SECURITIES AND EXCHANGE COMMISSION
                      WASHINGTON, D.C. 20549

                           FORM 10-KSB
(Mark One)
[X]     Annual report under Section 13 or 15(d) of the Securities Exchange Act
        of 1934

           FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001
                                or

[ ]     Transition report under Section 13 or 15(d) of the Securities Exchange
        Act of 1934

         FOR THE TRANSITION PERIOD FROM ______________ TO _______________

                 COMMISSION FILE NUMBER  0-27591
                                         -------

      ENGLISH LANGUAGE LEARNING AND INSTRUCTION SYSTEM, INC.
      -----------------------------------------------------
          (Name of Small Business Issuer in Its Charter)

                        POLITICS.COM, INC.
              -------------------------------------
             (Former name of Small Business Issuer)

         DELAWARE                                   33-0836078
       ----------------                           ---------------
(State or Other Jurisdiction                      (IRS Employer
of Organization)                                  Identification Number)


   3520 North University Avenue, Suite 275, Provo, UT    84604
-----------------------------------------------------------------
         (Address of Principal Executive Offices)            (Zip Code)

                          (801) 374-3424
     -------------------------------------------------------
         (Issuer's Telephone Number, Including Area Code)

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

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


                 COMMON STOCK, PAR VALUE $.00001
                 -------------------------------
                         (Title of Class)


                 -------------------------------
                         (Title of Class)


<PAGE> 1

     Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days. YES [X] NO [ ]

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

     The issuer had revenues of $7,305,408 for its fiscal year ended December
31, 2001.

     The aggregate market value of the common stock, $.00001 par value, of
the registrant held by non-affiliates (computed by reference to the closing
price of the issuer's common stock on the NASD's OTC Bulletin Board on April
3, 2001) was approximately $4,330,542.

     As of April 3, 2002, there were 14,762,221 outstanding shares of the
issuer's common stock, $.00001 par value.

<PAGE> 2


                              PART I

ITEM 1.  DESCRIPTION OF BUSINESS

GENERAL

      English Language Learning and Instruction System, Inc., a Delaware
corporation (the "Company"), is a software development and marketing company
based in Provo, Utah.  The Company=s business is developing and marketing
computer software programs and supporting written materials to teach the
English language.

      The Company's signature product is "ELLIS" (English Language Learning
and Instruction System), a series of 20 interactive multi-media software
programs designed to teach English students of all ages.  ELLIS combines text,
translation, full-motion video and digitized sound, graphics and animation
into a virtual language learning experience for learners of all proficiency
levels and native speakers of fifty-eight (58) languages.  ELLIS is designed
to be effective in all teaching of English as a Second Language ("ESL"),
English as a Foreign Language ("EFL"), Limited English Proficient ("LEP"), the
English component of bilingual education, and English literacy programs.

      All ELLIS components commence with high-quality video dialogues
featuring native English speakers.  The dialogues allow for and encourage
student interaction and participation in the lesson (for example,
role-playing, voice recording and pronunciation comparison).  Students may
adjust the speed of the dialogue, isolate phrases to clarify pronunciation,
compare their own speech with the native speakers', or research vocabulary,
grammar and cultural primers B all without leaving the lesson.  The dialogues
lead to interactive online exercises, and eventually to written exercises in
companion workbooks.  ELLIS contains several thousand hours of instruction
and, because of its ability to recognize and process a wide range of student
responses, a virtually infinite number of personalized student responses and
learning situations.  ELLIS programs operate on Windows, Windows XP, Windows
NT, Macintosh, and UNIX platforms.  Users access programs either by inserting
a CD into their PC or through a network.  The Company owns all proprietary and
worldwide distribution rights to ELLIS.  The Company does not anticipate
incorporating any software or other technology that would diminish the
Company's position in ELLIS.

      The most popular suite of ELLIS programs is the ELLIS Academic Suite,
which includes three lesson-based applications (ELLIS Intro, ELLIS Middle
Mastery and ELLIS Senior Mastery) with over 1,000 hours of interactive English
instruction.  The Academic Suite also includes ELLIS Master Pronunciation and
ELLIS Placement, an adaptive testing component that identifies an individual
learner's needs.  Additionally, the Company offers the ELLIS Business Series,
which consists of five programs offering English training for learners in
virtually any industry or level of English proficiency.

      During 2000 and 2001, the Company spent $505,929 and $986,768
respectively on research and development.  None of these costs were born
directly by customers.

<PAGE> 3

THE MARKET OPPORTUNITY

      English has become the standard language of business, technology,
medicine, banking, travel, diplomacy and higher education around the world.
English is studied as a first or second language in over 75 countries.
Billions of dollars are spent every year to teach and learn English.  By way
of example, over 450 million Chinese are currently studying English, according
to the Council Exchange for Teaching in China.

      The 2000 United States census reported that over 52 million Americans do
not speak English as their first language or are pre-literate.  This segment
grew 250% more than the overall population since 1980.  On January 7, 2002,
President Bush signed a new education bill authorizing $3 billion specifically
geared toward ESL, bilingual, and literacy programs, representing a 49%
increase over 2001 spending.

      The Company's management estimates that the education technology market
in the U.S. is $7.5 billion for 2001.  The education technology market grew
13.6% from 1991 to 2000 and the instructional software market is anticipating
growth of 22% between 2001 and 2004, reaching $3.3 billion by 2004, according
to Simba Information Inc., Education Market Research, U.S. Bancorp Piper
Jaffray.

      As the need for English continues to grow, the Company's management
believes that institutions will continue to look to technology and away from
more traditional textbook driven methods to accommodate increased enrollment.
The Company believes that it has established a reputation for product
excellence and effectiveness in the U.S. market over the past decade and is
developing a comparable market presence internationally.

PRODUCTS

      The Company exclusively develops, publishes, distributes, and supports
the ELLIS line of software, manuals and services.  All content within the
ELLIS offerings is owned by the Company.  The Company constantly updates its
current product line and releases new programs regularly based on growing
opportunities.  ELLIS multimedia English language training software provides
instruction for corporate and institutional learners at all levels and ages.
The ELLIS curriculum features full-motion video, native language support in
over 60 languages, interactive role-playing, culture notes, grammar sentence
structure, communication skills, pronunciation, testing, complete management
system and more.  ELLIS is broadly sub-divided into ELLIS Academic, ELLIS Kids
and ELLIS Business.

<PAGE> 4

      ELLIS Academic

      The ELLIS Academic suite is a compilation of five core products that
take the learner from introductory levels to fluency and everything in
between.  With over a thousand hours of instruction, ELLIS Academic provides a
virtual language experience for learners at all levels. Academic products are
available in American, British, and Canadian versions.  Academic programs are
complimented with instructor guides and student workbooks.

      ELLIS Kids

      ELLIS Kids offers three programs designed especially to concentrate on
the needs, interests and language development requirements of younger children
learning English, regardless of their native language.  ELLIS Kids provides
instruction for children grades Kindergarten through 8 at three levels of
language proficiency: absolute beginner, beginner, and low intermediate
learner.  ELLIS Kids programs are complimented with instructor guides and
student workbooks.

      "Kids Essentials" released in February 2002, provides a basic foundation
for learners who have no English proficiency or are pre-literate.  Kids
Essentials uses animated songs followed by native-language supported
instruction to teach oral vocabulary and alphabet skills, including phonemic
awareness through a "Watch-Learn-Practice-Play" sequence.

      Levels One and Two provide the building blocks for beginning and low
intermediate learners using video stories to introduce tutorials.  Level One
focuses on proficiency and develops listening and speaking skills through
integrated lessons in vocabulary, listening, grammar, pronunciation, and
communication.  Level Two focuses on further development of the students'
listening and speaking skills.

      Ellis Business

      The ELLIS Business Series is comprised of five programs and uses all of
the learning and teaching features present in the ELLIS Academic Suite.  It
contains over 700 hours of instruction.  Major theme and context areas
include: airport, ground transportation, hotel, food, office social skills,
greetings, farewells, telephone skills, negotiations and contracts.  ELLIS
Business programs are complimented with instructor guides and student
workbooks.

      ELLIS software has consistently received high praise in all areas for
its quality, content and effectiveness.  Technology and Learning Magazine has
awarded ELLIS Intro, ELLIS Business, and ELLIS Kids with its Software Award of
Excellence in each of the past three years.  The editors of Computer Gazette
selected ELLIS Intro and ELLIS Kids as winners of the Fifth Annual "EDDIES"
Education Software Review Awards.

<PAGE> 5

      The complete line of ELLIS products has been developed fully by the
Company and the Company is the sole owner of the ELLIS software.

SALES METHODS

      ELLIS is sold to institutional customers servicing LEP school children
and adults including: public schools and adult education centers that have a
responsibility to teach English; (2) private schools, language schools, test
preparation schools and universities that make money teaching English; and (3)
companies that want to save money by teaching English to their employees to
maximize productivity.

      The Company sells much of its product through dealers who work as
independent contractors.  These dealers work in the United States and Canada
and have an average of ten years experience selling ELLIS or other English
training products.

      In 2001 the Company began hiring direct sales agents.  As of April 3,
2002, the Company has direct sales efforts and operations in the Washington
D.C. area, New Jersey, Arizona, Seattle/Vancouver, Brazil, Mexico, China,
Ecuador, Chile, and Spain.

      The Company also has distribution agreements with companies in Japan,
Korea, Singapore, Malaysia, Indonesia, Thailand, Brunei, France, United Arab
Emirates, England, Scotland, Wales, and Saudi Arabia.  All distributor
partners are entrenched in their respective markets and are managed by
regional directors at the Company.

INTELLECTUAL PROPERTY

      The Company has engaged counsel and is involved in early discussions
regarding the feasibility of seeking patent protection over certain aspects of
the ELLIS technology.

      The Company has acquired trademark protection for the English Language
Learning and Instruction System (ELLIS) name, and for both of the ELLIS Middle
Mastery and ELLIS Senior Mastery products.  It has acquired registered
trademark protection for ELLIS Master Pronunciation, and is seeking trademarks
for the ELLIS Intro, ELLIS Placement, the ELLIS Business Series, and ELLIS
Kids products.

