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

                                   FORM 10-KSB

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

                     For the fiscal year ended June 30, 2001


                        Commission file number 000-30756

                                  QuesTec, Inc.
                   -------------------------------------------
                 (Name of Small Business issuer in its charter)

                   Wyoming                                    11-3445299
                   -------                                    ----------
       (State or Other Jurisdiction of                     (I.R.S. Employer
       Incorporation or Organization)                    Identification Number)

          160B West Industry Court
             Deer Park, New York                                11729
             -------------------                                -----
  (Address of Principal Executive Offices)                    (Zip Code)

         Issuer's Telephone Number, Including Area Code: (631) 243-1880

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

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

           Securities registered pursuant to Section 12(g) of the Act:
                                  Common Stock

         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.

         Yes  X    No
             ---      ---

         Check if 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 the Company's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]

         The Company's revenues for fiscal year 2001 were:  $ 696,752.00.

         The aggregate market value of the voting and non-voting common equity
held by non-affiliates of the Company is $2,905,009.50, based on the closing
price of $0.11 as of October 12, 2001.

         As of October 12, 2001, there were 34,065,542 shares of the issuer's
Common Stock, $.0001 par value, outstanding.

         Transitional Small Business Disclosure Format (check one):

         Yes  X    No
             ---      ---


<PAGE>


                                  QUESTEC, INC.
                                   FORM 10-KSB
                        FOR THE YEAR ENDED JUNE 30, 2001


                                TABLE OF CONTENTS
                                -----------------
                                                                        Page No.
                                                                        --------
PART I        ...........................................................   1

Item 6.       Description of Business....................................   1

Item 7.       Description of Property....................................   8

Item 8.       Directors, Executive Officers and Significant
              Employees..................................................   8

Item 9.       Remuneration of Directors and Officers.....................  10

Item 10.      Security Ownership of Management and Certain
              Security Holders...........................................  11

Item 11.      Interest of Management and Others in Certain
              Transactions...............................................  13

PART II       ...........................................................  13

Item 1.       Market Price of and Dividends on the Registrant's
              Common Equity and Other Shareholder Matters................  13

Item 2.       Legal Proceedings..........................................  14

Item 3.       Changes in and Disagreements with Accountants..............  14

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

Item 5.       Compliance with Section 16(a) of the Exchange Act..........  14

Item 6.       Reports on Form 8-K........................................  15

PART F/S      ...........................................................  15

PART III      ...........................................................  16

Item 1.       Index to Exhibits..........................................  16

Item 2.       Description of Exhibits....................................  16


<PAGE>


                            DISCLOSURE ALTERNATIVE 2

         QuesTec has elected to follow Form 10-KSB disclosure Alternative 2 for
transitional small business issuers. The Item numbers included in this Form
10-KSB are based upon that disclosure alternative.

                           FORWARD-LOOKING STATEMENTS

         QuesTec, Inc. ("QuesTec" or the "Company") cautions readers that
certain important factors may affect QuesTec's actual results and could cause
such results to differ materially from any forward-looking statements which may
be deemed to have been made in this Report or which are otherwise made by or on
behalf of QuesTec. For this purpose, any statements contained in this Report
that are not statements of historical fact may be deemed to be forward-looking
statements. Without limiting the generality of the foregoing, words such as
"may," "expect," "believe," "anticipate," "intend," "could," "estimate," or
"continue" or the negative other variations thereof or comparable terminology
are intended to identify forward-looking statements. QuesTec is also subject to
risks detailed herein or detailed from time to time in QuesTec's filings with
the Securities and Exchange Commission.

                                     PART I

Item 6.       Description of Business

              QuesTec is a Wyoming corporation originally incorporated on
February 3, 1987 under the Company Act of British Columbia. At that time, the
Company was known as "SZL Sportsight, Inc." and was involved in the sports
entertainment industry as the designer and developer of a baseball pitch
analyzer. The name of the corporation was changed to "QuesTec Imaging, Inc." on
April 29, 1996, and the corporation was then reorganized in Wyoming on March 18,
1998. The corporate name was changed to "QuesTec.com, Inc." on January 18, 2000.
On January 17, 2001, the company name was changed to "QuesTec, Inc."

Current Business

              The Company is a technology-based information service provider,
creating computer-generated real-time virtual replays and in-game digital
analysis content for professional sporting events covered on TV and the
Internet. The Company also provides realistic content for future development of
sports video games. The Company's products use a series of cameras, computers
and sophisticated military-grade technology to track moving objects (such as
balls and players) and instantly reconstructs digital images which can be
replayed in real-time, viewed from any angle, compared and analyzed. Such
products are routinely and increasingly used during coverage of baseball, tennis
and golf around the world, while development of new products for other sports
continues. The Company's digital video content has been broadcast and used for
analysis during coverage of such high-profile sporting events as the World
Series, the Major League Baseball All Star Game, the French Open, the ATP World
Championships and World Cup Golf. The Company continues to provide and offer its
products and services to companies covering these three major sports throughout
the year, including FOX Sports Productions, FOX Sports Net, NBC Sports, MSG

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Network, CBS Sportsline, Major League Baseball, ZDF and ARD German National
Television, France 2 and France 3 French National Television, and The Golf
Channel and The Sports Network.

Current Products and Services

         The Company provides turnkey solutions for real-time virtual replays of
professional sporting events. These interactive 3D replays can be used for
television, sports entertainment, video games, interactive services, display
media, league scoring and officiating, and player training and evaluation. The
Company uses cameras, computers, video equipment, proprietary technology and
software to track and measure moving objects (such as balls and players) and
instantly in real-time, reconstructs digital 3D images which can than be viewed
from any angle, analyzed (replayed), compared, etc. Furthermore, each sporting
event can lead to multiple revenue streams for the Company. For example, the
Company can display pitches in a single baseball game on FOX Sports Net's home
team production, provide the real-time production service for FOX Sports Net's
away team broadcast, including separate national coverage, as well as foreign
networks for international broadcasts, transmit the data via the internet in
real-time for broadcast over the world wide web and/or Interactive TV platforms,
then later provide the data to Major League Baseball and professional teams as
well as video game producers.

         The Company's proprietary products and services include the following:

         PitchTrax(TM) This is used in Major League Baseball ("MLB") to create
virtual replays for television and provide a behind-the-scenes analysis tool for
commentators. PitchTrax(TM) tracks each pitch, and then measures the speed, path
and trajectory at various intervals as the ball approaches the strike zone.

         Umpire Information System (UIS)(TM) The Umpire Information System
(UIS)(TM) was developed specifically for Major League Baseball as their
"technology of choice" to support MLB's officiating process. The Company has
been contracted for five years to develop, install, operate and maintain UIS(TM)
as part of MLB's recently announced strike zone initiatives. As part of the
Agreement, the Company will install six systems in Major League ballparks during
2001. Additional systems for both Major League and Minor League ballparks are
planned for 2002.

         TennisProView(TM) The TennisProView(TM) system instantly captures and
displays the exact speed, trajectory and court impact point of each serve during
a tennis match. TennisProView(TM) creates a virtual replay for television and a
behind-the-scenes analysis tool for commentators, providing spray charts, and
serve analysis and player comparisons. Serve patterns and analysis can be
displayed on the Internet as well.

         GolfProView(TM) The GolfProView(TM) system is used during televised
golf coverage as an "instant preview." The system locates the golfer's ball on
the green, and then proceeds to calculate and display the optimal putt path
using 3D graphics. In addition, GolfProView(TM) displays in real-time the exact
distance to the hole, the ball's height with respect to the cup and quantifies
the break or breaks in inches.

                                       2

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         eSports(TM) eSports(TM) is the data delivery technology behind our
eReplays(TM) suite of products. eSports(TM) instantly delivers the real-time
digital information captured at live events worldwide through the Internet. This
makes it possible for the live action QuesTec captures at the site of a sporting
event to show up instantly as three-dimensional graphics on an Internet user's
computer screen, in synch with the live action as it unfolds.

Full-Service Provider

         The Company provides its clients with a complete turnkey solution. By
supplying all equipment and personnel required to produce the Company's unique
quantified content, the Company operates as both a facilities provider and
production company during each sporting event.

         A standard production "equipment" setup is comprised of a front-end
data capture system, consisting of cable infrastructure, a fixed closed circuit
camera system, a video control system and a computer network for data capture
and quantification. The visualization system includes a computer network for
quantified data retrieval and technology for real-time 3D rendering. The scoring
system is comprised of a computerized or manual timing and scoring system. The
communication system includes audio communication to client's production,
video/audio display of virtual replay and an Internet link for data transmission
for remote users and/or quality control management.

