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, 2002

          [ ] 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)



                         One Technology Drive
                              Building H
                           Irvine, CA 92618
                           ----------------
               (Address of principal executive offices)

                            (949) 753-0590
                            --------------
           (Issuer's telephone number, including area code)

         (Former name, former address and former fiscal year,
                    if changed since last report)

                   3511 W. Sunflower Ave, Suite 250
                         Santa Ana, CA 92704
                         -------------------
               (Address of principal executive offices)



          State the number of shares outstanding of each of
           the issuer's classes of common equity, as of the
              latest practicable date: at August 14 2003
                          189,444,999 shares




         Issuer's telephone number, including area code: (949) 753-0590



        SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE

    SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: COMMON STOCK,
                                $0.001 par value


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


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

The issuer's revenues for the fiscal year ended December 31, 2002 were $201,701

As of August  14, 2003, 189,444,999 of the issuer's common shares were issued
and outstanding, approximately of which 146,699,804 were held by non-affiliates.
As of August 14, 2002, the aggregate market value of shares held by non-
affiliates was approximately   $5,867,992   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 (the "Company") is in the process of a major
transition. We are undergoing a series of transactions intended to transform the
Company and to strategically move forward with new market opportunities that can
better enhance shareholder value 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. The Company also developed
PC utility products, primarily for the Internet user.

During the third quarter of 2002, the Company ceased the marketing and sales of
its digital media products.  Sales for these products were $26,292 for the year
2002.

During 2002, The Company continued sales of its 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.  These sales were
done through Kiss Software Corporation. Beginning in the fourth quarter of 2002
to reduce continued operating losses, the Company wound down this sales
activity.  Sales for the year were $145,707.   On February 1, 2003, the product
rights of Kiss Software Corporation were disposed of to James Budd for balance
of all moneys due Mr. Budd. These rights were of minimal value.


On July 26, 2002 eSynch acquired irrevocable voting rights of NACIO Systems.
eSynch entered into an irrevocable escrow agreement to acquire all of the
outstanding common and preferred shares of NACIO Systems, subject to a
successful completion of the plan of reorganization. NACIO Systems is one of the
early leaders in the managed hosting and managed services market. Founded in
1994 as MasterLink USA, NACIO operated for six years with a profitable business
model providing dedicated Internet access, private network connectivity and
collocation services as a business-only Internet Service Provider (ISP). The
name was changed to NACIO Systems in May 2000 in order to better reflect new
product and service offerings. In addition to ongoing connectivity and
collocation services, NACIO offers a full range of managed services from a
state-of-the-art Netsource Center facility in Novato, California. Currently,
NACIO serves more than 350 business customers, primarily in Northern California,
with a growing national presence. NACIO's mission is to be the premiere provider
of Netsourcing (network outsourcing) solutions to enterprises both large and
small. The combined Companies, offer a full suite of managed services including
dedicated managed servers, managed security, managed storage and backup,
disaster recovery, server load balancing, network infrastructure management and
application hosting. The Company was committed to creating and maintaining long-
term relationships with customers, strategic partners, vendors, and agents.

eSynch Corporation, signed, but had not consummated, an agreement to acquire all
of the outstanding capital stock of Nacio Systems, Inc. ("NSI"), a California
corporation. The acquisition was to be pursuant to an exchange of stock between
holders of NSI stock and the Registrant conducted in accordance with the
original Plan of Reorganization of NSI under Chapter 11 of the U.S. Bankruptcy
Code. NSI amended the Plan on April 25, 2003 which was approved by the
Bankruptcy Court's on May 22, 2003 which ordered that the eSynch undo the
previous acquisition of NSI capital stock and undo the stock issuance previously
consummated by the Company and the common and preferred shareholders of NSI
The previous Exchange Ratio was calculated based on the issuance under the Plan
of .5858 share of the Company's authorized and previously unissued common shares
in exchange for one (1) whole share of common stock of NSI and 1.8841 of the
Registrant authorized and previously unissued common shares in exchange for one
(1) whole share of the Series A and Series B preferred stock of NSI. The Company
therefore paid NSI a total of 30 million shares of the Company common shares for
all the common and preferred shares of NSI representing a total value of $1,
200,000 in shares of the Company's authorized and unissued Common Stock (valued
at $0.04 per Company's share) plus an investment in NSI's working capital of
$500,000.

The Company intended to continue to operate business of NSI as a stand-alone
subsidiary. There may be some uncertainty concerning making an estimate of the
value of NSI; however, the Company estimated the value of the long-lived assets
at approximately $8 million.

The Company considers all of the capital stock of the Company that had been
issued in exchange for shares of NSI to be forfeited by the NSI holders due to
the amendment of the Plan. The Company is endeavoring to recover all of the
stock certificates that have been thus voided.

1
An Action was taken by Written Consent dated July 15, 2003, over 50% of the
Stockholders of the Company on the amendment to the Articles of Incorporation of
the Company, as amended, to provide for a stock combination (reverse split) of
the Common Stock in an exchange ratio to be approved by the Board, ranging from
one newly issued share for each two outstanding shares of Common Stock to one
newly issued share for each forty outstanding shares of Common Stock and the
approval of a name change for the Company from eSynch Corporation to Mergence
Corporation.

In July 2003, the holders of all of the Company's outstanding Series J, K and M
Preferred Stock agreed to exchange the Preferred Stock for 23,000,000 shares of
the Company's common stock.  The closing shall take place simultaneously with
the reverse spilt of the Company's common stock at a rate of 40 for 1.

Forward2-Looking Statements

Some of the statements in this report are forward looking statements about what
may happen in the future. They include statements regarding our current beliefs,
plans, expectations and assumptions about matters such as our expected financial
position and operating results, our business strategy and our financing plans.
These statements can sometimes be identified by our use of forward looking words
such as "anticipate," "believe," estimate," "expect," "intend," "plan," "seek,"
"should," and similar expressions. We cannot guarantee that our forward-looking
statements will turn out to be correct or that our beliefs, plans, expectations
and assumptions will not change. Any forward-looking statements in this release
are made pursuant to the "safe harbor" provisions of the private securities
litigation act of 1995. Investors are cautioned that actual results may differ
substantially from such forward-looking statements. Forward-looking statements
involve risks and uncertainties including, but not limited to, the successful
completion of proposed funding raises, which may be necessary for us to
implement our plans to develop new market opportunities, continued acceptance of
our products and services in the marketplace, competitive factors, new products
and technological changes, our successful entry into new markets, our ability to
increase our customer base, as well as general political and other uncertainties
related to customer purchases, instability in market rates in the
telecommunication industries, our ability to sustain adequate cash flow from
operations, the ultimate outcome of pending litigation, and other risks
described in "risk factors," "management's discussion and analysis of financial
condition and results of operations" elsewhere in this report.

Risk Factors

The following risk factors apply to the Company and its intended business
operations. If any of the following risks actually occurs, the Company's
business, financial condition or results of operations could be materially
adversely affected.


             WE MAY EXPERIENCE FLUCTUATIONS IN OUR FINANCIAL RESULT

                       AND, AS A RESULT, OUR STOCK PRICE.

As a result of the sale and discontinuance of our core businesses, the Company
intends to commence new business operations, which may experience significant
fluctuations in financial results. Since the Company had insignificant revenue
from its other activities non-there can be no certainty that additional revenue
can be generated from new product lines in the future.


EMPLOYEES

As of August eSynch had 3 full-time employees and no part-time employees. Of our
full-time employees, 2 are in m, senior management, and 1 is in administration.
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. . Beginning in the fourth quarter of 2002 to reduce continued
operating losses, the Company wound down the Kissco sales activities.  Sales for
the year were $145,707.   On February 1, 2003, the product rights of Kiss
Software Corporation were disposed of to James Budd for balance of all moneys
due Mr. Budd. These rights were of minimal value.