      None of the ELLIS products uses or depends on a third-party intellectual
property which would limit the Company's rights to the products, and the
Company is not required to pay any license or other fees to third parties for
the distribution of the ELLIS products.  The Company does not anticipate
requiring the incorporation of any software or technologies that would
diminish its proprietary position with regard to the ELLIS products.  All of
the Company's employees and contractors are required to sign appropriate
confidentiality and non-disclosure agreements on commencement of employment,
and are also required to assign all rights or ownership resulting from their
work on the ELLIS products to the Company.  No present or former staff has any
property rights to the ELLIS products.

<PAGE> 6

HISTORY

      English Language Learning and Instruction System, Inc., a Delaware
corporation (the "Company"), was formed in January 1997 under the name Lone
Oak, Inc. Lone Oak, Inc. is the successor-by-merger of B&E Securities
Management, Inc., a Maryland corporation incorporated in January 1969.  The
merger with B&E Securities Management Company, Inc. was accomplished through a
stock for stock transaction in which all the common shares of B&E were
cancelled and Lone Oak, Inc. common shares were issued.  The transaction was
accounted for as a reverse merger (recapitalization).

      B&E Securities Management, Inc. was inactive from around 1971 until its
merger with and into Lone Oak, Inc. in February 1997.  Lone Oak, Inc. had no
significant operations since its inception until July 1999.  In April 1999,
Lone Oak, Inc. sold its wholly-owned subsidiary, D&E Flight Simulators, Inc.
for $5,000.  D&E Flight Simulators, Inc. was a flight simulator equipment
developer which was acquired by B&E Securities Management Company, Inc. on
January 12, 1998.  On July 27, 1999, Lone Oak, Inc. acquired all of the issued
and outstanding shares of common stock of Politics.com, Inc., a Nevada
corporation ("Politics.com-Nevada") (following which Lone Oak, Inc. changed
its name to Politics.com, Inc.).  The transaction was accounted for as a
reverse acquisition, with Politics-Nevada being the acquirer and Lone Oak the
acquired Company.

      Politics.com was a development stage Internet company intending to be a
global Internet media company, offering a branded network of information,
communication, entertainment, community, and commerce services with a common
theme of politics.

      On January 31, 2001, a special meeting of the shareholders of
Politics.com, Inc. was held in Tempe, Arizona.  The shareholders of
Politics.com, Inc. (i) approved the spin off of its ownership interest in New
Politics.com, Inc., a Nevada corporation ("New Poco"), to Politics.com, Inc.'s
shareholders of record as of January 5, 2001 (the "Spin Off"); (ii) approved a
one for ten reverse split of its common stock (the "Reverse Split"); (iii)
approved an Agreement and Plan of Reorganization (the "Reorganization
Agreement") between Politics.com, Inc. and Computer Assisted Learning and
Instruction, Inc., a Utah corporation ("CALI"), whereby CALI was merged with
and into Politics.com, Inc. and Politics.com, Inc. changed its name to English
Language Learning and Instruction System, Inc. ("ELLIS") and the shareholders
of CALI received 11,550,000 post Reverse Split shares of ELLIS; and (iv)
elected Francis R. Otto, Timothy D. Otto, Kimber B. Jensen, and Janet M. Otto
to the Board of Directors. At the time of the Reorganization, CALI had a total
of five shareholders.

COMPETITORS AND COMPETITIVE FACTORS AFFECTING OUR BUSINESS

      While the Company knows of no competitors that currently offer
interactive English training software of the same caliber as ELLIS, the
Company will compete in its market with numerous other businesses that provide
similar products.  These products cost less than ELLIS, and these products are
often the primary ESL option for individual users or institutions that do not
have the resources to afford the ELLIS line of products or necessary companion

<PAGE> 7

software.  The Company's focus on targeting ELLIS toward institutional, rather
than individual purchasers makes it possible for a competitor to establish
itself at the simplest level by merely offering ESL software priced for the
individual learner.  Additionally, ELLIS will compete within the institutional
market with more traditional English instructional methods such as textbooks
and audiotapes.  While the Company's management feels that ELLIS is superior
to more traditional instructional methods and even other ESL software
currently available, management further realizes that ELLIS' pricing structure
prevents its introduction to the personal ESL learner market on a significant
scale.  Though the Company believes that the institutions and agencies to
which it typically sells ELLIS will generally select ELLIS over other ESL
applications to service their constituencies' English instructional needs, the
Company has no control over the purchase decisions that these institutions,
agencies or individual learners might make relative to their ESL software
needs, real or perceived.  In short, the Company cannot assume that
prospective purchasers will always pay more money for a superior product.  The
Company believes that its ability to compete effectively in the marketplace
will be enhanced by the experience of its management personnel, ELLIS'
superior quality and effectiveness, and its ability to offer a wide range of
services to its potential customers.  There can be no assurance, however, if
one or more of its competitors with greater financial resources than presently
possessed by the Company will not offer additional services to its customers
at rates equal to or more favorable than those offered by the Company.

GOVERNMENT REGULATION

      The Company is not currently subject to direct regulation by any
governmental agency, other than regulations applicable to businesses
generally.  However, it is possible that a number of laws and regulations may
be adopted with respect to the Internet and e-commerce, covering issues such
as user privacy, pricing and characteristics and quality of products and
services.  The Company cannot predict the impact, if any, that future
regulation or regulatory changes may have on its business.

EMPLOYEES

      As of  April 2, 2002, the Company had 68 employees, of which 56 were
full-time and 12 were part-time.


ITEM 2.  DESCRIPTION OF PROPERTY.

      The Company currently rents approximately 9,868 square feet of office
space at a total cost of $11,831 per month for its principal executive offices
located at 3520 North University Avenue, Suite 275, Provo, Utah 84604.  These
leases all expire in January 2003.  The Company believes that its properties
are in good condition and satisfactory for its operations.

<PAGE> 8


ITEM 3.  LEGAL PROCEEDINGS.

       The Company is not currently a party to any material legal proceedings.


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

      On January 31, 2001, a special meeting of the shareholders of
Politics.com, Inc. approved the following matters: (1) a spin off of
Politics.com, Inc.'s ownership interest in New Politics.com, Inc. to the
shareholders of Politics.com, Inc. as of January 5, 2001; (2) a one for ten
reverse stock split of the common stock of Politics.com, Inc. as of January
31, 2001; (3) the merger of Computer Assisted Learning and Instruction, Inc.
and Politics.com, Inc. with Politics.com, Inc. being the surviving entity and
changing its name to English Language Learning and Instruction System, Inc.
All of the above matters were approved by the Company's shareholders with
9,604,379 votes in favor of each of the above matters out of a total of
12,010,180 shares outstanding as of January 31, 2001.  There were no opposing
or withheld votes and no abstentions.


                             PART II

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

      MARKET INFORMATION.  The Company's common stock is quoted on the NASD's
OTC Bulletin Board.  The following table sets forth, for the periods
indicated, the high and low quotations for the Company's common stock, as
reported on the OTC Bulletin Board. The over-the-counter market quotations
below reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not necessarily represent actual transactions.  All
quotations reflect the one for fifteen reverse stock split that was effected
on March 26, 1999 and the one for ten reverse stock split that was effected on
January 31, 2001.

                             High          Low
                           ---------     --------
2000
-----
First Quarter              $ 52.50       $ 16.25
Second Quarter             $ 23.75       $  3.75
Third Quarter              $ 19.375      $  1.875
Fourth Quarter             $  5.00       $  0.40

2001
----
First Quarter              $  5.00       $  1.20
Second Quarter             $  4.50       $  1.40
Third Quarter              $  4.45       $  2.15
Fourth Quarter             $  3.00       $  1.70

2002
----
First Quarter              $  2.00       $  1.01
Second Quarter
 (through April 3, 2002)   $  1.21       $  1.14

<PAGE> 9

      HOLDERS. As of April 3, 2002, there were approximately 172 holders of
record of the Company's common stock.

      DIVIDENDS.  The Company has never declared or paid any dividends on its
common stock and does not intend to pay any dividends in the foreseeable
future.  The Company anticipates that it will retain any earnings to finance
the growth and development of its business and for general corporate purposes.

PREFERRED STOCK
---------------

      HOLDERS.  As of April 3, 2002 there were two holders of record of the
Company's Series A Convertible Preferred Stock (the "Preferred Stock").

      DIVIDENDS.  The Company has never declared or paid any dividends on its
Preferred Stock and does not intend to pay any dividends in the foreseeable
future.  The Company anticipates that it will retain any earnings to finance
the growth and development of its business and for general corporate purposes.
The Preferred Stock is entitled to receive dividends at a rate of 12% per
annum as declared by the Company's Board of Directors or in the event of a
liquidation of the Company.

      VOTING.  The Preferred Stock votes together with the common stock and
not as a separate class with each share of Preferred Stock having a number of
votes equal to the number of shares of common stock issuable upon conversion
into common stock (a one for one basis).  Notwithstanding the foregoing, the
Preferred Stock is entitled to vote as a separate class in the election of one
member of the Company's Board of Directors.

      CONVERSION.  Each share of Preferred Stock is convertible at any time at
the option of the holder into one share of common stock, subject to adjustment
for any stock splits, stock dividends and other pro rata issuances of the
Company's securities.  In addition, the conversion ratio shall be adjusted in
the event that the Company issues any securities at a price below $3.00 per
share, as adjusted for stock splits.

      At any time on or after September 20, 2002, the Company may force the
Preferred Stock to convert into shares of common stock in the event that the
Company has an appropriate registration statement covering the Preferred Stock
on file with the Securities and Exchange Commission, and either the Company's
common stock has traded at an average of more than $8.00 per share for the
preceding 45 trading days or the Company has completed a public underwriting
with proceeds of more than $15,000,000 to the Company.

      LIQUIDATION.  Upon a liquidation, dissolution, winding-up, merger or
consolidation of the Company or a sale of all or substantially all of the
Company's assets, the Preferred Stock shall, at their sole discretion, receive
prior and in preference to the holders of common stock and any other equity
securities of the Company an amount equal to the purchase price paid for the
shares of Preferred Stock plus all accrued and unpaid dividends.

