U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

[X]   Annual report pursuant to section 13 or 15(d) of the Securities Exchange
      Act Of 1934 for the fiscal year ended December 31, 2001
                                           Or
[ ]   Transition report pursuant to section 13 or 15(d) of the Securities
      Exchange Act Of 1934 for the transition period from_________ to __________

                          COMMISSION FILE NO. 0-245424

                                  TECHSYS, INC.
                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

                         NEW JERSEY 22-3276736 (State or
                     other jurisdiction of (I.R.S. Employer
                   corporation or organization) Identification
                                      No.)

              147 Columbia Turnpike, Florham Park, New Jersey    07932
               (Address of principal executive offices)       (Zip Code)

         ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE: (973-236-1919)

              SECURITIES REGISTERED UNDER SECTION 12(B) OF THE ACT:
                                      None

              SECURITIES REGISTERED UNDER SECTION 12(G) OF THE ACT:

                                  Common Stock

Check whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB.
[X]

The accompanying consolidated balance sheet of the Company, and the related
consolidated statement of operations, stockholder's equity and cash flow for the
year ended December 31, 2001, are not accompanied by an executed report of our
auditors, Arthur Andersen. However, notwithstanding the failure of Arthur
Andersen to execute their report and to furnish their consent to include their
report in this Form 10KSB, Arthur Andersen did complete all its audit work with
respect to our financial statements. On Friday March 29, 2002, a fee dispute
arose between the Company and Arthur Andersen relating to the timing of payment
of fees to Arthur Andersen. Notwithstanding the nature of our dispute and the
fact that all Arthur Andersen work has been completed, you should consider the
following financial statements as unaudited.


State issuer's revenues for its most recent fiscal year: $1,079,569
As of March 12, 2002, 4,788,544 common shares were outstanding, and the
aggregate market value of the common shares of TechSys, Inc. held by
non-affiliates was approximately $2,351,688.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's Proxy Statement for the Registrant's 2002 Annual
Meeting of Shareholders are incorporated by reference into Part III of this
report.

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



<PAGE>






         FORWARD LOOKING STATEMENTS

         When used in this report, the words "may," "will," "expect,"
"anticipate," "continue," "estimate," "project," "intend" and similar
expressions are intended to identify forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934 regarding events, conditions and financial
trends that may affect the Company's future plans of operations, business
strategy, operating results and financial position. Current stockholders and
prospective investors are cautioned that any forward-looking statements are not
guarantees of future performance and are subject to risks and uncertainties and
that actual results may differ materially from those included within the
forward-looking statements as a result of various factors, including, without
limitation, the uncertainty of the Company's ability to succeed in its business
strategy to acquire companies in the technology industry, develop power cell
technologies, and increase the number of commercial hotels serviced by its dry
cleaning business. Such factors are described under the headings "Item 1. -
Business " and "Management's Discussion and Analysis of Financial Condition and
Results of Operations".

ITEM 1.           BUSINESS

OVERVIEW

         FORMATION

         The Company was incorporated as a New Jersey corporation in 1993.

FUEL CELL COMPANY BUSINESS

         The Company and Fuel Cell Companies, Inc., a privately held Nevada
corporation, ("FCCI"), entered into an Agreement and Plan of Merger (the "Merger
Agreement"), pursuant to which the Company was to merge a wholly-owned
subsidiary of the Company with and into FCCI in a stock-for-stock transaction
(the "Merger"). The Merger Agreement was terminated as discussed below.

         The Company acquired certain assets of FCCI including FCCI's equity
interests in SOFC Energy, Inc. ("SOFC Energy"), Micro Fuel Cell Systems, Inc.
("MFCS") and Clean Power Industries, Inc. (" CPI") both by foreclosing upon the
collateral that secured certain notes of FCCI and executing the Exchange
Agreement discussed below. The Company purchased and canceled notes (the "FCCI
Notes") of FCCI from the New York lender (the "Lender") that was the holder of
the FCCI notes. The FCCI Notes, in the aggregate principal amount of $700,000,
together with accrued interest thereon, were secured by FCCI's interests in SOFC
Energy, MFCS and CPI and certain other assets of FCCI. The Company's Chairman is
a founding partner of the Lender. The Company issued to the Lender a promissory
note in the principal amount of $725,866, representing principal plus accrued
interest on the FCCI Notes as of the date of the transaction. The promissory
note has an interest rate of 8% and was due and payable on or before October 29,
2001. In connection with the transaction, the Lender assigned all of its
interest in the promissory note (the "TechTron Note") to TechTron, Inc.,
("TechTron") a company in which most of the outstanding shares are owned by
Alvin S. Trenk, Chairman of the Company, Martin G. Jacobs, M.D., a Director of
the Company and Steven L. Trenk, Chief Executive Officer of the Company,
collectively, (the "Certain Executive Officers"). TechTron has agreed to extend
the due date of the TechTron Note to April 30, 2002.





                                      -2-
<PAGE>





         On August 2, 2001, the Company, FCCI and certain executive officers of
FCCI entered into an Exchange Agreement dated July 31, 2001 (the "Exchange
Agreement"), pursuant to which the Merger Agreement was terminated by mutual
consent and the Company acquired certain assets of FCCI. The assets acquired by
the Company included the capital stock of MFCS, SOFC Energy and CPI owned by
FCCI including all such capital stock previously owned, directly or indirectly,
by the executive officers of FCCI, representing approximately 77%, 90% and 100%
of the outstanding equity of MFCS, SOFC Energy and CPI, respectively. As a
result of the Company's acquisition of majority interests in MFCS, SOFC Energy
and CPI, the Company is now in the fuel cell technology development business.

         Pursuant to the Exchange Agreement, the Company issued 780,000 shares
of its common stock to FCCI with an approximate value of $1,021,800, or $1.31
per share, which was the fair market value of the Company's common stock on the
date of the transaction. The 780,000 shares represent consideration paid by the
Company to secure the additional equity interests in SOFC Energy, MFCS and CPI
held by FCCI's executive officers and to secure certain non-competition
covenants of FCCI and its executive officers and agreements necessary for the
Company to properly consummate the transaction. In addition, the Company
recorded $641,275 in capitalized transaction costs relating to the transaction
through December 31, 2001.

         On January 20, 2001, SOFC Energy entered into a license agreement (the
"Adelan Agreement") whereby SOFC Energy was granted exclusive and irrevocable
worldwide license to the existing patented inventions of Adelan Ltd. ("Adelan")
in return for providing certain funding for the further development and
commercialization of Adelan's inventions. As part of the Adelan Agreement,
approximately 10% of the outstanding common stock of SOFC Energy was issued to
Adelan. Under the Adelan Agreement, SOFC Energy was required to fund the
research and development projects and the development of licensed products by
Adelan with quarterly payments aggregating $1,500,000 beginning April 1, 2001.
The first quarterly installment of $375,000 due under the agreement was made by
SOFC Energy. Payments made by SOFC Energy towards the second and third quarter
payments due to Adelan aggregated $520,000 through December 31, 2001.

         In January 2002, SOFC Energy received a notification of default from
Adelan for failure to provide developmental funding under the Adelan Agreement.
At the time of the notification, $605,000 was due to Adelan. SOFC Energy failed
to cure the default and the Adelan Agreement terminated on February 15, 2002.

         On February 27, 2002, the Company and Freedom Cell Power Corp.,
("Freedom") a wholly-owned subsidiary of the Company, entered into a license
agreement with Adelan (the "Freedom License Agreement") by which Freedom
acquired substantially the same rights previously granted to SOFC Energy
pursuant to the Adelan Agreement. As part of the Freedom License Agreement,
Freedom is required to fund the research and development projects and the
development of licensed products by Adelan with weekly payments commencing
February 28, 2002 of $20,000 through March 31, 2002, $100,000 a month for the
three month period ended June 30, 2002 and $125,000 a month for the six month
period ended December 31, 2002. Additionally, Adelan is to receive 200,000
shares of the Company's common stock and a warrant to purchase an additional
100,000 shares of common stock with an exercise price of $1.00.





                                      -3-
<PAGE>




         Freedom, through its strategic partnership with Adelan, is developing
proprietary systems and products related to the portable, automotive,
residential and commercial sectors utilizing Adelan's Solid Oxide Fuel Cell
technology. Early commercial applications where Solid Oxide Fuel Cells are
expected to find dominant and competitive positions include power systems and
auxiliary power units for trucks, automobiles and recreational vehicles.

         MFCS is a company enrolled in the Technology Affiliates Program with
the California Institute of Technology ("CalTech"), and the Jet Propulsion
Laboratory ("JPL"), a federally funded research and development facility managed
by CalTech for the National Aeronautics and Space Administration ("NASA"). As a
result of the affiliate relationships with JPL and CalTech, MFCS holds an option
to acquire exclusive rights to the exploitation of the micro DMFC technologies
that are currently patent pending to JPL and CalTech. To date, JPL and CalTech
have filed the first of what is expected to be multiple patents for micro DMFC
related technologies and processes. Micro DMFCs produce electricity from the
simple components of methanol, water and air. The DMFC converts the energy in
methanol into an electric current, and will be used to power portable electronic
devices such as laptop computers, cell phones, PDAs and other small electronic
communication and entertainment devices.

         The following purchase price allocation is based on an analysis of fair
market value performed by an independent third party valuation specialist. The
values of the intangible assets are being amortized over five years. The
allocation of the purchase price to the net assets acquired is as follows:

     Purchase Price:
          Common stock issued (780,000 shares at $1.31 per share)   $1,021,800
          Note payable issued                                          725,866
          Acquisition costs                                            641,275
                                                                   -----------
     Total purchase price                                           $2,388,941

     Allocation:
          Current Assets                                               18,172
          Fixed Assets                                                 10,485
          Goodwill and Other Intangible Assets                      1,374,427
          Current liabilities                                          24,143
          In-process research & development                         1,010,000
                                                                   ----------
     Total allocation                                              $2,388,941

     The following unaudited pro forma summary presents information as if the
acquisition had occurred at the beginning of the respective periods:

                                                 FOR THE YEAR ENDED
                                                 ------------------
                                          DEC. 31, 2001       DEC. 31, 2000
                                          -------------       -------------
         Revenues                         $1,079,569          $  1,311,471
         Loss from continuing
             operations                   $(5,021,834)        $ (4,701,222)
         Net loss                         $(4,648,334)        $ (3,646,250)
                                          ===========         ============
           Pro forma loss per share       $     ( .99)        $       (.82)
                                          ============        ============

     The pro forma information is not necessarily indicative of the results that
would have occurred had the acquisition taken place at the beginning of the
respective periods.







                                      -4-
<PAGE>



DRY CLEANING BUSINESS

     During the second quarter of 1998, the Company established a subsidiary,
United Dry Cleaning, L.L.C. ("United") for the purpose of acquiring and
operating dry cleaning facilities initially in the Phoenix, Arizona area. This
area was selected for its rapid growth in construction and development and
increase in population, which, management believed, would provide United with
growth potential. The Company committed an aggregate of $1,000,000 to fund
United's initial operations. By early 1999, United owned and operated dry
cleaning plants and stores from eleven locations in the Phoenix area. The
Company divested itself of the majority of its retail dry cleaning business in
1999 in order to concentrate on providing dry cleaning services primarily to the
hospitality industry.

     In November 1999, the Company formed a new subsidiary, Valet-USA, Inc.
("Valet") to provide dry cleaning services to primarily the hospitality industry
in the Phoenix, Arizona area. Valet was formed as part of the Company's focus on
servicing the hospitality industry, as opposed to the retail customer market.
Management believes the Company can generate higher revenues from the
hospitality business than the Company has historically derived from the retail
business. Management believes the Company will benefit from the reduction in
employee payroll and benefit expense that the Company expects as a result of the
Company's shift from the retail business to the hospitality business as well as
the elimination of most retail advertising.

     Since inception, the Company's sales and margin from its dry cleaning
operations have been below levels originally anticipated by the Company. This
reduced level of sales and margin, directly related to increased costs and
competition in the retail drop store market, resulted in lower than anticipated
cash flow. As a result, in 1999 the Company arranged for a $250,000 line of
credit for Valet to fund the daily operation. The line of credit is with a
company owned by the Chairman of the Company. The line of credit bears interest
at a rate of 8% per annum and is payable on demand.

     Although management believes that the Company's retail drop store business
underperformed, through a sales and marketing campaign, the Company increased
its number of total hotel customers from approximately 35 at inception of the
business to approximately 138 hotel customers as of December 31, 2001. Hotel
customers require employee, guest, drapery and linen services and the Company
believes it can continue to develop this niche within the Phoenix, Arizona dry
cleaning market. For the years ended December 31, 2001 and 2000, respectively,
the Company recorded $858,075 and $932,025 in sales to hotel customers,
representing 83% and 81% of total sales. Management has concluded that in order
for the Company's dry cleaning business to be successful, the Company must
continue to focus on seeking out new hotel customers.

INVESTMENTS IN INFORMATION TECHNOLOGY BUSINESSES

     On August 31, 2000, the Company purchased a 2% equity interest in
Technology Keiretsu, LLC ("TK"), the parent company of Alliant Technologies,
Inc. ("Alliant"). Alliant is a provider of Internet technology solutions for
business that offers a complete range of services, including strategic business
consulting, e-commerce application development, business process engineering and
infrastructure engineering. The purchase price for the Company's interest was
$250,000 cash and 66,666 shares of the Company's common stock valued at
$583,327, or $8.75 per share, which was the fair market value of the stock on
the date the transaction was consummated. On September 29, 2000, the Company





                                      -5-
<PAGE>

executed an Exchange Agreement whereby the Company exchanged its 25% interest in
Little Universe, LLC ("LU"), acquired from Alliant in April 2000 for $250,000,
for an additional 1% equity interest in TK. Prior to the exchange the Company
had recorded $18,076 in loss related to their equity portion of LU's loss. In
September 2001, the Company recorded an impairment charge of $799,451 based on
analysis of current market conditions and discussions with TK management to
determine the approximate fair market value of the Company's minority equity
investment. As of December 31, 2001, the Company's 3% equity interest in TK is
currently valued at $265,800 in the accompanying Consolidated Balance Sheet.

     On September 1, 2000, the Company purchased a 4% equity interest in
SupportScape, Inc. ("SupportScape"). The all-cash purchase price was $250,000.
SupportScape is a web resource which provides real time customer support to
e-businesses through personalized mail response service to customers through
online query forms and e-mails as well as through live one-to-one chat. In
December 2001, the Company wrote off its entire investment in SupportScape. The
Company's decision to write down its investment was based on current market
conditions and discussions with SupportScape management. SupportScape offices
were destroyed in the World Trade Center disaster and has been unable to provide
the Company with necessary information to determine the fair market value of its
investment.

PURCHASE AGREEMENT

     In August 2000 the Company sold to Lazar & Company I.G., LLC ("Lazar"), a
New York limited liability company, 200,000 shares of the Company's common stock
and a warrant to purchase 6,800,000 additional shares of the Company's common
stock at an exercise price of $3.00 per share, (the "Warrant"). The rights to
purchase the shares were to vest in five portions based upon targets relating to
the market capitalization of the Company. The first portion of shares
purchasable under the warrant, representing 850,000 shares, was exercisable as
of December 31, 2000 as a result of the first targeted market capitalization of
the Company being achieved.

     The purchase price for the 200,000 shares of common stock was $750,000, or
$3.75 per share, which was the fair market value of the stock on the date the
agreement was executed. The purchase price for the warrant was $350,000, for an
aggregate purchase price of $1,100,000 (the "Purchase Price"). Lazar paid the
Company $50,000 in cash and delivered to the Company a $1,050,000 secured
recourse promissory note (the "Note") with an interest rate of 7% per annum as
payment of the Purchase Price.

     On December 5, 2000, the Company entered into an agreement with Lazar
whereby the Company obtained the right under certain circumstances to purchase
from Lazar portions of the Warrant. The purchase price would be paid by the
Company by a reduction of the unpaid principal amount due from Lazar pursuant to
the Note. The Company's right to purchase portions of the Warrant extended for a
period of 180 days from the date of the agreement. The Company exercised all of
its available purchase rights and purchased an aggregate of 5,950,000 shares
under the Warrant pursuant to the agreement at an aggregate exercise price of
$204,167.




                                      -6-
<PAGE>


     In August 2000, the Company issued warrants to purchase up to an aggregate
of 1,350,000 shares of common stock at an exercise price of $3.00 per share to
Certain Executive Officers. The rights to purchase the shares vest in five
portions based upon targets relating to the market capitalization of the
Company. As of December 31, 2000, the first portion of shares purchasable under
the warrant, representing 168,750 shares, were exercisable based upon the first
targeted market capitalization of the Company being achieved. The Company
recorded a compensation charge of $1,012,500 in 2000 relating to the vested
portion of the Warrants. As of December 31, 2001, no other portions were vested.

FAILED MERGER

     On February 5, 1999, the Company and TelaLink Network, Ltd., a privately
held Delaware corporation ("TelaLink") executed an Agreement and Plan of Merger
("Merger Agreement") to merge the two companies in a stock-for-stock transaction
(the "Merger"). On September 21, 1999, the Company terminated the TelaLink
Merger Agreement upon determining that financing for the proposed transactions
would not be available on terms acceptable to the Company.

