### FORM 10-K

### SECURITIES AND EXCHANGE COMMISSION

### WASHINGTON, D.C. 20549

(Mark One)

|[X]   | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]       
|----- | ----------------------------------------------------------------------------------------------------------
|      | For the fiscal year ended December 31, 2001 OR                                                            
|      |                                                                                                           
|[   ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from Not Applicable to ________________________

Commission file number 0-17840

NEW HORIZONS WORLDWIDE, INC.
(Exact name of Registrant as specified in its charter)

|Delaware                                                       |                | 22-2941704                          
|-------------------------------------------------------------- | -------------- | ------------------------------------
|(State of other jurisdiction of incorporation or organization) |                | (I.R.S. Employer Identification No.)
|                                                              
|1900 S. State College Blvd., Suite 200, Anaheim, CA            |                | 92806                               
|(Address of principal executive offices)                       |                | (Zip Code)                          
|                                                              
|Registrants telephone number, including area code:            | (714) 940-8000

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

|Title of each Class | Name of each exchange on which registered
|------------------- | -----------------------------------------
|Not Applicable      | Not Applicable                           

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

Common Stock, $.01 Par Value
Title of Class

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

Indicate by check mark if disclosure of delinquent  filers pursuant to Item 405 of Regulation S-K is not contained  herein,  and
will not 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-K or any amendment to this Form 10-K. _____

The aggregate market value of the Common Stock held by  non-affiliates  of the Registrant as of March 22, 2002 was approximately
$88,692  computed  on the basis of the last  reported  sales  price per share  ($11.85)  of such stock on The Nasdaq  Stock
Market.

The number of shares of the
Registrants Common Stock outstanding as of March 22, 2002 was 10,250,657.

DOCUMENTS OR PARTS THEREOF INCORPORATED BY REFERENCE

|Part of Form 10-K                  | Documents Incorporated  by Reference                                                                                                              
|---------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------
|Part III (Items 10, 11, 12 and 13) | Portions of the Registrants definitive Proxy Statement to be used in connection
with its Annual Meeting of Stockholders to be held on May 7, 2002

NEW HORIZONS WORLDWIDE, INC.
INDEX TO ANNUAL REPORT
ON FORM 10K

|PART I  
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|Item 1. 
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|Item 2. 
|Item 3. 
|Item 4. 
|PART II 
|Item 5. 
|Item 6. 
|Item 7. 
|Item 7A.
|Item 8. 
|Item 9. 
|PART III
|Item 10.
|Item 11.
|Item 12.
|Item 13.
|PART IV 
|Item 14.
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### PART I

#### ITEM 1.  BUSINESS

This Annual Report on Form 10-K contains  forward-looking
 statements  which involve risks and  uncertainties.  The
Companys actual results may differ  significantly  from the results discussed in the  forward-looking  statements.
Factors  that may cause such a  difference  include,  but are not  limited  to,  those  discussed  throughout  this
document and under the caption Information About Forward-Looking Statements.

New Horizons  Worldwide,
 Inc., (the Company or New  Horizons)  formerly  Handex  Corporation,  through various
subsidiaries,  both owns and franchises  computer  training centers.  The Company sold its  environmental  business
segment  and  changed  its name to New  Horizons  in late  1996,  in  order to  concentrate  its  resources  on the
technology  training  market.  The  Companys  common  stock  trades on The Nasdaq  Stock  Market  under the symbol
NEWH.

GENERAL

New  Horizons 2001  system-wide  revenues  of
 $512  million  make it the  largest  independent  provider  in the
fragmented PC software applications and technical  certification  training industry.  Through various subsidiaries,
the Company  both owns and  franchises  computer  training  centers.  Through  these  training  centers the Company
offers a variety of flexible training choices including  instructor-led  training,  Internet-based  training, often
referred to as  eLearning,  computer-based  training via CD-ROM,  computer  labs,  certification  exam  preparation
tools,  courseware,  and  24-hours,  seven-days-a-week,  free help desk  support.  The goal of the  training  is to
deliver to the student information and skills which have immediate and practical value in the workplace.

The New Horizons worldwide network delivered over 2.8 million
 student-days of information  technology (IT) training in
2001, generating  system-wide revenues,  which include both the results of company-owned and franchised operations,
of $512 million,  down 3.4% from $530  million in 2000.  The  network has  approximately  2000  classrooms,  2,400
instructors and 2,000 account executives.

New  Horizons  specializes  in  instructor-led  training
which is the  industrys  dominant  delivery  method  for
IT  training.  The Company has become a leader in the industry by developing the processes for
delivering quality training for the largest technology training segments:  technical  certification and PC software
applications  training.  The  networks  training  centers  offer a broad range of courses for several of the major
software vendors,  including Microsoft,  Novell, Lotus, Cisco, Linux, Adobe, Apple Computer,  Corel,  Symantec, and
Sun  Microsystems.  New Horizons has the largest network of Microsoft  Certified  Technical  Education  Centers and
Novell Authorized  Education Centers in the world. In 2001 New Horizons introduced a suite of Information  Security
(network  security)  courses  which are  designed  to improve the IT  professionals  knowledge  regarding  network
security.  Additionally,  with  certification  testing  becoming  increasingly  important,  New  Horizons  also has
established the largest number of Authorized  Prometric  Testing  Centers in the world.  Classes can be held at New
Horizons  locations  or on-site at the  clients  facility.  Curriculum  can be tailored to the  clients  specific
needs.  The Company can also provide training and courseware for the customers proprietary software.

Realizing the impact of the Internet and growing  customer
demand for  flexibility  with regard to how training is
delivered,  New Horizons in 2001 introduced its Integrated  Learning program  consisting of three  components:  the
traditional  instructor-led  Classroom Learning,  Online LIVE Learning and Online ANYTIME Learning.  Online LIVE is
synchronous,   interactive  virtual  classrooms  featuring  instructor-facilitated  classes  delivered  over  the
Internet.  Online  ANYTIME is  asynchronous  instruction,  identical in content to the classroom  instruction,  but
self-paced and available to those students who prefer a more independent learning method.

New Horizons owns and operates 27 computer  training  facilities  located in Anaheim,  Burbank,  Los Angeles,  Long
Beach,  Sacramento,  Stockton, and Modesto,  California;  Albuquerque,  New Mexico; Atlanta and Marietta,  Georgia;
Indianapolis,  Indiana; Charlotte, North Carolina; San Antonio, Texas; and Denver, Englewood,  Broomfield, Loveland
and Colorado Springs,  Colorado; Chicago and Rosemont,  Illinois;  Cleveland, Ohio; two in New York City, New York;
Memphis, Jackson and Nashville, Tennessee; and Hartford, Connecticut.

As of December 31, 2001, the Companys  franchisees
 operated 140 locations in the United States and Canada and 117
locations in 44 other  countries  around the world.  An additional 25 franchises  had been sold as of that date and
are scheduled for future openings.

Page 1

The Company was  incorporated  in Delaware on December 15, 1988,  and its principal  executive  offices are located
1900  S.  State  College  Blvd,  Suite  200,  Anaheim,  California  92806.  The  Company  maintains  a  website  at
http://www.newhorizons.com.

THE INFORMATION TECHNOLOGY EDUCATION AND TRAINING MARKET

The rapidly  growing role of  IT in
business  organizations  and the emergence of the Internet
are  creating  significant  and  increasing  demand  for  IT  training.  A May 2001 IDC  study
estimated  that in 2000 the  worldwide  market for  IT  education and training was about $22.4
billion and is expected to grow at a pace of 13% per year to over $40 billion in the year 2005.

The growing  need for  technology  training  is driven by
several  developments  including:  (i)  increased  use of
computers in the workplace requiring  employees to acquire and apply IT skills; (ii) rapid and
complex  technological  changes in operating  systems,  new software  development,  and technical  training;  (iii)
continuing  emphasis by industry on  productivity,  increasing the number of functions being  automated  throughout
organizations;  (iv) greater focus by organizations on core  competencies  with a shifting  emphasis to outsourcing
of non-core  activities;  (v) corporate  downsizing  requiring  remaining personnel to develop a greater variety of
skills;  (vi) increasing interest in IT  certification from both a companys and an employees
perspective;  and (vii)  development  of the Internet.  In its study IDC estimated  that in 2001 there were 455,000
unfilled IT job openings in the United States and expects that number to grow to 606,000 by 2004.

Although a significant  portion of technology  training is
provided by in-house training  departments,  IDC, in its
study,  identified a decided shift towards  outsourcing to external  training  professionals.  This  outsourcing is
motivated by several  factors,  including:  (i) the lack of internal  trainers  experienced in the latest software;
(ii) the cost of  maintaining  an in-house  staff of trainers;  and (iii) the cost of  developing  and  maintaining
internal courseware.

Organizations  are  searching  out and  selecting
outside  technology  training  services  that  can  provide  the
following:  (i)  cost  effective  delivery  of  high  quality  instruction;  (ii)  qualified,   technically  expert
instructors;  (iii) flexibility to deliver a consistent  training product at geographically  dispersed  facilities;
(iv) ability to tailor the training  products to specific  customers  needs; (v) definitive,  current  courseware;
(vi) testing and certification of technical  competency;  (vii) effective training methods delivering knowledge and
skills  with  immediate  practical  value in the  workplace;  (viii) a depth and  breadth of  curriculum;  and (ix)
flexible and convenient scheduling of classes.

Instructor-led  classroom  training is the dominant
delivery  method for technology  training in the United States
with 66% of the IT education  market  in 2000  according  to the May 2001  IDC  report.  IDC
projects  that  instructor-led  training  will  continue  to  maintain a  significant  share of the market  because
trainees value the  personalized  attention,  interaction  with  classmates and  instructors,  and insulation  from
workplace  interruptions.  While IDC projects  instructor-led  training will continue to be a significant  delivery
method in the market, the role of technology-based  training,  primarily consisting of eLearning and computer-based
training,  is gaining  greater  acceptance.  IDC  estimates  that  technology-based  training  will have 59% of the
IT  education market by 2005 while  instructor-led  classroom training will have 35%. IDC also
states in its March 2001 report  entitled  eLearning in Practice:  Blended  Solutions in Action that many eLearning
buyers are using the  eLearning  methodology  in  addition  to  classroom  learning.  New  Horizons  Integrated
Learning strategy allows students to combine eLearning and classroom learning while utilizing the same course content.

THE NEW HORIZONS BUSINESS MODEL

New Horizons  company-owned and franchised  operations both provide an instructor-led  training delivery system to
customers that is executed by certified employee instructors  primarily in fully equipped classrooms  maintained by
New Horizons or its  franchises.  Approximately  10% of classes are given on site at the customers  location.  New
Horizons often supplies the computer  hardware for these on-site  classes.  Additionally,  as part of New Horizons
Integrated  Learning  strategy, both  synchronous  and  asynchronous eLearning alternatives  are offered to the
students.  Lastly,  courseware  is offered  to the  Companys  franchises  by its Nova  Vista  product  procurement
company.

Curriculum  is  centered  on  technical  certification  programs  (approximately  57%)  and  software  applications
(approximately  43%).  Classes  are  concise,  generally  ranging  from one to five days,  and are  designed  to be
intensive  skill-building  experiences.  The  Company  offers  a broad  array  of  information  technology  courses
covering the most popular software  applications and technical  certification  programs.  The Company also provides
customized training for customers proprietary  software  applications.  The Company believes it offers more classes
more often than any other company in the industry.

Page 2

In addition to certified  instructors and broad curriculum,
the New Horizons business model is designed to provide
its customers  significant  training  value by  featuring:  (i)  guaranteed  training  through the Companys  free,
six-month repeat privileges;  (ii) skills assessment for both standard or proprietary software;  (iii) professional
certification  training;  (iv) the largest  network of authorized  training  centers in the industry;  (v) free, 24
hours-a-day,  seven-days-a-week  help desk service for a full  sixty-day  period after a class has been  completed;
(vi)  on-site  training at customers facilities;  (vii) club  memberships  providing a series of classes for one
platform at one low price; (viii) flexible scheduling  including evening and weekend classes;  (ix) the Corporate
Education Solutions (CES) program
which  coordinates  a  national/international  referral  system and delivery  network of training for major clients
which have training  requirements  in multiple  locations;  and (x) its  Integrated  Learning  program which allows
customers to integrate the delivery  methodology  between  instructor-led  classroom training and  technology-based
training.

The Company has historically  grown through the sale of
franchises,  the opening of new company-owned facilities,
the buyback of franchises in certain markets,  and revenue growth from the existing training  centers.  Revenues at
locations  open more than twelve months had a reduction in revenue of  approximately  5%, down from an increase of 17%
in 2000,  due  primarily  to the effect of the  downturn in the  domestic  economy.  The Company  believes a mix of
franchised and company-owned  centers will enable it to combine the accelerated  expansion  opportunities  provided
by  franchising  while  maintaining  ownership of a significant  number of training  centers.  The Company plans to
continue to grow  through (i)  improvement  of revenues and profits at both current  company-owned  and  franchised
locations;  (ii) the sale of  additional  franchises;  (iii) the  selective  buyback of existing  franchises in the
United States which have  demonstrated the ability to achieve above average  profitability  while increasing market
share,  and (iv) the  potential  acquisition  of companies in similar or  complementary  businesses.  The Companys
ability  to  achieve  growth  from the  buyback of  existing  franchises  and  acquisitions  in the future  will be
dependent,  in part, on its borrowing capacity under its credit agreement,  as amended.  The availability under the
credit agreement was $2.9 million as of January 31, 2002.

Company-Owned Training Centers

At the end of 2001 the Company owned and operated 27 training
 centers that generated  $118.3 million in revenue up
from $111.3  million in 2000.  In January 2001 the Company  acquired its  Indianapolis,  Indiana  franchise  and in
April it  acquired  its  Atlanta,  Georgia  franchise  locations.  The  locations  open at the end of 2001  were as
follows:

|California  | Colorado         | Georgia     | Illinois          | Indiana      | Tennessee
|----------- | ---------------- | ----------- | ----------------- | ------------ | ---------
|Anaheim     | Denver           | Atlanta     | Chicago           | Indianapolis | Memphis  
|Los Angeles | Englewood        | Marietta    | Rosemont          |              | Nashville
|Burbank     | Broomfield       |             |                   |              | Jackson  
|Long Beach  | Colorado Springs |             |                   |              |          
|Sacramento  | Loveland         |             |                   |              |          
|Stockton    |                  |             |                   |              |          
|Modesto     |                  |             |                   |              |          
|            |                  |             |                   |              |          
|
|Albuquerque | Charlotte        | San Antonio | New York City (2) | Hartford     | Cleveland

The acquisitions were a
result of the Companys strategy to acquire well performing franchises in
select United States markets. Since 1998 the Company has acquired 11 franchise
locations: 2 in 2001, none in 2000, 6 in 1999, and 3 in 1998. As part of all of
the purchase contracts, other than those for Sacramento and Stockton, the selling
shareholders agreed to continue to manage the acquired training centers for two
or three years, and could receive additional consideration if certain operating
performance criteria are met. The acquisitions have been recorded using the
purchase method of accounting and the operating results have been included in
the Companys financial statements from the date of acquisition.

Page 3

Franchising

At the end of 2001 the
Company supported a worldwide network of independent franchises which provide
IT training at 257 locations in 46 countries. There were an
additional 12 franchised locations which had been sold and which are scheduled
to open at various times during 2002. The franchisee is given a non-exclusive
license and franchise to participate in and use the business model and sales
system developed and refined by the Company. The Company initially offered
franchises for sale in 1991 and sold its first franchise in 1992. The Company
had 204 franchised locations operating at the end of 1999; 254 at the end of
2000; and 257 at the end of 2001, of which 140 were in the United States and
Canada and 117 were abroad.