<PAGE> 10

REGISTRATION RIGHTS
-------------------

      Certain of the Company's shareholders have registration rights relating
to their shares.  These agreements are described below.

      Any holder or group of holders receiving their shares from either Camden
Partners Strategic Fund II-A, L.P. or Camden Partners Strategic Fund II-B,
L.P. (collectively "Camden"), may, at any time after September 20, 2002,
request registration of their shares by the Company, provided that such holder
or group represents at least 25% of the securities purchased by Camden from
the Company.

      The Company also agreed to cause a "shelf" registration to become
effective on or before March 20, 2002 covering the shares purchased by Camden
from the Company.  The Company fulfilled this obligation by filing a
registration statement on Form S-3 with the Securities and Exchange Commission
on March 11, 2002, registering an additional 1,138,555 shares of the Company's
common stock as well as the 1,000,000 shares of the Company's Series A
Convertible Preferred Stock stock purchased by the Camden purchasers described
above. Sales by such shareholders under such Form S-3 will be restricted in
the manners described above.

      In addition, holders of Preferred Stock have the right to (a) two demand
registrations with minimum gross proceeds of $2,000,000 each; (b) unlimited
registrations on Form S-3 with minimum gross proceeds of $500,000 (limited to
one per six month period); and (c) unlimited "piggy-back" registration rights
(subject to certain limitations at the discretion of the Company's
underwriters).

      The Company has also filed an additional registration statement on Form
S-3 to register a total of 3,107,741 shares of the Company's common stock with
the SEC.  The SEC has indicated to the Company that it has no further comment
with respect to the Form S-3 and the Company will file an amendment thereto to
render the Form S-3 effective at such time as the Company has received
indication from the SEC that the SEC has no further comment on the Company's
periodic filings that are currently being reviewed by the SEC.

RECENT SALES OF UNREGISTERED SECURITIES
---------------------------------------

      The following sales of unregistered securities have been restated to
give effect to the one for fifteen reverse stock split effective on March 26,
1999 and the one for ten reverse stock split effective on January 31, 2001.

      In March 2000, the Company sold 50,000 shares of common stock for an
aggregate purchase price of $500,000.  Warrants to purchase 70,000 shares of
common stock at a price of $10.00 per share were attached to the shares sold
in this offering.  Such warrants were subsequently cancelled by the Company.
The shares issued in connection with this private placement were issued in
reliance upon the exemption from registration contained in Section 4(2) of the
Securities Act.

<PAGE> 11

      In June 2000, the Company issued 20,000 shares of common stock to
certain investors who had previously purchased shares of the Company's common
stock in private placements and were entitled by the terms of such private
placement to receive stock in the event that the Company did not have a
registration statement declared effective by the Securities and Exchange
Commission by June 2000.

      In October 2000, the Company issued 10,000 shares of common stock as
consideration for the voiding of a transaction to Medinex Systems, Inc.  These
shares were valued at $410,501.  This issuance was effected without
registration under the Securities Act, in reliance upon the exemption from
registration contained in Section 4(2) of the Securities Act. This issuance
was effected without registration under the Securities Act, in reliance upon
the exemption from registration contained in Section 4(2) of the Securities
Act.

      In December 2000, 95,096 shares of common stock were issued to certain
officers and directors of the Company in exchange for the forgiveness of
$95,096 of indebtedness. This issuance was effected without registration under
the Securities Act, in reliance upon the exemption from registration contained
in Section 4(2) of the Securities Act.

      In February 2001, 503,775 shares of common stock were issued in
connection with a private placement.  Each share of common stock purchased in
this private placement was accompanied with a warrant to purchase one share of
the Company's common stock at a purchase price of $4.00 per share at any time
until February 1, 2003. The shares issued in connection with the private
placement were issued without registration under the Securities Act in
reliance upon the exemption from registration contained in Rule 506 of
Regulation D of the Securities Act.

      In March 2001, the Company issued an aggregate of 750,000 shares of the
Company's common stock to Carriage House Capital as fees for assistance with
the Reorganization and the offering of Units. This issuance was effected
without registration under the Securities Act, in reliance upon the exemption
from registration contained in Section 4(2) of the Securities Act.

      In June 2001, the Company issued an aggregate of 281,428 shares of the
Company's common stock and warrants to purchase 500,000 shares of the
Company's common stock at an exercise price of $1.00 per share to Carriage
House Capital as additional fees for services rendered on behalf of the
Company.  These issuances were effected without registration under the
Securities Act, in reliance upon the exemption from registration contained in
Section 4(2) of the Securities Act.

<PAGE> 12

      In June 2001, the Company issued an aggregate of 202,500 shares of the
Company's common stock at a price of $2.00 per share, raising net proceeds of
$352,350. The shares issued in connection with the private placement were
issued without registration under the Securities Act, in reliance upon the
exemption from registration contained in Rule 506 of Regulation D of the
Securities Act.

      In September 2001, the Company issued an aggregate of 585,000 shares of
the Company's common stock at a price of $2.00 per share, and 1,000,000 shares
of Series A Convertible Preferred Stock at a price of $3.00 per share, raising
aggregate net proceeds of 3,771,000. These issuances were effected without
registration under the Securities Act, in reliance upon the exemption from
registration contained in Rule 506 of Regulation D of the Securities Act.

      To the extent that the foregoing transactions constituted "sales" within
the meaning of the Securities Act, except as otherwise noted, the securities
issued in such transactions were not registered under the Securities Act in
reliance upon the exemption from registration set forth in Section 4(2)
thereof, relating to sales by an issuer not involving any public offering.
Each of the foregoing transactions, to the extent constituting "sales" within
the meaning of the Securities Act, were exempt under the applicable exemption
based on the following facts: to the Company's knowledge, there was no general
solicitation, there were a limited number of purchasers; the purchasers were
provided with or had access to information about the Company; either (i) the
purchasers or their respective representatives were sophisticated about
business and financial matters; or (ii) the purchasers were "accredited
investors" within the meaning of Rule 501 under the Securities Act; and the
Company took reasonable steps to assure that the purchasers were not
underwriters within the meaning of Section 2(11) under the Securities Act.


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

      The following discussion and analysis of the Company's and the Company's
predecessor's financial condition as of December 31, 2001 and the Company's
and the Company's predecessor's results of operations for the three and twelve
month periods ended December 31, 2001 and December 31, 2000 should be read in
conjunction with the Company's financial statements and notes thereto included
elsewhere in this Form 10-KSB.  All information contained in this Item 6
reflects only the Company's continuing operations.

Results of Operations

      The Company's current operations consist of operations historically
conducted by Computer Assisted Learning and Instruction System, Inc.

<PAGE> 13

Comparison of the Three Month Periods Ended December 31, 2001 and December
31, 2000

      Revenues.  Revenues for the three month period ended December 31, 2001
were $950,455, compared to $994,242 for the three month period ended December
31, 2000.  In the three month period ended December 31, 2000, there is also an
additional $465,504 in dealer commissions that in 2001 are booked directly as
ELLIS revenue.  The decrease in sales comes from an economic slowdown that has
decreased spending in the educational sector.  In addition, for the three
month period ended December 31, 2000 the company experienced several
extraordinary sales that increased revenue for the period.

      Cost of Goods.  Cost of goods sold for the three month period ended
December 31, 2001 were $12,177, compared to $6,990 for the three month period
ended December 31, 2000. This increase is due to additional costs in the
manufacturing of the newly developed ELLIS Kids program compact discs.

      General and Administrative Expenses.  General and administrative
expenses for the three month period ended December 31, 2001 were $2,182,363,
compared to $715,183 for the three month period ended December 31, 2000.  This
increase was due to increased costs associated with the hiring of additional
employees associated with the Company 's marketing expansion and
restructuring.

      Depreciation and Amortization.  Depreciation and amortization costs for
the three month period ended December 31, 2001 were $25,707, compared to
$10,254 for the three month period ended December 31, 2000.  This increase was
due primarily to an increase in the Company's capital expenditures associated
with geographic expansion.

Comparison of the Twelve Month Periods Ended December 31, 2001 and December
31, 2000

      Revenues.  Revenues for the twelve month period ended December 31, 2001
were $7,305,408, compared to $3,845,113 for the twelve month period ended
December 31, 2000.  In the twelve month period ended December 31, 2000, there
is also an additional $3,342,014 in dealer commissions that in 2001 are booked
directly as ELLIS revenue.  Although the company has established a larger and
more efficient sales network, market conditions at the end of the year has had
an adverse impact on sales efforts resulting in an increase of 1.6 percent
over prior year sales.

      Cost of Goods.  Cost of goods sold for the twelve month period ended
December 31, 2001 were $52,639, compared to $63,064 for the twelve month
period ended December 31, 2000.  This change is due to the manufacture of new
products.

      Cost of Sales.  Dealer discounts for the twelve month period ended
December 31, 2001 were $2,505,146 compared to $3,342,014 in dealer discounts
which were offset against revenues in the twelve month period ended December
31, 2000.  This decrease in cost is attributable to the ten to fifteen percent
reduction in dealer discounts during the year. Other selling expenses
increased from $600,448 in 2000 to $1,402,296 in 2001 due to the Company's
restructuring and international expansion.

<PAGE> 14

      General and Administrative Expenses.  Total general and administrative
expenses for the twelve month period ended December 31, 2001 were $4,239,719,
compared to $2,270,725 for the twelve month period ended December 31, 2000.
Marketing expenses increased from $163,501 in 2000 to $877,163 in 2001 due to
the Company's aggressive marketing expansion.  Development expenses increased
from $505,929 in 2000 to $986,768 in 2001 primarily due to the release of the
new ELLIS Kids programs.  Administrative expenses increased from $1,601,295 in
2000 to $2,375,788 in 2001 due to the Company's expansion and restructuring.

      Depreciation and Amortization.  Depreciation and amortization costs for
the twelve month period ended December 31, 2001 were $84,242, compared to
$64,794 for the twelve month period ended December 31, 2000.  This increase
was due primarily to an increase in the Company's capital expenditures
associated with geographic expansion.