On September 30, 1999, we acquired the stock of Oxford Media Corporation, a
leading designer and developer of digital technologies for video-on-demand.
During the third quarter of 2002, the Company ceased the marketing and sales of
its digital media products.  Sales for these products were $26,292 for the year
2002.


ITEM 2. DESCRIPTION OF PROPERTY

Our headquarters is an office facility in Irvine, California of approximately
1,000 square feet under a month-to-month lease. Management currently believes
that the space is sufficient for the Company 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.

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. As of December 31, 2000 the Company accrued $81,326. During the year
Entered December 31, 2001 the Company accrued the remaining $52,332.

There is a collection action filed on May 9, 2002 wherein Garfinle Limited
Partnership II ("GLP") alleged breach of a $450,000 promissory note.  On August
21, 2002 the court granted GLP's application for right to attach order against
the company for the approximate sum of $528,696. Assitionally, GLP filed a
motion for summary judgement against the Company which is presently set for
August 14, 2003.

During the years 2001 and 2002 several lawsuits were filed against the Company
generally for non-payment of amounts due.  These lawsuits resulted in Judgments
against the Company totaling $1,138,000.  All amounts have been recorded in the
Company's financial statements as accounts payable.  The Company is currently
attempting to negotiate settlements with all creditors.

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 tortuous 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, 2002.
On May 16, 2003, the court granted multiple motions for summary judgment and /or
summary adjudication on a certain cause in favor of some of the Company's
directors and former directors including Tom Hemingway, T. Richard Hutt, James
Budd, Robert Orbach, David Lyons and Norton Garfinkle. Watters has filed an
appeal of that ruling which currently remains pending.  The parties have
stipulated to stay the balance of the case pending resolution of the appeal.
..

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 agreed in August 2002 to a payment from eLiberation Corporation in full
settlement of the lawsuit.


                                     PART II


ITEM 5. MARKET FOR COMMON SHARES AND RELATED SHAREHOLDER MATTERS

The Common Stock, since May 30, 2003  is  quoted on the Pink Sheets, Symbol
ESYN. On August 14, 2003, the high and low prices for the Common Stock on the
OTC Bulletin Board were $0.04 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 August
14, 2002, there were approximately 265 holders of record of the Common Stock.



                                            High          Low

Year Ended December 31, 2002
----------------------------
January 1 to March 31, 2002                $0.09         $0.04
April 1 to June 30, 2002                   $0.05         $0.02
July 1 to September 30, 2002               $0.05         $0.03
October 1 to December 31, 2002.            $0.03         $0.01

January 1 to August 1, 2003                $0.00         $0.04



----------------------------
January 1 to March 31, 2001                $1.56         $0.28
April 1 to June 30, 2001                   $0.43         $0.23
July 1 to September 30, 2001               $0.35         $0.12
October 1 to December 31, 2001             $0.17         $0.04




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, 2002.

The Company issued Common Stock as follows:  3,100,000 shares for services of
$103,000 and 20,000,000 shares for compensation of $587,500. 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 delivers 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 allows 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, 2002 in the
amount of $55,575,596. The Company's net loss of $ 3,806,814 in 2002 included
non-cash operating expenses of $1,357,550 for Stock Based Compensation and
Services, and Deprecation and Amortization of  Licenses, and $476,138 for
Goodwill with the remaining loss being $973,126. 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, with the remaining loss being $3,382,360

<TABLE>
<CAPTION>


FOR THE YEARS ENDED                                                   DECEMBER  31,

                                                                2002             2001
                                                            ___________     ____________
<S>                                                        <C>             <C>

SALES                                                       $  201,701      $  376.802
COST OF SALES                                                  109,759         130,966
                                                            -----------     ----------
        GROSS PROFIT                                            91,942         245,836
                                                            -----------     ----------

OPERATING AND OTHER EXPENSES
     General and administrative                               2,033,567       3,378,768
     Research and development                                    16,111         257,775
     Stock issued for services                                  320,200         745,186
     Stock-based compensation to employees and consultants    1,037,850         630,808
     Amortization of goodwill                                                 1,674,976
     Impairment of goodwill                                                     792,458
     Interest expense                                            72,387         527,250
     Impairment loss on assets disposed                         135,784          79,312
                                                            -----------       ----------
        TOTAL OPERATING AND OTHER EXPENSES                   (3,615,899)     (8,086,353)
                                                            -----------      ----------
OTHER INCOME                                                     28,725          68,885
                                                            -----------      ----------
LOSS BEFORE EXTRAORDINARY GAIN                              ( 3,587,174)     (7,771,662)
EXTRAORDINARY GAIN FROM DEBT FORGIVENESS                                        545,874
                                                            -----------      ----------

NET LOSS                                                     (3,587,174)     (7,225,768)
PREFERRED STOCK DIVIDENDS                                      (219,640)       (547,130)
                                                            -----------       ---------

LOSS APPLICABLE TO COMMON SHAREHOLDERS                      $(3,806,814)    $(7,772,917)
                                                            ===========    ============
</TABLE>




YEAR ENDED DECEMBER 31, 2002 COMPARED TO YEAR ENDED DECEMBER 31, 2001

Sales were $201,701 in 2002 compared to $376.802 in 2001.

The cost of product sold in 2002 was 54% compared to 55% in 2000. The increase
was due to an increase in distribution costs related to additional revenue
sharing channels. General and administrative expenses were $2,033,567 in 2002
compared with $3,378,768 in 2001.  The decrease was due to a winding down of
operations beginning in the third quarter of 2002 included decreased salaries
and related costs of $ 760,000, decreased consulting expenses of $326,000 and
rents of $359,000. In 2002, interest expense was $75,187 versus $527,250 in
2001. In addition, cost associated with the issuance of stock for services was
$320,200 in 2002 as compared with $745,186 in 2002. Stock-based compensation was
$1,037,850 in 2002 compared with $630,808 in 2001. There was no amortization of
Goodwill in 2002 compared to $1,674,976 in 2001. There was no impairment of
goodwill for 2002 as compared $792,458 where none was recognized for 2001.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2002 the Company had $ 985 in cash and cash equivalents and a
deficit in working capital (current liabilities in excess of current assets) of
$5,837,159. Included in accounts payable are judgments for $1,138,000.  Some
judgment debtors have attempted to levy assets of the Company.  The Company is
currently in process of negotiating with creditors.

The Company raised $847,281 of cash from financing activities in 2002 and
$1,919,665 of cash in 2001. 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 2002 it was using
$25,000 more cash each month than was being generated by operations compared to
using approximately $65,000 more cash each month than generated by operations
during the fourth fiscal quarter of 2001. 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
August 12, 2003, or until their successors are elected or appointed and
qualified, and (ii) the executive officers of the Company as of August 12, 2003,
who are elected to serve at the discretion of the Board of Directors.





NAME                    POSITION(S) WITH THE COMPANY                AGE
------------------------------------------------------------------------

Thomas Hemingway        Chairman and Chief Executive Officer        46

T. Richard Hutt(1)      Director, Vice President and                64
                          Secretary/Treasurer

James H. Budd           Director and Vice President                 62



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 security holders 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.


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.


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, 2002, 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, 2002 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 2002  $144,250 (A)                    $317,500                        317,500
  CEO               2001   146,250
                    2000   146,250                                   $300,000             300,000


James H. Budd       2002  $100,946 (B)                     150,000                        150,000
  Vice President    2001   115,918
                    2000   135,417                                    270,000             270,000


T. Richard Hutt     2001   102,099 (C)                     150,000                        150,000
   Vice President   2000   108,303
                    2000   124,745                                    270,000             270,000


Mark Utzinger       2002   125,000                         150,000      4,000             154,000

</TABLE>

  (A) Contributed to the Company
  (B) $99,330 contributed to the Company
  (C) $95,330 contributed to the Company


(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       OTHER         BENEFITS DUE ON
NAME                 COMPENSATION       BENEFITS      TERMINATION

-------------------  ------------    ------------- -----------------------------------
<S>                 <C>             <C>            <C>

Thomas C. Hemingway     $150,000     Any           If he is terminated by the Company
  CEO                                benefits      without cause, he is paid an amount
                                     for other     equal to 12 months' base salary and
                                     officers,     all other benefits and perquisites
                                     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.

