UNITED STATES
                    SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549
                          ----------------------

                               FORM 10-KSB
                           ---------------------

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

                         For the fiscal year ended December 31, 1998

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

               For the transition period from  ___________ to __________

                      Commission File Number 0-26790

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

                   Delaware                            87-0461856
         -------------------------------  -----------------------------------
        (State or other jurisdiction of   (I.R.S. Employer Identification No.)
        incorporation or organization)

                                15502 Mosher
                              Tustin, CA 92780
                  -----------------------------------------
                   (Address of principal executive offices)
          Issuer's telephone number, including area code: (714)258-1900


  Securities registered pursuant to Section 12(b) of the Act:  None

  Securities registered pursuant to Section 12(g) of the Act:  Common Stock,
   $0.001 par value

        Check whether the issuer (1) has 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  No X

        Check if there is no disclosure of delinquent filers in response to
  Item 405 of Regulation S-B contained in this form, and no disclosure will
  be contained, to the best of registrant's  knowledge, in  definitive  proxy
  or information statements incorporated by reference in Part III of this Form
  10-KSB or any amendment to this Form 10-KSB. |_|

        The issuer's revenues for the fiscal year ended December 31, 1998 were
  $203,571.

        As of June 21, 1999, 9,106,840 of the issuer's common shares were
  issued and outstanding, approximately 4,598,409 of which were held by
  non-affiliates. As of June 21, 1999, the aggregate market value of shares
  held by non-affiliates was approximately $13,381,370 based upon the closing
  bid and asked quotation on the OTC Bulletin Board.


                     DOCUMENTS INCORPORATED BY REFERENCE

       None.

           Transitional Small Business Disclosure Format: Yes_____ No X



                                     PART I

 ITEM 1.  BUSINESS

        eSynch Corporation(the "Company")formerly Innovus Corporation
 "Innovus"), had been engaged in the sale of multimedia authoring and
 presentation software, with related templates and media packages since
 inception and to approximately May1998. Innovus moved operations from
 Salt Lake City, Utah, May 1998 to Newport Beach, California. On August 5,
 1998 Intermark Corporation ("Intermark") was reorganized into Innovus
 whereby the Intermark shareholders became the majority shareholders of
 the Company. Intermark has been engaged in software marketing services
 from its inception through August 1998. By shareholder action, Innovus
 changed its name to eSynch Corporation on November 9,1998.

        The primary activities of eSynch, the consolidated company, have
 consisted of raising capital and limited retail and turnkey sales of
 software and related marketing services through distribution channels
 and through the Internet. The Company has currently under development
 and in limited operation an electronic software distribution system
 ("ESD") through the Internet.

        The Sales of Innovus Multimedia, the wholly owned subsidiary
 of Innovus, and related products during 1998 and 1997 were minimal,
 despite the Company's efforts to  re-focus the target market and
 re-price the software. Due to lack of resources, Innovus Multimedia
 ceased active operations in March 1998. The Company has no plans to
 market or sell the Innovus Multimedia products.

        On November 17, 1998, eSynch acquired Softkat Inc. and on
 May 25, 1999 eSynch sold Softkat Inc. Softkat Inc. ("Softkat")
 published, distributed and sold non-proprietary software through
 national and regional retailers. Sales for the products were minimal
 for the period from November 17, 1998 through December 31, 1998.
 Softkat was sold on May 25, 1999 which was consistent with the Company's
 decision to further strengthen its focus of Electronic Software
 distribution and e-commerce. The Company believed that the Softkat
 business could not be economically converted to one that emphasizes
 electronic software distribution over traditional physical goods
 distribution, and determined that Softkat's financial condition and
 prospects generally were poorer than anticipated, including matters
 presently in litigation that were not known to the Company prior to
 the Softkat acquisition.

 Following the end of the year, the Company acquired Kiss Software
 Corporation. Kiss is a developer and publisher programs such as: Modem
 Wizard, ShortCuts, Speed Surfer Internet Toolbox Undo and Recover Toolbox.


 Company Strategy

        The Company has since August 1998 focused its business on its ESD
 product, Internet utility software products and the acquisition of related
 Internet e-commerce companies.

        Sales and distribution of digital content is an important factor in
 the success of the electronic commerce arena, especially since digital
 content can be delivered instantly. eSynch Corporation is a pioneer in this
 area and has developed highly scalable and powerful ESD technologies that
 enable digital content to be downloaded fast and securely. Although the
 Company's ESD technology is still in development, there is potential
 for its current ESD solutions to grow and mature. This  is intended to be
 accomplished by providing valuable features such as software rentals,
 pay-per-use options, feature licensing, both audio and video, and software
 subscriptions. The amount of growth depends on the flexibility of current
 ESD architectures. The Company believes that eSynch's proprietary software
 maintains the flexibility needed for growth, while providing ESD solutions
 relevant to resellers.

        With the influx of online users and their demand for real-time
 satisfaction, Electronic Software Distribution represents the maturing of
 the computer industry by providing secure and fast delivery of software
 products and seems to be becoming the software acquisition method of
 choice for Internet users.

        The Company's belief is that each computer with a connection to the
 Internet is a potential customer. This is particularly important with
 respect to the planned growth of the Company's worldwide distribution.
 Traditional retail outlets are limited in the range of products they can
 carry simply by virtue of having limited shelf space. The Web does not
 have such space limitations.

        In addition, the Company is currently seeking high-tech Internet
 software companies for a roll up strategy. Company profiles are focused
 on high tech Internet and utility software products that the Company will
 sell through its distribution channels.  At this time no acquisitions are
 at the likely or committed stage, and no assurances of successful future
 acquisitions are intended.

 Marketing and Sales

        During 1998 the Company's Marketing and sales efforts were focused
 on publishing high technology Internet software. eSynch owns titles such
 as: WebSnake, CoolCat and a proprietary Electronic Software Distribution
 system, eSynchESDtm currently under development.

 In addition to sales through traditional retail, the Company has been
 pursuing new and innovative ways to sell and market its software using ESD
 and the Internet. eSynch's proprietary software produces several
 advantages over traditional retail. For instance, since customers are not
 sold a physical product, there are no costs associated with physical goods.
 The Company's system should allow a series of products to evolve into ESD
 solutions quickly and naturally.

 The technology required to facilitate electronic commerce in the consumer
 market is a subset of the technology required to service the corporate
 market because the corporate market requires solutions to problems such as
 network licensing and the accompanying pricing and management issues. The
 Company's ESD system is being designed as a complete solution in each
 market.

 Competition

          The markets for the Company's products are highly competitive and
 are characterized by pressures to reduce prices, incorporate new
 features and accelerate the release of new product versions.  A number of
 companies currently offer products that compete directly or indirectly with
 one or more aspects of the Company's products.

 Competitors or new competitors could develop a product, which competes with
 all aspects of the Company's products. Most current and potential
 competitors are larger, better established, and have greater financial
 resources than the Company. Such competitors will have the ability to more
 aggressively market and price their products than the Company. Competitors
 and potential competitors include virtually all software manufacturers and
 distributors, especially distributors of software via the Internet such as
 Beyond.Com, Digital River, and Amazon.com.

 Proprietary Rights

          The Company regards certain features of its products as
 proprietary and relies on a combination of copyright, trademark and trade
 secret laws, confidentiality procedures and contractual provisions to
 protect its proprietary information. The Company holds no patents applicable
 to its business and has no patent applications pending. The Company seeks to
 protect its products and related documentation and other written materials
 under trade secret and copyright laws (as described below) which afford
 only limited protection, and are dependent on numerous factors.  The
 Company seeks to protect its product names under common law trademark and
 unfair competition laws, although none of the Company's product names are
 registered trademarks.  Despite the Company's efforts to protect its
 proprietary rights, unauthorized parties may attempt to copy aspects of the
 Company's products or obtain and use information that the Company regards
 as proprietary.


 Employees

        The Company has eighteen full time employees as of June 15, 1999. Of
 the total employees, 5 are engaged in management and administration and
 4 in sales and marketing. The Company believes its relationship with its
 employees to be good.

 Company History

         The Company was incorporated in 1988 as a Delaware corporation.
 Innovus Multimedia, Inc., the predecessor to the Company's operating
 subsidiary, was founded in 1987, and acted as a value-added reseller of
 multimedia hardware and software in the form of stand alone kiosks until
 1993. In September of 1994, as part of Innovus' transition to a business
 oriented multimedia software developer, and to enhance its capital raising
 ability. In 1998, Intermark in a reverse acquisition acquired Innovus.
 Subsequently, new management joined the Company, and the Company
 de-emphasized its multimedia business, and focused on business oriented ESD
 and Internet Utility software development. As part of this transition, the
 Company hired new software developers, marketing personnel, and others, and
 secured equity financing for research and development to date.


 ITEM 2.           DESCRIPTION OF PROPERTY

          At June 21, 1999, the Company's executive offices were located in
 approximately 30,000 square feet of office space rented from a third
 party in Tustin, CA. The Company's rental agreement expires on April 30,
 2004. The Company's current monthly rent is $20,010.


 ITEM 3.                   LEGAL PROCEEDINGS

        In a Softkat related matter, on September 25, 1998, Diamar Interactive
 Corp. filed a complaint against the Company in the Sonoma County Superior
 Court, State of California.  The complaint alleges that the Company owes
 $44,183 for goods and services provided to Softkat, Inc., a former
 subsidiary of the Company, based on a theory of successor liability.  The
 Company has filed an answer denying that it is obligated to pay any amounts
 incurred by Softkat.

        In a Softkat related matter, on January 21, 1999, Interplay
 Entertainment Corp. filed a complaint against the Company and Innovus in
 the Orange County Superior Court, State of California.  The complaint
 alleges that the Company and Innovus owe $86,041 for goods and services
 provided to Softkat, Inc., a former subsidiary of the Company and Innovus,
 based on a theory of successor liability.  The Company and Innovus have
 filed an answer denying that they are obligated to pay any amounts
 incurred by Softkat.

        In a Softkat related matter, on February 2, 1999, RPS, Inc. filed a
 complaint against the Company in the United States District Court, Central
 District of California. The complaint alleges that the Company owes
 $52,555.58 for delivery services provided to Softkat, Inc., a former
 subsidiary of the Company, based on a theory of successor liability. The
 Company has filed an answer denying that it is obligated to pay any amounts
 incurred by Softkat.

