UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

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

                                   FORM 10-K/A

                                 AMENDMENT NO. 1

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

                      For the year ended December 31, 2002

                                       OR

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

                         Commission file number: 0-27290

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

                                    KSW, INC.

           (Exact name of the Registrant as specified in its charter)


                Delaware                                       11-3191686
      ----------------------------                        ------------------
      (State or other jurisdiction                          (I.R.S. Employer
     incorporation or organization)                       Identification No.)

               37-16 23rd Street, Long Island City, New York 11101
               ---------------------------------------------------
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (718) 361-6500
                                                            -------------

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

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

                          Common Stock, $.01 par value
                                (Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No __


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

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes __ No [X]

The aggregate market value of the voting and non-voting common equity held by
non-affiliates of the Registrant on June 30, 2002 was $ 3,786,958 (based on a
price of $ .90 per share).

As of March 28, 2003, there were 5,470,311 shares of Common Stock, $.01 par
value per share, outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE:

                                      NONE


                                       2
<PAGE>
<TABLE>
<S>       <C>               <C>                                                                                  <C>

           EXPLANATORY NOTE................................................................................................4

PART II....................................................................................................................4

           ITEM 6.            SELECTED FINANCIAL DATA......................................................................4

           ITEM 7.            MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                              FINANCIAL CONDITION AND RESULTS OF OPERATIONS................................................6

           ITEM 7A.           QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK...................................16

           ITEM 8.            FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.................................................16

PART IV...................................................................................................................16

           ITEM 14.           CONTROLS AND PROCEDURES.....................................................................16

           ITEM 15.           EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.............................17


SIGNATURES................................................................................................................18

</TABLE>

                                       3
<PAGE>
                                EXPLANATORY NOTE


This amendment to the Annual Report on Form 10-K of KSW, Inc. a Delaware
corporation (the "Company" or "KSW") for the fiscal year ended December 31,
2002, that was originally filed on March 31, 2003, is being filed for the
purpose of restating its financial statements and restating certain disclosures
for the year ended December 31, 2002 and the quarters included therein.

At the end of January 2004, the Company's management identified and determined
that reported revenues and costs of revenues during the year ended 2002 and the
nine months ended September 30, 2003, including their respective interim
periods, were materially overstated. This overstatement was a result of an
accounting error attributable to the failure to eliminate certain intra-company
accounts. The overstatement did not change previously reported gross profit,
operating income, net income (loss) or earning (loss) per share for the affected
periods. The Company's previously issued statements of operations for the year
ended 2002 and nine months ended September 30, 2003 including for their
respective interim periods, should not be relied upon as to the revenues and
costs of revenues reported in such statements as a result of these accounting
errors.

This accounting error was initially reported by the Company on February 2, 2004,
in a press release, a copy of which was attached as an exhibit to the Current
Report on Form 8-K of the same date.

This amendment amends and restates in their entirety Items 6, 7 and 8 of Part II
and Item 14 and Item 15 (A) 1 and 2 of Part IV of the Form 10-K for the fiscal
year ended December 31, 2002, including such restated consolidated financial
statements (together with other information relating to such restated
consolidated financial statements) and the Company's amended and restated
managements' discussion and analysis of financial condition and results of
operations. In addition, in connection with the filing of this amendment, the
Company is including as exhibits certain currently dated certifications of the
Company's Chief Executive Officer and Chief Financial Officer and updated
consent letters from the Company's independent accountants.

For additional discussion of developments relating to periods subsequent to
December 31, 2002, please see the Company's Form 10-K report filed with the
Securities and Exchange Commission with respect to the year ended December 31,
2003. The remainder of the Form 10-K for the year ended December 31, 2002, is
not reproduced in this amendment, and this amendment does not reflect events
occurring after the filing of the Company's original Form 10-K or, except as
indicated, modify or update the original Form 10-K.

                                     PART II

ITEM 6.    SELECTED FINANCIAL DATA

           The following summary of certain financial information relating to
the Company for the year ended December 31, 2002 (restated), is derived from,
and is qualified by reference to, the financial statements for the year audited


                                       4
<PAGE>
by Rosen Seymour Shapss Martin & Company, LLP. The information for the years
ended December 31, 2001, 2000, 1999, and 1998 is derived from, and is qualified
by reference to, the financial statements for those years audited by Marden,
Harrison & Kreuter CPAs, P.C. Previous year amounts have been reclassified to
conform to the December 31, 2002 presentation. Each of the previously mentioned
financial statements is included herein or in prior year's annual reports on
Form 10-K, and should be read in conjunction with such financial information.

<TABLE>
<CAPTION>
                                                                           FOR THE YEAR ENDED DECEMBER 31,
                                                              ---------------------------------------------------------
                                                             (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)


INCOME STATEMENT:                                   2002               2001               2000               1999            1998
                                                 (Restated)
<S>                                             <C>               <C>                <C>               <C>             <C>
Revenues..............................            $46,448(a)         $51,012            $52,247            $44,720         $39,535
Costs of revenues.....................             40,808(a)          49,153             48,249             38,029          36,434
Gross profit..........................              5,640              1,859(b)           3,998(b)           6,691           3,101
Selling, general, administration,
expenses............................                4,196              4,499              4,706              4,280           4,364
Operating income (loss)...........                  1,444             (2,640)              (708)             2,411          (1,263)
Other income (expense)...........                    (107)               (55)               279                 99              63
Income (loss) before income taxes.....              1,337             (2,695)              (429)             2,510          (1,200)
Provision (benefit) for income
   taxes..............................              1,714(c)          (1,218)              (163)             1,143            (566)
Income (loss) before cumulative
    effect of change in accounting
    principle.........................               (377)            (1,477)              (266)             1,367            (634)
Cumulative effect of change in
   accounting principle net........                (1,888)(d)              -                  -                  -               -
Net (loss) income......................            (2,265)            (1,477)              (266)             1,367            (634)
Net (loss) income per share -
   Basic...............................              (.41)              (.27)              (.05)               .25            (.12)
   Diluted.............................              (.41)              (.27)              (.05)               .25            (.11)

</TABLE>

(a)The Company's management identified and determined that reported revenues
   and costs of revenues during the year ended December 31, 2002 were materially
   overstated as a result of an accounting error attributable to the failure to
   eliminate certain intra-company accounts. The Company has restated these
   previously reported amounts and, with the oversight of its Audit Committee,
   has corrected its financial reporting system. Gross profit for the year ended
   December 31, 2002 did not change due to the offsetting effects of the
   misstatements.

(b)For the years ended December 31, 2001 and 2000, the Company experienced a
   gross profit erosion primarily due to lower than anticipated productivity and
   higher labor costs on several projects which commenced during the later half
   of 2000 and completed during 2001. As a result of these contract losses, the
   Company has changed its estimating and bidding practices, as discussed in the
   Management Discussions and Analysis section.

(c)During the year ended December 31, 2002, the Company recorded a valuation
   allowance totaling $1,045 against its deferred tax assets, at the
   recommendation of the Company's outside auditors engaged in the preparation
   of this audit.

(d)For the year ended December 31, 2002, the Company recorded a cumulative
   effect of a change in accounting principle for the write-off of goodwill as a
   result of the adoption of SFAS 142, which accounted for $1,888 of the net
   loss.


                                       5
<PAGE>
<TABLE>
<CAPTION>

                                                       FOR THE YEAR ENDED DECEMBER 31,
                                                       -------------------------------
                                            (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

                                                     2002            2001               2000              1999              1998

<S>                                          <C>                <C>               <C>                <C>
Number of shares used in computation :
   Basic...............................         5,470,311          5,470,311          5,468,991          5,468,644        5,463,505
   Diluted.............................         5,470,311          5,470,311          5,641,050          5,468,644        5,655,195

BALANCE SHEET DATA:
Total assets...........................            17,171             27,620             28,263             26,147           21,273
Working capital........................             3,495              5,213              6,996              7,023            5,194
Current liabilities....................            10,029             18,149             17,255             14,912           11,388
Long-term liabilities..................                 -                 19                 51                 40               57
Stockholders' equity...................             7,142              9,452             10,957             11,195            9,828

OTHER DATA:
Current ratio..........................            1.35:1             1.29:1             1.41:1             1.47:1           1.46:1

</TABLE>

ITEM 7     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS


The following is a discussion of the financial condition and results of
operations of the Company for the years ended December 31, 2002 (restated), 2001
and 2000.

OVERVIEW
           The Company's contracts most often involve work periods in excess of
one year. Revenue on uncompleted fixed price contracts is recorded under the
"percentage of completion" method of accounting. The Company begins to recognize
profit on its contracts when it first incurs direct costs. Contract costs
include all direct material and labor costs and those other direct costs related
to contract performance including, but not limited to, subcontractors' costs and
supplies. General and administrative costs are charged to expense as incurred.
Pursuant to construction industry practice, a portion of billings, generally not
exceeding 10%, may be retained by the customer until the project is completed
and all obligations of the contractor are performed. The Company has not been
subject to a material loss in connection with such retentions, although at times
legal procedures have been required to collect retentions due the Company.


CRITICAL ACCOUNTING POLICIES AND ESTIMATES

           The Company's consolidated financial statements and accompanying
notes have been prepared in accordance with generally accepted accounting
principles. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods.


                                       6
<PAGE>
           The Company continually evaluates the accounting policies and
estimates it uses to prepare the consolidated financial statements. In general,
management's estimates are based on historical experience, on information from
third party professionals and on various other assumptions that are believed to
be reasonable under the facts and circumstances. Actual results could differ
from those estimates made by management.

           The Company believes its critical accounting policies and estimates
include the accounting for revenue recognition for construction contracts,
accounting for intangible assets and goodwill, and accounting for income taxes.

           Accounting for revenue recognition for construction contracts
           -------------------------------------------------------------

           The Company recognizes revenue for long-term construction contacts
not yet completed using the "percentage of completion" method, measured by the
percentage of total costs incurred to date to estimated total costs at the
completion of each contract. When the Company bids projects, a comprehensive
budget is prepared dividing the project into phases and line items indicating
separate labor, equipment, material, subcontractor and overhead cost estimates.
As projects progress, the Company's project managers plan, schedule and oversee
operations and review project costs compared to the estimates. Management
reviews on a bi-weekly basis the progression of the contract with the project
manager. An analysis is prepared and reviewed monthly by management comparing
the costs incurred to the budgeted amounts. The results of these procedures,
determine the estimated total costs at completion, based on facts and
circumstances known at the time. Any revision in cost and profit estimates are
reflected in the accounting period in which the facts, which require the
revisions, become known.

           Accounting for intangible assets and goodwill
           ---------------------------------------------

           During 2001, the Financial Accounting Standards Board issued SFAS
142, Goodwill and Other Intangible Assets, which established new accounting and
reporting requirements for goodwill and other intangible assets. Under SFAS 142,
the amortization of goodwill ceased as of January 1, 2002 and a test for
impairment was established. SFAS 142 requires that goodwill be tested annually
using a two step process. The first step is to identify a potential impairment.
The second step measures the amount of impairment loss, if any. Intangible
assets with indefinite lives will be tested for impairment using a one-step
process that compares the fair value to the carrying amount of the asset.

           The Company performed an impairment test on its goodwill during the
first quarter of 2002. Since the goodwill recorded was attributed to the entire
Company (a single reporting unit), and the fair value of the Company as
reflected in the market value of its stock was significantly below its net worth
including goodwill, the entire goodwill was written off during the first quarter
of 2002.


                                       7
<PAGE>
           Accounting for income taxes
           ---------------------------

           Judgment is required in developing the Company's provision for income
taxes, including the determination of deferred tax assets and liabilities and
any valuation allowances that might be required against the deferred tax assets.
At December 31, 2002, the Company, at the recommendation of its outside
auditors, recorded a valuation allowance against its net deferred tax assets
totaling $1,045,000. In the event that actual results differ from these
estimates, the Company may be required to record an additional adjustment to the
valuation allowance on its deferred tax assets, which could have a material
effect on the Company's financial condition and results of operations.


