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

                                  -------------

                                   FORM 10-KSB

(Mark One)

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

                   For the Fiscal Year ended December 31, 2001

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

             For the transition period from __________ to __________


                        Commission file number 000-17001

                                  -------------

                                    CECS CORP.

                 (Name of small business issuer in its charter)

                DELAWARE                                 52-1529536
    (State or other jurisdiction of         (I.R.S. employer identification No.)
     incorporation or organization)

         391 Cosgrove Avenue NW                             98110
     Bainbridge Island, Washington                        (Zip Code)
(Address of principal executive offices)

         Issuer's telephone number, including area code: (206) 842-6948

       Securities registered under Section 12(b) of the Exchange Act: NONE

         Securities registered under Section 12(g) of the Exchange Act:

                          COMMON STOCK, PAR VALUE $.01
                                (Title of class)

                                 --------------

     Check whether the issuer (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 [ ]

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

     Issuer's revenues for the year ended December 31, 2001:  $0

     Aggregate market value of the voting stock held by non-affiliates of the
registrant based upon a price of $.002 per share, the closing price of the
registrant's Common Stock at March 26, 2002:  $93,540

     For purposes of this calculation, all directors and officers of the
registrant have been considered affiliates.

     Number of outstanding shares of Common Stock at March 26, 2002: 47,970,875

     Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]


                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the definitive proxy statement (the "Definitive Proxy
Statement") to be filed with the Securities and Exchange Commission relative to
the Company's 2002 Annual Meeting of Stockholders are incorporated by reference
into Part III of this Report.

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                           FORWARD LOOKING STATEMENTS

    This Annual Report on Form 10-KSB contains forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934, as amended,
and Section 27A of the Securities Act of 1933, as amended. For this purpose, any
statements contained herein that are not statements of historical fact may be
deemed to be forward-looking statements. Without limiting the foregoing, the
words "believes," "anticipates," "plans," "expects" and similar expressions are
intended to identify forward-looking statements. The important factors discussed
under the caption "Risks Relating to Our Business," among others, could cause
actual results to differ materially from those indicated by forward-looking
statements made herein and presented elsewhere by management. Such
forward-looking statements represent management's current expectations and are
inherently uncertain. Investors are warned that actual results may differ from
management's expectations.
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                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

OUR BUSINESS

    The Board of Directors (the "Board") of Choices Entertainment Corporation
(the "Company" or "We") adopted a proposal on January 17, 2000 to change the
business of the Company to that of a technology holding company. The
shareholders of the Company approved the change of the name of the company to
CECS CORP. at their annual meeting held on May 26, 2000 in Seattle, Washington.
WHAT WE DID IN 2001

o    We completed a sell program of our holdings in Photochannel Stock. See,
     below and Note 3 to our financial statements.

o    We closed our executive offices. See, Note 10 to our financial statements.

o    We worked with our portfolio companies to attempt to realize something on
     our investment. See, Notes 5 and 6 to our financial statements.

o    We actively sought a merger or reverse merger partner to add an operating
     company with sustainable revenues

o    We kept general and administrative expenses to a minimum by becoming an SEC
     EDGAR self-filer, paying no salaries, closing our executive offices,
     negotiating money settlements on outstanding liabilities at a discount
     whenever possible, and by terminating any remaining service or consulting
     contracts. See generally, Management's Discussion and Analysis of Financial
     Condition and Results of Operation or Plan of Operations.

WHAT WE DID IN 2000

     As a result in a change in the business of the Company, we are acquired,
invested in, and incubated companies engaged in Internet, computing and other
technologies in various stages of development with a primary focus of operating
these companies.


                           PHOTOCHANNEL NETWORKS INC.

     We acquired securities issued by publicly traded Photochannel Networks Inc.
In January 2000, the Company subscribed to a private placement of CAN$2,300,000
principal amount of Convertible Subordinated Redeemable 0% Debentures maturing
April 30, 2000 (the "Debentures") issued by PhotoChannel Networks Inc., a
British Columbia corporation ("Photochannel"). The subscription agreement calls
for advances to Photochannel in exchange for the issuance of Debentures as
follows: CAN$350,000 by January 31, 2000; CAN$750,000 by February 29, 2000; and
CAN$1,200,000 by April 14, 2000. The Debentures are convertible into
Photochannel common stock, no par value, ("Photochannel Stock") at the rate of 1
share of Photochannel Stock for each CAN$.50 in Debenture principal amount. The
Debentures were converted to Photochannel Stock prior to maturity in accordance
with the terms of the Debentures.

     Also, the company was granted warrants pursuant to a vesting schedule to
purchase additional shares of Photochannel Stock as follows: 140,000 warrants
with an exercise price of CAN$.75; 300,000 warrants with an exercise price of
CAN$1.00; and 480,000 warrants with an exercise price of CAN$1.25. Each warrant
entitled the Company to purchase 1 share of Photochannel Stock at the exercise
price, for cash. The warrants were exercised in full before the expiration date
of June 30, 2000. As of the date of the filing of this report on Form 10KSB, the
Company had completed its obligations under the subscription agreement.

     In September 2000, we received a certificate for 1,590,250 shares of freely
trading Photochannel Stock representing our portion of the total offering of
Debentures actually subscribed, paid for, and converted by us and our exercise
of the warrants with an exercise price of CAN$.50 and the partial exercise by us
of the warrants with an exercise price of CAN$.75. The contract rights to
subscribe to the balance of the debentures and warrants were sold by us to third
parties for an aggregate cash amount of US$203,095.

     As of the end of March 2002, we held no shares of Photochannel Stock. In
September 2000, the board of directors decided to reduce our exposure to the
vagaries of the stock market by commencing to sell Photochannel Stock. This
decision was additionally based on the fact that substantially all of our
working capital was overly concentrated in the Photochannel Stock position.

ABOUT PHOTOCHANNEL

     Photochannel is a development stage company engaged in E-commerce selling
online photo-finishing services and digital and other cameras and photographic
equipment. Photochannel's website may be viewed at WWW.PHOTOCHANNEL.COM.


                             TRIDIUM RESEARCH, INC.

    We acquired securities of non-publicly traded Tridium Research, Inc. In
March 2000, the Company paid $50,000 cash to acquire 250,000 shares of common
stock of Tridium Research Inc., a Washington corporation ("Tridium") based in
Kirkland, Washington. In June 2000, we acquired an additional 125,000 shares of
common stock in Tridium for $25,000. The 375,000 shares of common stock acquired
represents in excess of 5% of all Tridium common stock issued and outstanding.
Originally, the Company obligated itself to provide an additional $200,000 to
Tridium, upon terms and conditions to be determined, but no satisfactory
agreement could be reached as to such terms and conditions and other than the
additional $25,000 invested, we have made no further acquisition of Tridium
securities.

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<PAGE>

ABOUT TRIDIUM

     Tridium Research Inc. ("Tridium") is a development stage company that
produces and sells a dual monitor video card featuring "dual direct draw" (on
both screens) that plugs into the AGP (as opposed to the PCI) slot on a
computer. The ability to run multiple monitors is particularly applicable to
networked systems for businesses needing to display and provide user interface
to multiple users. The cards also permit multiple monitor arrays of, for
example, advertising displays, stock quoting systems, streaming video, and even
wide-screen movies.

     Tridium has a patent application pending with respect to the hardware and
the software that it has developed, but no assurance can be given that a patent
or patents will issue.

     More information about Tridium can be obtained from its website at
www.dualmonitor.com.


                                  SOFTUSE, INC.

     We organized a wholly owned subsidiary named SoftUse, Inc. ("SoftUseSM")
under the laws of the state of Delaware on November 2, 2000. The total number of
shares SoftUseSM is authorized to issue is 1,000 shares of common stock, all of
which have been subscribed by CECS CORP. SoftUseSM had no material operating or
financial activity in the fiscal year covered by this report.

ABOUT SOFTUSESM

     SoftUseSM has obtained domain names as Softuse.com and Softuse.ws. Still in
the early stages of organization and development, SoftUseSM will be developed as
an application service provider or "ASP". The new subsidiary has developed a
demonstration website still under construction, and is in the process of
establishing strategic alliances with companies engaged in providing services to
ASP's. SoftUseSM is also engaged in discussions regarding the acquisition of
other companies with particular applications to be offered by SoftUseSM.


                                 SPEAKLINK, INC.

     We have provided capital on a loan basis to Speaklink, Inc. (Speaklink), a
privately held company based in Seattle, Washington. The Company is the holder
of two Speaklink promissory notes each in the amount of $35,000. The first note,
dated October 19, 2000, matured December 19, 2000 and the second note, dated
October 27, 2000, matured December 27, 2000, in each case with accrued interest.
The notes contain all of the standard terms and conditions of commercially
reasonable promissory notes written or made in the ordinary course of business.
The Company has demanded repayment of the notes at this time and is in
discussion with Speaklink as to repayment, conversion of the notes to equity or
other satisfaction of the notes.

ABOUT SPEAKLINK

     Speaklink is a voice application service provider (VASP) making business
applications and Internet-based content available to anyone with a telephone.
Speaklink designs, develops, hosts and maintains platform agnostic, 100 percent
VoiceXML compliant applications for companies, organizations, and government
entities looking to gain a presence on the burgeoning "Voice Web". At the same
time, Speaklink provides the telecommunications infrastructure that allows end
users to access voice applications developed in-house or by outside developers.
Combining all of these services makes Speaklink the ideal partner for companies
wanting to extend their reach to anyone with a telephone, anytime, anywhere.
Speaklink:


                       IT'S YOUR WEB . . . SPEAK TO IT!SM

     More information about Speaklink can be obtained from its website at
www.Speaklink.com.

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                               FASTVOICE.COM, INC.

     We have provided capital pursuant to a bridge loan regime to Fastvoice.com,
Inc. (Fastvoice), a privately held company based in Seattle, Washington. The
Company is the holder of a Fastvoice.com promissory note in the amount of
$72,000 dated January 11, 2001 and maturing July 31, 2001. The rate of interest
on the note is 11%. The promissory note of Fastvoice.com has been structured as
a part of a Term Sheet with Zilkah Venture Partners, L.P. ("Zilkah") pursuant to
which Zilkah and others have advanced approximately $700,000 to Fastvoice.com.