</TABLE>


STOCK GRANTS AND STOCK OPTIONS GRANTS IN 2002

Stock Grants:
 Tom Hemingway:    11,000,000 shares valued at $317,500
 James Budd         5,000,000 shares valued at $150,000
 T. Richard Hutt:   5,000,000 shares valued at $150,000
 Mark Utzinger:     5,000,000 shares valued at $150,000


Stock Option Grants:
  Mark Utzinger:                           750,000 shares at $0.03 per share


THERE WERE NO OPTION GRANTS DURING FISCAL  2001.

The following options were cancelled by the Officers in 2002:

  Tom Hemingway:          842,500 shares
  James Budd:             387,000 shares
  T. Richard Hutt:        387,000 shares

The following table sets forth information concerning stock options, which were
exercised during, or held at the end of, fiscal 2002 by the Named Officers:

  Mark Utzinger      95,416 shares at an exercise price of $3.63 per share -
                             exercisable
                     550,000 shares at an exercise price of $0.03 per share
                     200,000 shares were exercised at $0.03 a share during 2002


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.





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

MANAGEMENT. The following table sets forth as of August 14, 2003, 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)                  18,539,299   9.7%         0         0%
James H. Budd(2)                     10,993,685   5.8          0         0
T. Richard Hutt(3)                   13,028,206   6.8          0         0
Mark Utzinger                        10,645,416   5.6          0         0

All Directors and Executive Officers
as a group (4 Persons)(              53,206,606  28.0%         0         0%

</TABLE>



ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS4.

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.





                                     PART IV


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

  (a)  INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES


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


<TABLE>
<CAPTION>

Exhibit No.     Description

<S>            <C>
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.

</TABLE>


<TABLE>
<CAPTION>


** Indicates management compensation arrangements.
<S> <C>
(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.
(31) Incorporated by reference to the like-numbered exhibit to the Company's Form 10-QSB
        filed May 22,2002
(32  Incorporated by reference to the like-numbered exhibit to the Company's Form S-8
        filed May 24, 2002
(33) Incorporated by reference to the like-numbered exhibit to the Company's Form 8K filed
        July 31, 2002
(34) Incorporated by reference to the like-numbered exhibit to the Company's Form  10-QSB
        filed August 19,2002
(35) Incorporated by reference to the like-numbered exhibit to the Company's Form 10-QSB/A
        filed August 26,2002
(36) Incorporated by reference to the like-numbered exhibit to the Company's Form 8-K/A
        filed September 27,2002
(37) Incorporated by reference to the like-numbered exhibit to the Company's Form S-8
        filed September 27, 2002
(38) Incorporated by reference to the like-numbered exhibit to the Company's Form PRE-14C
        filed November 8, 2002
(39) Incorporated by reference to the like-numbered exhibit to the Company's Form DEF-14C
        filed November 18, 2002
(40) Incorporated by reference to the like-numbered exhibit to the Company's Form 10-QSB
        filed November 19, 2002
(41) Incorporated by reference to the like-numbered exhibit to the Company's Form PRE-14C
        filed March 27,2003
(42) Incorporated by reference to the like-numbered exhibit to the Company's Form DEF-14C
        filed April 8, 2003
(43) Incorporated by reference to the like-numbered exhibit to the Company's Form 8-K
        filed July 30, 2003
(44) Incorporated by reference to the like-numbered exhibit to the Company's Form PRE-14C
        dated August 1, 2003

 (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.
(99.5) Incorporated by reference to exhibit 99 to the Company's Form 10-K filed April 16,
        2002.

</TABLE>



 ITEM 14. CONTROLS AND PROCEDURES.

As of a date within 90 days of the date of this report, the Company's Chief
Executive Officer and Chief Financial Officer evaluated the effectiveness of the
design and operation of the Company's disclosure controls and procedures. Based
upon this evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the disclosure controls and procedures are effective in ensuring
that information required to be disclosed by the Company in the reports that it
files or submits under the Securities and Exchange Act of 1934, as amended, is
recorded, processed, summarized and reported within the time period specified
by the Securities and Exchange Commission's rules and forms.

Additionally, there were no significant changes in the Company's internal
controls that could significantly affect the Company's disclosure controls
and procedures subsequent to the date of their evaluation, nor were there any
significant deficiencies or material weaknesses in the Company's internal
controls. As a result, no corrective actions were required or undertaken.


                                        SIGNATURES


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


                                        Esynch Corporation


Date   August 15, 2003                  By: /s/ T. Richard Hutt
                                        ---------------------------------
                                        Vice President, Secretary -Treasurer
                                         and Chief Financial Officer







In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities indicated
on the 15th day of August 2003.



        Signature                                  Title


     /S/ Thomas Hemingway                Chairman, Chief Executive Officer,
------------------------------------       President and Director
         Thomas Hemingway



     /S/ T. Richard Hutt                Vice President, Secretary-Treasurer,
------------------------------------       Chief Financial and Accounting
         T. Richard Hutt                   Officer and Director



    /S/  James Budd                      Director
------------------------------------
         James Budd







                         CERTIFICATION PURSUANT TO
                    18 U.S.C. SECTION 1350, AS ADOPTED
                      PURSUANT TO SECTION 302 OF THE
                        SARBANES-OXLEY ACT OF 2002


                   I, Thomas Hemingway, certify that:

1. I have reviewed this annual report on Form 10-KSB of Esynch Corporation;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
aspects the financial condition, results of operations and cash flows of
the registrant as of, and for, the period presented in this annual report.

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing of this annual
report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal
controls and in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.

Date: August 15, 2003



/s/ Thomas Hemingway
------------------------------------
Thomas Hemingway, Chairman, Chief Executive Officer and President
Esynch Corporation





                                    36
                         CERTIFICATION PURSUANT TO
                    18 U.S.C. SECTION 1350, AS ADOPTED
                      PURSUANT TO SECTION 302 OF THE
                        SARBANES-OXLEY ACT OF 2002

                     I, T. Richard Hutt, certify that:

1. I have reviewed this annual report on Form 10-KSB of Esynch Corporation;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
aspects the financial condition, results of operations and cash flows of
the registrant as of, and for, the period presented in this annual report.

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing of this annual
report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal
controls and in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.

Date: August 15, 2003



/s/ T. Richard Hutt
------------------------------------
T. Richard Hutt, Vice President, Secretary-Treasurer and Chief Financial
Officer Esynch Corporation








<PAGE>


                       ESYNCH CORPORATION AND SUBSIDIARIES


                                 FINANCIAL STATEMENTS
                                   TABLE OF CONTENTS

                                                                     PAGE

Report of Independent Certified Public Accountants                    F-1

Consolidated Balance Sheets - December 31, 2002 and 2001              F-2

Consolidated Statements of Operations for the Years Ended
   December 31, 2002 and 2001                                         F-3

Consolidated Statements of Stockholders' Deficit
   the Years Ended December 31, 2001 and 2002                         F-4

Consolidated Statements of Cash Flows for the Years
   Ended December 31, 2002 and 2001                                   F-5

Notes to Consolidated Financial Statements                            F-6


<PAGE>


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


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


To the Board of Directors and the Stockholders
eSynch Corporation and Subsidiaries


We   have  audited  the  accompanying  consolidated  balance  sheets  of  eSynch
Corporation  and Subsidiaries as of December 31, 2002 and 2001 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, 2002 and 2001 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, 2002, the Company has a working capital  deficiency
and  a capital deficiency. The Company has numerous judgments against it and  is
unable  to  pay  its current liabilities. These factors raise substantial  doubt
about  the Company's ability to continue as a going concern. Management's  plans
regarding these matters are 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
August 15, 2003


