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, 2001

          [ ] 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)

                        3511 W. Sunflower Ave, Suite 250
                              Santa Ana, CA  92704
                    (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 X No

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

The issuer's revenues for the fiscal year ended December 31, 2001 were $376,802.

As  of  April  5, 2002, 54,289,618 of the issuer's common shares were issued and
outstanding,  approximately  48,504,863 of which were held by non-affiliates. As
of  April  5,  2002, the aggregate market value of shares held by non-affiliates
was  approximately  $2,425,243 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

OVERVIEW
--------

eSynch  Corporation,  a  Delaware  corporation  founded  in  1994, who's primary
activities  of  eSynch  Corporation  have  consisted of developing and marketing
media  rights  management  solutions,  encryption  and  key-clearing  services,
video-on-demand  services  and  video  streaming  through the Internet, software
sales  through  the Internet, video encoding, compression and authoring, raising
capital,  and  acquiring  businesses.  eSynch  designs,  develops,  markets  and
supports  intelligent  digital  media  solutions  and  services, including media
rights  management, audio and video encryption, delivery, tracking, key clearing
and measurement tools, and streaming media services. The Company has developed a
suite  of  software and related components designed for the delivery of live and
on-demand audio and video through cable, satellite and the Internet. The Company
provides  turnkey  solutions,  offering  services  necessary  to  provide secure
streaming  media including software development and implementation of e-commerce
applications,  production,  encoding,  decoding  and  encryption,  client-side
metrics,  reporting,  content  management,  pay-per-view  streaming, hosting and
archiving.  The  Company's  software helps businesses deliver high-quality video
content  to  their  customers.  The  Company  also develops PC utility products,
primarily  for  the  Internet  user.

During  2001,   We  continued  sales  of  our  popular utility software products
including  RamOptimizer,  a  PC  utility  for  improving  memory  management,
InvisibleFolders,  a  PC utility that allows end-users to easily hide any folder
(or  group of folders) with a simple keystroke combination, StartUpManager, a PC
utility  to  help users manage their startup applications by reducing the amount
of  system resources opened at start up, and BroadbandWizard.  Increasingly more
of  the  Companies  future  revenues stem from its industry leading media rights
management  solutions  including  its  encryption  capability.

ESynch  MediaOffice(tm),  ChoiceCaster(tm),  SiteStreamer(tm),  KISSCO(tm),
BroadbandWizard(tm),  NetMonitor(tm),  RamOptimizer(tm),  StartUpManager(tm),
InvisibleFolders(tm)  are  trademarks  or  service  marks  of the Company or our
subsidiaries.  All  other  trademarks  or  trade names are the property of their
respective  owners.

PRODUCTS
--------

 eSynch continues to develop software technologies that address opportunities in
the  digital  media  space. In 2001, we introduced  software technologies in the
digital  media  space  and  software  for  the  PC  utility  market.
eSynch  MediaOffice(TM)  is  an  advanced  set  of  tools based on the Microsoft
Windows  Media Rights Manager platform to provide a fully integrated and readily
available  digital  rights  management  system.
eSynch SiteStreamer(TM) is the easy way to display video content within the best
graphical  interfaceyours.  SiteStreamer(TM)  will  help  you increase customer
satisfaction,  further  promote  your  brand,  and  create  additional  revenue
opportunities.
eSynch  MediaPod(TM)  is  an  audiovisual presentation platform with interactive
search  and  navigation capabilities that enables the user to easily control the
viewing  experience.  Designed  to let viewers interact with information the way
they  want,  looking  at  parts  that interest them, skipping ahead to others or
going  deeper  when desired, the MediaPod Player(TM) puts the viewer in control,
thereby  permitting  them  to  engage  with  the  content.
eSynch MediaMosaic(TM) provides users a multi-media presentation experience. The
drag  'n  drop  windows  can  include  one  or  more  of the following: table of
contents,  transcript,  image  viewer,  and  related  documents  and HTML pages.
Broadband  Wizard(TM)  4.0 by KISSCO is the easiest way to test and optimize the
speed  of  your  DSL,  cable  or  other  high  speed  Internet  connection.
Invisble  Folders  Drag and drop any folder into Invisible Folder's main window,
press  a  button,  and  the folder will disappear! Press another button, enter a
password,  and  the  folder  will  reappear.
RAM  Optimizer  allows  you  to  instantly free up memory when your system slows
down.
StartUp  Manager  allow  you  to  easily  turn  off any program that starts with
Windows,  even  those  that  don't  appear  in  the  Windows  StartUp  folder.

BUSINESS  SEGMENTS  AND  GEOGRAPHIC  AREAS
------------------------------------------

We  currently  operate  in  two  business segments: global services for Internet
content  and  streaming  media applications and PC utility software. Although we
offer our services in a number of foreign locations, over 90% of our revenue has
been  derived  from  customers  located  in  the  United  States.

CUSTOMERS
---------

The  Company  introduced its first PC utility software in 1997 and digital media
software  in  late  2000.  Our  customer base spans a broad spectrum of Internet
categories,  including  sales  of PC utility software to the world wide consumer
market,  digital media technology and services directly and through partnerships
and  resellers  to  entertainment  companies,  content  owners  and  web  based
businesses  for  the  year  ended  December  31,  2001.

SALES,  SERVICES  AND  MARKETING
--------------------------------

We currently sell our technology and services through a direct sales force and a
network  of  partnerships and resellers. Our plan is to continue to pursue major
content  providers  through  our  direct  sales force and to enter other markets
through  our  reseller  program  and  other  indirect  distribution channels. In
December  2000  we  implemented  a  reseller program with Web hosting companies,
system  integration  firms,  streaming technology companies and commerce service
providers.  During  the year ended December 31, 2001, indirect sales represented
20%  of  our  revenue.

ENGINEERING  AND  DEVELOPMENT
-----------------------------

We  have  developed  working  deliverable  technology solutions and believe that
continued  strong  product and service development capabilities are essential to
enhancing  our core technologies, developing new applications for our technology
and  maintaining our competitiveness. We have invested and intend to continue to
invest  a significant amount of human and financial resources in our engineering
and  development  organization.

We are focusing our engineering and development efforts on enhancing our digital
rights  management,  encryption and end to end solutions designed to efficiently
monetize  content  owner  assets  and  building on our technology to develop new
services.

COMPETITION
-----------

The solutions market for Internet content commerce and digital rights management
is  new, intensely competitive and characterized by rapidly changing technology,
evolving  industry standards and frequent new product and service announcements.
We  expect competition to increase both from existing competitors and new market
entrants  for  various  components  of  our  products.

The  markets for the Company's Internet offerings are highly competitive and are
characterized  by  pressures  to  incorporate  new  features  and accelerate the
release of new versions. This makes our proprietary technology and dedication to
R&D  capabilities and employee resources of great value to our customers as well
as  a  point  of  differentiation  from our competition.  While many competitors
claim  to  have  a digital rights management capability, our technology combined
with our substantial broad service partnering provide rapidly deliverable end to
end,  scalable digital rights management solutions for the now increasingly ripe
demand  for  the  Internet  distribution  channel.

We  also  continue to face intense competition in the software utilities market,
including  from  much  larger, well-financed software developers and publishers.
Microsoft Corporation, for instance, has historically succeeded at incorporating
utilities  into its operating systems. Numerous other software companies compete
in  the  software  utilities area, and numerous software utilities are available
without  charge  from  their  providers.

Increased  competition  could result in price reductions, fewer customer orders,
reduced  gross  margins  and loss of market share, any of which could materially
and  adversely  affect  our  business,  financial  condition  and  operations.

FACTORS  AFFECTING  FUTURE  OPERATING  RESULTS
----------------------------------------------

We  believe  that this document contains "forward-looking statements" within the
meaning  of  the  Private  Securities  Litigation  Reform  Act  of  1995.  These
statements  are  subject to risks and uncertainties and are based on the beliefs
and  assumptions  of  our management based on information currently available to
our  management.  Use  of  words  such  as "believes," "expects," "anticipates,"
"intends,"  "plans,"  "estimates,"  "should,"  "likely"  or similar expressions,
indicate  a forward-looking statement. Forward-looking statements involve risks,
uncertainties  and  assumptions.  Certain  of  the information contained in this
annual  report  on  Form  10-K consists of forward-looking statements. Important
factors  that  could  cause  actual  results  to  differ  materially  from  the
forward-looking  statements  include  the  following:

We  are  primarily dependent on our Internet content, applications and streaming
media  delivery  services and our future revenue depends on continued demand for
our  services.

Currently,  our  future growth depends on the commercial success of our Internet
content,  applications  and  streaming  media  products  and  other services and
products  we  may  develop and/or offer. While we have been selling our services
commercially  since  1997, sales may not continue in the future for a variety of
reasons.  First,  the  market  for  our  existing services is relatively new and
issues  concerning  the  commercial  use  of  the  Internet, including security,
reliability,  speed,  cost,  ease  of  access,  quality  of  service, regulatory
initiatives and necessary increases in bandwidth availability, remain unresolved
and  are  likely  to  affect  its  development.

Any  failure  of  our network infrastructure could lead to significant costs and
disruptions  which  could  reduce  our  revenue and harm our business, financial
results  and  reputation.

PROPRIETARY  RIGHTS,  PATENTS,  TRADEMARKS  AND  COPYRIGHTS
-----------------------------------------------------------

The Company regards certain features of its products and services as proprietary
and  relies  on  a  combination of patent, copyright, trademark and trade secret
laws,  confidentiality  procedures  and  contractual  provisions  to protect its
proprietary  information.

The  Company  has  filed a patent application for technology used in its digital
rights  management,  encryption,  streaming  media product and services business
segment.

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 current 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.

RESEARCH  AND  DEVELOPMENT
--------------------------

During  the  year-ended  December  31,  2001,  the  Company  spent approximately
$257,775  on research and development related to the various streaming media and
other product initiatives launched in the period. During 2000, the Company spent
approximately  $493,000  on  research  and  development.

EMPLOYEES
---------

As  of  March 2002 eSynch had 14 full-time employees and no part-time employees.
Of  our  full-time  employees,  2  are  in  marketing and sales, 4 are in senior
management,  2  are  in  administration,  2  are  in  development  and 4 were in
operations.

We  believe that our relations with our employees are satisfactory. We are not a
party  to any collective bargaining agreements and we have never experienced any
work  stoppage.  As  eSynch  continues  to  grow and introduce more products and
services,  we  expect  to  hire  additional  personnel.

COMPANY  HISTORY
----------------

We  were  incorporated  in  Delaware  on  December 21, 1988, as Tri-Nem, Inc. On
October  5,  1994,  the  Company  changed  its  name  to Innovus Corporation. On
November  9,  1998,  the  Company  changed  its  name  to  eSynch  Corporation.

On  August  5,  1998,  we  were acquired through a reverse merger agreement with
Intermark  Corporation.  Our  headquarters  was  moved  from  Utah  to  Southern
California.

During  the first half of 1998, the Innovus operations were reduced dramatically
in order to conserve cash. We stopped manufacturing or developing our multimedia
authoring  software.  After  the  acquisition,  we  focused  our efforts on debt
reduction  and winding up the former business of Innovus Multimedia Corporation.
We  began a new business direction with the software publishing and distribution
business  of  Intermark  and  development  of its proprietary Electronic Digital
Delivery  technology.

In  November  1998,  all  of  the  shares  of common stock were reclassified and
combined  in  a  one-for-ten  reverse  stock  split.

In  November 1998, we acquired the stock of SoftKat, Inc. We sold SoftKat in May
1999  to  further  strengthen  our focus on electronic software distribution and
e-commerce.  We  believed  that  the  SoftKat business could not be economically
converted  to  one  that  would  emphasize electronic software distribution over
traditional  physical  goods  distribution.  In  addition,  we  determined  that
SoftKat's  financial  condition  and  prospects  generally  were  poorer  than
anticipated  and  discovered  matters  unknown  to  us  prior  to  the  SoftKat
acquisition  that  resulted  in  litigation.

On  April  1, 1999, we acquired the stock of Kiss Software Corporation (KISSCO),
of  Newport  Beach,  California.  Kissco  develops, publishes and sells Internet
utility  products.

On  September  30,  1999,  we  acquired the stock of Oxford Media Corporation, a
leading  designer  and  developer  of  digital technologies for video-on-demand.

RECENT  ANNOUNCEMENTS
---------------------

Recently  the  Company created a number of strategic business relationships with
notable  digital rights management and e-commerce companies including MicroSoft,
IBill,  PayCom,  BuyMicro,  IBM,  and  TEC  Networks.

ITEM  2.  DESCRIPTION  OF  PROPERTY

Our headquarters is an office facility in Santa Ana, California of approximately
5,000  square  feet under 15 month lease. Management currently believes that the
space  will adequately provide for our hosting, streaming, encoding, encryption,
key clearing, publishing, marketing and sales operations as well as research and
development and engineering. The condition of the property is good. The property
is  located  in an office and industrial area with nearby access to freeways and
airports.

ITEM  3.  LEGAL  PROCEEDINGS

ESYNCH  AND  SUBSIDIARIES
-------------------------

We  are  involved  in  several lawsuits in the normal course of business and all
amounts  for  exposure  to  these  lawsuits  have been recorded in our financial
statements  except  as  noted  below.

On  May 18, 1999, a complaint was filed against the Company in the Sonoma County
Superior  Court,  State of California. The complaint alleged that we owed, based
on  a  theory of successor liability, $84,801 for damages resulting from a lease
between the plaintiff and SoftKat, Inc., and a judgment obtained against SoftKat
for unpaid rent. We filed an answer denying that we were obligated to pay any of
these claims and we opposed any attempt to impose successor liability. At trial,
the  court  rendered  a  judgment,  subject  to  appeal,  in  favor  of  eSynch.

In  September,  1999,  a  lawsuit was filed by C-Group in United States District
Court,  District  of  Maryland, against Intermark seeking $99,110 for goods that
were  claimed  to  be  purchased  by  Intermark. In October, 1999, the plaintiff
amended the complaint and reduced the amount it is seeking to $81,326. In March
2001 a judgment was entered against Intermark  in the amount of $133,658 related
to the claim against Intermark which included $53,332 related to a claim against
Softkat.  The  Company  was not  properly  notified  and the  judgment  will be
Appealed.  As of December 31, 2000 the Company accrued $81,326.  During the year
Entered December 31, 2001 the Company accrued the remaining $52,332.

In  June  2000, the Company was named as a co-defendant along with its landlord,
Bixby  Land  Company,  in a lawsuit filed by Terry Murphy, a former employee, in
California  Superior  Court,  County  of  Orange,  claiming  unspecified damages
resulting  from  an  accident  that  occurred  at  the Company's leased offices.
Subsequently,  Bixby  filed a cross-complaint against the Company related to the
lawsuit  seeking  indemnity, equitable contribution and declaratory relief.  All
litigation  related  to  this situation has ended and the Company has been found
not  liable.

On  January  11,  2001, the Company was named as defendant in a lawsuit filed by
Post  Modern  Edit,  LLC,  in  California Superior Court, County of Los Angeles,
seeking  damages  of  not  less  than  $50,000  for  breach of a confidentiality
agreement,  breach  of  contract,  and  other  claims  related to a proposed but
unconsummated  acquisition  by  the  Company  of Post Modern Edit. The Company's
outside  litigation counsel is reviewing the lawsuit and an appropriate response
will  be  timely  filed.  This  claim  was  settled  for  $6,300  in  May  2001.

On  April  3,  2001, a lawsuit was filed by BFree Ltd. in Superior Court, County
of  Orange, California, against the Company as successor to Innovus Corporation,
seeking  $25,544 for goods and services claimed to have been provided to Innovus
during 1997.   A settlement reduced the liability to $4,000 in March of 2002 and
payments  of  $500  per  month  will  retire  this  obligation by November 2002.

On  July 18, 2001, David P. Noyes, the Company's former Chief Financial Officer,
filed  a  claim  with the Labor Commissioner, State of California, for wages due
under an employment contract seeking $96,572. Mr. Noyes was terminated for cause
by  the  Company  in  November 2000. This claim was reduced to $13,239.47 by the
Federal  Labor Board and left undecided a claim by the Company against Mr. Noyes
for  an  unpaid  $20,000  loan  plus  interest.
The  Company  is  filing  a  counter  claim  for  repayment  of  the  loan.

On  July 26, 2001, Bixby Land Company, the Company's landlord, filed an unlawful
detainer  action  to  recover  delinquent  rent  and  penalties in the amount of
approximately  $125,000.   On  November  1st,  2001  the  Company  relocated its
corporate  offices  to  29  Hubble  Irvine,  CA  92618.  In October a settlement
agreement  with  Bixby  Land  Company  was reached regarding a settlement of the
Company's  liability  of  $808,134  with  respect  to a lease obligation for the
Tustin  facility.  The  settlement  agreement provided that the Company would be
release  from  all  future  payments under the terms of the lease if the Company
made  payments  totaling $100,000 and transferred the Company's existing $60,010
security  deposit  to  the  landlord.  The  Company  did  not  make the required
payments  under  the  settlement  agreement.  In  October 2001, Bixby received a
judgment against the Company for $136,058.  As of December 31, 2001, the Company
accrued  the  $136,058  and  expensed  the  security  deposit.  The  Company  is
currently  negotiating  a  reduced  settlement  with  Bixby  Land  Company.
Additionally  in  conjunction  with  this  event the Company has written off the
total  net  asset  value  of  its  leasehold  improvements  of  $51,174.

On  December  18,  2001,  the  Company  settled with Digital Leisure, Inc. for a
$7,500  payment  arrangement,  which  was  paid  in  full  by  February 1, 2002.

On  August  9, 2001, an action was filed in California Superior Court, County of
Orange,  against  the  Company,  certain  officers  and its current Directors by
Donald  C.  Watters, the Company's former president, chief operating officer and
director,  claiming  breaches  of  contract,  good  faith  and fair dealing, and
fiduciary  duty,  and  tortious adverse employment action in violation of public
policy.  Mr.  Watters  is  seeking  general damages of not less than $2,780,000,
punitive  damages,  interest,  attorney's  fees and court costs. Mr. Watters was
terminated  by  the  Company for cause. The Company believes that the claims are
without  merit  and intends to vigorously defend the action and thus nothing has
been  accrued  as  of  December  31,  2001.

On  August  10,  2001,  a  lawsuit  was  filed  by Kforce.com seeking to collect
approximately  $43,000 claimed to be owed under a Consulting Services Agreement.
The  claim  was  fully  accrued  in  the  Company's  financial  statements as of
September 30, 2001 and The Company agreed to a settlement of $42,315 with Kforce
on  March  14,  2002.

In  September,  2001  a lawsuit was filed by Technopolis Communications, Inc. in
the Superior Court of California, County of Orange, against Innovus Corporation,
dba  eSynch  Corporation,  seeking  $35,733  for  services  claimed to have been
provided to eSynch.  The case is currently in the discover stage and a mandatory
settlement  conference  date  has been set.  As of December 31, 2001 the Company
has  accrued  $50,000.

On July 27,  2001,  the Company  filed  a  complaint  against  eLiberation
Corporation,  which  was  subsequently amended  January  3,  2002.  The  Company
seeks compensatory  damages  in  the amount of $39,671.  On  September 28, 2001,
eLiberation Corporation  filed a  cross-complaint  against  the  Company and  an
officer  claiming  that  the  Company  and  the  officer  deliberately
misrepresented  and  made  false  representations  to  eLiberation  Corporation.
eLiberation  Corporations  seeks  general  and  special damages in the amount of
not  less  than  $2,500,000.  The  Company  believes that the cross-complaint is
without  merit  and  intends  to  vigorously  defend the action and thus nothing
has  been  accrued  as  of  December  31,  2001.





                                     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
April  5, 2002, the high and low prices for the Common Stock on the OTC Bulletin
Board  were $0.05 and $0.04, 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. As of April 15, 2002, there
were  approximately  264  holders  of  record  of  the  Common  Stock.


<TABLE>
<CAPTION>

                                            High          Low
                                            ----          ---
Year Ended December 31, 2001
----------------------------
<S>                                       <C>           <C>
January 1 to March 31, 2001                $1.56         $.28
April 1 to June 30, 2001                   $.43          $.23
July 1 to September 30, 2001               $.35          $.12
October 1 to December 31, 2001             $.17          $.04

Year Ended December 31, 2001
----------------------------
January 1 to April 5, 2002                 $.09          $0.04
</TABLE>

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
Secured  Convertible  Debentures or shares of Series J Preferred Stock, Series K
Preferred Stock and Series L 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

The  Company  issued  the  following  shares  without  registration  under  the
Securities  Act  of  1933  during  the  year  ended  December  31,  2001.

