SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549
                          ----------------------

                                FORM 10-KSB/A


[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

                      Commission file number 000-22845


                        CREATIVE HOST SERVICES, INC.
                       ------------------------------
                (Name of Small Business Issuer in Its Charter)

           California                                   33-0169494
   ------------------------------                    ------------------
  (State or Other Jurisdiction of                    (IRS Employer
   Incorporation or Organization)                    Identification No.)


  16955 Via Del Campo, Suite 110, San Diego, California    92127
  -----------------------------------------------------  ----------
  (Address of Principal Executive Offices)               (Zip Code)

                               (858) 675-7711
              ----------------------------------------------------
              (Registrant's Telephone Number, Including Area Code)


Securities registered pursuant to Section 12(b) of the Exchange Act: None


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

                         Common Stock, no par value
                         --------------------------
                              (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 pursuant to Item 405
of Regulation S-B contained in this form, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendments to
this Form 10-KSB.  [X]

    The issuer's revenues for the fiscal year ended December 31, 2001 were
$30,745,851.

<PAGE>


The aggregate market value of the common equity held by non-affiliates of
issuer computed by reference to the closing price at which the stock sold on
December 16, 2002 as reported by NASDAQ was $12,264,816.

The number of shares outstanding of issuer's no par value Common Stock, as of
December 16, 2002, was 8,006,210.

Transitional Small Business Disclosure Format:  Yes [ ]    No [X]


                     DOCUMENTS INCORPORATED BY REFERENCE: None


                            TABLE OF CONTENTS

PART I                                                               PAGE

Item  1.  Description of Business.                                    3

Item  2.  Description of Property.                                    14

Item  3.  Legal Proceedings.                                          14

Item  4.  Submission of Matters to a Vote of Security Holders.        14

PART II

Item  5.  Market For Common Equity and Related                        15
              Stockholder Matters.

Item  6.  Management's Discussion and Analysis of Financial           16
              Condition and Results of Operations.

Item  7.  Financial Statements.                                       24

INDEPENDENT AUDITORS' REPORT                                          F-1
CONSOLIDATED FINANCIAL STATEMENTS:
  Consolidated Balance Sheet                                          F-2
  Consolidated Statements of Operations                               F-3
  Consolidated Statements of Shareholders' Equity                     F-4
  Consolidated Statements of Cash Flows                               F-6
  Notes to Consolidated Financial Statements                          F-8

Item  8.  Changes in and Disagreements with Accountants on            25
          Accounting and Financial Disclosure.

PART III

Item  9.  Directors, Executive Officers, Promoters and                25
          Control Persons; Compliance with Section 16(a)
          of The Exchange Act.

Item 10.  Executive Compensation.                                     27

Item 11.  Security Ownership of Certain Beneficial Owners and         30
          Management.

Item 12.  Certain Relationships and Related Party Transactions.       31

Item 13.  Exhibits, Financial Statement Schedules, and                32
          Reports on Form 8-K.

SIGNATURES                                                            35

                                      -2-
<PAGE>

Explanatory Note:

This amendment to Form 10-KSB is being filed to give effect to the restatement
of Creative Host Services, Inc.'s Consolidated Financial Statements for the
years ended December 31, 2001 and 2000 included in Item 7, as discussed in
Note 1 thereto and in Item 6.  The restatements did not have an effect on the
reported net income or income per share.  This amendment is also being filed
in response to certain comments received by the Company from the Commission
relating to the Company's pending registration statement on Form SB-2.



                                   PART I

Item 1.  Description of Business.

THE CONCESSION BUSINESS

Creative Host Services, Inc. ("Creative Host" or the "Company") is primarily
engaged in the business of acquiring and operating food, beverage and other
concessions at airports throughout the United States of America. The Company
currently has approximately 96 operating concession facilities at 24 airports,
94 of which we own and two of which are franchised, including concessions at
Los Angeles International Airport, Denver International Airport, Portland
International Airport, and the airports in Orange County and Ontario,
California; Madison and Appleton, Wisconsin; Lexington, Kentucky; Greensboro
(Piedmont Triad), North Carolina; Pittsburgh and Allentown, Pennsylvania;
Roanoke, Virginia; Columbia, South Carolina; Sioux Falls, South Dakota; Cedar
Rapids and Des Moines, Iowa; Baton rouge and Shreveport, Louisiana; Midland,
Texas; Albany, New York; Boston, Massachusetts and Saginaw (MBS), Michigan.
The airport contracts include concessions that range from a concession to
operate single and multiple food and beverage outlets to a master concession
to operate all food and beverage, as well as news and gift and merchandise,
locations at an airport. Our airport concession business is complemented by
inflight catering contracts awarded to us by major airlines at certain
airports. In-flight catering comprised approximately six percent of the
Company's revenue in 2001. The Company has in-flight catering contracts with
Delta Airlines, United Airlines and numerous other smaller airline companies.
Approximately 90 percent of the Company's revenue in 2001 was derived from
proprietary concepts such as Creative Croissants.

Concessions to operate food and beverage and other retail operations at
domestic airports are generally granted by an airport authority pursuant to a
request for proposal process. Proposals generally contain schematic drawings
for the concession layout, a commitment to make capital improvements at the
concession location, and sample menus. Rent is paid to the airport authority
on the basis of a percentage of sales, with a minimum amount of rent
guaranteed by the concessionaire. For airport locations with a history of
operations, the Company evaluates information concerning historical revenues
for the location to determine the amount to bid for both percentage and
minimum rent.  For locations that are newly constructed, the Company evaluates
projections for the number of passengers expected to use the airport and
amounts to be spent per person at airport concessions to form a revenues
projection.  Given the requirement to make capital improvements, the Company
makes large capital outlays at the beginning of a concession term, which it
seeks to recover during the remaining term. Concessions are usually awarded
for a ten-year term. Generally concessions are resubmitted for proposals at
the end of the term and we must resubmit a bid to secure an additional ten-
year term.

                                      -3-
<PAGE>


The Company has secured nearly all of its existing airport concessions through
the request for proposal process.  The Company believes its success in
securing concessions through this process is attributable to tailoring its
bids to each specific airport's needs, offering a unique selection of quality
food and beverages, and a distinctive decor.  In our proprietary menu items
the Company strives to provide foods that are healthy and higher quality than
typical fast food or cafeteria-style products, while maintaining value
pricing. The Company's Bakery/Deli style restaurants feature a selection of
croissant sandwiches and a selection of vegetable, fruit and pasta salads. At
locations that are anticipated to have higher revenues, the Company's strategy
is to secure franchise relationships with nationally recognized food and
beverage companies as part of our proposals.  The Company has entered into
agreements with several such companies, including Carl's Jr., Schlotsky's
Deli, Nathan's Hotdogs and TCBY Yogurt. Under these arrangements, the Company
owns the concession rights from the airport authority and its employees
operate the location.  The Company then pays franchise fees under a franchise
agreement.  The Company's strategy is to continue to develop relationships
with a number of national and regional food and beverage companies, which it
expects will provide it with the flexibility to tailor product offerings to
meet a particular airport's desires.

While the Company has seriously pursued the submission of proposals only since
1989, it has been successful in a significant number of the proposals it has
submitted.  Management attributes this success in winning airport proposals
principally to its efforts to customize each bid, striving to make creative
proposals that address local preferences and distinguish the Company from its
competitors in its offering of decor as well as food products.  The Company
focuses on small to medium size airports and has found a niche market. The
following are examples of the Company's approaches to the concession business:

MASTER CONCESSION:  The Company will generally seek to become the master
concessionaire for all airport services, including food and beverage, lounge
and bar, specialty retail, news and gifts, and other services at airports with
at least 400,000 enplanements per year. The Company currently serves as the
master concessionaire at the Cedar Rapids, Iowa airport.

CAFE AND SPIRITS: If the opportunity for a master concession is not available,
then the Company submit bids utilizing specific food and beverage concepts, or
other service concepts depending on the nature of the concession. One such
concept is "Cafe and Spirits" which features various branded and non-branded
food and beverages, such as TCBY Yogurt and Creative Croissants, along with a
bar, lounge and mini library.  The Company currently operate Cafe and Spirits
formats at all Creative Croissants locations that serve liquor.

CREATIVE CROISSANTS-Registered Trademark- BAKERY DELI: The Company can
implement its bakery/deli concept, Creative Croissants, either as a stand
alone concession or as part of a food court, depending on the preference of
the airport authority and the available concession category.  The Company
currently operates Creative Croissants at nearly every airport it currently
services.

ATTAINING FRANCHISE RIGHTS: For larger concessions, where the airport desires
branded food products, the Company attempts to secure franchise rights from
nationally or regionally recognized food and beverage companies.  The Company
has entered into Franchise Agreements with (i) TCBY Yogurt to operate TCBY
franchises at its Lexington, Roanoke, Columbia and Cedar Rapids concession
facilities; (ii) Carl's Jr./Green Burrito to operate franchises at its two
Ontario, California concession facilities; (iii) ICBY to operate ICBY
franchises at its Greensboro, Des Moines, Allentown and Sioux Falls concession

                                      -4-
<PAGE>


facilities; (iv) Schlotsky's to operate a Schlotsky's Deli at Pittsburgh; and
(v) Nathan's Hot Dog to operate franchises at various airports. The Company
may in the future purchase and operate franchises from other major food or
beverage franchisors to include in its bid proposals.

ACQUISITION OF OTHER CONCESSIONAIRES:  The Company has also sought to expand
its physical presence at airports by acquiring existing concessionaires with
one or more airport locations.  Generally, the airport authority overseeing
the operations at the airport will have the right under the existing
concession agreement to approve the change in control.  The strengths the
Company demonstrates in the request for proposal process are used to secure
the consent of an airport authority to a transfer of concession rights in an
acquisition of an existing location.  The Company has typically negotiated for
an extension of the concession term in exchange for additional capital
improvements or additional facilities or menu items to be offered at the
concession location as part of securing the airport authority's consent to the
transfer.

In October 2000, the Company completed the acquisition of Gladco Enterprises,
Inc., an airport concessions company from Pittsburgh, Pennsylvania with annual
revenues of approximately $10 million.  The Company's strategy is to expand
our captive audience business to more airports in the United States, and
eventually to other public venues.  The Company also intends to seek to expand
the types of concession services that it provides, and to be awarded more
multiple and master concession contracts such as the one it was awarded for
the Cedar Rapids, Iowa airport.  While the Company has historically focused on
the food and beverage segment, it intends to seek concession awards to provide
newsstands, gift shops, specialty stores and other services to augment the
Company's food and beverage business at airports and other venues.

Prior to the Company's initial public offering in July 1997, it qualified as a
Disadvantaged Business Enterprise ("DBE") based on Mr. Sayed Ali's ownership
of all of our common stock.  The Company's historical success in securing
concession locations may have been partially attributed to its DBE status. The
impact of the initial public offering on the Company's status as a DBE and the
impact of any such potential loss of DBE status on the Company's ability to
secure new concession locations is unclear. To the extent that the Company's
historic rate of success in securing new airport concessions was partially
attributable to its status as a DBE, that growth rate may decline if the
Company is not recognized as a DBE or if DBE programs are eliminated or
curtailed.

In analyzing a concession opportunity, particularly in the airport industry,
the Company evaluates the following factors, among others: (1) the estimated
rate of return on the investment in the facilities, (2) the historical
performance of the location, (3) the historical and estimated future number of
annual enplanements at the airport, (4) the competition in the vicinity of the
proposed facility, (5) the rent and common area maintenance charges for the
proposed facilities and (6) the length of the proposed concession term.  In
customizing the design proposal and theme for a concession opportunity, the
Company analyzes the character of the community and the expected preferences
of the patrons (for example, whether they are primarily tourists or business
persons) to determine the most attractive facility.  The scope of the contract
and the size and shape of the site are other elements considered in the
analysis.

As part of any proposal or acquisition, the Company receives information
concerning any historical operations conducted at the specific location.
Generally, an airport authority will provide three years of historical
information for a location with its request for proposal. Similarly, in an
acquisition transaction, the Company will review a target operator's

                                      -5-
<PAGE>


historical performance as part of its due diligence review. In either
scenario, the Company then evaluates the estimated impact on revenues and
gross margins that will result from any remodeling, capital improvements and
menu changes. Where the concession location is to be newly constructed, such
as at the Newark New Jersey, airport, the Company reviews estimates of
passenger enplanements for the new terminals and amounts typically spent per
passenger at concessions.

Once the Company has been awarded a concession contract at an airport, it is
generally scheduled to assume the management of the existing facilities within
90 to 120 days after the award, or to commence construction of an entirely new
facility within three to six months after the award.  The Company is generally
required to place three types of bonds with an airport authority before it may
take over operations at a concession.  In connection with its bid, the Company
is occasionally required to post a bond for the amount of capital improvements
it is committed to make at the airport.

During commencement of construction for any specific construction project, the
Company is required to post a construction bond for the specific facilities to
be constructed.  This bond terminates upon completion of each specific project
and the bond for all of the capital improvements expires upon completion of
all capital improvements for the airport.  In addition, the Company is
required to post a performance bond to cover some specified percentage of its
minimum rent obligations.  This bond remains in place during the term of the
concession.  To date the Company has not experienced significant difficulty in
securing bonds for its obligations to various airport authorities.  The
Company's bonding capacity is limited by its size, and has therefore limited
the projects on which it can bid.  If the Company continues to grow, it
anticipates increasing its bonding capacity and the ability to bid for larger
projects at the largest domestic airports.

Typically the Company operates an existing facility for two to three months
before beginning the remodeling of the site according to the specifications in
our airport bid proposal. During the remodeling phase of an existing facility,
which usually takes 45 to 60 days, the facility is either closed or serves at
minimal levels. Once the remodeling is completed, the facility opens for full
service, generally for most hours during which the airport is actively
operating.


ACQUISITION OF GLADCO ENTERPRISES, INC.

On October 9, 2000, the Company completed the closing of the acquisition of
GladCo Enterprises, Inc. ("GladCo"), a company located near Pittsburgh,
Pennsylvania that currently manages concessions in five airports.

The Company completed the acquisition of GladCo in accordance with the terms
of a Purchase Agreement.  In accordance with the Purchase Agreement, the
Company acquired 100% of the stock of GladCo, HLG Acquisition Corporation, a
Pennsylvania corporation and an affiliate of GladCo, and HLG Franchise
Marketing Company, a Pennsylvania limited partnership and an affiliate of
GladCo, from Edwin L. Klett, Louis Coccoli, Jr., Herbert H. Gill and the
Virgil A. Gladieux Marital Trust in consideration for an aggregate amount
equal to $7,000,000 (subject to adjustments as set forth in the Purchase
Agreement), payable as follows: (i) $300,000 in cash which had been prepaid as
a deposit, (ii) the payment of all outstanding principal and accrued interest
of, or assumption of obligations and liabilities as set forth in the Purchase
Agreement, which were not in excess of $2,500,000; (iii) the issuance of
shares of the Company's common stock equal to $500,000 divided by the average

                                      -6-
<PAGE>


of the closing prices of our common stock on the NASDAQ Small Cap Market for
each of the thirty trading days ending two days prior to closing of the
transaction (this resulted in an average price of $7.18, which resulted in
69,638 shares issued); and (iv) approximately $3.7 million in cash.  The
Company agreed to register the shares of common stock, which it completed. The
total issued shares to the sellers was approximately 0.1% of the Company's
issued and outstanding common stock immediately after the acquisition.

The Company agreed to permit the sellers to elect, by written notice to the
Company, to require the Company to repurchase the shares when they are freely
tradable and registered at a price equal to the per share issuance price times
the number of shares repurchased. The Company repurchased a total of 39,694 of
these shares in June 2001 for total consideration of $285,003, leaving 29,944
of these shares outstanding.

The Company also agreed to increase the purchase price at any time up to one
year from closing by $280,000 upon execution of a definitive lease, sub-lease
or other operating agreement with respect to each of the two retail sites and
commercial operations at the Newark, New Jersey International Airport. The
Company signed a lease for the Newark, New Jersey International Airport within
the one year period from closing.  As a result, the Company fulfilled its
obligation to increase the purchase price by $280,000.

The Company agreed to employ Mr. Coccoli in an executive capacity and as
President of GladCo.  The consideration exchanged pursuant to the Acquisition
Agreement was negotiated between GladCo and the Company's management.

In evaluating GladCo as a candidate for the acquisition, the Company used
criteria such as the value of the airport concession assets of GladCo, its
airport relationships, cash flows, potential growth and its history with the
various airport operations.  The Company determined that the consideration for
the merger was reasonable.

The Company obtained part of the funds for the acquisition of GladCo by the
sale of approximately $2,500,000 in 7% Convertible Debentures due September
26,2003 (the "Debentures") to GCA Strategic Investment Fund Limited. The
purchase price of the Debentures was 95% of the principal amount, or
$2,375,000. The Debentures are convertible at the lower of 110% of the volume
weighted average sales price of Creative Host's common stock on the day
immediately preceding closing or 85% of the five lowest volume weighted
average sales prices of the Company's common stock during the 25 days
immediately preceding the date of a notice of conversion. The Company also
issued 125,000 warrants to purchase common stock to GCA Strategic Investment
Fund at an exercise price of 102% of the closing bid price on the day
immediately preceding the Closing Date. The exercise price of the warrants is
$6.85 per share. The Company agreed to register the shares of common stock
issuable upon conversion of the Debentures and the shares issuable upon
exercise of the warrants on Form S-3.  The agreements provide certain negative
covenants requiring compliance with terms by Creative Host and are adjustable
upon certain events.