The offer and sale of
franchises and business opportunities are subject to regulation by the United
States Federal Trade Commission, as well as many states and foreign
jurisdictions. There also exist numerous state laws that regulate the offer and
sale of franchises and business opportunities, as well as the ongoing
relationship between franchisors and franchisees, including the termination,
transfer, and renewal of franchise rights. The failure to comply with these laws
could adversely affect the Companys operations.

New Horizons estimates the
initial investment required to acquire and start a franchise operation,
including the initial franchise fee, ranges from approximately $250,000 to
$500,000.

United States and Canada

Franchise Fees

A franchisee in the United
States and Canada is charged an initial franchise fee and ongoing monthly
royalties, which become effective a specified period of time after the center
begins operation. The initial franchise fee is based on the size of the
territory granted as defined in the Franchise Agreement. In the United States
and Canada, the size of a territory is measured by the number of personal
computers (PCs) in the territory. The initial franchise fee
for a start-up center for a Type 1 territory (150,000 or more PCs) is
$75,000; for a Type 2 territory (75,000 to 149,999 PCs) is $50,000; and a
Type 3 territory (50,000 to 75,000 PCs) is $25,000. Entrepreneurs
converting an existing training center to a New Horizons center receive a 20%
reduction in the initial fee as a conversion allowance. Based on information
furnished by IDC concerning the number of PCs in various geographic areas,
as of December 31, 2001, the Company has identified 25 Type 1 territories, 21
Type 2 territories, and 16 Type 3 territories as the remaining territories
currently available for sale as franchises in the United States and Canada.

The initial franchise fee
is payable upon execution of the Franchise Agreement and is not refundable under
any circumstances. The territory is a limited exclusive territory in
that New Horizons agrees not to own or franchise any other New Horizons Computer
Learning Center provided the franchisee operates in compliance with the terms of
its franchise agreement. The geographic boundaries of a territory are typically
determined by United States Postal Service zip codes. Unless the Franchise
Agreement terminates or is amended by mutual agreement, a territory will not be
altered. Franchises are expected to market their business to customers located
within the defined territory and not to customers within territories of other
New Horizons franchises or affiliates. Franchisees generally have six months
from the date of the execution of the Franchise Agreement to open a center
before the minimum monthly royalties commence.

Royalties

In addition to the initial
franchise fee, franchisees pay the following fees to New Horizons: (i) a monthly
continuing royalty fee, consisting of the greater of 3% to 6% of monthly gross
revenues or a minimum flat fee of $1,500 for a Type 1 territory or $1,000 for a
Type 2 and Type 3 territory; (ii) a monthly marketing and advertising fee of 1%
of gross revenues and (iii) a course materials and proprietary computer-based
training products surcharge of 9% of the gross revenues from course materials
and proprietary computer-based training products sold to third parties. The 6%
royalty fee rate was effective for franchises sold during September 1996 or
later.

Page 4

Franchise Agreement

Each Franchise Agreement
runs for an initial term of ten years and is renewable for additional five-year
terms. During 2001, the franchise locations in Detroit, Michigan and San Diego,
California renewed their franchise agreements for additional five-year terms. In
2002, six franchise agreements come up for renewal. The franchise is exclusive for instructor-led
training within the specific defined territory and is subject to a number of
limitations and conditions. These limitations and conditions include, but are
not limited to: (i) staffing requirements, including a General Manager plus a
minimum number of account executives based on the territory type; (ii) a minimum
number of classrooms depending on the territory type; (iii) full-time and
continuous operations; (iv) a pre-defined minimum required curriculum; (v)
computer equipment and system requirements; (vi) signage and display material
requirements; (vii) minimum insurance requirements; and (viii) record keeping
requirements. New Horizons reserves to itself the exclusive right to offer and
deliver eLearning within all territories. New Horizons and its franchisees have
profit sharing arrangements for sales of New Horizons eLearning offerings
sold in a franchisees territory. The agreement also contains
non-competition restrictions which bar: (i) competing with New Horizons during
the term of the Franchise Agreement and for one year after termination of the
franchise within a 25 mile radius of any New Horizons center; (ii) diverting or
attempting to divert any customer or business of the franchise business to any
competitor; (iii) performing any act that is injurious or prejudicial to the
goodwill associated with the New Horizons service marks or operating system; and
(iv) soliciting any person who is at that time employed by the franchisor or any
of its affiliated corporations to leave his or her employment. In addition,
there are certain restrictions on the franchisees rights to transfer the
franchise license. New Horizons also maintains a right of first
refusal if a transfer effects a change of control. The agreement also
contains default and termination remedies.

International

Franchise Fees

Initial franchisee fees and
territories for international franchises are market/country specific. While the
Company does have some unit franchises internationally, the Company has
predominantly entered into Master Franchise Agreements providing franchisees
with the right to award subfranchises to other parties within a particular
region. The Master Franchisee pays an initial master franchise fee that is based
upon the expected number of subfranchises to be sold. The master franchise fee
is then earned ratably over the sale of the subfranchises. Under the terms of
these Master Franchise Agreements, the franchisee commits to open or cause to be
opened a specified number of locations within a specified time frame. The Master
Franchisee is responsible for the pre-opening and ongoing support of the
sub-franchises. The Company shares with the Master Franchisee in the proceeds of
subsequent sales of individual franchises and also receives a percentage of the
royalties received by the Master Franchisee. In 2001 the Company entered into
Master Franchise Agreements for the development of Malta, North Africa, the
Philippines, Vietnam, and Chile. Approximately 21% of the Companys
system-wide revenues were generated by international locations in 2001. In
addition to those markets currently served by its franchisees, the Company has
identified over 160 additional international markets that may support a training
center.

The initial franchise fee
is payable upon execution of the Franchise Agreement and is not refundable under
any circumstances. The territory is a limited exclusive territory in
that New Horizons agrees not to own or franchise any other New Horizons Computer
Learning Center provided the franchisee operates in compliance with the terms of
its Franchise Agreement. Unless the Franchise Agreement terminates or is amended
by mutual agreement, a territory will not be altered. Franchises are expected to
market their business to customers located within the defined territory and not
to customers within territories of other New Horizons franchises or affiliates.
Franchisees generally have six months from the date of the execution of the
Franchise Agreement to open a center before the minimum monthly royalties
commence.

Royalties

In addition to the initial
franchise fee, franchisees pay the following fees to New Horizons: (i) Unit
Franchisees: a monthly continuing royalty fee, ranging from 3% to 6% of monthly
gross revenues with minimum royalties ranging from $350 to $3,000, depending on
the marketplace; and (ii) Master Franchisees: 40% of the royalties received from
their Subfanchisees with those royalties ranging from 3% to 6% with the
aforementioned minimums and (iii) a course materials and proprietary
computer-based training products surcharge of 9% of the gross revenues from
course materials and proprietary computer-based training products sold to third
parties. The 6% royalty fee rate was effective for franchises sold during
September 1996 or later.

Page 5

Master Franchise Agreement

A Master Franchisee
receives a territory which is typically a country or a region encompassing
multiple countries. Under the Master Franchise Agreement the Master Franchisee
shall: (i) license and service third party Unit Subfranchises operated by
persons other than the Master Franchisee and (ii) own and operate at least one
New Horizons location under a separate Unit Franchise Agreement. Each Master
Franchise Agreement runs for an initial term of ten years and is renewable for
one additional ten-year term. The Master Franchisee is expected to: (i) grant
unit sub-franchises in a form of Sub-Franchise Agreement as approved by New
Horizons; (ii) perform and enforce against each Unit Subfranchise the terms of
any Unit Subfranchise Agreement it enters into; (iii) provide the initial
training in the New Horizons system to each Unit Subfranchise; and (iv) provide
ongoing support, consulting and assistance to each Unit Subfranchise after the
initial training. For these obligations the Master Franchisee retains 60% of the
initial franchise fees and the ongoing royalties received from the Unit
Subfranchises.

Unit Franchise Agreement

Each Unit Franchise
Agreement runs for an initial term of ten years and is renewable for additional
five-year terms. In 2002 the Mexico City, Mexico franchise agreement comes up
for renewal.  The franchise is exclusive for instructor-led training within the specific
defined territory, typically a city, and is subject to a number of limitations
and conditions. These limitations and conditions include, but are not limited
to: (i) staffing requirements, including a General Manager plus a minimum number
of account executives based on the territory; (ii) a minimum number of
classrooms depending on the territory; (iii) full-time and continuous
operations; (iv) a pre-defined minimum required curriculum; (v) computer
equipment and system requirements; (vi) signage and display material
requirements; (vii) minimum insurance requirements; and (viii) record keeping
requirements. The agreement also contains non-competition restrictions which
bar: (i) competing with New Horizons during the term of the Franchise Agreement;
(ii) diverting or attempting to divert any customer or business of the franchise
business to any competitor; (iii) performing any act that is injurious or
prejudicial to the goodwill associated with the New Horizons service marks or
operating system; and (iv) soliciting any person who is at that time employed by
the franchisor or any of its affiliated corporations to leave his or her
employment. In addition, there are certain restrictions on the franchisees
rights to transfer the franchise license. New Horizons also maintains a
right of first refusal if a transfer effects a change of control.
The agreement also contains default and termination remedies.

Franchise Support

In return for the initial
franchise fee and the other monthly fees, the Company provides franchisees with
the following services, products, and managerial support: (i) two weeks of
initial franchise training at the Companys operating headquarters in
Anaheim, California, and one week of field training at the franchisees
location; (ii) franchise and sales system information contained in the
Companys Confidential Operations Manual and other training manuals; (iii)
ongoing operating support via on-site visits from Regional Franchise Support
Managers, access to troubleshooting and business planning assistance; (iv)
access to the CES program which coordinates a national/international referral
system and delivery network of training for major clients which have training
requirements in multiple locations; (v) periodic regional and international
meetings and conferences; (vi) advisory councils and monthly communications,
(vii) periodic training sessions delivered over the Internet for franchise
staff, (viii) periodic classroom training events for franchise staff delivered
at the corporate headquarters in Anaheim, and (ix) product, program or
operational support via telephone from New Horizons personnel.

Page 6

CUSTOMERS

Customers for the training
provided by New Horizons company-owned and franchised training centers are
predominantly employer-sponsored individuals from a wide range of public and
private corporations, service organizations, government agencies and
municipalities. Little, if any, of the Companys revenues are generated
from Title IV entitlement programs.

No single customer
accounted for more than 10% of New Horizons revenues in 2001.

The New Horizons system
delivered over 2.8 million student-days of technology training in 2001.

SALES AND MARKETING

New Horizons markets its
services primarily through account executives who utilize telesales to target
and contact potential customers. The New Horizons sales system is organized and
disciplined. After undergoing a formal initial training program, account
executives are expected to generate their own database of customers through
telephone sales, make a minimum number of calls per day, and invoice and collect
a minimum amount of revenue each month. These minimums escalate over the first
eight months an account executive is selling and are designed to move the
account executive from being compensated with a non-recoverable draw against
commission to a full commission compensation program. Account executives
target sales areas are local and regional. Sales opportunities that involve
national and international accounts and involve delivery of training at multiple
locations are turned over to the Companys CES program.

The CES program is designed
to market computer training services to large organizations which have
facilities and training needs over a broad geographic area within and outside the United States. This program provides New
Horizons national and international customers with a single point of
contact to the entire New Horizons network of training and support services.
During 2001 New Horizons competed for and won national and international
contracts with AOL Time Warner, BellSouth, BP British Petroleum, Ernst &
Young, Kraft Foods, Toyota Motor Sales, USA, Inc., and US Cellular, amongst
others.

The Company maintains a web
site for marketing its products over the Internet (http://www.newhorizons.com).
The Company believes that the Internet will become an increasingly important
tool in its marketing program.

TRAINING AUTHORIZATIONS

New Horizons is authorized
to provide certified training by more than 15 software publishers, including
Microsoft, Novell, Apple, and Sun Microsystems. Many of the industrys
major software vendors do not offer training, but support their products through
independent training companies using a system of standards and performance
criteria. In support of these vendors, the Company has 160 Microsoft (CTEC), 78
Novell (NAEC), 115 SAIR Linux ACE, 66 Corel CTP, and 11 Lotus (LAEC) authorized
centers worldwide. The authorization agreements are typically annual in length
and are renewable at the option of the publishers. While New Horizons believes
that its relationships with software publishers are good, the loss of any one of
these agreements could have a material adverse impact on its business. New
Horizons is the largest Certified Internet Webmaster (CIW) Authorized Training
Partner (ATP) network with 167 CIW ATPs worldwide as of December 31, 2001.
Additionally, with certification testing becoming increasingly important, New
Horizons has grown its number of Authorized Prometric Testing Centers to 189.
Lastly, in 2001 the Company introduced a suite of courses for instruction on
Information Security (network security). As of December 31, 2001 over 50 centers
have become Ascendant Learnings Security Certified Professional Authorized
Training Partners.

COMPETITION

The IT
training market is highly competitive, highly fragmented, has low barriers to
entry, and has no single competitor which accounts for a dominant share of the
market. The Companys competitors are primarily in-house training
departments and independent education and training organizations. Computer
retailers, computer resellers, and others also compete with the Company.
Periodically, some of these competitors offer instruction and course titles
similar to those offered by New Horizons at lower prices. In addition, some of
these competitors may have greater financial strength and resources than New
Horizons.

New Horizons believes that
competition in the industry is based on a combination of pricing, breadth of
offering, quality of training, and flexibility and convenience of service.

Page 7

The Company recognizes that
the emergence of technology-based training, primarily consisting of eLearning
and computer-based training, are important and growing competitive developments
in the industry.

In-House Training Departments

In-house training
departments provide companies with the highest degree of control over the
delivery and content of IT training, allowing for customized
instruction tailored to specific needs. However, according to IDC, the demand
for outsourced training is expected to grow as more companies switch to outside
training organizations. By outsourcing, companies can choose to spend based on
real-time training needs while alleviating the overhead costs for in-house
instructors salaries and benefits.

Independent Education and Training Organizations

Although the majority of
independent training organizations is relatively small and focuses on local or
regional markets, the Company competes directly on a national level with several
firms providing similar curriculum. Learning Tree, Global Knowledge Network,
Executrain, and Productivity Point target the same customer base and operate in
some of the same markets as New Horizons. The Company believes that the
combination of its market presence, the depth and breadth of its course
offerings, its flexible customer service approach, its centralized control of
delivery to national customers, its status as the worlds largest network
of Microsoft Certified Technical Education Centers and Novell Authorized
Education Centers, and its organized and disciplined sales system distinguishes
it from these competitors.

Instructor-led Training

The Company competes with
Learning Tree, Global Knowledge, Executrain, and Productivity Point in addition
to in-house training departments and independent training organizations.

Technology-Based Training

Instructor-led training has
historically been the dominant delivery method for IT
training. Technology-based training, consisting of eLearning,
CD-ROMs, videotape, and satellite video broadcast, has become a
significant delivery modality. According to IDC, technology-based training,
which was 28% of the United States IT training market in
2000, is expected to grow at a faster rate than instructor-led training through
the year 2005. The IDC study estimates that by 2005 technology-based training
will have a 59% share of the United States IT training
market while instructor-led training will have a 35% share. Within
technology-based training the dominant growth modality, according to IDC, will
be eLearning with an increase in market share from 15% in 2000 to 40% in 2005.

