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



FORM 10-KSB

[X] Annual Report Under Section 13 or 15(d) of The Securities Exchange
Act of 1934 For the fiscal year ended September 30, 2001

[  ] Transition Report Under Section 13 or 15(d) of The Securities
Exchange Act of 1934 for the transition period from ______  to ________

Commission File Number 33-37809-NY

                         CASTLE  HOLDING  CORP.
              (Name of Small Business Issuer in its Charter)


             Nevada
(State of Other Jurisdiction of Incorporation)
           77-0121957
(I.R.S. Employer Identification No.)
45 Church  Street, Freeport,  New York                 11520
(Address of Principal Executive Offices)	     (Zip Code)

Issuer's Telephone Number: (516) 868-2000

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

Securities Registered under Section 12(g) of the Exchange Act:  Common Stock,
Par Value $.0025 per share.

Check whether the issuer (1) filed all reports required to be filed by section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports(s), and (2) has
been subject to such filing requirements for the past 90 days. ___Yes  X   No

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

The issuer's revenues for its most recent fiscal year was $1,319,297.

As of November 30, 2001, the aggregate market value of the registrant's common
stock  (based on its $ .09 reported last bid price on the OTC Bulletin Board)
held by non-affiliates of the registrant was  $245,790.

As of November 30, 2001, there were 6,930,100 common shares outstanding and
706,750 Class A Convertible preferred shares outstanding.

<PAGE>                                         1


PART I


Item 1.  DESCRIPTION OF BUSINESS

Castle Holding Corp. (the "Company" or the "Registrant") is a holding company
incorporated in Nevada on June 13, 1986. The Company conducts substantially all
of its business through two subsidiaries, Castle Securities Corp. ("Castle" or
"CSC-1") and Citadel Securities Corp. ("Citadel" or "CSC-2"). Castle was
incorporated in New York on December 7, 1984 and operates as a broker-dealer
in securities.   Its businesses activities include the underwriting and
brokerage of fixed income and equity securities.   Citadel was incorporated in
New York on April 11, 1991 and also operates as a broker-dealer in securities.
Citadel makes markets in Nasdaq, OTC Bulletin Board and "Pink Sheets"
securities,has no retail customers, and conducts business exclusively with
otherbroker-dealers.

Castle and Citadel are broker-dealers registered with the Securities and
Exchange Commission ("SEC") and members of the National Association of
Securities Dealers  ("NASD"), the Municipal Securities Rule Making Board
("MSRB"), and the Securities Investor Protection Corporation ("SIPC").  Castle
is currently licensed to conduct its broker-dealer business in 37 states and
the District of Columbia.  Citadel is currently licensed to conduct its broker-
dealer business only in New York.

Revenues by Source

For the years ended September 30, 2001 and 2000, revenues were derived as
follows:
<TABLE>
<CAPTION>

                                                Years Ended September 30,

			2001	       2000

<S>	                                                        <C>	      <C>
   Commissions:
         Castle Online	                             $    950,142     $ 3,554,846
         Other stocks and bonds                                 96,630           491,314
         Mutual funds		      206,233             68,894

         Total commissions	                                1,253,005       4,115,054

   Principal transactions:
         Trading accounts	                                     39,392	  268,570
          Investment accounts	            (142)              1,043

          Total principal transactions	        39,250	  269,613

   Internet services                                                    5,230                1,450

   Interest and dividends	                                    27,042	    21,828

   Total revenues	                          $  1,324,527      $ 4,407,945

</TABLE>
<PAGE>                                        2

Castle Online

Castle Online ("Online") is a division of Castle that started in July 1996 to
allow customers to engage in securities transactions directly over the Internet.
In April 1997, Online installed a T-1 fiber optics data feed expandable into a
T-3 data feed. To date, only securities listed on the New York Stock Exchange,
the American Stock Exchange and the Nasdaq Stock Market have been available to
Online customers.

Castle maintains a web site (www.castleonline.com) where parties interested in
online trading can both learn about the various features of this service and
can register for trading.   This system offers customers the ability to execute
day trades (the practice of buying and selling securities, usually exiting the
position in the same day) using Online Java Trader order entry software.

With respect to the Nasdaq Stock Market (over 95% of Online transactions
involve securities listed there), the system offers five routing selections
for customers to transact their buying and selling.   The first is SOES, an
automated execution method that allows an investor to buy at the offer and sell
at the bid.   The second is SelectNet, whereby an investor can submit an order
within the spread for only market makers to view and possibly execute.  We also
offer two Electronic Communications Networks ("ECNs"), Island ("ISLD") and
Archipelago ("ARCA"), and one market maker NDB Capital ("NDBC").  By submitting
an order on an ECN, an investor "posts" the order to buy or sell a security on
the Nasdaq Level 2 screen, so that the entire market can see it and execute on
it.  The ISLD or ARCA symbol, which displays the customer order like a market
maker, will move to the price designated by an investor's order.

Online's software offers customers the ability to place unsolicited market and
limit orders and view executions without the necessity of telephone calls to
Castle registered representatives. For $75 per month ($0 if customer monthly
transactions exceed 50), customers are provided real time Nasdaq level II
quotes, other quotes, news, and charts.  Commissions start at $17.95 per trade.

For the years ended September 30, 1999, 2000, and 2001, Online customer
transactions totaled 149,107, 209,679, and 63,100, respectively.

Registrant expects Online to become its primary source of future growth,
revenues and profitability.

Principal  Transactions

In April 1994, Castle resumed market-making activities in over-the-counter
equity securities (Castle had ceased such activities on August 24, 1992). In
April 1996, such activities were transferred to Citadel.   At November 15,
2001,Citadel employs one trader making markets in a total of 41 securities,
1 quoted on the American Stock Exchange, 23 quoted on the OTC Bulletin
Board, and 17 quoted on the "Pink Sheets".

Trading profits or losses are dependent upon the skill of the firm's employees
in market making activities, the capital allocated to the firm's positions in
various securities and the general trend of prices and level of activity in
the securities markets. Trading as principal requires the commitment of capital
and creates an opportunity for profits and losses due to market fluctuations.
Citadel takes both long and short positions in those securities in which it
makes a market.

Under its present restriction agreement with the NASD, Citadel is limited to
making markets in 100 securities.

Investment  Banking

Since inception, Castle has been the managing underwriter of completed "best
efforts" public offerings of equity securities for 23 issuers (the last one
was completed in 1991).  Additionally,

<PAGE>                                        3

Castle has participated in other equities and municipal bond offerings as a
selected dealer or selling group member.

Castle maintains a website (www.castleIPO.com) to display prospectuses and
offer new issues over the Internet.

As an underwriter, Castle is subject to liability under the Securities Act
of 1933, as amended, and state and other laws in the event, among other
matters, that the registration statement or prospectus contains a material
misstatement or omission. Castle's potential liability as an underwriter is
not generally covered by insurance.

Investment  Management

On December 23, 1993, Castle Advisers Inc. ("CAI") was formed to operate as
a general partner for limited partnerships in the business of securities
investment. On March 29, 1994, CAI executed a limited partnership agreement
with Castle Advisors Limited Partnership 94-1 ("CALP") to operate as their
general partner. Under the agreement, CAI receives a performance incentive
allocation equal to 1% of the profits (which exceed cumulative losses
previously allocated to limited partners).

At September 30, 2001, CALP had net assets of $74,616, including its $57,600
investment in the Company.   From inception to September 30, 2001, CAI has
earned $525 in performance incentive fees.

Other Internet Operations

On March 13, 2000, Cyber Holdings Corp.com ("CHC-2") (57% owned by the Company)
was formed to acquire Cyberville City Inc. ("CCI") and Long Island Web TV.com
Corp. ("LITV").  CCI and LITV, which employ one full time employee and are both
in the developmental stage, operate websites and offer advertising and
production packages to business customers.   For the year ended September 30,
2001, CHC-2 and subsidiaries had $36,600 intercompany revenues (eliminated in
consolidation) and $5,230 third party revenues (reflected as a reduction in
other expenses in the consolidated statement of operations).

Clearing Broker

In executing customers' orders to buy or sell listed securities and other
securities in which it does not make a market, Castle generally acts as an
agent and charges a commission.

Castle and Citadel have clearing agreements with JB Oxford & Company. The
clearing broker clears transactions on a fully disclosed basis for Citadel
and for Castle's account and the accounts of its customers.   The services
provided by the clearing broker include billing and receipt, and custody and
delivery of securities, for which Castle and Citadel pays the clearing broker
certain transaction fees and miscellaneous charges.

Competition

The Company, through Castle and Citadel, both registered broker/dealers and
members of the NASD, is engaged in a highly competitive business.  Its
principal competition includes, with respect to one or more aspects of its
business, all of the member organizations of the New York Stock Exchange
("NYSE") and other registered securities exchanges, all members of the NASD,
and commercial banks and thrift institutions.  Many of these organizations are
national firms and have substantially greater financial and human resources
than Castle or Citadel.

Discount brokerage firms seeking to expand their share of the retail market,
including firms affiliated with commercial banks and thrift institutions, are
devoting substantial funds to

<PAGE>                                     4

advertising and direct solicitation of customers. In many instances, Castle and
Citadel are competing directly with such organizations. In addition, there is
competition for investment funds from the real estate, insurance, banking and
savings and loan industries. The Company believes that the principal factors
affecting competition for the securities industry are the quality and ability
of professional personnel and relative prices of services and products offered.

Regulation

The securities industry in the United States is subject to extensive regulation
under federal and state laws. The SEC is the federal agency charged with
administration of the federal securities laws. Much of the regulation of broker
-dealers, however, has been delegated to self-regulatory organizations,
principally the NASD and the national securities exchanges, although the SEC
maintains jurisdiction and is not necessarily bound by the actions or
recommendations of the NASD. These self-regulatory organizations adopt rules
(which are subject to approval by the SEC) that govern the industry and conduct
periodic examinations of member broker-dealers. Securities firms are also
subject to regulation by state securities commissions in the states in which
they are registered.

The regulations to which broker-dealers are subject cover all aspects of the
securities business, including sales methods, trade practices among broker-
dealers, capital structure of securities firms, record-keeping and conduct of
directors, officers and employees. Additional legislation, changes in rules
promulgated by the SEC and self-regulatory organizations, or changes in the
interpretation or enforcement of existing laws and rules often directly affect
the method of operation and profitability of broker-dealers. The SEC, self-
regulatory organizations and state securities regulators may conduct
administrative proceedings, which can result in censure, fine, suspension
or expulsion of a broker-dealer, its officers or employees. The principal
purpose of regulation and discipline of broker-dealers is the protection of
customers and the securities markets rather than protection of creditors and
stockholders of broker-dealers.