As part of the financing by GCA Strategic Investment Fund, the Company
negotiated for and obtained the right to pay off the GCA investment through
alternative financings.  The Company paid off the $900,000 balance of the GCA
note in July 2001. As of the date the note was retired, Global Capital had
converted $1,100,000 of the debentures and $93,642 of related accrued interest
into 1,345,003 shares of Creative Host common stock.

The Company intends to continue the historical businesses and proposed
businesses of GladCo.

                                     -7-
<PAGE>


GladCo Enterprises, Inc. ("GladCo") is a Pittsburgh-based hospitality
and service company with $10.5 million in annual revenues, that operates food
and beverage concessions in five international airports, including Pittsburgh
International; Atlantic City International; Logan International, in Boston;
Albany International, in New York; and M.B.S. International in Freeland,
Michigan. The Company operates 22 individual concessions within those
airports. Those concessions, combined with Creative Host's current
concessions, give the combined companies locations in a total of 25 airports
nationally, and approximately 95 overall concessions within those airports.
Management believes that the GladCo acquisition also improves each company's
available co-branding product mix.

In management's view, the Creative Host/GladCo business combination is both
strategic and synergistic, providing an experienced management team,
heightened East Coast presence, and creating an infrastructure that provides
efficient management, setting the stage for additional growth both internally
and through acquisition. With the Company's ability to raise equity, combined
with years of experience of Mr. Coccoli and Mr. Ali, it may open the doors for
further opportunities.

Upon completion of the acquisition, GladCo became a wholly-owned subsidiary of
Creative Host, with no noticeable change to any of Gladco's storefronts,
method of operation or GladCo's current management team, led by 30-year
industry veteran, Louis Coccoli, Jr., who will remain President of GladCo.
Through the acquisition, the Company enhanced our presence on the East Coast
through representation by GladCo's corporate office in Pittsburgh.

GladCo currently manages concessions in five airports. GladCo has also signed
a lease for three store locations in the Newark, New Jersey International
Airport, with projected annual sales of more than $3.6 million.  In addition
to its own signature facilities, GladCo operates several national brands,
including Schlotzky's Deli, Hot Licks Bar & Grill and Samuel Adams Brew Pub,
and has an exclusive agreement with Yuengling Brewery, the oldest brewery in
the United States.

The combined companies are expected to realize the benefits of having East
Coast and West Coast offices, providing geographically appealing management,
operations consolidation, additional industry contacts and clout, and
creativity enhancements from combined co-branding and airport concessions
experience. As a company, GladCo has focused its bids to include bar and
lounge services that return higher margins than typical food service
concessions, which compliment the Company's existing operations.


CONCESSION LOCATIONS

The following table identifies the Company's existing airport concessions and
those which have been awarded and are expected to be in operation in 2002,
including the facilities acquired when the Company purchased GladCo in October
2000:

                                      -8-
<PAGE>


                 EXISTING AND AWARDED CONCESSION LOCATIONS
                       Year Ended December 31, 2001
<TABLE>
<CAPTION>
                                                             Date of
                                                             Completion
                                             Date            or Expected    Expiration
Name/Location of . . . . Description of      Commenced       Completion     Date of         2001
Concession . . . . . . . Concession          Operations      of Remodeling  Contract        Revenue
----------------------   ----------------    ------------    -------------  -----------     ----------
<S>                      <C>                 <C>             <C>            <C>             <C>
Charleston, SC (1) . . . Food and Beverage   July 2000       January 2001   January 2011    $1,787,617

Baton Rouge (1). . . . . Food and Beverage   July 1999       July 2000      July 2010       $  776,499

Shreveport,. . . . . . . Food and Beverage   May 1999        February 1996  November 2009   $  574,464
Louisiana (1). . . . . . . . . . . . . . .                   and May 1999

Midland, Texas (1) . . . Food and Beverage   January 1999    January 1999   September 2007  $  836,488

Ontario, California. . . Food and Beverage   September 1998  September      July 2008       $1,727,567
                                                               1998

John F. Kennedy. . . . . Food and Beverage   October 1999    July 1999      May 2008(2)     Franchise
International (2)                                                                           (8)

Greensboro   . . . . . . Food and Beverage   December 1997   November 1998  May 2008        $2,305,328
(Piedmont Triad)
North Carolina (1)

Sioux Falls, South . . . Food and Beverage   August 1997     March 1999     August 2007     $  708,188
Dakota (1) . . . . . . . Inflight Catering

Des Moines,. . . . . . . Food and Beverage   July 1997       November 1998  July 2007(3)    $1,556,172
Iowa (3)

Cedar Rapids,. . . . . . Master Concession;  November 1996   October 1997   March 2004(5)   $1,485,971
Iowa (1) . . . . . . . . Food and Beverage;
                         News & Gifts;
                         Specialty Stores;
                         Inflight Catering

Columbia,. . . . . . . . Food and Beverage;  October 1996    October 1997   October 2006(4) $1,271,700
South Carolina (1) . . . Catering

Allentown, . . . . . . . Food and Beverage   July 1996       January 1998   July 2006       $1,329,594
Pennsylvania . . . . . . Inflight Catering

Lexington, . . . . . . . Food and Beverage   July 1996       February 1997  July 2006       $  805,688
Kentucky (1) . . . . . . Inflight Catering

Roanoke, . . . . . . . . Food and Beverage   June 1996       January 1997   June 2006       $  576,995
Virginia(1). . . . . . . Inflight Catering

Freeland (MBS) . . . . . Food and Beverage   May 1996        May 1996       May 2006        $  844,233
Michigan (6)

Appleton,. . . . . . . . Food and Beverage   January 1996    January 1996   July 2005       $  373,735
Wisconsin(1)

Madison, . . . . . . . . Food and Beverage   January 1996    July 1996      January 2006    $1,030,010
Wisconsin (1)

</TABLE>
                                      -9-
<PAGE>



(continued)

<TABLE>
<S>                      <C>                 <C>             <C>            <C>             <C>

Portland . . . . . . . . Food and Beverage   October 1995    October 1995   June 2005       $  819,602
International(1)

Los Angeles. . . . . . . Food and Beverage   June 1995       September      June 2005(6)    $1,200,472
International(5)                                             1995

Denver . . . . . . . . . Food and Beverage   February 1995   One            June 2003 and   $1,150,516
International. . . . . .                                     completed      November 2006
                                                             February
                                                             1995

Albany,. . . . . . . . . Food and Beverage   February 1995   February 1995  February 2008   $1,442,308
New York (6)

Pittsburgh,. . . . . . . Food and Beverage   October 1992    October 1992   October 2006    $6,577,558

Orange County. . . . . . Food and Beverage   September 1990  December 2000  February 2001   Franchise
                                                                            (5)             (8)

Boston,. . . . . . . . . Food and Beverage   November 2001   Under          May 2003 (3)    $   99,992
Massachusetts (7). . . . . . . . . . . . .                   Negotiation

Newark,. . . . . . . . . Food and Beverage   October 2001    April 2002     September       $3,600,000
New Jersey . . . . . . .                                                    2008            (9)

</TABLE>

(1) The Company is currently the sole food and beverage concessionaire at this
airport.

(2) Delta Airlines, the owner of the airport terminal, has reserved the right
under its concession agreement with the Company to recapture the premises upon
30 days notice and payment for the Company's improvements.

(3) The airport retains the right under the contract to recapture the premises
upon payment for the Company's improvements.

(4) After the initial year of the term, the airport authority has the right to
terminate the contract upon payment to the Company of its "remaining business
interest" in the concession.

(5) After June 2001, this contract can be terminated by the airport upon 90
days notice.

(6) This contract was acquired by the Company when we purchased GladCo.

(7) The Company is currently negotiating with the airport for a longer-term
contract.

(8) All of the locations with revenue listed in the last column of the table
are Company-operated locations. Locations operated by franchisees are
indicated with the word "Franchise" in the last column of the table.

(9) Three locations at this airport will become operational in 2002 with total
estimated annual revenues of $3,600,000.

                                     -10-
<PAGE>



FRANCHISE OPERATIONS

From 1986 through 1994, the Company was actively engaged in the business of
franchising restaurants under the "Creative Croissant" name. Unfortunately,
the Company's restaurant franchise business was not successful, and, in 1990,
it began the transition to company-owned airport concessions that is the major
focus of its current business plan.  The Company continues to have franchise
relationships with the Orange County airport concessions that are operated by
a franchisee.

The Company expects its revenues from franchising (approximately 0.1% of total
revenues for the twelve month period ended December 31, 2001) to remain
unchanged or decline over time as it concentrates on expanding its concession
business and establishing facilities owned directly by the Company at
airports, other captive audiences and other public venues.  If the Company is
able to establish a greater national brand name presence, through its airport
and other concession business, then it may devote some resources to the
development of the franchising segment of its business.  In the meantime, the
Company may continue to sell franchises in special situations when a franchise
would be more advantageous to its business than a Company owned facility, when
financing is not otherwise available, or generally in situations that do not
involve concession contracts.

MARKETING AND SALES

The Company's marketing strategy involves two fundamental components: (i)
securing the concession and (ii) increasing sales once the concession has been
granted. We plan to continue to concentrate our marketing and sales efforts on
acquiring high volume concessions at airports and evaluating other public
venues with high, captive pedestrian traffic such as sports stadiums, public
libraries, universities/colleges, zoos and theme parks throughout the United
States.  For the near future, the Company intends to focus on the
approximately 123 airports in the United States with over 400,000 enplanements
per year.  In those smaller regional airports, whenever possible the Company
will seek to be the master concessionaire for all concession operations
conducted at such airports.

The Company targets the airport concession business through its presence at
airport authority association meetings and trade shows, its network of
existing relationships in the airport business community, and through
submission of bids in response to requests for proposals by airports. By
continually monitoring the availability of proposals at airports throughout
the nation, the Company seeks to be involved in every proposal that is
economically feasible.  In bidding for concessions, the Company primarily
focuses on those airports with locations indicating that the concession will
earn annual gross revenues of $500,000 to $2,000,000. Once a concession has
been targeted, the Company develops a customized bid tailored to address a
theme or culture specific to the concession location.  Management is currently
working with airport managers to design unique and exciting food court areas
with a variety of food choices, comfortable seating and self-serve options
without the inconveniences of traditional restaurants.  The Company's
proposals for airports may include children's play areas, reading areas, mini-
libraries and/or computer services.

The Company's food and beverage facilities have traditionally been designed
with a European flair for fresh, healthy and nutritious gourmet and specialty
foods, served quickly and at value prices. We are diversifying into agreements
with renowned food and beverage suppliers such as Carls Jr., Schlotzky's and
TCBY Yogurt. The food and beverage concessions sell gourmet coffee beans as
gift packages, colorful sports bottles and thermal coffee mugs featuring the
"Creative Croissants-Registered Trademark" logo and key menu items, custom
gift baskets and other promotional merchandise.

                                     -11-
<PAGE>


DISTRIBUTION

The Company relies on Sysco Corporation as its primary distributor for
foodservice products to its customer locations.  The Company's agreement with
Sysco provides for customer service, delivery service and information services
to be provided by Sysco.  The Company's annual purchase volume from Sysco is
approximately $7,000,000.

COMPETITION

The concession industry is extremely competitive and there are numerous
competitors with greater resources and more experience than the Company has.
The dominant competitors in the airport concession market are HMS Host and CA
One Services, Inc., which have been serving the airport concession market for
decades. HMS Host and CA One Services have established a marketing strategy of
offering comprehensive concession services to airport authorities in which
they submit a bid on an entire airport or terminal complex. They generally
operate large airport master concessions with annual sales in excess of $2.2
million.

Other formidable competitors in the concession business, especially food and
beverage, include Service America Corporation, Anton Food, Concession
International and Air Host, Inc.

The Company is primarily focusing initially on smaller airport concessions
where competition from large competitors is less intense. However, there are a
limited number of concession opportunities domestically. If the Company
achieves greater penetration in regional airports, it will be required to
enter into larger domestic airports or other venues to sustain its growth.
Entry into larger domestic airports will necessarily involve direct
competition with HMS Host and CA One Services.

The Company strives to differentiate itself in all markets with the design and
product mix it offers to each particular airport.  The Company designs its
concession bids and facilities around unique themes or concepts that it
develops for each location.  In this manner, the Company seeks to appeal to
airport authorities that are seeking individual bidders with interesting and
creative food concepts, both to boost the airport's income from percentage
rents and to enhance the look and reputation of the airport and the cities it
serves.  The Company also offers a variety of food concepts with an emphasis
on fresh foods and high quality, while maintaining value-oriented prices.

GOVERNMENT REGULATION

The airport concession business is subject to the review and approval of
government or quasi government agencies with respect to awarding concession
contracts. In addition, food and beverage concessions are subject to the same
rigorous health, safety and labor regulations that apply to all restaurants
and food manufacturing facilities. Concession businesses are also subject to
labor and safety regulations at the local, state and federal level.
Concessions granted by airport authorities and other public agencies may also
be subject to the special rules and regulations of that agency, including
rules relating to architecture, design, signage, operating hours, staffing and
other matters. Failure to comply with any of these regulations could result in
fines or the loss of a concession agreement.

The Federal Aviation Administration requires airports receiving federal funds
to award contracts for concession facilities producing at least 10% of total
airport concession revenue to certain designated categories of entities that
qualify as Disadvantaged Business Enterprises.  The federal requirements do

                                     -12-
<PAGE>


not specify the nature or manner in which the disadvantaged business must
participate. Historically, companies in the industry have relied on hiring
disadvantaged business employees, purchasing provisions from disadvantaged
business suppliers, contracting for services from disadvantage businesses or
subcontracting a portion of the concession to a disadvantaged business in
order to meet this requirement. When the Company first entered the airport
concession business, its Common Stock was owned entirely by the Company's
President, Mr. Sayed Ali.  As a result, the Company qualified as a
disadvantaged business enterprise.  The Company's status as a disadvantaged
business enterprise assisted it in securing concession awards with several
airports, and some of our concession agreements specify that we will retain
our disadvantaged business status.  As a result of our initial public offering
and subsequent stock sales, Mr. Ali's ownership in our common stock decreased
to approximately 12.9%.  The Company does not know what impact this will have
on our status as a disadvantaged business.  The Company has succeeded in
securing airport concession contracts at eight additional locations since its
initial public offering, although it are not aware of the extent to which its
disadvantaged business status, or lack thereof, was a factor in the airport
authorities' decisions to award the Company such contracts.  The Company will
have to address the issue on an airport by airport basis.  If necessary, it
will comply with a particular airport's request for additional disadvantaged
business participation through the industry practice of hiring or contracting
with other disadvantaged businesses.  The Company believes that it will retain
its existing locations and can continue to secure new concessions on the basis
of the products and services it offers and its industry reputation. To the
extent its historic rate of success in securing airport concessions is
attributable to its clear status as a disadvantaged business, the Company's
growth rate may decline.

The restaurant industry and food manufacturing businesses are highly regulated
by federal, state and local governmental agencies. Restaurants must comply
with health and sanitation regulations and are periodically inspected for
compliance. Labor laws apply to the employment of restaurant workers,
including such matters as minimum wage requirements, overtime and working
conditions. The Americans With Disabilities Act applies to the Company's
facilities prohibiting discrimination on the basis of disability with respect
to accommodations and employment. Food preparation facilities must comply with
the regulations of the United States Department of Agriculture, as well as
state and local health standards.

Franchising is regulated by the Federal Trade Commission and by certain state
agencies, including the California Department of Corporations. In addition,
the California Franchising Law contains specific restrictions and limitations
on the relationship between franchisors and franchisees. Franchisors must file
an annual Franchise Offering Circular with the Federal Trade Commission and
certain states (many states do not regulate the offer and sale of franchises)
every year.

EMPLOYEES

As of December 31, 2001, the Company had over 620 employees, including 17 in
administration.  The employees include approximately 260 who were employed by
GladCo when the Company acquired that company in October 2000. As the Company
expands and opens more concessions, it anticipates hiring additional personnel
including administrative personnel commensurate with growth.  The Company has
never had a collective bargaining agreement with its employees and it is not
aware of any material labor disputes.

                                     -13-
<PAGE>


SEASONALITY

Historically, the Company has experienced seasonal variability in quarterly
operating results with higher concessions revenues in the second and third
quarters than the first and fourth quarters.  The higher concession revenues
in the second and third quarters improve profitability by increasing revenues
and reducing the impact of fixed costs.  This seasonal impact on operating
results is expected to continue.


TRADEMARKS

The Company presently has one registered trademark with the United States
Patent and Trademark Office on the Principal Register, registered as "Creative
Croissants-Registered Trademark." In addition, the Company is in the process
of filing trademark applications to register the name "Creative Host Services,
Inc." and as its business develops, the Company plans to continue to develop
merchandising of trademark products, such as clothing, drinking bottles, mugs
and other similar products, utilizing its service marks and trademarks in
order to generate additional revenues.  The Company's policy is to pursue
registrations of its marks wherever possible.  The Company is not aware of any
infringing uses that could materially affect its business or any prior claim
to the trademarks that would prevent it from using those trademarks in its
business.


Item 2.  Description of Property.