The Company recognizes that
its future success depends on, among other factors, the markets continued
acceptance of instructor-led training as a delivery method for IT
 training, the Companys ability to continue to market
competitive instructor-led course offerings, and the Companys ability to
successfully capitalize on the potential of technology-based training delivery
methods, in particular, eLearning. In 2001 the Company introduced its eLearning
product offering with Online LIVE Learning, its synchronous virtual classroom
product, and Online ANYTIME Learning, its asynchronous self-paced product. The Companys
competitors in the eLearning environment include SmartForce,
DigitalThink, Knowledgenet, NETg, ElementK and others.

IT
training can be broken into three segments: Segment 1 includes the most
sophisticated levels of training for programmers and software developers;
Segment 2 includes certification for engineers (Microsoft, Novell); and Segment
3 includes the end users of standard application software. While the Company
does very little training of programmers and software developers, it does
compete in Segments 2 and 3, with an estimated 57% of revenues from Segment 2
and 43% from Segment 3.

COURSEWARE SALES AND OTHER

New Horizons derives
revenue from the sale of courseware to its franchises, from an administrative
fee for managing its CES program and from fees earned on its Center Management
System (CMS) software program. The revenues earned from this category increased
$12,402 or 222% over the $5,579 realized in 200, primarily as a result of new products being offered to the Companys
franchisees in 2001.

Page 8

The new  courseware
products that were added in 2001 included  Microsoft  Official  Curriculum,  used in technical
training  classes,  learning  guides,  used primarily in applications  classes,  and Online LIVE and Online ANYTIME
products.  These products added approximately $9.7 million in revenue in 2001.

New Horizons in 2001
deployed CMS in 54 of its franchise locations. The
system integrates the customer contact, registration, resource management,
scheduling and invoicing functions of a training center. The franchises can
choose to host the software locally, in which case they acquire the software license
rights from New Horizons or, alternatively, they can choose to have New Horizons
be the application service provider (ASP) for a monthly fee of $995 to $3,995.
In 2001 the company earned over $800,000 in fees for the CMS product.

INFORMATION ABOUT FORWARD-LOOKING STATEMENTS

The statements made in this
Annual Report on Form 10-K that are not historical facts are forward-looking
statements. Such statements are based on current expectations but involve risks,
uncertainties, and other factors which may cause actual results to differ
materially from those contemplated by such forward-looking statements. Important
factors which may result in variations from results contemplated by such
forward-looking statements include, but are by no means limited to: (i) the
Companys ability to respond effectively to potential changes in the manner
in which computer training is delivered, including the increasing acceptance of
technology-based training, including through the Internet, which could have more
favorable economics with respect to timing and delivery costs and the emergence
of just-in-time interactive training; (ii) the Companys ability to attract
and retain qualified instructors and management employees; (iii) the rate at
which new software applications are introduced by manufacturers and the
Companys ability to keep up with new applications and enhancements to
existing applications; (iv) the level of expenditures devoted to upgrading
information systems and computer software by customers; (v) the Companys
ability to compete effectively with low cost training providers who may not be
authorized by software manufacturers; and (vi) the Companys ability to
manage the growth of its business.

The Companys strategy
focuses on enhancing revenues and profits at current locations, and also
includes the possible opening of new company-owned locations, the sale of
additional franchises, the selective acquisition of existing franchises in the
United States which have demonstrated the ability to achieve above average
profitability while increasing market share, and the acquisition of companies in
similar or complementary businesses. The Companys growth strategy is
premised on a number of assumptions concerning trends in the IT
 training industry. These include the continuation of growth in the
market for IT training and the trends toward outsourcing and
eLearning. To the extent that the Companys assumptions with respect to any
of these matters are inaccurate, its results of operations and financial
condition could be adversely affected.

REGULATIONS

The offer and sale of
franchises and business opportunities are subject to regulation by the United
States Federal Trade Commission, as well as many states and foreign
jurisdictions. There also exist numerous laws that regulate the ongoing
relationship between franchisors and franchisees, including the termination,
transfer and renewal of franchise rights. The failure to comply with any such
laws could have an adverse effect on the Company.

INSURANCE

The Company maintains
liability insurance in amounts it believes to be adequate based on the nature of
its business. While the Company believes that it operates its business safely
and prudently, there can be no assurance that liabilities incurred with respect
to a particular claim will be covered by insurance or, if covered, that the
dollar amount of such liabilities will not exceed coverage limits.

TRADEMARKS

The Company has issued
trademark registrations and pending trademark applications for the word mark
NEW HORIZONS and for other trademarks incorporating the words
NEW HORIZONS, including New Horizons Online Learning, New Horizons
Classroom Learning, New Horizons Online Live Learning and New Horizons
Integrated Learning. Additionally, the Company has pending trademark
registrations for CHOOSE. LEARN. SUCCEED. The Company believes that the
New Horizons name and trademarks are important to its business. The Company is
not aware of any pending or threatened claims of infringement or challenges to
the Companys right to use the New Horizons name and trademarks in its
business. However, the Company has been advised that it cannot register the word
mark NEW HORIZONS in certain foreign countries and that it cannot
register or use any of the New Horizons trademarks in Australia or the
Dominican Republic. The Company has applications filed with the Australian
trademark office to protect Skill Master as its trademark in Australia, and its
franchises there are using that name and trademark. Additionally, the Company
has applications filed with the Dominican Republic trademark office to protect
Skill Master as its trademark in the Dominican Republic. The
Company believes that the inability to register certain of its trademarks in
certain foreign countries will have a material adverse effect on its financial
condition or results of operations.

Page 9

EMPLOYEES

As of February 28, 2002,
the Company employed a total of 1,093 individuals in its corporate operations
and company-owned facilities. Of these employees, 324 are instructors, 309 are
account executives, and 460 are administrative and executive personnel. New
Horizons also utilizes the services of outside contract instructors to teach
some of its curriculum, primarily technical certification programs which require
instructors who are certified by Microsoft, Novell, and Lotus.

None of New Horizons
employees is represented by a labor organization. New Horizons considers
relations with its employees to be good.

#### ITEM 2.  PROPERTIES

The Companys
corporate headquarters and its flagship training center are located in Anaheim,
California, pursuant to a lease, which expires in 2012. The Company relocated to
the Anaheim facility in October 2001.

On October 2, 1998, the
Company purchased 8.3 acres of undeveloped land in Santa Ana, California for
approximately $5.1 million. The Company had intended to construct a building on
the land that would serve as the world headquarters. At December 31, 2001 the
land is in escrow for a selling price in excess of its carrying value. However,
there can be no assurances that such sale will be consummated.

As of December 31, 2001,
New Horizons operated training centers at 26 other leased facilities in
California, Connecticut, Georgia, Illinois, Indiana, New Mexico, New York, North
Carolina, Ohio, Tennessee and Texas, with leases that expire from 2002 to 2014.

The Company believes that
its facilities are well maintained and are adequate to meet current requirements
and that suitable additional or substitute space will be available as needed to
accommodate any expansion of operations and for additional offices, if
necessary.

#### ITEM 3.  LEGAL PROCEEDINGS

The Company has accrued
$1,055 related to residual environmental liabilities retained from the sale of
its environmental remediation business in 1996.

The Company is also
involved in various other claims and legal actions arising in the ordinary
course of business. In the opinion of management, the ultimate disposition of
these matters will not have a material adverse effect on the Companys
consolidated financial position or results of operations.

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

No matters were submitted
to a vote of security holders during the fourth quarter of the year ended December 31, 2001.

Page 10

### PART II

#### ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

The common stock is traded
on The Nasdaq Stock Market under the symbol NEWH. The following table sets forth
the range of high and low closing quotations per share of common stock from
January 1, 2000, through December 31, 2001, as reported by The Nasdaq Stock
Market.

`2001                                                            HIGH        LOW
1st Quarter .........       (January 1 - March 31)             17.56       13.50
2nd Quarter .........       (April 1 - June 30)                18.50       13.44
3rd Quarter .........       (July 1 - September 30)            15.44       11.52
4th Quarter .........       (October 1 - December 31)          12.20        8.45


2000                                                            HIGH        LOW
1st Quarter .........       (January 1 - March 31)             17.75       11.19
2nd Quarter .........       (April 1 - June 30)                23.23       16.00
3rd Quarter .........       (July 1 - September 30)            24.00       11.69
4th Quarter .........       (October 1 - December 31)          16.75       12.63`

As of March 8, 2002, the
Companys common stock was held by 421 holders of record. The Company has
never paid cash dividends on its common stock and has no present intention to
pay cash dividends in the foreseeable future. The Company currently intends to
retain any future earnings to finance the growth of the Company.

Page 11

ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA(Dollars in thousands, except per share)

|                                                      | 2001         | 2000         | 1999         | 1998         | 1997        
|----------------------------------------------------- | ------------ | ------------ | ------------ | ------------ | ------------
|Total revenues                                        | $  159,899   | $  142,698   | $  111,476   | $   72,629   | $   52,633  
|Cost of revenues                                      | 85,102       | 65,850       | 50,301       | 32,749       | 26,814      
|Selling, general and administrative expenses          | 65,999       | 58,752       | 46,407       | 31,354       | 23,368      
|Write-off of management system                        |             |             | 3,338        |             |            
|Settlement of franchise arbitration                   |             |             | 303          |             |            
|                                                      |              |              |              |              |             
|Operating income                                      | 8,798        | 18,096       | 11,127       | 8,526        | 2,451       
|Interest income                                       | 369          | 503          | 643          | 1,424        | 1,301       
|Interest expense                                      | (1,450)      | (318)        | (354)        | (255)        | (469)       
|Non-recurring gains                                   | 2,683        |             |             |             |            
|Gain from release of certain franchise obligations    |             |             |             |             | 2,600       
|                                                      |              |              |              |              |             
|Income from continuing operations before income taxes | 10,400       | 18,281       | 11,416       | 9,695        | 5,883       
|Provision for income taxes                            | 3,520        | 7,312        | 4,153        | 3,813        | 2,269       
|                                                      |              |              |              |              |             
|Income from continuing operations                     | 6,880        | 10,969       | 7,263        | 5,882        | 3,614       
|(Loss) income from discontinued operations            | (426)        |             |             |             | 349         
|                                                      |              |              |              |              |             
|Net income                                            | $    6,454   | $   10,969   | $    7,263   | $    5,882   | $    3,963  
|                                                      |              |              |              |              |             
|                                                     
|                                                     
|Basic Earnings Per Share (1)                          |             
|Income per share from continuing operations           | $      0.68  | $      1.12  | $      0.76  | $      0.64  | $      0.41 
|(Loss) income per share from discontinued operations  | (0.04)       |             |             |             | 0.04        
|                                                      |              |              |              |              |             
|Net income per share                                  | $      0.64  | $      1.12  | $      0.76  | $      0.64  | $      0.45 
|                                                      |              |              |              |              |             
|                                                     
|Diluted Earnings Per Share (1)                        |             
|Income per share from continuing operations           | $      0.65  | $      1.06  | $      0.72  | $      0.61  | $      0.40 
|(Loss) income per share from discontinued operations  | (0.04)       |             |             |             | 0.04        
|                                                      |              |              |              |              |             
|Net income per share                                  | $      0.61  | $      1.06  | $      0.72  | $      0.61  | $      0.44 
|                                                      |              |              |              |              |             
|                                                     
|                                                      | Dec. 31,     | Dec. 31,     | Dec. 31,     | Dec. 31,     | Dec. 31,    
|Selected Consolidated Balance Sheet Data              | 2001         | 2000         | 1999         | 1998         | 1997        
|Working capital                                       | $      4,315 | $        983 | $      6,010 | $     20,951 | $     27,030
|Total assets                                          | 160,160      | 122,726      | 105,084      | 86,746       | 66,571      
|Long term obligations less current portion            | 24,067       |             | 6,730        | 267          | 1,516       
|Total stockholders equity                            | 99,904       | 88,621       | 72,677       | 61,569       | 49,056      

(1) Per share amounts for
1998 and 1997 have been adjusted to reflect the five-for-four split of the
Companys common stock effected June 8, 1999.

Page 12

ITEM 7.   MANAGEMENTS DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(Dollars in thousands, except per share data)

CRITICAL ACCOUNTING POLICIES

Revenue Recognition  Instructor-led Classes

The Company offers a wide
range of instructor-led learning programs to public and private corporations,
service organizations, government agencies and municipalities, as well as to
individual students. The instructor-led learning programs allow the students to
choose from several learning options as described below:

Club memberships  The
club allows the club member to attend as many classes as they choose over a
finite period of time for a fixed price.

Training vouchers 
Training vouchers allow the customer the right to send one attendee per voucher
to a New Horizons class over a period of one year for a fixed price.

Technical certification
programs  The Company offers technical certification programs whereby its
customers can attend the classes necessary to allow them to pass the required
tests to reach a specific certification.

Other  The Company
offers a variety of other training classes to individual students at a fixed
price per class.

The Company recognizes
revenues from these programs on a ratable basis over the duration of the
respective programs based upon the estimated number of classes the students will
attend. The Companys estimates of student attendance have been derived
from historical experience over a period of several years in which the learning
programs have been in place. Where the Company has less than a minimum of two
years of historical experience, revenues are recognized on a straight line basis
over the duration of the programs. The Company adjusts its revenue recognition
rates upon changes in historical experience. Although such adjustments have not
been significant in the past, there can be no assurances they will continue to
be insignificant in the future.

Revenue Recognition  eLearning Training

In 2001 the Company
introduced its eLearning products, Online LIVE and Online ANYTIME. Online LIVE
is synchronous, interactive virtual classrooms featuring
instructor-facilitated classes delivered over the Internet. If a student is not
satisfied with an Online LIVE class, the student has the option of retaking the
Online LIVE classes, led by a different instructor, at no charge, or may choose
to attend an instructor-led class at no charge. Revenue is recognized for Online
LIVE as the classes are delivered. Student retakes from Online LIVE classes have
not been significant.

Online ANYTIME is
asynchronous instruction, identical in content to the classroom instruction, but
self-paced training delivered over the Internet for one year. Revenue is
recognized for Online ANYTIME on a straight-line basis over one year. There is,
as yet, no historical experience for Online ANYTIME to provide a revenue
recognition policy that more closely matches the delivery of the training.

Revenue Recognition  Franchise Fees

A unit franchisee is
charged an initial franchise fee upon execution of the Franchise Agreement which
is not refundable under any circumstances. This fee is recognized upon the
franchisees completion of two weeks of initial franchise training at the
Companys operating headquarters in Anaheim, California. The information,
assistance, and materials provided during this training session represent the
substantial obligations of the Company to the franchisee.

A master franchise fee
provides international franchisees with the right to award subfranchises to
other parties within a particular region. It is payable upon execution of the
Franchise Agreement and is not refundable under any circumstances. This fee is
based upon the expected number of subfranchises to be sold. The master franchise
fee is earned ratably as the subfranchises are sold.

Page 13

Revenue Recognition  Franchise Royalties

The Company receives
monthly continuing royalties from unit franchisees, a percentage of royalties
from master franchisees that they receive from their subfranchisees, and a
course materials and proprietary computer-based training products surcharge.
These royalties are recognized in the month in which the franchisee generates
the related revenue.

Revenue Recognition  Corporate
Education Solutions (CES) Program Fees

The Company facilitates
training within its franchise network for large organizations that have
locations and training needs throughout the world. The Company earns revenue,
derived as a percentage of the training business, as the training is delivered.