        On February 5, 1999, Lawrence Tyson filed a complaint against
 Intermark and Innovus in the San Mateo County Superior and Municipal
 Courts, State of California. The complaint alleges that the Intermark and
 Innovus owe $8,000 on a promissory note given by Intermark. The Company
 believes that the Complaint has not been properly served on Intermark and
 Innovus and, therefore, no answers or appearances have been filed. The
 Company denies any amount is owed.

        In a Softkat related matter, on February 24, 1999, Muramatsu, Inc.
 filed a complaint against the Company and Intermark in the Orange County
 Superior Court, State of California. The complaint alleges that the Company
 and Intermark owe $42,207.65 for convention display services provided to
 Softkat, Inc., a former subsidiary of the Company and Intermark, based on a
 theory of successor liability.  The Company and Intermark have filed an
 answer denying that they are obligated to pay any amounts incurred by
 Softkat.

        In a Softkat related matter, on April 7, 1999, Sunclipse, Inc.
 filed a complaint against the Company in the Orange County Superior Court,
 State of California. The complaint alleges that the Company owes $131,752.06
 for goods and services provided to Softkat, Inc., a former subsidiary of
 the Company, based on a theory of successor liability.  On May 24, 1999,
 Sunclipse filed a first amended complaint seeking the same relief against
 the Company as it sought in its original complaint.  The Company intends to
 file an answer denying that it is obligated to pay any amounts incurred by
 Softkat.

 On April 15, 1999, Bremer Public Relations, Inc. obtained a default
 judgment in the amount of $32,980.85 against Innovus based on a Complaint
 filed in the Third Judicial District for the City of Salt Lake City, State
 of Utah.  The Company has been attempting to negotiate a settlement of the
 amounts owed but has not done so to date.

 In a Softkat related matter, on April 30, 1999, Digital Leisure, Inc. filed
 a complaint against the Company and Innovus in the Orange County Superior
 Court, State of California.  The complaint alleges that the Company and
 Innovus owe $125,715 for goods and services provided to Softkat, Inc., a
 former subsidiary of the Company and Innovus, based on a theory of
 successor liability.  The Company and Innovus have filed an answer denying
 that they are obligated to pay any amounts incurred by Softkat.

        In a Softkat related matter, on May 18, 1999, Frank Grange filed a
 complaint against the Company in the Sonoma County Superior Court, State of
 California. The complaint alleges that the Company owes $84,801.40 for
 damages resulting from a lease between Plaintiff and Softkat, Inc., a
 former subsidiary of the Company, and a Judgment obtained against Softkat
 for unpaid rent, based on a theory of successor liability. The Company has
 not yet responded to the Complaint but intends to file an answer denying
 that it is obligated to pay any amounts incurred by Softkat.

        In a Softkat related matter, on June 4, 1999, Cambrix Publishing, Inc.
 filed a complaint against the Company in the Orange County Superior Court
 Harbor Justice Center, State of California.  The complaint alleges that the
 Company owes $12,067.05 for goods and services provided to Softkat, Inc., a
 former subsidiary of the Company, based on a theory of successor liability.
 On September 25, 1998; Diamar Interactive Corp. filed a complaint against the
 Company in the Sonoma County Superior Court, State of California. The
 complaint alleges that the Company owes $44,183 for goods and services
 provided to Softkat, Inc., a former subsidiary of the Company, based on a
 theory of successor liability.  The Company has not yet responded to the
 Complaint but intends to file an answer denying that it is obligated to
 pay any amounts incurred by Softkat.

        In a Softkat related matter, on May 25, 1999, Transworld Systems,
 Inc. filed suit against the Company for $3,998.15 for collection work done
 on behalf of Softkat Inc., a former subsidiary of the Company.

        Although Softkat has been sold there may be asserted and unasserted
 claims against Softkat or the Company:

        The Company is aware of several other creditors of Softkat, Inc.,
 which have claims against Softkat for amounts owed based on good and/or
 services provided to Softkat. In most cases, we do not know the identity
 of these creditors, the amounts that they claim are due and owing or the
 circumstances of their claims. Some of the claims against Softkat have
 been asserted either in pending litigation or threatened litigation.

        Regarding these unasserted claims against Softkat, there is a
 reasonable likelihood that some of the plaintiffs/creditors will seek to
 satisfy their claims against the Company on theories of either successor
 liability or alter ego.


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

          The following matters were submitted to a vote of the security
 holders during the fourth quarter of the calendar year ended December 31,
 1998:

 On Tuesday, October 27, 1998, the Company held its Annual Meeting of
 Stockholders to consider and act upon the following matters,

     1.   To elect a board of five directors to serve until the next
          annual meeting of the Company's stockholders  and until their
          successors have been elected and qualify;

            Voting results:

            Thomas Hemingway
            For:
            Against:
            Abstain:

            T. Richard Hutt
            For:
            Against:
            Abstain:

            James H. Budd
            For:
            Against:
            Abstain:

            Robert Orbach
            For:
            Against:
            Abstain:

            David Lyons
            For:
            Against:
            Abstain:

     2.   To authorize a reverse stock split (the "Reverse Stock
          Spilt" in which each ten (10) shares of the Company's
          Common Stock, par value $.001, then outstanding would be
          reclassified into one (1) share of the Company's Common
          Stock, par value $.001, as presently classified (herein
          called "Common Stock");

            Voting results:

            For:
            Against:
            Abstain:

     3.   To authorize a change in the Company's name  (the  "Name
          Change") to ESYNCH CORPORATION

            Voting results:

            For:
            Against:
            Abstain:

                                PART II

 ITEM 5.   MARKET FOR COMMON SHARES AND RELATED SHAREHOLDER MATTERS

        The Common Stock is currently quoted on the OTC Bulletin Board,
 Symbol ESYN. On June 21, 1999, the closing bid and asked quotations for
 the Common Stock on the OTC Bulletin Board were $2.91 and $3.06,
 respectively. The following table reflects the high and low closing bid
 quotations reported by the OTC Bulletin Board. Such prices represent
 inter-dealer quotations, do not include markups, markdowns, or commissions
 and may not reflect actual transactions.

                                             High              Low
                                             ----              ---
 Year Ended December 31, 1998
 (As adjusted for  1 for 10 reverse stock split)
 -----------------------------
 January 1 to March 31, 1998                $  2.10          $ 0.70
 April 1 to June 30, 1998                   $  4.20          $ 1.50
 July 1 to September 30, 1998               $  3.20          $ 1.20
 October 1 to December 31, 1998             $ 1.56           $ 1.00


 Year to Date -- Ending June 16, 1999
 -----------------------------
 January 1 to March 31, 1999                 $4.87           $1.00
 April 1 to June 23, 1999                    $3.62           $2.06


          The Company has not paid any cash dividends since its inception.
 The Company is prohibited from paying dividends on its Common Stock while
 it has outstanding shares of Series I Preferred Stock and until it has
 current earnings. The Company currently intends to retain future earnings
 in the operation and expansion of its business and does not expect to pay
 any cash dividends in the foreseeable future.

          Sale of Unregistered Shares

          During the fourth quarter of 1998, the Company issued the
 following shares without registration under the Securities Act of 1933:
 During the quarter, the Company issued approximately 600,000 shares of
 Series I Preferred Stock and 720,000 shares of Common Stock.  The Series I
 Preferred shares were issued in exchange for the notes payable by Softkat,
 Inc. The shares of Common Stock were issued in exchange for common stock
 of Softkat, Inc.

       The Company also issued 335,000 additional shares for reduction of a
 note and services.

 Subsequently to December 31, 1998, the Company issued 310,377 shares of
 stock for cash and notes in the amount of $715,000 and issued 478,500
 shares of stock for services in the amount $927,175.

      The Company believes such issuance was exempt pursuant to Section
 3(a)(9), Regulation D, Section 4(2) and/or 4(6) of the Securities Act of
 1933.


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


          The following Selected Financial Data should be read in
 conjunction with the financial statements and notes thereto bound elsewhere
 herein.

  Year Ended                         December 31,1998  December 31, 1997
                                     ----------------  -----------------

 Sales                               $        203,571      $     496,070

 Cost of Sales                                156,617            229,032

 Gross Profit                                  46,954            267,038

 Operating Expenses

 General and Administrative                 1,999,340            857,094

 Amortization of Goodwill                     228,330

 Interest                                     132,641             16,253

 Amortization of Debt Discount                355,567

 Impairment loss on assets to be sold       2,323,841

 Loss Before Extraordinary Item            (4,992,765)          (606,309)
 ,
 Debt Forgiveness                              14,423

 Net Loss                              $   (4,978,342)     $    (606,309)

      The following discussion should be read in conjunction with the
 financial statements and notes thereto found elsewhere herein. The
 financial statements have been prepared on the basis of the Company being a
 going concern. The Company has had continued losses, and currently has a
 substantial accumulated deficit.


 Year ended December 31, 1998 compared to year ended December 31, 1997

        Net sales were $203,571 in 1998 compared to $496,070 in 1997. 1998
 included $109,000 from Softkat operations for the period November 17, 1998
 through December 31, 1998. The Company's decision in 1998 to focus on ESD
 reduced the direct product sales activity and marketing services were
 discontinued. Substantial customer returns and credits reduced Softkat
 sales activity from operational activity prior to its acquisition.

        The cost of product sold in 1998 was 77% compared to 46% in 1997. This
 was due to the sales of the lower margin Softkat product through its retail
 distribution and lower sales activity.

        General and administrative expenses were $ 1,999,340 in 1998 compared
 with $857,094 in 1997. Legal and accounting expenses increased to $321,000
 in 1998 from $24,855 due to cost incurred with the Innovus merger and the
 Softkat acquisition. Costs associated with the beneficial conversion
 feature of notes payable was $355,567 and interest expense was $132,641 in
 1998 versus $16,253 in 1997. In addition, cost associated with the issuance
 of stock was $393,000 and stock options $69,000 in 1998 versus $251,000 and
 $0 in 1997. Costs associated with amounts accrued for payroll taxes and
 penalties were $362,000 in 1998 versus $129,000 in 1997. Outside services
 were $201,000 in 1998 versus $58,000 in 1997 with the increase activity in
 stockholder relations of being a public Company.

        Amortization of goodwill was $228,330 and represented amortization
 of the goodwill will generated by the Softkat acquisition of $2,670,000 and
 written off on the straight-line basis using an estimated useful life of
 3.63 years.