Net  Capital  Requirements

As broker-dealers, Castle and Citadel are subject to the SEC's Net Capital Rule
(the "Rule") which is designed to measure the general financial integrity and
liquidity of a broker-dealer. The Rule requires the maintenance of minimum net
capital (at September 30, 2001, $100,000 for Castle and $100,000 for Citadel)
and requires that the ratio of aggregate indebtedness, as defined, to net
capital, as defined, not exceed 15 to 1. In computing net capital, various
adjustments to net worth are made with a view to excluding assets that are not
readily convertible into cash and making a conservative statement of other
assets, such as a firm's position in securities. Compliance with the Rule
limits those operations of securities firms that require the intensive use of
their capital, such as underwriting commitments and principal trading
activities, and limits the ability of securities firms to pay dividends.

Both Castle and Citadel are required to file "Focus" reports with the NASD.
The purpose of these reports is to provide the NASD with a current financial
status for each Company and to evidence compliance with the net capital
requirements.

In addition to the above requirements, funds invested as equity capital may
not be withdrawn, nor may any unsecured advances or loans be made to any
stockholder of a registered broker-dealer, if, after giving effect to such
withdrawal, advance or loan and to any other such withdrawal, advance or loan
as well as to any scheduled payments of subordinated debt which are scheduled
to occur within six months, the net capital of the broker-dealer would fail
to equal 120% of the minimum dollar amount of net capital required or the ratio
 of aggregate indebtedness to net capital would exceed 10 to 1. Finally, any
funds invested in the form of subordinated debt generally must be invested for
a minimum term of one year and repayment of such debt may be suspended if the
broker-dealer fails to maintain certain minimum net capital levels. For
example, scheduled payments of subordinated debt are suspended in the event
that the ratio of aggregate indebtedness

<PAGE>                                           5

to net capital of the broker-dealer would exceed 12 to 1 or if its net capital
would be less than 120% of the minimum dollar amount of net capital required.
At September 30, 2001, Castle had net capital of $203,245, which was $103,245
in excess of its required net capital, and its ratio of aggregate indebtedness
 to net capital was .71 to 1. Citadel had net capital of $190,757, which was
$90,757 in excess of its required net capital, and its ratio of aggregate
indebtedness to net capital was .07 to 1.

Employees

At September 30, 2001, the Company employed a total of 41 persons, including
2 executive personnel, 34 other registered representatives (26 part-time), and
5 other full-time administrative persons.

Registered representatives are required to take examinations given by the NASD
and approved by the NYSE and all principal exchanges as well as state
securities authorities in order to be registered. There is intense competition
among securities firms for registered representatives with proven sales
production records.

The Company considers its employee relations to be good and believes that its
compensation and employee benefits are competitive with those offered by other
securities firms. None of the Company's employees are covered by a collective
bargaining agreement.

Item 2.  DESCRIPTION OF PROPERTY

The Company, Castle, and Citadel maintain their business headquarters at 45
Church Street, Freeport, New York 11520, where they occupy approximately
16,000 square feet of office space. The facilities are occupied under six
lease agreements that provide for total monthly rentals of $6,686 and expire
October 2002. At the option of a wholly owned subsidiary of the Company, the
leases are renewable for periods extending the terms to October 2007.   The
facilities provide the Company with sufficient space in which to conduct its
present activities and store required business records pursuant to rules and
regulations of the SEC and the NASD.

On July 16, 2001, Castle opened a branch office at 29 John Street, New York,
New York 10038.  The office is occupied under a sublease expiring
November 30, 2005,  which the Company may terminate at any time by providing
10 days written notice to the sublessor.  In connection therewith, the Company
paid the sublessor $217,597 in nonrefundable prepaid rent.

Item 3.  LEGAL PROCEEDINGS
Since inception, Castle and certain of its principals have been the targets
of various legal and administrative proceedings brought by the SEC, the NASD
or other state securities commissions.  Additionally, in the normal course of
its business, Castle, from time to time, is involved in claims, lawsuits and
arbitrations brought by its customers.

Material legal proceedings outstanding at September 30, 2001 follows:

(1)	SEC v. U.S. Environmental, Inc., Castle, Michael T. Studer et al

On September 13, 1994, the SEC filed a civil action against Castle, its
president, a former registered representative, and eight other defendants.
The action alleges violations of Section 5(a) and (c), and 17(a) of the
Securities Act of 1933, Section 10(b) and 15c of the Exchange Act of 1934
and Rules l0b-3, l0b-5, l0b-6, and 15cl-2 thereunder.   The complaint seeks
injunctive relief and disgorgement of profits in the approximate amount of
$175,000. An answer and amended answer has been filed on behalf of Castle
and its president and discovery has been completed, but no trial date has
yet been set.

<PAGE>                                    6



(2)	NASD Department of Enforcement v. Castle, Michael T. Studer et al

On August 31, 2001, the NASD Department of Enforcement commenced a disciplinary
proceeding against Castle, its president, two registered representatives and
one former registered representative. The Complaint alleges violations of NASD
Conduct Rules 2110, 2120, 2510, and 3010 and Section 10 (b) of the Securities
Exchange Act of 1934 and SEC Rule l0b-5 thereunder.  The Complaint seeks
injunctive relief and disgorgement of any and all ill - gotten gains.  Castle
answered the Complaint and is vigorously defending itself.

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

The Company did not submit any matters to a vote of security holders during
the quarterly period ended September 30, 2001.




PART II


Item 5.	MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS

The Company's common stock, $.0025 par value, is traded in the over-the-counter
market under the OTC Bulletin Board symbol "CHOD".   However, there is no
established trading market as actual transactions are infrequent.  The
following table sets forth the range of high and low closing bid quotations by
calendar quarters as reported by the National Quotation Bureau from October 1,
1999 through September 30, 2001.  Bid quotations represent prices between
dealers, do not include retail mark-ups, mark-downs or other fees or
commissions, and do not necessarily represent actual transactions.

<TABLE>
<CAPTION>

                 Quarter Ended	                         High Bid             Low Bid
	<S>	                   <C>	                   <C>
	December 31, 1999               $     0.550            $    0.156
	March 31, 2000		1.438	0.406
	June 30, 2000		1.063	0.438
	September 30, 2000	0.469	0.281
	December 31, 2000                      0.281                   0.125
	March 31, 2001		0.230	0.094
	June 30, 2001		0.125	0.090
	September 30, 2001	0.190	0.080

</TABLE>
As of September 30, 2001, the number of holders of record of the Company's
common stock was 229. There were 11 market makers for the Company's common
stock, 6,930,100 shares outstanding, and the closing bid price was $0.09.

Registrant has paid no cash dividends and has no present plan to pay cash
dividends, intending instead to reinvest its earnings, if any. However,
payment of future cash dividends will be determined from time to time by
its Board of Directors, based upon its future earnings, financial
condition, capital requirements and other factors.

<PAGE>                                           7

Recent Sales of Unregistered Securities

Equity securities of the Registrant sold by the Registrant during the quarterly
period ended September 30, 2001 that were not registered under the Securities
Act were:

(1)	July 1, 2001 to September 30, 2001 - 270,750 shares of Class A
Convertible Preferred Stock, $0.01 par value, were sold at a price of
$1.00 per share ($270,750) to 38 investors in connection with a private
offering.  No underwriting discounts or commissions were paid in connection
with any of the above sales.  For all of the above sales, the Registrant
claimed exemption from registration under Rule 506 of Regulation D of the
Securities Act of 1933.

(2)	August 9, 2001 - 6,000 shares of Common Stock, $0.0025 par value were
issued to Equities Magazine LLC in exchange for certain specified advertising
(valued at $1,200) to be provided the Company.  No underwriting discounts or
commissions were paid in connection with this issuance.  The Registrant
claimed exemption from registration under Section 4(2) of the Securities Act
of 1933.

(3)	August 31, 2001 - 10,000 shares of Common Stock, $.0025 par value were
issued to Equities Magazine LLC in exchange for certain specified advertising
(valued at $2,000) to be provided the Company.  No underwriting discounts or
commissions were paid in connection with this issuance.  The Registrant
claimed exemption from registration under Section 4(2) of the Securities Act
of 1933.

Item 6.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Results  of  Operations

General - Substantial positive and negative fluctuations can occur in the
Registrant's business due to a variety of factors, including variations in the
market value of securities, the volatility and liquidity of trading markets,
and the level of market activity. As a result, net income and revenues in any
particular period may not be representative of full-year results and may vary
significantly from year to year and from quarter to quarter. In addition,
results of operations have been in the past and may in the future continue to
be materially affected by many factors of a national and international nature,
including economic and market conditions, currency values, inflation, the
availability of capital, the level and volatility of interest rates, the
valuation of securities positions and investments, and legislative and
regulatory developments, as well as the size, number and timing of
transactions. The Registrant's results of operations also may be materially
affected by competitive factors and its ability to attract and retain highly
skilled individuals.

Year ended September 30, 2001 compared to year ended September 30, 2000

For the year ended September 30, 2001, net loss was $(227,950), or (.03) per
share; the net loss includes the loss before extraordinary item of $839,018,
or $(.12) per share, offset by an extraordinary gain (net of provision for
income taxes) of 611,068, or $.09 per share.  For the year ended September
30, 2000, net income was $112,620, or $.02 per share.  As more fully described
in Note 9 to the Consolidated Financial Statements, the extraordinary gain in
2001 resulted from the settlement of a class action claim against certain
Nasdaq market makers in December 2000.

Pretax income (loss) before extraordinary item was $(1,250,329) in 2001,
compared to $109,500 in 2000.  Total revenues decreased $3,083,418 (70%)
and total expenses decreased $1,723,589 (40%) in 2001 compared to 2000.

Revenues less commissions and clearing and execution costs were $863,147 in
2001 compared to $3,028,274 in 2000.

<PAGE>                                  8

Commissions revenue from the Castle Online division of Castle decreased
$2,604,704 (73%) from $3,554,846 in 2000 to $950,142 in 2001.  Castle Online
customer transactions decreased from 209,679 in 2000 to 63,100 in 2001,
largely due to a general decline in market conditions in 2001, especially
involving stocks traded on the Nasdaq Stock Market.  Castle Online funded
customers decreased from 308 at September 30, 2000 to 263 at September 30,
2001.  Castle Online average revenue per transaction was $16.95 and $15.06
in 2000 and 2001, respectively.

