<PAGE>

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

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                         ------------------------------
                                   FORM 20-F
                         ------------------------------

<Table>
<S>  <C>
[ ]  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF
     THE SECURITIES EXCHANGE ACT OF 1934 or

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

     For the fiscal year ended December 31, 2001, or

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

     For the transition period from ________ to ________
</Table>

                          Commission File No.: 1-4192

                                MFC BANCORP LTD.
             (Exact Name of Registrant as Specified in Its Charter)

                            YUKON TERRITORY, CANADA
                (Jurisdiction of Incorporation or Organization)

     FLOOR 21, MILLENNIUM TOWER, HANDELSKAI 94-96, A-1200, VIENNA, AUSTRIA
                              (Address of Office)

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

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

                         ------------------------------
                        COMMON SHARES WITHOUT PAR VALUE
                                (Title of Class)
                         ------------------------------

 Securities for which there is a reporting obligation pursuant to Section 15(d)
                                of the Act: NONE

     Indicate the number of outstanding shares of each of the issuer's classes
of capital or common stock as of the close of the period covered by the annual
report:

                   13,177,156 COMMON SHARES WITHOUT PAR VALUE

     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 [ ]

     Indicate by check mark which financial statement item the registrant has
elected to follow.  Item 17 [ ]  Item 18 [X]
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

                                MFC BANCORP LTD.

                                   FORM 20-F

                               TABLE OF CONTENTS

<Table>
<Caption>
                                                                        PAGE
                                                                        ----
<S>       <C>                                                           <C>
                                   PART I
ITEM 1.   IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS.......    3
ITEM 2.   OFFER STATISTICS AND EXPECTED TIMETABLE.....................    3
ITEM 3.   KEY INFORMATION.............................................    3
          Forward-Looking Statements..................................    3
          Exchange Rates..............................................    4
          Selected Financial Data.....................................    4
          Risk Factors................................................    6
ITEM 4.   INFORMATION ON THE COMPANY..................................   10
          History and Development of the Company......................   10
          Business Overview...........................................   10
          Organizational Structure....................................   13
          Property, Plants and Equipment..............................   14
ITEM 5.   OPERATING AND FINANCIAL REVIEW AND PROSPECTS................   14
          Operating Results...........................................   15
          Liquidity and Capital Resources.............................   16
          Foreign Currency............................................   17
          Derivative Instruments......................................   18
          Inflation...................................................   18
ITEM 6.   DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES..................   18
          Directors and Senior Management; Board Practices............   18
          Compensation................................................   20
          Employees...................................................   21
          Share Ownership.............................................   21
ITEM 7.   MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS...........   22
          Major Shareholders..........................................   22
          Related Party Transactions..................................   22
ITEM 8.   FINANCIAL INFORMATION.......................................   23
          Consolidated Statements and Other Financial Information.....   23
          Significant Changes.........................................   23
          Legal Proceedings...........................................   23
          Dividend Information........................................   23
ITEM 9.   THE OFFER AND LISTING.......................................   24
          Markets and Price History...................................   24
ITEM 10.  ADDITIONAL INFORMATION......................................   25
          Articles and Bylaws.........................................   25
          Exchange Controls...........................................   26
          Taxation....................................................   27
          Documents on Display........................................   29
ITEM 11.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
          RISK........................................................   30
          Interest Rate Risk..........................................   30
          Foreign Currency Exchange Rate Risk.........................   31
          Equity Price Risk...........................................   32
ITEM 12.  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES......   32

                                  PART II
ITEM 13.  DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.............   32
ITEM 14.  MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND
          USE OF PROCEEDS.............................................   32
ITEM 15.  [RESERVED]..................................................   32
ITEM 16.  [RESERVED]..................................................   32

                                  PART III
ITEM 17.  FINANCIAL STATEMENTS........................................   32
ITEM 18.  FINANCIAL STATEMENTS........................................   33
ITEM 19.  EXHIBITS....................................................   62
SIGNATURES............................................................   64
</Table>

                                        2
<PAGE>

     IN THIS ANNUAL REPORT, PLEASE NOTE THE FOLLOWING:

     - REFERENCES TO "WE", "OUR", "US" OR "MFC" MEAN MFC BANCORP LTD. AND ITS
       SUBSIDIARIES UNLESS THE CONTEXT OF THE SENTENCE CLEARLY SUGGESTS
       OTHERWISE;

     - ALL REFERENCES TO MONETARY AMOUNTS ARE IN CANADIAN DOLLARS, UNLESS
       OTHERWISE INDICATED;

     - THE INFORMATION SET FORTH IN THIS ANNUAL REPORT IS AS AT DECEMBER 31,
       2001, UNLESS AN EARLIER OR LATER DATE IS INDICATED; AND

     - SELECTED FINANCIAL INFORMATION HAS BEEN PROVIDED IN U.S. DOLLARS FOR
       INFORMATIONAL PURPOSES ONLY USING AN EXCHANGE RATE OF ONE CANADIAN DOLLAR
       BEING EQUAL TO U.S.$0.6279, BEING THE FEDERAL RESERVE BANK OF NEW YORK
       RATE FOR CONVERSION OF CANADIAN DOLLARS TO U.S. DOLLARS AS AT DECEMBER
       31, 2001.

                                     PART I

ITEM 1.  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

     Not applicable.

ITEM 2.  OFFER STATISTICS AND EXPECTED TIMETABLE

     Not applicable.

ITEM 3.  KEY INFORMATION

FORWARD-LOOKING STATEMENTS

     The statements in this annual report that are not based on historical facts
are called "forward-looking statements" within the meaning of the United States
Private Securities Litigation Reform Act of 1995. These statements appear in a
number of different places in this annual report and can be identified by words
such as "estimates", "projects", "expects", "intends", "believes", "plans", or
their negatives or other comparable words. Also look for discussions of strategy
that involve risks and uncertainties. Forward-looking statements include
statements regarding the outlook for our future operations, forecasts of future
costs and expenditures, evaluation of market conditions, the outcome of legal
proceedings, the adequacy of reserves, or other business plans. You are
cautioned that any such forward-looking statements are not guarantees and may
involve risks and uncertainties. Our actual results may differ materially from
those in the forward-looking statements due to risks facing us or due to actual
facts differing from the assumptions underlying our predictions. Some of these
risks and assumptions include:

     - general economic and business conditions, including changes in interest
       rates;

     - prices and other economic conditions;

     - natural phenomena;

     - actions by government authorities, including changes in government
       regulation;

     - uncertainties associated with legal proceedings;

     - technological development;

     - future decisions by management in response to changing conditions;

     - our ability to execute prospective business plans; and

     - misjudgments in the course of preparing forward-looking statements.

     We advise you that these cautionary remarks expressly qualify in their
entirety all forward-looking statements attributable to us or persons acting on
our behalf.

                                        3
<PAGE>

EXCHANGE RATES

     The following table sets out exchange rates, based on the noon buying rates
in New York City for cable transfers in foreign currencies as certified for
customs purposes by the Federal Reserve Bank of New York (the "Noon Buying
Rate"), for the conversion of Canadian dollars into U.S. dollars in effect at
the end of the following periods, the average exchange rates during such periods
(based on daily Noon Buying Rates) and the range of high and low exchange rates
for such periods:

<Table>
<Caption>
                                                             YEARS ENDED DECEMBER 31,
                                                    ------------------------------------------
                                                     2001     2000     1999     1998     1997
                                                    ------   ------   ------   ------   ------
<S>                                                 <C>      <C>      <C>      <C>      <C>
End of period.....................................  0.6279   0.6666   0.6925   0.6504   0.6999
High for period...................................  0.6697   0.6984   0.6925   0.7105   0.7487
Low for period....................................  0.6241   0.6397   0.6535   0.6341   0.6945
Average for period................................  0.6457   0.6732   0.6744   0.6714   0.7221
</Table>

     The following table sets out the high and low exchange rates, based on the
Noon Buying Rate for the conversion of Canadian dollars into U.S. dollars, for
the following periods:

<Table>
<Caption>
                                                               HIGH     LOW
                                                              ------   ------
<S>                                                           <C>      <C>
2001
October.....................................................  0.6287   0.6418
November....................................................  0.6363   0.6241
December....................................................  0.6396   0.6254

2002
January.....................................................  0.6289   0.6200
February....................................................  0.6295   0.6207
March.......................................................  0.6342   0.6266
April 1 to April 9..........................................  0.6293   0.6252
</Table>

     On April 9, 2002, the Noon Buying Rate for the conversion of Canadian
dollars into U.S. dollars was U.S.$0.6264 per Canadian dollar.

     The presentation of our financial statements in U.S. dollars is for
informational purposes only and our financial statements are translated to U.S.
dollars for convenience using year-end exchange rates, as required by Regulation
S-X.

SELECTED FINANCIAL DATA

     The following table summarizes selected consolidated financial data for MFC
prepared in accordance with Canadian generally accepted accounting principles
("Canadian GAAP"). Additional information is presented to show the difference
that would result from the application of United States generally accepted
accounting principles ("U.S. GAAP") to MFC's financial information. For a
description of the differences between Canadian GAAP and U.S. GAAP, see Note 16
of our consolidated financial statements included in this annual report. The
information in the table was extracted from the more detailed consolidated
financial statements and related notes included in this annual report and should
be read in conjunction with such financial statements and with the information
appearing under the heading, "Item 5. Operating and Financial Review and
Prospects".

                                        4
<PAGE>

CANADIAN GAAP

<Table>
<Caption>
                                                             YEARS ENDED DECEMBER 31,
                                               ----------------------------------------------------
                                                 2001       2000       1999       1998       1997
                                               --------   --------   --------   --------   --------
                                                   (in thousands, other than per share amounts)
<S>                                            <C>        <C>        <C>        <C>        <C>
Revenues.....................................  $214,246   $156,220   $125,526   $123,310   $ 86,060
Income from continuing operations............    45,288     39,163     36,328     30,235     23,617
Income from continuing operations per share
  Basic......................................      3.59       3.24       3.00       2.48       2.06
  Diluted....................................      3.35       3.03       2.83       2.30       2.00
Net income...................................    45,288     39,163     31,389     30,235     23,617
Net income per share
  Basic......................................      3.59       3.24       2.59       2.48       2.06
  Diluted....................................      3.35       3.03       2.46       2.30       2.00
Total assets.................................   394,639    332,063    270,107    238,109    226,890
Net assets...................................   249,118    216,915    173,773    156,808    122,964
Debt.........................................    98,000     35,421     30,917     40,091     41,602
Shareholders' equity.........................   245,997    213,134    170,811    154,396    120,156
Capital stock................................    76,673     65,138     65,498     65,706     70,368
Cash dividends(1)............................        --         --         --        369        106
Cash dividends per share(1)..................        --         --         --       0.03       0.01
Cash dividends (U.S.$)(1)....................        --         --         --        251        N/A
Cash dividends per share (U.S.$)(1)..........        --         --         --       0.02        N/A
Weighted average common stock outstanding,
  fully diluted (in thousands of shares).....    14,002     13,438     13,422     13,706     12,246
</Table>

---------------
(1) Paid on MFC's common shares.

U.S. GAAP

<Table>
<Caption>
                                                            YEARS ENDED DECEMBER 31,
                                              ----------------------------------------------------
                                                2001       2000       1999       1998       1997
                                              --------   --------   --------   --------   --------
                                                  (in thousands, other than per share amounts)
<S>                                           <C>        <C>        <C>        <C>        <C>
Revenues....................................  $212,000   $162,694   $128,270   $118,842   $ 83,138
Income from continuing operations...........    20,802     45,637     40,313     31,922     12,365
Income from continuing operations per share
  Basic.....................................      1.65       3.78       3.33       2.62       1.07
  Diluted...................................      1.60       3.51       3.12       2.42       1.00
Net income..................................    43,211     45,637     35,374     31,922     12,365
Net income per share
  Basic.....................................      3.42       3.78       2.92       2.62       1.07
  Diluted...................................      3.20       3.51       2.75       2.42       1.00
Total assets................................   391,489    336,523    265,658    229,529    223,528
Net assets..................................   245,968    221,375    169,325    149,381    115,529
Debt........................................    98,000     35,421     30,917     40,091     41,602
Shareholders' equity........................   242,847    217,594    166,363    146,969    112,721
Capital stock...............................    76,673     65,138     65,498     65,706     70,368
Cash dividends(1)...........................        --         --         --        369        106
Cash dividends per share(1).................        --         --         --       0.03       0.01
Cash dividends (U.S.$)(1)...................        --         --         --        251        N/A
Cash dividends per share (U.S.$)(1).........        --         --         --       0.02        N/A
Weighted average common stock outstanding,
  fully diluted (in thousands of shares)....    14,002     13,438     13,422     13,706     12,246
</Table>

---------------
(1) Paid on MFC's common shares.

                                        5
<PAGE>

RISK FACTORS

     Our primary risks are transaction risks, credit or counterparty risks and
market risks. In addition, we have been and may continue to be affected by many
other factors, including, but not limited to: (i) economic and market
conditions, including the liquidity of capital markets; (ii) the volatility of
market prices, rates and indices; (iii) the timing and volume of market
activity; (iv) inflation; (v) the cost of capital, including interest rates;
(vi) political events, including legislative, regulatory and other developments;
(vii) competitive forces, including our ability to attract and retain personnel;
(viii) support systems; and (ix) investor sentiment. In determining whether to
make an investment in the capital stock of MFC, you should consider carefully
all of the information set forth in this annual report and, in particular, the
following risk factors:

TRANSACTION RISKS

     We are subject to transaction risks.

     We manage transaction risk through allocating and monitoring our capital
investments, only underwriting securities in circumstances where the risk to our
capital is minimal, carefully screening clients and transactions, and engaging
qualified personnel to manage transactions. Nevertheless, transaction risks can
arise from, among others, our merchant banking and proprietary investing
activities and relate to the risks of the proposed transaction. These risks
include market and credit risks associated with our role in providing advisory
services.

     We often make investments in highly unstructured situations and in
companies undergoing severe financial stress. Such investments often involve
severe time constraints. These investments may expose us to significant
transaction risks. An unsuccessful investment may result in the total loss of
such an investment and may have a material adverse effect on our business,
results of operations and financial condition.

    We may face a lack of suitable acquisition or merger or other proprietary
    investment candidates.

     In order to grow our business, we may seek to acquire or invest in new
companies and proprietary investments. Our failure to make acquisitions or
investments may limit our growth. In pursuing acquisition and investment
opportunities, we may be in competition with other companies having similar
growth and investment strategies. Competition for these acquisitions or
investment targets could result in increased acquisition or investment prices
and a diminished pool of businesses, technologies, services or products
available for acquisition or investment.

CREDIT OR COUNTERPARTY RISKS

    Counterparties or others may default on their obligations.

     We manage credit risk on an individual transaction, counterparty level and
on a portfolio basis. Credit limits for clients and counterparties are
established by our credit officers and management with knowledge of the client's
creditworthiness. In addition, we have established policies and limitations with
respect to our securities lending practices. Our management also reviews and
monitors exposure concentrations at a portfolio level. Nevertheless, we are
exposed to the risk that parties owing us money, securities or other assets will
not perform their obligations. These parties include our trading counterparties,
clients, clearing agents, exchanges and other financial intermediaries, as well
as issuers whose securities we hold. These parties may default on their
obligations to us due to bankruptcy, lack of liquidity, operational failure or
other reasons. These counterparty obligations may arise, for example, from
placing money market deposits, the extension of credit in trading and investment
activities, and participation in payment and securities transactions on our
behalf and as an agent on behalf of our clients.

    We may not obtain sufficient or accurate credit risk information.

     To reduce credit risk, we only place money market deposits with banks
selected for their financial strength and reliability. Further, we otherwise
attempt only to deal with creditworthy counterparties and obtain collateral
where appropriate. However, although we regularly review our credit exposure to
specific
                                        6
<PAGE>

clients and counterparties and to specific industries, countries and regions
that we believe may present credit concerns, default risk may arise from events
or circumstances that are difficult to detect, such as fraud. We may also fail
to receive full information with respect to the trading risks of a counterparty.
In addition, in cases where we have extended credit against collateral, we may
find that we are undersecured, for example, as a result of sudden declines in
market values that reduce the value of collateral.

MARKET RISKS

     Market risk relates to fluctuations in the liquidity of securities, as well
as volatility in market conditions generally. The markets for securities and
other related products are affected by many factors over which we have little or
no control. These factors include the financial performance and prospects of
specific companies and industries, world markets and economic conditions, the
availability of credit and capital, political events and perceptions of market
participants.

    We are exposed to the risk of a market downturn.

     As a financial services company, our business is materially affected by
conditions in the financial markets and economic conditions generally. In the
event of a market downturn, our business, results of operations and financial
condition could be adversely affected. In addition, you cannot be assured that
an active public market for our securities will continue.

     A market downturn could lead to a decline in the number and size of the
transactions that we execute for our clients, including transactions in which we
provide financial advisory and other services, and to a corresponding decline in
the revenues we receive from fees.

     A downturn in a market could further result in losses to the extent that we
own assets in such market. Conversely, to the extent that we have sold assets we
do not own (i.e., if we have short positions) in any market, an upturn in such
market could expose us to potentially unlimited losses as we attempt to cover
our short positions by acquiring assets in a rising market.

     Even in the absence of a market downturn, we are exposed to substantial
risk of loss due to market volatility.

    We are exposed to political, economic, legal, operational and other risks as
    a result of our global operations.

     In conducting our business in major markets around the world, we are
subject to political, economic, legal, operational and other risks that are
inherent in operating in other countries. These risks range from difficulties in
settling transactions in emerging markets to possible nationalization,
expropriation, price controls and other restrictive governmental actions, and
terrorism. We also face the risk that exchange controls or similar restrictions
imposed by foreign governmental authorities may restrict our ability to convert
local currency received or held by us in their countries into Swiss francs,
Canadian dollars, U.S. dollars or other currencies, or to take those other
currencies out of those countries.

    Fluctuations in interest rates and foreign currency exchange rates may
    affect our results.

     Fluctuations in interest rates may affect the fair value of our financial
instruments sensitive to interest rates. An increase in interest rates may
decrease the fair value of our financial instrument assets and a decrease in
interest rates may decrease the fair value of our financial instrument
liabilities, thereby resulting in a reduction in our equity. See "Item 11.
Quantitative and Qualitative Disclosures About Market Risk -- Interest Rate
Risk" for additional information with respect to our exposure to interest rate
risk.

     Similarly, fluctuations in foreign currency exchange rates may affect the
fair value of our financial instruments sensitive to foreign currency exchange
rates. Our reporting currency is the Canadian dollar. We hold financial
instruments primarily denominated in U.S. dollars, Euro and Swiss francs. A
depreciation of such currencies against the Canadian dollar will decrease the
fair value of our financial instrument assets denominated in such currencies and
an appreciation of such currencies against the Canadian dollar will
                                        7
<PAGE>

increase the fair value of our financial instrument liabilities denominated in
such currencies, thereby resulting in a reduction in our equity. See "Item 11.
Quantitative and Qualitative Disclosures About Market Risk -- Foreign Currency
Exchange Rate Risk" for additional information with respect to our exposure to
foreign currency exchange rate risk.

    A rise in inflation may affect our results.

     We do not believe that inflation has had a material impact on our revenues
or income over the past three fiscal years. In addition, since our assets to a
large extent are liquid in nature, they are not significantly affected by
inflation. However, increases in inflation could result in increases in our
expenses, which may not be readily recoverable in the price of services provided
to our clients. To the extent inflation results in rising interest rates and has
other adverse effects on capital markets, it could adversely affect our
business, results of operations and financial condition.

    Our risk management strategies leave us exposed to unidentified or
    unanticipated risks.

     We use a variety of instruments and strategies to manage exposure to
various types of risks. For example, we use derivative foreign exchange
contracts to manage our exposure and our clients' exposure to foreign currency
exchange rate risks. If any of the variety of instruments and strategies we
utilize to manage our exposure to various types of risk are not effective, we
may incur losses. Many of our strategies are based on historical trading
patterns and correlations. However, these strategies may not be fully effective
in mitigating our risk exposure in all market environments or against all types
of risk. Unexpected market developments may affect our risk management
strategies during this time, and unanticipated developments could impact our
risk management strategies in the future.

     Market risk may increase the other risks that we face.