The Company's executive offices are located in a 3,903 square foot facility at
16955 Via Del Campo, Suite 110, San Diego, California.  The combined facility
is covered by a five-year lease terminating March 31, 2007 with monthly
payments of $6,683 plus common area maintenance charges.


Item 3.  Legal Proceedings.

The Company is not subject to any material legal proceedings. The Company is
subject from time to time to legal claims in the ordinary course of its
business.  Management does not believe that any of these legal claims will
have a significant adverse effect on its financial condition or business.


Item 4.  Submission of Matters to a Vote of Security Holders.

No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this Report.

                                     -14-
<PAGE>




                                PART II

Item 5.  Market For Common Equity and Related Stockholder Matters.

MARKET INFORMATION

The Company's Common Stock trades on the Small-Cap Market tier of The Nasdaq
Stock Market, Inc. ("NASDAQ") under the symbol CHST.  The following table sets
forth the range of high and low sales prices for Creative Host's Common Stock
for each full quarterly period for the fiscal years ended December 31, 2001
and 2000, as reported by NASDAQ.

       Year       PERIOD                           High      Low
       ----    -------------                      ------    ------
       2001    First Quarter                      $ 3.21    $ 1.18
               Second Quarter                       1.69      0.82
               Third Quarter                        1.45      0.77
               Fourth Quarter                       1.31      0.90

       2000    First Quarter                       14.00      5.50
               Second Quarter                      28.15     10.37
               Third Quarter                       12.12      4.43
               Fourth Quarter                       8.73      1.81

HOLDERS

The number of record holders of the Common Stock was 100 on March 20, 2002.
Such number of record owners was determined from the Company's shareholder
records, and does not include beneficial owners of the Company's Common Stock
whose shares are held in the names of various security holders, dealers and
clearing agencies.  The Company believes that there are a significant number
of beneficial owners of its Common Stock whose shares are held as such in "
"street name."  The Company believes that the number of beneficial owners of
its Common Stock held by others in nominee names exceeds 1000 in number.


DIVIDENDS

The Company has never paid any cash dividends on its Common Stock and does not
anticipate paying any cash dividends on its Common Stock in the future.
Instead, the Company intends to retain future earnings, if any, to fund the
development and growth of its business.

                                     -15-
<PAGE>


Item  6.  Management's Discussion and Analysis of Financial
          Condition and Results of Operations.


FORWARD-LOOKING STATEMENTS AND PROJECTIONS

The Private Securities Reform Act of 1995 provides a "safe harbor" for
forward-looking statements. Certain information included in this report, and
other reports issued by the Company, contain statements that are forward
looking. The Company may from time to time make forward-looking statements and
projections concerning future expectations.  When used in this discussion, the
words "estimate," "project," "anticipate" and similar expressions are intended
to identify forward-looking statements and include, but are not limited to,
statements relating to anticipated trends in revenues, plans for future
expansion and other business development activities, including acquisition of
new concessions as well as other capital spending, financing sources, the
effects of regulation and competition, and the ability to increase net income
and cash flow.  Such forward-looking information involves numerous risks and
uncertainties that could significantly affect anticipated results in the
future and, accordingly, such results may differ from those expressed in any
forward-looking statements made by or on behalf of the Company.  These risks
and uncertainties include, but are not limited to, those relating to
additional capital necessary to complete construction of capital improvements
awarded under existing and future concession agreements, possible early
termination of concession contracts, possible delay in the commencement of
concession operations at newly awarded concession facilities, the need and
ability to attract and retain qualified management, governmental regulatory
requirements including applications for licenses and approvals under
applicable jurisdictional laws and regulations, the terms and conditions of
any potential merger or acquisition of existing airport concession operations,
the volatility of the Company's stock price and of securities markets in
general, domestic and international economic conditions, debt service
(including sensitivity to fluctuations in interest rates), the impact of
terrorism and war on tourism and airline travel, and other factors discussed
herein.


RESTATEMENT OF FINANCIAL STATEMENTS

The Company has restated its Consolidated Financial Statements for the years
ended December 31, 2001 and 2000 as discussed in Note 1 to the Company's
Consolidated Financial Statements for the year ended December 31, 2001.  The
following management's discussion and analysis takes into account the effects
of the restatements.


OVERVIEW

The Company commenced business in 1987 as an owner, operator and franchisor of
French style cafes featuring hot meal croissants, fresh roasted gourmet
coffee, fresh salads and pastas, fruit filled pastries, muffins and other
bakery products. The restaurant franchise business has never been profitable.
The Company has not sold a new franchise since 1994.

In 1990, the Company entered the airport food and beverage concession market
when it was awarded a concession to operate a food and beverage location for
John Wayne Airport in Orange County, California, which is currently operated
by one of the Company's franchisees.  In 1994, the Company was awarded its
first multiple concession contract for the Denver International Airport, where
it was awarded a second concession in 1994 and two subsequent concessions in
1995. The success of the franchisees operating the Orange County and Denver

                                     -16-
<PAGE>



International Airport concessions prompted the Company to enter into the
airport concession business. Since 1994, the Company has opened 96 concession
locations at 24 airports.  In 1996, the Company was awarded its first master
concession contract for the airport in Cedar Rapids, Iowa, where it has the
right to install and manage all food, beverage, news, gift and other services.

As a result of this transition in the Company's business, its historical
revenues have been derived from three principal sources: airport concession
revenues, restaurant franchise royalties and wholesale sales from its food
preparation center.  These revenue categories comprise a fluctuating
percentage of total revenues from year to year.  Over the past six years,
revenues from concession operations have grown from 59% of total revenues in
1995 to nearly 100% of total revenues in 2001.

During the fiscal year ended December 31, 2001, the Company sold its interest
in the assets and lease at its Asheville, North Carolina location and at one
of its Denver, Colorado locations.  The Company also sold the assets
associated with its bakery operation in San Diego, California.  These
operations were under-performing.

The Company had a working capital deficit at December 31, 2001 of $503,062
compared to a working capital deficit of $831,503 at December 31, 2000.
Capital improvement costs incurred to meet the requirements of new airport
concession contracts and the retirement of debt have placed demands on the
Company's working capital. During the fiscal year ended December 31, 2001, the
Company raised $364,362 in capital through the sale of assets, borrowed
$1,268,000 through a bank loan at an average interest rate of approximately 9%
per annum, and borrowed a net of $1,779,888 against a line of credit at an
average interest rate of approximately 6% per annum.

The Company will have capital requirements in 2002 to finance the acquisition
or construction of new airport concessions, restaurants and other concession
related businesses such as news & gifts, specialty, in-flight catering and
other services.  It is expected that the Company will have additional capital
requirements to the extent that it wins additional contracts from its current
and future airport concession bids, or enters into agreements to acquire
existing airport concession businesses.


                                     -17-
<PAGE>


RESULTS OF OPERATIONS

The following table sets forth for the period indicated selected items of the
Company's statement of operations as a percentage of total revenues.

                                            YEAR ENDED
                                            DECEMBER 31,
                                          ----------------
                                            2001     2000
                                          ----------------
Revenues:
  Concessions. . . . . . . . . . .         99.7%     99.1%
  Franchise Royalties. . . . . . .          0.1       0.2
  Other. . . . . . . . . . . . . .          0.2       0.7
                                          ------    ------
  Total Revenues . . . . . . . . .        100.0%    100.0%

Operating Costs and Expenses:
  Cost of Goods Sold . . . . . . .         28.4      31.1
  Payroll and Employee Benefits. .         31.7      31.9
  Occupancy. . . . . . . . . . . .         15.5      15.0
  Selling. . . . . . . . . . . . .          9.0       7.9
  General and Administrative . . .          4.6       5.0
  Depreciation and Amortization. .          6.8       5.6
  Loss (Gain) on Sale of Assets. .          0.4         -
  Interest Expense, net . . . .  .          2.2       3.7
  Provision for Income Taxes . . .         (0.1)      0.1
  Gain on Extinguishment of Debt .         (0.4)        -
                                          ------    ------
  Net Income (Loss). . . . . . . .          1.9%    (0.3)%
                                          ======    ======


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

REVENUES.  The Company's gross revenues for the fiscal year ended December 31,
2001 were $30,745,851 compared to $23,725,859, for the fiscal year ended
December 31, 2000. Revenues from concession activities increased $7,139,983
($30,646,435 compared to $23,506,452) and food preparation center sales
decreased $165,843 (from $171,463 to $5,620) while franchise royalties
declined $7,305 (from $47,944 to $40,639), for the fiscal year ended December
31, 2001 as compared to the fiscal year ended December 31, 2000.  The increase
in total concession revenues was primarily attributable to $7,426,624 in
additional revenue due to a full year of operations in 2001 of the GladCo
locations acquired in 2000 and an increase of $822,430 due to a full year of
operations in 2001 of two other locations opened in 2000.  These increases
were partially offset by a $496,906 decrease from 2000 to 2001 from three
locations that operated for a full year in 2000, but did not operate for a
full year in 2001 and a decrease of $612,165 from 2000 to 2001 at locations
that operated for a full year during both years.

COST OF GOODS SOLD. The cost of goods sold for the fiscal year ended December
31, 2001 was $8,716,551 compared to $7,368,000 for the fiscal year ended
December 31, 2000.  As a percentage of total revenues, the cost of goods sold
was 28% in 2001 and 31% in 2000. The improvement in cost of goods sold as a
percentage of revenue is due to efficiencies at existing locations such as the
consolidation of purchasing with Sysco (which has resulted in lower costs for
products purchased from Sysco). On April 1, 2001, the Company entered into a
new Master Distribution Agreement with Sysco Corporation that reflected a
higher level of discounts due to the increased volume of purchases following
the GladCo acquisition.

                                     -18-
<PAGE>


OPERATING COSTS AND EXPENSES. Operating costs and expenses for the fiscal year
ended December 31, 2001 were $29,517,249, compared to $22,896,001 for the
fiscal year ended December 31, 2000. Payroll expenses increased from
$7,575,967 in 2000 to $9,746,338 in 2001.  As a percentage of total revenues,
payroll expense was 32% in both 2000 and 2001.  The Company expects payroll
expenses to increase in total dollar amounts with the addition of new
concession facilities, but to decrease modestly as a percentage of revenues if
existing facilities operate more efficiently and it continues to reap
increasing benefits from the cost control measures implemented in 2000.
Occupancy expenses increased from $3,563,886 in 2000 to $4,768,824 in 2001. As
a percentage of total revenues, occupancy expenses were 15% in 2000 and
increased to 16% in 2001. Selling expenses increased from $1,867,614 in 2000
to $2,772,040 in 2001. As a percentage of total revenues, selling expenses
increased from 8% in 2000 to 9% in 2001. The increase in selling and occupancy
expenses as a percent of total revenues is due to the acquisition of the
GladCo business in October 2000, and the effect of the office in Pittsburgh
for a full year in 2001. General and administrative expenses increased from
$1,193,264 in 2000 to $1,428,234 in 2001. As a percentage of total revenues,
general and administrative expenses were 5% in both 2001 and 2000.

INTEREST EXPENSE. Interest expense for the fiscal year ended December 31, 2000
was $882,906 compared to $661,630 for the fiscal year ended December 31, 2001.
As a percentage of total revenues, interest expense was 4% in 2000 and
decreased to 2% in 2001. For the fiscal year ended December 31, 2000, $352,941
of the interest expenses was a one-time charge due to the beneficial
conversion feature of the Global Capital note.

OTHER INCOME AND EXPENSE. Loss on sale of assets for the year ended December
31, 2001 was $130,725. This loss represents the net effect of the sale of
assets at two under-performing locations as well as the sale of certain other
surplus bakery equipment. The aggregate operating loss from the two under-
performing locations was $92,954 for the year ended December 31, 2001 and
$57,601 for the year ended December 31, 2000. Gain on extinguishment of
convertible debt for the year ended December 31, 2001 was $128,261. On the
date of extinguishment of the convertible debt, the intrinsic value of shares
into which the debt was convertible was $1,619,163, of which $677,249 related
to the beneficial conversion feature. The extinguishment of this debt gave
rise to a gain of $419,163 which is presented net of $290,902 related interest
and discounting of the original note, resulting in the net gain on
extinguishment of $128,261.

NET INCOME (LOSS). Net income for the fiscal year ended December 31, 2001 was
$586,261 compared to a net loss of $(68,328) for the fiscal year ended
December 31, 2000. Increased efficiencies at existing stores contributed
approximately $67,000 to this increase in net income while a full year of
operations in 2001 of the GladCo locations acquired in 2000 contributed the
remainder of the increase.

SAME STORE SALES. We operated locations at seventeen airports during both the
full fiscal years ended December 31, 2000 and December 31, 2001. Sales for
those locations were $19,033,973 for the fiscal year ended December 31, 2000
and $18,416,539 for the fiscal year ended December 31, 2001, representing a
decrease of $617,434, or 3.2%. This decrease was due to the effect of the
September 11, 2001 terrorist attacks.

                                     -19-
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

The Company has funded its capital requirements in recent years through the
sale of equity and debt securities, cash flow from operations and bank debt.
In September 2000, the Company sold approximately $2,000,000 in 7% Convertible
Debentures due September 26, 2003 to GCA Strategic Investment Fund Limited.
The purchase price of the debentures was 95% of the principal amount, which
after other fees resulted in net proceeds of $1,813,000. The debentures were
convertible at the lower of 110% of the volume weighted average sales price of
the Company's common stock on the day immediately preceding closing or 85% of
the five lowest volume weighted average sales prices of its common stock
during the 25 days immediately preceding the date of a notice of conversion.
All of these debentures have either been converted or repurchased by the
Company. The proceeds were utilized in the acquisition of GladCo Enterprises,
Inc.

During the fiscal year ended December 31, 2001, we raised $364,362 in capital
through the sale of assets, borrowed an additional $1,268,000 through a bank
loan at an average interest rate of approximately 9% per annum, and borrowed a
net of $1,779,888 against a line of credit at an average interest rate of
approximately 6% per annum. As of December 31, 2001, $234,112 was available to
the Company from its line of credit.  The line of credit was originated with
First National Bank of San Diego for $2,500,000 on November 13, 2000 and
expires on October 31, 2003. The maximum borrowing allowed under the line is
reduced by $125,000 each quarter. Financial covenants required by this line of
credit include the following: a minimum current ratio of 90%; maximum debt to
tangible net worth of .85 to 1; and minimum debt coverage of 1.70 to 1.  As a
result of the restatement of the Company's financial statements at December
31, 2001 (see Note 1 to the Company's consolidated financial statements), it
did not meet the minimum current ratio, although this condition was
subsequently met. The Company plans to pay off the line of credit by December
31, 2002.  As of December 31, 2001, the Company had a working capital deficit
of $503,062.

Cash increased $88,233 for the year ended December 31, 2001 compared to
$1,523,032 for the year ended December 31, 2000. Net cash provided by
operating activities for the year ended December 31, 2001 was $1,913,554
compared to $2,069,847 for the year ended December 31, 2000. Cash provided by
financing activities for the year ended December 31, 2001 included $1,268,000
borrowed through a bank loan and $1,779,888 proceeds from a line of credit.
Cash provided by financing activities for the year ended December 31, 2000
included $1,992,362 borrowed through notes and $6,387,332 proceeds from the
issuance of capital stock. Cash provided by investing activities for the year
ended December 31, 2001 included $364,362 proceeds from the sale of assets.
Cash used for investing activities for the year ended December 31, 2001
included $2,143,486 for property and equipment and $528,460 for construction
in progress. Cash used for investing activities for the year ended December
31, 2000 included $4,481,546 for property and equipment and $3,370,722 for the
excess of the purchase price for GladCo Enterprises over the fair market value
of its assets. Cash used for financing activities for the year ended December
31, 2001 included $168,368 to redeem common stock ($142,501 for redeemable
common stock and $25,867 on the open market); $258,085 to redeem the equity
feature of retired debt; $1,220,250 to retire debt; and, $918,922 for the
principal portion of capitalized lease obligations. Cash used for financing
activities for the year ended December 31, 2000 included $56,664 payments on a
line of credit; $143,847 to retire debt; and, $873,730 for the principal
portion of capitalized lease obligations.

                                     -20-
<PAGE>


While it is management's belief that there is sufficient cash to fund existing
operations for the next twelve months, the Company may need to raise
additional working capital in 2002 for construction and acquisition of new
facilities.  During the first two months of 2002, the Company raised
approximately $945,000 of capital in a private placement of convertible notes
and warrants through a broker-dealer registered with the National Association
of Securities Dealers, Inc.  Two investors subsequently rescinded their
investments because they were unwilling to sign the subordination agreement
required under the terms of the private placement and the Company refunded
their investment in the total amount of $100,000.  The convertible notes are
convertible into a total of 804,762 shares of common stock, and the 633,750
warrants issued entitle the warrant holders to purchase a total of 633,750
additional shares of the Company's common stock for an exercise price of $2.00
per share for a period of five years from the date of issuance.  The Company
terminated the offering in early March 2002. According to the terms of the
notes and warrants, the common stock issuable upon the conversion of the notes
and exercise of the warrants must be registered by the Company with the
Securities and Exchange Commission.