Liquidity and Capital Resources

      The Company has funded its cash requirements primarily through cash
flows from its operating activities and proceeds from the sale of common and
preferred stock and warrants.  The Company raised $4,307,375 during the year
in private offerings of common and preferred stock and warrants. The Company
presently has approximately $380,000 in cash as well as $1,565,000 in
receivables.  With the present cash on hand and receivables, the Company does
not intend to seek further outside funding at this time.  If collections from
customers and resellers do not occur within less than sixty days, the Company
will need to take other measures to ensure proper funding for its operations.

      The Company is currently incurring cash expenses in the amount of
approximately $540,000 per month, of which fixed costs account for
approximately $431,000.  The Company anticipates capital expenditures will be
approximately $179,025 for the current fiscal year.

      During the year the Company had established a revolving line of credit
from a commercial bank in the amount of $250,000.  This loan has been paid off
and is now closed.  The Company had also taken out a $100,000 two-year loan
from a commercial bank, which was paid off in September, 2001.

Brazilian Acquisition

      In January of 2002 the Company entered into an agreement to acquire
69,999 of the 70,000 outstanding shares of Cali Brasil Ltda, a Brazilian
corporation ("Cali Brasil"). According to the terms of this transaction, Cali
Brasil will change it's name to ELLIS do Brasil Ltda.  Cali Brasil's primary
function has been to distribute ELLIS software throughout Brazil.  In December
2001 Cali Brasil acquired three English language schools; two in Salvador,
Brazil that operate under the name "Forever", and the third in Curitiba,
Brazil that operates under the name "Liberty".  CALI Brasil also owns and
operates the Michigan Language school franchise system that has 14 individual
franchise schools in its system.  The total acquisition cost of these language
schools was $320,000.

<PAGE> 15


ITEM 7.  FINANCIAL STATEMENTS.

      The following financial statements are included herein:

The Company's audited financial statements as of December 31, 2001 and 2000

      Balance sheets as of December 31, 2001 and 2000

      Statements of income for the years ended December 31, 2001 and 2000

      Statements of stockholders' equity for the years ended December 31, 2001
      and 2000

      Statements of cash flows for the years ended December 31, 2001 and 2000

      Notes to financial statements

<PAGE> 16

                  ENGLISH LANGUAGE LEARNING AND
                     INSTRUCTION SYSTEM, INC.

                    December 31, 2001 and 2000

<PAGE> 17




TABLE OF CONTENTS
                                                                        Page
------------------------------------------------------------------------------


INDEPENDENT AUDITORS' REPORT                                             1

FINANCIAL STATEMENTS:

  Balance Sheets                                                           2

  Statements of Income                                                     4

  Statements of Stockholders' Equity                                       5

  Statements of Cash Flows                                                 6

  Notes to Financial Statements                                            7

<PAGE> 18




                      Squire & Company, P.C.



                   INDEPENDENT AUDITORS' REPORT



The Board of Directors
English Language Learning and Instruction System, Inc.

We have audited the accompanying balance sheets of English Language Learning
and Instruction System, Inc. (the Company) as of December 31, 2001 and 2000,
and the related statements of income, stockholders' equity and cash flows for
the years then ended.  These financial statements are the responsibility of
the Company's management.  Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of English Language Learning and
Instruction System, Inc. as of December 31, 2001 and 2000, and the results of
its operations and its cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.

/s/ Squire & Company, PC

March 4, 2002





<PAGE> 19


ENGLISH LANGUAGE LEARNING AND INSTRUCTION SYSTEM, INC.
BALANCE SHEETS
December 31, 2001 and 2000
                                                          2001         2000
------------------------------------------------------------------------------
ASSETS

Current Assets:
  Cash                                              $          -  $    11,366
  Accounts receivable - net of allowance                 863,461    1,039,652
  Income taxes receivable                                337,045            -
  Employee receivable                                          -        4,046
  Inventories                                             59,651       45,478
  Marketable securities                                2,203,740            -
  Prepaid expenses                                       270,445       93,909
  Current portion of notes receivable                    175,054            -
  Deferred tax assets                                    710,042        9,857
                                                    ------------- ------------

     Total current assets                              4,619,438    1,204,308

Fixed Assets:
  Property and equipment                                 522,267      716,256
  Accumulated depreciation                              (160,708)    (356,869)
                                                    ------------- ------------

     Net fixed assets                                    361,559      359,387

Notes Receivable - less current portion                  810,413            -

Other Assets                                              18,622       34,043
                                                    ------------- ------------

    Total assets                                    $  5,810,032  $ 1,597,738
                                                    ============= ============





The accompanying notes are an integral part of these statements.

                               -2-


<PAGE> 20

ENGLISH LANGUAGE LEARNING AND INSTRUCTION SYSTEM, INC.
BALANCE SHEETS (CONTINUED)
December 31, 2001 and 2000
                                                        2001          2000
------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Line of credit                                   $    130,901  $          -
  Accounts payable                                      217,399       219,757
  Accrued liabilities                                   268,472        85,433
  Income taxes payable                                        -       343,966
                                                    ------------- ------------

     Total current liabilities                          616,772       649,156

Deferred Tax Liability                                   21,094        15,571
                                                    ------------- ------------

     Total liabilities                                   637,866      664,727

Stockholders' Equity:
  Preferred stock, $0.00001 par value,
    50,000,000 shares authorized, 1,000,000
    issued and outstanding                                    10            -
  Common stock, $0.00001 par value, 20,000,000
    shares authorized, 14,806,383 shares
    issued and outstanding                                   148      462,451
  Additional paid-in capital                           6,436,586            -
  Retained earnings (deficit)                         (1,264,578)     470,560
                                                    ------------- ------------

     Total stockholders' equity                        5,172,166      933,011
                                                    ------------- ------------

     Total liabilities and stockholders' equity     $  5,810,032  $ 1,597,738
                                                    ============= ============




The accompanying notes are an integral part of these statements.

                               -3-


<PAGE> 21



ENGLISH LANGUAGE LEARNING AND INSTRUCTION SYSTEM, INC.
STATEMENTS OF INCOME
Years Ended December 31, 2001 and 2000
                                                         2001         2000
------------------------------------------------------------------------------

Software Sales                                         7,167,211    3,795,469
Non-Software Sales                                       138,197       49,644
                                                    ------------- ------------

    Total sales                                        7,305,408    3,845,113

Operating Expenses                                     8,331,010    2,999,771
                                                    ------------- ------------

Operating Income (Loss)                               (1,025,602)     845,342

Other Income (Expense):
  Nonrecurring organizational expenses                  (714,006)           -
  Nonrecurring consulting expenses                    (1,000,728)           -
  Interest income                                         21,910       12,085
  Other income                                             1,425       19,581
  Loss on sale of fixed assets                           (30,110)     (12,156)
  Interest expense                                       (25,552)         (39)
                                                    ------------- ------------

    Total other income (expense)                      (1,747,061)      19,471
                                                    ------------- ------------

Income (Loss) Before Income Taxes                     (2,772,663)     864,813

Provision for Income Tax:
  Current                                               (342,863)     325,380
  Deferred                                              (694,662)      98,238
                                                    ------------- ------------

    Total income tax expense (benefit)                (1,037,525)     423,618
                                                    ------------- ------------

Net Income (Loss)                                   $ (1,735,138) $   441,195
                                                    ============= ============
Earnings (Loss) Per Share - Basic                   $      (0.13) $      0.04
                                                    ============= ============
Earnings (Loss) Per Share - Fully Diluted           $      (0.12) $      0.04
                                                    ============= ============

Weighted Average Shares Outstanding:
  Basic                                               13,786,323   11,550,000
  Fully Diluted                                       14,233,217   11,550,000




The accompanying notes are an integral part of these statements.

                               -4-


<PAGE> 22
<TABLE>
<CAPTION>

ENGLISH LANGUAGE LEARNING AND INSTRUCTION SYSTEM, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31, 2001 and 2000
-----------------------------------------------------------------------------------------------------------------------

                                                                       Treasury  Additional   Retained
                                 Preferred Stock       Common Stock    Stock     Paid-In      Earnings
                                Shares    Amount    Shares    Amount   Shares    Capital      (Deficit)      Total
                             ----------- ------- ----------- --------- --------- ------------ ------------ ------------

                           <c>        <c>     <c>         <c>      <c>        <c>          <c>          <c>
Balance at January 1, 2000            -  $     -      2,715  $ 21,685         -  $         -  $   29,365   $    51,050

Issuance of Stock                     -        -  4,090,785         -   296,500            -           -             -

Contributed Capital                   -        -  7,160,000   440,766         -            -           -       440,766

Comprehensive Net
Income Calculation:
  Net Income                          -        -          -         -         -            -     441,195       441,195
                             ----------- ------- ----------- --------- --------- ------------ ------------ ------------

Balance at December 31, 2000          -        - 11,253,500   462,451   296,500            -     470,560       933,011

Stock issued for
 consulting services                  -        -  1,031,428        10         -      600,718           -       600,728

Organization expense from
 stock exchange                       -        -  1,210,180        12         -      713,994           -       714,006

Stock issued in
 reverse merger                       -        -          -  (462,338) (296,500)     462,338           -             -

Stock issued                  1,000,000       10  1,311,275        13         -    4,659,536           -     4,659,559

Comprehensive Net
income Calculation:
  Net Loss                            -        -          -         -         -            -   (1,735,138)  (1,735,138)
                             ----------- ------- ----------- --------- --------- ------------ ------------ ------------

Balance at December 31, 2001  1,000,000  $    10 14,806,383  $    148         -  $ 6,436,586  $(1,264,578) $ 5,172,166
                             =========== ======= =========== ========= ========= ============ ============ ============




The accompanying notes are an integral part of these statements.