     In addition to the market risks described above, market risks could
exacerbate the other risks that we face. For example, if we incur substantial
trading losses, our need for liquidity could rise sharply while our access to
liquidity could be impaired. In addition, in conjunction with a market downturn,
our clients and counterparties could incur substantial losses of their own,
thereby weakening their financial condition and increasing our credit risk.

COMPETITION RISKS

     We face significant global competition.

     We conduct our business in a global environment that is highly competitive
and unpredictable. Many of our competitors are national or international
companies with far greater resources, capital and access to information than us.
Competition includes firms traditionally engaged in financial services such as
banks, broker-dealers and investment dealers, along with other sources such as
insurance companies, mutual fund groups, trading houses and other companies
offering financial services in Europe and globally. Increased competition may
lead us to become involved in transactions with more risk. In addition, many
non-bank competitors are not subject to the same extensive regulations that
govern us.

LEGAL AND REGULATORY RISKS

     We are exposed to legal liability.

     We are exposed to legal risks in our business and the volume and amount of
damages claimed in litigation against financial intermediaries are increasing.
These risks include potential liability under securities or other laws for
materially false or misleading statements made in connection with securities and
other transactions, potential liability for advice we provide to participants in
corporate transactions and disputes over the terms and conditions of complex
trading arrangements. We also face the possibility that counterparties in
complex or risky trading transactions will claim that we improperly failed to
tell them of the risks involved or that they

                                        8
<PAGE>

were not authorized or permitted to enter into these transactions with us and
that their obligations to us are not enforceable. During a prolonged market
downturn, we would expect these types of claims to increase.

     These risks are often difficult to assess or quantify and their existence
and magnitude often remains unknown for substantial periods of time. We incur
significant legal expenses every year in defending against litigation, and we
expect to continue to do so in the future. See "Item 8. Financial
Information -- Legal Proceedings" for additional information with respect to our
legal and regulatory proceedings.

     Extensive regulation of our business limits our activities.

     The financial services industry is subject to extensive regulation. Our
banking operations are subject to various Swiss regulatory requirements,
including capital requirements administered by the Swiss Federal Banking
Commission (the "SFBC"). The SFBC is our primary banking regulator and
establishes minimum capital requirements for our banking subsidiary. Our failure
to meet minimum capital requirements can result in mandatory, and possibly
additional discretionary action by the SFBC that, if undertaken, could have a
direct materially adverse effect on us. Under risk-based capital adequacy
guidelines established by the SFBC, banks in Switzerland must meet specific
capital guidelines that involve quantitative measures of assets, liabilities and
other off-balance sheet items, as calculated under Swiss regulatory accounting
practices. Our banking operations are required to file certain reports with the
SFBC and we are subject to their examination. Our banking subsidiary is subject
to restrictions on loans and extensions of credit to, and on certain other types
of transactions with, affiliates.

     The requirements imposed by our regulators are designed to ensure the
integrity of the financial markets and to protect customers and other third
parties which deal with us and are not designed to protect our shareholders.
Consequently, these regulations often serve to limit our activities, including
through net capital, customer protection and market conduct requirements.

EMPLOYMENT RISKS

     We depend on the services of our key employees.

     Our future success depends, in significant part, upon the continued service
and performance of our senior management and other key employees. Losing the
services of some or all of these individuals could impair our ability to manage
our company, obtain new or maintain existing client engagements and complete new
proprietary investments.

ENFORCEMENT RISKS

     You may be unable to enforce civil liabilities.

     The enforcement of civil liabilities by investors under applicable U.S.
federal and state securities laws will be adversely affected because we are
organized under the laws of the Yukon Territory, Canada, the majority of our
officers or directors are not residents of the U.S., and substantially all of
our assets are located outside of the U.S.

     As a result, it may be difficult or impossible for U.S. investors to effect
service of process upon us or our officers or directors within the United
States. It may also be difficult to realize against us or them, in the United
States, upon judgments of U.S. courts for civil liabilities under applicable
U.S. federal and state securities laws. Courts in Canada or elsewhere may not
enforce: (i) judgments of U.S. courts obtained in actions against us or our
officers or directors predicated upon the civil liability provisions of
applicable U.S. federal and state securities laws; and (ii) in original actions,
liabilities against us or our officers or directors predicated upon such laws.

     You may have trouble enforcing U.S. bankruptcy laws and other laws in
     Canada or elsewhere.

     We are organized under the laws of the Yukon Territory, Canada and our
principal operating assets are located outside of the United States. Under
bankruptcy laws in the United States, courts typically have

                                        9
<PAGE>

jurisdiction over a debtor's property, wherever it is located, including
property situated in other countries. Courts outside of the United States may
not recognize the U.S. bankruptcy court's jurisdiction. Accordingly, you may
have trouble administering a U.S. bankruptcy case involving a Canadian debtor
with property located outside of the United States. Any orders or judgments of a
bankruptcy court in the United States may not be enforceable.

OTHER RISKS

     Our risk management policies and procedures may not prevent losses.

     We have adopted risk management processes to facilitate, control and
monitor risk taking. Nonetheless, the policies and procedures we rely on to
identify, monitor and manage risks may not be fully effective. Some of our
methods for managing risk are based upon our observance of historical market
behaviour. You cannot be assured that these methods will accurately predict
future market behaviour. As a result, our future risk exposure could be
significantly greater than the historical measures indicate.

     Other risk management methods that we use depend upon the evaluation of
information regarding markets, clients or other matters that is publicly
available or otherwise accessible by us. This information may not in all cases
be accurate, complete, up-to-date or properly evaluated. Management of
operational, legal and regulatory risk requires, among other things, policies
and procedures to record properly and verify a large number of transactions and
events, and these policies and procedures may not be fully effective.

     Certain factors may inhibit a takeover that our shareholders may consider
favourable.

     Certain provisions of our charter documents and the corporate legislation
which governs us may discourage, delay or prevent a change of control or changes
in our management that shareholders may consider favourable. Such provisions
include authorizing the issuance by our board of directors of preferred stock in
series, providing for a classified board of directors with staggered, three-year
terms and limiting the persons who may call special meetings of shareholders. We
also have a shareholder protection rights plan designed to protect us and our
shareholders from unfair, abusive or coercive acquisition tactics. See "Item 10.
Additional Information -- Articles and Bylaws".

     In addition, the Investment Canada Act (the "ICA") imposes limitations on
the rights of non-Canadians to acquire our common shares. See "Item 10.
Additional Information -- Exchange Controls".

     If a change of control or change in management is delayed or prevented, the
market price of our common stock could decline.

ITEM 4.  INFORMATION ON THE COMPANY

HISTORY AND DEVELOPMENT OF THE COMPANY

     MFC is a corporation organized under the laws of the Yukon Territory in
Canada. We were originally incorporated in June 1951 by letters patent. We were
continued under the Canada Business Corporations Act in March 1980 and under the
Business Corporations Act (Yukon) in August 1996. Our name was changed to
"Nalcap Holdings Inc." in August 1987, to "Arbatax International Inc." in March
1996 and to "MFC Bancorp Ltd." in February 1997. Our registered office is
located at Suite 300, 204 Black Street, Whitehorse, Yukon, Canada Y1A 2M9. In
2002, we relocated our office from Dublin, Ireland to Floor 21, Millennium
Tower, Handelskai 94-96, A-1200, Vienna, Austria (Tel: 43 1 240 250).

BUSINESS OVERVIEW

     We are a financial services company that focuses on merchant banking. We
provide specialized banking and corporate finance services internationally. We
advise clients on corporate strategy and structure, including mergers and
acquisitions and capital raising. In October 2001, we expanded our merchant
banking operations by acquiring an Austrian trading group whose operations are
primarily focused on Eastern Europe. We also commit our own capital to promising
enterprises and invest and trade to capture investment opportunities for our own
account. We seek to invest in businesses or assets whose intrinsic value is not
properly reflected in
                                        10
<PAGE>

their share price or value. Our proprietary investing is generally not passive
and we seek investments where our financial expertise and management can either
add or unlock value. Our operations are primarily conducted in Europe and North
America.

     Our business focuses on providing innovative finance and advisory services
for corporate finance transactions and capital raising. We counsel clients on
business and financing strategy and the execution of transactions that advance
their strategic goals, including mergers, acquisitions, reorganizations and
divestitures, and assist in structuring and raising capital. We focus on meeting
the financial needs of small to mid-sized companies and other business
enterprises primarily in Europe and North America. We believe that many of these
clients, particularly in Europe, are underserviced by the large global
investment banks and financial service providers. We specialize in advising and
structuring business enterprises involved in unstructured and novel situations
where a strong financial partner is needed and traditional, off-the-shelf
solutions are not workable. In addition, from time to time, we act as a bridge
lender or provide interim financing to business enterprises pending
reorganization or prior to their going public to generate fee income and in
conjunction with our investment strategy. In furtherance of this strategy, we
often advise and help restructure enterprises that are undergoing financial
stress or have or are near debt defaults.

     Our experience and operating structure permit us to respond more rapidly to
our clients' needs than many of our larger competitors. These traits are
important to small and mid-sized business enterprises, many of which do not have
large internal corporate finance departments to handle their capital
requirements. We develop a partnership approach to assist those clients. These
activities are conducted through our wholly-owned subsidiary, MFC Merchant Bank
S.A. ("MFC Bank"), a fully licensed Swiss bank. In 2002, our banking operations
were relocated from Geneva to Herisau, Switzerland. Since 1999, our banking
operations have outsourced and placed substantially all of their client deposits
with other major financial institutions on a fiduciary or trust basis and earn a
fee on the amount of money received from the counterparty. This is in contrast
to most North American banks, which generate revenue from the spread between
their cost of funds and the credit received. These fiduciary or trust deposits
are off-balance sheet items and permit us to generate revenues without
committing or tying up significant amounts of capital. These arrangements also
let us maintain key client relationships and mandates where we can provide
value-added advisory services and yet offer clients the capability and economies
of scale of a large banking institution.

     Our banking operations are subject to various Swiss regulatory
requirements, including capital requirements administered by the SFBC. The SFBC
is our primary banking regulator and establishes minimum capital requirements
for MFC Bank. Our failure to meet minimum capital requirements can result in
mandatory, and possibly additional discretionary, action by the SFBC that, if
undertaken, could have a direct material effect on us. Under risk-based capital
adequacy guidelines established by the SFBC, banks in Switzerland must meet
specific capital guidelines that involve quantitative measures of assets,
liabilities and other off-balance sheet items, as calculated under Swiss
regulatory accounting practices. Our banking operations are required to file
certain reports with the SFBC and we are subject to their examination. MFC Bank
is subject to restrictions on loans and extensions of credit to, and on certain
other types of transactions with, affiliates. We believe that the capital of our
banking operations is sufficient for its current and reasonably foreseeable
operations.

     Our sources of revenues include fees, interest income and related trading
income. We earn advisory fees by providing strategic and financial advice for
clients. We earn interest income through interest earned on our capital.

     Our trading activities are based in Vienna, Austria, and focus on
purchasing, selling, financing and trading pulp, paper and wood products, base
metals and other assets. In such activities, we try to capture trading and
financing spreads.

     Our proprietary investing consists of investing our own capital and
utilizing our expertise to capture investment opportunities. We seek to invest
in businesses or assets whose intrinsic value is not properly reflected in their
share price or value. Our investing is generally not passive and we invest where
we believe our expertise in financial restructuring and management can add or
unlock value. We invest globally and our objective is to maximize total return
measured through both long-term appreciation and recognized gains.
                                        11
<PAGE>

     One of our proprietary investments is an indirect interest in a mineral
royalty (the "royalty interest") in the Wabush Iron Ore Mine (the "Wabush Mine")
located in the Province of Newfoundland, Canada. It has provided an
uninterrupted source of fairly predictable revenue for over 30 years, which we
have used to finance our proprietary investments. The royalty interest consists
of a mining sub-lease of the lands upon which the Wabush Mine is situated that
commenced in 1956 and expires in 2055. The terms of the mining sub-lease do not
provide for renewal. Revenues from the royalty interest are subject to a minimum
annual royalty of $3.25 million and are dependent on both the price levels for
iron ore and the amount of iron ore shipped from the Wabush Mine.

     Other proprietary investments include an indirect minority interest in an
oil and gas royalty stream acquired in October 2001 and a portfolio of real
estate assets which are primarily located in the State of Washington, U.S.A. We
are conducting pre-development work relating to infrastructure, rezoning,
subdivision and permitting on a substantial portion of the properties to the
extent necessary to protect or enhance their value. We intend to divest or
otherwise monetize these real estate assets and redeploy the proceeds in our
merchant banking activities.

     Our operations are primarily conducted in Europe and North America. The
following is a summary of our revenues by geographic region for the years set
forth:

<Table>
<Caption>
                                                                2001       2000       1999
                                                              --------   --------   --------
                                                                      (in thousands)
<S>                                                           <C>        <C>        <C>
Canada......................................................  $ 17,183   $ 10,459   $ 17,851
Western Europe..............................................   192,714    136,671     88,075
United States...............................................     4,349      9,090     19,600
                                                              --------   --------   --------
                                                              $214,246   $156,220   $125,526
                                                              ========   ========   ========
</Table>

ACQUISITIONS

     In October 2001, we acquired approximately 96% of Hovis GmbH ("Hovis") of
Vienna, Austria. Hovis was established in 1993 and is, directly and indirectly
through subsidiaries, primarily engaged in trading activities in Eastern Europe.
Such activities include purchasing, selling, financing and trading pulp, paper,
wood products, base metals and other assets.

     We acquired Hovis pursuant to an investment and restructuring agreement
made among MFC, Sutton Park International Limited, Garda Investments Corp.,
Hovis Commodity Trading GmbH (formerly Glamiox Beteiligungsverwaltungs GmbH)
("HCT"), Hovis, Jurriaan J. Hovis ("J.J. Hovis"), Johannes Hovis and Ferdinand
Steinbauer dated for reference October 1, 2001 (the "Investment Agreement").
Pursuant to the terms of the Investment Agreement, our wholly-owned subsidiary
invested approximately $11.4 million in HCT, the holding company which owns all
of the issued share capital of Hovis, in exchange for approximately 96% of its
issued share capital. Two principals of Hovis, Messrs. J.J. Hovis and
Steinbauer, subscribed for approximately 4.5% in aggregate of the issued share
capital of HCT in consideration of the payment of an aggregate of approximately
$0.3 million.

     Under the terms of the Investment Agreement, Messrs. J.J. Hovis and
Steinbauer have the right to acquire up to an additional 44.5% of the issued
capital of HCT in the event that its consolidated net worth reaches prescribed
targets on or before December 31, 2006 or they pay the difference between the
actual net worth and target amount in cash.

     Under the terms of the Investment Agreement, Messrs. J.J. Hovis and
Steinbauer also have the right to require us to purchase their shares in HCT
during a prescribed period pursuant to a stipulated price calculation. We have
the right to acquire their HCT shares for an aggregate of approximately $0.3
million if they do not acquire shares in the capital of HCT prior to December
31, 2006 or this right is terminated prior to that date.

     The Investment Agreement contains representations, warranties, covenants
and conditions customary for this type of agreement. The Investment Agreement
also provided for, among other things, a restructuring of
                                        12
<PAGE>

Hovis' bank and other credit facilities, a reorganization of its corporate
structure, Messrs. J.J. Hovis and Steinbauer entering into personal service
contracts and the shareholders of HCT entering into an owners' agreement (the
"Owners' Agreement").

     The Owners' Agreement sets out the respective rights and obligations of the
shareholders of HCT, as well as its and Hovis' management and operations. Under
the terms of the Owners' Agreement, the shareholders adopted certain rules of
procedure for HCT and caused Hovis and each of its subsidiaries to adopt certain
rules of procedure pursuant to which the managing directors of those companies
are bound. The Owners' Agreement also sets out matters relating to the
constitution and election of a board of directors of HCT and Hovis, as well as
the appointment of managing directors and their respective rights and duties.
The Owners' Agreement also contains customary restrictions on share transfers
other than to permitted transferees, rights of first refusal and default
provisions and remedies.

     In conjunction with the acquisition of Hovis, we implemented certain
operating and strategic changes. These include reaffirming and establishing
various credit lines of Hovis and its subsidiaries in the aggregate amount of
approximately $76.6 million. Further, we streamlined the operations of Hovis to
focus on its core trading activities and intend to divest some of its non-core
industrial assets.

     The acquisition of Hovis provides us with trading operations that further
enhance our merchant banking activities.

     In October 2001, we also acquired approximately 53% of the outstanding
common shares of Trimble Resources Corporation ("Trimble") for approximately
$1.0 million. Trimble's primary asset is a minority equity investment in a U.S.
company that has an interest in and earns royalties from an oil field in Yemen.

     In addition, in October 2001, we acquired all of the outstanding shares of
Prada Holdings, Ltd. ("Prada") not owned by us for a total recorded cost of
approximately $2.4 million. Subsequently, as a wholly-owned subsidiary, Prada
was merged into MFC. Its primary asset was 10% participating preferred shares of
an affiliate which operates in the infrastructure business in Eastern Europe and
holds the beneficial interest in the royalty interest. Dividends earned on such
preferred shares were approximately $5.3 million in 2001 and $5.4 million in
each of 2000 and 1999.

COMPETITION

     We conduct our business in a global environment that is highly competitive
and unpredictable. We encounter intense competition in all aspects of our
business and compete directly with other financial services companies, brokerage
firms, investment banks, merchant banks, trading houses and other investment
managers. We face competition in Switzerland from other banks, asset managers
and a range of non-bank financial institutions and internationally from
investment banks and securities dealers. Many of our competitors are national or
international companies with far greater resources, capital and access to
information than us. As a result, we may become involved in transactions with
more risk.

ORGANIZATIONAL STRUCTURE

     Our significant operating subsidiaries, their jurisdictions of organization
and our shareholdings are as follows:

<Table>
<Caption>
                                                                 JURISDICTION OF           SHAREHOLDING AT
NAME OF SUBSIDIARY                                        INCORPORATION OR ORGANIZATION     APRIL 9, 2002
------------------                                        -----------------------------    ---------------
<S>                                                       <C>                              <C>
MFC Merchant Bank S.A..................................         Switzerland                      100%
TriMaine Holdings, Inc.................................     State of Washington                   83%
Trimble Resources Corporation(1).......................            Canada                       53.3%
Hovis GmbH.............................................           Austria                       95.5%
</Table>

---------------
(1) We also own $28.0 million of its $49.0 million of senior debentures.

                                        13
<PAGE>

PROPERTY, PLANTS AND EQUIPMENT

     Our offices are located in Vienna, Austria, Herisau, Switzerland and
Berlin, Germany. All of our premises are leased.

     We indirectly participate in the royalty interest. The royalty interest
consists of a mining sub-lease of the lands upon which the Wabush Mine is
situated that commenced in 1956 and expires in 2055. The lessor is Knoll Lake
Minerals Limited ("Knoll Lake"), which holds a mining lease from the Province of
Newfoundland, Canada. The lease requires the payment of royalties to Knoll Lake
of $0.22 per ton on shipments of iron ore from the Wabush Mine. Iron ore is
shipped from the Wabush Mine to Pointe Noire, Quebec, Canada, where it is
pelletized. Geological studies done on the Wabush Mine to date have estimated
that the mine has iron ore deposits of approximately 713 million tons averaging
34.5 fe. In 2001, 2000 and 1999, 4.6 million, 5.9 million and 5.5 million tons
of iron ore, respectively, were shipped from the Wabush Mine.

     The Wabush Mine is operated by an unincorporated joint venture consisting
of Wabush Iron Company Limited (U.S.A.), Steel Company of Canada Limited
(Canada) and Dominion Foundries & Steel Limited (Canada) (collectively, the
"Consortium"), which pays royalties to the holder of the royalty interest based
upon the amount of iron ore shipped from the Wabush Mine. These royalties are
not to be less than $3.25 million annually until 2055. In 1987, the royalty rate
specified in the base price was amended to require a base royalty rate of $1.685
per ton with escalations as defined by agreement. Iron ore is typically sold
either as a concentrate, whereby the iron ore is in granular form, or as a
pellet, whereby iron ore concentrate has been mixed with a binding agent, formed
into a pellet and then fired in a furnace. Iron ore pellets can be charged
directly into blast furnaces without further processing and are primarily used
to produce pig iron which is subsequently transformed into steel. As such, the
demand and, consequently, the pricing of iron ore is dependent upon the raw
material requirements of integrated steel producers. Demand for blast furnace
steel is in turn cyclical in nature and is influenced by, among other things,
the level of general economic activity. As the operator of the Wabush Mine is
owned by the Consortium of steel producers, production from the mine has been
generally maintained at relatively consistent levels.