     As of the date of termination, the Company had loaned a total of $1,027,000
to TelaLink and its affiliates to provide working capital pursuant to promissory
notes made by TelaLink in favor of the Company bearing an interest rate of 12%
per annum due and payable on April 30, 2000. On January 19, 2000, the Company
sold its interests in the TelaLink notes as discussed below.

     The Company entered into a Stock Purchase Agreement (the "Stock Purchase
Agreement") by and among the Company, Pine Tree Telephone and Telegraph Company
("PTTC") and the principal (95%) stockholder of PTTC, whereby the Company agreed
to purchase not less than 95% of PTTC's issued and outstanding capital stock.
PTTC is a telecommunication services provider to areas near Lewiston and
Portland, Maine. To secure the Company's rights under the Stock Purchase
Agreement, the Company deposited the sum of $915,000 in an escrow account. The
deposit was to be treated as a non- refundable deposit against the purchase
price to be paid by the Company at closing, or otherwise in accordance with the
Stock Purchase Agreement.

     On January 19, 2000, the Company received $1,463,800 and a subsequent
payment of $1,538 pursuant to the terms of an Inter-Party Agreement by and among
the Company, Quorum Communications, Inc., TelaLink, Country Road Communications,
Inc. ("Country Road"), Prudential Insurance Company of America and various other
unrelated third parties. The Company also received reimbursement of the $915,000
PTTC deposit plus accrued interest of $50,338, in exchange for the Company
assigning all of its rights and obligations under the Stock Purchase Agreement.

     Under the terms of the Inter-Party Agreement, the Company sold its interest
in the various TelaLink notes totaling $1,027,000 to Country Road for a purchase
price of up to $1,100,000, of which $500,000 was paid at closing and the balance
paid in the form of a promissory note ("The Promissory Note"). The Promissory
Note had an interest rate of 6.5% per annum and was to mature January 19, 2005.
Interest was due and payable in annual installments commencing on January 19,
2001, which was received by the Company, and on each anniversary thereafter up
to and including the maturity date. Effective August 1, 2001, certain prepayment
conditions of the Promissory Note were met and Country Road was required to
prepay the Promissory Note at an adjusted principal amount of $500,000 plus
accrued and unpaid interest. On September 25, 2001, the Company received
$522,260 from Country Road as prepayment of all principal and accrued interest
amounts due under the Promissory Note.



                                      -7-
<PAGE>





     On April 21, 2000, the Company issued 100,000 shares of the Company's
common stock, with a fair market value of $325,000 to a third party equity
investor of TelaLink in exchange for the release of any and all claims and liens
that it may have the right to assert against TelaLink and the Company. This
value is included in costs of failed acquisition in 2000.

DISCONTINUED OPERATIONS

     FORMER DIALYSIS TREATMENT BUSINESS

     Until October 1997, the Company was engaged primarily in the dialysis
treatment business. The Company and its subsidiaries provided equipment,
services and supplies to individuals in their homes and other residential
alternative sites, including prisons and nursing homes and provided acute care
dialysis placement services. The Company also owned and operated a center to
train individual patients in the self-administration of peritoneal dialysis
treatments. The Company was also engaged in providing consulting and
administrative services to customers (the "Consulting Customers") that provide
dialysis treatments to patients at and from in-center facilities owned and
operated by the customers. The Consulting Customers included Upper Manhattan
Dialysis Center, Inc. ("UMDC"), Alpha Administration Corp. ("Alpha") and
Continental Dialysis Center of the Bronx, Inc. ("CDBI"), each of which is a New
York corporation. All of the outstanding common stock of Alpha and CDBI and 50%
of the outstanding common stock of UMDC is owned by Certain Executive Officers.
The Company, Alpha and CDBI sold substantially all of its assets relating to the
dialysis treatment business in October 1997 to IHS of New York, Inc.(the "IHS
Closing"). UMDC, the Company's remaining Consulting Customer, sold substantially
all of its assets in January 1998 to Renal Research Institute, LLC ("RRI"),
subject to state regulatory approval that was not received until 2001.

     The Company also established an 80% owned subsidiary, Renal Management,
Inc. ("RMI"), to engage in renal disease and nephrology practice management. RMI
did not conduct any substantive business nor enter into any agreements with
customers. In December 1998, the Company sold its interest in RMI to Renal
Disease Management, Inc. ("RDM") in exchange for shares of that company's common
stock. Due to a merger in 2000, the Company received 2,118 shares of Renal Care
Group, Inc. in exchange for its shares of RDM. The Company sold its RDM shares
and received an aggregate of $55,207 in proceeds from the sale.

     Effective January 29, 1998 (the "First RRI Closing"), UMDC sold
substantially all of its assets to RRI pursuant to the terms of an asset
purchase agreement (the "RRI Purchase Agreement") among UMDC, RRI and the
shareholders of UMDC. RRI is a joint venture between Fresenius Medical Care,
N.A. and Beth Israel Medical Center ("BIMC").

     At the First RRI Closing, RRI paid approximately $4,174,000, in partial
payment of an aggregate purchase price (inclusive of payments for a covenant not
to compete) of approximately $7,984,000, for the assets of UMDC. UMDC retained
its accounts receivable, cash and cash equivalents in the transaction, as well
as certain liabilities of UMDC outstanding as of the date of the First RRI
Closing. Under the terms of the RRI Purchase Agreement, BIMC applied for state
regulatory approval (the "NY Approval") to own and operate the in-center
dialysis facility currently operated by UMDC. As a result of this closing, UMDC
was able to pay the Company for certain prior obligations.





                                      -8-
<PAGE>


     In February 2001, in connection with the transactions between UMDC and RRI,
the Company received two payments totaling approximately $1,280,000 for certain
prior obligations. Aggregate payments from RRI to UMDC, the Company and certain
shareholders of UMDC totaled approximately $3,279,000. UMDC operated its
dialysis facility operation through April, 2001 at which time BIMC obtained all
regulatory approvals necessary to operate the unit.

     In 2001 Alpha and CDBI were dissolved. At the time of Alpha's dissolution,
amounts payable to Alpha by the Company totaled $68,779. Amounts payable to
Alpha were offset by the Company with accrued interest due from Alpha not
previously recognized due to realization uncertainties. At the time of CDBI's
dissolution, $26,512 was due the Company from CDBI which the Company wrote off
in 2001. In addition, $120,000 due from CDBI under its consulting and service
agreement were deemed uncollectible by the Company. These fees had not
previously been recorded by the Company due to realization uncertainties.

     In connection with the IHS closing, the Company entered into a consulting
agreement (the "IHS Consulting Agreement") to provide the consulting services of
Certain Executive Officers to IHS for a period of three years from the closing
date, in exchange for aggregate payments of $1,000,000 from IHS payable over the
term of the IHS Consulting Agreement. The IHS Consulting Agreement terminated in
October, 2000. At the time of termination, approximately $162,000 was due to the
Company from IHS under the agreement. The Company received a payment of $75,000
from IHS in July 2001 pursuant to a settlement agreement between the Company and
IHS relating to these fees (See Item 3. Legal Proceedings).

     NON COMPETITION AGREEMENTS

     The Company and the Certain Executive Officers agreed not to compete in the
dialysis treatment and certain related businesses (i) in the case of IHS, within
25 miles of any business acquired by IHS for a period of five years following
October 8, 1997 and (ii) in the case of RRI, generally within the Borough of
Manhattan, New York for a period of ten years following January 29, 1998. The
Company and Certain Executive Officers remain subject to a covenant not to
compete which obligates each of them to refrain from competing with Renal
Treatment Centers, Inc. and certain of its subsidiaries in New Jersey within 35
miles of Cape May Court House, New Jersey in certain businesses for a term of
seven years.

GOVERNMENTAL REGULATION

     GENERAL HEALTH CARE REGULATION

     The Company's former dialysis business and its former consulting customers
operations were subject to extensive governmental regulations at the federal,
state and local levels. The laws, rules and regulations which govern its
consulting customers are very broad and are subject to continuing change and
interpretation. There is also an absence of regulations or decisions
specifically addressing the dialysis business. Thus, it is possible that certain
of the Company's past contractual arrangements or business practices might be
challenged, and if so successfully challenged, there can be no assurance that
the Company would not be adversely affected.

     The Company provided consulting services to certain facilities that are
administered by corporations and/or physicians who are not under the direct
control of the Company. Because the Company does not have control over the
actions of such corporations and physicians who rendered services, the Company
is subject to the risk that such corporations or physicians may have violated
federal, state or local laws and regulations including Medicare and Medicaid
laws without the knowledge or consent of the Company. The Company cannot assure
that limited violations did not occur at such facilities in the past.






                                      -9-
<PAGE>



     ENVIRONMENTAL LAWS

     The Company's fuel cell business is subject to numerous federal, state, and
local laws, regulations and policies that govern environmental protection. These
laws and regulations have changed frequently in the past and may continue to do
so in the future. The Company's operations may not comply with such changes and
it may be required to make significant unanticipated capital and operating
expenditures to comply with such changes. If the Company fails to comply with
applicable environmental laws and regulations, governmental authorities may seek
to impose fines or other penalties, or to revoke or deny the issuance or renewal
of certain permits which are needed for ongoing operations. Accordingly, the
Company might be subject to damage claims or penalties, and we may be curtailed
from conducting our business operations. Management believes that its fuel cell
technology development operation is handled in accordance with applicable laws,
rules and regulations.

     The Company's former operations were, and its current dry cleaning
operations are, subject to various state hazardous waste disposal laws. The
Company disposed of its medical waste through hazardous waste vendors which are
primarily responsible for compliance with such laws. Those laws in effect during
the period in which the Company was engaged in the provision of dialysis related
services did not classify most of the waste produced during the provision of
dialysis services to be hazardous, although disposal of non- hazardous medical
waste is also subject to regulation. The dry cleaning business uses various
cleaning chemicals which are classified as hazardous substances under applicable
state and federal regulations. Management believes that all hazardous substances
used in the dry cleaning operations are handled in accordance with applicable
laws, rules and regulations.

     In its role as owner and/or operator of properties or facilities, the
Company may be subject to liability for investigating and remedying any
hazardous substances that have come to be located on the property, including any
such substances that may have migrated from, or may have been emitted,
discharged, leaked, escaped or been transported from the property. Management is
not aware of any such events. Management is not aware of any pending or
threatened claim, investigation or enforcement action regarding such
environmental issues that, if determined adversely to the Company, would have
material adverse consequences.

     The Company's former dialysis operations were subject to a wide variety of
other federal, state and local environmental laws and regulations. Among the
types of general regulatory requirements faced by health care providers are as
follows: air and water quality control requirements; waste management
requirements; specific regulatory requirements applicable to asbestos,
polychlorinated biphenyls, and radioactive substances; requirements for
providing notice to employees and members of the public about hazardous
materials and wastes; and certain other requirements.

     The Company believes that it is and has been in substantial compliance with
all applicable environmental regulatory requirements, and is not aware of any
noncompliance with applicable environmental regulatory requirements which could
have a material adverse effect on the Company.







                                      -10-
<PAGE>


COMPETITION

     The Company faces intense competition in the markets for fuel cell systems.
In the fuel cell market, there are numerous companies in the United States,
Europe and Asia developing fuel processors, fuel cell stacks utilizing a wide
range of technologies, and integrated fuel cell systems. These companies include
Avista Labs, Ballard Power Systems, H-power, Nuvera, Medis Technologies,
Manhattan Scientifics, Plug Power, Toyota, and International Fuel Cells, among
others. Each of these companies has the potential to capture market share in the
markets the Company intends to address.

     The Company's dry cleaning business faces competition from many individual
and franchised cleaners. The cost of entry into the dry cleaning business is
relatively low. It requires only a low or semi skilled labor force which
management believes is generally available at low to moderate wages in the
Phoenix, Arizona area. The Company believes it can compete by targeting the
hospitality industry. Nonetheless, the Company's dry cleaning business faces
substantial local competition from smaller and similar sized competitors.

EMPLOYEES

     As of March 12, 2002, the Company employed five full-time employees,
including officers, at its corporate offices. As of that date, Valet employed
seventeen full-time and five part-time employees. No employees are covered by
collective bargaining agreements, and the Company considers its employee
relations to be good.

LIABILITY INSURANCE

     The Company carries property, general liability and professional liability
insurance in amounts and coverage deemed adequate by management. However, there
can be no assurance that any future claims will not exceed applicable insurance
coverage and no assurance can be given that liability insurance will continue to
be available at a reasonable cost.

ITEM 2.  PROPERTIES

     The Company's corporate headquarters during 2001 consisted of approximately
1100 square feet located in Florham Park, New Jersey. This space is leased from
a third party and provides for a base annual rent of $20,683 and expires March
2003. In addition, the Company maintains an office in New York. The space is
comprised of approximately 3,700 square feet. The lease provides for a base
annual rent of $212,097 and expires August 2008. The Company's subsidiary,
Valet, conducts dry cleaning operations from a single leased plant and store
location comprising approximately 3,600 square feet. The lease provides for a
base annual rent of $69,223 and expires February 29, 2004. Management believes
that alternative facilities are readily available in the location in which Valet
conducts business.



                                      -11-
<PAGE>


ITEM 3.  LEGAL PROCEEDINGS

     In connection with the Company's sale of assets to IHS of New York ("IHS")
in October 1997, an escrow account was created to secure the indemnity
obligation of the Company to IHS. IHS asserted a claim against the escrow of
approximately $142,000 for indemnification of certain liabilities not assumed by
IHS as part of the IHS Purchase Agreement. The Company responded and defended
against the claim. In September 2000 the Company filed a lawsuit in the Supreme
Court of New Jersey against IHS seeking the release of certain funds from escrow
and seeking to recover $162,000 in unpaid consulting fees pursuant to the IHS
Consulting Agreement dated October 8, 1997.

     In June 2001, the Company executed a settlement agreement and general
release (the "Settlement Agreement") by and among the Company, Alpha, a former
consulting customer of the Company, and IHS. Under the Settlement Agreement, IHS
paid the Company $75,000 in satisfaction of all unpaid consulting fees pursuant
to the consulting agreement and agreed to the release of the balance of the
escrow account to the Company in exchange for indemnification by Alpha for
certain liabilities. The Company received the $75,000 consulting payment and the
balance of $141,290 in the escrow account was released to the Company in July
2001, concluding the matter.

     On October 19, 2001, the District Court, Clark County, Nevada (the "Court")
entered an order (the "Order") in favor of the Company and Fuel Cell Companies,
Inc., as shareholders, enjoining the former board of directors of MFCS from
interfering with the MFCS shareholders' right to call and participate in a
special meeting of MFCS shareholders, and enjoining the board of directors of
MFCS from wasting or encumbering the corporate assets of MFCS, or canceling
shares or issuing additional shares of MFCS stock (the "Order"). The Order
directed that a notice of special meeting of the shareholders of MFCS be sent to
the shareholders. The Order was the result of an application for a temporary
restraining order and motion for preliminary injunction and permanent injunctive
relief filed by FCCI and the Company on August 28, 2001 (the "Application").

     The Application was filed after the former board of directors of MFCS
refused to hold a shareholders meeting called by the shareholders and the
refusal to recognize a transfer of shares of MFCS held by Fuel Cell Companies,
Inc. (the "Shares") to the Company.

     In accordance with the Order, a notice of special meeting was delivered to
the shareholders of MFCS and the special meeting of shareholders was held on
October 29, 2001. At the special meeting, the shareholders of MFCS removed the
former directors of MFCS and elected three new directors. At a meeting of the
board of directors of MFCS following the special meeting, the board of directors
of MFCS approved the transfer to the Company of the shares of MFCS held by FCCI.

     On October 30, 2001, MFCS commenced an action against the former directors
of MFCS and a former attorney for MFCS in the District Court, Clark County,
Nevada to recover costs and other damages incurred by MFCS in connection with
MFCS' litigation with the Company and FCCI as a result of the management of MFCS
by the former directors. This litigation is still pending.

     Many aspects of the former businesses of the Company and its subsidiaries
involved risks of potential liability. The Company and its subsidiaries and
affiliates may be subject to actions by patients and are subject to actions by
employees in the normal course of the Company's and the subsidiaries' respective
former businesses, including actions grounded in personal injury. Further, the
Company and its subsidiaries may, from time to time, be involved in proceedings
with, and investigations by, governmental agencies relating to licensure and to
the Federal, state and local laws, rules and regulations under which the Company
and its subsidiaries operated. Management believes that the outcome of these
proceedings will not have a material adverse effect on the Company's financial
position or results of operations.




                                      -12-
<PAGE>


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

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

PART II

ITEM 5.  MARKET FOR COMPANY COMMON STOCK AND RELATED SECURITY HOLDER MATTERS

     The Company's common stock is listed on the Nasdaq SmallCap Market (the
"SmallCap") under the trading symbol "TKSS." There were approximately 73 holders
of record of the Company's common stock as of March 12, 2002. The following
table sets forth the closing high and low bids for each of the securities for
each quarter following the quarter ended December 31, 1999. The figures set
forth below were obtained from the National Association of Securities Dealers
(NASD) "Monthly Market Summary Reports".