When the Company is awarded a new concession facility, the Company is
generally committed to expend a negotiated amount for capital improvements to
the facility. In addition, the Company is responsible for acquiring equipment
necessary to conduct its operations.  As a result, the Company incurs
substantial costs for capital improvements at the commencement of a concession
term. Generally, however, the term of the concession grant will be for a
period of 10 years, providing the Company with an opportunity to recover its
capital expenditures. Substantially all of the Company's concession locations
have been obtained in the past four years, which has resulted in significant
capital needs.  As a result, the Company has been required to seek capital,
and to apply capital from operations, for the construction of capital
improvements at newly awarded concession locations.  The Company intends to
continue to bid for concession locations, including bidding on larger
proposals.  Anticipated cash flows from operations will not be sufficient to
finance new acquisitions at the level of growth experienced over the past two
years.  Accordingly, to the extent the Company is successful in securing new
concession contracts, the Company will continue to need additional capital, in
addition to cash flow from operations, in order to finance the construction of
new capital improvements.

The Company anticipates capital requirements of approximately $3.5 million in
fiscal 2002 to complete the construction of improvements at concession
facilities that have already been awarded.  This includes approximately $2.2
million for the three concession locations the Company has been awarded at the
Newark, New Jersey International Airport and approximately $1.3 million at
other existing concession locations.  The Company expects to meet its capital
requirement for 2002 by financing equipment purchases through capital lease
obligations, senior debt and cash provided by operating activities.  Should
the Company fail to raise the capital necessary to complete the construction
of these improvements, the Company would be at risk of potentially losing the
related contract.  The Company may have more capital requirements than
anticipated during 2002 if additional bids are won or additional airport
concession facilities are acquired. The Company is continually evaluating
other airport concession opportunities, including submitting bid proposals and
acquiring existing concession owners and operators. The level of the Company's
capital requirements will depend upon the number of airport concession
facilities that are subject to bid, as well as the number and size of any
potential acquisition candidates that arise.  The Company cannot be certain
that it will have sufficient capital to finance its growth and business
operations or that such capital will be available on terms that are favorable
to it or at all.

                                     -21-
<PAGE>


The following table summarizes the Company's contractual obligations at
December 31, 2001.
<TABLE>
<CAPTION>
                                                              Payments Due by Period
--------------------------------------------------------------------------------------------------
Contractual Obligations                            Less than     1 to                      After
                                        Total       one year    3 years     4 to 5 years   5 years
<S>                                 <C>           <C>          <C>          <C>           <C>
----------------------------------  ------------  -----------  -----------  ------------  ----------
Long-term debt                      $  1,360,999  $   603,972  $   749,266  $      7,761  $        -
----------------------------------  ------------  -----------  -----------  ------------  ----------
Employment Contract - Mr. Ali       $    748,000  $   225,000  $   523,000             -           -
----------------------------------  ------------  -----------  -----------  ------------  ----------
Employment Contract - Mr. Coccoli   $    567,000  $   160,000  $   407,000             -           -
----------------------------------  ------------  -----------  -----------  ------------  ----------
Line of Credit - FNB-SD             $  1,779,888  $    29,888  $ 1,750,000             -           -
----------------------------------  ------------  -----------  -----------  ------------  ----------
Capital Lease Obligations           $  2,750,568  $ 1,164,525  $ 1,583,007  $      3,036           -
----------------------------------  ------------  -----------  -----------  ------------  ----------
Operating Leases                    $ 31,871,757  $ 5,431,550  $15,659,535  $  4,113,821  $6,666,851
----------------------------------  ------------  -----------  -----------  ------------  ----------
Total Contractual Cash Obligations  $ 39,078,212  $ 7,614,935  $20,671,808  $  4,124,618  $6,666,851
----------------------------------  ------------  -----------  -----------  ------------  ----------
</TABLE>

The operating leases for the facilities, the capital leases on the equipment
and the employment contracts are operating costs and will be paid with cash
generated from operations. In 2001, income from operations was $1,228,602. The
repayment of principal on the long-term debt and the line of credit will be
paid either by cash generated from operations or refinanced at or before
maturity. In 2001, the cash generated from operating activities totaled
$1,913,554, which is in excess of the amount of the long-term debt repayment
due in 2002.


CRITICAL ACCOUNTING POLICIES

Critical accounting policies are those that are most important to the
portrayal of a company's financial condition and results, and that require
management's most difficult, subjective or complex judgments, often as a
result of the need to make estimates about the effect of matters that are
inherently uncertain. Note 1 to the consolidated financial statements for the
year ended December 31, 2001, includes a summary of the significant accounting
policies and methods used in the preparation of our consolidated financial
statements. The following is a review of the more critical accounting policies
and methods used by the Company.

Revenue Recognition:

The Company records concession revenues as the sales are made, it record sales
from the food preparation center upon shipment and it records revenues from
in-flight catering upon delivery.

Goodwill:

In connection with the Company's acquisition of GladCo Enterprises, Inc.,
which was accounted for under the purchase method of accounting, the Company
recorded goodwill.  Until the Company's adoption of Statement of Financial
Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible Assets,
on January 1, 2002, the Company amortized this goodwill using the straight-
line method over the estimated useful life of twenty years.  The Company
periodically reviews the recoverability of the carrying value of goodwill for
impairment whenever events or changes in circumstances indicate that the

                                     -22-
<PAGE>


carrying amount of the asset may not be recoverable. Recoverability is
determined by comparing the forecasted future net cash flows from the
operations to which the goodwill relates, based on management's best estimates
using the appropriate assumptions and projections at the time, to the carrying
amount of the goodwill.  If the carrying value was determined not to be
recoverable from future operating cash flows, the goodwill would be impaired
and the Company would be required to recognize an impairment loss. Impairment
could result in a material adverse impact on the Company's operating results.

Income Taxes:

The Company reports deferred income taxes using the liability method.  It
recognizes deferred tax assets for deductible temporary differences and
deferred tax liabilities for taxable temporary differences.  Temporary
differences are the differences between the reported amounts of assets and
liabilities and their tax bases.  The Company reduces deferred tax assets by a
valuation allowance when, in its opinion, it is more likely than not that some
portion or all of the deferred tax assets will not be realized. As a result of
cumulative losses in recent years, management evaluated its future prospects
and considered the future benefit of its deferred tax assets in light of the
historical operating results.  Accordingly, the Company recorded a full
valuation allowance against its deferred tax assets of $670,800 at December
31, 2001.  Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment.

These accounting policies are applied consistently for all years presented.
The Company's operating results would be affected if other alternatives were
used.


 RECENT ACCOUNTING PRONOUNCEMENTS

In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 142 addresses the initial recognition, measurement and
amortization of intangible assets acquired individually or with a group of
other assets (but not those acquired in a business combination), and addresses
the amortization provisions for excess cost over fair value of net assets
acquired or intangibles acquired in a business combination.  SFAS No. 142 also
addresses how goodwill and other intangible assets should be accounted for
after they have been initially recognized in the financial statements. The
statement was effective January 1, 2002.  The Company stopped amortizing
goodwill effective January 1, 2002.  The Company will conduct transitional
impairment tests in 2002, to indicate any impairment of existing goodwill.

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations," which requires companies to record the fair value of a liability
for asset retirement obligations in the period in which they are incurred. The
statement applies to a company's legal obligations associated with the
retirement of a tangible long-lived asset that results from the acquisition,
construction, and development or through the normal operation of a long-lived
asset. When a liability is initially recorded, The Company would capitalize
the cost, thereby increasing the carrying amount of the related asset.  The
Company depreciates the capitalized asset's retirement cost over the life of
the respective asset while the liability is accreted to its present value.
Upon settlement of the liability, the obligation is settled at its recorded
amount or the company incurs a gain or loss. The statement is effective for
fiscal years beginning after June 15, 2002.  The Company does not expect the
adoption of SFAS No. 143 to have a material impact on its financial position
or results of operations.

                                     -23-
<PAGE>



On January 1, 2002, the Comany adopted SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS No. 144 addresses the
accounting and reporting for the impairment or disposal of long-lived assets.
The statement provides a single accounting model for long-lived assets to be
disposed of. New criteria must be met to classify the asset as an asset held-
for-sale. This statement also addresses reporting the effects of a disposal of
a segment of a business. The adoption of this new standard did not have a
material impact on the Company's financial position or results of operations.


In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4, 44 and 64, Amendment of SFAS No. 13 and Technical Corrections", which
the Company does not believe will materially affect its financial statements.
SFAS No. 145 requires that gains and losses from the extinguishment of debt be
classified as extraordinary items only if they meet the criteria in Accounting
Principles Board Opinion No. 30.




Item 7. Financial Statements

CREATIVE HOST SERVICES, INC. AND SUBSIDIARIES
                         INDEX TO FINANCIAL STATEMENTS



AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE
YEARS ENDED DECEMBER 31, 2001 AND 2000:                                 Page
                                                                        ----

INDEPENDENT AUDITORS' REPORT                                             F-1

CONSOLIDATED FINANCIAL STATEMENTS:
  Consolidated Balance Sheet                                             F-2
  Consolidated Statements of Operations                                  F-3
  Consolidated Statements of Shareholders' Equity                        F-4
  Consolidated Statements of Cash Flows                                  F-6
  Notes to Consolidated Financial Statements                             F-8


                                     -24-
<PAGE>


INDEPENDENT AUDITORS' REPORT


Board of Directors
Creative Host Services, Inc. and Subsidiaries
San Diego, California

We have audited the accompanying consolidated balance sheet of Creative Host
Services, Inc. and Subsidiaries as of December 31, 2001, and the related
consolidated statements of operations, shareholders' equity and cash flows for
each of the years ended December 31, 2001 and 2000. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.

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
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Creative
Host Services, Inc. and Subsidiaries at December 31, 2001, and the results of
its operations and cash flows for the years ended December 31, 2001 and 2000,
in conformity with accounting principles generally accepted in the United
States of America.


                       /s/ Stonefield Josephson,  Inc.
                           CERTIFIED PUBLIC ACCOUNTANTS

                           Santa Monica, California
                           March 15, 2002 (except for
                           Notes (1) and (6) as to which
                           the date is November 7, 2002)






                                     F-1
<PAGE>


<TABLE>
           CREATIVE HOST SERVICES, INC. AND SUBSIDIARIES
           CONSOLIDATED BALANCE SHEET - DECEMBER 31, 2001

                                                              ASSETS
                                                          (As restated-
                                                            see Note 1)
<S>                                                       <C>
CURRENT ASSETS:
  Cash. . . . . . . . . . . . . . . . . . . . . . . . .   $ 1,801,288
  Receivables, net of allowance of $33,985. . . . . . .       533,137
  Inventory . . . . . . . . . . . . . . . . . . . . . .       451,734
  Prepaid expenses and other current assets . . . . . .       311,848
                                                         ------------
          Total current assets. . . . . . . . . . . . .     3,098,007

PROPERTY AND EQUIPMENT, net of accumulated
  depreciation and amortization . . . . . . . . . . . .    15,892,732

OTHER ASSETS:
  Deposits. . . . . . . . . . . . . . . . . . . . . . .       295,261
  Goodwill, net . . . . . . . . . . . . . . . . . . . .     4,272,119
  Other assets. . . . . . . . . . . . . . . . . . . . .       103,581
                                                         ------------
          Total other assets. . . . . . . . . . . . . .     4,670,961
                                                         ------------
                                                         $ 23,661,700
                                                         ============
  LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
  Accounts payable and accrued expenses . . . . . . . .  $  2,017,778
  Current maturities of notes payable . . . . . . . . .       603,972
  Current maturities of leases payable. . . . . . . . .       916,302
  Income taxes payable. . . . . . . . . . . . . . . . .        63,017
                                                         ------------
          Total current liabilities . . . . . . . . . .     3,601,069

LINE OF CREDIT. . . . . . . . . . . . . . . . . . . . .     1,779,888

NOTES PAYABLE, less current maturities. . . . . . . . .       757,027

LEASES PAYABLE, less current maturities . . . . . . . .     1,429,217
                                                         ------------
          Total Liabilities . . . . . . . . . . . . . .     7,567,201

REDEEMABLE COMMON STOCK . . . . . . . . . . . . . . . .       214,997

SHAREHOLDERS' EQUITY:
  Common stock; no par value, 20,000,000 shares
    authorized, 7,806,018 shares issued and outstanding    16,912,900
  Additional paid-in capital. . . . . . . . . . . . . .       879,111
  Accumulated deficit . . . . . . . . . . . . . . . . .    (1,912,509)
                                                         ------------
          Total shareholders' equity. . . . . . . . . .    15,879,502
                                                         ------------
                                                         $ 23,661,700
                                                         ============
</TABLE>
See accompanying independent auditors' report and notes to consolidated
financial statements.

                                     F-2
<PAGE>


<TABLE>
                  CREATIVE HOST SERVICES, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS

                                                              Year ended          Year ended
                                                          December 31, 2001    December 31, 2000
                                                          -----------------    -----------------
                                                           (As restated-
                                                              see Note 1)
<S>                                                        <C>                  <C>
REVENUES:
  Concessions . . . . . . . . . . . . . . . . . . . .      $   30,646,435       $   23,506,452
  Food preparation center sales . . . . . . . . . . .               5,620              171,463
  Franchise royalties . . . . . . . . . . . . . . . .              40,639               47,944
  Other . . . . . . . . . . . . . . . . . . . . . . .              53,157                    -
                                                            --------------       --------------
          Total revenues. . . . . . . . . . . . . . .          30,745,851           23,725,859
                                                            --------------       --------------
OPERATING COSTS AND EXPENSES:
  Cost of goods sold. . . . . . . . . . . . . . . . .           8,716,551            7,368,000
  Payroll and other employee benefits . . . . . . . .           9,746,338            7,575,967
  Occupancy . . . . . . . . . . . . . . . . . . . . .           4,768,824            3,563,886
  Selling expenses. . . . . . . . . . . . . . . . . .           2,772,040            1,867,614
  General and administrative. . . . . . . . . . . . .           1,428,234            1,193,264
  Depreciation and amortization . . . . . . . . . . .           2,085,262            1,327,270
                                                            --------------       --------------
          Total operating costs and expenses. . . . .          29,517,249           22,896,001
                                                            --------------       --------------
INCOME FROM OPERATIONS. . . . . . . . . . . . . . . .           1,228,602              829,858
                                                            --------------       --------------
OTHER EXPENSES:
  Loss on sale of assets. . . . . . . . . . . . . . .             130,725                    -
  Interest expense. . . . . . . . . . . . . . . . . .             661,630              529,965
  Interest charge related to beneficial conversion feature              -              352,941
                                                            --------------       --------------
  Total other expense . . . . . . . . . . . . . . . .             792,355              882,906

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES . . .             436,247              (53,048)

PROVISION FOR INCOME TAXES, current . . . . . . . . .              98,300               20,280
INCOME TAX BENEFIT, deferred. . . . . . . . . . . . .            (120,053)              (5,000)
                                                            --------------       --------------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM . . . . . . .             458,000              (68,328)
                                                            --------------       --------------
EXTRAORDINARY ITEM:
  Gain on extinguishment of convertible debt - net. .            (128,261)                   -
                                                            --------------       --------------
NET INCOME (LOSS) . . . . . . . . . . . . . . . . . .       $     586,261        $     (68,328)
                                                            ==============       ==============
NET INCOME (LOSS) PER SHARE -
  INCOME (LOSS) BEFORE EXTRAORDINARY ITEM . . . . . .                0.06                (0.01)
                                                            --------------       ==============
  EXTRAORDINARY ITEM. . . . . . . . . . . . . . . . .                0.02                    -
                                                            --------------
--------------
  Net Income (loss), basic and diluted. . . . . . . .       $        0.08        $       (0.01)
                                                            ==============       ==============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING -
  basic . . . . . . . . . . . . . . . . . . . . . . .           7,386,478            5,887,953
                                                            ==============       ==============
  diluted . . . . . . . . . . . . . . . . . . . . . .           7,413,411            5,887,953
                                                            ==============       ==============

</TABLE>

See accompanying independent auditors' report and notes to consolidated
financial statements.


                                     F-3
<PAGE>


<TABLE>
                CREATIVE HOST SERVICES, INC. AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

                                          Additional                 Total
                                 Common stock           paid-in      Accumulated    shareholders'
                             Shares       Amount        capital        deficit          equity
                            ---------   ----------    -----------     -----------    ------------
<S>                         <C>         <C>            <C>            <C>            <C>
Balance as previously
reported at January 1,
2000                        4,369,887   $ 7,769,665    $  922,472     $(2,287,442)   $ 6,404,695

Prior period adjustment
(See Note 1)                                                             (143,000)      (143,000)
                            ---------    ----------     ---------       ----------     ----------
Balance as restated
at January 1, 2000          4,369,887     7,769,665       922,472      (2,430,442)     6,261,695
(See Note 1)

Warrants exercised in
exchange for common stock     812,571     2,717,323                                    2,717,323

Conversion of convertible
debt                          573,857     1,478,348                                    1,478,348

Net proceeds from issuance
of common stock               597,700     3,493,409                                    3,493,409

Stock options exercised in
exchange for common stock      70,500       114,600                                      114,600

Common stock issued for
services                       20,000       133,750                                      133,750

Issuance of warrants in
connection with financing                                 450,450                        450,450

Issuance of warrants in
connection with settlement
agreement                                                  10,250                         10,250

Intrinsic value of
beneficial conversion
feature issued in
connection with financing                                 352,941                        352,941

Net loss for the year
ended December 31, 2000                                                   (68,328)       (68,328)

Balance as restated at
  December 31, 2000         6,444,515    15,707,095     1,736,113      (2,498,770)    14,944,438
                            ---------   -----------   -----------      -----------    ----------

</TABLE>


See accompanying independent auditors' report and notes to consolidated
financial statements.


