<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-K

[ 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            to
                               ----------    ----------

                        Commission file number: 001-14171

                                    C2, Inc.
             (Exact name of registrant as specified in its charter)
<TABLE>
<S><C>
        Wisconsin                                                                      39-1915787
(State of other jurisdiction of incorporation or organization)        (I.R.S. Employer Identification No.)

700 N. Water Street, Suite 1200, Milwaukee, Wisconsin                                      53202
       (Address of principal executive office)                                           (Zip Code)
</Table>

Registrant's telephone number, including area code  (414) 291-9000
                                                   ----------------

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

<TABLE>
<S><C>
    Title of Each Class                                            Name of Each Exchange on Which Registered
    -------------------                                            -----------------------------------------

Common Stock - $1 par value                                             Nasdaq
</TABLE>

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. [X ]

The aggregate market value (based on $6.50 closing price) of voting stock held
by nonaffiliates of the registrant at March 4, 2002: $11,404,348

Number of Shares of Common Stock Outstanding at March 4, 2002:  5,081,864
The Index to Exhibits is located on page 37.


<PAGE>



                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the 2002 Annual Meeting of Shareholders (to
be filed with the Commission under Regulation 14A within 120 days after the end
of the registrant's fiscal year and, upon such filing, to be incorporated by
reference into Part III.)

                                     PART I
ITEM 1.    BUSINESS

C2, INC.

C2, Inc. ("C2" or the "Company") was formed in 1997 for the purpose of acquiring
a 66.67 percent ownership interest in Total Logistic Control, LLC ("TLC") for
$10,667,000 in cash, plus the assumption of TLC's liabilities, and the
assumption of contingent liabilities attributable to the historic operations or
assets of Christiana Companies, Inc. ("Christiana").

C2 completed its initial public offering on March 4, 1999. The offering resulted
in the sale of 5,202,664 shares of common stock, par value $1 per share ("Common
Stock"), at $4.00 per share raising $20,410,000 of initial equity capital, net
of offering costs. From these proceeds, the Company used $10,667,000 to acquire
666.67 membership units, representing a 66.7 percent ownership interest in TLC
as part of the merger transaction between Christiana and Weatherford
International, Inc. ("Weatherford"). On September 30, 2000, the Company,
directly and/or through a wholly-owned subsidiary, acquired the remaining 33.3
percent of TLC from Weatherford in a cash purchase in the amount of $8,284,000.

The Company's growth strategy anticipated that a part of its future growth would
come from acquiring, either directly or through TLC, other businesses, which may
or may not be related to TLC's current business. In line with that strategy, on
March 12, 1999, the Company announced the purchase of Zero Zone, Inc., a
Wisconsin-based manufacturer of refrigerated and freezer display cases. The
Company invested $4,500,000 in equity and capital notes for 70.6 percent of the
outstanding common stock of Zero Zone. The remaining 29.4 percent of Zero Zone
is held by its President and other members of its management team.


TOTAL LOGISTIC CONTROL, LLC

TLC was formed on June 30, 1997 through a combination of the operations of two
wholly-owned subsidiaries of Christiana: Wiscold, Inc. ("Wiscold") and Total
Logistic Control Inc. On September 1, 1992, Christiana acquired the assets of
Wiscold, a company formed in 1915, which engaged in providing public
refrigerated warehousing services, vegetable processing and individual quick
freeze ("IQF") services, automated poly bag and bulk packaging services, and
transportation services into and out of its facilities. On January 4, 1994,
Christiana acquired Total Logistic Control, Inc., a Zeeland, Michigan-based firm
engaged in providing fully integrated third-party logistic services, including
warehouse, distribution and transportation services in both refrigerated and
non-refrigerated facilities.

On September 1, 2000, TLC acquired the ProSource Group, Inc., located in Aurora,
Illinois. ProSource provides dedicated third-party management to operate both
manufacturing and distribution centers, primarily for Fortune 500 consumer
products companies.

Today, TLC provides integrated third-party logistic services including full
service public and contract warehousing and facility and operations management
in all ranges of frozen, refrigerated and ambient temperatures. Integrated
logistic services generally combine transportation, warehousing and information
services to manage the distribution channel for a customer's products from the
point of manufacture to the point of consumption. TLC's transportation and
distribution services include full service truckload, less-than-truckload and
pooled consolidation in both temperature-controlled and dry freight equipment,
dedicated fleet services and specialized store-door delivery formats.
Transportation and logistic

                                       2


<PAGE>

management services are provided utilizing company-owned equipment as well as
through carrier management services utilizing third party common and contract
carriers. TLC also provides product fulfillment services, food distribution,
kitting, repackaging and just-in-time production supply services.

TLC's transportation fleet consists of 335 tractors, 351 refrigerated trailers
and 232 dry trailers providing transportation services nationally.

TLC's Logistics Management Services ("LMS") offers logistics consulting and
supply chain management solutions utilizing optimization software to design and
operate integrated distribution programs. LMS typically contracts with
third-party warehouse and transportation companies to provide the most cost and
service effective program for its customers.

TLC provides dedicated facility management services through its newest division,
Dedicated Facility Solutions. These services include staffing and managing the
operations of manufacturing or distribution facilities. To date, TLC has been
awarded two projects. The first is the management of a 200,000 square foot
ambient fulfillment center located in Hurlock, Maryland on behalf of Cadmus
Communications Corporation. TLC does not own, nor is it a party to the lease on
this facility. TLC provides staffing and operations management on a cost plus
fee basis under a six-year contract.

The second project was awarded during the fourth quarter of fiscal 2001 and
entails TLC staffing and managing the operations of a brewery located in
Fogelsville, Pennsylvania. Operation of the brewery commenced in January 2002,
producing the carbonated malt-based beverage, Smirnoff Ice on behalf of Guiness
UDV, a subsidiary of Diagio PLC. TLC provides these services under a cost plus
fee basis. An initial six-year term has been agreed upon, however, the full
management services contract terms have not been finalized. TLC does not own or
lease this facility.

TLC believes it is the tenth largest provider of public refrigerated warehouse
space in the United States. All of TLC's refrigerated facilities are modern and
efficient single story buildings at dock height elevation and are fully
insulated. TLC's refrigerated logistic centers are as follows:

            -     Rochelle Logistic Center campus, located in Rochelle,
                  Illinois, is TLC's largest refrigerated warehouse operation,
                  initially constructed in 1986. Currently this location is
                  comprised of 14,100,000 cubic feet of capacity in two separate
                  buildings having undergone four capacity expansions in 1988,
                  1990, 1993 and 1996. All space is capable of temperatures of
                  -20(degree)F to ambient. Rochelle Logistic Center is
                  strategically located at the intersection of two main line
                  East-West railroads, the Burlington Northern and the Union
                  Pacific, and at the cross roads of two interstate highways,
                  I-39 and I-88. Rochelle Logistic Center serves the Midwest
                  distribution needs of national food companies.

            -     Beaver Dam Logistic Center, located in Beaver Dam, Wisconsin,
                  was originally constructed in 1975. Since 1975, this facility
                  has undergone three freezer additions, the most recent in
                  1991, and today is comprised of 7,200,000 cubic feet of
                  freezer storage space. Beaver Dam Logistic Center serves
                  distribution related customers as well as vegetable and
                  cranberry processors. This facility's unique capabilities
                  involve value-added services for vegetable processors
                  including IQF, blanching, slicing, dicing and food service and
                  retail poly bag packaging operations. Beaver Dam Logistic
                  Center's IQF tunnels have the capacity to freeze 30,000 pounds
                  of product per hour. This facility is served by the Wisconsin
                  and Southern Railroad.

            -     Milwaukee Logistic Center, located in Wauwatosa, Wisconsin,
                  was originally constructed in 1954. There have been six
                  expansions of this facility, and today the Milwaukee Logistic
                  Center facility comprises 4,300,000 cubic feet of which
                  3,754,000 cubic feet is freezer capacity and 546,000 cubic
                  feet is cooler space. This

                                       3

<PAGE>



                  facility has multi-temperature refrigerated storage ranging
                  from -20(degree)F to +40(degree)F and daily blast freezing
                  capacity of 300,000 pounds. An additional 3,000,000 cubic feet
                  of company-owned refrigerated and processing space adjacent to
                  the Milwaukee Logistic Center facility is leased on a
                  long-term basis to a third-party retail grocery company.

            -     Kalamazoo Logistic Center, located in Kalamazoo, Michigan, has
                  two distribution centers. Facility #1 is a 3,300,000 cubic
                  foot facility with 1,100,000 cubic feet of freezer capacity,
                  400,000 cubic feet of cooler capacity and 1,800,000 cubic feet
                  of dry storage capacity. This location services a number of
                  distribution customers in the Midwest and is strategically
                  located at the crossroads of I-94 and US 131 in Michigan,
                  equal distance between Chicago and Detroit. Facility #2 is
                  located adjacent to Facility #1 and is comprised of 2,800,000
                  cubic feet of cooler capacity, all of which is dedicated to
                  one large distribution customer under a five-year operating
                  agreement. These facilities are held under long-term leases
                  which expire in 2010 and 2008, respectively.

            -     Also located at the Kalamazoo Logistic Center is a
                  Company-owned 10,000 square foot transportation equipment
                  maintenance center. Approximately 50 percent of TLC's fleet of
                  over-the-road transportation units are domiciled in Kalamazoo,
                  Michigan.

            -     Holland Logistic Center, located in Holland, Michigan, has
                  undergone a number of expansions over the years, with a major
                  reconstruction in 1983. This refrigerated facility comprises
                  2,100,000 cubic feet of storage capacity of which 1,300,000
                  cubic feet is freezer capacity, 400,000 cubic feet is cooler
                  capacity and 400,000 cubic feet is convertible between freezer
                  and cooler capacity. Holland Logistic Center services both
                  distribution customers as well as fruit growers in Western
                  Michigan. This location is situated on a CSX rail spur with
                  two refrigerated rail docks. This facility is held under a
                  long-term lease which expires April, 2011.

            -     On January 5, 2000, TLC acquired the Paw Paw Logistics Center,
                  a 2,500,000 cubic foot refrigerated facility located in Paw
                  Paw, Michigan. This multi-temperature facility is located 15
                  miles west of the Kalamazoo facilities on Interstate 94. This
                  site has 16 acres of land and the warehouse can be expanded by
                  an additional 300,000 cubic feet. In addition as a part of the
                  acquisition, TLC received an option to purchase 90 additional
                  acres of land contiguous to the facility. The Paw Paw
                  Logistics Center was initially constructed in 1981 and under
                  went two expansions in 1984 and 1990. In early 2000, TLC
                  completed an extensive upgrading and re-racking of this
                  facility.

In addition to the refrigerated distribution centers described above, TLC
operates a network of owned and leased dry (non-refrigerated) distribution
centers comprising approximately 1,000,000 square feet of storage capacity. Dry
distribution centers are located in Zeeland (2) and Kalamazoo, Michigan;
Munster, Indiana and Dayton, New Jersey. Additionally, TLC contracts with
approximately 22 dry warehouse facilities to provide warehousing and order
fulfillment services on behalf of its clients under long-term logistic
management services contracts.

TLC's customers consist primarily of national, regional and local firms engaged
in food and beverage manufacturing, consumer and industrial product
manufacturing, wholesale distribution and retailing. During 2001, TLC's top 10
customers accounted for approximately 57.9 percent of total consolidated
revenues. TLC currently services approximately 1,400 customers.