              THREE MONTHS ENDED           HIGH            LOW
              ------------------           ----            ---

              March 31, 2000               10.75             2
              June 30, 2000                 5.44          2.13
              September 30, 2000            9.81          3.25
              December 31, 2000             8.94             1
              March 31, 2001               1.563          .375
              June 30, 2001                2.150         1.313
              September 30, 2001            3.50           .73
              December 31, 2001              .95           .38

         On January 3, 2000, the Company granted a warrant to purchase up to an
aggregate of 100,000 shares of its common stock to a financial services provider
of which the Chairman is a founding partner at an exercise price of $2.00, which
was the fair market value of the Company's common stock on the date of grant.
The warrant has an estimated value of $73,482 calculated using the Black-Scholes
option pricing model and has been expensed in the accompanying Consolidated
Statements of Operations.

         On March 22, 2000, the Company granted a warrant to purchase up to an
aggregate of 50,000 shares of its common stock to Alliant, at an exercise price
of $3.00. The warrant has an estimated value of $203,753 calculated using the
Black-Scholes option pricing model and has been expensed in the accompanying
Consolidated Statements of Operations.




                                      -13-
<PAGE>


         On July 6, 2000, the Company granted a warrant to purchase up to an
aggregate of 25,000 shares of its common stock to a financial services provider,
at an exercise price of $3.50. The warrant has an estimated value of $64,132
calculated using the Black-Scholes option pricing model and has been expensed in
the accompanying Consolidated Statements of Operations.

         During 2000, the Company issued 181,485 shares of its common stock in
connection with the cashless exercise of stock options issued under the
Company's 1994 Long-Term Incentive Award Plan and the 1997 Equity Incentive Plan
as well as 73,393 shares in connection with the exercise of warrants issued to
professional services providers. The Company recorded compensation expense of
$1,108,500 relating to the issuance of these shares in the accompanying
Consolidated Statements of Operations.

         During 2000, the Company granted warrants to purchase up to an
aggregate of 330,000 shares of its common stock to the Company's former board of
advisors who were terminated in the first quarter of 2001. As a result, 242,500
of the 330,000 warrants originally issued were canceled as they were unvested.
The remaining 87,500 warrants have exercise prices ranging from $4.00 to $4.50
and have been valued at $317,048 utilizing the Black-Scholes option pricing
model. Such amount has been expensed in the accompanying Consolidated Statements
of Operations.

         On July 31, 2001, the Company awarded to Jeffrey M. Trenk a warrant to
purchase up to an aggregate of 100,000 shares of common stock at an exercise
price of $1.31, which was the fair market value of the Company's common stock on
the date of grant. The warrant has an estimated value of $113,890 calculated
using the Black-Scholes option pricing model and has been recorded in general
and administrative expenses in the accompanying Consolidated Statements of
Operations. Jeffrey M. Trenk provides consulting services to the Company's dry
cleaning operation. Jeffrey M. Trenk is the son of Alvin S. Trenk, Chairman of
the Company, nephew of Martin G. Jacobs, M.D., a director of the Company, and
brother of Steven L. Trenk, Chief Executive Officer of the Company.

         On July 31, 2001, the Company granted warrants to purchase up to an
aggregate of 100,000 shares of its common stock to a financial services provider
of which the Chairman of the Company is a founding partner. The warrants were
granted with an exercise price of $1.31, which was the fair market value of the
Company's common stock on the date of grant. The warrants were issued for
financial services provided in connection with the Company's fuel cell
subsidiary acquisitions (See Note 12 to the Consolidated Financial Statements).
The warrant has an estimated fair value of $99,038 which was calculated using
the Black-Scholes option pricing model. Such amount has been included as part of
the purchase price relating to the FCCI subsidiary acquisitions.




                                      -14-
<PAGE>


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS

RESULTS OF OPERATIONS

         Year Ended December 31, 2001 Compared with Year Ended December 31,
2000.

         On October 8, 1997, the Company sold substantially all its New Jersey,
New York, Connecticut and Pennsylvania dialysis business assets to IHS of New
York, a New York corporation ("IHS"). Following the IHS closing, the Company's
sources of revenue included amounts payable for consulting services to be
provided to IHS through October 2000, at a rate of $27,777 per month. For the
year ended December 31, 2001 and 2000, the Company recognized $47,223 and
$166,662, respectively, for consulting services under this agreement. The
reduction in 2001 revenue versus the prior year revenue is due to the expiration
of the agreement in October, 2000. Amounts recorded in 2001 relate to a portion
of the payments received by the Company in July, 2001 pursuant to a settlement
agreement between the Company and IHS which were previously unrecorded due to
realization uncertainties.

         Valet-USA, Inc. ("Valet"), a wholly-owned subsidiary of the Company,
provides dry cleaning services primarily to the hospitality industry in the
Phoenix, Arizona area. As of December 31, 2001, Valet provided employee, guest,
drapery and linen dry cleaning services to approximately 138 hotel customers in
the Phoenix area. The Company believes that it can generate higher revenues from
the hospitality business than it derived from the retail business and that the
Company will benefit due to a reduction in personnel, supplies, capital
equipment lease obligations and real property leases as a result of the sale of
the retail business. Valet currently operates a single plant and drop store from
a leased location. The results of the terrorist events of September 11, 2001
have adversely effected the travel and related industries and have negatively
impacted the Company's hospitality dry cleaning business. Several hotels
serviced by Valet have filed for Chapter 11 Bankruptcy. In addition, Valet has
seen a 30% decrease in revenues from September 11, 2001 through December 31,
2001 as compared to the same period for the previous year. This decrease in
revenues is directly attributable to the terrorist events of September 11, 2001.

         On April 5, 2001, the Company and Fuel Cell Companies, Inc., a
privately held Nevada corporation, ("FCCI"), entered into an Agreement and Plan
of Merger, (the "Merger Agreement") pursuant to which the Company was to merge a
wholly-owned subsidiary of the Company with and into FCCI in a stock-for-stock
transaction, (the "Merger"). The Merger Agreement was subsequently terminated.

         The Company acquired certain assets of FCCI including FCCI's equity
interests in SOFC Energy, Inc. ("SOFC Energy"), Micro Fuel Cell Systems, Inc.
("MFCS") and Clean Power Industries, Inc. (" CPI") both by foreclosing upon the
collateral that secured certain notes of FCCI and executing the Exchange
Agreement discussed below. The Company purchased and canceled notes (the "FCCI
Notes") of FCCI from the New York lender (the "Lender") that was the holder of
the FCCI notes. The FCCI Notes, in the aggregate principal amount of $700,000,
together with accrued interest thereon, were secured by FCCI's interests in SOFC
Energy, MFCS and CPI and certain other assets of FCCI. The Company's Chairman is
a founding partner of the Lender. The Company issued to the Lender a promissory
note in the principal amount of $725,866, representing principal plus accrued
interest on the FCCI Notes as of the date of the transaction. The promissory
note has an interest rate of 8% and was due and payable on or before October 29,
2001. In connection with the transaction, the Lender assigned all of its
interest in the promissory note (the "TechTron Note") to TechTron, Inc.,
("TechTron") a company in which most of the outstanding shares are owned by
Alvin S. Trenk, Chairman of the Company, Martin G. Jacobs, M.D., A Director of
the Company and Steven L. Trenk, Chief Executive Officer of the Company,
collectively, (the "Certain Executive Officers"). TechTron has agreed to extend
the due date of the TechTron Note to April 30, 2002.



                                      -15-
<PAGE>


         On August 2, 2001, the Company, FCCI and certain executive officers of
FCCI entered into an Exchange Agreement dated July 31, 2001 (the "Exchange
Agreement") pursuant to which the Merger Agreement was terminated by mutual
consent and the Company acquired certain assets of FCCI including the capital
stock of MFCS, SOFC Energy, and CPI, owned by FCCI including all such capital
stock previously owned, directly and indirectly, by executive officers of FCCI
representing approximately 77%, 90% and 100% of the outstanding equity of MFCS,
SOFC Energy and CPI, respectively. As a result of the Company's acquisition of
majority interests in MFCS, SOFC Energy and CPI, the Company is now in the fuel
cell technology development business.

         On April 20, 2000, MFCS entered into an agreement with the Jet
Propulsion Laboratory ("JPL") to fund certain work to be performed by JPL
through its Technology Affiliates Program, pursuant to a National Aeronautics
and Space Administration ("NASA") task order (the "JPL Task Plan"). In
connection with the agreement, JPL and certain individuals of JPL were issued
approximately 9% of the currently outstanding common stock of MFCS. Funding
requirements for the projects are based on periodic costs as incurred. The total
estimated funding requirement for the projects to be completed by JPL are
estimated to be approximately $1,700,000. The Company has provided $100,000 in
funding to JPL pursuant to the JPL Task Plan from the date of the Company's
acquisition of its majority interest in MFCS through December 31, 2001.
Additionally, the Company made subsequent payments of $100,000 to JPL in 2002.
Payments made by MFCS to JPL prior to the Company's acquisition of MFCS
aggregated $494,000.

         As a result of the affiliate relationships with JPL and CalTech, MFCS
holds an option to acquire exclusive rights to the exploitation of the micro
DMFC technologies that are currently patent pending to JPL and CalTech. To date,
JPL and CalTech have filed the first of what is expected to be multiple patents
for micro DMFC related technologies and processes. Micro DMFCs produce
electricity from the simple components of methanol, water and air. The DMFC
converts the energy in methanol into an electric current, and will be used to
power portable electronic devices such as laptop computers, cell phones, PDAs
and other small electronic communication and entertainment devices.

         On January 20, 2001, SOFC Energy entered into a license agreement (the
"Adelan Agreement") whereby SOFC Energy was granted exclusive and irrevocable
worldwide license to the existing patented inventions of Adelan, Ltd. ("Adelan")
in return for providing certain funding for the further development and
commercialization of Adelan's inventions. As part of the Adelan Agreement,
approximately 10% of the outstanding common stock of SOFC Energy was issued to
Adelan. Under the Adelan Agreement, SOFC Energy is required to fund the research
and development projects and the development of licensed products by Adelan with
quarterly payments aggregating $1,500,000 beginning April 1, 2001. The first
quarterly installment of $375,000 due under the agreement was made by SOFC
Energy. The Company provided an additional $520,000 in funding to Adelan
pursuant to the Adelan Agreement through December 31, 2001.

         In January 2002, the Company and SOFC Energy received a notification of
default from Adelan for failure to provide developmental funding under the
Adelan Agreement. At the time of the notification, $230,000 of accrued payments
not made as of December 31, 2001 and $375,000 representing amounts due January
1, 2002 for the first quarter of 2002, were due to Adelan under the Adelan
Agreement. SOFC Energy failed to cure the default and the Adelan Agreement
terminated on February 10, 2002.




                                      -16-
<PAGE>



         On February 27, 2002, the Company and Freedom Cell Power Corp.,
("Freedom") a wholly- owned subsidiary of the Company, entered into a license
agreement with Adelan (the "Freedom License Agreement") by which Freedom
acquired basically the same rights and privileges previously granted to SOFC
Energy pursuant to the Adelan Agreement. Freedom is required to fund the
research and development projects and the development of licensed products by
Adelan with weekly payments commencing February 28, 2002 of $20,000 through
March 31, 2002, $100,000 a month for the three months ended June 30, 2002 and
$125,000 a month for the six month period ended December 31, 2001. Additionally,
Adelan is to receive 200,000 shares of the Company's common stock and a warrant
to purchase an additional 100,000 shares of common stock with an exercise price
of $1.00.

         Freedom, through its strategic partnership with Adelan, is developing
proprietary systems and products related to the portable, automotive,
residential and commercial sectors utilizing Adelan's Solid Oxide Fuel Cell
technology. Early commercial applications where Solid Oxide Fuel Cells are
expected to find dominant and competitive positions include power systems and
auxiliary power units for trucks, automobiles and recreational vehicles.

         RECENT DEVELOPMENT

         On March 14, 2002, the Justice Department charged our independent
auditor, Arthur Andersen LLP, with a single felony count of obstruction of
justice for destruction of documents related to its audit of Enron Corp. In
response to this indictment, the Securities and Exchange Commission publicly
announced that it has requested and received assurances from Andersen that it
will continue to audit financial statements in accordance with generally
accepted accounting standards and applicable professional and firm accounting
standards, including quality control standards. The Commission also stated that
it has been advised by Andersen that if it becomes unable to provide these
assurances, it would advise the Commission immediately. The Commission further
stated that as long as Andersen continues to be in a position to provide these
assurances, the Commission will continue to accept financial statements audited
by Andersen in public filings. We obtained from Andersen certain representations
concerning audit quality controls, including representations regarding the
continuity of Andersen personnel working on our audit and the availability of
national office consultation. Investors can call a hotline set up by the
Commission, 1-800-SEC-0330, or e-mail the Commission at help@sec.gov, with any
questions.

         SIGNIFICANT ACCOUNTING POLICIES

         We rely on the use of estimates and make assumptions that impact our
financial condition and results. These estimates and assumptions are based on
historical results and trends as well as our forecasts as to how these might
change in the future. Some of the most-critical accounting policies that might
materially impact our results include:



                                      -17-
<PAGE>


         INTANGIBLES -- The Company amortizes on a straight line basis the
excess cost of net assets acquired over periods not exceeding seven years. The
Company amoritizes the value of intangible assets acquired in its fuel cell
subsidiary acquisitions over an estimated useful life of five years. In June
2001, the FASB issued SFAS No. 141, "Business Combinations" ("SFAS No. 141"),
and SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS No. 142"). SFAS
No. 141 requires all business combinations initiated after June 30, 2001 to be
accounted for using the purchase method of accounting. SFAS No. 142, which will
be adopted by the Company effective January 1, 2002, requires that goodwill and
certain intangible assets resulting from business combinations entered into
prior to June 30, 2001 no longer be amortized, but instead be reviewed for
recoverability. Any write-down of goodwill would be charged to results of
operations as a cumulative change in accounting principle upon adoption of the
new accounting standard if the recorded value of goodwill and certain
intangibles exceeds its fair value. The Company expects that the adoption of
these accounting standards will eliminate the amortization of goodwill which was
$32,000 for the year ended December 31, 2001. Recoverability reviews could
result in periodic write-downs subsequent to the date of adoption.






                                      -18-
<PAGE>


         REVENUES

         There were no revenues in 2001 relating to the Company's fuel cell
technology development business.

         The Company's dry cleaning business recorded revenues of $1,032,346 in
2001 and $1,144,809 in 2000. Of these revenues, approximately $858,075 or 83%
and $932,024 or 81% related to dry cleaning services provided to hotel customers
in 2001 and 2000, respectively, while the remaining $174,271 and $212,785
related to dry cleaning services provided by the retail store. The decrease of
$112,463 relates directly to the terrorist events of September 11, 2001 and
their adverse impact on the hospitality industry serviced by Valet. The Company
anticipates that hotels will continue to be the primary source of revenue for
Valet.

         At the IHS Closing on October 8, 1997, the Company completed the sale
of its New Jersey, New York, Connecticut and Pennsylvania dialysis business
assets to IHS. Following the IHS Closing, the Company's sources of revenue
included amounts payable for consulting services available to IHS through
October 2000, at a rate of $27,777 per month. In 2001 and 2000, the Company
recognized $47,223 and $166,662 in revenue, respectively, for consulting
services under this agreement.

         Prior to the IHS Closing and RRI First Closing, the Company provided
certain services in New York through consulting, administrative, or
subcontracting service arrangements with the Consulting Customers. The
Consulting Customers were partially or 100% owned by the Certain Executive
Officers. Under the Company's agreements with its Consulting Customers, the
Company provided various administrative and consulting services in addition to
equipment and supplies. In exchange for these services, the Company was entitled
to a monthly fee, as well as reimbursement of the Company's direct costs for
equipment and supplies.




                                      -19-
<PAGE>


         For the years ended December 31, 2001 and 2000 respectively, the
Company recorded $600,000 and $1,694,972 in additional revenues related to
payments received from UMDC, a former consulting customer of the Company, not
previously recorded as receivables due to realization uncertainties. Such
amounts have been included in income from discontinued operations in the
accompanying Consolidated Statement of Operations. The Company does not expect
to receive future operating revenues related to its former dialysis based
businesses or from the business of its former Consulting Customers.

         COST OF SERVICES

         Cost of services was $888,215 and $939,721 or 86% and 82% of revenues
attributable to the Company's dry cleaning business in 2001 and 2000,
respectively. Cost of services is primarily comprised of $614,683 and $668,604
in salaries and other payroll expenses as well as $102,571 and $129,975 for
supplies in 2001 and 2000, respectively. In addition, $13,393 and $6,354 of
depreciation expense has been allocated to cost of services in 2001 and 2000,
respectively. The decrease of $51,506 is directly related to the corresponding
decrease in revenues for the period.







                                      -20-
<PAGE>

         GENERAL AND ADMINISTRATIVE EXPENSES

         General and administrative expenses totaled $2,223,841 in 2001, as
compared with $5,035,550 for 2000. The net decrease of $2,811,709 is primarily
comprised of non-cash stock-based compensation expense in 2000 of $2,959,413
including $1,108,500 in compensation expense related to the cashless exercise of
stock options and $1,012,500 relating to warrants that became partially vested
based on the Company achieving a market capitalization target.

         RESEARCH AND DEVELOPMENT

         The Company's fuel cell operation research and development costs
totaled $620,000 from the date of acquisition through December 31, 2001. There
were no such expenses in 2000 due to the Company's fuel cell subsidiaries being
acquired in the third quarter of 2001. Payments made by the Company to Adelan
and JPL under their respective agreements totaled $520,000 and $100,000,
respectively, from the date of acquisition through December 31, 2001.