The  Company  issued  Common  Stock  as  follows: 672,727 shares for cash in the
amount  $135,000;  75,000  shares  for  services  of $24,638; 801,187 shares for
purchase  of  technology of $275,448; 153,377 shares for interest of $40,190 and
20,000  shares  in  exercise of stock options and warrants. These issuances were
made  pursuant  to  Section  4(2).

 The  Company  believes  such  issuances  were  exempt pursuant to Regulation D,
Regulation  S,  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  found  elsewhere  herein.

The  following  discussions  contain forward-looking statements regarding eSynch
and  its  wholly  owned  subsidiaries,  its  business,  prospects and results of
operations  which  are  subject to certain risks and uncertainties posed by many
factors and events that could cause the Company's actual business and results of
operations  to  differ materially from those that may be expressed or implied by
such  forward-looking  statements.

OVERVIEW
--------

eSynch  Corporation  designs, develops, markets and supports intelligent digital
media solutions and services, including media rights management, audio and video
encryption,  delivery,  tracking,  key clearing and measurement tools, streaming
media  services.  We  have  developed a suite of software and related components
designed  for  the delivery of live and on-demand audio and video through cable,
satellite  and  the  Internet. We provide turnkey end-to-end solutions, offering
all  of  the  services  necessary  to  provide secure streaming media including,
strategic  consulting,  software  development and implementation, development of
e-commerce  applications,  production,  encoding  and  decoding,  encryption,
client-side  metrics,  up-linking,  web  site  development  and  integration,
distribution,  reporting,  digital  conversion, content management, pay-per-view
streaming,  hosting  and  archiving.  Our  software  helps  businesses securely,
profitably,  and  effectively  deliver  high-quality  video  content  to  their
customers.  The  Company  also  develops  PC utility products, primarily for the
Internet  user.

PRODUCTS
--------

eSynch  continues to develop software technologies that address opportunities in
the  digital  media  space. In 2001, we introduced  software technologies in the
digital  media  space  and  software  for  the  PC  utility  market.
eSynch  MediaOffice(TM)  is  an  advanced  set  of  tools based on the Microsoft
Windows  Media Rights Manager platform to provide a fully integrated and readily
available  digital  rights  management  system.
eSynch SiteStreamer(TM) is the easy way to display video content within the best
graphical  interfaceyours.  SiteStreamer(TM)  will  help  you increase customer
satisfaction,  further  promote  your  brand,  and  create  additional  revenue
opportunities.
eSynch  MediaPod(TM)  is  an  audiovisual presentation platform with interactive
search  and  navigation capabilities that enables the user to easily control the
viewing  experience.  Designed  to let viewers interact with information the way
they  want,  looking  at  parts  that interest them, skipping ahead to others or
going  deeper  when desired, the MediaPod Player(TM) puts the viewer in control,
thereby  permitting  them  to  engage  with  the  content.
eSynch MediaMosaic(TM) provides users a multi-media presentation experience. The
drag  'n  drop  windows  can  include  one  or  more  of the following: table of
contents,  transcript,  image  viewer,  and  related  documents  and HTML pages.
Broadband  Wizard(TM)  4.0 by KISSCO is the easiest way to test and optimize the
speed  of  your  DSL,  cable  or  other  high  speed  Internet  connection.
Invisble  Folders  Drag and drop any folder into Invisible Folder's main window,
press  a  button,  and  the folder will disappear! Press another button, enter a
password,  and  the  folder  will  reappear.
RAM  Optimizer  allows  you  to  instantly free up memory when your system slows
down.
StartUp  Manager  allow  you  to  easily  turn  off any program that starts with
Windows,  even  those  that  don't  appear  in  the  Windows  StartUp  folder.

REVENUE
-------

The  Company  has  generated  revenue  from  services  and  technology  software
delivered  over the Internet and will generate future revenue from video related
services,  including  digital  rights  management,  encryption,  key  clearing,
encoding, authoring, digital production, hosting,  live and on-demand video, and
web  site  integration.

Internet  and  Software  Licenses:  The  company  derives  revenue from Internet
services,  software,  and  e-commerce  via  the  Internet. The company typically
bundles  varying  product  and  service  offerings that it sells through its web
sites,  email  databases  and  Internet  partner  sites.

New  Media:  The company derives revenue by delivering live, on-demand video and
audio  content  over  the  Internet and by providing related services, including
production,  post production, compression, encoding, encryption, web site design
and  integration,  distribution,  reporting,  advertising,  sponsorships,
co-branding,  e-commerce,  revenue  sharing  and partnerships. The fees can vary
from  a  fixed  monthly  charge  to a per item charge depending on the bundle of
services  provided  and  agreed  upon.  To  the extent that the customer exceeds
agreed  upon storage and delivery limits, eSynch will charge variable fees based
upon  usage,  time  and  incremental  services  used  by  the  customer.

Advertising: The Company derives advertising revenue based on traffic and unique
visitors  to  our  web  sites  and  use  of  our  micro  portal  products.

COST  OF  REVENUE
-----------------

Cost of Internet and Software License Fees: Cost of licensing consists primarily
of  fees paid to third-party vendors for order fulfillment of electronic orders.
When  packaged  software  is sold through traditional retail channels, costs for
product  media, duplication, manuals, and packaging materials are also incurred.
Cost  of  service  revenue  includes the cost of in-house and contract personnel
providing  support  and  other  services  and expenses incurred in expanding our
streaming  media  hosting  services.

Cost  of  New  Media:  Cost  of  new media consists of production expense, which
includes  salaries  and  costs  associated  with event production, bandwidth and
monthly  fees  paid  to  Internet  Service Providers and depreciation of servers
included  in  the  Company's  global  network.

Cost  of  Advertising  Revenue: Cost of advertising revenue includes the cost of
personnel  associated  with  content  creation  and maintenance and fees paid to
third  parties  for  content  and  reporting  included  in  our  websites.

EXPENSES
--------

eSynch  expenses consist of system development, sales and marketing, and general
and  administrative  expenses.  System development expenses consist primarily of
salaries  and  payroll  related  expenses,  fees  to  outside  contractors  and
consultants,  allocation  of  rent  and  depreciation  on  equipment.  Sales and
marketing  and  general  and  administrative  expenses  consist  of salaries and
related  benefits, commissions, promotional expenses, public relations services,
professional  services,  stock  issued  for  services, stock-based compensation,
amortization  of  goodwill,  and  general  operating  costs.

RESULTS  OF  OPERATIONS
-----------------------

The  Company  has  incurred  losses  from  operations,  negative cash flows from
operating  activities  and has accumulated a deficit at December 31, 2001 in the
amount  of  $51,768,782.  The  Company's net loss of $7,225,788 in 2001 included
non-cash  operating  expenses  of  $3,130,584  for  Stock Based Compensation and
Services,  and  Amortization of Patents, Goodwill and Licenses, and $745,186 for
Goodwill  with  the  remaining  loss  being  $3,382,360. . The  Company's
net  loss  of  $23,511,547  in  2000  included  non-cash  operating  expenses of
$10,048,623  for  Stock  Based  Compensation  and  Services, and Amortization of
Patents,  Goodwill  and  Licenses, and $6,976,801 for impairment of patents with
the  remaining  loss  being  $6,486,123.

<TABLE>
<CAPTION>


FOR THE YEARS ENDED                                         DECEMBER 31, 2001   DECEMBER 31, 2000
<S>                                                         <C>                 <C>
                                                            -----------           ----------
SALES                                                       $  376,802          $  745,440
COST OF SALES                                                  130,966             100,486
                                                            -----------           ----------
        GROSS PROFIT                                            245,836             644,954
                                                            -----------           ----------

OPERATING AND OTHER EXPENSES
     General and administrative                               3,378,768           6,033,897
     Research and development                                   257,775             493,406
     Stock issued for services                                  745,186             977,722
     Stock-based compensation to employees and consultants      630,808           2,268,396
     Amortization of patents                                        -             5,127,529
     Impairment of patents                                          -             6,976,801
     Amortization of goodwill                                 1,674,976           1,674,976
     Impairment of goodwill                                     792,458                   -
     Interest expense                                           527,250             791,145
     Impairment loss on assets disposed                          79,312                   -
                                                            -----------           ----------
        TOTAL OPERATING AND OTHER EXPENSES                   (8,086,353)        (24,343,872)
                                                            -----------           ----------
OTHER INCOME                                                     68,855              90,935
                                                            -----------           ----------
LOSS BEFORE EXTRAORDINARY GAIN                              ($7,771,662)        (23,607,983)
EXTRAORDINARY GAIN FROM DEBT FORGIVENESS                        545,874              96,436
                                                            -----------           ----------

NET LOSS                                                     (7,225,788)        (23,511,547)
PREFERRED STOCK DIVIDENDS                                      (547,130)         (4,977,506)
                                                            -----------           ----------


LOSS APPLICABLE TO COMMON SHAREHOLDERS                      $(7,772,917)       $(28,489,053)
                                                           =============       ==============
</TABLE>

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

Sales  were  $376,802  in  2001  compared  to  $745,440  in  2000.

The  cost  of product sold in 2001 was 35% compared to 13% in 2000. The increase
was  due  to  an  increase  in  distribution costs related to additional revenue
sharing  channels.  General  and administrative expenses were $3,378,768 in 2001
compared  with  $6,033,897  in  2000. This approximately sixty percent reduction
included  decreased  salaries and related costs of  $533,389, decreased expenses
for  operations  of  acquired  companies  of $370,364, decreased advertising and
promotion  of  $254,846,  and  decreased  travel, equipment leases, connectivity
charges  and  insurance  expenses  of  $546,261.  In  2001, interest expense was
$527,250 versus $791,145 in 2000. In addition, cost associated with the issuance
of  stock  for  services was $745,186 in 2001 as compared with $972,722 in 2000.
Stock-based  compensation was $630,808 in 2001 compared with $2,268,396 in 2000.
There  was  no  amortization  and  impairment  of  patents  in  2001 compared to
$12,104,330 in 2000.  Amortization of goodwill and licenses in 2001 and 2000 was
$1,674,976.  Also  impairment  of  goodwill for 2001 was $792,458 where none was
recognized  for  2000.

LIQUIDITY  AND  CAPITAL  RESOURCES
----------------------------------

At  December  31, 2001 the Company had $4,783 in cash and cash equivalents and a
deficit  in working capital (current liabilities in excess of current assets) of
$5,122,558.  Included  in  current  liabilities  is  an  accrual for expenses of
$606,147  for  matters related to Innovus and Intermark prior to the acquisition
in  August  1998.  No  amounts  have  been  assessed  by  any  creditors.

The Company raised from financing activities approximately $1,919,655 of cash in
2001  and  $3,612,386  of cash in 2000. This included proceeds from stock issued
for  cash of approximately $1,453,000 and $645,235, no proceeds from issuance of
warrants in 2001 and $934,000 in 2000, proceeds of $236,400 from the exercise of
warrants  and  options  in  2001 and  $68,621  in  2000, proceeds of issuance of
Preferred  Stock  of $177,000 and $1,615,000 and proceeds from borrowings net of
repayments  of approximately $80,000 and $757,000 in 2001 and 2000 respectively.

The Company estimates that during the fourth fiscal quarter of 2001 it was using
$65,000  more cash each month than was being generated by operations compared to
using  approximately $325,000 more cash each month than generated  by operations
during  the  fourth  fiscal  quarter  of  2000.  The  Company  intends  to raise
additional  capital  to fund continuing operations and acquisitions. There is no
assurance,  however,  that  financing will be available on terms satisfactory to
the  Company  or  at  all.

ITEM  7.  FINANCIAL  STATEMENTS

Financial statements are filed as part of this report on pages F-1 through F-29.


                                    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
April  5,  2002,  or  until  their  successors  are  elected  or  appointed and
qualified,  and (ii) the executive officers of the Company as of  April 5, 2002,
who  are  elected  to  serve  at  the  discretion  of  the  Board  of Directors.

<TABLE>
<CAPTION>



NAME                    POSITION(S) WITH THE COMPANY                AGE
------------------------------------------------------------------------
<S>                     <C>                                        <C>

Thomas Hemingway        Chairman and Chief Executive Officer        45

David Lyons             Director and President                      52

T. Richard Hutt(1)      Director, Vice President and                62
                          Secretary/Treasurer

James H. Budd           Director and Vice President                 60


Robert Orbach(1)        Director                                    49
</TABLE>



The  Company  does  not  have  a nominating committee of the Board of Directors.

(1)  A  member  of the audit committee of the Board of Directors of the Company.

The  Board  of  Directors  acting  as  a  whole  performs  the  functions of the
compensation  committee.

THOMAS  HEMINGWAY
-----------------

On August 5, 1998, Mr. Hemingway became the Chief Executive Officer and Chairman
of  the  Company  pursuant to the Agreement and Plan of Share Exchange among the
Company,  Intermark  Corporation,  a  California  corporation ("Intermark"), and
Intermark's  securityholders  upon  the  consummation  of  that  transaction.  A
co-founder  of  Intermark, from October 1995 to the present Mr. Hemingway served
as  Chief  Executive  Officer  and  in  other  senior  management  positions  at
Intermark,  a software publishing, sales and marketing company. From August 1994
to  September 1995, Mr. Hemingway operated a consulting business specializing in
software  sales and marketing. From January 1994 to July 1994, Mr. Hemingway was
chief  operating  officer  at  Ideafisher  Systems, an artificial intelligence /
associative  processing software company. From August 1993 to December 1993, Mr.
Hemingway  was serving as a consultant with L3, an edutainment software company.
From  January  1993 to July 1993, Mr. Hemingway was involved in computer-related
consulting in the capacity of chief executive officer of Becker/Smart House, LV,
a  home  automation  enterprise.  In  1992, Mr. Hemingway was involved in making
private  investments  in  various industries. Previously, from 1987 to 1991, Mr.
Hemingway  founded  and served as 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, a research and development firm
developing  products  for  the  computer  and  communications  industry.

DAVID  LYONS
------------

Mr.  Lyons  was  appointed  to  the  Board  of Directors in January 2000 and was
appointed  President  in February 2001. From 1997 into 2000, Mr. Lyons served as
Vice  President  -  Acquisitions, Eastern Region, for Expanets, Inc., a start-up
consolidation  venture  financed  by  Northwestern  Corp.  (NYSE:NOR) to acquire
telecommunications  voice  and  data companies. From 1996 to 1997, Mr. Lyons was
employed  by  Extel  Communications, Inc., a telecommunications installation and
maintenance  company,  as  Executive  Vice President, Acquisitions. From 1992 to
1996,  Mr.  Lyons served as a principal in the Sherman Investment Group, Inc., a
Merchant  Banking Company which invests in and provides managerial assistance to
medium sized public and private companies. Prior to 1996, Mr. Lyons was Chairman
and CEO of Amnex, Inc., an operator service and long distance company. Mr. Lyons
previously  served  as  a  member of Board of Directors from October 27, 1998 to
November  15,  1999.

JAMES  H.  BUDD
---------------

Mr.  Budd  was elected to the Board of Directors on October 27, 1998. In August,
1998,  Mr. Budd became a Vice President of the Company pursuant to the Agreement
and  Plan  of  Share  Exchange  among  the  Company,  Intermark  and Intermark's
securityholders. A co-founder of Intermark, from October 1995 to the present Mr.
Budd has served as Vice President of Marketing and in other executive capacities
of  Intermark,  a  software publishing, sales and marketing company. From August
1994  to September 1995, Mr. Budd operated a consulting business specializing in
software  sales  and  marketing. From March 1994 to July 1994, Mr. Budd was vice
president  of  marketing  at  Ideafisher  Systems,  an artificial intelligence /
associative  processing  software  company. From November 1993 to February 1994,
Mr.  Budd  was  involved  in  making  private investments in various industries.
Previously,  from  July  1978  to  October  1993, Mr. Budd was founder and chief
executive  officer 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
-----------------

Mr.  Hutt  was elected to the Board of Directors on October 27, 1998. In August,
1998, Mr. Hutt became a Vice President and the Secretary of the Company pursuant
to  the  Agreement  and  Plan of Share Exchange among the Company, Intermark and
Intermark's securityholders. A co-founder of Intermark, from October 1995 to the
present  Mr.  Hutt  has  served  as  Vice  President  of  Sales and Secretary of
Intermark.  From  September  1992  to  September 1995, 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.

 ROBERT  ORBACH
 --------------

Mr.  Orbach was appointed to the Board of Directors in January, 2000. Mr. Orbach
is  the  founder  and president of Orbach, Inc., providing high level consulting
and  advisory  services  for  PC  hardware  and  software  companies,  regarding
acquisitions  and  strategic  partnering as well as marketing, and has served in
that  capacity  since  May  1990.  In  addition,  Mr.  Orbach is on the Board of
Directors  of Midisoft and In10city. Mr. Orbach previously served as a member of
Board  of  Directors  from  October  27,  1998  to  November  15,  1999.

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, 2000 and December 31, 2001, on
year-end  reports  furnished  to  the  Company  after  December  31,  2001.

ITEM  10.  EXECUTIVE  COMPENSATION.

The  following  table  sets  forth  compensation received by the Company's Chief
Executive Officer and by each of the persons who were, for the fiscal year ended
December  31, 2001, the other four most highly compensated executive officers of
the  Company  whose  total  compensation during that year exceeded $100,000 (the
"Named Officers"), for the three fiscal years ended December 31, 2001 or for the
shorter  period  during  which the Named Officer was compensated by the Company.



<TABLE>
<CAPTION>

                                       SUMMARY  COMPENSATION  TABLE


                                                                    LONG-TERM COMPENSATION
                                                                ------------------------------
                                         ANNUAL COMPENSATION            AWARDS         PAYOUTS
                                 ----------------------------   ------------------   ---------

NAME AND                                                 RESTRICTED SECURITIES
PRINCIPAL                                 OTHER ANNUAL     STOCK    UNDERLYING   LTIP    ALL OTHER
POSITION            YEAR  SALARY   BONUS COMPENSATION(1)  AWARD(S)  OPTIONS(#)  PAYOUTS COMPENSATION
------------------- ----  ------   ----- --------------- ---------- ----------- ------- ------------
<S>                 <C>   <C>      <C>   <C>              <C>        <C>       <C>      <C>

Thomas C. Hemingway 2001  $150,000
  CEO               2000  $146,250                                    300,000            $300,000
                    1999  $150,000                                    250,000            $350,000


James H. Budd       2001  $115,918
  Vice President    2000  $135,417                                    270,000                 -
                    1999  $115,000                                        -                   -


T. Richard Hutt     2001  $108,303
   Vice President   2000  $124,745                                    270,000                 -
                    1999  $115,000                                        -                   -


Robert B. Way       2001  $108,303
  Vice President    2000  $111,271                                    180,000                 -
                    1999  $82,500                                    250,000            $234,500

Donald C. Watters   2001   $13,077
   Former President 2000  $140,410                                    300,000            $582,571
                    1999  $112,500                                    700,000            $530,000

David P. Noyes      2001  N/A
  Former CFO        2000  $127,962                                    240,000            $977,819
                    1999  $116,894                                    500,000            $337,067
</TABLE>

(1) Perquisites and other personal benefits did not for any Named Officer in the
aggregate  equal  or  exceed
     the  lesser  of  $50,000  or  10%  of  the total of annual salary and bonus
reported  in  this  table  for  such  person.

     EXECUTIVE  EMPLOYMENT  AGREEMENTS

     The  Company has an employment agreement with each Executive Officer listed
below.  The  terms  of  those
     employment  agreements  are  summarized  in  the  following  table:


<TABLE>
<CAPTION>



                     CURRENT BASE   OPTION      OTHER         BENEFITS DUE ON
NAME                 COMPENSATION   GRANT       BENEFITS      TERMINATION
<S>                  <C>            <C>        <C>            <C>

-------------------  ------------   --------   -------------  ----------------------------------
Thomas C. Hemingway     $150,000    250,000     Any           If he is terminated by the Company
  CEO                               at $1.00    benefits      without cause, he is paid an amount
                                    each,       for other     equal to 12 months' base salary and
                                    fully       officers,     all other benefits and perquisites
                                    vested      and 3 weeks   continue for 12 months and
                                                vacation      the Company will be
                                                per year      required  to repurchase
                                                              all his stock and options
                                                              at the 30-day average market price.

James H. Budd          $130,000                 Any           If he is terminated by the Company
  Vice President                                benefits      without cause, he is paid an amount
                                                for other     equal to 3 months' base salary and
                                                officers,     all other benefits and perquisites
                                                and 2 weeks   continue for 3 months and all stock
                                                vacation      options held by him vest and
                                                per year      become exercisable.