The following discussion
should be read in conjunction with the Consolidated Financial Statements and
related notes and SELECTED CONSOLIDATED FINANCIAL DATA included
elsewhere in this report.

GENERAL

The Company operates
computer training centers in the United States and franchises computer training
centers in the United States and abroad. Prior to 1997, the Company also
operated an environmental remediation business. As a result of the completion of
the sale of Handex Environmental, Inc. to ECB, Inc. in December 1996, the
results of operations for the Companys environmental business segment have
been classified as discontinued operations for all periods presented in the
accompanying consolidated financial statements. The Company operates in two
business segments: one operates wholly-owned computer training centers and the
other supplies systems of instruction, sales, and management concepts concerning
computer training and sells courseware to independent franchisees.

Corporate revenues are
defined as revenues from company-owned training centers, initial franchise fees,
and royalties from franchise operations. System-wide revenues are defined as
total revenues from all centers, both company-owned and franchised. System-wide
revenues are used to gauge the growth rate of the entire New Horizons training
network.

Revenues from company-owned
training centers operated by New Horizons consist primarily of training fees. Cost of revenues consists
primarily of instructor costs, rent, utilities, classroom equipment, courseware
costs, and computer hardware, software and peripheral expenses. Included in
selling, general and administrative expenses are personnel costs associated with
technical and facilities support, scheduling, training, accounting and finance,
and sales.

Revenues from franchising
consist primarily of initial franchise fees paid by franchisees for the purchase
of specific franchise territories and franchise rights, training royalty and
advertising fees based on a percentage of gross training revenues realized by
the franchisees, percentage royalty fees received on the sale of courseware,
revenue earned from the sale of third-party courseware to the franchisees
through Nova Vista, a company established for the purpose of product procurement
and sales to the franchisees, and revenue earned from CES program, a program to
service large corporate customers. Cost of revenues consists primarily of costs
associated with courseware procurement and franchise support personnel who
provide system guidelines and advice on daily operating issues including sales,
marketing, instructor training, and general business problems. Included in
selling, general and administrative expenses are technical support, accounting
and finance support, CES support, advertising expenses, and franchise sales
expenses.

RESULTS OF OPERATIONS 2001 VERSUS 2000

Revenues

Revenues for 2001 increased
$17,201 to $159,899 or 12.1% over the $142,698 realized in 2000. The increase in
revenues was attributable to higher revenues from the sale of Microsoft official
curriculum and student learning guides by Nova Vista and the acquisition of the
Indianapolis, Indiana and Atlanta, Georgia franchises in 2001.

Revenues at company-owned
centers increased 6.3% to $118,336 from $111,319 in 2000. The increase was
primarily attributable to the acquisition of the Indianapolis and Atlanta
franchises.

Page 14

In the Companys
franchising segment, royalty fees for 2001 were $22,415, down 5.1% from the 2000
total of $23,609. The decrease was principally due to revenue reduction at
locations open more than one year, resulting primarily from the effect of the downturn in
the domestic economy, the acquisition of the Atlanta and Indianapolis
franchises, and franchise closures in 2001. The reduction was partially offset
by new centers opened in 2001. Franchise fees for 2001 were $1,167, down 46.7%
from the 2000 total of $2,191. At the end of 2001, there were 257 franchise
locations in operation, up 1.2% over the 254 in operation at the end of 2000.
One hundred forty locations operate in the United States and Canada while 117
operate in 44 other countries around the world. Other franchising revenues for
2001 increased $12,402, up 222% from the 2000 total of $5,579. The increase was
due mainly to higher revenues from the sale of Microsoft official curriculum and
student learning guides by Nova Vista.

System-wide revenues, which
are defined as revenues from all centers, both company-owned and franchised,
decreased to $511,814 in 2001, down 3.5% from $530,272 in 2000.

Cost of Revenues

Cost of revenues increased
$19,252 or 29.2% for 2001 compared to 2000. As a percentage of revenues, cost of
revenues increased to 53.2% for 2001 from 46.1% in 2000. The increase in cost of
revenues in absolute dollars was primarily due to the acquisition of the
Indianapolis and Atlanta franchises in 2001 and the significant increase in the
sale of courseware to the franchisees. The increase as a percentage of revenue
resulted from a reduction in revenue in the company-owned centers owned at the
beginning of the year and the increase in the sale of courseware, which is at a
lower gross margin.

New Horizons derives
revenue from the sales of courseware to its franchisees through Nova Vista, its
product procurement company. The revenues earned from this category increased
substantially in 2001 as a result of new products being offered to the
Companys franchises in 2001. The new courseware products in 2001 included
Microsoft Official Curriculum, used in technical training classes, learning
guides, used primarily in applications classes, and Online LIVE and Online
ANYTIME products. These products added approximately $9.7 million in revenue in
2001.

Selling, General and Administrative Expenses

Selling, general and
administrative expenses increased $7,247 or 12.3% for 2001 compared to 2000. As
a percentage of revenues, selling, general and administrative expenses rose to
41.3% for 2001 from 41.2% for 2000. The increase in absolute dollars for
selling, general and administrative expenses was due primarily to the
acquisition of the Indianapolis and Atlanta franchises in 2001. Selling, general
and administrative expense as a percentage of revenues remained relatively the
same.

Interest Income (Expense)

Interest income for 2001
decreased $134 or 26.6% to $369 compared with $503 in 2000. As a percentage of
revenues, interest income decreased to 0.2% for 2001 from 0.4% for 2000.

Interest expense increased
$1,132 to $1,450 for 2001 or 356% compared to $318 in 2000. As a percentage of
revenues, interest expense was 0.9% in 2001 and 0.2% in 2000. The increase in
interest expense in absolute dollars was due to higher outstanding debt in 2001
as compared to 2000.

Income Taxes

The  provision  for income taxes
as a percentage of income before income taxes was 33.8% for 2001 compared to 40.0%
for  2000.  The  decrease  in the  effective  tax  rate  was  due  principally  to the  tax  treatment  of  certain
non-recurring gains recorded in 2001. (See Note 6)

RESULTS OF OPERATIONS 2000 VERSUS 1999

Revenues

Revenues for 2000 increased
$31,222 to $142,698 or 28.0% over the $111,476 realized in 1999. The increase in
revenues was attributable to significant growth in royalties and the inclusion
of the Albuquerque, New Mexico, Charlotte, North Carolina, Sacramento and
Stockton, California, San Antonio, Texas, and Denver, Colorado centers for a
full year in 2000.

Page 15

Revenues at company-owned
centers increased 28.7% to $111,319 from $86,520 in 1999. The increase was
primarily attributable to increased revenues at the New York and Chicago centers
and the acquisition of the Albuquerque, Charlotte, Sacramento, Stockton, San
Antonio, and Denver franchises.

In the Companys
franchising segment, royalty fees for 2000 were $23,609, up 20.9% over the 1999
total of $19,532. The increase was principally due to a 17.8% revenue increase
at locations open more than one year and the addition of 50 franchise locations
during the year. Franchise fees for 2000 were $2,191, down 15.9% from the 1999
total of $2,606. At the end of 2000, there were 254 franchise locations in
operation, up 24.5% over the 204 in operation at the end of 1999. One hundred
thirty eight locations operate in the United States and Canada while 116 operate
in 42 other countries around the world. Other franchising revenues for 2000
increased $2,761, up 98.0% from the 1999 total of $2,818. The increase was due
mainly to higher revenues from the sale of NHIPP and A+ certification products
by Nova Vista.

System-wide revenues, which
are defined as revenues from all centers, both company-owned and franchised,
increased to $530,272 at the end of 2000, up 21.9% from $435,124 in 1999.

Cost of Revenues

Cost of revenues increased
$15,549 or 30.9% for 2000 compared to 1999. As a percentage of revenues, cost of
revenues increased to 46.1% for 2000 from 45.1% in 1999. The increase in cost of
revenues in absolute dollars was primarily due to the inclusion of the
Albuquerque, Charlotte, Sacramento, Stockton, San Antonio, and Denver centers
for a full year. The increase as a percentage of revenue resulted from lower
revenue growth in the company-owned centers.

Selling, General and Administrative Expenses

Selling, general and
administrative expenses increased $12,345 or 26.6% for 2000 compared to 1999. As
a percentage of revenues, selling, general and administrative expenses declined
to 41.2% for 2000 from 41.6% for 1999. The increase in absolute dollars for
selling, general and administrative expenses was due primarily to the inclusion
of the Albuquerque, Charlotte, Sacramento, Stockton, San Antonio, and Denver
centers for a full year in 2000. The decrease in selling, general and
administrative expense as a percentage of revenues was principally due to the
significant growth in revenues and control of the addition of non-revenue
producing employees.

Interest Income (Expense)

Interest income for 2000
decreased $140 or 21.8% to $503 compared with $643 in 1999. As a percentage of
revenues, interest income decreased to 0.4% for 2000 from 0.6% for 1999. The
Company did not earn any tax-free income in 2000 and earned $13 in 1999.

Interest expense decreased
$36 to $318 for 2000 or 10.2% compared to $354 in 1999. As a percentage of
revenues, interest expense was 0.2% in 2000 and 0.3% in 1999. The decrease in
interest expense in absolute dollars was due to lower outstanding debt in 2000
as compared to 1999.

Income Taxes

The provision for income
taxes as a percentage of income before income taxes was 40.0% for 2000 compared
to 36.4% for 1999. The increase in the effective tax rate was due principally to
the decrease of foreign tax credits and state enterprise zone tax credits.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2001,
the Companys current ratio was 1.1 to 1, working capital was $4,315, and
its cash and cash equivalents totaled $6,077. Working capital as of December 31,
2001, reflected an increase of $3,332 from $983 as of December 31, 2000. The
increase was due principally to net income earned for the year and borrowings
on its term loan.

Cash provided by operating
activities was $13,338, a decrease of $14,471 compared to 2000. The decrease was
primarily due to a decrease of $4,515 in net income and the cash flow effect of
the decrease in other current liabilities of $5,148 and income taxes payable of
$4,873.

Page 16

In 2001 cash used by
investing activities increased by $18,695 to $38,496. This was due primarily to
a $13,577 increase in cash paid for companies acquired in 2001 and previously
acquired companies that met certain operating performance targets and an
increase in additions to property, plant and equipment of $5,117.

On April 25, 2001, the
Company executed a credit agreement with a commercial bank group providing a
revolving credit facility of up to $65 million. On January 31, 2002, the Company
and the bank group executed an amendment to the credit agreement that had the
following terms and conditions: (1) $25 million of the outstanding balance was
converted to a term loan with a maturity of January 31, 2004 with principal
payments of $1.25 million in 2002 and $3.5 million in 2003, (2) a revolving line
of credit of up to $5 million limited to 15% of outstanding accounts receivable,
(3) an interest rate equal to the banks prime rate of interest plus 1.5%
until the Company has sustained $4 million in EBITDA for two consecutive
quarters at which time the interest rate will be at the Companys option
between LIBOR plus an applicable margin or the banks prime rate plus an
applicable margin, with the applicable margin, ranging from 2.50% to 3.75% for
LIBOR and 0.75% to 2.125% for the banks prime rate, dependant upon the
leverage ratio of the Company, (4) the mandatory repayment against the term loan
of the proceeds, if any, from the sale of the Santa Ana land, (5) a prohibition
from engaging in any acquisitions unless the acquisition is funded exclusively
with the proceeds of equity or subordinated debt, and (6) a requirement for the
Company to meet various financial covenants, including minimum monthly and
quarterly EBITDA, maximum leverage ratio, minimum fixed charge coverage ratio,
maximum capital expenditures, and maximum earnout payment ratio. The amendment
also waived the December 31, 2001 non-compliance with the fixed charge coverage
ratio. With this new amendment the availability under the credit facility was
$2.9 million as of January 31, 2002. Barring any unanticipated decline in
operating results, the Company expects to remain in compliance with the
covenants of its credit agreement through 2002.

The nature of the
IT and training industry requires substantial cash
commitments for the purchase of computer equipment, software, and training
facilities. During 2001, New Horizons spent approximately $13.8 million on
capital items. Capital expenditures for 2002 are expected to total approximately
$6 million.

On October 2, 1998, the
Company purchased 8.3 acres of undeveloped land in Santa Ana, California for
approximately $5.1 million. At December 31, 2001, the land is in escrow for a
selling price in excess of its carrying value. However, there can be no
assurances that such sale will be consummated.

Management believes that
its current working capital position and cash flows from operations, along with
its credit facility, will be adequate to support its current and anticipated
capital and operating expenditures and its strategies to grow its computer
training business.

IMPACT OF ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial
Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 141, Business Combinations and SFAS No. 142,
Goodwill and Other Intangible Assets. SFAS No. 141 requires that all
business combinations initiated after June 30, 2001 be accounted for using the
purchase method of accounting. SFAS No. 142 addresses financial accounting and
reporting for acquired goodwill and other intangible assets. Goodwill and
intangible assets that have indefinite useful lives will not be amortized into
results of operations, but instead will be tested at least annually for
impairment and written down when impaired. The Company will adopt the provisions
of each statement which apply to goodwill and intangible assets acquired prior
to June 30, 2001 effective January 2002. However, SFAS No. 141 was immediately
applicable to any goodwill and intangible assets the Company acquired after June
30, 2001. Goodwill and intangible assets with indefinite lives will no longer be
amortized but will be tested for impairment annually and also in the event of an
impairment indicator. SFAS No. 142 is effective for fiscal years beginning after
December 15, 2001. The Company adopted SFAS No. 142 as of January 1, 2002 and
has begun to test goodwill for impairment under the new rules, applying a
fair-value-based test. The Company expects that the adoption of SFAS No. 142
will increase operating income through the reduction of amortization expense by
approximately $3.7 million on an annual basis.

SFAS No. 143,
Accounting for Asset Retirement Obligations addresses financial
accounting and reporting for obligations associated with the retirement of
tangible long-lived assets and the associated asset retirement costs. SFAS No.
143 is effective for financial statements issued for fiscal years beginning
after June 15, 2002. The Company believes the adoption of SFAS No. 143 will not
have a material impact on its results of operations or financial position and
will adopt such standards on January 1, 2003, as required.

Page 17

In August 2001, the FASB
issued SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, which supersedes previous guidance on financial
accounting and reporting for the impairment or disposal of long-lived assets and
for segments of a business to be disposed of. Adoption of SFAS No. 144 is
required no later than the beginning of fiscal 2003. Management does not expect
the adoption of SFAS No. 144 to have a significant impact on the Companys
financial position or results of operations. However, future impairment reviews
may result in charges against earnings to write down the value of long-lived
assets.

SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, is
effective for all fiscal years beginning after June 15, 2000. SFAS No. 133, as
amended, establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts and for hedging activities. Under SFAS No. 133, certain contracts that
were not formerly considered derivatives may now meet the definition of a
derivative. The Companys adoption of SFAS No. 133 effective January 1,
2001 did not have a significant impact on the financial position, results of
operations, or cash flows of the Company.

Page 18

#### ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to
market risk related to changes in interest rates. A discussion of the
Companys accounting policies for financial instruments and further
disclosures relating to financial instruments are included in the Notes to
Consolidated Financial Statements. The Company monitors the risks associated
with interest rates and financial instrument positions.

The Companys primary
interest rate risk exposure results from floating rate debt on its bank line of
credit. At December 31, 2001 the Companys bank debt consisted of floating
rate debt. If interest rates were to increase 100 basis points (1.0%) from
December 31, 2001 rates, and assuming no changes in bank debt from the December
31, 2001 levels, the additional annual expense would be approximately $253 on a
pre-tax basis. The Company currently does not hedge its exposure to floating
interest rate risk.

