issuance of
Series B Preferred Stock, the Company's U.K. subsidiary ("E-Sync UK") issued
3,000,000 preference shares. These preference shares were exchanged by the
holder thereof for 681,818 additional shares of the Company's Series B Preferred
Stock on July 17, 2001. The preference shares issued by E-Sync U.K. (i) had no
voting rights (other than with respect to the winding up of E-Sync U.K. and
altering the rights of such shares), (ii) had a priority in payment on a winding
up of E-Sync U.K., (iii) were not entitled to dividends, (iv) were
non-transferable, and (v) were redeemable on November 5, 2009 subject to the
satisfaction of certain conditions. For financial statement presentation
purposes, at December 31, 1999 through March 31, 2001, these securities had been
reported on the Company's stockholders' equity section of the Balance Sheet as
if the 681,818 shares of Series B Preferred Stock underlying the preference
shares were sold in lieu of the preference shares. In June 2001 it was
determined that, because these preference shares contained such a redemption
provision, these securities should not have been classified as equity on the
Company's Balance Sheet. The impact of this misclassification overstated the
Company's stockholders' equity by $3 million at December 31, 1999 through March
31, 2001. However, as indicated above, on July 17, 2001 the holder of the
preference shares exchanged these shares into Series B Preferred Stock. Although
the preference shares were subsequently exchanged, the amounts have been
reclassified in the accompanying Balance Sheet as of December 31, 2000 in
accordance with the applicable accounting literature. The following pro forma
schedule reflects the effect on stockholders' equity of this reclassification at
December 31, 2000.

                                       22
<PAGE>   23
<TABLE>
<CAPTION>
                                                                        Proforma Adjustment
                                                         As Reported     Preference Shares    Reclassified
                                                         December 31,      exchanged into     December 31,
                                                             2000        Series B Preferred       2000
                                                             ----        ------------------       ----
<S>                                                      <C>            <C>                  <C>
   E-Sync Networks, (UK) LTD  Preference Shares            $     --           $  3,000          $  3,000
                                                           --------           --------          --------
   Stockholders' Equity:
   Convertible preferred stock,
        Series A                                                 10                                   10
        Series B                                                 23                                   23
   Common stock                                                  84                                   84
   Additional paid in capital                                28,728             (3,000)           25,728
   Deferred Compensation                                        (13)                                 (13)
   Accumulated deficit                                      (25,155)                             (25,155)
   Less treasury stock at cost, 992,565 shares               (1,216)                              (1,216)
                                                           --------           --------          --------
             Total stockholders' equity (deficit)          $  2,461           $     --          $   (539)
                                                           ========           ========          ========
</TABLE>


(2)      SIGNIFICANT ACCOUNTING POLICIES

         (a)  USE OF ESTIMATES

         In preparing the Company's financial statements, management is required
to make estimates and assumptions that affect the reported amounts of assets and
liabilities, and disclosures of contingent assets and liabilities at the date of
the financial statements, as well as the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

         (b)  PRINCIPLES OF CONSOLIDATION

         The accompanying consolidated financial statements include the accounts
of the Company and its subsidiaries, E-Sync Networks (U.K.) Ltd. and Braincraft
Learning Technologies, Inc. All significant intercompany transactions have been
eliminated in consolidation.

         (c)  CASH EQUIVALENTS

         For purposes of the statement of cash flows, the Company considers all
highly liquid instruments including money market funds and certificates of
deposit with original maturities of three months or less to be cash equivalents.

         (d)  REVENUE RECOGNITION

         The Company's revenues consist of fees for Professional Services
provided to its customers and are billed on a fixed-fee or time and material
basis with contracts typically ranging from 1 to 12 months. Revenues under fixed
fee contracts are recognized using the percentage-of-completion method. Deferred
revenue represents amounts billed in excess of costs incurred and is recorded as
a liability. To the extent costs incurred and anticipated costs to complete
projects in progress exceed anticipated billings, a loss is recognized in the
period such determination is made for the


                                       23
<PAGE>   24
excess. Consulting services are invoiced mid-month and at month-end. Revenue is
recognized when services are performed.

         Managed Services consist of both fixed charges, billed in advance, and
usage based charges billed at the end of the month. Contracts for Managed
Services are typically for a one-year period. The Company recognizes revenue in
the period the services are performed. Customers are invoiced at the beginning
of the month for fixed rate services and at the end of the month for usage
sensitive services.

         (e)  EQUIPMENT

         Equipment is stated at cost less accumulated depreciation. Depreciation
is calculated using the straight line method over the estimated useful lives of
the related assets, generally ranging from three to seven years. Equipment under
capital lease obligations are depreciated over the lesser of the useful life or
the term of the lease.

         (f)  PRODUCT DEVELOPMENT

         Product development expenses include personnel and consulting costs
associated with designing, developing and testing the Company's systems and are
expensed as incurred.

         (g)  TAXES

         Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. Valuation allowances are provided for any portion of the
deferred tax assets which are not more likely than not to be realized.

         (h)  EARNINGS (LOSS) PER SHARE

         Loss per share is presented in accordance with the provisions of SFAS
No. 128, Earnings Per Share, and the Securities and Exchange Commission Staff
Accounting Bulletin No. 98. Under SFAS No. 128, basic EPS is computed by
dividing income or loss available to common stockholders by the weighted average
number of common shares outstanding for the period. Diluted EPS reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock and resulted in the
issuance of common stock. As a result of the Company's net loss, diluted net
loss per share was the same as basic net loss per share for the years ended
December 31, 2000 and 1999, since the effect of any potentially dilutive
securities would be anti-dilutive.

         Diluted net loss per common share does not include the effects of (i)
options to purchase 2,919,333 and 1,002,105 shares of common stock, for the
years ended December 31, 2000 and 1999, respectively, (ii) the issuance of
4,772,727 shares of common stock issuable upon the conversion of Series A , B
preferred stock and preference shares on an "as if" converted basis, for the
years ended December 31, 2000 and 1999, (iii) warrants to purchase 156,000
shares of common stock for the year ended 2000, as the effect of their inclusion
is anti-dilutive for each period.