T. Richard Hutt        $130,000                 Any           If he is terminated by the Company
  Vice President                                benefits      without cause, he is paid an amount
                                                for other     equal to 3 months' base salary and, all
                                                officers      other benefits and perquisites
                                                and 2 weeks   continue for 3 months and all stock
                                                vacation      options held by him vest and
                                                per year      become exercisable.

Robert Way             $130,000   250,000       Any           If he is terminated by the Company
  Vice President                  at $1.00      benefits      without cause, he is paid an amount
                                  each, fully   for other     equal to 3 months' base salary and
                                  vested        officers,     all other benefits and perquisites
                                                and 3 weeks   continue for 3 months and all stock
                                                vacation      options held by him vest and  become
                                                per year      exercisable.
</TABLE>


THERE  WERE  NO  OPTION  GRANTS  DURING  FISCAL  2001

OPTION  GRANTS  DURING  FISCAL  2000

The following table sets forth information on all grants of stock options during
the  fiscal  year  ended  December  31,  2000,  to  Named  Officers:


<TABLE>
<CAPTION>


                                    OPTION  GRANTS  TABLE
                             OPTION  GRANTS  IN  FISCAL  YEAR  2000

                                     INDIVIDUAL GRANTS
                      --------------------------------------------------
                                 % OF TOTAL
                      NUMBER OF    OPTIONS
                     SECURITIES    GRANTED TO
                     UNDERLYING    EMPLOYEES    EXERCISE
                      OPTIONS      IN FISCAL    PRICE      EXPIRATION
NAME                  GRANTED       YEAR(1)    ($/SHARE)     DATE(2)
------------------------------------------------------------------------
<S>                   <C>           <C>         <C>        <C>

Thomas C. Hemingway    300,000        12.2%      $3.63     Jul 2010

James H. Budd          270,000        11.0%      $3.63     Jul 2010

T. Richard Hutt        270,000        11.0%      $3.63     Jul 2010

Robert B. Way          180,000         7.3%      $3.63     Jul 2010

Donald C. Watters      300,000        12.2%      $3.63     Jul 2010

David P. Noyes         240,000         9.7%      $3.63     Jul 2010
</TABLE>


(1)  Options  to  purchase an aggregate of 2,465,000 shares of common stock were
granted  by  the  Company to employees, including the Named Officers, during the
fiscal  year  ended  December 31, 2000. Subsequently, a total of 525,000 options
expired  or  were  voided.

(2) Options held by the Named Officers have a term of 5 and 10 years, subject to
earlier  termination  in  certain  events  related to termination of employment.

OPTION  EXERCISES  IN  FISCAL  2000  AND  YEAR-END  OPTION  VALUES

The  following  table sets forth information concerning stock options which were
exercised  during,  or  held  at  the end of, fiscal 2001 by the Named Officers:


<TABLE>
<CAPTION>


                           AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                                  AND FISCAL YEAR-END OPTION VALUES


                                                       NUMBER OF
                                                  SECURITIES UNDERLYING      VALUE OF UNEXERCISED
                                                   UNEXERCISED OPTIONS       IN-THE-MONEY OPTIONS
                        SHARES         VALUE       AT FISCAL YEAR END(#)    AT FISCAL YEAR END($)(1)
                     ACQUIRED ON     REALIZED  -----------------------------------------------------
NAME                  EXERCISE       ($)(1)    EXERCISABLE  UNEXERCISABLE  EXERCISABLE UNEXERCISABLE
----------------------------------------------------------------------------------------------------
<S>                  <C>            <C>          <C>         <C>           <C>          <C>

 Thomas C. Hemingway       -             -         842,500          -            -           -
 James H. Budd             -             -         387,000          -            -           -
 T. Richard Hutt           -             -         376,932          -            -           -
</TABLE>


(1)  Market  value of underlying securities at exercise date or year end, as the
case  may  be,  minus  the exercise or base price of "in-the-money" options. The
value  of  options  is  based on the closing sale price for the Company's common
stock  as  of December 31, 2001 as reported on the OTC Bulletin Board, which was
$.04,  minus  the  exercise  price.

COMPENSATION  OF  DIRECTORS

The  Company's non-employee Director is not currently compensated for attendance
at  Board  of  Directors  meetings.  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.

                                       19
ITEM  11.  SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND MANAGEMENT.

MANAGEMENT.  The  following  table  sets  forth as of April 5, 2002, information
regarding  beneficial ownership of the Company's stock by each director and each
executive officer, and by all directors and executive officers of the Company as
a  group.  Each named person and all directors and executive officers as a group
are  deemed to be the beneficial owners of shares that may be acquired within 60
days  upon  exercise  of  stock  options.  Accordingly, the number of shares and
percentages  set  forth  next  to  the name of such person and all directors and
executive  officers  as  a  group include the shares issuable upon stock options
exercisable  within  60 days. However, the shares so issuable upon such exercise
by  any  such  person  are  not included in calculating the percentage of shares
beneficially  owned  by  any  other  stockholder.


<TABLE>
<CAPTION>


                                                 SHARES  BENEFICIALLY  OWNED
                                                  --------------------------
                                             COMMON                  PREFERRED
                                             ------                  ---------


NAME OF BENEFICIAL OWNER             NUMBER     PERCENT      NUMBER    PERCENT
------------------------             ------     -------      ------    -------
<S>                                 <C>          <C>         <C>       <C>

Thomas Hemingway(1)                  1,900,333      3.5%         0          0%
James H. Budd(2)                     1,405,300      2.6%         0          0%
T. Richard Hutt(3)                   1,409,738      2.6%         0          0%
David Lyons(4)                       1,036,700      1.9%         0          0%
Robert Orbach(5)                        32,684      1.9%         0          0%
All Directors and Executive Officers
as a group (5 Persons)(8)            5,784,755     10.7%         0          0%
</TABLE>



ITEM  12.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS.

On  April  1, 1999, the Company acquired Kiss Software Corporation, a California
corporation ("Kissco"). Donald C. Watters, Jr. was a major shareholder of Kissco
and received in that acquisition 381,270 shares of Common Stock, and the Company
also  assumed  a Kissco option entitling Mr. Watters to acquire 48,568 shares of
Common  Stock  at  a  price  of  $  2.11  per  share.  Robert  B. Way was also a
shareholder  of  Kissco  and received in the acquisition 32,430 shares of Common
Stock, and the Company also assumed a Kissco option entitling Mr. Way to acquire
19,427  shares  of  Common  Stock  at  $2.11  per  share.

On September 30, 1999, the Company acquired Oxford Media Corporation, a Delaware
corporation,  for  450,000  shares  of  the Company's Common Stock. Oxford Media
Corporation  was controlled by Mr. Norton Garfinkle. In addition, for consulting
services  and  services  as  a  director  of the Company, Mr. Garfinkle received
warrants  to  purchase  450,000  shares  of  Common  Stock.

In  March  2000,  the Company filed a Registration Statement on Form S-8 for the
purpose  of  registering  a  Re-offer  Prospectus  associated with certain Stock
Option  Agreements,  Warrants,  and  Consulting  Agreements.  Certain  executive
Officers  and  Directors  plus  two  unrelated  parties  were  named  as Selling
Stockholders.  The  Company registered 505,700 shares, 300,000 shares and 18,000
shares  related  to  Stock  Options,  Warrants,  and  Consulting  Agreements,
respectively.

On  March  1,  2000, the Company entered into a License Agreement with Garfinkle
Limited Partnership II, of which Norton Garfinkle, a director and shareholder of
the  Company,  is a Partner. The License Agreement grants the Company the use of
two patents for use in the video-on-demand segment of the Company's business. As
consideration  for  the  grant  of license, Garfinkle Limited Partnership II was
given  a  warrant  for  950,000  shares  of  the Company's common stock plus the
Company  will  pay  a  royalty  of five percent of the gross revenue paid by end
users  as  a  result  of  the  use  of  the  Patents.

On  June  14,  2000,  the  Company  borrowed  $450,000  from Norton Garfinkle, a
director  and  shareholder,  evidenced  by an unsecured note bearing interest at
eight  percent  and due on demand. On January 10, 2001, the Company renegotiated
the  terms  of  the  terms of the note requiring Mr. Garfinkle to deliver to the
Company  a  written  notice  at  least 20 days prior to demand for repayment. In
consideration  of  the  change  in  payment  terms,  the  Company  issued to Mr.
Garfinkle  a  warrant  to purchase 250,000 shares of the Company's common stock.

On  August  28,  2000,  the  Company loaned Thomas Hemingway, Chairman and Chief
Executive  Officer, and a director of the Company, the sum of $500,000 evidenced
by  a promissory note bearing interest at ten percent per annum, due and payable
on  February  24,  2001.  As  of the date hereof, $300,000 plus accrued interest
remains  outstanding, of which $300,000 was recorded in the Company's accounting
records  as  income  to  Mr.  Hemingway  for  the  year-ended December 31, 2001.


<TABLE>
<CAPTION>


                                     PART IV

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

(a)  INDEX  TO  FINANCIAL  STATEMENTS  AND  SUPPLEMENTAL  SCHEDULES

                                                                          Page No.
<S>                                                                       <C>
Title of Documents
Report of Hansen, Barnett & Maxwell, Independent Certified Public
Accountants, on the December 31, 2000 and 1999 Financial
Statements                                                                F-1

Consolidated Financial Statements:

     Consolidated Balance Sheets as of December 31, 2001 and 2000         F-2

     Consolidated Statements of Operations for the Years Ended
       December 31, 2001 and 2000                                         F-3

     Consolidated Statements of Stockholders' Equity (Deficit) for the
       Years Ended December 31, 2001 and 2000 .                           F-4

     Consolidated Statements of Cash Flows for the Years Ended
       December 31, 2001 and 2000                                         F-6

Notes to Consolidated Financial Statements                                F-7
</TABLE>



FINANCIAL  STATEMENT  SCHEDULES:

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

     (a)  Exhibits


Exhibit  No.    Description
2.5(1)          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.

2.6(2)          Agreement  and  Plan  of  Reorganization  dated  as  of
                September  30,  1999  among  the  Registrant,  OMC
                Acquisition  Corp.,  a  Delaware  corporation,  Oxford
                Media  Corp.,  a  Delaware  corporation  ("OMC")  and
                Norton  Garfinkle,  individually  and  as  trustee  of
                each  of  The  Gillian  Garfinkle  S  Corporation  Trust
                and  The  Nicholas  Garfinkle  S  Corporation  Trust.

2.7(2)          Non-Exclusive  License  Agreement  between  Oxford
                Management  Corporation,  a  Nevada  corporation,
                and  Oxford  Media  Corporation.

2.8(3)          Registration  Rights  Agreement dated September 30, 1999 between
                the  Company  and  Norton  Garfinkle,  individually  and  as
                trustee  of  each  of  The Gillian Garfinkle S Corporation Trust
                and  The  Nicholas  Garfinkle  S  Corporation  Trust

2.9(4)          Agreement  of  Purchase  and  Sale  of  Stock  dated  as  of
                May  25,  1999  between  the  Registrant  and  Kilburn
                Consultants,  Inc.,  an  Isle  of  Man  corporation.

3.1(3)          Restated  Certificate  of  Incorporation  of  the  Company

3.3.1(5)        Bylaws  (Effective  November  15,  1999  as  Amended November 3,
                2000).

4.1(6)          Form  of  Stock  Certificate

4.2(6)          Stock  Option  Agreement  between  the  Company  and  Thomas
Hemingway**

4.3(6)          Stock  Option  Agreement between the Company and James H. Budd**

4.4(6)          Stock Option Agreement between the Company and T. Richard Hutt**

4.5(6)          Stock  Option  Agreement  between  the  Company  and David Lyons

4.6(6)          Stock  Option  Agreement  between  the  Company and Robert Way**

4.7(6)          Warrant  Agreement  between  the  Company and Donald C. Watters,
                Jr.**

4.8(6)          Warrant  Agreement  between  the  Company  and  David P. Noyes**

4.9(6)          Consulting  Agreement  between  the  Company  and  Lee  Puglisi

4.10(6)         Consulting  Agreement  between  the  Company  and  Ryan  Spencer

4.11(7)         January  1999  Stock  Plan**

4.12(8)         Corporate  Resolutions  relating to January, 1999 Stock Plan**

4.19.1(3)       Certificate  of  Designation  -  Series  J  Preferred  Stock

4.19.2(3)       First  Amendment  of  Certificate  of  Designation  -  Series  J
                Preferred  Stock

4.19.3(3)       Second  Amendment  of  Certificate  of  Designation  -  Series J
                Preferred  Stock

4.20(9)         Certificate  of  Designation  of  Relative  Rights
                and  Preferences  of  Series  K  Preferred  Stock

4.21(5)         Amended  Certificate  of  Designation  of  Relative  Rights  and
                Preferences  of  Series  L  Preferred  Stock.

4.22(10)        Form  of Secured Convertible Debenture issued by the Registrant.

4.23(11)        Certificate  of  Designation  of Relative Rights and Preferences
                of  Series  M  Preferred  Stock.

10.7.1(12)      Employment  Agreement  dated  as  of  March  1, 1999 between the
                Company  and  Thomas  Hemingway.**

10.7.2(2)       Employment  Agreement  dated  as  of  April  1, 1999 between the
                Company  and  James  H.  Budd;
                Employment  Agreement  dated  as  of  April  1, 1999 between the
                Company  and  T.  Richard  Hutt;
                Employment  Agreement  dated  as  of  April  1, 1999 between the
                Company  and  Robert  Way;  and

10.8(13)        1999  Stock  Incentive  Plan.**

10.9(13)        Form  of  Indemnification  Agreement  entered  into with certain
                officers  and  directors  of  the  Company.**

10.11.1(13)     Series  J  Convertible  Preferred Stock Purchase Agreement dated
                as  of  July 22, 1999 among the Company and the Purchasers named
                therein.

10.11.2(13)     Amendment  dated  as  of  October  29,  1999  to  the  Series  J
                Convertible  Stock  Purchase Agreement among the Company and the
                Purchasers  named  therein.

10.12(13)       Registration  Rights Agreement dated as of July 22, 1999 between
                the  Company  and  initial  Purchasers  of  Series J Convertible
                Stock.

10.13(13)       Form  of  Warrant  issued  in  the  placement  of  Series  J
                Preferred  Stock.

10.14(9)        Series  K  Convertible  Preferred Stock Purchase Agreement dated
                as  of December 30, 1999 among the Registrant and the Purchasers
                named  therein.

10.15(9)        Registration  Rights  Agreement  dated  as  of December 30, 1999
                among  the  Registrant  and  the  Purchasers  named  therein

10.16(9)        Form of Warrant issued in the placement of Series K    Preferred
Stock.



10.17(5)        Series  L  Convertible  Preferred Stock Purchase Agreement dated
                as  of  September  26,  2000  among  the  Registrant  and  the
                Purchasers  named  therein.

10.18(5)        Registration  Rights  Agreement  dated  as of September 26, 2000
                among  the  Registrant  and  the  Purchasers  named  therein.

10.19(5)        Form  of  Warrant  to  Purchase  Shares  of  Common Stock of the
                Registrant  related  to  the  sale  of  Series  L  Convertible
                Preferred  Stock.

10.20(10)       Securities  Purchase  Agreement  dated  as  of  December 7, 2000
                among  the  Registrant  and  the  Buyers  named  therein.

10.21(10)       Registration  Rights  Agreement  dated  as  of  December 7, 2000
                among  the  Registrant  and  the  Buyers  named  therein.

10.22(10)       Form  of  Warrant  to  Purchase  Shares  of  common stock of the
                Registrant  issued  by the Registrant in related to the issuance
                of  Secured  Convertible  Debentures.

10.23(10)       Warrant  to  Purchase  150,000  Shares  of  common  stock of the
                Registrant  dated  as  of  November  30, 2000 with an expiration
                date  of  November 30, 2005 issued by the Registrant to Trautman
                Wasserman  &  Company  Incorporated.

10.24(11)       Series  M  Convertible  Preferred Stock Purchase Agreement dated
                as  of  January 18, 2001 among the Registrant and the Purchasers
                named  therein.

10.25(11)       Registration  Rights  Agreement  dated  as  of  January 18, 2001
                among  the  Registrant  and  the  Purchasers  named  therein.

10.26(11)       Form  of  Warrant  to  Purchase  Shares  of  Common Stock of the
                Registrant  related  to  the  sale  of  Series  M  Convertible
                Preferred  Stock.

99.1(99.1)      Press  Release  on  sale  of  SoftKat,  Inc.

99.2(99.2)      Press  Release  on  proposed  merger  with  Streamedia
                Communications,  Inc.

99.3(99.3)      Press  Release  on  date  of  record  for merger with Streamedia
                Communications,  Inc.

99.4(99.4)      Press  Release  on the termination of the merger with Streamedia
                Communications,  Inc.
**  Indicates  management  compensation  arrangements.

 (1)     Incorporated  by  reference  to  the  like-numbered  exhibit  to  the
         Company's  Form  8-K  filed  April  19,  1999.
 (2)     Incorporated  by  reference  to  the  like-numbered  exhibit  to  the
         Company's  Form  8-K  filed  October  15,  1999.
 (3)     Incorporated  by  reference  to  the  like-numbered  exhibit  to  the
         Company's  Form  SB-2  filed  November  29,  1999.
 (4)     Incorporated  by  reference  to  the  like-numbered  exhibit  to  the
         Company's  Form  8-K  filed  February  8,  2000.
 (5)     Incorporated  by  reference  to  the  like-numbered  exhibit  to  the
         Company's  Form  8-K  filed  December  18,  2000.
 (6)     Incorporated  by  reference  to  the  4.2  exhibit  to  the
         Company's  Form  S-8  filed  March  27,  2000.
 (7)     Incorporated  by  reference  to  the  4.1  exhibit  to  the
         Company's  Form  S-8  filed  February  1,  1999.
 (8)     Incorporated  by  reference  to  the  4.2  exhibit  to  the
         Company's  Form  S-8  filed  February  1,  1999.
 (9)     Incorporated  by  reference  to  the  like-numbered  exhibit  to  the
         Company's  Form  8-K  filed  February  15,  2000.
(10)     Incorporated  by  reference  to  the  like-numbered  exhibit  to  the
         Registrant's  Form  S-3  filed  December  15,  2000.
(11)     Incorporated  by  reference  to  the  like-numbered  exhibit  to  the
         Company's  Form  8-K  filed  January  26,  2001.
(12)     Incorporated  by  reference  to  the  like-numbered  exhibit  to  the
         Company's  Form  10-QSB  filed  August  19,  1999.
(13)     Incorporated  by  reference  to  the  like-numbered  exhibit  to  the
         Company's  Form  SB-2/A  filed  January  18,  2000.
(14)     Incorporated  by  reference  to  the  like-numbered  exhibit  to  the
         Company's  Form  S-3/A  filed  February  9,  2001.
(15)     Incorporated  by  reference  to  the  like-numbered  exhibit  to  the
         Company's  Form  S-3  filed  February  13,  2001.
(16)     Incorporated  by  reference  to  the  like-numbered  exhibit  to  the
         Company's  Form  SC-13D  filed  February  14,  2001.
(17)     Incorporated  by  reference  to  the  like-numbered  exhibit  to  the
         Company's  Form  S-3/A  filed  March  9,  2001.
(18)     Incorporated  by  reference  to  the  like-numbered  exhibit  to  the
         Company's  Form  8-K  filed  March  9,  2001.
(19)     Incorporated  by  reference  to  the  like-numbered  exhibit  to  the
         Company's  Form  S-3/A  filed  March  20,  2001.
(20)     Incorporated  by  reference  to  the  like-numbered  exhibit  to  the
         Company's  Form  8-K/A  filed  March  29,  2001.
(21)     Incorporated  by  reference  to  the  like-numbered  exhibit  to  the
         Company's  Form  S-3/A  filed  March  30,  2001.
(22)     Incorporated  by  reference  to  the  like-numbered  exhibit  to  the
         Company's  Form  SC-13G/A  filed  April  4,  2001.
(23)     Incorporated  by  reference  to  the  like-numbered  exhibit  to  the
         Company's  Form  424B3  filed  May  3,  2001.
(24)     Incorporated  by  reference  to  the  like-numbered  exhibit  to  the
         Company's  Form  SC-13D  filed  May  4,  2001.
(25)     Incorporated  by  reference  to  the  like-numbered  exhibit  to  the
         Company's  Form  S-8POS  filed  June  11,  2001.
(26)     Incorporated  by  reference  to  the  like-numbered  exhibit  to  the
         Company's  Form  S-8  filed  September  14,  2001.
(27)     Incorporated  by  reference  to  the  like-numbered  exhibit  to  the
         Company's  Form  S-8  filed  November  19,  2001.
(28)     Incorporated  by  reference  to  the  like-numbered  exhibit  to  the
         Company's  Form  S-8  filed  December  13,  2001.
(29)     Incorporated  by  reference  to  the  like-numbered  exhibit  to  the
         Company's  Form  14-C  filed  February  25,  2002.
(30)     Incorporated  by  reference  to  the  like-numbered  exhibit  to  the
         Company's  Form  S-8  filed  March  29,  2002.
(99.1)   Incorporated  by  reference  to exhibit 99 to the Company's Form 10-KSB
         filed  June  25,  1999.
(99.2)   Incorporated  by  reference  to exhibit 99 to the Company's Form 10-KSB
         filed  January  26,  2001.
(99.3)   Incorporated  by  reference  to exhibit 99 to the Company's Form 10-KSB
         filed  March  1,  2001.
(99.4)   Incorporated  by  reference  to  exhibit  99  to the Company's Form 8-K
         filed  April  9,  2001.