RESULTS OF OPERATIONS

           The following table sets forth, as a percentage of net sales, certain
items of the Company's statement of operations for the periods indicated:

<TABLE>
<CAPTION>
                                                         2002                        2001                            2000
                                                         ----                        ----                            ----
                                                    (RESTATED)
                                              AMOUNT         PERCENT      AMOUNT         PERCENT          AMOUNT         PERCENT
                                              ------         -------      ------         -------          ------         -------
                                                                            (DOLLARS IN THOUSANDS)

<S>                                      <C>             <C>           <C>            <C>              <C>             <C>
REVENUES...............................     $   46,448          100.0    $   51,012         100.0       $   52,247           100.0
COSTS OF REVENUES......................         40,808           87.9        49,153          96.4           48,249            92.3
                                            -----------    -----------   -----------   -----------      -----------     -----------
GROSS PROFIT...........................          5,640           12.1         1,859           3.6            3,998             7.7
EXPENSES
      Selling, general, administrative
      expenses.........................          4,196            9.0         4,499           8.8            4,706             9.0
                                            -----------    -----------   -----------   -----------      -----------     -----------

OPERATING INCOME (LOSS)................          1,444            3.1        (2,640)         (5.2)            (708)           (1.3)
OTHER INCOME (EXPENSES)................           (107)           (.2)          (55)          (.1)             279             (.5)
                                            -----------    -----------   -----------   -----------      -----------     -----------

INCOME/(LOSS) BEFORE PROVISION FOR
  INCOME TAXES.........................          1,337            2.9        (2,695)         (5.3)            (429)            (.8)

PROVISION FOR INCOME TAXES.............          1,714            3.7        (1,218)         (2.4)            (163)            (.3)
                                            -----------    -----------   -----------   -----------      -----------     -----------

INCOME BEFORE CUMULATIVE CHANGE IN
  ACCOUNTING PRINCIPLE.................           (377)           (.8)       (1,477)         (2.9)            (266)            (.5)
CUMULATIVE CHANGE IN ACCOUNTING FOR
  GOODWILL, NET OF TAX BENEFIT.........         (1,888)          (4.1)          -             -               -                 -
                                            -----------    -----------   -----------   -----------      -----------     -----------

NET LOSS............................        $  ( 2,265)          (4.9)    $  (1,477)         (2.9)      $     (266)            (.5)
                                            ===========    ===========   ===========   ===========      ===========     ===========

</TABLE>

YEAR ENDED DECEMBER 31, 2002 (RESTATED) COMPARED TO YEAR ENDED DECEMBER 31, 2001

Revenues
--------

           Revenues decreased by $ 4,564,000 or (9.0)% to $ 46,448,000
(restated) for the year ended December 31, 2002, as compared to $ 51,012,000 for
the year 2001. New projects started in the latter part of 2001 were completed
during 2002 and a majority of new projects included in the Company's backlog at
December 31, 2002 had not commenced. Revenue for the fourth quarter of 2002 was


                                       8
<PAGE>
$10,236,000 (restated), a reduction of $3,922,000 as compared to the fourth
quarter of 2001 totaling $14,158,000. This decline was a result of market
conditions, which were impacted by a slower economy and the attack on September
11, 2001 causing fewer contracts to bid. At December 31, 2002 the Company had
backlog of approximately $26,200,000 (restated). The Company is actively seeking
new contracts to add to its backlog. Revenues during the first half of 2001 were
substantially less than the second half due to the delayed start of several new
projects, which did not generate substantial revenues until the third quarter of
2001.

Costs of revenues
-----------------

           Costs of revenues decreased by $8,345,000 or (17.0%) to $40,808,000
(restated) for the year ended December 31, 2002, as compared to $49,153,000 for
the year ended December 31, 2001, primarily due to the higher labor costs in the
first half of 2001. As a result of these higher labor costs, the Company has
changed its bidding and estimating practices. The Company has also been more
selective in projects that it bids which are highly labor intensive.

Gross profit
------------

           For the year ended December 31, 2002, the Company had a gross profit
of $5,640,000 or 12.1% (restated), as compared to $1,859,000 or 3.6% for the
year 2001. The increase can be attributed to gross profits from newer contracts
started in 2001 and completed during 2002, which did not have the erosion of
gross profit due to labor costs, which will be discussed later in this
paragraph. In addition, the Company received $338,000 from the WTC Business
Recovery Program of which $176,000 was allocated to costs of revenues in 2002.
In the fourth quarter of 2002, the gross profit was $1,519,000 or 14.8%
(restated) as compared to $1,251,000 or 8.8% for the same period in 2001.
Starting with the third quarter of 2000 and continuing through the first half of
2001 the Company experienced an erosion of its gross profit percentage due to
lower than anticipated productivity and higher labor costs on several projects.
As a result of losses on these contracts, the Company has changed its bidding
and estimating practices. The Company is more selective in bidding on projects
that are highly labor intensive. While there continued to be some erosion during
the completion of the projects in the third and fourth quarter of 2001, such
erosion was more than offset by higher gross margins on newer projects.

Selling, general and administrative expenses
--------------------------------------------

           For the year ended December 31, 2002, selling, general and
administrative expenses decreased by $303,000 or (6.7%) to $4,196,000 from
$4,499,000 for the year ended December 31, 2001. During the fourth quarter ended
December 31, 2002 selling, general and administrative expenses were $ 743,000 as
compared to $ 950,000 for the same period in 2001, a decrease of $207,000 or
(21.8%). Included in the above expenses were legal fees of $770,000 in 2002 of
which $450,000 applied to a settlement in the Helionetics Creditors Committee
Action, ($58,000 in the fourth quarter), and $ 653,000 in 2001 ($ 280,000 in the
fourth quarter, of which $250,000 represented an accrual for anticipated future
costs). In 2002, the Company received $338,000 from the WTC Business Recovery
Grant Program of which $162,000 was allocated to overhead costs. During 2002,
total general and administration salaries decreased by approximately $338,000 as
compared to 2001, which is largely due to the Company utilizing a portion of its
office staff on its trade management projects. This decrease in salary expense
was offset by increased medical insurance costs in 2002 which were approximately
$200,000 higher than 2001.


                                       9
<PAGE>
Other expense
-------------

           Other expenses increased to $107,000 in 2002 as compared to $55,000
in 2001, largely due to a reduction in interest income, which is a result of
lower interest rates and lower cash balances throughout the year.

Provision (benefit) for income taxes
------------------------------------

           Income taxes for the year ended December 31, 2002 were $1,714,000 or
128.2 % of the taxable income as compared to an income tax benefit for the year
ended December 31, 2001 of $1,218,000 or 45.2% of the taxable loss. The 2002
income tax expense contains a $1,045,000 valuation allowance against the
Company's deferred tax assets. Without this valuation allowance, the income tax
expense as a percentage of taxable income would have been approximately 50%. In
addition, the percentages in both years were affected by certain state and local
taxes paid based on net worth.

Cumulative effect of change in accounting principle
---------------------------------------------------

           The Financial Accounting Standards Board issued SFAS 142 "Goodwill
and Other Intangible Assets" which became effective on January 1, 2002. In
accordance with this pronouncement goodwill would no longer be amortized, but
tested each year for impairment. Since the goodwill applied to the entire
Company as a whole and the fair value of the Company as represented by its
market capitalization was significantly below its net worth including the
goodwill, the goodwill of $3,514,000 ($1,888,000 net of taxes) was written off
during the first quarter of 2002.

Net loss
--------

           As a result of all of the items mentioned above the Company incurred
a net loss of $2,265,000 in 2002 compared to a net loss of $1,477,000 in
2001.

           Without the Helionetics settlement, legal fees, write off of goodwill
and the deferred tax valuation allowance, the Company would have had net income
for the year ended December 31, 2002 of $ 1,084,000 or $.20 per share, assuming
a 46% tax provision related to the increase in income.

           During the year ended December 31, 2002 the Company earned 41%, 15%
and 11% of its revenue from its three largest customers, as restated. The
Company bids on large multi-year contracts, which can account for more than 10%
of its contract revenue in any given year.


                                       10
<PAGE>
YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

Revenues
--------

           Revenues decreased by $1,235,000 or 2.4% to $51,012,000 for the year
ended December 31, 2001, compared to $52,247,000 for the year 2000. Revenues
during the first half of 2001 were substantially less than the second half due
to the delayed start of several new projects which did not generate substantial
revenues until the third quarter of 2001. Revenue in the second half of 2001
increased to $30,603,000, compared to $20,402,000 for the first half, a 50%
increase. At December 31, 2001 the Company had backlog of approximately
$51,000,000 (restated).

Costs of revenues
-----------------

           Costs of revenues increased by $904,000 or 1.9% from $48,249,000 for
the year ended December 31, 2000 compared to $49,153,000 for the year ended
December 31, 2001, even though revenue decreased, due to the higher labor costs
in the first half of 2001 which are described in the following paragraph.

Gross profit
------------

           For the year ended December 31, 2001, the Company had a gross profit
of $1,859,000 or 3.6% compared to $3,998,000 or 7.7% for the year 2000. In the
fourth quarter of 2001, the gross profit was $1,251,000 or 8.8% compared to a
gross loss of $19,000 or 0.1% for the same period in 2000. Starting with the
third quarter of 2000 and continuing through the first half of 2001 the Company
experienced an erosion of its gross profit percentage due to lower than
anticipated productivity and higher labor costs on several projects. While there
continued to be some erosion during the completion of the projects in the third
and fourth quarter of 2001, they were more than offset by higher gross margins
on newer projects.

Selling, general and administrative expenses
--------------------------------------------

           Selling, general and administrative expenses decreased by $207,000 or
4.4% from $ 4,706,000 for the year ended December 31, 2000 compared to
$4,499,000 for the year ended December 31, 2001. During the fourth quarter ended
December 31, 2001, selling, general and administrative expenses were $950,000
compared to $1,119,000 for the same period in 2000, a reduction of $169,000 or
15.1%. Included in the above expenses were legal fees of $401,000 in 2000
($119,000 in the fourth quarter) and $653,000 in 2001 ($280,000 in the fourth
quarter, of which $250,000 represents an accrual for anticipated future costs).
The reason for the reduction of selling, general and administrative costs in the
fourth quarter, in spite of the increased legal costs, was the commencement of
new trade management projects. On these projects, certain administrative costs
are job costed instead of being carried in selling, general and administrative
costs.



                                       11
<PAGE>
Other income (expenses)
-----------------------

           For the year ended December 31, 2001, the Company had total other
income (expenses),net of $(55,000) as compared to total other income
(expenses),net of $279,000. This difference is largely due to interest income
earned on certificates of deposits in 2000 which matured in 2001. In addition,
proceeds from those certificates were used for operations as well as the
purchase of managed stock funds. These stock funds generated a $100,000 realized
loss on the sale of marketable securities in 2001.

Provision (benefit) for income taxes
------------------------------------

           The income tax benefit for the year ended December 31, 2001 was
$1,218,000 or 45% of taxable loss compared to $163,000 or 38% of taxable loss
for the year ended December 31, 2000 The percentages were affected by certain
state and local taxes paid based on net worth.

Net loss
--------

           As a result of all of the items mentioned above the Company had a net
loss of $1,477,000 in 2001 compared to a net loss of $266,000 in 2000. During
the fourth quarter of 2001, the Company had a net profit of $163,000 compared to
a net loss of $650,000 in 2000.

           During the year ended December 31, 2001 the Company earned 23%, 16%
and 14% of its revenue from its three largest customers. The Company bids on
large multi-year contracts which can account for more than 10% of its contract
revenue in any given year.



LIQUIDITY AND CAPITAL RESOURCES

           The Company's principal capital requirements have been to fund
working capital needs. The Company has historically relied primarily on
internally generated funds and bank borrowings to finance its operations and
expansion. As of December 31, 2002, total cash was $2,516,000, a $1,801,000
increase over the $715,000 reported as of December 31, 2001.

Cash provided by (used in) operations
-------------------------------------

           Net cash provided by operating activities was $1,678,000 in 2002. Net
cash used in operations was $4,567,000 in 2001 and $497,000 in 2000. The
increase in 2002 was primarily due to the increase in operating income and the
Company's ability to collect its accounts receivable in a more timely manner.
During 2001 and the later half of 2000, the Company experienced an erosion of
gross profits on several projects due to lower productivity and higher labor
costs. These projects were completed during 2001. The Company believes it has
changed its bidding and estimating practices to minimize these problems in the
future. In addition, during 2001 and 2000, the Company incurred legal expenses
of $653,000 and $401,000, respectively, to defend itself in various legal
actions.