                                       4

<PAGE>

Competition in integrated logistic services is on both a national and local
basis with a predominant emphasis on transportation services. At present, there
are no direct competitors providing the full scope of warehousing,
transportation, logistic management and facility management services across the
full range of temperatures provided by TLC. However, each of TLC's individual
business lines is highly fragmented with many local, regional and national
competitors, especially in the transportation and dry warehousing industries.
TLC believes it has a competitive edge in its ability to provide fully
integrated logistic services designed to its customers' distribution needs which
may, but would not necessarily, include utilizing TLC's network of strategically
located refrigerated and dry distribution centers, transportation equipment, and
logistic management services. TLC's revenues and earnings can be affected by
changes in competitive pricing in both transportation and warehousing
operations, particularly at the local level; harvest yields of certain vegetable
and fruit crops grown in the Upper Midwest; changes in customers distribution
patterns or channels; industry consolidation of its customers and competitors;
changes in short-term interest rates; general economic conditions; and energy
costs, particularly diesel fuel and electric power.

TLC holds a trademark on its name and logo. No other trademarks, patents,
licenses, franchises or concessions are considered material to its business.

Expenditures for research and development and compliance with environmental
regulations have not been, and are not anticipated to be, significant.

ZERO ZONE

Zero Zone, headquartered in North Prairie, Wisconsin, manufactures frozen and
refrigerated glass door and open-faced reach-in display cases used by grocery,
convenience and drug store chains for retail merchandising of food, beverage and
floral products.

Zero Zone currently owns and operates two manufacturing facilities and leases
one warehouse for offsite storage of finished products. Zero Zone's headquarters
and main manufacturing facility was built in 1995. The original plant consisted
of 61,000 square feet and was expanded during 1999 by an additional 52,000
square feet. Zero Zone's operations consist of light manufacturing, primarily
heat exchange equipment fabrication, panel molding and assembly operations.

Zero Zone's second manufacturing facility is located four miles east of North
Prairie in Genesee, Wisconsin. This 34,000 square foot Genesee facility is
primarily utilized for production of display casements with self-contained
refrigeration equipment including the Open Merchandiser Cooler (OMC) Line. Zero
Zone renovated the Genesee location during 2000 to accommodate the OMC product
line. This new product line maintains safe product temperatures of 41(0)F or
lower, as required by food regulatory authorities. The Company also introduced
in 2000 a new wrap-around end case to give back-to-back freezer lineups a
continuous product presentation from aisle-to-aisle. The Maximizer(R) product
line added a new reach-in model. A single door freezer is available in addition
to 2-, 3-, 4- and 5-door units as previously offered.

In 2000, Zero Zone purchased a 6,300 square foot building and 2.47 acres of land
directly adjacent to its North Prairie facility to facilitate additional storage
space and a customer display center to exhibit products.

Zero Zone currently leases a warehouse in Waukesha, Wisconsin used for storage
of finished products. The current arrangement includes 79,200 square feet of
space with an option to add 60,000 additional square feet.

Competition in commercial refrigeration equipment manufacturing varies depending
on the market segment being served. Zero Zone is primarily a supplier to
retailers engaged in grocery, drug and convenience stores. Zero Zone also sells
to refrigeration contractors, dealers, and food wholesalers. Zero Zone's top 10
customers accounted for approximately 18.2 percent of total consolidated
revenues. Zero Zone's active customer list includes approximately 500 customers.



                                       5

<PAGE>

Zero Zone's competition consists of larger companies that supply a complete line
of refrigerated equipment while Zero Zone's specialty is glass door and
open-faced, reach-in display cases. Zero Zone believes it has a competitive
advantage in its product quality and performance, along with a flexible
manufacturing process that allows for shorter lead times and quicker response to
its customers' construction and refurbishment schedules.

On February 5, 2002, Zero Zone acquired a manufacturer of refrigeration systems
located in Ramsey, Minnesota. Now known as Zero Zone Refrigeration, this company
manufactures refrigeration houses and racks used to power and control the
refrigeration systems, electrical panels, air conditioning and stand-by power
for supermarkets, convenience stores and industrial applications. This
acquisition positions Zero Zone to provide a complete package of display cases
and refrigeration systems to its customers.

Zero Zone revenues and earnings can be affected by the loss of a significant
customer, industry consolidation in both customers and competitors, changes in
competitive pricing, raw material cost changes, changes in distribution
channels, the level of new construction and refurbishment of grocery and chain
store retailers, availability of skilled labor and general economic conditions.

                                    EMPLOYEES

The following table shows the number of full-time C2, TLC and Zero Zone
employees at the dates indicated.

<TABLE>
<CAPTION>

                                                    FULL-TIME EMPLOYEES AT FEBRUARY 28,
                                   ----------------------------------------------------------------------
                                           2002                    2001                     2000
                                   ---------------------   ---------------------    ---------------------
<S>                                <C>                     <C>                      <C>

 C2                                          10                      11                       11
 TLC                                      1,050                   1,005                      913
 Zero Zone                                  184                     185                      162
                                   ---------------------   ---------------------    ---------------------
   TOTAL                                  1,244                   1,201                    1,086

</TABLE>



                        EXECUTIVE OFFICERS OF THE COMPANY
<Table>
<Caption>
                                            POSITION AND PRINCIPAL OCCUPATION
     NAME                      AGE             DURING THE LAST FIVE YEARS
-----------------------------------------------------------------------------------
<S>                           <C>    <C>
     William T. Donovan        50    President and Chief Executive Officer of C2
                                     (1)

     David J. Lubar            47    Chairman of C2 (2)

     Oyvind Solvang            43    Vice President of C2 (3)

</Table>

     (1)   Mr. Donovan served as Chairman and Chief Financial Officer of the
           Company from December 1997 to July 24, 2000, when he was named the
           Company's President and Chief Executive Officer. He has served in the
           capacity listed or in another capacity as an executive officer of
           Christiana for more than the last five years. He was a principal of
           Lubar & Co. (venture capital and investments) for more than five
           years. Mr. Donovan is a director of Grey Wolf, Inc.



                                       6



<PAGE>


            (2)   David Lubar served as President of the Company from December
                  1997 to July 24, 2000, when he was named the Company's
                  Chairman. Mr. Lubar has been a principal of Lubar & Co.
                  (venture capital and investments) located in Milwaukee,
                  Wisconsin since 1983.

            (3)   Oyvind Solvang has been Vice President of C2, Inc. since
                  December 1997. Mr. Solvang has served as President of Cleary
                  Gull Reiland & McDevitt, Inc., an investment banking firm,
                  located in Milwaukee, Wisconsin from January 1996 to October
                  1996 and Chief Operating Officer from October 1995 to January
                  1996.

         Sheldon B. Lubar, a director of the Company, is the father of David J.
         Lubar and father-in-law of Oyvind Solvang. None of the other directors
         or executive officers are related to each other. The term of office of
         each of the executive officers expires at the annual meeting of
         directors.

         ITEM 2. PROPERTIES WAREHOUSING FACILITIES

         At December 31, 2001, TLC directly owned or leased thirteen warehouse
         facilities in five states. Of this total, eight are public refrigerated
         with the balance being non-refrigerated facilities. Refrigerated
         warehousing operations are conducted through eight public logistic
         centers located in Wisconsin (2), Michigan (4), and Illinois (2). TLC's
         refrigerated facilities are large single-story buildings constructed at
         dock height with full insulation and vapor barrier protection.
         Refrigeration is provided by screw-type compressors all of which employ
         ammonia-based cooling systems. The facilities are strategically located
         and well served by rail and truck.

         TLC's refrigerated warehouse facilities are described in the following
         table:

<TABLE>
<CAPTION>
                                                                                TOTAL STORAGE SPACE
                FACILITY                              LOCATION               (CUBIC FEET IN MILLIONS)          TYPE OF FACILITY
-----------------------------------------     --------------------------    ---------------------------    -------------------------
<S>                                           <C>                           <C>                            <C>
Rochelle Logistic Center I                    Rochelle, IL                               10.6              Distribution
Rochelle Logistic Center II                   Rochelle, IL                                3.5              Distribution
Beaver Dam Logistic Center                    Beaver Dam, WI                              7.2              Distribution/Production
Milwaukee Logistic Center                     Milwaukee, WI                               4.3              Distribution
Paw Paw Logistic Center                       Paw Paw, MI                                 2.5              Distribution
Kalamazoo Logistic Center I (1)(2)            Kalamazoo, MI                               3.3              Distribution
Kalamazoo Logistic Center II (1)              Kalamazoo, MI                               2.8              Distribution
Holland Logistic Center (1)                   Holland, MI                                 2.1              Distribution/Production
                                                                                         ----
    TOTAL                                                                                36.3
                                                                                         ====
</TABLE>

(1) Leased Facility
(2) Includes 1,800,000 cubic feet of non-refrigerated storage capacity.

         At both the Rochelle and Beaver Dam Logistic Centers, the Company owns
         substantial additional acreage available for expansion. In addition,
         the Company has an option to purchase 90 additional acres of contiguous
         land for future expansion and development at the Paw Paw Logistic
         Center. This option expires December 31, 2002.

         At December 31, 2001, TLC directly operated five public
         non-refrigerated or dry warehouse distribution facilities located in
         Michigan (3), Indiana and New Jersey. Zeeland Distribution Center II,
         located in Zeeland, Michigan is a Company-owned facility. All other dry
         facilities are held under leases and generally serve the distribution
         requirements of customers on a month-to-month basis. These facilities
         are single story block or metal construction buildings. All dry
         facilities are constructed at dock height and are approved as food
         grade storage facilities.

            TLC's dry warehouse facilities are described on the following table:



                                       7

<PAGE>


<TABLE>
<CAPTION>

                                                                                 TOTAL STORAGE
                                                                                     SPACE
                                                                                  (SQ. FT. IN                 TYPE OF
                  FACILITY                               LOCATION                  THOUSANDS)                 FACILITY
---------------------------------------------    --------------------------   ---------------------    -----------------------
<S>                                              <C>                          <C>                      <C>

Zeeland Logistic Center I (1)                    Zeeland, MI                             202                   Public
Zeeland Logistic Center II                       Zeeland, MI                             220                   Public
Michigan Distr. Center I (1)                     Kalamazoo, MI                            88                   Public
Munster Logistic Center (1)                      Munster, IN                             400                   Public
Dayton Logistic Center (1)                       Dayton, NJ                               90                   Public
                                                                              ---------------------
    TOTAL                                                                              1,000
                                                                              ---------------------
(1) Leased facility.
</TABLE>

TLC owns one maintenance and operations facility and leases two additional
facilities. These facilities provide maintenance services and bases for
operations for TLC's fleet of tractors and trailers, and are located in
Kalamazoo, Michigan (owned), Erie, Pennsylvania (leased) and La Vergne,
Tennessee (leased).

Zero Zone currently owns and operates two manufacturing facilities and leases
one warehouse for offsite storage of finished products. Zero Zone's headquarters
and main manufacturing facility was built in 1995. The original plant consisted
of 61,000 square feet and was expanded during 1999 by an additional 52,000
square feet. Zero Zone's second manufacturing facility is located four miles
east of North Prairie in Genesee, Wisconsin. This 34,000 square foot facility is
primarily utilized for production of display casements with self-contained
refrigeration equipment including the Open Merchandiser Cooler (OMC) line.

In 2000, Zero Zone purchased a 6,300 square foot building and 2.47 acres of land
directly adjacent to its North Prairie facility to facilitate additional storage
space and a customer display center to exhibit product.

Zero Zone currently leases a warehouse in Waukesha, Wisconsin used for storage
of finished products. The current arrangement includes 79,200 square feet of
space with an option to add an additional 60,000 square feet.

ITEM 3. LEGAL PROCEEDINGS.