         ALLOWANCE FOR DOUBTFUL ACCOUNTS

         A provision for doubtful accounts was recorded to the extent deemed to
be adequate to absorb possible losses resulting from uncollectible receivables.
The Company reviews individual accounts and a reserve is established to reflect
any amounts considered doubtful of collection based on the Company's knowledge
of specific payors, an analysis of the aging of the accounts, as well as past
experience with the accounts under review.

         As of December 31, 2001 and 2000, the Company's dry cleaning business
had accounts receivable of $99,134 and $112,988, respectively. As a percentage
of receivables outstanding, the allowance relating to the dry cleaning business
was 26% and 10%, respectively. The increase in allowance is directly related to
the adverse impact of the terrorist events on September 11, 2001 related to the
hospitality industry. Hotel accounts are serviced by the Company's dry cleaning
subsidiary.

         Management continues to evaluate the collectibility of all accounts and
believes the stated allowance as of December 31, 2001 is adequate to absorb
possible losses resulting from uncollectible receivables.

         DEPRECIATION AND AMORTIZATION EXPENSE

         Depreciation and amortization expense for 2001 and 2000 totaled
$125,634 and $65,435, respectively, of which $13,393 and $6,354, respectively,
of depreciation expense related to the dry cleaning business and is included in
cost of services. The increase of $60,199 is directly related to the
amortization of the intangible assets acquired in the Company's fuel cell
subsidiary acquisitions in 2001 as well as additional amortization of
intangibles recorded by the Company's dry cleaning subsidiary.



                                      -21-
<PAGE>




         IMPAIRMENT OF INVESTMENTS

         In September 2001, the Company recorded an impairment charge of
$799,451 based on analysis of current market conditions and discussions with TK
management to determine the approximate fair market value of the Company's
minority equity investment. As of December 31, 2001, the Company's 3% equity
interest in TK is currently valued at $265,800 in the accompanying Consolidated
Balance Sheet.

         In December 2001, the Company wrote off the entire investment in
SupportScape. The Company's decision to write down its investment was based on
current market conditions and discussions with SupportScape management.
SupportScape offices were destroyed in the World Trade Center disaster and has
been unable to provide the Company with necessary information to determine the
fair market value of its investment.

         FAILED ACQUISITION

         In 2000, the Company issued 100,000 shares of the Company's common
stock with a fair market value of $325,000 to a third party equity investor of
TelaLink Network, Ltd. ("TelaLink") in exchange for the release of any and all
claims and liens that it may have the right to assert against TelaLink and the
Company. This value is included in costs of failed acquisition in 2000 (See Note
12 to the consolidated financial statements).

         GAIN ON SALE OF BUSINESS

         On November 16, 1999, the Company sold its majority interest in United
Dry Cleaning LLC ("United") to UDC Acquisition Corp., Inc. ("UDC Acquisition"),
an Arizona corporation. The outstanding common stock of UDC Acquisition is owned
by Jeffrey M. Trenk, son of Alvin S. Trenk, Chairman of the Company, nephew of
Martin G. Jacobs, M.D., a director of the Company and brother of Steven L.
Trenk, Chief Executive Officer of the Company. The sale included net fixed
assets of $199,292, a write-off of net goodwill of $588,959 offset by a relief
from liabilities of $1,544,015. The Company recognized a gain related to the
transaction of $755,764 in the second quarter of 2000, when certain
contingencies were resolved.

         WRITE-OFF OF IN-PROCESS RESEARCH AND DEVELOPMENT ACQUIRED

         The Company recorded $1,010,000 of in-process research and development
costs in connection with the Company's acquisition of majority interests in MFCS
and SOFC Energy. The value of the in- process research and development acquired
is based on an analysis performed by the Company's third party valuation
consultant.

         As a result of the affiliate relationships with JPL and CalTech, MFCS
holds an option to acquire exclusive rights to the exploitation of the micro
DMFC technologies that are currently patent pending to JPL and CalTech. To date,
JPL and CalTech have filed the first of what is expected to be multiple patents
for micro DMFC related technologies and processes. Micro DMFCs produce
electricity from the simple components of methanol, water and air. The DMFC
converts the energy in methanol into an electric current, and will be used to
power portable electronic devices such as laptop computers, cell phones, PDAs
and other small electronic communication and entertainment devices.

         Freedom, through its strategic partnership with Adelan, is developing
proprietary systems and products related to the portable, automotive,
residential and commercial sectors utilizing Adelan's Solid Oxide Fuel Cells.
Early commercial applications, where Solid Oxide Fuel Cells are expected to find
dominant and competitive positions include power systems and auxiliary power
units for trucks, automobiles and recreational vehicles.

         The in-process research and development was valued utilizing the cost
approach on a project by project basis. The historical costs involved in the
research and development effort were identified and the time value of the
investment made in developing the technology considered. The risk profile of the
technology has not changed significantly so far in the development cycle. While
progress has been made in developing the technology, the same uncertainties
regarding successful completion and commercialization exist. An investor selling
the technology at the valuation date would expect to receive a return on the
investment made in developing it, at a rate commensurate with the risk
undertaken in doing so. An investor acquiring the technology at the valuation
date gains the benefit of the expenditures made, and is also that much closer to
reaping the benefit of the expenditures than the Company when those expenditures
were made, justifying a higher valuation. Therefore the costs invested in the
development of the technology are inflated by the appropriate expected rate of
return, or 45%, for such a venture. These values were then reduced on a pro-rata
basis to reflect the Company's percentage ownership in its subsidiaries. The
value of in-process research and development acquired relating to research and
development work performed by JPL was valued at $635,000. The remaining $375,000
of acquired in-process research and development relates to research and



                                      -22-
<PAGE>

development work performed by Adelan.

         INTEREST INCOME, NET

         Net interest income was $149,448 in 2001 and $154,439 in 2000. The
decrease of $4,991 is directly related to an increase in interest income of
$68,779 relating to Alpha, the Company's former consulting customer, offset by
decreases in interest income due to decreased cash available for investment by
the Company as well as declining interest rates and associated returns on
investments.

         BENEFIT FOR INCOME TAXES

         The Company did not record a net tax benefit as of December 31, 2001
and 2000. The benefit for income taxes relating to the loss from continuing
operations is offset by a provision for the same amount related to the income
from discontinued operations. All of the Company's deferred tax assets as of
December 31, 2001 have been offset by a valuation allowance as a result of the
Company's operating results.

LIQUIDITY AND CAPITAL RESOURCES

         The Company experienced a positive net cash flow of $225,655 for 2001.
Net cash used in operating activities of $1,803,169 related primarily to income
from discontinued operations of $600,000 and the Company's net loss of
$4,074,731 offset by stock compensation expense of $145,115 relating to warrants
issued to outside service providers, and an impairment charge of $1,049,451
relating to the Company's minority equity investments in Technology Keiretsu,
LLC and SupportScape, Inc. and a write-off of $1,010,000 relating to in-process
research and development acquired in connection with the Company's fuel cell
subsidiary acquisitions. Net cash provided by investing activities of $2,028,824
reflects amounts repaid by consulting customers of $1,879,891 as well as
repayment of notes receivable of $527,000 and proceeds from the sale of U.S.
Government securities of $500,000.

         FACTORS THAT MAY AFFECT OPERATING RESULTS AND LIQUIDITY

         In addition to the risk factors included in "Item 1. Business," the
following risk factors could materially and adversely affect our future
operating results and could cause actual events to differ materially from those
predicted in forward-looking statements related to our business.

THE COMPANY HAS A HISTORY OF LOSSES, EXPECTS TO SUSTAIN FUTURE LOSSES, AND MAY
NEVER ACHIEVE OR SUSTAIN PROFITABILITY.

         The Company has incurred substantial losses in the past three years.
The Company does not project achieving operating profitability for at least two
years and may not be able to generate sufficient cash flow to support operations
even after achieving profitability. Even if the Company is able to bring its
fuel cell products to the commercial marketplace, the Company will likely
continue to incur operating losses for some period. Even if the Company achieves
profitability, the Company may be unable to sustain or increase its
profitability in the future due to competitive or other pressures.



                                      -23-
<PAGE>

THE COMPANY'S FUEL CELL PRODUCTS ARE STILL BEING DEVELOPED AND TESTED AND THE
COMPANY MAY BE UNABLE TO ACHIEVE VIABLE COMMERCIAL PRODUCTION.


         The Company's fuel cell products are still being developed and tested
and the Company's ability to achieve commercial production of these products is
subject to significant uncertainties including the Company's ability to complete
necessary research and development, field testing, manufacture and assemble
products on a commercial scale, obtain raw materials and key component parts
from third party suppliers, and develop effective means of marketing and selling
the Company's products.

THE COMPANY MAY NEVER COMPLETE THE RESEARCH AND DEVELOPMENT OF A COMMERCIALLY
VIABLE FUEL CELL SYSTEM.

         The Company does not know whether it will successfully complete
research and development of a commercially viable fuel cell system. The Company
has produced and is currently testing a number of early stage demonstrations of
its fuel cell systems. However, these systems require significant technical
improvements and research and development before they can be considered for
commercial use. There can be no assurance that our efforts to resolve technical
challenges and to do so in a manner that allows the Company to produce reliable
fuel cell systems at an acceptable cost will be effective.

THE COMPANY MAY NOT BE ABLE TO MEET ITS PRODUCT DEVELOPMENT AND
COMMERCIALIZATION MILESTONES.

         The Company's ability to compete effectively against other
organizations will depend upon its ability to achieve certain product
development and commercialization milestones in a timely and cost-effective
manner. The successful introduction of the Company's fuel cell products is
likely to be time sensitive, as other organizations are developing and
commercializing similar products. If the Company is unable to meet its
milestones, the Company's products may not be competitive or may not have a
market when they are introduced.

THE COMPANY MAY NOT BE ABLE TO OBTAIN SUFFICIENT FUNDS TO GROW ITS BUSINESS.

         The Company is currently working to address its capital requirements.
However, there is no assurance that the Company will be able to complete this
financing or that even if the Company does, it will be adequate to meet the
Company's requirements. The Company does not currently have adequate bank credit
facilities or other working capital lines under which it may borrow funds for
working capital purposes. The Company's ability to obtain additional funding,
through private debt or equity financings, will be subject to a number of
factors including market conditions, the Company's operating results, technical
progress, and investor sentiment. These factors may make the timing, amount and
terms and conditions of such funding unattractive to the Company. If the Company
cannot raise adequate funds, the Company may not be able to continue to fund its
operations.

         The Company previously advanced $355,022 to TechTron net of repayments.
Most of the outstanding shares of TechTron are owned by Alvin S. Trenk, Chairman
of the Company, Steven L. Trenk, Chief Executive Officer of the Company and
Martin G. Jacobs, M.D. a director of the Company, collectively, (the "Certain
Executive Officers"). The Company obtained promissory notes from TechTron in a
principal amount equal to the aggregate amount of the advances, the majority of
which bear interest at a rate of 8% per annum and are payable upon demand. All
amounts due from TechTron are unsecured but guaranteed by Certain Executive
Officers.


                                      -24-
<PAGE>




         In connection with the Company's acquisition of its majority interest
in its fuel cell subsidiaries (See Note 2), the Company issued a promissory note
in the principal amount of $725,866, which was assigned to TechTron. The
TechTron Note was issued in connection with the Company's purchase and
cancellation of certain notes of FCCI from TechTron which were secured by FCCI's
interests in its former subsidiaries and certain other assets of FCCI. The
TechTron Note has an interest rate of 8% and is due and payable on or before
October 29, 2001. TechTron has agreed to extend the due date on the TechTron
Note to April 30, 2002. Amounts due from TechTron have been offset against
amounts due to TechTron as of December 31, 2001 in the accompanying Consolidated
Balance Sheet.

         On April 20, 2000, MFCS entered into an agreement with the Jet
Propulsion Laboratory ("JPL") to fund certain work to be performed by JPL
through its Technology Affiliates Program, pursuant to a National Aeronautics
and Space Administration ("NASA") task order (the "JPL Task Plan"). In
connection with the agreement, JPL and certain individuals of JPL were issued
approximately 9% of the outstanding common stock of MFCS. Funding requirements
for the projects are based on periodic costs as incurred. The total estimated
funding requirement for the projects to be completed by JPL is approximately
$1,700,000. The Company has provided $100,000 in funding to JPL pursuant to the
JPL Task Plan from the date of the Company's acquisition of its majority
interest in MFCS through December 31, 2001. Additionally, the Company made
subsequent payments aggregating $100,000 to JPL in 2002. Payments made by MFCS
to JPL prior to the Company's acquisition of MFCS aggregated $494,000.

         On January 20, 2001, SOFC Energy, Inc. ("SOFC Energy") entered into a
license agreement (the "Adelan Agreement") whereby SOFC Energy was granted
exclusive and irrevocable worldwide license to the existing patented inventions
of Adelan Ltd. ("Adelan") in return for providing certain funding for the
further development and commercialization of Adelan's inventions. As part of the
Adelan Agreement, approximately 10% of the outstanding common stock of SOFC
Energy was issued to Adelan. Under the Adelan Agreement, SOFC Energy was
required to fund the research and development projects and the development of
licensed products by Adelan with quarterly payments aggregating $1,500,000
beginning April 1, 2001. The first quarterly installment of $375,000 due under
the agreement was made by SOFC Energy. The Company has provided $520,000 in
funding to Adelan pursuant to the Adelan Agreement through December 31, 2001.

         In January 2002, the Company and SOFC Energy received a notice of
default from Adelan for failure to provide Adelan with all required
developmental funding under the Adelan Agreement. At the time of the
notification, $605,000 was due from the Company to Adelan under the Adelan
Agreement. SOFC Energy failed to cure the default and the Adelan Agreement
terminated on February 15, 2002.

         On February 27, 2002, the Company and Freedom Cell Power Corp.
("Freedom"), a wholly- owned subsidiary of the Company, entered into a license
agreement with Adelan (the "Freedom License Agreement") by which Freedom
acquired substantially the same rights previously granted to SOFC Energy
pursuant to the Adelan Agreement.

         Under the Freedom License Agreement, Freedom is required to fund the
research and development projects and the development of licensed products by
Adelan with weekly payments commencing February 28, 2002 of $20,000 through
March 31, 2002, $100,000 a month for the three months ended June 30, 2002 and
$125,000 a month for the six month period ended December 31, 2002. Additionally,
Adelan is to receive 200,000 shares of the Company's common stock and a warrant
to purchase an additional 100,000 shares of common stock with an exercise price
of $1.00.



                                      -25-
<PAGE>


         The Company will need to obtain additional financing to fund the
Company's newly acquired fuel cell subsidiary operations. Although the Company
is actively pursuing such financing, there can be no assurance that the Company
will be able to obtain adequate financing on terms acceptable to the Company.
The Company expects that its cash and cash equivalents will be sufficient to
fund the Company's operations through April 30, 2002.

         In 1999, the Company arranged for a $250,000 line of credit for Valet
to fund its daily operations. The line bears interest at a rate of 8% per annum
and is payable on demand. The line of credit is with a company owned by the
Chairman of the Company. As of December 31, 2001, $147,500 of debt remained
available on the line of credit.

         In April 2001, the Company received $600,000 from Upper Manhattan
Dialysis Center, Inc. ("UMDC"), a former consulting customer of the Company, as
repayment of all remaining amounts due from UMDC, as well as amounts assigned to
the Company by Certain Executive Officers. No additional amounts are due the
Company from UMDC.

         On August 21, 2000, the Company sold to Lazar & Company, I.G., LLC
("Lazar"), 200,000 shares of the Company's common stock and a warrant (the
"Lazar Warrant") to purchase 6,800,000 additional shares of the Company's common
stock at an exercise price of $3.00 per share. Lazar paid the Company $50,000 in
cash and delivered to the Company a $1,050,000 secured recourse promissory note
(the "Note") as payment of the purchase price. On December 5, 2000, the Company
entered into an agreement with Lazar whereby the Company obtained the right
under certain circumstances to purchase from Lazar portions of the Lazar
Warrant. The purchase price would be paid by the Company by a reduction of the
unpaid principal amount due from Lazar pursuant to the Note. The Company's right
to purchase portions of the Lazar Warrant extended for a period of 180 days from
the date of the agreement. The Company has exercised its entire available
purchase rights and purchased an aggregate of rights to purchase 5,950,000
shares under the Lazar Warrant at an aggregate exercise price of $204,167. The
remaining 850,000 warrants are vested.