                       ESYNCH CORPORATION AND SUBSIDIARIES


                                TABLE OF CONTENTS



                                                                           PAGE

     Report  of  Independent  Certified  Public  Accountants                F-1

     Consolidated  Balance  Sheets  -  December  31,  2001  and  2000       F-2

     Consolidated  Statements  of  Operations  for  the  Years  Ended
        December  31,  2001  and  2000                                      F-3

     Consolidated  Statements  of  Stockholders'  Deficit
        the  Years  Ended  December  31,  2000  and  2001                   F-4

     Consolidated  Statements  of  Cash  Flows  for  the  Years
        Ended  December  31,  2001  and  2000                               F-6

     Notes  to  Consolidated  Financial  Statements                         F-7



<PAGE>





                                                                             F-1
HANSEN,  BARNETT  &  MAXWELL                                     (801)  532-2200
     A  Professional  Corporation                           Fax  (801)  532-7944
 CERTIFIED  PUBLIC  ACCOUNTANTS                    5  Triad  Center,  Suite  750
                                             Salt  Lake  City,  Utah  84180-1128
                                                                 www.hbmcpas.com

<PAGE>



               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


To  the  Board  of  Directors  and  Stockholders
eSynch  Corporation  and  Subsidiaries

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

We conducted our audits in accordance with auditing standards generally accepted
in  the  United  States  of  America.  Those  standards require that we plan and
perform  the  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,  2001 and 2000 and the results of their
operations  and  their  cash  flows  for the years then ended in conformity with
accounting  principles  generally  accepted  in  the  United  States of America.

The  accompanying  consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 of the
consolidated  financial  statements,  the  Company  has suffered substantial and
recurring  losses  from  operations  and  negative  cash  flows  from  operating
activities. At December 31, 2001, 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  is  also  described in Note 1. The consolidated financial statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.


                                         HANSEN,  BARNETT  &  MAXWELL

Salt  Lake  City,  Utah
April  12,  2002







    [GRAPHIC  OMITED]                     Member  of  AICPA  Division  of  Firms
                                                     Member  of  SECPS







                               [GRAPHIC  OMITED]


     Member  of  AICPA  Division  of  Firms
     Member  of  SECPS
<TABLE>
<CAPTION>

                                     ESYNCH CORPORATION AND SUBSIDIARIES
                                         CONSOLIDATED BALANCE SHEETS

                                                                                        DECEMBER 31,
                                                                                        -------------
                                                                                       2001          2000
                                                                                   -------------  ----------

                                                          ASSETS
CURRENT ASSETS
<S>                                                                                <C>            <C>
  Cash                                                                             $       4,783  $        -
  Accounts receivable, net of allowance for bad debt of $31,150 and $80,504               41,779       8,414
  Accounts receivable - related party, net of allowance for
    bad debt of $46,000 and $44,000 . . . . . . . . . . . . . . . . . . . . . . .              -           -
  Notes receivable, net of allowance for bad debt of $347,040 and $350,929                     -       6,172
  Note receivable from affiliate, net of $300,000 compensation recognized in 2000              -     200,000
  Prepaid expenses                                                                             -      22,154
                                                                                   -------------  ----------
    TOTAL CURRENT ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .         46,562     236,740
                                                                                   -------------  ----------
EQUIPMENT, NET OF ACCUMULATED DEPRECIATION. . . . . . . . . . . . . . . . . . . .        363,966     724,435
GOODWILL, NET OF ACCUMULATED AMORTIZATION . . . . . . . . . . . . . . . . . . . .              -   2,467,434
OTHER ASSETS, NET OF ACCUMULATED AMORTIZATION . . . . . . . . . . . . . . . . . .        250,602     206,169
                                                                                   -------------  ----------
TOTAL ASSETS                                                                       $     661,130  $3,634,778
                                                                                   =============  ==========
</TABLE>


<TABLE>
<CAPTION>

                             LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)


CURRENT LIABILITIES
<S>                                                                        <C>            <C>
  Checks issued in excess of cash in bank                                  $          -   $    150,797
  Accounts payable                                                            1,148,646        701,680
  Accounts payable - related party                                               59,359              -
  Accrued liabilities                                                         2,567,858      1,961,044
  Accrued preacquisition liabilities                                             60,273        606,147
  Notes payable - current portion                                                77,150         77,150
  Notes payable - related party                                                 521,250        461,250
  Capital lease obligation - current portion                                    197,107         63,244
  Preferred dividends payable                                                   537,477        374,754
                                                                           -------------  -------------
    TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . . . . . . . .     5,169,120      4,391,066
                                                                           -------------  -------------
LONG-TERM LIABILITIES
  Capital lease obligation                                                            -        115,570
  Convertible debentures                                                              -        500,000
                                                                           -------------  -------------
    TOTAL LONG-TERM LIABILITIES . . . . . . . . . . . . . . . . . . . . .             -        615,570
                                                                           -------------  -------------
STOCKHOLDERS' DEFICIT
  Series J convertible preferred stock - $10,000 stated value per share;
     275 shares authorized; 72.5 shares and 139.5 shares outstanding,
    respectively; liquidation preference of $725,000. . . . . . . . . . .       600,000      1,270,000
   Series K convertible preferred stock - $10,000 stated value per share;
    250 shares authorized; 42.5 shares and 81.5 shares outstanding,
     respectively; liquidation preference of $425,000 . . . . . . . . . .       300,000        690,000
  Series L convertible preferred stock - $10,000 stated value per share;
      210 shares authorized; no shares outstanding                                    -              -
  Series M convertible preferred stock - $10,000 stated value per share;
    220 shares authorized; 196.9 shares and 172.8 shares outstanding;
       liquidation  preference of $1,969,000                                  2,616,862      2,414,862
  Undesignated preferred stock - $0.001 par value, 399,055 shares
     authorized; no shares outstanding                                                -              -
  Common Stock - $0.001 par value; 250,000,000 shares authorized;
    36,914,742 and 13,234,757 shares issued and outstanding . . . . . . .        36,915         13,235
  Additional paid-in capital                                                 43,717,015     38,628,990
  Receivable from shareholder                                                   (10,000)             -
  Deferred compensation                                                               -       (393,080)
  Accumulated deficit                                                       (51,768,782)   (43,995,865)
                                                                           -------------  -------------
    TOTAL STOCKHOLDERS' DEFICIT . . . . . . . . . . . . . . . . . . . . .    (4,507,990)    (1,371,858)
                                                                           -------------  -------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                $    661,130   $  3,634,778
                                                                           =============  =============
</TABLE>

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


<TABLE>
<CAPTION>

                             ESYNCH CORPORATION AND SUBSIDIARIES
                            CONSOLIDATED STATEMENTS OF OPERATIONS


                                                          FOR THE YEARS ENDED
                                                         ---------------------
                                                             DECEMBER 31,
                                                         ---------------------
                                                                 2001               2000
                                                         ---------------------  -------------

REVENUE                                                        $376,802           $745,440
<S>                                                      <C>                    <C>
COST OF PRODUCTS SOLD . . . . . . . . . . . . . . . . .               130,966        100,486
                                                         ---------------------  -------------
    GROSS PROFIT. . . . . . . . . . . . . . . . . . . .               245,836        644,954
                                                         ---------------------  -------------
OPERATING AND OTHER EXPENSES
  General and administrative                                        3,378,768      6,033,897
  Research and development                                            257,775        493,406
  Stock issued for services                                           745,186        977,722
  Stock-based compensation to employees and consultants               630,808      2,268,396
  Amortization of patents                                                   -      5,127,529
  Impairment of patents                                                     -      6,976,801
  Amortization of goodwill                                          1,674,976      1,674,976
  Impairment of goodwill                                              792,458              -
  Interest expense                                                    527,250        791,145
  Impairment loss on assets disposed                                   79,132              -
                                                         ---------------------  -------------
    TOTAL OPERATING AND OTHER EXPENSES. . . . . . . . .            (8,086,353)   (24,343,872)
                                                         ---------------------  -------------
OTHER INCOME. . . . . . . . . . . . . . . . . . . . . .                68,855         90,935
                                                         ---------------------  -------------
LOSS BEFORE EXTRAORDINARY GAIN. . . . . . . . . . . . .            (7,771,662)   (23,607,983)
EXTRAORDINARY GAIN FROM DEBT FORGIVENESS, NET OF TAX. .               545,874         96,436
                                                         ---------------------  -------------

NET LOSS. . . . . . . . . . . . . . . . . . . . . . . .            (7,225,788)   (23,511,547)
PREFERRED STOCK DIVIDENDS . . . . . . . . . . . . . . .              (547,129)    (4,977,506)
                                                         ---------------------  -------------

LOSS APPLICABLE TO COMMON SHAREHOLDERS                   $         (7,772,917)  $(28,489,053)
                                                         =====================  =============

BASIC AND DILUTED EXTRAORDINARY GAIN PER COMMON SHARE    $               0.02   $       0.01
                                                         =====================  =============
BASIC AND DILUTED LOSS PER COMMON SHARE                  $              (0.33)  $      (2.43)
                                                         =====================  =============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
   USED IN PER SHARE CALCULATION. . . . . . . . . . . .            23,319,445     11,734,387
                                                         =====================  =============
</TABLE>



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


<TABLE>
<CAPTION>

                                         ESYNCH CORPORATION AND SUBSIDIARIES
                                  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT



                                                      PREFERRED STOCK                COMMON STOCK         ADDITIONAL
                                                     ----------------                --------------       PAID-IN
                                                    SHARES           AMOUNT        SHARES     AMOUNT      CAPITAL
                                               ----------------  --------------  ----------  ---------  ------------

BALANCE - DECEMBER 31, 1999                         432.5          $2,418,612    10,505,464   $10,506   $17,044,450
<S>                                            <C>               <C>             <C>         <C>        <C>
Shares issued for cash                                       -               -      325,330        325       644,910
Shares issued for services                                   -               -      292,000        292       977,430
Shares issued in settlement of suit                          -               -       12,000         12        96,988
Shares issued for settlement of debt                         -               -       20,000         20             -
Compensation related to the grant of
  stock options and warrants                                 -               -            -          -     2,278,735
Amortization of unearned
 compensation                                                -               -            -          -             -
Exercise of warrants and options                             -               -    1,138,129      1,138        67,483
Issuance of Series K preferred
  stock and 37,500 warrants                               55.0               -            -          -       400,000
Warrants issued for cash                                     -               -            -          -        15,000
Issuance of Series L preferred stock
 and 413,334 warrants                                    168.0       1,034,805            -          -       515,695
Amortization of discount on Series J
 preferred stock as a preferred dividend                     -         206,388            -          -             -
Amortization of discount on Series K
 preferred stock as a preferred dividend                     -       2,000,000            -          -             -
Amortization of discount on Series L
 preferred stock as a preferred dividend                     -         565,195            -          -             -
Conversion of Series J preferred stock                  (135.5)     (1,355,000)     500,287        500     1,384,919
Conversion of Series K preferred stock                  (131.0)     (1,310,000)     441,547        442     1,343,763
Warrants issued and modified and
  beneficial conversion feature modified
 upon conversion of Series L preferred
  stock into Series M preferred stock                      4.8         814,862            -          -     1,002,765
Warrants and beneficial conversion
  feature issued with convertible
  debentures, net of $73,225 offering
  costs                                                      -               -            -          -       482,389
Warrants issued with bridge notes                            -               -            -          -       232,258
Warrants issued for patents acquisition
  from related party and modification of
  warrants                                                   -               -            -          -    12,104,330
Modification of warrants                                     -               -            -          -        37,875
Series J preferred stock dividend accrual                    -               -            -          -             -
Series K preferred stock dividend accrual                    -               -            -          -             -
Series L preferred stock dividend accrual                    -               -            -          -             -
Net loss                                                     -               -            -          -             -
                                               ----------------  --------------  ----------  ---------  ------------
BALANCE - DECEMBER 31, 2000                              393.8       4,374,862   13,234,757     13,235    38,628,990

                                                                                   TOTAL
                                                 DEFERRED       SHAREHOLDER      ACCUMULATED    STOCKHOLDERS'
                                                COMPENSATION     RECEIVABLE       DEFICIT        EQUIT Y
                                               --------------  --------------  -------------  -------------

BALANCE - DECEMBER 31, 1999                      $(382,741)          $-        $(15,506,812)   $3,584,015
<S>                                            <C>             <C>             <C>            <C>
Shares issued for cash. . . . . . . . . . . .              -                -             -        645,235
Shares issued for services. . . . . . . . . .              -                -             -        977,722
Shares issued in settlement of suit . . . . .              -                -             -         97,000
Shares issued for settlement of debt. . . . .             --               20
Compensation related to the grant of
  stock options and warrants. . . . . . . . .     (2,278,735)               -             -              -
Amortization of unearned
 compensation . . . . . . . . . . . . . . . .      2,268,396                -             -      2,268,396
Exercise of warrants and options. . . . . . .              -                -        68,621
Issuance of Series K preferred
  stock and 37,500 warrants . . . . . . . . .              -                -             -        400,000
Warrants issued for cash. . . . . . . . . . .              -                -        15,000
Issuance of Series L preferred stock
 and 413,334 warrants . . . . . . . . . . . .              -                -             -      1,550,500
Amortization of discount on Series J
 preferred stock as a preferred dividend. . .              -                -      (206,388)             -
Amortization of discount on Series K
 preferred stock as a preferred dividend. . .              -                -    (2,000,000)             -
Amortization of discount on Series L
 preferred stock as a preferred dividend. . .              -                -      (565,195)             -
Conversion of Series J preferred stock. . . .              -                -             -         30,419
Conversion of Series K preferred stock. . . .              -                -             -         34,205
Warrants issued and modified and
  beneficial conversion feature modified
 upon conversion of Series L preferred
  stock into Series M preferred stock . . . .              -                -    (1,817,627)             -
Warrants and beneficial conversion
  feature issued with convertible
  debentures, net of $73,225 offering
  costs . . . . . . . . . . . . . . . . . . .              -                -       482,389
Warrants issued with bridge notes . . . . . .              -                -       232,258
Warrants issued for patents acquisition
  from related party and modification of
  warrants. . . . . . . . . . . . . . . . . .              -                -            --     12,104,330
Modification of warrants. . . . . . . . . . .              -                -             -         37,875
Series J preferred stock dividend accrual . .              -                -      (245,505)      (245,505)
Series K preferred stock dividend accrual . .              -                -      (118,824)      (118,824)
Series L preferred stock dividend accrual . .              -                -       (23,967)       (23,967)
Net loss. . . . . . . . . . . . . . . . . . .              -                -   (23,511,547)   (23,511,547)
                                               --------------  --------------  -------------  -------------
BALANCE - DECEMBER 31, 2000 . . . . . . . . .       (393,080)               -   (43,995,865)    (1,371,858)


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

</TABLE>

<TABLE>
<CAPTION>


                                         ESYNCH CORPORATION AND SUBSIDIARIES
                                   CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT


                                                                                                         ADDITIONAL
                                                          PREFERRED                  COMMON STOCK        PAID-IN
                                                       ----------------             --------------
                                                     SHARES                  AMOUNT          SHARES       AMOUNT
                                                -------------               -------------    -------      -----------
                                                DEFICIT
<S>                                                   <C>        <C>           <C>            <C>         <C>
BALANCE - DECEMBER 31, 2000                            393.8      $4,374,862    13,234,757    $13,235     $38,628,990
Shares issued for cash                                     -               -    6,142,068       6,142      1,446,858
Shares issued for services                                 -               -    4,557,357       4,557        740,628
Shares issued for settlement of debt                       -               -      444,444         444         39,556
Shares issued in settlement of interest                    -               -      458,559         459        138,311
Shares purchased in settlement of dispute                  -               -      (21,000)        (21)        (6,279)
Shares issued for technology                               -               -      801,187         801        274,647
Compensation related to the grant of stock
  options and warrants                                     -               -            -           -        330,850
Amortization of unearned compensation                      -               -            -           -              -
Reversal of unearned compensation                          -               -            -           -        (93,122)
Exercise of warrants and options                           -               -    6,582,500       6,584        239,816
Conversion of Convertible Debentures
  and Interest                                             -               -    2,105,464       2,105        538,895
Conversion of Series J preferred stock                 (67.0)       (670,000)   1,568,310       1,568        795,195
Conversion of Series K preferred stock                 (39.0)       (390,000)   1,041,096       1,041        445,326
Series M Preferred issued with warrants
  and beneficial conversion feature, net of
  $23,000 offering costs                                21.6         177,000            -           -        177,000
Series M Preferred issued for Series L
  Preferred dividends                                    2.5          25,000            -           -              -
Modification of warrants                                   -               -            -           -         20,344
Series J preferred stock dividend accrual                  -               -            -           -              -
Series K preferred stock dividend accrual                  -               -            -           -              -
Series M preferred stock dividend accrual                  -               -            -           -              -
Net loss                                                   -               -            -           -              -
                                             ----------------  --------------  -----------  ----------  -------------

BALANCE - DECEMBER 31, 2001                            311.9   $   3,516,862   36,914,742   $  36,915   $ 43,717,015
                                             ================  ==============  ===========  ==========  =============

                                                                                  TOTAL
                                              DEFERRED           SHAREHOLDER   ACCUMULATED

                                              CAPITAL            COMPENSATION                   RECEIVABLE
                                             --------------  ---------------  -------------    ------------
<S>                                            <C>              <C>            <C>           <C>

BALANCE - DECEMBER 31, 2000                      $(393,080)              $-   $(43,995,865)  $(1,371,858)
Shares issued for cash. . . . . . . . . . .         -                     -              -     1,453,000
Shares issued for services. . . . . . . . .              -                -              -       745,186
Shares issued for settlement of debt. . . .              -                -              -        40,000
Shares issued in settlement of interest . .              -                -              -       138,769
Shares purchased in settlement of dispute .              -                -              -        (6,300)
Shares issued for technology. . . . . . . .              -                -              -       275,448
Compensation related to the grant of stock
  options and warrants. . . . . . . . . . .              -                -              -       330,850
Amortization of unearned compensation . . .        299,958                -              -       299,958
Reversal of unearned compensation . . . . .         93,122                -              -             -
Exercise of warrants and options. . . . . .              -          (10,000)             -       236,400
Conversion of Convertible Debentures
  and Interest. . . . . . . . . . . . . . .              -                -              -       541,000
Conversion of Series J preferred stock. . .              -                -              -       126,763
Conversion of Series K preferred stock. . .              -                -              -        56,367
Series M Preferred issued with warrants
  and beneficial conversion feature, net of
  $23,000 offering costs. . . . . . . . . .              -                -       (177,000)      177,000
Series M Preferred issued for Series L
  Preferred dividends . . . . . . . . . . .              -                -              -        25,000
Modification of warrants. . . . . . . . . .              -                -              -        20,344
Series J preferred stock dividend accrual .              -                -       (119,017)     (119,017)
Series K preferred stock dividend accrual .              -                -        (61,890)      (61,890)
Series M preferred stock dividend accrual .              -                -       (189,222)     (189,222)
Net loss. . . . . . . . . . . . . . . . . .              -                -     (7,225,788)   (7,225,788)
                                             --------------  ---------------  ------------- ------------

BALANCE - DECEMBER 31, 2001 . . . . . . . .  $           -   $      (10,000)  $(51,768,782)  $(4,507,990)
                                             ==============  ===============  =============  ============
The accompanying notes are an integral part of these consolidated financial statements