Commissions revenue from other sources decreased $257,345 (46%) from $560,208
in 2000 to $302,863 in 2001.  Customer transactions totaled 21,685 and 7,402
in 2000 and 2001, respectively.  Average revenue per transaction was $25.83
and $40.92 in 2000 and 2001, respectively.

Revenue from principal transactions decreased $230,363 (85%) from $269,613 in
2000 to $39,250 in 2001.  Principal transactions totaled 2,533 and 420 in
2000 and 2001, respectively.   Average revenue per transaction was  $106.44
and $93.45 in 2000 and 2001, respectively.  The decrease in principal
transactions results from lower OTC Bulletin Board and "Pink Sheets" (where
most of the securities which Citadel make markets in are quoted) volume.

Commissions expense decreased $428,872 (82%) from $522,613 in 2000 to $93,741
in 2001 as a result of lower revenues. Commissions expense as a percentage of
total revenues was 12% and 7% in 2000 and 2001, respectively.  The percentage
decrease is due to the fact that a smaller percentage of revenues was derived
from principal transactions, where the commissions payout percentage is higher.

Clearing and execution costs decreased $489,419 (57%) from $857,058 in 2000 to
$367,639 in 2001 as a result of the decrease in the number of transactions. In
2000, clearing and execution costs were reduced by $77,038 in order flow
credits (which reduced year 2000 clearing and execution costs).   Excluding
the order flow credits, clearing and execution costs as a percentage of total
revenues was 21% and 28% in 2000 and 2001, respectively.

Communications expense decreased $245,887 (45%) from $549,538 in 2000 to
$303,651 in 2001.  The decrease was due largely to the cessation of MCI quote
line service in June 2000 and lower network and workstation charges from the
Nasdaq Stock Market.

Administrative compensation and employee benefits decreased $347,646 (35%)
from $1,003,047 in 2000 to $655,401 in 2001.   The decrease was due to a
reduction in personnel, reduction in certain salary levels, and lower payroll
taxes as a result of lower salaries and commissions.

Liquidity and Capital Resources

A large portion of the Registrant's assets is highly liquid and short-term in
nature. Cash and cash equivalents, due from brokers, and securities owned at
September 30, 2001 totaled $700,590, 49% of the Registrant's assets.

Cash and cash equivalents decreased $75,614 from $488,446 at September 30,
2000 to $412,832 at September 30, 2001. This decrease was due to $327,055 used
in operating activities and $321,811 used in investing activities, offset by
$573,252 provided by financing activities.  The $327,055 used in operating
activities was largely due to prepaid rent paid in connection with Castle's
opening of a branch office in New York, New York in July 2001.  The $573,252
provided by financing activities results from the $686,878 net proceeds
received in connection with the sale of shares of Class A Convertible
Preferred Stock (see Note 7 to consolidated financial statements), offset
by $77,500 repayment of notes payable and $36,126 repayment of obligations under
capital leases.
 <PAGE>                                      9
Castle and Citadel, the Registrant's broker-dealer subsidiaries, are subject to
"net capital" requirements of the SEC. Among other things, these requirements
limit the number of markets,

which they may make, and the value of securities inventories which they may
carry. Presently, a broker or dealer engaged in activities as a market maker
must maintain net capital in an amount not less than $2,500 for each security
in which it makes a market (unless a security in which it makes a market has
a market value of $5.00 or less in which event the amount of net capital shall
be not less than $1,000 for each such security).

At September 30, 2001, Castle had net capital of $203,245, which was $103,245
in excess of its required net capital of $100,000 and Citadel had net capital
of $190,757, which was $90,757 in excess of its required net capital of
$100,000.

<PAGE>                                  10

<CAPTION>
<TABLE>
Item 7.  FINANCIAL STATEMENTS


Index to Consolidated Financial Statements
<S>                                                                                                                       <C>
Description	                                                                                   Page No.

Independent Auditors' Report		                           12

Consolidated Statements of Financial Condition,
    September 30, 2001 and 2000		                            13

Consolidated Statements of Operations,
    Years ended September 30, 2001 and 2000		14

Consolidated Statement of Changes in Stockholders' Equity,
    Years ended September 30, 2001 and 2000		15-16

Consolidated Statements of Cash Flows,
    Years ended September 30, 2001 and 2000	                              17-18

Notes to Consolidated Financial Statements,
    Years Ended September 30, 2001 and 2000	                              19-32
</TABLE>







<PAGE>                                     11




INDEPENDENT AUDITOR'S REPORT


Board of Directors and Stockholders of
Castle Holding Corp.

We have audited the accompanying consolidated statements of financial condition
of Castle Holding Corp. and subsidiaries (the "Company") as of September 30,
2001 and 2000 and the related consolidated statements of operations, changes in
stockholders' equity, and cash flows for the years then ended.  These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the  consolidated financial position of the
Companyas of September 30, 2001 and 2000 and the results of their
consolidated operations and their cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States
of America.

Massella Rubenstein LLP
Jericho, New York
December 20, 2001














<PAGE>                                12

CASTLE HOLDING CORP. AND SUBSIDIARIES
Consolidated Statements of Financial Condition
<TABLE>
<CAPTION>
	                                                                                               September 30,
	                                                                                          2001	    2000
<S>                                                                                             <C>                       <C>
Assets
Cash and cash equivalents	                            $    412,832	$   488,446
Due from brokers	                                                                216,974 	     282,920
Securities owned, at market value	                                     70,784 	       45,194
Equipment, less accumulated depreciation of
  $110,425 and $64,214, respectively	                                      72,847 	       77,281
Equipment under capital leases, less accumulated
  depreciation of $117,536 and $80,870, respectively	        63,664 	    100,330
Leasehold improvements, less accumulated
  amortization of $205,994 and $126,552, respectively	      101,081 	    138,640
Prepaid rent,                                                                                       205,280 	                 -
Restricted cash and securities 	                                    238,151 	                 -
Other assets	                                                                   42,585 	       75,688

Total assets	                                                          $ 1,424,198       $ 1,208,499

Liabilities and Stockholders' Equity
Liabilities:
   Notes payable	                                                           $                 -  	$       77,500
   Accounts payable and accrued expenses	       336,124 	       443,884
   Commissions payable	                                                                      2,740 	         27,309
   Income taxes payable	                                                                      4,256 	            3,561
   Securities sold, not yet purchased, at market	                    1                      303
   Obligations under capital leases	                                       69,653 	       105,779
   Loan subordinated to claims of general creditors	          50,000 	         50,000

      Total liabilities	                                                                   462,774 	       708,336

Commitments and contingencies

Minority interest	                                                                       1,000 	           1,867

Stockholders' equity:
   Preferred stock, $.01 par value; authorized 9,000,000
      shares, none issued and outstanding                                                  -                           -
   Class A Convertible Preferred Stock, $.01 par value;
      authorized 1,000,000 shares, issued and outstanding
      706,750 and 0 shares;liquidation of preference
      $706,750 and $0, respectively            	                                         7,068 	                   -
   Common stock, $.0025 par value; authorized
      100,000,000 shares, issued and outstanding
      6,930,100 and 6,914,100  shares, respectively	         17,325 	       17,285
   Additional paid-in capital	                                 1,501,380 	     994,910
   Accumulated deficit	                                                                (464,974)	   (237,024)
      Total	                                                                                            1,060,799 	    775,171
   Less: stock subscriptions receivable	                                   (100,375)	   (276,875)

      Total stockholders' equity	                                     960,424 	    498,296

Total liabilities and stockholders' equity	                               $ 1,424,198    $ 1,208,499
</TABLE>

See notes to consolidated financial statements.

<PAGE>                                      13
<TABLE>
CASTLE HOLDING CORP. AND SUBSIDIARIES
Consolidated Statements of Operations
<CAPTION>
	                                               Year Ended September 30,
	                                                 2001		 2000
<S>                                                                                       <C>                      <C>
Revenues:
   Commissions	                                                     $ 1,253,005      $ 4,115,054
   Principal transactions	                                                              39,250             269,613
   Internet Services                                                                            5,230                  1,450
   Interest and dividends	                                                              27,042 	  21,828

   Total revenues	                                                         1,324,527          4,407,945

Expenses:
   Commissions	                                                                93,741 	  522,613
   Clearing and execution costs	                                367,639 	  857,058
   Communications	                                                              303,651 	  549,538
   Advertising	                                                                44,738 	    72,712
   Administrative compensation and employee benefits	    655,401         1,003,047
   Professional and consulting fees	                                 183,827 	  363,170
   Registration and regulatory fees	                                   30,536 	    25,133
   Occupancy	                                                                83,563 	     70,627
   Interest	                                                                26,934 	     29,041
   Other	                                                                                           784,826 	  805,506

   Total expenses	                                                          2,574,856          4,298,445

(Loss) income before (benefit from) provision for income
   taxes	                                                                                      (1,250,329)	  109,500

(Benefit from) provision for  income taxes	                               (410,444)	               -

(Loss) income before minority interest and
   extraordinary item	                                                             (839,885)	  109,500

Minority interest                                                                                        867                 3,120

(Loss) income before extraordinary item                                  (839,018)            112,620

Extraordinary gain, net of provision for income
      taxes of $ 410,444                              	                                  611,068 	                -

Net (loss) income 	                                                         $  (227,950)     $     112,620

Net (loss)  income per share:
   Basic and diluted:
      (Loss) income  before extraordinary item                       $         (0.12)      $           0.02
      Extraordinary gain	                                                                      0.09	                -

      Net (loss) income 	                                                          $        (0.03)       $          0.02

Weighted average number of common shares outstanding:

   Basic	                                                                                           6,915,433        6,816,558

   Diluted	                                                                                            7,032,371        6,836,558
</TABLE>

                See notes to consolidated financial statements.
<PAGE>                                    14
<TABLE>
CASTLE HOLDING CORP. AND SUBSIDIARIES
Consolidated Statement of Changes in Stockholders' EquitY
For the Years Ended September 30, 2001 and 2000

<CAPTION>
                                 <C>      <C>            <C>        <C>           <C>            <C>         <C>          <C>
	                           Class A Convertible                                                                             Total
	                            Preferred Stock,     Common Stock,    Additional  Accum-   Stock Sub-   Stock-
	                           $0.01 Par Value      $.0025 Par Value  Paid-in       ulated      scriptions    holders'
	                           shares  Amount     Shares   Amount   Capital       Deficit      Receivable  Equity