         We are obligated to make future payments under various contracts we
have entered into, including amounts pursuant to research and development
agreements, employment agreements, capital leases, noncancelable operating lease
agreements for office space and a retail store. Future minimum contractual cash
obligations for the next five years and in the aggregate at December 31, 2001,
are expected to be as follows:




                                      -26-
<PAGE>


<TABLE>
<CAPTION>


                                   PAYMENTS DUE BY PERIOD YEARS ENDING DECEMBER 31,
                                   ------------------------------------------------
Contractual
OBLIGATION                     TOTAL       2002          2003         2004         2005       2006
-------------------------    ---------  -----------   ----------    ---------  --------   ----------

<S>                        <C>          <C>          <C>           <C>      <C>      <C>
JPL R & D (1)               $1,106,000   $  600,000   $  506,000    $      0  $       0  $       0
Adelan R & D (2)             1,150,000    1,150,000          0             0          0          0
Operating leases (3)         1,279,000      308,000      295,000     230,000    223,000    223,000
Capital leases                  41,796       13,932       13,932      13,932          0          0
Employment Agreements (4)    3,025,000      650,000      650,000     625,000    550,000    550,000
                            ----------   ----------   ----------   ---------   --------   --------
                            $6,601,796   $2,721,932   $1,464,932   $ 868,932   $773,000   $773,000
                            ----------   ----------   ----------   ---------   --------   --------

<FN>

(1)  Total funding requirements for the projects to be completed by JPL are
     estimated to be approximately $1,700,000. Aggregate payments as of December
     31, 2001 totaled $594,000. Funding requirements are based on periodic costs
     as incurred. For purposes of this analysis, funding is estimated to be
     $50,000 per month.
(2)  Based on license agreement. Funding after December 31, 2002 is to be
     considered and agreed to by the parties at that time.
(3)  Does not include payments due under renewals to the original lease term.
(4)  Employment agreements assume automatic renewal of terms.
</FN>
</TABLE>


    NEW ACCOUNTING PRONOUNCEMENTS

     In August 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets" ("SFAS No. 144"). This
Statement formally supersedes SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and For Long-Lived Assets to be Disposed Of" ("SFAS No. 121"),
and the accounting and reporting provisions of Accounting Principles Board
("APB") Opinion No. 30, "Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions" ("APB No. 30"). However, certain provisions of SFAS No. 121 and
APB No. 30 have been maintained. The Company will adopt the provisions of SFAS
No. 144 effective January 1, 2002. The adoption is not expected to have a
material effect on the Company's results of operations, financial position or
cash flows.





                                      -27-
<PAGE>


     In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations" ("SFAS No. 143"). This Statement establishes common
accounting practices relating to legal obligations associated with the
retirement of tangible long-lived assets that result from the acquisition,
construction, development or normal operation of a long-lived asset. The Company
will adopt SFAS No. 143 on January 1, 2003. The adoption is not expected to have
a material effect on the Company's results of operations, financial position or
cash flows.

     In June 2001, the FASB issued SFAS No. 141, "Business Combinations" ("SFAS
No. 141"), and SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS No.
142"). SFAS No. 141 requires all business combinations initiated after June 30,
2001 to be accounted for using the purchase method of accounting. SFAS No. 142,
which will be adopted by the Company effective January 1, 2002, requires that
goodwill and certain intangible assets resulting from business combinations
entered into prior to June 30, 2001 no longer be amortized, but instead be
reviewed for recoverability. Any write-down of good will value would be charged
to results of operations as a cumulative change in accounting principle upon the
adoption of the new accounting standard if the recorded value of goodwill and
certain intangibles exceeds its fair value. The Company expects that the
adoption of these accounting standards will eliminate the amortization of
goodwill which was $32,000 for the year ended December 31, 2001. Recoverability
reviews could result in periodic write-downs subsequent to the date of adoption.

ITEM 7.  FINANCIAL STATEMENTS

    The response to this item is submitted in a separate section of this report
commencing on Page F-1.

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

    No change in accountants or disagreement requiring disclosure pursuant to
applicable regulations took place within the Company's two most recent fiscal
years or in any subsequent interim period.

PART III

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

    The material contained in "Election of Directors" and "The Board of
Directors and Executive Officers" of the Company's definitive proxy statement
(to be filed pursuant to the Securities Exchange Act of 1934, as amended) for
the 2002 annual meeting of Shareholders of the Company is hereby incorporated by
reference.

ITEM 10.  EXECUTIVE COMPENSATION

    The material contained in "Executive Compensation" of the Company's
definitive proxy statement (to be filed pursuant to the Securities Exchange Act
of 1934, as amended) for the 2002 annual meeting of the Shareholders of the
Company is hereby incorporated by reference.




                                      -28-
<PAGE>



ITEM 11.  SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The material contained in "Security Ownership of Certain Beneficial Owners,"
"Election of Directors," and "The Board of Directors and Executive Officers" of
the Company's definitive proxy statement (to be filed pursuant to the Securities
Exchange Act of 1934, as amended) for the 2002 annual meeting of the
Shareholders of the Company is hereby incorporated by reference.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The material contained in "Certain Relationships and Related
Transactions" of the Company's definitive proxy statement (to be filed pursuant
to the Securities Exchange Act of 1934, as amended) for the 2002 annual meeting
of the Shareholders of the Company is hereby incorporated by reference.

PART IV

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

              (a) Exhibits

                  99.1 Letter to Commission Pursuant to Temporary Note 3T.
                  All other exhibits to the Company's Annual Report on Form
                  10-KSB, are available upon written or oral request of the
                  Secretary of the Company. All such requests shall be made to
                  the Secretary as follows:

                        TechSys, Inc.
                        147 Columbia Turnpike, Suite 109
                        Florham Park, New Jersey 07932
                        Attention: Mark N. Raab,
                        Chief Financial Officer And Secretary
                        (973) 236-1919

              (b) Reports on Form 8-K.

                  On August 15, 2001, the Company filed with the SEC a current
                  report on Form 8-K reporting an event under Item 2 -
                  Acquisition or Disposition of Assets which was amended by the
                  Form 8-K/A filed by the Company with the SEC on October 15,
                  2001.










                                      -29-
<PAGE>



                         TECHSYS, INC. AND SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

     The accompanying consolidated balance sheet of the Company, and the related
consolidated statement of operations, stockholder's equity and cash flow for the
year ended December 31, 2001, are not accompanied by an executed report of our
auditors, Arthur Andersen. However, notwithstanding the failure of Arthur
Andersen to execute their report and to furnish their consent to include their
report in this Form 10KSB, Arthur Andersen did complete all its audit work with
respect to our financial statements. On Friday March 29, 2002, a fee dispute
arose between the Company and Arthur Andersen relating to the timing of payment
of fees to Arthur Andersen. Notwithstanding the nature of our dispute and the
fact that all Arthur Andersen work has been completed, you should consider the
following financial statements as unaudited.



                                                                         PAGE



Consolidated Financial Statements:

     Consolidated Balance Sheets as of December 31, 2001
        and 2000..........................................................F-2

     Consolidated Statements of Operations for the Years
        Ended December 31, 2001 and 2000..................................F-3

     Consolidated Statements of Stockholders' Equity for the
        Years Ended December 31, 2001 and 2000............................F-4

     Consolidated Statements of Cash Flows for the Years Ended
        December 31, 2001 and 2000........................................F-5

     Notes to Consolidated Financial Statements...........................F-7






















                                       F-1





<TABLE>
<CAPTION>



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

ASSETS                                                                         2001           2000
                                                                               ----           ----

Current Assets:
<S>                                                                       <C>            <C>
Cash and cash equivalents .............................................   $   258,102    $    32,447
Investments ...........................................................       354,932              0
Investments in U.S. Government securities .............................             0        500,000
Accounts receivable, less allowance for
   doubtful accounts of $25,925 in 2001 and $11,786 in 2000 ...........        73,209        101,202
Amounts due from consulting customer ..................................             0      1,279,891
Amounts due from affiliates ...........................................             0        355,022
Amounts due from officer ..............................................       295,000              0
Other current assets ..................................................        41,437        247,400
                                                                          -----------    -----------
    Total current assets ..............................................     1,022,680      2,515,962

Note receivable .......................................................             0        527,000
Amounts due from officer ..............................................             0        330,000
Investment in Technology Keiretsu, LLC ................................       265,800      1,065,251
Investment in SupportScape, Inc. ......................................             0        250,000
Property and equipment, at cost, less accumulated depreciation ........       112,425        138,690
Goodwill and other intangibles, less accumulated amortization .........     1,467,695        182,143
Other assets ..........................................................        89,448        129,025
                                                                          -----------    -----------
                                                                          $ 2,958,048    $ 5,138,071
                                                                          ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Line of credit ........................................................   $   102,500    $   102,500
Note payable to affiliate, net ........................................       370,844              0
Accounts payable ......................................................       651,309        324,145
Accrued expenses ......................................................       313,682        368,119
                                                                          -----------    -----------
     Total current liabilities ........................................     1,438,335        794,764
                                                                          -----------    -----------

Commitments and Contingencies

Stockholders' Equity:
Preferred stock 5,000,000 shares authorized, none issued or outstanding             0              0
Common stock, no par value, 20,000,000 shares authorized,
     4,703,544 and 3,923,544  shares issued and outstanding at
     December 31, 2001 and 2000, respectively .........................     9,557,079      8,535,279
Paid-in capital .......................................................     2,220,899      2,180,913
Accumulated deficit ...................................................    (9,397,616)    (5,322,885)
Other comprehensive loss ..............................................       (14,816)             0
Subscription receivable ...............................................      (845,833)    (1,050,000)
                                                                          -----------    -----------
     Total stockholders' equity .......................................     1,519,713      4,343,307
                                                                          -----------    -----------
                                                                          $ 2,958,048    $ 5,138,071
                                                                          -----------    -----------
</TABLE>


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



                                       F-2



<PAGE>

<TABLE>
<CAPTION>



                         TECHSYS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000


                                                                     2001            2000
                                                                     ----            ----
Revenues from continuing operations:

<S>                                                                <C>            <C>
     Dry cleaning services .....................................   $ 1,032,346    $ 1,144,809
     Consulting services .......................................        47,223        166,662
                                                                   -----------    -----------
                                                                     1,079,569      1,311,471

Costs of services ..............................................       888,215        939,721
General and administrative expenses ............................     2,223,841      5,035,550
Research and development .......................................       620,000              0
Depreciation and amortization ..................................       112,241         59,082
Impairment of investments ......................................     1,049,451              0
Write-off of in-process research and development acquired ......     1,010,000              0
Gain on sale of business .......................................             0       (755,764)
Costs of failed acquisition ....................................             0        322,609
Interest income, net ...........................................      (149,448)      (154,439)
                                                                   -----------    -----------
     Total costs and expenses ..................................     5,754,300      5,446,759
                                                                   -----------    -----------

Loss from continuing operations before income taxes ............    (4,674,731)    (4,135,288)

Benefit for income taxes .......................................      (226,500)      (640,000)
                                                                   -----------    -----------

Loss from operations ...........................................    (4,448,231)    (3,495,288)

Income from discontinued operations (less applicable
   income taxes of $226,500 and $640,000 in 2001 and 2000,
       respectively) ...........................................       373,500      1,054,972
                                                                   -----------    -----------

     Net loss ..................................................   $(4,074,731)   $(2,440,316)
                                                                   ===========    ===========


Basic and diluted (loss) income per share:
     Continuing operations .....................................   $     (1.05)   $      (.96)
     Discontinued operations ...................................           .09            .29
                                                                   -----------    -----------
     Net loss per share ........................................   $      (.96)   $      (.67)
                                                                   ===========    ===========


Basic and diluted weighted average shares outstanding ..........     4,252,640      3,646,778
                                                                   ===========    ===========
</TABLE>


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







                                       F-3



<PAGE>

<TABLE>
<CAPTION>



                         TECHSYS, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000


                                                                                            OTHER
                                                                                           COMPRE-                         TOTAL
                              COMMON       PAID-IN        ACCUMULATED   SUBSCRIPTION       HENSIVE                     COMPREHENSIVE
                              STOCK        CAPITAL          DEFICIT      RECEIVABLE         LOSS          TOTAL            LOSS
                        ---------------------------------------------------------------------------------------------------------
BALANCE,
<S>                        <C>           <C>            <C>            <C>               <C>            <C>              <C>
DECEMBER 31, 1999 ......   $ 5,485,061   $   160,000    $(2,882,569)   $      --         $      --      $ 2,762,492           --
ISSUANCE OF COMMON
STOCK FOR SERVICES
RENDERED ...............       180,000          --             --             --                --          180,000           --
ISSUANCE OF
COMMON STOCK
IN CONNECTION WITH
FAILED MERGER ..........       325,000          --             --             --                --          325,000           --
ISSUANCE OF
COMMON STOCK
IN CONNECTION WITH
TECHNOLOGY KEIRETSU
INVESTMENT .............       583,327          --             --             --                --          583,327           --
CASHLESS EXERCISE OF
STOCK OPTIONS ..........     1,108,500          --             --             --                --        1,108,500           --
EXERCISE OF OPTIONS
AND WARRANTS ...........       103,391          --             --             --                --          103,391           --
SALE OF COMMON
STOCK AND WARRANTS .....       750,000       350,000           --       (1,050,000)             --           50,000           --
ISSUANCE OF WARRANTS
FOR SERVICES ...........          --       1,670,913           --             --                --         1,670,913           --
NET LOSS ...............          --            --       (2,440,316)          --                --        (2,440,316)   $(2,440,316)
                           -----------   -----------    -----------    -----------       -----------    ------------    -----------
BALANCE,
DECEMBER 31, 2000 ......     8,535,279     2,180,913     (5,322,885)    (1,050,000)             --        4,343,307    $(2,440,316)
                                                                                                                       ===========

ISSUANCE OF COMMON
STOCK IN CONNECTION
WITH ACQUISITIONS ......     1,021,800          --             --             --                --         1,021,800           --
ISSUANCE OF
 WARRANTS ..............          --         244,153           --             --                --           244,153           --
REPURCHASE OF
WARRANTS ...............          --        (204,167)          --          204,167              --             --             --
NET LOSS ...............          --            --       (4,074,731)          --                --        (4,074,731)   $(4,074,731)
UNREALIZED LOSS ON
SECURITIES AVAILABLE FOR
SALE ...................          --            --             --                            (14,816)       (14,816)   $    (14,816)
                           -----------   -----------    -----------    -----------       -----------    -----------    -----------

BALANCE,
DECEMBER 31, 2001 ......   $ 9,557,079   $ 2,220,899    $(9,397,616)   $  (845,833)      $   (14,816)   $ 1,519,713    $(4,089,547)
                           ===========   ===========    ===========    ===========       ===========    ===========    ===========

</TABLE>


       THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN
                INTEGRAL PART OF THESE CONSOLIDATED STATEMENTS.

                                      F-4


<PAGE>


<TABLE>
<CAPTION>




                         TECHSYS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000

                                                                                 2001            2000
                                                                                 ----            ----
Cash Flows From Operating Activities:
<S>                                                                            <C>            <C>
     Net loss ..............................................................   $(4,074,731)   $(2,440,316)
     Adjustments to reconcile net loss to net cash
       used in operating activities
     Depreciation and amortization .........................................       125,634         65,435
     Impairment of investments .............................................     1,049,451              0
     Provision for doubtful accounts .......................................        18,546          5,066
     Loss on equity investment .............................................             0         18,076
     Common stock issued in connection with failed merger ..................             0        325,000
     Stock-based compensation expense ......................................       145,115      2,959,413
     Gain loss on sale of business .........................................             0       (755,764)
     Loss on disposal of fixed assets ......................................        14,955              0
     Income from discontinued operations ...................................      (600,000)    (1,694,972)
     Write-off of in-process research and development acquired .............     1,010,000              0
     Changes in operating assets and liabilities,
        net of businesses acquired:
          Accounts receivable ..............................................         9,447        (23,230)
          Other assets .....................................................       249,830       (102,606)
          Amounts due from affiliates ......................................             0        149,545
          Accounts payable .................................................       303,021       (447,628)
          Accrued expenses .................................................       (54,437)      (436,548)
                                                                               -----------    -----------
     Net cash used in operating activities .................................    (1,803,169)    (2,378,529)
                                                                               -----------    -----------

Cash Flows From Investing Activities:
     Amounts repaid by consulting customers ................................     1,879,891        415,082
     Business acquisitions, net of acquired cash ...........................      (528,415)             0
     Repayment of notes receivable .........................................       527,000        500,000
     Repayment of Pine Tree deposit ........................................             0        915,000
     Investment in SupportScape, Inc. ......................................             0       (250,000)
     Investment in Technology Keiretsu, LLC and Little Universe, LLC .......             0       (500,000)
     Purchases of U.S. Government securities ...............................             0       (400,000)
     Purchase of investments ...............................................    (1,025,197)             0
     Proceeds from sales of investments ....................................       655,449              0
     Proceeds from sale or maturity of U.S. Government securities ..........       500,000      1,480,220
     Purchases of property and equipment ...................................       (14,904)       (53,462)
     Repayments from officer ...............................................        35,000              0
                                                                               -----------    -----------
Net cash provided by (used in) investing activities ........................     2,028,824      2,106,840
                                                                               -----------    -----------

Cash Flows From Financing Activities:
     Net borrowings under line of credit ...................................             0         32,500
     Proceeds from exercise of stock options and warrants ..................             0        103,391
     Proceeds from sale of common stock and warrants .......................             0         50,000
                                                                                              -----------
     Net cash provided by  financing activities ............................             0        185,891
                                                                               -----------    -----------

Net increase in cash and cash equivalents ..................................       225,655        (85,798)
     Cash and cash equivalents, beginning of year ..........................        32,447        118,245
                                                                               -----------    -----------
     Cash and cash equivalents, end of year ................................   $   258,102    $    32,447
                                                                               -----------    -----------

Supplemental Disclosures of Cash Flow Information:
     Cash paid for income taxes............................................$        12,352    $     5,682
                                                                               ===========    ===========
     Cash paid for interest................................................$         4,799    $     5,505
                                                                               -----------    -----------

</TABLE>


                                      F-5


<PAGE>




Supplemental Disclosures of non-cash transactions:

The 2000 gain on sale of businesses includes net fixed assets of $199,292, a
write off of net goodwill of $588,959 offset by a relief from liabilities of
$1,544,015.