                                       12
<PAGE>
Cash provided by (used in) investing activities
-----------------------------------------------

           Net cash used in investing activities was $55,000 in 2002 and
$2,639,000 in 2000. In 2001, net cash provided by investing activities was
$1,625,000. During 2000, the Company started investing its excess cash in
certificates of deposits and managed stock funds, which resulted in net
purchases of marketable securities of $2,516,000. During 2001, the certificate
of deposits matured and the proceeds were used to fund the operating losses. The
Company continued its practice of investing its excess cash in managed stock
funds during 2002 and 2001.

Cash provided by (used in) financing activities
-----------------------------------------------

           Net cash provided by financing activities was $178,000 in 2002 and
$158,000 in 2001. These increases were primarily due to the Company utilizing
its line of credit. The Company currently has a $2,000,000 line of credit with
Merrill Lynch, which expires on December 31, 2003. The line of credit calls for
borrowing at 3% over the 30 day dealer commercial paper rate (4.29% at December
31, 2002). At December 31, 2002 and 2001, there were $387,000 and $190,000,
respectively, of outstanding borrowing against the facility. During 2000, cash
used in operating activities was $16,000, primarily due to the repayment of long
term liabilities.

           The Company's backlog at December 31, 2002 was $26,200,000 (restated)
as compared to approximately $51,000,000 (restated) at December 31, 2000. The
Company is actively seeking new contracts, but due to the September 11, 2001
attacks and the current economic conditions there are fewer contracts to bid.
The Company believes its current cash resources are adequate to fund a moderate
decrease in sales volume next year. However, the Company's capital resources may
not be sufficient to sustain a substantial revenue decrease.

           The Company's current bonding limits are also sufficient given the
volume and size of the Company's contracts. The Company's surety may require
that the Company maintain certain tangible net worth levels and may require
additional guarantees if the Company should desire increased bonding limits. At
December 31, 2002, approximately $10,250,000 of the Company's backlog of
$26,200,000 (restated) is bonded.

           The Company believes its current cash resources are adequate to fund
its working capital requirements in the next year. However, the Company's
capital resources may not be sufficient to sustain a substantial increase in
growth or substantial decline in revenue. The Company's management has had
experience in expanding into new geographic areas with the Company's
predecessors; however, to date the Company has conducted its operations
primarily in the New York City metropolitan area.

           The Company currently has no significant capital expenditure
commitments.


                                       13
<PAGE>
CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

The following table summarizes the Company material obligations and commitments
to make future payments under contracts:

<TABLE>
<CAPTION>
                                                                           PAYMENTS DUE BY PERIOD
                                                                           ----------------------

            CONTRACTUAL OBLIGATIONS                TOTAL                  LESS THAN 1 YEAR               1 - 3 YEARS
            -----------------------                -----                  ----------------               -----------
<S>                                       <C>                          <C>                           <C>
           Operating leases                   $ 271,000  (1)                $ 180,000                    $  91,000
           Line of Credit                       387,000  (2)                  387,000                         -
                                              ----------                    ----------                   ----------
           Total contractual cash
             obligations                      $ 658,000                     $ 567,000                    $  91,000
                                              ==========                    ==========                   ==========
</TABLE>

(1)  The Company is obligated to pay monthly rental payments of approximately
     $15,000 and has the option to extend this lease an additional five years
     from June 2004 to June 2009.

(2)  The Company has a $2,000,000 line of credit with Merrill Lynch which
     expires December 2003. The line of credit calls for borrowings at 3% over
     the 30 Day Dealer Commercial Paper Rate (4.29% at December 31, 2002).


FORWARD LOOKING STATEMENTS

Certain statements contained under "Item 1. Business" and this "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations," and other statements contained herein regarding matters that are
not historical facts, constitute "forward-looking statements" (as such term is
defined in the Private Securities Litigation Reform Act of 1995). These forward
looking statements generally can be identified as statements that include
phrases such as "believe", "expect", "anticipate", "intend", "plan", "foresee",
"likely", "will" or other similar words or phrases. Such forward-looking
statements concerning management's expectations, strategic objectives, business
prospects, anticipated economic performance and financial condition, and other
similar matters involve known and unknown risks, uncertainties and other
important factors that could cause the actual results, performance or
achievements of results to differ materially from any future results,
performance or achievements discussed or implied by such forward-looking
statements. This document describes factors that could cause actual results to
differ materially from expectation of the Company. All written and oral
forward-looking statements attributable to the Company or persons acting on
behalf of the Company are qualified in their entirety by such factors. Such
risks, uncertainties, and other important factors include, among others:


                                       14
<PAGE>
o    The Company has in the past experienced erosion in gross profit margins due
     to lower than anticipated labor productivity and higher labor costs due to
     shortages of skilled labor and unforeseen jobsite conditions. While the
     Company employs a comprehensive labor tracking system and has striven to
     maintain productivity levels, there is no assurance that these factors will
     not affect productivity in the future.

o    Recent federal government tariff increases on foreign steel imports are
     likely to raise the costs of piping, which is the primary material supplied
     by the Company on projects, and which may impact the Company's profit
     margins.

o    A prolonged economic downturn could result in a decrease in construction
     spending in the private and public sectors which could reduce the Company's
     revenues.

o    The Company relies on certain customers for a significant share of its
     revenues. The loss of any of these customers could have a material adverse
     effect on the Company's business and its operating results.

o    The Company faces intense competition due to the highly competitive nature
     of the mechanical contracting market that could limit its ability to
     increase its market share and its revenues.

o    The Company's continued ability to obtain bonding is critical to its
     ability to bid on most public work and on certain types of private
     projects. The inability to obtain bonding in the future could adversely
     impact the Company's revenues.

o    During the construction period, owners or general contractors may request
     that the Company perform certain work which is a change to or in addition
     to the original contract. Such work often requires months to obtain formal
     change orders (including dollar amounts). Change orders are often the
     subject of dispute and, sometimes litigation. Slow receipt on collections
     may also result from general contractor or owner financial difficulties.
     The failure of an owner or general contractor to issue change orders or
     make payments could delay receipt of revenue and require litigation to
     collect sums due the Company.

o    Although the Company's operations are not directly affected by inflation,
     both New York City and New York State have large debt service burdens.
     Inflationary pressures have tended to result in a reduction in capital
     spending by both state and local agencies; such capital expenditure
     reductions in turn could have a negative impact on the Company's revenues.

o    The attack of September 11, 2001 has reportedly had an adverse effect on
     public budgets and the availability of private funds for construction. If
     these effects continue, any reduction in construction spending could have a
     negative impact on the Company's revenues.


                                       15
<PAGE>
ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

           The Company does not utilize futures, options or other derivative
instruments. As of December 31, 2002, the Company has invested $ 473,000 in
managed stock funds selected by Merrill Lynch.

           The Company's market risk exposure with respect to financial
instruments depends upon changes in the "30-Day Dealer Commercial Paper Rate"
which at December 31, 2002 was 1.29%. The Company may borrow up to $2,000,000
under its credit facility. Amounts outstanding under the credit facility bear
interest at 3% over the 30-day dealer commercial paper rate (4.29% at December
31, 2002). The Company currently does not use interest rate derivative
instruments to manage exposure to interest rate changes. There was $387,000
outstanding debt under this facility at December 31, 2002.

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

           Information required by this item, including the consolidated
financial statements and related notes, is incorporated herein by reference from
Part IV of this Annual Report on Form 10-K.


                                     PART IV

           Items 14 and 15(A)1 and 2 of Form 10-K, are amended and restated in
its entirety, and Item 15 of Form 10-K is further supplemented for certain
additional exhibits required in connection with the filing of this amendment, as
follows.


ITEM 14.   CONTROLS AND PROCEDURES

           At the end of January 2004, the Company's management identified
material overstatements of reported revenues and costs of revenues with respect
to the year ended December 31, 2002, as well as in each of the quarterly periods
ended March 31, 2003, June 30, 2003 and September 30, 2003. As disclosed in
press release and a Form 8-K furnished to the SEC on February 2, 2004, these
overstatements resulted from an accounting error attributable to the Company's
failure to eliminate certain intra-company accounts. Reported gross profit,
operating income (loss), net income (loss), and earning (loss) per share for the
periods, however, were unaffected. Management has analyzed and, with the
oversight of its Audit Committee, has corrected its financial reporting system.
The Company's financial reporting system has been changed to better monitor and
track these eliminations, which were the cause of the overstatement. As a result
of the accounting error, the Company has restated its financial statements in
this amendment to its Annual Report on Form 10-K for the year ended December 31,
2002, and in its Annual Report on Form 10-K for the year ended December 31,
2003.


                                       16
<PAGE>
           The Company carried out an evaluation, under the supervision and with
the participation of management, including our Chief Executive Officer and Chief
Financial Officer, of the effectiveness of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act)
as of December 31, 2002. Based on that evaluation, our Chief Executive Officer
and Chief Financial Officer concluded that, except as described above, our
disclosure controls and procedures were effective as of December 31, 2002.

           There has been no change in the Company's internal control over
financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) during Company's fourth fiscal quarter ended December 31, 2002,
that has materially affected, or is reasonably likely to materially affect, the
Company's internal control over financial reporting. However, as noted above,
the Company has made changes to its financial reporting system in the first
quarter of 2004.



ITEM 15.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(A) Documents filed as part of this report:

           1. and 2. Financial statement and financial statement schedules.

           See Index to consolidated financial statements and financial
statement schedules on page F-1 of this form 10-K

           3. Exhibits

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

23.1           Consent of Marden, Harrison & Kreuter, CPAs P.C.

23.2           Consent of Rosen Seymour Shapss Martin & Company, LLP.

31.1           Certification by the Chief Executive Officer pursuant to Section
               302 of the Sarbanes-Oxley Act of 2002.

31.2           Certification by the Chief Financial Officer pursuant to Section
               302 of the Sabarnes-Oxley Act of 2002.

32.1           Certification by the Chief Executive Officer pursuant to 18
               U.S.C. Section 1350, as adopted by Section 906 of the
               Sarbanes-Oxley Act of 2002 (furnished herewith).

32.2           Certification by the Chief Financial Officer pursuant to 18
               U.S.C. Section 1350, as adopted by Section 906 of the
               Sarbanes-Oxley Act of 2002 (furnished herewith).


                                       17
<PAGE>
                                   SIGNATURES

           Pursuant to the requirements of Section 13 of 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Form 10-K/A to be
signed on its behalf by the undersigned, thereunto duly authorized.

                                      KSW, INC.

                                      By: /s/ Floyd Warkol
                                          --------------------------------------
                                          Floyd Warkol
                                          President, Chief Executive Officer,
                                          Secretary and Chairman of the Board of
                                          Directors
                                          March 29, 2004



                                       18
<PAGE>
                          INDEX TO FINANCIAL STATEMENTS

                                                                        PAGE
                                                                        ----

Independent auditors' reports                                          F-2-3

Consolidated financial statements:

Consolidated balance sheets                                            F-4-5

Consolidated statements of operations                                    F-6

Consolidated statements of comprehensive loss                            F-7

Consolidated statements of stockholders' equity                          F-8

Consolidated statements of cash flows                                 F-9-10

Notes to consolidated financial statements                           F-11-37




                                      F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------

To the Board of Directors and Stockholders
KSW, Inc. and Subsidiary
37-16 23rd Street
Long Island City, New York 11101

We have audited the accompanying consolidated balance sheet of KSW, Inc. and
subsidiary as of December 31, 2002, and the related consolidated statements of
operations, comprehensive loss, stockholders' equity and cash flows for the year
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 audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall consolidated financial statement presentation. We
believe that our audit provides 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 KSW,
Inc. and subsidiary as of December 31, 2002, and the results of its operations
and its cash flows for the year ended in conformity with accounting principles
generally accepted in the United States of America.