Balance, September 30, 1999      - $      -  6,640,500 $ 16,601 $ 862,444  $ (349,644) $ (188,125) $ 341,276

Issuance of common shares for
   services in November 1999         -           -        20,000             50        3,550	 -                     -   3,600

Subscription to purchase common
   shares by two  directors
   of the Company in January
   2000                                    -          -  200,000            500       109,500          -   (110,000)   -
Collection of stock subscriptions
   receivable in February 2000     -          -             -                -            -             -   11,250   11,250

Conversion of $10,000 note
   payable into common shares
   in March 2000	            -          -    40,000         100    9,900           -        -    10,000

Issuance of common shares for
   services in March 2000             -           -            7,400     19     3,681           -           -  3,700

Issuance of common shares for
   consulting services
   in March 2000 	            -            -           3,000         7    2,993           -           -  3,000

Issuance of common shares for
   consulting services in
   May 2000 	           -             -             700           2       348           -            -    350

Collection of stock subscriptions
   receivable in May 2000	         -              -                 -             -             -            -    10,000  10,000

Issuance of common shares for
   consulting services in June
   2000 	                                         -              -         2,500	 6   2,494       -          -   2,500

Net income	           -              -                  -	   -            -   112,620     -   112,620

Balance, September 30, 2000    -             -  6,914,100  17,285  994,910   (237,024)   (276,875)  498,296
</TABLE>

         See notes to consolidated financial statements.
<PAGE>                                       15
<TABLE>
CASTLE HOLDING CORP. AND SUBSIDIARIES
Consolidated Statement of Changes in Stockholders' Equity
For the Years Ended September 30, 2001 and 2000
(Continued)
<CAPTION>
                                       <C>          <C>        <C>      <C>       <C>         <C>         <C>          <C>
	                         Class A Convertible 			       Total
	                        Preferred Stock,     Common Stock,    Additional  Accum-    Stock Sub-      Stock-
	                        $0.01 Par Value      $.0025 Par Value  Paid-in      ulated      scriptions       holders'
	                       Shares  Amount    Shares    Amount  Capital       Deficit      Receivable     Equity

Sale of preferred shares
   at $1.00 per share, net
   of $19,872 offering costs      706,750   7,068             -              -   679,810                -           -   686,878

Issuance of common shares for
   services              	                   -            -   16,000   40   3,160           -           -     3,200

Adjustment of purchase price of
   stock subscriptions receivable     -            -             -       -   (176,500)        -   176,500      -

Net loss	                                            -          -          -        -             -  (227,950)     -  (227,950)

Balance, September 30, 2001 706,750 $7,068 6,930,100 $17,325 $1,501,380  $(464,974) $(100,375) $960,424

</TABLE>




	See accompanying notes to consolidated financial statements
<PAGE>                            16
<TABLE>
CASTLE HOLDING CORP. AND SUBSIDIARIES
Consolidated Statements of Cash Flows

<CAPTION>
		                                                      Year Ended September 30,
		                                                          2001                          2000
<S>                                                                                          <C>                              <C>
Cash flows from operating activities:
   Net  (loss) income	                                                       $  (227,950)	    $ 112,620
   Adjustments to reconcile net (loss) income to net
      cash (used in) provided by operating activities:
      Depreciation and amortization		  162,319 	      113,581
      Minority interest		                                      (867)	        (3,120)
      Issuance of common stock for services                                  3,200 	       13,150
   Changes in assets and liabilities:
      Due from brokers		                                  65,946 	   (145,465)
      Securities owned, net		                                (25,590)	        (9,574)
      Prepaid rent                                                                            (205,282)                          -
      Other assets		                                   33,103 	      (19,692)
      Accounts payable and accrued expenses                         (107,760)	       203,615
      Commissions payable		    (24,569)	         10,134
      Income taxes payable		            695 	           1,563
      Securities sold, not yet purchased		          (302)	            (503)

   Net cash (used in) provided by operating activities	  (327,055)	      276,309

Cash flows used in investing activities:
   Purchase of equipment  		     (41,777)	      (66,323)
   Purchase of leasehold improvements		     (41,883)	      (82,810)
   Cash restricted for purchase of restricted marketable
    securities	                                                                (57,813)	                   -
   Purchase of restricted marketable securities                        (180,338)                            -

   Net cash used in investing activities		    (321,811)	    (149,133)

Cash flows provided by (used in) financing activities:
   Proceeds from sale of Class A convertible preferred
      shares                            	                                    686,878                             -
   Collection of stock subscriptions receivable	                    -	          21,250
   Repayment of notes payable		       (77,500)	                     -
   Repayment of obligations under capital leases	       (36,126)	        (43,113)
   		                                                                  573,252               (21,863)
   Net cash provided by (used in) financing activities

Net (decrease) increase  in cash and cash equivalents	       (75,614)	        105,313

Cash and cash equivalents, beginning of year                            488,446 	        383,133

Cash and cash equivalents, end of year	                               $   412,832	  $  488,446
</TABLE>
    See notes to consolidated financial statements.
<PAGE>                                   17
<TABLE>
CASTLE HOLDING CORP. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Continued)
<CAPTION>

	                                                                                    Year Ended September 30,
	                                                                                      2001	     2000
<S>                                                                                        <C>                               <C>
Supplemental disclosures of cash flow information:
   Interest paid	                                                    $     38,934	    $    29,041

   Income taxes paid	                                                    $      4,855	    $     2,150

Schedule of non-cash investing activities:
   Acquisition of equipment in connection with capital
      lease obligations	                                                    $          -                          $    77,464

   Retirement of fully depreciated equipment                   $          -	    $   172,482

Schedule of non-cash financing activities:
   Conversion of note payable to common stock             $          -	    $    10,000
   Issuance of stock subscriptions receivable in
      connection with sale of common stock                      $          -	    $   110,000

   Adjustment of purchase price of
      stock subscriptions receivable	                       $    176,500	    $               -
</TABLE>




















See notes to consolidated financial statements.
<PAGE>                               18

CASTLE HOLDING CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements


1.      ORGANIZATION

Castle Holding Corp. ("CHC") is a holding company, which was
incorporated in Nevada on June 13, 1986. CHC conducts substantially all of its
business through its subsidiaries.  CHC's principal operating subsidiaries are
Castle Securities Corp. ("CSC-1") and Citadel Securities Corp. ("CSC-2"), both
securities broker-dealers registered under the Securities Exchange Act of 1934
and members of the National Association of Securities Dealers, Inc. ("NASD").
CSC-1, incorporated in New York on December 7, 1984, conducts operations from
its main office in Freeport New York and its branch office in New York, New York
since July 16, 2001 and earns commission revenues from brokering customer
transactions.  CSC-2, incorporated in New York on April 11, 1991, makes markets
in Nasdaq, OTC Bulletin Board, and "Pink Sheets" securities from its office in
Freeport New York, has no retail customers, and conducts business exclusively
with other broker dealers.  Both CSC-1 and CSC-2 clear their trades with a
clearing broker on a fully disclosed basis pursuant to agreements expiring in
September 2002.

          The remaining sixteen  (16) subsidiaries of CHC are as follows:

1.	Citadel Capital Corp. (95.0 % owned) (incorporated in Delaware March 29,
1988) - no operations as of September 30, 2001.
2.	Beverage King, Ltd. (100 % owned) (incorporated in Delaware January 2,
1990) - subleases automobiles and equipment to other CHC subsidiaries.
3.	Meroke Capital Corp. (100 % owned) (incorporated in New York October 7,
1992) - no operations as of September 30, 2001.
4.	Castle Trucking Corp. (100 % owned) (incorporated in New York May 4,
1993) - subleases office space to other CHC subsidiaries and others.
5.	Castle Advisors Inc. (100 % owned) (incorporated in New York
December 23, 1993) - acts as general   partner (with a 1% ownership) in a
limited partnership in the business of securities investment.
6.	Sparta Holding Corp. (100 % owned) (incorporated in Nevada December 23,
1993) - no operations as of September   30, 2001.
7.	Wall Street Indians, Ltd. (100 % owned) (incorporated in New York
May 27, 1994) - subleases office space and provides communications and office
services and supplies to CHC's subsidiaries and others.
8.	Chinamer International Corp. (100 % owned) (incorporated in Nevada
October 18, 1994) - no operations as of September 30, 2001.
9.	Galaxynet Inc. (87.7 % indirectly owned) (incorporated in New York
December 15, 1995) - provides marketing, programming, and communications
services to other CHC subsidiaries.
10.	Rocketnet Inc. (87.7 % owned) (incorporated in Nevada December 20, 1995)
- owns 100% of Galaxynet Inc. and provides software and communications services
to other CHC subsidiaries.
11.	U Trade Inc. (100 % owned)  (incorporated in New York November 17, 1997)
- inactive at September 30, 2001.
12.	Java Trader Inc. (100% owned) (incorporated in Nevada March 10, 1999)
- inactive at September 30, 2001.
13.	Long Island Web TV.com Corp. (57.7% indirectly owned) (incorporated in
New York September 22, 1999) - operates a website targeted to Long Island, New
York viewers and offers advertising and production packages to business
customers.
<PAGE>                                 19

CASTLE HOLDING CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements


14.	The Unlisted Stock Market Corporation (100% owned) (incorporated in New
York December 9, 1999) - no operations as of September 30, 2001.
15.	Cyber Holdings Corp.com (57.7% owned) (incorporated in New York March 13,
2000) - owns 100% of Cyberville City Inc. and Long Island Web TV.com Corp.
16.	Cyberville City Inc. (57.7% indirectly owned) (incorporated in New York
December 9, 1998) - operates www.kidscarnival.com and other websites (non
revenue producing at September 30, 2001), and provides web-hosting and other
services to other CHC subsidiaries and others.

2.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation - The consolidated financial statements include the
accounts of CHC and its eighteen majority owned subsidiaries  (collectively, the
"Company").  All significant intercompany balances and transactions have been
eliminated in consolidation.

Equity investment in subsidiaries'  Investments in privately held companies are
accounted for under the equity method of accounting whereby earnings or losses
from investments in which the Company maintains a minority interest are
reflected in the Company's earnings based on the Company's prorata
ownership interest.

Revenue recognition - Securities transactions (and related revenue and expenses,
including commissions and principal transactions revenue and commissions
expense) are recorded on a settlement date basis, which is generally three
business days after trade date. Revenues and expenses on a trade date basis are
not materially different from revenues and expenses on a settlement date basis.
Internet services consist of video taping revenues, which are recognized
 when the related services are completed.