Management's Discussion and Plan of Operations for the Next 12 Months

         QuesTec has closed out its best fiscal year to date. Revenues were up
more than 130% over the previous fiscal year end. These increases in reported
revenues are attributed to advertising sales generated by the Company's
PitchTrax(TM) virtual replay technology which is provided exclusively to FOX
Sports Net, and the Company's recently announced 5-year contract with the Office
of the Commissioner of [Major League] Baseball to develop, install and operate
their Umpire Information System(TM).

         The Company continues to make significant progress in the installation
and operation process of the Company's patented "PitchTrax(TM)" pitch tracking
system into Major League ballparks. QuesTec now has a presence in 23 Major
League ballparks and has 19 PitchTrax(TM) systems deployed. In addition to
expanding the Company's onsite presence at Major League ballparks, QuesTec is
also working to establish its Internet baseball content as a unique real-time
feature for live game coverage. The Company's unique content has been integrated
into FOX Sports.com's recently released "Hit the Pros" interactive video game.
Complementary baseball products such as HitTrax(TM) and Player Positioning(TM)
are currently being developed, integrated and marketed as part of the Company's
unique content offerings.

         During this fiscal year QuesTec recently announced a five (5) year
Agreement with the Office of the Commissioner of [Major League] Baseball to
develop, install and operate the new "Umpire Information System (UIS)(TM)." This
new system is an enhanced version of the Company's core technology, which was
used to create a state-of-the-art pitch measurement and reporting system in
support of MLB's previously announced strike zone initiatives. As part of this

                                       3

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Agreement, the Company has also been contracted to install, operate, and
maintain the new UIS(TM) for the term of the contract. This new system includes
several key modifications to the Company's commercial PitchTrax(TM) product
currently licensed exclusively to the FOX Channels Group as "in-game
enhancement" during live television broadcasts of Major League Baseball games.

         The UIS(TM) is a separate and distinct system than PitchTrax(TM), and
requires the installation of new cabling infrastructure, more advanced and
sophisticated cameras, as well as separate and distinct data capture,
quantification and reporting applications. QuesTec has finished development of
the UIS(TM) and is installing and operating six systems for MLB this year. Plans
are currently being finalized to install and operate additional systems for the
2002 season. During the off-season, QuesTec will work with MLB to install and
operate the UIS(TM) in several minor league ballparks for fall league and spring
training usage.

         During the fiscal year ended June 30, 2001, the Company and its Board
of Directors established clear business strategies and principles relating to
business development, operating efficiency, managerial tasks, product pricing,
debt reduction and investor relations. The Board initiated its business approach
by reshaping QuesTec's corporate structure, amending the Company's name to
better identify the company and its products, and increasing revenues. The
Company's increasing revenue base is a clear validation of the Board's planning,
commitment and direction.

         QuesTec has placed a concentrated effort on promoting its technology as
it relates to baseball. The Company's work with FOX and MLB has been the primary
focus during the past fiscal year. Marketing of other sports related
technologies such as TennisProView(TM) have resumed. The shake out of the .com's
and the delays with the deployment of interactive television has had an impact
on the Company's ability to expand its operations in these fields. While
management believes that the current market conditions in these sectors will
improve, they have decided to concentrate the Company's efforts on existing
products and markets domestically and internationally.

         The Company is presently involved in a number of projects, such as
contributions to FOX Sports Network's regional and national baseball broadcasts,
Major League Baseball's strike zone initiative and television coverage of ATP
Tour's Master Series Tennis tournaments. Within the next 12 months, the Company
anticipates that it will complete installation of PitchTrax(TM) in all 30 Major
League Baseball ballparks (at the present time, PitchTrax(TM) is in operation in
19 of the ballparks, and is cabled for future operation in an additional three
ballparks), establish Internet baseball production services as a standard daily
feature (to date, this has been a special event package for All Star Game and
World Series productions), expand TennisProView(TM) production service through
contracts with major world-wide providers of tennis coverage, establish Internet
tennis production service as a standard per-match feature, and complete
development and deployment of a new version of GolfProView(TM).

                                       4

<PAGE>

Marketing

         The advent of the Internet and the convergence of digital media have
created a need for new and unique content for television networks, Internet
service providers, interactive television providers, data repositories and
multimedia. Through direct marketing efforts, the Company has established, on a
global basis, relationships with the governing bodies of athletic leagues and
associations, major television rights holders and Internet service providers.

         The Company's marketing strategy is to maintain dominance in current
markets through technical excellence and outstanding service, and to enter into
and subsequently dominate new markets while expanding global awareness of the
Company's brand. The Company hopes to establish itself as the branded market
leader in real-time data and motion-capture systems for sports. The Company
plans to do so by launching a promotional campaign targeting journalists and
editors who cover sports, media, entertainment, the Internet and investment
community, availing itself of significant on-air exposure during sports
broadcasts that use the Company's products, which carry the Company's logo or
end-of-production credits. In addition, the Company shall utilize public
relations by customers as they promote their own services that utilize the
Company's technology.

Research and Development Partners

         The Company is committed to the improvement of its present product line
and the development of new products to provide the opportunity for growth in an
ever-changing market.

         Because the Company has historically worked with labor intensive,
limited production systems for baseball, tennis and golf, in September 1998 the
Company entered into a seven-year agreement with Titan Systems Corporation,
Aerospace Electronics Division, a subsidiary of Titan Corporation (NYSE: TTN)
("Titan"), a leading military software developer specializing in acquiring and
tracking multiple targets in real-time. Under the agreement, Titan provides the
Company with all research and development of live motion-capture tracking
technology for future sports-related applications, and the Company and Titan
collaborate on the development of certain graphics software and technology. The
Company and Titan jointly own the software and technology if the Company and
Titan develop such software and technology together; otherwise, Titan retains
ownership of the software and technology it develops, and the Company owns the
software and technology, as well as the parts of each system, not developed by
Titan. In addition, Titan will grant the Company exclusive rights to use the
software for sports-related applications. In exchange for the license, the
Company granted Titan options to purchase 500,000 shares of its common stock
with an exercise price of $0.20 per share. The options have a life of five years
and are subject to one year of restriction. The options are valued at $55,357
under the Black-Scholes Option Price Model. In addition, the Company is required
to pay Titan a 10% royalty fee on the Company's portion of gross revenues
derived directly or indirectly from the sale, license or use of the graphics
software and technology. Total royalty fees incurred during the years ended June
30, 2001 and 2000 amounted to $67,675 and $28,870, respectively.

         As a result of its relationship with Titan, the Company has been able
to finalize development of "user friendly," reliable and robust systems which
are now able to be deployed for multiple events, productions and uses. The
integration of Titan's signal processing intelligence with the Company's core

                                       5


<PAGE>


technology and production expertise has allowed the Company to broaden its
product/service offerings. The Company believes that its relationship with Titan
is imperative in maintaining its position as a technological leader in the
industry. Paul W. Baim, a Director of the Company, is also the Director of
Sports Technologies at Titan. Please see Item 11, "Interest of Management and
Others in Certain Transactions."

         The Company also has a strategic partnership with LMC Live Motion
Company ("LMC") of Wiesbaden, Germany, whereby LMC markets and assists in
producing the Company's services in Europe. In June 1998, the Company entered
into a seven-year research and development agreement with LMC, whereby the
Company and LMC have established a strategic alliance in research and
development of software-related broadcast enhancement products in the field of
sports broadcasting and athletic analysis. In exchange for the research and
development efforts of LMC, the Company will grant LMC an exclusive license to
the Company's intellectual property and designate LMC as its distributor in
Europe, Dubai and United Arab Emirates. The total licensing fee received from
LMC during the years ended June 30, 2001 and 2000 amounted to $-0- and $77,932,
respectively. No distribution fee has been paid to LMC during the years ended
June 30, 2001 and 2000.

         The Company's business is materially dependent on its strategic
relationships with Titan and LMC. The Company can not guarantee that it will
successfully maintain those relationships.

Employees

         The Company presently has five full-time employees and 35 independent
contractors that are coordinated from its Deer Park, New York office.

Dependence on Key Employee

         The Company materially depends upon the services of Edward J.
Plumacher, a key employee of the Company. At the present time, the Company has
not entered into an employment agreement with Mr. Plumacher and does not
anticipate entering into such an agreement with Mr. Plumacher in the foreseeable
future. The Company has obtained Key-man insurance for Mr. Plumacher in the
amount of $1,000,000, of which the Company is the beneficiary of $500,000 and
Mr. Plumacher's family is the beneficiary of $500,000. The Company would be
materially adversely affected by the loss of services by Mr. Plumacher.