                                         Rosen Seymour Shapss Martin & Co., LLP
                                         Certified Public Accountants



New York, New York
February 19, 2003
except for Notes 14 and 15, which is as of March 19, 2004



                                      F-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------

To the Board of Directors and Stockholders
KSW, Inc. and Subsidiary
37-16 23rd Street
Long Island City, New York 11101

We have audited the accompanying consolidated balance sheet of KSW, Inc. and
subsidiary as of December 31, 2001, and the related consolidated statements of
operations, comprehensive loss, stockholders' equity and cash flows for the
years ended December 31, 2001 and 2000. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
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 consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall consolidated 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 KSW,
Inc. and subsidiary as of December 31, 2001, and the results of its operations
and its cash flows for the years ended December 31, 2001 and 2000 in conformity
with accounting principles generally accepted in the United States of America.

Marden, Harrison & Kreuter
Certified Public Accountants, P.C.



White Plains, New York
February 1, 2002



                                      F-3
<PAGE>
                            KSW, INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS

                           DECEMBER 31, 2002 AND 2001
                        (IN THOUSANDS, EXCEPT SHARE DATA)

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

<TABLE>
<CAPTION>
                                                                      2002                     2001
                                                                  -----------              -----------
         A S S E T S
         -----------
<S>                                                         <C>                       <C>
Current assets:
    Cash                                                          $     2,516              $       715
    Marketable securities                                                 473                      641
    Accounts receivable, net                                            6,774                   17,639
    Retainage receivable                                                2,746                    2,549
    Costs and estimated earnings in excess of billings
       on uncompleted contracts                                           569                       26
    Deferred income taxes                                                   -                    1,067
    Prepaid expenses and other receivables                                446                      725
                                                                  -----------              -----------

                     Total current assets                              13,524                   23,362


Property and equipment, net                                               232                      333
Accounts receivable                                                     1,937
Goodwill, net                                                               -                    3,514
Deferred income taxes and other                                         1,478                      411
                                                                  -----------              -----------

         Total assets                                             $    17,171              $    27,620
                                                                  ===========              ===========

</TABLE>
                                   (continued)



                                      F-4
<PAGE>
<TABLE>
<CAPTION>
                                                                                      2002                       2001
                                                                                      ----                       ----
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S>                                                                             <C>                        <C>
Current liabilities:
    Loan payable                                                                  $       387                $       190
    Accounts payable                                                                    7,075                     11,375
    Retainage payable                                                                   1,317                      1,774
    Accrued payroll and benefits                                                          247                        747
    Accrued expenses                                                                      171                        374
    Billings in excess of costs and estimated
      earnings on uncompleted contracts                                                   832                      3,689
                                                                                  ------------               ------------

                     Total current liabilities                                         10,029                     18,149

Long-term liabilities                                                                       -                         19
                                                                                  ------------               ------------

                     Total liabilities                                                 10,029                     18,168
                                                                                  ------------               ------------

Commitments and contingencies (Note 8)

Stockholders' equity:
    Preferred stock: 1,000,000 shares authorized,
         no shares issued and outstanding                                                   -                          -
    Common stock:  $.01 par value, 25,000,000 shares authorized, 5,470,311
        shares issued and outstanding                                                      54                         54
    Additional paid-in capital                                                          9,729                      9,729
    Accumulated deficit                                                                (2,593)                      (328)
    Accumulated other comprehensive loss:
        Net unrealized holding loss on available for sale securities                      (48)                        (3)
                                                                                  ------------               ------------

                     Total stockholders' equity                                         7,142                      9,452
                                                                                  ------------               ------------

                     Total liabilities and stockholders' equity                   $    17,171                $    27,620
                                                                                  ============               ============

</TABLE>

                 See notes to consolidated financial statements.


                                      F-5
<PAGE>
                            KSW, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

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

<TABLE>
<CAPTION>
                                                                                     2002
                                                                                   (RESTATED)             2001                2000
                                                                                   ----------           ----------        ----------
<S>                                                                            <C>                 <C>                  <C>
Revenues                                                                           $  46,448            $  51,012         $  52,247

Costs of revenues                                                                     40,808               49,153            48,249
                                                                                   ----------           ----------        ----------
  Gross profit                                                                         5,640                1,859             3,998

Selling, general and administrative expenses                                           4,196                4,499             4,706
                                                                                   ----------           ----------        ----------
  Operating income (loss)                                                              1,444               (2,640)             (708)
                                                                                   ----------           ----------        ----------
Other income (expense):

Interest income (expense), net                                                           (17)                  45               279

Loss on sale of marketable securities                                                    (90)                (100)                -
                                                                                   ----------           ----------        ----------

  Total other income (expense)                                                          (107)                 (55)              279
                                                                                   ----------           ----------        ----------

Income (loss) before provision (benefit)
 for income taxes                                                                      1,337               (2,695)             (429)

Provision (benefit) for income taxes                                                   1,714               (1,218)             (163)
                                                                                   ----------           ----------        ----------
   Loss before cumulative effect of change in
   accounting principle                                                                (377)              (1,477)             (266)

Cumulative effect of change in accounting for
 goodwill, net of income tax benefit of $ 1,626                                       (1,888)                   -                 -
                                                                                   ----------           ----------        ----------

   Net loss                                                                        $  (2,265)           $  (1,477)        $    (266)
                                                                                   ==========           ==========        ==========

Loss per common share basic and diluted before effect of change in
accounting principle                                                               $    (.06)           $    (.27)        $    (.05)

Cumulative effect of change in accounting principle                                     (.35)                   -                 -
                                                                                   ----------           ----------        ----------

Basic and diluted loss per common share                                            $    (.41)           $    (.27)        $    (.05)
                                                                                   ==========           ==========        ==========

Weighted average common shares outstanding -

Basic                                                                              5,470,311            5,470,311         5,468,991

Diluted                                                                            5,470,311            5,470,311         5,641,050

</TABLE>

                 See notes to consolidated financial statements.


                                      F-6
<PAGE>
                            KSW, INC. AND SUBSIDIARY

                  CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                                 (IN THOUSANDS)

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

<TABLE>
<CAPTION>
                                                                                   2002                 2001                2000
                                                                                -----------         -----------         -----------

<S>                                                                          <C>                <C>                  <C>
Net loss                                                                        $   (2,265)         $   (1,477)         $     (266)
                                                                                -----------         -----------         -----------

Other comprehensive income (loss) before tax
   Net unrealized holding gains
    (losses) arising during the year                                                  (176)               (128)                 25

   Less: reclassification adjustment for
     losses included in net loss                                                        90                 100                   -
                                                                                -----------         -----------         -----------

   Other comprehensive income (loss) before tax                                        (86)                (28)                 25

Income tax related to items of other comprehensive loss                                 41                   -                   -
                                                                                -----------         -----------         -----------


  Other comprehensive income (loss) net of tax                                         (45)                (28)                 25
                                                                                -----------         -----------         -----------

Total comprehensive loss                                                        $   (2,310)         $   (1,505)         $     (241)
                                                                                ===========         ===========         ===========

</TABLE>


                 See notes to consolidated financial statements


                                      F-7
<PAGE>
                            KSW, INC. AND SUBSIDIARY

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                        (IN THOUSANDS, EXCEPT SHARE DATA)

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

<TABLE>
<CAPTION>
                                                                          ADDITIONAL      RETAINED          OTHER
                                                  COMMON STOCK             PAID-IN        EARNINGS       COMPREHENSIVE
                                           SHARES            AMOUNT        CAPITAL       (DEFICIT)       INCOME (LOSS)       TOTAL
                                           ------            ------        -------       ---------       -------------       -----

<S>                                      <C>             <C>            <C>            <C>               <C>              <C>
Balances, December 31, 1999                  5,468,644      $     54    $   9,726       $   1,415                  -         11,195
Exercise of stock options                        1,667             -            3               -                  -              3
Net loss                                             -             -            -            (266)                 -           (266)
Net unrealized gain on available for
  sale securities                                    -             -            -               -                 25             25
                                            ----------     ----------   ----------      ----------         ----------     ----------

Balances, December 31, 2000                  5,470,311            54        9,729           1,149                 25         10,957
Net loss                                             -             -            -          (1,477)                 -         (1,477)
Net unrealized loss on available for
  sale securities
                                                     -             -            -               -                (28)           (28)
                                            ----------     ----------   ----------      ----------         ----------     ----------
Balances, December 31, 2001                  5,470,311            54        9,729            (328)                (3)         9,452
Net loss                                             -             -            -          (2,265)                 -         (2,265)
Net unrealized loss on available for
 sale securities                                     -             -            -               -                (45)           (45)
                                            ----------     ----------   ----------      ----------         ----------     ----------
Balances, December 31, 2002                  5,470,311     $      54    $   9,729       $  (2,593)           $   (48)     $   7,142
                                            ==========     ==========   ==========      ==========         ==========     ==========

</TABLE>


                 See notes to consolidated financial statements.



                                      F-8
<PAGE>
                            KSW, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                                 (IN THOUSANDS)

                           ---------------------------
<TABLE>
<CAPTION>
                                                                              2002          2001             2000
                                                                           ----------    ----------       ----------
<S>                                                                       <C>         <C>                <C>
Reconciliation of net loss to net cash provided by
  (used in) operating
    activities:

       Net loss                                                            $  (2,265)    $  (1,477)       $    (266)

    Adjustments to reconcile net loss to net cash
    provided by (used in) operating activities:

           Depreciation and amortization                                         131           304              323
           Deferred income taxes                                               1,667        (1,243)            (197)
           Write off of goodwill, net                                          1,888             -                -
           Realized loss on sale of marketable securities                         90           100                -
           Loss on sale of fixed assets                                           17             -                -

    Changes in assets (increase) decrease:
               Accounts receivable                                             8,928        (3,935)          (3,098)
               Retainage receivable                                             (197)          714              859
               Costs and estimated earnings in excess of billings on
                  uncompleted contracts                                         (543)          112              200
               Prepaid expenses and other receivables                            279           154             (661)

    Changes in liabilities increase (decrease):
               Accounts payable                                               (4,300)        2,552            2,553
               Retainage payable                                                (457)           (7)               7
               Accrued payroll and benefits                                     (500)         (401)             (17)
               Accrued expenses                                                 (203)         (306)             311
               Billings in excess of costs and estimated earnings on
                  uncompleted contracts                                       (2,857)       (1,134)            (511)
                                                                           ----------    ----------       ----------

                         Net cash provided by (used in) operating
                           activities                                          1,678        (4,567)            (497)
                                                                           ----------    ----------       ----------

Cash flows from investing activities:
    Net sale (purchase) of marketable securities                                  (8)        1,772           (2,516)
    Proceeds from sale of property                                                14             -                -
    Purchase of property and equipment                                           (61)         (147)            (123)
                                                                           ----------    ----------       ----------
                         Net cash provided by (used in) investing
                           activities                                            (55)        1,625           (2,639)
                                                                           ----------    ----------       ----------
</TABLE>
                                   (continued)


                                      F-9
<PAGE>
                            KSW, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (CONCLUDED)

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                                 (IN THOUSANDS)

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

<TABLE>
<CAPTION>

                                                                          2002              2001               2000
                                                                       ---------         ---------          ---------
<S>                                                                   <C>               <C>                 <C>
Cash flows from financing activities:
   Exercise of stock options                                                  -                 -                  3
   Long term liabilities                                                    (19)              (32)               (19)
   Increase in loans payable                                                197               190                  -
                                                                       ---------         ---------          ---------

       Net cash provided by (used in) financing activities                  178               158                (16)
                                                                       ---------         ---------          ---------

       Net increase (decrease) in cash and cash equivalents               1,801            (2,784)            (3,152)

Cash and cash equivalents, beginning of year                                715             3,499              6,651
                                                                       ---------         ---------          ---------

Cash and cash equivalents, end of year                                 $  2,516          $    715         $    3,499
                                                                       =========         =========          =========

Supplemental disclosure of cash flow information:
  Cash paid during the year for:

       Interest                                                        $     31          $     48         $       22

       Income taxes                                                    $     47          $     12         $      690

</TABLE>

                  See notes to consolidated financial statement


                                      F-10
<PAGE>
                            KSW, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                        (IN THOUSANDS, EXCEPT SHARE DATA)

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

      (1)   PRINCIPLES OF CONSOLIDATION AND NATURE OF OPERATIONS

            The consolidated financial statements for the years ended December
            31, 2002, 2001 and 2000, include the accounts of KSW, Inc. and its
            wholly-owned subsidiary, KSW Mechanical Services, Inc., collectively
            "the Company." All material intercompany accounts and transactions
            have been eliminated in consolidation.