                                      F-4
<PAGE>


<TABLE>
                CREATIVE HOST SERVICES, INC. AND SUBSIDIARIES
          CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (CONTINUED)



                                          Additional                 Total
                                 Common stock           paid-in      Accumulated    shareholders'
                             Shares       Amount        capital        deficit          equity
                            ---------   ----------    -----------     -----------    ------------

<S>                         <C>          <C>           <C>            <C>           <C>
Conversion of convertible
debt                        1,345,003     1,193,642                                    1,193,642

Common stock issued
for services                   39,000        38,030                                       38,030

Retire discount on debt
converted to common stock                                  (179,753)                    (179,753)

Retire balance of
beneficial conversion
feature issued in
connection with financing                                  (677,249)                   (677,249)

Purchase common stock on
open market                   (22,500)      (25,867)                                    (25,867)

Net income for the year
ended December 31, 2001                                                   586,261       586,261
                            ----------   -----------   ------------   -----------    ----------

Balance as restated at
 December 31, 2001           7,806,018   $16,912,900   $    879,111   $(1,912,509)  $15,879,502
                            ==========   ===========   ============   ===========   ===========

</TABLE>

See accompanying independent auditors' report and notes to consolidated
financial statements.



                                     F-5
<PAGE>



<TABLE>
              CREATIVE HOST SERVICES, INC. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                Year ended           Year ended
                                            December 31, 2001    December 31, 2000
                                            -----------------    -----------------
<S>                                         <C>                  <C>
CASH FLOWS PROVIDED BY
  OPERATING ACTIVITIES:
  Net income (loss) . . . . . . . . . . .   $        586,261     $         (68,328)
                                            -----------------    ------------------
 ADJUSTMENTS TO RECONCILE NET INCOME/
  (LOSS) TO NET CASH PROVIDED BY OPERATING
  ACTIVITIES:
      Depreciation and amortization . . .          2,085,262             1,327,270
      Provision for bad debts . . . . . .            (17,589)               12,608
      Amortization of debenture discount.            101,056                38,806
      Loss on sale of assets. . . . . . .            130,725                     -
      Gain on extinguishment of debt. . .           (128,261)                    -
      Intrinsic value of beneficial
        conversion feature. . . . . . . .                  -               352,941
      Income tax benefit - deferred . . .                  -                (5,000)
      Value of warrants issued in
      connection with settlement agreement                 -                10,250

 CHANGES IN ASSETS AND LIABILITIES:
  (INCREASE) DECREASE IN ASSETS:
      Accounts receivable . . . . . . . .            131,428               (75,428)
      Inventory . . . . . . . . . . . . .             13,747              (108,011)
      Prepaid expenses and
        other current assets. . . . . . .           (122,348)             (116,763)
      Deposits and other assets . . . . .            (87,076)             (281,013)

  INCREASE (DECREASE) IN LIABILITIES:
      Accounts payable and
        accrued expenses. . . . . . . . .           (636,237)              874,024
      Deferred taxes. . . . . . . . . . .            (97,940)                    -
      Income taxes payable. . . . . . . .             (45,474)             108,491
                                            ------------------   ------------------
          Total adjustments . . . . . . .           1,327,293            2,138,175
                                            ------------------   ------------------
          Net cash provided by
            operating activities. . . . .           1,913,554            2,069,847
                                            ------------------   ------------------
CASH FLOWS PROVIDED BY (USED FOR)
  INVESTING ACTIVITIES:
  Property and equipment. . . . . . . . .          (2,143,486)          (4,481,546)
  Construction in progress. . . . . . . .            (528,460)                   -
  Excess of purchase price over
    fair market value of assets . . . . .                   -           (3,370,722)
  Proceeds from sale of assets. . . . . .             364,362                    -
                                            ------------------   ------------------
          Net cash used for
            investing activities. . . . .          (2,307,584)          (7,852,268)
                                            ------------------   ------------------
CASH FLOWS PROVIDED BY (USED FOR)
 FINANCING ACTIVITIES:
  Proceeds from notes payable . . . . . .           1,268,000            1,992,362
  Proceeds from (payments on)
   line of credit, net. . . . . . . . . .           1,779,888              (56,664)
  Net cash amount paid upon retirement of
   beneficial conversion feature . . .  .            (258,085)                   -

</TABLE>
                                     F-6
<PAGE>


<TABLE>
                  CREATIVE HOST SERVICES, INC. AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                                               Year ended           Year ended
                                            December 31, 2001    December 31, 2000
                                            -----------------    -----------------
<S>                                         <C>                  <C>
Issuance of capital stock . . . . . . .                                6,387,332
  Redeem common stock . . . . . . . . . .            (168,368)                   -
  Repayment on notes payable. . . . . . .          (1,220,250)            (143,847)
  Repayment on leases payable . . . . . .            (918,922)            (873,730)
                                            ------------------   ------------------
Net cash provided by
  financing activities. . . . . . . . . .             482,263            7,305,453
                                            ------------------   ------------------
NET INCREASE IN CASH. . . . . . . . . . .              88,233            1,523,032
CASH, beginning of year . . . . . . . . .           1,713,055              190,023
                                            ------------------   ------------------
CASH, end of year . . . . . . . . . . . .   $       1,801,288    $       1,713,055
                                            ==================   ==================

SUPPLEMENTAL DISCLOSURE OF
  CASH FLOW INFORMATION:
  Interest paid . . . . . . . . . . . . .   $         560,574    $         557,811
                                            ==================   ==================
  Income taxes paid . . . . . . . . . . .   $          99,155    $           5,845
                                            ==================   ==================

SUPPLEMENTAL DISCLOSURE OF NON-CASH
  INVESTING AND FINANCING ACTIVITIES:
  Notes payable and accrued interest
    converted to common stock . . . . . .   $       1,193,642    $       1,505,000
                                            ==================   ==================
  Intrinsic value of warrants
    issued with common stock. . . . . . .   $               -    $         647,444
                                            ==================  ===================
  Common stock issued in
    exchange for outstanding
    stock of GladCo Enterprises, Inc. . .   $               -    $         500,000
                                            ==================   ==================
  Equipment acquired and financed
    by a capital lease. . . . . . . . . .   $          47,473    $         252,142
                                            ==================   ==================
  Equipment acquired and financed
    by a note . . . . . . . . . . . . . .   $          12,223    $               -
                                            ==================   ==================
  Deferred tax liability arising
    from business combination . . . . . .   $               -    $         200,000
                                            ==================   ==================
  Common stock issued in
    exchange for services . . . . . . . .   $          38,030    $         133,750
                                            ==================   ==================
  Common stock redeemed
    by issuing notes. . . . . . . . . . .   $         142,501    $               -
                                            ==================   ==================
  Notes issued in settlement
    of a contingent liability . . . . . .   $         105,000    $               -
                                            ==================   ==================
  Retire discount on debt converted
      to common stock         . . . . . .   $         179,753    $               -
                                            ==================   ==================
</TABLE>

See accompanying independent auditors' report and notes to consolidated
financial statements.
                                     F-7
<PAGE>


            CREATIVE HOST SERVICES, INC. AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  YEARS ENDED DECEMBER 31, 2001 AND 2000

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

                  ORGANIZATION AND BASIS OF PRESENTATION:

Creative Host Services, Inc. (the "Company") was formed in 1986 to acquire the
operating assets of Creative Croissants, Inc., which consisted of a food
preparation center in San Diego and two French-style cafes featuring hot meal
croissants, muffins, pastas and salads. The cafes were acquired in May 1987
and the food preparation center was acquired in April 1988 in transactions
accounted for using the purchase method of accounting. In 1989, the Company
commenced franchising operations, licensing its trademarks to third parties,
who agreed to purchase baked goods from the Company's food preparation center
under franchise arrangements with the Company, and earned an initial franchise
fee, a royalty based upon sales, and in some cases advertising and marketing
fees as a percentage of gross sales. In 1990 the Company entered into the
captive audience market at airports with its first franchisee-operated
concession at the John Wayne International Airport in Orange County,
California. In 1994, the Company began operating company owned food and
beverage concessions at airports and commenced certain in-flight catering
sales. The accompanying financial statements include the operations of
Company-owned concessions (mainly at various airports across the United
States), revenues earned from franchisees and operations from its wholesale
food preparation activities.

Effective October 9, 2000, the Company acquired 100% of the outstanding stock
of GladCo Enterprises, Inc., a Pennsylvania corporation, the outstanding
shares of HLG Acquisition Corporation, a Pennsylvania corporation and the
outstanding limited partnership interest in HLG Franchise Marketing Company
for $7.3 million.

                        PRINCIPLES OF CONSOLIDATION:

The accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries, GladCo Enterprises, Inc, HLG
Acquisition Corporation and HLG Franchise Marketing Company. All material
intercompany accounts have been eliminated in consolidation.

                            REVENUE RECOGNITION:

Concession revenues are recorded as the sales are made, sales from the food
preparation center are recorded upon shipment and revenues from in-flight
catering are recorded upon delivery. Revenues from the initial sale of
individual franchises are recognized, net of an allowance for uncollectible
amounts and any commissions to outside brokers, when substantially all
significant services to be provided by the Company have been performed.

                               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 revenues
and expenses during the reporting period. Actual results could differ from
those estimates.

See accompanying independent auditors' report.


                                     F-8
<PAGE>


              CREATIVE HOST SERVICES, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                 YEARS ENDED DECEMBER 31, 2001 AND 2000

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

                                 FAIR VALUE:

Unless otherwise indicated, the fair values of all reported assets and
liabilities which represent financial instruments (none of which are held for
trading purposes) approximate the carrying values of such instruments.

                                 INVENTORY:

Inventory, consisting principally of foodstuffs and supplies, is valued at the
lower of cost (first-in, first-out) or market.

                            PROPERTY AND EQUIPMENT:

Property and equipment are recorded at cost, including interest on funds to
finance the construction of concession locations. Such interest amounted to
approximately $23,000 during 2000. For financial statement purposes,
depreciation is computed primarily by the straight-line method over the
estimated useful lives of the assets, as follows:

Office equipment 10 years

Restaurant concession and commissary equipment 10 years

Leasehold improvements are amortized over the useful lives of the
improvements, or terms of the leases, whichever is shorter.

                                  GOODWILL:

In connection with its acquisition of GladCo Enterprises, Inc., which was
accounted for under the purchase method of accounting, the Company recorded
goodwill. The goodwill was amortized through December 31, 2001 using the
straight-line method over the estimated useful life of twenty years. The
Company will continually evaluate the existence of goodwill impairment in
accordance with the provisions of SFAS 121, "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to be Disposed of".

                       DEBT WITH STOCK PURCHASE WARRANTS:

The proceeds received from debt issued with stock purchase warrants is
allocated between the debt and the warrants, based upon the relative fair
values of the two securities valued using the Black-Scholes method. The value
of the warrants results in a debt discount which is included in additional
paid-in capital and is amortized to expense over the term of the debt
instrument, using the interest method. In the event of settlement of such debt
in advance of the maturity date, an expense is recognized based upon the
difference between the then carrying amount of the debt (i.e., face amount
less unamortized discount) and amount of payment.

See accompanying independent auditors' report.

                                     F-9
<PAGE>



             CREATIVE HOST SERVICES, INC. AND SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
               YEARS ENDED DECEMBER 31, 2001 AND 2000


(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

                               INCOME TAXES:

Deferred income taxes are reported using the liability method. Deferred tax
assets are recognized for deductible temporary differences and deferred tax
liabilities are recognized for taxable temporary differences. Temporary
differences are the differences between the reported amounts of assets and
liabilities and their tax bases. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely than
not that some portion or all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effects of changes in
tax laws and rates on the date of enactment.

                             EARNINGS PER SHARE:

Earnings per share was computed based upon the weighted average number of
shares of common stock outstanding during each period. Diluted earnings per
share reflect per share amounts that would have resulted if diluted potential
common stock had been converted to common stock.  For the fiscal year ended
December 31, 2001, the weighted average shares used to compute diluted
earnings per share includes the effects of 26,933 options to purchase common
stock.  Common stock equivalents, which consist of 385,103 and 208,000 shares
of options and 728,946 and 608,575 shares of warrants, have not been included
in the earnings per share computation for the years ended December 31, 2001
and 2000, respectively, as the amounts are anti-dilutive.

                                    CASH:

EQUIVALENTS
-----------
For purposes of the statement of cash flows, cash equivalents include all
highly liquid debt instruments with original maturities of three months or
less which are not securing any corporate obligations.

CONCENTRATION
-------------
The Company maintains its cash in bank deposit accounts, which at times may
exceed federally insured limits. The Company has not experienced any losses in
such accounts.

                       COMPREHENSIVE INCOME AND LOSS:

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 has no
items that represent other comprehensive income and, therefore, has not
included a schedule of comprehensive income in the financial statements.

See accompanying independent auditors' report.

                                     F-10
<PAGE>


              CREATIVE HOST SERVICES, INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                 YEARS ENDED DECEMBER 31, 2001 AND 2000


(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

                       CONCENTRATION OF CREDIT RISK:

The Company provides in-flight catering to various airlines throughout the
United States primarily through its own concession operations and does not
require collateral. Over 90% of the Company's sales are on a cash basis. One
location accounts for more than 10% of the Company's revenues. Allowances have
been provided for uncollectible amounts, which have historically been within
management's expectations.

                          SEGMENT INFORMATION:

The Company currently considers its business to consist of one reportable
operating segment.

                      NEW ACCOUNTING PRONOUNCEMENTS:

In January 2001, the FASB Emerging Issues Task Force issued EITF 00-27
effective for convertible debt instruments issued after November 16, 2000.
This pronouncement requires the use of the intrinsic value method for
recognition of the detachable and imbedded equity features included with
indebtedness, and requires amortization of the amount associated with the
convertibility feature over the life of the debt instrument rather than the
period for which the instrument first becomes convertible. Inasmuch as all
debt instruments were entered into prior to November 16, 2000 and all of the
debt discount relating to the beneficial conversion feature was previously
recognized in 2000 as expense in accordance with EITF 98-5, there was no
impact on these financial statements. This EITF 00-27, could impact future
financial statements, should the Company enter into such agreements.

In June 2001, the FASB issued SFAS No. 141 "Business Combinations." SFAS No.
141 supersedes Accounting Principles Boards ("APB") Opinion No. 16 and
requires that any business combinations initiated after June 30, 2001 be
accounted for as a purchase, therefore, eliminating the pooling-of-interest
method defined in APB Opinion 16. The statement is effective for any business
combination initiated after June 30, 2001, and shall apply to all business
combinations accounted for by the purchase method for which the date of
acquisition is July 1, 2001 or later. The adoption of this pronouncement did
not affect the Company''s financial position or results of operations since
the Company has not participated in such activities covered under this
pronouncement since its adoption.

In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 142 addresses the initial recognition, measurement and
amortization of intangible assets acquired individually or with a group of
other assets (but not those acquired in a business combination), and addresses
the amortization provisions for excess cost over fair value of net assets
acquired or intangibles acquired in a business combination. The statement is
effective for fiscal years beginning after December 15, 2001,


See accompanying independent auditors' report.

                                      F-11
<PAGE>




CREATIVE HOST SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 2001 AND 2000


(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

and is effective July 1, 2001 for any intangibles acquired in a business
combination initiated after June 30, 2001. After adoption of this
pronouncement the Company will no longer amortize goodwill (approximately
$227,000 during the year ended December 31, 2001), but instead will test
goodwill for impairment at least annually.

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations," which requires companies to record the fair value of a liability
for asset retirement obligations in the period in which they are incurred. The
statement applies to a company's legal obligations associated with the
retirement of a tangible long-lived asset that results from the acquisition,
construction, and development or through the normal operation of a long-lived
asset. When a liability is initially recorded, the company would capitalize
the cost, thereby increasing the carrying amount of the related asset. The
capitalized asset retirement cost is depreciated over the life of the
respective asset while the liability is accreted to its present value. Upon
settlement of the liability, the obligation is settled at its recorded amount
or the company incurs a gain or loss. The statement is effective for fiscal
years beginning after June 30, 2002. The Company does not expect the adoption
to have a material impact to the Company's financial position or results of
operations.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets." Statement 144 addresses the accounting and
reporting for the impairment or disposal of long-lived assets. The statement
provides a single accounting model for long-lived assets to be disposed of.
New criteria must be met to classify the asset as an asset held-for-sale. This
statement also focuses on reporting the effects of a disposal of a segment of
a business. This statement is effective for fiscal years beginning after
December 15, 2001. The Company does not expect the adoption of SFAS No. 144 to
have a material impact on the Company's financial position or results of
operations.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4, 44 and 64, Amendment of FAS No. 13 and Technical Corrections", which
the Company does not believe will materially affect its financial statements.
SFAS No. 145 requires that gains and losses from the extinguishment of debt be
classified as extraordinary items only if they meet the criteria in Accounting
Principles Board Opinion No. 30.


See accompanying independent auditors' report.