                                        F-1



                                     ESYNCH CORPORATION AND SUBSIDIARIES
                                         CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                         DECEMBER 31,
                                                                -------------------------
                                                                     2002          2001
                                                                ------------  -----------
<S>                                                            <C>           <C>

                                        ASSETS

CURRENT ASSETS
  Cash                                                            $        985   $    4,783
  Accounts receivable, net of allowance for bad debt
   of $0 and $31,150                                                         -       41,779
                                                                  ------------  -----------
    TOTAL CURRENT ASSETS                                                   985       46,562
                                                                  ------------  -----------
EQUIPMENT, NET OF ACCUMULATED DEPRECIATION                                   -      363,966
OTHER ASSETS, NET OF ACCUMULATED AMORTIZATION                                -      250,602
                                                                  ------------  -----------
TOTAL ASSETS                                                      $        985  $   661,130
                                                                  ============  ===========

                             LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
  Accounts payable                                             $  2,559,906  $ 1,148,646
  Accounts payable - related party                                        -       59,359
  Accrued liabilities                                             2,415,175    2,628,131
  Notes payable                                                     683,400      598,400
  Capital lease obligation                                                -      197,107
  Preferred dividends payable                                       179,663      537,477
                                                               ------------  -----------
    TOTAL CURRENT LIABILITIES                                     5,838,144    5,169,120
                                                               ------------  -----------
STOCKHOLDERS' DEFICIT
  Series J convertible preferred stock - $10,000 stated
   value per share; 275 shares authorized; 58.2 shares and
   72.5 shares outstanding, respectively; liquidation
   preference of $457,000. and $725,000, respectively               457,000      600,000
   Series K convertible preferred stock - $10,000 stated
    value per share; 250 shares authorized; 18.3 shares and
    42.5 shares outstanding, respectively; liquidation
    preference of $ 58,000                                           58,000      300,000
  Series M convertible preferred stock - $10,000 stated value
   per share; 220 shares authorized; 196.9 shares and 196.9
   shares outstanding; liquidation  preference of $1,969,000      2,616,862    2,616,862
  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;
   101,186,902 and 36,914,742 shares issued and outstanding         101,187       36,915
  Additional paid-in capital                                     46,505,388   43,717,015
  Receivable from shareholder                                             -      (10,000)
  Accumulated deficit                                           (55,575,596) (51,768,782)
                                                               ------------  -----------
    TOTAL STOCKHOLDERS' DEFICIT                                  (5,837,159)  (4,507,990)
                                                               ------------  -----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                    $        985  $   661,130
                                                               ============  ===========

</TABLE>


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

                                        F-2



                             ESYNCH CORPORATION AND SUBSIDIARIES
                            CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                  FOR THE YEARS ENDED
                                                                       DECEMBER 31,
                                                               -----------------------------
                                                                         2002           2001
                                                               --------------  -------------
<S>                                                           <C>             <C>

REVENUE                                                        $      201,701  $     376,802
COST OF PRODUCTS SOLD                                                 109,759        130,966
                                                               --------------  -------------
    GROSS PROFIT                                                       91,942        245,836
                                                               --------------  -------------
OPERATING AND OTHER EXPENSES
  General and administrative                                        2,033,567      3,378,768
  Research and development                                             16,111        257,775
  Stock issued for services                                           320,200        745,186
  Stock-based compensation to employees and consultants             1,037,850        630,808
  Amortization of goodwill                                                  -      1,674,976
  Impairment of goodwill                                                    -        792,458
  Interest expense                                                     72,387        527,250
  Impairment loss on assets disposed                                  135,784         79,132
                                                               --------------  -------------
    TOTAL OPERATING AND OTHER EXPENSES                              3,615,899      8,086,353
                                                               --------------  -------------
OTHER INCOME                                                           28,725         68,855
                                                               --------------  -------------
LOSS BEFORE EXTRAORDINARY GAIN                                     (3,587,174)    (7,771,662)
EXTRAORDINARY GAIN FROM DEBT FORGIVENESS, NET OF TAX                        -        545,874
                                                               --------------  -------------
NET LOSS                                                           (3,587,174)    (7,225,788)
PREFERRED STOCK DIVIDENDS                                            (219,640)      (547,129)
                                                               --------------  -------------

LOSS APPLICABLE TO COMMON SHAREHOLDERS                         $   (3,806,814)  $ (7,772,917)
                                                               ==============  =============
BASIC AND DILUTED LOSS PER COMMON SHARE
   Loss before extraordinary gain                              $       (0.05)  $      (0.35)
   Extraordinary gain                                                      -           0.02
                                                               -------------  -------------
   Net Loss                                                    $       (0.05)  $      (0.33)
                                                               =============  =============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
   USED IN PER SHARE CALCULATION                                  70,380,941     23,319,455
                                                               =============  =============

</TABLE>

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

                                        F-3



                                    ESYNCH CORPORATION AND SUBSIDIARIES
                            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

<TABLE>
<CAPTION>


                           Preferred Stock        Common Stock       Additional                                           Total
                          ------------------  ---------------------    Paid-In    Deferred  Shareholder Accumulated    Stockholders'
                          Shares    Amount      Shares     Amounts     Capital  Compensation Receivable   Deficit        Deficit
-----------------------------------------------------------------------------------------------------------------------------------
<S>                      <C>     <C>         <C>         <C>        <C>          <C>         <C>       <C>            <C>
Balance -
 December 31, 2000        393.80  $4,374,862  13,234,757  $  13,235  $38,628,990  $(393,080)  $      -  $(43,995,865)  $(1,371,858)
Shares issued for cash         -           -   6,142,068      6,142    1,446,858          -          -             -     1,453,000
Shares issued for
 services                      -           -   4,557,357      4,557      740,628          -          -             -       745,186
Shares issued for
 settlement of debt            -           -     444,444        444       39,556          -          -             -        40,000
Shares issued in
 settlement of interest        -           -     458,559        459      138,310          -          -             -       138,769
Shares purchased in
 settlement of dispute         -           -     (21,000)       (21)      (6,279)         -          -             -        (6,300)
Shares issued for
 Technology                    -           -     801,187        801      274,647          -          -             -       275,448
Compensation related to
 the grant of stock
 options and warrants          -           -           -          -      330,850          -          -             -       330,850
Amortization of unearned
 compensation                  -           -           -          -            -    299,958          -             -       299,958
Reversal of Unearned
 Compensation                  -           -           -          -      (93,122)    93,122          -             -             -
Exercise of warrants and
 options                       -           -   6,582,500      6,583      239,818          -    (10,000)            -       236,400
Conversion of Convertible
 Debentures                    -           -   2,105,464      2,105      538,895          -          -             -       541,000
and Interest
Conversion of Series J
 preferred stock          (67.00)   (670,000)  1,568,310      1,568      795,195          -          -             -       126,763
Conversion of Series K
 preferred stock          (39.00)   (390,000)  1,041,096      1,041      445,326          -          -             -        56,367
Warrants and beneficial
 conversion feature
 issued with Series M
 Preferred, net of
 $23,000 offering costs    21.60     177,000           -          -      177,000          -          -      (177,000)      177,000
Series M Preferred issued
 for Series L Preferred
 dividends                  2.50      25,000           -          -            -          -          -             -        25,000
Modification of warrants       -           -           -          -       20,344          -          -             -        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        311.90  $3,516,862  36,914,742  $  36,915  $43,717,015  $       -   $(10,000) $(51,768,782)  $(4,507,990)