From time to time, TLC and Zero Zone, in the normal course of business, are
involved in litigation incidental to the conduct of their businesses. The
Company does not believe that the ultimate disposition of any currently pending
claims, individually or in the aggregate, would have a material adverse effect
on the Company's consolidated financial condition or results of operations.

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

No matters were submitted to a vote of shareholders during the quarter ended
December 31, 2001.

                                       8
<PAGE>




                                     PART II

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

The common stock of the Company was originally listed on the Nasdaq Small Cap
Market effective March 5, 1999. On June 4, 1999 the Company's common stock was
listed on the Nasdaq National Market. The table below sets forth the reported
high and low sales prices as reported by Nasdaq for the quarters ended March 31,
2000 through March 4, 2002.


<TABLE>
<CAPTION>
                                        2002                        2001                       2000
--------------------------------------------------------------------------------------------------------------
QUARTER ENDED                      HIGH        LOW           HIGH           LOW         HIGH            LOW
--------------------------------------------------------------------------------------------------------------
<S>                                <C>       <C>           <C>           <C>         <C>              <C>

March 31*                          $8.250     $ 6.000       $ 7.750       $5.625      $  6.500        $4.125
June 30                                                       7.750        6.000         7.750         4.750
September 30                                                  7.000        6.000        17.813         6.000
December 31                                                   8.750        4.750        10.000         7.250
</Table>

                        * Ten weeks ended March 4, 2002

At March 4, 2002, there were approximately 121 shareholders of record and over
400 round lot holders. There have been no dividends paid, and based on the
Company's strategic business plan of reinvesting cash flow, none are anticipated
in the foreseeable future.

ITEM 6. SELECTED FINANCIAL DATA.

Selected Financial Data is provided under the caption "Five Year Financial
Information" which is included on page 35.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

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

The Company's consolidated revenues for fiscal 2001 totaled $212,445,000,
compared to $183,450,000 reported for fiscal 2000, an increase of $28,995,000,
or 15.8 percent. The Company's consolidated revenues in fiscal 2001 included
$147,663,000 of logistics services, reflecting year-to-year growth of 30.2
percent, and product sales of $64,782,000 which declined 7.6 percent in fiscal
2001.

The increase in logistic services in fiscal 2001 was attributable to strong
growth at TLC, particularly in Logistic Management Services, Transportation
Operations, and Dedicated Facility Solutions. Revenues attributable to TLC's
Warehousing Operations were lower by approximately 10 percent, due largely to
the expiration of two contracts, one in refrigerated operations and one in dry
warehousing.

The decline in product sales was attributable to lower volume at Zero Zone,
reflecting the generally low level of capital spending in the retail grocery,
convenience and drug store chains, all of which have been depressed throughout
2001.

The direct margin attributable to logistics services was 12.1 percent in fiscal
2001, down from 16.3 percent in fiscal 2000, reflecting continued higher growth
in lower margin Logistic Management and Facility Management activities than in
Warehousing Operations. However, such non-asset based Logistics and Facility
Management Services have substantially lower capital requirements to fund growth
than asset intensive Warehousing Operations.

                                       9

<PAGE>

The direct margin attributable to product sales in fiscal 2001 was 20.3 percent
reflecting a decrease over last year's level of 23.1 percent. The decrease in
margin is largely attributable to lower volume and price pressure.

Depreciation and amortization expense in fiscal 2001 was $8,153,000 compared to
$7,895,000 reported for fiscal 2000. The 3.3 percent increase resulted from a
full year of depreciation on capital expenditures of $9,845,000 in 2000.

Selling general and administrative expenses in fiscal 2001 totaled $15,425,000,
or 7.3 percent of total revenues, compared to $15,623,000, or 8.5 percent for
the same period in 2000. Aggressive cost containment strategies were employed at
both TLC and Zero Zone. Lower commission expense at Zero Zone resulting from the
decline in sales volume was also a contributing factor to the reduction in
expenses in 2001.

Consolidated earnings from operations for fiscal 2001 totaled $7,495,000,
compared to $11,153,000 reported for fiscal 2000, reflecting a 32.8 percent
decline. Lower volume at Zero Zone was the principal factor impacting operating
profit in 2001. Margin pressure resulting from increased competitive pricing
experienced at both Zero Zone and TLC was also a contributing factor in the
decline in operating earnings in 2001.

Consolidated net interest expense in fiscal 2001 was $5,051,000, compared to
$5,899,000 reported for fiscal 2000. The decrease in interest expense was
primarily attributable to the decline in short-term interest rates. In addition,
consolidated funded debt was reduced during fiscal 2001 by $6,441,000, which
contributed to the decline in interest expense. In order to reduce exposure to
higher interest rates in the future, both TLC and Zero Zone entered into a
series of interest rate swap transactions beginning on September 28, 2001 and
continuing through January 8, 2002. These swap transactions effectively
converted $28,420,000 of floating rate debt to fixed rate debt. These swaps were
executed at rates that were relatively low by historic standards.

In fiscal 2001, consolidated net earnings totaled $812,000, or $0.16 per share
fully diluted, down 59.3 percent from last year's net earnings of $1,995,000, or
$0.38 per share fully diluted. The decline in fiscal 2001 net earnings was due
to lower earnings from operations primarily attributable to reduced volume of
product sales at Zero Zone and to a lesser extent, lower operating margins at
both Zero Zone and TLC as previously noted.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

The Company's consolidated revenues for fiscal 2000 totaled $183,450,000,
compared to $145,676,000 as reported in fiscal 1999, an increase of $37,774,000,
or 25.9 percent. C2's consolidated revenues in fiscal 2000 included $113,376,000
of logistics service revenue, which reflected year-to-year growth of 17.9
percent, and product sales of $70,074,000, which grew 41.4 percent in fiscal
2000. The increase in revenue was primarily driven by strong revenue growth at
both TLC and Zero Zone and the inclusion of a full year's operations of Zero
Zone in fiscal 2000 compared to only 9 1/2 months in fiscal 1999. For the year,
TLC reported revenue growth of 18.6 percent driven in large part by new logistic
management service relationships, increased utilization of warehouse facilities
and larger fleet operations. Zero Zone reported sales growth of 46.6 percent,
reflecting a full year's operations in 2000 versus only 9 1/2 months in fiscal
1999, as well as full year comparative growth of 26.8 percent.

The direct margin attributable to logistics services was 16.3 percent in fiscal
2000, down from 19.4 percent in fiscal 1999 reflecting higher growth in lower
margin logistic management services than in warehousing operations. However,
non-asset based logistic management services have substantially lower capital
requirements to fund growth than asset-intensive warehousing operations.


                                       10

<PAGE>

The direct margin attributable to product sales in fiscal 2000 was 23.1 percent
reflecting an increase over last year's level of 22.1 percent. The increase in
margin is largely attributable to including a full year of Zero Zone operations
compared to only 9 1/2 months in fiscal 1999.

Depreciation and amortization expense in fiscal 2000 was $7,895,000, compared to
$7,519,000 reported in fiscal 1999, reflecting an increase of $376,000, or 5.0
percent. The increase is primarily attributable to the inclusion of Zero Zone
operations for the entire year in 2000.

Selling, general and administrative expenses in fiscal 2000 totaled $15,623,000,
or 8.5 percent of total revenues compared to $13,087,000, or 9.0 percent, for
the same period in 1999. The increase in selling, general and administrative
expense in fiscal 2000 of $2,536,000, or 19.4 percent, was primarily
attributable to higher volume at Zero Zone and the inclusion of a full-year of
Zero Zone's operations in fiscal 2000. Selling, general and administrative
expense attributable to TLC declined 3.7 percent in fiscal 2000.

Consolidated earnings from operations for fiscal 2000 totaled $11,153,000,
compared to $9,044,000 in fiscal 1999, an increase of $2,109,000, or 23.3
percent, but reflected a consistent margin on revenues year-to-year.

Consolidated net interest expense in fiscal 2000 was $5,899,000, compared to
$4,644,000 reported for fiscal 1999. The increase of $1,255,000 is primarily
attributable to a full period of increased debt in fiscal 2000 compared to last
year, the acquisition of a refrigerated warehouse facility which was funded by
an increase in TLC's revolving credit facility, the acquisition of the remaining
33.3 percent of TLC on September 30, 2000, funded through borrowings under C2's
line of credit, and generally higher interest rates on variable rate borrowings.

In fiscal 2000, consolidated net earnings totaled $1,995,000, or $0.39 basic
earnings per share, up 59.0 percent from last year's net earnings of $1,255,000,
or $0.24 per share. Included in last year's results was an extraordinary charge
of $153,000, net of tax, incurred by Zero Zone related to refinancing its senior
debt. Excluding the extraordinary charge in fiscal 1999, net earnings increased
41.7 percent year-to-year. The increase in fiscal 2000 net earnings excluding
the extraordinary charge, was primarily attributable to higher sales volume at
Zero Zone, the inclusion of Zero Zone's operations for a full-year period this
year and incurring certain one-time expenses in fiscal 1999 related to the
Christiana Weatherford merger and transaction.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents at December 31, 2001 totaled $2,539,000, compared to
$2,294,000 at December 31, 2000. The Company's working capital at December 31,
2001 was $7,924,000, compared to $1,366,000 at December 31, 2000. Working
capital in 2001 increased due primarily to the refinancing of $7,000,000 in
short-term borrowings outstanding at December 31, 2000 attributable to the
purchase of the remaining 33 percent interest in TLC. This short-term line of
credit borrowing was refinanced under TLC's long-term revolving credit and term
loan facilities on June 8, 2001.

Operating activities in 2001 provided cash of $10,666,000, derived primarily
from net earnings of $812,000, depreciation and amortization of $8,153,000,
offset by a net decrease in working capital accounts of $1,353,000.

Net cash used in investing activities in fiscal 2001 totaled $3,980,000 and
included capital expenditures of $4,377,000, the major components of which were:
$1,216,000 related to information system investments, $233,000 of transportation
equipment, $1,768,000 of buildings and improvements and $763,000 for capital
additions at Zero Zone.

Cash flows used in financing activities in fiscal 2001 totaled $6,441,000 the
components of which were $9,667,000 in net repayments under C2's and Zero Zone's
lines of credit, payments of long-term debt of $3,902,000 and $7,128,000 in
long-term borrowings primarily at TLC.


                                       11

<PAGE>

On June 8, 2001, TLC entered into an amended and restated credit agreement with
its bank group. The new credit facilities include a $40,000,000, 5-year reducing
revolving credit agreement and a $25,000,000, 5-year term loan. The revolving
credit facility steps down $2,000,000 per year beginning July 1, 2002, with a
final maturity of $32,000,000 on June 30, 2006. The term loan amortizes $416,666
per quarter commencing September 30, 2001, with a final payment due on June 30,
2006. At December 31, 2001, outstanding indebtedness under these facilities
totaled $57,083,000. Unused borrowings under the revolving credit agreement
totaled $7,000,000 at December 31, 2001.

Zero Zone has a $7,500,000 secured line of credit facility which, at year end,
had outstanding borrowings of $1,163,000. At year-end, the Company had in place
a $15,000,000 unsecured line of credit facility for general corporate purposes.
There were no borrowings outstanding under this facility at December 31, 2001.

The Company's current sources of capital include: cash generated from
operations, existing cash resources which, at year end, totaled $2,539,000 and
unused borrowings under existing credit facilities totaling approximately
$28,000,000. The Company believes these resources are sufficient to fund
projected cash requirements of its current operations.

The Company continues to evaluate new acquisitions in areas strategic to
existing operations as well as in new lines of business. Future acquisitions may
be funded through cash flows from operations, existing credit facilities and the
issuance of equity securities under a rights offering to shareholders or
otherwise, if desirable.