ABOUT FASTVOICE

     Fastvoice has developed an integrated communications solution that is
device, operating system and "last mile" independent. Fastvoice offers a
market-ready telecom carrier grade solution that is truly scaleable and that
offers full integration of calendaring, scheduling, task management, messaging,
contact management, CRM, call screening, alerting, and real time group
collaboration. All of the features are made available using any duplex
communication device. Fastvoice enables WAP like functionality to standard
wire-line as well as non-WAP wireless telephony. Fastvoice compliments most
legacy systems, synchronizing with MS-Outlook, Lotus, Palm, and other similar
systems. More information about FastVoice can be obtained from its website at
WWW.FASTVOICE.COM.


                       OTHER MATTERS AND PRIOR ACTIVITIES

     Since the board of directors resolution in January 2000 adopting what we
call the Millenium Initiative, the two executives of the company, Tracy Shier
and Thomas Renna, have spent substantially all of their time: raising capital,
establishing headquarters offices in leased facilities at Seattle, Washington,
administering the Company's obligations as a publicly traded company, finding,
evaluating, negotiating for and acquiring interests in technologies and
technology companies to be acquired, attempting to attract additional qualified
personnel to handle managerial, administrative and clerical tasks, and
maintaining shareholder relations.

     In deciding to change the direction of the Company, we decided to terminate
a letter of intent to acquire the business plan of Republic Hotel Investors,
Inc. (Republic"). The business plan called for the acquisition of a substantial
hotel portfolio that would have resulted in turning the Company into a hotel
properties holding company. On September 21, 1999, the Company announced
entering into a letter of intent to acquire the business of privately held
Republic Hotel Investors, Inc. of Seattle, Washington and Vancouver B.C. That
letter of intent was intended to lead to an agreement which would have
transferred to Choices all of Republic's assets in exchange for 144,789,382
shares of restricted Choices common stock. The details of the transaction are
contained in a Form 8-K filed with the Securities and Exchange Commission on
September 20, 1999.

     As a result of the termination of the letter of intent, Lorne Bradley
resigned as our Chairman and President. Also, we have issued 500,000 restricted
shares of the Company's common stock to Republic or its nominee as a negotiated
settlement with Mr. Bradley in connection with the termination of the letter of
intent. The reasons the Board decided to terminate the Republic agreement
included the then current state of the hotel financing market, the overbuilt and
late stage status of the hotel industry and, most importantly, a lack of
enthusiasm for financing the hotel business plan on the part of our existing
shareholders.

     From June 1998 to September 1999, we focused on: (i) satisfying and
compromising various claims and liabilities; (ii) defending and settling
litigation, and paying professional fees, including substantial professional
fees associated with such litigation; (iii) maintaining administrative functions
(at present the Company has no employees); (iv) marshalling the books, documents
and records of the Company and transferring them to the storage facilities in
Coral Springs, Florida: (iv) retaining new independent public auditors to
replace the Company's prior independent public auditors, who resigned; (v)
actively engaging in discussions with various persons for the acquisition of a
new business or business opportunity for the Company; and, (vi) continuing the
status of the Company as a reporting registrant under the Securities Exchange
Act of 1934 and a publicly traded company.

OUR BUSINESS STRATEGY

     We intend to operate in four modalities: providing capital to public
companies, providing capital to start-ups, acquiring operating companies, and
incubating new businesses under the corporate umbrella.

     Our goal is to be the most profitable technology holding company in the
group of publicly traded companies of similar business focus by successfully
implementing our business plan and achieving our objectives.

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Our objectives are:

           o to maximize the rate of return on shareholders' equity and enhance
           shareholder value;
           o to earn a rate of return over and above our cost of capital of not
           less than 2 times our cost of capital, including capital provided by
           debt (if any), equity and funds generated from business operations;
           o to grow total assets to $50,000,000 and thereafter to increase our
           assets until we experience decreasing rates of return on investment
           capital;
           o to generate revenues sufficient to cover our general and
           administrative expenses and to service debt (if any).

Our strategies include:

           o to acquire by purchase or merger interests in companies focusing on
           commercially viable technological advances;
           o to incubate some companies which we believe have exceptionally good
           prospects for future commercial success but may not generate positive
           economic results in the near term while in a development stage;
           o to maximize the value of the companies we hold, in whole or in
           part, (our "clients") by assisting them in building business
           operations and opportunities having the potential to be highly
           profitable and becoming leaders in their particular industry or
           sub-industry;
           o to discontinue, sell, spin-off, offer for merger or acquisition, or
           otherwise dispose of those interests or companies that have matured
           to the point where the rate of return based on profitability to be
           expected from continued ownership is equal to or below our cost of
           capital.

Our tactics include:

           o presently to focus on Internet and computer related technologies,
           however, nothing in our business plan limits us from taking positions
           or starting companies in other technological areas such as
           telecommunications, bio-medical, micro-scanning and other
           high-technology fields or industries;
           o to acquire and build a highly skilled, experienced and talented
           team of company executives and support people and to maximize their
           productivity through technology;
           o to raise capital at a cost that approaches market rates for
           companies engaged in similar businesses;
           o to maintain at relatively low levels our company general and
           administrative expense;
           o to build and expand business relationships between and among the
           companies we own, in whole or in part, as well as other participants
           in their respective industries or sub-industries, such that mutually
           reciprocal business advantage can be achieved and such that we
           achieve synergy in the mix of our corporate holdings.

RISKS RELATING TO OUR BUSINESS

WE MAY NOT HAVE OPERATING INCOME OR NET INCOME IN THE FUTURE.

     During the fiscal year ended December 31, 2001, we had an operating loss of
approximately $130,264, net loss of approximately $564,373, and other
comprehensive loss of $57,763. We may not have operating income or net income in
the future. If we continue to operate at a loss, we may not have enough money to
maintain or grow our business.

OUR OPERATING HISTORY UNDER THE NEW BUSINESS PLAN IS LIMITED.

     We have limited operating history. Our success cannot be guaranteed or
accurately predicted. There can be no assurance that we will be able to acquire,
incubate, own or operate Internet and other technologies profitably. Our
prospects must be considered in light of the risks, expenses and difficulties
frequently encountered in the establishment of a new company or line of business
in a highly competitive market and industry.

     There is no assurance that we will be able to operate and manage our
technology business on a profitable basis or that cash flow from operations will
be sufficient to pay our operating costs. We anticipate the need to raise
additional capital to finance our initial operations. We will seek, if
necessary, additional financing through debt or equity financing. We cannot
assure that additional

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financing, if needed, will be available to us, or that, if available, the
financing will be on terms acceptable to the Company. There is no assurance that
our estimate of our reasonably anticipated liquidity needs is accurate or that
new business developments or other unforeseen events will not occur resulting in
the need to raise additional funds. In the event that we cannot raise needed
capital, it will have a material adverse effect on the Company.

     We expect to incur significant operating losses and to generate negative
cash flow from operating activities during the next several years. There can be
no assurance that we will achieve or sustain profitability or positive cash flow
from operating activities in the future or that it will generate sufficient cash
flow to service any debt requirements.

WE MAY HAVE PROBLEMS RAISING MONEY WE NEED IN THE FUTURE.

     In recent years, we have financed our operating losses in part with loans
from shareholders and private placements of the Company's securities. This
funding source may not be sufficient in the future, and we may need to obtain
funding from outside sources. However, we may not be able to obtain funding from
outside sources. In addition, even if we find outside funding sources, we may be
required to issue securities to them with greater rights than those currently
possessed by holders of shares of the Company's common and preferred stock. We
may also be required to take other actions that may lessen the value of the
Company's common and preferred stock, including borrowing money on terms that
are not favorable to us.

WE DEPEND ON CERTAIN IMPORTANT EXECUTIVE OFFICERS, AND THE LOSS OF ANY OF THEM
MAY HARM OUR BUSINESS.

     Our performance is substantially dependent on the performance of our
executive officers and, in particular, Tracy M. Shier, our President and Chief
Executive Officer. His familiarity with the Internet industry and technology in
general, investment methods and structures, financial markets, business
organization, especially in a start-up phase, law, and other matters makes him
especially important at this time to our success. The loss of the services of
any of our executive officers or future key employees may harm our business.

OUR STRATEGY OF EXPANDING OUR BUSINESS THROUGH ACQUISITIONS OF OTHER BUSINESSES
AND TECHNOLOGIES PRESENTS SPECIAL RISKS.

     We intend to continue to expand our business through the acquisition of
businesses, technologies, products and services from other businesses.
Acquisitions involve a number of special problems, including, depending on the
nature and structure of the acquisition, and not necessarily in the order of
importance: difficulty integrating acquired technologies, operations, and people
with the existing business; diversion of management attention in connection with
both negotiating the acquisitions and integrating the acquired assets; potential
issuance of securities in connection with the acquisition that may lessen the
rights of holders of our currently outstanding securities; the need to incur
additional debt; strain on managerial and operational resources as management
tries to oversee the larger operations; the requirement to record additional
amortization of good will and other intangible assets that could be significant;
and, exposure to unforeseen liabilities of acquired companies.

     We may not be able to successfully address these problems. Moreover, our
future operating results will depend to a significant degree on our ability to
successfully manage growth and integrate acquisitions. In addition, some of our
investments are in early-stage companies with limited operating histories and
limited or no revenues. We may not be able to successfully develop these young
companies.

IF THE UNITED STATES OR OTHER GOVERNMENTS REGULATE THE INTERNET MORE CLOSELY,
OUR BUSINESS MAY BE HARMED.

     Because of the Internet's popularity and increasing use, new laws and
regulations may be adopted. These laws and regulations may cover issues such as
privacy, pricing and content. The enactment of any additional laws or
regulations may impede the growth of the Internet and our Internet-related
business and could place additional financial burdens on us.

WE MUST BE ABLE TO RESPOND TO THE RAPID CHANGES IN TECHNOLOGY AND DISTRIBUTION
CHANNELS RELATED TO THE INTERNET.

     Our success will depend on our ability to adapt to a rapidly evolving
marketplace. We may not be able to adequately adapt our products and services or
acquire new products and services that can compete successfully. In addition, we
may not be able to establish and maintain effective distribution channels.

                                        6
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WE ARE SUBJECT TO INTENSE COMPETITION.