                                       24
<PAGE>   25
          (i)  ADVERTISING COSTS

         Advertising and promotion costs are expensed as incurred. These costs
were $128,000 and $333,800 for the twelve months ended December 31, 2000 and
1999, respectively.

         (j)  FAIR VALUE OF FINANCIAL INSTRUMENTS; RISK CONCENTRATION

         Based on borrowing rates currently available to the Company for capital
leases with similar terms and maturities, the fair value of the Company's
capital leases approximates the carrying value. The carrying values of all other
financial instruments potentially subject to valuation risk, principally cash,
accounts receivable, notes payable and accounts payable, also approximate fair
value because of their short-term maturities.

         A significant portion of the Company's revenue is concentrated with a
few customers. During the years ended December 31, 2000 and 1999, two customers
individually accounted for more than 10% of the Company's total revenues
aggregating 27% and 26% for the years ended December 31, 2000 and 1999,
respectively. As of December 31, 2000, one customer's accounts receivable
balance was approximately 17% of the outstanding accounts receivable.

         (k)  GOODWILL AND OTHER INTANGIBLE ASSETS

         Goodwill and other intangible assets are stated net of accumulated
amortization. Goodwill and other intangible assets are being amortized on a
straight-line basis over their expected period of benefit of five years.

         (l)  IMPAIRMENT OF LONG-LIVED ASSETS

         Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-lived Assets and for Long-lived Assets to be Disposed of"
("SFAS No. 121") establishes accounting standards for the impairment of
long-lived assets, certain identifiable intangibles, and goodwill related to
those assets. Under provisions of the Statement, impairment losses are
recognized when expected future cash flows are less than the assets' carrying
value. Accordingly, when indicators of impairment are present, the Company will
evaluate the carrying value of equipment in relation to the operating
performance and future undiscounted cash flows of the underlying business. SFAS
No. 121 requires analysis of each item on an individual asset-by-asset basis,
where applicable. The amount of the impairment loss is the excess of the
carrying amount of the impaired asset over the fair value of the asset.
Generally, fair value represents the expected future cash flows from the use of
the asset or group of assets, discounted at an interest rate commensurate with
the risks involved. See Note 4 to these consolidated financial statements.

          (m) ACCOUNTING FOR STOCK-BASED COMPENSATION

         The Company has adopted Statement of Financial Accounting Standard
("SFAS") No. 123, "Accounting for Stock-Based Compensation", which permits
entities to recognize as expense over the vesting period the fair value of all
stock-based awards on the date of grant. Alternatively, SFAS No. 123 allows
entities to continue to apply the provisions of Accounting Principle Board
("APB") Opinion No. 25 and provide pro forma net earnings disclosures for
employee stock option grants if the fair-value-based method defined in SFAS No.
123 had been applied. The Company has elected to follow the accounting
prescribed by APB Opinion No. 25.

         (n)  NEW ACCOUNTING PRONOUNCEMENTS

         In June 1998, the FASB issued SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities," (SFAS 133) which establishes accounting and
reporting standards for derivative instruments, including derivative


                                       25
<PAGE>   26
instruments embedded in other contracts, and for hedging activities. SFAS No.
133, as amended by SFAS 137, (Accounting for Derivative Instruments and Hedging
Activities -- Deferral of the effective date of SFAS No. 133 - an Amendment of
SFAS No. 133) is effective for all fiscal quarters of fiscal years beginning
after June 15, 2000. In June 2000, SFAS No.138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities", was issued to provide
additional implementation guidance related to SFAS 133. These statements are not
expected to have a material effect on the Company's financial position or
results of operations as it currently does not have any derivative instruments
or hedging activities.

                  Other pronouncements issued by the FASB or other authoritative
accounting standard groups with future effective dates are either not applicable
or are not significant to the financial statements of E-Sync.

(3) BALANCE SHEET COMPONENTS

<TABLE>
<CAPTION>
Property and Equipment                                    December 31, 2000
                                                          -----------------
                                                               ($000's)
<S>                                                       <C>
Computer equipment                                              $3,785
Equipment acquired under capital leases                            633
Furniture and fixtures                                             339
Leasehold improvements                                           1,241
                                                                ------
                                                                 5,998
Less:  accumulated depreciation and amortization,
       including $506 on equipment under capital lease           2,238
                                                                ------
           Equipment, net                                       $3,760
                                                                ======
</TABLE>

<TABLE>
<CAPTION>
Accrued Expenses                                          December 31, 2000
                                                          -----------------
                                                                ($000)
<S>                                                       <C>
Salary and related benefits                                     $  644
Professional Fees                                                  270
Deferred rent                                                      224
Other accrued expenses                                              96
                                                                ------
           Total accrued expenses                               $1,234
                                                                ======
</TABLE>

(4) IMPAIRMENT OF LONG LIVED ASSETS

         On November 8, 1999, the Company acquired 100% of the outstanding stock
of Braincraft Learning Technologies, Inc. ("Braincraft") for a total purchase
price of $3.8 million. The purchase price includes (i) $250,000 of cash, (ii)
671,676 shares of E-Sync common stock valued at $2.9 million (iii) acquisition
costs of $225,000 and (iv) options valued at $542,000. The Company assigned a
value of $4.6 million to goodwill and other intangible assets, of which $910,000
and $132,000 was amortized during the years ended December 31, 2000 and 1999,
respectively. The Acquisition was accounted for as a purchase business
combination. .

         During the fourth quarter of 2000, the company committed to a plan to
discontinue the operations of its web design consulting, which was the principal
activity of Braincraft. As a result, it was determined that the goodwill
associated with Braincraft was impaired and the Company record a charge of $3.5
million to write off the balance of goodwill as of December 31, 2000. In
addition, the Company recorded a charge totaling $225,000 for minimum lease
payments and other costs to shut down these operations. The Company expects the
shut down to be completed during the second quarter of 2001.