                                    -5-

</TABLE>
<PAGE> 23
<TABLE>
<CAPTION>


ENGLISH LANGUAGE LEARNING AND INSTRUCTION SYSTEM, INC.
STATEMENTS OF CASH FLOWS
Years Ended December 31, 2001 and 2000
                                                                            2001           2000
---------------------------------------------------------------------------------------------------

                                                                     <c>           <c>
Cash Flows from Operating Activities:
  Net income (loss)                                                     $ (1,735,138) $    441,195
  Adjustments to reconcile net income to net cash
   provided by operating activities:
    Depreciation                                                              84,242        64,794
    Deferred taxes                                                          (694,662)       98,238
    Noncash wages                                                             24,000             -
    Nonrecurring consulting and organizational expenses                    1,314,734             -
    Bad debt allowance                                                        60,000             -
    Loss on sale of fixed assets                                              30,110        12,156
    (Increase) decrease in operating assets:
       Accounts receivable                                                  (548,928)     (569,547)
       Income taxes receivable                                              (337,045)            -
       Employee receivable                                                     4,046        (2,363)
       Inventories                                                           (14,173)      (24,599)
       Prepaid expenses                                                     (176,536)      (79,894)
       Other assets                                                           15,422       (16,011)
    Increase (decrease) in operating liabilities:
       Accounts payable                                                       (2,358)      127,352
       Accrued liabilities                                                   183,037        29,300
       Income taxes payable                                                 (343,966)      306,822
                                                                        ------------- -------------

         Total adjustments                                                  (402,077)      (53,752)
                                                                        ------------- -------------

    Net cash provided (used) by operating activities                      (2,137,215)      387,443

Cash Flows from Investing Activities:
  Proceeds from sale of marketable securities                                496,260             -
  Proceeds from sale of fixed assets                                          62,500        23,100
  Purchase of marketable securities                                       (2,700,000)            -
  Purchase of equipment                                                     (179,025)     (150,897)
  Loan to distributor                                                       (320,349)            -
                                                                        ------------- -------------

    Net cash used by investing activities                                 (2,640,614)     (127,797)

Cash Flows from Financing Activities:
  Net payments on stockholder loan                                                 -      (309,894)
  Proceeds from line of credit                                               130,901             -
  Proceeds from issuance of preferred stock                                3,000,000             -
  Proceeds from issuances of common stock                                  2,106,589             -
  Stock issuance costs incurred                                             (471,027)            -
                                                                        ------------- -------------

    Net cash provided (used) by financing activities                       4,766,463      (309,894)
                                                                        ------------- -------------

Net Decrease in Cash                                                         (11,366)      (50,248)

Cash at Beginning of Year                                                     11,366        61,614
                                                                        ------------- -------------

Cash at End of Year                                                     $          -  $     11,366
                                                                        ============= =============


The accompanying notes are an integral part of these statements.

                                    -6-
</TABLE>
<PAGE> 24



ENGLISH LANGUAGE LEARNING AND INSTRUCTION SYSTEM, INC.
NOTES TO FINANCIAL STATEMENTS
-----------------------------------------------------------------------------

Note 1. Summary of Significant Accounting Policies
        ------------------------------------------

This summary of significant accounting policies of English Language Learning
and Instruction System, Inc. (the Company) is presented to assist in
understanding the Company's financial statements.  These accounting policies
conform to generally accepted accounting principles and have been consistently
applied in the preparation of these financial statements.  In the opinion of
management, these financial statements include all adjustments which are
necessary for the fair presentation of the results for the periods presented.

Organization and Business Description - Computer Assisted Learning
Instruction, Inc. (CALI) was incorporated in the state of Utah on January 1,
1994.  On December 15, 2000, CALI entered into an Agreement and Plan of
Reorganization (Reorganization Agreement).  This Reorganization Agreement was
executed on January 31, 2001 and was accounted for as a reverse merger with
Politics.com, Inc., a Delaware corporation incorporated in January 1997.  All
of the outstanding common stock of CALI was exchanged for 11,550,000 shares of
common stock of Politics.com, Inc (POCO).  The transaction, accounted for as a
reverse merger acquisition, resulted in the recapitalization of CALI;
inasmuch, as it was deemed to be the acquiring entity for accounting purposes.
Politics.com, Inc. then changed its name to English Language Learning and
Instruction System, Inc. (ELLIS).

In connection with the reverse merger, the 11,550,000 shares of common stock
of CALI were exchanged at a rate of one share of CALI for one share of POCO.
The earnings per share data have been retroactively restated to reflect the
post merger share amounts.  The historical financial statements prior to
January 31, 2001, are those of CALI.

ELLIS is engaged in the development, marketing, and support of English
language training software.  The Company's customers consist primarily of
retail distributors located in North America, South America, Europe, and Asia.

Revenue Recognition - Prior to 2001, the Company recorded revenue at the price
the software was sold to its distributors consistent with distribution
agreements.  The Company has renegotiated its agreements with the distributors
allowing the Company to record revenue at the price the software is sold to
the customer effective January 1, 2001.  Distributors are then paid a
commission for each sale.  Technical support and installation costs are
included in the cost of the software and are usually provided by the
distributors.  These costs are minimal and do not represent a significant
portion of the sales price.

The effect of this change in the distributor relationship for the year ended
December 31, 2001 is to increase software sales revenue by $2,505,146.  The
Company also recognizes an additional $2,505,146 of distributor commissions
reported as a component of Operating Expenses on the Statement of Income for
the year ended December 31, 2001.  This change will have no effect on net
income (loss) or earnings (loss) per share.

Cash and Cash Equivalents -The Company considers demand deposits at banks and
money market funds at other financial institutions with an original maturity
of three months or less to be cash equivalents.

                               -7-
<PAGE> 25



ENGLISH LANGUAGE LEARNING AND INSTRUCTION SYSTEM, INC.
NOTES TO FINANCIAL STATEMENTS
-----------------------------------------------------------------------------

Note 1. Summary of Significant Accounting Policies (continued)
        ------------------------------------------------------

Inventories - Inventories consisting primarily of product packaging,
documentation, and media, are stated at the lower of cost or market.
Inventory cost is determined using the first-in, first-out method.

Other Assets - Other assets consist of prepaid rents, professional retainer
fees, and intangible assets.

Equity Transactions - In connection with the reverse merger with POCO, the
Company entered into an agreement to pay $400,000 in cash and to issue
1,031,428 of the combined entity's shares for consulting services.  The
Company has recognized a $600,728 expense (or $0.58 per share) in relation to
these shares for consulting services.  The total expense recognized for
consulting services related to the reverse merger is $1,000,728.

Additionally, the Company issued 1,210,180 shares of the combined entity's
shares to POCO's shareholders.  These shares are treated as a one-time
organizational expense in the amount of $714,006 (or $0.59 per share).

The Company issued 1,311,275 shares of common stock at prices ranging from
$1.00 to $2.00 per share and 1,000,000 shares of preferred stock at $3.00 per
share during the year ended December 31, 2001.

Research and Development Costs - Research and development expenditures,
consisting primarily of software development costs incurred prior to achieving
technological feasibility are charged to operations as incurred.  After
technological feasibility is established any additional software development
costs would be capitalized in accordance with Statement of Financial
Accounting Standards (SFAS) No. 86, Capitalization of Software Development
Costs.  Under the Company's software development process, technological
feasibility is established upon completion of a working model.  The Company to
date has not capitalized any software development costs due to the
immateriality of such costs.

Advertising - The Company expenses the costs of advertising when the
advertising takes place.  At December 31, 2001, the Company had prepaid for an
advertising campaign performed in January 2002.  This amount ($87,239) is
included in Prepaid Expenses on the balance sheet.

Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts in the financial statements
and the accompanying notes.  Actual amounts could differ from those estimates.

Earnings per Share - Basic and fully diluted earnings per share is computed by
dividing net income available for common stock by the weighted average number
of common shares during the period.

                               -8-
<PAGE> 26



ENGLISH LANGUAGE LEARNING AND INSTRUCTION SYSTEM, INC.
NOTES TO FINANCIAL STATEMENTS
-----------------------------------------------------------------------------

Note 2. Fixed Assets
        ------------

Property and equipment are stated at cost.  Property and equipment are
depreciated using the straight-line method for financial reporting purposes.
Asset lives vary from three to ten years based on the estimated useful life of
the assets.

Major classifications of property and equipment for December 31, 2001 and 2000
are as follows:

                                                          2001        2000
                                                   ------------- -------------
  Computer software         3 year life            $     16,437  $      5,656
  Computer hardware         3-5 year life               190,847        98,892
  Phone equipment           5 year life                  33,422        19,884
  Leasehold improvements    5 year life                   6,563             -
  Furniture and fixtures    5-10 year life              216,073       424,216
  Vehicles and boats        10 year life                 58,925       167,608
                                                   ------------- -------------
                                                        522,267       716,256
  Accumulated depreciation and amortization            (160,708)     (356,869)
                                                   ------------- -------------

                                                   $    361,559  $    359,387
                                                   ============= =============


The Company reviews its fixed assets for impairment in accordance with SFAS
121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of."  No fixed assets were determined to be impaired for
the years ending December 31, 2001 and 2000.

Maintenance, repairs, and renewals which neither materially add to the value
of the equipment nor appreciably prolong its life are charged to expense as
incurred.  Gains and losses on dispositions are included in net income.

Note 3.  Foreign Currency Transactions
         ------------------------------

During 2000, the Company established relations with a company in Brazil, CALI
Brasil, Ltda.  The Company's agreement with CALI Brasil, Ltda. allows it to
record revenue at the price the software was sold to the customer.  The
Company then pays a commission for each sale to CALI Brasil, Ltda.

CALI Brasil's sales translated from Brazilian reals (the functional currency)
to US dollars (the reporting currency) for the years ending December 31, 2001
and 2000 were $145,645 and $146,722, respectively.  The Company reports the
accounts receivable and commissions payable to CALI Brasil, Ltda. using the
exchange rate at the date of the balance sheet.  The Company reports the sales
and commissions of CALI Brasil, Ltda. using a weighted-average exchange rate
over the period of the income statement.  Gains or losses on translating the
functional currency to the reporting currency are reported as a component of
operating expenses.

No other transactions for the years ending December 31, 2001 and 2000 involved
a currency other than U.S. dollars.