        The net loss was $ 4,978,342 for 1998 compared with $606,309 in 1997.
 The loss in 1998 included $2,323,841 on the loss recorded on the sale of
 Softkat, $228,330 on the amortization of the goodwill generated by the
 Softkat acquisition and Softkat operating loss for the period November 17,
 1998 through December 31, 1998 in the amount of $111,359.  In addition, the
 Company has accrued additional expenses for Softkat disposal of $100,000
 and estimated that other expenses incurred in 1998 related to the
 Softkat acquisition and operations to approximate $250,000 included in
 general and administrative expenses.  On May 25, 1999 Softkat was sold to a
 third party for $50,000 cash and a note receivable of $100,000 which
 resulted in the above loss of $2,323,841. Only the $50,000 cash received
 is recognize in the calculation of the loss. The subsequent sale and
 resulting loss provided evidence of conditions

 Liquidity and Capital Resources

          At December 31, 1998 the Company had  $1,413 of cash and cash
 Equivalents and a deficit in working capital (current liabilities in
 excess of current assets) of $2,154,676. The Company has been relying
 upon short-term borrowings and the issuance of stock. The proceeds from
 the issuance of long-term debt were $558,000 in 1998 versus $85,000 in
 1997. In addition stock was issued for services of $393,000 in 1998 versus
 $251,000 in 1997.

 Subsequently to December 31, 1998, the Company issued 310,377 shares of
 stock for cash and notes in the amount of $715,000 and issued 168,500
 shares of stock for services in the amount $477,000.

        In June 1999, the Company received a signed commitment from an
 investing source for equity financing in the aggregate amount of $2,500,000,
 subject to certain terms and conditions. The financing is to be in the form
 of convertible preferred stock and warrants issued by the Company. The
 Company is obligated, at its expense, to register the stock within 60 days
 of closing, with an effective date within 150 days after closing or the
 investors will be entitled to a registration payment equal to 2% of the
 purchase price for the first 30 days the Company is tardy and 2% for every
 30 day period thereafter. In no event will the shares be sold except
 pursuant to an effective registration statement pursuant to the Securities
 Act of 1933 and the required delivery of a prospectus.  No assurance is
 possible that such financing will be completed.

 Forward Looking Statements.

          This report contains both historical statements of fact and
 forward-looking statements. Statements regarding the Company's expectations
 as to future sales of its products, future revenue and cash flow, future
 developments of plans to continue as a going concern and certain other
 Information presented in this report constitute forward-looking statements
 within the meaning of the Private Securities Litigation Reform Act of 1995.
 When used in this Form 10-KSB or other filings by the Company with the
 Securities and Exchange Commission, in the Company's press releases or
 other public or shareholder communications, or in oral statements made with
 the approval of an authorized officer of the Company's executive officers,
 the words or phrases "would be," "will allow," "intends to," "will likely
 result," "are expected to, "will continue," "is anticipated," "estimate,"
 "project," or similar expressions are intended to identify forward-looking
 statements. Although the Company believes that its expectations with
 respect thereto are based on reasonable assumptions within the bounds of
 its knowledge of its business and operations, there can be no assurance
 that actual results will not differ materially from its expectations. In
 addition to matters affecting the economy and the Company's industry
 generally, factors, which could cause actual results to differ from
 expectations, include the following:


         Continued lack of market acceptance of other Company products
         Lack of profitability
         Inability to obtain additional needed capital or capital on
            favorable terms
         Inability to devise a viable business plan, and intentions to
            conduct
         Business on an untested business plan
         Product and technological obsolescence
         Competition

        The Company does not undertake, and specifically disclaims any
 obligation, to update any forward-looking statements to reflect occurrences
 or unanticipated events or circumstances after the date of such statements.


 ITEM 7.  FINANCIAL STATEMENTS

          Financial statements are filed as part of this report on pages F-1
 through F-15


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

          Information required by this Item has been "previously reported"
 (as defined in Rule 12b-2) in the Company's Form 8-K dated June 1, 1998.
 Such Form 8-K reported change in independent auditors from Grant Thornton
 LLP to Hansen Barnett & Maxwell.


 PART III

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

 Executive Officers and Directors

          Set forth below is information regarding  (i) the directors of the
 Company as of June 21, 1999, who will serve until the next annual meeting
 of shareholders or until their successors are elected or appointed and
 qualified, and (ii) the executive officers of the Company as of June 15,
 1999, who are elected to serve at the discretion of the Board of Directors.

          The Company's executive officers and directors are as follows:

       Name               Age            Position

 Thomas Hemingway. . . . . 43    Chairman and Chief Executive Officer
 Donald C. Watters . . . . 41    President and Chief Operating Officer
 David Noyes . . . . . . . 55    Interim, Chief Financial Officer
 James Budd. . . . . . . . 57    Director and Vice President
 T. Richard Hutt . . . . . 58    Director, Secretary/Treasurer
 David Lyons . . . . . . . 53    Director
 Robert Orbach . . . . . . 47    Director

 THOMAS HEMINGWAY -  (Chairman) co-founder and Chief Executive Officer of
 eSynch. Mr. Hemingway devotes his full time to business development. Prior
 to co-founding the Company, Mr. Hemingway was chief operating officer at
 Ideafisher Systems, an artificial intelligence / associative processing
 software company. Previously, Mr. Hemingway served as CEO of Becker/Smart
 House, LV, a home automation enterprise, and founder and president of
 Intellinet Information Systems, a provider of network services and systems.
 Earlier in his career Mr. Hemingway was a founder of Omni Advanced
 Technologies, an R&D firm developing products for the computer and
 communications industry.

 DONALD C. WATTERS - President and Chief Operating Officer of eSynch
 Corporation. Formerly, Mr. Watters was President and CEO of Kiss Software
 Corporation (KISSCO) a publisher/developer of Internet software utilities.
 During this time, Mr. Watters was directly responsible for the companies
 rapid growth of the Kissco's product line -- leading to several prestigious
 product awards -- including PC World's Editor's Pick, 5 Stars from ZDNet,
 and in the 'Top 100 Products of 1998' for both Windows Magazine and Computer
 Shopper. Prior to Kissco, Mr. Watters was vice president of worldwide sales
 of Touchstone Software and one of its major shareholders where during a
 four-year period; he increased sales 369 percent and raised the company
 market capitalization from $700K to $129M.

 DAVID P. NOYES - Interim, Chief Financial Officer of eSynch Corporation,
 and a Certified Public Accountant with a MBA from the Anderson school of
 management at UCLA. Mr. Noyes was a senior manager with Ernst and Young and
 has 24 years management experience as either Chief Executive Officer or
 Chief Financial Officer with several high technology companies including
 companies in computer software and hardware, electronics and oil field
 services.  Mr. Noyes, has significant mergers and acquisition experience,
 turnaround experience and has successfully managed and provided strategic
 leadership to a number of very successful rapidly growing companies.

 JAMES BUDD - (Director) co-founder and Vice President of Web Strategies of
 Intermark. Prior to co-founding the Company, Mr. Budd was vice president of
 marketing at Ideafisher Systems, an artificial intelligence / associative
 processing software company. Previously, he was founder and CEO of Command
 Business Systems, a developer of business software products. Earlier in his
 career, Mr. Budd held marketing and sales management positions at Unisys,
 Nixdorf, Tymshare, and Prime Computer.

 T. RICHARD HUTT - (Director) co-founder, Vice President and
 Secretary/Treasurer. Prior to co-founding the Company, Mr. Hutt was
 distribution sales manager for Strategic Marketing Partners, a leading
 national software and technology marketing firm. Previously, he was in the
 communications and mini-computer industry, with TRW where he formed the
 Canadian subsidiary as vice president of sales.  He moved to TRW's Redondo
 Beach headquarters and managed the western division until Fujitsu acquired
 the business unit. Before joining TRW, he was with NCR's financial sales
 division in Canada.  Prior to that he managed the VAR division at Wang
 Laboratories. Moving to Matsushita, he played a key role in the development
 of the distribution channel for their Panasonic products.

        The Board of Directors of the Company has voted to establish two
 committees, the Compensation Committee, and the Audit Committee.  Neither
 committee met during 1998 and all activities of the respective committees
 were undertaken by the Board as a whole.

 Compliance with Section 16(a) of the Exchange Act.

        Section 16(a) of the Securities Exchange Act of 1934 requires the
 Company's officers and directors, and persons who own more than ten percent
 of a registered class of the Company's equity securities, to file reports
 of ownership and changes in ownership with the Securities and Exchange
 Commission and the National Association of Securities Dealers.  Officers,
 directors and greater than ten-percent shareholders are required by
 Securities and Exchange Commission regulations to furnish the Company with
 copies of all Section 16(a)forms they file.  Based solely on a review of
 the copies of such forms furnished to the Company between January 1, 1998
 and December 31, 1998, on year-end reports furnished to the Company after
 December 31, 1998 and on representations that no other reports were
 required, the Company has determined that during the last fiscal year all
 applicable 16(a) filing requirements were met except as follows: none


 ITEM 10.   EXECUTIVE COMPENSATION.

          The following table sets forth the aggregate cash compensation
 paid by the Company for services rendered during the last year to the
 Company's Chief Executive Officer as of December  31, 1998 and to each of
 the Company's other executive officers whose annual salary and bonus
 exceeded $100,000.

           SUMMARY COMPENSATION

                              Annual Compensation Long Term Compensation

                              Year              Other Annual
 Name and Compensation       Ended          Salary Stock Options
 Principal Position           12/31            ($)          ($)

 Thomas Hemingway(1)          1998         $  88,789      250,000
 .

 Stock Options Granted in Last Fiscal Year

          Information concerning 1998 grants to named executive officers is
 reflected in the table below. The amounts shown for each of the named
 executive officers as potential realizable values are based on arbitrarily
 assumed annualized rates of stock price appreciation of five percent and
 ten percent over the full terms of the options. These potential realizable
 values are based solely on arbitrarily assumed rates of price appreciation
 required by applicable SEC regulations.  Actual gains, if any, on option
 exercises and common stockholdings are dependent on the future performance
 of the Company and overall stock market conditions. There can be no
 assurance that the potential realizable values shown in this table will be
 achieved.