</TABLE>


<TABLE>
<CAPTION>


                                        ESYNCH CORPORATION AND SUBSIDIARIES
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                                    FOR THE YEARS ENDED
                                                                                ---------------------
                                                                                      DECEMBER 31,
                                                                                 ---------------------
                                                                                       2001               2000
                                                                               ---------------------  -------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                            <C>                    <C>
  Net loss                                                                     $         (7,225,788)  $(23,511,547)
  Adjustments to reconcile net loss to net cash used by operating activities:
    Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . .               436,811        281,862
    Amortization and impairment of goodwill . . . . . . . . . . . . . . . . .             2,467,434      1,674,976
    Amortization and impairment of patents. . . . . . . . . . . . . . . . . .                     -     12,104,330
    Amortization of debt discount . . . . . . . . . . . . . . . . . . . . . .                88,247        454,164
    Loss on disposal of property and equipment. . . . . . . . . . . . . . . .                79,132              -
    Write off of inventory. . . . . . . . . . . . . . . . . . . . . . . . . .                     -         15,943
    Write off of acquisition costs. . . . . . . . . . . . . . . . . . . . . .               250,085        275,000
    Change in allowance for doubtful accounts . . . . . . . . . . . . . . . .              (258,499)       424,504
    Stock issued for services, interest and settlements . . . . . . . . . . .               924,955      1,074,722
    Stock based compensation. . . . . . . . . . . . . . . . . . . . . . . . .               630,808      2,268,396
    Additional compensation on modification of warrants . . . . . . . . . . .                20,344         37,875
    Interest expense on bridge loan paid with warrants. . . . . . . . . . . .                     -        232,258
    Forgiveness of debt . . . . . . . . . . . . . . . . . . . . . . . . . . .              (545,874)       (96,436)
    Changes in operating assets and liabilities:
      Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . .                15,988        (69,765)
      Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . .                (9,768)        23,124
        Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . .                22,154           (340)
      Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                34,030        (85,586)
      Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . .               296,895        409,733
      Related party accounts payable. . . . . . . . . . . . . . . . . . . . .                59,357              -
      Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . .               606,814        527,624
                                                                               ---------------------  -------------
  NET CASH USED IN OPERATING ACTIVITIES                                                  (2,106,875)    (3,959,163)
                                                                               ---------------------  -------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Proceeds from (loan to) affiliate                                                         200,000       (500,000)
  Acquisition of property and equipment                                                      (8,007)      (149,194)
  Loans made to potential acquisition company                                                     -       (324,000)
                                                                               ---------------------  -------------
  NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                                       191,993       (973,194)
                                                                               ---------------------  -------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Stock issued for cash                                                                   1,453,000        645,235
  Purchases of common stock                                                                  (6,300)             -
  Proceeds from the issuance of warrants                                                          -        933,640
  Proceeds from the exercise of options and warrants                                        236,400         68,621
  Proceeds from issuance of preferred shares, net of costs                                  177,000      1,228,085
  Proceeds from borrowings                                                                   80,000      1,615,334
  Payment on capital lease obligation                                                       (20,435)       (20,195)
  Payments on notes payable                                                                       -       (858,334)
                                                                               ---------------------  -------------
  NET CASH PROVIDED BY FINANCING ACTIVITIES                                               1,919,665      3,612,386
                                                                               ---------------------  -------------
NET INCREASE (DECREASE) IN CASH . . . . . . . . . . . . . . . . . . . . . . .                 4,783     (1,319,971)
CASH - BEGINNING OF YEAR. . . . . . . . . . . . . . . . . . . . . . . . . . .                     -      1,319,971
                                                                               ---------------------  -------------
CASH - END OF YEAR                                                             $              4,783   $          -
                                                                               =====================  =============
</TABLE>


SUPPLEMENTAL  CASH  FLOW  INFORMATION  AND  NON-CASH  INVESTING  AND  FINANCING
-------------------------------------------------------------------------------
ACTIVITIES  -  NOTE  8
----------------------
<PAGE>
------
                       ESYNCH CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



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



                                       F-9
NOTE  1--NATURE  OF  BUSINESS  AND  SUMMARY  OF  SIGNIFICANT ACCOUNTING POLICIES

The  primary  activities  of  eSynch  Corporation  (eSynch  or the Company) have
consisted  of  raising  capital,  acquiring businesses, developing and marketing
video-on-demand  services  and  video  streaming  through the Internet, software
sales  through  the Internet, and DVD video encoding, compression and authoring.

PRINCIPLES OF CONSOLIDATION - The accompanying consolidated financial statements
include  the  accounts  of  eSynch and of its wholly owned subsidiary, Intermark
Corporation,  for  all  periods  presented, and the accounts of its wholly owned
subsidiaries,  Kiss  Software Corporation and Oxford Media Corporation, from the
dates  of  their  acquisitions  on  April  1,  1999  and  September  30,  1999,
respectively.  All  inter-company transactions and balances have been eliminated
in  consolidation.  Amounts presented at December 31, 2000 have been adjusted to
conform  to  the  December  31,  2001  presentation.

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

BUSINESS  CONDITION  -  The  accompanying consolidated financial statements have
been  prepared  on  the  basis of the Company continuing as a going concern. The
Company  has incurred losses from operations, negative cash flows from operating
activities  and  has accumulated a deficit at December 31, 2001 in the amount of
$51,768,782.  Management's plan to mitigate the impact of these conditions is to
obtain  additional  equity financing through the issuance of the Company's debt,
common  stock,  convertible preferred stock or warrants. However, realization of
the  proceeds  from 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 as a going
concern.

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 a concentration of market risk. Sales to any customer in 2001 and
2000  did  not  exceed  10%  of  total  sales.

FAIR  VALUES  OF  FINANCIAL  INSTRUMENTS  -  The  amounts  reported  as accounts
receivable,  notes receivable, checks issued in excess of cash in bank, accounts
payable,  accrued  liabilities,  accrued  pre-acquisition  liabilities,  notes
payable,  capital  lease obligation and convertible debentures are considered to
be reasonable approximations of their fair values. The fair value estimates were
based  on  the  near  term nature of certain of the financial instruments and on
market information available to management at the time of the preparation of the
financial  statements.

INVENTORY  -  Inventory  was  stated  at  the  lower of cost or market. Cost was
determined  using the first-in, first-out method. During the year ended December
31, 2000 the Company wrote off the $15,943 balance of inventory as it had become
obsolete.  The  Company  has  made  the  transition from channel distribution to
internet  download distribution of products and therefore no longer requires the
maintenance  of  the hard goods inventory and  therefore  carries  no  inventory
balance.

EQUIPMENT  -  Equipment  is  stated  at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the equipment, which are
three  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  $2,030 and $301,674 during the years ended December
31,  2001  and  2000,  respectively.

LOSS  PER  SHARE  -  The  Company  computes  basic and diluted loss per share in
accordance  with  Statement  of Financial Accounting Standards No. 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 convertible preferred stock and convertible
notes  payable except during loss periods when those potentially issuable common
shares  would  decrease  the  loss  per  share.

As  of  December 31, 2001 and 2000, there were 72.5 and 139.5 shares of Series J
convertible  preferred  shares,  42.5  and  81.5  shares of Series K convertible
preferred, respectively.  As of December 31, 2001 and 2000, there were 196.9 and
172.8  shares of Series M convertible preferred and zero and $500,000 of secured
convertible  debentures,  respectively.  As of December 31, 2001 and 2000, there
were  options  and warrants to purchase 6,058,738 and 8,035,930 shares of common
stock,  respectively.  These  items  were  not  included  in  the calculation of
diluted  loss  per share for the years ended December 31, 2001 and 2000, as they
would  have  been  anti-dilutive,  thereby  decreasing  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  software  inventory  owned by the Company.
Revenue  from  DVD video encoding, compression and authoring and video-on-demand
services  is  recognized  when  the  product  or  services are completed and the
products  are  transmitted  or  shipped  to  the  customer.

NEW  ACCOUNTING  STANDARDS  - In June 2001, FASB issued two statements. SFAS No.
141,  "Business  Combinations,"  requires  usage  of the purchase method for all
business  combinations initiated after June 30, 2001, and prohibits the usage of
the  pooling  of  interests  method of accounting for business combinations. The
provisions  of  SFAS  No. 141 relating to the application of the purchase method
are  generally effective for business combinations completed after July 1, 2001.
Such  provisions include guidance on the identification of the acquiring entity,
the  recognition of intangible assets other than goodwill acquired in a business
combination  and  the  accounting  for  negative  goodwill.

SFAS  No.  142,  "Goodwill  and  Other  Intangible  Assets," changes the current
accounting  model  that  requires  amortization  of  goodwill,  supplemented  by
impairment  tests,  to  an accounting model that is based solely upon impairment
tests.  SFAS  No.  142  also  provides  guidance  on accounting for identifiable
intangible  assets  that  may or may not require amortization. The provisions of
SFAS  No.  142  related to accounting for goodwill and intangible assets will be
generally  effective  for  the  Company  at  the  beginning of 2002, except that
certain provisions related to goodwill and other intangible assets are effective
for  business  combinations  completed after July 1, 2001.  At December 31, 2001
the  Company  evaluated  its  goodwill  and  recognized  impairment.

In  June  2001,  the  FASB  issued SFAS No. 143 "Accounting for Asset Retirement
Obligations."  SFAS  No.143  addresses  financial  accounting  and reporting for
obligations  associated  with the retirement of intangible long-lived assets and
associated  asset retirement costs. SFAS No. 143 requires that the fair value of
a  liability  for  an asset retirement obligation be recognized in the period in
which it is incurred.  The asset retirement obligations will be capitalized as a
part  of  the  carrying amount of the long-lived asset.  SFAS No. 143 applies to
legal  obligations  associated  with  the  retirement  of long-lived assets that
result  from  the acquisition, construction, development and normal operation of
long-  lived  assets.  SFAS  No. 143 is effective for years beginning after June
15,  2002,  with  earlier adoption permitted.  The Company does not believe this
statement  will  have  any  impact  to  the  Company.

In  August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal  of  Long-Lived  Assets."  SFAS No. 144 establishes a single accounting
model  for  long-lived  assets  to be disposed of by sale and the recognition of
impairment  of long-lived assets to be held and used.  SFAS No. 144 is effective
for  fiscal  years  beginning  after December 15, 2001, with an earlier adoption
encouraged.  The  Company  is evaluating the impact of adopting SFAS No. 144 but
believes  it  will  not  have  a  material  effect  on  the Company's results of
operations  or  financial  position.




NOTE  2--ACQUISITIONS

KISS  SOFTWARE  - Effective April 1, 1999, the Company completed the acquisition
of  Kiss Software Corporation, 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  0.181557136  common  shares  of  eSynch  and  each of their
preferred shares for 0.4183964 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  $2.11  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  stock  and  options  issued, has been estimated at
$3,965,571.  Of this amount, $3,568,908 is applicable to the common stock issued
in  the  Kiss acquisition and $396,663 is applicable to the stock options issued
to  the  Kiss employees. The purchase price was allocated to the acquired assets
and  liabilities assumed based on their estimated fair values. The excess of the
purchase price over the estimated fair value of the identifiable acquired assets
less  liabilities  assumed  was  $5,315,094,  which  was recognized as goodwill.
Amortization of goodwill recognized during the years ended December 31, 2001 and
2000  was  $1,635,009  and $1,635,009, respectively. Goodwill is being amortized
over  approximately  three  years  on  a  straight-line  basis.

At  December  31,  2001,  management  evaluated the goodwill for impairment and,
based  on an analysis of estimated future cash flows, management determined that
the  goodwill  was  impaired.  Accordingly, the Company recognized an impairment
loss in the amount of the $762,485 to reduce the remaining un-amortized carrying
value  of  the  goodwill  to  its  estimated  discounted  net future cash flows.

OXFORD  MEDIA  -  Effective  September  30,  1999,  the  Company  completed  the
acquisition  of  Oxford  Media  Corp. ("Oxford"), engaged in DVD video encoding,
compression  and  authoring.  Under  the  Agreement  the  shareholders of Oxford
exchanged  all  the outstanding shares of Oxford common stock for 450,000 shares
of  the  Company's  common  stock.  The  acquisition was accounted for using the
purchase  method of accounting and the purchase price of the acquired assets was
computed  to  be  $720,000 which was attributed to the assets acquired including
software  licenses  in  the  amount  of  $100,000  and goodwill in the amount of
$119,900.  Oxford  received  a  nonexclusive  license  from  Oxford  Management
Corporation,  a  Nevada  corporation, which is a license of proprietary software
and  source  code  for a video-on-demand hotel pay-per-view system. The value of
the  software  license  is  included in other assets and is being amortized over
three  years.  Amortization  of the software license recognized during the years
ended  December  31,  2001  and 2000 was $33,333 and  $33,333, respectively. The
goodwill  is  also  being  amortized over three years.  Amortization of goodwill
recognized  during  the  years  ended December 31, 2001 and 2000 was $39,967 and
$39,967,  respectively.

At  December  31,  2001,  management  evaluated the goodwill for impairment and,
based  on an analysis of estimated future cash flows, management determined that
the  goodwill  was  impaired.  Accordingly, the Company recognized an impairment
loss  in the amount of the $29,973 to reduce the remaining un-amortized carrying
value  of  the  goodwill  to  its  estimated  discounted  net future cash flows.

NOTE  3  --  NOTES  RECEIVABLE

Note  receivable  from  affiliate  consists  of  a  $500,000  loaned  to  an
officer-director  during  the  year  ended December 31, 2000. The note bears 10%
interest  and was due February 26, 2001. In January 2001, the Company received a
payment of $200,000 on this note.  At December 31, 2000, the Company treated the
remaining $300,000 of the note receivable as compensation to the shareholder and
recorded  an  accrual  for  payroll taxes. As of December 31, 2001 and 2000, the
Company  has  included  this  receivable on the accompanying balance sheets, the
amount  is  fully  reserved  at  December  31,  2001.  Additionally, the Company
reserved  $48,737  and  $17,123  of accrued interest as of December 31, 2001 and
2000,  respectively.

On  June  14,  2000,  the  Company  signed  a  letter  of  intent  to  acquire
eLiberation.com  Corporation  ("eLiberation.com").  In  June,  2000, the Company
advanced $250,000 to eLiberation.com under a short-term, secured note due August
31,  2000.  On  July  21,  2000  the  Company  advanced an additional $30,000 to
eLiberation.com  under  the existing terms and due date.  On August 25, 2000 the
Company  agreed  to  extend  the due date of the note to November 30, 2000 based
upon  the  agreement  by eLiberation.com to deliver certain marketing promotions
for the Company.  Effective August 31, 2000, the Company exercised its option to
terminate the acquisition.  The Company elected to reserve $275,000 of this note
at  December  31,  2000  as  an acquisition cost based on the initial amount was
advanced  in  connection with an anticipated acquisition.  During the year ended
December  31, 2001, the Company received payment of $280,000 on this receivable.
Upon receipt the Company reversed the allowance.  At December 31, 2001 and 2000,
the  Company  reserved  accrued  interest  due  of  $27,660  and  $14,647.

During  the years ended December 31, 2001 and 2000, the Company advanced a total
of  $27,000  and $44,000 to certain members of management, respectively.  Of the
amounts advanced the Company received repayment of $12,000 in 2001.  At December
31,  2001  and 2000 amounts due from these members of management totaled $46,000
and  $44,000,  respectively.  At December 31, 2001 and 2000, the Company has the
$46,000  and  $44,000 reserved as uncollectible.  During the year ended December
31,  2001  the  Company  wrote  off  $13,000  and the related reserve due to the
departure  of  one  of  the  officers.

Notes  receivable  includes  $250,085  loaned  to Streamedia Communications Inc.
during  the  quarter  ended  March  31,  2001.  The amounts were loaned under an
assumed merger. The loans bear interest at 10% and were due on May 21, 2001. The
loan  is  collateralized  by  913,687  shares of Streamedia Communications, Inc.
common  stock.  At  December  31,  2001  the Company reserved the receivable and
accrued  interest  of  $20,559  due  to uncollectablity and the collateral being
worthless.

<TABLE>
<CAPTION>


NOTE  4  -  EQUIPMENT

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

                                      2001        2000
                                   ----------  -----------
<S>                                <C>         <C>
    Furniture and fixtures. . . .  $  28,647   $   87,398
    Computer equipment. . . . . .    897,415      862,130
    Leasehold improvements. . . .          -       78,114
                                   ----------  -----------

    Total Cost. . . . . . . . . .    926,062    1,027,642
                                   ----------  -----------
    Less Accumulated Depreciation   (562,096)    (303,207)
                                   ----------  -----------

    Net Equipment . . . . . . . .  $ 363,966   $  724,435
                                   ==========  ===========
</TABLE>


Depreciation expense for the years ended December 31, 2001 and 2000 was $328,073
and  $248,336,  respectively.

During the year ended December 31, 2001 the Company disposed of certain property
and equipment.  The cost of the property and equipment disposed was $70,201 with
accumulated  depreciation  of  $42,243  and  a  loss on disposal of $27,958.  In
addition the Company wrote off leasehold improvements with a cost of $78,114 and
accumulated  amortization  of  $26,940  due  to  the  vacating  of the Company's
previous  corporate offices located in Tustin, California.  The Company recorded
an  impairment  loss  of  $51,174  related  to  the  leasehold  improvements.

NOTE  5  -  PURCHASE  OF  PATENT  RIGHTS  AND  TECHNOLOGY

PATENT RIGHTS - On March 1, 2000, the Company entered into a licensing agreement
with  a  related  party to license two patents in exchange for certain royalties
and  contingently  issuable  warrants.  The  patents  relate  to  the broadcast,
playback  and  limited use capability of Internet streaming media and video. The
licensing  agreement  gave  the  Company  the exclusive rights to the use of the
patents until January 1, 2002, after which time, the licensing agreement becomes
non-exclusive.  As consideration for the licensing agreement, the Company issued
950,000 fully paid warrants to receive shares of common stock. The warrants were
held  in  escrow until January 1, 2001 because, under the agreement, the Company
had  the  option  to cancel the warrants and the licensing agreement at any time
before  January  1,  2001.  As  a  result,  no  amounts  were recognized for the
warrants  and  the  patents  until  the  fourth  quarter of 2000 when management
determined  to  not  cancel  the  licensing  agreement.  The market value of the
Company's  common stock was $12.75 per share on March 1, 2000. The warrants were
valued  at  $12,104,330,  using  the Black-Scholes option pricing model with the
following  weighted-average  assumptions:  5.0%  risk-free  interest  rate,  0%
expected  dividend  yield,  127%  volatility  and  3.0 years estimated life. The
Company  determined  that  the  useful life of the patents was approximately two
years  and  during  the year ended December 31, 2000 amortized $5,127,529 of the
patents.

On  December  29, 2000 the warrants were modified to increase the exercise price
to $0.50 per share. The modified warrants became exercisable on January 10, 2001
and  expire  if  not  exercised on January 10, 2004.  No additional value to the
patents  was  recorded  as  a  result  of  this  modification.

At December 31, 2000, management evaluated the patents for impairment and, based
on  an  analysis  of  estimated  future  cash flows from the patents, management
determined  that  the patents were impaired. Accordingly, the Company recognized
an  impairment  loss  in  the  amount  of the $6,976,801 to reduce the remaining
un-amortized  carrying  value  of  the patents to their estimated discounted net
future  cash  flows.

TECHNOLOGY  -  During  the  year  ending December 31, 2001, the Company acquired
proprietary  data  encryption technology for use in its streaming media products
and services business sector.  In connection with the purchase of the technology
the  Company  issued  801,187  shares  valued  at  $275,448 and made payments of
$26,000 for the modification of the software.  The technology combines a variety
of  advanced  methods  giving  the  Company  the ability to deliver simultaneous
streaming  media  and  downloading services in a fully secure, industry-standard
environment.  The  acquired  technology  is  being  used in combination with the
Company's  existing  technologies  in  products  and services.  The Company will
amortize  the  cost  of  the technology over future cash inflows or three years,
whichever  is  greater.  During  the  year  ended December 31, 2001 amortization
expense  was  $75,362.  The  net  value  of  the technology of $226,086 has been
included  in  other  assets on the accompanying December 31, 2001 balance sheet.

NOTE  6  -  ACCRUED  LIABILITIES

The pre-acquisition liabilities represent liabilities assumed at the time of the
acquisition  of  Innovus  Corporation  (now  eSynch  Corporation)  and  the
reorganization  of  Intermark  Corporation  in  1996.  During the year 2000, the
Company reduced the reserve by $27,500 from cash payments.  In 2001 and 2000 the
Company  reduced  the  reserve  by  $545,874 and $96,436, respectively, based on
items  in which the statute of limitations of four years had expired.  The gains
from  reserve  forgiveness  during  2001  and 2000 have been accounted for as an
extraordinary  gain  in  the  accompanying  financial  statements.