                               -9-
<PAGE> 27



ENGLISH LANGUAGE LEARNING AND INSTRUCTION SYSTEM, INC.
NOTES TO FINANCIAL STATEMENTS
-----------------------------------------------------------------------------

Note 4.  Notes Receivable
         ----------------

During 2001, the Company converted $665,118 in accounts receivable from a
distributor to a note.  This note bears interest at 7 percent, requires
monthly payments of $17,901, is due May 2005, and is unsecured.  The balance
at December 31, 2001 was $647,217.  The current portion of this note is
$175,054.

During 2001, the Company loaned CALI Brasil, Ltda. $338,250.  This note bears
interest at 12 percent, is due in full with interest December 2004, and is
unsecured.

Note 5.  Marketable Securities
         ---------------------

The Company held marketable debt securities recorded at an aggregate fair
market value of $2,203,740 at December 31, 2001.  These securities are
classified as available-for-sale.  The Company had no unrealized gains or
losses at December 31, 2001, from these securities.

Note 6.  Line of Credit
         --------------

The Company has established a line of credit from a bank.  This line of credit
has a limit of $250,000 and bears interest at a variable rate.  The line is
due March 20, 2002.  At December 31, 2001, the balance outstanding on this
line was $130,901.

Note 7.  Income Taxes
         ------------

The provision for income taxes is based on income and expense reported in the
financial statements which differs from that reported for income tax purposes.
Accordingly, deferred income taxes are provided in recognition of such
differences.  Temporary differences include vacation accrual, excess tax
depreciation, and net operating loss carryforwards.











                               -10-
<PAGE> 28



ENGLISH LANGUAGE LEARNING AND INSTRUCTION SYSTEM, INC.
NOTES TO FINANCIAL STATEMENTS
-----------------------------------------------------------------------------

Note 7.  Income Taxes (Continued)
         ------------------------

Income tax liabilities, expense, and deferred taxes are computed by following
the procedures outlined in Financial Accounting Standards Board Statement No.
109, "Accounting for Income Taxes".  The applicable federal and state tax
rates in effect at December 31, 2001 and 2000 were used in calculating the
income tax liabilities, expense, and deferred taxes.  Income tax expense for
the years ended December 31, 2001 and 2000 is computed as follows:


                                                      2001         2000
                                                 ------------- -------------
       Current:
         Federal income tax expense (benefit)    $   (295,165) $    282,761
         State income tax expense (benefit)           (47,698)       42,619
         Deferred income tax expense (benefit)       (694,662)       98,238
                                                 ------------- -------------
           Income tax expense (benefit)          $ (1,037,525) $    423,618
                                                 ============= =============


       The income tax provision reconciled to the tax computed at the federal
statutory rate is as follows at December 31:

       Income taxes at the statutory rate        $   (942,705) $    294,036
       Expense and (revenue) adjustments - net         37,122        76,149
       State income taxes, net of federal benefit    (230,131)       28,539
       Prior year tax amendment                             -       (18,558)
       Other                                           98,189        43,452
                                                 ------------- -------------
            Total income tax provision           $ (1,037,525) $    423,618
                                                 ============= =============


       Deferred tax assets and liabilities consist of the following:

       Deferred tax assets:
         Allowance for doubtful accounts         $     24,245  $      1,865
         Net operating loss carryforward              657,441             -
         Vacation accrual                              28,356         7,992
                                                 ------------- -------------
            Total deferred tax assets                 710,042         9,857

       Deferred tax liabilities:
         Excess tax depreciation                      (21,094)      (15,571)
                                                 ------------- -------------
           Net deferred tax assets (liabilities) $    688,948  $     (5,714)
                                                 ============= =============



                               -11-
<PAGE> 29



ENGLISH LANGUAGE LEARNING AND INSTRUCTION SYSTEM, INC.
NOTES TO FINANCIAL STATEMENTS
-----------------------------------------------------------------------------

Note 7. Income Taxes (Continued)
        ------------------------

       The income tax provision reconciled to the Balance Sheet accounts is as
follows at December 31:
                                                      2001         2000
                                                 ------------- -------------
       Tax payments made:
         Federal                                 $    296,268  $          -
         State                                         47,698           100
                                                 ------------- -------------
       Total tax payments                             343,966           100

       Current income tax (expense) benefit           337,045      (325,380)
       Prior year income taxes payable               (343,966)      (18,586)
                                                 ------------- -------------

       Income taxes payable                                 -      (343,966)
                                                 ------------- -------------
       Income taxes receivable                   $    337,045  $          -
                                                 ============= =============

No valuation allowance for net operating loss (NOL) carryforwards has been
made.  The NOL carryforwards can be applied against taxable income in future
years.  The NOL carrryforwards expire in 2016.

Note 8.  Related Party Transactions
         --------------------------

The Company's majority stockholder had loaned the Company $709,800 as of
December 31, 1999.  Accrued interest of $40,860 has been included in the total
of $750,660.  During 2000, the Company repaid $309,894 of this loan.  This
stockholder then converted the remaining balance, $440,766, to 7,160,000
shares of common stock.

Note 9.  Concentrations
         --------------

The Company is engaged in a single business segment, the development and
marketing of language training software.  The computer software industry is
highly competitive and rapidly changing.  Significant technological changes in
the industry or customer requirements or the emergence of competitive products
with new capabilities or technologies, could adversely affect operating
results.

The Company sells its products primarily through distributors and resellers.
Sales through the two largest distributors of the Company accounted for
approximately 39 and 28 percent of the Company's net revenues for December 31,
2001 and 2000, respectively.

The Company believes that no single end-user customer accounted for more than
five percent of the Company's sales in 2001 and 2000.

                               -12-


<PAGE> 30



ENGLISH LANGUAGE LEARNING AND INSTRUCTION SYSTEM, INC.
NOTES TO FINANCIAL STATEMENTS
-----------------------------------------------------------------------------

Note 9.  Concentrations (Continued)
         --------------------------

Financial instruments which potentially subject the Company to concentrations
of credit risk consist primarily of accounts receivable.  The credit risk
associated with accounts receivable is mitigated by the Company's credit
evaluation process, reasonably short collection terms, and the geographical
dispersion of sales transactions.  The Company estimates an allowance for
doubtful accounts of $65,000 based on the credit worthiness of its
distributors and customers as well as general economic conditions.

Note 10.  Leases
          ------

The Company entered into a three-year lease agreement for an office building
in Provo, Utah, beginning in February of 2001.  The initial monthly payment of
$6,839 will be adjusted annually for increases in the consumer price index.
The Company entered into a 21-month lease agreement for additional office
space beginning April of 2001.  The initial monthly payment of $4,568 will be
adjusted annually for increases in the consumer price index.  Future minimum
payments are required as follows for the years ending December 31:

                        2002       $   153,829
                        2003            89,818
                        2004            14,230
                                   ------------

                                   $   257,877
                                   ============

The Company entered into two three-year lease agreements for vehicles.  The
monthly payments are $1,161 and $760.  Future minimum payments for the years
ending December 31 are as follows:

                        2002       $    23,052
                        2003            23,052
                        2004             5,763
                                   ------------

                                   $    51,867
                                   ============

Note 11.  Pension Plans
          -------------

The Company has a defined benefit pension plan covering all employees who meet
age and length of service requirements.  The benefits are based on years of
service and the employee's compensation during the last three consecutive
years of employment. The Company's funding policy is to contribute annually an
amount that can be deducted for federal income tax purposes.  Contributions
are intended to provide not only for benefits attributed to service to date
but also for those benefits expected to be earned in the future.
Contributions vest to employees at the end of six years of service.

The Company is in the process of terminating the defined benefit plan.  As of
November 15, 2001, all future benefit accruals under the plan are frozen.  No
curtailment gain or loss has been recognized.  The final termination cost to
the Company has not yet been determined and has not been presented in the
financial statements.

                               -13-
<PAGE> 31



ENGLISH LANGUAGE LEARNING AND INSTRUCTION SYSTEM, INC.
NOTES TO FINANCIAL STATEMENTS
-----------------------------------------------------------------------------

Note 11.  Pension Plans (Continued)
          -------------------------


                                                   December 31,  December 31,
                                                        2001         2000
                                                   ------------- -------------
  Change in benefit obligations:
    Benefit obligation at beginning of year        $    164,931  $     98,219
    Service cost                                         40,596        53,689
    Interest cost                                        11,545        13,023
    Actuarial change in PBO                              47,830             -
                                                   ------------- -------------
    Benefit obligation at end of period            $    264,902  $    164,931
                                                   ============= =============

  Change in plan assets:
    Fair value of plan assets at beginning of year $    162,634  $          -
    Actual return on plan assets                          5,560         1,214
    Employer contribution                                68,560       161,417
    Benefits paid                                             -             -
                                                   ------------- -------------
  Fair value of plan assets at end of period       $    236,754  $    162,631
                                                   ============= =============


                                                    December 31,  December 31,
                                                        2001         2000
                                                   ------------- -------------
  Net pension cost included the following components:
    Service cost                                   $     40,596  $     53,689
    Interest cost                                        11,545        13,023
    Expected return on plan assets                      (11,384)       (5,696)
    Amortization of prior service cost                    9,501         9,501
    Unrecognized net actuarial gain                      (9,328)            -
                                                   ------------- -------------
                                                   $     40,930  $     70,517
                                                   ============= =============

                                                     December 31, December 31,
                                                         2001         2000
                                                   ------------- -------------
  Funded status of the plan:
    Plan assets less than projected benefits       $    (28,151) $    (72,817)
    Unrecognized prior service cost                     167,036       176,537
    Unrecognized net gain                               (26,179)      (83,337)
                                                   ------------- -------------
    Net amount recognized                          $    112,706  $     20,383
                                                   ============= =============
  Amounts recognized in the balance sheet:
    Prepaid expenses                               $    112,706  $     90,900
                                                   ============= =============

The weighted-average discount rate and long-term rate of return used in
determining the actuarial present value of the projected benefit obligation
was 7 percent for the years ended December 31, 2001 and 2000.  The expected
long-term rate of return was 7 percent for the years ended December 31, 2001
and 2000. The expected average percentage increase in compensation levels was
3 percent for the years ended December 31, 2001 and 2000.