                                Individual Grants

      --------------------------------------------------------------------
                                           % of Total
                           Options           Options      Exercise price
         Name              Granted (#)

     Thomas Hemingway          292,500           46.3%         $ .94
     James Budd                117,000           18.5            .94
     T. Richard Hutt           117,000           18.5            .94
     David Lyons                11,700            1.9            .21

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


 The Board of Directors approved a stock option plan in April of 1998 which
 authorized options to purchase 600,000 shares of common stock. Options to
 purchase 540,000 common shares were granted under the plan on April 24,
 1998, with a weighted-average exercise price of $0.99 per shares. The Plan
 was approved and the options were granted. The options became exercisable
 immediately. 450,000 of the unexercised options expire on April 24, 2003
 and the remaining 90,000 unexercised options expire on April 24, 2008.
 Compensation relating to the options of $69,288 was recognized when the
 shares vested which was on the date of grant. After the merger with
 Innovus, the number of options and the price of the options were
 recalculated. The number of options now exercisable is 631,800 with a
 weighted average exercise price of $0.90. 549,900 of the options expire on
 April 24, 2003 and the remaining 81,900 options expire on April 24, 2008.
 No additional expense needs to be recognized in association with the
 recalculation of the options outstanding and the exercise price.

 A summary of the status of the Company's stock options as of December 31,
 1998 and changes during the year then ended are presented below:

                                                      Weighted-Average
                                            Shares      Exercise Price
                                          -----------   --------------
  Outstanding at beginning of year        $        -    $     -
  Granted                                   1,031,800       0.90
                                          -----------
  Outstanding at end of year                1,031,800       0.90
                                          ===========
  Options exercisable at year-end             631,800       0.84
                                          ===========
  Weighted-average fair value of
   options granted during the year        $      0.91
                                          ===========

  The fair value of each option granted was estimated on the date of grant
  using the Black-Scholes option-pricing model with the following
  weighted-average assumptions used for grants in 1998: dividend yield of
  0.0%; expected volatility of 73.0%; risk-free interest rate of 5.63%
  and 5.68% and expected life of the options of 5.0 years and 10.0 years.

  At the time these options were granted, Intermark was a private company
  and its transaction with the Company had not been contemplated.
  Nonetheless, amounts are presented based on an estimate of value as if the
  transaction were relatively certain to occur.


  Compensation of Directors

           The Company's non-employee Directors are not currently
  compensated for attendance at Board of Directors meetings.  Non-employee
  directors have been granted, on an ad hoc basis, stock options upon being
  appointed to the Board. The Company may adopt a formal director
  compensation plan in the future. All of the Directors are reimbursed for
  their expenses for each Board and committee meeting attended.

                                       - 18 -

  ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

           The following table sets forth information  regarding  Common
  Stock of the Company beneficially owned as of June 21, 1999 by: (i) each
  person known by the Company to beneficially own 5% or more of the
  outstanding Common Stock, (ii)by each director and director  nominee,  and
  (iii) by all officers and directors as a group.




  =============================================================================
  Name of Officers and Directors
  and Names and Addresses of                Amount of Common
  Principal Stockholders                          Shares*          Percentage

  -----------------------------------------------------------------------------
  Thomas Hemingway(1)                           1,415,216              14.5%
  15502 Mosher Ave
  Tustin, CA 92780

  -----------------------------------------------------------------------------
  James Budd(2)                                 1,239,716              12.7%
  15502 Mosher Ave
  Tustin, CA 92780

  -----------------------------------------------------------------------------
  T. Richard Hutt(3)                               1,239,716           12.7%
  15502 Mosher Ave
  Tustin, CA 92780

  -----------------------------------------------------------------------------
  David Lyons(4)                                   11,700                .1%
  15502 Mosher Ave
  Tustin, CA 92780

  -----------------------------------------------------------------------------
  Robert Orbach                                    11,686                .1%
  15502 Mosher Ave
  Tustin, CA 92780

  Donald C. Watters                               354,573               3.9%
  15502 Mosher Ave
  Tustin, CA 92780

  -----------------------------------------------------------------------------
  All Directors and Executive                   4,272,607              43.9%
  Officers (6 persons)

  =============================================================================
  (1)  Includes options presently exercisable to purchase 292,500 shares.
  (2)  Includes options presently exercisable to purchase 117,000 shares.
  (3)  Includes options presently exercisable to purchase 117,000 shares.
  (4)  Includes options presently exercisable to purchase 11,700 shares.


  ITEM 12.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

           In April, 1999 the Company entered into short term bridge
  financing  arrangements with Mr. Hemingway, whereby the Company borrowed
  $90,000 from
  Mr. Hemingway.  The bridge financing had a stated interest rate of 10% per
  annum. Mr. Hemingway has since been paid in full for this financing.

                                       PART IV

  ITEM 13.       EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
                  FORM 8-K.

  (a)  INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES


                                                                  Page No.
  Title of Documents

  Report of Hansen, Barnett & Maxwell, Independent Certified
    Public Accountants, on the December 31, 1998 and 1997
    Financial Statements............................................ F-1

  Consolidated Financial Statements:

       Consolidated Balance Sheets as of December 31, 1998.......... F-2

       Consolidated Statements of Operations for the Years Ended
         December 31, 1998 and 1997................................. F-3

       Consolidated Statements of Stockholders' Equity (Deficit)
        for the Years Ended December 31, 1997 and 1998.............. F-4

       Consolidated Statements of Cash Flows for the Years Ended
         December 31, 1998 and 1997................................. F-5

  Notes to Consolidated Financial Statements........................ F-6

  Financial Statement Schedules:

  All schedule are omitted because they are not applicable or the  required
  information is shown in the financial statements or the notes thereto.

     (b)  Reports on Form 8-K

     The Company filed on October 19, 1999, on Form 8-K/A, an amendment to
  its current report filed August 20, 1998 reporting Acquisition and
  Disposition of Assets.


     (c)  Exhibits

     The following documents are included as exhibits to this report.
       2.1(1)   Agreement and Plan of Share Exchange dated as of
                May 8, 1998 among the Company; Intermark
                Corporation, a California corporation; and the
                Exchanging Security holders of Intermark Corporation
                Omitted are the following schedules or attachments
                to the agreement identified immediately above:
                (A)  Form of Certificate of Designation of
                Series H Convertible Preferred Stock;
                (B)  Intermark Corporation Financial Statements
                (Unaudited) for its 1997 Fiscal Year;
                (C) Confidentiality Agreement dated March 1998
                between the Registrant and Intermark
                Corporation;
                (D) Disclosure Schedule of Intermark Corporation;
                (E) Disclosure Schedule of the Registrant.
       2.2(2)   First Amendment, dated as of June 17, 1998, of
                Agreement and Plan of Share Exchange dated as of
                May 8, 1998 among the Company; Intermark
                Corporation, a California corporation; and the
                Exchanging Security holders of Intermark Corporation
       2.3(2)   Second Amendment, dated as of July 30, 1998, of
                Agreement and Plan of Share Exchange dated as of
                May 8, 1998 among the Company; Intermark
                Corporation, a California corporation; and the
                Exchanging Security holders of Intermark Corporation
       2.4      Agreement and Plan of Merger dated as of
                February 26, 1999 among the Company; Softkat, Inc.,
                a California corporation ("Softkat"); certain
                stockholders, of Softkat, and INUS-Softkat Acquisition
                Corporation, a wholly-owned subsidiary of the
                Company.  Omitted are the following schedules
                or ancillary documents to the agreement identified
                immediately above:
                                (A) Disclosure Schedule of Softkat;
                                (B) Disclosure Schedule of the Company.

       2.5(4)   Agreement and Plan of Merger dated as of
                February 26, 1999 among the Company; Kiss
                Software Corporation, a California corporation
                ("Kissco"); certain stakeholders,
                of Kissco; and ESYN Kissco Acquisition
                Corporation, a wholly-owned subsidiary of the
                Registrant. Omitted are the following schedules
                or ancillary documents to the agreement identified
                immediately above:
                                (A) Escrow Agreement;
                                (B) Disclosure Schedule of Kissco;
                                (C) Disclosure Schedule of the Registrant.
       3.1(5)   Restated Certificate of Incorporation of the Company
       3.2(8)   By-laws
       4.1(6)   January 1999 Stock Plan, including 310,000
                shares of Esynch Common Stock granted and
                issued to individual consultants named on the
                attached Corporate Resolutions
       4.2(6)   Corporate Resolutions relating to January, 1999 Stock Plan
       4.10(2)  Certificate of Designation - Series H Preferred Stock
       4.11(7)  Certificate of Designation - Series I Preferred Stock
       4.12(7)  Certificate of Elimination - Series A Preferred Stock
       4.13(7)  Certificate of Elimination - Series C Preferred Stock
       4.14(7)  Certificate of Elimination - Series D Preferred Stock
       4.15(7)  Certificate of Elimination - Series E Preferred Stock
       4.16(7)  Certificate of Elimination - Series F Preferred Stock
       4.17(7)  Certificate of Elimination - Series G Preferred Stock
       4.18(7)  Certificate of Elimination - Series H Preferred Stock
      10.4(7)   Registration Rights Agreement dated August 4, 1998
                among the Company and those holders of the Company's
                stock listed in Exhibit A thereto
      10.5(7)   Form of Stock Option Agreement dated April 24, 1998
                between Intermark Corporation and each of Thomas
               Hemingway, T. Richard Hutt and James Budd
      10.6(2)  Instrument of Option Assumption dated August 4,
               1998 between the Company and each of the optionees
               named in Exhibit 10.5, among others, resulting in
               the Company's assumption of options as follows:
               Thomas Hemingway   331,541 shares of common stock at $.83 each
               T. Richard Hutt    132,616 shares of common stock at $.83 each
               James Budd         132,616 shares of common stock at $.83 each
      27.1     Financial Data Schedule
      99       Press Release on sale of Softkat,Inc.

  (1)   Incorporated by reference to the like-numbered exhibit to the
          Company's Form 8-K filed May 12, 1998.
  (2)   Incorporated by reference to the like-numbered exhibit to the
          Company's Form 8-K filed August 20, 1998.
  (4)   Incorporated by reference to the like-numbered exhibit to the
          Company's Form 8-K filed April 19, 1999.
  (5)   Incorporated by reference to Exhibit A to the
          Company's Schedule 14A filed October 7, 1998.
  (6)   Incorporated by reference to the like-numbered exhibit to the
          Company's Form S-8 filed February 1, 1999.
  (7)   Incorporated by reference to the like-numbered exhibit to the
          Company's Form 10-QSB filed November 25, 1998.
  (8)   Incorporated by reference to the like-numbered exhibit to the
          Company's Registration Statement (Registration No. 33-33136-D).