Dependence on Major Customers

         Almost 100% of the Company's revenues for the fiscal year 2001 were
derived from three major customers of the Company: Oral Health America sponsors
the Company's PitchTrax(TM) product on FOX Sports Net; the Office of the
Commissioner of [Major League] Baseball utilizes the Company's Umpire
Information System (UIS)(TM); and Gearhouse Broadcast Ltd. utilizes the
TennisProView(TM) production service for the ATP Tours Master Series. The
Company can not guarantee that its existing major customers will continue doing
business with the Company.

                                       6

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Patents and Trademarks

         In February of 1987, the Company was assigned all of the rights to a
U.S. Patent for a Baseball Strike Indicator and Trajectory Analyzer, which
patent is the foundation of the technology for the Company's PitchTrax(TM)
product. The Company does not own any other U.S. Patents for its proprietary
products and technology. In addition, although the Company asserts trademark
protection for all of its proprietary products, to date the Company has not
federally registered any of its trademarks. As a result, the Company can not
guarantee that it is not infringing on the patent or trademark rights of others.
The Company does not have any immediate plans to secure any additional U.S.
Patent or federally registered trademark at this time.

Competition

         Companies that compete in the sports information and production market
are SporTVision, Elias Sports Bureau, Inside Edge, STATS, Inc., Sports Ticker,
Princeton Video, Baseball.TV and Orad. All companies mentioned charge
competitive prices and their pricing strategies are based on a per
contract/project basis. Each broadcast of an athletic event has a certain budget
for production enhancement features, which features the Company and its
competitors both offer. However, the Company's competitors offer principally
statistics and manual data entry packages from historical events as information
and analysis tools during the production, while the Company offers real-time
measurements of live action and the only products available that create live
content that the viewer can see and understand from an on-screen display. In a
baseball broadcast, for example, the Company can offer a visual display of pitch
sequences, either during the on-going at bat or in comparison with prior at
bats, where the viewer can see how a pitcher is pitching a particular batter and
the speed and location of a series of pitches.

         Competitors can offer statistical information regarding particular
situations. The Company and its competitors vie for the same production dollars
budgeted for broadcast enhancements, as only one type of enhancement is usually
utilized per production event.

Volatile Stock Price

         The trading price of the Company's Common Stock has been, and in the
future is expected to be, volatile. The Company expects to experience further
market fluctuations as a result of a number of factors, including:

                o   current and anticipated results of operations;

                o   changes in the Company's business, operations or financial
                    results;

                o   general market and economic conditions;

                o   competition;

                o   low trading volume;

                o   the number of market makers in the Company's stock;

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                o   technological developments; and

                o   other factors.


Item 7.       Description of Property

         The Company's executive offices are located at 160B West Industry
Court, Deer Park, New York 11729, in an approximately 4,200 square-foot space.
The space, which houses all the Company's operations, is leased for a period
through December 31, 2003. The annual rent under the lease agreement for the
fiscal year ended June 30, 2001 was $30,752.


Item 8.       Directors, Executive Officers and Significant Employees

                  The following table sets forth the names, ages and positions
held with respect to each Director, Executive Officer and Significant Employee
of the Company.

             Name                  Age               Position
------------------------------   -------     ---------------------------

Philip J. Albanese                  58        Director

Paul W. Baim                        41        Director

William E. Cavanaugh                67        Director

Derek L. Donaldson                  57        President, Secretary and Director

Stephen A. Ehrlich                  45        Director

Steven B. Greenfield                36        Chairman of the Board

Bruce L. Nesenger                   53        Director

Edward J. Plumacher                 41        Marketing Manager

Dan Beard                           31        Production Manager

Ron Klimkowski                      58        Sports Marketing Director

Chris Malone                        37        New Media Manager

         Directors and Executive Officers

         Philip J. Albanese has been a Director of the Company since 1998. He
has been the President of National Equipment Rental Program, Inc. since 1991.

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         Paul W. Baim is a Director of the Company, having been elected to the
position in December 1998. Mr. Baim is currently the Director of Sports
Technologies at Titan Systems Corporation, Aerospace Electronics Division in
Waltham, MA, a subsidiary of Titan Corporation (NYSE:TTN) ("Titan"), where he
has been involved in software engineering for the past six years. His business
responsibilities include directing engineering research and development, system
architecture, program management, technology assessment and business
development. Titan and QuesTec have formed a stategic relationship pertaining to
the research and development of QuesTec's graphics software and technology. See
Item 6, "Business - Research and Development Partners," and Item 11, "Interest
of Management and Others in Certain Transactions."

         William E. Cavanaugh, a Director of the Company since December 1998, is
a retired business executive. Prior to his retirement in 1996, he was the Chief
Operating Officer of the Company for two years.

         Derek L. Donaldson became President and Secretary of the Company in
January 2001, and has been a Director of the Company since November 1990. He is
an attorney in Kamloops, British Columbia, Canada, and is the sole shareholder
and director of Derek Donaldson Law Corp.

         Stephen A. Ehrlich has been a Director of the Company since September,
2000. He is the Segment Executive of World Sports and Entertainment for IBM, for
whom he has worked in an executive capacity for the prior five years.

         Steven B. Greenfield became Chairman of the Board of Directors of the
Company in January 2001, and has been a Director of the Company since September
2000. Mr. Greenfield is an attorney who has practiced law in the State of
Florida since 1991, and is the principal of Steven B. Greenfield, P.A., located
in Boca Raton, Florida. Mr. Greenfield has previously represented numerous
professional athletes in connection with his real estate law practice.

         Bruce L. Nesenger, a Director of the Company since September, 2000, is
the president and Chief Executive officer of Nesenger Chevrolet and Nesenger
Mazda located in Long Island, New York. Mr. Nesenger is a member of the Long
Island Dealers Advertising Board and the New York Dealers Marketing Group Board.

         Significant Employees

         Edward J. Plumacher, the Company's Marketing Manager, has been employed
by the Company since 1992. Mr. Plumacher oversees the Company's technical
operations on a daily basis, and is responsible for the marketing of existing
and new products, as well as the set up and coordination of new product
installations. Mr. Plumacher also attends to all of the Company's financial and
accounting functions. On or about December 2, 1994, in connection with the
violation of various rules of the American Stock Exchange ("AMEX") allegedly
committed by Mr. Plumacher during his former employment relationship with
Shearson Lehman Brothers, Inc. in the mid to late 1980s, the Disciplinary Panel
of the AMEX censured and permanently barred Mr. Plumacher from employment or
association in any capacity with any of its members or member organizations.

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On or about January 23, 1998, in connection with Mr. Plumacher's failure to
comply with the insider reporting requirements of the Securities Act of British
Columbia, as well as the AMEX censure and bar of Mr. Plumacher described above,
the British Columbia Securities Commission ordered that, among other things, Mr.
Plumacher be prohibited from becoming or acting as a director or officer of any
reporting issuer within its jurisdiction of British Columbia for a period of
eight years.

         Dan Beard, as Production Manager for the Company, is responsible for
setting up and operating video productions for sporting events, including the
coordination of required equipment. Mr. Beard has been employed by the Company
since June, 1998. He previously was an independent technical director from June,
1997 through June, 1998, and prior to that the time served as a TV Director for
Cablevision from 1995 through June, 1997.

         Ron Klimkowski, in his position as Sports Marketing Director,
communicates with sports teams in order to arrange the coordination of
installation of the Company's products at stadiums and training facilities, as
well as the scheduling of production at sporting events. Mr. Klimkowski, a
former major league pitcher with the New York Yankees, has been employed by the
Company since January, 1996, and prior to that time worked as a financial
consultant at Paine Webber for 3 years.

         Chris Malone, the New Media Manager of the Company since January 1999,
coordinates development of new products and the research into new applications
for the Company's products. Prior to holding this position at the Company, Mr.
Malone was head of production services since December 1996 when he joined the
Company. From November 1993 through December 1996, Mr. Malone was General
Manager of Eastern Micro Systems, a small retail computer store.

         None of the above-named individuals is involved in any certain legal
proceedings required to be disclosed by this Item.


Item 9.       Remuneration of Directors and Officers

--------------------------------------------------------------------------------
Name of individual or   Capacities in remuneration   Aggregate remuneration
  identity of group          was received
--------------------------------------------------------------------------------
 Edward J. Plumacher       Marketing Manager            $132,000.00 (1)
--------------------------------------------------------------------------------

         (1) Includes $72,000.00 paid to Mr. Plumacher as base salary for his
services to the Company for the fiscal year 2001.