                                       26
<PAGE>   27
(5) CAPITALIZATION

         Common Stock

         In 2000, the Company sold 540,541 shares of common stock and received
net proceeds of $1,000,000. In addition, the Company issued 208,122 shares upon
the exercise of common stock options and received net proceeds of $183,000.

         In the fourth quarter of 1999, the Company issued 75,000 shares of
common stock to an advisor for services to be performed over two years. The
$422,000 value ascribed to these shares is recorded as other assets and is being
ratably amortized over two years. For the years ended December 31, 2000 and
1999, $211,000 and $141,000 has been amortized. Such amounts are included in
non-cash compensation in the statements of operations.

         Series A Convertible Preferred Stock

         On January 28, 1999, Commercial Electronics Capital Partnership, LP
("CECAP"), and a related entity, Commercial Electronics, L.L.C. (collectively,
"Purchaser"), purchased 732,160 shares of common stock from three retiring
directors at $.85 per share. In connection therewith, the Purchaser also
purchased (i) 1,000,000 shares of Series A convertible preferred stock with no
par value, and (ii) a warrant to purchase up to 1,500,000 shares of the
Company's common stock for 18 months at a price of $1.00 per share, for an
aggregate cash consideration paid to the Company of $3,000,000. The Purchaser
exercised the warrants during 1999. The Series A convertible preferred stock is
convertible into common stock at any time at the option of the holder on the
basis of 2.5 shares of common stock for each share of preferred stock.

         In connection with the aforementioned transaction, the Purchaser became
the beneficial owner of 4,732,160 shares of the Company's authorized common
stock, representing approximately 59% of the Company's outstanding common stock
(assuming the conversion of Purchaser's preferred stock into common stock and
the full exercise of the Purchaser's warrant to purchase common stock). Such
beneficial ownership, along with the fact that the Purchaser's designees
currently constitute a majority of the Company's Board of Directors, and the
fact that Purchaser has the contractual right to retain control of the Company's
Board of Directors, constituted a change in control of the Company from the
retiring directors to the Purchaser and their director nominees. Utilization of
the Company's net tax loss carry forwards will be significantly limited as a
result of the change in control of the Company.

         Series B Convertible Preferred Stock

         In the fourth quarter of 1999, the Company issued 1,590,909 shares of
Series B Convertible Preferred Stock at $4.40 per share. The Company received
aggregate cash proceeds of $ 6.985 million from such sales, net of offering
costs ($ 7 million of gross proceeds).

         In connection with the issuance of Series B Preferred Stock, the
Company's U.K. subsidiary issued 3,000,000 preference shares. These preference
shares were exchanged by the holder thereof for 681,818 additional shares of the
Company's Series B Preferred Stock on July 17, 2001. The preference shares
issued by E-Sync U.K. (i) had no voting rights (other than with respect to the
winding up of E-Sync U.K. and altering the rights of such shares), (ii) had a
priority in payment on a winding up of E-Sync U.K., (iii) were not entitled to
dividends, (iv) were non-transferable, and (v) were redeemable on November 5,
2009 subject to the satisfaction of certain conditions. Because these preference
shares contained a redemption provision, these securities are reclassified as
mezzanine in the accompanying Balance Sheet. See Note 1 Reclassification.


                                       27
<PAGE>   28
During 2000, the Company issued an additional 80,000 shares of Series B
Convertible Preferred Stock in connection with the fourth quarter of 1999
offering of shares of Series B Convertible Preferred Stock at $4.40 per share to
accredited investors. The proceeds of $351,010 were received during the fourth
quarter of 1999 with respect to such shares.

         Any holder of Series B Preferred Stock shall have the right, at its
option, at any time and from time to time, to convert any or all of such
holder's shares of Series B Preferred Stock into one share of Common Stock for
each Series B Preferred share. Upon the third anniversary of the Issue Date,
each outstanding share of Series B Preferred Stock, or if earlier, the transfer
of any shares of Series B Preferred Stock by an initial holder to any person
other than an affiliate of such initial holder, such shares shall automatically
be converted into shares of Common Stock.

         Each share of Series B Preferred Stock entitles the holder thereof to
vote on each of the matters entitled to be voted on by holders of common stock,
voting together as a single class with other shares entitled to vote thereon.
Unless the consent or approval of a greater number of shares shall then be
required by law, the affirmative vote of the holders of at least a majority of
the outstanding shares of Series B Preferred Stock, voting as a single class,
shall be necessary to (i) authorize, increase the authorized number of shares
of, or issue any shares of any class of Senior Stock, (ii) amend, alter or
repeal the Certificate of Incorporation so as to affect the shares of Series B
Preferred Stock adversely, (iii) authorize or issue any security convertible
into Senior Stock or (iv) effect an Extraordinary Event (as defined therein).

         Liquidation Preference

         In the event of any liquidation or winding up of the Company, holders
of Series A and B convertible preferred stock will be entitled to an amount
equal to the applicable purchase price per share plus any accrued but unpaid
dividends.

(6)  BENEFIT PLANS

         (a)  401(K) PLAN

         The Company established a 401(k) defined contribution plan covering
substantially all eligible employees. An eligible employee may elect to reduce
his taxable compensation and have the amount of any such reduction contributed
to the Plan on the employee's behalf. The Company may also make a discretionary
matching contribution to the Plan. During the years ended December 31, 2000 and
1999, the Company's matched contribution was 15%.

         An eligible employee may elect to reduce his taxable compensation by
15% (but not more than $10,500 per year or such greater amount as may be set by
the Internal Revenue Service). The amount of the reduction is called elective
deferral. The Company will then contribute the elective deferral to the Plan on
the employee's behalf. The Company's contributions to the plan for the years
ended December 31, 2000 and 1999, were $44,000 and $37,000, respectively.