                                      SIGNATURE

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


                                                INNOVUS CORPORATION

  Dated: June 21, 1999                          By /s/Thomas Hemingway
                                                ---------------------------
                                                Thomas Hemingway

                                         24







                     ESYNCH CORPORATION AND SUBSIDIARIES


                              TABLE OF CONTENTS



                                                                         Page

     Report of Independent Certified Public Accountants                   F-1

     Consolidated Balance Sheet - December 31, 1998                       F-2

     Consolidated Statements of Operations for the Years Ended
        December 31, 1998 and 1997                                        F-3

     Consolidated Statements of Stockholders' Deficit for the
        Years Ended December 31, 1997 and 1998                            F-4

     Consolidated Statements of Cash Flows for the Years
        Ended December 31, 1998 and 1997                                  F-5

     Notes to Consolidated Financial Statements                           F-6





<PAGE>
      HANSEN, BARNETT & MAXWELL
      A Professional Corporation
     CERTIFIED PUBLIC ACCOUNTANTS

                                                       (801) 532-2200
      Member of AICPA Division of Firms              Fax (801) 532-7944
               Member of SECPS                  345 East Broadway, Suite 200
  Member of Summit International Associates    Salt Lake City, Utah 84111-2693



              REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


To the Board of Directors and Stockholders
eSynch Corporation and Subsidiaries

We have audited the accompanying consolidated balance sheet of eSynch
Corporation and Subsidiaries as of December 31, 1998 and the related
consolidated statements of operations, stockholders' deficit, and cash flows
for each of the two years in the period ended December 31, 1998. 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 generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of eSynch
Corporation and Subsidiaries as of December 31, 1998 and the results of
their operations and their cash flows for each of the two years in the
period ended December 31, 1998 in conformity with generally accepted
accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 in the
financial statements, the Company has suffered substantial and recurring
losses from operations and  negative cash flows from operating activities.
At December 31, 1998, the Company has  negative working capital and a
capital deficiency. These factors raise substantial doubt about the
Company's ability to continue as a going concern. Management's plan 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.


                                     HANSEN, BARNETT & MAXWELL
Salt Lake City, Utah
June 10, 1999

                                     F-1
<PAGE>


                     ESYNCH CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEET
                              DECEMBER 31, 1998

                                                                    Pro Forma
                                                       Historical   (Note 2)
                                                       ----------  -----------
                                                                   (Unaudited)
                                    ASSETS
Current Assets
   Cash                                                $    1,413  $     1,413
   Inventory                                               13,693       13,693
   Other receivable                                           -         50,000
                                                       ----------   ----------
       Total Current Assets                                15,106       65,106
                                                       ----------   ----------

Equipment                                                 162,194      162,194
   Less accumulated depreciation                         (109,988)    (109,988)
                                                       ----------   ----------
   Net Equipment                                           52,206       52,206
                                                       ----------   ----------

Assets to be sold - primarily goodwill                  4,552,847          -
                                                       ----------   ----------
Total Assets
                                                       $4,620,159   $  117,312
                                                       ==========   ==========


                    LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
   Trade accounts payable                              $1,120,281   $1,120,281
   Accrued liabilities                                    692,840      692,840
   Notes payable                                          406,661      406,661
   Liabilities relating to assets to be sold            4,502,847          -
                                                       ----------   ----------
       Total Current Liabilities                        6,722,629    2,219,782
                                                       ----------   ----------

Redeemable Preferred Stock - $0.001 par value;
 600,000 shares authorized; 600,000 shares of
 Series I issued and outstanding; liquidation
 preference -  $600,000                                       600          600
                                                       ----------   ----------
Stockholders' Deficit
   Preferred stock - $0.001 par value; 400,000 shares

    authorized; none issued or outstanding                     -            -

   Common stock - $0.001 par value; 20,000,000 shares
    authorized; 6,889,829 issued and outstanding            6,889        6,889
   Additional paid-in capital                           3,541,295    3,541,295
   Accumulated deficit                                 (5,651,254)  (5,651,254)
                                                       ----------   ----------
       Total Stockholders' Deficit                     (2,103,070)  (2,103,070)
                                                       ----------   ----------
Total Liabilities and Stockholders' Deficit            $4,620,159   $  117,312
                                                       ==========   ==========

  The accompanying notes are an integral part of these financial statements.

                                     F-2

<PAGE>
                     ESYNCH CORPORATION AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS


                                                         For the Years Ended
                                                             December 31,
                                                      ------------------------
                                                          1998         1997
                                                      -----------   ----------

Product Sales                                         $   203,571   $  496,070

Cost of Goods Sold                                        156,617      229,032
                                                      -----------   ----------
Gross Profit                                               46,954      267,038
                                                      -----------   ----------
Operating and Other Expenses
    General and administrative                          1,999,340      857,094
    Amortization of goodwill                              228,330           -
    Interest                                              132,641       16,253
    Amortization of debt discount                         355,567           -
    Impairment loss on assets to be sold                2,323,841           -
                                                      -----------   ----------
       Total Operating and Other Expenses               5,039,719      873,347
                                                      -----------   ----------
Loss Before Extraordinary Item                         (4,992,765)    (606,309)

Extraordinary Gain From Debt Forgiveness                   14,423           -
                                                      -----------   ----------
Net Loss                                              $(4,978,342)  $ (606,309)
                                                      ===========   ==========
Basic and Diluted Loss per Common Share
    Loss before extraordinary item                    $     (0.91)  $   (12.54)
    Extraordinary gain from debt forgiveness                   -            -
                                                      -----------   ----------

   Net Loss                                           $     (0.91)  $   (12.54)
                                                      ===========   ==========
Weighted Average Number of Common Shares
   Used in Per Share Calculation                        5,476,874       48,345
                                                      ===========   ==========


  The accompanying notes are an integral part of these financial statements.

                                     F-4

<PAGE>
                     ESYNCH CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
 <TABLE>
 <CAPTION>
                                          Preferred Stock        Common Stock        Additional                   Total
                                       ----------------------  ----------------------  Paid-In    Accumulated Stockholders'
                                         Shares     Amount       Shares      Amount     Capital      Deficit     Deficit
                                       ----------  ----------  ----------  ----------  ----------  -----------  ----------
<S>                                   <C>         <C>         <C>         <C>         <C>         <C>          <C>
 Balance -  December 31, 1996              16,378  $       16      21,350  $       21  $    7,963      (66,603)    (58,603)

 Shares issued for services                51,788          52      68,007          68     251,045           -      251,165

 Net loss for the year                         -           -           -           -           -      (606,309)   (606,309)
                                       ----------  ----------  ----------  ----------  ----------  -----------  ----------
 Balance - December 31, 1997               68,166          68      89,357          89     259,008     (672,912)   (413,747)

 Shares issued for services                 2,692           3       1,461           1     276,981           -      276,985

 Acquisition of Innovus                        -           -    1,215,375       1,215    (861,286)          -      (860,071)

 Conversion of preferred shares           (80,286)        (80)  4,516,088       4,516      (4,436)          -           -

 Beneficial conversion feature                 -           -           -           -      355,567           -      355,567

 Shares issued for conversion of
 notes payable and accrued interest         9,428           9     172,548         173     567,918           -      568,100

 Acquisition of SoftKat                        -           -      720,000         720   2,668,680           -    2,669,400

 Shares issued for services                    -           -      100,000         100     115,900           -      116,000

 Shares issued for conversion of
 accounts payable                              -           -       20,000          20      24,980           -       25,000

 Shares issued for interest payment
 on note payable                               -           -       55,000          55      68,695           -       68,750

 Compensation relating to the grant
 of stock options                              -           -           -           -       69,288           -       69,288

 Net loss for the year                         -           -           -           -           -   (4,978,342)  (4,978,342)
                                       ----------  ----------  ----------  ----------  ----------  -----------  -----------
 Balance - December 31, 1998                   -   $       -    6,889,829  $    6,889  $3,541,295  $(5,651,254) $(2,103,070)
                                       ==========  ==========  ==========  ==========  ==========  ===========  ===========
<FN>
       The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
                                      F-5

 <PAGE>
                      ESYNCH CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                         For the Years Ended
                                                             December 31,
                                                      ------------------------
                                                          1998         1997
                                                      -----------   ----------
 Cash Flows From Operating Activities
  Net loss                                            $(4,978,342)  $ (606,309)
  Adjustments to reconcile net loss to net
   cash used by operating activities:
     Amortization of goodwill                             228,330           -
     Depreciation                                          36,910        5,254
     Stock issued for interest                             68,750           -
     Amortization of debt discount                        355,567           -
     Stock issued for services                            392,985      251,165
     Compensation from stock options granted               69,289           -
     Impairment loss on assets to be sold               2,323,841           -
     Forgiveness of debt                                  (14,423)          -
     Changes in assets to be sold                         610,103           -
     Changes in liabilities relating to assets
      to be sold                                         (498,744)          -
     Payment of company expenses by employee                    -        4,507
     Changes in operating assets and liabilities,
       net of effects of businesses acquired:
         Accounts receivable                                25,000       3,220
         Inventory                                         (13,693)         -
         Other receivables                                      -       40,000
         Accounts payable                                  259,305      99,950
         Accrued liabilities                               410,489     166,099
                                                      ------------  ----------
  Net Cash Used By Operating Activities                   (724,633)    (36,114)
                                                      ------------  ----------
 Cash Flows From Investing Activities
     Payments for the purchase of equipment                 (5,823)    (19,923)
                                                      ------------  ----------
  Net Cash Used By Investing Activities                     (5,823)    (19,923)
                                                      ------------  ----------
 Cash Flows From Financing Activities
     Proceeds from issuance of debt                        806,071      73,482
     Principal payments on notes payable                   (74,202)    (19,048)
                                                      ------------  ----------
  Net Cash Provided By Financing Activities                731,869      54,434
                                                      ------------  ----------

 Net Increase (Decrease) In Cash                             1,413      (1,603)

 Cash - Beginning of Year                                       -        1,603
                                                      ------------  ----------
 Cash - End of  Year                                  $      1,413  $       -
                                                      ============  ==========

 Supplemental cash flow information and noncash investing and
    Financing activities -   Note 8


   The accompanying notes are an integral part of these financial statements.