         Also includes $60,000.00 paid to Mr. Plumacher as additional
compensation for his past services to the Company prior to the fiscal year 2001.
As part of an agreement reached between Mr. Plumacher and the Company on October
23, 1998, the Company has agreed to pay Mr. Plumacher for the value of his past
services to the Company, in the total amount of $240,000.00, which amount the
Company never paid Mr. Plumacher. Pursuant to that agreement, the Company has
paid Mr. Plumacher $180,000.00 in additional compensation to date. The Company

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plans to pay Mr. Plumacher the remaining $60,000.00 of additional compensation
during the fiscal year 2002, at the rate of $15,000.00 per fiscal quarter.

         Does not include the market value of 1,000,000 options to purchase
shares of the Company's Common Stock, which options were granted by the Company
to Mr. Plumacher on January 19, 2001. Please see Item 10, "Security Ownership of
Management and Certain Security Holders."


Item 10.      Security Ownership of Management and Certain Security Holders

         The following table sets forth, as of the close of business on October
12, 2001 (a) the name, and number of shares of each person known by the Company
to be the beneficial owner of more than 10% of the Company's Common Stock, (b)
the number of shares of Common Stock owned by each officer and director as well
as all officers and directors as a group, together with their respective
percentage holdings of such shares and (c) the number of options to purchase
shares of the Company's Common Stock owned by all of the aforementioned persons,
together with the exercise prices and dates of said options:

--------------------------------------------------------------------------------
  Name and Address      Amount of Common     Percent of     Amount of Options
     Of Owner(1)          Stock Owned        Class of           Owned(2)
                                              Common
                                            Stock Owned
--------------------------------------------------------------------------------
Philip J. Albanese           24,000                *               420,000(3)
--------------------------------------------------------------------------------
Paul W. Baim                175,100(4)             *               925,000(5)
--------------------------------------------------------------------------------
William E. Cavanaugh        200,000(6)             *               100,000(7)
--------------------------------------------------------------------------------
Derek L. Donaldson          408,297(8)            1.2%             252,351(9)
--------------------------------------------------------------------------------
Stephen A. Ehrlich                0                 0                    0
--------------------------------------------------------------------------------
Steven B. Greenfield      1,373,300(10)           4.0%             250,000(11)
--------------------------------------------------------------------------------
Bruce L. Nesenger           981,334               2.9%             230,000(12)
--------------------------------------------------------------------------------
Edward J. Plumacher       4,494,333(13)          13.2%             180,000(14)
--------------------------------------------------------------------------------
All Officers and          7,656,364              22.5%           2,357,351
Directors as
a Group
--------------------------------------------------------------------------------

* Less than 1%.

(1) The address of all persons listed above is 160B West Industry Court, Deer
Park, New York 11729.

(2)  All options vest immediately upon grant.

(3) This amount of options owned by Mr. Albanese includes 295,000 options with
an exercise price of $0.20 per share, which options expire on January 21, 2004;
and 125,000 options with an exercise price of $0.62 per share, which options
expire on February 10, 2004.

                                       11

<PAGE>


(4) This figure does not include beneficial ownership of 11,100 shares of the
Company's Common Stock held by Mr. Baim's wife as custodian for their minor
children pursuant to the Massachusetts Uniform Transfers to Minors Act, as to
which shares Mr. Baim disclaims any beneficial interest.

(5) This amount of options owned by Mr. Baim includes 500,000 options with an
exercise price of $0.20 per share, which options expire on January 21, 2006;
300,000 options with an exercise price of $0.38 per share, which options expire
on December 14, 2004; and 125,000 options with an exercise price of $0.62 per
share, which options expire on February 10, 2004.

(6) This figure does not include beneficial ownership of 80,000 shares of the
Company's Common Stock by Mr. Cavanaugh's immediate family, as to which shares
Mr. Cavanaugh disclaims any beneficial interest. This figure also does not
include beneficial ownership of 10,000 shares of the Company's Common Stock held
by Mr. Cavanaugh as custodian for his minor grandchildren pursuant to the
California Uniform Transfers to Minors Act, as to which shares Mr. Cavanaugh
disclaims any beneficial interest.

(7) These options owned by Mr. Cavanaugh have an exercise price of $0.20 per
share, which options expire on January 21, 2004.

(8) This figure does not include beneficial ownership of 11,000 shares of the
Company's Common Stock by the family of Mr. Donaldson, as to which shares Mr.
Donaldson disclaims any beneficial interest.

(9) This amount of options owned by Mr. Donaldson includes 180,000 options with
an exercise price of $0.38 per share, which options expire on December 14, 2004;
and 72,351 options with an exercise price of $0.20 per share, which options
expire on January 21, 2004.

(10) This figure does not include beneficial ownership of 12,500 shares of the
Company's Common Stock by the minor children of Mr. Greenfield, as to which
shares Mr. Greenfield disclaims any beneficial interest.

(11) These options owned by Mr. Greenfield have an exercise price of $0.20 per
share, which options expire on January 21, 2004.

(12) These options owned by Mr. Nesenger have an exercise price of $0.20 per
share, which options expire on January 21, 2004.

(13) This figure does not include beneficial ownership of 146,000 shares of the
Company's Common Stock held by Mr. Plumacher's wife as custodian for their minor
children pursuant to the New York Uniform Transfers to Minors Act, as to which
shares Mr. Plumacher disclaims any beneficial interest.

(14) These options owned by Mr. Plumacher have an exercise price of $0.20 per
share, which options expire on January 21, 2004.

                                       12

<PAGE>


Item 11.      Interest of Management and Others in Certain Transactions

              Paul W. Baim, a Director of the Company, is also the Director of
Sports Technologies at Titan Systems Corporation, Aerospace Electronics
Division, a subsidiary of Titan Corporation (NYSE: TTN) ("Titan"). In September
1998, the Company entered into an agreement with Titan, whereby Titan provides
the Company with all research and development of live motion-capture tracking
technology for future sports-related applications, and whereby the Company and
Titan collaborate on the development of certain graphics software and
technology. Please see Item 6, "Description of Business - Research and
Development Partners." As part of its Agreement with Titan, the Company granted
Titan options to purchase 500,000 shares of its common stock with an exercise
price of $0.20 per share. The options have a life of five years and are subject
to one year of restriction. The options are valued at $55,357 under the
Black-Scholes Option Price Model. In addition, the Company is required to pay
Titan a 10% royalty fee on the Company's portion of gross revenues derived
directly or indirectly from the sale, license or use of the graphics software
and technology. Total royalty fees incurred during the years ended June 30, 2001
and 2000 amounted to $67,675 and $28,870, respectively.

                                     PART II

Item 1.       Market Price of and Dividends on the Registrant's Common Equity
              and Other Shareholder Matters

              QuesTec's Common Stock is quoted on the OTC Bulletin Board under
the symbol QSTI. The following table sets forth the average of the high and low
bid prices of QuesTec's Common Stock as reported on the OTC Bulletin Board for
each quarter from June 30, 1999 through June 30, 2001. The quotations are
over-the-market quotations and, accordingly, reflect inter-dealer prices,
without retail mark-up, mark-down or commission and may not represent actual
transactions.

--------------------------------------------------------------------------------
                                  Quarter Ended
--------------------------------------------------------------------------------
     Fiscal
      Year                    Sept. 30     Dec. 31     Mar. 31     June 30
--------------------------------------------------------------------------------
      2001        High          $0.75       $0.51       $0.50       $0.25
--------------------------------------------------------------------------------
                  Low           $0.40       $0.09       $0.09       $0.09
--------------------------------------------------------------------------------
      2000        High          $0.72       $1.02       $1.20       $0.90
--------------------------------------------------------------------------------
                  Low           $0.43       $0.31       $0.38       $0.38
--------------------------------------------------------------------------------

              As of October 8, 2001, there were 258 holders of record of the
Company's Common Stock.

              The quotations in the foregoing table represent prices between
dealers and do not include retail markup, markdown, or commissions paid and may
not represent actual transactions. Such quotations are not necessarily
representative of actual transactions or of the value of the Company's
securities.

                                       13

<PAGE>


Dividend Policy

         The Company has never declared any cash dividends on its Common Stock.
At present, the Company does not anticipate paying any cash dividends on its
Common Stock in the foreseeable future and intends to devote any earnings to the
development of the Company's business.


Item 2.       Legal Proceedings

         At June 30, 2001, the Company owed federal payroll taxes, including
interest and penalties, of approximately $448,000. The Company is in the process
of seeking an acceptable payment arrangement with the Internal Revenue Service.