     We also indirectly own approximately 47 acres of undeveloped real property
which is annexed to the City of Gig Harbor, Washington, U.S.A. Of the total
acreage, 29 acres are zoned for medium density residential use and 18 acres are
zoned for business park/professional office use. We may develop all or part of
the land through partnerships, joint ventures or other economic associations
with local developers. Our current involvement with the property is limited to
pre-development work, including infrastructure (roads, sewer and water
services), preliminary permits, market studies, feasibility studies and related
activities. All utilities are available to the property and the City of Gig
Harbor has completed work on an extension of a street through the property.

     We also indirectly own a 17.2 acre property located in Federal Way,
Washington, U.S.A. This property is zoned business park and all utilities are
available to the site. The site is encumbered by a wetland area which has been
estimated at 8.25 acres inclusive of setback requirements. Currently, site
approval applications have been made for an 800 unit self-storage facility and a
53,800 square foot warehouse/office facility.

     Other properties include land located on Corvallo Island in the
Mediterranean, on which we are conducting pre-development work in order to
facilitate its monetization.

ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS

     The following discussion and analysis of our financial condition and
results of operations for the three years ended December 31, 2001 should be read
in conjunction with our consolidated financial statements and related notes
included in this annual report. Our financial statements included herein were
prepared in accordance with Canadian GAAP. For a reconciliation of our financial
statements included herein to U.S. GAAP, see Note 16 to the financial
statements. We have made certain reclassifications to the prior periods'
financial statements to conform to the current period's presentation.

                                        14
<PAGE>

OPERATING RESULTS

     We are a financial services company that focuses on merchant banking. We
provide specialized banking and corporate finance services internationally.
These activities are primarily conducted through our wholly-owned subsidiary,
MFC Bank. In October 2001, we expanded our merchant banking activities by
acquiring a trading group focused on Eastern Europe. We also commit our own
capital to promising enterprises and invest and otherwise trade to capture
investment opportunities for our own account. We seek to invest in businesses or
assets whose intrinsic value is not properly reflected in their share price or
value. Our investing is generally not passive. We seek investments where our
financial and management expertise can add or unlock value.

     Our results of operations may be materially affected by market fluctuations
and economic factors. In addition, our results of operations have been and may
continue to be affected by many factors of a global nature, including economic
and market conditions, the availability of capital, the level and volatility of
equity prices and interest rates, currency values, commodity prices and other
market indices, technological changes, the availability of credit, inflation and
legislative and regulatory developments. Our results of operations may also be
materially affected by competitive factors. Competition includes firms
traditionally engaged in financial services such as banks, broker-dealers and
investment dealers, along with other sources such as insurance companies, mutual
fund groups and other companies offering financial services in Europe and
globally.

     In recent years, the financial services industry has experienced
consolidation and convergence as financial institutions involved in a broad
spectrum of services have merged or combined. The trend to consolidate is
expected to continue and produce global financial institutions with much greater
capital and other resources than ourselves. As a result of the economic and
competitive factors discussed above, our results of operations may vary
significantly from period to period. We intend to manage our business for the
long term and to mitigate the effect of such factors by focusing on our core
operations of meeting the financial needs of small to mid-sized companies and
other business enterprises internationally.

YEAR ENDED DECEMBER 31, 2001 COMPARED TO THE YEAR ENDED DECEMBER 31, 2000

     The following table provides our selected quarterly financial information
for 2001:

<Table>
<Caption>
                                                                       2001
                                                 ------------------------------------------------
                                                 DECEMBER 31   SEPTEMBER 30   JUNE 30    MARCH 31
                                                 -----------   ------------   --------   --------
                                                   (in thousands, other than per share amounts)
<S>                                              <C>           <C>            <C>        <C>
Revenues.......................................   $ 89,878       $ 33,478     $ 46,888   $ 44,002
Expenses.......................................     71,095         25,958       37,349     35,830
Net income.....................................     19,876          7,786        9,543      8,083
Diluted earnings per share.....................       1.40           0.58         0.72       0.63
Total assets...................................    394,639        298,760      280,423    297,823
Shareholders' equity...........................    245,997        251,398      229,446    221,767
</Table>

     In 2001, our revenues increased by 37.1% to $214.2 million from $156.2
million in 2000, primarily as a result of the acquisition of our trading
operations in October 2001 and increased investment activities. In 2001,
revenues included a recognition of non-cash gains on indebtedness including of a
subsidiary of $22.4 million. Expenses from continuing operations increased by
48.9% to $170.2 million in 2001 from $114.4 million in 2000, primarily as a
result of the acquisition of our trading operations and higher investment
expenses. In 2001, financial services expenses increased by 59.7% to $142.0
million from $88.9 million in 2000. General and administrative expenses
increased marginally to $22.8 million in 2001 from $21.2 million in 2000.
Interest expense increased by 27.3% to $5.4 million in 2001 from $4.2 million in
2000, primarily as a result of a net increase in our total indebtedness
resulting from acquisitions completed in 2001. In 2001, we recorded a loss on
the change in the fair value of currency derivatives of $1.1 million.

                                        15
<PAGE>

     In 2001, net earnings increased to $45.3 million, or $3.59 per share on a
basic basis ($3.35 per share on a diluted basis) from $39.2 million, or $3.24
per share on a basic basis ($3.03 per share on a diluted basis) in 2000.

     In December 2001, we declared a special dividend-in-kind (the "Special
Dividend") to our shareholders of 9,016,293 shares of Mymetics Corporation
("Mymetics"). The Special Dividend will be paid upon receipt of all necessary
regulatory approvals and registrations. The Special Dividend resulted in our
recording a reduction in retained earnings of $29.2 million as at December 31,
2001. See "Item 8. -- Dividend Information".

YEAR ENDED DECEMBER 31, 2000 COMPARED TO THE YEAR ENDED DECEMBER 31, 1999

     The following table provides selected quarterly financial information for
MFC for each quarter of 2000:

<Table>
<Caption>
                                                                     2000
                                              ---------------------------------------------------
                                              DECEMBER 31    SEPTEMBER 30    JUNE 30     MARCH 31
                                              -----------    ------------    --------    --------
                                                 (in thousands, other than per share amounts)
<S>                                           <C>            <C>             <C>         <C>
Revenues....................................   $ 57,736        $ 28,614      $ 42,209    $ 27,661
Expenses....................................     43,061          16,509        33,316      21,468
Net income..................................     12,766          12,085         8,147       6,165
Fully diluted earnings per share............       0.98            0.93          0.64        0.48
Total assets................................    332,063         304,846       285,613     291,393
Shareholders' equity........................    213,134         195,801       186,171     174,910
</Table>

     In 2000, our revenues increased to $156.2 million from $125.5 million in
1999, primarily as a result of investment activities. Our portfolio remains
principally invested in investment grade securities. In 1999, we transferred our
private banking services largely as a result of economies of scale.

     In 1999, we began electronic banking and equities trading for our clients
through our NetBanking website. In March 2000, we discontinued operation of the
website due to changing economic fundamentals in Europe. As a result, we took a
one-time loss from such discontinued operations of $4.9 million, or $0.37 per
share on a diluted basis, for the year ended December 31, 1999.

     Expenses from continuing operations increased to $114.4 million in 2000
from $89.4 million in 1999, primarily as a result of higher investment expenses.
In 2000, investment expenses increased to $88.9 million from $65.3 million in
1999. General and administrative expenses increased to $21.2 million in 2000
from $19.3 million in 1999. Interest expense decreased to $4.2 million in 2000
from $4.9 million in 1999, primarily as a result of lower outstanding
indebtedness during 2000 compared to 1999.

     In 2000, net earnings were $39.2 million, or $3.24 per share on a basic
basis ($3.03 per share on a diluted basis). In 1999, net earnings were $31.4
million, or $2.59 per share on a basic basis ($2.46 per share on a diluted
basis). Income from continuing operations in 1999 was $36.3 million, or $3.00
per share on a basic basis ($2.83 per share on a diluted basis).

LIQUIDITY AND CAPITAL RESOURCES

     The following table is a summary of selected financial information
concerning MFC for the periods indicated:

<Table>
<Caption>
                                                      DECEMBER 31,            DECEMBER 31,
                                                  --------------------    --------------------
                                                    2001        2000        2001        2000
                                                  --------    --------    --------    --------
                                                    (U.S. Dollars in      (Canadian Dollars in
                                                       thousands)              thousands)
<S>                                               <C>         <C>         <C>         <C>
Cash and cash equivalents.......................  $ 48,453    $ 45,677    $ 77,166    $ 68,524
Securities......................................    47,598      53,582      75,805      80,384
Total assets....................................   247,796     221,346     394,639     332,063
Debt............................................    61,535      23,611      98,000      35,421
Shareholders' equity............................   154,462     142,070     245,997     213,134
</Table>

                                        16
<PAGE>

     We maintain a high level of liquidity, with a substantial amount of our
assets held in cash and cash equivalents, securities and customer loans
collateralized by marketable securities. The highly liquid nature of these
assets provides us with flexibility in managing our business and financing. We
also use this liquidity in client related services where we act as a financial
intermediary for third parties and in our own proprietary investing activities.

     At December 31, 2001, our cash and cash equivalents were $77.2 million,
compared to $68.5 million at December 31, 2000. At December 31, 2001, we had
securities of $75.8 million, compared to $80.4 million at December 31, 2000.

     At December 31, 2001, our debt was $98.0 million, compared to $35.4 million
at December 31, 2000. At December 31, 2001, the majority of our borrowings were
denominated in U.S. dollars, and, to a lesser extent, in Euro and Canadian
dollars, with maturities of $23.6 million in 2002, $20.0 million in 2003 and
$54.4 million thereafter. See Note 8 of our consolidated financial statements
included elsewhere in this annual report.

OPERATING ACTIVITIES

     Operating activities provided cash of $59.7 million in 2001, compared to
$30.8 million in 2000. In 2001, a decrease in amounts due from investment
dealers resulting primarily from the outsourcing of our private banking client
accounts provided cash of $12.9 million, compared to $3.7 million in 2000. A
decrease in receivables primarily related to collections by two operations
acquired in 2001 provided cash of $35.4 million in 2001, compared to an increase
in receivables using cash of $3.5 million in 2000. A decrease in accounts
payable and accrued expenses used cash of $8.5 million in 2001, compared to an
increase in accounts payable and accrued expenses providing cash of $2.1 million
in 2000. In 2001, purchases of securities used cash of $3.0 million, compared to
$12.2 million in 2000. We expect to generate sufficient cash flow from
operations to meet our working capital requirements.

INVESTING ACTIVITIES

     Investing activities provided cash of $23.7 million in 2001, compared to
using cash $31.2 million in 2000. In 2001, a net decrease in loans resulting
primarily from the outsourcing of private banking client accounts provided cash
of $25.1 million. In 2000, a net increase in loans used cash of $31.7 million.
In 2001, the acquisition of subsidiaries, net of cash acquired, used cash of
$1.0 million.

FINANCING ACTIVITIES

     Net cash used by financing activities was $76.1 million in 2001, compared
to net cash provided by financing activities of $16.9 million in 2000. Net debt
repayments primarily by two operations acquired in 2001 used cash of $25.3
million in 2001, compared to net borrowings providing cash of $4.0 million in
2000. In 2001, a net decrease in deposits resulting from the outsourcing of
private banking client accounts and assets used cash of $62.4 million, compared
to a net increase in deposits providing cash of $13.3 million in 2000. The
issuance of common shares pursuant to outstanding incentive stock options in
2001 provided cash of $11.5 million, compared to net repurchases of common
shares using cash of $0.4 million in 2000.

     We did not pay cash dividends on our common shares in 2001 or 2000. In
February 2002, we announced our intention to repurchase up to 600,000 of our
common shares through the Nasdaq National Market or in private transactions,
from time to time, over the 12 month period ending February 2003, in order to
reduce dilution to existing shareholders. The timing of the repurchases will
depend upon market conditions and the market price for our common shares.

FOREIGN CURRENCY

     Substantially all of our operations are conducted in international markets
and our consolidated financial results are subject to foreign currency exchange
rate fluctuations.

     We translate foreign assets and liabilities into Canadian dollars at the
rate of exchange on the balance sheet date. Revenues and expenses are translated
at the average rate of exchange prevailing during the period.
                                        17
<PAGE>

Unrealized gains or losses from these translations are recorded as shareholders'
equity on the balance sheet and do not affect our net earnings.

     As a substantial amount of our revenues are received in Swiss francs, our
financial position for any given period, when reported in Canadian dollars, can
be significantly affected by the exchange rate for Swiss francs prevailing
during that period. In the year ended December 31, 2001, we reported
approximately a net $5.2 million foreign exchange translation gain and, as a
result, our cumulative foreign exchange translation gain at December 31, 2001
was $4.5 million, compared to a $0.8 million loss at December 31, 2000.

     We use derivative foreign exchange contracts to manage our exposure and our
clients' exposure to foreign currency exchange rate risks. At December 31, 2001,
we held four forward foreign exchange contracts in the aggregate notional amount
of $24.7 million which covers the period through May 31, 2002. We entered into
these contracts for our own account to manage our exposure to foreign currency
exchange risks. At December 31, 2000, we held three forward foreign exchange
contracts in the aggregate notional amount of $21.1 million each of which was
less than one month in duration. See "Item 11. Quantitative and Qualitative
Disclosures About Market Risk".

     Based upon the period average exchange rates in 2001, the Canadian dollar
decreased by approximately 4.3% in value against the Swiss franc and by
approximately 4.1% in value against the U.S. dollar since December 31, 2000. As
at December 31, 2001, the Canadian dollar decreased by approximately 3.5% in
value against the Swiss franc and by approximately 5.8% in value against the
U.S. dollar since December 31, 2000.

DERIVATIVE INSTRUMENTS

     Derivatives are financial instruments, the payments of which are linked to
the prices, or relationships between prices, of securities or commodities,
interest rates, currency exchange rates or other financial measures. Derivatives
are designed to enable parties to manage their exposure to interest rates and
currency exchange rates, and security and other price risks. We use derivatives
to provide products and services to clients and to manage our foreign exchange
exposure for our own account. See "Item 11. Quantitative and Qualitative
Disclosures about Market Risk".

INFLATION

     We do not believe that inflation has had a material impact on our revenues
or income over the past three fiscal years. Because our assets to a large extent
are liquid in nature, they are not significantly affected by inflation. However,
increases in inflation could result in increases in our expenses, which may not
be readily recoverable in the price of services provided to our clients. To the
extent inflation results in rising interest rates and has other adverse effects
on capital markets, it could adversely affect our financial position and
profitability.

ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

DIRECTORS AND SENIOR MANAGEMENT; BOARD PRACTICES

     Our Articles provide for three classes of directors with staggered terms.
Each director holds office until the expiry of his term or until his successor
is elected or appointed, unless his office is earlier vacated in accordance with
our Bylaws or with the provisions of the Business Corporations Act (Yukon). At
each annual meeting of MFC, a class of directors is elected to hold office for a
three year term. Successors to the class of directors whose terms expire are
identified as being of the same class as the directors they succeed and are
elected to hold office for a term expiring at the third succeeding annual
meeting of shareholders. A director appointed or elected to fill a vacancy on
the board of directors holds office for the unexpired term of his predecessor.
Officers of MFC serve at the discretion of the board of directors.

                                        18
<PAGE>

     The following table sets out certain information concerning our directors
and executive officers:

<Table>
<Caption>
                                                                                DATE OF         EXPIRATION
                              PRESENT                                         COMMENCEMENT       OF TERM
                              POSITION                                       OF OFFICE WITH   OF OFFICE WITH
NAME                          WITH MFC      PRINCIPAL OCCUPATION                  MFC              MFC
----                          --------      --------------------             --------------   --------------
<S>                           <C>           <C>                              <C>              <C>
Michael J. Smith(1).........  Director and  President, Chief Executive            1986             2002
                              President     Officer and Director of MFC           1996
Roy Zanatta.................  Director and  Secretary and Director of MFC         1996             2002
                              Secretary                                           1996
Sok Chu Kim(1)..............  Director      Senior Vice-President, Korea          1996             2004
                                            Exchange Bank, 1967 to 1985;
                                            President of Korea
                                            International Merchant Bank,
                                            1985 to 1989; Advisor to Sukura
                                            Bank (Seoul, Korea); Director
                                            of Korea Liberalization Fund
                                            Ltd.
Oq-Hyun Chin(1).............  Director      Business Advisor, The Art Group       1994             2004
                                            Architects & Engineers Ltd.
Dr. Stefan Feuerstein.......  Director      Managing Director, MFC Capital        2000             2003
                                            Partners AG; Managing Director
                                            of the Industrial Investment
                                            Council of the New German
                                            States; President of the
                                            Thuringian Economic Development
                                            Corporation (Germany) from 1992
                                            to 2001
</Table>

---------------
(1) Member of the Audit Committee.

     There are no arrangements or understandings with major shareholders,
customers, suppliers or others pursuant to which any person referred to above
was selected as a director or executive officer, nor are there any family
relationships between any of the persons referred to above.

     Our Audit Committee is responsible for, among other things: (1) meeting
with the external auditors separate from management to review specific issues;
(2) reviewing with the external auditors their annual report and reports to our
board of directors, from time to time, with respect to internal audit and
accounting procedures; and (3) making recommendations relating to the
appointment and remuneration of external auditors.

     We do not have a Remuneration Committee of our board of directors. Our
executive compensation program is administered by our Chief Executive Officer
under the supervision of our board of directors.

EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT OR CHANGE OF CONTROL

     Mr. Smith and Mr. Zanatta (each an "Executive") each entered into an
amended and restated employment agreement with MFC in 2000. Each agreement
generally provides, subject to certain termination provisions, for the continued
employment of the Executive for a period of 36 months with automatic one month
renewals, so that each agreement at all times has a remaining term of 36 months.
Each agreement provides for an annual base salary and other compensation to be
paid to the Executive as determined by our board of directors. In the event he
is terminated without cause or resigns for good reason (as defined in each
agreement) within three years of a change of control (as defined in each
agreement), the Executive will be entitled to a lump sum severance payment of
three times the sum of (i) his current annual salary under the agreement, and
(ii) the higher of his current annual bonus under the agreement and the highest
variable pay and bonus received by him in the previous five fiscal years. If the
Executive is terminated without cause or resigns for good reason after three
years of a change of control, he will be entitled to the same payments in equal
instalments over 12 months.

                                        19
<PAGE>

     In addition, all unvested rights in any stock options or other equity
awards made to the Executive will vest in full in the event of a change of
control. The Executive will also be entitled, for a period of 365 days following
the earlier of the date of his termination and the date of the change of
control, to require us to purchase all or any part of our common shares held by
such Executive on the date of termination or date of change of control, at a
price equal to the average closing market price of our common shares on the
Nasdaq National Market for the ten preceding trading days.

COMPENSATION

     During the fiscal year ended December 31, 2001, we paid an aggregate of
approximately $2.3 million in cash compensation to our directors and officers.
This amount does not take into account incentive stock options granted to or
exercised by such directors and officers or other non-cash compensation, as more
particularly described below. No other funds were set aside or accrued by MFC
during the fiscal year ended December 31, 2001 to provide pension, retirement or
similar benefits for our directors or officers pursuant to any existing plan
provided or contributed to by MFC.

     We are required, under applicable securities legislation in Canada, to
disclose to our shareholders details of compensation paid to certain executive
officers. The following fairly reflects material information regarding
compensation paid to such persons.