Included in accrued liabilities at December 31, 2001 and 2000 are $1,516,161 and
$638,740,  respectively,  in  obligations  to  state and federal governments for
payroll  taxes  from  the  current  years  and from previous years and estimated
interest  and penalties owing on such tax obligations.  At December 31, 2001 the
Company  has  accrued  salaries  of $304,176, some of these employees have filed
labor actions against the Company for payments of these salaries.  Additionally,
during  2001  the  Company  withheld  401K  contributions  from employees' wages
however  these  employee  contributions  were  not  contributed to the plan.  At
December  31,  2001,  amounts  due  to  the  plan  were  $42,011.


<TABLE>
<CAPTION>


NOTE  7  -  NOTES  PAYABLE


Notes payable consisted of the following:
                                                                          DECEMBER 31,
                                                                           -------------
                                                                         2001          2000
                                                                     -------------  ----------
<S>                                                                  <C>            <C>
10% Convertible note payable to a shareholder; unsecured;
  due on demand                                                      $     450,000  $  450,000
8% Convertible debentures; secured by all the assets of the
  the Company; due on December 7, 2003                                           -     500,000
7% Note payable to a shareholder; interest due quarterly; principal
  payable $14,754 quarterly beginning March 2001; unsecured                 77,150      77,150
12% Note payables to a shareholders; payable on demand; unsecured           40,000           -
10% Note payables to a shareholders; payable on demand; unsecured           31,250      31,250
                                                                     -------------  ----------

TOTAL NOTES PAYABLE                                                  $     598,400  $1,058,400
                                                                     =============  ==========
</TABLE>


During  the  year  ended  December  31,  2001,  the  Company borrowed $40,000 an
individual.  The note bears interest at 12% and was due on July 21, 2001.  As of
December  31, 2001 the Company has not made any principle payments on the notes.
During  2001  the Company issued 50,000 shares of common stock valued at $16,000
for interest and consideration to shareholder for making the loan.  The value of
the  shares  has  been  included  in  interest  expense.

During  the  year  ended December 31, 2001, the Company borrowed $40,000 from an
individual.  The  note was due on July 25, 2001.  The note did not have a stated
interest  rate  rather  if  the  note  was  paid  back by July 25, 2001 then the
interest  would  be  $5,000 and 20,000 shares of the Company's common stock.  If
the  note  was  not paid by July 25, 2001 then the interest would be $10,000 and
40,000  shares  of the Company's common stock.  The Company did not pay back the
note  prior  to the due date.  In October 2001, the notes payable of $40,000 and
accrued  interest  of $10,000 was converted into 500,000 shares of common stock.
The  Company  additionally issued the 40,000 shares required under the agreement
and  valued  them  at $12,000 which has been recorded as interest expense on the
accompanying  statement  of  operations.

At  December  31, 2001 and 2000, the Company has $450,000 due under a promissory
note to a shareholder and a member of the Board of Directors.  The note bears an
interest  rate  of  10%.  The  note  was  entered  into on June 14, 2000 and was
originally  due  on  September  12,  2000. At December 31, 2000, the note was in
default.  During  January 2001, the Company issued a warrant to purchase 250,000
shares  of  common  stock  to  this  shareholder.  The  warrants  were valued at
$160,850  using  the  Black-Schoels method.  In return the shareholder agreed to
extend  the  terms of the note. Currently the note is due on demand with 20 days
prior  written  notice.

The  10%  Series  A  Convertible  Debentures  in the amount of $25,000 each were
issued  in April 1998 to three shareholders.  The note holders were entitled, to
convert  the  debenture  principal amounts, together with accrued interest, into
shares of the Company's common stock at $1.25 per share. During 1999, two of the
note  holders  converted  their  debentures  into  common  stock.  In  1999, the
remaining  note  was  extended  by  the  holder to be due on March 31, 2000. The
remaining  $25,000  note was converted into 20,000 shares of common stock during
the  year  ended  December  31,  2000.

Prior  to  the closing of the Series L convertible preferred stock offering, the
Company  borrowed  $1,000,000  as bridge loans from the investors. In connection
with  this  borrowing,  the  Company  issued  75,000 warrants at exercise prices
ranging  from  $3.50  to  $4.50  for  interest  on the bridge loans. The Company
recorded  $232,258 in interest expense related to these warrants during the year
ended  December  31,  2000.  On  September 29, 2000, the Company transferred the
$1,000,000  bridge  loans  to  the  Series  L  convertible  preferred  stock.

SECURED  CONVERTIBLE  DEBENTURES

On  December  7,  2000  the  Company  issued  Secured  Convertible  Debentures
("Debentures")  in  the amount of $500,000. The Debentures bear interest rate at
8%  per  annum and are due on December 7, 2003. The Company received $438,000 in
proceeds, net of issuance costs of $62,000. In connection with these Debentures,
the Company issued warrants to purchase 250,000 shares of common stock at $1.375
per  share.  The  placement  agent received a cash commission of 8% of the gross
proceeds  equaling  $40,000  and  warrants  to  purchase  62,500  shares  of the
Company's common stock at an exercise price of $1.375 per share. Under the terms
of  a  registration  rights  agreement  the  Company agreed to bear the costs of
registering the common stock underlying the conversion of the Debentures and the
exercise  of  the  warrants.

The  Debentures became convertible into common stock on the date of issuance and
are convertible into the number of shares of common stock determined by dividing
the face amount of the debentures by the conversion price, computed as the lower
of $1.375 per common share or 78% of the average of the three lowest closing bid
prices  per  share  in  the  twenty-trading-day  period ending on the day before
conversion.  Any  Debentures  not  converted  on  the  third  anniversary of the
issuance  date  will  be  automatically  converted into common stock, subject to
extensions  by  the  Company  for  certain  events.

The  Debenture  holders received a beneficial conversion feature on the dates of
issuance.  The  value of the beneficial conversion feature was determined as the
difference  between  the  fair value of the Company's common stock per share and
the  conversion  price,  multiplied by the number of shares of common stock into
which  the  Debentures  are  convertible. The value of the beneficial conversion
feature was $286,164 and was recognized as additional paid-in capital during the
year  ended  December  31,  2000.

The warrants are exercisable from the date of issuance through December 7, 2005.
The  fair  value  of  the warrants on the date issued was $507,250 ($101,450 was
allocated  to  the  warrants issued to the placement agent) determined using the
Black-Scholes  option  pricing  model  with  the  following  weighted-average
assumptions:  5.26%  risk-free interest rate, 0% expected dividend yield, 149.8%
volatility  and  5.0  years estimated life. The Company capitalized a portion of
the  amounts  paid  to  the  placement  agent  and a portion of the value of the
warrants  issued  to the placement agent, as debt issue costs.  As a result, the
Company  recorded $90,225 in debt issue costs and is amortizing these costs over
the  three year term of the Debentures. During the years ended December 31, 2001
and  2000,  amortization  expense  was  $88,247  and  $1,978,  respectively.

The  net  proceeds  from the Debenture offering were allocated to the securities
issued  based upon their relative fair values and resulted in allocating $45,836
to  the  Debentures  (after allocating $90,225 to debt issue costs), $286,164 to
the  beneficial  conversion feature and $196,225 to the warrants (net of $73,225
offering  costs).  The  amount  allocated  to  the  warrants  was  recognized as
additional  paid-in  capital.  The  Debentures  were  convertible at the date of
issuance;  therefore, the $454,164 debt discount was charged to interest expense
at  the  date  of  issuance.

Interest  on  the Debentures is accrued at the rate of 8% per annum. Interest is
not required to be paid until conversion, payment or until an acquisition of the
Company occurs.  The Company has the option of paying accrued interest either in
cash  or  in  common  shares,  based on the conversion price then in effect.  To
date,  the Company has not paid any interest on the Debentures. Accrued interest
payable  on  the balance sheet date was estimated based on the fair value of the
number of shares of common stock issuable using the current conversion price. At
December  31,  2000  accrued  interest  on  the  Debentures  was  $3,398.

The  Company  had the option to redeem the Debentures on ten days written notice
to  the  holders  of the Debentures and by payment of an amount equal to 120% of
the  principal,  plus  accrued interest. If the Company was in default of one or
more  defined  conditions of the Debentures, the holders of the Debentures could
have  demanded  the  immediate  payment  of the Debentures at 120% of their fair
amount,  plus  accrued  interest.

During  the  year  ended  December  31,  2001,  holders  of  Secured Convertible
Debenture  converted  a  total  of $500,000 and received 2,105,464 common shares
including  accrued interest, legal fees and penalties in the aggregate amount of
$41,000.  No  Secured  Convertible  Debentures  were outstanding at December 31,
2001.

Additionally,  holders  of the warrants issued in connection with the debentures
converted  the  warrants  for  312,500  shares  of  common  stock for a net cash
consideration  of  $81,900.  The  Company  had  previously modified the exercise
price  of  the  warrants  resulting  in  an  additional  charge to operations of
$20,344.

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

SUPPLEMENTAL  CASH  FLOW  INFORMATION - The Company paid $26,399 and $16,869 for
interest  during  the  years  ended  December  31,  2001 and 2000, respectively.

NONCASH  INVESTING AND FINANCING ACTIVITIES - During the year ended December 31,
2001,  the  Company  converted $670,000 of Series J Preferred stock, $390,000 of
Series  K Preferred stock, $500,000 of Secured Convertible Debenture, and agreed
to  rescind  the  conversion  of  $40,000  of Series M Preferred stock for a net
issuance  of  4,714,870  shares  of common stock, including interest shares. The
Company  accrued  $370,129  of  dividends  on  the preferred stock and converted
$183,130  of  that  dividend  into  shares of common stock.  The Company accrued
$41,000  of  interest on the convertible debenture and converted $41,000 of that
interest  into shares of common stock.  The Company acquired $38,727 of computer
equipment under a capital lease and wrote off leasehold improvements with a cost
of  $78,113  and  accumulated  amortization of $26,940.  The Company disposed of
property  and  equipment  with a cost of $70,201 and accumulated depreciation of
$42,243.  The  Company has a receivable from a shareholder of $10,000 related to
the  exercise of warrants.  The Company issued 444,444 shares of common stock in
settlement  of  a note payable of $40,000.  The Company issued 801,187 shares of
common  stock  valued  at  $275,448  for  encryption  technology.  The  Company
amortized  the  discount  of  $177,000  of  the  Series  M  preferred stock as a
dividend.

During  year ended December 31, 2000, the Company amortized the discounts of the
Series  J,  Series  K, Series L and Series M preferred stock as a dividend.  The
amount  of the amortization was $4,589,210.  The Company converted $1,355,000 of
Series J Preferred stock and $1,310,000 of Series K Preferred stock into 941,834
shares  of  common stock. Equipment under capital lease of $199,910 was acquired
under  the  terms  of  a  capital  lease  obligation.


<TABLE>
<CAPTION>


NOTE  9  -  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, 2001 and 2000 are shown
below:

                                     2001          2000
                                 ------------  ------------
<S>                              <C>           <C>
  Operating loss carry forwards  $ 8,817,952   $ 7,181,306

  Valuation Allowance . . . . .   (8,817,952)   (7,181,306)
                                 ------------  ------------

  NET DEFERRED TAX ASSET         $         -   $         -
                                 ============  ============
</TABLE>


For tax reporting purposes, the Company has net operating loss carry forwards in
the  amount of approximately $21,969,086 which will expire beginning in the year
2011  through  2021.  The  valuation  allowance  increased  by  $1,636,646  and
$2,964,358  during  the  years  ended  December 31, 2001 and 2000, respectively.

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


<TABLE>
<CAPTION>



                                                    FOR THE YEARS ENDED
                                                       DECEMBER 31,
                                                   ---------------------
                                                           2001               2000
                                                   ---------------------  ------------
<S>                                                <C>                    <C>
    Benefit at statutory rate (34%)                $         (2,456,768)  $(7,993,926)
    Amortization of goodwill                                    675,015       675,015
    Amortization of patents                                           -     2,066,394
    Impairment of patents                                             -     2,811,651
    Impairment of goodwill                                      319,361             -
    Stock-based compensation                                    254,216       914,164
    Other                                                        26,755        43,571
    Change in valuation allowance                             1,636,646     2,964,358
    State tax benefit, net of federal tax effect               (455,225)   (1,481,227)
                                                   ---------------------  ------------

    PROVISION FOR INCOME TAXES                     $                  -   $         -
                                                   =====================  ============
</TABLE>


NOTE  10  -  STOCKHOLDERS'  EQUITY

SERIES  J  CONVERTIBLE  PREFERRED  STOCK
----------------------------------------

From  August  through  October  1999,  the  Company  issued Series J convertible
preferred stock at a price of $10,000 per share in a private placement offering.
The  Company  received  $2,387,500 in net proceeds (net of $237,500 offering and
estimated  registration  costs) in exchange for the issuance of  262.5 shares of
Series  J convertible preferred stock and warrants to purchase 196,875 shares of
common  stock  at  a  weighted-average  exercise  price  of $3.86 per share. The
placement  agent  received  a  cash  commission  of 5% of the gross proceeds and
expense  reimbursement equaling $137,500 and 12.5 shares of Series J convertible
preferred  stock. Under the terms of a registration rights agreement the Company
agreed  to  bear  the  costs  of  registering  the  common  stock underlying the
conversion  of  the  preferred  stock  and  the  exercise  of  the  warrants.

The Series J convertible preferred stock became convertible into common stock 90
days after issuance and is convertible into the number of shares of common stock
determined  by  dividing  its  $10,000  stated value per share by the conversion
price,  computed as the lower of $3.50 per common share or 80% of the average of
the  six  lowest  closing  bid prices per share in the twenty-trading-day period
ending  on  the day before conversion. Any Series J convertible preferred shares
not  converted  on  the  third  anniversary  of  the  issuance  dates  will  be
automatically  converted into common stock, subject to extensions by the Company
for  certain  events.

The Series J convertible preferred shareholders received a beneficial conversion
feature on the dates of issuance. The value of the beneficial conversion feature
was  determined as the difference between the fair value of the Company's common
stock  per share and the conversion price, multiplied by the number of shares of
common  stock  into  which  the  Series  J  convertible  preferred  stock  were
convertible. The value of the beneficial conversion feature was $285,714 and was
recognized  as  additional  paid-in  capital.

The  warrants  are  exercisable  from  the dates of issuance through October 29,
2002. The fair value of the warrants on the dates issued was $518,916 determined
using the Black-Scholes option pricing model with the following weighted-average
assumptions:  5.0%  risk-free  interest  rate,  0% expected dividend yield, 143%
volatility and 3.0 years estimated life. The net proceeds from the offering were
allocated  to  the  Series  J convertible preferred stock and the warrants based
upon  their  relative  fair  values and resulted in allocating $1,582,870 to the
Series  J convertible preferred stock, net of the $285,714 beneficial conversion
feature,  and  $518,916 to the warrants. The amount allocated to of the warrants
was  recognized  as  additional  paid-in  capital.

The  difference between the total stated value of Series J convertible preferred
stock  of  $2,625,000  and  the  amount  allocated  to  the Series J convertible
preferred  stock  was  recognized  as  a  discount  on  the Series J convertible
preferred  stock  of  $1,042,130.  The  discount  was  amortized  as  additional
preferred  stock  dividends  from the dates of issuance to January 28, 2000, the
date  that  the  Series  J  convertible  preferred stockholders had the right to
convert  their  shares,  and  resulted  in  the  Company recognizing $206,388 of
preferred  dividends  during  the  year  ended  December  31,  2000.

Dividends  on the Series J convertible preferred stock are cumulative and accrue
at  the  rate  of  7% per annum. The dividends are not required to be paid until
conversion,  redemption  or  until  an  acquisition  of the Company occurs.  The
Company  has  the option of paying accrued dividends either in cash or in common
shares,  based on the conversion price then in effect.  To date, the Company has
elected to pay  accrued preferred dividends on the various conversion dates with
common  stock. Although the number of common shares issued in payment of accrued
preferred  dividends  were  determined  by the conversion price in effect on the
dates  issued, they were recorded at fair value, which effectively increased the
dividend  rate.  Accrued  dividends  payable  on  the  balance  sheet  date were
estimated  based  on  the  fair  value  of  the number of shares of common stock
issuable  using  the current conversion price, and totaled $234,906 and $242,961
at  December  31,  2001  and  2000, respectively. Series J convertible preferred
stock  dividends  accrued during the years ended December 31, 2001 and 2000 were
$119,017  and  $245,505,  respectively.

The Series J convertible preferred stock has a liquidation preference of $10,000
per  share  plus  accumulated  and  unpaid  dividends and may be redeemed at the
Company's  option  for  $12,000  per  share  plus  accumulated  dividends.

During  the  years  ended  December  31,  2001  and  2000,  holders  of Series J
convertible  preferred  stock converted a total of 67 and 135.5 preferred shares
valued  at  $670,000  and  $1,355,000  and received 1,568,310 and 500,287 common
shares  including  144,850  and  8,416  shares issued in payment of $126,763 and
$30,419  of accrued dividends, respectively. Additional accrued dividends remain
unpaid  on  converted  Series  J  convertible  preferred  stock.

SERIES  K  CONVERTIBLE  PREFERRED  STOCK
----------------------------------------

In  December  1999  and  January  2000,  the Company issued Series K convertible
preferred stock at a price of $10,000 per share in a private placement offering.
The  Company  received  $1,800,000 in net proceeds (net of $200,000 offering and
estimated  registration  costs)  in  exchange  for the issuance of 200 shares of
Series  K convertible preferred stock and warrants to purchase 150,000 shares of
common  stock  at  a  weighted-average  exercise  price  of $7.94 per share. The
placement  agent received a cash commission of 5% of the gross proceeds equaling
$75,000 and 12.5 shares of Series K convertible preferred stock. Under the terms
of  a  registration  rights  agreement  the  Company agreed to bear the costs of
registering  the  common  stock underlying the conversion of the preferred stock
and  the  exercise  of  the  warrants.

The  Series  K  convertible preferred stock became convertible into common stock
120  days  after issuance and is convertible into the number of shares of common
stock  determined  by  dividing  its  $10,000  stated  value  per  share  by the
conversion  price, computed as the lower of $3.50 per common share or 80% of the
average of the six lowest closing bid prices per share in the twenty-trading-day
period  ending  on the day before conversion. Any Series K convertible preferred
shares  not  converted  on  the  third anniversary of the issuance dates will be
automatically  converted into common stock, subject to extensions by the Company
for  certain  events.  The Company is obligated, at its expense, to register the
common  stock  issuable  upon conversion of the Series K preferred shares within
150  days of the issued date 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.

The Series K convertible preferred shareholders received a beneficial conversion
feature on the dates of issuance. The value of the beneficial conversion feature
was  determined as the difference between the fair value of the Company's common
stock  per share and the conversion price, multiplied by the number of shares of
common  stock  into  which  the  Series  K  convertible  preferred  stock  were
convertible. The value of the beneficial conversion feature was $970,102 and was
recognized  as  additional  paid-in  capital.

The  warrants  are  exercisable  on  the date of issuance. The fair value of the
warrants  on  the  dates  issued was $829,898 determined using the Black-Scholes
option  pricing  model  with  the  following  weighted-average assumptions: 5.0%
risk-free  interest  rate, 0% expected dividend yield, 148.0% volatility and 3.0
years  estimated  life. The net proceeds from the offering were allocated to the
Series  K convertible preferred stock and the warrants based upon their relative
fair  values and resulted in allocating $0 to the Series K convertible preferred
stock,  net  of  the $970,102 beneficial conversion feature, and $829,898 to the
warrants.  The  amount  allocated  to  the warrants was recognized as additional
paid-in  capital.

The  difference between the total stated value of Series K convertible preferred
stock  of  $2,000,000  and  the  amount  allocated  to  the Series K convertible
preferred  stock  was  recognized  as  a  discount  on  the Series K convertible
preferred  stock  of  $2,000,000.  The  discount  was  amortized  as  additional
preferred stock dividends from the dates of issuance to April 29, 2000, the date
which  the  Series K convertible preferred stockholders had the right to convert
their  shares,  and  resulted in the Company recognizing $2,000,000 of preferred
dividends  during  the  year  ended  December  31,  2000.

Dividends  on the Series K convertible preferred stock are cumulative and accrue
at  the  rate  of  7% per annum. The dividends are not required to be paid until
conversion,  redemption  or  until  an  acquisition  of the Company occurs.  The
Company  has  the option of paying accrued dividends either in cash or in common
shares,  based on the conversion price then in effect.  To date, the Company has
elected  to pay accrued preferred dividends on the various conversion dates with
common  stock. Although the number of common shares issued in payment of accrued
preferred  dividends  were  determined  by the conversion price in effect on the
dates  issued, they were recorded at fair value, which effectively increased the
dividend  rate.  Accrued  dividends  payable  on  the  balance  sheet  date were
estimated  based  on  the  fair  value  of  the number of shares of common stock
issuable  using  the current conversion price, and totaled $113,349 and $107,826
at  December  31,  2001  and  2000, respectively. Series K convertible preferred
stock  dividends  accrued during the years ended December 31, 2001 and 2000 were
$61,890  and  $118,824,  respectively.