The Companys
risk related to foreign currency exchange rates is not material.

#### ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Pages F-1 to F-20 contain
 the Financial Statements and supplementary data specified for Item 8 of Part II of Form
10-K.

#### ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None

Page 19

Independent Auditors' Report

We
have audited the accompanying consolidated balance sheets of New Horizons
Worldwide, Inc. and subsidiaries (the Company) as of December 31, 2001 and 2000
and the related consolidated statements of income, comprehensive income,
stockholders equity, and cash flows for each of the three years in the
period ended December 31, 2001. These financial statements are the
responsibility of the Companys management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with auditing standards generally accepted in
the United States of America. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In
our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of New Horizons Worldwide, Inc. and
subsidiaries as of December 31, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2001, in conformity with accounting principles generally accepted
in the United States of America.

DELOITTE & TOUCHE LLP

Costa Mesa, California
February 27, 2002

Page F-1

#### CONSOLIDATED BALANCE SHEETS
New Horizons Worldwide, Inc. and Subsidiaries

December 31, 2001 and December 31, 2000(Dollars in thousands, except share data)

`Assets                                                      2001           2000
Current assets:
     Cash and cash equivalents ...................     $   6,077      $   5,515
     Accounts receivable, less allowance
       for doubtful accounts of $829
       in 2001 and $717 in 2000 (Note 2) .........        20,814         21,329
     Inventories .................................         1,517          1,362
     Prepaid expenses ............................         2,178          1,932
     Refundable income taxes .....................         2,057           --
     Deferred income tax assets (Note 7) .........         2,906          2,796
     Other current assets  (Note 8) ..............         1,680            469
         Total current assets ....................        37,229         33,403

Property, plant and equipment, net
  (Note 4) .......................................        20,046         13,094
Land held for disposition (Note 4) ...............         5,099          5,099

Excess of cost over net assets of
  acquired companies, net of accumulated
  amortization of $9,453 in 2001 and
  $5,830 in 2000 (Note 13) .......................        93,626         67,234
Cash surrender value of life insurance ...........         1,131          1,100
Other assets (Note 8) ............................         3,029          2,796

Total Assets .....................................     $ 160,160      $ 122,726
                                                       =========      =========
Liabilities & Stockholders Equity
Current liabilities:
     Notes payable and current portion
       of long-term debt (Note 3) ................     $   1,665      $     103
     Accounts payable ............................         3,277          3,215
      Deferred revenue ...........................         9,895         10,120
     Income taxes payable (Note 7) ...............          --            1,600
     Other current liabilities (Note 9) ..........        18,077         17,382
         Total current liabilities ...............        32,914         32,420

Long-term debt, excluding current portion
  (Note 3) .......................................        24,067           --
Deferred income tax liability (Note 7) ...........         2,195            849
Deferred rent (Note 12) ..........................         1,080            833
Other long-term liabilities ......................          --                3
         Total liabilities .......................        60,256         34,105
Commitments and contingencies (Note 12) ..........          --             --

Stockholders' equity (Note 11):
     Preferred stock without par value,
       2,000,000 shares authorized, no
         shares issued ...........................          --             --
     Common stock, $.01 par value,
       20,000,000 shares authorized;
       issued and outstanding 10,397,257
       shares in 2001 and 10,083,038
       shares in 2000 ............................           104            101
     Additional paid-in capital ..................        46,895         42,069
     Retained earnings ...........................        54,203         47,749
     Treasury stock at cost - 185,000
       shares in 2001 and 2000 ...................        (1,298)        (1,298)
         Total stockholders equity ..............        99,904         88,621

Total Liabilities & Stockholders' Equity .........     $ 160,160      $ 122,726
                                                       =========      =========`

See accompanying notes to consolidated financial statements

Page F-2

#### CONSOLIDATED STATEMENTS OF INCOME

New Horizons Worldwide, Inc. and Subsidiaries

Years ended December 31, 2001, December 31, 2000, and December 31, 1999
(Dollars in thousands, except per share)

`2001        2000        1999
Revenues
     Franchising
         Franchise fees .................      $  1,167    $  2,191    $  2,606
         Royalties ......................        22,415      23,609      19,532
         Courseware sales and other .....        17,981       5,579       2,818
         Total franchising revenues .....        41,563      31,379      24,956

     Company-owned training centers .....       118,336     111,319      86,520
         Total revenues .................       159,899     142,698     111,476

Cost of revenues ........................        85,102      65,850      50,301

Selling, general and administrative expenses     65,999      58,752      46,407

Write-off of management system  (Note 5)           --          --         3,338

Settlement of franchise arbitration  (Note 5)      --          --           303

Operating income ........................         8,798      18,096      11,127

Interest income .........................           369         503         643

Interest expense ........................        (1,450)       (318)       (354)

Non-recurring gains  (Note 6) ...........         2,683        --          --  

Income from continuing operations before
  income taxes ..........................        10,400      18,281      11,416

Provision for income taxes  (Note 7) ....         3,520       7,312       4,153

Income from continuing operations .......         6,880      10,969       7,263

Loss from discontinued operations, net of
  applicable taxes of $285  (Note 6) ....          (426)       --          --  

Net income ..............................      $  6,454    $ 10,969    $  7,263
                                               ========    ========    ========
Basic Earnings Per Share
Income per share from continuing operations    $   0.68        1.12        0.76
Loss per share from discontinued operations       (0.04)       --          --  
Net income per share ....................      $   0.64    $   1.12    $   0.76
                                               ========    =======     ========
Diluted Earnings Per Share
Income per share from continuing operations    $   0.65        1.06        0.72
Loss per share from discontinued operations       (0.04)       --          --  
Net income per share ....................      $   0.61    $   1.06    $   0.72
                                               ========    ========    ========`

See accompanying notes to consolidated financial statements

Page F-3

#### CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

New Horizons Worldwide, Inc. and Subsidiaries

`2001       2000       1999

    Net income ...............................    $ 6,454    $10,969    $ 7,263

    Other comprehensive income:

         Reclassification adjustment for
           gains included in net income ......       --         --          (53)

    Comprehensive income .....................    $ 6,454    $10,969    $ 7,210
                                                  =======    =======    =======`

See accompanying notes to consolidated financial statements

Page F-4

### CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

New Horizons Worldwide, Inc. and Subsidiaries

Years ended December 31, 2001, December 31, 2000, and December 31, 1999
(In thousands)

|                                                                     |        |          |          |          |           | Accumulated |         
|-------------------------------------------------------------------- | ------ | -------- | -------- | -------- | --------- | ----------- | --------
|
|
|
|                                                                    
|Balance at January 1, 1999                                           | 9,558  | $     95 | $ 33,202 | $ 29,517 | $ (1,298) | $      53   | $ 61,569
|Issuance of common stock from exercise of stock options and warrants | 8      |         | 75       |         |          |            | 75      
|Income tax benefit from the exercise of stock options and warrants   |       |         | 18       |         |          |            | 18      
|Issuance of common stock for acquisitions                            | 223    | 2        | 3,665    |         |          |            | 3,667   
|Compensatory  warrant grants                                         |       |         | 138      |         |          |            | 138     
|Other comprehensive income                                           |       |         |         |         |          | (53)        | (53)    
|Net income                                                           |       |         |         | 7,263    |          |            | 7,263   
|                                                                     |        |          |          |          |           |             |         
|Balance at December 31, 1999                                         | 9,789  | 97       | 37,098   | 36,780   | (1,298)   |            | 72,677  
|Issuance of common stock from exercise of stock options              | 149    | 2        | 1,577    |         |          |            | 1,579   
|Income tax benefit from the exercise of stock options                |       |         | 544      |         |          |            | 544     
|Issuance of common stock for acquisitions                            | 145    | 2        | 2,850    |         |          |            | 2,852   
|Net income                                                           |       |         |         | 10,969   |          |            | 10,969  
|                                                                     |        |          |          |          |           |             |         
|Balance at December 31, 2000                                         | 10,083 | 101      | 42,069   | 47,749   | (1,298)   |            | 88,621  
|Issuance of common stock from exercise of stock options              | 8      |         | 94       |         |          |            | 94      
|Income tax benefit from the exercise of stock options                |       |         | 10       |         |          |            | 10      
|Issuance of common stock for acquisitions                            | 306    | 3        | 4,722    |         |          |            | 4,725   
|Net income                                                           |       |         |         | 6,454    |          |            | 6,454   
|                                                                     |        |          |          |          |           |             |         
|Balance at December 31, 2001                                         | 10,397 | $    104 | $ 46,895 | $ 54,203 | $ (1,298) |            | $ 99,904
|                                                                     |        |          |          |          |           |             |         

See accompanying notes to consolidated financial statements

Page F-5

#### CONSOLIDATED STATEMENTS OF CASH FLOWS

New Horizons Worldwide, Inc. and Subsidiaries

Years ended December 31, 2001, December 31, 2000, and December 31, 1999(Dollars in thousands)

`2001        2000        1999
Cash flows from operating activities
  Net income ..............................    $  6,454    $ 10,969    $  7,263
    Adjustments to reconcile net income to net
    cash provided by operating activities:
      Depreciation and amortization ........     11,055       7,711       6,074
      Write-off of management system (Note 5)      --          --         2,860
      Deferred income taxes ................      1,236        (256)       (470)
      Stock-based compensation .............         --        --           138
      Cash provided (used) from the change
        in (net of effects of acquisitions):
         Accounts receivable ...............      2,373        (338)     (1,689)
         Inventories .......................         32        (136)       (113)
         Prepaid expenses and other assets .     (1,633)        691        (921)
         Accounts payable ..................       (514)      1,060        (590)
         Deferred revenue ..................     (2,222)      1,802       1,523
         Other current liabilities .........        (16)      5,132      (1,885)
         Income taxes payable ..............     (3,647)      1,226         582
         Deferred rent .....................        220         (52)        121
              Net cash provided by
                operating activities .......     13,338      27,809      12,893

Cash flows from investing activities
  Purchase of marketable securities ........       --          --          (279)
  Redemption of marketable securities ......       --          --        16,100
  Cash surrender value of life insurance ...        (31)        (30)       (207)
  Additions to property, plant and equipment    (13,814)     (8,697)     (6,748)
  Cash paid for acquired companies, net of
    cash acquired (Note 13) ................    (20,629)       --       (26,034)
  Cash paid for previous acquisitions
    (Note 13) ..............................     (4,022)    (11,074)     (2,336)
      Net cash used by investing activities     (38,496)    (19,801)    (19,504)

Cash flows from financing activities
  Proceeds from issuance of common stock ...         94       1,579          75
  Proceeds from debt obligations ...........     61,734       4,480      12,906
  Principal payments on debt obligations ...    (36,108)    (11,420)    (10,375)
    Net cash provided (used) by financing
      activities ...........................     25,720      (5,361)      2,606

Net increase (decrease) in cash and cash
  equivalents ..............................        562       2,647      (4,005)

Cash and cash equivalents at beginning of
  year .....................................      5,515       2,868       6,873
Cash and cash equivalents at end of  year ..   $  6,077    $  5,515    $  2,868
                                               ========    ========    ========
Supplemental disclosure of cash flow
  information
     Cash was paid for:
         Interest ..........................   $  1,181    $    282    $    339
                                               ========    ========    ========

         Income taxes ......................   $  5,663    $  5,589    $  4,091
                                               ========    ========    ========`

See accompanying notes to consolidated financial statements

Page F-6

#### CONSOLIDATED STATEMENTS OF CASH FLOWS

New Horizons Worldwide, Inc. and Subsidiaries

Years ended December
 31, 2001, December 31, 2000, and December 31, 1999(Dollars in thousands)

Supplemental Disclosure of Non-Cash Transactions

`2001        2000        1999
Non-cash investing and financing activities:

     Income tax benefit from exercise of
       stock options                           $     10    $    544    $     18
                                               ========    ========    ========`

The Company completed
two acquisitions in 2001, none in 2000 and six in 1999 summarized as follows (Note 13):

`2001        2000        1999

     Fair value of assets acquired             $  25,71   $    --      $ 34,076

     Short-term debt and other obligations
       incurred                                    --          --          (921)

     Value of stock issued                       (1,652)       --        (2,983)

     Cash paid, net of cash acquired            (20,629)       --       (26,034)

     Liabilities assumed                       $  3,431    $   --      $  4,138
                                               ========    ========    ========`

During the year
ended December 31, 2001 the Company issued common stock with a value of $3,073 as additional
consideration for previous acquisitions.

Page F-7

### NEW HORIZONS WORLDWIDE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2001, December 31, 2000, and December 31, 1999
(Dollars in thousands, except per share data)

#### 1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

New Horizons  Worldwide,
Inc. (New Horizons or the Company) owns and franchises  computer  training  centers.  The
Companys training centers provide application software and technical certification training to a
wide range of individuals and employer-sponsored individuals from national and
international public and private corporations, service organizations and
government agencies. In addition, the Company also offers courseware for sale to
its franchisees. As of December 31, 2001, the Company and its franchisees
delivered training in 27 company-owned and 257 franchised locations in 46
countries around the world.

Principles of Consolidation

The consolidated financial
statements include the accounts of New Horizons Worldwide, Inc. and its
subsidiaries, all of which are wholly owned. All significant inter-company
balances and transactions have been eliminated in consolidation.

Basis of Presentation

The accompanying
consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America.

Franchise Sales

The terms of a typical
franchise agreement allow for the sale of individual franchises to operators of
computer learning centers for an initial fee. The initial fees are $25, $50 or
$75 depending on the estimated number of personal computers within a given
territory. Operators of existing computer training centers receive a 20%
reduction in the initial fee as a conversion allowance. Additionally,
franchisees are assessed the following fees, among other fees, as defined by the
Franchise Agreement:

|a. | Continuing Monthly Royalty                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | The fee amount
        is equal to the greater of 3% to 6% of gross revenues or certain
        minimums as defined depending on the size of the territory. Amounts commence
        accruing on the effective date of the Franchise Agreement for new operators and
        in the sixth month after the effective date of the franchise agreement for
        operators converting their existing computer learning center to a New Horizons.
|  
|b. | Course Material and Computer-Based Training Products Royalty                                                                                                                                                                                                                                                                                                                                                                                   
|  
|   | The
        fee amount is equal to 9% of gross revenues from course materials and
        proprietary computer-based training products sold to third parties.                                                                                                                                                                                                                                                                                  
|  
|c. | Marketing and Advertising Fee                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   | The fee amount is equal to 1% of gross revenues for franchisees in the United States
and Canada and 0.2% for international franchisees who elect to participate.
Amounts commence accruing on the date the franchise commences operation of the
franchise business.                                                                                                                                                                            

Courseware Sales

New Horizons derives
revenue from the sales of courseware to its franchisees through Nova Vista, its
product procurement company. The revenues earned from this category increased
substantially in 2001 as a result of new products being offered to the
Companys franchisees in 2001. The new courseware products in 2001 included
Microsoft Official Curriculum, used in technical training classes, learning
guides, used primarily in applications classes, and Online LIVE and Online
ANYTIME products. These products added approximately $9.7 million in revenue in
2001.

Page F-8

Revenue Recognition

Instructor-led Classes

The Company offers a wide
range of instructor-led learning programs to public and private corporations,
service organizations, government agencies and municipalities, as well as to
individual students. The instructor-led learning programs allow the students to
choose from several learning options as described below:

Club memberships  The
club allows the club member to attend as many classes as they choose over a
finite period of time for a fixed price.