As of December 31, 2001, the Company had no material capital commitments.

Certain matters discussed in this Report are "forward-looking statements"
intended to qualify for the safe harbor from liability established by the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements can generally be identified as such because the context of the
statement includes phrases such as the Company "believes," "expects" or other
words of similar import. Similarly, statements that describe the Company's
future plans, objectives or goals are also forward-looking statements,
including, among other, discussions of growth in the market and demand for
services in third party logistics, the outlook for growth in the market for new
construction or refurbishment of grocery, drug and convenience stores, and thus
demand for Zero Zone's products. Such forward-looking statements are subject to
certain risks and uncertainties which could cause actual results or outcomes to
differ materially from those currently anticipated. Although the Company
believes its expectations are based on reasonable assumptions, it can give no
assurance that its goals will be achieved. Important factors that could affect
actual results or outcomes include, without limitation:

    -    Demand for and profitability of warehousing, transportation, logistic
         services, dedicated facilities, logistic management services and
         refrigerated display cases may be adversely affected by increases in
         interest rates, adverse economic conditions, increased energy costs,
         loss of a material customer or other factors.

    -    Growth in volume of services or products may be adversely affected by
         reduced ability to identify and hire qualified employees.

    -    The Company's profitability may be adversely affected by increases in
         interest rates because a material portion of the Company's debt bears
         interest at variable rates.

    -    Consolidations within the food industry or food retailers could impact
         the Company's customers.

    -    Company's market share and profit margins may be adversely affected as
         a result of new or increased competitive conditions in warehousing,
         transportation or display case manufacturing.

Shareholders, potential investors and other readers are urged to consider these
factors in evaluating the forward-looking statements and are cautioned not to
place undue reliance on such forward-looking

                                       12

<PAGE>




statements. The forward-looking statements included are made only as of the date
of this Report. The Company is not obligated to publicly update such
forward-looking statements to reflect subsequent events or circumstances.

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

C2, Inc. does not have any holdings in long-term fixed income investments or
foreign exchange transactions in 2001 or 2000 which would give rise to exposure
to market risk related to interest rate fluctuations. Details of the Company's
derivative holdings related to interest rate swap transaction can be found under
Footnote C to the Company's financial statements on page 27.

ITEM 8.    FINANCIAL STATEMENT AND SUPPLEMENTARY DATA.

See Index to Financial Information on page 17.

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

None
                                    PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT.

The information required by this Item with respect to directors and Section 16
compliance is included under the captions "Election of Directors" and "Section
16(a) Beneficial Ownership Reporting Compliance", respectively, in the Company's
definitive Proxy Statement for its 2002 Annual Meeting of Shareholders ("Proxy
Statement") and is hereby incorporated herein by reference. Information with
respect to the executive officers of the Company appears in Part I, page 6 of
this Annual Report on Form 10-K.

ITEM 11.   EXECUTIVE COMPENSATION.

The information required by this Item is included under the captions "Board of
Directors - Directors Compensation" and "Executive Compensation" in the Proxy
Statement and is hereby incorporated herein by reference; provided, however,
that the subsection entitled "Executive Compensation - Report on Executive
Compensation" shall not be deemed to be incorporated herein by reference.

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

The information required by this Item is included under the caption "Principal
Shareholders" in the Proxy Statement and is hereby incorporated herein by
reference.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information required by this Item is included under the caption "Certain
Transactions" in the Proxy Statement and is hereby incorporated herein by
reference.

                                       13


<PAGE>


                                     PART IV

ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

         (a) (1) Financial Statement and Schedules - The financial statements
and financial statement schedules listed in the accompanying index to financial
statement and financial statement schedules are filed as part of this Annual
Report on Form 10-K and are incorporated herein by reference. See Index on page
17.

             (2) Exhibits - The exhibits listed in the accompanying index to
exhibits are filed as part of this Annual Report on Form 10-K. See Index on page
37.

         (b) Reports on Form 8-K:

         No reports on Form 8-K were filed by the Company during the quarter
ended December 31, 2001.



















                                       14

<PAGE>


                                   SIGNATURES

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

                                             C2, Inc.

Date:        March 4, 2002                   By: /s/ William T. Donovan
                                             -----------------------------------
                                             William T. Donovan, President & CEO

Pursuant to the requirements of the Securities Exchange Act of 1934 this 10-K
report has been signed below on March 4, 2002 the following persons on behalf of
the Registrant and in the capacity indicated.

                                          Signature


/s/ William T. Donovan                    President & Chief Executive Officer
------------------------------------      and a Director
William T. Donovan


/s/David J. Lubar                         Chairman and a Director
------------------------------------
David J. Lubar


/s/ Nicholas F. Brady                     Director
------------------------------------
Nicholas F. Brady


/s/ Sheldon B. Lubar                      Director
------------------------------------
Sheldon B. Lubar


/s/ William H. Lacy                       Director
------------------------------------
William H. Lacy


/s/ John A. Becker                        Director
------------------------------------
John A. Becker


/s/ Betty J. White                        Treasurer, Controller and Assistant
------------------------------------      Secretary
Betty J. White





                                       15

<PAGE>
















                                    C2, INC.


                              FINANCIAL INFORMATION


                   FOR INCLUSION IN ANNUAL REPORT ON FORM 10-K

                          YEAR ENDED DECEMBER 31, 2001











                                       16


<PAGE>





                                    C2, INC.
                         INDEX TO FINANCIAL INFORMATION

<TABLE>
<CAPTION>

                                                                                                    Page No.
                                                                                                    --------
<S>                                                                                                 <C>


Report of Independent Public Accountants................................................................18

C2, Inc. Consolidated Balance Sheets as of December 31, 2001 and 2000...................................19

C2, Inc. Consolidated Statements of Income for the years ended
  December 31, 2001, 2000 and 1999......................................................................20

C2, Inc. Consolidated Statements of Shareholders' Equity
  For the years ended December 31, 2001, 2000 and 1999..................................................21

C2, Inc. Consolidated Statements of Cash Flows for the years
  ended December 31, 2001, 2000 and 1999................................................................22

Notes to Consolidated Financial Statements..............................................................23

Selected Financial Data.................................................................................35

</TABLE>








                                       17
<PAGE>




REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders of C2, Inc.:

We have audited the accompanying consolidated balance sheets of C2, Inc. and
subsidiaries (a Wisconsin Corporation) as of December 31, 2001 and 2000, and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the three years in the period ended December 31, 2001. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of C2, Inc. and subsidiaries as of
December 31, 2001 and 2000, and the results of its operations and its cash flows
for each of the years in the three year period ended December 31, 2001, in
conformity with accounting principles generally accepted in the United States.


ARTHUR ANDERSEN LLP





Milwaukee, Wisconsin
February 8, 2002




                                       18

<PAGE>


                            C2, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        AS OF DECEMBER 31, 2001 AND 2000


<TABLE>
<CAPTION>


                                                                                 2001                     2000
                                                                         ---------------------     --------------------
<S>                                                                      <C>                       <C>

ASSETS:
Current Assets:
    Cash and cash equivalents                                               $     2,539,000           $     2,294,000
    Accounts receivable, net                                                     22,525,000                21,701,000
    Inventories                                                                   9,640,000                 8,575,000
    Prepaids and other assets                                                     4,709,000                 3,630,000
                                                                         ---------------------     --------------------
        Total current assets                                                     39,413,000                36,200,000
                                                                         ---------------------     --------------------

Long-Term Assets:
    Property, plant and equipment, net                                           73,079,000                76,567,000
    Goodwill, net                                                                14,482,000                15,579,000
    Other assets                                                                  1,777,000                 1,554,000
                                                                         ---------------------     --------------------
        Total long-term assets                                                   89,338,000                93,700,000
                                                                         ---------------------     --------------------

        Total assets                                                           $128,751,000              $129,900,000
                                                                         =====================     ====================


LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Liabilities:
    Current maturities of long-term debt                                     $    3,167,000           $       500,000
    Line of credit                                                                1,163,000                10,830,000
    Accounts payable                                                             14,181,000                12,873,000
    Accrued liabilities                                                          12,978,000                10,631,000
                                                                         ---------------------     --------------------
        Total current liabilities                                                31,489,000                34,834,000
                                                                         ---------------------     --------------------

Long-Term Liabilities:
    Long-term debt, less current maturities                                      66,272,000                65,713,000
    Other liabilities                                                             2,334,000                 1,853,000
                                                                         ---------------------     --------------------
        Total long-term liabilities                                              68,606,000                67,566,000
                                                                         ---------------------     --------------------
        Total liabilities                                                       100,095,000               102,400,000
                                                                         ---------------------     --------------------

SHAREHOLDERS' EQUITY:
    Preferred stock, par value $.01 per share                                         --                       --
         10,000,000 shares authorized, none issued or outstanding
    Common stock, par value $.01 per share; 50,000,000 shares
        authorized, 5,206,064 shares issued                                          52,000                    52,000
     Additional paid-in capital                                                  20,371,000                20,371,000
     Treasury stock at cost (124,200 shares)                                       (578,000)                 (578,000)
     Accumulated other comprehensive income                                         344,000                    --
     Retained earnings                                                            8,467,000                 7,655,000
                                                                         ---------------------     --------------------
Total shareholders' equity                                                       28,656,000                27,500,000
                                                                         ---------------------     --------------------
                                                                               $128,751,000              $129,900,000
                                                                         =====================     ====================
</TABLE>



                 See notes to consolidated financial statements.



                                       19

<PAGE>
                            C2, INC. AND SUBSIDIARIES
                         CONSOLIDATED INCOME STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                      2001                 2000                   1999
                                                              -------------------   --------------------    ------------------
<S>                                                            <C>                  <C>                    <C>
Revenues:
    Logistics Services                                           $ 147,663,000         $ 113,376,000         $  96,132,000
    Product Sales                                                   64,782,000            70,074,000            49,544,000
                                                                 -------------         -------------         -------------
                                                                   212,445,000           183,450,000           145,676,000
                                                                 -------------         -------------         -------------
Costs and Expenses:
    Logistics Expenses                                             129,749,000            94,870,000            77,443,000
    Cost of Product Sales                                           51,623,000            53,909,000            38,583,000
    Depreciation and Amortization                                    8,153,000             7,895,000             7,519,000
    Selling, General and Administrative                             15,425,000            15,623,000            13,087,000
                                                                 -------------         -------------         -------------
                                                                   204,950,000           172,297,000           136,632,000
                                                                 -------------         -------------         -------------
       Earnings from Operations                                      7,495,000            11,153,000             9,044,000

Other Income (Expense):
    Interest Expense, net                                           (5,051,000)           (5,899,000)           (4,644,000)
    Merger-Related Expenses                                                 --                    --              (343,000)
    Other Income (Expense), net                                        (45,000)               58,000               (18,000)
                                                                 -------------         -------------         -------------
                                                                    (5,096,000)           (5,841,000)           (5,005,000)

Earnings before Income Taxes, Minority Interest
    and Extraordinary Item                                           2,399,000             5,312,000             4,039,000

Provision for Income Taxes                                           1,027,000             2,270,000             1,619,000
                                                                 -------------         -------------         -------------

Net Earnings before Minority Interest and
    Extraordinary Item                                               1,372,000             3,042,000             2,420,000

Minority Interest                                                      560,000             1,047,000             1,012,000
                                                                 -------------         -------------         -------------

Net Earnings before Extraordinary Item                                 812,000             1,995,000             1,408,000

Extraordinary Item, net of Tax and Minority Interest                        --                    --               153,000
                                                                 -------------         -------------         -------------

Net Earnings                                                     $     812,000         $   1,995,000         $   1,255,000
                                                                 =============         =============         =============

Basic Earnings per Share before Extraordinary Item               $        0.16         $        0.39         $        0.27
                                                                 =============         =============         =============

Basic Earnings per share                                         $        0.16         $        0.39         $        0.24
                                                                 =============         =============         =============

Diluted Earnings per Share before Extraordinary Item             $        0.16         $        0.38         $        0.27
                                                                 =============         =============         =============

Diluted Earnings per Share                                       $        0.16         $        0.38         $        0.24
                                                                 =============         =============         =============
</TABLE>

                See notes to consolidated financial statements.