     The market for Internet products and services is highly competitive.
Moreover, the market for Internet products and services lacks significant
barriers to entry, enabling new businesses to enter this market relatively
easily. Competition in the market for Internet products and services may
intensify in the future. Numerous well-established companies and smaller
entrepreneurial companies are focusing significant resources on developing and
marketing products and services that will compete with our products and
services. In addition, many of our current and potential competitors have
greater financial, technical, operational and marketing resources. We may not be
able to compete successfully against these competitors. Competitive pressures
may also force prices for Internet goods and services down and may reduce our
revenues.

OUR STRATEGY OF SELLING ASSETS OF, OR INVESTMENTS IN, THE COMPANIES THAT WE
ACQUIRE AND DEVELOP PRESENTS RISKS.

     A significant element of our business plan involves selling, in public or
private offerings, the companies, or portions of the companies, that we have
acquired and developed. Market and other conditions largely beyond our control
affect: our ability to engage in such sales; the timing of such sales; and the
amount of proceeds from such sales.

     As a result, we may not be able to sell some of these assets. In addition,
even if we are able to sell, we may not be able to sell at favorable prices. If
we are unable to sell these assets at favorable prices, our business will be
harmed.

THE VALUE OF OUR BUSINESS MAY FLUCTUATE BECAUSE THE VALUE OF SOME OF OUR ASSETS
FLUCTUATES.

     A portion of our assets may be held in the future in the equity securities
of both publicly traded and non-publicly traded companies. The market price and
valuations of the securities that we hold in other companies may fluctuate due
to market conditions and other conditions over which we have no control.
Fluctuations in the market price and valuations of the securities that we hold
in other companies may result in fluctuations of the market price of our common
stock and may reduce the amount of working capital available to us.

OUR QUARTERLY RESULTS MAY FLUCTUATE WIDELY.

     Our operating results have fluctuated widely on a quarterly basis during
the last several years, and we expect to experience significant fluctuation in
future quarterly operating results. Many factors, some of which are beyond our
control, have contributed to these quarterly fluctuations in the past and may
continue to do so. These factors include: payment of costs associated with our
acquisitions, timing and sales of assets; specific economic conditions in the
industries in which we do business; and general economic conditions.

     The emerging nature of the commercial uses of the Internet makes
predictions concerning our future revenues difficult. We believe that
period-to-period comparisons of our results of operations will not necessarily
be meaningful and should not be relied upon as indicative of our future
performance. It is also possible that in some future fiscal quarters, our
operating results will be below the expectations of securities analysts and
investors. In such circumstances, the price of our common stock may decline.

THE PRICE OF OUR COMMON STOCK MAY BE VOLATILE.

     The market price of our common stock may be volatile, experiencing wide
fluctuations. In recent years, the stock market has experienced significant
price and volume fluctuations that have particularly impacted the market prices
of equity securities of many companies engaged in Internet-related businesses.
Some of these fluctuations appear to be unrelated or disproportionate to the
operating performance of such companies. Future market movements may adversely
affect the market price of our common stock.

OWNERSHIP OF OUR COMPANY IS CONCENTRATED.

     We estimate that our officers, directors and 5% or greater shareholders
beneficially owned approximately 55% of our voting stock on a fully diluted
basis as of March 26, 2002. As a result, this group possesses significant
influence over the Company on matters including the election of directors. The
concentration of ownership may: delay or prevent a change in control; impede a
merger, consolidation, takeover or other business involving the Company; or
discourage a potential acquirer from making a tender offer or otherwise
attempting to obtain control of the Company.

                                        7
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GENERAL DESCRIPTION--HISTORY

     On June 16, 1997, the Company sold substantially all of its assets and
business to West Coast Entertainment Corporation ("West Coast"). Prior to the
sale to West Coast (the "West Coast Transaction"), the Company operated a chain
of retail video home entertainment stores, principally under the trade name
CHOICES(R) MOVIES AND GAMES, which rented and sold videocassette tapes, video
games and other video home entertainment products. The Company's home
entertainment stores were located in Delaware, New Jersey and Pennsylvania.

     The Company's board of directors by resolution dated January 17, 2000,
adopted the Millenium Initiative and changed the business of the Company from
video rentals to that of being a technology holding company.

     The Company was incorporated in Maryland in July 1985, under the name PPV
Enterprises, Inc., and was reincorporated in Delaware under the name DataVend,
Inc. in August 1987. In March 1990, the Company changed its name to "Choices
Entertainment Corporation." In May 2000, the company changed its name to CECS
CORP.

EMPLOYEES AND OTHER MATTERS

     The company has no paid employees. The primary executive of the Company is
Tracy M. Shier ("Shier"), who has from time to time provided all or
substantially all of his time to the business affairs of the Company. In May
2001, Thomas Renna ("Renna") resigned as officer and director of the Company.
The board of directors has from time-to-time granted to each of Shier and Renna
cash and other compensation on a past services rendered basis. In the future,
Mr. Shier will not contribute full time to the company and will be paid on a
time and billing basis at the rate of $250 per hour, his usual professional
services billing rate. Other terms of Shier's involvement in the company have
yet to be negotiated and finalized.


ITEM 2. DESCRIPTION OF PROPERTY

     Until July 2001, the Company maintained executive offices of approximately
2,200 square feet of Class B office space pursuant to a non-cancelable operating
lease that expired December 30, 2001. The rent was $4,292 per month. In July
2001, the Company terminated its sublease without further payment or penalty.
The Company has been operating since then out of a personal home office provided
by Shier for no current rent.

ITEM 3. LEGAL PROCEEDINGS

     The Company is unaware of any litigation either threatened or pending
against it that has not previously been disclosed. (See Note 13 to our financial
statements.)

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

    None.


                      [THIS SPACE INTENTIONALLY LEFT BLANK]




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                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY STOCK AND RELATED STOCKHOLDER MATTERS

    The Company's Common Stock trades in the over-the-counter market on the
Bulletin Board ("OTC-Bulletin Board") under the symbol CECS. The following table
sets forth the high and low inside bid prices as reported by the Bulletin Board.

                                                   COMMON STOCK
                                                       (CESC)
                                                 -----------------
                                                 HIGH         LOW
                                                 ----         ----
               2000
               First quarter                      .32          .32
               Second quarter                     .08          .08
               Third quarter                      .10          .09
               Fourth quarter                     .02          .02

               2001
               First quarter                      .02          .01
               Second quarter                     .01          .01
               Third quarter                      .01            *
               Fourth quarter                       *            *

                           * Less than $.01 per share


On March 26, 2002, the closing price for the Company's common stock was $.002 as
reported by the OTC-Bulletin Board.

     The quotations set forth above reflect inter-dealer prices, without retail
markup, markdown or commission and may not necessarily represent actual
transactions.

     HOLDERS. As of March 26, 2002, approximately 590 holders of record held the
outstanding shares of the Company's common stock and 1 holders of record held
the outstanding shares of the Company's preferred stock.

     DIVIDENDS. The Company has not declared or paid any dividends on its common
stock since its inception. The Board of Directors does not contemplate the
payment of dividends in the foreseeable future.

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

     The following is management's discussion and analysis of certain
significant factors that have affected the Company's financial condition,
changes in financial condition and results of operations. It also includes a
discussion of the Company's liquidity and capital resources at December 31,
2000, and later dated information, where practicable. This discussion should be
read together with the Company's Financial Statements and the Notes thereto
beginning on page F-1.



                      [THIS SPACE INTENTIONALLY LEFT BLANK]




                                        9
<PAGE>

     This schedule contains summary unaudited financial information taken from
the financial statements of CECS CORP. (formerly "Choices Entertainment
Corporation") and is qualified in its entirety by reference to such financial
statements.
<TABLE><CAPTION>
                                            2000              1999               1998 *            1997 *            2001
                                        -----------       -----------        -----------       -----------       -----------
<S>                                    <C>               <C>                <C>               <C>               <C>
STATEMENT OF OPERATIONS DATA:
Net Sales                               $        --       $        --        $        --       $        --       $        --
Cost of Sales                                    --                --                 --                --                --
                                        -----------       -----------        -----------       -----------       -----------
Gross Profit                                     --                --                 --                --                --
Operating Expenses                          425,808           825,816            117,736           716,369           130,264
                                        -----------       -----------        -----------       -----------       -----------
Income (Loss) From Operations              (425,808)         (825,816)          (117,736)         (716,369)         (130,264)
Other Income (Expense)                      364,652           (14,973)           353,307           (37,081)         (434,109)
                                        -----------       -----------        -----------       -----------       -----------
Income (Loss) from Continuing
Operations                              $   (61,156)      $  (840,789)       $   235,571       $  (753,450)      $  (564,373)
                                        ===========       ===========        ===========       ===========       ===========
PER SHARE DATA:
Continuing Operations                   $       .00       $      (.03)       $       .01       $      (.03)      $      (.01)
                                        ===========       ===========        ===========       ===========       ===========
Weighted Average Shares Outstanding
(Basic)                                  40,674,367        24,489,327         22,004,000        22,004,000        47,963,943
                                        ===========       ===========        ===========       ===========       ===========
BALANCE SHEETS:
Total Assets                                689,590            20,113              2,220           201,996            19,661
Total Liabilities                           520,816           625,936             92,254           524,939           473,023
                                        -----------       -----------        -----------       -----------       -----------
Stockholders' Equity                        168,774          (605,823)           (90,034)         (322,943)         (453,362)
                                        ===========       ===========        ===========       ===========       ===========
</TABLE>

     * On June 16, 1997, the Company sold substantially all of its assets and
business to West Coast Entertainment Corporation ("West Coast"). Notwithstanding
the sale of its operating business, the Company's financial statements included
herein have been presented on the basis that the Company is a going concern,
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. The accounting affect of the sale of
substantially all of the Company's assets and business to West Coast (the "West
Coast Transaction") was a net loss of $2,663 for the year ended December 31,
1998, before extraordinary income of $303,799 relating to the affects of the
West Coast Transaction. There was no material accounting effect on the financial
statements of the Company due to the West Coast Transaction for the periods
ended December 31, 2001 and December 31, 2000.


FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

     As of December 31, 2001, the Company had a net working capital deficit of
approximately $473,023. As of March 31, 2002, the Company had no cash balances.
The Company had no revenues for the period.

     The primary source of funds for the year ended December 31, 2001 was the
net proceeds of the sale of marketable securities. See Note 3 to our financial
statements.

     During the course of the year, we paid down promissory notes by $30,000
leaving a balance of $310,000, at interest rates of 12%.