         (b) STOCK OPTIONS

         In May 2000, the shareholders of the company approved an amendment to
the Company's 1999 Long-term Incentive Plan to increase the number of shares of
common stock available under the plan to 4,500,000 shares. At December 31, 2000,
2,798,833 shares were outstanding and 1,668,545 shares were available for future
grants. Under prior stock option plans 121,000 shares were outstanding, no
shares are available for future grants. Vesting under the 1999 plan ranges from
immediately to three years.

         In December 1999, the Company issued options to purchase 40,000 shares
of common stock, at an exercise price of $4.20 per share, to a consultant in
connection with acting as a technical advisor for the Company's U.K. operations
for


                                       28
<PAGE>   29
three years. The Company issued an additional 35,000 options to this consultant
at exercise prices ranging from $6.375 to $11.125 in the quarter ended June 30,
2000. During the quarter ended September 30, 2000, the consulting agreement was
terminated and the options were cancelled. As a result, the company reversed
approximately $337,000 of deferred compensation. During 2000, the Company issued
options to purchase 4,000 shares of common stock to a consultant in exchange for
providing certain investor relation services. These options have an exercise
price of $15.00, are exercisable for a period of ten years and vest ratably over
the consultant's period of service. The Company accounts for these options in
accordance with Emerging Issue Task Force Abstract No. 96-18, "Accounting for
Equity Instruments That are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling Goods or Services." Pursuant to EITF 96-18, the Company
values the options using a Black-Scholes pricing model. The value ascribed to
these options is adjusted at each intervening balance sheet date to the
then-current market value. The cost is being amortized over the applicable
vesting periods. The Company has amortized $97,000 and $14,000 of the deferred
compensation during the years ended December 31, 2000 and 1999, respectively.
Such amounts are included in non-cash compensation in the consolidated
statements of operations.

         Also during 2000, the Company issued to various consultants fully
vested options to purchase 48,000 shares of common stock, at exercise prices
from $0.01 to $1.8125 per share in exchange for providing various operational
advice. These options are exercisable for a period of ten years. The Company
valued these options using the Black-Scholes pricing model and they will be
amortized over the applicable service periods. The Company amortized
approximately $77,000 during the year ended December 31, 2000. Such amounts are
included in non-cash compensation in the statements of operations.

         During May 2000, the Company issued fully vested options to purchase
50,000 shares of common stock, at an exercise price of $4.20 per share, to a
consultant for services performed. These options are exercisable for a period of
ten years. The Company valued these options using the Black-Scholes pricing
model. For the year ended December 31, 2000, the $318,000 ascribed to these
options is included in non-cash compensation in the consolidated statements of
operations.

         During 2000, the Company granted employees options to purchase 965,135
shares of common stock at exercise prices ranging from $0.2031 to $0.4600 per
share. These options vest immediately and are exercisable for ten years.
Compensation expense was recorded for the difference between the exercise price
and fair value at the grant date, totaling approximately $683,000. Such amounts
are included in non-cash compensation in the statements of operations.

         During the year ended December 31, 2000, the Company granted options at
the then fair value, to purchase approximately 819,000 shares, of common stock
to employees at prices ranging from $1.84 to $6.38. These options are
exercisable for a ten year period and vest over three years. In addition, during
2000, the Company granted options to purchase 737,000 shares of common stock, at
an exercise price of $1.16, the then current fair value, to the Company's CEO.
These options are exercisable for a period of ten years. Approximately 246,000
shares vest in January 2001, with the balance of approximately 491,000 shares
vesting over three years.

         The following table summarizes the options granted under the plan for
the period from December 31, 1998 through December 31, 2000:


                                       29
<PAGE>   30
<TABLE>
<CAPTION>
                                                                Weighted Average
                                                 Shares          Exercise Price
                                                 ------          --------------
<S>                                             <C>             <C>
Outstanding at 12/31/98..................         760,300             $0.48
   Granted...............................         700,605             $4.02
   Exercised.............................        (443,800)            $0.43
   Expired / Canceled....................         (15,000)            $0.70
                                                ---------
Outstanding at 12/31/99..................       1,002,105             $2.97
   Granted...............................       2,657,879             $2.23
   Exercised.............................        (208,122)             $.87
   Expired / Canceled....................        (532,529)            $4.65
                                                ---------
Outstanding at 12/31/00..................       2,919,333             $2.15
                                                ---------
</TABLE>

         At December 31, 2000 and 1999, there were 1,305,976 and 323,189 options
that were exercisable.

         The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." The Company accounts for its option plan under APB Opinion No.
25, "Accounting for Stock Issued to Employees," and related interpretations and,
accordingly, no compensation costs have been recognized for the employee stock
option plan. Had compensation costs for the Company's employee stock option plan
been determined based on the fair value at the grant date for awards, net
earnings and earnings per share would have been reduced as follows:

<TABLE>
<CAPTION>
                            DECEMBER 31, 2000    DECEMBER 31, 1999
                            -----------------    -----------------
<S>                         <C>                  <C>
   NET EARNINGS
   As reported                 $  (13,432)          $   (7,163)
   Pro Forma                   $  (15,675)          $   (9,791)

   EARNINGS PER SHARE
   As reported
         Basic                 $    (1.96)          $    (1.51)
         Diluted               $    (1.96)          $    (1.51)

   Pro Forma
         Basic                 $    (2.29)          $    (2.06)
         Diluted               $    (2.29)          $    (2.06)
</TABLE>

         The resulting effect on the pro forma net loss per common share for the
years ended December 31, 2000 and 1999 is not likely to be representative of the
effects on the net loss on a pro forma basis in future years, because the pro
forma results include the impact of only two years of grants and related
vesting, while subsequent years will include additional grants and vesting.


                                       30
<PAGE>   31
         The following table summarizes information about the stock options at
December 31, 2000.