Shares issued for
 services                      -           -  34,710,000     34,710    1,035,490          -          -             -     1,070,200
Shares issued in
 settlement of payroll
 liabilities                                   5,000,000      5,000      132,500                                           137,500
Conversion of Series J
 preferred stock          (14.30)   (143,000)  5,195,175      5,195      137,805          -          -             -             -
Conversion of Series K
 preferred stock          (24.20)   (242,000)  7,562,500      7,563      234,437          -          -             -             -
Shares issued for payment
 of preferred dividends                        2,513,198      2,513       71,716          -          -             -        74,230
Beneficial conversion
 feature of dividends
 paid with common shares       -           -           -          -       92,158          -          -             -        92,158
Preferred stock dividend
 accrual                       -           -           -          -            -          -          -       (219,640)    (219,640)
Exercise of stock options      -           -   6,590,000      6,590      106,310          -          -              -      112,900
Fair Value of Options
 Granted                       -           -           -          -      149,850          -          -              -      149,850
Contribution from
 Officers/Shareholder          -           -           -          -      415,992          -          -              -      415,992
Receipt of Shareholder
 Receivable                    -           -           -          -            -          -     10,000              -       10,000
Settlement of Dividends        -           -   2,701,287      2,701      412,114                                           414,815
Net loss                       -           -           -          -            -          -          -     (3,587,174)  (3,587,174)
----------------------------------------------------------------------------------------------------------------------------------
Balance -
 December 31, 2002        273.40  $3,131,862 101,186,902  $ 101,187  $46,505,387  $       -   $      -  $ (55,575,596) $(5,837,159)
===================================================================================================================================

</TABLE>





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

                                        F-4



                                ESYNCH CORPORATION AND SUBSIDIARIES
                               CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                 FOR THE YEARS ENDED
                                                                                      DECEMBER 31,
                                                                            --------------------------------
                                                                                2002               2001
                                                                            --------------     -------------
<S>                                                                        <C>                <C>

CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                                                   $ (3,587,174)     $( 7,225,788)
  Adjustments to reconcile net loss to net cash used by operating activities:
    Depreciation and amortization                                                 476,198           436,811
    Amortization and impairment of goodwill                                             -         2,467,434
    Amortization of debt discount                                                       -            88,247
    Loss on disposal of property and equipment                                    138,370            79,132
    Write off of acquisition costs                                                      -           250,085
    Change in allowance for doubtful accounts                                           -          (258,499)
    Stock issued for services, interest and settlements                           320,200           924,955
    Stock based compensation                                                    1,037,350           630,808
    Additional compensation on modification of warrants                                 -            20,344
    Forgiveness of debt                                                                 -          (545,874)
    Changes in operating assets and liabilities:
      Accounts receivable                                                          41,779            15,988
      Other receivables                                                                 -            (9,768)
      Prepaid expenses                                                                  -            22,154
      Other assets                                                                      -            34,030
      Accounts payable                                                          1,214,153          296,895
      Related party accounts payable                                              (59,359)           59,357
      Accrued liabilities                                                        (432,596)          606,814
                                                                        ---------------------  -------------
  NET CASH USED IN OPERATING ACTIVITIES                                         ( 851,079)       (2,106,875)
                                                                        ---------------------  -------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Collections on loan to affiliate                                                      -           200,000
  Acquisition of property and equipment                                                 -            (8,007)
                                                                        ---------------------  -------------
  NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                                   -           191,993
                                                                        ---------------------  -------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Stock issued for cash                                                                 -         1,453,000
  Purchases of common stock                                                             -            (6,300)
  Proceeds from the exercise of options and warrants                              112,900           236,400
  Proceeds from issuance of preferred shares, net of costs                        581,203           177,000
  Proceeds from borrowings                                                         85,000            80,000
  Payment on capital lease obligation                                                   -           (20,435)
  Contributions from officer and shareholders                                     415,992                 -
  Preferred stock dividends                                                      (357,814)                -
  Payment on Receivable from Shareholder                                           10,000                 -
                                                                        ---------------------  -------------
  NET CASH PROVIDED BY FINANCING ACTIVITIES                                       847,281         1,919,665
                                                                        ---------------------  -------------
NET INCREASE (DECREASE) IN CASH                                                   ( 3,798)            4,783
CASH - BEGINNING OF YEAR                                                            4,783                 -
                                                                        ---------------------  -------------
CASH - END OF YEAR                                                            $       985      $      4,783
                                                                        =====================  =============

</TABLE>

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


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

                                        F-5



                         ESYNCH CORPORATION AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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.
The Company has curtailed all of these activities due to lack of financial
resources.

Principles Of Consolidation - The accompanying consolidated financial statements
include the accounts of eSynch and of its wholly owned subsidiaries. All inter-
company transactions and balances have been eliminated in consolidation.

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, 2002 in the amount of
$55,575,596. The Company has numerous judgments against it and is unable to pay
its current liabilities.  Management's plan's are to seek a merger for the
Company and to request compromise of existing liabilities. Management does not
anticipate that the Company can obtain additional debt or equity financing.
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 2002 and
2001 did not exceed 10% of total sales.

Fair Values Of Financial Instruments - The amounts reported as accounts payable,
accrued liabilities, and capital lease obligations are considered to be
reasonable approximations of their fair values. The fair value estimates were
estimated by management and were not based on comparable debt as the Company is
unable to obtain outside financing..

Stock-Based Compensation - Stock-based compensation to employees is recognized
and measured in accordance with the principles of APB Opinion No. 25, Accounting
for Stock Issued to Employees, and related Interpretations. 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. 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 $1,037,850 and $630,808 for the years ended December 31, 2002 and 2001,
respectively. The following table illustrates the effect on net loss and basic
and diluted loss per share for the years ended December 31, 2002 and 2001 if the
Company had applied the fair value recognition provisions of FASB Statement No.
123, Accounting for Stock-Based Compensation, to stock-based employee
compensation:

                                                          2002           2001
                                                   -----------    -----------

Net loss, as reported                              $(3,587,174)   $(7,225,788)
Add: Stock-based employee compensation expense
 included in reported net loss                       1,037,850        630,808
Deduct: Total stock-based employee compensation
 expense determined under fair value based
 method for all awards                              (1,104,100)      (725,687)
                                                   -----------    -----------
Pro Forma, Net Loss                                 (3,653,424)   $(7,320,667)
                                                   ===========    ===========
Basic and diluted loss per common share:
  As reported                                      $     (0.05)   $     (0.33)
  Pro forma                                        $     (0.06)   $     (0.34)
                                                   ===========    ===========


                                        F-6


                         ESYNCH CORPORATION AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Loss Per Share - Basic loss per common share is computed by dividing loss before
extraordinary gain and net loss, both adjusted by preferred dividends, 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, 2002 and 2001, there were 58.2 and 72.5 and shares of Series
J convertible preferred shares, 18.3 and 42.5 and shares of Series K convertible
preferred shares, 196.9 and 196.9 shares of Series M convertible preferred
shares, respectively. As of December 31, 2002 and 2001, there were options and
warrants to purchase 6,729,113 and 8,469,781 shares of common stock,
respectively. These items were not included in the calculation of diluted loss
per share for the years ended December 31, 2002 and 2001, 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, the products
are transmitted or shipped to the customer and accepted by the customer.

New Accounting Standards - In April 2002, the FASB issued Statement of Financial
Accounting Standards No. 145, Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical Corrections. Among other
provisions, this statement modifies the criteria for classification of gains or
losses on debt extinguishment such that they are not required to be classified
as extraordinary items if they do not meet the criteria for classification as
extraordinary items in APB Opinion No. 30, Reporting the Results of Operations -
Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual and Infrequently Occurring Events and Transactions. The Company will be
required to apply the provisions of this standard to transactions occurring
after December 31, 2002. The Company has elected not to adopt standard and has
not reclassified the extraordinary gain from debt forgiveness in the
accompanying 2001 financial statements. Other than classifying future debt
forgiveness that may occur in loss before extraordinary gain, the adoption of
this standard in 2003 is not expected to have a material effect on the Company's
financial position or results of operations.