Training vouchers 
Training vouchers allow the customer the right to send one attendee per voucher
to a New Horizons class over a period of one year for a fixed price.

Technical certification
programs  The Company offers technical certification programs whereby its
customers can attend the classes necessary to allow them to pass the required
tests to reach a specific certification.

Other  The Company
offers a variety of other training classes to individual students at a fixed
price per class.

The Company recognizes
revenues from these programs on a ratable basis over the duration of the
respective programs based upon the estimated number of classes the students will
attend. The Companys estimates of student attendance have been derived
from historical experience over a period of several years in which the learning
programs have been in place. Where the Company has less than a minimum of two
years of historical experience, revenues are recognized on a straight-line basis
over the duration of the programs. The Company adjusts its revenue recognition
rates upon changes in historical experience. Although such adjustments have not
been significant in the past, there can be no assurances they will continue to
be insignificant in the future.

eLearning Training

In 2001 the Company
introduced its eLearning products, Online LIVE and Online ANYTIME. Online LIVE
is synchronous, interactive virtual classrooms featuring
instructor-facilitated classes delivered over the Internet. If a student is not
satisfied with an Online LIVE class, the student has the option of retaking the
Online LIVE classes, led by a different instructor, at no charge, or may choose
to attend an instructor-led class at no charge. Revenue is recognized for Online
LIVE as the classes are delivered. Student retakes from Online LIVE classes have
not been significant.

Online ANYTIME is
asynchronous instruction, identical in content to the classroom instruction, but
self-paced training delivered over the Internet for one year. Revenue is
recognized for Online ANYTIME on a straight-line basis over one year. There is,
as yet, no historical experience for Online ANYTIME to provide a revenue
recognition policy that more closely matches the delivery of the training.

Franchise Fees

A unit franchisee is
charged an initial franchise fee upon execution of the Franchise Agreement which
is not refundable under any circumstances. This fee is recognized upon the
franchisees completion of two weeks of initial franchise training at the
Companys operating headquarters in Anaheim, California. The information,
assistance, and materials provided during this training session represent
substantial obligations of the Company to the franchisee.

A master franchise fee
provides international franchisees with the right to award subfranchises to
other parties within a particular region. It is payable upon execution of the
Franchise Agreement and is not refundable under any circumstances. This fee is
based upon the expected number of subfranchises to be sold. The master franchise
fee is earned ratably as the subfranchises are sold.

Page F-9

Franchise Royalties

The Company receives
monthly continuing royalties from unit franchisees, a percentage of royalties
from master franchisees that they receive from their subfranchisees, and a
course materials and proprietary computer-based training products surcharge.
These royalties are recognized in the month in which the franchisee generates
the related revenue.

Corporate Education Solutions (CES) Program Fees

The Company facilitates
training within its franchise network for large organizations that have
locations and training needs throughout the world. The Company earns revenue,
derived as a percentage of the training business, as the training is delivered.

Inventories

Inventories are stated at
the lower of cost or market. Inventory costs are determined using the first-in,
first-out (FIFO) method.

Property, Plant and Equipment

Property, plant and
equipment are stated at cost. Depreciation is provided over the estimated useful
lives of the respective assets, using the straight-line method as follows:

| | Equipment              | 3 to 5 years                            
| | ---------------------- | ----------------------------------------
| | Furniture and fixtures | 5 to 10 years                           
| | Leasehold improvements | Useful life or term of lease, if shorter

Income Taxes

The Company accounts for
income taxes under the asset and liability method in accordance with Statement of Financial Accounting Standards
(SFAS) No. 109, Accounting for Income Taxes. Under this method, deferred tax
assets and liabilities are recognized for the estimated future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years when those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

When options granted under
the Companys stock option plans are exercised, the Company receives a tax
deduction related to the difference between the market value of its common stock
at the date of exercise and the sum of the exercise price and any compensation
expense recognized for financial reporting purposes. The tax benefit resulting
from this tax deduction is reflected as a decrease in the Companys income
tax liability and an increase to additional paid-in capital.

Intangibles and Other Long-Lived Assets

The excess of cost over net
assets acquired was being amortized on a straight-line basis over periods ranging
from 25 to 40 years. The Company assesses the recoverability of its long-lived
assets whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. The Company has periodically reviewed
the carrying value of long-lived assets on an undiscounted cash flow basis to
determine whether impairment to such value has occurred. Management has
concluded that there was no impairment of its intangibles or other long-lived
assets at December 31, 2001.

Cash and Cash Equivalents

The Company considers all
highly liquid debt instruments with original maturities of three months or less
to be cash equivalents.

Page F-10

Concentration of Credit Risk

The Companys credit
risk on trade receivables is diversified over a wide geographic area and many
customers. Ongoing customer credit evaluations are performed with respect to the
Companys trade receivables and collateral is generally not required to be
provided by the customer.

Earnings Per Share

The Company calculates
earnings per share (EPS) pursuant to SFAS No. 128 Earnings Per
Share. The computation of Basic EPS is based on the weighted average
number of shares outstanding during each year. The computation of Diluted EPS is
based upon the weighted average number of shares outstanding, plus the shares
that would be outstanding assuming the exercise of all outstanding options and
warrants, computed using the treasury stock method. Dilutive options and
warrants are not considered in the calculation of net loss per share.

The weighted average number
of shares outstanding used in determining Basic EPS was 10,106,653 in 2001,
9,778,672 in 2000, and 9,521,621 in 1999. The weighted average number of shares
outstanding used in determining Diluted EPS was 10,508,519 in 2001, 10,327,827
in 2000, and 10,021,991 in 1999. The difference between the shares used for
calculating Basic and Diluted EPS relates to common stock equivalents consisting
of stock options and warrants outstanding during the respective periods.

During 1999, the
Companys Board of Directors approved a five-for-four split of the
Companys common stock. This split was effected on June 8, 1999 for
shareholders of record on May 18, 1999. All per share and share information has
been restated to reflect this stock split.

Stock-Based Compensation

The Company applies
Accounting  Principles Board Opinion 25 and related  interpretations in accounting for employee
stock-based  compensation.  The Company  adopted the pro forma and other  disclosure  requirements of SFAS No. 123,
which requires  presentation  of the pro forma effect of the  fair-value  based method on net income and net income
per share in the financial statement footnotes.  (See Note 11)

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 of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

Fair Value of Financial Instruments

The Companys
consolidated balance sheets include the following financial instruments: trade
accounts receivable, trade accounts payable, notes receivable, and long-term
debt. The Company considers the carrying amounts in the financial statements to
approximate fair value of these financial instruments due to the relatively
short period of time between the origination of the instruments and their
expected realization. The interest rates on notes receivable and long-term debt
approximate current market rates.

Deferred Finance Costs

Deferred finance costs,
which total $876 at December 31, 2001, are included in other assets and are
amortized to interest expense over the life of the respective finance agreement.

Page F-11

New Accounting Pronouncements

In June 2001, the Financial
Accounting Standards Board (FASB) issued SFAS No. 141, Business Combinations and SFAS No. 142,
Goodwill and Other Intangible Assets. SFAS No. 141 requires that all
business combinations initiated after June 30, 2001 be accounted for using the
purchase method of accounting. SFAS No. 142 addresses financial accounting and
reporting for acquired goodwill and other intangible assets. Goodwill and
intangible assets that have indefinite useful lives will not be amortized into
results of operations, but instead will be tested at least annually for
impairment and written down when impaired. The Company will adopt the provisions
of each statement which apply to goodwill and intangible assets acquired prior
to June 30, 2001 effective January 2002. However, SFAS No. 141 was immediately
applicable to any goodwill and intangible assets the Company acquired after June
30, 2001. Goodwill and intangible assets with indefinite lives will no longer be
amortized but will be tested for impairment annually and also in the event of an
impairment indicator. SFAS No. 142 is effective for fiscal years beginning after
December 15, 2001. The Company adopted SFAS No. 142 as of January 1, 2002 and
has begun to test goodwill for impairment under the new rules, applying a
fair-value-based test. The Company expects that the adoption of SFAS No. 142
will increase operating income through the reduction of amortization expense by
approximately $3.7 million on an annual basis.

SFAS No. 143,
Accounting for Asset Retirement Obligations addresses financial
accounting and reporting for obligations associated with the retirement of
tangible long-lived assets and the associated asset retirement costs. SFAS No.
143 is effective for financial statements issued for fiscal years beginning
after June 15, 2002. The Company believes the adoption of SFAS No. 143 will not
have a material impact on its results of operations or financial position and
will adopt such standards on January 1, 2003, as required.

In August 2001, the FASB
issued SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, which supersedes previous guidance on financial
accounting and reporting for the impairment or disposal of long-lived assets and
for segments of a business to be disposed of. Adoption of SFAS No. 144 is
required no later than the beginning of fiscal 2003. Management does not expect
the adoption of SFAS No. 144 to have a significant impact on the Companys
financial position or results of operations. However, future impairment reviews
may result in charges against earnings to write down the value of long-lived
assets.

SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, is
effective for all fiscal years beginning after June 15, 2000. SFAS No. 133, as
amended, establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts and for hedging activities. Under SFAS No. 133, certain contracts that
were not formerly considered derivatives may now meet the definition of a
derivative. The Companys adoption of SFAS No. 133 effective January 1,
2001 did not have a significant impact on the financial position, results of
operations, or cash flows of the Company.

Reclassification

Certain items on the 2000
and 1999 consolidated statements have been reclassified to conform to the 2001
presentation.

Page F-12

#### 2.  ALLOWANCE FOR DOUBTFUL ACCOUNTS

Allowance f
or doubtful accounts includes the following:

`2001        2000        1999

           Balance, beginning of year ......      $ 717       $ 943       $ 927

           Provisions ......................        419         203         169

           Deductions ......................       (307)       (429)       (153)

           Balance, end of year ............      $ 829       $ 717       $ 943
                                                  =====       =====       =====`

#### 3.  LONG-TERM OBLIGATIONS

The Companys debt
and capital lease obligations are as follows:

`2001        2000
     Term loan with bank                                   $ 25,300    $    --

     Note payable to a former franchisee pursuant to a
       franchise acquisition at 7% interest rate, to be
       paid September, 2002                                     407         --

     Amounts due under capital leases with effective
       interest rates ranging from 8.5% to 14.6% per
       annum (Note 12)                                           25         103
                                                             25,732         103

     Less: Current portion of notes payable and long-term
       debt                                                  (1,665)       (103)

                                                           $ 24,067    $    --
                                                           ========    ========`

On April 25, 2001, the
Company executed a credit agreement with a commercial bank group providing a
revolving credit facility of up to $65 million. On January 31, 2002, the Company
and the bank group executed an amendment to the credit agreement that had the
following terms and conditions: (1) $25 million of the outstanding balance was
converted to a term loan with a maturity of January 31, 2004 with principal
payments of $1.25 million in 2002 and $3.5 million in 2003, (2) a revolving line
of credit of up to $5 million limited to 15% of outstanding accounts receivable,
(3) an interest rate equal to the banks prime rate of interest plus 1.5%
until the Company has sustained $4 million in EBITDA for two consecutive
quarters at which time the interest rate will be at the Companys option
between LIBOR plus an applicable margin or the banks prime rate plus an
applicable margin, with the applicable margin, ranging from 2.50% to 3.75% for
LIBOR and 0.75% to 2.125% for the banks prime rate, dependant upon the
leverage ratio of the Company, (4) the mandatory repayment against the term loan
of the proceeds, if any, from the sale of the Santa Ana land, (5) a prohibition
from engaging in any acquisitions unless the acquisition is funded exclusively
with the proceeds of equity or subordinated debt, and (6) a requirement for the
Company to meet various financial covenants, including minimum monthly and
quarterly EBITDA, maximum leverage ratio, minimum fixed charge coverage ratio,
maximum capital expenditures, and maximum earnout payment ratio. The amendment
also waived the December 31, 2001 non-compliance with the fixed charge coverage
ratio. The Company was in compliance with all other debt covenants as of
December 31, 2001. With this new amendment the availability under the credit
facility was $2.9 million as of January 31, 2002.

The following is a summary
of future payments required under the above obligations:

| | 2002      | $   1,665 | 
| | --------- | --------- | 
| | 2003      | 3,505     | 
| | 2004      | 20,562    | 
| | $  25,732 |          
| |           |          

Page F-13

#### 4.  PROPERTY, PLANT AND EQUIPMENT

The components
of property, plant and equipment are summarized below:

`2001        2000

         Leasehold improvements ........................   $  5,362    $  2,857
         Equipment and software ........................     32,222      21,953
         Furniture and fixtures ........................      7,312       4,914
         Construction-in-progress ......................       --         3,474
                                                             44,896      33,198
         Less accumulated depreciation and amortization     (24,850)    (20,104)
                                                           $ 20,046    $ 13,094
                                                           ========    ========`

Included in the
Companys property, plant and equipment are equipment and leasehold
improvements under capital leases amounting to $9 (2001) and $125 (2000), net of
accumulated depreciation of $5,426 (2001) and $4,850 (2000).

Land held for disposition

On October 2, 1998, the
Company purchased 8.3 acres of undeveloped land in Santa Ana, California for
approximately $5.1 million. The Company had intended to construct a building on
the land that would serve as the world headquarters. Instead, the Company has
relocated its world headquarters and the Santa Ana training facility to Anaheim,
California in 2001. At December 31, 2001, the land is in escrow for a selling
price in excess of its carrying value. However, there can be no assurances that
such sale will be consummated.

#### 5.  WRITE-OFF OF MANAGEMENT SYSTEM AND SETTLEMENT OF FRANCHISE ARBITRATION

In the fourth quarter of
1999, the Company decided to discontinue the development of its proprietary
training center management system and, accordingly, recorded a charge of $3,338
comprised primarily of capitalized development costs.

During the year ended
December 31, 1999, the Company settled a dispute with a previously terminated
master franchisee resulting in a charge of $303, which is included in the
accompanying statements of income.

#### 6.  NON-RECURRING GAINS (LOSSES)

In December 1996, the
Company sold its environmental remediation business segment and received, as
partial consideration for such business, an interest in a joint venture in the
form of a right to a portion of the proceeds from a future sale of such venture.
In July 2001, the Company recorded a gain of $1,203, representing its portion of
the proceeds from the subsequent sale of the joint venture.

For the year ended December
31, 2001, the Company recorded a non-recurring gain of $1,480 resulting from the
net increase in the carrying value of certain assets received as consideration
from the sale of its environmental remediation business in 1996. Such increase
was realized substantially in the form of cash received in November 2001.

The Company recorded a net
loss from discontinued operations to increase its estimated costs to resolve
certain environmental liabilities retained from the sale of its environmental
remediation business in 1996. The aggregate liability of $1,055 is included in
other liabilities at December 31, 2001.