The Series K convertible preferred stock has a liquidation preference of $10,000
per  share  plus  accumulated  and  unpaid  dividends and may be redeemed at the
Company's  option  for $12,000 per share plus accumulated dividends upon 30 days
notice.

During  the  years  ended  December  31,  2001  and  2000,  holders  of Series K
Convertible  Preferred  Stock  converted  a total of 39 and 131 preferred shares
valued  at  $390,000  and  $1,310,000  and received 1,041,096 and 441,547 common
shares  including  79,633  and  6,259  shares  issued  in payment of $56,367 and
$34,205  of  accrued  dividends,  respectively.

SERIES  L  CONVERTIBLE  PREFERRED  STOCK
----------------------------------------

On  September  29, 2000, the Company issued Series L convertible preferred stock
at  a  price  of  $10,000 per share in a private placement offering. The Company
received  $1,550,500  in  net  proceeds  (net  of $49,500 offering and estimated
registration  costs)  in  exchange  for  the  issuance of 160 shares of Series L
convertible  preferred  stock  and warrants to purchase 213,334 shares of common
stock  at  a  weighted-average  exercise price of $5.00 per share. The placement
agent  received  a cash commission of 1% of the gross proceeds equaling $16,000,
eight  shares  of  Series L convertible preferred stock and warrants to purchase
200,000 shares of common stock at an exercise price of $3.33. Under the terms of
a  registration  rights  agreement  the  Company  agreed  to  bear  the costs of
registering  the  common  stock underlying the conversion of the preferred stock
and  the  exercise  of  the  warrants.

The Series L convertible preferred stock became convertible into common stock 90
days after issuance and is convertible into the number of shares of common stock
determined  by  dividing  its  $10,000  stated value per share by the conversion
price,  computed as the lower of $3.75 per common share or 90% of the average of
the  three  lowest closing bid prices per share in the twenty-trading-day period
ending  on  the day before conversion. Any Series L convertible preferred shares
not  converted  on  the  third  anniversary  of  the  issuance  dates  will  be
automatically  converted into common stock, subject to extensions by the Company
for  certain  events.

The Series L convertible preferred shareholders received a beneficial conversion
feature on the dates of issuance. The value of the beneficial conversion feature
was  determined as the difference between the fair value of the Company's common
stock  per share and the conversion price, multiplied by the number of shares of
common  stock  into  which  the  Series  L  convertible  preferred  stock  were
convertible. The value of the beneficial conversion feature was $100,861 and was
recognized  as  additional  paid-in  capital.

The  warrants  are  exercisable from the dates of issuance through September 29,
2005.  The  fair  value  of  the  warrants  on  the  dates issued was $1,141,657
determined  using  the  Black-Scholes  option  pricing  model with the following
weighted-average  assumptions:  5.85%  risk-free  interest  rate,  0%  expected
dividend yield, 157.4% volatility and 5.0 years estimated life. The net proceeds
from the offering were allocated to the Series L convertible preferred stock and
the  warrants  based  upon their relative fair values and resulted in allocating
$1,034,805  to  the  Series  L  convertible preferred stock, net of the $100,861
beneficial conversion feature, and $414,834 to the warrants. The allocated value
of  the  warrants  was  recognized  as  additional  paid-in  capital.

The  difference between the total stated value of Series L convertible preferred
stock  of  $1,600,000  and  the net amount allocated to the Series L convertible
preferred  stock  was  recognized  as  a  discount  on  the Series L convertible
preferred  stock  of $565,195. The discount was amortized over the 90-day period
following  the  date  of  issuance  as additional preferred stock dividends, and
resulted  in  the Company recognizing $565,195 of preferred dividends during the
year  ended  December  31,  2000.

Dividends  on  the  Series  L  convertible  preferred  stock were cumulative and
accrued  at  the  rate of 5% per annum through January 22, 2001. The Company has
the option of paying accrued dividends either in cash or in common shares, based
on the conversion price then in effect. During the year ended December 31, 2000,
no  shares  of  Series  L Convertible Preferred Stock were converted into common
shares.  As  explained  below,  the  Series  L convertible preferred shares were
converted  into Series M convertible preferred shares effectively on December 7,
2000.  However,  Series  L  convertible preferred dividends were accrued through
December  31,  2000  and were estimated based on the fair value of the number of
shares  of  common stock issuable using the current conversion price and totaled
$23,967.  In December 2001 the Company issued 2.5 shares of Series M convertible
preferred  stock  in  satisfaction of the Series L convertible preferred accrued
interest.

SERIES  M  CONVERTIBLE  PREFERRED  STOCK
----------------------------------------

On  December 7, 2000, the Company agreed with the Series L convertible preferred
stockholders to modify the terms of the Series L convertible preferred stock and
the  related warrants to be equal to the terms of the convertible debentures and
related  warrants  issued  that  day.  To  effect  the  modification,  the  168
outstanding  shares  of Series L convertible preferred stock were converted into
168  shares  of  Series  M  convertible  preferred stock and the related 213,334
warrants  to  purchase  common  stock at prices ranging from $4.00 to $6.00 were
increased  to 800,000 warrants to purchase common stock at $1.375 per share. The
placement agent received 4.8 additional shares of Series M convertible preferred
stock  in  connection  with the conversion and the exercise price of the 200,000
warrants  previously  issued to the placement agent was decreased from $3.33 per
share  to  $1.375  per  share. Under the terms of a modified registration rights
agreement  the  Company agreed to bear the costs of registering the common stock
underlying  the  conversion  of  the  preferred  stock  and  the exercise of the
warrants.

The Series M convertible preferred stock became convertible into common stock on
the  date  of  issuance  and  is convertible into the number of shares of common
stock  determined  by  dividing  its  $10,000  stated  value  per  share  by the
conversion price, computed as the lower of $1.375 per common share or 78% of the
average  of  the  three  lowest  closing  bid  prices  per  share  in  the
twenty-trading-day  period  ending  on  the  day before conversion. Any Series M
convertible  preferred  shares  not  converted  on  the third anniversary of the
issuance  dates  will be automatically converted into common stock. By modifying
the  terms  of  the  beneficial  conversion feature when the value of the common
stock  was  $1.75  per share, the beneficial conversion feature was increased by
$814,862.  This  increase  was  recognized  as  preferred stock dividends and an
increase  in  the  carrying value of the Series M convertible preferred stock on
the  date  of  the  modification.

The modified warrants are exercisable from the dates of issuance through January
2006.  The  additional  value  of the Series M convertible preferred shareholder
warrants  on  the  date  modified  was  $1,002,765.  The  incremental  value was
determined as the difference between the fair value of the modified warrants and
the  fair  value  of  old warrants immediately before their terms were modified,
both  determined using the Black-Scholes option pricing model with the following
weighted-average  assumptions:  5.85%  risk-free  interest  rate,  0%  expected
dividend  yield,  157.4%  volatility  and 5.0 years estimated life. Although the
warrants  originally  issued  with the Series L convertible preferred stock were
detached  from the Series L convertible preferred stock, the preferred stock and
the warrants were modified as a unit.  Accordingly, the increase in the value of
the  modified  warrants was recognized as a discount to the Series M convertible
preferred  stock  and  immediately  amortized  as  additional  preferred  stock
dividends.

On  January  23,  2001,  the  Company  issued  additional  shares  of  Series  M
convertible  preferred  stock  in  a  private  placement  offering.  The Company
received $177,000 in net proceeds (net of $23,000 of offering costs) in exchange
for  the  issuance  of  20  shares  of  Series M convertible preferred stock and
warrants  to  purchase  100,000  shares  of common stock at an exercise price of
$1.375  per  share.  The  placement  agent  received  1.6  shares  of  Series  M
convertible  preferred  stock  and  warrants to purchase 25,000 shares of common
stock  at  an  exercise  price  of  $1.375.

The  accounting for the additional issuance of Series M preferred shares and the
related warrants was recognized in the year ended December 31, 2001.  The Series
M  shareholders received a beneficial conversion feature related to the issuance
of  the  warrants  in  the  amount  of  $113,644.  The  amount was recognized as
additional  paid-in  capital.

The  fair  value of the additional warrants on the date issued was $111,500. The
net  proceeds  from  the  offering  were  allocated  to the Series M convertible
preferred  stock  and  the  warrants  based  upon their relative fair values and
resulted in allocating $113,644 to the beneficial conversion feature and $63,356
to  the  warrants.  The  allocated  value  of  the  warrants  was  recognized as
additional  paid-in  capital.

The  difference between the total stated value of Series M convertible preferred
stock of $177,000 and the amount allocated to the Series M convertible preferred
stock  was  recognized as a discount on the Series K convertible preferred stock
of  $177,000. The discount was amortized as additional preferred stock dividends
on  the  date  of  issuance,  the  date which the Series M convertible preferred
stockholders  had the right to convert their shares, and resulted in the Company
recognizing  $177,000  of preferred dividends during the year ended December 31,
2001.

Dividends  on  the  Series  M  convertible  preferred  stock are cumulative from
January  22,  2001 and accrue at the rate of 8% per annum. The dividends are not
required  to be paid until conversion, redemption or until an acquisition of the
Company  occurs.  The  Company has the option of paying accrued dividends either
in  cash  or  in common shares, based on the conversion price then in effect. To
date,  the Company has elected to pay accrued preferred dividends on the various
conversion  dates with common stock. Although the number of common shares issued
in  payment  of  accrued  preferred  dividends were determined by the conversion
price  in  effect  on  the dates issued, they were recorded at fair value, which
effectively  increased  the  dividend  rate.  Accrued  dividends  payable on the
balance  sheet  date  were  estimated  based  on the fair value of the number of
shares  of common stock issuable using the current conversion price, and totaled
$189,222  at  December  31, 2001. Series M convertible preferred stock dividends
accrued  during  the  year  ended  December  31,  2001  were  $189,222.

The holders of Series M convertible preferred stock are entitled to a preference
in  the  event  the Company is liquidated. That preference is $10,000 per share,
plus  accrued  and  unpaid  dividends.

PREFERRED  STOCK
----------------

The  Series  J  convertible  preferred stock, the Series K convertible preferred
stock  and  the  Series  M  convertible  preferred  stock  are on a parity as to
liquidation  preferences  but  junior  to  the  Debentures.  Any  and all of the
remaining  assets  could  be  distributed to holders of junior securities (e.g.,
other  shares  of  preferred  stock  or  common stock), in order of seniority. A
merger  or acquisition of the Company can only be effected if the holders of the
convertible  preferred  stock  maintain  their  relative rights, preferences and
privileges.  A  transaction  that  is  inconsistent  with  this  provision  is
prohibited.  Holders  of convertible preferred stock are not entitled to vote in
the  election  of  directors.  The  vote  of  holders  of  three-fourths  of the
convertible  preferred stock outstanding is required, however, to reclassify any
of the outstanding securities (e.g., a stock split), to make a distribution with
respect  to  any  stock that is junior to the convertible preferred stock (e.g.,
any  dividend to holders of common stock), or to authorize any securities senior
to  the  Series  M  convertible  preferred.

COMMON  STOCK
-------------

During  the  year  ended  December  31, 2001, the Company issued Common Stock as
follows:  the  purchase  of  6,142,068  shares for a total cash consideration of
$1,453,000,  4,557,357  shares  for services in the amount of $745,186 which was
charged  to  stock  issued for services expense, the issuance of 444,444 for the
settlement  of  debt  of  $40,000,  458,559 shares for the settlement of accrued
interest  and penalties valued at $138,769 which was charged to interest expense
and  801,187 shares in the amount of $275,448 as part of the acquisition of data
encryption  technology.

During  2001,  shareholders exercised 6,582,500 options and warrants to purchase
shares  of  the  Company's  common stock.  The total proceeds from the exercises
were  $236,400,  net  a  $10,000 receivable from one of the shareholders for the
exercise

During  February 2000, a shareholder exercised options to purchase shares of the
Company's  common  stock.  The shareholder exercised 15,000 options at $1.50 per
share.  Total  proceeds  from  the  exercise of the options were $22,500. In May
2000,  warrants  for  the  purchase of 19,427 shares of stock were exercised for
cash  consideration  of  $41,000.  These  warrants  were  exercised at $2.11 per
share.  In  September  2000, a warrant for the purchase of 2,500 shares of stock
was  exercised  for  cash  consideration  of  $5,000,  or  $2.00  per  share.

During 2000, certain officers and members of management of the Company exercised
1,223,399 options for the purchase of common stock.  The purchases were cashless
exercises resulting in a total of 1,101,202 shares of common stock being issued.

During  the  year  ended December 31, 2000, the Company issued 292,000 shares of
common  stock  for  services.  These shares were valued at $977,722 based on the
fair  market  value of the shares on the date of issuance. During the year ended
December  31,  2000,  the  Company  issued 12,000 shares of common stock for the
settlement  of a lawsuit claim. These shares were valued at $97,000 based on the
fair  market  value  of  the  shares  on  the  date  of  issuance.

NOTE  11  -  STOCK  OPTIONS  AND  WARRANTS

The  Company  has  issued  stock  options  to  employees and consultants under a
stock-based  compensation  plan  and  under individual contracts. Under the 1999
Stock  Incentive  Plan, which was approved by the shareholders in November 1999,
the  Company  may  grant  options  to  its  employees  and consultants for up to
3,000,000  shares of common stock. Under the 1998 Stock Option Plan, options may
be  granted  to  employees  and  consultants  for  up  to 600,000 common shares.
Options were also granted in exchange for options outstanding under stock option
plans  of  Innovus  and  Kiss  in connection with their purchases.  The exercise
price of each option under the plans and the individual contracts have generally
been  below  the  market  price  of  the  Company's  stock on the date of grant.
Options  generally vest from immediately to over three years and are exercisable
for  up  to  five  to  ten  years.

In  July 2000, the Company issued options to purchase 2,040,000 shares of common
stock  at an exercise price of $3.63 per share.  These options were issued under
the  1999  Stock  Incentive  Plan  to  officers,  directors and employees of the
Company. In November 2000, the Company issued options to purchase 500,000 shares
of  common  stock  at  an  exercise  price  of  $1.30 to its new chief financial
officer.  During the year ended December 31, 2001, the Company's chief financial
officer  resigned  the  position  and  the corresponding options were forfeited.

<PAGE>
OPTIONS  GRANTED  TO EMPLOYEES AND CONSULTANTS  - A summary of the status of the
Company's  stock options as of December 31, 2001 and 2000 and changes during the
years  then  ended  are  presented  below:


<TABLE>
<CAPTION>



                                               OPTIONS OUTSTANDING
                                             ---------------------
                                            2001            2000
                                    ---------------------  -------
                                                         WEIGHTED-               WEIGHTED-
                                                          AVERAGE                AVERAGE
                                                          EXERCISE               EXERCISE
                                                SHARES       PRICE    SHARES      PRICE
----------------------------------  ---------------------  -------  -----------
<S>                                 <C>                    <C>      <C>          <C>
Outstanding at beginning of year               3,987,055   $  2.52   2,863,434   $1.15
  Granted. . . . . . . . . . . . .                     -         -   2,540,000    3.17
  Forfeited. . . . . . . . . . . .            (2,020,192)     2.31    (156,053)   1.49
  Exercised. . . . . . . . . . . .               (20,000)     0.25  (1,260,326)   0.85
                                    ---------------------           -----------
Outstanding at end of year                     1,946,863      2.41   3,987,055    2.52
                                    =====================           ===========
Options exercisable at end of year             1,880,609      2.37   3,025,803    2.63
                                    =====================           ===========
Weighted-average fair value of
 options granted during year        $                  -               $  3.15
                                    =====================               =======
</TABLE>

The  following  table  summarizes information about stock options outstanding at
December  31,  2001:


<TABLE>
<CAPTION>



                               OUTSTANDING                                     EXERCISABLE
                            ----------------                                   -----------
                                                           WEIGHTED-AVERAGE
                                                            ----------------
RANGE OF         NUMBER        REMAINING       WEIGHTED-AVERAGE     NUMBER      WEIGHTED-AVERAGE
EXERCISE PRICES  OUTSTANDING  CONTRACTUAL LIFE   EXERCISE PRICE    EXERCISABLE   EXERCISE PRICE
----------------  -----------  ----------------  -----------------  -----------  -----------------
0.25-0.50             61,900         6.32 years       $0.25          61,900           $0.25
<S>              <C>          <C>               <C>               <C>                <C>
0.94-1.30.           776,500         3.23              0.96            776,500         0.96
1.50-2.00.            43,750          .89              1.86             43,750         1.86
2.11-2.63.             9,713         5.38              2.11              9,713         2.11
3.63 . . .         1,055,000         8.57              3.63            988,746         3.63
            ----------------                                 -----------------

0.25-3.63         1,946,863         6.18              2.41          1,880,609         2.37
            ================                                 =================
</TABLE>


The  Company  measures  compensation  under  stock-based  options  and  plans to
employees  using  the intrinsic value method prescribed in Accounting Principles
Board  Opinion  25,  Accounting  for  Stock  Issued  to  Employees,  and related
interpretations.  Compensation  relating  to the options granted to employees is
being  recognized  over  the  vesting  period  of  the  options.  Stock-based
compensation  charged to operations was $22,650 and $170,236 for the years ended
December  31,  2001  and 2000, respectively. At December 31, 2001, there were no
future  amounts  remaining to be amortized in connection with options granted to
employees.

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 years ended December 31, 2001 and
2000:


<TABLE>
<CAPTION>



                                              YEARS ENDED DECEMBER 31,
                                             --------------------------
                                                        2001                 2000
                                             --------------------------  -------------
<S>                                          <C>                         <C>
    Loss Applicable to Common Shareholders
      As reported . . . . . . . . . . . . .            (7,772,917)      $(28,489,053)
      Pro forma . . . . . . . . . . . . . .                 (7,867,796)   (35,022,943)
    Basic and Diluted Loss per Common Share
      As reported . . . . . . . . . . . . .  $                   (0.33)  $      (2.43)
      Pro forma . . . . . . . . . . . . . .                      (0.33)         (2.98)
</TABLE>


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 2000; dividend yield 0%; expected volatility of
161%; risk-free interest rate of 5.86%, expected life of the options of 10 years
and  underlying  stock  price  $3.17.

OPTIONS  AND  WARRANTS  GRANTED  TO  NON-EMPLOYEES

During  the  year ended December 31, 2001 the Company granted 6,250,000 warrants
under  consulting  agreements  and  250,000  warrants  in  consideration  of the
extension of the due date of a loan.  The warrants were valued at $330,850 using
the  Black-Scholes  option  pricing  model  with  the following weighted-average
assumptions;  4.04%  risk-free  interest  rate, 0% expected dividend yield, 150%
volatility  and  0.16  years.  All  amounts  were expensed during the year ended
December  31,  2001.

During  2000,  the  Company issued warrants to purchase 200,000 shares of common
stock  at prices ranging from $6.50 to $9.50 to a financial relations and direct
marketing  advertising  firm.  The  warrants  were  valued at $929,000 using the
Black-Scholes  option  pricing  model  with  the  following  weighted-average
assumptions;  5.0%  risk-free  interest  rate, 0% expected dividend yield, 61.9%
volatility  and 4.0 years, of which $81,671 and $847,329 was expensed during the
years  ended  December  31,  2001  and  2000,  respectively.

In  June  2000,  the  Company  issued  options  under a consulting agreement for
150,000  shares  of  common  stock at $7.75 per share. The shares vest quarterly
over  the  period  of  one year.  The warrants were valued at $949,500 using the
Black-Scholes  option  pricing  model  with  the  following  weighted-average
assumptions:  5.0%  risk-free  interest  rate, 0% expected dividend yield, 61.3%
volatility and 3.0 years, of which $184,459 and $765,041 was expensed during the
years  ended  December  31,  2001  and  2000,  respectively.

In  August  2000,  the Company issued warrants to a marketing representative for
the  purchase  of  40,000  shares  of common stock at $2.00 per share.  The fair
value  of  the  warrants was $150,400, which was recognized as an expense during
2000.

During  the  year ended December 31, 2000, the Company's legal counsel purchased
75,000 warrants for $15,000.  These warrants are exercisable at $2.00 per share,
vest  on  January  1,  2001  and expire on December 31, 2005.  The warrants were
valued  at  $102,660  and were expensed during the year ended December 31, 2000.