            The Company furnishes and installs heating, ventilating and air
            conditioning systems and processes piping systems for institutional,
            industrial, commercial, high-rise residential and public works
            projects, primarily in the State of New York. The Company also
            serves as a mechanical trade manager, performing project management
            services relating to the mechanical trades and as a constructability
            consultant. The Company considers itself to be one operating
            segment.

      (2)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

            (A)   CASH AND CASH EQUIVALENTS

                  The Company considers all highly liquid instruments with
                  original maturities of three months or less to be cash
                  equivalents. At December 31, 2002 and 2001, there were no cash
                  equivalents.

            (B)   REVENUE AND COST RECOGNITION

                  Revenue is primarily recognized on the "percentage of
                  completion" method for long-term construction contracts not
                  yet completed, measured by the percentage of total costs
                  incurred-to-date to estimated total costs at completion for
                  each contract. This method is utilized because management
                  considers the cost-to-cost method the best method available to
                  measure progress on these contracts. Revenues and estimated
                  total costs at completion are adjusted monthly as additional
                  information becomes available and based upon the Company's
                  internal tracking systems. Because of the inherent
                  uncertainties in estimating revenue and costs, it is
                  reasonably possible that the estimates used will change within
                  the near term.

                  Contract costs include all direct material and labor costs and
                  those other indirect costs related to contract performance
                  including, but not limited to, indirect labor, subcontract
                  costs and supplies. General and administrative costs are
                  charged to expense as incurred.



                                      F-11
<PAGE>
                            KSW, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                        (IN THOUSANDS, EXCEPT SHARE DATA)

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

      (2)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONT'D

            (B)   REVENUE AND COST RECOGNITION - CONT'D

                  The Company has contracts that may extend over more than one
                  year, therefore, revisions in cost and profit estimates during
                  the course of the work are reflected in the accounting period
                  in which the facts, which require the revisions, become known.

                  Provisions for estimated losses on uncompleted contracts are
                  made in the period in which such losses are determined.

                  The Company does not record any income from claims until the
                  claims have been received or awarded. The gross profit
                  recognized in 2002, 2001 and 2000 applicable to the
                  finalization of contract balances of contracts completed in
                  prior periods were approximately $176, $65 and $264,
                  respectively.

                  Revenues recognized in excess of amounts billed are recorded
                  as a current asset under the caption "Costs and estimated
                  earnings in excess of billings on uncompleted contracts."
                  Billings in excess of revenues recognized are recorded as a
                  current liability under the caption "Billings in excess of
                  costs and estimated earnings on uncompleted contracts."

                  In accordance with construction industry practice, the Company
                  reports in current assets and liabilities those amounts
                  relating to construction contracts realizable and payable over
                  a period in excess of one year.

                  Fees for the management of certain contracts are recognized
                  when services are provided.

                  At December 31, 2002 and 2001, retainage receivable aggregated
                  $2,746 and $2,549, respectively, of which approximately $ 0
                  and $336, respectively, is not collectible within one year.

            (C)   MARKETABLE SECURITIES

                  Marketable securities, consisting of managed security
                  accounts, are classified as "available-for-sale" securities
                  and are stated at fair market value. Realized gains and
                  losses, determined using the specific identification method,
                  are included in earnings. Unrealized holding gains and losses
                  are reported as comprehensive income (loss) in a separate
                  component of stockholders' equity.


                                      F-12
<PAGE>
                            KSW, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                        (IN THOUSANDS, EXCEPT SHARE DATA)

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

(2)        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONT'D

            (D)   ALLOWANCE FOR DOUBTFUL ACCOUNTS

                  The Company establishes an allowance for uncollectible trade
                  accounts receivable and retainage receivable based on
                  historical collection experience and management's periodic
                  evaluation of the collectibility of outstanding accounts
                  receivable and retainage receivable on an account by account
                  basis. The allowance for doubtful accounts is $200 as of
                  December 31, 2002 and 2001.

            (E)   CREDIT RISK

                  Financial instruments, which potentially expose the Company to
                  concentrations of credit risk, consist primarily of cash and
                  cash equivalents and trade accounts and retainage receivables.

                  The Company maintains its cash and cash equivalents accounts
                  at balances, which exceed Federally insured limits for such
                  accounts. The Company limits its credit risk by selecting
                  financial institutions considered to be highly creditworthy.
                  At December 31, 2002 and 2001, amounts in excess of federally
                  insured limits totaled approximately $2,575 and $ 495,
                  respectively.

                  Trade accounts and retainage receivables are due from
                  government agencies, municipalities and private owners located
                  in the New York metropolitan area. The Company does not
                  require collateral in most cases, but may file claims or
                  statutory liens against the construction projects if a default
                  in payment occurs. Trade accounts and retainage receivables
                  from the Company's three largest customers totaled
                  approximately $6,987 and $9,728 at December 31, 2002 and 2001,
                  respectively.

            (F)   PROPERTY AND EQUIPMENT

                  Property and equipment is stated at cost. Depreciation is
                  computed over the estimated useful lives, generally five
                  years, of the assets using the straight-line method. Leasehold
                  improvements are amortized over the lesser of the estimated
                  useful lives of the assets to which they apply or the related
                  lease term. Repairs and maintenance are charged to operations
                  in the period incurred.


                                      F-13
<PAGE>
                            KSW, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                        (IN THOUSANDS, EXCEPT SHARE DATA)

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

     (2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONT'D

          (G)  GOODWILL:

               Prior to January 1, 2002, the Company amortized goodwill which
               represents the excess of costs over the fair value of net assets
               acquired, over a 30 year period.

               At December 31, 2001 the Company's goodwill, net of accumulated
               amortization of $1,476, totaled $3,514.

               Amortization expense for the years ended December 31, 2001 and
               2000 was approximately $153 per year.

               During 2001, the Financial Accounting Standards Board issued SFAS
               142, Goodwill and Other Intangible Assets. Under SFAS 142, the
               amortization of goodwill ceased as of January 1, 2002 and a test
               for impairment was established whereby the fair value of goodwill
               was compared to its carrying value. If the fair value of goodwill
               is determined to be less than its carrying value, the carrying
               amount of goodwill is reduced to its fair value as an impairment
               charge in the period. If the fair value of goodwill is greater
               than its carrying value, no adjustment to goodwill is made.

               Since the Company's goodwill was attributed to the entire Company
               (a single reporting unit) and the fair value of the Company as
               reflected in the market value of its stock was significant below
               its net worth including goodwill, the entire goodwill was
               written-off during the first quarter of 2002. The net worth as
               well as the market value of the Company has declined in recent
               years due to, among other things, legal and settlement costs of
               over $1,800 associated with the Helionetics Creditors committee
               action as well as the Stroock, Stroock & Lavan, LLP action (see
               note 8 (E)). In addition, the Company incurred unanticipated
               costs on the Co-op City project totaling $3,663, which the
               Company has a legal action to recover, (see note 8 (E)). The
               Company also experienced erosion of gross profits on several
               projects during the later half of 2000 and 2001 due to lower than
               anticipated productivity and higher labor costs. The Company
               believes it has corrected this productivity issue as well as
               revising its bidding methods.


                                      F-14
<PAGE>
                            KSW, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                        (IN THOUSANDS, EXCEPT SHARE DATA)

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


     (2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONT'D

          (G)  GOODWILL - CONT'D

               The following is a pro forma reconciliation of reported net
               income adjusted for adoption of SFAS-142 for the years ended
               December 31, 2002, 2001 and 2000:

<TABLE>
<CAPTION>
                                                                                 2002               2001                2000
                                                                                 ----               ----                ----

<S>                                                                  <C>                      <C>                <C>
                     Reported net loss                                       $   (2,265)         $   (1,477)        $     (266)
                     Goodwill amortization net of taxes                      $    1,888          $       82         $       82
                                                                             -----------         -----------        -----------

                     Pro forma net loss                                      $     (377)         $   (1,395)        $     (184)
                                                                             ===========         ===========        ===========

                                                                                 2002               2001                2000
                                                                                 ----               ----                ----
                     Basic and Diluted loss per share:
                     Reported net loss per share                             $     (.41)         $      (27)        $     (.05)
                     Goodwill amortization per share, net of taxes           $     (.35)         $      .02         $      .02
                                                                             -----------         -----------        -----------

                     Pro forma loss per share                                $     (.06)         $     (.25)        $     (.03)
                                                                             ===========         ===========        ===========

</TABLE>

          (H)  INCOME TAXES

               The Company uses the asset and liability method of accounting for
               income taxes recommended in SFAS No. 109, "Accounting for Income
               Taxes.". Deferred taxes are recognized for temporary differences
               between the bases of assets and liabilities for financial
               statement and income tax purposes. The temporary differences
               relate primarily to different accounting methods used for
               depreciation and amortization of property and equipment,
               goodwill, allowance for doubtful accounts and net operating loss
               carryforwards. A valuation allowance is recorded for deferred tax
               assets when, based on outside auditor recommendation, it is more
               likely than not that some or all of the deferred tax assets will
               not be realized through future operations.


                                      F-15
<PAGE>
                            KSW, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                        (IN THOUSANDS, EXCEPT SHARE DATA)

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

     (2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONT'D

          (I)  EARNINGS PER SHARE

               Basic earnings per share includes no dilution and is computed by
               dividing income available to common shareholders by the
               weighted average number of common shares outstanding for the
               period. Diluted earnings per share reflect, in periods in which
               they have a dilutive effect, the effect of common shares issuable
               upon exercise of stock options. The difference between reported
               basic and diluted weighted average common shares results from the
               assumption that all dilutive stock options outstanding were
               exercised. For the years presented, the effect of common stock
               equivalents has been excluded from the diluted calculation since
               the effect would be antidulitive.

          (J)  USE OF ESTIMATES

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

          (K)  STOCK OPTIONS

               The Company uses the intrinsic value method of accounting for
               employee stock options in accordance with APB No. 25 and as
               permitted by Statement of Financial Accounting Standards No. 123,
               "Accounting for Stock-Based Compensation." Accordingly,
               compensation cost for stock options is measured as the excess, if
               any, of the quoted market price of the Company's stock at the
               date of the grant over the amount the employee must pay to
               acquire the stock. The compensation cost is recognized over the
               vesting period of the options.


                                      F-16
<PAGE>
                            KSW, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                        (IN THOUSANDS, EXCEPT SHARE DATA)

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


     (2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONT'D

          (L)  LONG LIVED ASSETS

               The Company reviews certain long-lived assets and identifiable
               intangibles (including goodwill) for impairment whenever events
               or changes in circumstances indicate that the carrying amount may
               not be recoverable. In that regard, the Company assesses the
               recoverability of such assets based upon estimated non-discounted
               cash flow forecasts.

          (M)  IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

               The FASB issued Statement of Financial Accounting Standards No.
               143, Accounting for Obligations Associated with the Retirement of
               Long-lived Assets (SFAS 143) in August 2001. SFAS 143 establishes
               accounting standards for the recognition and measurement of an
               asset retirement obligation and its associated asset retirement
               cost. The Company expects that the provisions of SFAS 143 will
               not have a material impact on its consolidated results of
               operations and financial position upon adoption. The Company
               plans to adopt SFAS 143 effective January 1, 2003.

               The Company adopted Statement of Financial Accounting Standards
               No. 144, Accounting for the Impairment or Disposal of Long Lived
               Assets (SFAS 144), effective January 1, 2002, which did not have
               a material impact on the Company's consolidated results of
               operations and financial position. SFAS 144 establishes a single
               accounting model for the impairment or disposal of long-lived
               assets, including discontinued operations.