                                     F-12
<PAGE>



              CREATIVE HOST SERVICES, INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                 YEARS ENDED DECEMBER 31, 2001 AND 2000


(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

PRIOR PERIOD ADJUSTMENTS:

As of January 1, 2000, a change was made to the Company's retained earnings to
properly account for vacation pay.  The adjustment increased the accumulated
deficit and accrued expenses by $143,000.  There was no impact on the results
of operations for 2001 or 2000.  Additionally, for the year ended December 31,
2001, the Company has reclassified the gain on the extinguishment of debt as
an extraordinary item in its consolidated statements of operations.  The
reclassification of the gain on extinguishment of debt as an extraordinary
item resulted in the
following changes in dollar and per share amounts:

<TABLE>
                                                  As Previously
                                                     Reported     As Restated
                                                  -------------   -----------
       <S>                                         <C>            <C>
       Income before extraordinary item            $   586,261    $   458,000
       Extraordinary item                                    -        128,261
                                                    ----------     ----------
       Net income                                  $   586,261    $   586,261
                                                    ==========     ==========
       Net income per share - basic:
       Income before extraordinary item            $      0.08    $      0.06
       Extraordinary item                                    -           0.02
                                                    ----------     ----------
       Net income                                  $      0.08    $      0.08
                                                    ==========     ==========
       Net income per share - diluted:
       Income before extraordinary item            $      0.08    $      0.06
       Extraordinary item                                    -           0.02
                                                    ----------     ----------
       Net income                                  $      0.08    $      0.08
                                                    ==========     ==========
</TABLE>

(2) PROPERTY AND EQUIPMENT:

A summary at December 31, 2001 is as follows:

         Food and beverage concession equipment           $   16,209,560
         Leasehold improvements                                3,881,472
         Office equipment                                        189,779
         Construction in progress                                362,490
                                                            ------------
                                                              20,643,301
         Less accumulated depreciation and amortization        4,750,569
                                                            ------------
         Property and Equipment - Net of depreciation     $  15,892,732

Depreciation and amortization expense totaled $1,799,519 and $1,252,667 for
the years ended December 31, 2001 and 2000, respectively.

See accompanying independent auditors' report.

                                     F-13
<PAGE>


                 CREATIVE HOST SERVICES, INC. AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                    YEARS ENDED DECEMBER 31, 2001 AND 2000



(3) OTHER ASSETS:

                                GOODWILL
                                --------

Goodwill, arising from the acquisition of GladCo. Enterprises, Inc., is being
amortized over 20 years. A summary at December 31, 2001 is as follows:


          Goodwill                               $     4,547,210
          Less  accumulated  amortization                275,091
                                                  --------------
                                                 $     4,272,119
                                                  ==============
Amortization expense amounted to $219,174 and $55,917 for the years ended
December 31, 2001 and 2000, respectively.


                                 OTHER ASSETS
                                 ------------

A summary of the components of other assets at December 31, 2001 is as
follows:

                  Franchise  costs                 $     335,909
                  Loan  fees                              72,218
                  Other                                   28,278
                                                     -----------
                                                         436,405
                  Less  accumulated  amortization        332,824
                                                    ------------
                                                   $     103,581
                                                    ============

Amortization expense amounted to $66,569 and $18,686 for the years ended
December 31, 2001 and 2000, respectively.


(4) ACCOUNTS PAYABLE AND ACCRUED EXPENSES:

Purchases from one supplier amounted to approximately $4,418,000 for the year
ended December 31, 2001. Approximately $231,500 of the accounts payable was
due to this supplier at December 31, 2001.


See accompanying independent auditors' report.


                                    F-14
<PAGE>


                  CREATIVE HOST SERVICES, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                    YEARS ENDED DECEMBER 31, 2001 AND 2000



(5) NOTES PAYABLE:

A summary is as follows:

<TABLE>
<S>                                                        <C>
Note payable to a bank, interest at 9% per annum,
  due July 2004 . . . . . . . . . . . . . . . . . . . . . . .     $   1,033,333
Notes payable to former shareholders, interest at 9% per annum,
  due in monthly installments of $8,493 through December 2002 .          97,114
Notes payable to former shareholders, interest at 9% per annum,
  due in monthly installments of $4,797 through December 2003 .         105,000
Note payable to a finance company, interest at 13.1% per annum,
  due in monthly installments of $1,264 through April 2004. . .           8,923
Note payable to a finance company, interest at 11.1% per annum,
  due in monthly installments of $7,909 through May 2002. . . .          38,472
Note payable to a corporation, interest at 8% per annum,
 due in monthly installments of $1,784 through May 2006 . . . .          78,157
                                                                   ------------
                                                                      1,360,999
Less current maturities . . . . . . . . . . . . . . . . . . . .         603,972
                                                                   ------------
                                                                  $     757,027
                                                                   ============
</TABLE>

The following is a summary of the principal amounts payable over the next five
years and thereafter:



                           2002     $     603,972
                           2003           476,181
                           2004           253,252
                           2005            19,833
                           2006             7,761
                                        ---------
                                    $   1,360,999
                                        =========


                            CONVERTIBLE DEBENTURES
                            ----------------------
In September 2000, the Company entered into a purchase agreement with an
investment company to issue a total of $2,500,000 convertible debentures with
interest at 7% per annum at a 5% discount rate and a warrant to purchase
125,000 shares of the Company's common stock at an exercise price of $6.86 per
share. In September 2000, the Company issued $2,000,000 of the convertible
debenture at a 5% discount rate, or $100,000, and the warrant. A payment of
interest only is payable on the last day of each quarter starting December 31,
2000. The remaining principal balance of the debenture is payable in full in
September 2003. The debentures are convertible at the option of the holder at
any time after October 26, 2000 at the lesser of

See accompanying independent auditors' report.


                                    F-15
<PAGE>


                 CREATIVE HOST SERVICES, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                    YEARS ENDED DECEMBER 31, 2001 AND 2000


(5) NOTES PAYABLE, CONTINUED:


$7.70 per share or 85% of the average of the 5 lowest volume weighted average
sales prices of the common stock during the past 25 trading days immediately
preceding the notice of conversion. The intrinsic value of the beneficial
conversion feature totaled $352,941 and has been charged to interest expense
pursuant to EITF 98-5. The debenture is collateralized by substantially all
assets of the Company. The fair value of the associated warrant was determined
based on the Black-Scholes pricing method. The value of the warrant totaled
$450,450 and was included in paid-in capital at December 31, 2000. The
debenture, net of discounts totaling $550,450, has an effective interest rate
of 30.2%. The discount is being amortized to interest expense over the life of
the debenture using the interest rate method.

During the year ended December 31, 2001, $1,193,642 of the outstanding
debenture, including related interest was converted to 1,345,003 shares of
common stock at an average rate of $0.89 per share and required the write-off
of unamortized discount totaling $179,753.

In August 2001, the Company paid-off the remaining convertible debenture
balance of $941,915, for $1,200,000 cash, including principal and interest,
before its expiration date, with cash obtained through bank financing. On the
date of retirement, the intrinsic value of shares into which the debt was
convertible was $1,619,163, of which $677,249 related to the beneficial
conversion feature. The extinguishment of this debt gave rise to a gain of
$419,163 (which is presented on the Statement of Operations and the Statement
of Cash Flows net of related unamortized loan origination costs of $60,069 and
unamortized discount of $230,833, giving rise to a net gain of $128,261) and
required cash of $258,085 as the negotiated cost of the early retirement, for
the year ended December 31, 2001.

The Company does not expect to issue the remaining $500,000 of convertible
debentures under the purchase agreement.


(6) LINE OF CREDIT:

The Company has a revolving line of credit with a bank expiring October 31,
2003. The line of credit originated on November 13, 2000, with maximum
borrowing capacity of $2,500,000.  The maximum borrowing allowed is reduced by
$125,000 each quarter. The line incurs an interest rate of 0.25% under the
bank's reference rate. The line is collateralized by inventory, furniture,
equipment and intangible property. $1,779,887 was due the bank on the line at
December 31, 2001.


See accompanying independent auditors' report.


                                    F-16
<PAGE>




               CREATIVE HOST SERVICES, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                    YEARS ENDED DECEMBER 31, 2001 AND 2000

(6) LINE OF CREDIT, CONTINUED:


The Company must maintain the following covenants:

          Debt to worth                  .85: 1.0
          Current ratio                  .9 : 1.0
          Debt coverage ratio           1.7 : 1.0 to June 30, 2002
                                        1.8 : 1.0 to December 31, 2002
                                        2.0 : 1.0 thereafter
         Capital expenditures limit   $5,000,000 per year
         Acquisition limit            $5,000,000 per year

As a result of the restatement of the Company's financial statements, (see
Note 1) at December 31, 2001, the Company did not meet the minimum current
ratio, although this condition was subsequently met.  The Company plans to pay
off this line of credit by December 31, 2002.


(7) LEASES PAYABLE:

Equipment leases payable to a finance company with an approximate average
interest at 14.3%, are due in monthly installments through the year 2006, and
are secured by food and beverage concession equipment.

The following is a summary of the principal amounts payable under capital
leases over the next five years:

                    2002                              $     1,164,525
                    2003                                      980,449
                    2004                                      588,424
                    2005                                       14,134
                    2006                                        3,036
                                                            ---------
                    Total  minimum  lease  payments         2,750,568
                    Less  amount  representing  interest      405,049
                                                           ----------
                    Present value of net minimum
                    lease payments                          2,345,519
                    Less  current  maturities                 916,302
                                                            ---------
                                                          $ 1,429,217


See accompanying independent auditors' report.


                                    F-17
<PAGE>



                CREATIVE HOST SERVICES, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                  YEARS ENDED DECEMBER 31, 2001 AND 2000


(8) INCOME TAXES:

For federal income tax return purposes, the Company has available net
operating loss carryforwards of approximately $850,000, which expire through
2019 and are available to offset future income tax liabilities. Due to the
completion of the Company's initial public offering, there are significant
limitations on the Company's ability to utilize this operating loss
carryforward.

Temporary differences which give rise to deferred tax assets and liabilities
at December 31, 2001 and 2000 are as follows:

                                                           2001        2000
                                                       ----------  ----------
Current deferred tax asset (liability)
 arising from:
  Net operating loss carryforward. . . . . . . . . . . $ 289,900   $ 822,800
  Accrued vacation . . . . . . . . . . . . . . . . . .    27,200           -
  State income taxes . . . . . . . . . . . . . . . . .    26,600           -
  Allowance for doubtful accounts. . . . . . . . . . .    14,600           -
  AMT credit . . . . . . . . . . . . . . . . . . . . .    20,000           -
  Insurance claim receivable . . . . . . . . . . . . .   (81,500)          -
                                                       ---------   ---------
                                                         296,800     822,800
Less valuation allowance . . . . . . . . . . . . . . .  (296,800)  (822,800)
                                                       $       -   $       -
                                                       ==========  ==========
Long-term deferred tax asset (liability)
 arising from:
  Depreciation and amortization. . . . . . . . . . . . $ 845,800   $  97,060
  Non-taxable business combination . . . . . . . . . .  (195,000)   (200,000)
                                                       ----------  ----------
                                                         650,800    (102,940)
  Amortization of deferred tax . . . . . . . . . . . .    20,000       5,000
                                                       ----------  ----------
                                                         670,800     (97,940)
Less valuation allowance . . . . . . . . . . . . . . .  (670,800)          -
                                                       ----------  ----------

                                                       $       -   $ (97,940)
                                                       ==========  ==========


See accompanying independent auditors' report.


                                    F-18
<PAGE>


                 CREATIVE HOST SERVICES, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                   YEARS ENDED DECEMBER 31, 2001 AND 2000


(8) INCOME TAXES, CONTINUED:

Reconciliation of the Federal income tax expense (benefit) to the statutory
rate is as follows.

                                                2001       2000
                                               ------     ------
     Net Income (loss) before taxes           $    436,247  $ (53,048)
     Statutory Rate                                    34%        34%
     Federal income tax expense (benefit)          148,324    (18,036)

     Amortization of goodwill not deductible
      for income tax purposes . . .  . . .          77,303     20,216
     Other adjustments - net                       (15,793)    (2,180)
     State income taxes. . . . . . . . . . .        78,300     20,280
     Net operating loss carryforward . . . .      (289,887)         -
                                                -----------  --------
     Less valuation allowance. . . . . . . .       (20,000)    (5,000)
                                                -----------  --------
                                             $     (21,753)  $ 15,280
                                                ===========  ========

During 2001, the Company had an extraordinary gain on extinguishment of debt
in the amount of $128,261.  There was no tax expense associated with this
extraordinary item as the amount did not give rise to taxable income.


(9) COMMITMENTS AND CONTINGENCIES:

OPERATING LEASES
----------------

The Company leases its office facility and concession locations under various
operating lease agreements expiring through 2010. Rental expense under
operating leases totaled $4,523,047 and $3,577,693 for 2001 and 2000,
respectively. As of December 31, 2001, future minimum rental payments required
under operating leases, exclusive of additional rental payments based on
concession sales and number of enplanements, are as follows:

      Year  ending  December  31,
          2002                                   $     5,431,550
          2003                                         5,479,477
          2004                                         5,238,386
          2005                                         4,941,672
          2006                                         4,113,821
          Thereafter                                   6,666,851
                                                       ---------
                                                 $    31,871,757
                                                      ==========

See accompanying independent auditors' report.

                                    F-19
<PAGE>




                 CREATIVE HOST SERVICES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                   YEARS ENDED DECEMBER 31, 2001 AND 2000


(9) COMMITMENTS AND CONTINGENCIES, CONTINUED:

In connection with the concessionaire agreements with various airport
authorities, the Company has obtained surety bond coverage for the guarantee
of lease payments in the event of non-performance under the agreements, in the
aggregate amount of approximately $425,000. The insurer may seek
indemnification from the Company for any amounts paid under these bonds.

CAPITAL IMPROVEMENTS
--------------------

The Company plans to make capital improvements at two of its locations. The
cost of the capital improvements is estimated at approximately $3,500,000,
excluding capitalized interest. Generally our sub-contractor will provide the
construction bonds for the planned capital improvements. No construction bonds
are outstanding in the name of the Company.  The construction is expected to
be completed in 2002.


EMPLOYMENT AGREEMENTS
---------------------

The Company has an employment agreement with its chairman of the board
providing for total compensation of $748,000 through the year 2004. The
Company also has an employment agreement with Louis Coccoli, Jr. providing for
total compensation of $562,500 through the year 2005.

(10) REDEEMABLE COMMON STOCK:

On October 9, 2000, the Company acquired for approximately $7.3 million all of
the outstanding stock of Gladco Enterprises, Inc., and related entities, an
operator of airport food concessions based in Pittsburgh, Pennsylvania. The
purchase consideration consisted of approximately $6.5 million cash, 69,638
shares of the Company's common stock valued at $500,000 and contingent
consideration of $280,000 which was paid during 2001. The Company agreed to
permit the sellers to elect to require the Company to repurchase these shares
when they are freely tradable at a price equal to the per share issuance price
times the number of shares repurchased. In December 2001, 39,694 of these
shares were redeemed for $142,502 cash and by issuing notes for $142,501.  At
December 31, 2001, 29,944 of these shares remain outstanding. Accordingly,
these shares are excluded from stockholders' equity. The contingent
consideration resulted from the Company's execution of a lease agreement for
the Newark, New Jersey International Airport within one year from the
acquisition date.


See accompanying independent auditors' report.


                                    F-20
<PAGE>


               CREATIVE HOST SERVICES, INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                  YEARS ENDED DECEMBER 31, 2001 AND 2000


(11) COMMON STOCK:

In September 2000, one purchase warrant was issued to an investment company in
connection with a convertible debenture. The warrant entitles the holder to
purchase 125,000 shares of the Company's common stock at an exercise price of
$6.86 per share. The warrants are exercisable immediately and expire in
September 2003.

In January through July 2000, shareholders exercised 512,450 warrants to
purchase shares of common stock at an exercise price of $5.40 per share. The
exercises generated proceeds, net of costs, totaling $2,567,898.

In 2000, warrants to purchase 81,500 shares of stock were exercised for net
proceeds of $149,425.

In 2000, individuals exercised 229,100 warrants to purchase common stock. The
individuals exercised the warrants on a "cashless" basis and as a result were
issued 218,621 shares of the Company's common stock.

In 2000, employees and directors of the Company exercised 70,500 options to
purchase shares of common stock at an average exercise price of $1.63 per
share. The exercises generated proceeds totaling $114,600. In 2000, the
Company commenced three private placement offerings of 261,700, 211,000 and
125,000 shares of the Company's common stock at a purchase price of $5.00,
$7.25 and $7.00 per share, respectively. The offerings generated proceeds, net
of offering costs, totaling $1,133,120, $1,485,289 and $875,000, respectively.

In 2001, $1,193,642 of a convertible debenture and the associated accrued
interest were converted into 1,345,003 shares of common stock. See convertible
debenture at Note (5).


(12) STOCK OPTIONS:

The Company has adopted the 1997 Stock Option Plan (the "1997 Plan"). The 1997
Plan authorizes the issuance of an additional 280,000 shares of the Company's
common stock pursuant to the exercise of options granted thereunder. The
Compensation Committee of the Board of Directors administers the Plan, selects
recipients to whom options are granted and determines the number of shares to
be awarded. Options granted under the 1997 Plan are exercisable at a price
determined by the Compensation Committee at the time of grant, but in no event
less than fair market value.



See accompanying independent auditors' report.