         In January 1995, Montreal Trust Company initiated in the Supreme Court
of British Columbia a collection action against the Company with respect to a
1990 loan to the Company in the original principal amount of $120,000. In April
1995, Montreal Trust Company obtained a judgment against the Company for that
amount. Thereafter, the Company from time to time made payments on the judgment.
During the second half of the Company's fiscal year ended June 30, 2001, the
Company paid $30,000 on the judgment. Pursuant to a settlement reached in June
2001, the Company agreed to pay Montreal Trust Company $30,000 in three monthly
installments of $10,000 each during the first quarter of its 2002 fiscal year
that ended on September 30, 2001, to satisfy the judgment. The Company paid that
balance in full during the first quarter.

         In October 1998, the Company and the New York State Attorney General
entered into an Assurance of Discontinuance. Without admitting or denying
certain allegations related to the Company's sale of its stock without proper
registration in the State of New York, the Company paid the state $20,000, and
agreed to sell securities in New York only in compliance with the applicable New
York law and to notify the New York Department of Law within five days of the
date if or when Edward J. Plumacher becomes either a director or officer of the
Company.


Item 3.       Changes in and Disagreements with Accountants

              None.


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

              None.

Item 5.       Compliance with Section 16(a) of the Exchange Act

              The Securities and Exchange Commission has implemented a rule that
requires companies to disclose information with respect to reports that are
required to be filed pursuant to Section 16 of the Securities Exchange Act of

                                       14

<PAGE>


1934, as amended (the "Exchange Act"), by directors, officers and 10%
shareholders of each company, if any of those reports are not filed timely. To
the Company's knowledge, based solely on a review of the copies of the reports
furnished to the Company and written representations that no other reports were
required during the fiscal year ended June 30, 2001, (i) none of the Company's
officers or directors filed a Form 3, Initial Statement of Beneficial Ownership
of Securities, on a timely basis, (ii) Steven B. Greenfield, Philip J. Albanese,
Paul W. Baim, William E. Cavanaugh and Stephen A. Ehrlich, all of whom are
Directors of the Company, each did not file a Form 4, Statement of Changes of
Beneficial Ownership of Securities, on a timely basis, (iii) Edward J.
Plumacher, a significant employee of the Company, has failed to file several
Forms 4, Statement of Changes of Beneficial Ownership of Securities, on a timely
basis, and (iv) all other required filings, if any, were made in a timely
manner. To date, all officers and directors of the Company are current with
their required Section 16 filings, except for Messrs. Cavanaugh, Ehrlich and
Plumacher. The Company is currently assisting those individuals to become
current in their required Section 16 filings.


Item 6.       Reports on Form 8-K

              None.

                                    PART F/S

              The financial statements are attached at the end of this document.









                                       15

<PAGE>


                                    PART III

Item 1.       Index to Exhibits

Exhibit No.                         Description
----------                          -----------
2                   Charter and Bylaws*

6                   Material Contracts

                    6a.  Agreement with Office of the Commissioner of Baseball

                    6b.  Agreements with Atlantic Aerospace Electronics
                         Corporation dated September 9, 1998*

                    6c.  Agreement with LMC Live Motion Company dated
                         June 9, 1998*

21                  Subsidiaries: QuesTec.com, Inc., a Delaware corporation,
                    100% owned by QuesTec, Inc., the Registrant, a Wyoming
                    corporation.

*  Incorporated by reference from Form 10-SB filed on March 2, 2000


Item 2.       Description of Exhibits

              As indicated in the above Index, the Agreement with Office of the
Commissioner of Baseball is being filed as an Exhibit to this filing. The other
Exhibits are incorporated by reference.



                                       16

<PAGE>


                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant has caused its Annual Report on Form 10-KSB to be signed
on its behalf by the undersigned, thereunto duly authorized.

                                             QUESTEC, INC.

Date: October 15, 2001                       By: /s/ Derek L. Donaldson
                                                 -------------------------------
                                                 Derek L. Donaldson, President



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

<TABLE>
<CAPTION>

         Signature                                   Title                            Date
         ---------                                   -----                            ----


                                                  <c>                              <c>
           /s/ Philip J. Albanese                    Director                         October 15, 2001
         ----------------------------------------
         Philip J. Albanese

           /s/ Paul W. Baim                          Director                         October 15, 2001
         ----------------------------------------
         Paul W. Baim

                                                     Director                         October 15, 2001
         ----------------------------------------
         William E. Cavanaugh

           /s/ Derek L. Donaldson                    President, Secretary and         October 15, 2001
         ----------------------------------------    Director
         Derek L. Donaldson

                                                     Director                         October 15, 2001
         ----------------------------------------
         Stephen A. Ehrlich

           /s/ Steven B. Greenfield                  Chairman of the Board            October 15, 2001
         ----------------------------------------
         Steven B. Greenfield

           /s/ Bruce L. Nesenger                     Director                         October 15, 2001
         ----------------------------------------
         Bruce L. Nesenger

           /s/ Edward J. Plumacher                   (Employee in Charge              October 15, 2001
         ----------------------------------------    of Finance and Accounting
         Edward J. Plumacher                         Functions)

</table>

                                       17

<PAGE>

                   QuesTec, Inc. (Formerly QuesTec.Com, Inc.)

                                    Contents
--------------------------------------------------------------------------------

                                                                          Page
                                                                          ----
Report of Independent Auditors                                            F-1


FINANCIAL STATEMENTS

  Balance Sheets                                                          F-2

  Statements of Operations                                                F-3

  Statement of Changes in Stockholders' Deficit                           F-4

  Statements of Cash Flows                                                F-5


Notes To Financial Statements                                       F-6 - F-12

<PAGE>



                         REPORT OF INDEPENDENT AUDITORS




The Board of Directors and Stockholders
QuesTec, Inc. (Formerly QuesTec.Com, Inc.)
Deer Park, NY


We have audited the accompanying balance sheets of QuesTec, Inc. (Formerly
QuesTec.Com, Inc.) as of June 30, 2001 and 2000, and the related statement of
operations, changes in stockholders' deficit, and cash flow for each of the
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of QuesTec, Inc. (Formerly
QuesTec.Com, Inc.) at June 30, 2001 and 2000, and the results of its operations
and its cash flows for each of the years then ended, in conformity with
generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has incurred a significant loss from
operations and has a deficit. In addition, as of June 30, 2001, the Company owed
payroll taxes, including interest and penalty, of approximately $448,000. These
conditions raise substantial doubt about its ability to continue as a going
concern. Management's plans regarding those matters also are described in Note
1. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.


/s/ Radin, Glass & Co., LLP
---------------------------
Certified Public Accountants
New York, NY
August 21, 2001

                                      F-1
<PAGE>
                      QuesTec, Inc. (Formerly QuesTec.Com, Inc.)
                                    Balance Sheets
                             June 30, 2001 and 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                        ASSETS

                                                                                       2001               2000
                                                                               ----------------   ----------------

CURRENT ASSETS:
<S>                                                                               <C>                <C>
    Cash                                                                          $     48,778       $      3,007
    Accounts receivable, net                                                                --             51,175
    Note receivable                                                                     18,399             10,000
    Prepaid expenses and other current assets                                            5,960              6,466
                                                                                  ------------       ------------

       Total Current Assets                                                             73,137             70,648

PROPERTY AND EQUIPMENT, Net                                                            230,033            183,417

OTHER ASSETS:
    Software development costs, net of accumulated amortization of $251,128
       and $135,254, respectively                                                      239,092            301,513
                                                                                  ------------       ------------

       TOTAL ASSETS                                                               $    542,262       $    555,578
                                                                                  ============       ============


                         LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
    Accounts payable                                                              $     61,966       $    195,071
    Accrued liabilities, current portion                                               984,415            864,874
    Deferred revenue                                                                   452,200                 --
    Note payable, bank                                                                      --              9,980
    Advances from stockholders                                                          91,136             79,320
                                                                                  ------------       ------------

       Total Current Liabilities                                                     1,589,717          1,149,245

OTHER LIABILITIES:
    Accured liabilities, non-current portion                                                --             68,667
                                                                                  ------------       ------------

       TOTAL LIABILITIES                                                             1,589,717          1,217,912
                                                                                  ------------       ------------

COMMITMENTS AND CONTINGENCIES                                                               --                 --

STOCKHOLDERS' DEFICIT:
    Preferred stock, $0.0001 par value, 20,000,000 shares authorized,
       none issued and outstanding                                                          --                 --
    Common stock, $0.0001 par value, 80,000,000 shares authorized,
       34,065,542 and 31,571,643 shares issued and outstanding, respectively             3,406              3,157
    Additional paid-in capital                                                      10,418,194          9,844,295
    Accumulated deficit                                                            (11,469,055)       (10,509,786)
                                                                                  ------------       ------------

       TOTAL STOCKHOLDERS' DEFICIT                                                  (1,047,455)          (662,334)
                                                                                  ------------       ------------

       TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                $    542,262       $    555,578
                                                                                  ============       ============
</TABLE>

                       See notes to financial statements.