     In the event the Company is not successful in securing needed capital in
the near term, as to which no assurance can be given, we do not believe that
there will be any amounts available for distribution to the Company's
stockholders in the event of liquidation upon dissolution of the Company.

                                       10
<PAGE>

CAPITAL EXPENDITURES

     The Company made no capital expenditures during the year ended December 31,
2001.

MATERIAL CHANGES IN FINANCIAL CONDITION

     The following material changes in financial condition reflect changes
occurring during the period from December 31, 2000 through December 31, 2001.

ASSETS:

     Total assets decreased by approximately $669,929 during the period from
December 31, 2000 through December 31, 2001, as the result of the sale of
securities and held by the Company and the write off of notes receivable and the
impairment of non-marketable securities held for investment.

LIABILITIES:

     Total liabilities decreased by approximately $47,793 during the period from
December 31, 2000 through December 31, 2001, primarily due to the repayment of
indebtedness for cash, and the settlement and satisfaction of certain
outstanding accrued payables.

STOCKHOLDERS' EQUITY:

     During the period from December 31, 2000 through December 31, 2001, the
decrease in stockholders' equity of approximately $622,136 was due to an
decrease as a result of write offs and the sale of marketable securitiesand an
increase in other comprehensive loss of approximately $58,000.


MATERIAL CHANGES IN RESULTS OF OPERATIONS

     The following material changes in results of operations occurred during the
two-year period from January 1, 2000 through December 31, 2001.

CONTINUING OPERATIONS:

     Loss from continuing operations was approximately $130,264 during 2001,
compared to loss of approximately $401,894 during 2000. The decrease of
approximately $271,630 was due to the repayment, settlement and other
disposition of the Company's accrued professional and consulting expense and to
a decrease in general and administrative expense of $65,932 in 2001 from
$223,412 in 2000. The Company closed its corporate offices and decreased
business activity at the Company in 2001.

NET LOSS:

     The Company had a net loss of approximately $564,373 for 2001 as compared
to net loss of approximately $61,000 for 2000, which net loss in 2000 included
non-operating gain of $364,652. The non-operating gain was due primarily to the
sale of the Company's marketable securities holdings and contract rights. Net
loss for 2001 included a loss on sale of marketable securities, bad debt and
impairment expense and other expense totaling $434,109.

ITEM 7.  FINANCIAL STATEMENTS

     Our financial statements and notes thereto are filed together with this
report starting at Page F-1. The financial statements and notes for the period
ending December 31, 2001 are audited by Merdinger, Fruchter, Rosen & Corso, P.C.
and are included herein based on their report dated May 5, 2002. . The financial
statements as presented include financial results which were audited by prior
independent public auditors. See Item 8 below.

                                       11
<PAGE>

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

     On March 28, 2002 CECS CORP. (the "Registrant") engaged Merdinger,
Fruchter, Rosen & Corso, P.C. to serve as Registrant's independent public
auditor and to be the principal accountants to conduct the audit of the
Registrant's financial statements for the fiscal year ending December 31, 2001.


     Miller and Co. LLP was previously the independent auditor for Registrant.
In a letter dated September 20, 2001, Miller and Co. LLP ("Miller") advised
Registrant that Miller was terminating the client-auditor relationship with
Registrant and would not stand for re-election.


     Registrant filed a Form 8-K on September 28, 2001 and a Form 8-K/A on
October 2, 2001 setting forth the material details of the withdrawal and the
assent of Miller and Co. as to the language used to describe its withdrawal,
respectively. There were no disagreements with accountants on accounting or on
financial disclosure.


                                    PART III

     The information called for by Items 9-12 of Form 10KSB are contained in the
definitive proxy statement (the "Definitive Proxy Statement") to be filed with
the Securities and Exchange Commission relative to the Company's 2001 Annual
Meeting of Stockholders and is hereby incorporated by reference to the
Definitive Proxy Statement.

ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K

(a) Exhibits are listed in the Index to Exhibits appearing on Page E-1.
(b) Reports on Form 8-K during the quarter ended December 31, 2001.

           Form 8K/A filed on October 2, 2001 advising of Change in Auditor


--------------------------------------------------------------------------------

                                   SIGNATURES

    In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report on Form 10KSB for the period ending December 31, 2001 to be
signed on its behalf by the undersigned, thereunto duly authorized.

                                          CECS CORP.


Date: May 13, 2002                        By:  /s/ TRACY M. SHIER
                                              ---------------------------------
                                              CHIEF EXECUTIVE OFFICER

Date: May 13, 2002                        By:  /s/ TRACY M. SHIER
                                              ---------------------------------
                                              INTERIM CHIEF FINANCIAL OFFICER

     In accordance with the Exchange Act, this report is signed by the following
persons on behalf of the registrant in the capacities and on the dates
indicated.


 /s/ TRACY M. SHIER
----------------------------
Tracy M. Shier, Director                                         May 13, 2002


                                       12
<PAGE>


                          INDEX TO FINANCIAL STATEMENTS



                                   CECS CORP.
                          (A Development Stage Company)
                              FINANCIAL STATEMENTS





                                                                       PAGE
                                                                       ----



INDEPENDENT AUDITORS' REPORT                                            F-1

BALANCE SHEETS                                                          F-2

STATEMENTS OF OPERATIONS                                                F-3

STATEMENTS OF COMPREHENSIVE LOSS                                        F-4

STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIENCY)                          F-5

STATEMENTS OF CASH FLOWS                                                F-6

NOTES TO FINANCIAL STATEMENTS                                           F-8






















                                       13
<PAGE>

                                  [LETTERHEAD]
                          INDEPENDENT AUDITORS' REPORT


To the BOARD OF DIRECTORS AND TO THE shareholders OF CECS CORP.
Bainbridge Island, Washington

We have audited the accompanying balance sheet of CECS CORP. (A Development
Stage Company) as of December 31, 2001, and the related statements of
operations, shareholders' equity (deficiency), and cash flows for the year then
ended and for the period from January 16, 2000 (inception) to December 31, 2001.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit. The financial statements of CECS CORP. as of and for the year
ended December 31, 2000 and for the period from January 16, 2000 (inception)
through December 31, 2000 were audited by other auditors whose report dated
April 11, 2001, on those statements included an explanatory paragraph describing
conditions that raised substantial doubt about the Company's ability to continue
as a going concern. The financial statements for the period from January 16,
2000 (inception) through December 31, 2000 reflect total revenues and net loss
of $0 and $61,157, respectively, of the related totals. The other auditor's
report has been furnished to us, and our opinion, insofar as it relates to the
amounts included for such period, is based solely on the report of such other
auditors.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides 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 CECS CORP. as of December 31,
2001, and the results of its operations and its cash flows for the year then
ended, in conformity with accounting principles generally accepted in the United
States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
accompanying financial statements, the Company is a development stage enterprise
with no established source of revenue, and that has incurred recurring losses
from operations which raises substantial doubt about its ability to continue as
a going concern. Management's plans in regard to these matters are also
discussed in Note 2. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.



                                        MERDINGER, FRUCHTER, ROSEN & CORSO, P.C.
                                        Certified Public Accountants

Los Angeles, California
May 5, 2002




                                       F-1
<PAGE>

                                   CECS CORP.
                          (A Development Stage Company)
                                 BALANCE SHEETS
<TABLE><CAPTION>
                                                                                                        December 31,
                                                                                             ---------------------------------
                                                                                                 2001                 2000
                                                                                             ------------         ------------
<S>                                                                                          <C>                  <C>
ASSETS
CURRENT ASSETS
  Cash and cash equivalents                                                                  $       --           $     23,966
  Due from brokers                                                                                   --                 39,242
  Marketable securities, at market                                                                   --                446,359
  Prepaid expenses                                                                                   --                 12,332
                                                                                             ------------         ------------
TOTAL CURRENT ASSETS                                                                                 --                521,899

PROPERTY AND EQUIPMENT, net of accumulated depreciation
  of $7,565 and $2,521, respectively                                                               19,661               22,691

NON-MARKETABLE SECURITIES, at cost                                                                   --                 75,000

NOTES RECEIVABLE, net of allowance for doubtful
  accounts of $142,000 and $-0-, respectively                                                        --                 70,000
                                                                                             ------------         ------------

TOTAL ASSETS                                                                                 $     19,661         $    689,590
                                                                                             ============         ============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES
  Accounts payable and accrued expenses                                                      $     93,023         $     85,367
  Due to related parties                                                                           40,000               95,449
  Lawsuit settlement payable                                                                       30,000                 --
  Notes payable                                                                                   310,000              340,000
                                                                                             ------------         ------------
TOTAL LIABILITIES                                                                                 473,023              520,816
                                                                                             ------------         ------------
COMMITMENTS AND CONTINGENCIES                                                                        --                   --

SHAREHOLDERS' EQUITY (DEFICIENCY)
  Preferred stock, par value $0.01 per share, convertible to common stock, authorized
    50,000,000 shares, 11.416 and 17.741 shares issued and outstanding, respectively                 0.12                 0.18
  Common stock, par value $0.01 per share, authorized 200,000,000 shares,
    47,970,875 and 47,717,875 issued and outstanding, respectively                                479,709              477,179
  Additional paid-in capital                                                                   22,079,371           22,081,901
  Accumulated deficit                                                                          22,386,912)         (22,386,912)
  Deficit accumulated during the development stage                                               (625,530)             (61,157)
  Accumulated other comprehensive income                                                             --                 57,763
                                                                                             ------------         ------------
TOTAL SHAREHOLDERS' EQUITY (DEFICIENCY)                                                          (453,362)             168,774
                                                                                             ------------         ------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)                                      $     19,661         $    689,590
                                                                                             ============         ============
</TABLE>
The accompanying notes are an integral part of these financial statements.