                                       20
<PAGE>


                            C2, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                                 Accumulated                    Current
                                                         Additional              Other                          Year
($000)                            Common       Treasury  Paid-In     Retained    Comprehensive      Members     Comprehensive
                                  Stock        Stock     Capital     Earnings    Income             Equity      Income (Loss)
                                  ---------------------------------------------- -----------------------------  -----------------
<S>                               <C>        <C>         <C>         <C>         <C>             <C>            <C>
Balance December 31, 1998             --         --           --          --         --          $   35,457               --

Distribution to Christiana            --         --           --          --         --             (13,312)              --

Sale of Common Stock              $   52         --      $20,358          --         --                  --               --

Adjustments Related
     to the Acquisition of            --         --           --     $ 4,405         --             (22,145)              --
     Total Logistic Control

Net Earnings                          --         --           --       1,255         --                  --       $    1,255
                                                                                                                  ---------------

Total Comprehensive Income            --         --           --          --         --                  --       $    1,255
                                  ----------------------------------------------------------------------------    ===============

Balance, December 31, 1999            52         --       20,358       5,660         --                  --               --

Purchase of Treasury Stock            --     $ (578)          --          --         --                  --               --

Exercise Stock Options                --         --           13          --         --                  --               --

Net Earnings                          --         --           --       1,995         --                  --       $    1,995
                                                                                                                  ---------------

Total Comprehensive Income            --         --           --          --         --                  --       $    1,995
                                  ----------------------------------------------------------------------------    ===============

Balance, December 31, 2000            52       (578)      20,371       7,655         --                  --

Unrealized Gains on Interest          --         --           --          --      $ 344                  --       $      344
   Rate Swaps

Net Earnings                          --         --           --         812         --                  --              812
                                                                                                                  ---------------

Total Comprehensive Income            --         --           --          --         --                  --
                                                                                                                  $    1,156
                                                                                                                  ===============

                                  ----------------------------------------------------------------------------
Balance, December 31, 2001        $   52     $ (578)     $20,371     $ 8,467      $ 344                  --
                                  ============================================================================
</TABLE>




                 See notes to consolidated financial statements.



                                       21
<PAGE>




                            C2, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
             FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999
<TABLE>
<CAPTION>
                                                                             2001               2000               1999
                                                                       ------------        ------------        ------------
<S>                                                                    <C>                 <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income                                                             $    812,000        $  1,995,000        $  1,255,000
Adjustments to Reconcile Net Income to
    Net Cash Provided by Operating Activities:
    Depreciation and amortization                                         8,153,000           7,895,000           7,519,000
    Gain on disposal of assets                                              (90,000)           (139,000)            (64,000)
    Minority interest in income of subsidiaries                             560,000           1,047,000             944,000
    Deferred income tax provision                                          (122,000)            915,000            (728,000)
Changes in Assets and Liabilities:
     (Increase) in accounts receivable                                     (824,000)         (3,685,000)         (6,688,000)
     (Increase) in inventories                                           (1,065,000)         (2,147,000)         (4,082,000)
     (Increase) decrease in prepaids and other assets                      (535,000)         (1,703,000)          2,407,000
     Increase in accounts payable and accrued liabilities                 3,777,000           4,391,000           3,811,000
                                                                       ------------        ------------        ------------
        Net cash provided by operating activities                        10,666,000           8,569,000           4,374,000

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of fixed assets                                            (4,377,000)         (9,845,000)         (7,435,000)
     Businesses acquired, net of cash received                                   --          (8,284,000)        (13,089,000)
     Proceeds from sale of fixed assets                                     397,000             562,000             908,000
                                                                       ------------        ------------        ------------
        Net cash used in investing activities                            (3,980,000)        (17,567,000)        (19,616,000)

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from sale of stock                                                  --              13,000          20,410,000
    Borrowings on line of credit, net                                    (9,667,000)          8,060,000           2,769,000
    Proceeds from issuance of long-term debt                              7,128,000                  --          18,276,000
    Payment of amounts due to Christiana                                         --                  --          (3,000,000)
    Payment of long-term debt                                            (3,902,000)           (775,000)         (4,823,000)
    Purchase of treasury stock                                                   --            (578,000)                 --
    Distribution for income taxes                                                --            (381,000)           (134,000)
    Distribution to Christiana related to merger agreement                       --                  --         (13,312,000)
                                                                       ------------        ------------        ------------
        Net cash (used in) provided by financing activities              (6,441,000)          6,339,000          20,186,000
                                                                       ------------        ------------        ------------

NET INCREASE (DECREASE) IN CASH AND
        CASH EQUIVALENTS                                                    245,000          (2,659,000)          4,944,000

BEGINNING CASH AND CASH EQUIVALENTS                                       2,294,000           4,953,000               9,000
                                                                       ------------        ------------        ------------

ENDING CASH AND CASH EQUIVALENTS                                       $  2,539,000        $  2,294,000        $  4,953,000
                                                                       ============        ============        ============

Supplemental Disclosures of Cash Flow Information
    Interest paid                                                      $  4,962,000        $  5,977,000        $  4,791,000
    Amounts paid for income taxes                                      $  1,506,000        $  3,924,000        $  1,922,000
</TABLE>



                See notes to consolidated financial statements.






                                       22
<PAGE>

C2, INC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2001, 2000 AND 1999

A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

DESCRIPTION OF BUSINESS: C2 is a Milwaukee-based public company principally
engaged in third-party integrated logistic and facility management services and
equipment manufacturing. C2, Inc.'s operating units include Total Logistic
Control, LLC, a provider of refrigerated and non-refrigerated third-party
integrated logistic and facility management services, and Zero Zone, Inc., a
manufacturer of refrigerated and freezer display cases used in grocery,
convenience and drug store chains for retail merchandising of food, beverage and
floral products.

INITIAL PUBLIC OFFERING: On March 4, 1999, C2, Inc. common shares were issued to
subscribers contemporaneous with the distribution of the cash merger
consideration attributable to the Christiana Companies, Inc. (formerly NYSE:CST)
("Christiana") and Weatherford International, Inc. (NYSE:WFT) ("Weatherford")
transaction which closed on February 8, 1999. The stock offering was fully
subscribed and 5,202,664 shares were issued at $4.00 per share. Total proceeds
to the Company were $20,410,000, net of offering costs of $400,000.

CONCENTRATION OF CREDIT RISK: In 2001 and 2000, two customers represented
approximately 31.7 percent and 27.5 percent, respectively of total consolidated
revenues. In 1999, one customer represented 16% of total consolidated revenues.

PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the
accounts of C2, Inc. and its subsidiaries, Total Logistic Control, LLC and Zero
Zone, Inc. All material intercompany transactions have been eliminated in
consolidation.

ACQUISITIONS: In connection with the above-mentioned merger, on February 8,
1999, C2, Inc. acquired a two-thirds interest in Total Logistic Control, LLC
("TLC") for $10,667,000. TLC provides integrated third-party logistic services
which include refrigerated and non-refrigerated warehousing, transportation,
logistic management services, facilities and operations management, food
distribution, product fulfillment, international customs house brokerage and
freight forwarding and packaging.

On March 12, 1999, C2, Inc. purchased 70.6 percent of the common stock of Zero
Zone, Inc. ("Zero Zone") in connection with a $19,500,000 recapitalization plan
for Zero Zone. C2, Inc. invested $3,000,000 in common stock and $1,500,000 in
capital notes.

On September 1, 2000, TLC acquired substantially all the assets of the ProSource
Group, Inc. located in Aurora, Il. ProSource provides dedicated third-party
management to operate both manufacturing and distribution centers primarily for
Fortune 500 consumer products companies.

On September 30, 2000, C2, Inc. purchased the remaining 33.3 percent of TLC for
$8,284,000. As of September 30, 2000, TLC was a wholly-owned subsidiary of C2,
Inc. The premium over the carrying value of minority interest was $992,000 all
of which was allocated to TLC's fixed assets.

These acquisitions have been accounted for as purchase transactions.


REVENUE RECOGNITION: Logistic service revenues are recognized when goods are
delivered to the customer or when services are provided. Costs and related
expenses are recorded as incurred. Revenues and costs related to product sales
are recognized when products are shipped to customers.

Prior to fiscal 2000, all of TLC's business was reflected as logistics revenue
and logistics expense. A portion of TLC's business includes the purchase of
product for resale. As a result, 2000 and prior




                                       23
<PAGE>

periods have reclassified certain product related activities of TLC from
logistics revenue and expenses to product sales and cost of product sales.

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.

CASH AND CASH EQUIVALENTS: Cash and cash equivalents consist of cash and U.S.
Treasury securities having a maturity within three months of year end.

ACCOUNTS RECEIVABLE: Accounts receivable are presented net of an allowance for
uncollectible accounts of $468,000 and $415,000 at December 31, 2001 and 2000,
respectively. The provision for bad debts was $90,000, $110,000, and $82,000 for
the years ended December 31, 2001, 2000, and 1999, respectively.

INVENTORIES: Inventories at TLC consist of repair parts and commodities and
other food products held for distribution under an exclusive logistic contract.
These items are carried at their lower of FIFO (first-in, first-out) cost or
market value. At Zero Zone, inventories are stated at the lower of FIFO cost or
market value and include materials, labor and manufacturing overhead. As of
December 31, 2001 and 2000, inventories are comprised of the following:
<TABLE>
<CAPTION>
                                                                                     2001                2000
                                                                               -----------------    ----------------
<S>                                                                            <C>                  <C>
Repair parts                                                                   $     108,000        $     130,000
Commodities and other                                                              3,207,000            2,377,000
Raw materials and work in process                                                  3,780,000            3,292,000
Finished goods                                                                     2,545,000            2,776,000
                                                                               -----------------    ----------------
                                                                               $   9,640,000        $   8,575,000
                                                                               =================    ================
</TABLE>

PROPERTY, PLANT AND EQUIPMENT: Fixed assets are carried at cost, less
accumulated depreciation, which is computed using both straight-line and
accelerated methods for financial reporting purposes. The cost of major renewals
and improvements are capitalized; repair and maintenance costs are expensed as
incurred. Tires related to new equipment are included in the capitalized
equipment cost and depreciated using the same methods as equipment. Replacement
tires are expensed when placed in service. A summary of the cost of fixed
assets, accumulated depreciation and the estimated useful lives for financial
reporting purposes is as follows:
<TABLE>
<CAPTION>
                                                            AT DECEMBER 31,
                                              --------------------------------------------         ESTIMATED
                                                     2001                    2000                USEFUL LIVES
                                              --------------------    --------------------    --------------------
<S>                                           <C>                     <C>                     <C>
Land                                            $    4,665,000          $    4,665,000                      --
Machinery and equipment                             37,483,000              36,386,000               3-7 years
Buildings and improvements                          80,152,000              78,504,000             30-40 years
Construction in progress                               610,000                 501,000                      --
                                              --------------------    --------------------
                                                   122,910,000             120,056,000
Less:  Accumulated depreciation                    (49,831,000)            (43,489,000)
                                              --------------------    --------------------
                                                $   73,079,000          $   76,567,000
                                              ====================    ====================
</TABLE>






                                       24
<PAGE>

ACCRUED LIABILITIES:  The major components of accrued liabilities are:
<TABLE>
<CAPTION>
                                                                        At December 31,
                                                        -------------------------------------------------
                                                                 2001                         2000
                                                        ------------------------      -------------------
<S>                                                     <C>                           <C>
     Deferred revenue                                       $         2,088,000          $       600,000
     Other                                                           10,890,000               10,031,000
                                                        ------------------------      -------------------
                                                            $        12,978,000          $    10,631,000
                                                        ========================      ===================
</TABLE>

Deferred revenue arises as handling revenue is billed on the front end when
product is received at a warehouse. Revenue is fully earned when the product is
delivered out of the warehouse. The portion related to handling when the product
leaves the warehouse is treated as deferred revenue and recognized when the
product is shipped.