                                      F-2
<PAGE>
                QuesTec, Inc. (Formerly QuesTec.Com, Inc.)
                         Statements of Operations
                   For the Years Ended June 30, 2001 and 2000
--------------------------------------------------------------------------------

                                                    2001                 2000
                                                -------------    ---------------

SALES                                           $    696,752       $    297,002
Less: Discount                                       (19,950)                --
                                                ------------       ------------

    NET SALES                                        676,802            297,002

COST OF GOODS SOLD                                   214,613            188,043
                                                ------------       ------------

    GROSS PROFIT                                     462,189            108,959
                                                ------------       ------------

OPERATING EXPENSES:
    Depreciation and amortization                    193,514            143,283
    Sales and marketing                               48,786            213,057
    General and administrative                     1,089,026          1,076,327
                                                ------------       ------------

    TOTAL OPERATING EXPENSES                       1,331,326          1,432,667
                                                ------------       ------------

    OPERATING LOSS                                  (869,137)        (1,323,708)

OTHER INCOME (EXPENSES)
    Interest expense, net                            (90,132)           (31,055)
                                                ------------       ------------

    LOSS BEFORE INCOME TAXES                        (959,269)        (1,354,763)

INCOME TAXES                                              --                 --
                                                ------------       ------------

    NET LOSS                                    $   (959,269)      $ (1,354,763)
                                                ============       ============

Net Loss Per Share (Basis and Diluted)          $      (0.03)      $      (0.04)
                                                ============       ============

Weighted Average Common Shares Outstanding        32,610,582         30,795,940
                                                ============       ============


                       See notes to financial statements.

                                      F-3
<PAGE>
      QuesTec, Inc. (Formerly QuesTec.Com, Inc.)
            Statements of Changes in Stockholders' Equity
For the Years Ended June 30, 2001 and 2000
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>

                                                           Preferred Stock                        Common Stock
                                                  -----------------------------------    ------------------------------
                                                       Shares             Amount             Shares          Amount
                                                  ---------------    ----------------    --------------  --------------

<S>                                               <C>                <C>                 <C>            <C>
Balance - June 30, 1999                                    --        $       --          29,321,143     $       --

Change of par value                                        --                --                --              2,932
Shares issued for option exercised                         --                --           1,720,500              172
Debt converted to equity                                   --                --             530,000               53
Stock-based compensation                                   --                --                --               --
Net loss                                                   --                --                --               --
                                                   ------------      ------------      ------------     ------------

Balance - June 30, 2000                                    --                --          31,571,643            3,157

Shares issued for option and warrant exercised             --                --           2,493,899              249
Net loss                                                   --                --                --               --
                                                   ------------      ------------      ------------     ------------

Balance - June 30, 2001                                    --        $       --          34,065,542     $      3,406
                                                   ============      ============      ============     ============

[restubbed table]

<CAPTION>

                                                     Additional
                                                       Paid-in        Accumulated
                                                       Capital          Deficit            Total
                                                  ----------------- ---------------   --------------

<S>                                                <C>               <C>               <C>
Balance - June 30, 1999                            $  8,762,105      $ (9,155,023)     $   (392,918)

Change of par value                                      (2,932)             --                   0
Shares issued for option exercised                      652,675              --             652,847
Debt converted to equity                                211,947              --             212,000
Stock-based compensation                                220,500              --             220,500
Net loss                                                   --          (1,354,763)       (1,354,763)
                                                   ------------      ------------      ------------

Balance - June 30, 2000                               9,844,295       (10,509,786)         (662,334)

Shares issued for option and warrant exercised          573,899              --             574,148
Net loss                                                   --            (959,269)         (959,269)
                                                   ------------      ------------      ------------

Balance - June 30, 2001                            $ 10,418,194      $(11,469,055)     $ (1,047,455)
                                                   ============      ============      ============

</TABLE>

                       See notes to financial statements.

                                      F-4
<PAGE>
                       QuesTec, Inc. (Formerly QuesTec.Com, Inc.)
                                Statements of Cash Flows
                   For the Years Ended June 30, 2001 and 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                   2001           2000
                                                              ------------     -----------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                           <C>              <C>
    Net loss                                                  $  (959,269)     $(1,354,763)
    Adjustments to reconcile net loss to net cash
       provided by operating activities:
         Depreciation and amoritzation                            193,514          143,283
         Accrued interest on note receivable                         (869)            --
         Stock-based compensation                                    --            220,500
    Changes in operating assets and liabilities:
         Accounts receivable                                       51,175          (28,364)
         Accounts payable                                        (133,104)          32,831
         Accrued expenses                                         414,817        1,059,907
         Deferred revenue                                         452,200             --
                                                              -----------      -----------

         CASH FLOW PROVIDED BY OPERATING ACTIVITIES                18,464           73,394
                                                              -----------      -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchases of property and equipment                          (123,751)        (108,415)
    Collections on (issuance of) note receivable                   10,000          (10,000)
    Costs incurred in software development                        (53,453)        (140,398)
                                                              -----------      -----------

         CASH FLOW USED IN INVESTING ACTIVITIES                  (167,204)        (258,813)
                                                              -----------      -----------

CASH FLOWS FROM FINANCING ACTIVITIES
    Proceeds from issuance of common stock                        152,675           39,711
    Net changes in due to stockholders                             51,816          146,137
    Proceeds from (repayments of) note payable, bank, net          (9,980)           2,578
                                                              -----------      -----------

         CASH FLOW PROVIDED BY FINANCING ACTIVITIES               194,511          188,426
                                                              -----------      -----------

         NET INCREASE IN CASH                                      45,771            3,007

CASH, Beginning                                                     3,007             --
                                                              -----------      -----------

CASH, Ending                                                  $    48,778      $     3,007
                                                              ===========      ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

    Cash paid during the periods for:
       Interest                                               $     7,621      $     9,007
                                                              ===========      ===========
       Taxes                                                  $       110      $       405
                                                              ===========      ===========

    Non-cash investing and financing activities:
       Exercise of options by reducing liabilities            $   403,943      $   613,136
                                                              ===========      ===========
       Conversion of debt                                     $      --        $   212,000
                                                              ===========      ===========
       Exercise of options for note                           $    17,530      $      --
                                                              ===========      ===========
</TABLE>



                       See notes to financial statements.

                                      F-5


<PAGE>

                   QuesTec, Inc. (Formerly QuesTec. com, Inc.)
                          Notes to Financial Statements
       ------------------------------------------------------------------

1. Description of the Company:

QuesTec, Inc. (formerly QuesTec.com, Inc.) (the "Company") designs, develops and
markets proprietary software and hardware systems, with shared technology bases,
which present three-dimensional computer analyzed images for sports
entertainment, business and industrial markets.

As shown in the accompanying financial statements, the Company incurred a net
loss of ($959,269) during the year ended June 30, 2001, and, as of that date,
the Company's current liabilities exceeded its current assets by $1,516,580 and
its total liabilities exceeded its total assets by $1,047,455. At June 30, 2001,
the Company owed payroll taxes, including interest and penalty, of approximately
$448,000. These factors create an uncertainty as to the Company's ability to
continue as a going concern. The Company has recently obtained a five-year
contract with Major League Baseball to develop, install and operate the
Company's Umpire Information System (see Note 8). In addition, the Company is
able to generate additional revenue from advertising sales from the Company's
existing PitchTrax systems. Furthermore, the Company has successfully entered
into an Installment Payment Agreement with New York State to satisfy its
outstanding tax liability and is currently working on a settlement agreement
with Internal Revenue Service. The Company plans to continue form strategic
alliances in order to reduce future development costs and create additional
opportunity and applications for the expansion of revenue/earnings for new
customers utilizing its existing technology. The exploitation of these
additional revenue streams requires little capital to potentially generate
additional income. The ability of the Company to continue as a going concern is
dependent upon the success of obtaining the settlement agreement with Internal
Revenue Service and the continued expansion of its operations. The financial
statements do not include any adjustments that might be necessary should the
Company be unable to continue as a going concern.

2. Summary of Significant Accounting Policies:

Software Development Costs:

The Company capitalizes software development costs in accordance with SFAS No.
86, "Accounting for the Costs of Computer Software to be Sold, Leased or
Otherwise Marketed". Software costs, which are capitalized after technological
feasibility is established, totaled $53,453 and $140,398 in years ended June 30,
2001 and 2000, respectively. Amortization of capitalized software costs is
computed using the straight-line method over the estimated economic life of the
software, primarily four years. Amortization expense was $116,380 and $94,847
for the years ended June 30, 2001 and 2000, respectively.