                                      F-5

 <PAGE>
                     ESYNCH CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 ORGANIZATION AND  NATURE OF OPERATIONS -  Intermark Corporation
 ("Intermark") was incorporated under the laws of the State of California in
 October 1995. On August 5, 1998, Intermark was reorganized into Innovus
 Corporation, a publicly-held shell corporation, as explained in Note 2. By
 shareholder action, Innovus Corporation, the parent company, changed its
 name to eSynch Corporation ("eSynch") on November 9, 1998. On November 17,
 1998, eSynch acquired SoftKat Inc. ("SoftKat"). Subsequent to December 31,
 1998, SoftKat was sold to a third-party. See Note 2.

 The primary activities of eSynch, the consolidated company, have consisted
 of raising capital, acquiring Innovus Corporation and SoftKat Inc., and
 limited retail and turnkey sales of software games and various other
 programs and related marketing services through distribution channels and
 through the Internet.

 PRINCIPLES OF CONSOLIDATION - The accompanying consolidated financial
 statements include the accounts of Intermark Corporation ("Intermark") for
 all periods presented, the accounts of Innovus Corporation and SoftKat,
 Inc. from the dates of their acquisitions on August 5, 1998 and November
 17, 1998, respectively. These entities are collectively referred to as
 "eSynch" or the "Company".  All inter-company transactions and balances
 have been eliminated in consolidation. In accordance with the accounting
 treatment on the impairment of long-lived assets to be disposed of, the
 accounts of SoftKat has been consolidated under two line items on the
 financial statements, "Assets to be sold" and "Liabilities relating to
 assets to be sold", respectively. The carrying amount of assets to be sold
 has been adjusted by the impairment loss on the subsequent sale of SoftKat.

 USE OF ESTIMATES - The preparation of financial statements in conformity
 with generally accepted accounting principles requires management to make
 estimates and assumption that affect the reported amounts in the financial
 statements and accompanying notes. Actual results could differ from those
 estimates.

 BUSINESS CONDITION -  The financial statements have been prepared on the
 basis of the Company continuing as a going concern. The Company has
 incurred losses from operations and negative cash flows from operating
 activities and has accumulated a deficit at December 31, 1998 in the amount
 of  $5,651,253. These conditions raise substantial doubt regarding the
 Company's ability to continue as a going concern. Management's plan to
 mitigate the impact of these conditions is to obtain additional equity
 financing through the issuance of the Company's common stock, convertible
 preferred stock or warrants. As discussed in Note 12, the Company has
 obtained a signed commitment from an investment source for equity financing
 in the aggregate amount of $2,500,000. The Company is also currently in
 negotiations for additional financing arrangements. However, realization of
 the proceeds form these potential transactions is not assured. These
 financial statements do not include any adjustments relating to the
 recoverability and classification of recorded assets or amounts and
 classifications of liabilities that might be necessary should the Company
 be unable to continue.

 CONCENTRATION OF RISK AND MAJOR CUSTOMERS - The Company operates
 exclusively in the software industry, accordingly, segment information
 relating to operations in different industries is not presented in these
 financial statements. The concentration of business in the highly
 competitive software industry subjects the Company to concentrated market
 risk.  During the year ended December 31, 1997, sales to three major
 customers totaled 31%, 19%, and 15% of sales, respectively. Sales to any
 major customer in 1998 were not significant.

 FAIR VALUES OF FINANCIAL INSTRUMENTS - The amounts reported as cash,
 accounts payable, notes payable, and liabilities relating to assets to be
 sold are considered to reasonable approximations of their fair values. The
 fair value estimates were based on market information available to
 management at the time of the preparation of the financial statements.

 INVENTORY - Inventory is stated at the lower of cost or market. Cost is
 determined using the first-in, first-out method. Inventory balance at
 year-end consisted of packaged software.

                                      F-6

 EQUIPMENT -  Equipment is stated at cost. Depreciation is computed using
 the straight-line method over the estimated useful lives of the equipment,
 which are five to seven years. Maintenance and repairs of equipment are
 charged to operations and major improvements are capitalized. Upon
 retirement, sale, or other disposition of equipment, the cost and
 accumulated depreciation are eliminated from the accounts and gain or loss
 is included in operations.

 STOCK-BASED COMPENSATION -  Stock-based compensation to employees is
 measured by the intrinsic value method. This method recognizes compensation
 expense related to stock options granted to employees based on the
 difference between the fair value of the underlying common stock and the
 exercise price of the stock option on the date granted. Compensation
 expense related to stock options granted to non-employees is determined
 based upon the fair value of the stock options on the date granted.

 ADVERTISING COSTS - Advertising costs have been recognized as expense when
 incurred, and amounted to none and $13,056 during the years ended December
 31, 1998 and 1997, respectively

 LOSS PER SHARE -  The Company computes basic and diluted loss per share in
 accordance with Statement of Financial Accounting Standards No. 128, ("SFAS
 128"), "Earnings Per Share." Basic loss per common share is computed by
 dividing net loss available to common stockholders by the weighted-average
 number of common shares outstanding during the period. Diluted loss per
 share is calculated to give effect to stock warrants, options and
 convertible notes payable except during loss periods when those potentially
 issuable common shares would decrease the loss per share. The effects of
 1,751,800 potentially issuable common shares outstanding at December 31,
 1998 were excluded from the calculation of diluted loss per share for the
 year ended December 31, 1998, as they would have decreased the loss per share.

 REVENUE RECOGNITION - The Company sells software products at fixed prices
 for which the right to return is granted to the buyer. Accordingly, revenue
 is recognized when the buyer has paid for the products and the amount of
 future returns can be reasonably estimated. Cost of products sold is
 recognized at the date the sale is recognized less an estimate for sales
 returns. Until the sale is recognized, products purchased from publishers
 are accounted for as consigned product from publishers and the related cost
 is not reflected in the financial statements with the exception of a
 limited amount of software inventory owned by the Company at year-end.

 NEW ACCOUNTING STANDARDS -  In March 1998, the AICPA issued SOP 98-1,
 "Accounting for the Costs of Computer Software Developed or Obtained for
 Internal Use." The Company is currently analyzing the impact of this
 statement, which is required to be adopted in 1999, and does not expect
 this statement to have a material impact on the Company's financial
 position, results of operations or cash flows.

 The Financial Accounting Standard Board issued SFAS No. 133, "Accounting
 for Derivative Instruments and Hedging Activities" in June 1998. This
 statement is effective for the year beginning January 1, 2000 and will not
 require retroactive restatement of prior period financial statements. The
 Company does not believe the new statement will have any impact on the
 financial statements but it has not completed its evaluation of SFAS 133.

 NOTE 2--ACQUISITIONS

 INNOVUS -  In May 1998, Intermark entered into an Agreement and Plan of
 Share Exchange (the "Agreement") with Innovus Corporation (Innovus), a
 publicly held Delaware corporation, which had discontinued its  operations
 by May 1998. Innovus had 1,215,375 (post 1-for-10 split) common shares
 outstanding on August 5, 1998 when the Agreement was completed. Under the
 terms of the Agreement, the shareholders of Intermark exchanged all of the
 3,783,875 Intermark common shares for 1,033,669 shares of common stock and
 78,706 shares of Series H preferred stock of Innovus and Intermark was
 reorganized into a newly-formed subsidiary of Innovus. The Series H
 preferred shares had voting rights equivalent to the 4,427,213 common
 shares into which they were convertible. As a result, the Intermark
 shareholders became the majority shareholders of the Company in a
 transaction intended to qualify as a tax-free reorganization. The
 transactions were accounted for as the recapitalization of Intermark at
 historical cost and the issuance of common stock in exchange for the net
 liabilities of Innovus in the amount of $860,071 which were recorded at
 their historical cost. The operations of Innovus were not significant to
 the operations of the Company; therefore, pro forma results of operations
 are not presented.

                                      F-7

 SOFTKAT -  On November 17, 1998, the Company acquired SoftKat, Inc,. a
 California corporation primarily engaged in the wholesale distribution of
 computer software games. In exchange for the SoftKat common shares, the
 Company issued 720,000 common shares and 600,000 shares of Series I
 redeemable, convertible preferred shares. Up to an additional 720,000
 common shares are contingently issuable  based upon the difference between
 the market price of the common stock one year from the date of acquisition
 and a target market price of $3.00 per share. The acquisition was accounted
 for using the purchase method of accounting. The acquisition purchase
 price, based upon the fair value of the common and preferred stock issued
 and the addition contingently issuable common shares, was $2,670,000. The
 excess of the purchase price over the estimated fair value of the
 identifiable acquired assets less liabilities assumed was $6,882,300, which
 was recognized as goodwill. The results of operations of SoftKat have been
 included in the 1998 consolidated financial statements from the date of
 acquisition and consisted of sales of $109,317 and a net loss of $111,359.
 Goodwill expense was recognized from the acquisition date on the
 straight-line basis using an estimated useful life of 3.6 years.

 In February 1999, Management of the Company decided to dispose of SoftKat
 because it did not meet the core business objectives of the Company. On May
 25, 1999, SoftKat was sold to a third party for $50,000 cash and a note
 receivable for $100,000 which resulted in the recognition of an impairment
 loss of $2,323,841. The subsequent sale and resulting loss provided
 evidence of conditions that existed at December 31, 1998; therefore, an
 impairment loss was recognized in 1998 in accordance with SFAS No. 121,
 "Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets
 to Be Disposed Of." The impairment loss was determined by the excess of the
 carrying amount of the assets in excess of the $50,000 subsequently
 collected and the amount of the related liabilities. The $100,000 note
 receivable was not considered in the computation of the impairment loss or
 the resulting carrying value of the assets to be sold, but will be
 recognized when and if collected. The resulting amount of the assets to be
 sold and the related liabilities assumed by the buyer have been presented
 separately in the accompanying balance sheet. The unaudited pro forma
 consolidated balance sheet is to present the Company's financial position
 had the disposition of SoftKat occurred on December 31, 1998.

 Pro forma information, assuming the acquisition and subsequent sale
 occurred on January 1, 1998 and 1997, would have exact opposite reporting
 effects, effectively netting to the pro forma results presented in the
 historical operations of the Company. Therefore, pro forma operating
 information relating to SoftKat is not presented.