In 2000, the Company issued 30,000 shares of common stock to a related party
consultant valued at $180,000.

In 2000, the Company issued 66,666 shares of common stock valued at $583,327 in
connection with the purchase of interests in Technology Keiretsu, LLC.

In 2000, the Company issued 100,000 shares of common stock valued at $325,000 in
connection with a settlement of a failed acquisition.

In 2000, the Company issued 181,485 shares of common stock valued at $1,108,500
in connection with the cashless exercise of stock options.

In 2000, the Company issued warrants to purchase 430,000 shares of the Company's
common stock in consideration of services valued at $1,670,913.

In 2000, in connection with the sale of common stock and warrants, the Company
obtained a $1,050,000 subscription receivable.

In 2001, the Company issued 780,000 shares of common stock valued at $1,021,800
in connection with the acquisition of the Company's fuel cell subsidiaries.

In 2001, the Company issued to a financial services provider warrants to
purchase 100,000 shares of the Company's common stock valued at $99,038 in
consideration of professional services rendered in connection with the
acquisition of the Company's fuel cell subsidiaries.

In 2001, the Company issued a promissory note for $725,866 in connection with
the acquisition of the Company's fuel cell subsidiaries.

In 2001, the Company issued to outside consultants warrants to purchase 144,000
shares of the Company's common stock in consideration of professional services
valued at $145,115.

In 2001, the Company repurchased 5,950,000 warrants issued in 2000 in exchange
for a reduction of $204,167 in a subscription receivable.

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






                                      F-6










<PAGE>






                         TECHSYS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  NATURE OF BUSINESS:

     TechSys, Inc. (the "Company") is in the business of identifying and
accelerating the commercialization of proprietary power producing products
utilizing various unique fuel cell technologies and investing in and acquiring
technology businesses in emerging markets. The Company also operates a dry
cleaning business that provides dry cleaning services primarily to the
hospitality industry in the Phoenix, Arizona area.

     The Company was originally engaged in the business of providing dialysis
related services, training, equipment and supplies to patients at home, in
prisons and in hospitals. The Company also provided acute dialysis nursing
services and administrative services as well as consulting services under
agreement.

     In October, 1997, the Company sold substantially all of its dialysis
related assets to IHS of New York, Inc., a New York corporation ("IHS"). In
addition, Alpha Administration Corp. ("Alpha"), the operator of the South Bronx
Kidney Center ("Bronx Facility"), and Continental Dialysis Center of the Bronx,
Inc. ("CDBI") sold substantially all of their respective assets to IHS. All of
the outstanding common stock of Alpha and CDBI is owned by the Chairman, Chief
Executive Officer and a Director of the Company, collectively ("Certain
Executive Officers"). Prior to the sale, the Company provided consulting and
administrative services to Alpha and CDBI. The aggregate price paid by IHS at
the closing of the IHS Sale was approximately $5,120,000 which was allocated as
follows: $2,620,000 to the Company, $900,000 to Alpha and $1,600,000 to CDBI,
("the IHS Sale").

     In connection with the IHS sale, the Company and IHS entered into a
consulting agreement pursuant to which the Company provided certain consulting
services to IHS over the three-year term of the agreement in consideration of an
aggregate of $1,000,000 payable by IHS to the Company over the term of the
agreement. The Company also entered into a Non-Competition Agreement with IHS
pursuant to which the Company, CDBI, Alpha and certain officers and directors of
each of these companies agreed not to engage in certain activities in
competition with IHS in certain specified geographic areas commencing on October
8, 1997.

     In 2001, Alpha and CDBI were dissolved. At the time of Alpha's dissolution,
amounts payable to Alpha by the Company totaled $68,779. Amounts payable to
Alpha were offset by the Company in 2001 with accrued interest due from Alpha
not previously recognized by the Company due to realization uncertainties. At
the time of CDBI's dissolution, $26,512 was due the Company from CDBI. The
Company deemed these amounts uncollectible and wrote off amounts due from CDBI
in 2001. In addition, $120,000 due the Company from CDBI under its consulting
and service agreement were deemed uncollectible by the Company. These fees had
not been previously recorded by the Company due to realization uncertainties.


                                      F-7


<PAGE>


     In 1998, the Company established a subsidiary, United Dry Cleaning, L.L.C.
("United") for the purpose of acquiring and operating dry cleaning facilities
initially in the Phoenix, Arizona area. This area was selected for its rapid
growth in construction and development and increase in population, which,
management believed, would provide United with growth potential. The Company
committed an aggregate of $1,000,000 to fund United's initial operations. By
early 1999, United owned and operated dry cleaning plants and stores from eleven
locations in the Phoenix area. Commencing in the first quarter of 1999, the
Company began to divest itself of the retail dry cleaning business and in
November 1999 formed a new subsidiary, Valet-USA ("Valet") to concentrate on
providing services to the hospitality industry (See Note 4).

     The accompanying consolidated financial statements have been prepared
assuming the Company will continue as a going concern. The Company has incurred
recurring losses from operations and has a working capital deficiency that
raises substantial doubt about its ability to continue as a going concern. The
consolidated financial statements do not include any adjustments relating to the
recoverability and classification of asset carrying amounts or the amount and
classification of liabilities that might result should the Company be unable to
continue as a going concern.

     The Company will need to obtain additional financing to fund the Company's
newly acquired fuel cell subsidiary operations. Although the Company is actively
pursuing such financing, there can be no assurance that the Company will be able
to obtain adequate financing on terms acceptable to the Company. The Company
expects that its cash and cash equivalents will be sufficient to fund the
Company's operations through April 30, 2002.

(2) FUEL CELL COMPANY ACQUISITIONS

     The Company and Fuel Cell Companies, Inc., a privately held Nevada
corporation, ("FCCI"), entered into an Agreement and Plan of Merger (the "Merger
Agreement"), pursuant to which the Company was to merge a wholly-owned
subsidiary of the Company with and into FCCI in a stock- for-stock transaction
(the "Merger"). The Merger Agreement was terminated as discussed below.

     The Company acquired certain assets of FCCI including FCCI's equity
interests in SOFC Energy, Inc. ("SOFC Energy"), Micro Fuel Cell Systems, Inc.
("MFCS") and Clean Power Industries, Inc. (" CPI") both by foreclosing upon the
collateral that secured certain notes of FCCI and executing the Exchange
Agreement discussed below. The Company purchased and canceled notes (the "FCCI
Notes") of FCCI from the New York lender (the "Lender") that was the holder of
the FCCI notes. The FCCI Notes, in the aggregate principal amount of $700,000,
together with accrued interest thereon, were secured by FCCI's interests in SOFC
Energy, MFCS and CPI and certain other assets of FCCI. The Company's Chairman is
a founding partner of the Lender. The Company issued to the Lender a promissory
note in the principal amount of $725,866, representing principal plus accrued
interest on the FCCI Notes as of the date of the transaction. The promissory
note has an interest rate of 8% and was due and payable on or before October 29,
2001. In connection with the transaction, the Lender assigned all of its
interest in the promissory note (the "TechTron Note") to TechTron, Inc.,
("TechTron") a company in which most of the outstanding shares are owned by
Alvin S. Trenk, Chairman of the Company, Martin G. Jacobs, M.D., A Director of
the Company and Steven L. Trenk, Chief Executive Officer of the Company,
collectively, (the "Certain Executive Officers"). TechTron has agreed to extend
the due date of the TechTron Note to April 30, 2002. Amounts due from TechTron
have been offset against amounts due to TechTron as of December 31, 2001 in the
accompanying Consolidated Balance Sheet.


                                      F-8

<PAGE>


     On August 2, 2001, the Company, FCCI and certain executive officers of FCCI
entered into an Exchange Agreement dated July 31, 2001 (the "Exchange
Agreement") pursuant to which the Merger Agreement was terminated by mutual
consent and the Company acquired certain assets of FCCI including the capital
stock of MFCS, SOFC Energy and CPI owned by FCCI including all such capital
stock previously owned, directly or indirectly, by the executive officers of
FCCI, representing approximately 77%, 90% and 100% of the outstanding equity of
MFCS, SOFC Energy and CPI, respectively. As a result of the Company's
acquisition of majority interests in MFCS, SOFC Energy and CPI, the Company is
now in the fuel cell technology development business.

     Pursuant to the Exchange Agreement, the Company issued 780,000 shares of
its common stock to FCCI with an approximate value of $1,021,800, or $1.31 per
share, which was the fair market value of the Company's common stock on the date
of the transaction. The 780,000 shares represent consideration paid by the
Company to secure the additional equity interests in SOFC Energy and MFCS held
by FCCI's executive officers and to secure certain non-competition covenants of
FCCI and its executive officers and agreements necessary for the Company to
properly consummate the transaction. In addition, the Company recorded $641,275
in capitalized transaction costs relating to the transaction through December
31, 2001 which includes warrants granted to a third party with a fair value of
$99,038 calculated using the Black Scholes model.

     On January 20, 2001, SOFC Energy entered into a license agreement (the
"Adelan Agreement") whereby SOFC Energy was granted exclusive and irrevocable
worldwide license to the existing patented inventions of Adelan Ltd. ("Adelan")
in return for SOFC Energy providing certain funding for the further development
and commercialization of Adelan's inventions. As part of the Adelan Agreement,
approximately 10% of the outstanding common stock of SOFC Energy was issued to
Adelan. Under the Adelan Agreement, SOFC Energy was required to fund the
research and development projects and the development of licensed products by
Adelan with quarterly payments aggregating $1,500,000 beginning April 1, 2001.
From the date of acquisition of the Company's majority interest in SOFC Energy,
SOFC Energy made an initial payment of $100,000 and weekly payments of $20,000
thereafter to Adelan. Payments made by SOFC Energy towards the second and third
quarter payments due to Adelan aggregated $520,000 through December 31, 2001.
The first quarterly installment of $375,000 due under the agreement was made by
SOFC Energy.

     In January 2002, SOFC Energy received a notification of default from Adelan
for failure to provide developmental funding under the Adelan Agreement. At the
time of the notification, $605,000 was due Adelan under the Adelan Agreement.
SOFC Energy failed to cure the default and the Adelan Agreement terminated on
February 15, 2002.

         On February 27, 2002, the Company and Freedom Cell Power Corp.,
("Freedom") a wholly-owned subsidiary of the Company, entered into a license
agreement with Adelan (the "Freedom License Agreement") by which Freedom
acquired substantially the same rights and privileges previously granted to SOFC
Energy pursuant to the Adelan Agreement. As part of the Freedom License
Agreement, Adelan is to receive 200,000 shares of the Company's common stock and
a warrant to purchase an additional 100,000 shares of common stock with an
exercise price of $1.00. Under the Freedom License Agreement, Freedom is
required to fund the research and development projects and the development of
licensed products by Adelan with weekly payments of $20,000 through March 31,
2002, $100,000 a month for the three month period ended June 30, 2002 and
$125,000 a month for the six month period ended December 31, 2002.

                                       F-9


<PAGE>


     As a result of the strategic relationship with Adelan, Freedom holds
worldwide exclusive rights to all exploitation of Adelan's Solid Oxide Fuel Cell
technologies related to Adelan's Solid Oxide Fuel Cell fuel processing and its
patents pending. Early commercialization applications where Solid Oxide Fuel
Cells are expected to find dominant and competitive positions include portable
power systems and auxiliary power units for trucks, automobiles and recreational
vehicles.

     MFCS is a company enrolled in the Technology Affiliates Program with the
California Institute of Technology ("CalTech"), and the Jet Propulsion
Laboratory ("JPL"), a federally funded research and development facility managed
by CalTech for the National Aeronautics and Space Administration ("NASA"). As a
result of the affiliate relationships with JPL and CalTech, MFCS holds an option
to acquire exclusive rights to the exploitation of the micro DMFC technologies
that are currently patent pending to JPL and CalTech. To date, JPL and CalTech
have filed the first of what is expected to be multiple patents for micro DMFC
related technologies and processes. Micro DMFCs produce electricity from the
simple components of methanol, water and air. The DMFC converts the energy in
methanol into an electric current, and will be used to power portable electronic
devices such as laptop computers, cell phones, PDAs and other small electronic
communication and entertainment devices.

     The following purchase price allocation is based on an analysis of fair
value performed by an independent valuation specialist. The values of the
intangible assets are being amortized over five years. The allocation of the
purchase price to the net assets acquired is as follows:

     Purchase Price:
          Common stock issued
            (780,000 shares at $1.31 per share)                      $1,021,800
          Note payable issued                                           725,866
          Acquisition costs                                             641,275
                                                                     ----------
     Total purchase price                                            $2,388,941

     Allocation:
          Current assets                                             $   18,172
         Fixed assets                                                    10,485
          Goodwill and other intangible assets                        1,374,427
          Current liabilities                                            24,143
          In-process research & development                           1,010,000
                                                                     ----------
     Total allocation                                                $2,388,941

     The in-process research and development was valued utilizing the cost
approach on a project by project basis. The historical costs involved in the
research and development effort were identified and the time value of the
investment made in developing the technology considered. The risk profile of the
technology has not changed significantly so far in the development cycle. While
progress has been made in developing the technology, the same uncertainties
regarding successful completion and commercialization exist. An investor selling
the technology at the valuation date would expect to receive a return on the
investment made in developing it, at a rate commensurate with the risk
undertaken in doing so. An investor acquiring the technology at the valuation
date gains the benefit


                                      F-10

<PAGE>


of the expenditures made, and is also that much closer to reaping the benefit of
the expenditures than the Company when those expenditures were made, justifying
a higher valuation. Therefore the costs invested in the development of the
technology are inflated by the appropriate expected rate of return, or 45%, for
such a venture. These values were then reduced on a pro-rata basis to reflect
the Company's percentage ownership in its subsidiaries. The value of in-process
research and development acquired relating to research and development work
performed by JPL was valued at $635,000. The remaining $375,000 of acquired
in-process research and development relates to research and development work
performed by Adelan.

     The following unaudited pro forma summary presents information as if the
acquisition had occurred at the beginning of the respective periods:

                                                         FOR THE YEAR ENDED
                                                         ------------------
                                                  DEC. 31, 2001    DEC. 31, 2000
                                                  -------------    -------------

                Revenues                           $ 1,079,569      $ 1,311,471
                Loss from continuing operations    $ (5,021,834)    $(4,701,222)
                Net loss                           $ (4,648,334)    $(3,646,250)
                                                   ============     ===========
                Pro forma loss per share           $     ( .99)     $      (.82)
                                                   ===========      ===========

      The pro forma information is not necessarily indicative of the results
that would have occurred had the acquisition taken place at the beginning of the
respective periods.

     The operating results of the Company's former dialysis-related businesses
disposed of in prior years have been segregated from continuing operations and
reported as a separate line item in the Consolidated Statements of Operations.
Revenues from discontinued operations were $600,000 and $1,694,972 in 2001 and
2000, respectively. Such amounts represent payments from a consulting customer
that were previously not recorded due to realization uncertainties.

(3)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

     CONSOLIDATION -- The consolidated financial statements include the accounts
of the Company and its wholly-owned and majority-owned subsidiaries. All
significant intercompany transactions have been eliminated in consolidation.

     USE OF ESTIMATES -- The preparation of financial statements in conformity
with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the recorded amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.


                                      F-11

<PAGE>



     CASH EQUIVALENTS -- The Company considers all highly liquid investments
with a maturity of three months or less at the time of purchase to be cash
equivalents. The carrying amount of cash equivalents approximates fair value.

     INVESTMENTS -- The Company accounts for investments in marketable
securities in accordance with SFAS No. 115, "Accounting for Certain Investments
in Debt and Equity Securities." The Company recorded an unrealized loss of
$14,816 to reflect the decline in its investments as of December 31, 2001.


     ACCOUNTS RECEIVABLE AND ALLOWANCES -- The allowance for doubtful accounts
consists of management's estimate of amounts that may prove uncollectible.
Actual results could differ from this estimate.

     PROPERTY AND EQUIPMENT -- Property and equipment are stated at cost, less
accumulated depreciation. Depreciation is provided using the straight line
method based on the estimated useful lives of individual assets ranging from two
to ten years. Leasehold improvements are depreciated over the shorter of the
estimated useful lives or lease term. Costs of maintenance and repairs are
charged to expense as incurred.

     LONG-LIVED ASSETS -- The Company reviews the recoverability of its
long-lived assets when events or changes in circumstances may indicate a
possible impairment. The assessment for potential impairment is based primarily
on the Company's ability to recover the unamortized balance of its long-lived
assets from expected future cash flows from its operations on an undiscounted
basis.

     INTANGIBLES -- The Company amortizes on a straight line basis the excess
cost of net assets acquired over periods not exceeding seven years. The Company
amoritizes the value of intangible assets acquired in its fuel cell subsidiary
acquisitions over an estimated useful life of five years.

     REVENUE RECOGNITION -- Revenue is recognized when dry cleaning items are
cleaned and delivered to customers. Consulting services revenue is recognized
ratably each month in accordance with the consulting agreement with IHS.

     RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS -- In June 2001, the FASB issued
SFAS No. 141, "Business Combinations" ("SFAS No. 141"), and SFAS No. 142,
"Goodwill and Other Intangible Assets" ("SFAS No. 142"). SFAS No. 141 requires
all business combinations initiated after June 30, 2001 to be accounted for
using the purchase method of accounting. SFAS No. 142, which will be adopted by
the Company effective January 1, 2002, requires that goodwill and certain
intangible assets resulting from business combinations entered into prior to
June 30, 2001 no longer be amortized, but instead be reviewed for
recoverability. Any write-down of goodwill would be charged to results of
operations as a cumulative change in accounting principle upon adoption of the
new accounting standard if the recorded value of goodwill and certain
intangibles exceeds its fair value on the date of adoption. The Company expects
that the adoption of these accounting standards will eliminate the amortization
of goodwill which was approximately $32,000 for the year ended December 31,
2001. Recoverability reviews could result in periodic write-downs subsequent to
the date of adoption.





                                      F-12

<PAGE>


     In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations" ("SFAS No. 143"). This Statement establishes common
accounting practices relating to legal obligations associated with the
retirement of tangible long-lived assets that result from the acquisition,
construction, development or normal operation of a long-lived asset. The Company
will adopt SFAS No. 143 on January 1, 2003. The adoption is not expected to have
a material effect on the Company's results of operations, financial position or
cash flows.

     In August 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets" ("SFAS No. 144"). This
Statement formally supersedes SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and For Long-Lived Assets to be Disposed Of" ("SFAS No. 121"),
and the accounting and reporting provisions of Accounting Principles Board
("APB") Opinion No. 30, "Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions" ("APB No. 30"). However, certain provisions of SFAS No. 121 and
APB No. 30 have been maintained. The Company will adopt the provisions of SFAS
No. 144 effective January 1, 2002. The adoption is not expected to have a
material effect on the Company's results of operations, financial position or
cash flows.

     INCOME TAXES -- The Company accounts for income taxes in accordance with
the provisions of SFAS No. 109, "Accounting for Income Taxes" ("SFAS No. 109").
SFAS No. 109 requires an asset and liability approach which requires the
recognition of deferred tax assets and deferred tax liabilities for the expected
future tax consequences of temporary differences between the carrying amount and
the tax bases of assets and liabilities. Valuation allowances are established
when necessary to reduce deferred tax assets to the amount expected to be
realized.

     LOSS PER SHARE -- Basic loss per share represents net loss divided by the
weighted average shares outstanding. Diluted loss per share represents net loss
divided by the weighted average shares outstanding adjusted for the incremental
dilution of outstanding employee stock options and warrants, if dilutive.

     Accordingly, the number of weighted average shares outstanding as well as
the amount of net loss per share are the same for basic and diluted per share
calculations for the periods reflected in the accompanying financial statements.

     As of December 31, 2001 and 2000, the basic and diluted weighted average
common shares outstanding were 4,252,640 and 3,646,778, respectively. As of
December 31, 2001, there were 2,123,600 outstanding stock options issued to
Directors, officers and employees of the Company as well as 2,861,500 warrants
issued to employees, Directors and non-employees which were excluded from
diluted net loss per share for both periods because the effect would be
antidilutive.

     STOCK-BASED COMPENSATION -- Stock-based compensation related to employees
and directors is recognized using the intrinsic value method. For disclosure
purposes, pro forma net loss and loss per share are provided as if the fair
value method had been applied.

Stock-based compensation issued to non-employees is valued utilizing the fair
value method.


                                      F-13

<PAGE>



     IMPAIRMENT OF LONG-LIVED ASSETS -- The Company accounts for long-lived
assets in accordance with provisions of SFAS No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of."
SFAS No. 121 requires that long-lived assets and certain identifiable
intangibles be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows expected
to be generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the assets. The Company has
performed an analysis and determined that no such impairment exists at December
31, 2001.

     RECLASSIFICATIONS -- Certain reclassifications have been made to the 2000
financial statements in order to conform to the 2001 presentation.

(4) SALE OF BUSINESS:

     On November 16, 1999, the Company sold its majority interest in United to
UDC Acquisition Corp. Inc. ("UDC Acquisition"), an Arizona corporation, pursuant
to terms of a Stock Purchase Agreement. The majority of the outstanding common
stock of UDC Acquisition is owned by Jeffrey M. Trenk, son of Alvin S. Trenk,
Chairman of the Company, brother of Steven L. Trenk, Chief Executive Officer of
the Company, and nephew of Martin G. Jacobs, M.D., a Director of the Company,
collectively, the Certain Executive Officers. The aggregate purchase price for
the Company's stock interest, $10,000, was offset against amounts due to Jeffrey
M. Trenk from the Company (See Note 8). The sale included net fixed assets of
$199,292, and a write-off of net goodwill of $588,959, offset by a relief from
liabilities of $1,544,015.

     Under the terms of the sale, UDC Acquisition acquired substantially all of
the assets and substantially all of the liabilities of United at the time of
sale. The Company did not recognize a gain related to the transaction until 2000
due to pending litigation by Ultimate Cleaners, Inc. (a company that previously
sold its dry cleaning assets to United) to foreclose on the assets that it sold
to United. The Company was notified by UDC Acquisition that it executed a
settlement agreement with Ultimate for all amounts due under the Settlement
Agreement between United and Ultimate. As a result, in 2000 the Company
recognized a gain of $755,764 related to the sale.

(5)  PROPERTY AND EQUIPMENT:

         Property and equipment consists of the following as of December 31:
<TABLE>
<CAPTION>

                                                                    2001       2000
                                                                    ----       ----

<S>                                                                <C>         <C>
     Furniture and fixtures......................................  40,855      33,959
     Office equipment............................................  44,713     194,001
     Dry cleaning machinery and equipment.......................   67,001      64,001
     Vehicles....................................................  20,550      35,400
     Leasehold improvements......................................   2,012       2,012
                                                                 ---------  ---------
                                                                  175,131     329,373

     Less -- Accumulated depreciation............................( 62,706)  (190,683)
                                                                 --------- ---------

                                                                 $112,425   $138,690
                                                                 ========   ========
</TABLE>


         Depreciation expense was $50,705 and $49,364 in 2001 and 2000,
respectively.

(6) BORROWINGS:

         During 2000, Valet financed the purchase of three automobiles for use
in the servicing of the hospitality industry aggregating $57,404. The notes
require installment payments aggregating $1,161 a month for a period of sixty
months at an interest rate of 7.75%.

                                      F-14


<PAGE>



         During 1999, the Company obtained a $250,000 line of credit to fund the
operations of Valet of which $102,500 is outstanding as of December 31, 2001 and
2000. The line bears interest at a rate of 8% per annum and is payable on
demand. The line of credit is with a company owned by the Chairman of the
Company. As of December 31, 2001, $147,500 of availability remained on the line
of credit. The line is primarily secured by substantially all of Valet's assets.

(7)  INCOME TAXES:

         At December 31, 2001 and 2000, the Company had a net deferred tax asset
of $2,450,000 and $2,100,000. The deferred tax asset is reduced by a valuation
allowance of $2,450,000 and $2,100,000, respectively as of December 31, 2001 and
2000. The deferred tax asset is primarily related to the net operating loss
carryforward of approximately $8,970,000 and $5,400,000 as of December 31, 2001
and 2000.

         Realization of the net deferred tax asset is dependent on generating
sufficient taxable income prior to expiration of the loss carryforward and the
timing of the reversal of other temporary differences. As of December 31, 2001
and 2000, full valuation allowances have been provided against the net deferred
tax asset. The primary reconciling item between the statutory Federal income tax
rate and the Company's effective rate is the Company's net operating loss for
which no tax benefit has been provided for the years ended December 31, 2001 and
2000.

(8)  RELATED PARTY TRANSACTIONS:

         The Company had previously advanced $355,022 to TechTron, Inc.
("TechTron") net of repayments. Most of the outstanding shares of TechTron are
owned by Alvin S. Trenk, Chairman of the Company, Martin G. Jacobs, M.D., a
Director of the Company and Steven L. Trenk, Chief Executive Officer of the
Company (collectively "Certain Executive Officers"). The Company obtained from
TechTron promissory notes in a principal amount equal to the aggregate amount of
the advances, the majority of which bear interest at a rate of 8% per annum and
are payable upon demand. All amounts due from TechTron are unsecured but
guaranteed by Certain Executive Officers.

         In connection with the Company's acquisition of majority interests in
its fuel cell subsidiaries (See Note 2), the Company issued a promissory note in
the principal amount of $725,866, which was assigned to TechTron (the "TechTron
Note"). The TechTron Note was issued in connection with the Company's purchase
and cancellation of certain notes of Fuel Cell Companies, Inc. ("FCCI") which
were secured by FCCI's interests in its former subsidiaries and certain other
assets of FCCI. The TechTron Note bears an interest rate of 8% and was due and
payable on or before October 29, 2001. TechTron has agreed to extend the due
date of the TechTron Note to April 30, 2002. Amounts due from TechTron have been
offset to amounts due to TechTron as of December 31, 2001 in the accompanying
Consolidated Balance Sheet.


                                      F-15


<PAGE>


         In 1998 and 1997, respectively, the Company loaned $350,000 and $35,000
to the President of the Company. The President executed promissory notes for
these advances which were due and payable in full within one year. In 2001 and
1999, the Company received $35,000 and $55,000 respectively, representing
payment of the 1997 loan and partial payment of the 1998 advances. The notes
relating to the 1998 advances bear interest at a rate imputed by the Internal
Revenue Service for instruments having a maturity of one or more years (4.33% to
5.58%). The Company has extended the term of the notes to be payable prior to
December 31, 2002.

          The Company previously loaned monies to, provided services to and
incurred liabilities on behalf of Upper Manhattan Dialysis Center, Inc.,
("UMDC") and certain of its shareholders. UMDC is 50% owned by Certain Executive
Officers and was a consulting customer of the Company. Amounts due from
consulting customer as of December 31, 2000 consisted of the $1,279,891 payment
received by the Company from UMDC in 2001. The Company received a subsequent
payment from UMDC of $600,000 in 2001. The Company recognized $600,000 and
$1,694,972, respectively, in revenues related to payments from UMDC in 2001 and
2000 not previously recorded as receivables due to realization uncertainties.
Such revenues are included in income from discontinued operations.

          Jeffrey M. Trenk currently provides consulting services to the
Company's dry cleaning operation and is paid approximately $120,000 per year. On
March 21, 2000, the Company awarded 30,000 shares of the Company's common stock,
valued at $180,000, as additional compensation to Jeffrey M. Trenk. The Company
recorded $180,000 in general and administrative expenses relating to the
issuance of these shares in the accompanying Consolidated Statements of
Operations.

         On July 31, 2001, the Company awarded Jeffrey M. Trenk a warrant to
purchase up to an aggregate of 100,000 shares of common stock at an exercise
price of $1.31, which was the fair market value of the Company's common stock on
the date of grant. The warrant has an estimated value of $113,890 calculated
using the Black-Scholes option pricing model and has been recorded in general
and administrative expenses in the accompanying Consolidated Statements of
Operations.

(9)  COMMITMENTS:

         EMPLOYMENT AGREEMENTS -- In 1994, the Company entered into compensation
agreements with the Chairman, Chief Executive Officer and the Corporate Medical
Director of the Company. The agreements with the Chairman and the Chief
Executive Officer have initial terms of five years and are extended
automatically after the first year and thereafter unless such extensions are
terminated by the Board of Directors. The Company's compensation agreement with
the Corporate Medical Director was terminated by mutual consent on September 30,
2001. Effective November 1, 2001, all payments by the Company to the Company's
Chairman under his compensation agreement were deferred. At that time, amounts
due to the Company's Chief Executive Officer under his compensation agreement
were reduced from $250,000 to $50,000 annually with a 100% deferral of reduced
payment amounts. In 2001, the Company entered into a compensation agreement with
its newly hired President. The agreement has an initial term of two years and
can be extended by the Company for an additional year at the Company's
discretion.

         The agreements with the Company's Chairman, Chief Executive Officer and
President provide for minimum aggregate compensation of $650,000 in 2002,
$650,000 in 2003, $625,000 in 2004, $550,000 in 2005 and $550,000 in 2006. Each
of the individuals may receive bonuses as determined by the Board of Directors,
except the Chief Executive Officer whose bonus is equal to 10% of the Company's
pretax income in excess of the prior year's pretax income, limited to 100% of
base salary. There were no bonuses paid for 2001 or 2000. Compensation paid to
the Chairman, President, Chief Executive Officer and former Corporate Medical
Director aggregated $492,307 and $661,000 in 2001 and 2000, respectively.


                                      F-16

<PAGE>


         LEGAL -- The Company is engaged in certain legal proceedings incidental
to its normal course of business activities. Management believes the outcome of
these proceedings will not have a material adverse effect on the Company's
financial position or results of operations.

         BENEFIT PLAN -- The Company maintains a 401(k) profit sharing plan. The
Company matches 10% of the employees' contributions up to 6% of base pay.
Company contributions were $1,880 and $1,868 in 2001 and 2000, respectively.

         LEASE AGREEMENTS --Rent expense was $296,495 and $184,315 for the years
ended December 31, 2001 and 2000, respectively. The increase of $112,180 is
primarily due to the Company's opening of its New York office in August 2000.
Lease commitments for the Company provide for minimum payments aggregating
$308,000 in 2002, $295,000 in 2003, $230,000 in 2004, $223,000 in 2005 and
$223,000 in 2006.

         We are obligated to make future payments under various contracts we
have entered into, including amounts pursuant to research and development
agreements, employment agreements, capital leases, noncancelable operating lease
agreements for office space and a retail store. Future minimum contractual cash
obligations for the next five years and in the aggregate at December 31, 2001,
are expected to be as follows:
<TABLE>
<CAPTION>

                                  PAYMENTS DUE BY PERIOD YEARS ENDING DECEMBER 31,
                                  ------------------------------------------------
Contractual
OBLIGATION                       TOTAL           2002            2003          2004         2005          2006
--------------------------    -----------    -----------     -----------   -----------   ---------     ---------

<S>                          <C>            <C>             <C>           <C>           <C>           <C>
JPL R & D (1)                 $ 1,106,000    $   600,000     $   506,000   $         0   $       0     $      0
Adelan R & D (2)                1,150,000      1,150,000               0             0           0            0
Operating leases (3)            1,279,000        308,000         295,000       230,000     223,000      223,000
Capital leases                     41,796         13,932          13,932        13,932           0            0
Employment Agreements (4)       3,025,000        650,000         650,000       625,000     550,000      550,000
                              -----------     ----------      ----------   -----------   ---------     --------
                              $ 6,601,796     $2,721,932      $1,464,932   $   868,932   $ 773,000     $773,000
                              -----------     ----------      ----------   -----------   ---------     --------
<FN>

(1)  Total funding requirements for the projects to be completed by JPL are
     estimated to be approximately $1,700,000. Aggregate payments as of December
     31, 2001 totaled $594,000. Funding requirements are based on periodic costs
     as incurred. For purposes of this analysis, funding is estimated to be
     $50,000 per month.
(2)  Based on license agreement. Funding after December 31, 2002 is to be
     considered and agreed to by the parties at that time.
(3)  Does not include payments due under renewals to the original lease term.
(4)  Employment agreements assume automatic renewal of terms.
</FN>
</TABLE>


(10) STOCKHOLDERS' EQUITY:

    During 2000, the Company granted fully vested warrants to purchase up to
25,000 and 50,000 shares of its common stock to consultants for past services at
exercise prices of $3.00 and $3.50, respectively. The warrants have an estimated
value of $267,885 calculated using the Black-Scholes option pricing model and
such amount has been expensed in the accompanying Consolidated Statements of
Operations.

     During 2000, the Company granted a fully vested warrant to purchase up to
an aggregate of 100,000 shares of its common stock to a company in which the
Company's Chairman is an owner at an exercise price of $2.00. The warrant has an
estimated value of $73,482 calculated using the Black- Scholes option pricing
model and has been expensed in the accompanying Consolidated Statements of
Operations.

    During 2000, the Company granted warrants to purchase up to an aggregate of
330,000 shares of its common stock to the Company's former Board of Advisors.
Upon termination of the Board in December 2000, non-vested warrants to purchase
242,500 shares of the Company's common stock were canceled. The 87,500 vested
warrants have exercise prices ranging from $4.00 to $4.50 and have been valued
at $317,047 utilizing the Black-Scholes option pricing model and have been
expensed in the accompanying Consolidated Statement of Operations. The Company
marked to market the value of the warrants at December 31, 2000.

    Warrants to purchase 77,893 shares of the Company's common stock were
exercised in 2000.

                                      F-17

<PAGE>




    During 2000, the Company issued 181,485 shares of its common stock in
connection with the cashless exercise of stock options. The Company recorded
$1,108,500 in stock-based compensation expense relating to the issuance of these
shares in the accompanying Consolidated Statement of Operations.

    On August 21, 2000, the Company sold to Lazar & Company I.G., LLC ("Lazar"),
a New York limited liability company, 200,000 shares of the Company's common
stock and a warrant to purchase 6,800,000 additional shares of the Company's
common stock at an exercise price of $3.00 per share, (the "Warrant"). The
Warrant was to vest in five portions based upon targets relating to the market
capitalization of the Company. As of December 31, 2000, the first portion of
shares purchasable under the warrant, representing 850,000 shares, were
exercisable based upon the first targeted market capitalization of the Company
being achieved. During 2001, no targets were achieved.