EXECUTIVE COMPENSATION

     The following table provides a summary of compensation paid by us during
each of the last three fiscal years to our Chief Executive Officer and to our
next four most highly paid executive officers who received a combined salary and
bonus during the fiscal year ended December 31, 2001 in excess of $100,000
(collectively, with the Chief Executive Officer, the "Named Executives"):

                           SUMMARY COMPENSATION TABLE

<Table>
<Caption>
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
                                                                                               LONG-TERM
                                                                                              COMPENSATION
                                                         ANNUAL COMPENSATION(1)                  AWARDS
                                 FISCAL YEAR                                OTHER ANNUAL    SECURITIES UNDER    ALL OTHER
NAME AND                            ENDED         SALARY        BONUS       COMPENSATION    OPTIONS GRANTED    COMPENSATION
PRINCIPAL POSITION              DECEMBER 31,        ($)          ($)            ($)               (#)              ($)
---------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>             <C>           <C>          <C>              <C>                <C>            <C>
  Michael J. Smith                  2001          353,295      352,497         18,381                --              --
  President, Chief                  2000          289,198      259,017         17,596                --           2,290
  Executive Officer                 1999          212,944      256,809             --                --              --
  and Director
  Claudio Morandi                   2001          232,763      218,791         14,334                --              --
  President                         2000          212,333      133,974          5,278            25,000           2,290
  MFC Bank                          1999          179,171      154,085         10,102                --              --
  Roy Zanatta                       2001          233,938       49,393             --                --              --
  Secretary and                     2000           85,161       10,000             --                --              --
  Director                          1999          104,852      119,844             --                --              --
  John Musacchio                    2001          291,557           --             --                --              --
  Vice-President                    2000          272,803           --             --                --              --
                                    1999          283,833           --             --                --              --
  Peter Jessop                      2001          146,500      121,551          5,973                --              --
  Vice-President                    2000          126,660       89,315          5,278            25,000              --
                                    1999          122,820       90,800          5,942                --              --
---------------------------------------------------------------------------------------------------------------------------------
</Table>

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

(1) On a cash basis, unless otherwise stated.

                                        20
<PAGE>

DIRECTORS' COMPENSATION

     We did not pay any compensation to our directors for their services as
directors during the year ended December 31, 2001, nor are there any
arrangements for any such compensation to be paid. Our directors are, however,
reimbursed for reasonable expenses incurred in connection with their services as
directors.

OPTIONS TO PURCHASE SECURITIES

     We have an incentive stock option plan that provides for the grant of
incentive stock options to purchase our common shares to our directors, officers
and key employees and other persons providing ongoing services to us. Our stock
option plan is administered by our board of directors. The maximum number of our
common shares which may be reserved and set aside for issuance under our stock
option plan is 2,762,000. Each option upon its exercise entitles the grantee to
one common share. The exercise price of an option may not be less than the
closing market price of our common shares on the Nasdaq National Market on the
day prior to the date of grant of the option. In the event our common shares are
not traded on such day, the exercise price may not be less than the average of
the closing bid and ask prices of our common shares on the Nasdaq National
Market for the ten trading days immediately prior to the date the option is
granted. Options may be granted under our stock option plan for an exercise
period of up to ten years from the date of grant of the option. We did not grant
any options in 2001.

EMPLOYEES

     We currently employ approximately 145 people. As at December 31, 2001, 2000
and 1999, we employed approximately 144, 36 and 37 people, respectively. We are
not party to any collective agreements with any labour unions.

SHARE OWNERSHIP

     The following table sets forth information as of April 9, 2002 concerning
the beneficial ownership of our common shares by each of our Named Executives
and directors:

<Table>
<Caption>
                                                                NUMBER OF      PERCENTAGE
NAME OF BENEFICIAL OWNER                                      COMMON SHARES     OF CLASS
------------------------                                      -------------    ----------
<S>                                                           <C>              <C>
Michael J. Smith............................................     612,000          4.8%
Claudio Morandi.............................................          --(1)        --
Roy Zanatta.................................................          --(2)        --
John Musacchio..............................................          --(3)        --
Sok Chu Kim.................................................          --           --
Oq-Hyun Chin................................................          --           --
Dr. Stefan Feuerstein.......................................          --(4)        --
</Table>

---------------
(1) Mr. Morandi has incentive stock options entitling him to acquire an
    aggregate of up to 145,000 of our common shares at an exercise price of
    U.S.$7.25 per share in respect of options to purchase up to 45,000 shares
    expiring July 25, 2002, U.S.$6.00 per share in respect of options to
    purchase up to 75,000 shares expiring October 28, 2003 and U.S.$7.00 per
    share in respect of options to purchase up to 25,000 shares expiring April
    11, 2005.
(2) Mr. Zanatta has incentive stock options entitling him to acquire an
    aggregate of up to 125,000 of our common shares at an exercise price of
    U.S.$7.25 per share in respect of options to purchase up to 65,000 shares
    expiring July 25, 2002 and U.S.$6.00 per share in respect of options to
    purchase up to 60,000 shares expiring October 28, 2003.
(3) Mr. Musacchio has incentive stock options entitling him to acquire up to
    50,000 of our common shares at an exercise price of U.S.$6.00 per share
    expiring October 28, 2003.
(4) Dr. Feuerstein has incentive stock options entitling him to acquire up to
    50,000 of our common shares at an exercise price of U.S.$7.00 per share
    expiring March 29, 2005.

                                        21
<PAGE>

ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

MAJOR SHAREHOLDERS

     The following table sets forth certain information as at April 9, 2002
concerning the ownership of our common shares by each person known to us, based
solely upon public records and filings, to be the direct and/or indirect owner
of five percent or more of our common shares:

<Table>
<Caption>
IDENTITY OF PERSON OR GROUP                                   AMOUNT OWNED    PERCENT OF CLASS
---------------------------                                   ------------    ----------------
<S>                                                           <C>             <C>
Peter Kellogg...............................................    3,141,550(1)        25.0%
FMR Corp....................................................      763,800            6.0%
</Table>

---------------
(1) In his public filings, Mr. Kellogg disclaims beneficial ownership of
    2,821,550 of the shares, or approximately 22.1% of our issued and
    outstanding common shares.

     Our officers and directors, as a group, own or control, directly or
indirectly, an aggregate of 612,000 common shares and have options to purchase
an additional 610,000 common shares, representing approximately 9.1% of our
common shares on a fully diluted basis.

     All common shareholders have identical voting rights.

SHAREHOLDER DISTRIBUTION

     As at April 9, 2002, there were approximately 647 holders of record of our
common shares and a total of 12,774,856 common shares were outstanding.
Approximately 10,675,934 or 83.6% of our common shares are held of record by 566
U.S. holders, including depositories and clearing agencies.

RELATED PARTY TRANSACTIONS

     Other than as disclosed herein, to the best of our knowledge, there have
been no material transactions since January 1, 2001 to which we were or are a
party and in which a director or officer of MFC, any relative or spouse of any
director or officer, or any individual owning, directly or indirectly, an
interest in our voting power that gives it significant influence over us, has or
will have a direct or indirect material interest nor were any of our directors
or officers, any relatives or spouses of such directors or officers, or any
individuals owning, directly or indirectly, an interest in our voting power that
gives them significant influence over us, indebted to us during this period.

     At December 31, 2001, we had notes payable to affiliates in the aggregate
amount of approximately $13.0 million from whom we earned fees of $0.3 million
during 2001. Our President and Chief Executive Officer is also the President and
a director of both such affiliates. We had a payable to an affiliate of $0.3
million at December 31, 2001, which will be paid in the normal course.

     We receive dividends pursuant to the royalty interest from a 25% owned
affiliate at a rate of 10% annually. Dividends earned amounted to $5.3 million
in 2001.

                                        22
<PAGE>

ITEM 8.  FINANCIAL INFORMATION

CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

     See "Item 18. Financial Statements" for financial statements filed as part
of this annual report.

SIGNIFICANT CHANGES

     No significant changes have occurred since the date of the financial
statements provided in Item 18 below.

LEGAL PROCEEDINGS

     We are subject to routine litigation incidental to our business and are
named from time to time as a defendant in various legal actions arising in
connection with our activities, certain of which include large claims for
punitive damages. We are also involved, from time to time, in investigations and
proceedings by governmental and self-regulatory agencies. Some of these legal
actions, investigations and proceedings may result in adverse judgments,
penalties or fines.

     In view of the inherent difficulty of predicting the outcome of such
matters, particularly in cases in which substantial damages are sought, we
cannot state what the eventual outcome of pending matters will be. We are
contesting the allegations made in each pending matter and believe, based on
current knowledge and after consultation with counsel, that the outcome of such
matters will not have a material adverse effect on our consolidated financial
condition, but may be material to our operating results for any particular
period, depending on the level of our income for such period.

DIVIDEND INFORMATION

     The actual timing, payment and amount of dividends paid on our common
shares is determined by our board of directors, based upon things such as our
cash flow, results of operations and financial condition, the need for funds to
finance ongoing operations and such other business considerations as our board
of directors considers relevant. In June 1997, we paid a dividend of $0.01 per
share and, in June 1998, we paid a dividend of U.S.$0.02 per share. We did not
pay any cash dividends in 1999, 2000 or 2001.

     On December 17, 2001, we declared the Special Dividend to our shareholders
consisting of 9,016,293 shares of common stock of Mymetics. The Special Dividend
will be distributed pro rata among our shareholders on the basis of 0.6 common
shares of Mymetics for each one of our common shares held by shareholders.
Fractional interests will be rounded off. The record date for the Special
Dividend is December 31, 2001 and the ex-dividend date and payment date will be
the day after all conditions to the distribution of the Special Dividend have
been satisfied, which include obtaining certain regulatory approvals and
receipts. On December 21, 2001, we caused the Mymetics shares comprising the
Special Dividend to be transferred to a special purpose trust to be held by
trustees for distribution to our shareholders pursuant to a trust settlement.
Mymetics is a biotechnology research and development company organized pursuant
to the laws of Delaware whose shares are quoted on the OTC Bulletin Board under
the symbol "MYMX". It is currently expected that the Special Dividend payment
date will be in or around mid-2002.

                                        23
<PAGE>

ITEM 9.  THE OFFER AND LISTING

MARKETS AND PRICE HISTORY

     Our common shares are quoted on the Nasdaq National Market under the symbol
"MXBIF" and on the Frankfurt Stock Exchange under the symbol "MFC GR". The
following table sets forth the high and low sales prices of our common shares on
the Nasdaq National Market for the periods indicated:

<Table>
<Caption>
                                                                       NASDAQ
                                                                 NATIONAL MARKET(1)
                                                              ------------------------
                                                                 HIGH          LOW
                                                              ----------    ----------
<S>                                                           <C>           <C>
ANNUAL HIGHS AND LOWS
1997........................................................  U.S.$11.56    U.S.$ 5.45
1998........................................................       14.38          4.69
1999........................................................       12.25          5.81
2000........................................................       10.00          6.75
2001........................................................       11.60          7.13
QUARTERLY HIGHS AND LOWS
2000
First Quarter...............................................  U.S.$10.00    U.S.$ 6.75
Second Quarter..............................................        8.38          6.81
Third Quarter...............................................        8.56          6.94
Fourth Quarter..............................................        8.88          7.50
2001
First Quarter...............................................        8.50          7.13
Second Quarter..............................................       11.00          7.63
Third Quarter...............................................       10.00          7.40
Fourth Quarter..............................................       11.60          7.90
2002
First Quarter...............................................       11.51          9.20
MONTHLY HIGHS AND LOWS
2001
October.....................................................  U.S.$10.40    U.S.$ 7.90
November....................................................       10.30          8.50
December....................................................       11.60          8.65
2002
January.....................................................       11.51         10.00
February....................................................       10.25          9.70
March.......................................................       10.35          9.20
April 1 to April 9..........................................       10.49         10.15
</Table>

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

(1) Our common shares were quoted on the OTC Bulletin Board from May 1996 to May
    1997. Since May 1997, our common shares have been quoted on the Nasdaq
    National Market.

                                        24
<PAGE>

ITEM 10.  ADDITIONAL INFORMATION

ARTICLES AND BYLAWS

     We are incorporated under the laws of the Yukon Territory, Canada and have
been assigned corporate access number 29216.

     Our Articles and Bylaws do not contain a description of our objects and
purposes, except insofar as to restrict us from carrying on the business of a
railway, steamship, air transport, canal, telegraph, telephone or irrigation
company. We may perform any and all corporate activities permissible under the
laws of the Yukon Territory.

     Our Articles and Bylaws do not restrict a director's power to vote on a
proposal, arrangement or contract in which the director is materially
interested, vote compensation to themselves or any other members of their body
in the absence of an independent quorum or exercise borrowing powers. There is
no mandatory retirement age for our directors and our directors are not required
to own securities of MFC in order to serve as directors.

     Our authorized capital consists of common shares and class A preferred
shares. Our class A preferred shares may be issued in one or more series and our
directors may fix the number of shares which is to comprise each series and the
designation, rights, privileges, restrictions and conditions attaching to each
series. Currently, we have authorized 140,000 class A preferred shares, series 1
(the "Series 1 Shares"), 140,000 class A preferred shares, series A (the "Series
A Shares"), 100,000 class A preferred shares, series 2 (the "Series 2 Shares")
and 20,000 class A preferred shares, series 3 (the "Series 3 Shares").

     Holders of our common shares are entitled to vote at all meetings of
shareholders, except meetings at which only holders of a specified class of
shares are entitled to vote, receive any dividend declared by MFC and, subject
to the rights, privileges, restrictions and conditions attaching to any other
class of shares, receive the remaining property of MFC upon dissolution.

     Our class A preferred shares of each series rank on a parity with our class
A preferred shares of any other series and are entitled to a preference over our
common shares with respect to the payment of dividends and the distribution of
assets or return of capital in the event of liquidation, dissolution or
winding-up of MFC.

     Holders of our Series 1 Shares and Series A Shares are entitled to
dividends of $5.00 per share per annum. Our Series 1 Shares and Series A Shares
are redeemable at our option at a price of $100.00 and carry retraction rights
entitling a holder to require us to redeem their Series 1 Shares or Series A
Shares, respectively, at any time after five years from the date of issuance for
a price of $100.00. Our Series 1 Shares and Series A Shares are also convertible
into such number of our common shares as is specified in our Articles at any
time after five years from the date of issuance or in the event the Series 1
Shares or Series A Shares, respectively, are called for redemption.

     Holders of our Series 2 Shares and Series 3 Shares are entitled to
dividends of $3.00 per share per annum. Our Series 2 Shares and Series 3 Shares
are redeemable at our option at a price of $100.00.

     The provisions in our Articles attaching to our common shares and class A
preferred shares may be altered, amended, repealed, suspended or changed by the
affirmative vote of the holders of not less than two-thirds of the common shares
and two-thirds of the class A preferred shares, respectively.

     Our Articles provide for three classes of directors with staggered terms.
Each director holds office until the expiry of his term or until his successor
is elected or appointed, unless his office is earlier vacated in accordance with
our Bylaws or with the provisions of the Business Corporations Act (Yukon). At
each annual meeting of MFC, a class of directors is elected to hold office for a
three year term. Successors to the class of directors whose terms expire are
identified as being of the same class as the directors they succeed and are
elected to hold office for a term expiring at the third succeeding annual
meeting of shareholders. A director appointed or elected to fill a vacancy on
the board of directors holds office for the unexpired term of his predecessor.

                                        25
<PAGE>

     An annual meeting of shareholders must be held at such time in each year
not later than 15 months after the last preceding annual meeting and at such
place as our board of directors, or failing it, our Chairman, Managing Director
or President, may from time to time determine. The holders of not less than five
percent of our issued shares that carry the right to vote at a meeting may
requisition our directors to call a meeting of shareholders for the purposes
stated in the requisition. The quorum for the transaction of business at any
meeting of shareholders is two persons present in person or by proxy who
together hold or represent by proxy in aggregate not less than one-third of our
outstanding shares entitled to vote at the meeting. Only persons entitled to
vote, our directors and auditor and others who, although not entitled to vote,
are otherwise entitled or required to be present, are entitled to be present at
a meeting of shareholders.

     Except as provided in the ICA, there are no limitations specific to the
rights of non-Canadians to hold or vote our common shares under the laws of
Canada or the Yukon Territory, or in our charter documents. See "Exchange
Controls" below for a discussion of the principal features of the ICA for
non-Canadian residents proposing to acquire our common shares.

     As set forth above, our Articles and Bylaws contain certain provisions that
would have an effect of delaying, deferring or preventing a change in control of
MFC, including authorizing the issuance by our board of directors of preferred
stock in series, providing for a classified board of directors with staggered,
three-year terms and limiting the persons who may call special meetings of
shareholders. Our Articles and Bylaws do not contain any provisions that would
operate only with respect to a merger, acquisition or corporate restructuring of
MFC.

     In 1993, we adopted a shareholder protection rights plan to protect us and
our shareholders from unfair, abusive or coercive acquisition tactics.
Generally, the plan provides for the issuance to the holders of each of our
outstanding common shares of a right to purchase one of our common shares at an
exercise price determined in accordance with the plan upon the commencement of a
take-over bid. We have waived the application of the plan to an existing
shareholder to permit such shareholder to acquire up to 25% of our common
shares.

     Our Bylaws do not contain any provisions governing the ownership threshold
above which shareholder ownership must be disclosed.

EXCHANGE CONTROLS

     There are presently no governmental laws, decrees or regulations in Canada
which restrict the export or import of capital, or which impose foreign exchange
controls or affect the remittance of interest, dividends or other payments to
non-resident holders of MFC's common shares. However, any remittances of
dividends to United States residents are subject to a 15% withholding tax (5% if
the beneficial owner of the dividends is a corporation owning at least 10% of
our voting shares) pursuant to the Canada-U.S. Tax Convention (1980), as amended
(the "Treaty"). See "Item 10. Additional Information -- Taxation".

     Except as provided in the ICA, there are no limitations specific to the
rights of non-Canadians to hold or vote our common shares under the laws of
Canada or the Yukon Territory, or in our charter documents. The following
summarizes the principal features of the ICA for non-Canadian residents
proposing to acquire our common shares. THIS SUMMARY IS OF A GENERAL NATURE ONLY
AND IS NOT INTENDED TO BE, AND SHOULD NOT BE CONSTRUED TO BE, LEGAL ADVICE TO
ANY HOLDER OR PROSPECTIVE HOLDER OF OUR COMMON SHARES, AND NO OPINION OR
REPRESENTATION TO ANY HOLDER OR PROSPECTIVE HOLDER OF OUR COMMON SHARES IS
HEREBY MADE. ACCORDINGLY, HOLDERS AND PROSPECTIVE HOLDERS OF OUR COMMON SHARES
SHOULD CONSULT WITH THEIR OWN LEGAL ADVISORS WITH RESPECT TO THE CONSEQUENCES OF
PURCHASING AND OWNING OUR COMMON SHARES.

     The ICA governs the acquisition of Canadian businesses by non-Canadians.
Under the ICA, non-Canadian persons or entities acquiring "control" (as defined
in the ICA) of a corporation carrying on business in Canada are required to
either notify, or file an application for review with, Investment Canada, the
federal agency created by the ICA. Investment Canada may review any transaction
which results in the direct or indirect acquisition of control of a Canadian
business, where the gross value of corporate assets exceeds certain threshold
levels (which are higher for investors from members of the World Trade
Organization

                                        26
<PAGE>

("WTO"), including Americans, or WTO member-controlled companies) or where the
activity of the business is related to Canada's cultural heritage or national
identity. No change of voting control will be deemed to have occurred, for
purposes of the ICA, if less than one-third of the voting control of a Canadian
corporation is acquired by an investor.

     If an investment is reviewable under the ICA, an application for review in
the form prescribed is normally required to be filed with Investment Canada
prior to the investment taking place, and the investment may not be implemented
until the review has been completed and the Minister responsible for Investment
Canada is satisfied that the investment is likely to be of net benefit to
Canada. If the Minister is not satisfied that the investment is likely to be of
net benefit to Canada, the non-Canadian applicant must not implement the
investment, or if the investment has been implemented, may be required to divest
itself of control of the Canadian business that is the subject of the
investment.

     Certain transactions relating to our common shares would be exempt from the
ICA, including:

     - the acquisition of our common shares by a person in the ordinary course
       of that person's business as a trader or dealer in securities;

     - the acquisition of control of MFC in connection with the realization of
       security granted for a loan or other financial assistance and not for a
       purpose related to the provisions of the ICA; and

     - the acquisition of control of MFC by reason of an amalgamation, merger,
       consolidation or corporate reorganization following which the ultimate
       direct control in fact of MFC, through ownership of our common shares,
       remains unchanged.

TAXATION

CERTAIN CANADIAN FEDERAL INCOME TAX CONSEQUENCES

     We consider that the following general summary fairly describes the
principal Canadian federal income tax consequences applicable to a holder of our
common shares who is a resident of the United States, who is not, will not be
and will not be deemed to be a resident of Canada for purposes of the Income Tax
Act (Canada) (the "ITA") and any applicable tax treaty and who does not use or
hold, and is not deemed to use or hold, his common shares of MFC in connection
with carrying on a business in Canada (a "non-resident holder").