                                      F-17
<PAGE>
                            KSW, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                        (IN THOUSANDS, EXCEPT SHARE DATA)

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

     (2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONT'D

          (M)  IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS - CONT'D

               In June 2002, the FASB issued Statement of Financial Accounting
               Standards No. 146, Accounting for Costs Associated with Exit or
               Disposal Activities (SFAS 146). SFAS 146 requires that a
               liability for a cost associated with an exit or disposal activity
               be recognized when the liability is incurred. SFAS 146 requires
               that the initial measurement of a liability be at fair value. The
               Company plans to adopt SFAS 146 effective January 1, 2003 and
               does not expect that the adoption will have a material impact on
               its consolidated results of operations and financial position.

               In December 2002, the FASB issued Statement of Financial
               Accounting Standards No. 148 (SFAS 148), Accounting for Stock
               Based Compensation - Transition and Disclosure. SFAS 148 amends
               SFAS 123, Accounting for Stock Based Compensation, to provide
               alternative methods of transition for an entity that voluntarily
               changes to the fair value based method of accounting for stock
               based employee compensation. The adoption of his pronouncement
               did not have a material effect on the financial statements as the
               Company continues to apply the intrinsic value method in
               accordance with APB No. 25.

          (N)  RECLASSIFICATIONS

               Certain amounts in the 2001 and 2000 consolidated financial
               statements have been reclassified for comparative purposes to
               conform with the 2002 presentation. These reclassifications did
               not affect net income or working capital as previously reported.


                                      F-18
<PAGE>
                            KSW, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                        (IN THOUSANDS, EXCEPT SHARE DATA)

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

     (3)  MARKETABLE SECURITIES

          The cost and fair value of the marketable securities, classified as
          available-for-sale securities at December 31, 2002 and 2001, was as
          follows:

<TABLE>
<CAPTION>
                                                                   Gross               Gross
                                                                Unrealized           Unrealized            Fair
                                                  Cost         Holding Gains       Holding Losses          Value
                                                  ----         -------------       --------------          -----
<S>                                            <C>           <C>                 <C>                   <C>
        December 31, 2002:
        Managed stock funds                      $   561          $    19             $  (107)            $   473
                                                 ========         ========            ========            ========

        December 31, 2001:
        Managed stock funds                      $   644          $     -              $   (3)            $   641
                                                 ========         ========            ========            ========

</TABLE>

          At December 31, 2002 and 2001, gross unrealized holding losses on
          available for sale securities were $107 and $3, respectively. At
          December 31, 2002 and 2001, gross unrealized holding gains on the sale
          of available for sale securities were $19 and $0, respectively. The
          change in net unrealized holding gains (losses) is $(45) and $(28) for
          the years ended December 31, 2002 and 2001, respectively. During the
          years ended December 31, 2002 and 2001 available for sale securities
          were sold for total proceeds of approximately $ 404, and $ 2,571,
          respectively . The gross realized losses on these sales totaled
          approximately $ 90 and $ 100, for the years ended December 31, 2002
          and 2001, respectively.

     (4)  CONSTRUCTION CONTRACTS

          Information with respect to contracts in progress at December 31, 2002
          and 2001 is as follows:


                                      F-19
<PAGE>
                            KSW, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                        (IN THOUSANDS, EXCEPT SHARE DATA)

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

     (4)  CONSTRUCTION CONTRACTS - CONT'D

<TABLE>
<CAPTION>
                                                                                              2002
                                                                                           (RESTATED)                  2001
                                                                                           ----------                  ----
<S>                                                                                <C>                        <C>
            Costs on uncompleted contracts                                                $   36,124               $   28,408

            Estimated earnings thereon                                                         3,458                    4,144
                                                                                          -----------              -----------
                                                                                              39,582                   32,552

            Less billings applicable thereto                                                  39,845                   36,215
                                                                                          -----------              -----------
                                                                                          $     (263)              $   (3,663)
                                                                                          ===========              ===========

          Included in the accompanying consolidated balance sheets under the
          following captions:

                                                                                             2002                      2001
                                                                                             ---                       ----
            Costs and estimated earnings in excess of billings
            on uncompleted contracts                                                      $      569               $       26

            Billings in excess of costs and estimated earnings
            on uncompleted contracts                                                            (832)                  (3,689)
                                                                                          -----------              -----------
                                                                                          $     (263)              $   (3,663)
                                                                                          ===========              ===========

     (5)  PROPERTY AND EQUIPMENT

          Property and equipment at December 31, 2002 and 2001 consists of the
          following:
                                                                                              2002                       2001
                                                                                              ----                       ----

                Machinery and equipment                                                   $      497               $      624
                Furniture and fixtures                                                           712                      676
                Leasehold improvements                                                           828                      828
                                                                                          -----------              -----------
                                                                                               2,037                    2,128

                Less accumulated depreciation and amortization                                 1,805                    1,795
                                                                                          -----------              -----------
                                                                                          $      232               $      333
                                                                                          ===========              ===========

</TABLE>
          Depreciation and amortization expense relating to property and
          equipment was approximately $131, $151 and $170 for the years ended
          December 31, 2002, 2001 and 2000, respectively.


                                      F-20
<PAGE>
                            KSW, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                        (IN THOUSANDS, EXCEPT SHARE DATA)

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

     (6)  INCOME TAXES

          For the years ended December 31, 2002, 2001 and 2000, components of
          provision (benefit) to income taxes are as follows:

<TABLE>
<CAPTION>
                                                               2002                   2001                  2000
                                                               ----                   ----                  ----
<S>                                                   <C>                     <C>                    <C>
            Current
                 Federal                                  $         -            $         -           $       (16)
                 State and local                                   47                     54                    50
                                                          ------------           ------------          ------------

                                                                   47                     54                    34
                                                          ------------           ------------          ------------
            Deferred
                 Federal                                          997                   (760)                 (122)
                 State and local                                  670                   (512)                  (75)
                                                          ------------           ------------          ------------
                                                                1,667                 (1,272)                 (197)
                                                          ------------           ------------          ------------
                                 Total                    $     1,714            $    (1,218)          $      (163)
                                                          ============           ============          ============

</TABLE>

          At December 31, 2002, at the recommendation of its outside auditors,
          the Company provided a valuation allowance against its net deferred
          tax assets of $1,045 based upon an uncertainty regarding the ultimate
          utilization of these deferred tax assets in their entirety. The
          majority of the 2002 increase in the deferred tax asset before the
          valuation allowance, is attributable to the write-off of goodwill as a
          result of implementation of SFAS-142.

          A reconciliation of the provision (benefit) for income taxes with
          amounts determined by applying the statutory U.S. Federal income tax
          rate to income before taxes is as follows:

<TABLE>
<C>                                                                        <C>                 <C>          <C>
                                                                                     2002           2001        2000
                                                                                     ----           ----        ----
            Computed tax at the federal statutory rate of 34%                    $   455       $   (916)       $ (146)
            State taxes, net of Federal benefit                                      162           (326)          (52)
            Valuation allowance                                                    1,045              -             -
            Other items, net                                                          52             24            35
                                                                                ---------      ---------      ---------
            Provision (benefit) for income taxes                                $  1,714       $ (1,218)       $ (163)
                                                                                =========      =========      ========

</TABLE>

                                      F-21
<PAGE>
                            KSW, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                        (IN THOUSANDS, EXCEPT SHARE DATA)

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

     (6)  INCOME TAXES - CONT'D

          The details of deferred tax assets and liabilities at December 31,
          2002 and 2001 are as follows:

<TABLE>
<CAPTION>
                                                                                        2002                 2001
                                                                                        ----                 ----
<S>                                                                              <C>                  <C>
            Deferred income tax assets:

                   Net operating loss carryforwards                                  $     979          $    1,585
                   Amortization of goodwill                                              1,058                   -
                   Property and equipment                                                  267                 278
                   Allowance for doubtful accounts                                          92                  92
                   Unrealized losses on marketable securities                               41                   -
                   Other tax carryforwards                                                  77                   -
                                                                                     ----------         -----------
            Total deferred income tax assets                                             2,514               1,955
                                                                                     ----------         -----------

            Deferred income tax liabilities:
                   Amortization of goodwill                                                  -                (486)
                                                                                     ----------         -----------
                                                                                             -                (486)
                                                                                     ----------         -----------

                   Net deferred income tax assets before valuation allowance             2,514               1,469
                   Valuation allowance                                                  (1,045)                  -
                                                                                     ----------         -----------
                   Deferred income tax assets, net                                   $   1,469          $    1,469
                                                                                     ==========         ===========

</TABLE>

          At December 31, 2002, the Company has net operating loss carry
          forwards remaining of approximately $2,128 expiring through December
          31, 2021. At December 31, 2001, $1,067 of the net current portion of
          deferred income tax assets is recorded as a current asset, and $402
          net long-term deferred income tax asset is included in long-term
          assets in the accompanying balance sheets. At December 31, 2002, the
          $1,469 balance is included in long-term assets in the accompanying
          balance sheets.

                                      F-22
<PAGE>
                            KSW, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                        (IN THOUSANDS, EXCEPT SHARE DATA)

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

     (7)  ACCUMULATED OTHER COMPREHENSIVE INCOME

          At December 31, 2002 and 2001, accumulated other comprehensive income
          (loss), which consists of net unrealized holding gains (losses) on
          available for sale securities, is as follows:

                                                           2002           2001
                                                           ----           ----
                     Beginning balance                    $  (3)          $ 25
                     Current period change                  (45)           (28)
                                                          ------          -----
                     Ending balance                       $ (48)          $ (3)
                                                          ======          =====

     (8)  COMMITMENTS AND CONTINGENCIES

          (A)  PERFORMANCE BONDS

               The Company is contingently liable to a surety under a general
               indemnity agreement. The Company agrees to indemnify the surety
               for any payments made on contracts of suretyship, guaranty or
               indemnity as a result of the Company not having the financial
               capacity to complete projects. Management believes the likelihood
               of the surety having to complete projects is remote. The
               contingent liability is the cost of completing all bonded
               projects, subject to bidding by third parties which is an
               undeterminable amount. Management believes that all contingent
               liabilities will be satisfied by performance on the specific
               bonded contracts involved.

          (B)  OPERATING LEASES

               The Company is obligated under non-cancelable operating leases,
               for office space with future rental payments at December 31, 2002
               as follows:

                           YEAR ENDING
                           DECEMBER 31
                           -----------

                              2003            $    180
                              2004                  91
                                              --------
                                              $    271
                                              ========


                                      F-23
<PAGE>
                            KSW, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                        (IN THOUSANDS, EXCEPT SHARE DATA)

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


     (8)  COMMITMENTS AND CONTINGENCIES - CONT'D

          (B)  OPERATING LEASES -CONT'D

               Under the terms of the lease agreement, the Company is obligated
               to pay monthly rental amounts of approximately $15 and has the
               option to extend the lease an additional five years from June
               2004 through June 2009.

               The Company had an operating lease with related entities
               controlled by its chief executive officer for rental of office,
               shop and warehouse space which expired on December 31, 2002. The
               Company will rent this space on a month-to-month basis at
               approximately $8.5 per month through March 2003. The Company is
               pursuing alternate warehouse space.

               Rent expense for the years ended December 31, 2002, 2001 and 2000
               amounted to approximately $ 279, $ 276 and $272 respectively,
               including $103 to related entities controlled by the chief
               executive officer in each year.

          (C)  EMPLOYMENT AGREEMENTS

               KSW Mechanical Services, Inc., the Company's wholly-owned
               subsidiary, entered into employment agreements with two of its
               officers for the period January 1999 through December 2000. These
               agreements provided for aggregate base annual compensation of
               $660 each year plus 15% of income before taxes in excess of $250.
               The officers were also entitled to medical insurance, disability
               insurance and life insurance. The Company has not entered into
               new employment agreements with these individuals. The original
               agreement provided for a non-compete provision which expired
               December 2002. Since January 1, 2001, they continued in the same
               capacities and continued to receive the same base financial
               remuneration as under the prior employment agreements. During
               2002 and 2001, officers' combined compensation was a base salary
               of $660. No bonuses were paid in 2002, 2001 and 2000 to these two
               officers. During 2002, these two officers have elected to reduce
               their salaries in the amount of $50 to reimburse the Company in
               the settlement of the Helionetics Credits Committee action (see
               note 8(e)). These officers are entitled to reimbursement of this
               salary reduction from 10% of any proceeds up to $500 from the
               Stroock, Stroock & Lavan, LLP litigation.