                                       F-2
<PAGE>


                                   CECS CORP.
                          (A Development Stage Company)
                            STATEMENTS OF OPERATIONS

<TABLE><CAPTION>
                                                                                      Cumulative from
                                                                                         Inception
                                                                                        (January 16,
                                                              December 31,                2000) to
                                                      ---------------------------        December 31,
                                                         2001              2000              2001
                                                      ---------         ---------         ---------
<S>                                                   <C>               <C>               <C>
REVENUE                                               $    --           $    --           $    --
                                                      ---------         ---------         ---------

OPERATING EXPENSES
  General and administrative expenses                    65,932           223,412           289,344
  Professional and consulting fees                       59,288           175,961           235,249
  Depreciation expense                                    5,044             2,521             7,565
                                                      ---------         ---------         ---------

TOTAL OPERATING EXPENSES                                130,264           401,894           532,158
                                                      ---------         ---------         ---------

LOSS FROM OPERATIONS                                   (130,264)         (401,894)         (532,158)
                                                      ---------         ---------         ---------

OTHER INCOME (EXPENSES)
  Impairment expense                                    (75,000)             --             (75,000)
  Bad debt expense - notes receivable                  (142,000)             --            (142,000)
  Gain on sale of certain contract rights                  --             203,095           203,095
  Interest expense                                      (42,545)          (23,915)          (66,460)
  Lawsuit settlement                                    (30,000)             --             (30,000)
  Gain (loss) on sale of marketable securities         (144,564)          161,557            16,993
                                                      ---------         ---------         ---------

TOTAL OTHER INCOME (EXPENSE)                           (434,109)          340,737           (93,372)
                                                      ---------         ---------         ---------

NET LOSS                                              $(564,373)        $ (61,157)        $(625,530)
                                                      =========         =========         =========


NET LOSS PER SHARE OF COMMON STOCK
BASIC/DILUTED LOSS PER SHARE:                         $   (0.01)        $   (0.00)
                                                      =========         =========
</TABLE>








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

                                       F-3


<PAGE>

                                   CECS CORP.
                          (A Development Stage Company)
                        STATEMENTS OF COMPREHENSIVE LOSS
<TABLE><CAPTION>
                                                                                      Cumulative from
                                                                                         Inception
                                                                                        (January 16,
                                                              December 31,                2000) to
                                                      ---------------------------        December 31,
                                                         2001              2000              2001
                                                      ---------         ---------         ---------
<S>                                                   <C>               <C>               <C>

COMPREHENSIVE LOSS

  Net loss                                            $(564,373)        $ (61,157)        $(625,530)

  Unrealized gain (loss)                                (57,763)           57,763              --
                                                      ---------         ---------         ---------

COMPREHENSIVE LOSS                                    $(622,136)        $  (3,394)        $(625,530)
                                                      =========         =========         =========
</TABLE>







                      [THIS SPACE INTENTIONALLY LEFT BLANK]











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

                                       F-4
<PAGE>

                                   CECS CORP.
                          (A Development Stage Company)
                 STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIENCY)

<TABLE><CAPTION>
                                            Preferred Stock                     Common Stock
                                    ------------------------------      -----------------------------
                                       Shares            Amount            Shares           Amount
                                    ------------      ------------      ------------     ------------

<S>                                 <C>               <C>               <C>              <C>              <C>
Balance at December 31, 1999             109.100      $       1.09        28,504,395     $    285,044

Issuance of preferred stock in
  exchange for debt and cash                 390              3.90              --               --

Issuance of common on
  Conversion of preferred stock         (481.359)            (4.81)       19,213,480          192,135

Net loss for the year ended
  December 31, 2000                         --                --                --               --

Other comprehensive income                  --                --                --               --
                                    ------------      ------------      ------------     ------------

Balance at December 31, 2000              17.741              0.18        47,717,875          477,179

Issuance of common stock in
  exchange on conversion of
  preferred stock                         (6.325)           (0.060)          253,000     $      2,530

Net loss for the year ended
  December 31, 2001                         --                --                --               --

Other comprehensive loss                    --                --                --               --
                                    ------------      ------------      ------------     ------------

Balance at December 31, 2001              11.416      $       0.12        47,970,875     $    479,709
                                    ============      ============      ============     ============

                                                                           Deficit
                                                                         Accumulated      Accumulated
                                     Additional                           During the         Other
                                       Paid-in        Accumulated        Development     Comprehensive
                                       Capital           Deficit            Stage            Income             Total
                                    ------------      ------------      ------------      ------------      ------------

Balance at December 31, 1999        $ 21,496,035      $(22,386,912)     $       --        $       --        $   (605,832)

Issuance of preferred stock in
  exchange for debt and cash             777,996              --                --                --             778,000

Issuance of common on
  Conversion of preferred stock         (192,130              --                --                --                --

Net loss for the year ended
  December 31, 2000                         --                --             (61,157)             --             (61,157)

Other comprehensive income                  --                --                --              57,763            57,763
                                    ------------      ------------      ------------      ------------      ------------

Balance at December 31, 2000          22,081,901       (22,386,912)          (61,157)           57,763           168,774

Issuance of common stock in
  exchange on conversion of
  preferred stock                         (2,530)             --                --                --                --

Net loss for the year ended
  December 31, 2001                         --                --            (564,373)             --            (564,373)

Other comprehensive loss                    --                --                --             (57,763)          (57,763)
                                    ------------      ------------      ------------      ------------      ------------

Balance at December 31, 2001        $ 22,079,371      $(22,386,912)     $   (625,530)     $       --        $   (453,362)
                                    ============      ============      ============      ============      ============
</TABLE>
The accompanying notes are an integral part of these financial statements.

                                       F-5
<PAGE>

                                   CECS CORP.
                          (A Development Stage Company)
                            STATEMENTS OF CASH FLOWS
<TABLE><CAPTION>
                                                                                                      Cumulative from
                                                                                                      January 16, 2000
                                                                               December 31,             (Inception) to
                                                                       ---------------------------        December 31,
                                                                          2001              2000              2001
                                                                       ---------         ---------         ---------
<S>                                                                    <C>               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                               $(564,373)        $ (61,157)        $(625,530)
Adjustments to reconcile net loss to net cash
 used in operating activities:
   Depreciation and amortization                                           5,044             2,521             7,565
   Issuance of common stock in exchange for services                        --              10,000            10,000
   Realized loss (gain) on sale of marketable securities                 144,564          (364,652)         (220,088)
   Impairment expense                                                     75,000              --              75,000
   Bad debt expense - notes receivable                                   142,000              --             142,000
Change in assets and liabilities:
   (Increase) decrease in due from brokers                                39,242           (39,242)             --
   (Increase) decrease in prepaid rent                                    12,332           (11,713)              619
   Increase (decrease) in accounts payable and accrued expenses            7,656          (182,894)         (175,238)
   Increase in lawsuit payable                                            30,000              --              30,000
   Increase (decrease) in due to related parties                         (55,449)         (134,551)         (190,000)
                                                                       ---------         ---------         ---------
NET CASH USED IN OPERATING ACTIVITIES                                   (163,984)         (781,688)         (945,672)
                                                                       ---------         ---------         ---------

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of marketable securities                              244,032           704,072           948,104
Purchase of property and equipment                                        (2,014)          (25,212)          (27,226)
Purchase of non-marketable securities                                       --             (75,000)          (75,000)
Purchase of marketable securities and rights                                --            (605,700)         (605,700)
Issuance of notes receivable                                             (72,000)          (70,000)         (142,000)
                                                                       ---------         ---------         ---------
NET CASH PROVIDED BY (USED) IN INVESTING ACTIVITIES                      170,018           (71,840)           98,178
                                                                       ---------         ---------         ---------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable                                                 --             686,500           686,500
Repayment of notes payable                                               (30,000)         (351,500)         (381,500)
Proceeds from issuance of preferred stock                                   --             523,000           523,000
                                                                       ---------         ---------         ---------
NET CASH (USED) IN PROVIDED BY FINANCING ACTIVITIES                      (30,000)          858,000           828,000
                                                                       ---------         ---------         ---------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                     (23,966)            4,472           (19,494)

CASH AND CASH EQUIVALENTS- beginning                                      23,966            19,494            19,494
                                                                       ---------         ---------         ---------

CASH AND CASH EQUIVALENTS- ending                                      $    --           $  23,966         $    --
                                                                       =========         =========         =========
</TABLE>
The accompanying notes are an integral part of these financial statements.

                                       F-6
<PAGE>

                                   CECS CORP.
                          (A Development Stage Company)
                            STATEMENTS OF CASH FLOWS
<TABLE><CAPTION>
                                                                                                      Cumulative from
                                                                                                      January 16, 2000
                                                                               December 31,             (Inception) to
                                                                       ---------------------------        December 31,
                                                                          2001              2000              2001
                                                                       ---------         ---------         ---------
<S>                                                                    <C>               <C>               <C>

CASH PAID DURING THE YEAR:
  Interest expense                                                     $    --           $  27,188         $  27,188
                                                                       =========         =========         =========
  Income taxes                                                         $    --           $    --           $    --
                                                                       =========         =========         =========
</TABLE>

NON-CASH FINANCING ACTIVITIES:

During the year ended December 31, 2001, a shareholder converted 6.325 shares of
preferred stock into 253,000 shares of common stock.






                      [THIS SPACE INTENTIONALLY LEFT BLANK]














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

                                       F-7
<PAGE>

                                   CECS CORP.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000

NOTE 1       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

             Nature of Operations
             --------------------
             CECS Corp. (the "Company") was incorporated under the laws of the
             State of Maryland on July 11, 1985, as PPV Enterprises, Inc.
             ("PPV"). On August 18, 1987, the Company changed its name to
             DataVend, Inc. ("Datavend") and reincorporated under the laws of
             the State of Delaware. On March 14, 1990, the Company changed its
             name to Choices Entertainment Corporation ("Choices"). On June 16,
             1997, the Company sold substantially all of its assets and business
             to West Coast Entertainment Corporation ("Westcoast").

             On August 30, 1999, the Company entered into an agreement the
             effect of which would have been to change the Company to a hotel
             properties holding and operating company. On January 16, 2000, the
             Company's Board of Directors adopted a plan to change the business
             of the Company to that of a technology holding company and
             terminated the plan to become a hotel company effective as of
             December 30, 1999. On May 26, 2000, the Company's shareholders
             approved the change of the name of the corporation to CECS CORP.

             The Company is currently a development stage enterprise under the
             provisions of Statement of Financial Accounting Standards ("SFAS")
             No. 7.

             Use of Estimates
             ----------------
             The preparation of financial statements in conformity with
             accounting principles generally accepted in the United States of
             America 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 revenue and
             expenses during the reporting period. Actual results could differ
             from those estimates.

             Cash and Cash Equivalents
             -------------------------
             The Company considers all highly liquid investments purchased with
             original maturities of three months or less to be cash equivalents.