     This summary is based upon the current provisions of the ITA, the
regulations thereunder (the "Regulations"), the current publicly announced
administrative and assessing policies of the Canada Customs and Revenue Agency
and the Treaty. This summary also takes into account the amendments to the ITA
and Regulations publicly announced by the Minister of Finance (Canada) prior to
the date hereof (the "Tax Proposals") and assumes that all such Tax Proposals
will be enacted in their present form. However, no assurances can be given that
the Tax Proposals will be enacted in the form proposed, or at all. This summary
is not exhaustive of all possible Canadian federal income tax consequences and,
except for the foregoing, this summary does not take into account or anticipate
any changes in law, whether by legislative, administrative or judicial decision
or action, nor does it take into account provincial, territorial or foreign
income tax legislation or considerations, which may differ from the Canadian
federal income tax consequences described herein.

     THIS SUMMARY IS OF A GENERAL NATURE ONLY AND IS NOT INTENDED TO BE, AND
SHOULD NOT BE CONSTRUED TO BE, LEGAL, BUSINESS OR TAX ADVICE TO ANY PARTICULAR
HOLDER OR PROSPECTIVE HOLDER OF OUR COMMON SHARES, AND NO OPINION OR
REPRESENTATION WITH RESPECT TO THE TAX CONSEQUENCES TO ANY HOLDER OR PROSPECTIVE
HOLDER OF OUR COMMON SHARES IS MADE. ACCORDINGLY, HOLDERS AND PROSPECTIVE
HOLDERS OF OUR COMMON SHARES SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT
TO THE INCOME TAX CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF OUR COMMON
SHARES IN THEIR PARTICULAR CIRCUMSTANCES.

    Dividends

     Dividends paid on our common shares to a non-resident holder will be
subject under the ITA to withholding tax at a rate of 25% subject to a reduction
under the provisions of an applicable tax treaty, which

                                        27
<PAGE>

tax is deducted at source by MFC. The Treaty provides that the ITA's standard
25% withholding tax rate is reduced to 15% on dividends paid on shares of a
corporation resident in Canada (such as MFC) to residents of the United States,
and also provides for a further reduction of this rate to 5% where the
beneficial owner of the dividends is a corporation resident in the United States
that owns at least 10% of the voting shares of the corporation paying the
dividend.

    Capital Gains

     A non-resident holder is not subject to tax under the ITA in respect of a
capital gain realized upon the disposition of a common share of MFC unless such
share represents "taxable Canadian property" (as defined in the ITA) to the
holder thereof. Our common shares generally will be considered taxable Canadian
property to a nonresident holder if:

     - the non-resident holder;

     - persons with whom the non-resident holder did not deal at arm's length;
       or

     - the non-resident holder and persons with whom such non-resident holder
       did not deal at arm's length,

     owned or had an interest in an option in respect of not less than 25% of
the issued shares of any class of our capital stock at any time during the five
year period immediately preceding the disposition of such shares. In the case of
a non-resident holder to whom shares of MFC represent taxable Canadian property
and who is resident in the United States, no Canadian taxes will generally be
payable on a capital gain realized on such shares by reason of the Treaty unless
the value of such shares is derived principally from real property situated in
Canada.

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

     The following is a general discussion of certain possible United States
Federal foreign income tax matters under current law, generally applicable to a
U.S. Holder (as defined below) of our common shares who holds such shares as
capital assets. This discussion does not address all aspects of United States
Federal income tax matters and does not address consequences peculiar to persons
subject to special provisions of Federal income tax law, such as those described
below as excluded from the definition of a U.S. Holder. In addition, this
discussion does not cover any state, local or foreign tax consequences. See
"Certain Canadian Federal Income Tax Consequences" above.

     The following discussion is based upon the Internal Revenue Code of 1986,
as amended (the "Code"), Treasury Regulations, published Internal Revenue
Service ("IRS") rulings, published administrative positions of the IRS and court
decisions that are currently applicable, any or all of which could be materially
and adversely changed, possibly on a retroactive basis, at any time. In
addition, this discussion does not consider the potential effects, both adverse
and beneficial, of any recently proposed legislation which, if enacted, could be
applied, possibly on a retroactive basis, at any time. No assurance can be given
that the IRS will agree with such statements and conclusions, or will not take,
or a court will not adopt, a position contrary to any position taken herein.

     THE FOLLOWING DISCUSSION IS FOR GENERAL INFORMATION ONLY AND IS NOT
INTENDED TO BE, NOR SHOULD IT BE CONSTRUED TO BE, LEGAL, BUSINESS OR TAX ADVICE
TO ANY HOLDER OR PROSPECTIVE HOLDER OF OUR COMMON SHARES, AND NO OPINION OR
REPRESENTATION WITH RESPECT TO THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
TO ANY SUCH HOLDER OR PROSPECTIVE HOLDER IS MADE. ACCORDINGLY, HOLDERS AND
PROSPECTIVE HOLDERS OF COMMON SHARES SHOULD CONSULT THEIR OWN TAX ADVISORS WITH
RESPECT TO FEDERAL, STATE, LOCAL, AND FOREIGN TAX CONSEQUENCES OF PURCHASING,
OWNING AND DISPOSING OF OUR COMMON SHARES.

     U.S. Holders

     As used herein, a "U.S. Holder" includes a holder of our common shares who
is a citizen or resident of the United States, a corporation created or
organized in or under the laws of the United States or of any political
subdivision thereof, any entity which is taxable as a corporation for U.S. tax
purposes and any other

                                        28
<PAGE>

person or entity whose ownership of our common shares is effectively connected
with the conduct of a trade or business in the United States. A U.S. Holder does
not include persons subject to special provisions of Federal income tax law,
such as tax-exempt organizations, qualified retirement plans, financial
institutions, insurance companies, real estate investment trusts, regulated
investment companies, broker-dealers, non-resident alien individuals or foreign
corporations whose ownership of our common shares is not effectively connected
with the conduct of a trade or business in the United States and shareholders
who acquired their shares through the exercise of employee stock options or
otherwise as compensation.

     Foreign Tax Credit

     A U.S. Holder who pays (or has had withheld from distributions) Canadian
income tax with respect to the ownership of our common shares may be entitled,
at the option of the U.S. Holder, to either a deduction or a tax credit for such
foreign tax paid or withheld. Generally, it will be more advantageous to claim a
credit because a credit reduces United States Federal income taxes on a
dollar-for-dollar basis, while a deduction merely reduces the taxpayer's income
subject to tax. This election is made on a year-by-year basis and generally
applies to all foreign income taxes paid by (or withheld from) the U.S. Holder
during that year. There are significant and complex limitations which apply to
the tax credit, among which is an ownership period requirement and the general
limitation that the credit cannot exceed the proportionate share of the U.S.
Holder's United States income tax liability that the U.S. Holder's foreign
source income bears to his or its worldwide taxable income. In determining the
application of this limitation, the various items of income and deduction must
be classified into foreign and domestic sources. Complex rules govern this
classification process. There are further limitations on the foreign tax credit
for certain types of income such as "passive income", "high withholding tax
interest", "financial services income", "shipping income", and certain other
classifications of income. THE AVAILABILITY OF THE FOREIGN TAX CREDIT AND THE
APPLICATION OF THESE COMPLEX LIMITATIONS ON THE TAX CREDIT ARE FACT SPECIFIC AND
HOLDERS AND PROSPECTIVE HOLDERS OF OUR COMMON SHARES SHOULD CONSULT THEIR OWN
TAX ADVISORS REGARDING THEIR INDIVIDUAL CIRCUMSTANCES.

     Passive Foreign Investment Corporation

     We do not believe that we are a passive foreign investment corporation (a
"PFIC"). If a U.S. Holder disposes of shares in a PFIC, any resultant gain will
be subject to a tax that is determined by apportioning the gain pro rata over
the entire holding period of the shares. The amount of gain that is apportioned
to the current year, and to any pre-1987 holding period, is included in the U.S.
Holder's current income.

     The tax on the amount apportioned to any prior years beginning with 1987 is
calculated using the highest tax rate in each applicable year. In addition,
interest compounded daily is charged on the tax due for each prior year from the
due date of the return for the respective year to the due date for the current
year. The interest rate is set quarterly. The U.S. Holder's current year tax is
increased by the special tax and interest on amounts apportioned to prior years.

     A U.S. Holder can avoid this special tax and interest charge by making a
permanent election to treat a PFIC as a "qualified electing fund" and to report
in each year thereafter such shareholder's pro rata share of the ordinary
earnings and net capital gains of a PFIC. If the election is not made in the
first year that the U.S. Holder owns the shares, a special election would have
to be made to cleanse the effect of the prior year's holding periods.

     These rules apply similarly to distributions from a PFIC that would be
considered excess distributions. Complex rules govern the determination of
applicable gains and excess distributions, the calculation of the amounts
allocated pro rata to prior years, the resultant tax and applicable interest,
and the qualified electing fund elections whether as pedigreed or non-pedigreed.
HOLDERS AND PROSPECTIVE HOLDERS OF COMMON SHARES OF A PFIC SHOULD CONSULT THEIR
OWN TAX ADVISORS REGARDING THEIR INDIVIDUAL CIRCUMSTANCES.

DOCUMENTS ON DISPLAY

     We are subject to the informational requirements of the Securities Exchange
Act of 1934, as amended. In accordance with these requirements, we file reports
and other information with the Securities and Exchange
                                        29
<PAGE>

Commission. These materials, including this annual report and the exhibits
hereto, may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549
and at the Commission's regional offices at 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511, and 233 Broadway, New York, New York 10279. Copies
of the materials may be obtained from the principal office of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The public
may obtain information on the operation of the Commission's public reference
facilities by calling the Commission in the United States at 1-800-SEC-0330. The
Commission also maintains a web site at http://www.sec.gov that contains
reports, proxy statements and other information regarding registrants that file
electronically with the Commission.

ITEM 11.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We are exposed to market risk from changes in interest rates, foreign
currency exchange rates and equity prices which may affect our results of
operations and financial condition. We manage these risks through internal risk
management policies. We also use derivative foreign exchange contracts to manage
our exposure and our clients' exposure to foreign currency exchange rate risks.
At December 31, 2001, we held four forward foreign exchange contracts in the
aggregate notional amount of $24.7 million which covers the period through May
31, 2002. We entered into these contracts for our own account to manage our
exposure to foreign currency exchange risks. At December 31, 2000, we held three
forward foreign exchange contracts in the aggregate notional amount of $21.1
million each of which was less than one month in duration. If any of the variety
of instruments and strategies we utilize to manage our exposure to various types
of risk are not effective, we may incur losses. Many of our strategies are based
on historical trading patterns and correlations. However, these strategies may
not be fully effective in mitigating our risk exposure in all market
environments or against all types of risk. Unexpected market developments may
affect our risk management strategies during this time, and unanticipated
developments could impact our risk management strategies in the future.

INTEREST RATE RISK

     Fluctuations in interest rates may affect the fair value of fixed interest
rate financial instruments sensitive to interest rates. An increase in interest
rates may decrease the fair value of our financial instrument assets and
increase the fair value of our financial instrument liabilities. A decrease in
interest rates may increase the fair value of our financial instrument assets
and decrease the fair value of our financial instrument liabilities. An increase
in interest rates may also increase the risk of defaults on loans. However,
since our loans are collateralized, we do not consider that the loans are
subject to interest rate risk. Our financial instruments which may be sensitive
to interest rate fluctuations are investments and debt obligations. The
following tables provide information about our exposure to interest rate
fluctuations for the carrying amount of financial instruments that may be
sensitive to such fluctuations as at December 31, 2001 and 2000, respectively,
and expected cash flows from these instruments.

                            AS AT DECEMBER 31, 2001
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                EXPECTED FUTURE CASH FLOW*
                           CARRYING    FAIR     ----------------------------------------------------------
                            VALUE      VALUE     2002      2003      2004     2005     2006     THEREAFTER
                           --------   -------   -------   -------   ------   ------   -------   ----------
<S>                        <C>        <C>       <C>       <C>       <C>      <C>      <C>       <C>
Investments(1)...........  $60,530    $60,503   $27,246   $ 4,955   $5,688   $4,900   $ 4,900    $37,451
Debt obligations(2)......   63,381     46,954     7,759    18,351    1,735    1,735    33,718     23,856
</Table>

---------------
* Including interest and dividends where applicable.
(1) Investments consist of debt securities and preferred stock.
(2) Debt obligations consist of the bonds and notes payable which bear fixed
    interest rates.

                                        30
<PAGE>

                            AS AT DECEMBER 31, 2000
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                 EXPECTED FUTURE CASH FLOW*
                             CARRYING    FAIR     --------------------------------------------------------
                              VALUE      VALUE     2001      2002     2003     2004     2005    THEREAFTER
                             --------   -------   -------   ------   ------   ------   ------   ----------
<S>                          <C>        <C>       <C>       <C>      <C>      <C>      <C>      <C>
Investments(1).............  $44,147    $43,815   $40,793   $  534   $  977   $   --   $   --    $ 1,671
Debt obligations(2)........   21,131     13,946     1,690    1,690    1,690    1,690    1,690     24,935
</Table>

---------------
* Including interest and dividends where applicable.
(1) Investments consist of debt securities.
(2) Debt obligations consist of the bonds which mature on April 1, 2008 and bear
    interest at 8% per annum.

FOREIGN CURRENCY EXCHANGE RATE RISK

     Our reporting currency is the Canadian dollar. We hold financial
instruments primarily denominated in U.S. dollars, Euro and Swiss francs. A
depreciation of such currencies against the Canadian dollar will decrease the
fair value of our financial instrument assets and liabilities. An appreciation
of such currencies against the Canadian dollar will increase the fair value of
our financial instrument assets and liabilities. Our financial instruments which
may be sensitive to foreign currency exchange rate fluctuations are investments,
loans, deposits and debt obligations. The following tables provide information
about our exposure to foreign currency exchange rate fluctuations for the
carrying amount of financial instruments that may be sensitive to such
fluctuations as at December 31, 2001 and 2000, respectively, and expected cash
flows from these instruments:

                            AS AT DECEMBER 31, 2001
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                EXPECTED FUTURE CASH FLOW*
                           CARRYING    FAIR     ----------------------------------------------------------
                            VALUE      VALUE     2002      2003      2004     2005     2006     THEREAFTER
                           --------   -------   -------   -------   ------   ------   -------   ----------
<S>                        <C>        <C>       <C>       <C>       <C>      <C>      <C>       <C>
Investments(1)...........  $67,989    $66,867   $59,893   $    55   $  822   $   --   $    --    $ 7,356
Loans(2).................   45,460     45,460    37,687     9,913       --       --        --         --
Deposits(3)..............      524        524       524        --       --       --        --         --
Debt obligations(4)......   82,394     64,941    18,544    14,309    6,057    5,888    37,702     23,856
</Table>

---------------
* Including interest and dividends where applicable.
(1) Investments consist of debt securities and equity securities, both of which
    are primarily denominated in U.S. dollars or Swiss francs.
(2) Loans are denominated in U.S. dollars or Swiss francs.
(3) Deposits consist of cash deposits with MFC Bank.
(4) Debt obligations consist of the bonds and notes payable, all of which are
    denominated in U.S. dollars or Euro.

                            AS AT DECEMBER 31, 2000
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                EXPECTED FUTURE CASH FLOW*
                            CARRYING    FAIR     ---------------------------------------------------------
                             VALUE      VALUE     2001      2002      2003     2004     2005    THEREAFTER
                            --------   -------   -------   -------   ------   ------   ------   ----------
<S>                         <C>        <C>       <C>       <C>       <C>      <C>      <C>      <C>
Investments(1)............  $63,208    $73,882   $67,447   $   534   $  977   $   --   $   --    $ 4,690
Loans(2)..................   77,420     77,420    77,579       548    2,967       13       25         --
Deposits(3)        .......   45,509     45,509    45,509        --       --       --       --         --
Debt obligations(4).......   35,421     28,236     2,853    10,051    8,307    1,690    1,690     24,935
</Table>

---------------
* Including interest and dividends where applicable.
(1) Investments consist of debt securities and equity securities, both of which
    are primarily denominated in U.S. dollars or Swiss francs.
(2) Loans are denominated in U.S. dollars or Swiss francs.
(3) Deposits consist of cash deposits with MFC Bank.
(4) Debt obligations consist of the bonds and other debt, all of which are
    denominated in U.S. dollars.

                                        31
<PAGE>

EQUITY PRICE RISK

     Changes in trading prices of equity securities may affect the fair value of
equity securities or the fair value of other securities convertible into equity
securities. An increase in trading prices will increase the fair value and a
decrease in trading prices will decrease the fair value of equity securities or
instruments convertible into equity securities. Our financial instruments which
may be sensitive to fluctuations in equity prices are investments and debt
obligations. The following tables provide information about our exposure to
fluctuations in equity prices for the carrying amount of financial instruments
sensitive to such fluctuations as at December 31, 2001 and 2000, respectively,
and expected cash flows from these instruments:

                            AS AT DECEMBER 31, 2001
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                 EXPECTED FUTURE CASH FLOW*
                             CARRYING    FAIR     --------------------------------------------------------
                              VALUE      VALUE     2002      2003     2004     2005     2006    THEREAFTER
                             --------   -------   -------   ------   ------   ------   ------   ----------
<S>                          <C>        <C>       <C>       <C>      <C>      <C>      <C>      <C>
Investments(1).............  $72,703    $71,110   $28,027   $4,900   $4,900   $4,900   $4,900    $49,596
Debt obligations(2)........   21,687     20,385     1,735    1,735    1,735    1,735    1,735     23,856
</Table>

---------------
* Including interest and dividends where applicable.
(1) Investments consist of equity securities.
(2) Debt obligations consist of the bonds which are convertible into common
    shares of MFC at a fixed price.

                            AS AT DECEMBER 31, 2000
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                 EXPECTED FUTURE CASH FLOW*
                             CARRYING    FAIR     --------------------------------------------------------
                              VALUE      VALUE     2001      2002     2003     2004     2005    THEREAFTER
                             --------   -------   -------   ------   ------   ------   ------   ----------
<S>                          <C>        <C>       <C>       <C>      <C>      <C>      <C>      <C>
Investments(1).............  $39,408    $49,242   $32,149   $   --   $   --   $   --   $   --    $ 7,259
Debt obligations(2)........   21,131     13,946     1,690    1,690    1,690    1,690    1,690     24,935
</Table>

---------------
* Including interest and dividends where applicable.
(1) Investments consist of equity securities.
(2) Debt obligations consist of the bonds which are convertible into common
    shares of MFC at a fixed price.

ITEM 12.  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

     Not applicable.

                                    PART II

ITEM 13.  DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

     None.

ITEM 14.  MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
          PROCEEDS

     None.

ITEM 15.  [RESERVED]

ITEM 16.  [RESERVED]

                                    PART III

ITEM 17.  FINANCIAL STATEMENTS

     Not applicable.

                                        32
<PAGE>

ITEM 18.  FINANCIAL STATEMENTS

INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

1.   Independent Auditors' Report on the Consolidated Financial Statements of
     MFC as at December 31, 2001, 2000 and 1999

2.   Consolidated Balance Sheets at December 31, 2001 and 2000 (audited)

3.   Consolidated Statements of Income for the years ended December 31, 2001,
     2000 and 1999 (audited)

4.   Consolidated Statements of Changes in Shareholders' Equity for the years
     ended December 31, 2001, 2000 and 1999 (audited)

5.   Consolidated Statements of Cash Flows for the years ended December 31,
     2001, 2000 and 1999 (audited)

6.   Notes to Consolidated Financial Statements

7.   Independent Auditors' Report on Financial Statement Schedules

8.   Financial Statement Schedules:

     I     Condensed Financial Information of Registrant

     III   Supplementary Insurance Information

     IV   Reinsurance

     VI   Supplemental Information Concerning Property -- Casualty Insurance
Operations

                                        33
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Shareholders
MFC Bancorp Ltd.