 NOTE 3--EQUIPMENT

 Equipment consisted of the following:

     Furniture and fixtures                           $   3,233
     Computer equipment                                 155,882
     Office equipment                                     3,079
                                                      ---------
     Total                                            $ 162,194
                                                      =========

 Depreciation expense for the years ended December 31, 1998 and 1997 was
 $36,910 and $ 5,254, respectively.

                                      F-8
 NOTE 4--NOTES PAYABLE

 Notes payable consisted of the following:

 Capital lease obligations for equipment                      $     768

 12% Line of credit payable to a bank; secured by all
 assets of the Company; due September 30, 1998; in default       22,893

 40% Convertible note payable to a shareholder; unsecured;
 due March 15, 1999                                             300,000

 10% Series A Convertible debentures payable to three
 shareholders; secured by all assets of the Company;
 due October 31, 1998; in default                                75,000

 Note payable to a shareholder; no stated rate of
 interest; payable on demand; unsecured                           8,000
                                                              ---------
 Total Notes Payable                                          $ 406,661
                                                              =========

 In September 1997, the Company established a  line of credit with a limit
 of $25,000, with a bank. The note was due September 8, 1998. The loan is
 guaranteed by three officers of the Company and bears interest at 3% over
 the prime rate (12% at December 31, 1998). The Company has not made any
 principal payments since the inception of the loan and the loan is
 currently in default.

 From January through October 1998, the Company issued convertible notes
 payable totaling $495,500. The notes bore interest at 10% in addition to
 the amortization of the discount resulting from the beneficial conversion
 feature. The notes were converted into 142,383 shares of common stock and
 9,428 shares of Series H preferred stock in October 1998.

 The $300,000 note payable to a shareholder is convertible into common
 shares at $3.00 per share. The conversion period began on the date of the
 note and terminates on the due date of March 15, 1999 unless  the entire
 principal payment of the note is not made by the due date at which time the
 conversion right reverts back to the holder indefinitely. In December 1998,
 the Company issued 55,000 common shares to the note holder as interest on
 the note. The amount recorded as interest expense for these shares was
 $68,750. During 1999, the Company made cash payments of $30,000 interest
 and $125,000 principal to the holder. The Company is currently in default
 on the remaining balance of the loan.

 The 10% Series A convertible debentures in the amount of $25,000 each were
 issued in April 1998 to three shareholders. The note holders are entitled,
 at their option, to convert the debenture  principal face amount then
 outstanding, together with accrued interest, into shares of the Company's
 common stock at a conversion price of $0.125 per share. The Company is
 currently in default on the debentures.

 NOTE 5--INCOME TAXES

 There was no provision for or benefit from income tax for any period. The
 components of the net deferred tax asset at December 31, 1998 are shown below:


      Operating loss carry forwards                          $ 1,190,549
      Valuation Allowance                                     (1,190,549)
                                                             -----------
      Net Deferred Tax Asset                                 $        -
                                                             ===========

 For tax reporting purposes, the Company has net operating loss carry
 forwards in the amount of $2,896,848 which will expire beginning in the
 year 2011.

 The following is a reconciliation of the amount of tax (benefit) that would
 result from applying the federal statutory rate to pretax loss with the
 provision for income taxes.

                                      F-9

                                                    For the Years Ended
                                                        December 31,
                                                  ------------------------
                                                      1998         1997
                                                  -----------   ----------
      Tax at statutory rate (34%)                 $(1,692,637)  $ (206,145)
      Non-deductible expenses                       1,083,122       10,327
      Change in valuation allowance                   919,440      233,075
      State tax benefit, net of federal
       tax effect                                    (313,636)     (38,197)
      Change in effective tax rate                      3,711          940
                                                  -----------   ----------
      Net Income Tax Expense                      $        -    $       -
                                                  ===========   ==========

 NOTE 6--ACCRUED LIABILITIES

 Included in accrued liabilities are $612,170 in obligations to states and
 the federal government for overdue payroll taxes from previous years and
 the estimated interest and penalties owing on such tax and obligations for
 estimated payroll taxes, interest and penalties on 1996, 1997, and 1998
 officer wages and 1998 employee wages that have not been reported to the
 respective governmental agencies.

 NOTE 7--COMMITMENTS AND CONTINGENCIES

 CONSULTING AGREEMENTS -  On January 5, 1998, the Company entered into a
 software programming consulting agreement with an unrelated third party.
 Under the terms of the agreement, the consultant received cash payments of
 $2,000 in 1998 and $10,000 in 1999 upon completion of the project on April
 12, 1999. The consultant was also issued 45,000 shares of common stock on
 April 12, 1999.  The amount of expense recognized during 1999 on the shares
 issued was $146,250.

 On August 27, 1998, the Company entered into a marketing consulting
 agreement with an unrelated third party.  Under the terms of the agreement,
 the consultant was issued 30,000 shares of common stock for $100. The
 Company is obligated to issue 30,000 common shares each three months to the
 consultant. The agreement is through August 1999 and is cancellable by
 either party.  The amount of expense recognized on the shares issued under
 this agreement is calculated using the market value of the stock at the end
 of the three month period.

 LEASE COMMITMENTS -  The Company leases office and warehouse facilities
 under two-year agreements accounted for as operating leases. Lease expense
 for the years ended December 31, 1998 and 1997 was $56,400 and $51,875. In
 July 1998, the Company renewed one lease through May 31, 2000 at $4,700 per
 month. In May 1999, the Company moved to a  new office and warehouse
 facility and entered into a new five-year operating lease. The lessor of
 the existing lease granted the Company an unconditional release from the
 lease effective as of the date of relocation. Monthly minimum rental
 payments on the new lease are $20,010 to be adjusted upwards by 4% for each
 succeeding year during the term of the lease.

 The following is a schedule of future minimum rental payments required
 under existing leases and the new lease.

                 Years Ending December 31:
                         1999                           $  178,880
                         2000                              249,725
                         2001                              259,714
                         2002                              270,102
                         2003                              280,906
                         Thereafter                         97,381
                                                        ----------
                         Total                          $1,336,708
                                                        ==========

                                      F-10

 NOTE 8 -  SUPPLEMENTAL CASH FLOW INFORMATION AND NONCASH
            INVESTING AND FINANCING ACTIVITIES

 Supplemental Cash Flow Information -
                                                  For the Years Ended
                                                      December 31,
                                               ------------------------
                                                   1998         1997
                                               -----------   ----------
       Cash paid for interest                  $       256   $    3,876

 NONCASH INVESTING AND FINANCING ACTIVITIES -

 During the year ended December 31, 1998, the Company converted $25,000 of
 accounts payable to common stock.  The Company also converted notes payable
 in the amount of $558,131 and accrued interest in the amount of $9,967 into
 common stock.

 During August 1998, the Company issued 1,215,375 shares of common stock in
 exchange for the assets and liabilities of Innovus Corporation.
 Liabilities were assumed as follows:


       Fair value of assets acquired           $    46,670
       Common stock issued                         860,071
                                               -----------
       Liabilities Assumed                     $   906,741
                                               ===========

 On November 17, 1998, the Company issued 600,000 shares of Series I
 Preferred Stock and 720,000 shares of common stock in exchange for all of
 the issued and outstanding common stock of SoftKat, Inc.  In conjunction
 with the acquisition, liabilities were assumed as follows:

       Fair value of assets acquired
        other than goodwill                    $   789,670
       Goodwill                                  6,882,300
       Common and preferred stock issued        (2,670,000)
                                               -----------
       Liabilities Assumed                     $ 5,001,591
                                               ===========

 NOTE 9 -  STOCKHOLDERS' EQUITY

 On August 5, 1998, Intermark was recapitalized as discussed in Note 2. To
 effect the recapitalization, the Intermark shareholders at that date
 exchanged all of the 3,783,875 outstanding Intermark common shares for
 78,706 shares of Series H preferred stock and 1,033,669 common shares of
 Innovus (now eSynch Corporation). The recapitalization of Intermark was
 accounted for at historical cost. The accompanying financial statements,
 including the following description of equity transactions, have been
 restated for all periods presented to reflect the preferred and common
 shares issued in the recapitalization. On November 9, 1998, the
 shareholders approved a 1-for-10 reverse stock split of all common shares
 outstanding at that date.  The accompanying financial statements have also
 been restated for all periods presented to reflect the stock split on a
 retroactive basis.

 The Series I redeemable preferred stock has a liquidation preference of
 $1.00. The Company is required to redeem 200,000 shares of the preferred
 stock at $1.00 per share upon obtaining financing of $1,500,000 or more
 from any source and must redeem an additional 200,00 shares of preferred
 stock upon obtaining an additional $3,000,000 in funding. Dividends on the
 preferred stock are payable prior and in preference to any declaration or
 payment of any dividends on the common stock, when, as, and if declared by
 the Board of Directors. However, there is no stated dividend rate. The
 preferred stock is convertible, at the option of the holder, into common
 stock at the lesser of $3.00 per share or the average closing bid price of
 the common stock over the ten trading days ending on either November 16,
 1999 or an earlier date on which the Company receives a second funding of
 at least $3,000,000 mentioned above. The preferred stock has voting rights
 equivalent to the number of common shares into which it can be converted
 and has additional voting rights with respect to approval of any issuance
 of a senior series of preferred shares.

                                      F-11

 On October 3, 1995, the Company issued 16,254 shares of Series H preferred
 stock and 21,350 common shares for $8,000 cash at $0.01 per common
 equivalent share.  On May 19, 1997, the Company issued 44,697 shares of
 Series H preferred stock and 58,699 common shares to members of the Board
 of Directors as compensation for their services during 1995. The shares
 were valued at $22,000, or $0.01 per common equivalent share, which was the
 fair value of the services provided and the fair value of the preferred and
 common shares issued as established by management of the Company and based
 upon the value at which shares were issued for cash during 1995. The
 Company issued 7,091 shares of Series H preferred stock and 9,308 common
 shares effectively in July 1997 for services valued at $229,165, or $0.56
 per share.

 On August 5, 1998, 1,112 shares of Series H preferred stock and 1,461
 common shares were issued for services valued at $164,876, or $2.58 per
 common equivalent share. The value of these services was determined based
 upon the trading price of the Company's common stock at that date. On
 September 16, 1998, the Company issued 1,580 shares of Series H preferred
 stock to third parties for services.  The services were valued at $112,108
 based upon the trading price of the Company's common shares into which the
 preferred shares were convertible, or $1.26 per common equivalent share on
 the date issued.