In May 2003, the FASB issued Statement of Financial Accounting Standards No.
150, Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equities. Statement No. 150 will require financial instruments
that are mandatorily redeemable or that contain an obligation to repurchase the
financial instrument be classified as liabilities. Statement No. 150 must be
applied by the Company beginning July 1, 2003. The adoption of Statement No. 150
is not expected to have a material effect on the financial position of the
Company.

NOTE 2-GOODWILL AND LONG-LIVED ASSETS

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.
Amortization of goodwill recognized during the year ended December 31, 2001 was
$1,635,009. Beginning in the fourth quarter of 2002, the Company wound down this
sales activity of Kiss Software to reduce losses from operations.  Sales for the
year ended December 31, 2002 were $145,707.   On February 1, 2003, the product
rights of Kiss Software Corporation were disposed of to James Budd for balance
of all moneys due Mr. Budd. These rights were of minimal value.

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 of zero.

Oxford Media - Effective September 30, 1999, the Company completed the
acquisition of Oxford Media Corp. ("Oxford"), engaged in DVD video encoding,
compression and authoring. At December 31, 2001, management evaluated the
related goodwill for impairment and, based on an analysis of estimated future



                                        F-7


                         ESYNCH CORPORATION AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



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 unamortized carrying value of the goodwill to its estimated
discounted net future cash flows of zero. During the third quarter of 2002, the
Company ceased the marketing and sales of its digital media products.  Sales for
these products were $26,292 for the year ended December 31, 2002.

The Company abandoned its property and equipment in 2002 and recognized an
impairment loss of $135,784 and $79,132 in the years ended December 31, 2002 and
2001, respectively.

NOTE 3 -- NOTES RECEIVABLE FROM AFFILIATES

During January 2001, the Company collected $200,000 on a note receivable from
and officer-director.  Also during the year ended December 31, 2001, the Company
collected $280,000 from eLiberation.com Corporation, a corporation owned by a
former officer of the Company. The loan had been previously written-off and the
collection was accounted for as a bad debt recovery during 2001.

During the years ended December 31, 2001, the Company advanced a total of
$27,000  to certain members of management, respectively. Of the amounts advanced
the Company received repayment of $12,000 in 2001. At December 31, 2001 amounts
due from these members of management totaled $46,000 At December 31, 2001, the
Company has the $46,000 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 from employment with the Company.

The Company loaned $250,085 to Streamedia Communications Inc. during the quarter
ended March 31, 2001. The loans bear interest at 10% and were due on May 21,
2001. The loan was 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.

NOTE 4 - EQUIPMENT

The Company abandoned its remaining equipment in the year ended December 31,
2002 and recognized an impairment loss of $135,784. 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.

Equipment consisted of the following at December 31, 2002 and 2001:

                                                2002              2001
                                              -------         ---------
     Furniture and fixtures                   $     -         $  28,647
     Computer equipment                             -           897,415
     Leasehold improvements                         -                 -
     Total Cost                                     -           926,062
     Less: Accumulated depreciation                 -          (562,096)
                                              -------         ---------
     Net Equipment                            $     -         $ 363,966
                                              =======         =========

Depreciation expense for the years ended December 31, 2002 and 2001 was $227,969
and $328,073, respectively.

NOTE 5 - TECHNOLOGY

During the year ended 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 combined a variety of advanced
methods and gave the Company the ability to deliver simultaneous streaming media
and downloading services in a fully secure, industry-standard environment. The
acquired technology was used in combination with the Company's existing
technologies in products and services. The Company amortized the cost of the


                                        F-8


                         ESYNCH CORPORATION AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


technology over the estimated future cash inflows or three years, whichever
resulted in the greater amount of amortization. During the year ended December
31, 2001, amortization expense was $75,362. The net value of the technology of
$226,086 was included in other assets on the accompanying December 31, 2001
balance sheet. During the year ended December 31, 2002, the Company discontinued
the use of the technology and amortized the balance of the cost of the
technology.

NOTE 6 - ACCRUED LIABILITIES

In 2001, the Company reduced liabilities that had accrued at the time of the
acquisition of Innovus Corporation by $545,874 based on liabilities for which
the statute of limitations of four years had expired. The gain from forgiveness
of debt during 2001 was accounted for as an extraordinary gain.

Included in accrued liabilities at December 31, 2002 and 2001 are $ 1,585,000
and $1,516,161, respectively, in obligations to state and federal governments
for payroll taxes from the current year, from previous years and for estimated
interest and penalties owing on such tax obligations. At December 31, 2002 and
2001 the Company has accrued salaries of $239,923 and $304,176, respectively.
Some of these employees to whom the accrued salaries are due have obtained
judgments against the Company for payment of these salaries and these amounts
have been reclassified to accounts payable. Additionally, during 2002 and 2001,
the Company withheld 401K contributions from employees' wages; however, these
employee contributions were not contributed to the plan. At December 31, 2002
and 2001, amounts due to the plan were $43,467 and $42,011, respectively.

NOTE 7 - NOTES PAYABLE

During the year ended December 31, 2002, the Company borrowed $125,000 from an
individual. The note is non-interest bearing, unsecured and due on demand.
During 2002, an individual forgave a $40,000 note plus interest. 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.

At December 31, 2002 and 2001, the Company has $450,000 due under a promissory
note to Garfinkle Limited Partnership II ("GLP"), a company of a shareholder and
a former 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 warrants to purchase 250,000 shares of common
stock to GLP. The warrants were valued at $160,850 using the Black-Scholes
option-pricing model. In return, GLP agreed to extend the terms of the note.

There was a collection action filed on May 9, 2002 by GLP wherein GLP alleged
breach of the $450,000 promissory note.  On August 21, 2002, the court granted
GLP's application for right to attach order against the Company for the
approximate sum of $528,696. Additionally, GLP filed a motion for summary
judgment against the Company which is set for trial during August 2003.

Notes payable consisted of the following at December 31, 2002 and 2001:

                                                              2002       2001
                                                           ---------  ---------
10% Convertible note payable to a shareholder, unsecured,
  due on demand                                            $ 450,000  $ 450,000
7% Note payable to a shareholder, interest due quarterly,
  principal payable $14,754 quarterly, unsecured              77,150     77,150
12% Note payable to a shareholder, payable on demand,
  unsecured                                                        -     40,000
Non-interest bearing, unsecured note, due on demand          125,000          -
10% Note payable to a shareholder, payable on
 demand, unsecured                                            31,250     31,250
                                                           ---------  ---------
Total Notes Payable                                        $ 683,400  $ 598,400
                                                           =========  =========


                                        F-9


                         ESYNCH CORPORATION AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



SECURED CONVERTIBLE DEBENTURES

On December 7, 2000 the Company issued Secured Convertible Debentures
("Debentures") in the amount of $500,000. The Debentures bore interest rate at
8% per annum and were due on December 7, 2003. The Debentures became convertible
into common stock on the date of issuance and were 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 would
automatically be converted into common stock, subject to extensions by the
Company for certain events.

During the year ended December 31, 2001, holders of Debentures converted all
$500,000 of the Debentures into 2,105,464 common shares including accrued
interest, legal fees and penalties in the aggregate amount of $41,000. As a
result of the conversion, none of the Debentures were outstanding at December
31, 2001.


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

Supplemental Cash Flow Information - The Company paid $72,387 and $26,399 for
interest during the years ended December 31, 2002 and 2001, respectively.

Noncash Investing And Financing Activities - During the year ended December 31,
2001, preferred shareholders and debenture holders converted $670,000 of Series
J Preferred stock, $390,000 of Series K Preferred stock, $500,000 of Debentures
into common stock. The Company accrued $370,129 of dividends on the preferred
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 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.