                               -14-
<PAGE> 32



ENGLISH LANGUAGE LEARNING AND INSTRUCTION SYSTEM, INC.
NOTES TO FINANCIAL STATEMENTS
-----------------------------------------------------------------------------

Note 11. Pension Plans (continued)
         -------------------------

The Company has established a 401(k) profit sharing plan.  Employees may
contribute the lesser of $10,000 or 25 percent of their compensation to the
Company's plan.  The Company contributes an additional 100 percent of the
amount contributed by employees up to a maximum of 4 percent of compensation.
Participants are fully vested in employer contributions after 3 years of
service.  The Company contributed $19,694 for the year ended December 31,
2001.

Note 12. Preferred Stock
         ---------------

The Company's issued preferred stock consists of 1,000,000 shares of Series A
Convertible Preferred Stock.  Preferred shares are entitled to preferential
cumulative dividends at 12 percent per annum (totaling $360,000 per year) as
and when declared by the Board of Directors.  In the event of a dissolution or
liquidation, the preferred shares receive $3 per share ($3,000,000 in total)
plus any unpaid accumulated dividends.  The preferred shares are convertible
at any time into common stock at a rate of one share of common stock for each
share of preferred stock subject to particular antidilution provisions.  The
preferred shares are not redeemable.

The Company has the ability to convert the preferred shares to common shares
one year after the preferred shares were issued provided the Company's common
stock average closing price for the preceding 45 days exceeds $8 per share or
the Company completes a public underwriting exceeding $15 million to the
Company.

Note 13. Stock Option Plan
         -----------------

Throughout 2001 the Company granted stock options to qualified employees and
distributors.  The options have a vesting period of four years and expire ten
years from the date of issuance.  The exercise price is the fair market value
on the date of issuance.  The total number of options granted was 171,225.

The Company follows Accounting Principles Board Opinion 25 "Accounting for
Stock Issued to Employees" to account for its stock option plan.  Under APB
25, no compensation is required to be recorded in the consolidated financial
statements.  An alternative method of accounting for stock options is SFAS 123
"Accounting for Stock-Based Compensation".  Under SFAS 123, employee stock
options are valued at grant date at fair value.  The fair value of the options
at the grant date would be recorded as compensation expense, net of income
taxes, recognized ratably over the vesting period.

Had compensation cost for the Company's stock option plan been determined as
prescribed by SFAS 123, stock-based compensation costs would have reduced
income before taxes by $44,393 and net income by $44,393 for the year ending
December 31, 2001.  There is no pro forma effect on basic and fully diluted
earnings per share for the year ending December 31, 2001.

The average Black-Scholes value of options granted under the stock option plan
during 2001 was $1.14.  Value was estimated using a weighted-average expected
life of 7.0 years, no dividends, volatility of 90 percent, and an average
risk-free interest rate of 6.11 percent.

                               -15-

<PAGE> 33

ENGLISH LANGUAGE LEARNING AND INSTRUCTION SYSTEM, INC.
NOTES TO FINANCIAL STATEMENTS
-----------------------------------------------------------------------------

Note 14.  Additional Cash Flow Information
          --------------------------------

The Company paid $25,551 and $39 in interest during the years ended December
31, 2001 and 2000, respectively.  The Company paid $343,966 and $100 in taxes
during the years ended December 31, 2001 and 2000, respectively.

During the year ended December 31, 2001, the Company converted accounts
receivable of $665,118 to a note receivable (see Note 4).

During the year ended December 31, 2000, the Company's remaining debt to a
stockholder, in the amount of $440,766, was converted to 7,160,000 shares of
common stock.

Note 15.  Recent Accounting Pronouncements
          --------------------------------

In September 2000, the FASB issued SFAS 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities".  This
statement is a replacement of SFAS 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities".  Most of the
provisions of SFAS 125 were carried forward to SFAS 140 without
reconsideration by the FASB, and some were changed only in minor ways.  In
issuing SFAS 140, the FASB included issues and decisions that had been
addressed and determined since the original publication of SFAS 125.  SFAS 140
is effective for transfers after March 31, 2001.

In July 2001, the FASB issued SFAS No. 141 "Business Combinations," SFAS No.
142 "Goodwill and Other Intangible Assets," and SFAS No. 143 "Accounting for
Asset Retirement Obligations."  SFAS 141 is a replacement of APB Opinion No.
16 "Business Combinations" and discontinues the pooling of interests method of
accounting for business combinations.  SFAS 141 is effective for business
combinations initiated on or after July 1, 2001.  SFAS 142 is a replacement of
APB Opinion No. 17 "Intangible Assets" and establishes new rules for
accounting for goodwill and other intangible assets.  SFAS 142 is effective
for fiscal years beginning after December 15, 2001.  SFAS 143 requires that
the fair value of a liability for an asset retirement obligation be recognized
in the period it is incurred if a reasonable estimate of fair value can be
made.  The associated asset retirement costs are capitalized.  SFAS 143 is
effective for years beginning after June 15, 2002.

In August 2001, the FASB issued SFAS No. 144 "Accounting for the Impairment or
Disposal of Long-Lived Assets."  SFAS 144 supercedes SFAS No. 121 and APB
Opinion No. 30.  SFAS 144 is effective for fiscal years beginning after
December 15, 2001 and interim periods with those fiscal years.

The application of all of these recent pronouncements is not expected to have
a material impact on the Company's financial statements.

                               -16-
<PAGE> 34



ENGLISH LANGUAGE LEARNING AND INSTRUCTION SYSTEM, INC.
NOTES TO FINANCIAL STATEMENTS
-----------------------------------------------------------------------------

Note 16.  Restatement of Previously Issued Financial Statements
          -----------------------------------------------------

In the process of terminating the defined benefit plan (see Note 11), it was
discovered that the net pension cost had not been accounted for correctly.
Accordingly, the financial statements for the year ended December 31, 2000,
have been restated to correct the errors.  A synopsis of the restatement is as
follows:

                                                               As Previously
                                                   Restated        Stated
                                                -------------- --------------
  Pension payable                               $           -  $      70,517
  Retained earnings (deficit), January 1, 2000         29,365       (132,052)
  Retained earnings, December 31, 2000                470,560        400,043
  Recalculated pension cost adjustment                      -         90,900
  Net income                                          441,195        532,095



This restatement reduces the basic and fully-diluted earnings per share for
the year ended December 31, 2000, by $0.01.

Note 17.  Subsequent Events
          -----------------

The Company has granted options for the purchase of 106,981 shares of stock to
employees and distributors of the stock.  The options may be exercised at the
fair market value of the stock on the date of grant and vest ratably over four
years.

The Company has entered into an agreement to purchase 99.99 percent of CALI
Brasil, Ltda.  CALI Brasil, Ltda. has changed its name to ELLIS Brasil, Ltda.
The terms of this purchase have not been finalized.


                               -17-

<PAGE> 35


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.

      Effective May 11, 2001, the Company engaged Squire & Co., P.C.
("Squire") as its independent auditors.  The Company's previous auditor was
Wolinetz, Lafazan & Company, P.C. ("Wolinetz, Lafazan").

      The financial statements as of and for the years ended December 31, 2000
and 1999, contained no adverse opinion or a disclaimer of opinion, and were
modified as to uncertainty of the Company to continue as a going concern.

      During the two fiscal years ended December 31, 2000 and 1999 and the
subsequent interim period through May 11, 2001, (i) there were no
disagreements with Wolinetz, Lafazan on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedures,
which disagreements if not resolved to his satisfaction would have caused him
to make reference in connection with his report to the subject matter of the
disagreement, and (ii) Wolinetz, Lafazan has not advised the small business
issuer of any of the information as defined in paragraph (B)(1) through (3) of
Regulations S-B Item 304 (a)(1)(iv).

      Wolinetz, Lafazan furnished the Company with a letter addressed to the
Securities and Exchange Commission stating that they agree with the statements
contained in the paragraph above.  A copy of the letter from Wolinetz, Lafazan
to the Securities and Exchange Commission was filed as Exhibit 1 to the
Current Report on Form 8-k filed by the Company on May 11, 2001.

<PAGE> 36

                             PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

      The directors and executive officers of the Company, along with certain
biographical information is set forth below.  Each director other than David
Warnock and Edward Hutton, Jr. was elected at a special meeting of the
Company's shareholders on January 31, 2001, and shall serve until the
Company's annual meeting of shareholders in 2002.  Mr. Warnock was appointed
to serve as a director of the Company as the representative of the Camden
purchasers.

NAME                 AGE     POSITION
----                ----     --------

Francis R. Otto      65      Founder, Chairman and Director

Timothy D. Otto      33      Chief Executive Officer, President
                             and Director

Kimber B. Jensen     33      Chief Operations Officer and Director

Janet M. Otto        67      Director

David Warnock        43      Director

Edward Hutton, Jr.   56      Director

      Francis R. Otto, Ph.D.  Dr. Otto is the Company's Founder, Chairman of
the Board and a Director of the Company.  He received a Bachelors of Arts in
Spanish from Baldwin-Wallace College, Berea, Ohio, in 1958.  Dr. Otto received
a Masters of Arts in Spanish Language and Literature in 1960 and a Ph.D. in
Educational Administration and Curriculum Development in 1966, both from the
University of Wisconsin.  Dr. Otto was a Professor of Linguistics at Ohio
State University from 1966 until 1973.  From 1973 until 1976, he was a
Professor of Linguistics at the University of the Americas, Puebla, Mexico.
He was a Professor of Linguistics at Brigham Young University, Provo, Utah,
from 1976 through 1990.  Dr. Otto has been an active advocate of
computer-assisted language instruction throughout his career.  He is a charter
member of TESOL (Teaching English as a Second Language).  In 1982, he founded
and served as Director of CALICO (Computer Assisted Learning and Instruction
Consortium), an international symposium research group devoted to applying
technology to language instruction.  He founded the Company in 1990.  Dr. Otto
is the father of five children and fluent in Spanish.  He is 65 years of age.