During the year ended December 31, 1999, the Company granted 350,000 warrants to
a  member  of  the Board of Directors as compensation for services.  The Company
granted  an  additional  100,000  warrants to the same director in October 1999.
The  warrants are exercisable at $1.00 per share. During the year ended December
31,  2001,  the  Company  reduced the exercise price on these warrants to $0.50.
This  modification  resulted  in  $37,875  of  additional  compensation.  This
additional  compensation  was  recorded  in  the  year  ended December 31, 2000.


The  options and warrants are exercisable for periods from two to ten years. The
options  and  warrants  are  summarized  as  follows:


<TABLE>
<CAPTION>



                                                    OPTIONS OUTSTANDING
                                                  ---------------------
                                                        2001              2000
                                               ---------------------  --------------------
                                                           WEIGHTED-           WEIGHTED
                                                           AVERAGE             AVERAGE
                                                           EXERCISE            EXERCISE
                                                 SHARES      PRICE     SHARES   PRICE
                                               ---------   -------   --------  -------
<S>                                 <C>                    <C>      <C>         <C>
Outstanding at beginning of year .             1,365,000   $  2.71    900,000   $1.13
Granted. . . . . . . . . . . . . .             6,500,000      0.05    515,000    5.91
Cancelled. . . . . . . . . . . . .                     -         -    (50,000)   1.25
Exercised. . . . . . . . . . . . .            (6,250,000)     0.03          -       -
                                    ---------------------           ----------
Outstanding at end of year . . . .             1,615,000      2.41  1,365,000    2.71
                                    =====================           ==========
Options exercisable at end of year             1,615,000      2.41  1,215,000    2.45
                                    =====================           ==========
Weighted-average fair value of
 options granted during year . . .  $               0.04             $  4.35
                                              ===========             =======
</TABLE>


The  following  table  summarizes  information  about non-employee stock options
outstanding  at  December  31,  2001:


<TABLE>
<CAPTION>



                                   OUTSTANDING                           EXERCISABLE
                              ----------------                           -----------
                                WEIGHTED-AVERAGE
RANGE OF              NUMBER         REMAINING      WEIGHTED-AVERAGE    NUMBER     WEIGHTED-AVERAGE
EXERCISE PRICES   OUTSTANDING   CONTRACTUAL LIFE    EXERCISE PRICE   EXERCISABLE   EXERCISE PRICE
                ----------------  -----------  -----------------  ----------------  -----------  -----------------
<S>              <C>             <C>             <C>               <C>            <C>
0.50 - 1.00.           750,000         5.25         $     0.53         7  50,000  $      0.53
1.25 - 2.00.           515,000         2.36               1.42           515,000         1.42
6.50 - 9.50.           350,000         2.09               7.89           350,000         7.89
              ----------------                                  ----------------

0.50- 9.50.          1,615,000          3.64              2.41         1,615,000         2.41
               ================                                   ================
</TABLE>


Compensation  from non-employee options and warrants was determined based on the
fair  value  at  the  grant  dates  consistent  with  the method set forth under
Statement  of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation.  Compensation  relating  to  the  options  and  warrants  is being
recognized  over  their  vesting  periods.  Stock-based  compensation charged to
operations  for  non-employees  was  $608,158 and $2,098,160 for the years ended
December  31,  2001  and  2000,  respectively.

At  December  31,  2001 and 2000, there were 2,496,875 and 2,683,875 warrants to
purchase common stock outstanding, respectively, at exercise prices ranging from
$0.50  to  $12.36  that  were  issued  in connection with purchase and financing
transactions.

NOTE  12  -  COMMITMENTS  AND  CONTINGENCIES

CAPITAL  LEASE  - The Company entered into a lease for computer equipment during
the  year  ended  December  31,  2000.  The  lease  is for thirty-six months and
requires  a  monthly payment of $7,413.  During the year ended December 31, 2001
the  Company entered into an additional lease for computer equipment.  The lease
is for thirty-six months and requires a minimum monthly payment of approximately
$1,171.  The  leases  have  been  treated as capital leases.  The following is a
schedule  of  future  minimum  rental  payments  under  the  capital  lease:

<TABLE>
<CAPTION>



                                                  FOR THE YEARS ENDING DECEMBER 31:
<S>                                              <C>
          2002. . . . . . . . . . . . . . . . .  $                          140,738
          2003. . .   . . . . . . . . . . . . .                              80,773
          2004. . . . . . . . . . . . . . . . .                               4,685
                                                 -----------------------------------

    Total minimum payments. . . . . . . . . . .                             226,196
    Less amount representing interest . . . . .                             (29,089)
                                                 -----------------------------------

    Present value of net minimum lease payments                             197,107
    Less current portion. . . . . . . . . . . .                             197,107
                                                 -----------------------------------

    LONG-TERM CAPITAL LEASE OBLIGATION. . . . .  $                                -
                                                 ===================================
</TABLE>


At  December  31,  2001,  the  Company  was  in default on its capitalized lease
obligations as a result of delinquent payments.  The financial institutions have
not waived the defaults under their respective agreements.  As a result of these
defaults,  all  of  the  Company's  capitalized  lease  obligations  have  been
classified  as  current  in  the  accompanying  December 31, 2001 balance sheet.

The gross amount of assets under the capital leases is $237,738 with accumulated
depreciation  of  $102,473  at  December  31,  2001.

OPERATING  LEASE  -  Until  November  of  2001,  the  Company  leased office and
warehouse facilities in Tustin California under a five-year agreement classified
as  an  operating  lease.  Monthly  minimum  rental  payments  on the lease were
$20,010 to be adjusted upwards by 4% for each succeeding year during the term of
the  lease.  The  Company  terminated this lease and booked an accrued liability
for  its  remaining  obligations  herewith  of  $136,351  during the year ending
December  31,  2001.  The  Company  moved  to  a  temporary  multi-tenant office
facility in Irvine, California, paying a rental rate of $6,000 per month under a
month-to-month  contract  from  November  1, 2001 to February 2002.  In February
2002,  the  Company  moved  to  Santa  Ana,  California  where  it leases office
facilities  under  a  fifteen-month  agreement classified as an operating lease.
Monthly  minimum  rental  payments  on  the  lease are $3,750. Additionally, the
Company  previously  leased  space  for  its computer servers and bandwidth. The
lease  had  a  term  of  two  years and a minimum monthly payment of $4,110.  In
September  of  2001,  the  Company  moved  its  co-location  operation from this
facility  to  a new location in Irvine, California and canceled the lease.  Upon
cancellation  of  the agreement the Company entered into a new agreement with an
alternative  company  to  provide  space for its computer servers and bandwidth.
The  lease  is  month-to-month  and  requires  a monthly payment of $5,750.  The
following  is  a  schedule  of  future  minimum  rental  payments required under
existing  leases:


<TABLE>
<CAPTION>



         YEARS ENDING DECEMBER 31:
<S>      <C>
2002. .                     41,250
2003. .                     15,000
         -------------------------
                            56,250
                           =======
</TABLE>


Lease  expense  for  the years ended December 31, 2001 and 2000 was $276,330 and
$369,950.

LITIGATION  -  In September, 1999 a lawsuit was filed by C-Group, Inc. in United
States  District  Court, District of Maryland, against Intermark seeking $99,110
for  goods that were claimed to be purchased by Intermark. In October, 1999, the
plaintiff  amended the complaint and reduced the amount of the claim to $81,326.
In March 2001 a judgment was entered against Intermark in the amount of $133,658
related to the claim against Intermark which included $52,332 related to a claim
against  Softkat. The Company was not properly notified and the judgment will be
appealed.  As of December 31, 2000 the Company accrued $81,326.  During the year
ended  December  31,  2001  the  Company  accrued  the  remaining  $52,332.

On  June  22,  2000,  the  Company  entered  into two agreements with NBC Quokka
Ventures, LLC., related to NBCOlympics.com web site (collectively, "NBCO").  The
agreements cover the licensing of a custom version of the Company's ChoiceCaster
product,  branding  and  recognition  commitments  on and sponsorship of the web
site, and certain other services to be provided by the Company.  Currently, NBCO
is  claiming  an  amount due of $500,000 in connection with the agreement.  NBCO
claims  that  the Company did not provide the agreed upon services.  The Company
included  this  amount in accrued liabilities as of December 31, 2000 and was in
settlement  negotiations.  In  2001  NBCO  filed  for  Chapter 11 Bankruptcy and
disbursed  all  of  its  assets.  As  a result the Company reversed the $500,000
accrual  in  the  year  ended  December  31,  2001.  The reversal is recorded in
general and administrative expenses on the accompanying statement of operations.

The Company was a defendant in a lawsuit filed by a third party claiming damages
for a breach of an investment banking agreement. As damages, the third party was
seeking  250,000  warrants  to  purchase  shares of common stock of the Company.
During  the year ended December 31, 1999, the Company estimated that the lawsuit
could be settled for the issuance of 200,000 warrants and recorded an expense of
$154,968.  On  December  12,  2000,  the Company settled this lawsuit and issued
150,000 warrants to purchase shares of the Company's common stock. No adjustment
to  the  previous  expense  was  recognized.

In  September,  1999,  U.S. Print Corporation filed a complaint in Orange County
Superior  Court,  State  of California. The complaint sought to recover from the
Company  $92,414  for services allegedly purchased but not paid for by Intermark
Corporation. A reserve to cover the Company's potential liability was accrued in
the financial statements as of December 31, 1999.  In September 2000, U.S. Print
filed  a motion to dismiss the complaint against the Company and the reserve has
been  eliminated.

On February 7, 2000, the Company reached an agreement with a third party whereby
the  third  party accepted as settlement of a lawsuit involving a guarantee of a
liability  by  the  Company  for 12,000 shares of the Company's common stock and
$35,000  in  cash.  The  related  expense  was  recognized during the year ended
December  31,  1999.

In  June  2000, the Company was named as a co-defendant along with its landlord,
Bixby  Land  Company,  in a lawsuit filed by Terry Murphy, a former employee, in
California  Superior  Court,  County  of  Orange,  claiming  unspecified damages
resulting  from  an accident that occurred at the Company's leased offices.  The
Company's  insurance  carriers  are defending the claims against the Company and
discovery proceedings are currently underway.  During 2001, the court determined
that  the  Company  was  not  a  responsible  party  in  the  lawsuit.

On  January  11,  2001, the Company was named as defendant in a lawsuit filed by
Post  Modern  Edit,  LLC,  in  California Superior Court, County of Los Angeles,
seeking  damages  of  not  less  than  $50,000  for  breach of a confidentiality
agreement,  breach  of  contract,  and  other  claims  related to a proposed but
unconsummated  acquisition  of  Post Modern Edit by the Company. On May 9, 2001,
the  parties  reached  a  full settlement of the litigation in which Post Modern
Edit  agreed  to  return 21,000 shares of the Company's common stock it owned in
exchange  for  $6,300  cash  paid by the Company.  Upon the return of the 21,000
shares  the  Company  cancelled  them.

On April 3, 2001, a lawsuit was filed by BFree Ltd. in Superior Court, County of
Orange,  California,  against  the  Company as successor to Innovus Corporation,
seeking  $25,544 for goods and services claimed to have been provided to Innovus
during  1997.  The  claim  is  included  in  pre-acquisition  liabilities on the
accompanying  balance  sheets.  Subsequent  to  December  31,  2001  the Company
entered  into  a  settlement  agreement with Bfree Ltd.  Under the agreement the
Company  is  to  pay  $4,000 in monthly increments of $500 starting on March 15,
2002.  The  amount  bears  interest  at  10%.

On  July 18, 2001, David P. Noyes, the Company's former Chief Financial Officer,
filed  a  claim  with the Labor Commissioner, State of California, for wages due
under an employment contract seeking $96,572. Mr. Noyes was terminated for cause
by  the  Company  in  November  2000.  Subsequent to December 31, 2001 the Labor
Commission  found  that David P. Noyes had been terminated with cause.  However,
the  Labor  Commission awarded David P. Noyes $11,695 for un-reimbursed expenses
and  $1,544  for  accrued  interest on those expense.  The Company accrued these
amounts  during  the  year  ended  December  31,  2001.

On  July 26, 2001, Bixby Land Company, the Company's landlord, filed an unlawful
detainer  action  to  recover  delinquent  rent  and  penalties in the amount of
approximately  $125,000.   On  November  1st,  2001  the  Company  relocated its
corporate  offices  to  29  Hubble  Irvine,  CA  92618.  In October a settlement
agreement  with  Bixby  Land  Company  was reached regarding a settlement of the
Company's  liability  of  $808,134  with  respect  to a lease obligation for the
Tustin  facility.  The  settlement  agreement provided that the Company would be
release  from  all  future  payments under the terms of the lease if the Company
made  payments  totaling $100,000 and transferred the Company's existing $60,010
security  deposit  to  the  landlord.  The  Company  did  not  make the required
payments  under  the  settlement  agreement.  In  October 2001, Bixby received a
judgment against the Company for $136,058.  As of December 31, 2001, the Company
accrued  the  $136,058  and  expensed  the  security  deposit.  Additionally  in
conjunction  with  this  event  the  Company has written off the total net asset
value  of  its  leasehold  improvements  of  $51,174.

On July 27, 2001, the Company filed a complaint against eLiberation Corporation,
which  was subsequently amended January 3, 2002.  The Company seeks compensatory
damages  in  the  amount  of  $39,671.  On  September  28,  2001,  eLiberation
Corporation  filed a cross-complaint against the Company and an officer claiming
that  the  Company  and  the  officer deliberately misrepresented and made false
representations  to  eLiberation  Corporation.  eLiberation  Corporations  seeks
general  and  special  damages  in  the amount of not less than $2,500,000.  The
Company  believes  that  the  cross-complaint  is  without  merit and intends to
vigorously  defend  the  action and thus nothing has been accrued as of December
31,  2001.

On  July  27,  2001, the Company entered into a Release and Settlement Agreement
with  Digital  Leisure,  Inc.  Under  the  Release and Settlement Agreement, the
Company  agreed  to  pay  Digital  Leisure a total of $40,867, plus interest, in
regularly  scheduled  payments.  As  a result of the Company's failure to comply
with  the  payment schedule, Digital Leisure has subsequently secured a judgment
for  the  total  amount  owed.  On  December  18,  2001 the Company entered into
another  settlement  agreement requiring total payment of $7,500 over the period
of  two months.  At December 31, 2001 the Company had an obligation of $6,500 in
connection  with  the  settlement.  Subsequent  to year end the $6,500 was paid.

On  August  9, 2001, an action was filed in California Superior Court, County of
Orange,  against  the  Company,  certain  officers  and its current Directors by
Donald  C.  Watters, the Company's former president, chief operating officer and
director,  claiming  breaches  of  contract,  good  faith  and fair dealing, and
fiduciary  duty,  and  tortious adverse employment action in violation of public
policy.  Mr.  Watters  is  seeking  general damages of not less than $2,780,000,
punitive  damages,  interest,  attorney's fees and court costs.  Mr. Watters was
terminated  by  the Company for cause.  The Company believes that the claims are
without  merit  and intends to vigorously defend the action and thus nothing has
been  accrued  as  of  December  31,  2001.

On  August  10,  2001,  a  lawsuit  was  filed  by Kforce.com seeking to collect
approximately  $43,000 to be owed under a consulting services agreement.  During
2001, the Company stipulated a judgment in favor of Kforce.com.  The judgment is
fully  accrued  in  the  Company's financial statements as of December 31, 2001.

In  September,  2001  a lawsuit was filed by Technopolis Communications, Inc. in
the Superior Court of California, County of Orange, against Innovus Corporation,
dba  eSynch  Corporation,  seeking  $35,733  for  services  claimed to have been
provided to eSynch.  The case is currently in the discover stage and a mandatory
settlement  conference  date  has been set.  As of December 31, 2001 the Company
has  accrued  $50,000.

Various claims have been asserted against the Company for alleged liabilities or
obligations  of  SoftKat, Inc., a subsidiary purchased in 1998 and sold in 1999,
based upon the theory of successor liability or alter ego. The Company prevailed
in nine suits which have been settled or dismissed. Other claims may be asserted
against  the Company by creditors of SoftKat, Inc., but management is unaware of
any  pending  claims  at  this  time.

PAYROLL  AND  PAYROLL  TAX  LIABILITIES  -  Included  in  accrued liabilities at
December  31,  2001  and  2000  are  $1,516,161  and  $638,740, respectively, in
obligations  to state and federal governments for payroll taxes from the current
years and from previous years and estimated interest and penalties owing on such
tax  obligations.  At  December  31,  2001  the  Company has accrued salaries of
$304,176,  some  of these employees have filed labor actions against the Company
for  payments of these salaries.  Additionally, during 2001 the Company withheld
401K  contributions  from  employees' wages however these employee contributions
were not contributed to the plan.  At December 31, 2001, amounts due to the plan
were  $42,011.

NOTE  13  -  401K  PLAN

The  Company has an optional 401K plan available for its employees.  In order to
qualify  employees must have worked for the Company for at least one-hundred and
eighty  days and be at least twenty-one years of age.  The employee may elect to
invest up to ten percent of their pre-tax earnings.  The Company agrees to match
75% of the employee's contributions up to four percent of their earnings and one
percent  of  their  earnings  between  four  and  ten  percent of their earnings
contributed.  The  Company  made  no  contributions to the 401K plan in the year
ending  December  31,  2001 and made contributions of $11,347 in the year ending
December  31,  2000.

NOTE  14  -  SUBSEQUENT  EVENTS  (UNAUDITED)

On  January 17, 2002, holders of Series J Preferred converted 6 shares of Series
J Preferred into 3,254,876 shares of common stock.  On January 17, 2002, holders
of  Series  K Preferred converted 17 shares of Series K Preferred into 9,000,000
shares  of  common  stock.

On  February 25, 2002, The Company made a 14-C filing authorizing an increase in
authorized  shares from 50,000,000 to 250,000,000.  The authorized shares in the
accompanying  financial  statements have been adjusted to reflect this increase.

Subsequent to December 31, 2001 the  Company  issued  5,120,000 shares of common
stock for consulting  and  legal  services.


                                    SIGNATURE

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

                               ESYNCH CORPORATION



                          By  /s/Thomas  Hemingway
                            -------------------
                             Thomas  Hemingway
                      Chairman  and  Chief  Executive
                                   Officer





                               DATE APRIL 15, 2002

In accordance with the Exchange Act, the Company caused this report to be signed
on  its  behalf  by  the  undersigned,  thereunto  duly  authorized.



By  /s/  Thomas  Hemingway                       Date  April  15,  2002
    ---------------------
    Thomas  Hemingway
    Chairman,  Director,
    Chief  Executive  Officer

By  /s/  David  Lyons                            Date  April  15,  2002
    ---------------------
    David  Lyons
    Director,  President

By  /s/  T.  Richard  Hutt                        Date  April  15,  2002
    ---------------------
    T.  Richard  Hutt
    Director,  Secretary-
    Treasurer,  Vice  President

By  /s/  James  H.  Budd                          Date  April  15,  2002
    ---------------------
    James  H.  Budd
    Director,  Vice  President

By  /s/  Mark  Utzinger                          Date  April  15,  2002
    ---------------------
    Mark  Utzinger
    Chief  Accounting  Officer



ABOUT  ESYNCH

eSynch  Corporation  (OTC  Bulletin  Board: ESYN), founded in 1994, is a leading
provider  of  video  delivery  tools,  streaming  media  services,  and software
utilities.  eSynch's  flagship  products  include  SiteStreamer,  and  advanced
software  solution  that allows Web sites to stream video in a more intelligent,
fully  branded  environment;  ChoiceCaster, the first all-in-one broadband media
player;  and  KISSCO  software  utilities.  For  more  information, please visit
www.esynch.com.

SAFE  HARBOR  STATEMENT

Statements herein express management's beliefs and expectations regarding future
performance  and  are  forward-looking  and  involve  risks  and  uncertainties,
including,  but not limited to, the ability to negotiate outstanding prior debts
of  acquired  companies;  properly  identify  acquisition  partners;  adequately
perform  due  diligence;  manage  and  integrate  acquired  businesses; react to
quarterly  fluctuations  in  results;  raise  working  capital  and secure other
financing;  respond  to  competition  and rapidly changing technology; deal with
market  and  stock price fluctuations; and other risks. These risks are and will
be  detailed,  from time to time, in eSynch's Securities and Exchange Commission
filings,  including  Form 10-KSB for the year ended Dec. 31, 1999 and subsequent
Forms  10-KSB,  10-QSB  and  8-K.  Actual  results  may  differ  materially from
management's  expectations.

ESYNCH  CONTACT

ROBIN  CRUSE

MARKETING  COMMUNICATIONS

(714)  258-1900
rcruse@esynch.com


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