             Concentration of Credit Risk
             ----------------------------
             The Company places its cash in what it believes to be credit-worthy
             financial institutions. However, cash balances may have exceeded
             FDIC insured levels at various times during the year. The Company
             has not experienced any losses in such accounts and believes it is
             not exposed to any significant credit risk on cash and cash
             equivalents.

             Equity Securities
             -----------------
             The Company accounts for investment in accordance with SFAS No. 115
             "Accounting for Certain Investments in Debt and Equity Securities,"
             which classifies investments as trading securities, available for
             sale securities, and held to maturity securities. SFAS No. 115
             requires unrealized holding gains and losses for available-for-sale
             securities to be excluded from earnings and reported as a net
             amount in a separate component of shareholders' equity until
             realized.

                                      F- 8
<PAGE>

                                   CECS CORP.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000


NOTE 1       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

             Equity Securities (continued)
             -----------------------------
             Non-marketable securities are carried at cost, unless the Company
             believes and has reason to believe that the securities should be
             valued at some lower basis due to impairment of realization.

             Property and Equipment
             ----------------------
             Property and equipment are recorded at cost. Depreciation is
             computed using the straight-line method based upon the estimated
             useful lives of the various classes of assets. Maintenance and
             repairs are charged to expense as incurred.

             Income Taxes
             ------------
             Income taxes are provided for based on the asset and liability
             method of accounting pursuant to Statement of Financial Accounting
             Standards ("SFAS") No. 109, "Accounting for Income Taxes". The
             asset and liability method requires the recognition of deferred tax
             assets and liabilities for the expected future tax consequences of
             temporary differences between the reported amount of assets and
             liabilities and their tax basis.

             Fair Value of Financial Instruments
             -----------------------------------
             The carrying value of the Company's financial instruments as of
             December 31, 2001, which include cash and cash equivalents,
             accounts payable and accrued expenses, and notes payable
             approximate their values due to their short maturities.

             Long-Lived Assets
             -----------------
             SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets
             and for Long-Lived Assets to be Disposed of" requires that
             long-lived assets be reviewed for impairment whenever events or
             changes in circumstances indicate that the carrying amount of an
             asset may not be recoverable. The Company has adopted this
             statement and determined that an impairment loss needs to be
             recognized for non-marketable securities (see Note 6).

             Loss Per Share
             --------------
             SFAS No. 128, "Earnings Per Share" requires presentation of basic
             loss per share ("Basic LPS") and diluted loss per share ("Diluted
             LPS"). The computation of basic loss per share is computed by
             dividing loss available to common stockholders by the
             weighted-average number of outstanding common shares during the
             period. Diluted LPS gives effect to all dilutive potential common
             shares outstanding and all shares held in treasury during the
             period. The computation of diluted LPS does not assume conversion,
             exercise or contingent exercise of securities that would have an
             anti-dilutive effect on losses.

                                       F-9
<PAGE>

                                   CECS CORP.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000


NOTE 1       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

             Loss Per Share (continued)
             --------------------------

             The shares used in the computation of loss per share were as
             follows:

                                               December 31,
                                      -----------------------------
                                         2001               2000
                                      -----------       -----------
             Basic and diluted         47,963,943        40,674,367
                                      ===========       ===========

             Stock-Based Compensation
             ------------------------
             SFAS No. 123, "Accounting for Stock-Based Compensation,"
             encourages, but does not require companies to record compensation
             cost for stock-based employee compensation plans at fair value. The
             Company has chosen to continue to account for stock-based
             compensation using the intrinsic value method prescribed in
             Accounting Principles Board ("APB") Opinion No. 25, "Accounting for
             Stock Issued to Employees," and related interpretations.
             Accordingly, compensation cost for stock options is measured as the
             excess, if any, of the quoted market price of the Company's stock
             at the date of the grant over the amount an employee must pay to
             acquire the stock.

             Comprehensive Income
             --------------------
             SFAS No. 130, "Reporting Comprehensive Income", establishes
             standards for the reporting and display of comprehensive income and
             its components in the financial statements. As of December 31, 2001
             and 2000, the Company had items that represent comprehensive
             income; therefore, has included a schedule of comprehensive income
             in the financial statements.

             Segment Disclosure
             ------------------
             SFAS No. 131, "Disclosure about Segments of an Enterprise and
             Related Information" changes the way public companies report
             information about segments. SFAS No. 131, which is based on the
             selected segment information, requires quarterly and entity-wide
             disclosures about products and services, major customers, and the
             material countries in which the entity holds assets and reports
             revenues. The Company is not organized by multiple operating
             segments for the purpose of making operating decisions or assessing
             performance. Accordingly, the Company operates in one operating
             segment and does not report entity-wide disclosures.

             Recent Accounting Pronouncements
             --------------------------------
             On June 29, 2001, Statement of Financial Accounting Standards
             ("SFAS") No. 141, "Business Combinations", was approved by the
             Financial Accounting Standards Board ("FASB"). SFAS 141 requires
             that the purchase method of accounting be used for all business
             combinations initiated after June 30, 2001. Goodwill and certain
             intangible assets will remain on the balance sheet and not be
             amortized. On an annual basis, and when there is reason to suspect
             that their values have been diminished or impaired, these assets
             must be tested for impairment, and write-downs may be necessary.
             The Company is required to implement SFAS No. 141 on January 1,
             2002 and it has not determined the impact, if any, that this
             statement will have on its consolidated financial position or
             results of operations

                                      F-10
<PAGE>

                                   CECS CORP.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000


NOTE 1       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

             Recent Accounting Pronouncements (continued)
             --------------------------------------------
             On June 29, 2001, SFAS No. 142, "Goodwill and Other Intangible
             Assets", was approved by the FASB. SFAS No. 142 changes the
             accounting for goodwill from an amortization method to an
             impairment-only approach. Amortization of goodwill, including
             goodwill recorded in past business combinations, will cease upon
             adoption of this statement. The Company is required to implement
             SFAS No. 142 on January 1, 2002 and it has not determined that
             impact, if any, that this statement will have on its consolidated
             financial position or results of operations

             In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset
             Retirement Obligation." SFAS No. 143 is effective for fiscal years
             beginning after June 15, 2002, and will require companies to record
             a liability for asset retirement obligations in the period in which
             they are incurred, which typically could be upon completion or
             shortly thereafter. The FASB decided to limit the scope to legal
             obligation and the liability will be recorded at fair value. The
             effect of adoption of this standard on Company's results of
             operations and financial positions is being evaluated.

             In August 2001, the FASB issued SFAS No. 144, "Accounting for the
             Impairment or Disposal of Long-Lived Assets." SFAS No. 144 is
             effective for fiscal years beginning after December 15, 2001. It
             provides a single accounting model for long-lived assets to be
             disposed of and replaces SFAS No. 121 "Accounting for the
             Impairment of Long-Lived Assets and Long-Lived Assets to Be
             Disposed Of." The effect of adoption of this standard on Company's
             results of operations and financial positions is being evaluated.

NOTE 2       GOING CONCERN

             The accompanying financial statements have been prepared in
             conformity with accounting principles generally accepted in the
             United States of America, which contemplate continuation of the
             Company as a going concern. However, the Company has no established
             source of revenue.

             As of December 31, 2001, the Company has an accumulated deficit of
             $23,012,442 and net losses of approximately of $564,000 and $61,000
             for the years ended December 31, 2001 and 2000, respectively.

             As of the date of this report, the Company has no cash in the bank.
             In 2001, the Company relied on raising capital privately,
             borrowings, and the proceeds from the sale of marketable securities
             to provide capital for its operating and investing activities. The
             Company's viability for the foreseeable future is dependent upon
             its ability to find business opportunities and raise needed
             capital. The Company's viability in raising needed capital is
             seriously in question. In the event the Company is not successful
             in securing needed capital in the near term, as to which no
             assurance can be given, the Company does not believe that its
             viability as an ongoing business is assured.

                                      F-11
<PAGE>

                                   CECS CORP.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000


NOTE 2       GOING CONCERN (Continued)

             This matter raises substantial doubt about the Company's ability to
             continue as a going concern. These financial statement do not
             include any adjustments relating to the recoverability and
             classification of recorded asset amounts, or amounts and
             classification of liabilities that might result from this
             uncertainty.

             Management is exploring merging or acquiring a company with viable
             operations.

NOTE 3       MARKETABLE SECURITIES/DUE FROM BROKER

             The Company's investments in marketable securities are classified
             as available-for-sale. The cost and approximate fair value of
             marketable securities available-for-sale are summarized as follows
             at December 31, 2000:

                                                    Unrealized    Fair
                                            Cost       Gain      Value
                                          --------   --------   --------
             Publicly traded securities   $388,596   $ 57,763   $446,359
                                          ========   ========   ========

             For the year ended December 31, 2000, gross proceeds from the sale
             of securities was $378,662, with an average cost of $217,105, and a
             realized gain of $161,557 using the average cost method.

             As of December 31, 2000, the Company had a receivable totaling $
             39,242 for the shares sold with the settlement date after the year
             end.

             For the year ended December 31, 2001, gross proceeds from the sale
             of securities was $244,032,with an average cost of $388,596, which
             resulted in realized loss of $144,564. The average cost method was
             used to calculate realized loss.

             As of December 31, 2001, the Company sold all of its marketable
             securities.








                                      F-12
<PAGE>


                                   CECS CORP.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000

NOTE 4       PROPERTY AND EQUIPMENT

             Property and equipment at cost, consisted of the following:

                                                           December 31,
                                                  ----------------------------
                                                     2001              2000
                                                  ----------        ----------
              Computer Equipment                  $    3,102        $    1,088
              Furniture and Fixture                   17,171            17,171
              Office Equipment                         6,953             6,953
                                                  ----------        ----------
                                                      27,226            25,212
              Less:  Accumulated Depreciation         (7,565)           (2,521)
                                                  ----------        ----------
              Property and Equipment, net         $   19,661        $   22,691
                                                  ==========        ==========

             For the years ended December 31, 2001 and 2000, depreciation
             expense was $5,044 and $2,521, respectively.

NOTE 5       NON-MARKETABLE EQUITY SECURITIES

             The Company acquired securities of Tridium Research, Inc., a
             Washington corporation ("Tridium") a non-publicly traded based in
             Kirkland, Washington during 2000. In March 2000, the Company paid
             $50,000 cash to acquire 250,000 shares of common stock of Tridium.
             In June 2000, the Company acquired an additional 125,000 shares of
             common stock of Tridium for $25,000. The 375,000 shares of common
             stock acquired represented in excess of 5% of all Tridium common
             stock issued and outstanding. Originally, the Company obligated
             itself to provide an additional $200,000 of funding to Tridium,
             upon terms and conditions to be determined, but no satisfactory
             agreement could be reached as to such terms and conditions.