<TABLE>
<CAPTION>
                              OPTIONS OUTSTANDING                                               OPTIONS EXERCISABLE
  -----------------------------------------------------------------------------          ---------------------------------
     Range of               Number         Weighted Average        Weighted                  Number           Weighted
     Exercise           Outstanding at        Remaining             Average              Exercisable at        Average
      Prices               12/31/00        Contractual Life      Exercise Price             12/31/00        Exercise Price
      ------               --------        ----------------      --------------             --------        --------------
<S>                     <C>                <C>                   <C>                     <C>                <C>
  $0.01 - $0.56            1,095,695             9.39                $0.23                  1,094,028           $0.23
  $1.16 - $1.84              853,914             9.94                $1.25                     20,000           $1.50
  $2.98 - $3.31               81,470             9.02                $3.16                     12,090           $2.98
  $4.12 - $4.62              404,484             8.87                $4.22                    168,161           $4.21
  $5.01 - $6.38              483,770             9.33                $6.17                     11,697           $5.73
                           ---------                                                        ---------
                           2,919,333             9.30                $2.15                  1,305,976           $0.83
                           =========                                                        =========
</TABLE>


(7)  NOTES PAYABLE

         During August 2000, the Company received $1,000,000 from affiliates in
connection with the issuance of subordinated term notes payable due on August
15, 2001. The notes bear an interest rate of 12% per annum. The principal
balance is payable at maturity, however, in the event the Company receives
proceeds in excess of $3,000,000 from the sale of securities, the holders may
demand prepayment of all or any part of the then outstanding balance. At
December 31, 2000 the outstanding balance net of discount was $892,000.

         In connection with the issuance of these notes, the Company issued
warrants to purchase 30,000 shares of the Company's common stock at exercise
prices ranging from $3.85 to $5.50 per share. The warrants are transferable and
expire on August 15, 2005. A value of approximately $167,000 was ascribed to
these warrants using the Black-Scholes pricing model. The value of the warrants
was recorded as a reduction to the notes payable with a corresponding increase
to additional paid-in capital. This value is being amortized as interest expense
over the one-year term of the notes. For the year ended December 31, 2000, the
Company amortized approximately $58,000, which is included in interest expense
in the consolidated statement of operations.

         During December 2000, the Company received $850,000 from an affiliate
in connection with the issuance of subordinated term notes payable. The notes
bear an interest rate of 10% per annum. The principal balance and interest is
payable at the maturity date, May 31, 2001. The note and accrued interest will
automatically convert in the event the Company receives proceeds in excess of
$3,500,000 from the sale of securities under the same terms as such sale. In the
event the note is not automatically converted and the note is not repaid prior
to May 31, 2001 the holder may convert a portion of the note into common stock
at $0.25 per share, not to exceed 600,000 shares. At December 31, 2000, the
outstanding balance net of discount was $762,000. Subsequent to year end the
Company received an additional $150,000 under the same terms and conditions.

         In connection with the issuance of these notes, the Company issued
warrants to purchase 108,000 shares of the Company's common stock at an exercise
price of $1.25 per share. The warrants are transferable and expire on December
22, 2005. A value of approximately $88,000 was ascribed to these warrants using
the Black-Scholes pricing model. The value of the warrants was recorded as a
reduction to the notes payable with a corresponding increase to additional
paid-in capital. This value is being amortized as interest expense over the term
of the notes.

         In September 2000, the Company entered into a one-year Financing
Agreement with a bank. The maximum available under the facility was $1.5
million. The facility contained limits on borrowing based upon stipulated
percentages of accounts receivable and selected financial ratios. During
December 2000 the Company repaid amounts outstanding and terminated the line. In
connection with the Financing Agreement as modified, the Company issued


                                       31
<PAGE>   32
warrants to purchase 18,181 shares of the Company's Common Stock at an exercise
price of $2.00 per share, the fair value of these options was de minimus. The
warrants are transferable and expire on September 22, 2007.

         The Company had a Loan and Security Agreement with a commercial bank
for a line of credit of $750,000 for working capital needs plus an additional
term loan of up to $100,000 for purchases of equipment. The working capital line
of credit was repaid and terminated in the fourth quarter of 1999. Advances
outstanding at December 31, 1998 were converted to a term loan. The term of the
loan was for thirty months payable in equal monthly principal payments of
one-thirtieth of the outstanding balance at December 31, 1998, plus interest
payable monthly commencing January 31, 1999, at one-half percent above prime on
the outstanding principal balance. The Company has repaid the amount outstanding
under the term loan during the third quarter of 2000.

         The Company's subsidiary, Braincraft Learning Technologies Inc.,
("Braincraft") also has an outstanding line of credit with a commercial bank of
$100,000 bearing interest at 2% above the bank's prime rate. The amount
outstanding under the line of credit at December 31, 2000 was approximately
$62,000.

(8) INCOME TAXES

         For the year ended December 31, 2000 and 1999 there is no provision for
federal, state or local income taxes since the Company incurred losses during
those periods.

Significant components of the Company's deferred tax asset as of December 31,
2000 are as follows:

<TABLE>
<S>                                                                         <C>
                Net operating loss carry-forward                            $ 7,092,940
                Investment tax credit carry-forward and other, net              135,000
                                                                            -----------
                Deferred tax asset                                            7,227,940
                   Less valuation allowance                                  (7,227,940)
                                                                            -----------
                Net deferred tax assets                                     $         0
                                                                            ===========
</TABLE>


         At December 31, 2000, the Company's U.S. operating loss carry-forward
for Federal tax purposes approximated $18,458,000 and $13,680,000 for state tax
purposes. The Company's U.K. operating loss carry-forwards are approximately
$1,620,000 for tax purposes as of December 31, 2000. The expected Federal
Statutory rate is 34%. The Company has established a valuation allowance to
reduce its net deferred tax asset to zero at December 31, 2000 because current
evidence indicates that it is more likely than not that the deferred tax asset
will not be realized.