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

Fair value disclosures - The carrying value of cash and cash equivalents,
restricted cash and securities, due from brokers, securities owned, accounts
payable and accrued expenses, commissions payable, income taxes payable, and
securities sold, not yet purchased are a reasonable estimate of their fair
value.The carrying value of the Company's obligations under capital leases
and loan subordinated to claims of general creditors at September 30, 2001
are a reasonable estimate of their fair value based upon currently available
interest rates of similar instruments available with similar maturities.

Cash and cash equivalents - At September 30, 2001, cash and cash equivalents
included $210,601 in four money market funds and $19,143 in cash not covered
by FDIC insurance.  The Company considers such risk to be minimal based on
the reputation of such financial institutions.  The Company considers highly
liquid investments with maturities of three months or less at the time of
purchase to be cash equivalents.

Securities owned and securities sold, not yet purchased - Marketable securities
owned consist of trading and investment securities valued at market.
Unrealized gains and losses from mark to market valuations of securities are
reflected in income. Securities for which no ready market exists are valued at
estimated fair value as determined by the Board of Directors.
<PAGE>                                20

CASTLE HOLDING CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements


Equipment, equipment under capital leases, and leasehold costs and
improvements - Equipment, equipment under capital leases, and leasehold costs
and improvements are stated at cost. Equipment and equipment under capital
leases are depreciated using the straight-line method over the estimated useful
lives of the respective assets, generally three to seven years.  Leasehold costs
and improvements are amortized over the respective remaining lease
terms on a straight-line basis.

Website costs - The Company expenses its post-implementation/operations stage
website maintenance costs incurred in accordance with Statement of  Position
("SOP") 98-1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use".  Costs for general and administrative, overhead,
maintenance and training, are expensed as incurred.

Income taxes - The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards  ("SFAS") No. 109, "Accounting For
Income Taxes." Deferred tax assets and liabilities are determined based on the
difference between the financial statement and tax bases of assets and
liabilities, using enacted tax rates in effect for the year in which the
differences are expected to reverse.   Current income taxes are based on the
year's taxable income for federal and state income tax reporting purposes.
Deferred income taxes, if any, reflect the net effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.

Earnings per share - During 1997, the Financial Accounting Standards Board
issued SFAS No. 128, "Earnings Per Share."  SFAS No. 128 replaced the previously
required reporting of primary and fully diluted earnings per share with basic
earnings per share ("EPS") and diluted EPS, respectively.   Unlike the
previously reported primary earnings per share, basic EPS exclude
the dilutive effects of stock options.  Diluted EPS is similar to
the previously reported fully diluted earnings per share.   EPS
amounts for all periods presented have been calculated in accordance with the
requirements of SFAS No. 128. Diluted EPS, which effect is antidilutive, has
been presented for the year ended September 30, 2001 since there is no material
impact on the financial statements.

Stock based compensation - The Company accounts for stock-based employee
compensation arrangements in accordance with provisions of Accounting Principles
Board ("APB") Opinion  No. 25, "Accounting for Stock Issued to Employees". Under
APB No. 25, the Company recognizes no compensation expense related to employee
stock options, as no options were granted at a price below the market price
on the day of the grant.

In fiscal year ended September 30, 1997, SFAS No. 123, "Accounting for
Stock-Based Compensation", became effective for the Company.  SFAS No. 123,
prescribes the recognition of compensation expense for employees and
non-employees. Under SFAS No. 123, compensation expense is based on the fair
value of options on the grant date.  SFAS No. 123 allows companies to continue
to apply APB 25 for employee compensation if certain pro forma disclosures are
made assuming a hypothetical fair value method application. The Company has
elected to continue to apply the provisions of APB 25.  See Note 8 for pro forma
disclosures required by SFAS No. 123 plus additional information on the
Company's stock options.

The Company accounts for stock based compensation issued to non-employees in
accordance with the provisions of SFAS No. 123.
<PAGE>                             21

CASTLE HOLDING CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Impact of recently issued accounting standards - The Company does not believe
that any recently issued but not yet effective accounting standards, have a
material effect on the Company's consolidated financial position, results of
operations or cash flows.  The following summarizes recently issued standards:

During June 2001 SFAS No.141, "Business Combinations" was released.  This
standard addresses financial accounting and reporting for business combinations.
All business combinations within the scope of SFAS 141 are to be accounted for
using one method - the purchase method.  The provisions of SFAS 141 apply to all
business combinations initiated after June 30, 2001.  Use of the
pooling-of-interests method for those business combinations is prohibited.  It
also applies to all business combinations accounted for using the purchase
method for which the date of acquisition is July 1, 2001 or later.

During June 2001 SFAS No.142,  "Goodwill and Other Intangible Assets" was
released.  It addresses how intangible assets that are acquired individually or
with a group of other assets (but not those acquired in a business combination)
should be accounted for in financial statements upon their acquisition.
SFAS 142 also addresses how goodwill and other intangible assets should be
accounted for after they have been initially recognized in the financial
statements.  The Company is required to adopt the provisions of this new
standard beginning with the first quarter of fiscal year 2002.

Reclassifications - Certain prior year balances have been reclassified to
conform to current year presentation.

<PAGE>                               22


CASTLE HOLDING CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements



3.	SECURITIES OWNED, AT MARKET VALUE AND SECURITIES SOLD, NOT YET
  PURCHASED, AT MARKET
<TABLE>
<CAPTION>
                                                                                                                      September 30,
				                  2001     2000
Securities owned, at market value consist of:
  <S>                                                                                                              <C>         <C>
 Trading accounts:
    Corporate equities - listed on exchange or Nasdaq Stock Market  $            -   $           -
     Corporate equities - listed on OTC Bulletin Board
        or "Pink Sheets"		                                                       22,984     37,944

    Total trading accounts		                         22,984     37,944

     Investment accounts:
        The Nasdaq Stock Market, Inc.- 3,000 and 600 shares,
           respectively (unlisted)		                           37,800      6,600
        Exhaust Technologies, Inc. - 20,000 shares (unlisted)                        10,000              -
        Other corporate equities - listed on
           OTC Bulletin Board or "Pink Sheets"		         -          650

        Total investment accounts		                            47,800       7,250


        Totals			                        $ 70,784  $ 45,194

 Securities sold, not yet purchased, at market consist of:
    Trading accounts:
       Corporate equities - listed on exchange or Nasdaq Stock Market   $      -          $          -
       Corporate equities  - listed on OTC Bulletin Board
          or "Pink Sheets"  				    1                303

        Totals			                        $      1          $    303
</TABLE>

4.      NOTES  PAYABLE
<TABLE>
<CAPTION>
      				        September 30,
                                                                                                          2001             2000
 <S>                                                                                                 <C>                <C>
  Notes payable consist of:
     Note payable to officer, interest at 12% paid annually,
        due on demand	   		      $            -        $  22,500
     Note payable to The OTC Equity
      Fund,  Inc. ("OEF"),  interest at 12%  paid
      annually, due on demand		                     -             55,000

             Totals			       $           -         $  77,500
</TABLE>
<PAGE>                                 23

CASTLE HOLDING CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements


On December 21, 1998, CHC obtained a $100,000 business revolving credit line
from a financial institution.  Such line of credit is personally guaranteed by
CHC's president and treasurer and is available through December 14, 2002.
Borrowings thereunder bear interest at prime rate plus .5% and amortize over 36
equal monthly installments.  At September 30, 2001 and 2000, there was no
balance due under this line of credit.

5.      OBLIGATIONS UNDER CAPITAL LEASES

The Company, through its subsidiaries, has acquired office machinery and
equipment pursuant to various noncancellable capital lease agreements.  All of
the lease agreements are secured by the related equipment.

At September 30, 2001, the aggregate future minimum remaining lease payments
under noncancellable capital lease agreements were as follows:
<TABLE>
<CAPTION>
                                Year Ended
	                   September 30,                                          Amount
		  <S>                                            <C>
		   2002                                           $   33,080
                                              2003               		  19,893
		   2004		  19,893
		   2005		    8,289

		   Total		  81,155

Less amount representing interest	                              (11,502)

 Net present value of capital lease obligations                  $   69,653
</TABLE>

At September 30, 2001 and 2000, the gross amount of  office machinery and
equipment recorded under capital leases was $181,200.

6.      LOAN FROM RELATED PARTY SUBORDINATED TO CLAIMS OF GENERAL
CREDITORS

   The terms of the $50,000 loan was interest bearing at 12% per annum and was
due in full on September 30, 2002.  The loan was from the OTC Equity Fund, Inc.
("OEF"), a corporation whose secretary is also the president of CHC.  The loan,
which was issued pursuant to an agreement (as amended on August 24, 2000) filed
with the NASD and was permitted in computing net capital under the Securities
and Exchange Commission's Uniform Net Capital Rule (see note 11) through
September 30, 2001, was repaid on October 31, 2001.

<PAGE>                                 24

CASTLE HOLDING CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements


7.	STOCKHOLDERS' EQUITY

Class A Convertible Preferred Stock

In March 2001, CHC commenced a private offering of up to 100 Units (each Unit
consists of 10,000 shares of Class A Convertible, Secured Preferred Stock) at
a price of $10,000 per Unit.  Through September 30, 2001, CHC has sold 70.675
Units, or a total of 706,750 shares of Class A Convertible Preferred Stock,
for gross proceeds of $706,750.

Each share of Class A Convertible Preferred Stock is convertible at any time
into one share of the Company's Common Stock at the election of the Class A
Convertible Preferred Stockholder.

At any time after one year from the issue date of the Class A Convertible
Preferred Shares, CHC may require conversion of the Class A Convertible
Preferred Shares provided that the Common Stock has maintained a closing trading
price of at least $1.50 per share for more than twenty consecutive trading days.

At any time after ten years from the issue date of the Class A Convertible
Preferred Shares (regardless of the trading price of the Common Stock), CHC may
require conversion of the Class A Convertible Preferred Shares provided that CHC
pay the Class A Convertible Preferred Stockholder $ .50 per Class A Convertible
Preferred Share.

The Class A Convertible Preferred Shares are non-voting and will have a first
priority, up to $ 1.00 per Class A Convertible Preferred Share, in the event of
a liquidation of CHC.