Furniture and Equipment:

Furniture and equipment are stated at cost, less accumulated depreciation and
amortization. Depreciation and amortization are provided using the straight-line
method over the estimated useful lives of the related assets, which range from
five to seven years. When furniture and equipment is sold or otherwise disposed
of, the cost and related accumulated depreciation are eliminated from the
accounts and any resulting gain or loss is recognized in income.

Allowance for Doubtful Account:

At June 30, 2001 and 2000, management concluded that no allowance for doubtful
account is needed as all accounts receivable are 100% collectible.

Revenue Recognition:

The Company recognizes revenue when persuasive evidence of an arrangement
exists, delivery has occurred or services have been rendered, the sale price is
fixed and determinable and collectibility is reasonably assured. Service
revenues, consisting of system design, installation and field service, are
generally recognized as services are rendered in accordance with the terms of
contracts. Deferred revenue represents fees received in advance for services to
be performed after year-end.


                                      F-6
<PAGE>
                   QuesTec, Inc. (Formerly QuesTec. com, Inc.)
                          Notes to Financial Statements
       ------------------------------------------------------------------

Income Taxes:

The Company utilizes the liability method of accounting for income taxes as set
forth in SFAS No. 109, "Accounting for Income Taxes". Under the liability
method, deferred taxes are determined based on the difference between the
financial statement and tax basis of assets and liabilities using enacted tax
rates in effect in the years in which the differences are expected to reverse.

Stock-Based Compensation:

The Company accounts for stock transactions in accordance with APB Opinion No.
25, "Accounting For Stock Issued to Employees." Accordingly, no compensation is
recorded on the issuance of employee stock options at fair market value. The
Company accounts for non-employee stock transactions in accordance with SFAS No.
123 and EITF 96-18.

Reclassifications:

Certain reclassifications have been made to the prior year's financial
statements to conform to the current year presentation. These reclassifications
had no effect on previously reported results of operations or retained earnings.

Advertising Costs:
Advertising costs are expensed as incurred.

Web-site Development Costs:

The Company adopted EITF 00-2, "Accounting for Web-site Development Costs". EITF
00-2 requires certain web-site development costs to be expensed and others to be
capitalized. During the years ended June 30, 2001 and 2000, no web-site
development costs were incurred, which would be capitalized under EITF 00-2.
Routine maintenance cost on the web-site was charged to expense as incurred.

Management's Estimates:

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the dates of the financial statements and
the reported amounts of expenses during the reporting periods. Actual results
could differ from those estimates.

Fair Value of Financial Instruments:

The carrying amounts reported in the balance sheet for assets and liabilities
approximate fair value based on the short-term maturity of these instruments.

Accounting for Long-Lived Assets:

The Company reviews long-lived assets, certain identifiable assets and any
goodwill related to those assets for impairment whenever circumstances and
situations change such that there is an indication that the carrying amounts may
not be recoverable. At June 30, 2001 and 2000, the Company believes that there
has been no impairment of its long-lived assets.

Income (Loss) Per Share:

Basic EPS is computed by dividing income (loss) available to common stockholders
by the weighted-average number of common shares outstanding for the period.
Diluted EPS is based on the weighted-average number of shares of common stock
and common stock equivalents outstanding for the period. Common stock
equivalents are excluded in the computation of diluted EPS, as such inclusion is
antidiluted.


                                      F-7
<PAGE>



Reporting of Segments:

SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information", establishes the criteria for determining an operating segment and
establishes the disclosure requirements for reporting information about
operating segments. The Company has determined that under SFAS No. 131, it
operates in one segment of service.

3.   Furniture and Equipment:

Furniture and equipment consist of the following as of June 30:

                                                        2001            2000
                                                  --------------- --------------

Furniture and equipment                              $ 458,268       $ 334,517
Less: Accumulated depreciation and amortization       (228,235)       (151,100)
                                                     ---------       ---------
         Furniture and Equipment, net                $ 230,033       $ 183,417
                                                     =========       =========

Depreciation expense was $77,134 and $48,436 for the years ended June 30, 2001
and 2000, respectively.

4.   Accrued Liabilities:

Accrued liabilities consist of the following as of June 30:

                                                         2001           2000
                                                   --------------- -------------

Accrued taxes, interest and penalty                    $448,020      $264,482
Accrued payroll                                         421,188       384,429
Litigation settlement                                    30,000        76,776
Accrued expenses                                         85,207       207,854
                                                       --------      --------
                                                        984,415       933,541
Less: Current Portion                                   984,415       864,874
                                                       --------      --------
         Accrued Liabilities, Non-current Portion      $     --      $ 68,667
                                                       ========      ========

The Company owed payroll taxes, including interest and penalty at June 30, 2001
and 2000 approximating $448,000 and $264,000, respectively.

5. Advance from Stockholders:

Certain stockholders and officers of the Company had made advances on behalf of
the Company during the years ended June 30, 2001 and 2000. These advances are
non-interest bearing and are due on demand.

6. Income Taxes:

No provision has been made in the accompanying financial statements for income
tax expense as a result of the current operating loss and net operating loss
carryforwards. Differences between income tax benefits computed at the Federal
statutory rate (35%) and reported income taxes for years ended June 30, 2001 and
2000 are primarily attributable to the net operating loss carryforwards. The
utilization of the Company's net operating loss carryfowards is subject to
certain limitations under the provisions of Internal Revenue Code Section 382.

At June 30, 2001 and 2000, the Company had deferred tax assets of approximately
$4,517,000 and $4,065,000, respectively, which represent the tax impact of the
Company's net operating loss carryforwards. A valuation allowance is required
if, based on the weight of available evidence, it is more likely than not that
some portion of all of the deferred tax assets will not be realized. Management
concluded a full valuation allowance was appropriate at June 30, 2001 and 2000
due to operating losses incurred. The Company estimated the available net
operating loss carryforwards to be approximately $12,905,000 and $11,955,000 at
June 30, 2001 and 2000, respectively, which will expire on various dates through
2021.

                                      F-8
<PAGE>



7. Stockholders' Equity:

Authorized:

On December 16, 1999, the Board of Directors amended the certificate of
incorporation to increase the number of authorized shares from 50,000,000 to
100,000,000 shares having a par value of $0.0001. The authorized share capital
of the Company comprised of 80,000,000 common shares and 20,000,000 preferred
shares.

Conversion of Debt:

During the years ended June 30, 2000, the Company converted certain liabilities
in the amount of approximately $212,000, owed to certain stockholders/employees
of the Company to 530,000 shares of its common stock. The conversion rate was
the average trading price of the Company's shares during the previous ten (10)
trading days. There was no conversion feature in the original debt.

Options and Warrants:

During the year ended June 30, 2001, the Company granted 3,615,000 options to
its employees with an exercise price of $0.20 per share, which is greater than
market value at the grant date. All these options were vested immediately. In
addition, options and warrants to purchase 2,493,899 shares of the Company's
common stock were exercised. The Company received $152,675 in cash, $17,530 in
note and reduced liability of $403,943.

During the year ended June 30, 2000, the Company granted certain consultants
options to purchase 550,000 shares of its common stock at exercise price ranging
from $0.38 to $0.53 per share. Accordingly, the Company recorded consulting
costs of $188,000 based on the Black-Scholes Option Price Model. In addition,
the Company granted 650,000 options to its employees with an exercise price of
$0.53 per share, which is less than market value. As a result, the Company
recognized $32,500 in compensation expenses for these options. Furthermore, the
Company granted 1,350,000 options to its employee and directors with exercise
prices of $0.38 per share, which is greater than the market value of the stock
at the grant dates. During the year ended June 30, 2000, options to purchase
1,720,500 shares of the Company's common stock were exercised. The Company
received $39,711 in cash and reduced liability of $613,136.