         The Tax Reform Act of 1986 enacted a complex set of rules (Internal
Revenue Code Section 382) limiting the utilization of net operating loss
carry-forwards to offset future taxable income following a corporate "ownership
change." Generally, this occurs when there is a greater than 50% change in
ownership. As discussed in Note 5 a change in control occurred in 1999.

(9) MEDICAL BENEFITS OBLIGATION

         Pursuant to the 1999 Purchase Agreement, the Company signed a "Medical
Benefit Letter" which obligates the Company to provide medical benefits to the
three retiring directors and their spouses until they reach age 65 (dates
ranging from September 12, 2004 to December 29, 2009). The Company's maximum
obligation under the "Medical Benefit Letter" is $400,000. The Company initially
recorded a liability approximating $260,000 representing the net present value
of the maximum $400,000 medical benefit obligation. The Company was also
required to deposit $250,000 in a Medical Escrow Fund to secure a portion of the
Company's obligation under the "Medical Benefit Letter". The Company has
classified the deposit of $250,000 as "other assets" in the accompanying balance
sheet. The Company is


                                       32
<PAGE>   33
entitled to withdraw from the medical escrow fund medical benefits paid pursuant
to the "Medical Benefit Letter" on a quarterly basis. Such payments totaled
$19,756 during the twelve months ended December 31, 2000, and were charged
against the medical benefit obligation liability.

(10) COMMITMENTS AND CONTINGENT LIABILITIES

         The Company entered into various capital lease agreements in prior
years for computer and other equipment. The lease terms vary from 36 to 39
months, with interest rates ranging from 8.77% and 35.08%.

         The related future lease minimum payments as of December 31, 2000 are
as follows:

<TABLE>
<CAPTION>
Year Ending December 31                                                    Capital Leases
-----------------------                                                    --------------
<S>                                                                        <C>
       2001                                                                   $54,000
       2002                                                                    10,000
                                                                              -------
Net minimum lease payment                                                     $64,000
Amount representing interest (weighted average interest rate of 13%)            6,000
                                                                              -------
Present value of net minimum capital lease payments                           $58,000
Less current portion                                                           10,000
                                                                              -------
Obligations under capital leases, excluding current portion                   $48,000
                                                                              =======
</TABLE>


         Total rental expenses for office space, equipment and automobiles
included in the results of operations for fiscal years ended December 31, 2000
and 1999, were $870,000 and $720,000 respectively. Minimum rental commitments
under non-cancelable operating leases covering space and equipment are as
follows:


<TABLE>
<CAPTION>
                           Year                       Rental Commitments
                           ----                       ------------------
<S>                                                   <C>
                           2001                           $  517,000
                           2002                              338,000
                           2003                              271,000
                           2004                              267,000
                           2005                              308,000
                                                          ----------
                                                          $1,701,000
                                                          ==========
</TABLE>


(11) BUSINESS SEGMENT INFORMATION

         The FASB issued Statement of Financial Accounting Standards No. 131,
Disclosures about Segments of an Enterprise and Related Information (SFAS No.
131) in June 1997. SFAS 131 supersedes FASB Statement No. 14, Financial
Reporting for Segments of a Business Enterprise, but retains the requirement to
report information about major customers. SFAS 131 replaces the "industry
segment' concept of Statement 14 with a "management approach" concept as the
basis for identifying reportable segments. The management approach is based on
the way that management organizes the segments within the enterprise for making
operating decisions and assessing performance. Consequently, the segments are
evident from the structure of the enterprise's internal organization. It focuses
on financial information that an enterprise's decision makers use to make
decisions about the enterprise's operating matters.

         Serving its medium and large business including Fortune 1000 customers,
the Company offers secure online messaging, directory and fax services, web
application development services, hosted communications and infrastructure
integration solutions that link business partners via the web. The operations of
the Company are conducted through two


                                       33
<PAGE>   34
business segments primarily within the continental United States and the United
Kingdom. Descriptions of the business segments' services and operations are as
follows:

Managed Services

         Managed Services provides customers with standards-based hosting
services for e-business and portal applications that are secure, scalable and
reliable. These services are supported by our state-of-the-art data center
staffed 24x7 and guaranteed system service level commitments. E-Sync Networks
focuses on availability and serviceability by providing extensive redundancy and
proactive monitoring of system level events, which results in a premium pricing
revenue generation model.

         The Managed Services business delivers its services through three
products, TotalMail, Directory and Messaging Services, and Hosting Services.
TotalMail offers outsourced and web-based integration of e-mail with voice mail,
paging, telephony, calendaring, public and private folders, directory services,
distribution lists, and virus scanning. TotalMail also provides portable access
and security with unique cardholder data to Information Exchange Services.
Directory and Messaging Services connects varied messaging environments
providing full synchronization between disparate systems and standards, in
addition to meta-directory solutions that allow a single entry point for
information to be shared by multiple platforms. As an enhancement, messaging
integration, which connects users of disparate messaging applications (Lotus
Notes, cc:Mail, Profs, etc.) within an organization, can be implemented over
intranets, extranets, and virtual private networks (VPNs). Fax services, which
allows conversion, encryption and delivery of faxes to e-mail or e-mail to faxes
without any additional hardware or software, includes (i) Application to Fax
which simultaneously delivers computer-generated files from mainframe or
PC-based applications to one or many facsimile devices worldwide, (ii) Mailfax,
which sends faxes and attachments via e-mail, and (iii) Inbound Fax, which
allows receipt of inbound faxes at the desktop via e-mail. Hosting Services,
whereby the Company will maintain customers' applications remotely at one of its
sites using the latest technologies, provides security, redundancy, and data
backup for the client's applications. The Company uses public key infrastructure
(PKI) technology to deliver digital certificates, encryption keys, and
SmartCards for optimum secure messaging and hosting.