Page F-14

#### 7.  INCOME TAXES

Income tax expense for the
periods below differs from the amounts computed by applying the United States
federal income tax rate of 35% to the pretax income as a result of the
following:

`2001        2000        1999

Computed "expected" tax expense ............   $ 3,640     $ 6,398     $ 3,996
Amortization of excess of cost over net
     assets acquired .......................       147          72          63
State and local tax expense, net of federal
income tax effect ..........................       577       1,016         494
Interest income from tax-free investments ..      --          --           (48)
Discontinued operations ....................      (841)       --          --
Other ......................................        (3)       (174)       (352)
Income tax expense .........................   $ 3,520     $ 7,312     $ 4,153
                                               =======     =======     =======
Effective rates ............................     33.8%       40.0%       36.4%

Income tax expense consists of:
     Federal:
       Current .............................   $   693     $ 5,388     $ 3,258
       Deferred ............................     1,215        (256)       (389)
     State and local:
       Current .............................       439       1,563         783
       Deferred ............................       449        --           (81)
     Foreign ...............................       724         617         582
Income Tax Expense .........................   $ 3,520     $ 7,312     $ 4,153
                                               =======     =======     =======`

The tax effects of
temporary differences that give rise to significant portions of the deferred tax
assets and liabilities at December 31, 2001 and 2000, are presented below:

`2001         2000
   Deferred tax assets:
        Accounts receivable, principally due to
          allowance for doubtful accounts ............      $  709       $  897
        Reserve for uninsured losses and litigation ..         422          280
        Accrued expenses .............................         865        1,383
        Property, plant and equipment, principally due
          to differences in depreciation .............       1,095        1,292
        Foreign Tax Credit carryforward ..............         744         --
        Deferred revenue .............................         387          359
        Other ........................................         166           65
                                                             4,388        4,276
   Deferred tax liabilities:
        Excess of cost over net assets of acquired
         companies ...................................       3,457        2,206
        Other ........................................         220          123
                                                             3,677        2,329

   Net deferred income taxes .........................      $  711       $1,947
                                                            ======       ======`

Page F-15

#### 8.  OTHER ASSETS

Other assets consist of:

`2001          2000

Notes receivable from officers .....................      $ 1,470       $ 1,385
Notes receivable from ECB, Inc. ....................          758         2,933
Bank credit agreement costs ........................          689          --
Notes receivable from franchisees ..................          654          --
Other ..............................................        1,138         1,907
Valuation reserves .................................         --          (2,960)
                                                            4,709         3,265

Less: Current portion of notes receivables .........       (1,680)         (469)

                                                          $ 3,029       $ 2,796
                                                          =======       =======`

Included in other assets
are long-term notes receivable from officers of the Company in the aggregate
amount of $1,470. The notes receivable are demand notes, $860 of which is
collateralized by the proceeds from certain life insurance policies and bear
interest at 7.3%. The remaining $610 relates primarily to non-interest bearing
loans in connection with officers relocation expenses. The Company does
not intend to demand repayment of these notes during fiscal 2002.

The Company entered into a
credit agreement with Bank of America on April 25, 2001. Costs incurred in
entering into the agreement are being amortized over 36 months, the life of the
agreement.

#### 9.  OTHER CURRENT LIABILITIES

Other current liabilities consist of:

`2001          2000

Accounts payable to franchisees ......................    $ 5,921       $ 5,446
Salaries, wages and commissions payable ..............      4,006         4,356
Royalties and fees payable to courseware partners ....      3,231           --
Payable to former franchisees pursuant to franchise
     acquisitions ....................................       --           3,975
Accrued operating expenses and other liabilities .....      4,919         3,605
                                                          $18,077       $17,382
                                                          =======       =======`

#### 10.  EMPLOYEE SAVINGS PLAN

The Company has a 401(k)
Profit Sharing Trust and Plan in which employees not currently covered by a
collective bargaining agreement are eligible to participate. None of the
Companys employees is currently covered by a collective bargaining
agreement. The plan was established in 1995 and through December 31, 1998, was
non-contributory. Effective January 1, 1999, the Board of Directors elected to
match 25% of the employees contributions. The Company contributed $576 and
$526 for 2001 and 2000, respectively. In October 2001, the Board of Directors
elected to suspend the match effective January 1, 2002.

#### 11.  STOCK OPTION PLAN

The Company maintains a Key
Employees Stock Option Plan and an Omnibus Equity Plan which provide for the
issuance of non-qualified options, incentive stock options, and stock
appreciation rights. The Key Employee Stock Option Plan, which expired in 1999,
had provided for the granting of options to purchase up to 1,500,000 shares of
common stock and the current Omnibus Equity Plan provides for the granting of
options to purchase up to 1,250,000 shares of common stock. Incentive stock
options are exercisable for up to ten years, at an option price of not less than
the fair market value on the date the option is granted or at a price of not
less than 110% of the fair market price in the case of an option granted to an
individual who, at the time of grant, owns more than 10% of the Companys
common stock. Non-qualified stock options may be issued at such exercise price
and on such other terms and conditions as the Compensation Committee of the
Board of Directors may determine. Optionees may also be granted stock
appreciation rights under which they may, in lieu of exercising an option, elect
to receive cash or common stock, or a combination thereof, equal to the excess
of the fair market value of the common stock over the option price. All options
were granted at fair market value at dates of grant.

Page F-16

Directors of the Company
who are not employees currently hold options to acquire a total of 310,000
shares pursuant to option plans and agreements, including 60,000 awarded in 2000
under the Companys Omnibus Equity Plan. The exercise price under all of
such options was the fair market value as of the date of grant.

Changes in shares, under
all current and former plans and other arrangements, for 2001, 2000 and 1999 are
summarized as follows:

| | 2001 | 2000 | 1999
| | ---- | ---- | ----

|                                                               | Shares    | Weighted Average  Price | Shares    | Weighted Average  Price | Shares    | Weighted Average  Price
|-------------------------------------------------------------- | --------- | ----------------------- | --------- | ----------------------- | --------- | -----------------------
|
|Outstanding, beginning of year                                 | 1,378,874 | $ 10.39                 | 1,278,249 | $  9.97                 | 1,102,878 | $  8.75                
|Granted                                                        | 276,250   | 13.79                   | 277,750   | 12.41                   | 273,808   | 15.81                  
|Exercised                                                      | (7,875)   | 11.97                   | (149,000) | 10.14                   | (7,812)   | 10.06                  
|Canceled                                                       | (29,875)  | 13.91                   | (28,125)  | 11.43                   | (90,625)  | 12.87                  
|                                                               |           |                         |           |                         |           |                        
|Outstanding, end of year                                       | 1,617,374 | 10.90                   | 1,378,874 | 10.39                   | 1,278,249 | 9.97                   
|
|Options exercisable, end of year                               | 1,073,724 | $ 9.61                  | 900,974   | $ 8.88                  | 876,125   | $ 8.22                 
|
|Weighted average fair value of options granted during the year | $ 7.65    |                         | $ 6.51    |                         | $ 6.58    |                        
|

Outstanding stock
 options at December 31, 2001 consist of the following:

| | Options Outstanding | Options Exercisable
| | ------------------- | -------------------

|Range of Exercise Prices | Shares    | Weighted Average Remaining Life | Weighted Average Price | Shares    | Weighted Average Price
|------------------------ | --------- | ------------------------------- | ---------------------- | --------- | ----------------------
|
|                         | (Years)   |                                
|$ 5.20 - $ 9.28          | 581,250   | 2.2                             | $ 6.44                 | 572,500   | $ 6.40                
|10.22 -  15.90           | 881,624   | 3.5                             | 12.74                  | 435,324   | 12.69                 
|16.90 -  23.19           | 154,500   | 3.3                             | 17.16                  | 65,900    | 17.09                 
|
|$ 5.20 - $23.19          | 1,617,374 | 3.0                             | $10.90                 | 1,073,724 | $ 9.61                
|

The fair value of each
option grant was  estimated as of the grant date using the  Black-Scholes  option-pricing
model  assuming a risk-free  interest  rate of 4.0%,  volatility  of 55%,  and zero  dividend  yield for 2001; a
risk-free  interest rate of 6.6%,  volatility of 74%, and zero dividend yield for 2000; and a risk-free interest
rate of 6.1%,  volatility of 27% and zero  dividend  yield for 1999,  with  expected  lives of six years for all
periods.  The Company applies Accounting  Principles Board Opinion 25 and related  interpretations in accounting
for its plans.  If  compensation  expense was determined  based on the fair value method under the provisions of
SFAS No.  123,  the  Companys  net income and net  income  per share  would have been  reduced to the pro forma
amounts indicated below:

Page F-17

`2001           2000         1999

Net income                   As reported     $  6,454     $  10,969     $  7,263
                             Pro forma          5,263        10,194        6,803

Basic earnings per share     As reported     $   0.64     $    1.12     $   0.76
                             Pro forma           0.52          1.04         0.71

Diluted earnings per share   As reported     $   0.61     $    1.06     $   0.72
                             Pro forma           0.50          0.99         0.68`

As of December
31, 2001, there were 573,942 shares of common stock under the Omnibus Equity Plan that were
available for future grant.

#### 12.  COMMITMENTS AND CONTINGENCIES

Leases

The Company leases its
offices, training facilities and certain equipment under operating lease
obligations. Operating leases expire on various dates through 2014. The Company
recognizes rent expense on a straight-line basis and records deferred rent based
on the difference between cash paid and straight-line expense. Rent expense was
$9,421, $7,342 and $5,457, for 2001, 2000, and 1999 respectively.

Under the terms
of the leases, future minimum commitments at December 31, 2001 are as follows:

`Operating Leases
                   2002                                    $          10,653
                   2003                                               10,517
                   2004                                                9,962
                   2005                                                8,839
                   2006                                                8,172
                   2007 & after                                       29,524
              Total future minimum lease payments          $          77,667
                                                           =================`

Purchase Commitment

The Company has entered
into a contract with a provider to purchase $13,000 in courseware through June
30, 2004. That contract specifies minimum purchases of $4,500, $5,500, and
$3,000 in 2002, 2003, and 2004, respectively.

Litigation

The Company has accrued
$1,055 related to residual environmental liabilities retained from the sale of
its environmental remediation business in 1996 (Note 6).

The Company is also
involved in various other claims and legal actions arising in the ordinary
course of business. In the opinion of management, the ultimate disposition of
these matters will not have a material adverse effect on the Companys
consolidated financial position or results of operations.

#### 13.  ACQUISTIONS

A.  Indianapolis, Indiana franchise

On January 31, 2001, the
Company purchased its franchise in Indianapolis, Indiana. The consideration paid
included $4,926 in cash, net of cash acquired. The selling shareholders will
receive additional cash consideration if certain operating performance targets
are achieved. The acquisition has been recorded using the purchase method of
accounting and the operating results have been included in the Companys
financial statements from the date of acquisition. The acquisition resulted in
goodwill of $5,033 which was being amortized over 25 years.

Page F-18

B.  Atlanta, Georgia franchise

On April 2, 2001, the
Company purchased the assets of its franchise in Atlanta, Georgia. The
consideration paid included $15,703 in cash, net of cash acquired, and 113,984
shares of the Companys common stock valued at $1,652 based on the average
price of the Companys common stock for a reasonable period of time before
the terms of the transaction were finalized. The selling shareholders will
receive additional consideration, in cash and stock, if certain operating
performance targets are achieved. The acquisition has been recorded using the
purchase method of accounting and the operating results have been included in
the Companys financial statements from the date of acquisition. The
acquisition resulted in goodwill of $18,005, which was being amortized over 25
years.

C.   Additional consideration for previous acquisitions

During the twelve months
ended December 31, 2001, the Company provided additional consideration for
previous acquisitions consisting of $4,651 in cash and 132,501 in shares of the
Companys stock valued at $2,074 due to the previously acquired centers
meeting certain operating performance targets.

If the results from the
acquired locations had been included in the results of operations at the
beginning of each period presented below, the Companys unaudited revenue, net
income, and earnings per share would have approximated the following:

`Twelve Months Ended     Twelve Months Ended
                                      December 31, 2001        December 31, 2000

       Revenue                           $  163,992            $    162,321

       Net Income                        $    6,852            $     12,647

       Basic Earnings Per Share          $     0.67            $       1.28

       Diluted Earnings Per Share        $     0.64            $       1.21`

#### 14.  QUARTERLY FINANCIAL DATA (UNAUDITED)

Summarized quarterly
financial data for continuing operations for 2001 and 2000 is as follows:

`First       Second     Third         Fourth
                                 Quarter     Quarter    Quarter       Quarter
Year ended December 31, 2001
Revenues                        $ 41,132    $ 44,721   $ 39,028      $ 35,018
Operating income                   4,686       3,792      1,486       (1,166)
Net income                         2,811       2,106      1,841         (304)
Basic earnings per share            0.28        0.21       0.18        (0.03)
Diluted earnings per share          0.27        0.20       0.17        (0.03)

                                  First       Second     Third         Fourth
                                 Quarter     Quarter    Quarter       Quarter
Year ended December 31, 2000
Revenues                        $ 34,025    $ 36,649   $ 35,970      $ 36,054
Operating income                   4,546       5,265      4,533         3,752
Net income                         2,704       3,169      2,752         2,344
Basic earnings per share            0.28        0.33       0.28          0.24
Diluted earnings per share          0.27        0.31       0.26          0.23`

Page F-19

#### 15.  SEGMENT REPORTING

The Company operates in two
business segments  company-owned training centers and franchising
operations. The company-owned training centers segment operates wholly-owned
computer training centers in the United States and derives its revenues from the
operating revenues of those centers. The franchising segment franchises computer
training centers domestically and internationally and supplies systems of
instruction and sales and management concepts concerning computer training to
independent franchisees. The franchising segment revenues are from the initial
franchise fees and royalties from the franchise operations and other revenue,
primarily related to product sales through Nova Vista. The two segments are
managed separately because of the differences in the source of revenues and the
services offered. Information on the Companys segments is as follows:

|                                                                  | Company-owned Centers | Franchising | Executive Office | Discontinued Operations | Consolidated
|----------------------------------------------------------------- | --------------------- | ----------- | ---------------- | ----------------------- | ------------
|
|For the year ended December 31, 2001                              |                      
|Revenues from external customers                                  | $ 118,336             | $  41,563   | $       --       | $       --              | $ 159,899   
|Non-recurring gains                                               | --                    | --          | 2,683            | --                      | 2,683       
|Interest income                                                   | 72                    | 297         | --               | --                      | 369         
|Interest expense                                                  | (1,450)               | --          | --               | --                      | (1,450)     
|Depreciation and amortization expense                             | 8,883                 | 2,172       | --               | --                      | 11,055      
|Income tax expense                                                | (26)                  | 3,546       | --               | --                      | 3,520       
|Net income from continuing operations                             | (2,196)               | 9,076       | --               | --                      | 6,880       
|Loss from discontinued operations, net of applicable income taxes | --                    | --          | --               | (426)                   | (426)       
|Net deferred tax asset                                            | (945)                 | 1,656       | --               | --                      | 711         
|Total assets                                                      | 124,963               | 29,014      | 6,183            | --                      | 160,160     
|Additions to property, plant & equipment                          | 7,642                 | 6,172       | --               | --                      | 13,814      
|                                                                 
|For the year ended December 31, 2000                              |                      
|Revenues from external customers                                  | $ 111,319             | $  31,379   | $       --       | $       --              | $ 142,698   
|Interest income                                                   | 314                   | 189         | --               | --                      | 503         
|Interest expense                                                  | (259)                 | (59)        | --               | --                      | (318)       
|Depreciation and amortization expense                             | 6,879                 | 832         | --               | --                      | 7,711       
|Income tax expense                                                | 2,798                 | 4,514       | --               | --                      | 7,312       
|Net income                                                        | 4,124                 | 6,845       | --               | --                      | 10,969      
|Net deferred tax asset                                            | 900                   | 1,047       | --               | --                      | 1,947       
|Total assets                                                      | 96,554                | 21,268      | 4,904            | --                      | 122,726     
|Additions to property, plant & equipment                          | 4,798                 | 3,899       | --               | --                      | 8,697       
|                                                                 
|For the year ended December 31, 1999                              |                      
|Revenues from external customers                                  | $ 86,520              | $  24,956   | $       --       | $       --              | $ 111,476   
|Interest income                                                   | 453                   | 190         | --               | --                      | 643         
|Interest expense                                                  | (331)                 | (23)        | --               | --                      | (354)       
|Depreciation and amortization expense                             | 5,183                 | 891         | --               | --                      | 6,074       
|Write-off of management system                                    | --                    | 3,338       | --               | --                      | 3,338       
|Income tax expense                                                | 2,853                 | 1,300       | --               | --                      | 4,153       
|Net income                                                        | 5,027                 | 2,236       | --               | --                      | 7,263       
|Net deferred tax asset                                            | (80)                  | 1,771       | --               | --                      | 1,691       
|Total assets                                                      | 85,537                | 16,294      | 3,253            | --                      | 105,084     
|Additions to property, plant & equipment                          | 4,840                 | 1,922       | (14)             | --                      | 6,748       

Page F-20

### PART III

#### ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS

The  information
required by this Item 10 as to the Directors of the Company is  incorporated  herein by reference
to the  information  set forth  under the  caption  Election  of  Directors  in the  Companys  definitive  Proxy
Statement for the Annual  Meeting of  Stockholders  to be held on May 7, 2002,  since such Proxy  Statement will be
filed with the  Securities and Exchange  Commission  not later than 120 days after the end of the Companys  fiscal
year pursuant to Regulation 14A.