GOODWILL: Goodwill has been amortized on a straight-line basis over 40 years
($537,000 in 2001, $537,000 in 2000 and $469,000 in 1999, respectively). The
accumulated amortization at December 31, 2001 and 2000 was $2,301,000 and
$1,764,000, respectively. C2, Inc. continually evaluates whether events and
circumstances have occurred that indicate the remaining useful life may warrant
revision or that the remaining balance of goodwill may not be recoverable. C2,
Inc. evaluates for possible impairment using an estimate of future discounted
cash flows to measure whether the goodwill is impaired. If impaired, a loss is
recognized for the amount by which the carrying value exceeds the fair value. No
amounts were deemed impaired.

In June 2001, the FASB issued FAS Nos. 141, "Business Combinations" and No. 142,
"Goodwill and Other Intangible Assets" effective for fiscal years beginning
after December 31, 2001. Under the new rules, goodwill and intangible assets
deemed to have indefinite lives will no longer be amortized, but will be subject
to periodic impairment tests in accordance with the statements. Other intangible
assets will continue to be amortized over their useful lives. The statement also
requires business combinations initiated after June 30, 2001 to be accounted for
using the purchase method of accounting, and broadens the criteria for recording
intangible assets separate from goodwill.

Effective January 1, 2002, all amortization expense on goodwill and intangible
assets with indefinite lives ceased. The Company anticipates that the
application of the nonamortization provisions will increase annual net income by
approximately $537,000, or $0.11 per share as compared to 2001. During the first
quarter of 2002, the Company performed the first of the required impairment
tests of goodwill and indefinite lived intangible assets as of January 1, 2002.
No amounts were deemed impaired.

EXTRAORDINARY ITEM: During the third quarter of 1999, Zero Zone completed a
refinancing of its senior debt which entailed the issuance of both non-taxable
and taxable industrial revenue bonds and an increase in its bank credit
facility. A pretax extraordinary charge of $362,000 related to the debt
refinancing was incurred during that quarter. The charge to C2, Inc. was
$153,000, net of tax and minority interest.

PRO FORMA RESULTS: C2, Inc was organized to acquire 66.7 percent of Total
Logistic Control, LLC in connection with a merger transaction between Christiana
and Weatherford completed on February 8, 1999. On March 12, 1999, C2, Inc.
acquired 70.6 percent of Zero Zone, Inc. On September 30, 2000, C2, Inc.
acquired the remaining 33.3 percent of TLC. The consolidated financial
statements for the year ended December 31, 1999 reflect the results of TLC from
January 1, 1999 and of Zero Zone from March 12, 1999. Because the controlling
ownership of TLC is deemed to be substantially the same before and after its
acquisition by C2, Inc., historical financial statements for the year ended
December 31, 1999 presents the results of operations of TLC, without regard to
minority interest or capital structure changes. The following unaudited pro
forma results of operations have been prepared assuming these acquisitions had
occurred on January 1, 1999. This pro forma information is not necessarily
indicative of those results of operations that would have occurred had the
acquisitions been made on those dates, or of results which may occur in the
future.



                                       25
<PAGE>



<TABLE>
<CAPTION>
             PRO FORMA OPERATING RESULTS                                              (UNAUDITED)
                                                                                    AT DECEMBER 31,
                                                                      --------------------------------------------
                                                                             2000                    1999
                                                                      --------------------    --------------------
<S>                                                                   <C>                     <C>
Revenues                                                                  $183,450,000            $151,540,000
Earnings from operations                                                    11,054,000               9,531,000
Net earnings before extraordinary item                                       1,703,000               1,290,000
Extraordinary item                                                                  --                 153,000
Net earnings                                                                 1,703,000               1,137,000
Basic earnings per share before extraordinary item                                0.33                    0.25
Basic earnings per share                                                          0.33                    0.22
Diluted earnings per share before extraordinary item                              0.32                    0.24
Diluted earnings per share                                                        0.32                    0.21
</TABLE>

EARNINGS PER SHARE: Following is a reconciliation of basic and diluted earnings
per share for the years ended December 31, 2001, 2000, and 1999.
<TABLE>
<CAPTION>
                                                                      YEAR ENDED DECEMBER 31,
                                                --------------------------------------------------------------------
                                                       2001                    2000                    1999
                                                --------------------    --------------------    --------------------
<S>                                             <C>                     <C>                     <C>
Basic Earnings per Share:
Net earnings available to common
    shareholders before extraordinary
     item                                          $  812,000                 $1,995,000             $1,408,000
Net earnings available to common
    shareholders                                   $  812,000                 $1,995,000             $1,255,000
Average shares of common stock
    outstanding                                     5,081,864                  5,106,043              5,202,664

Basic earnings per share before
    extraordinary item                             $     0.16                 $     0.39             $     0.27

Basic earnings per share                           $     0.16                 $     0.39             $     0.24

Diluted Earnings per Share:
Average shares of common stock
    outstanding                                     5,081,864                  5,106,043              5,202,664
Incremental common shares applicable
    to common stock options                           137,569                    160,746                109,807
                                                   ----------                 ----------             ----------
Average common shares assuming full
    dilution                                        5,219,433                  5,266,789              5,312,471

Diluted earnings per share before
    extraordinary item                             $     0.16                 $     0.38             $     0.27

Diluted earnings per share                         $     0.16                 $     0.38             $     0.24
</TABLE>


At December 31, 2001, options to purchase 50,000 shares were not included in the
above calculation because the exercise price exceeded the average market price.

ADVERTISING COSTS: The Company expenses advertising costs as incurred. Total
advertising expense was $222,000, $505,000 and $426,000 for 2001, 2000 and 1999,
respectively. Advertising costs are charged to selling, general and
administrative expenses.

LONG-LIVED ASSETS: The Company continually evaluates whether events and
circumstances have occurred that may indicate the remaining useful life of
long-lived assets may warrant revision or that the remaining balance may not be
recoverable. When factors indicate that long-lived assets should be evaluated
for possible impairment, the Company uses an estimate of discounted future cash
flows over the remaining




                                       26
<PAGE>

life of the long-lived assets to measure whether the long-lived assets are
impaired. If impaired, a loss is recognized for the amount by which the carrying
value exceeds the fair value.

In August 2001, the Financial Accounting Standards Board ("FASB") issued
Financial Accounting Standards ("FAS") No. 144, "Accounting for Impairment or
Disposal of Long-Lived Assets." This statement established a single accounting
model for long-lived assets to be disposed of by sale and provides additional
implementation guidance for assets to be held and used and assets to be disposed
of other than by sale. The statement supersedes FAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" and
amends the accounting and reporting provisions of Accounting Principals Board
Opinion No. 30 related to the disposal of a segment of a business. The statement
is effective for fiscal years beginning after December 15, 2001. The Company has
not yet determined the effect that the adoption of the standard will have on its
financial position and results of operations.

OTHER ASSETS: Other assets represent primarily deferred charges and cash
surrender value of officer's life insurance.

RECLASSIFICATIONS: Certain reclassifications have been made in the 2000 and 1999
statements to conform with 2001 presentation.

B. RELATED PARTY TRANSACTIONS:

The Company's headquarters shares offices with Lubar & Co. Incorporated. The
office building in which C2, Inc. is headquartered is owned by 700 North Water
LLC which is owned by Sheldon B. Lubar, David J. Lubar, the Lubar Family (90
percent) and William T. Donovan (5 percent). Sheldon B. Lubar and David J. Lubar
are officers and directors of Lubar & Co. Incorporated, and each own 50 percent
of its stock. The Company pays its pro rata share of the rent, utilities and
other expenses of these premises (approximately $7,000 per month). A total of
$78,000 was paid in 2001. Certain officers and employees of C2, Inc. also
provide services to Lubar & Co. Incorporated. An allocation of compensation for
services is based on time spent on the respective entity and is periodically
reviewed.

In 2000 and 1999 TLC made contractual distributions to Christiana for income
taxes of $381,000 and $134,000. Also during 1999, TLC made distributions related
to dividends, note retirements and interest to Christiana of $13,312,000. These
distributions to Christiana are reflected as reductions to Members' Equity in
1999.

C. INDEBTEDNESS:

The following is a summary of long term indebtedness as of December 31:

<TABLE>
<CAPTION>
                                                             2001                   2000
                                                       ------------------    -------------------
<S>                                                    <C>                   <C>
Revolving credit agreement                                 $33,000,000           $53,300,000
Term loan                                                   24,083,000                    --
Bonds payable                                                8,420,000             8,920,000
Subordinated notes                                           3,936,000             3,993,000
                                                       ------------------    -------------------
                                                            69,439,000            66,213,000
Less:  Current portion of long-term debt                    (3,167,000)             (500,000)
                                                       ------------------    -------------------
                                                           $66,272,000           $65,713,000
                                                       ==================    ===================
</TABLE>

On June 8, 2001, TLC entered into an amended and restated credit agreement with
its bank group. The new credit facilities include a $40 million, 5-year reducing
revolving credit agreement and a $25 million, 5-year term loan. Both facilities
are secured by liens or security interests on substantially all of the assets of
TLC and mortgages on its real estate. The revolving credit facility steps down
$2 million per year beginning July 1, 2002, with a final maturity of $32 million
on June 30, 2006. The term loan amortizes




                                       27
<PAGE>

$416,666 per quarter commencing September 30, 2001, with a final payment of
$17,083,346 due on June 30, 2006. At December 31, 2001, outstandings under these
facilities totaled $57,083,000. The interest rate on these facilities are LIBOR
or prime rate based, at TLC's option, and vary pursuant to a pricing grid based
on the ratio of TLC's funded debt to EBITDA, as defined in the credit agreement.
At December 31, 2001, borrowings under these facilities carried an average
interest rate of LIBOR plus 3 percent, or 5.92 percent. As of December 31, 2001,
TLC was in compliance with all required covenants.

On September 28, 2001, TLC entered into two Interest Rate Swap agreements
("Swaps") which effectively fixed the interest rate payable by TLC on (a)
$5,000,000 of outstanding debt for the period to October 2, 2004, and (b)
$5,000,000 of outstanding debt for the period to June 30, 2006. The effective
interest rate for each Swap was fixed at 3.92 percent and 4.47 percent,
respectively, plus the LIBOR spread which is subject to reduction based on TLC's
leverage ratio, as defined. At December 31, 2001, the fixed interest rates for
the underlying principal under the Swap transactions were 6.92 percent and 7.47
percent, respectively.

On October 31, 2001, TLC entered into two more Swaps which effectively fixed the
interest rate payable by TLC on (a) $5,000,000 of outstanding debt for the
period to November 2, 2004 , and (b) $5,000,000 of outstanding debt through June
30, 2006. The effective interest rate for each Swap was fixed at 4.3175 percent
and 3.6725 percent, respectively, plus the LIBOR spread which is subject to
reduction based on TLC's leverage ratio, as defined. At December 31, 2001, the
fixed interest rates for the underlying principal under the Swap transactions
were 7.3175 percent and 6.6725 percent, respectively.