NOTE 9 - INCOME TAXES

There was no provision for, or benefit from, income taxes for any period
presented. The components of the net deferred tax asset as of December 31, 2002
and 2001 were as follows:

                                             2002               2001
                                         ------------       -----------
     Operating loss carry forwards       $ 10,155,967       $ 8,817,952
     Valuation allowance                  (10,155,967)       (8,817,952)
                                         ------------       -----------
     Net Deferred Tax Asset              $          -       $         -
                                         ============       ===========

For income tax reporting purposes, the Company has net operating loss carry
forwards in the amount of approximately $27,220,000 at December 31, 2002 that
will expire beginning in the year 2011 through 2022. The valuation allowance
increased by $1,338,015 and $1,636,646 during the years ended December 31, 2002
and 2001, respectively.

The following is a reconciliation of the tax benefit that would result from
applying the federal statutory tax rate to pretax loss with the provision for
income taxes for the years ended December 31, 2002 and 2001:

                                             2002              2001
                                         ------------      ------------
     Benefit at federal statutory
      rate (34%)                         $ (1,219,639)     $ (2,456,768)
     Amortization of goodwill                       -           675,015
     Impairment of goodwill                         -           319,361
     Stock-based compensation                 387,118           254,216
     Change in valuation allowance          1,338,015         1,636,646
     State tax benefit, net of federal
      tax effect                             (118,376)         (455,225)
     Other                                   (387,118)           26,755
                                         ------------      ------------

     Provision for Income Taxes          $          -      $          -
                                         ============      ============



                                        F-10


                         ESYNCH CORPORATION AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 10 - STOCKHOLDERS' EQUITY

Series J Convertible Preferred Stock - From August through October 1999, the
Company issued 262.5 shares of Series J convertible preferred stock at a price
of $10,000 per share in a private placement offering. The Series J convertible
preferred stock 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 was automatically
convertible into common stock, subject to extensions by the Company for certain
events.

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 was 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 were estimated based on the fair value
of the number of shares of common stock issuable using current conversion
prices, and totaled $95,970 and $234,906 at December 31, 2002 and 2001,
respectively. Series J convertible preferred stock dividends accrued during the
years ended December 31, 2002 and 2010 were $ 33,250 and $119,017, 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, 2002 and 2001, holders of Series J
convertible preferred stock converted a total of 14.3 and 67 preferred shares
valued at $143,000 and $670,000, respectively, and received 5,195,175 and
1,568,310 common shares. 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 200 shares of Series K convertible preferred stock at a price of
$10,000 per share in a private placement offering. The Series K convertible
preferred stock 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 was automatically
convertible into common stock, subject to extensions by the Company for certain
events.



                                        F-11


                         ESYNCH CORPORATION AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



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 was 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 were estimated based on the fair value
of the number of shares of common stock issuable using the current conversion
prices, and totaled $8,120 and $113,349 at December 31, 2002 and 2001,
respectively. Series K convertible preferred stock dividends accrued during the
years ended December 31, 2001 and 2000 were $4,060 and $61,890, 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 24.2 and 39 preferred shares
valued at $242,000 and $390,000, respectively, and received 7,762,500 and
1,041,096 common shares, respectively.

Series M Convertible Preferred Stock - On December 7, 2000, the Company issued
168 shares of Series M convertible preferred stock. The Series M convertible
preferred stock 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.

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 was 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 were
estimated based on the fair value of the number of shares of common stock
issuable using current conversion prices, and totaled $75,573 and $189,222 at
December 31, 2002 and 2001, respectively. Series M convertible preferred stock
dividends accrued during the years ended December 31, 2002 and 2001 were
$209,349 and $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.


                                        F-12


                         ESYNCH CORPORATION AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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, 2002, the Company issued
common stock as follows: the issuance of 37,710,000 shares for services and
compensation in the amount of $1,357,850, which was charged to stock issued for
services expense, the issuance of 5,000,000 shares for the settlement of debt of
$137,500, the issuance of 2,701,287 shares for the settlement of dividends
valued at $414,818 and the issuance of 15,270,873 shares for the conversion of
Series J and Series K convertible preferred stock as described above.

During 2002, option holders exercised 6,590,000 options to purchase shares of
the Company's common stock.  The total proceeds from the exercises were
$112,900.

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

During 2001, option holders 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, which amount
was subsequently collected.

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. On September 6, 2002, the 1999 Stock Incentive Plan was
amended to allow the granting of options for up to 12,750,000 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 in prior years. The exercise prices of options
under the plans and under individual option contract 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 March 2002, the Company issued options to purchase 250,000 share of common
stock at an exercise price of $0.04 per share.  In August 2002, the Company
issued options to purchase 1,750,000 shares of common stock at an exercise price
of $0.03 per share.  These options were issued under the 1999 Stock Incentive
Plan to officers, directors, and employees of the Company.

A summary of the status of the Company's stock options as of December 31, 2002
and 2001 and changes during the years then ended are presented below:

<TABLE>
<CAPTION>
                                               OPTIONS OUTSTANDING
                                             ---------------------
                                            2002            2001
                                    ---------------------  -------
                                                         WEIGHTED-               WEIGHTED-
                                                          AVERAGE                AVERAGE
                                                          EXERCISE               EXERCISE
                                                SHARES       PRICE    SHARES      PRICE
----------------------------------  ---------------------  -------  -----------  ---------
<S>                                <C>                    <C>      <C>          <C>
Outstanding at beginning of year               1,946,863   $  2.41   3,987,055   $2.52
  Granted                                      2,000,000      0.03           -       -
  Forfeited                                     (776,500)     0.96  (2,020,192)   2.31
  Expired                                       (200,000)     0.03           -       -
  Exercised                                     (200,000)     0.03     (20,000)   0.25
                                    ---------------------           -----------
Outstanding at end of year                     2,926,613      1.34   1,946,863    2.41
                                    =====================           ===========
Options exercisable at end of year             2,900,359      1.32   1,880,609    2.37
                                    =====================           ===========
Weighted-average fair value of
 options granted during year        $               0.01                          $  -
                                    =====================                       =======

</TABLE>


                                        F-13


                         ESYNCH CORPORATION AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



The following table summarizes information about stock options outstanding at
December 31, 2002:

<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>

0.01-0.04          1,800,000         2.14             $0.03       1,800,000        $0.03
0.25-0.50             61,900         5.32 years       $0.25          61,900        $0.25
2.11-2.63              9,713         4.38              2.11           9,713         2.11
3.63               1,055,000         7.57              3.63       1,028,746         3.63
            ----------------                                 --------------

0.01-3.63         2,926,617         7.57              3.72        2,900,359         3.72
            ================                                 ==============

</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 2002; dividend yield 0%; expected volatility of
214%; risk-free interest rate of 2.50%, expected life of the options of 2.48
years and underlying stock price $0.03

OPTIONS AND WARRANTS GRANTED TO NON-EMPLOYEES

During the year ended December 31, 2002, the Company issued options under a
consulting agreement for 3,390,000 shares of common stock for $0.01 per share.
The shares vested immediately. The options were valued at $45,900 using the
Black-Scholes option pricing model with the following weighted-average
assumptions: 1.73% risk-free interest rate, 0% expected dividend yield, 143.4%
volatility and 1.0 years, of which the entire amount was expensed during the
year ended December 31, 2002.

During the year ended December 31, 2002, the Company issued options under a
consulting agreement for 3,000,000 shares of common stock for $0.03 per share.
The shares vested immediately. The options were valued at $103,950 using the
Black-Scholes option pricing model with the following weighted-average
assumptions: 1.73% risk-free interest rate, 0% expected dividend yield, 143.4%
volatility and 1.0 years, of which the entire amount was expensed during the
year ended December 31, 2002.

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.