             During the second quarter of 2001, the Company discontinued its
             efforts to acquire Tridium Research, Inc. because the market size
             did not warrant the asking price of the principals. Because Tridium
             is not an operational company and does not have prospects for other
             financing, the Company impaired its investment in Tridium totaling
             $75,000, and recognized a loss in the statement of operations.


NOTE 6       NOTES RECEIVABLE

             The Company provided capital on a loan basis to Speaklink, Inc.
             ("Speaklink"), a privately held company based in Seattle,
             Washington. The Company is the holder of two Speaklink promissory
             notes each in the amount of $35,000. The first note, dated October
             19, 2000, matured December 19, 2000 and the second note, dated
             October 27, 2000, matured December 27, 2000, in each case with
             accrued interest. The notes contain all of the standard terms and
             conditions of commercially reasonable promissory notes written or
             made in the ordinary course of business. The Company has demanded
             repayment of the note. It appears that Speaklink does not have
             assets sufficient to repay the amount of the notes plus interest
             and is insolvent.

                                      F-13
<PAGE>

                                   CECS CORP.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000

NOTE 6       NOTES RECEIVABLE (Continued)

             Accordingly, the Company expensed these notes totaling $70,000
             during the year ended December 31, 2001.

             Additionally the Company provided capital on a loan basis to
             FastVoice, Inc. ("FastVoice"), a privately held company based in
             Seattle, Washington. The Company is the holder of a FastVoice
             promissory note in the amount of $72,000, dated January 20, 2001
             with interest at 12% per annum. The note contains all of the
             standard terms and conditions of a commercially reasonable
             promissory note written or made in the ordinary course of business.
             The Company has demanded repayment of the note. However, it appears
             that FastVoice does not have assets sufficient to permit repayment
             of the amount on the note plus interest and is insolvent.
             Accordingly, the Company expensed this note totaling $72,000 during
             the year ended December 31, 2001.


NOTE 7       RELATED PARTY TRANSACTIONS

             As of December 31, 2001 and 2000, the Company had payable to
             related parties totaling $40,000 and $95,449 for the consulting and
             professional services.

             The Company has related party transactions with several officers,
             directors and other related parties as follows:

             o   During the year ended December 31, 2001, the Company made
                 payments to Tracy Shier, President and CEO ("Shier"), Thomas
                 Renna, Vice President ("Renna") and Howard Patrick, Director
                 ("Patrick") in the amounts of $45,938 and $14,900, and $5,000,
                 respectively, for consulting services.

             o   During the year ended December 31, 2000, the Company made
                 payments to Tracy Shier, President and CEO, Thomas Renna, Vice
                 President and George Pursglove, formerly Interim CFO and
                 Director ("Pursglove") in the amounts of $147,000, $166,000 and
                 $20,000, respectively, for consulting services.

             o   Additionally, during the year ended December 31, 2000, the
                 board of directors approved a direct grant of common stock of
                 the Company to Shier and Renna in the amounts of 10,000,000 and
                 3,000,000 shares respectively of the Company's common stock.
                 The fair market value per share of the Company's common stock
                 as quoted on the OTC-BB was approximately $0.04 as of the day
                 of the grant. These grants were recorded as Stock Based
                 Compensation in the approximate amount of $520,000 in the
                 Statement of Operations in the quarter ended September 30,
                 2000. The grant of stock to Renna and Shier has been declined
                 by recipients and the board has voided the grant. Compensation
                 expense for the grant of common stock was subsequently
                 corrected in the fourth quarter 2000.

                                      F-14
<PAGE>

                                   CECS CORP.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000

NOTE 8       LAWSUIT SETTLEMENT PAYABLE

             The Company was a defendant to lawsuit from Dion Signs & Services,
             Inc. ("Dion") vs. Choices Entertainment Corporation ("Choices"),
             Civil Action No. 91-6871. Dion alleged that it was owed
             approximately $33,000 plus interest, costs and reasonable
             attorney's fees for the failure by Choices to pay for signage that
             was erected at various locations pursuant to a contract.

             The lawsuit discussed above was settled during May 2001, whereby
             the Company agreed to pay $22,000 to Dion over the next six months
             in semi-monthly installments of $6,000 except for the first
             installment, which is for $5,000. The Company was unable to make
             its first installment under the settlement agreement and
             accordingly the liquidated amount of the judgment is $30,000 plus
             accrued interest. The judgment has been placed in the hands of
             collection attorneys in the state of Washington and the Rhode
             Island judgment has been registered as a Washington judgment. As of
             December 31, 2001, no payment has been made on this judgement.

NOTE 9       NOTES PAYABLE

             As of December 31, 2001 and 2000, the Company had notes payable
             outstanding in the amount of $310,000 and $340,000, respectively.
             The notes are evidenced in writing and are held by 5 individuals
             who are stockholders in the Company. The notes have maturity dates
             of between October through December of 2000, and have all matured.
             The notes bear interest at the rate of 12% per annum.

NOTE 10      COMMITMENTS AND CONTINGENCIES

             The Company sub-leases its office facilities in Seattle, Washington
             under a non-cancelable operating lease, which commenced June 1,
             2000 and expires December 31, 2001. The rent was $4,112 per month
             for the period from June 1, 2000 through December 31, 2000 and
             increased to $4,719 per month through December 30, 2001.

             During July 2001, the Company entered into a termination
             arrangement with its sub-landlord to vacate corporate office
             facilities in Seattle, Washington. According to the arrangement,
             the sub-landlord applied all amounts of last month's rent and
             security deposit to payment of the monthly lease amounts through
             the date of termination on July 31, 2001. The reason for the
             termination was that the sub-landlord needed the space for its own
             expansion plans.

             Rent expense for the years ended December 31, 2001 and 2000 was
             $31,061 and $34,595, respectively.


                                      F-15
<PAGE>

                                   CECS CORP.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000



NOTE 11      STOCKHOLDERS' EQUITY (DEFICIENCY)

             Convertible Preferred Shares
             ----------------------------
             The aggregate number of shares of convertible preferred stock that
             the Company has authority to issue is 50,000,000 shares at a par
             value of $0.01. The Company, as of December 31, 2001 and 2000, had
             issued 11.416 and 17.741 shares of its redeemable convertible
             preferred stock, respectively.

             The Convertible Preferred Shares are the Company's only authorized
             and outstanding series or class of preferred shares. The
             Convertible Preferred Shares have no liquidation preference. Upon
             liquidation, dissolution or winding up of the Company, the holders
             of Convertible Preferred Shares will receive an amount equal to the
             amount, if any, received by holders of the Common Stock

             Dividends on the Convertible Preferred Shares are non-cumulative
             and will only be paid when, as and if declared by the Board of
             Directors of the Company, in its sole discretion, in an amount per
             share equal to the amount of the dividend declared on the Common
             Stock, if any.

             Convertible Preferred Shares are convertible, in whole or in part,
             at any time, at the option of the holder, into Common Stock at a
             ratio of 40,000 shares of the Company's Common Stock for each
             Convertible Preferred Share. Holders of the Convertible Preferred
             Shares are not entitled to any distributions unless declared by the
             Board of Directors as described above.

             The holders of Convertible Preferred Shares have voting rights
             equivalent to the rights of holders of the Common Stock. Each
             Convertible Preferred Share bears 40,000 votes on any matter
             brought before the stockholders such as the election of Directors
             and are entitled to notice of annual or special stockholder
             meetings.

             Convertible Preferred Shares are not redeemable by the Company.

             During the year ending December 31, 2001, 6.325 convertible
             preferred shares were converted into 253,000 shares of the
             Company's common stock.

             Common Stock
             ------------
             The aggregate number of shares of common stock that the Company has
             authority to issue is 200,000,000 shares at a par value of $0.01.
             As of December 31, 2001 and 2000, 47,970,875 and 47,717,875 shares
             were issues and outstanding, respectively. The Company's common
             stock is currently traded in the over-the-counter market on the
             OTC-Bulletin Board

                                      F-16
<PAGE>

                                   CECS CORP.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000

NOTE 11      STOCKHOLDERS' EQUITY (DEFICIENCY) (Continued)

             Common Stock (continued)
             ------------------------
             The holders of outstanding shares of Common Stock are entitled to
             receive dividends out of assets legally available therefore at such
             times and in such amounts as the board may from time to time
             determine. The shares of Common Stock are neither redeemable nor
             convertible, and the holders thereof have no preemptive or
             subscription rights to purchase any securities of the Company. Upon
             liquidation, dissolution or winding up of the company, the holders
             of Common Stock are entitled to receive the assets of the company
             which are legally available for distribution, after payment of all
             liabilities and any liquidation preference of any outstanding
             preferred stock. Each outstanding share of Common Stock is entitled
             to one vote on all matters submitted to a vote of stockholders.
             There is no cumulative voting and no preemptive right.

             The Company has not declared or paid any dividends on its preferred
             or common stock. The Board of Directors does not contemplate the
             payment of dividends in the foreseeable future.

NOTE 12      STOCK OPTIONS

             Stock Option and Appreciation Rights Plan
             -----------------------------------------
             The Company has an unallocated reserve of 1,694,000 shares of its
             common stock for grant under its 1987 Stock Option and Appreciation
             Rights Plan (the "1987 Plan"). Pursuant to the 1987 Plan, the
             Company may grant either incentive stock options, intended to
             comply with the requirements of Section 422A of the Internal
             Revenue Code of 1986, as amended (the "Code"), or non-qualified
             stock options, as well as stock appreciation rights. All matters
             relating to the 1987 Plan are administered by a committee selected
             by the Company's Board of Directors, including selection of
             participants, allotment of shares, determination of price and other
             conditions of purchase. The exercise price of incentive stock
             options granted under the 1987 Plan may not be less than the fair
             market value of the common stock on the date of grant and the term
             of the option may not exceed ten years from the date of grant. In
             the case of incentive options granted to individuals who own more
             than 10% of the outstanding common stock of the Company, the
             exercise price may not be less than 110% of the fair market value
             of the common stock on the date of the 1987 Plan grant and the term
             of the option may not exceed five years from the date of grant. All
             options and stock appreciation rights granted under the 1987 Plan
             are non-transferable other than by will or by the laws of descent
             and distribution.