Professional Services

         Professional Services provides consulting services in the areas of
Network Design and Integration, Security Solutions, and BackOffice(R)
Consulting. The Network Design and Integration area provides expert resources as
an extension of a client's IT office to assess information, messaging, and
connectivity needs, evaluate existing infrastructure architecture for
adaptability to change, define and test migration processes, execute and
document phased migration procedures for disparate messaging platforms, and
prepare enterprise-wide implementation plans. The Security Solutions area
provides the ability to exchange sensitive documents and private information
securely with confidence and reliability. With Large-Scale Anti-Virus Protection
capabilities and e-mail anti-virus filtering, the Company provides full
protection for applications, data, messaging, and user systems across entire
networks. BackOffice(R) Consulting provides architecture, design, and
implementation services. The Company is a Microsoft Solutions Provider Partner
and is uniquely qualified to conduct application analysis and development,
migration planning and implementation, and support for Windows NT, Windows 2000,
Exchange, Systems Management Server (SMS), SNA Server, and Internet/intranet
deployment.

         Through the Company's Braincraft subsidiary, which is reported as part
of Professional Services, the company provides business solutions that use
digital technologies to enhance communications and commerce between businesses
and their consumers, suppliers, employees and other partners. Braincraft
provides integrated, end-to-end solutions. Braincraft's consultants carry out
every aspect of a solution from strategic consulting to design of information
architectures and user-interfaces to integration of legacy systems utilizing a
wide variety of platforms, including the World Wide Web, wireless, broadband and
a variety of digital devices and information appliances, including desktop PCs,
mobile phones, pagers and personal digital assistants.

                                       34
<PAGE>   35
         Identifiable assets by segment are those assets that are used in the
operations of each segment as well as the accounts receivable generated by each
segment. Corporate assets consist primarily of cash and cash equivalents, short
term investments, prepaid expenses and corporate furniture, fixtures, and
equipment. Capital expenditures are comprised primarily of additions to data
processing equipment, furniture and fixtures, and leasehold improvements.

The following table presents the Company's business segment financial
information, in thousands:


<TABLE>
<CAPTION>
                                                                   DECEMBER 31, 2000  DECEMBER 31, 1999
                                                                   -----------------  -----------------
REVENUE:
<S>                                                                <C>                <C>
   Managed services                                                     $  4,004           $ 3,620
   Professional services                                                   5,753             3,870
                                                                        --------           -------
      Total revenues                                                    $  9,757           $ 7,490
                                                                        ========           =======
OPERATING INCOME (LOSS):
   Managed services                                                     $ (3,359)          $(3,788)
   Professional services                                                  (6,062)           (3,284)
                                                                        --------           -------
   Operating income (loss) from segments                                  (9,421)           (7,072)
   Impairment and restructuring charge (professional services)            (3,734)               --
   Corporate expenses, net                                                  (225)              (97)
   Interest (expense) income, net                                            (52)                6
                                                                        --------           -------
      Net earnings (loss)                                               $(13,432)          $(7,163)
                                                                        ========           =======
DEPRECIATION AND AMORTIZATION:
   Managed services                                                     $    359           $   202
   Professional services                                                      70                34
   Corporate                                                               1,337               292
                                                                        --------           -------
      Total depreciation and amortization                               $  1,766           $   528
                                                                        ========           =======
CAPITAL EXPENDITURES:
   Managed services                                                     $    335           $   927
   Professional services                                                      64                70
   Corporate                                                                 608             1,955
                                                                        --------           -------
      Total capital expenditures                                        $  1,007           $ 2,952
                                                                        ========           =======
</TABLE>


<TABLE>
<CAPTION>
IDENTIFIABLE ASSETS AT:                                            DECEMBER 31, 2000  DECEMBER 31, 1999
-----------------------                                            -----------------  -----------------
<S>                                                                <C>                <C>
   Managed services                                                     $  2,744           $ 2,071
   Professional services                                                     846               708
                                                                        --------           -------
      Total assets for reportable segments                                 3,590             2,779
   Corporate                                                               3,724            14,222
                                                                        --------           -------
      Total assets                                                      $  7,314           $17,001
                                                                        ========           =======
</TABLE>


                                       35
<PAGE>   36
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None

                                    PART III


ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information required by this Item 9 is incorporated herein by reference from the
definitive proxy statement of E-Sync Networks, Inc. to be filed with the
Securities and Exchange Commission ("SEC") within 120 days following the end of
the Company's fiscal year ended December 31, 2000, or May 1, 2001, relating to
its 2000 Annual Meeting of Stockholders.

ITEM 10. MANAGEMENT REMUNERATION AND TRANSACTIONS

Information required by this Item 10 is incorporated herein by reference from
the definitive proxy statement of E-Sync Networks, Inc. to be filed with the
Securities and Exchange Commission ("SEC") within 120 days following the end of
the Company's fiscal year ended December 31, 2000, or May 1, 2001, relating to
its 2000 Annual Meeting of Stockholders.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information required by this Item 11 is incorporated herein by reference from
the definitive proxy statement of E-Sync Networks, Inc. to be filed with the
Securities and Exchange Commission ("SEC") within 120 days following the end of
the Company's fiscal year ended December 31, 2000, or May 1, 2001, relating to
its 2000 Annual Meeting of Stockholders.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See the information set forth in the section entitled "Certain Relationships and
Related Transactions" in the 2001 Proxy Statement, which is incorporated herein
by reference.


                                       36
<PAGE>   37
                                     PART IV


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

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

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit                                                                      Location of exhibit in sequential
Number                          Description                                      numbering system
------                          -----------                                      ----------------
<S>       <C>                                                        <C>
2.1       Agreement and Plan of Merger, dated as of September 27,    Incorporated by reference from Exhibit
          1999, by and among E-Sync Networks, Inc., Braincraft       2.1 of Registrant's Form 8-K dated
          Learning Technologies, Inc., BLT Acquisition Corp., Dan    November 8, 1999
          Stechow and Kevin Marth.