                                      F-24
<PAGE>
                            KSW, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                        (IN THOUSANDS, EXCEPT SHARE DATA)

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


     (8)  COMMITMENTS AND CONTINGENCIES -CONT'D

          (D)  ENVIRONMENTAL REGULATION

               The Company must comply with certain Federal, state and local
               regulations involving contract compliance as well as the disposal
               of certain toxins. In management's opinion, there are no
               environmental contingencies or violations of environmental laws
               or regulations, which would have a material adverse impact on the
               results of operations or on the Company's financial condition.

          (E)  LEGAL

               Except as listed below, the Company is not aware of any pending
               or threatened legal proceedings which could have a material
               adverse effect on its financial position or results of
               operations. The following are the material lawsuits in which the
               Company is a party:

          a.   Co-op City. In February 1999, the Company sued the general
               contractor and its bonding company in New York State Supreme
               Court, Queens County to recover its contract balance and unpaid
               proposals in the sum of $5,771. Included in that sum is a claim
               for unanticipated costs incurred through 1998 in the sum of
               $3,663, which amount has not been reflected as a claim receivable
               in the Company's financial statements because it is the policy of
               the Company not to record any income from claims until the claims
               have been received or awarded. The defendant has asserted
               counterclaims totaling $6,269, which the Company believes lack
               merit. While the Company and its counsel believe its lawsuit has
               merit, there is no guaranty of a favorable outcome. This case was
               tried for 14 days and adjourned by the Court to May 2003 for
               further trial proceedings. The financial statements at December
               31, 2002 and 2001, contain approximately $1,937 which consists of
               accounts receivable applicable to the base contract of
               approximately $437 and unpaid retainage billings of approximately
               $1,500.

          b.   Stroock & Stroock & Lavan, LLP. On February 13, 2001, the Company
               commenced an action in the Superior Court of the State of
               California, County of Los Angeles against its former counsel,
               Stroock & Stroock & Lavan, LLP ("Stroock") for malpractice in
               connection with Stroock's representation of the Company in
               connection with the transactions which form the basis for the
               matter involving Helionetics Creditors Committee, which was
               settled in May 2002. That action had claimed that Helionetics'
               distribution of the Company's stock to Helionetics' shareholders
               was a fraudulent conveyance. The Company's complaint also alleges
               malpractice in connection with Stroock's representation of the


                                      F-25
<PAGE>
                            KSW, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                        (IN THOUSANDS, EXCEPT SHARE DATA)

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


     (8)  COMMITMENTS AND CONTINGENCIES - CONT'D

          (E)  LEGAL - CONT'D

          b.   Stroock & Stroock & Lavan, LLP. - cont'd:

               Company and three of its directors and officers in the
               Helionetics Creditors Committee Action. The Company's action
               seeks to recoup its legal fees paid for the distribution, the
               fees spent in defense of the Helionetics Creditors Committee
               Action, and the $450 payment made by the Company and its
               directors to settle that action (a total of approximately
               $1,800), plus punitive damages. Subsequent to the filing of this
               malpractice action in California, Stroock sued the Company and
               three of its directors in New York State Supreme Court seeking
               "not less than $300" for legal fees allegedly earned in
               connection with Stroock's representation of the Company in the
               Helionetics Creditors Committee Action. The Company moved to
               dismiss this case on the grounds that California is the proper
               venue for the parties' disputes and that any claims for legal
               fees relate to the Company's malpractice action in California. On
               October 24, 2001, the New York Court granted the Company's motion
               to the extent of staying the New York action pending the
               determination of the California Action, on condition that the
               Company does not object to Stroock's assertion of a counterclaim
               for legal fees in the California malpractice action. Discovery is
               complete in this California action. Trial is scheduled for April
               1, 2003.

          c.   Other Proposals and Claims. During the ordinary and routine
               course of its work on construction projects, the Company may
               incur expenses for work outside the scope of its contractual
               obligations, for which the owner or general contractor agrees
               that the Company will be entitled to additional compensation, but
               where there is not yet an agreement on price. The Company's
               financial statements include the amounts the Company believes it
               will ultimately receive on these authorized proposals. Also
               during the course of its work on construction projects, the
               Company may incur expenses for work outside the scope of its
               contractual obligations, for which no acknowledgment of liability
               exists from the owner or general contractor for such additional
               work. These claims may include change proposals for extra work or
               requests for an equitable adjustment to the Company's contract
               price due to unforeseen disruptions to its work. In accordance
               with accounting principles generally accepted in the United
               States of America for the construction industry, until written
               acknowledgment of the validity of the claims are received, claim
               recoveries are not recognized in the accompanying financial
               statements.


                                      F-26
<PAGE>
                            KSW, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                        (IN THOUSANDS, EXCEPT SHARE DATA)

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


     (8)  COMMITMENTS AND CONTINGENCIES - CONT'D

          (E)  LEGAL - CONT'D

          c.   Other Proposals and Claims - cont'd

               No accruals have been made in the accompanying consolidated
               financial statements related to these proposals for which no
               acknowledgment of liability exists. While the Company has been
               generally successful in obtaining a favorable resolution of such
               claims, there is no assurance that the Company will be successful
               in the future.

          d.   World Trade Center (WTC) Business Recovery Grant Program

               The WTC Business Recovery Grant Program (the "Program") was
               established by the New York State Urban Development Corporation
               (d/b/a the Empire State Development Corporation) to provide
               assistance to certain businesses that have been adversely
               impacted as a result of the events of September 11, 2001. The
               Program was amended during August 2002 to include businesses
               working in the area designated as the Restricted Zone as of
               September 11, 2001 under a contractual agreement if they meet
               certain qualifying criteria of the Program. The Company received
               $338 from the Program for economic losses on two projects which
               reduced 2002 costs of revenues by approximately $176 and selling,
               general and administrative costs by approximately $162.





                                      F-27
<PAGE>
                            KSW, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                        (IN THOUSANDS, EXCEPT SHARE DATA)

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

     (9)  CONCENTRATION RISKS

          (A)  LABOR CONCENTRATIONS

               The Company's direct labor is supplied primarily by one union
               through a collective bargaining agreement which expires in June
               2005. Although the Company's past experience was favorable with
               respect to resolving conflicting demands with unions, it is
               always possible that a protracted conflict may occur which will
               impact the renewal of the collective bargaining agreements.

          (B)  CONTRACT REVENUE/SIGNIFICANT CUSTOMERS

               Revenues from the Company's three largest customers were
               approximately 41%, 15% and 11% (restated) of its contract revenue
               in 2002, 23%, 16% and 14% in 2001, and 20%, 19% and 15% in 2000.

     (10) RETIREMENT PLANS

          (A)  PROFIT-SHARING/401(K) PLAN

               The Company sponsors a profit-sharing/401(k) plan covering
               employees not covered under collective bargaining agreements who
               meet the age and length of service requirements of the plan. The
               Company may make discretionary contributions to the plan. The
               total of employee contributions may not exceed Federal government
               limits. The Company expensed approximately $62, $63 and $62 as a
               25% matching contribution for the years ended December 31, 2002,
               2001 and 2000, respectively.



                                      F-28
<PAGE>
                            KSW, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                        (IN THOUSANDS, EXCEPT SHARE DATA)

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

     (10) RETIREMENT PLANS - CONT'D

          (B)  MULTIEMPLOYER PENSION PLANS

               Employees of the Company who are members of a collective
               bargaining (union) agreement are covered by union pension plans.
               The Company makes contributions to multiemployer pension plans
               that cover its various union employees. These plans provide
               benefits based on union members' earnings and periods of coverage
               under the respective plans. The Company has expensed
               approximately $1,189, $2,226 and $2,014 for the years ended
               December 31, 2002, 2001 and 2000, respectively, related to
               multi-employer pension plans for its union employees.

     (11) LINE OF CREDIT - BANK

          The Company has a $2,000 line of credit with Merrill Lynch, which
          expires December 2003. This line is collateralized by all corporate
          assets. The line of credit calls for borrowings at 3% over the 30 day
          dealer commercial paper rate ( 4.29% at December 31, 2002). The line
          of credit agreement also requires the Company to maintain certain
          financial statement covenants.

     (12) STOCKHOLDERS' EQUITY

          (A)  STOCK OPTION PLAN

               The Board of Directors of the Company adopted the 1995 Stock
               Option Plan (the Plan). The Plan enabled the Company to make
               incentive-based compensation awards to its employees, officers,
               directors and consultants. A total of 750,000 shares were
               authorized for issuance under the Plan. Options to purchase
               620,000 shares of common stock at $1.50 per share were issued
               during December 1995 (of which, 535,000 shares were issued to
               officers and directors of the Company and its subsidiary). The
               Plan requires that the exercise price of options be set at not
               less than the fair market value of the common stock on the date
               of grant pursuant to the requirements of APB Opinion No. 25.


                                      F-29
<PAGE>
                            KSW, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                        (IN THOUSANDS, EXCEPT SHARE DATA)

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

     (12) STOCKHOLDERS' EQUITY CONT'D.

          (A)  STOCK OPTION PLAN - CONT'D

               In the case of the initial options, the price of $1.50 was
               determined to be in excess of the fair market value in light of
               the contingencies facing the Company prior to completion of this
               Distribution. Options awarded vest one-third on each anniversary
               of the date of grant and are fully vested three years after grant
               and expire ten years from the date of the grant. Additional
               credit towards vesting is given in the event of death (six
               months) or disability (three months). Any shares which are
               subject to an award but are not used because the terms and
               conditions of the award are not met, or any shares which are used
               by participants to pay all or part of the purchase price of any
               option may again be used for awards under the Plan. The Plan
               provides that no shares may be issued to officers or directors in
               excess of the 750,000 shares originally planned to be authorized
               unless the Company's stockholders approve an increase in the
               number of shares which may be used for that purpose. At the
               Company's annual meeting held on June 27, 1996, the stockholders
               approved an amendment to the plan to increase by 350,000 shares
               the total number of shares of common stock available for future
               options from 130,000 to 480,000 shares.

               Holders of shares issued pursuant to the Plan are entitled to
               registration of such shares annually, subject to restrictions in
               any underwriting agreement. In 1999, the Company issued a total
               of 55,000 stock options to three key employees and to a Director,
               Stanley Kreitman. At December 31, 1999, there were 641,667
               granted options outstanding. No options were exercised under the
               plan in 2002 and 2001. In 2000 1,667 options were exercised.
               During 2001, 18,333 options under the plan were canceled. There
               were no option cancellations in 2002 and 2000. During 2002, 2001
               and 2000, no new options were granted. At December 31, 2002,
               there were 621,667 exercisable options outstanding, all of which
               have an exercise price of $1.50 per share.


                                      F-30
<PAGE>
                            KSW, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                        (IN THOUSANDS, EXCEPT SHARE DATA)

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



     (12) STOCKHOLDERS' EQUITY CONT'D.

          (A)  STOCK OPTION PLAN - CONT'D

               Changes that occurred in options outstanding during 2002, 2001
               and 2000 are summarized below:

<TABLE>
<CAPTION>
                                                                 2002                    2001                       2000
                                                                 Fixed                   Fixed                      Fixed
                                                      Option    Exercise    Option      Exercise     Option        Exercise
                                                      Shares     Price      Shares       Price       Shares         Price
                                                      -----------------------------------------------------------------------

<S>                                                 <C>         <C>         <C>        <C>          <C>          <C>
Outstanding at beginning of year                      621,667    $ 1.50      640,000    $ 1.50         641,667      $ 1.50

Granted                                                   -                      -                         -

Exercised                                                 -                      -                      (1,667)     $ 1.50

Expired/ Canceled                                         -                   (18,333)                     -

                                                      --------               ---------                ---------
Outstanding at end of year                            621,667    $ 1.50       621,667    $ 1.50        640,000      $ 1.50
                                                      ========               =========                =========

Exercisable at end of year                            621,667    $ 1.50       621,667    $ 1.50        621,667      $ 1.50

</TABLE>

               The following table summarizes information about stock options
               outstanding at December 31, 2002:

                                                       Remaining
                Exercise Price         Shares        Contractual Life
                --------------         ------        ----------------

                     $1.50             621,667         3.2 years


                                      F-31
<PAGE>
                            KSW, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                        (IN THOUSANDS, EXCEPT SHARE DATA)

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

     (12) STOCKHOLDERS' EQUITY CONT'D.