     We have audited the consolidated balance sheets of MFC Bancorp Ltd. and
Subsidiaries as at December 31, 2001 and 2000, and the consolidated statements
of income, changes in shareholders' equity and cash flows for the years ended
December 31, 2001, 2000 and 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

     In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the Company as at December 31,
2001 and 2000, and the results of its operations and its cash flows for the
years ended December 31, 2001, 2000 and 1999, in accordance with generally
accepted accounting principles in Canada, which differ from United States
generally accepted accounting principles as described in Note 16 to the
consolidated financial statements.

/s/ PETERSON SULLIVAN P.L.L.C.
Seattle, Washington
March 27, 2002

                                        34
<PAGE>

                       MFC BANCORP LTD. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2001 AND 2000
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                           U.S. DOLLARS
                                                           (INFORMATION      CANADIAN DOLLARS
                                                              ONLY)       -----------------------
                                                               2001          2001         2000
                                                           ------------   ----------   ----------
<S>                                                        <C>            <C>          <C>
                                       ASSETS
Cash and cash equivalents................................   $   48,453    $   77,166   $   68,524
Securities...............................................       47,598        75,805       80,384
Loans....................................................       43,788        69,737      119,113
Receivables..............................................       27,861        44,371       20,321
Due from investment dealers..............................          310           493       13,510
Commodity investments....................................        3,420         5,447           --
Properties held for development and sale.................       14,115        22,480        9,243
Resource property........................................       23,516        37,451           --
Goodwill.................................................       17,623        28,066       17,032
Equity method investments................................       19,401        30,898           --
Prepaid and other........................................        1,711         2,725        3,936
                                                            ----------    ----------   ----------
                                                            $  247,796    $  394,639   $  332,063
                                                            ==========    ==========   ==========
                        LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
  Accounts payable and accrued expenses..................   $   26,152    $   41,649   $   16,155
  Debt...................................................       61,535        98,000       35,421
  Future income tax liability............................        3,358         5,348           --
  Deposits...............................................          329           524       63,572
                                                            ----------    ----------   ----------
       Total liabilities.................................       91,374       145,521      115,148
                                                            ----------    ----------   ----------
Minority interests.......................................        1,960         3,121        3,781
Shareholders' Equity
  Common stock, without par value; authorized unlimited
     number..............................................       48,143        76,673       65,138
  Cumulative translation adjustment......................        2,795         4,452         (771)
  Retained earnings......................................      103,524       164,872      148,767
                                                            ----------    ----------   ----------
                                                               154,462       245,997      213,134
                                                            ----------    ----------   ----------
                                                            $  247,796    $  394,639   $  332,063
                                                            ==========    ==========   ==========
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                        35
<PAGE>

                       MFC BANCORP LTD. AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF INCOME
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
                   (IN THOUSANDS, EXCEPT EARNINGS PER SHARE)

<Table>
<Caption>
                                                  U.S. DOLLARS
                                                  (INFORMATION             CANADIAN DOLLARS
                                                     ONLY)          ------------------------------
                                                      2001            2001       2000       1999
                                               ------------------   --------   --------   --------
<S>                                            <C>                  <C>        <C>        <C>
Financial services revenue...................       $134,526        $214,246   $156,220   $125,526
Expenses
  Financial services.........................         89,186         142,038     88,942     65,262
  General and administrative.................         14,333          22,826     21,194     19,305
  Interest expense...........................          3,371           5,369      4,218      4,867
                                                    --------        --------   --------   --------
                                                     106,890         170,233    114,354     89,434
                                                    --------        --------   --------   --------
Income from continuing operations before
  income taxes...............................         27,636          44,013     41,866     36,092
Recovery of (provision for) income taxes.....            485             772     (1,689)     1,016
                                                    --------        --------   --------   --------
                                                      28,121          44,785     40,177     37,108
Minority interests...........................            316             503     (1,014)      (780)
                                                    --------        --------   --------   --------
Income from continuing operations............         28,437          45,288     39,163     36,328
Discontinued operations
  Loss from operations of discontinued
     internet banking........................             --              --         --     (4,234)
  Loss from disposal of internet banking
     operations..............................             --              --         --       (705)
                                                    --------        --------   --------   --------
  Loss from discontinued operations..........             --              --         --     (4,939)
                                                    --------        --------   --------   --------
       Net income............................       $ 28,437        $ 45,288   $ 39,163   $ 31,389
                                                    ========        ========   ========   ========
Earnings per share Basic
     Income from continuing operations.......       $   2.25        $   3.59   $   3.24   $   3.00
     Loss from discontinued operations.......             --              --         --       (.41)
                                                    --------        --------   --------   --------
       Net income............................       $   2.25        $   3.59   $   3.24   $   2.59
                                                    ========        ========   ========   ========
  Fully diluted
     Income from continuing operations.......       $   2.10        $   3.35   $   3.03   $   2.83
     Loss from discontinued operations.......             --              --         --       (.37)
                                                    --------        --------   --------   --------
       Net income............................       $   2.10        $   3.35   $   3.03   $   2.46
                                                    ========        ========   ========   ========
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                        36
<PAGE>

                       MFC BANCORP LTD. AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
                        (CANADIAN DOLLARS, IN THOUSANDS)

<Table>
<Caption>
                                             COMMON STOCK
                                         --------------------               CUMULATIVE
                                         NUMBER OF              RETAINED    TRANSLATION
                                           SHARES     AMOUNT    EARNINGS    ADJUSTMENT     TOTAL
                                         ----------   -------   ---------   -----------   --------
<S>                                      <C>          <C>       <C>         <C>           <C>
BALANCE AT DECEMBER 31, 1998...........  12,056,623   $65,706   $ 78,215     $ 10,475     $154,396
Net income.............................          --        --     31,389           --       31,389
Shares issued for exercise of stock
  options..............................       8,000        70         --           --           70
Shares issued for cash.................       2,533        26         --           --           26
Repurchase of shares...................     (26,000)     (304)        --           --         (304)
Translation adjustment.................          --        --         --      (14,766)     (14,766)
                                         ----------   -------   --------     --------     --------
BALANCE AT DECEMBER 31, 1999...........  12,041,156    65,498    109,604       (4,291)     170,811
Net income.............................          --        --     39,163           --       39,163
Shares issued for exercise of stock
  options..............................      47,000       436         --           --          436
Shares issued for cash.................     500,000     5,230         --           --        5,230
Repurchase of shares...................    (500,000)   (6,026)        --           --       (6,026)
Translation adjustment.................          --        --         --        3,520        3,520
                                         ----------   -------   --------     --------     --------
BALANCE AT DECEMBER 31, 2000...........  12,088,156    65,138    148,767         (771)     213,134
Net income.............................          --        --     45,288           --       45,288
Shares issued for exercise of stock
  options..............................   1,089,000    11,535         --           --       11,535
Translation adjustment.................          --        --         --        5,223        5,223
Dividend in equity securities, at
  carrying value.......................          --        --    (29,183)          --      (29,183)
                                         ----------   -------   --------     --------     --------
BALANCE AT DECEMBER 31, 2001...........  13,177,156   $76,673   $164,872     $  4,452     $245,997
                                         ==========   =======   ========     ========     ========
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                        37
<PAGE>

                       MFC BANCORP LTD. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
                        (CANADIAN DOLLARS, IN THOUSANDS)

<Table>
<Caption>
                                                                 2001       2000       1999
                                                               --------   --------   --------
<S>                                                            <C>        <C>        <C>
Cash flows from continuing operating activities
  Income from continuing operations.........................   $ 45,288   $ 39,163   $ 36,328
  Adjustments for:
     Amortization and depreciation..........................      2,049      2,041      2,361
     Fee income received in common shares of an affiliate...         --         --     (3,169)
     Gain on debts..........................................    (22,409)        --         --
     Minority interests.....................................       (503)     1,014        780
     Dividend from equity method investee...................      1,021         --         --
     Change in operating assets and liabilities, net of
       effects of acquisitions
       Due from investment dealers..........................     12,938      3,668    (11,052)
       Securities...........................................     (2,980)   (12,209)     6,730
       Receivables..........................................     35,377     (3,481)     1,668
       Properties held for development and sale.............       (406)    (1,232)        28
       Accounts payable and accrued expenses................     (8,466)     2,064       (951)
       Deferred income tax liability........................     (1,417)        --         --
       Other................................................       (777)      (275)    (2,782)
                                                               --------   --------   --------
Cash flows from continuing operating activities.............     59,715     30,753     29,941
Cash flows from investing activities of continuing
  operations
  Net decrease (increase) in loans..........................     25,099    (31,661)   (34,659)
  Purchases of subsidiaries, net of cash acquired...........     (1,018)        --       (738)
  Other.....................................................       (425)       430       (331)
                                                               --------   --------   --------
Cash flows from investing activities of continuing
  operations................................................     23,656    (31,231)   (35,728)
Cash flows from financing activities of continuing
  operations
  Net increase (decrease) in deposits.......................    (62,385)    13,282     34,332
  Borrowings................................................     12,310      8,135        969
  Debt repayments...........................................    (37,562)    (4,089)    (8,199)
  Issuance of common stock..................................     11,535         --         --
  Repurchase of common shares, net..........................         --       (360)      (208)
  Other.....................................................         --       (111)       (66)
                                                               --------   --------   --------
Cash flows from financing activities of continuing
  operations................................................    (76,102)    16,857     26,828
Exchange rate effect on cash and cash equivalents...........      1,373      2,578     (7,064)
                                                               --------   --------   --------
Increase in cash and cash equivalents from continuing
  operations................................................      8,642     18,957     13,977
Net cash used in discontinued operations....................         --         --     (3,281)
                                                               --------   --------   --------
Increase in cash and cash equivalents.......................      8,642     18,957     10,696
Cash and cash equivalents, beginning of year................     68,524     49,567     38,871
                                                               --------   --------   --------
Cash and cash equivalents, end of year......................   $ 77,166   $ 68,524   $ 49,567
                                                               ========   ========   ========
</Table>

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

                                        38
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.  THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     The consolidated financial statements and accompanying notes have been
prepared in conformity with generally accepted accounting principles applicable
in Canada. The notes are stated in Canadian dollars, as rounded to the nearest
thousand (except per share amounts).

NATURE OF OPERATIONS

     The Company is in the financial services industry which includes banking,
merchant banking and proprietary investing on an international basis. These
activities are managed as a unit and are treated as a single segment.

PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements include the accounts of the Company
and its subsidiaries. Investments in entities where the Company owns at least a
20% voting interest, but does not have control, are accounted for under the
equity method. The amount of earnings from equity investees during 2001 was not
material. All significant intercompany accounts and transactions of continuing
operations have been eliminated.

BUSINESS COMBINATIONS

     During 2001, the Canadian Institute of Chartered Accountants ("CICA")
issued a new accounting standard on business combinations which is effective for
transactions occurring after June 30, 2001. Under this standard, the purchase
method of accounting must be used for all business combinations. This method
involves allocating the purchase price paid for a business to the assets
acquired, including identifiable intangible assets, and the liabilities assumed
based on their fair values at date of acquisition with any excess being
recognized as goodwill. The Company accounted for all acquisitions prior to July
1, 2001, using the purchase method.

     The CICA adopted another new standard in 2001 which deals with accounting
for goodwill and other intangible assets which the Company has adopted for
periods beginning January 1, 2002. This standard provides that for those
business combinations completed before July 1, 2001, where the carrying amount
of acquired intangible assets does not meet certain criteria for separate
recognition, the assets should be reclassified to goodwill, while items meeting
the definition of intangible but originally recorded as goodwill should be
reclassified and accounted for as intangible assets according to their nature.
The Company does not expect to reclassify significant amounts from goodwill.

     Further, under this standard, goodwill and intangible assets with
indefinite lives that are included on the Company's consolidated balance sheet
will no longer be amortized to income over time beginning January 1, 2002.
However, these assets will be subject to an annual impairment review to
determine that fair value remains greater than, or equal to, carrying value. Any
excess of carrying value over fair value will be expensed in the period the
impairment is determined. Amortization of goodwill acquired prior to July 1,
2001, will stop beginning January 1, 2002. Amortization expense associated with
this goodwill amounted to $950, $942 and $908 during 2001, 2000 and 1999,
respectively, based on estimated benefit periods of 15 to 40 years. The
accumulated amortization was $5,246 and $4,296 at December 31, 2001 and 2000,
respectively. Any goodwill or intangible assets with indefinite lives arising
from acquisitions after June 30, 2001, were not amortized under this standard in
2001. Management reviewed goodwill and determined that no writedowns were deemed
necessary at December 31, 2001.

CASH AND CASH EQUIVALENTS

     Cash and cash equivalents include highly liquid investments with original
maturities of three months or less and are generally interest bearing. The
Company regularly maintains cash balances in other financial
                                        39
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

institutions in excess of insured limits. Interest paid on a cash basis was
$4,667, $4,990 and $5,449 for the years ended December 31, 2001, 2000 and 1999,
respectively. Income tax amounts paid were none, $81 and $27 during 2001, 2000
and 1999, respectively.

     During 2001, the Company received securities totaling $5,506 in repayment
of a loan. During 2000, the Company exchanged 402,500 of preferred shares of an
affiliate for $1,779 in cash and 2,597,060 common shares of that affiliate. The
Company received collateral in the extinguishment of a receivable in the amount
$2,490 in 1999.

SECURITIES

     Trading account securities, held by the Company's banking subsidiary, are
stated at current market value with the unrealized gain or loss included in the
results of operations. Short-term securities held by non-bank subsidiaries are
carried at the lower of aggregate cost or current market value.

     Long-term investment securities held by non-bank subsidiaries are purchased
with the original intention to hold the securities to maturity or until market
conditions render alternative investments more attractive. Equity securities are
stated at cost and debt securities at amortized cost unless there has been an
other than temporary decline in value, at which time the security is written
down and the unrealized loss is included in the results of operations.

     Realized gains or losses on sales of securities are determined based on the
specific cost basis.

LOANS

     Loans are stated net of allowances for credit losses, accrued interest,
reimbursable expenses and unamortized loan fees.

     Loans are classified as impaired when there is no longer reasonable
assurance of the timely collection of principal and interest. Whenever a
contractual payment is 90 days past due, loans are automatically classified as
impaired unless they are fully secured and in the process of collection. When a
loan is deemed impaired, its carrying amount is reduced to its estimated
realizable amount, measured by discounting the expected future cash flows at the
effective interest rate in the loan or, as a practical expedient, based on a
loan's observable market price or the fair value of collateral if the loan is
collateral dependent. In subsequent periods, any increase in the carrying value
of the loan is credited to the provision for credit losses. Impaired loans are
returned to performing status when there is no longer reasonable doubt regarding
timely collection of principal and interest, all amounts in arrears including
interest have been collected, and all charges for loan impairment have been
reversed. Where a portion of a loan is written off and the remaining balance is
restructured, the new loan is carried on the accrual basis when there is no
longer any reasonable doubt regarding collectibility of principal and interest,
and payments are not 90 days past due. Collateral is obtained for loans (and
other receivables) if, based on an evaluation of credit-worthiness, it is
considered necessary for the overall borrowing facility.

     Assets acquired in satisfaction of loans are recorded at the lesser of
their fair value at the date of transfer or the carrying value of the loan. Any
excess of the carrying value of the loan over the fair value of the assets
acquired is written off. Operating results and gains and losses on disposal of
such assets are treated as write-offs and recoveries.

     Interest income from loans is recognized when earned using the interest
method unless the loan is classified as impaired at which time recognition of
interest income ceases. Interest on impaired loans is credited to the carrying
value of the loan when received. Fees relating to lending activities, net of
related expenses, are deferred and recognized over the term of the loan using
the interest method.

                                        40
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

ALLOWANCE FOR CREDIT LOSSES

     The Company's allowance for credit losses is to be maintained at an amount
considered adequate to absorb estimated credit-related losses. Such allowance
reflects management's best estimate of the losses in the Company's credit
portfolio and judgments about economic conditions. Estimates and judgments could
change in the near-term, and could result in a significant change to a
recognized allowance. Credit losses arise primarily from loans but may also
relate to other credit instruments such as guarantees and letters of credit. An
allowance for credit losses may be increased by provisions which are charged to
income and reduced by write-offs net of any recoveries.

     Specific provisions are established on a loan-by-loan basis. A general
provision may be established to absorb potential credit losses attributable to
the deterioration of credit quality on aggregate exposures for which specific
provisions cannot yet be determined. A country risk provision may be made based
on exposures in less developed countries and on management's overall assessment
of the underlying economic conditions in those countries. Write-offs are
generally recorded after all reasonable restructuring or collection activities
have taken place and there is no realistic prospect of recovery.

     No loans were considered impaired at December 31, 2001 and 2000, and the
Company did not consider it necessary to reserve for any specific loans, country
risks or general risks.

DERIVATIVES

     During 2001 and 2000, the Company entered into forward foreign currency
exchange contracts in the notational amounts of $24,655 and $21,114,
respectively. These contracts were entered into by the Company for its own
account consistent with its policy to manage foreign currency exchange risks.
Any losses are recognized in the period of change in fair value with any gains
in fair value being recognized only to the extent of prior recorded losses. The
Company had four contracts at December 31, 2001, which cover the period through
May 31, 2002. The Company does not anticipate nonperformance on these contracts.
The Company recorded a loss from a change in the fair value of these contracts
amounting to $1,070 during 2001. The Company had three contracts at December 31,
2000, which were less than one month in duration and fair value approximated
replacement value.

COMMODITY INVESTMENTS

     Commodity investments consist of basic materials held for sale in the
near-term. These investments are stated at the lower of cost (specific
identification) or market.

PROPERTIES HELD FOR DEVELOPMENT AND SALE

     Properties held for development and sale are stated at cost unless the
estimated future undiscounted cash flows expected to result from disposition is
less than carrying value in which case a loss is recognized based on the fair
value of similar property in the same geographic region. No such losses have
been recorded in these consolidated financial statements.

RESOURCE PROPERTY

     Resource property is stated at cost. Amortization is provided on the
straight-line basis over the period revenue is to be received which will end in
2055. However, if expected future undercounted cash flows are less than carrying
value, a loss will be recognized.

FOREIGN CURRENCY TRANSLATION

     The Company translates foreign assets and liabilities of its
self-sustaining foreign subsidiaries at the rate of exchange at the balance
sheet date. Revenues and expenses have been translated at the average rate of
exchange throughout the year. Unrealized gains or losses from these conversions
are included in the equity
                                        41
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

section of the consolidated balance sheet. Realized gains or losses have been
included in general and administrative expenses in the consolidated statements
of income. The translation adjustments did not recognize the effect of income
tax because the Company expects to reinvest the amounts indefinitely.

TAXES ON INCOME

     The Company uses the asset and liability method to provide for income taxes
on all transactions recorded in these consolidated financial statements. Under
this method, future income tax assets and liabilities are recognized for
temporary differences between the tax and accounting bases of assets and
liabilities as well as for the benefit of losses to be carried forward to future
years for tax purposes that are likely to be realized using expected tax rates
in which the temporary differences are expected to be recovered or settled.

STOCK BASED COMPENSATION

     The Company follows the intrinsic value based method of accounting for
compensation resulting from the granting of stock options. No compensation
expense has been recognized in these consolidated financial statements for the
granting of options because the exercise price of the options approximated the
market price for the common shares at the grant date.

EARNINGS PER COMMON SHARE

     In 2000, the CICA adopted a new accounting standard with respect to the
computation of earnings per share. Under this standard, the most significant
change is that the treasury stock method is to be used, instead of the imputed
earnings approach, for determining the dilutive effect of warrants and options.
As allowed, the Company has adopted this new standard retroactively and has
restated fully diluted earnings per share for prior periods. The change has
resulted in an increase in fully diluted earnings per share from continuing
operations of $.25 and $.23 for the years ended December 31, 2000 and 1999,
respectively, and a decrease in diluted loss per share from discontinued
operations of $.05 for the year ended December 31, 1999.

DISCONTINUED OPERATION

     During the first quarter of 2000, the Company decided to discontinue its
internet banking operations. This activity allowed customers to use the internet
to initiate transactions at the Company's Swiss banking subsidiary.

     The discontinued internet banking activity had expenses of $4,251 and net
losses from operations of $4,234 in 1999, its only period of operation. All of
the net assets of the internet banking activity amounting to $705 were written
off as of December 31, 1999. There was no income tax effect.