As a provision of the private offering, CHC will use 33% of the gross proceeds
of the offering to purchase U.S. Treasury Strips ("Strips") having a maturity of
approximately 10 years from the date of issuance of the Class A Convertible
Preferred Shares.  The proceeds from the Strips will be available solely to
holders of the Class A Convertible Preferred Shares and will be in addition to
the other assets of CHC.  The Strips, and upon maturity, their proceeds, will be
held by CHC to secure payment of the investment in the Class A Convertible
Preferred Shares in the event of liquidation of CHC. The protection afforded by
the Strips will terminate upon the conversion of the Class A Convertible
Preferred Shares and the Strips, or their proceeds, will thereafter be available
to CHC.

Common Stock

In the year ended September 30, 2000, CHC issued a total of 273,600 shares of
common stock.200,000 shares were issued to two directors of CHC in consideration
of two stock subscriptions receivable totaling $110,000.  40,000 shares were
issued to an investor as a result of the investor's conversion of a $10,000 note
payable.  33,600 shares were issued to consultants and other parties for
services valued at a total of $13,150.

In the year ended September 30, 2001, CHC issued a total of 16,000 shares of
common stock for services valued at $3,200.

Stock Subscriptions Receivable

From July 1997 to February 2000, the Company issued a total of 893,000 shares
of common stock to fourteen key employees in exchange for stock subscriptions
receivable of $298,125.  The receivable is in the form of non-recourse notes
due to the Company, which in substance is the same as the grant of a stock
option and has been accounted for as a variable stock option award.  The
Company received payment of $21,250 from three employees representing 90,000
shares during the year ended September 30, 2000.  On September 28, 2001, the
Board of Directors adjusted the outstanding stock subscriptions receivable to
$100,375 to reflect the decline in market price.  The reduction in the
receivable effectively lowered the purchase price under the original
agreements (which ranged from $.125 to $.625 per share) to $.125 per share.
There was no charge to income for the year ended September 30, 2001 since the
market price on September 28, 2001 was $.09 per share, $.035 per share below
the exercise price.  However, should the market price of the Company's common
stock increase above the exercise price at a future date, the Company will be
required to record a charge against income for compensation expense.



8.	1998 INCENTIVE STOCK OPTION PLAN

In December 1998, as amended in January 2000, the Company established the 1998
Incentive Stock Option Plan (the "Plan") to compensate and attract certain key
employees.  The aggregate number of shares of common stock of the Company that
may be issued under the Plan is 1,000,000 shares.   The exercise price of any
incentive stock option granted under the Plan shall not be less than the fair
market value of the stock on the date of grant, as determined in good faith by
the Board of Directors.
<PAGE>                               25

CASTLE HOLDING CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements


On December 31, 1998, CHC granted stock options (for a total of 394,000 shares
of its common stock) to 40 employees of the Company.   The options provide the
respective employees the right to purchase CHC common stock at a price of  $.75
per share and are exercisable and vest over five years at a rate of 20% for each
year after date of grant.  Upon vesting, the options are exercisable for one
year.

On January 7, 2000, CHC granted stock options (for a total of 400,000 shares of
its common stock) to 52 employees of the Company.   On August 7, 2000, CHC
granted stock options (for a total of 50,000 shares of its common stock) to
2 employees of the Company.   The options provide the respective employees the
right to purchase CHC common stock at a price of $.50 per share and are
exercisable and vest over five years at a rate of 20% for each yearafter date
of grant.  Upon vesting, the options are exercisable for one year.

 Activity relating to  CHC's stock options follows:
<TABLE>
<CAPTION>


                                                                                                           Stock Subscriptions
	                                                   Number of Shares         Receivable (In
                                                           $.75 options  $.50 options Substance Options) Totals
   <S>                                                          <C>         <C>                  <C>                   <C>
    Balance at September 30, 1999      360,000                         -     693,000        1,053,000
    Granted during the year                                  -      450,000           200,000           650,000
    Exercised during the year                               -                   -            (90,000)          (90,000)
    Forfeited during the year                      (3,200)        (7,000)                       -           ( 10,200)

    Balance at September 30, 2000     356,800      443,000           803,000         1,602,800

    Expired during the year                     (81,600)        (1,200)         -	         (82,000)
    Forfeited during the year                   (62,000)     (74,000)         -                          (136,000)

    Balance at September 30, 2001     213,200      367,800            803,000        1,384,000
</TABLE>

As of September 30, 2001 the number of options remaining, which may be granted
under the Plan, amounted to 156,000.

The Company has adopted the disclosure only provisions of SFAS No. 123,
"Accounting for Stock- Based Compensation".  Accordingly, no compensation
costs have been recognized for the options granted and the stock subscriptions
receivable adjustment (see note 7).  Had compensation cost been recognized
based on the fair value on the grant date or adjustment date consistent with
the provisions of SFAS No. 123, the Company's net income (loss) and net income
(loss) per share would have been as follows:
<TABLE>
<CAPTION>			 Year Ended September 30,

		                                                                    2001	       2000
<S>                                                                                                   <C>                     <C>
Net (loss) income  - as reported		        $  (227,950)      $   112,620

Net (loss) income - pro forma		        $  (235,980)      $   106,120

Basic net (loss) income per share - as reported	        $       ( 0.03)	       $       0.02
                         26
Basic net (loss) income per share - pro forma	        $       ( 0.03)	       $       0.02

Diluted net (loss) income per share - as reported	        $       ( 0.03)	        $       0.02

Diluted net (loss) income per share - pro forma	         $       ( 0.03)       $       0.02

</TABLE>

The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model utilizing a high stock price volatility
percentage, expected dividend yield of 0.0%, risk free interest rate of 6%, and
an expected five year life.


CASTLE HOLDING CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements



The weighted average fair value of the stock subscriptions adjusted and the
options granted during the year ended September 30, 2001 and 2000 is as follows:
<TABLE>
1497:    <CAPTION>
                                                                                2001              2000
                                                              <C>              <C>
Fair Value of each stock subscription
    adjusted or option granted  	  $          .01      $         .01
Total number of stock subscriptions
adjusted or options granted                           803,000         650,000
Total fair value of all stock subscriptions
   adjusted or options granted                      $     8,030       $    6,500

</TABLE>

In accordance with SFAS 123, the weighted average fair value of stock options
granted is required to be based on a theoretical statistical model using the
Black-Scholes assumptions.In actuality, because the Company's incentive stock
options are not traded on any exchange, employees can receive no value nor
derive any benefit from holding stock options under these plans without an
increase in the market price of the Company stock.  Such an increase in stock
price would benefit all stockholders commensurately.


9.    EXTRAORDINARY GAIN

In connection with the settlement of a class action claim against certain Nasdaq
market makers in December 2000, CSC-1 received $581,674 on January 9, 2001 in
settlement of certain of its past principal transactions and $528,132 of fees on
January 16, 2001 and $9,208 of fees on July 31, 2001 for assisting in the
processing of certain customer claims related to the same class action claim.
CSC-1 has recorded these transactions as an extraordinary gain since it
considers the transactions to be unusual and infrequent in the normal course of
business.

The extraordinary gain was calculated as follows:
<TABLE>

    <S>	                                                                                                                    <C>
     Revenue from class action settlement transactions		 $ 1,119,014

     Costs associated with class action settlement transactions	     (97,502)

     Net revenue from class action settlement transactions	   1,021,512

     Provision for income taxes			    (410,444)

     Extraordinary gain		                                                            $   611,068
</TABLE>

10.   INCOME TAXES

        CHC files a consolidated income tax return with its subsidiaries owned
80% or more for federal reporting purposes.   CHC's 57.7% owned subsidiary Cyber
Holding Corp.com files a consolidated federal income tax return with its   two
wholly owned subsidiaries.  CHC and its subsidiaries file separate income tax
returns for state reporting purposes.
<PAGE>                                 27

CASTLE HOLDING CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements


The provision for (benefit from) income taxes consists of:
<TABLE>
<CAPTION>
			                              Year Ended September 30,
	                                                                                                 2001	       2000
			         Extraordinary
	                                          Operations     Gain	         Total	       Total
  <S>                                             <C>                   <C>                 <C>              <C>
   Current:
      Federal	              $ (314,830)      $  314,830      $              -   	$                -
      State	                 (95,614)               95,614                       -	                  -

      Total	                (410,444)            410,444                      -	                  -

   Deferred:
      Federal	                 (70,254)                          -           (70,254)       34,709
      State	                 (21,336)                          -           (21,336)        10,541
      Valuation allowance	                   91,590  	-             91,590      (45,250)

      Total	                              -	-                          -                   -

   Total provision for
   (benefit from) income taxes   $ (410,444)        $  410,444     $                  -	   $              -
</TABLE>

A reconciliation of the computed expected income tax expense (benefit) to
the provision for (benefit from) income taxes follows:
<TABLE>
<CAPTION>
			                            Year Ended September 30,
	                                                                                                           2001         2000
			                     Extraordinary
	                                                         Operations  Gain                   Total            Total
   <S>                                                                <C>               <C>            <C>             <C>
   Computed Federal income tax at 34%	    $ (385,084)  $ 314,830  $ (70,254)  $  34,709
   Computed state income tax	        (116,950)       95,614     (21,336)       10,541
   Change in valuation allowance	            91,590                   -       91,590     (45,250)

   Total provision for (benefit from)
    income taxes	                                   $ (410,444)  $ 410,444  $             -      $           -
</TABLE>

Based on management's present assessment, the Company has not yet determined it
to be more likely than not that a deferred tax asset of $198,082 attributable to
the future utilization of  $492,987 of prior year net operating loss
carryforwards will be realized.  Accordingly, the Company has provided a 100 %
allowance against the deferred tax asset in the financial statements at
September 30, 2001.    The Company will continue to review this valuation
allowance and make adjustments as appropriate.  The net operating loss
carryforwards expire as follows: $181,231 in year 2012, $59,892 in year 2018,
$23,914 in year 2019, and $227,950 in year 2021.

<PAGE>                                28


CASTLE HOLDING CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements


11.	NET CAPITAL REQUIREMENTS

As broker-dealers, CSC-1 and CSC-2 are subject to the Securities and Exchange
Commission Uniform Net Capital Rule (the "Rule"). The Rule requires the
maintenance of minimum net capital and requires that the ratio of aggregate
indebtedness, as defined, to net capital, as defined, not exceed 15 to 1.
At September 30, 2001, CSC-1 had net capital of $203,245, which was $103,245
in excess of its required net capital of $100,000 and its ratio of aggregate
indebtedness to net capital was .71 to 1.   At September 30, 2001, CSC-2  had
net capital of $190,757, which was $90,757 in excess of its required net
capital of  $100,000 and its ratio of aggregate indebtedness to net capital
was .07 to 1.