At TLC, the unrealized appreciation on these Swap transactions at December 31,
2001 was $231,000, which was recorded as a separate component of equity in other
comprehensive income.

On August 31, 1999, Zero Zone completed new financing facilities with a major
commercial bank. The facilities include:

     -     A revolving line of credit in the amount of $7,500,000. Interest on
           this line is at LIBOR or Prime based at the Company's option plus an
           amount that varies determined by the ratio of senior funded debt to
           EBITDA. At December 31, 2001, the interest rate was 3.644 percent.
           Outstanding borrowings under this facility at December 31, 2001 and
           2000 were $1,163,000 and $3,830,000, respectively. Zero Zone's
           revolving credit requires the Company maintain a defined level of net
           worth and debt service coverage computed quarterly. Zero Zone was in
           compliance with all covenants at December 31, 2001 and 2000.

     -     A tax exempt Industrial Revenue Bond in the amount of $3,420,000.
           This bond has a 20-year life with no annual principal amortization.
           Interest is reset weekly and at December 31, 2001, it was 1.8
           percent.

     -     A taxable Industrial Revenue Bond in the Amount of $5,000,000. This
           bond has annual payments of $500,000 commencing September 1, 2000
           with a final payment due September 1, 2011. The effective life of
           this bond is 12 years. Interest is reset weekly and at December 31,
           2001, was 2.1 percent.

     -     Both Industrial Revenue Bonds are secured by letters of credit issued
           by a major commercial bank and are secured by its assets.

     -     Subordinated notes in the amount of $2,350,000 payable to former
           shareholders of Zero Zone. These notes are payable $1,000,000 per
           year, commencing in March 2002 with a final maturity of $350,000,
           payable March 2004. Interest on these notes is 8 percent.

     -     Capital notes in the amount of $3,000,000, payable to existing
           shareholders of Zero Zone. These notes are payable in three equal
           installments beginning December 31, 2005. Interest on




                                       28
<PAGE>

           these notes is 8.5 percent of which 3.4 percent is payable in cash
           and 5.1 percent accrues as Payable in Kind (PIK) notes.

     -     At December 31, 2001, Zero Zone has subordinated PIK notes totaling
           $458,000, which accrue interest at 8.5 percent. These notes are
           payable on demand after March 12, 2004.

On November 2, 2001, Zero Zone entered into an Interest Rate Swap Agreement with
a major commercial bank. This agreement effectively fixes the interest rate
payable on the taxable Industrial Revenue Bond in the amount of $5,000,000 at
4.53 percent until August 1, 2011. At December 31, 2001, this Swap transaction
had unrealized appreciation of $113,000.

C2, Inc. has a $15,000,000 unsecured line of credit, renewable annually.
Borrowings under this line bear interest at either LIBOR plus 150 basis points,
or prime at the Company's option. No compensating balances are required under
the terms of this credit facility. There were no outstanding borrowings under
this line at December 31, 2001.

    As of December 31, 2001, the future maturities of consolidated indebtedness
are as follows:

<TABLE>
<S>                                       <C>
               2002                       $      3,167,000
               2003                              3,167,000
               2004                              2,517,000
               2005                              4,167,000
               2006                             50,915,000
               Thereafter                        5,506,000
</TABLE>

At December 31, 2001, the fair value of the long-term debt was not materially
different from the carrying value.



                                       29
<PAGE>




D. INCOME TAXES:

The tax provision recorded by C2, Inc. for 2001, 2000 and 1999 represents taxes
booked at the C2, Inc. level for corporate activity, operations related to Zero
Zone and its share of TLC income.

The summary of the provision for income taxes is as follows:
<TABLE>
<CAPTION>
                                                  YEAR ENDED DECEMBER 31,
                                   ------------------------------------------------------
                                        2001               2000                1999
                                   ----------------   ----------------    ---------------
<S>                                <C>                <C>                 <C>
                   Current:
                      Federal      $    (511,000)      $      846,000      $    1,961,000
                      State              (90,000)             124,000             277,000
                      Deferred         1,628,000            1,300,000            (619,000)
                                   -----------------   -----------------   ----------------
                                   $   1,027,000       $    2,270,000      $    1,619,000
                                   =================   =================   ================

</TABLE>

The components of deferred income taxes are:
<TABLE>
<CAPTION>
                                                                   AT DECEMBER 31,
                                                     -----------------------------------------
                                                            2001                  2000
                                                     -------------------   -------------------
<S>                                                  <C>                   <C>
Deferred Tax Assets:
    NOL carry forward                                   $    850,000                    --
    AMT credit carry forward                                 323,000                    --
   Compensation related accruals                             929,000           $   527,000
   Bad debt reserve                                          159,000                77,000
   Other                                                     434,000               463,000
                                                     -------------------   -------------------
   Total Deferred Tax Assets                            $  2,695,000           $ 1,067,000
                                                     -------------------   -------------------
     (Included in Prepaids and other assets)

Deferred Tax Liabilities:
   Tax Over Book Depreciation                           $  1,910,000           $ 1,254,000
                                                     -------------------   -------------------
           (Included in Other liabilities)

Net Deferred Tax Asset (Liability)                      $    785,000           $  (187,000)
                                                     ===================   ===================
</TABLE>

The net operating loss carry forward will expire in 20 years. The alternative
minimum tax credit carry forward has an indefinite term. No valuation reserves
were deemed necessary for these carry forwards.

A reconciliation of the statutory Federal income tax rate for years ended
December 31, 2001 and 2000 are as follows:
<TABLE>
<CAPTION>
                                                                              AT DECEMBER 31,
                                                                     ----------------------------------
                                                                          2001                2000
                                                                     ---------------     --------------
<S>                                                                  <C>                 <C>
Statutory Federal income tax rate                                         34%                 34%
Increase in taxes resulting from state income tax, net                     6%                  6%
Non-deductible goodwill amortization                                       4%                  4%
Other, net                                                                (2)%                (1)%
                                                                     ---------------     --------------
                                                                          42%                 43%
                                                                     ===============     ==============
</TABLE>




                                       30
<PAGE>



E. STOCK OPTIONS AND EMPLOYEE BENEFIT PLANS:

In 1999 the Company adopted a stock option and stock appreciation plan and has
520,000 shares of its common stock reserved for issuance under a stock option
plan, which permits the granting of options as well as appreciation rights and
awards. Options are granted at market values and vest ratably over one to five
years. At December 31, 2001, 187,200 options were exercisable. No appreciation
rights have been granted. The following table summarizes information concerning
outstanding and exercisable options at December 31, 2001.

<TABLE>
<CAPTION>
     Year of               No. of             Exercise          Vesting            Vested at
      Grant               Options              Price          Period (yrs)          12/31/01
------------------------------------------------------------------------------------------------
<S>                    <C>                    <C>             <C>                <C>
       1999                   331,000           $    4.00          5                    132,400
       2000                    12,000                5.00          5                      2,400
       2000                    12,000                5.25          5                      2,400
       2001                    50,000                7.25      Immediate                 50,000
                       ---------------                                           ---------------

                              405,000                                                   187,200
                       ===============                                           ===============
</TABLE>

The weighted-average exercise price of total stock options outstanding at
December 31, 2001 was $4.47 per share. Additionally, the weighted average
remaining contractual life in years of stock options outstanding at December 31,
2001 was 8.0 years.

Changes in stock options outstanding are summarized as follows:
<TABLE>
<CAPTION>
                                                                      NUMBER OF        EXERCISE PRICE
                                                                       OPTIONS           PER OPTION
                                                                     -------------    -----------------
<S>                                                                  <C>              <C>
Options granted in 1999                                                 348,000        $      4.00
Balance December 31, 1999                                               348,000                 --
     Options granted                                                     12,000               5.00
     Options granted                                                     12,000               5.25
     Options cancelled                                                  (13,600)             (4.00)
     Options exercised                                                   (3,400)             (4.00)
                                                                     -------------
Balance December 31, 2000                                               355,000
     Options granted                                                     50,000               7.25
                                                                     -------------
Balance December 31, 2001                                               405,000
                                                                     =============
</TABLE>



Pro forma information regarding net income and earnings per share is required by
Statement of Financial Accounting Standards No. 123 and has been determined as
if the Company had accounted for its stock options under the fair value method
as provided therein. The fair value of each option is estimated on the date of
the grant using an option pricing model with the following weighted-average
assumptions used for options issued in 2001, 2000 and 1999: risk-free interest
rate of 6.5 percent, expected remaining life of 1 to 5 years depending on the
terms of the options granted, expected volatility of 57.6 percent, and no
expected dividends; for options issued in 2000 the expected volatility is 83.6
percent; for options issued in 2001 the expected volatility is 66.1 percent. The
weighted average fair value of options granted in 2001 was $2.05.




                                       31
<PAGE>



For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period of 1 to 5 years. Set
forth below is a summary of the Company's net earnings and earnings per share as
reported and pro forma, as if the fair value based method of accounting defined
in SFAS No. 123 had been applied.

<TABLE>
<CAPTION>
                                            December 31, 2001                            December 31, 2000
                                   ------------------------------------        ---------------------------------------
                                     As Reported          Pro Forma                As Reported           Pro Forma
                                   ---------------    -----------------        ------------------    -----------------
<S>                                <C>                <C>                      <C>                   <C>
Net earnings                       $   812,000        $     529,000            $    1,995,000        $    1,855,000
Basic earnings per share           $      0.16        $        0.10            $         0.39        $         0.36
</TABLE>


The Company has 401(k) plans covering substantially all of its employees. The
costs under these plans have not been material. The Company does not provide
post-employment medical or life insurance benefits.

F. COMMITMENTS:

TLC and Zero Zone have operating leases for warehouse and office facilities and
transportation equipment. Rental expense under these leases was $10,775,000,
$9,098,000 and $6,606,000 in 2001, 2000 and 1999, respectively. At December 31,
2001, future minimum lease payments under noncancellable operating leases are as
follows:

<TABLE>
<S>                                               <C>
                         2002                     $8,358,000
                         2003                      7,090,000
                         2004                      5,299,000
                         2005                      4,196,000
                         2006                      3,819,000
                       Thereafter                  5,708,000
</TABLE>

G. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES:

The Company has limited involvement with derivative financial instruments and
does not use them for trading purposes. Prior to 2001, there were no derivative
financial instruments outstanding. As of December 31, 2001, interest rate swaps
are the only derivative financial instruments held by the Company. These
interest rate swaps were put into place during 2001 in an effort to manage
certain interest rate risks. The interest rate swaps, designated as cash flow
hedging relationships, were entered in an effort to mitigate the risk of rising
interest rates in future periods by converting certain floating rate debt
instruments into fixed rate debt. As these interest rate swaps are deemed to be
effective, gains and losses on these instruments are deferred in other
comprehensive income and recognized in interest expense over the period in which
the Company accrues interest expense on the related debt instruments. See Note
C.




                                       32
<PAGE>



H.  SEGMENT INFORMATION:

Prior to 2000 C2, Inc. divided its operations into three discrete segments -
warehousing services, logistic services and product sales. In recent years C2,
Inc.'s subsidiary, TLC, has operated increasingly as a fully integrated logistic
service provider which has resulted in a change in the composition of its
reportable segments in conformance with SFAS No. 131. TLC's integrated logistic
services include providing warehousing, transportation, distribution services,
packaging and food processing and facility management services. C2, Inc. now
presents its operations in two segments, logistic services and product sales.
Product sales includes the purchase for resale of certain food products by TLC
and open and glass-door refrigerated and frozen display cases manufactured and
sold by Zero Zone. Products within this segment are sold primarily to grocery,
municipal school districts, convenience and drug store chains throughout the
United States. These operating segments are determined based upon the primary
services and product lines provided to customers. These operating segments are
restated for fiscal 1999 to conform with the changes in segment composition for
2000.