EXECUTIVE OFFICERS OF THE REGISTRANT*

The following is
a list of the  executive  officers of the Company.  The  executive  officers are elected each year
and serve at the pleasure of the Board of Directors.

`NAME                        AGE   POSITION

     Curtis Lee Smith, Jr.       74    Chairman of the Board

     Thomas J. Bresnan           49    President and Chief Executive Officer

     Stuart O. Smith             69    Vice Chairman of the Board and Secretary

     Martin G. Bean (1)          37    Chief Operating Officer (1)

     Robert S. McMillan          50    Vice President, Treasurer and Chief
     Financial                                       Officer

     Kenneth M. Hagerstrom (2)   44    President - Company-owned Center Division
                                         Executive Vice President - New Horizons
                                          Computer Learning Centers, Inc.`

* The description of
executive officers called for in this Item is included pursuant to Instruction 3
to Section (b) of Item 401 of Regulation S-K.

(1) Martin Bean
joined New Horizons as Chief Operating Officer effective January 7, 2002.(2) Kenneth Hagerstrom resigned effective January 7, 2002.

Set forth below is a brief
description of the background of those executive officers of the Company who are
not Directors of the Company. Information with respect to the background of
those executive officers who are also Directors of the Company is incorporated
herein by reference as set forth under the caption Election of
Directors in the Companys definitive Proxy Statement for the Annual
Meeting of Stockholders to be held on May 7, 2002.

ROBERT S. MCMILLAN was
named Vice President,  Treasurer and Chief Financial  Officer of the Company in August 1997.
He served as Chief Financial Officer of New Horizons Computer Learning Centers,  Inc.  beginning in 1995 and became
a Senior Vice  President in January  1997.  From 1992 to 1995,  Mr.  McMillan was Chief  Financial  Officer of ZNYX
Corporation,  Fremont California.  From 1990 to 1992, he was Chairman,  Chief Executive Officer and Chief Financial
Officer of Omnivar, in Burbank, California.

KENNETH HAGERSTROM was
named President of the Company-owned Center Division of New Horizons in November
1997. Additionally, in October 1999 he was named Executive Vice President of New
Horizons Computer Learning Centers, Inc. From June 1997 until November 1997 Mr.
Hagerstrom was the Director of Field Support for New Horizons Computer Learning
Centers, Inc. From October 1995 to June 1997 he was General Manager of the
Company-owned center in New York, NY. He originally joined New Horizons network
in 1994 at the Boston, MA franchise as an Account Executive and was promoted in
1995 to Sales Manager. Before then, from 1982 to 1994, Mr. Hagerstrom was
President of KMS Enterprises of Boston, MA.

Page 20

#### ITEM 11.  EXECUTIVE COMPENSATION

The information required by
this Item 11 is incorporated by reference to the information set forth under the
caption Compensation of Directors and Executive Officers in the
Companys definitive Proxy Statement for the Annual Meeting of Stockholders
to be held on May 7, 2002, since such Proxy Statement will be filed with the
Securities and Exchange Commission not later than 120 days after the end of the
Companys fiscal year pursuant to Regulation 14A.

#### ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by
this Item 12 is incorporated by reference to the information set forth under the
caption Share Ownership of Principal Holders and Management in the
Companys definitive Proxy Statement for the Annual Meeting of Stockholders
to be held on May 7, 2002, since such Proxy Statement will be filed with the
Securities and Exchange Commission not later than 120 days after the end of the
Companys fiscal year pursuant to Regulation 14A.

#### ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by
this Item 13 is incorporated by reference to the information set forth under the
caption Certain Transactions in the Companys definitive Proxy
Statement for the Annual Meeting of Stockholders to be held on May 7, 2002,
since such Proxy Statement will be filed with the Securities and Exchange
Commission not later than 120 days after the end of the Companys fiscal
year pursuant to Regulation 14A.

Page 21

### PART IV

#### ITEM 14.  EXHIBITS AND REPORTS ON FORM 8-K

|(a) (1) | Financial Statements                                                                                                                   
|------- | ---------------------------------------------------------------------------------------------------------------------------------------
|       
|        | The
        following Consolidated Financial Statements of the Registrant and its
        subsidiaries are included in Part II, Item 8:

|        |                                                                                                                                                                                                                                                          | Page        | 
|------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------- | 
|       
|        | Reports  of Independent Auditors                                                                                                                                                                                                                         | F-1         | 
|        | Consolidated Balance Sheets                                                                                                                                                                                                                              | F-2         | 
|        | Consolidated Statements of Earnings                                                                                                                                                                                                                      | F-3         | 
|        | Consolidated Statements of Comprehensive Income                                                                                                                                                                                                          | F-4         | 
|        | Consolidated Statements of Stockholders Equity                                                                                                                                                                                                          | F-5         | 
|        | Consolidated Statements of Cash Flows                                                                                                                                                                                                                    | F-6 to F-7  | 
|        | Notes to Consolidated Financial Statements                                                                                                                                                                                                               | F-8 to F-20 | 
|       
|(a) (2) | All other schedules for which provision is made in the applicable accounting
        regulation of the Securities and Exchange Commission are not required under the
        related instructions or are inapplicable and, therefore, have been omitted.
|       
|(a) (3) | Exhibits                                                                                                                                                                                                                                                
|       
|        | Reference is made to the Exhibit Index at sequential page 24 hereof.                                                                                                                                                                                    
|       
|(b)     | Reports on Form 8-K                                                                                                                                                                                                                                     
|       
|        | No reports on Form 8-K were filed by the Registrant
         during the quarter ending December 31, 2001.                                                                                                                                               

Page 22

SIGNATURES

Pursuant to the
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
Registrant has caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized at Anaheim, California this 27th day of March, 2002.

NEW HORIZONS WORLDWIDE, INC.

By: /s/Curtis Lee Smith, Jr.
Curtis Lee Smith, Jr., Chairman

Pursuant to the
requirements of the Securities Exchange Act of 1934, this Report has been signed
below by the following persons on behalf of the Registrant and in the capacities
and on the dates indicated:

`Signature                      Title                                  Date

/s/Curtis Lee Smith, Jr.       Chairman,                       )
Curtis Lee Smith, Jr.          (Principal Executive Officer)   )
                                                               )
                                                               )
                                                               )
/s/Robert S. McMillan          Vice President, Treasurer and   )
Robert S. McMillan             Chief Financial Officer         )
                               (Principal Financial and        )
                                Accounting Officer)            )
                                                               )
                                                               )
/s/Stuart O. Smith             Director                        )
Stuart O. Smith                                                )  March 27, 2002
                                                               )
                                                               )
/s/Thomas J. Bresnan           Director                        )
Thomas J. Bresnan                                              )
                                                               )
                                                               )
/s/David A. Goldfinger         Director                        )
David A. Goldfinger                                            )
                                                               )
                                                               )
/s/Richard L. Osborne          Director                        )
Richard L. Osborne                                             )
                                                               )
                                                               )
/s/Scott R. Wilson             Director                        )
Scott R. Wilson                                                )
                                                               )
                                                               )
/s/William H. Heller           Director                        )
William H. Heller                                              )
                                                               )
                                                               )
/s/Martin G. Bean              Director                        )
Martin G. Bean                                                 )
                                                               )
                                                               )`

Page 23

### EXHIBIT INDEX

|Exhibit Number | Exhibit Description                                                                                                                                            
|-------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|              
|3.1            | Restated Certificate of Incorporation of the Registrant(12)                                                                                                    
|              
|3.2            | Amended and Restated By-laws of the Registrant(12)                                                                                                             
|              
|4.1            | Specimen Certificate for Share of Common Stock, $.01 par value, of the Registrant(6)                                                                           
|              
|4.2            | Credit Agreement between the Registrant and Bank of America, N. A., as Agent(12)                                                                               
|              
|4.3            | Amendment No. 1, dated December 20, 2001, to the Credit Agreement between the Registrant and Bank of America, N.A., as Agent *                                 
|              
|4.4            | Amendment No. 2, dated January 31, 2002, to the Credit Agreement between the Registrant and Bank of America, N.A., as Agent *                                  
|              
|10.1          | Omnibus Equity Plan of the Registrant(2)                                                                                                                       
|              
|10.2          | Standard form of Stock Option Agreement executed by recipients of options under Omnibus Equity Plan(9)                                                         
|              
|10.3          | Key Employees Stock Option Plan of the Registrant(1)                                                                                                           
|              
|10.4          | Amendment No. 1 to the Key Employees Stock Option Plan of the Registrant(6)                                                                                    
|              
|10.5          | Stock Option Agreement dated August 6, 1992, between the Registrant and Thomas J. Bresnan(6)                                                                   
|              
|10.6          | Stock Option Agreement dated January 22, 1998, between the Registrant and Kenneth Hagerstrom based on performance criteria(5)                                  
|              
|10.7          | Stock Option Agreement dated January 22, 1998, between the Registrant and Robert S. McMillan based on performance criteria(5)                                  
|              
|10.8          | Outside Directors Stock Option Plan of the Registrant(1)                                                                                                       
|              
|10.9          | Amendment No. 1 to the Outside Directors Stock Option Plan of the Registrant(6)                                                                                
|              
|10.10         | 1997 Outside Directors Elective Stock Option Plan of the Registrant(2)                                                                                         
|              
|10.11         | Form of Option Agreement executed by recipients of options under 1997 Outside Directors Elective Stock Option Plan(2)                                          
|              
|10.12         | Stock Option Agreement dated September 19, 1996, between the Registrant and David A. Goldfinger(2)                                                             
|              
|10.13         | Stock Option Agreement dated September 19, 1996, between the Registrant and William Heller(2)                                                                  
|              
|10.14         | Stock Option Agreement dated September 19, 1996, between the Registrant and Richard L. Osborne(2)                                                              
|              
|10.15         | Stock Option Agreement dated September 19, 1996, between the Registrant and Scott R. Wilson(2)                                                                 
|              
|10.16         | Stock Option Agreement dated December 15, 2000, between the Registrant and David A. Goldfinger(11)                                                             
|              
|10.17         | Stock Option Agreement dated December 15, 2000, between the Registrant and William Heller(11)                                                                  
|              
|10.18         | Stock Option Agreement dated December 15, 2000, between the Registrant and Richard L. Osborne(11)                                                              
|              
|10.19         | Stock Option Agreement dated December 15, 2000, between the Registrant and Scott R. Wilson(11)                                                                 
|              
|10.20         | Form of Indemnity Agreement with Directors and Officers of the Registrant(6)                                                                                   
|              
|10.21         | New Horizons Worldwide 401(k) Profit Sharing Trust and Plan (6)                                                                                                
|              
|10.22         | Warrants for the purchase of 43,750 shares of Common Stock, $.01 par value per share, of the Registrant issued to The Nassau Group, Inc. - December 31, 1997(4)
|              
|10.23         | Relocation agreement dated July 27, 1999, between the Registrant and Thomas J. Bresnan(8)                                                                      
|              
|10.24         | Promissory note dated August 31, 1999, between the Registrant and Thomas J. Bresnan(9)                                                                         
|              
|10.25         | Amendment dated January 4, 2000, to relocation agreement between the Registrant and Thomas J. Bresnan(9)                                                       
|              
|10.26         | Promissory note dated October 14, 1999, between the Registrant and Kenneth M. Hagerstrom(9)                                                                    
|              
|10.27         | Promissory note dated June 1, 2001, between the Registrant and Kenneth M. Hagerstrom(12)                                                                       
|              
|10.28         | Severance agreement dated January 4, 2000, between the Registrant and Kenneth M. Hagerstrom(9)                                                                 
|              
|10.29         | Severance agreement dated January 4, 2000, between the Registrant and Robert S. McMillan(9)                                                                    
|              
|10.30          | Lease Agreement dated February 15, 2000, between New Horizons Worldwide, Inc. and Stadium Gateway Associates, LLC, guaranteed by the Registrant(9)             
|              
|10.31          | Lease Agreement dated April 27, 2000, between New Horizons Worldwide, Inc. and 1114 Trizechahn-Swig, guaranteed by the Registrant(10)                          
|              
|21.1           | Subsidiaries to the Registrant *                                                                                                                               
|              
|23.1           | Consent of Deloitte & Touche LLP *                                                                                                                             
|              

|(1)  | Incorporated  herein by reference to the appropriate  exhibits to the Registrant's  Registration  Statement on Form S-1  (File No. 33-28798).         
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------
|(2)  | Incorporated herein by reference to the appropriate exhibits to the Registrant's Registration Statement on Form S-8 (Reg. No. 333-56585).             
|(3)  | Incorporated  herein by reference to the appropriate  exhibit to the Registrant's Annual Report on Form 10-K for the year ended December 28, 1996.    
|(4)  | Incorporated  herein by reference to the appropriate  exhibit to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1997.    
|(5)  | Incorporated herein by reference to the appropriate exhibit to the Registrants Quarterly Report on Form 10-Q for the period ended March 31, 1998.    
|(6)  | Incorporated herein by reference to the appropriate exhibit to the Registrants Annual Report on Form 10-K for the year ended December 31, 1998.      
|(7)  | Incorporated herein by reference to the appropriate exhibit to the Registrants Quarterly Report on Form 10-Q for the period ended March 31, 1999.    
|(8)  | Incorporated herein by reference to the appropriate exhibit to the Registrants Quarterly Report on Form 10-Q for the period ended September 30, 1999.
|(9)  | Incorporated herein by reference to the appropriate exhibit to the Registrants Annual Report on Form 10-K for the year ended December 31, 1999.      
|(10) | Incorporated herein by reference to the appropriate exhibit to the Registrants Quarterly Report on Form 10-Q for the period ended June 30, 2000.     
|(11) | Incorporated herein by reference to the appropriate exhibit to the Registrants Annual Report on Form 10-K for the period ended December 31, 2001.    
|(12) | Incorporated herein by reference to the appropriate exhibit to the Registrants Quarterly Report on Form 10-Q for the period ended June 30, 2001.     
|    
|*    | Filed herewith                                                                                                                                        
|    
|    | Compensatory plan or arrangement