Pursuant to a restrictive agreement amended August 22, 1996 with the NASD,
CSC-2 agreed to maintain minimum net capital of at least $120,000.
 Accordingly, at September 30, 2001, CSC-2 had  $70,757 net capital in excess
of the NASD minimum required amount.

12.      RELATED PARTY TRANSACTIONS

Expense allowance - For the years ended September 30, 2001 and 2000, the Company
paid a total of $72,000 and $57,000, respectively, to its president and
treasurer for accountable expenses pursuant to an agreement with the Company.

Stock subscriptions receivable - Stock subscriptions receivable include
receivables from officers and directors of CHC (secured by 502,000 shares of
CHC common stock), which was reduced from $204,375 at September 30, 2000 to
$62,750 at September 30, 2001.

Sea Friends Incorporated - For the years ended September 30, 2001 and 2000, the
Company received $12,000 from Sea Friends Incorporated,a not-for profit
corporation, for usage of the Company's facilities.

The Company's president and secretary /treasurer are also directors of Sea
Friends Incorporated.

13.      COMMITMENTS AND CONTINGENCIES

Operating leases - The Company leases its headquarters office space
(approximately 16,000 square feet) under six noncancellable operating lease
agreements, which expire between October 2001 and October 2002, with renewal
options available to October 2007.  The leases that expired during October 2001
were renewed for an additional year.  Such lease agreements require minimum
monthly rental payments of $6,686. The Company leases its autos and equipment
under noncancellable operating lease agreements, which expire between April 2002
and May 2005 and require minimum monthly rental payments of approximately
$7,087.

Rent expense under all operating leases consisted of:
<TABLE>
<CAPTION>

	  	                    Year Ended September 30,
		                            2001                2000

	<S>                                                <C>                <C>
	 Headquarters office space	$ 71,246           $ 70,627
	 Autos and equipment	 100,355              95,257

	 Totals		$171,601        $165,884
</TABLE>
<PAGE>                              29

CASTLE HOLDING CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements


At September 30, 2001, the aggregate future minimum lease payments under
noncancellable operating lease agreements are as follows:
<TABLE>
<CAPTION>

                                Headquarters
		  Year Ended	Office	        Autos and
		September 30,   Space      	Equipment        Totals
		<S>            <C>             <C>             <C>
	    	   2002          $ 80,095    $ 74,455      $ 154,550
	   	   2003                6,686       32,356           39,042
	    	   2004	       -        10,103           10,103
	   	   2005	       -          3,828              3,828
	     	  Thereafter               -                   -	                      -

         	                                Totals        $ 86,781  $120,742       $207,523
</TABLE>

Litigation - On September 13, 1994, the Securities and Exchange Commission
(the "SEC") filed a civil action against CSC-1, its president, a former
registered representative, and eight other defendants.  The action alleges
violations of Sections 5(a) and (c), and 17(a) of the Securities Act of 1933,
Sections 10 (b) and 15c of the Securities Exchange Act of 1934 and Rules l0b-3,
l0b-5, l0b-6, and 15cl-2 thereunder. The complaint seeks injunctive relief and
disgorgement of profits approximating $175,000.   CSC-1 answered the complaint
and is vigorously defending the action.  In October 2001, the scheduled trial
date of November 27, 2001 was postponed to year 2002 due to the destruction of
the SEC's New York office in connection with the World Trade Center disaster.

On August 31, 2001, the NASD Department of Enforcement commenced a disciplinary
proceeding against CSC-1, its president, two registered representatives, and
one former registered representative.  The Complaint alleges violations of NASD
Conduct Rules 2110, 2120, 2510, and 3010 and Section 10 (b) of the Securities
Exchange Act of 1934 and SEC Rule 10b-5 thereunder.  The Complaint seeks
injunctive relief and disgorgement of any and all ill-gotten gains. CSC-1
answered the Complaint and is vigorously defending itself.

Management believes, based upon discussions with counsel, that CSC-1 and its
president have meritorious defenses to the matters and have a reasonable
possibility of prevailing, but should CSC-1 not prevail, it could be liable
for total amounts ranging from $5,000 to $225,000.

In addition, the Company is involved in various legal proceedings of a nature
considered normal to its business.  It is the Company's policy to accrue for
amounts related to these legal matters if it is probable that a liability has
been incurred and an amount is reasonably estimable.

As of September 30, 2001, the Company has accrued $85,000 in connection
with the above litigations.   Such amount is included in accounts payable and
accrued expenses.

The materiality of legal matters on the Company's future operating results
depends on the level of future results of operations as well as the timing and
ultimate outcome of such legal matters.

With respect to the disciplinary proceeding brought by the NASD Market
Surveillance Committee on October 6, 1994 and disclosed in the Company's
consolidated financial statements for the year ended September 30, 2000, the
NASD advised CSC-1 and its president on May 7, 2001 that their petition for
review had been dismissed and that CSC-1's president was to be suspended from
association with any NASD member in any capacity for 30 days.  The suspension
commenced June 4, 2001 and concluded July 3, 2001.  No monetary payment was
required.
<PAGE>                              30


CASTLE HOLDING CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements


Insurance - The Company does not maintain insurance coverage with respect to
errors and omissions.  The Company does not believe that there is a material
risk associated with this based upon its past experience.  Although the Company
is not aware of any claims in this area, there is no assurance that none exists.


14.     CREDIT RISK AND BUSINESS CONCENTRATION

Credit Risk - In the normal course of business, CSC-1 executes as agent
transactions on behalf of customers and CSC-2 executes principal transactions
with other broker-dealers. If the agency or principal transactions do not settle
because of failure to perform by either the customer or the counterparty, CSC-1
or CSC-2 may be obligated to discharge the obligation of the nonperforming
party and, as a result, may incur a loss if the market value of the securities
are different from the contract amount of the transactions.

CSC-l's clearing agent seeks to control the risks associated with CSC-l's
customer activities by requiring customers to maintain margin collateral in
compliance with various regulatory and internal guidelines.  CSC-l's clearing
agent monitors required margin levels daily, and pursuant to such guidelines,
requires the customers to deposit additional collateral, or to reduce positions,
when necessary.

Business concentration - For the year ended September 30, 2001, approximately
72% of the Company's revenues were derived from unsolicited customer
transactions ordered online over the Internet.

15.	SEGMENT INFORMATION

SFAS No.131, "Disclosure about Segments of an Enterprise and
Related Information"requires the Company to use a management approach in
identifying segments of its business and establishes standards for reporting
information about segments.

The Company's business operations are divided into three reportable segments:
securities brokerage, securities principal transactions, and internet services.
The Company's business segments are based on business units or entities
that offer different products and services.  Securities brokerage is operated
by CSC-1, securities principal transactions is operated by CSC-2, and
internet  services is operated by Cyber Holding Corp.com and its
subsidiaries Long Island WebTV.com Corp and Cyberville City Inc.

The Company's revenue, income (loss) before provision for income taxes,
depreciation and amortization, interest expense, total assets and capital
expenditures for each segment for the years ended September 30, 2001 and
2000 were as follows:
<PAGE>                                   31

CASTLE HOLDING CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
<TABLE>
<CAPTION>

		                                   2001	2000
<S>                                                           <C>                   <C>
Revenues:
   Securities brokerage	                          $  1,277,115 $  4,132,215
   Securities principal transactions                  42,182        274,280
   Internet services		       41,830          19,400
   Sub total                                                        1,361,127    4,425,895
   Elimination of Intersegment sales              (36,600)       (17,950)

   Total	                                                         $  1,324,527    4,407,945

Income (loss) before provision for
             income taxes:
   Securities brokerage	                           $ (1,158,731)       135,285
   Securities principal transactions	       (76,371)	   (1,871)
   Internet services		       (15,227)        (23,914)

   Total	                                                         $ (1,250,329)  $   109,500

(Benefit from) provision for income taxes:
   Securities brokerage	                            $   (410,444)    $               -
   Securities principal transactions                             -	              -
   Internet services		                  -	              -

   Total	                                                        $   (410,444)      $	              -

Minority interest:
   Securities brokerage		                 -                         -
   Securities principal transactions                            - 	              -
   Internet services		            867 	      3,120

    Total	                                                         $            867 	$    3,120

Extraordinary gain, net of provision for income
 taxes of $410,444:
   Securities brokerage	                            $    611,068 	$               -
   Securities principal transactions	                  -	                  -
   Internet services		                  -	                  -

   Total	                                                           $    611,068 	$                -


Depreciation and amortization:
   Securities brokerage	                               $      56,935 	$  110,818
   Securities principal transactions	            1,506 	            746
   Internet services		            3,878 	         2,017

   Total 	                                                            $    162,319 	$  113,581

Interest expense:

   Securities brokerage	                               $      20,382 	$    23,008
   Securities principal transactions	            6,000 	         6,003
   Internet services		               552 	              30

   Total 	                                                            $      26,934 	$    29,041

Total assets:
   Securities brokerage	                               $  1,164,096 	$  933,727
   Securities principal transactions	          247,141        261,965
   Internet services		             12,961 	       12,807

   Total 	                                                             $  1,424,198 	$1,208,499

Capital expenditures:
   Securities brokerage	                                $        73,792 	$   139,169
   Securities principal transactions	               5,858 	                   -
   Internet services		               4,010 	          9,964

   Total	                                                             $        83,660 	$  149,133

Capital Expenditures:
                      73,792      139,169
              -
     9,964
                         	                            83,660      149,133


</TABLE>
<PAGE>                                   32


CASTLE HOLDING CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
For the Years Ended September 30, 2001 and 2000



PART  III

Item 9.   DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
       (a)	The directors of the Registrant are:
        <S>                                    <C>           <C>                                                 <C>
	Director:
	Name	           Age	Other offices held                         Since


	Daniel J. Priscu	           79	Chairman		1987

	George R. Hebert        57	President		1987

	Michael T. Studer        51	Secretary, Treasurer	1987

</TABLE>

Each director will hold office until the next annual meeting of shareholders
(expected to be held in March 2000) and until their successors have been elected
and qualified.

The executive officers of the Registrant are:
<TABLE>
<CAPTION>
        <S>                                     <C>          <C>                                                  <C>
	Officer:
	Name	            Age	Other offices held                          Since


	Daniel J. Priscu             79	Chairman		1987

	George R. Hebert          57	President		1987

	Michael T. Studer          51	Secretary, Treasurer	1987

</TABLE>

Officers of the Registrant are elected by the Board of Directors at the annual
meetings of the Registrant's shareholders, and hold office until their death,
or until they shall resign or have been removed from office.