2.2       Amendment No. 1 to the Agreement and Plan of Merger,       Incorporated by reference from Exhibit
          dated as of November 8, 1999, by and among E-Sync          2.2 of Registrant's Form 8-K dated
          Networks, Inc., Braincraft Learning Technologies, Inc.,    November 8, 1999
          BLT Acquisition Corp., Dan Stechow and Kevin Marth.

2.3       Securities Purchase Agreement, dated as of January 28,     Incorporated by reference from Exhibit
          1999, by and among Wiltek, Inc., Commercial Electronics    2.1 of Registrant's Form 8-K dated
          Capital Partnership, L.P., and Commercial Electronics,     January 28, 1999
          L.L.C.

2.4       Stock Purchase Agreement, dated as of January 28, 1999,    Incorporated by reference from Exhibit
          by and among Jay Fitzpatrick, Boris Frenkel, F. Spencer    2.2 of Registrant's Form 8-K dated
          Pooley, Commercial Electronics Capital Partnership, L.P.   January 28, 1999
          and Commercial Electronics, L.L.C

2.5       Stock Purchase Agreement dated as of October 31, 2000,     Previously filed
          by and among E-Sync Networks Inc. and David Mack.

3.1       Articles of Incorporation                                  Incorporated by reference from
                                                                     Registrant's Definitive Proxy
                                                                     Statement dated June 23, 1999

3.2       Certificate of Amendment of Certificate of Incorporation   Incorporated by reference from Exhibit
          setting forth the terms of the "Senior Convertible         3.2 of Registrant's Form 8-K dated
          Series A Preferred Stock," as filed with the Secretary     January 28, 1999
          of the State of the State of Connecticut on January 26,
          1999.

4.1       Certificate of Designations, Preferences and Rights        Incorporated by reference from the
          of Senior Convertible Series B Preferred Stock of E-Sync   Registrants form 10KSB dated December
          Networks, Inc.                                             31, 1999

4.2       Amended and Restated Registration Rights Agreement,        Incorporated by reference from the
          dated as of November 1, 1999, among Commercial             Registrants form 10KSB dated December
          Electronics Capital Partnership, L.P., Commercial          31, 1999
          Electronics, L.L.C., the New Purchasers listed therein,
          and E-Sync Networks, Inc.

4.3       Subordinated Term Promissory Note dated August 15, 2000    Incorporated by reference from the
          between E-Sync Networks, Inc. and Michael P. Schulhof      Registrants form 10QSB dated September
                                                                     30, 2000

4.4       Subordinated Term Promissory Note dated August 15, 2000    Incorporated by reference from the
          between E-Sync Networks, Inc. and John C. Maxwell          Registrants form 10QSB dated September
                                                                     30, 2000
</TABLE>


                                 37
<PAGE>   38
<TABLE>
<S>       <C>                                                        <C>
4.5       Transferable Warrants to Purchase Common Stock of E-Sync   Incorporated by reference from the
          Networks, Inc. dated August 15, 2000, issued to Michael    Registrants form 10QSB dated September
          P. Schulhof                                                30, 2000

4.6       Transferable Warrants to Purchase Common Stock of E-Sync   Incorporated by reference from the
          Networks, Inc. dated August 15, 2000, issued to John C.    Registrants form 10QSB dated September
          Maxwell                                                    30, 2000

4.7       Accounts Receivable Financing Agreement Between E-Sync     Incorporated by reference from the
          Networks, Inc. and Silicon Valley Bank dated September     Registrants form 10QSB dated September
          22, 2000.                                                  30, 2000

4.8       Warrant to Purchase Common Stock of E-Sync Networks, Inc   Incorporated by reference from the
          dated September 22, 2000 issued to Silicon Valley Bank     Registrants form 10QSB dated September
                                                                     30, 2000

4.9       Amended and Restated Convertible Term Promissory Note      Previously filed
          dated December 22, 2000, between E-Sync Networks, Inc.
          and CE Capital Partnership, L.P.

4.10      Transferable Warrants to Purchase Common Stock of E-Sync   Previously filed
          Networks, Inc. dated December 22, 2000, issued to CE
          Capital Partnership, L.P.

10.1      Form of Employment Agreement between the Registrant and    Previously filed
          Michael W.G.Fix

10.3      Office Lease, dated as of March 25, 1999, between          Incorporated by reference from the
          Fairhaven Investors Limited Partnership and Wiltek, Inc.   Registrants form 10KSB dated December
                                                                     31, 1999

21        List of the Registrant's subsidiaries                      Incorporated by reference from the
                                                                     Registrants form 10KSB dated December
                                                                     31, 1999

23        Consent of KPMG LLP                                        Filed herewith
</TABLE>


         1. (b) Reports on Form 8-K -None


                                       38
<PAGE>   39
                                   Signatures

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

                                         E-Sync Networks, Inc.

                                         By:



                                         /s/ Michael A. Clark
                                         ---------------------------------------
                                         Michael A. Clark
                                         President and COO

                                         /s/ Thomas Wikander
                                         ---------------------------------------
                                         Thomas Wikander
                                         Controller (Chief Accounting Officer)

Date:  September 5, 2001

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 registrant and
in the capacities and on the date indicated:



/s/ Michael A. Clark                               Date: September 5, 2001
---------------------------------
Michael A. Clark
Director

/s/ John C. Maxwell III                            Date: September 5, 2001
---------------------------------
John C. Maxwell III
Director

/s/ Graeme MacLetchie                              Date: September 5, 2001
---------------------------------
Graeme MacLetchie
Director

/s/ Nathan Gantcher                                Date: September 5, 2001
---------------------------------
Nathan Gantcher
Director

/s/ Stephen D. Grubbs                              Date: September 5, 2001
---------------------------------
Stephen D. Grubbs
Director


                                       39