 On August 5, 1998, for financial reporting purposes, the Company issued
 1,215,375 common shares to acquire Innovus, as further discussed in Note 2.
 Innovus was a shell corporation with no operations and nominal assets.
 Therefore, the shares were recorded at the historical cost of the net
 liabilities assumed of $860,071.

 During 1998, the Company issued 9,428 shares of Series H Preferred stock
 and 172,548 common shares for  notes payable and accrued interest. The
 value of the notes converted was $558,131 and the value of the accrued
 interest converted was $9,969.

 On November 9, 1998, the Series H preferred shareholders converted 80,286
 shares of Series H preferred stock, pursuant to their terms, into 4,516,088
 common shares at the rate of 56.25 common shares for each preferred share
 converted.

 The Company recognized $355,567 of interest expense relating to beneficial
 debt conversion features associated with notes payable issued during 1998.
 The value of the conversion feature was determined based upon the
 difference between the fair value of the Company's common stock on the
 dates the notes were issued and the conversion rates. The proceeds received
 were allocated $355,567 to the beneficial conversion feature and the
 remainder to the notes. The resulting discount on the notes was recognized
 as interest expense through the dates the notes were first convertible
 which were the same dates as the notes were issued.

 On November 17, 1998, the Company acquired SoftKat, Inc. in exchange for
 the issuance of 720,000 common shares and 600,000 redeemable, convertible
 Series I preferred shares. Up to an additional 720,000 common shares are
 contingently issuable based upon the difference between the market price of
 the common stock one year from the date of acquisition and a target price
 of $3.00 per share. The purchase price, based upon the fair value of the
 common and preferred stock issued was $2,670,000.

 An officer of SoftKat was issued 100,000 common shares as compensation. The
 value of these shares was $116,000. The value of the services was
 determined based upon the fair value of the services provided and the fair
 value of the preferred and common shares.

 On December 18, 1998, the Company issued 20,000 common shares as a
 settlement of accounts payable. The value of the accounts payable
 was $25,000.

 As described in Note 4, on December 8, 1998, the Company issued 55,000
 common shares to a note holder as interest on a note payable. The value of
 these shares was $68,750 and was determined using the fair value of the
 common shares on the date of issuance.

                                      F-12

 NOTE 10 -  FORGIVENESS OF DEBT

 The Company negotiated reductions in accounts payable during 1998 and paid
 the negotiated amounts.  The amount of the debt forgiveness is $14,423 and
 has been accounted for as an extraordinary gain.

 NOTE 11 - STOCK OPTIONS

 The Board of Directors approved a stock option plan in April of 1998 which
 authorized options to purchase 600,000 shares of common stock.  Options to
 purchase 540,000 common shares were granted under the plan on April 24,
 1998, with a weighted-average exercise price of $0.99 per shares. The Plan
 was approved and the options were granted. The options became exercisable
 immediately. 450,000 of the unexercised options expire on April 24, 2003
 and the remaining 90,000 unexercised options expire on April 24, 2008.
 Compensation relating to the options of $69,288 was recognized when the
 shares vested which was on the date of grant. After the merger with
 Innovus, the number of options and the price of the options were
 recalculated. The number of options now exercisable is 631,800 with a
 weighted average exercise price of $0.90. 549,900 of the options expire on
 April 24, 2003 and the remaining 81,900 options expire on April 24, 2008.
 No additional expense needs to be recognized in association with the
 recalculation of the options outstanding and the exercise price.

 A summary of the status of the Company's stock options as of December 31,
 1998 and changes during the year then ended are presented below:


                                                   1998
                                        -----------------------------
                                                     Weighted-Average
                                          Shares      Exercise Price
                                        ------------   ------------
 Outstanding at beginning of year               -                -
 Granted                                   1,031,800   $       0.90
                                        ------------
 Outstanding at end of year                1,031,800           0.90
                                        ============
 Options exercisable at year-end             631,800           0.84
                                        ============
 Weighted-average fair value of
 of options granted during the year     $       0.91
                                        ============

 The following table summarizes information about stock options outstanding
 at December 31, 1998:

              Options Outstanding                      Options Exercisable
    -----------------------------------------------  ------------------------
                             Weighted-
                              Average    Weighted-                Weighted-
                 Number      Remaining   Average       Number      Average
     Range of  Outstanding  Contractual  Exercise    Exercisable   Exercise
      Prices   At 12/31/98     Life        Price     At 12/13/98     Price
    ----------  ----------  ----------   ----------  -----------   ----------
      $0.25        81,900   9.32 years     $0.21       81,900        $0.21
 $0.855 - $1.00   949,900     4.70         $0.96      549,900        $0.94

 The Company measures compensation under stock-based options and plans using
 the intrinsic value method prescribed in Accounting Principles Board
 Opinion 25, Accounting for Stock Issued to Employees, and related
 interpretations. Stock-based compensation charged to operations was $69,288
 and $0 for the years ended December 31, 1998 and 1997. Had compensation
 cost for the Company's options been determined based on the fair value at
 the grant dates consistent with the alternative method set forth under
 Statement of Financial Accounting Standards No. 123, Accounting for
 Stock-Based Compensation, net loss and loss per share would have increased
 to the pro forma amounts indicated below for the year ended December 31, 1998:

                                      F-13

      Net loss:
         As reported                           $ (4,978,342)
         Pro forma                               (5,415,327)
      Basic and diluted loss per share:
         As reported                           $      (0.91)
         Pro forma                                    (0.99)

 The fair value of each option granted was estimated on the date of grant
 using the Black-Scholes option-pricing model with the following
 weighted-average assumptions used for grants in 1998 and 1997,
 respectively: dividend yield of 0.0% for both periods; expected volatility
 of 73.0% and 0%; risk-free interest rate of 5.63%, 5.68% and 0% and
 expected life of the options of 5.0 years, 10.0 years and 0.0 years.

 NOTE 12 -  SUBSEQUENT EVENTS

 On January 13, 1999, the Company entered into a one-year agreement with a
 consulting firm to provide financial advisory services for the Company. As
 consideration for these services, the Company issued 200,000 five-year
 warrants to purchase shares of the Company's common stock at $1.25 per
 share. In addition, the Company has agreed to compensate the consulting
 firm based on the total consideration the Company receives in the future
 from the consulting firm's efforts as follows: 5% on the first $1,000,000,
 4% on the next $1,000,000, 3% on the next $1,000,000, and 2% on any
 balance.

 On January 28, 1999, the Company entered into consulting agreements whereby
 the consultants are to provide various services to the Company including
 negotiating contracts on behalf of the Company and introducing the Company
 to various Internet companies.  As consideration for these services, the
 consultants received 310,000 shares of common stock. The 1999 expense
 recognized for these shares will be  $450,500.

 On March 9,1999, the Company acquired Kiss Software Corporation ("Kiss"), a
 California corporation engaged in the wholesale and retail distribution of
 computer and Internet utility software products. Under the agreement,
 shareholders of Kiss agreed to exchange each of their common shares for
 .181557136 common shares of eSynch and each of their preferred shares for
 .4183964 common shares of eSynch. The exchange resulted in the Company
 issuing 1,428,134 common shares to Kiss  shareholders. The Company also
 issued 163,187 options in conjunction with the purchase. These options are
 exercisable at $2.05 each. The acquisition has been accounted for using the
 purchase method of accounting. The acquisition purchase price, based upon
 the fair value of the common stock and options issued, was estimated at
 $4,141,978 (unaudited). The excess of the purchase price over the estimated
 fair value of the identifiable acquired assets less liabilities assumed was
 $5,237,979 (unaudited), which will be recognized as goodwill. Goodwill will
 be amortized over 3.11 years on a straight-line basis.

 On March 19, 1999, the Company borrowed $250,000 from an unrelated third
 party. The related note is unsecured and interest accrues at the rate of
 5.0% per annum. The note and accrued interest are  payable on or before
 July 5, 1999.

 On March 15, 1999, the Company entered into a lease agreement for new
 facilities. The base monthly rental is $20,010 and is adjusted each year by
 4% over the previous years base rent after adjustment.  The term of the
 lease is for five years and the Company has the option to extend the lease
 for an additional five years.

 On March 25, 1999, an officer of the Company loaned the Company $90,000 at
 an interest rate of 10%.  The principal amount of the note was repaid
 shortly thereafter.

 On April 22, 1999, the Company entered into a one year agreement with a
 consultant to assist the Company in raising equity financing. The advisor
 is to receive 5% of the gross amount of the proceeds of any equity
 financing consummated by the Company during the term of the agreement.

 On May 25, 1999, the Company sold all of the stock of SoftKat, Inc. to an
 unrelated third party for $50,000  cash and a note receivable of $100,000
 due 180 days after the date of sale. See Note 2.

                                      F-14

 On June 1, 1999, the Company entered into a one year agreement with a
 consulting firm whereby the firm is to provide ongoing stock market support
 for the Company. The agreement is renewable for successive one year
 periods. As consideration for these services, the Company is to pay $48,000
 ($4,000 monthly) plus reasonable expenses. For the period of June 1, 1999
 through August 31, 1999, the monthly amount is to be paid in commons shares
 of the Company. The first cash payment of $4,000 is due September 1, 1999.

 On June 10, 1999, the Company issued 75,000 shares of common stock for
 $150,000 in cash. (Unaudited.)

 On June 11, 1999, the Company agreed to pay $50,000 in cash and agreed to
 issue 9,039 shares of common stock as a compromise and settlement of a
 lawsuit relating to a legal dispute between Kiss Corporation and a
 third-party. (Unaudited.)

 On June 11, 1999, the Company received a signed commitment from an
 investing source for equity financing in an aggregate amount of $2,500,000,
 subject to certain terms and conditions. The financing is to be in the form
 of convertible preferred stock and warrants issued by the Company. The
 Company is obligated, at its expense, to register the stock within 60 days
 of closing, with an effective date within 150 days after closing or the
 investors will be entitled to a registration payment equal to 2% of the
 purchase price for the first 30 days the Company is tardy and 3% for every
 30 day period thereafter. (Unaudited.)

 Subsequent to December 31, 1998, the Company issued 478,500 shares of
 common stock to various individuals for services provided to the Company.
 The expense recognized from the issuance of these shares will be $927,175.
 (Unaudited.)

                                     F-15