The business experience during the last five years for each director and
executive officer of the Registrant follows:

Daniel J. Priscu has been Chairman and a director of the Registrant since
September 1987.  Mr. Priscu received a B.A. degree from De Pauw University in
1947.

George R. Hebert has been President and a director of the Registrant since
September 1987. He also has been a registered representative and economist
with CSC-1 since September 1987 and with CSC-2 since October 1995. Mr. Hebert
received a B.S. degree from Stevens Academy, Pennsylvania Military College
(now Widener University) in 1967.

Michael T. Studer has been Secretary, Treasurer, and a director of the
Registrant since September 1987. He also has been President of Michael T.
Studer, CPA, P.C., a public accounting firm, since July 1987, President of
CSC-1 since its inception in December 1984, and President of CSC-2 since
October 1995. Mr. Studer received a B.S.B.A degree from Babson College in
1971.

(b)	Another significant employee of the Registrant is Thomas
Shaughnessy, age 47.  Mr. Shaughnessy has been a general securities principal
and of CSC-1 since July 1993, chief compliance officer from July 1993 to May
2001, and branch manager of the New York branch office since July 2001. Since
May 1972, he has served in the United States Marine Corps. on both a full-time
and part-time basis. Mr. Shaughnessy received a B.S.B.A. degree from State
University of New York at Brockport in 1978 and a M.B.A. degree from National
University in 1988.

(c)	There is no family relationship between any director, executive officer
or significant employee of the Registrant.

Item 10.  EXECUTIVE COMPENSATION

The following table sets forth all cash compensation paid by the Company during
the years ended September 30, 1999, 2000, and 2001 to each executive officer and
director of the Company:

<TABLE>
<CAPTION>
                                                                                                    Annual	  All Other
Name and Principal Position	Year                   Salary                     Compensation
<S>                                                               <C>                   <C>                         <C>

George R. Hebert, President	2001                 $44,200	 $36,000   (1)
			2000	44,200	  36,000   (1)
			1999	44,200	  32,000   (1)

Michael T. Studer, Secretary,	2001	 40,800	  36,000   (1)
 Treasurer		2000	 44,200	  21,000   (1)
			1999	 44,200	  32,000   (1)

Daniel J. Priscu, Chairman of  	2001	            -	             -
The Board	  	2000	            -	        300   (2)
			1999	            -	        600   (2)
</TABLE>

 (1) Represents an allowance for accountable expenses.
 (2) Represents director's fees.

Item 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, at September 30, 2001, the stock ownership of
each person known by the Company to be the beneficial owner of five percent or
more of the Company's common stock, all executive officers and directors
individually, and all executive officers and directors of the Company as a
group:

<TABLE>
<CAPTION>

Name and Address                       Amount and Nature	       Percent of
of Beneficial Owner	               of Beneficial Owner (1)          Class
<S>                                                 <C>                                            <C>
Daniel J. Priscu	                      49,600	           0.7%
4555 Blackstone Drive
Indianapolis, Indiana 46237


George R. Hebert	                 2,121,300 (2)	         30.6%
183 Gordon Place
Freeport, NY 11520

Michael T. Studer	                  2,028,200 (3)	        29.3%
410 McDermott Road
Rockville Centre, NY  11570

All executive officers and
directors as a group (3 persons)  4,199,100                             60.6%
</TABLE>

(1)	Unless otherwise indicated below, the Company has been advised that each
 person named above is the record owner of and exercises the sole voting and
investment power over the shares shown opposite his name.
(2)	Includes 230,000 shares held in trust for the benefit of Mr. Hebert's
daughter, 102,800 shares owned by Mr. Hebert's wife, 4,000 shares owned by The
OTC Equity Fund Inc., which organization Mr. Hebert is secretary, and 50% of
37,000 shares owned by Sea Friends Incorporated, of which organization Mr.
Hebert is president and a director, all of which Mr. Hebert disclaims beneficial
ownership of. Includes 50% of 640,000 shares owned by CALP (CHC Deferred
Compensation Plan for benefit of George R. Hebert owns a 50% limited partnership
interest therein), which Mr. Hebert doesn't exercise sole voting and investment
power over.
(3)	Includes 528,000 shares held in trust for Mr. Studer's children and 50%
of 37,000 shares owned by Sea Friends Incorporated, of which organization Mr.
Studer is treasurer and a director, which Mr. Studer disclaims beneficial
ownership of. Includes 50% of 640,000 shares owned by CALP (CHC Deferred
Compensation Plan for benefit of Michael T. Studer owns a 50% limited
partnership interest therein) which Mr. Studer does not exercise sole voting and
investment power over.


Item 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

As of September 30, 2000, the Registrant had notes payable to The OTC Equity
Fund, Inc., a corporation whose secretary is also president of the Registrant,
and Michael T. Studer, secretary and treasurer of the Registrant, in amounts of
$55,000 and $22,500, respectively. Such notes, which bore interest at the rate
of 12% per annum and were due on demand, were repaid in September 2001.

As of September 30, 2001, Citadel  had a loan payable subordinated to claims of
general creditors to The OTC Equity Fund, Inc. in the amount of $50,000. The
loan, which bore interest at the rate of 12% per annum and was due September 30,
2002, was repaid in October 2001.

In January 2000, the Registrant sold 100,000 common shares to George R. Hebert
(president of the Registrant) and 100,000 common shares to Michael T. Studer
(secretary and treasurer of the Registrant) at an adjusted  price of $.125 per
share in exchange for promissory notes in the amounts of $12,500 each.

As of September 30, 2001 the Company had stock subscriptions receivable from
officers and directors of $62,750 (secured by 502,000 shares of CHC common
stock).  On September 28, 2001, the receivable from officers and directors was
reduced from $204,375 to $62,750.  See note 7 to consolidated financial
statements.


Item 13.   EXHIBITS AND REPORTS ON FORM 8-K

(a)    Exhibits

        See Exhibit Index.

(b)    Reports on Form 8-K

 One report on Form 8-K (dated September 14, 2001) was filed by the Registrant
during the quarter ended  September 30, 2001.






SIGNATURES


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


CASTLE HOLDING CORP.



By /s/  George R. Hebert
George R. Hebert, President
Dated January 14, 2002


Pursuant to the requirements of 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 indicated on the dates indicated.


Signature	Title	                     Date



/s/  Daniel J. Priscu   Chairman of the Board of        January 14, 2002
Daniel J. Priscu	 Directors, Director





/s/  George R. Hebert 	President, Director               January 14, 2002
George R. Hebert





/s/  Michael T. Studer 	Secretary, Treasurer            January 14, 2002
Michael T. Studer	Principal Financial and
		Accounting Officer,Director










EXHIBIT INDEX


 3.1* Articles of Incorporation (Form S-18 Registration No. 33-8395-LA,
effective November 14, 1986)

 3.2* Amendments to Articles of Incorporation (Form S-18 Registration No.
33-37809-NY, effective February 11, 1991)

 3.2  Amendment to Articles of Incorporation filed August 15, 2001 (filed
herewith)

 3.3* By-laws (Form S-18 Registration No. 33-8395-LA, effective November
14, 1986)

 4.4* Specimen Stock Certificate (Form S-18 Registration No. 33-37809-NY,
effective February 11, 1991)

22    Subsidiaries of the Registrant (filed herewith)

99.1* Complaint for Injunctive and Other Relief (dated September 13, 1994) -
Securities and Exchange Commission, Plaintiff (Form 8-K dated September 13,
1994)


	*  Previously filed









EXHIBIT 3.2

DEAN HELLER		      Certificate of        FILED # C4088-86
Secretary of State	      Amendment
		      (PURSUANT TO NRS 78.385 and
                          78.390)                   AUG 15 2001


202 North Carson Street
Carson City, Nevada 89701-4201			    IN THE OFFICE OF
(775) 684 5708					    signature
                                               DEAN HELLER SECRETARY OF STATE
___________________________________________________________
Important: Read attached instructions before completing form.
_____________________________________________________________________________

Certificate of Amendment to Articles of Incorporation
For Nevada Profit Corporations
(Pursuant to NRS 78.385 and 78.390 - After Issuance of Stock)
-Remit in Duplicate-

1.   Name of corporation:	Castle Holding Corp.

2.  The articles have been amended as follows (provide article numbers, if
available):

The first sentence of Article four shall be amended to read as
follows:

*The amount of the total authorized capital stock the
corporation shall have the authority to issue is One Hundred
Million (100,000,000) shares or common stock, each having a
par value of $.0025, and Ten Million (10,000,000) shares of
preferred stock, each having a par value of $.01.

3.   The vote by which the stockholders holding shares in the corporation
entitling them to     exercise at least a majority of the voting power, or
such greater proportion of the voting power as may be  required in the case of
a vote by classes or series, or as may be required by the provisions of the
articles of incorporation have voted in favor of the amendment is:  54%.*

4.   Officer Signature (Required):


/s/ George R. Hebert			/s/ Michael T. Studer


*If any proposed amendment would alter or change any preference or any relative
 or other right given to any class or series of outstanding shares, then the
amendment must be approved by the vote, in addition to the affirmative vote
otherwise required, of the holders of shares representing a majority of the
voting power of each class or series affected by the amendment regardless of
limitations or restrictions on the voting power thereof.

IMPORTANT: Failure to include any of the above information and remit the proper
fees may cause this filing to be rejected.


Exhibit No. 22 - Subsidiaries of the Registrant
Castle Holding Corp.
Form 10-KSB for the fiscal year ended September 30, 2001



1.	Castle Securities Corp. (New York)
2.	Citadel Capital Corp. (Delaware)
3.	Beverage King, Ltd. (Delaware)
4.	Citadel Securities Corp.(New York)
5.	Meroke Capital Corp. (New York)
6.	Castle Trucking Corp. (New York)
7.	Castle Advisors Inc. (New York)
8.	Sparta Holding Corp. (Nevada)
9.	Wall Street Indians, Ltd (New York)
10.	Chinamer International Corp. (Nevada)
11.	Galaxynet Inc. (New York)
12.	Rocketnet Inc. (Nevada)
13.	U Trade Inc. (New York)
14.	Java Trader Inc. (Nevada)
15.	Long Island Web TV.com Corp. (New York)
16.	The Unlisted Stock Market Corporation (New York)
17.	Cyber Holdings Corp.com (New York)
18.	Cyberville City Inc. (New York)