                                    F-21
<PAGE>


               CREATIVE HOST SERVICES, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                   YEARS ENDED DECEMBER 31, 2001 AND 2000


(12) STOCK OPTIONS, CONTINUED:

During the year ended December 31, 2001, the Company adopted the 2001 Stock
Option Plan (the "2001 Plan"). The 2001 Plan authorized the issuance of
450,000 shares of the Company's common stock pursuant to the exercise of the
options granted thereunder. All remaining terms are the same as the 1997 Plan.
The Company granted 200,000 options under the 2001 Plan during the year.

The number and weighted average exercise prices of options granted under both
plans, for the years ended December 31, 2001 and 2000 are as follows:

                                             2001             2000
                                        ---------------  ---------------
                                                Average          Average
                                                Exercise        Exercise
                                        Number  Price     Number   Price
                                       -------  -------  -------  ------
Outstanding at beginning of the year   208,000  $  4.31  226,500  $2.89
Granted during the year. . . . . . .   205,000     1.17   67,000   6.20
Exercised during the year. . . . . .         -        -   70,500   1.63
Expired during the year. . . . . . .     6,000     4.07   15,000      -
Outstanding at end of the year . . .   407,000     2.93  208,000   4.31
Exercisable at end of the year . . .   260,666     3.19  159,500   3.80


The following table summarizes information about stock options outstanding at
December 31, 2001.
<TABLE>

                                  Weighted
                                  Average       Weighted   Weighted
Range of. . .  Number             Remaining     Average    Number              Average
Exercise. . .  Outstanding at     Contractual   Exercise   Exerciseable at     Exercise
Prices. . . .  December 31, 2001  Life          Price      December 31, 2001   Price
-------------  -----------------  ------------  ---------  ------------------  ---------
<S>                     <C>        <C>         <C>                   <C>      <C>
0.01 - $1.00             15,000    7.79 years  $    0.93              15,000  $     .93
-------------  -----------------  ------------  ---------  ------------------  ---------
1.01 - $2.00            203,500    9.29 years  $    1.16              83,500  $    1.16
-------------  -----------------  ------------  ---------  ------------------  ---------
2.01 - $3.00              2,500    4.04 years  $    2.13                   -          -
-------------  -----------------  ------------  ---------  ------------------  ---------
3.01 - $4.00            105,000    4.39 years  $    3.55             105,000  $    3.55
-------------  -----------------  ------------  ---------  ------------------  ---------
4.01 - $5.00             20,000    2.65 years  $    4.41              16,666  $    4.31
-------------  -----------------  ------------  ---------  ------------------  ---------
5.01 - $7.00             61,000    7.93 years  $    6.33              40,500  $    6.33
-------------  -----------------  ------------  ---------  ------------------  ---------
                        407,000    7.41 years  $    2.71             260,666  $    3.11
               =================  ============  =========  ==================  =========

</TABLE>

See accompanying independent auditors' report.

                                    F-22
<PAGE>


                CREATIVE HOST SERVICES, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                  YEARS ENDED DECEMBER 31, 2001 AND 2000


(12) STOCK OPTIONS, CONTINUED:

The Company has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB 25) and related
interpretations in accounting for its employee stock options because the
alternative fair value accounting provided for under FASB Statement No. 123,
"Accounting for Stock-Based Compensation," requires use of option valuation
models that were not developed for use in valuing employee stock options.
Under APB 25, because the exercise price of the Company's employee stock
options equals the market price of the underlying stock on the date of grant,
no compensation expense is recognized.

Proforma information regarding net income (loss) and income (loss) per share
under the fair value method is as follows:


<TABLE>
                                                 Year ended          Year ended
                                              December 31, 2001   December 31, 2000
                                              ------------------  -------------------
<S>                                           <C>                 <C>
Net income (loss) . . . . . . . . . . . . .   $          586,261  $          (68,328)

Proforma expense associated with
stock options under SFAS123 . . . . . . . .             211,291              329,587
                                              ------------------  -------------------

PROFORMA NET INCOME (LOSS). . . . . . . . .   $          374,970  $         (397,915)
                                              ==================  ===================

Net income (loss) per common share. . . . .   $             0.05  $            (0.07)
                                              ==================  ===================
</TABLE>

The fair value of each option is estimated on the date of grant using the
present value of the exercise price and is pro-rated on the percent of time
from the grant date to the end of the vesting period. The weighted-average
fair value of the options on the grant date was $1.17 and $6.23 per share for
2001 and 2000, respectively. The following assumptions were used for grants in
2001 and 2000: risk free interest rates ranging from 5.68% and 6.19%,
respectively, expected lives of five years; dividend yield of 0%; and expected
volatility of 298.35% and 417.78%, respectively.


(13) WARRANTS:

On July 3, and October 2, 2000, the Company issued warrant dividends to its
shareholders of record at an exercise price of 110% of the closing stock price
on each of the dates. Each shareholder of record received one warrant for each
40 shares of stock owned. The Company issued 151,128 and 162,864 warrants at
an exercise price of $13.20 and $8.32 per share in July and October 2000,
respectively.


See accompanying independent auditors' report.

                                    F-23
<PAGE>


               CREATIVE HOST SERVICES, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                  YEARS ENDED DECEMBER 31, 2001 AND 2000



(13) WARRANTS, CONTINUED:

At December 31, 2000, the Company had warrants outstanding that allow the
holders to purchase up to 608,575 shares of common stock at exercise prices
ranging from $1.38 to $13.20, expiring through November 2004.

The number and weighted average exercise prices of the warrants for the years
ended December 31, 2001 and 2000 are as follows:

                                             2001              2000
                                     ------------------  ----------------
                                                Average            Average
                                                Exercise           Exercise
                                      Number    Price     Number   Price
                                      --------  -------  ---------  -----

Outstanding at beginning of the year   608,575   $7.37   1,057,693  $3.65
Outstanding at end of the year . . .   733,982    6.44     608,575   7.37
Granted during the year. . . . . . .   295,000    1.76     438,982   9.58
Exercised during the year. . . . . .   169,593    1.63     823,050   3.93
Terminated during the year . . . . .         -       -      65,050   5.40


(14) EMPLOYEE PROFIT SHARING PLAN:

The Company has a salary reduction plan under the provision of Section 401(k)
of the Internal Revenue Code. The plan covers all full-time employees who have
completed one full year of service with the Company. Participation in the plan
is voluntary. For those employees participating, up to 15% of annual
compensation may be deferred as prescribed by the Internal Revenue Code.
Company contributions to the plan are discretionary. No Company contributions
were made to the plan for the years ended December 31, 2001 and 2000.

 (15) SUBSEQUENT EVENT:

In November 2001, the Company entered into a private placement agreement with
an entity whereby they would sell to qualified buyers and accredited investors
a minimum of 10 units with a maximum of 100 units. Each unit consists of
$50,000 principal amount Series A 9% Subordinated Convertible Note due
December 31, 2006 and 37,500 warrants to purchase the Company's common stock,
par value of $0.001 per share, at an exercise price of $2.00 per share.
Subsequent to year-end and through March 2002, approximately $925,000, before
expenses, was raised through the sale of these units.

In January 2002, the Company sold its location in Atlantic City, New Jersey to
a related party for $250,000 cash.  There were existing contractual
liabilities owed to the related party at the time of the sale, and the
$250,000 sales proceeds were offset against the contractual liabilities.  The
$250,000 sales price represents the fair market value of the Atlantic City,
New Jersey location. No gain or loss was recorded for this transaction as of
December 31, 2001.

See accompanying independent auditors' report.

                                    F-24
<PAGE>



Item 8. Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosure.

None.


                               PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act.


DIRECTORS AND EXECUTIVE OFFICERS:

The following table sets forth the names and ages of the Company's current
directors and executive Officers, their principal offices and positions and
the date each such person became a director or executive officer. The
Company's directors serve one-year terms until their successors are elected.
The executive officers serve terms of one year or until their death,
resignation or removal by the Board of Directors. There are no family
relationships between any of the directors and executive officers. In
addition, there was no arrangement or understanding between any executive
officer and any other person pursuant to which any person was selected as an
executive officer.  Creative Host will always maintain at least two
independent directors on its board of directors.

The directors and executive officers of Creative Host are as follows:
<TABLE>


                                            Present Positions            Director
     Name                        Age        With the Company               Since
--------------------------------------------------------------------------------------
<S>                              <C>      <C>                              <C>
Sayed Ali                        55       Chairman of the Board of         1986
                                          Directors, President and
                                          Chief Financial Officer

Booker T. Graves (1)(2)          64       Director                         1997

John P. Donohue, Jr. (1)(2)      73       Director                         1997

Charles B. Radloff (2)           74       Director                         1997

Tasneem Vakharia                 41       Secretary                        N/A

---------------------------
</TABLE>
(1)  Member of Compensation Committee
(2)  Member of Audit Committee


BUSINESS EXPERIENCE:

SAYED ALI is the founder, Chairman of the Board of Directors, President and
Chief Financial Officer of the Company. Mr. Ali has served as Chairman of the
Board of Directors and President since 1986. Mr. Ali served as Chief Financial
Officer from December 1986 to February 1997, and since August 1997. Mr. Ali
served as the Secretary of the Company from 1986 to December 1996. Prior to
founding the Company, from May 1985 to September 1987, Mr. Ali was the
Director of Operations of Steffa Control Systems, a manufacturer of energy
management systems. From March 1980 until May 1985, Mr. Ali was the Director
of Operations for Oak Industries, Inc., a $250 million telecommunications
equipment manufacturer.

                                    -25-
<PAGE>

BOOKER T. GRAVES has been a director of the Company since March 1997. Since
1993, Mr. Graves has been president of Graves Airport Concession Consultants,
a consulting company located in Denver, Colorado, which provides consulting
services to airports and other businesses. From 1993 to 1996, Mr. Graves was
the principal food and beverage consultant to the Denver International
Airport. From 1990 through 1993, Mr. Graves was General Manager of CA One
Services, Inc. (formerly Sky Chefs) at Denver Stapleton International Airport.
From 1980 until 1990, Mr. Graves was the General Manager of CA One Services,
Inc. of Phoenix Sky Harbor Airport.

JOHN P. DONOHUE, JR. has been a director of the Company since March 1997. From
1990 to the present, Mr. Donohue has been a private investor. Prior to that
time for 25 years, Mr. Donohue was employed by Oak Industries, Inc., a NYSE
listed company, in various capacities. From 1985 to 1990, Mr. Donohue served
as President of Oak Communications, Inc., a division of Oak Industries, Inc.
which manufactured communications equipment for the cable television industry.
From 1982 to 1985, he served as Vice President of Manufacturing overseeing up
to 6,000 manufacturing employees. From 1977 to 1982, Mr. Donohue served as
Vice President of Operations for the Oak Switch division of Oak Industries,
Inc.

CHARLES B. RADLOFF has been a director of the Company since March 1997. Mr.
Radloff has served as a business advisor and member of the board of directors
of DB Products, Inc. a privately owned company engaged in the design,
manufacture, and sale of electronic components for the communications and
aerospace industries. From 1987 to 1991, Mr. Radloff was President and Chief
Executive Officer of AKZO Electronic Materials Company, an electronics
manufacturer and wholly-owned subsidiary of AZKO, which is a Dutch multi-
national corporation with annual sales of approximately $12 billion. From 1965
to 1987, Mr. Radloff served in various executive positions with Oak
Industries, Inc., including his position as President and Chief Executive
Officer of Oak Communications and Chief Executive Officer of Oak Technology.
Mr. Radloff previously served on the board of directors of Comstream, Inc.

TASNEEM VAKHARIA has served as the Secretary of the Company since December
1996 and has been a Vice President of the Company since January 1997.  Ms.
Vakharia has been with Creative Host for over ten years, and has been
instrumental in managing the growth of the Company, administering the opening
of several new airport locations.  During those ten years, she has supervised
the administration, accounting, human resources and computer operations of the
Company.  Ms. Vakharia has a Master of Science degree in Management
Information Systems and a Bachelors Degree in Accounting and Finance.

SIGNIFICANT EMPLOYEES:

LOUIS COCCOLI, JR. serves as the President of the Company's wholly owned
subsidiary, GladCo Enterprises, Inc.  GladCo was acquired by the Company in
October 2000.  Prior to Creative Host's acquisition of GladCo, Mr. Coccoli
served as president of that company for the preceding seven years.  Before his
tenure at GladCo, Mr. Coccoli served as a Regional Vice President for th
Marriott Corporation and as Vice President of Galdieux Corporation.

Involvement in Certain Legal Proceedings:  No director or executive officer,
or person nominated or chosen to become a director or executive officer, was
involved in any legal proceeding requiring disclosure.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and each beneficial owner of more than ten percent of
the Common Stock of the Company, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission.  Officers, directors
and greater than ten-percent shareholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.

                                    -26-
<PAGE>

Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required to be filed, the Company believes that during fiscal 2001 all filing
requirements applicable to its officers, directors, and greater than ten-
percent beneficial owners were complied with.


Item 10.   Executive Compensation.

EXECUTIVE OFFICER COMPENSATION

Our compensation and benefits programs are designed to attract, retain and
motivate employees to operate and manage our business for the best interests
of our constituents.  We design executive compensation to provide incentives
for those senior members of management who bear responsibility for our goals
and achievements.  The compensation philosophy is based on a base salary, with
opportunity for significant bonuses to reward outstanding performance, and a
stock option program.  Our Compensation Committee is responsible for setting
base compensation, awarding bonuses and setting the number and terms of
options for the executive officers.  None of the current Committee members are
employees of the Company.  The Committee currently consists of Messrs. Donohue
and Graves.

The following table and notes provide information concerning compensation
awarded to, earned by or paid to the Chief Executive Officer of the Company
and to any other qualifying Executive Officers and employees who earned more
than $100,000 for all services rendered to the Company and its subsidiary for
fiscal years ended December 31, 2001, 2000 and 1999.

<TABLE>
<CAPTION>
                                SUMMARY COMPENSATION TABLE
                                                                        Long-Term
                                    Annual Compensation                Compensation
                                    -------------------                ------------
                                                                         Awards
                                                                         ------
                                                                       Securities
Name and Principal                                     Other Annual    Underlying
Position                  Year     Salary     Bonus    Compensation    Options/SARs
-------------------      ------   -------     ------   -------------   ------------
<S>                       <C>     <C>         <C>          <C>           <C>
Sayed Ali                 2001    $200,000    $30,000      $-0-               -
President and Chief       2000    $148,759    $15,000      $-0-          60,000(1)
Financial Officer         1999    $120,000    $15,000      $-0-          10,000(2)

Louis Coccoli, Jr.        2001    $160,000(3) $15,000      $-0-          10,000(4)
President;                2000    $150,000(3) $     -      $-0-          15,000(5)
GladCo Enterprises, Inc.
------------------------
</TABLE>

(1) Consists of 60,000 options granted to Mr. Ali under the Company's 1997
    Stock Option Plan to purchase 60,000 shares of the Company's common stock
    at an exercise price of $6.325 per share, which was 110% of the closing
    market price of the Company's common stock on the date of grant.  The
    options vest according to the following schedule: 20,000 on the date of
    grant, January 1, 2000; 20,000 on January 1, 2001; and 20,000 on January
    1, 2002.  The exercise period is five years from the date of grant.
    at an exercise price of $6.325 per share, which was 110% of the closing
    market price of the Company's common stock on the date of grant.  The
    options vest according to the following schedule: 20,000 on the date of
    grant, January 1, 2000; 20,000 on January 1, 2001; and 20,000 on January
    1, 2002.  The exercise period is five years from the date of grant.

                                    -27-
<PAGE>

(2) Consists of 10,000 options to purchase 10,000 shares of the Company's
    common stock at an exercise price of $1.02, which was 110% of the closing
    market price of the Company's common stock on the date of grant.  Those
    options vested on the date of grant and were exercised in 2000.

(3) Mr. Coccoli serves as President of the Company's subsidiary, GladCo
    Enterprises, Inc.  The Company acquired GladCo in October 2000.

(4) On October 29, 2001, Mr. Coccoli was granted 10,000 options to purchase
    10,000 shares of the Company's common stock at an exercise price of $1.05
    per share, which was the closing market price of the Company's common
    stock on the date of grant.  The options were vested on the date of grant
    and expire on October 29, 2006.

(5) As part of the acquisition of GladCo, Mr. Coccoli received warrants to
    purchase 15,000 shares of the Company's common stock at an exercise price
    of $4.75 per share.  The warrants expire on October 1, 2005.


The following table sets forth information concerning individual grants of
stock options made during the fiscal year ended December 31, 2001 to each of
the named executive officers.

<TABLE>
<CAPTION>
                  OPTION/SAR GRANTS IN LAST FISCAL YEAR
                          (Individual Grants)

                          Number of Secu-       Percent of Total
                         rities Underlying        Options/SARs
                           Options/SARs           Granted to         Exercise of
   Name                       Granted             Employees in        Base Price      Expiration
                                (#)                Fiscal Year          ($/Sh)            Date
--------------------     -----------------      ----------------     ------------      ----------
<S>                            <C>                   <C>              <C>              <C>
Louis Coccoli, Jr.(1)          10,000                25.0%            $1.05/Sh         10/29/06
--------------------
</TABLE>

(1) On October 29, 2001, Mr. Coccoli was granted 10,000 options to purchase
   10,000 shares of the Company's common stock at an exercise price of $1.05
   per share, which was the closing market price of the Company's common
   stock on the date of grant.  The options were vested on the date of grant
   and expire on October 29, 2006.