          (A)  STOCK OPTION PLAN - CONT'D

               The Company follows APB Opinion No. 25 in accounting for its
               employee stock options. Under the standard, no compensation
               expense is recognized because the exercise price of the shares
               equal the market price at the date of grant. The Company is
               required under Statement of Financial Accounting Standards No.
               123, "Accounting for Stock-Based Compensation" to disclose pro
               forma information regarding options grants made to employees
               based on specified valuation techniques that produce estimated
               compensation charges for disclosure purposes only. Had
               compensation cost for the Company's stock option plan been
               determined based on the fair value at the grant date consistent
               with the provisions of SFAS No. 123, the Company's pro forma net
               loss before cumulative effect of changes in accounting principle
               would have been as follows:

<TABLE>
<CAPTION>
                                                                                  2002            2001          2000
                                                                                  ----            ----          ----
<S>                                                                           <C>             <C>             <C>
            Net loss before the effect of change in accounting
              principle - as reported                                          $     (377)     $   (1,477)    $     (266)
            Stock option compensation, net of tax                                       -              (9)            (9)
                                                                               -----------     -----------    -----------
            Net loss before the effects of change in accounting
              principle - pro forma                                            $     (377)     $   (1,486)    $     (275)
                                                                               ===========     ===========    ===========


            Net loss - as reported                                             $   (2,265)     $   (1,477)    $     (266)
            Stock option compensation, net of tax                                       -              (9)            (9)
                                                                               -----------     -----------    -----------
            Net loss - pro forma                                               $   (2,265)     $   (1,486)    $     (275)
                                                                               ===========     ===========    ===========


            Per share (basic):
            Before cumulative effect of change in accounting
              principle - as reported                                          $     (.06)     $     (.27)     $     (05)
            Stock option compensation, net of tax                                       -               -              -
                                                                               -----------     -----------    -----------
            Before cumulative effect of change in accounting
              principle - pro forma                                            $     (.06)     $     (.27)     $    (.05)
                                                                               ===========     ===========    ===========

</TABLE>


                                      F-32
<PAGE>
                            KSW, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                        (IN THOUSANDS, EXCEPT SHARE DATA)

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

     (12) STOCKHOLDERS' EQUITY CONT'D

          (A)  STOCK OPTION PLAN - CONT'D

<TABLE>
<CAPTION>
                                                                               2002            2001           2000
                                                                               ----            ----           ----
<S>                                                                      <C>                <C>          <C>
            Per share (diluted):
            Before cumulative effect of change in accounting
              principle - as reported                                      $    (.06)       $    (.27)     $     (05)
            Stock option compensation, net of tax                                  -                -              -
                                                                           ----------       ----------     ----------

            Before cumulative effect of change in accounting
              principle - pro forma                                        $    (.06)       $    (.27)     $    (.05)
                                                                           ==========       ==========     ==========



            Net loss per share - as reported                               $    (.41)       $    (.27)     $    (.05)
                                                                           ==========       ==========     ==========

            Net loss per share - pro forma                                 $    (.41)       $    (.27)     $    (.05)
                                                                           ==========       ==========     ==========

</TABLE>

               The fair value of each option grant is estimated on the date of
               grant using the Black-Scholes option-pricing model with the
               following weighted-average assumptions used for grants in 1999:
               dividend yield of 0%; expected volatility of 54.67%; risk-free
               interest rate of 7.00%; and expected lives of six years.

          (B)  PREFERRED STOCK

               The Company is authorized to issue 1,000,000 shares of preferred
               stock. Through December 31, 2002, no shares of preferred stock
               have been issued by the Company.

     (13) BACKLOG [UNAUDITED]

          At December 31, 2002, the Company had a backlog of approximately
          $26,200 (restated). Backlog represents the amount of revenue the
          Company expects to realize from work to be performed on uncompleted
          contracts in progress at year end and from contractual agreements on
          work which has not commenced.


                                      F-33
<PAGE>

                            KSW, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                        (IN THOUSANDS, EXCEPT SHARE DATA)

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

     (14) RESTATEMENT

          The Company's management identified and determined that reported
          revenues and costs of revenues during the year ended December 31, 2002
          were materially overstated as a result of an accounting error
          attributable to the failure to eliminate intra-company accounts.
          Management has analyzed and corrected the Company's internal financial
          reporting system. The following is a summary by quarter of this
          restatement:

<TABLE>
<CAPTION>
                                                                                  AS PREVIOUSLY             AS
            QUARTERLY DATA                                                          REPORTED             RESTATED
            --------------                                                        ------------          -----------
<S>                                                                           <C>                    <C>
            Three months ended March 31, 2002 (unaudited)
            Revenue                                                            $      13,138          $      12,798
            Cost of Revenues                                                          11,617                 11,277
                                                                               --------------         --------------
            Gross Profit                                                       $       1,521          $       1,521
                                                                               ==============         ==============
            Gross Profit %                                                             11.6%                  11.9%
                                                                               ==============         ==============

            Three months ended June 30, 2002 (unaudited)
            Revenue                                                            $      14,756          $      14,066
            Cost of Revenues                                                          13,408                 12,718
                                                                               --------------         --------------
            Gross Profit                                                       $       1,348          $       1,348
                                                                               ==============         ==============
            Gross Profit %                                                              9.1%                   9.6%
                                                                               ==============         ==============

            Three months ended September 30, 2002 (unaudited)
            Revenue                                                            $      10,600           $      9,348
            Cost of Revenues                                                           9,348                  8,096
                                                                               --------------         --------------
            Gross Profit                                                       $       1,252           $      1,252
                                                                               ==============         ==============
            Gross Profit %                                                             11.8%                  13.4%
                                                                               ==============         ==============

            Three months ended December 31, 2002 (unaudited)
            Revenue                                                            $      11,819           $     10,236
            Cost of Revenues                                                          10,300                  8,717
                                                                               -------------          --------------
            Gross Profit                                                       $       1,519          $       1,519
                                                                               ==============         ==============
            Gross Profit %                                                             12.9%                  14.8%
                                                                               ==============         ==============

</TABLE>



                                      F-34
<PAGE>
                            KSW, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                        (IN THOUSANDS, EXCEPT SHARE DATA)

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

     (15) SELECTED QUARTERLY DATA (UNAUDITED)

          The following is unaudited selected quarterly data for the years ended
          December 31,2002 and 2001:

<TABLE>
<CAPTION>
                                                                    Year ended December 31, 2002
                                                                    ----------------------------

                                                    First              Second             Third          Fourth
                                                    quarter           quarter            quarter         quarter           Total
                                                    -------           -------            -------         -------           -----

<S>                                            <C>                <C>              <C>              <C>              <C>
Revenues, as reported                          $     13,138(a)   $     14,756(a)   $    10,600(a)   $    11,819(a)   $    50,313(a)
Revenues, restated                             $     12,798(a)   $     14,066(a)   $     9,348(a)   $    10,236(a)   $    46,448(a)
Gross profit                                   $      1,521      $      1,348      $     1,252      $     1,519      $     5,640

Net income (loss) before cumulative
 effect of change in accounting principle      $         15      $        146      $       120      $      (658)(b)  $      (377)


Cumulative effect of change in
  accounting principle, net                    $     (1,855)     $          -      $         -      $       (33)     $    (1,888)

Net income (loss)                              $     (1,840)     $        146      $       120      $      (691)     $    (2,265)


Per share of common stock earnings (losses)
 before cumulative change in
 accounting principle:

Basic                                          $        .01       $       .03      $       .02      $       (.12)      $     (.06)

Diluted                                        $        .01       $       .03      $       .02      $       (.12)      $     (.06)

</TABLE>

(a)  The Company's management identified and determined that reported revenues
     and costs of revenues during the year ended December 31, 2002, were
     materially overstated as a result of an accounting error attributable to
     the failure to eliminate certain intra-company accounts. The Company has
     restated these previously reported amounts and, with the oversight of its
     Audit Committee, has improved its financial reporting system.

(b)  During the fourth quarter of 2002, the Company, recorded a valuation
     allowance totaling $1,045 against its deferred tax assets.


                                      F-35
<PAGE>
                            KSW, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                        (IN THOUSANDS, EXCEPT SHARE DATA)

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

             (15) SELECTED QUARTERLY DATA (UNAUDITED) - CONT'D.

<TABLE>
<CAPTION>
                                                                         Year ended December 31, 2002
                                                                         ----------------------------

                                                        First          Second         Third             Fourth
                                                       quarter        quarter        quarter           quarter         Total
                                                       -------        -------        -------           -------         -----
<S>                                               <C>             <C>            <C>               <C>              <C>
Per share of common stock earnings (losses):
Basic                                              $    (0.34)    $     0.03     $      0.02       $      (.12)     $     (.41)
Diluted                                            $    (0.34)    $     0.03     $      0.02       $      (.12)     $     (.41)

Dividends                                          $        -     $        -     $         -       $         -      $        -
Stock prices:
High                                               $     1.04     $     1.05     $      1.05       $       .90
Low                                                $      .70     $      .70     $       .80       $       .90


                                                                         Year ended December 31, 2001
                                                                         ----------------------------

                                                        First          Second         Third             Fourth
                                                       quarter        quarter        quarter           quarter         Total
                                                       -------        -------        -------           -------         -----

Revenues                                           $   10,584     $    9,747     $    16,523       $    14,158      $   51,012
Gross profit                                             (363)(c)       (786)(c) $     1,757       $     1,251      $    1,859
Net income (loss)                                  $     (816)    $   (1,091)    $       267       $       163      $   (1,477)
Per share of common stock earnings (losses):
Basic                                              $     (.15)    $     (.20)    $       .05       $       .03      $     (.27)
Diluted                                            $     (.15)    $     (.20)    $       .05       $       .03      $     (.27)

</TABLE>

(c)  During the first half of 2001, the Company completed certain contracts
     which experienced gross profit erosion due to lower than anticipated
     productivity and higher labor costs. As a result of these contract losses,
     the Company has changed its bidding and estimating practices.


                                      F-36
<PAGE>
                            KSW, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONCLUDED)

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                        (IN THOUSANDS, EXCEPT SHARE DATA)
                          ----------------------------


     (15) SELECTED QUARTERLY DATA (UNAUDITED) - CONT'D.


<TABLE>
<CAPTION>
                                                                    Year ended December 31, 2001
                                                                    ----------------------------

                                                      First         Second          Third        Fourth
                                                      quarter      quarter         quarter      quarter       Total
                                                      -------      -------         -------      -------

<S>                                              <C>            <C>            <C>           <C>           <C>
Dividends                                          $      -     $        -     $        -    $        -    $     -

Stock prices:
High                                               $    1.37    $      1.01    $       .92   $      .92
Low                                                $     .62    $       .56    $       .47   $      .59

</TABLE>



                                      F-37
<PAGE>
                                  EXHIBIT INDEX


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


23.1                Consent of Marden, Harrison & Kreuter, CPAs P.C.

23.2                Consent of Rosen Seymour Shapss Martin & Company, LLP.

31.1                Certification by the Chief Executive Officer pursuant to
                    Section 302 of the Sarbanes-Oxley Act of 2002.

31.2                Certification by the Chief Financial Officer pursuant to
                    Section 302 of the Sabarnes-Oxley Act of 2002.

32.1                Certification by the Chief Executive Officer pursuant to 18
                    U.S.C. Section 1350, as adopted by Section 906 of the
                    Sarbanes-Oxley Act of 2002 (furnished herewith).

32.2                Certification by the Chief Financial Officer pursuant to 18
                    U.S.C. Section 1350, as adopted by Section 906 of the
                    Sarbanes-Oxley Act of 2002 (furnished herewith).