ESTIMATES

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

NEW ACCOUNTING STANDARDS

     Other than the new standards discussed in the prior paragraphs, the CICA
has also issued the following accounting standards:

     - A standard which will require the Company to document hedging
       relationships and explicitly demonstrate that they are sufficiently
       effective in order to use accrual accounting for positions hedged with
       derivatives. Otherwise, the derivative instrument will be
       marked-to-market through the current
                                        42
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

       year's statement of income. This standard is applicable for years
       beginning after July 1, 2002. The effect on the Company's consolidated
       financial statements is not yet determinable.

     - A standard with respect to stock-based compensation which will be
       effective beginning after January 1, 2002. Under this standard, stock
       based awards to non-employees must be accounted for using the fair-value
       based method. Because the compensation expense is dependent on the
       Company's share price at the issuance date, the effect of this standard
       is not determinable.

NOTE 2.  ACQUISITIONS

     In October 2001, the Company acquired 80.3% of the outstanding common
shares of Prada Holdings, Ltd. ("Prada"), a Canadian corporation. The results of
Prada's operations have been included in the Company's consolidated financial
statements since the acquisition date. Prada's primary asset is an investment in
a resource property represented by preferred shares of a 25% owned affiliate
which provides for dividends at the rate of 10% annually. Dividends earned
amounted to $5,294 in 2001 and $5,400 in each 2000 and 1999. The affiliate has
the rights to royalties paid by the operator of an iron ore mine located in
Canada. This acquisition is consistent with the Company's business of
proprietary investing. The purchase price of $2,405 was paid in cash. The
following table summarizes the estimated fair value of assets acquired and
liabilities assumed at the date of acquisition.

<Table>
<S>                                                             <C>
Current assets..............................................    $ 5,233
Equity method investment....................................        625
Resource property...........................................     37,925
                                                                -------
     Total assets acquired..................................     43,783
Current liabilities.........................................     30,570
Long-term debt..............................................     10,808
                                                                -------
     Total liabilities assumed..............................     41,378
                                                                -------
     Net assets acquired....................................    $ 2,405
                                                                =======
</Table>

     In October 2001, the Company acquired 53.3% of the outstanding common
shares of Trimble Resources Corporation ("Trimble"). The results of Trimble's
operations have been included in these consolidated financial statements since
the acquisition date. Trimble's primary asset is an equity investment in a
United States company which has an interest in an entity which earns royalties
from an oil field located in Yemen. This acquisition is consistent with the
Company's business of proprietary investing.

     The equity investment may be affected by the following risks:

     - The business may be affected by the availability of a ready market for
       the petroleum products sold, the prices received and ultimate production;
       which factors are beyond the control of the Company and the effects of
       which cannot be accurately predicted.

     - Since the oil fields are located in Yemen, there are uncertainties with
       respect to the political, legal, tax or regulatory environment in that
       country which could affect the United States company's ability to
       continue profitable operations.

                                        43
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     The aggregate purchase price was $1,041 paid in cash. The following table
summarizes the estimated fair values of the assets acquired and liabilities
assumed at the date of acquisition.

<Table>
<S>                                                           <C>
Current assets..............................................  $30,462
Equity method investment....................................   30,811
Goodwill....................................................    6,550
                                                              -------
          Total assets acquired.............................   67,823
Current liabilities.........................................    1,026
Long-term debt..............................................   61,086
Future income tax liability.................................    4,670
                                                              -------
          Total liabilities assumed.........................   66,782
                                                              -------
          Net assets acquired...............................  $ 1,041
                                                              =======
</Table>

     None of the goodwill is deductible for income tax purposes. The future
income tax liability is a result of the difference between the fair value of the
equity investment and its income tax basis for United States income tax
purposes.

     In November 2001, the Company acquired 95.5% of Hovis GmbH ("the Hovis
Group"). The Hovis Group consists of several companies located primarily in
Austria which are engaged in commodity trading activities with an emphasis in
forest products and certain minerals. The Hovis Group was acquired to further
enhance the Company's merchant banking activities. The results of operations of
the Hovis Group have been included in the Company's consolidated financial
statements since the acquisition date.

     The aggregate purchase price of $11,436 was paid in cash. The following
table summarizes the estimated fair values of the assets acquired and
liabilities assumed at the date of acquisition.

<Table>
<S>                                                           <C>
Current assets..............................................  $77,680
Properties..................................................      876
Goodwill....................................................    6,246
                                                              -------
          Total assets acquired.............................   84,802
Current liabilities.........................................   33,348
Bank debt...................................................   40,018
                                                              -------
          Total liabilities assumed.........................   73,366
                                                              -------
          Net assets acquired...............................  $11,436
                                                              =======
</Table>

     Under the terms of the Hovis Group acquisition agreement, the sellers may
receive up to an additional 44.5% of ownership contingent on achieving a
specified amount of net worth, as defined. If this occurs, the Company will have
a 51% ownership interest. Also, the sellers may put their ownership interests to
the Company at a price to be determined between the parties. Should this occur,
the Company would adjust the purchase price accordingly. Finally, goodwill is
not expected to be deductible for income tax purposes.

     The following unaudited proforma information presents the results of
operations of the Company as if the acquisitions had taken place on January 1,
2001 and 2000, respectively. The proforma information is not

                                        44
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

necessarily indicative of the results that would have occurred had the
acquisitions taken place at the beginning of the periods presented. Further, the
proforma information is not necessarily indicative of future results.

<Table>
<Caption>
                                                              YEAR ENDED DECEMBER 31,
                                                              -----------------------
                                                                 2001         2000
                                                              ----------   ----------
<S>                                                           <C>          <C>
Revenues....................................................   $375,783     $435,368
Net income..................................................   $ 38,670     $ 44,485
Earning per share
  Basic.....................................................   $   3.06     $   3.68
  Diluted...................................................   $   2.88     $   3.42
</Table>

NOTE 3.  SECURITIES

<Table>
<Caption>
                                                                 UNREALIZED GAINS AND LOSSES ON
                                                                       NON-BANK SECURITIES
                                 -----------------------------------------------------------------------------------------------
                                                      2001                                             2000
                                 ----------------------------------------------   ----------------------------------------------
                                 ORIGINAL     GROSS        GROSS      ESTIMATED                GROSS        GROSS      ESTIMATED
                                 CARRYING   UNREALIZED   UNREALIZED    MARKET     CARRYING   UNREALIZED   UNREALIZED    MARKET
                                  VALUE       GAINS        LOSSES       VALUE      VALUE       GAINS        LOSSES       VALUE
                                 --------   ----------   ----------   ---------   --------   ----------   ----------   ---------
<S>                              <C>        <C>          <C>          <C>         <C>        <C>          <C>          <C>
Short-term securities
  Debt.........................  $   250       $108        $   --      $   358    $10,701     $    --        $321       $10,380
  Preferred shares.............    1,816         --            28        1,788      1,500          --          55         1,445
  Common shares................   14,737         --         3,948       10,789     20,099      10,183          --        30,282
                                 -------       ----        ------      -------    -------     -------        ----       -------
                                  16,803        108         3,976       12,935     32,300      10,183         376        42,107
Long-term securities
  Debt.........................      795         --            34          761         --          --          --            --
  Preferred shares.............      601         --            --          601      1,671          --          --         1,671
  Common shares................   11,524         --         1,593        9,931      5,588          --         294         5,294
                                 -------       ----        ------      -------    -------     -------        ----       -------
                                  12,920         --         1,627       11,293      7,259          --         294         6,965
                                 -------       ----        ------      -------    -------     -------        ----       -------
Total non-bank securities......  $29,723       $108        $5,603      $24,228    $39,559     $10,183        $670       $49,072
                                 =======       ====        ======      =======    =======     =======        ====       =======
</Table>

     At December 31, 2001 and 2000, non-bank securities included common shares
in an affiliate with a cost of $2,935 and $1,892, respectively. At December 31,
2000, non-bank securities included preferred shares in an affiliate stated at
cost of $1,671, because no market existed for the shares.

     Bank trading securities at December 31, 2001, consisted of debt securities
amounting to $21,925 and equity securities of $28,025. The debt securities are
due $2,121 in 2002, $4,936 in 2004, $1,619 in 2005, $8,356 in 2006, and $4,893
in 2008. At December 31, 2000, debt trading securities at the bank amounted to
$30,275 and trading equity securities amounted to $10,550. The change in
carrying value of bank trading securities amounting to $12,567, $(4,311) and
$912 for the years ended December 31, 2001, 2000 and 1999, respectively, was
included in the results of operations.

NOTE 4.  LOANS

<Table>
<Caption>
                                                               2001        2000
                                                              -------    --------
<S>                                                           <C>        <C>
Bank loans, collateralized with traded securities...........  $11,606    $ 54,858
Non-bank loans, due from four companies $55,026 and due from
  two companies $32,950 at December 31, 2001 and 2000,
  respectively, collateralized by traded securities,
  receivables, inventories and other tangible assets........   58,131      64,255
                                                              -------    --------
                                                              $69,737    $119,113
                                                              =======    ========
</Table>

                                        45
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     Loan maturities:

<Table>
<Caption>
                                                   WITHIN 1 YEAR    1 - 5 YEARS    2001 TOTAL
                                                   -------------    -----------    ----------
<S>                                                <C>              <C>            <C>
Bank loans.......................................     $ 3,906         $7,700        $11,606
Non-bank loans...................................      56,164          1,967         58,131
                                                      -------         ------        -------
                                                      $60,070         $9,667        $69,737
                                                      =======         ======        =======
</Table>

     The non-bank loans generally earn interest ranging from 5.0% to 8.0% as of
December 31, 2001. Bank loans generally earn interest ranging from 4.375% to
7.35% as of December 31, 2001.

NOTE 5.  RECEIVABLES

<Table>
<Caption>
                                                               2001       2000
                                                              -------    -------
<S>                                                           <C>        <C>
Commodity transactions......................................  $31,488    $    --
Short-term advances.........................................    2,979      1,413
Investment income...........................................    5,035      8,859
Affiliates..................................................       --        800
Pension plan recovery.......................................    1,587      1,575
Fees........................................................       --      1,135
Contract receivable.........................................       --      5,222
Other.......................................................    3,282      1,317
                                                              -------    -------
                                                              $44,371    $20,321
                                                              =======    =======
</Table>

NOTE 6.  ACCOUNTS PAYABLE AND ACCRUED EXPENSES

<Table>
<Caption>
                                                               2001       2000
                                                              -------    -------
<S>                                                           <C>        <C>
Accounts payable............................................  $26,064    $ 7,025
Affiliates..................................................      301      5,448
Interest....................................................    8,557      1,015
Property and other taxes....................................    2,177      1,664
Due securities brokers......................................      445        296
Commissions and severance...................................    1,293         --
Other.......................................................    2,812        707
                                                              -------    -------
                                                              $41,649    $16,155
                                                              =======    =======
</Table>

NOTE 7.  DEPOSITS

<Table>
<Caption>
                                                              2001     2000
                                                              ----    -------
<S>                                                           <C>     <C>
Clients.....................................................  $164    $62,783
Banks.......................................................   360        789
                                                              ----    -------
                                                              $524    $63,572
                                                              ====    =======
</Table>

     All deposits at December 31, 2001, were payable on demand and non-interest
bearing.

                                        46
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8.  DEBT

<Table>
<Caption>
                                                               2001       2000
                                                              -------    -------
<S>                                                           <C>        <C>
Bonds payable, US$13,617 and US$14,085 as at December 31,
  2001 and 2000, respectively, interest at 8% due
  semi-annually in October and April, principal due April
  2008, unsecured, non-recourse. Convertible into common
  stock of the Company at $21.05 (1,030,038 common shares
  reserved at December 31, 2001)                              $21,687    $21,131
Bonds payable, US$13,190 at December 31, 2001, interest at
  8%, principal and interest due December 2006, unsecured,
  non-recourse                                                 21,007         --
Notes payable under lines of credit due to banks in 2002,
  interest from 3.13% to 7.25%, secured by commodity
  investment accounts receivable                               11,114         --
Notes payable to a bank, interest at six month Euribor plus
  1.1% (resulting in a rate of 4.356% at December 31, 2001),
  interest and principal payments of $1,950 due
  semiannually, due in full December 2006, secured by
  commodity investment accounts receivable                     15,599         --
Bonds payable, interest at 15% paid semiannually, unsecured,
  non-recourse. Entire amount paid in January 2002              7,906         --
Non-recourse notes payable, interest at 8% payable annually,
  principal due May 2003, unsecured                                --      6,445
Note payable, interest at 8.25%, interest payable quarterly,
  principal due January 2003, unsecured                         8,377      7,845
Note payable, interest at 7%, principal and interest due
  December 2003, unsecured, non-recourse                        7,700         --
Note payable, interest at 8%, payable on demand, unsecured,
  non-recourse                                                  4,610         --
                                                              -------    -------
                                                              $98,000    $35,421
                                                              =======    =======
</Table>

     As of December 31, 2001, the principal maturities of debt are as follows:

<Table>
<Caption>
MATURITY                                                      AMOUNT
--------                                                      -------
<S>                                                           <C>
2002........................................................  $23,629
2003........................................................   19,977
2004........................................................    3,900
2005........................................................    3,900
2006........................................................   24,907
Thereafter..................................................   21,687
                                                              -------
                                                              $98,000
                                                              =======
</Table>

     The notes payable of $8,377 and $4,610 at December 31, 2001, and $7,845 at
December 31, 2000, are to affiliates where the Company's president is also the
president and director of the creditor. The Company also earned fees of $323 and
$1,111 from these affiliates in 2001 and 2000, respectively, which were paid in
cash.

NOTE 9.  INCOME TAXES

     Income before income taxes, minority interests and discontinued operations
consists of:

<Table>
<Caption>
                                                         2001       2000       1999
                                                        -------    -------    -------
<S>                                                     <C>        <C>        <C>
Canadian..............................................  $ 6,214    $ 5,739    $ 7,294
Foreign...............................................   37,799     36,127     28,798
                                                        -------    -------    -------
                                                        $44,013    $41,866    $36,092
                                                        =======    =======    =======
</Table>

                                        47
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     The recovery of (provision for) income taxes consists of the following:

<Table>
<Caption>
                                                           2001      2000       1999
                                                           -----    -------    ------
<S>                                                        <C>      <C>        <C>
Current
  Canadian...............................................  $(220)   $    40    $  293
  Foreign................................................   (427)      (401)     (314)
Future
  Canadian...............................................    525          4       204
  Foreign................................................    894     (1,332)      833
                                                           -----    -------    ------
                                                           $ 772    $(1,689)   $1,016
                                                           =====    =======    ======
</Table>

     A reconciliation of the provision for income taxes calculated at applicable
statutory rates in Canada to the provision in the consolidated statements of
income is as follows:

<Table>
<Caption>
                                                       2001        2000        1999
                                                     --------    --------    --------
<S>                                                  <C>         <C>         <C>
Income before income taxes and minority interests
  and discontinued operations......................  $ 44,013    $ 41,866    $ 36,092
                                                     ========    ========    ========
Computed provision for income taxes at statutory
  rates............................................  $(16,777)   $(18,756)   $(16,169)
(Increase) decrease in taxes resulting from:
  Nontaxable dividend income.......................     2,018       2,421       2,421
  Foreign source income............................    14,408      16,193      12,901
  Other, net.......................................     1,123      (1,547)      1,863
                                                     --------    --------    --------
Recovery of (provision for) income taxes...........  $    772    $ (1,689)   $  1,016
                                                     ========    ========    ========
</Table>

     The tax effect of temporary differences that give rise to significant
components of future tax liabilities and assets are as follows:

<Table>
<Caption>
                                                                 2001        2000
                                                               --------    --------
<S>                                                            <C>         <C>
Future income tax liability, difference in tax basis of
  assets acquired in the United States......................   $ (5,348)   $     --
Future income tax asset, non-capital tax loss carryforwards:
  Canada....................................................     10,254       2,803
  Switzerland...............................................      1,020       4,361
  United States.............................................      5,440       5,246
  Austria...................................................      3,100          --
                                                               --------    --------
                                                                 19,814      12,410
  Valuation allowance.......................................    (19,814)    (12,410)
                                                               --------    --------
     Net future income tax asset............................         --          --
                                                               --------    --------
     Net future income tax liability........................   $ (5,348)   $     --
                                                               ========    ========
</Table>

     Management believes that, due to the nature of its operations, the
Company's available tax loss carryforwards may not be utilized prior to their
expiration dates. Therefore, the resulting tax benefit has been fully reserved
at December 31, 2001 and 2000.

                                        48
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     At December 31, 2001, the Company had estimated accumulated non-capital
losses which expire as follows:

<Table>
<Caption>
YEAR                                      CANADA     UNITED STATES    SWITZERLAND    AUSTRIA
----                                      -------    -------------    -----------    -------
<S>                                       <C>        <C>              <C>            <C>
2002...................................   $    --       $    --         $   --       $   --
2003...................................     1,100            --             --           --
2004...................................     4,300            --          3,400           --
2005...................................     8,500            --             --           --
2006...................................     7,300            --             --           --
2007...................................     4,700            --             --           --
2008...................................     1,000            --             --           --
2010-2020..............................        --        16,001             --           --
Indefinite.............................        --            --             --        9,120
                                          -------       -------         ------       ------
                                          $26,900       $16,001         $3,400       $9,120
                                          =======       =======         ======       ======
</Table>

NOTE 10.  EARNINGS PER COMMON SHARE

     Earnings per share data for years ended December 31 from continuing
operations is summarized as follows:

<Table>
<Caption>
                                                         2001       2000       1999
                                                        -------    -------    -------
<S>                                                     <C>        <C>        <C>
Income from continuing operations....................   $45,288    $39,163    $36,328
Less dividend paid on preferred shares held by
  subsidiary's minority shareholders.................        --        (79)      (117)
                                                        -------    -------    -------
Basic earnings from continuing operations............    45,288     39,084     36,211
Effect of dilutive securities, interest on
  convertible bonds..................................     1,634      1,599      1,708
                                                        -------    -------    -------
Diluted earnings from continuing operations..........   $46,922    $40,683    $37,919
                                                        =======    =======    =======
</Table>

<Table>
<Caption>
                                                                 SHARES
                                                 --------------------------------------
                                                    2001          2000          1999
                                                 ----------    ----------    ----------
<S>                                              <C>           <C>           <C>
Basic earnings per share, weighted average
  number of shares outstanding................   12,621,633    12,054,898    12,058,370
Effect of dilutive securities:
  Convertible bonds...........................    1,030,038     1,047,542     1,055,333
  Options.....................................      350,764       335,240       308,392
                                                 ----------    ----------    ----------
Weighted average number of shares
  outstanding -- diluted......................   14,002,435    13,437,680    13,422,095
                                                 ==========    ==========    ==========
</Table>

NOTE 11.  STOCK BASED COMPENSATION

1996 STOCK OPTION PLAN

     During 1996, the Company issued options to employees and directors to
acquire 900,000 common shares of stock at $9.41 which vested upon grant and have
a five-year term. All of these options were exercised in 2001. No additional
options to acquire shares will be offered under this plan.

                                        49
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1997 AMENDED STOCK OPTION PLAN

     The Company has a 1997 stock option plan which enables certain employees
and directors to acquire common shares. Under the plan, options vest on grant
and have a five-year term. The Company is authorized to issue up to 2,762,000
shares under this plan.

     During 2000, options to acquire 30,000 shares at $13.31 and 100,000 shares
at $10.50 were granted to officers and employees of the Company. At December 31,
2001, all of these options were outstanding and exercisable and have a remaining
contractual life of 3.25 years. At grant date, the weighted fair value of these
options was $3.34.

     During 1998, options to acquire 750,000 shares at $9.26 were granted to
officers and employees of the Company. At December 31, 2001, 482,500 of these
options were outstanding and exercisable and have a remaining contractual life
of 1.75 years. At grant date, the weighted fair value of these options was
$2.11.

     During 1997, options to acquire 742,500 shares at $11.10 were granted to
officers and employees of the Company. At December 31, 2001, 412,500 of these
options were outstanding and exercisable and have a remaining contractual life
of .5 years. At grant date, the weighted fair value of these options was $2.59.