     The purchase price for the 200,000 shares of common stock was $750,000, or
$3.75 per share, which was the fair market value of the stock on the date the
agreement was executed. The purchase price for the Warrant was $350,000, for an
aggregate purchase price of $1,100,000 (the "Purchase Price"). Lazar paid the
Company $50,000 in cash, and delivered a $1,050,000 secured recourse promissory
note (the "Note") with an interest rate of 7% per annum as payment of the
Purchase Price. The Note is included in stockholders' equity as a subscription
receivable.

     On December 5, 2000, the Company entered into an agreement whereby the
Company obtained the right under certain circumstances to purchase from Lazar
portions of the Warrant. The purchase price would be paid by the Company by a
reduction of the unpaid principal amount due from Lazar pursuant to the Note.
The Company's right to purchase portions of the Warrant extended for a period of
180 days from the date of the agreement. During 2001, the Company fully
exercised its purchase rights, and purchased an aggregate of 5,950,000 shares
under the Warrant at an aggregate exercise price of $204,167.

     The Company issued warrants to purchase up to an aggregate of 1,350,000
shares of common stock at an exercise price of $3.00 per share to Certain
Executive Officers. The rights to purchase the shares vest in five portions
based upon targets relating to the market capitalization of the Company. As of
December 31, 2000, the first portion of shares purchasable under the warrant,
representing 168,750 shares, were exercisable based upon the first targeted
market capitalization of the Company being achieved. The Company recorded a
compensation charge of $1,012,500 in 2000 relating to the vested portion of the
Warrants. No additional shares have vested.

    On July 31, 2001, the Company awarded to Jeffrey M. Trenk a warrant to
purchase up to an aggregate of 100,000 shares of common stock at an exercise
price of $1.31, which was the fair market value of the Company's common stock on
the date of grant. The warrant has an estimated value of $113,890 calculated
using the Black-Scholes option pricing model and such amount has been recorded
in general and administrative expenses in the accompanying Consolidated
Statements of Operations. Jeffrey M. Trenk provides consulting services to the
Company's dry cleaning operation. Jeffrey M. Trenk is the son of Alvin S. Trenk,
Chairman of the Company, nephew of Martin G. Jacobs, M.D., a director of the
Company, and brother of Steven L. Trenk, Chief Executive Officer of the Company.


                                      F-18



<PAGE>




    On July 31, 2001, the Company granted warrants to purchase up to an
aggregate of 100,000 shares of its common stock to a financial services provider
of which the Chairman of the Company is a founding partner. The warrants were
granted with an exercise price of $1.31, which was the fair market value of the
Company's common stock on the date of grant. The warrant was issued for
financial services provided in connection with the Company's fuel cell
subsidiary acquisitions (See Note 2). The warrant has an estimated fair value of
$99,038 calculated using the Black-Scholes option pricing model and has been
included as part of the purchase price relating to the FCCI subsidiary
acquisitions.

Outstanding common stock purchase warrants are summarized as follows:

                              NUMBER OF SHARES
        RANGE OF                OUTSTANDING  WEIGHTED AVERAGE   WEIGHTED AVERAGE
       EXERCISE PRICES          AT 12/31/01   REMAINING LIFE     EXERCISE PRICE
       -----------------        ----------------------------   -----------------
       $ 1.00   -   $ 1.31         244,000          3.5            $ 1.27
       $ 2.00   -   $ 2.63         155,000          1.6              2.30
       $ 3.00   -   $ 4.50       2,462,500          1.6              3.06
       -------------------       ---------          ---           -------
       $ 1.00   -   $ 4.50       2,861,500          1.7            $ 2.86

     The Company adopted the 1994 Long-Term Incentive Award Plan under which
shares of the Company's common stock as well as incentive and non-qualified
stock options to purchase the Company's common stock and stock appreciation
rights may be awarded or granted to senior executives. The Company has reserved
300,000 shares of its common stock for this plan of which 80,000 have been
issued as of December 31, 2001 under the plan.

    The Company adopted a Directors' Stock Option Plan under which each
non-employee director will receive non-qualified stock options to purchase
10,000 shares of the Company's common stock annually, which commenced July 1,
1994. The exercise price of the options will be the fair market value of the
Company's common stock at the date of grant. The Company has reserved 200,000
shares of its common stock for this plan of which 150,000 options have been
issued as of December 31, 2001 under the plan.

     In 1997, the Board of Directors of the Company adopted the 1997 Equity
Incentive Plan, a broad- based employee equity incentive plan. The Board of
Directors reserved 1,250,000 shares of the Company's common stock for this plan
of which 1,101,100 options have been issued as of December 31, 2001 under the
plan.


                                      F-19


<PAGE>


         In 2000, the Board of Directors of the Company adopted the 2000
Incentive Compensation Plan, a broad-based equity incentive plan. The Board of
Directors initially reserved 3,500,000 shares of the Company's common stock for
the plan. Upon shareholder approval in 2001, shares reserved for the plan was
increased to 7,000,000. As of December 31, 2001, 1,124,000 options have been
issued under the plan.

     Stock option activity under all plans is as follows:



<TABLE>
<CAPTION>


                                                                     WEIGHTED   WEIGHTED
                                                                     AVERAGE    AVERAGE
                                                                     EXERCISE     FAIR
                                                       NUMBER         PRICE       VALUE
Options outstanding December 31, 1999
<S>                                                 <C>              <C>
     (1,493,350 exercisable) ....................     1,503,350        1.86
     Granted ....................................       550,000        6.58        2.84
     Exercised ..................................      (237,250)       1.91
     Canceled ...................................      (365,000)       8.23
                                                      ---------
Options outstanding December 31, 2000
     (1,371,100 exercisable) ....................     1,451,100        2.04
    Granted .....................................       672,500        1.04         .85
                                                      ---------
    Options outstanding December 31, 2001
     (1,490,350 exercisable) ....................     2,123,600        1.72
                                                      =========        ====



                                        NUMBER
                 RANGE OF            OUTSTANDING            WEIGHTED AVERAGE    WEIGHTED AVERAGE
              EXERCISE PRICES        AT 12/31/01             REMAINING LIFE      EXERCISE PRICE
              ---------------        -----------             --------------      --------------
                $1.00-$1.50             1,277,500                7.8                $1.20
                $1.75-$2.50               606,100                5.0                 1.93
                $3.50-$5.88               240,000                4.3                 3.98
                                       ----------              -----                 ----
                                        2,123,600                6.6                $1.72
                                       ==========
</TABLE>


      In accordance with SFAS No. 123, "Accounting for Stock Based
Compensation", for disclosure purposes the fair market value of option grants is
estimated on the date of grant using the Black- Scholes options-pricing model
for pro forma purposes with the following assumptions used for grants in 2001
and 2000: dividend yield of 0%, risk-free interest rate of approximately 5% and
6%, respectively and expected option life of 10 years. Expected volatility was
assumed to be approximately 128% and 104% in 2001 and 2000, respectively. Had
the fair value method of accounting been applied to the Company's stock option
plans, the impact would be as follows:




                                      F-20

<PAGE>



                                                      2001             2000
                                                      -----            ----
Net loss as reported                              $(4,074,731)      $(2,440,316)
Net loss adjusted ...................             $(4,482,892)      $(2,853,458)
                                                  ===========       ===========
Adjusted net loss per share .........             $     (1.05)      $      (.78)
                                                  ===========       ===========

(11) INVESTMENTS IN INFORMATION TECHNOLOGY BUSINESSES

     On August 31, 2000, the Company purchased a 2% equity interest in
Technology Keiretsu, LLC ("TK"), the parent company of Alliant Technologies,
Inc. ("Alliant"). Alliant is a provider of Internet technology solutions for
business that offers a complete range of services, including strategic business
consulting, e-commerce application development, business process engineering and
infrastructure engineering. The purchase price for the Company's interest was
$250,000 cash and 66,666 shares of the Company's common stock valued at
$583,327, or $8.75 per share, which was the fair market value of the stock on
the date the transaction was consummated. On September 29, 2000, the Company
executed an Exchange Agreement whereby the Company exchanged its 25% interest in
Little Universe, LLC ("LU"), acquired from Alliant in April 2000 for $250,000,
for an additional 1% equity interest in TK. Prior to the exchange the Company
had recorded $18,076 in loss related to their equity portion of LU's loss. In
September 2001, the Company recorded an impairment charge of $799,451 based on
analysis of current market conditions and discussions with TK management to
determine the approximate fair market value of the Company's minority equity
investment. As of December 31, 2001, the Company's 3% equity interest in TK is
currently valued at $265,800 in the accompanying Consolidated Balance Sheet.

         On September 1, 2000, the Company purchased a 4% equity interest in
SupportScape, Inc. ("SupportScape"), for $250,000 in cash. SupportScape is a web
resource which provides real time customer support to e-businesses through
personalized mail response service to customers through online query forms and
e-mails as well as through live one-to-one chat. In December 2001, the Company
wrote down its entire investment in SupportScape which was based on current
market conditions and discussions with SupportScape management. SupportScape's
corporate offices were destroyed in the World Trade Center disaster and
SupportScape management has been unable to provide the Company with necessary
financial information in order for the Company to determine the fair market
value of its investment.

(12) FAILED MERGER

     On February 5, 1999, the Company and TelaLink Network, Ltd., a privately
held Delaware corporation ("TelaLink") executed an Agreement and Plan of Merger
("Merger Agreement") to merge the two companies in a stock-for-stock transaction
(the "Merger"). On September 21, 1999, the Company terminated the TelaLink
Merger Agreement upon determining that financing for the proposed transactions
would not be available on terms acceptable to the Company.

     As of the date of termination, the Company had loaned a total of $1,027,000
to TelaLink and its affiliates to provide working capital pursuant to promissory
notes made by TelaLink in favor of the Company bearing an interest rate of 12%
per annum due and payable on April 30, 2000. On January 19, 2000, the Company
sold its interests in the TelaLink notes as discussed below.


                                      F-21

<PAGE>


     The Company entered into a Stock Purchase Agreement (the "Stock Purchase
Agreement") by and among the Company, Pine Tree Telephone and Telegraph Company
("PTTC") and the principal (95%) stockholder of PTTC, whereby the Company agreed
to purchase not less than 95% of PTTC's issued and outstanding capital stock.
PTTC is a telecommunication services provider to areas near Lewiston and
Portland, Maine. To secure the Company's rights under the Stock Purchase
Agreement, the Company deposited the sum of $915,000 in an escrow account. The
deposit was to be treated as a non-refundable deposit against the purchase price
to be paid by the Company at closing, or otherwise in accordance with the Stock
Purchase Agreement.

     On January 19, 2000, the Company received $1,463,800 and a subsequent
payment of $1,538 pursuant to the terms of an Inter-Party Agreement by and among
the Company, Quorum, TelaLink, and Country Road Communications, Inc. ("Country
Road"), Prudential Insurance Company of America and various other unrelated
third parties. The Company also received reimbursement of the $915,000 PTTC
deposit plus accrued interest of $50,338, in exchange for the Company assigning
all of its rights and obligations under the Stock Purchase Agreement.

     Under the terms of the Inter-Party Agreement, the Company sold its interest
in the various TelaLink notes totaling $1,027,000 to Country Road for a purchase
price of up to $1,100,000, of which $500,000 was paid at closing and the balance
was paid in the form of a promissory note ("The Promissory Note"). The
Promissory Note had an interest rate of 6.5% per annum and was to mature January
19, 2005. Interest was due and payable in annual installments commencing on
January 19, 2001, which was received by the Company and on each anniversary
thereafter up to and including the maturity date. Effective August 1, 2001,
certain prepayment conditions of the Promissory Note were met and Country Road
was required to prepay the Promissory Note at an adjusted principal amount of
$500,000 plus accrued and unpaid interest. On September 25, 2001, the Company
received $522,260 from Country Road as prepayment of all principal and accrued
interest amounts due under the Promissory Note.

     On April 21, 2000, the Company issued 100,000 shares of the Company's
common stock, with a fair market value of $325,000 to a third party equity
investor of TelaLink in exchange for the release of any and all claims and liens
that it may have the right to assert against TelaLink and the Company. This
value is included in costs of failed acquisition in 2000.

(13) SEGMENT REPORTING

     The Company has adopted the provisions of the SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information" ("SFAS No. 131"). SFAS
No. 131 establishes standards for reporting information about operating segments
and related disclosures about products, geographic information and major
customers.

     The Company operates two current different lines of business, fuel cell
technology development and dry cleaning services. The fuel cell technology
development segment is in the business of producing two advanced fuel cell
systems. The Company provides certain funding for the further development and
commercialization of its fuel cell technology. The dry cleaning services segment
provides dry cleaning services primarily to the hospitality industry in the
Phoenix, Arizona area. Corporate is a separate unit which reflects all corporate
expenses, interest income on invested cash, depreciation on corporate assets,
consulting services under agreement and miscellaneous charges. The accounting
policies of the segments are the same as those described in the summary of
significant accounting policies.
                                      F-22


     The following table represents the financial results for each of the
Company's segments.
<TABLE>
<CAPTION>

                           DRY CLEANING                  FUEL CELL
  2001                     SERVICES      CORPORATE     DEVELOPMENT    CONSOLIDATED
  ----                     --------      ---------     -----------    ------------

<S>                      <C>            <C>            <C>            <C>
Revenues .............   $ 1,032,346    $    47,223    $         0    $ 1,079,569
Depreciation
and amortization .....        93,841         17,044         14,749        125,634
Interest
income, net ..........             0       (149,448)             0       (149,448)
Loss
from operations ......      (171,611)    (2,352,190)    (1,924,430)    (4,448,231)
Income
from disc. ops .......             0        373,500              0        373,500
Total assets .........       231,576      1,356,146      1,370,326      2,958,048

2000
----
Revenues .............   $ 1,144,809    $   166,662    $         0    $ 1,311,471
Depreciation
and amortization .....        38,815         26,620              0         65,435
Interest
income, net ..........             0       (154,439)             0       (154,439)
Loss
from operations ......      (125,162)    (3,370,126)             0     (3,495,288)
Income
from disc. ops .......             0      1,054,972              0      1,054,972
Total assets .........       380,752      4,757,319              0      5,138,071

</TABLE>


(14) SUBSEQUENT EVENTS

         A federal claim brought under the American with Disabilities Act
against the Company and its former subsidiary, Courthouse Dialysis, Inc., for
alleged employment discrimination was concluded as a result of a settlement
agreement (the "Settlement Agreement") dated January 14, 2002. Under the
Settlement Agreement, the Company was required to issue 85,000 shares of its
common stock to be held in trust as collateral security for the Company's
payments. The Company paid the plaintiff a lump sum of $22,500 and an additional
$27,500 is to be paid in equal monthly installments over eighteen months.
Amounts due under this claim were accrued by the Company in the Accompanying
Consolidated Balance Sheets.

         The former management of SOFC Energy, a Nevada corporation, that was
formerly partnered with Adelan, attempted to enter into a sublicensing
arrangement with SOFC Energy in connection with the License Agreement, dated as
of January 21, 2001, by and between SOFC Energy and Adelan (the "SOFC License
Agreement"), by utilizing FCCI and other entities controlled solely by the
former management of SOFC Energy. However, current management of SOFC Energy
declared the sublicensing arrangements void under Nevada law.

         On March 1, 2002, the Company agreed to grant FCCI, Fuel Cell Planet,
and the former management of SOFC Energy certain territorial sublicense
agreements in connection with the Freedom License Agreement dated as of February
27, 2002, between Freedom Cell Power Corp. and Adelan in exchange for the
release of any and all claims and liens that it may have the right to assert
against the Company.

                                      F-23


<PAGE>






                                   SIGNATURES

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

                                                    TECHSYS, INC.

Date: April 1, 2002                         By:    /S/STEVEN L. TRENK
                                                   ------------------
                                                   Steven L. Trenk,
                                                   Chief Executive Officer

         In accordance with the Exchange Act of 1934, this report has been
signed by the following persons on behalf of the registrant in the capacities
and on the dates indicated.

         SIGNATURE                CAPACITY IN WHICH SIGNED            DATE
         ---------                ------------------------            ----

/S/  STEVEN L. TRENK                                             April 1, 2002
---  ---------------
     Steven L. Trenk            Chief Executive Officer
                                Director

/S/ MARTIN G. JACOBS, M.D.                                       April 1, 2002
--- ----------------------
    Martin G. Jacobs, M.D.      Director


/S/ ALVIN S. TRENK              Chairman
--- --------------
    Alvin S. Trenk              Director                         April 1, 2002


/S/ STANLEY B. AMSTERDAM        Director                         April 1, 2002
--- --------------------
    Stanley B. Amsterdam


/S/ JEFFREY B. MENDELL          Director                         April 1, 2002
--- ------------------
    Jeffrey Mendell


/S/ KEITH BLAKELY               President
    -------------
    Keith Blakely               Chief Operating Officer          April 1, 2002


/S/ MARK N. RAAB                Chief Financial Officer          April 1, 2002
--- ------------
    Mark N. Raab                (Principal Financial Officer)






                                      F-24