                                      F-17
<PAGE>

                                   CECS CORP.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000


NOTE 12      STOCK OPTIONS (Continued)

             Stock Option and Appreciation Rights Plan (continued)
             -----------------------------------------------------
             The following table sets forth information with respect to
             incentive stock options under the Plan for the year ended December
             31, 2000:

                                         Number of
                                        Shares under               Price per
             Expiration Date             Option (1)                  Share
             ---------------             ----------                  -----
             November 29, 2001            1,500,50                    .75

             As of December 31, 2001, these options expired unexercised.

             Non-qualified Management Incentive Options
             ------------------------------------------
             On January 31, 1991, the Board of Directors approved the grant of
             4,750,000, 1991 Management Options to four executive officers of
             the Company. One officer has subsequently retired and two other
             officers have left the Company. One ex-officer exercised his
             options in full, one ex-officer exercised 540,000 options leaving
             510,000 options outstanding, and 1,000,000 options held by the
             second officer who has left the Company remains outstanding. All of
             the 1991 Management Options were issued at an exercise price of
             $.4325 per share, which represented the bid price for the Company's
             common stock on the date of the grant of such options. The 1991
             Management Options fully vested as of August 2, 1991, and expired
             January 31, 2001.

             On February 9, 1994, the Board of Directors approved the grant of
             915,000 1994 Management Options to three officers and one director
             of the Company at an exercise price of $.23 per share, which
             represented the bid price for the Company's common stock on the
             date of grant of such options. The 1994 Management Options vested
             fully as of April 7, 1994, and expired on January 31, 2001.


             Registration statements under the 1933 Act have been filed by the
             Company with respect to the 8,425,001 shares underlying the 1987
             Stock Option and Appreciation Rights Plan (the "1987 Plan"), the
             outstanding Long-Term Management Incentive Options, the 1991
             Management Options, and the 1994 Management Options, and an option
             held by a director. Of these options, 3,591,501 have either been
             cancelled, exercised or have expired and 3,139,499 options remained
             unissued under the 1987 SOP.

             On February 13, 1997, the Board of Directors of the Company
             authorized the grant of non-qualified stock options to purchase
             450,000 shares of the Company's common stock at $.05 per share, the
             fair market value of the common stock on that date, to three
             directors of the Company. The options became fully vested after six
             months from the date of grant. As of December 31, 2001 all options
             have expired.



                                      F-18
<PAGE>

                                   CECS CORP.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000

NOTE 12      STOCK OPTIONS (Continued)

             Non-qualified Management Incentive Options (continued)
             ------------------------------------------------------
             All of the events disclosed above regarding stock option grants
             occurred prior to June 1998, when current management took control
             of the Company by acquiescence in a proxy contest. Since June 1998,
             the Company has not granted any stock options, whether pursuant to
             the 1987 Plan or otherwise. Management believes and has reason to
             believe that all prior option grants have expired unexercised or
             are of doubtful validity and would not be honored by the Company
             without substantiation.


NOTE 13      INCOME TAXES

             The components of the provision for income taxes are as follows:

                                                       For The Years Ended
                                                           December 31,
                                                   --------------------------
                                                     2001              2000
                                                   --------          --------
             Current Tax Expense
                  U.S. Federal                      $     -           $     -
                  State and Local                         -                 -
                                                   --------          --------
             Total Current                                -                 -
                                                   --------          --------

             Deferred Tax Expense
                  U.S. Federal                            -                 -
                  State and Local                         -                 -
                                                   --------          --------
             Total Deferred                               -                 -
                                                   --------          --------

             Total Tax Provision (Benefit) from
             Continuing Operations                 $      -          $      -
                                                   ========          ========

             The reconciliation of the effective income tax rate to the Federal
             statutory rate is as follows for the years ended December 31, 2001
             and 2000:

             Federal Income Tax Rate                                     (34.0)%
             Effect of Valuation Allowance                                34.0%
                                                                      --------
             Effective Income Tax Rate                                     0.0%
                                                                      ========


                                      F-19
<PAGE>

                                   CECS CORP.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000

NOTE 13      INCOME TAXES (Continued)

             At December 31, 2001 and 2000, the Company had net carryforward
             losses of approximately $23,000,000 and $22,400,000, respectively.
             Because of the current uncertainty of realizing the benefit of the
             tax carryforwards, a valuation allowance equal to the tax benefit
             for deferred taxes has been established. The full realization of
             the tax benefit associated with the carryforwards depends
             predominantly upon the Company's ability to generate taxable income
             during the carryforward period.

             Deferred tax assets and liabilities reflect the net tax effect of
             temporary differences between the carrying amount of assets and
             liabilities for financial reporting purposes and amounts used for
             income tax purposes. Significant components of the Company's
             deferred tax assets and liabilities are as follows:

                                                           December 31,
                                                  ----------------------------
                                                      2001             2000
                                                  -----------      -----------
             Deferred Tax Assets
                  Loss Carryforwards              $ 7,820,000      $ 7,616,000
                  Less:  Valuation Allowance       (7,820,000)      (7,616,000)
                                                  -----------      -----------
             Net Deferred Tax Assets              $         -      $         -
                                                  ===========      ===========

             Net operating loss carryforwards expire starting in 2007 through
             2019. Per year availability is subject to change of ownership
             limitations under Internal Revenue Code Section 382.


NOTE 14      SUBSEQUENT EVENTS

             On May 2, 2002 the Company sold 5,000,000 shares of its common
             stock for $5,000 or $.001 per share.








                                      F-20
<PAGE>



                                INDEX TO EXHIBITS
  EXHIBIT
    NO.                         DESCRIPTION OF EXHIBIT *
---------           ------------------------------------------------------------

      3(a)      Certificate of Incorporation, as amended(1)
       (b)      Certificate of Designations of Series C Preferred Stock, as
                amended(2)
       (c)      Amended and Restated By-Laws,(13)
      4         Form of certificate evidencing shares of Common Stock(14)
     10(a)      Stock Option and Appreciation Rights Plan of 1987 (4)
       (b)      Form of Long-Term Management Incentive Stock Option Agreement(5)
       (c)      Form of 1991 Management Option Agreement(5)
       (d)      Consulting Agreement between Registrant and Ronald W.
                Martignoni(6)
       (e)      Severance Benefits Agreement, as amended, between Registrant and
                Lorraine E. Cannon(7)
       (f)      Form of 1994 Management Option Agreement(7)
       (g)      Non-Employee Director Stock Option Agreement between Registrant
                and Fred E. Portner(8)
       (h)      Non-Employee Director Stock Option Agreement between Registrant
                and Fred E. Portner(9)
       (i)      Non-Employee Director Stock Option Agreement between Registrant
                and James D. Sink(9)
       (j)      Asset Purchase Agreement, dated December 16, 1996, as amended,
                between West Coast Entertainment Corporation and Registrant(10)
  10.99(a)      Consulting Agreement between Registrant and Thomas Renna(11)
       (b)      Letter of Intent to Acquire Republic Hotel Investors, Inc.(12)
       (c)      Termination Contract with Republic Hotel Investors, Inc.(13)
       (d)      Sublease Agreement between Northwest Strategies, Inc. and CECS,
                Inc. [sic.] dated May 25, 2000 (14)
       (e)      Private Placement Subscription Agreement dated January 12, 2000
                re: Photochannel Networks Inc. (14)
       (f)      Subscription Agreement re: Tridium Research, Inc. dated March
                1, 2000 (14)
       (g)(1)   Promissory Note--Speaklink Inc. dated October 19, 2000 (14)
       (h)(1)   Fastvoice Term Sheet--Third Party dated October 31, 2000 (14)
  16.01         Letter of Withdrawal by Miller and Co. LLP (auditors) (15)
  16.01(b)      Letter of Acquiesence in Form 8K dated September 28, 2001 (16)
  21            Subsidiaries of Registrant (14)

-----------------

(1) Filed as an exhibit to Registrant's Registration Statement on Form S-8 File
    No. 33-87016).
(2) Filed as an exhibit to Registrant's 1996 Annual Report on Form 10-KSB.
(3) Filed as an exhibit to Registrant's 1992 Annual Report on Form 10-K.
(4) Filed as an exhibit to Registrant's Registration Statement on Form S-1,
    inclusive of Post-Effective Amendment No. 1 thereto (File No.: 33-198983).
(5) Filed as an exhibit to Registrant's Post-Effective Amendment No. 1 to
    Form S-1 Registration Statement (File No.: 33-32396).
(6) Filed as an exhibit to Registrant's Quarterly Report on Form 10-QSB, for the
    quarter ended September 30, 1997.
(7) Filed as an exhibit to Registrant's 1993 Annual Report on Form 10-K.
(8) Filed as an exhibit to Registrant's Quarterly Report on Form 10-QSB for the
    quarter ended March 31, 1996.
(9) Filed as an exhibit to Registrant's Quarterly Report on Form 10-QSB for the
    quarter ended March 31, 1997.

                                       E-1


<PAGE>



(10) Filed as an exhibit to Registrant's definitive Proxy Statement, dated
     February 11, 1997, with regard to a Special Meeting of Stockholders held on
     March 12, 1997, as further amended by Second and Third Amendments thereto
     filed as exhibits to Registrant's Forms 8-K, dated April 28, 1997, and May
     29, 1997.
(11) Filed as an exhibit to Registrant's Quarterly Report on Form 10-QSB, for
     the quarter ended June 30, 1999.
(12) Filed as an exhibit to Registrant's Current Report on Form 8-K dated August
     30, 1999.
(13) Filed as an exhibit to Registrant's Annual Report on Form 10-KSB, for the
     year ended December 31, 1999.
(14) Filed as an exhibit to Registrant's Annual Report on Form 10-KSB or the
     amendment thereto for the year ended December 31, 2000.
(15) Filed as an exhibit to Registrant's Current Report on Form 8-K dated
     September 28, 2001.
(16) Filed as an exhibit to Registrant's Current Report on Form 8-K/A dated
     October 2, 2001
--------------------------------------------------------------------------------

* All exhibits listed above are herby incorporated by reference to this report
to the fullest extent permitted by the rules and regulations of the Securities
and Exchange Commission, and by other applicable law.















                                [END OF DOCUMENT]












                                       E-2