The accounting policies used by C2, Inc.'s business segments are the same
accounting policies used in the preparation of its financial statements. Segment
profit is revenues less direct and allocable operating expenses and selling,
general and administrative expenses. Corporate items include interest income,
amortization expense, selling, general and administrative expenses, other
income/expense and income taxes at the corporate level only. All TLC
depreciation and amortization has been included as a component of logistic
services segment profit. Corporate assets are principally cash and cash
equivalents, selected goodwill, prepaid items and certain non-operating fixed
assets. Corporate capital expenditures consist primarily of computer equipment
and software.

Financial information by business segment is as follows:
<TABLE>
<CAPTION>
                                               Logistic           Product
                                               Services            Sales          Corporate              Total
                                           ---------------------------------------------------------------------------
<S>                                             <C>             <C>              <C>                  <C>
2001
Revenues                                      $ 147,663,000     $  64,782,000    $         --         $ 212,445,000
Interest expense                                  4,138,000           935,000         203,000             5,276,000
Segment net earnings                                326,000           805,000        (319,000)              812,000
Total assets                                     96,745,000        22,167,000       9,839,000           128,751,000
Capital expenditures                              3,600,000           763,000          14,000             4,377,000
Depreciation and amortization                     6,933,000         1,206,000          14,000             8,153,000

2000
Revenues                                      $ 113,376,000     $  70,074,000    $         --         $ 183,450,000
Interest expense                                  4,814,000         1,128,000         148,000             6,090,000
Segment net earnings                                264,000         1,997,000        (266,000)            1,995,000
Total assets                                     94,582,000        25,094,000      10,224,000           129,900,000
Capital expenditures                              8,200,000         1,632,000          13,000             9,845,000
Depreciation and amortization                     7,142,000           741,000          12,000             7,895,000

1999
Revenues                                      $  96,132,000     $  49,544,000              --         $ 145,676,000
Interest expense                                  3,885,000         1,070,000              --             4,955,000
Extraordinary item, net                                  --           153,000              --               153,000
Segment net earnings                                (22,000)        1,384,000        (107,000)            1,255,000
Total assets                                     90,606,000        27,113,000       5,908,000           123,627,000
Capital expenditures                              5,899,000         1,531,000           5,000             7,435,000
Depreciation and amortization                     6,760,000           759,000              --             7,519,000
</TABLE>




                                       33
<PAGE>

I.  SUBSEQUENT EVENTS:

On February 5, 2002, Zero Zone acquired the assets and assumed certain
liabilities of Systematic Refrigeration, Inc. Additional consideration is
contingent upon Systematic achieving certain future performance targets through
2006. Systematic, located in Ramsey, Minnesota, is a supplier of refrigeration
systems to the retail grocery industry and various industrial markets.
Systematic is an independent producer of refrigeration systems with annual
revenues of approximately $10,000,000. The company will be operated under the
trade name Zero Zone Refrigeration.

On January 8, 2002, Zero Zone entered into a second Interest Rate Swap Agreement
with a major commercial bank. This agreement fixed the interest rate on the
tax-exempt Industrial Revenue Bond in the amount of $3,420,000 at 4.135 percent
until January 3, 2012.



                                       34
<PAGE>



C2, INC AND SUBSIDIARIES
QUARTERLY FINANCIAL INFORMATION (1)
(unaudited)

<TABLE>
<CAPTION>
                                                                             QUARTER ENDED
                                      ------------------------------------------------------------------------------------------
                                           MARCH             JUNE            SEPTEMBER          DECEMBER            TOTAL
                                      ------------------------------------------------------------------------------------------
<S>                                   <C>                  <C>               <C>               <C>               <C>
2001
Revenues                                 $ 48,930,000      $ 54,928,000      $ 52,862,000      $ 55,725,000      $212,445,000
Earnings from operations                    2,174,000         2,310,000         1,376,000         1,635,000         7,495,000
Earnings before taxes                         727,000         1,002,000           172,000           498,000         2,399,000
   and minority interest
Net earnings                                  282,000           307,000             3,000           220,000           812,000
Basic earnings per share                         0.06              0.06              0.00              0.04              0.16
Diluted earnings per share                       0.05              0.06              0.00              0.04              0.16(1)


2000
Revenues                                 $ 46,507,000      $ 43,929,000      $ 45,081,000      $ 47,933,000      $183,450,000
Earnings from operations                    2,825,000         3,176,000         2,543,000         2,609,000        11,153,000
Earnings before taxes                       1,447,000         1,686,000         1,111,000         1,068,000         5,312,000
   and  minority interest
Net earnings                                  546,000           636,000           426,000           387,000         1,995,000
Basic earnings per share                         0.11              0.13              0.08              0.08              0.39(1)
Diluted earnings per share                       0.10              0.12              0.08              0.08              0.38
</TABLE>


FIVE YEAR FINANCIAL INFORMATION (2)

<TABLE>
<CAPTION>
                                                                       YEAR ENDED DECEMBER 31
                                      ------------------------------------------------------------------------------------------
                                            2001             2000              1999              1998               1997
                                      ------------------------------------------------------------------------------------------
<S>                                   <C>                <C>                <C>              <C>                <C>
Revenues                                $212,445,000     $183,450,000       $145,676,000     $ 90,610,000       $ 90,100,000

Net Earnings                                 812,000        1,995,000          1,255,000        4,375,000         13,571,000

Basic Earnings Per Share                        0.16             0.39               0.24             0.84               2.61

Total Assets                             128,751,000      129,900,000        123,627,000       87,061,000         89,434,000

Long-Term Liabilities                     68,606,000       67,566,000         67,432,000       38,607,000         36,967,000

Shareholders' Equity                      28,656,000       27,500,000         26,070,000       35,457,000         42,839,000
</TABLE>


     (1)  Difference due to rounding.
     (2)  The fiscal years ended December 31, 1998 and 1997 reflect the
          historical financial information of Christiana Companies, Inc. of
          which TLC was a part.



                                       35
<PAGE>
CORPORATE INFORMATION

DIRECTORS

John A. Becker
     Retired Vice Chairman & COO
     Firstar Corporation

Nicholas F. Brady
     Chairman
     Darby Overseas Investments, LTD.

William T. Donovan
     President & CEO
     C2, Inc.

William H. Lacy
     Retired Chairman & CEO
     MGIC Investment Corporation

David J. Lubar
     Chairman
     C2, Inc.

Sheldon B. Lubar
     Chairman
     Lubar & Co.

OFFICERS

William T. Donovan
     President and Chief Executive Officer

David J. Lubar
     Chairman

Oyvind Solvang
     Vice President
     Business Development

David E. Beckwith
     Secretary

 Betty J. White
      Treasurer, Controller and
      Assistant Secretary

 Gary R. Sarner
      Chief Executive Officer
      Total Logistic Control, LLC

 Jack Van der Ploeg
      Chief Executive Officer
      Zero Zone, Inc.

TRANSFER AGENT AND REGISTRAR
----------------------------
U.S. Bank, N.A. Corporate Trust Services
P.O. Box 2077
Milwaukee, Wisconsin 53201

CORPORATE HEADQUARTERS
----------------------
700 N. Water, Suite 1200
Milwaukee, WI 53202
Telephone: (414) 291-9000
Facsimile: (414) 291-9061

WEB SITE (www.C2-inc.com)
The C2, Inc. web site contains detailed company information, news releases, and
print-formatted SEC-filing financials. To receive e-mails with C2 news releases,
sign up via the Inquiry Section of the website.

EXCHANGE LISTING
C2, Inc. common stock trades on the Nasdaq Stock Market(R)under the symbol: CTOO

ANNUAL MEETING
C2, Inc. Annual Meeting of Shareholders will be held at 9:00 a.m. on April 23,
2002 at the Galleria Conference Room, 777 East Wisconsin Avenue, Milwaukee,
Wisconsin.






                                       36
<PAGE>



                                INDEX TO EXHIBITS



      EXHIBIT NO.                 BRIEF DESCRIPTION OF EXHIBIT

          2.1       Amended and Restated Agreement and Plan of Merger, dated as
                    of October 14, 1998, by and among Christiana Acquisition
                    Co., Weatherford International, Inc., Christiana Companies,
                    Inc. and C2, Inc. [Incorporated by referenced to Exhibit 2.1
                    to C2, Inc.'s Form S-1 Registration Statement (Reg. No.
                    333-460270)].

          2.2       Purchase Agreement dated as of December 12, 1997, as amended
                    by amendment No. 1 dated May 26, 1998 and Amendment No. 2
                    dated October 13, 1998, by and among Weatherford
                    International, Inc., Total Logistic Control, LLC, Christiana
                    Companies, Inc. and C2, Inc. [Incorporated by referenced to
                    Exhibit 2.2 C2, Inc.'s Form S-1 Registration Statement (Reg.
                    No. 333-46027)].

          2.3       Recapitalization Agreement by and among C2, Inc., Zero Zone,
                    Inc. and the shareholders of Zero Zone, Inc. [Incorporated
                    by referenced to Exhibit 2.1 to C2, Inc.'s Current Report on
                    Form 8-K dated March 12, 1999 and filed on March 29,1999].

          3.1       C2, Inc.'s Amended and Restated Articles of Incorporation.
                    [Incorporated by reference to Exhibit 3.1 to C2, Inc.'s Form
                    S-1 Registration Statement (Reg. No. 333-46027)].

          3.2       C2, Inc.'s Amended and Restated Bylaws. [Incorporated by
                    reference to Exhibit 3.2 to C2, Inc.'s Form S-1 Registration
                    Statement (Reg. No. 333-46027)].

          10.1      Form of Credit Agreement, by and among Total Logistic
                    Control, LLC, Firstar Bank, N.A., individually and as agent,
                    and the lenders that are a party thereto. [Incorporated by
                    reference to Exhibit 10.1 to C2, Inc.'s Form S-1
                    Registration Statement (Reg. No. 333-46027)].

          10.2      Form of First Amended and Restated Operating Agreement, by
                    and between C2, Inc. and Christiana Companies, Inc.
                    [Incorporated by reference to Exhibit 10.2 to C2, Inc.'s
                    Form S-1 Registration Statement (Reg. No. 333-46027)]

          10.3      C2, Inc. 1998 Equity Incentive Plan [Incorporated by
                    reference to Exhibit 10.2 to C2, Inc.'s Form S-1
                    Registration Statement (Reg. No. 333-46027)].

          10.4      Asset Purchase Agreement dated September 5, 2000 between
                    Total Logistic Control, LLC and the ProSource Group, Inc.

          10.5      Amendment of Asset Purchase Agreement dated September 5,
                    2000 between Total Logistic Control, LLC and the ProSource
                    Group, Inc.

          21        Company's Subsidiaries.


          23        Consent of Arthur Andersen, LLP

          99        The Proxy Statement for the 2002 Annual Meeting of
                    Shareholders will be filed with the Securities and Exchange
                    Commission under Regulation 14A within 120 days after the
                    end of the company's fiscal year. [Except to the extent
                    specifically incorporated by reference, the Proxy Statement
                    for the 2002 Annual Meeting of Shareholders shall not be
                    deemed to be filed with the Securities and Exchange
                    Commission as part of this Annual Report on Form 10-K].





                                       37