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
                                               -------------------------------------------
                                                        2002              2001
                                               ---------------------  --------------------
                                                           WEIGHTED-             WEIGHTED
                                                           AVERAGE               AVERAGE
                                                           EXERCISE              EXERCISE
                                                 SHARES      PRICE     SHARES   PRICE
                                               ---------   -------   --------    -------
<S>                                          <C>          <C>       <C>         <C>

Outstanding at beginning of year .             1,615,000   $  2.41    1,365,000   $2.71
Granted.                                       6,390,000      0.02    6,500,000    0.05
Cancelled                                            -          -           -        -
Exercised                                     (6,390,000)     0.02   (6,250,000)   0.03
                                             -----------             ----------
Outstanding at end of year                     1,615,000      2.41    1,615,000    2.41
                                             ===========             ==========
Options exercisable at end of year             1,615,000      2.41    1,615,000    2.41
                                             ===========             ==========
Weighted-average fair value of
 options granted during year . . .  $               0.02             $  0.02
                                             ===========             =======

</TABLE>

                                        F-14


                         ESYNCH CORPORATION AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




The following table summarizes information about non-employee stock options
outstanding at December 31, 2002:


<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         4.25         $     0.53         7  50,000  $      0.53
1.25 - 2.00.           515,000         1.36               1.42           515,000         1.42
6.50 - 9.50.           350,000         1.09               7.89           350,000         7.89
              ----------------                                  ----------------

0.50- 9.50.          1,615,000          2.64              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 $149,850 and $608,158 for the years ended
December 31, 2002 and 2001, respectively.

At December 31, 2001 and 2000, there were 2,496,875 warrants to purchase common
stock outstanding, 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:



                                       FOR THE YEARS ENDING DECEMBER 31:
             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                      $          -
                                                        =============


                                        F-15


                         ESYNCH CORPORATION AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



At December 31, 2002, the Company was in default on its capitalized lease
obligations as a result of delinquent payments. The financial institutions have
obtained judgments against the Company and the amount due is now recorded in
accounts payable. The Company no longer has the equipment. As a result of these
defaults, all of the Company's capitalized lease obligations were classified as
current in the accompanying December 31, 2001 balance sheet.

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 recognized 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. In November 2002, the Company entered into a
month-to month lease in Irvine with a monthly rent payment of $1,000 per month.

Lease expense for the years ended December 31, 2002 and 2001 was $48,608 and
$276,330 respectively.

Litigation - The Company was involved in several lawsuits that have resulted in
judgments against the Company. All amounts claimed under these actions have been
recorded in the accompanying financial statements, as described below.

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.

A collection action was filed on May 9, 2002 wherein Garfinkle Limited
Partnership II ("GLP") alleged breach of a $450,000 promissory note.  On August
21, 2002 the court granted GLP's application for right to attach order against
the Company for the approximate sum of $528,696. Additionally, GLP filed a
motion for summary judgment against the Company which is presently set for trial
in August 2003.

During the years 2001 and 2002, several lawsuits were filed against the Company
generally for non-payment of amounts due.  These lawsuits resulted in judgments
against the Company totaling $1,138,000.  All amounts have been recorded in the
Company's financial statements as accounts payable.  The Company is currently
attempting to negotiate settlements with all creditors.

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 tortuous 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; accordingly, no
accrual has been made for this claim. On May 16, 2003, the court granted
multiple motions for summary judgment and summary adjudication in favor of the
Company's directors and former directors. Mr. Watters has filed an appeal of
that ruling which currently remains pending.  The parties have stipulated to
stay the balance of the case pending resolution of the appeal.


                                        F-16


                         ESYNCH CORPORATION AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



On July 26, 2002 eSynch acquired irrevocable voting rights of NACIO Systems,
Inc. ("NSI"), a California corporation. eSynch entered into an irrevocable
escrow agreement to acquire all of the outstanding common and preferred shares
of NSI, subject to a successful completion of the plan of reorganization. eSynch
Corporation, signed, but had not consummated, an agreement to acquire all of the
outstanding capital stock of NSI. The acquisition was to be pursuant to an
exchange of stock between holders of NSI stock and eSynch conducted in
accordance with the original Plan of Reorganization of NSI under Chapter 11 of
the U.S. Bankruptcy Code. NSI amended the Plan on April 25, 2003 which was
approved by the Bankruptcy Court's on May 22, 2003 which ordered that the eSynch
undo the previous acquisition of NSI capital stock and undo the stock issuance
previously consummated by the Company and the common and preferred shareholders
of NSI

The acquisition was to be pursuant to an exchange of stock in accordance with
the original Plan of Reorganization of NSI. under Chapter 11 of the U.S.
Bankruptcy Code. In February 2003, the Company issued 40,006,021 shares of
common stock to the shareholders of NSI. NSI amended the Plan of Reorganization
on April 25, 2003, which was approved by the Bankruptcy Court on May 22, 2003,
and which ordered that the eSynch undo the acquisition.  eSynch has subsequently
received back 13,599,316 shares of its common stock and has cancelled those
shares. The Company is endeavoring to recover the remaining 26,406,705 common
shares but has not yet been successful and they remain outstanding. The Company
has filed an application for order canceling the stock distributed to be heard
on September 5, 2003.

Payroll And Payroll Tax Liabilities - Included in accrued liabilities at
December 31, 2002 and 2001 are $ 1,585,000 and $1,516,161, 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, 2002 and 2001 the Company has accrued salaries
of $239,923 and $304,176, respectively. Some of these employees have obtained
judgments against the Company for payments of these salaries and these amounts
have been reclassified to accounts payable. Additionally, during 2001 the
Company withheld 401K contributions from employees' wages however these employee
contributions were not contributed to the plan. At December 31, 2002 and 2001,
amounts due to the plan were $43,467 and $42,011 respectively.

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 years
ending December 31, 2002 and 2001.

NOTE 14 - SUBSEQUENT EVENTS

On July 26, 2002 eSynch acquired irrevocable voting rights of Nacio Systems,
Inc. ("NSI"). eSynch entered into an irrevocable escrow agreement to acquire all
of the outstanding common and preferred shares of Nacio, subject to a successful
completion of the plan of reorganization. NSI is involved in  managed hosting,
managed services, connectivity and collocation services.

The acquisition was to be pursuant to an exchange of stock in accordance with
the original Plan of Reorganization of NSI under Chapter 11 of the U.S.
Bankruptcy Code. In February 2003, the Company issued 40,006,021 shares of
common stock to the shareholders of NSI. NSI amended the Plan of Reorganization
on April 25, 2003, which was approved by the Bankruptcy Court on May 22, 2003,
and which ordered that the eSynch undo the acquisition.  eSynch has subsequently
received back 13,599,316 shares of its common stock and has cancelled those
shares. The Company is endeavoring to recover the remaining 26,406,705 common
shares but has not yet been successful and they remain outstanding. The Company
has filed an application for order canceling the stock distributed to be heard
on September 5, 2003.

During the period January 1, 2003 through August 14, 2002 the Company issued
9,713,000 shares of common stock for services valued at $609,000; 4,250,000
shares valued at $127,000 for payment of liquidated damages in connection with
series J and M preferred stock; 28,000,000 shares for compensation valued at
$625,000 and 550,000 shares issued pursuant to the excised of stock options.


                                        F-16


                         ESYNCH CORPORATION AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



An action was taken by written consent dated July 15, 2003, by over 50% of the
stockholders of the Company to provide for a stock combination (reverse split)
of the common stock in an exchange ratio to be approved by the Board of
Directors, ranging from one newly issued share for each two outstanding shares
of common stock to one newly issued share for each forty outstanding shares of
common stock and the approval of a name change for the Company from eSynch
Corporation to Mergence Corporation.

In July 2003, the holders of all of the Company's outstanding Series J, K and M
Preferred Stock agreed to exchange their preferred stock for 23,000,000 shares
of the Company's common stock and agreed that the closing will take place
simultaneously with the reverse spilt of the Company's common stock at a rate of
40 for 1.


                                        F-17