            AGGREGATE OPTIONS/SAR EXERCISES IN THE LAST FISCAL YEAR
                    AND FISCAL YEAR END OPTION/SAR VALUES


The following table contains information concerning each exercise of stock
options (or tandem SARs) and freestanding SARs during the last completed
fiscal year by each of the named executive officers and the fiscal year-end
value of unexercised options and SARs.
<TABLE>
<CAPTION
                                               Number of Securities
                    Shares                    Underlying Unexercised    Value of Unexercised
                    Acquired on    Value          Options/SARs as of      In-the-Money Options/
Name                Exercise      Realized       December 31, 2001      at December 31, 2001
----                -----------   --------  ------------------------   ----------------------
                                            Exercisable/Unexercisable  Exercisable/Unexercisable
                                            -------------------------  -------------------------
<S>                 <C>           <C>       <C>                             <C>
Sayed Ali                    -    $     -      105,000/20,000               $     0/0(1)

Louis Coccoli, Jr.           -    $     -       25,000/0(2)                 $ 2,000/0(1)
--------------
</TABLE>
(1) Based on the closing price of the Company's Common Stock on December 31,
    2001 of $1.25 per share.

(2) Includes 15,000 warrants and 10,000 options.

                                    -28-
<PAGE>

EMPLOYMENT AGREEMENTS

Sayed Ali, the Company's Chairman of the Board, President and Chief Financial
Officer, entered into an amended five-year employment agreement with the
Company which commenced effective January 1, 2000.  The employment agreement
provides for an annual salary for Mr. Ali of $175,000 in 2000, $200,000 in
2001, $225,000 in 2002, $248,000 in 2003 and $275,000 in 2004.  The agreement
provides that upon the mutual termination of employment, Mr. Ali will be
entitled to a severance payment equal to his base annual compensation during
the fifth year of the agreement. For any other termination, except for cause
on the part of the Company, Mr. Ali would be entitled to receive a lump sum
payment equal to the annual compensation, and any accrued but unpaid bonus,
due through the end of the agreement. Mr. Ali was also granted 60,000 stock
options under the Company's 1997 Stock Option Plan, vesting 20,000 upon grant,
20,000 in January 2001 and 20,000 in January 2002.  The exercise price is 110%
of the fair market value of the stock on the date of grant, and the exercise
period is five years from the date of grant.  Mr. Ali is also eligible to
receive annual cash bonuses as well as additional option grants at the
discretion of the Board of Directors.

For his services as President of GladCo, Louis Coccoli, Jr. also has an
employment contract with Creative Host.  The term of the agreement is from the
closing date of the acquisition of GladCo on October 1, 2000 until August 21,
2005.  The agreement provides for $150,000 in base annual salary with cost of
living increases and such merit raises as may be approved by the Board of
Directors. Mr. Coccoli is also eligible to receive annual cash bonuses as well
as option grants at the discretion of the Board of Directors. If the agreement
is terminated by Creative Host, not for cause, or Mr. Coccoli terminates for
good reason as defined in the agreement, Mr. Coccoli is entitled to receive
termination payments consisting of his remaining base salary, measured from
the highest annual level, for the remainder of the agreement.

DIRECTOR COMPENSATION

Directors receive no cash compensation for their services to the Company as
directors, but are reimbursed for expenses actually incurred in connection
with attending meetings of the Board of Directors. In addition, each outside
director is entitled to receive options as approved by the Board of Directors
under our 1997 Stock Option Plan and 2001 stock Option Plan.

STOCK OPTION PLAN

In January 2001, the Company's Board or Directors adopted the 2001 Stock
Option Plan for the Company's directors, executive officers, employees
and key consultants, which was ratified by the Company's shareholders in 2001.
Under the 2001 plan, a total of 450,000 shares are reserved for potential
issuance upon the exercise of up to 450,000 stock options that may be granted
under the plan. A total of 200,000 stock options have been granted under the
2001 plan to certain of our directors.  The Company expects to grant stock
options under the plan to directors, executive officers and other qualified
recipients in 2002 and in future years.
                                    -29-
<PAGE>



Item 11.    Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information known to the Company as of
December 16, 2002 with respect to the beneficial ownership of the Company's
Common Stock as of December 16, 2002 by (i) each person known by the Company
to own beneficially more than 5% of the Company's Common Stock, (ii) each of
the Company's directors and executive officers, and (iii) all officers and
directors of the Company as a group.


Name and Address of                 Amount and Nature            Percent of
Beneficial Owner(1)                of Beneficial Owner(2)         Class (3)
-------------------                ----------------------        ----------
John Stewart Jackson, IV                2,803,898(4)                 34.4%
c/o Jackson Burglar Alarm
100 East 20th Avenue
Denver, CO 80205-3102

Officers and Directors:
Sayed Ali                               1,045,000(5)                 12.9%
John P. Donohue                            90,000(6)                  1.1%
Booker T. Graves                           77,800(7)                  1.0%
Charles B. Radloff                         35,000(8)                  0.4%
Tasneem Vakharia                           80,000(9)                  1.0%
Louis Coccoli, Jr.                         59,944(10)                 0.7%

All officers and directors              1,387,744                    16.5%
  as a group (6 persons)

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

(1) The address of each of the directors and executive officers is c/o
    Creative Host Services, Inc., 16955 Via Del Campo, Suite 110, San Diego,
    California 92127

(2) Unless otherwise indicated, and subject to applicable community property
    laws, each person has sole voting and investment power with respect to
    the shares beneficially owned. Beneficial ownership is determined in
    accordance with the rules of the Securities and Exchange Commission and
    generally includes voting or investment power with respect to securities.

(3) Based on 8,006,210 shares of Common Stock outstanding as of December 16,
    2002. Shares of common stock subject to options and warrants
    currently exercisable or convertible, or exercisable or convertible
    within 60 days are deemed outstanding for computing the percentage of the
    person holding such option or warrant but are not deemed outstanding for
    computing the percentage of any other person. Does not include 1,431,107
    shares which could be issued upon the exercise of outstanding warrants and
    900,000 shares which could be issued upon the conversion of long-term
    debt.

(4) Of this amount (i) 2,614,513 shares are owned by Mr. Jackson, (ii) 10,000
    shares are beneficially owned through his spouse, (iii) 18,435 shares are
    beneficially owned through a family foundation, (iv) 970 shares are
    beneficially owned by Mr. Jackson through four separate trusts for his
    minor children pursuant  to the Uniform Minors Trust Act, (v) 400 shares
    are beneficially owned by Gregory Development, Inc., a real estate
    holding company which is controlled by Mr. Jackson, (vi) 18,350 shares
    are owned jointly with three daughters, and (vii) 70,501 shares and
    70,729 shares are beneficially owned through two separate warrants

                                    -30-
<PAGE>

    with  exercise prices of $13.20 and $8.32  per  share, respectively,
    which were issued as a dividend by Creative Host to the foregoing persons
    and entities.

(5) Includes 105,000 shares which Mr. Ali has the right to acquire upon
    the exercise of options issued under our 1997 Stock Option Plan and 15,000
    shares upon the exercise of vested options issued in 2002 under our 2001
    Stock Option Plan.  Does not include 20,000 shares for options which do
    not vest until January 1, 2004.  Other than his options, Mr. Ali's shares
    are held in two family trusts over which he has voting control.

(6) Includes 15,000 shares which Mr. Donohue has the right to acquire
    upon exercise of options issued under our 1997 Stock Option Plan and
    50,000 shares upon the exercise of vested options issued under our 2001
    Stock Option Plan.  Does not include 25,000 shares for options which are
    not vested.

(7) Includes 20,000 shares which Mr. Graves has the right to acquire
    upon exercise of options issued under our 1997 Stock Option Plan, and
    50,000 shares upon the exercise of vested options issued under our 2001
    Stock Option Plan.  Does not include 25,000 shares for options which are
    not vested.

(8) Includes 35,000 shares which Mr. Radloff has the right to acquire upon
    exercise of vested options issued under our 2001 Stock Option Plan. Does
    not include 25,000 shares for options which are not vested.

(9) Includes 35,000 shares which Ms. Vakharia has the right to acquire
    upon exercise of options issued under our 1997 Stock Option Plan and
    35,000 shares upon the exercise of vested options issued under our 2001
    Stock Option Plan.

(10)Includes 15,000 shares which Mr. Coccoli has the right to acquire through
    the exercise of warrants and 15,000 shares which he has the right to
    acquire upon the exercise of options.


There are no arrangements which may result in a change in control of Creative
Host.


Item 12. Certain Relationships and Related Transactions

None.

                                    -31-
<PAGE>


Item 13.  Exhibits and Reports on Form 8-K

(a) Listing of Exhibits by Table Number
    -----------------------------------

Exhibit No.                      Description
----------                       -----------

   3.1        Amended and Restated Articles of Incorporation*

   3.2        Bylaws*

   4.1        Specimen Certificate for Common Stock*

   4.3        Warrant Agreement (including form of Warrant
              Certificate)*

   4.4        The Company's 2001 Stock Option Plan for Directors,
              Executive Officers, Employees and Key Consultants*

   10.1       1997 Stock Option Plan*

   10.2       Employment Agreement between the Company and Sayed Ali*

   10.3       Lease Space In The Cedar Rapids Municipal Airport Terminal For
              The Purpose of Operating Food/Beverage, News/Gift, And Airline
              Catering Concessions dated as of September 16, 1996 between the
              Company and Cedar Rapids Airport Commission.*

   10.4       Food And Beverage Concession Agreement And Lease dated as of
              October 4, 1996 between the Company and Richland-Lexington
              Airport District.*

   10.5       Agreement between the Company and Delta Airlines.*

   10.6       Concession And Lease Agreement dated as of May 24,
              1996 between the Company and Lehigh-Northhampton
              Airport Authority.*

   10.7       Food And Beverage Concession Agreement And Lease
              Bluegrass Airport between the Company and Lexington-
              Fayette Urban County Airport Board.*

   10.8       Food And Beverage Concession Agreement dated as of
              July 26, 1995 between the Company and Outagamie
              County.*

   10.9       Food And Beverage Lease And Concession Agreement dated
              as of May 17, 1996 between the Company and Roanoke
              Regional Airport Commission.*

   10.10      Food And Beverage Concession Agreement dated as of October 24,
              1995 between the Company and the County of Dane.*

   10.11      Food And Beverage Concession Lease Agreement dated as of June
              10, 1994 between the Company and the Port of Portland.*

   10.12      Concession Agreement dated as of March 25, 1995
              between the Company and City of Los Angeles.*

                                    -32-
<PAGE>



   10.13      License And Use Agreement Food/Beverage Service Aspen/Pitkin
              County Airport 1994 Through 1999 dated as of April 1994 between
              the Company and Board of County Commissions of Pitkin County
              Colorado.*

   10.14      Food Court Agreement dated as of November 14, 1996 between the
              Company and City and County of Denver.*

   10.15      Agreement between the Company and the City and County of Denver
              as of November 19, 1996.*

   10.16      Agreement dated as of February 8, 1996 between the Company and
              the County of Orange.*

   10.17      Concession Agreement for Food and Beverage Operations at the Des
              Moines International Airport between the Company and the City of
              Des Moines, Iowa dated as of June 2, 1997.**

   10.18      Concession Agreement between the City of Los Angles Department
              of Airports and the Company Covering the Operation and
              Management of the Food and Beverage Package #3 Concession at
              Ontario International Airport.**

   10.19      Concession Agreement and Lease between the Piedmont Triad
              Airport Authority and the Company.**

   10.20      Form of Franchise Agreement.*

   10.21      TCBY Franchise Agreement dated October 29, 1996 between TCBY
              Systems, Inc., and St. Clair Development Corporation.*

   10.22      Industrial Real Estate Lease between the Company and
              WHPX-S Real Estate Limited Partnership.*

   10.23      Employment Agreement between the Company and Sayed Ale, Dated
              January 1, 2000.***

   10.24      Purchase Agreement between Creative Host Services, Inc. and
              Edwin L. Klett, Louis Coccoli, Jr., Herbert H. Gill and the
              Virgil Gladieux marital Trust dated as of September 28,
              2000.****

   10.25      Securities Purchase Agreement, dated as of September 26, 2000,
              between Creative Host Services, Inc. and GCA Strategic
              Investment Fund Limited.****

   10.26      Convertible Debenture, dated as of September 26,2000, issued by
              Creative Host Services, Inc. to GCA Strategic Investment Fund
              Limited.****

   10.27      Warrant, dated as of September 26,2000, issued by Creative Host
              Services, Inc. to GCA Strategic Investment Fund Limited.****

   10.28      Registration Rights Agreement, dated as of September 26,2000,
              between Creative Host Services, Inc. and GCA Strategic
              Investment Fund Limited.****

                                    -33-
<PAGE>

   10.29      Escrow Agreement, dated as of September 26, 2000, between
              Creative Host Services, Inc. and GCA Strategic Investment Fund
              Limited and the Law Offices of Kim T. Stephens.****

   10.30      Sysco Corporation Master Distribution Agreement dated January 3,
              2000.*****

   10.31      Form of Convertible Promissory Note dated January 29, 2002 and
              due December 31, 2006******

   10.32      Form of Purchase Warrant Agreement for shares exercisable at
              $2.00 per share.******

   21         Subsidiaries: GladCo Enterprises, Inc. (Incorporated in
              Pennsylvania on July 27, 1990).

   23.1      Consent of Independent Auditors

   99.1      Certification Pursuant to 18 U.S.C. Section 1350 as Adopted
             Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
----------

* Incorporated by reference from the exhibits included with the Company's
Registration Statement (No. 333-6722) on Form SB-2 filed with the SEC on April
3, 1997.

**Incorporated by reference from the exhibits included with the Company's
Annual Report (No. 000-22845) on Form 10-KSB filed with the SEC on March 31,
1998.

***Incorporated by reference from the exhibits included in the Company's Form
S-3 Registration Statement filed with the SEC on March 13, 2000.

****Incorporated by reference from the exhibits included in the Company's Form
8-K filed with the SEC on October 9, 2000.

*****Incorporated by reference from the exhibits included in the Company's
Form 10KSB/A filed with the SEC on October 16, 2001.

****** Incorporated by reference from the exhibits included in the Company's
Form SB-2 filed with the SEC on May 1, 2002


(b)  Reports on Form 8-K
     -------------------

The following is a list of Current Reports on Form 8-K filed by the
Company during the last quarter of the fiscal year ended
December 31, 2001.

       Report on Form 8-K, dated October 16, 2001, relating to the
       acquisition of GladCo Enterprises, Inc.


                                    -34-
<PAGE>



                               SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                            CREATIVE HOST SERVICES, INC.
                                                    (Registrant)

Date: December 30, 2002                   by /s/ Sayed Ali
                                             ----------------------------
                                             Sayed Ali, President and
                                             Chief Financial Officer

Date: December 30, 2002                   by  /s/ Paul Glasgo
                                              ----------------------
                                              Paul Glasgo, Controller,
                                              (Principal Accounting
                                               Officer)


Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.


Date: December 30, 2002                    /s/ Sayed Ali
                                           ----------------------------------
                                           Sayed Ali, Director and Chairman


Date: December 30, 2002                    /s/ Booker T. Graves
                                           ----------------------------------
                                           Booker T. Graves, Director


Date: December 30, 2002                    /s/ John P. Donohue, Jr.
                                           ----------------------------------
                                           John P. Donohue, Jr., Director


Date: December 30, 2002                   /s/ Charles B. Radloff
                                          -----------------------------------
                                          Charles B. Radloff, Director

                                    -35-
<PAGE>


CERTIFICATION:

I, Sayed Ali, certify that:

1.  I have reviewed this amendment to the annual report on Form 10-KSB/A of
Creative Host Services, Inc.;

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

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


Date:  December 30, 2002                        /s/ Sayed Ali
                                                   ----------------------
                                                  Sayed Ali, President,
                                                  Chief Executive Officer
                                                  and Chief Financial Officer


_____________________________________________________________________________


CERTIFICATION:


I, Paul Glasgo, certify that:

1.  I have reviewed this amendment to the annual report on Form 10-KSB/A of
Creative Host Services, Inc.;

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

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


Date:  December 30, 2002                       /s/ Paul Glasgo
                                                  ----------------------
                                                  Paul Glasgo, Controller,
                                                 (Principal Accounting
                                                  Officer)


                                    -36-
<PAGE>

                                                              EXHIBIT 23.1



CONSENT OF INDEPENDENT AUDITORS



Board of Directors
Creative Host Services, Inc.
San Diego, California

We consent to the incorporation by reference in the registration statement of
Creative Host Services, Inc. on Form S-8 (File No. 333-90630) of our Independent
Auditors' Report dated March 16, 2002, except for Notes (1) and (6) as to which
the date is November 7, 2002, on our audits of the consolidated balance sheet
of Creative Host Services, Inc. and Subsidiaries as of December 31, 2001, and
the related consolidated statements of operations, shareholders' equity and
cash flows for each of the years ended December 31, 2001 and 2000, which report
is included in this Annual Report on Form 10-KSB/A.



/S/ Stonefield Josephson, Inc.

CERTIFIED PUBLIC ACCOUNTANTS


Santa Monica, California
December 31, 2002