The weighted average fair value of the options granted during the years ended
June 30, 2001 and 2000 was $0.20 and $0.32 per share, respectively, which was
estimated at the date of grant using a Black-Scholes option-pricing model with
the following weighted-average assumptions for the years ended June 30, 2001 and
2000:
<TABLE>
<CAPTION>

                                Assumptions                                      2001               2000
    --------------------------------------------------------------------- ------------------- -----------------

<S>                                                                                   <C>               <C>
    Risk-free rate                                                                    4.78%             5.98%
    Dividend yield                                                                      --%               --%
    Volatility factor of the expected market price of the Company's
     common stock                                                                      350%               95%
    Expected life                                                                   5 Years           5 Years
</TABLE>

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options, which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the vesting period of the options. The Company's
pro forma information for the years ended June 30, 2001 and 2000 is as follows:

                                               2001              2000
                                       ---------------   ----------------

      Pro forma net loss                $ (1,573,819)      $  (1,959,263)
                                        ============       =============
      Pro forma net loss per share
        - basic and diluted             $      (0.05)      $       (0.06)
                                        ============       =============

                                      F-9
<PAGE>



Activities under the Plan are as follows:
<TABLE>
<CAPTION>

                                                 Options                              Warrants
                                   ------------------------------------- -----------------------------------
                                                                                                Range
                                    Number of Shares       Weighted                              of
                                      Outstanding          Average          Number of          Warrant
                                                        Exercise Price       Shares             Price
                                   ------------------- ----------------- ---------------- ------------------

<S>                                    <C>                  <C>               <C>               <C>
   Balance at July 1, 1999             3,135,674            $0.38             295,000           $0.30

     Granted                           2,550,000            $0.43               --
     Exercised                        (1,720,500)           $0.38               --
     Expired or cancelled               (152,174)           $0.23               --
                                   -------------------                   ----------------

   Balance at June 30, 2000            3,813,000            $0.37             295,000           $0.30

     Granted                           3,615,000            $0.20               --
     Exercised                        (2,236,399)           $0.22            (257,500)          $0.30
     Expired or cancelled               (395,000)           $0.30             (37,500)          $0.30
                                   -------------------                   ----------------

   Balance at June 30, 2001            4,796,601            $0.31               --
                                   ===================                   ================
</TABLE>

The following table summarizes information about stock options outstanding at
June 30, 2001:


         Exercise Price          Number Outstanding   Option Expiration Date
     ------------------------ ---------------------- -----------------------
              $0.46                       255,000        June 26, 2002
              $0.38                       142,250        April 8, 2003
              $0.20                       500,000       October 22, 2003
              $0.62                       250,000      February 10, 2004
              $0.53                       500,000        July 15, 2001
              $0.53                       200,000        July 15, 2004
              $0.38                       298,000      December 14, 2002
              $0.38                       555,000      December 14, 2004
              $0.20                        80,000       January 21, 2002
              $0.20                     1,516,351       January 21, 2004
              $0.20                       500,000       January 21, 2006
                              ----------------------
                                        4,796,601
                              ======================

8.   Commitments and Contingencies:

Lawsuits and Claims:

A suit brought by a former employee of the Company claiming approximately
$161,000 for breach of employment agreement, non-payment of wages, including
damages therefrom, unreimbursed employment related expenses and loans made to
the Company. This claim was settled on July 18, 2000, whereby the former
employee agreed to pay the Company the total sum of $10,000, which was collected
in the year ended June 30, 2001.

On March 10, 1997, an action was commenced by Montreal Trust Company with
respect to debt and for which judgment was obtained in the amount of $90,000
with interest accrued at the fixed rate of $15.18 (Canadian Dollars) per day.
Principal and interest payment of $1,000 (Canadian Dollars) should be paid
monthly. Payments should be applied to accrued interest first. During the year
ended June 30, 2001, the Company made a settlement agreement with Montreal Trust
Company and at June 30, 2001, $30,000 was the balance owing on the judgement.
Such judgement was paid in monthly installment of $10,000 on July 15, August 15
and September 15, 2001.

On October 23, 1998, the Company agreed to settle and affix the accrued salary
for a current employee to approximately $177,000. As part of the settlement, the
Company further agreed to pay the employee $60,000 per year for the next four
years, without condition. Such additional compensation has been accrued at
$15,000 per quarter by the Company.

                                      F-10

<PAGE>



Research and Development Agreement:

In June 1998, the Company entered into a seven-year research and development
agreement with LMC Live Motion Company ("LMC"), whereby the Company and LMC
establish strategic alliance in research and development of software related
broadcast enhancement products in the field of sports broadcasting and athletic
analysis. The Company will grant LMC an exclusive license to the Company's
intellectual property and designate LMC as its distributor in Europe, Dubai and
United Arab Emirates. The licensing fee and royalty of development and
distribution of software and products will be stipulated in the Individual
Contracts, as defined. Total licensing fee received from LMC during the years
ended June 30, 2001 and 2000 amounted to $-0- and $77,932, respectively. No
distribution fee has been paid to LMC during the years ended June 30, 2001 and
2000.

Agreement with Office of the Commissioner of Baseball ("COB"):

On February 2, 2001, the Company entered into a five-year agreement with COB to
develop, install and operate the Umpire Evaluation and Testing System (the
"System"). In consideration of the services provided by the Company, COB is
obligated to pay the Company development fee of $300,000, $100,000 and $100,000
for three different prototypes, stadium installation and equipment fee of
$30,000 each and operations fee of $200 per game in which the System is used
successfully to produce required data and $200 per day in which the System is
used successfully to produce the required data in a non-game context. As of June
30, 2001, two prototypes were completed, delivered and operated successfully.
Accordingly, the Company recorded revenue of $400,000 for the two prototypes.

Developing and License Agreement:

In September 1998, the Company entered into an agreement with Titan Systems
Corporation (formerly Atlantic Aerospace Electronics Corporation) ("Atlantic")
to collaborate developing certain software and graphic workstations. The Company
and Atlantic jointly own the software if the Company and Atlantic develop such
software together. Atlantic retains ownership of the software they develop and
the Company owns the graphic workstations. The parts of each system not
developed by Atlantic are owned by the Company. In addition, Atlantic will grant
the Company exclusive rights to use the software for sport related applications.
In exchange for the license, the Company granted Atlantic options to purchase
500,000 of its common stock with an exercise price of $0.20 per share. The
options have a life of five years and are subject to one year of restriction.
The options are valued at $55,357 under the Black-Scholes Option Price Model. In
addition, the Company is required to pay Atlantic a 10% royalty fee on the
Company's portion of gross revenues derived directly or indirectly from the
sale, license or use of the graphic workstations. Total royalty fee incurred
during the years ended June 30, 2001 and 2000 amounted to $67,675 and $28,870,
respectively.

Lease Agreement:

The Company entered into a lease agreement for its office and warehouse space
under a noncancellable operating lease expiring on December 31, 2001 with an
option to extend the lease for two years. Minimum annual rental commitments
under this operating lease as of June 30, 2001 are $15,750 payable through
December 31, 2001. Rental expense of $30,752 and $30,994 for the years ended
June 30, 2001 and 2000, respectively, has been charged to operations.

9. Significant Customers:

Approximately 60.28%, 24.03% and 14.30% of the Company's revenue was derived
from three major customers during the year ended June 30, 2001. Approximately
26.2% and 61.8% of the Company's revenue was derived from two major customers
during the year ended June 30, 2000.

10. Accounting Developments:

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations", which will be effective for financial statements issued for fiscal
years beginning after June 15, 2002. SFAS No. 143 establishes accounting
standards for recognition and measurement of a liability for an asset retirement
obligation and the associated asset retirement cost. The adoption of SFAS No.
143 is not expected to have a material effect on the Company's financial
position, results of operations and cash flows.


                                      F-11
<PAGE>



In June 2001, the FASB issued SFAS No. 141, "Business Combination" and SFAS No.
142, "Goodwill and Other Intangible Assets". SFAS No. 141 requires the use of
the purchase method of accounting and prohibits the use of the
pooling-of-interest method of accounting for business combinations initiated
after June 30, 2001. It also requires that the Company recognize acquired
intangible assets apart from goodwill. SFAS No. 142 requires, among other
things, that companies no longer amortize goodwill, but instead test goodwill
for impairment at least annually. In addition, SFAS No. 142 requires that the
Company identify reporting units for the purposes of assessing potential future
impairments of goodwill, reassess the useful lives of other existing recognized
intangible assets, and cease amortization of intangible assets with an
indefinite useful life. The adoption of SFAS No. 141 and SFAS No. 142 is not
expected to have a material effect on the Company's financial position, results
of operations and cash flows.

In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities", which amends the accounting and
reporting standards of SFAS No. 133. SFAS No. 133 was previously amended by SFAS
No. 137, which deferred the effective date of SFAS No. 133 to fiscal years
commencing after June 15, 2000. The Company has not entered into derivative
contracts either to hedge existing risks or for speculative purposes.
Accordingly, the Company does not believe that the adoptions of SFAS No. 138 and
SFAS No. 133 have a material impact on the Company's results of operations.

In March 2000, the FASB issued Interpretation (FIN) No. 44, "Accounting for
Certain Transactions Involving Stock Compensation - an Interpretation of APB
Opinion No. 25", which effective on July 1, 2000. The Company adopted the
provisions of FIN No. 44 as of July 1, 2000.

                                      F-12