      Timothy D. Otto.  Mr. Otto is the Chief Executive Officer, President,
and a Director of the Company.  He is the son of Dr. Frank Otto.  He has been
employed with ELLIS since its inception in 1990.  While serving as Director of


<PAGE> 37

Marketing, Mr. Otto was responsible for managing a relationship with IBM that
resulted in the launch of the ELLIS Products in 1992.  At the end of that
partnership in 1994, Mr. Otto created a network of independent distribution
partners in the United States, Mexico, Korea, the Middle East and the South
Pacific.   In 1996, he accepted the position of President and in early 1997
was also named CEO.  Since that time, the company has experienced phenomenal
growth in both revenue and market presence globally.  He has been the driving
force in the formation and development of strong business relationships and
corporate leadership that is shaping the company's future.  Mr. Otto studied
at Brigham Young University.  Mr. Otto speaks Spanish fluently and is the
father of two children.  He is 33 years of age.

      Kimber B. Jensen.  Mr. Jensen is Executive Vice President, Chief
Operations Officer, interim CFO.  He joined ELLIS in 1997 as Director of
Development and became Vice President and Chief Operations Officer in 1998.
From 1990 to 1996, Mr. Jensen worked with WordPerfect and Novell where he
received numerous awards including Employee of the Year for his department.
After Novell, he was a senior consultant for Oracle Corporation where he was
responsible for the design of a large-scale Internet application for the U.S.
Department of Defense.  Mr. Jensen joined the Company at a critical time and
brought much needed stability to the Company through his technical and
financial expertise.  Since his arrival, the Company has matured through the
efficiencies he has provided.  He is also directing the Company's remarkable
growth in Brazil, creating new business opportunities that are now being
applied by the Company on a global scale.  Mr. Jensen has a B.A. in Economics
from Brigham Young University. He is the father of two children and speaks
Portuguese fluently.  He is 33 years of age.

      Janet M. Otto.  Ms. Otto is a Director of the Company.  She received a
Bachelor of Science from Baldwin-Wallace College, Berea, Ohio, in 1957.  Ms.
Otto has taught a variety of subjects in public schools, including English as
a Second Language.  She has served and continues to serve in several
capacities with various charitable organizations.  She is the mother of five
children, the spouse of Francis R. Otto and the mother of Timothy D. Otto.
She is 67 years of age.

      David Warnock.  Mr. Warnock has served as a Director of the Company
since January 2002.  Mr. Warnock is a founding member and managing partner of
Camden Partners, Inc. (fka Cahill, Warnock & Co. LLC), a private investment
management firm established in 1995.  Prior to founding Cahill, Warnock, Mr.
Warnock spent 12 years at T. Rowe Price Associates in a variety of investment
management positions.  Mr. Warnock also serves as a director of Blue Rhino,
Corp., Children's Comprehensive Services, Inc., Environmental Safeguards,
Inc., Concorde Career Colleges, Inc., Touchstone Applied Science Technologies,
Inc.  He is 43 years of age.

      Edward Hutton, Jr.  Mr. Hutton has served as a Director of the Company
since March 2002.  Mr. Hutton currently serves as the President of GT Media.
Mr. Hutton was the Chief Executive Officer of Lippincott Williams & Wilkins, a
Wolters Kluwer Company.  In this position, he launched electronic and
one-to-one initiatives and established strategic foreign locations in Europe,
Asia and Latin America.  Mr. Hutton was President and Chief Executive Officer

<PAGE> 38

of Waverly, Inc., a publicly held publisher, for ten years culminating in the
sale to Wolters Kluwer.  He has also held various high level management
positions for such companies as Simon & Schuster and Harper & Row.  He is 56
years of age.



ITEM 10.   EXECUTIVE COMPENSATION

      Neither Howard R. Baer, the Company's former President and Chief
Executive Officer, nor Kevin C. Baer, the Company's former
Secretary/Treasurer, or any other officer or director of the Company received
any compensation from the Company during the fiscal year ended December 31,
2000.

      The table below sets forth the compensation paid by Computer Assisted
Learning and Instruction, Inc. to Timothy D. Otto and Kimber B. Jensen for the
fiscal year ended December 31, 2000 and compensation paid by the Company for
the fiscal year ended December 31, 2001.  The only compensation paid by CALI
and by the Company was in the form of salary and bonus.  No other type of
compensation was paid.

Timothy D. Otto   2000 Salary:    $80,000
                  2000 Bonus:     $58,799

                  2001 Salary:    $150,000
                  2001 Bonus:     $25,000

Kimber B. Jensen  2000 Salary:    $70,000
                  2000 Bonus:     $31,638

                  2001 Salary:    $130,000
                  2001 Bonus:     $15,000



ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The following table sets forth as of April 3, 2002 certain information
with respect to beneficial ownership of the Company's Common Stock by: (i)
each person known by the Company to beneficially more than 5% of the Company's
Common Stock; (ii) each of the Company's directors, (iii) each of the
executive officers of the Company; and (iv) all directors and executive
officers as a group. This information is based upon information received from
or on behalf of the named individual.  Unless otherwise noted, each person
identified possesses sole voting and investment power over the shares listed.
None of the persons named below hold any options exercisable within 60 days.

<PAGE> 39

Name of               Amount of Nature      Percent of Class
Beneficial Owner      Beneficial Ownership

Francis R. Otto (1)        9,221,000                53.0%

Timothy D. Otto (2)        1,155,000                 6.6%

Kimber B. Jensen (3)         577,500                 3.3%

Janet M. Otto (1)          9,221,000                53.0%

David Warnock (4)          1,500,000                 8.6%

Camden Partners
Strategic Fund II-A,
L.P. (5) (6)               1,416,000                 8.1%

Camden Partners
Strategic Fund II-B,
L.P. (6) (7)                  84,000                 0.5%

Edward Hutton, Jr.                 0                   0%

All directors and         10,963,500                75.8%
executive officers
as a group
____________

(1) Includes shares owned by Francis R. Otto and Janet M. Otto as joint
tenants.  Also includes shares owned in a family limited partnership over
which Francis R. Otto and Janet M. Otto maintain voting control.

(2) Includes shares owned in a family limited partnership over which Timothy
D. Otto maintains voting control.

(3) Includes shares owned in a family limited partnership over which Kimber B
Jensen maintains voting control.

(4) Mr. Warnock is the managing partner of Camden Partners, Inc., the general
partner of each of Camden Partners Strategic Fund II-A, L.P. and Camden
Partners Strategic Fund II-B, L.P.  Mr. Warnock disclaims any personal
beneficial ownership of such shares.

(5) Includes 472,000 shares of common stock and 944,000 shares of Series A
Preferred Stock convertible into common stock on one for one basis.

(6) All of the Company's securities owned by Camden entities are under the
common control of Camden Partners Strategic II, LLC.

(7) Includes 28,000 shares of common stock and 56,000 shares of Series A
Preferred Stock convertible into common stock on one for one basis.


<PAGE> 40

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      None.


ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

      Exhibits

EXHIBIT NO.     DESCRIPTION

2.1   Agreement and Plan of Reorganization by and among Politics.com, Inc. and
      Computer Assisted Learning and Instruction, Inc. (2)

3.1   Amended and Restated Certificate of Incorporation. (2)

3.2   Amended and Restated Bylaws. (2)

10.1  Leases for 3520 North University Avenue, Provo, Utah 84604. (2)

10.2  1999 Combination Stock Option Plan, filed as Exhibit 6.3 to the
      Company's Form 10-SB. (2)

10.3  Form of Non-Qualified Stock Option Agreement, filed as Exhibit
      6.5 to the Company's Form 10-SB. (2)

10.4  Form of Incentive Stock Option Agreement, filed as Exhibit 6.6
      to the Company's Form 10-SB. (2)

10.5  Stockholders Agreement dated September 20, 2001 between the Company and
      certain stockholders. (2)

10.6  Registration Rights Agreement dated September 20, 2001 between the
      Company and certain stockholders. (2)

10.7  Employment Agreement dated September 19, 2001 between the Company and
      Timothy D. Otto. (2)

10.8  Employment Agreement dated September 19, 2001 between the Company and
      Kimber Jensen. (2)

10.9  Employment Agreement dated September 19, 2001 between the Company and
      John Bodine. (2)

10.10 Non-Disclosure, Intellectual Property and Non-Competition Agreement
      dated September 18, between the Company and Dr. Frank Otto. (2)


<PAGE> 41


---------------
(1)       Filed herewith.

(2)       In accordance with Rule 12b-32 under the Securities Exchange Act of
          1934, as amended, reference is made to the documents previously
          filed with the Securities and Exchange Commission, which documents
          are hereby incorporated by reference.

      (b)    Reports on Form 8-K

      The Company did not file any current reports on Form 8-K during the
fourth quarter ended December 31, 2000.

<PAGE> 42



                            SIGNATURES

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

                         ENGLISH LANGUAGE LEARNING AND INSTRUCTION
                         SYSTEM, INC. (FORMERLY POLITICS.COM, INC.)

DATE: APRIL 5, 2002          BY:/s/ TIMOTHY D. OTTO
                                ----------------------------
                                TIMOTHY D. OTTO
                                CHIEF EXECUTIVE OFFICER, PRESIDENT AND
                                DIRECTOR

       Pursuant to the requirements of the Securities Exchange Act of 1934,
this report on Form 10-K has been signed below by the following persons on
behalf of the registrant and in the capacities indicated.

SIGNATURE                  TITLE                                DATE

/S/ Francis R. Otto
_____________________      Chairman of the Board                 April 5, 2002
Francis R. Otto            of Directors



/S/ Timothy D. Otto
____________________       Chief Executive Officer,              April 5, 2002
Timothy D. Otto            President and Director



/S/ Kimber B. Jensen
____________________       Vice President, Chief Operations      April 5, 2002
Kimber B. Jensen           Officer and Director



/S/ Janet M. Otto
____________________       Director                              April 5, 2002
Janet M. Otto



/S/ David Warnock
____________________       Director                              April 5, 2002
David Warnock


/S/ Edward Hutton, Jr.
____________________       Director                              April 5, 2002
Edward Hutton, Jr.