     Following is a summary of the status of the plan:

<Table>
<Caption>
                                                                              WEIGHTED
                                                               NUMBER         AVERAGE
                                                              OF SHARES    EXERCISE PRICE
                                                              ---------    --------------
<S>                                                           <C>          <C>
Outstanding at December 31, 1998...........................   1,264,000       $  9.96
  Forfeited................................................    (125,000)        (9.87)
  Exercised................................................      (8,000)        (8.70)
                                                              ---------
Outstanding at December 31, 1999...........................   1,131,000          9.98
  Granted..................................................     130,000         11.15
  Exercised................................................     (47,000)        (9.38)
                                                              ---------
Outstanding at December 31, 2000...........................   1,214,000         10.12
  Exercised................................................    (189,000)       (11.17)
                                                              ---------
Outstanding at December 31, 2001...........................   1,025,000       $ 10.77
                                                              =========       =======
</Table>

PROFORMA INFORMATION

     Had compensation expense been recognized on the basis of fair value of the
options granted under both plans, proforma net income and per share data would
have been as follows compared to the amounts reported:

<Table>
<Caption>
NET INCOME                                               2001       2000       1999
----------                                              -------    -------    -------
<S>                                                     <C>        <C>        <C>
As reported..........................................   $45,288    $39,163    $31,389
  Proforma -- Basic..................................   $45,071    $38,946    $30,605
  Proforma -- Diluted................................   $46,705    $40,466    $37,135
Earnings per share -- as reported
  Basic..............................................   $  3.59    $  3.24    $  2.59
  Diluted............................................   $  3.35    $  3.03    $  2.46
Earnings per share -- proforma
  Basic..............................................   $  3.57    $  3.22    $  2.54
  Diluted............................................   $  3.34    $  3.01    $  2.41
</Table>

                                        50
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     The fair value of each option granted was estimated for proforma purposes
on the grant date using the Black-Scholes Model. The assumptions used in
calculating fair value in those years when options were granted were as follows:

<Table>
<Caption>
                                                                 2000
                                                                -------
<S>                                                             <C>
Risk-free interest rate.....................................     7.0%
Expected life of the options................................    2 years
Expected volatility.........................................    42.65%
Expected dividend yield.....................................     0.0%
</Table>

NOTE 12.  COMMITMENTS AND CONTINGENCIES

LEASES

     Future minimum commitments under long-term non-cancelable leases are as
follows for the next five years:

<Table>
<Caption>
YEAR                                                            AMOUNT
----                                                            ------
<S>                                                             <C>
2002........................................................    $  437
2003........................................................       421
2004........................................................       357
2005........................................................       317
2006........................................................       315
                                                                ------
                                                                $1,847
                                                                ======
</Table>

     Rent expense was $439, $548 and $586 for the years ended December 31, 2001,
2000 and 1999, respectively.

LITIGATION

     The Company and its subsidiaries are subject to litigation in the normal
course of business. Management considers the aggregate liability which may
result from such litigation not material at December 31, 2001.

REGULATIONS

     The Company's wholly-owned banking subsidiary is located in Switzerland.
The subsidiary is subject to the rules and regulations of the Swiss Federal
Banking Commission which require equity capital amounting to $11,240 to be
maintained as of December 31, 2001.

NOTE 13.  INTEREST RATE SENSITIVITY POSITION

     Management has analyzed the bank subsidiary's interest rate sensitivity
position at December 31, 2001. Because of the current nature (over 90% of assets
and liabilities and off-balance sheet positions are due within three months) of
the bank subsidiary's position, the total interest rate gap is not significant
at December 31, 2001, assuming no interest rate hedging is undertaken over the
next twelve months.

                                        51
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 14.  SEGMENTED INFORMATION

     The following table presents revenues attributed to Canada, the Company's
country of domicile, and other geographic areas based upon the customer's
location:

<Table>
<Caption>
                                                         2001       2000       1999
                                                       --------   --------   --------
<S>                                                    <C>        <C>        <C>
Canada..............................................   $ 17,183   $ 10,459   $ 17,851
Europe..............................................    192,714    136,671     88,075
United States.......................................      4,349      9,090     19,600
                                                       --------   --------   --------
                                                       $214,246   $156,220   $125,526
                                                       ========   ========   ========
</Table>

     The following table presents total assets by geographic area based upon the
location of the assets.

<Table>
<Caption>
                                                       2001        2000        1999
                                                     --------    --------    --------
<S>                                                  <C>         <C>         <C>
Canada...........................................    $143,201    $ 62,200    $ 57,244
Europe...........................................     220,561     231,508     170,849
United States....................................      30,877      38,355      42,014
                                                     --------    --------    --------
                                                     $394,639    $332,063    $270,107
                                                     ========    ========    ========
</Table>

     During 2001 and 2000, one client represented approximately 13% and 11%,
respectively, of financial services revenues.

NOTE 15.  FAIR VALUE OF FINANCIAL INSTRUMENTS

     The fair value of other financial instruments at December 31 is summarized
as follows:

<Table>
<Caption>
                                                2001                           2000
                                    ----------------------------   ----------------------------
                                    CARRYING AMOUNT   FAIR VALUE   CARRYING AMOUNT   FAIR VALUE
                                    ---------------   ----------   ---------------   ----------
<S>                                 <C>               <C>          <C>               <C>
Cash and cash equivalents........       $77,166        $77,166        $ 68,524        $ 68,524
Loans............................        69,737         69,737         119,113         119,113
Deposits.........................           524            524          63,572          63,572
Debt.............................        98,000         80,547          35,421          28,236
</Table>

     The fair value of cash and cash equivalents is based on reported market
value. The fair value of loans is based on the value of similar loans. The fair
value of deposits approximates their carrying value as they are all due on
demand. The fair value of debt was determined using discounted cash flows at
prevailing market rates or based on reported market value for the Company's
publicly traded debt.

                                        52
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 16.  UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

     The Company's consolidated financial statements have been prepared in
accordance with generally accepted accounting principles (GAAP) in Canada, which
conform in all material respects with those in the United States (U.S.), except
as set forth below:

<Table>
<Caption>
                                                                 DECEMBER 31
                                                        -----------------------------
RECONCILIATION OF NET INCOME                             2001       2000       1999
----------------------------                            -------    -------    -------
<S>                                                     <C>        <C>        <C>
Income from continuing operations in accordance with
  Canadian GAAP.....................................    $45,288    $39,163    $36,328
Consolidation of investee...........................         --         --       (510)
Equity accounting for an investee...................         --       (440)        --
Gain on debts.......................................    (22,409)        --         --
Adjustment of gain on sale of shares in investee....        169         --      3,225
Change in unrealized gain (loss) on trading
  securities, net...................................     (2,246)     6,914      1,270
                                                        -------    -------    -------
Income from continuing operations...................     20,802     45,637     40,313
Loss from discontinued operations...................         --         --     (4,939)
                                                        -------    -------    -------
Income before extraordinary item....................     20,802     45,637     35,374
Extraordinary item, gain on debts...................     22,409         --         --
                                                        -------    -------    -------
Net income in accordance with U.S. GAAP.............    $43,211    $45,637    $35,374
                                                        =======    =======    =======
Basic earnings per common share U.S. GAAP
  Income from continuing operations.................    $  1.65    $  3.78    $  3.33
  Loss from discontinued operations.................         --         --       (.41)
  Extraordinary item................................       1.77         --         --
                                                        -------    -------    -------
                                                        $  3.42    $  3.78    $  2.92
                                                        =======    =======    =======
Diluted earnings per common share U.S. GAAP
  Income from continuing operations.................    $  1.60    $  3.51    $  3.12
  Loss from discontinued operations.................         --         --       (.37)
  Extraordinary item................................       1.60         --         --
                                                        -------    -------    -------
                                                        $  3.20    $  3.51    $  2.75
                                                        =======    =======    =======
</Table>

<Table>
<Caption>
                                                       2001        2000        1999
                                                     --------    --------    --------
<S>                                                  <C>         <C>         <C>
Retained earnings in accordance with U.S. GAAP...    $163,342    $153,478    $107,841
                                                     ========    ========    ========
</Table>

                                        53
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 COMPREHENSIVE INCOME

<Table>
<Caption>
                                                        2001       2000        1999
                                                       -------    -------    --------
<S>                                                    <C>        <C>        <C>
Net income in accordance with U.S. GAAP............    $43,211    $45,637    $ 35,374
Other comprehensive income, net of tax
  Foreign currency translation adjustment..........      5,223      3,520     (14,766)
  Unrealized holding gain (loss) on
     available-for-sale securities arising during
     the period....................................     (1,369)     2,435      (1,008)
                                                       -------    -------    --------
Other comprehensive income (loss)..................      3,854      5,955     (15,774)
                                                       -------    -------    --------
Comprehensive income...............................    $47,065    $51,592    $ 19,600
                                                       =======    =======    ========
</Table>

     The change in accumulated other comprehensive income is as follows:

<Table>
<Caption>
                                                 ACCUMULATED OTHER COMPREHENSIVE INCOME
                                           --------------------------------------------------
                                           FOREIGN CURRENCY        UNREALIZED
                                             TRANSLATION            LOSS ON
                                              ADJUSTMENT           SECURITIES         TOTAL
                                           ----------------    ------------------    --------
<S>                                        <C>                 <C>                   <C>
Balance at December 31, 1998...........        $ 10,475             $(1,678)         $  8,797
Change in other comprehensive loss.....         (14,766)             (1,008)          (15,774)
                                               --------             -------          --------
Balance at December 31, 1999...........          (4,291)             (2,686)           (6,977)
Change in other comprehensive income...           3,520               2,435             5,955
                                               --------             -------          --------
Balance at December 31, 2000...........            (771)               (251)           (1,022)
Change in other comprehensive income...           5,223              (1,369)            3,854
                                               --------             -------          --------
Balance at December 31, 2001...........        $  4,452             $(1,620)         $  2,832
                                               ========             =======          ========
</Table>

SECURITIES

     U.S. GAAP requires that certain investments be classified into
available-for-sale or trading securities categories and be stated at their fair
values. At December 31, 2001, approximately 27% of trading securities
represented an investment in one company. Any unrealized holding gains or losses
are to be reported as a component of comprehensive income until realized for
available-for-sale securities, and included in earnings for trading securities.

     Non-bank securities included trading securities at fair value and are
summarized as follows:

<Table>
<Caption>
                                                                 DECEMBER 31
                                                              -----------------
                                                               2001      2000
                                                              -------   -------
<S>                                                           <C>       <C>
Debt securities.............................................  $   358   $10,380
Preferred shares............................................    1,788     1,445
Common shares...............................................   10,789    25,349
                                                              -------   -------
                                                              $12,935   $37,174
                                                              =======   =======
</Table>

     The change in unrealized gain in trading securities is included in the
income reconciliation above.

     The non-bank available-for-sale securities consist of common shares,
preferred shares and debt securities, and the bank held no available-for-sale
securities at December 31, 2001 or 2000. At December 31, 2001 securities in four
companies represented 76% and in 2000 securities in two companies represented
79% of the total available-for-sale securities. The proceeds from the sale of
these securities amounted to $5,703, $6,603

                                        54
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

and $1,080, which resulted in realized gains (losses) of $775, $(364) and $96
during 2001, 2000 and 1999, respectively. The cost of these securities was
$6,908, $8,700 and $13,164, which resulted in unrealized losses in accumulated
other comprehensive income of $(1,620), $(251) and $(2,686) at December 31,
2001, 2000 and 1999, respectively.

NEW UNITED STATES ACCOUNTING STANDARDS

     Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets," is to be applied starting with years beginning after
December 15, 2001. This standard addresses how intangible assets, other than
those acquired in a business combination, should be accounted for. Goodwill and
intangible assets that have indefinite useful lives will no longer be amortized
but will be tested annually for impairment. This standard is similar to the new
CICA standard discussed in Note 1.

     Statement of Financial Accounting Standards No. 143, "Accounting for Asset
Retirement Obligations," is effective for years beginning after June 15, 2002.
This standard addresses accounting and reporting for obligations associated with
the retirement of tangible long-lived assets and associated retirement costs.
Management has not determined the effect, if any, this standard may have on the
Company's financial statements.

     Statement of Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," is effective for years beginning
after December 15, 2001. This standard supersedes the previous standard on this
issue as well as others which dealt with accounting for discontinued operations
and the elimination of an exception to consolidation. Management has not
determined the effect, if any, this standard may have on the Company's financial
statements.

                                        55
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Shareholders
MFC Bancorp Ltd.

     Our report on the consolidated financial statements of MFC Bancorp Ltd. is
included on page      of this Form 20-F. In connection with our audits of such
financial statements, we have also audited the related financial statement
schedules I, III, IV and VI of this Form 20-F.

     In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic consolidated financial statements taken as a
whole, present fairly in all material respects the information set forth
therein.

/s/ PETERSON SULLIVAN P.L.L.C.

Seattle, Washington
March 27, 2002

                                        56
<PAGE>

                                MFC BANCORP LTD.

           SCHEDULE I:  CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                             (DOLLARS IN THOUSANDS)

                                 BALANCE SHEETS

<Table>
<Caption>
                                                              AS AT DECEMBER 31,
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
<S>                                                           <C>        <C>
                                     ASSETS
Cash and securities.........................................  $152,971   $148,908
Receivables.................................................    44,864     33,831
Loans and notes receivable..................................    69,737    119,113
Commodity investments.......................................     5,447         --
Real estate held for development and sale...................    22,480      9,243
Resource property...........................................    37,451         --
Goodwill....................................................    28,066     17,032
Equity method investments...................................    30,898         --
Other.......................................................     2,725      3,936
                                                              --------   --------
                                                              $394,639   $332,063
                                                              ========   ========
                      LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits....................................................  $    524   $ 63,572
Accounts payable and accrued expenses.......................    41,649     16,155
Deferred tax liability......................................     5,348         --
Debt........................................................    98,000     35,421
Minority interests..........................................     3,121      3,781
Shareholders' equity........................................   245,997    213,134
                                                              --------   --------
                                                              $394,639   $332,063
                                                              ========   ========
</Table>

                            STATEMENTS OF OPERATIONS

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2001       2000       1999
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Financial services revenue..................................  $214,246   $156,220   $125,526
Expenses
  General and administrative................................    22,826     21,194     19,305
  Financial services........................................   142,038     88,942     65,262
  Interest..................................................     5,369      4,218      4,867
  Income taxes (recovery)...................................      (772)     1,689     (1,016)
  Minority interest.........................................      (503)     1,014        780
                                                              --------   --------   --------
                                                               168,958    117,057     89,198
                                                              --------   --------   --------
Income from continuing operations...........................    45,288     39,163     36,328
Loss from discontinued operations...........................        --         --     (4,939)
                                                              --------   --------   --------
Net income..................................................  $ 45,288   $ 39,163   $ 31,389
                                                              ========   ========   ========
</Table>

                                        57
<PAGE>

                            STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2001       2000       1999
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Net cash (used) provided by operating activities............  $ 59,715   $ 30,753   $ 26,660
Net cash (used) provided by financing activities............   (76,102)    16,857     26,828
Net cash (used) provided by investing activities............    23,656    (31,231)   (35,728)
Exchange rate effect on cash and cash equivalents...........     1,373      2,578     (7,064)
                                                              --------   --------   --------
Net change in cash..........................................     8,642     18,957     10,696
Cash and cash equivalents, beginning of year................    68,524     49,567     38,871
                                                              --------   --------   --------
Cash and cash equivalents, end of year......................  $ 77,166   $ 68,524   $ 49,567
                                                              ========   ========   ========
</Table>

                                        58
<PAGE>

                                MFC BANCORP LTD.

               SCHEDULE III:  SUPPLEMENTARY INSURANCE INFORMATION
<Table>
<Caption>
                                          FUTURE
                                          POLICY                 OTHER
                                        BENEFITS,                POLICY                            BENEFITS,    AMORTIZATION
                           DEFERRED      LOSSES,                 CLAIMS                           CLAIMS LOSS   OF DEFERRED
                            POLICY        CLAIMS                  AND                   NET           AND          POLICY
                          ACQUISITION    AND LOSS    UNEARNED   BENEFITS   PREMIUM   INVESTMENT   SETTLEMENT    ACQUISITION
SEGMENT                      COST        EXPENSES    PREMIUMS   PAYABLE    REVENUE     INCOME      EXPENSES         COST
-------                   -----------   ----------   --------   --------   -------   ----------   -----------   ------------
<S>                       <C>           <C>          <C>        <C>        <C>       <C>          <C>           <C>
Property and casualty:
December 31, 2001.......      --        $1,106,000     --         --         --      $ (38,000)       --            --
December 31, 2000.......      --        $1,307,000     --         --         --      $ 288,000        --            --
December 31, 1999.......      --        $3,021,000     --         --         --      $ 397,000        --            --

<Caption>

                            OTHER
                          OPERATING   PREMIUMS
SEGMENT                   EXPENSES    WRITTEN
-------                   ---------   --------
<S>                       <C>         <C>
Property and casualty:
December 31, 2001.......  $ 69,000      --
December 31, 2000.......  $143,000      --
December 31, 1999.......  $ 40,000      --
</Table>

                                        59
<PAGE>

                                MFC BANCORP LTD.

                            SCHEDULE IV: REINSURANCE

<Table>
<Caption>
                                                                  ASSUMED               PERCENTAGE
                                                     CEDED TO      FROM                 OF AMOUNT
                                           GROSS       OTHER       OTHER       NET       ASSUMED
                                           AMOUNT    COMPANIES   COMPANIES    AMOUNT      TO NET
                                          --------   ---------   ---------   --------   ----------
<S>                                       <C>        <C>         <C>         <C>        <C>
Property and casualty:
December 31, 2001.......................  $     --   $     --    $     --    $     --      N/A
December 31, 2000.......................  $     --   $     --    $     --    $     --      N/A
December 31, 1999.......................  $     --   $     --    $     --    $     --      N/A
</Table>

                                        60
<PAGE>

                                MFC BANCORP LTD.

     SCHEDULE VI:  SUPPLEMENTAL INFORMATION CONCERNING PROPERTY -- CASUALTY
                  INSURANCE OPERATIONS AS AT DECEMBER 31, 2001

     This schedule is omitted because the relevant information was either shown
on Schedule III or Schedule IV.

                                        61
<PAGE>

ITEM 19.  EXHIBITS

<Table>
<Caption>
EXHIBIT NO.                       DESCRIPTION OF EXHIBIT
-----------                       ----------------------
<C>            <S>
    1.1        Articles of Amalgamation.
    1.2        Bylaws.(1)
    2.1        Master Trust Indenture between Drummond Financial
               Corporation and Harris Trust Company of New York, as
               trustee, dated August 26, 1993. Incorporated by reference to
               Form S-1 filed June 7, 1993.
    2.2        First Supplemental Indenture between Drummond Financial
               Corporation and Harris Trust Company of New York, as
               trustee, dated November 30, 1993.(1)
    2.3        Second Supplemental Indenture between Drummond Financial
               Corporation and Harris Trust Company of New York, as
               trustee, dated October 23, 1996. Incorporated by reference
               to Drummond Financial Corporation's Form 10-QSB for the
               period ended September 30, 1996.
    2.4        Third Supplemental Indenture between Drummond Financial
               Corporation, Harris Trust Company of New York and The Bank
               of Nova Scotia Trust Company of New York dated for reference
               May 13, 1997.(1)
    2.5        Fourth Supplemental Indenture between Drummond Financial
               Corporation, The Bank of Nova Scotia Trust Company of New
               York and Drummond Financial (B.C.) Ltd. Dated for reference
               February 4, 1998.(1)
    2.6        Master Trust Indenture between MFC and Norwest Bank
               Minnesota, National Association, as trustee, dated March 31,
               1998.(1)
    4.1        Memorandum of Agreement between MFC and Wabush Iron Co.
               Limited, Stelco Inc. and Dofasco Inc. dated November 24,
               1987.(2)
    4.2        Amendment to Mining Lease between MFC and Wabush Iron Co.
               Limited, Stelco Inc. and Dofasco Inc. dated January 1,
               1987.(2)
    4.3        First Amendment to Memorandum of Agreement between MFC and
               Wabush Iron Co. Limited, Stelco Inc. and Dofasco Inc.(2)
    4.4        Assignment Agreement between MFC and Prada Holdings Ltd.
               dated as of January 1, 1992.(1)
    4.5        Separation Agreement between Mercer International Inc. and
               MFC dated for reference March 29, 1996.(1)
    4.6        Purchase Agreement between MFC and Volendam Securities C.V.
               dated for reference May 16, 1996.(1)
    4.7        Purchase Agreement between MFC and Volendam Securities C.V.
               dated for reference May 27, 1996.(1)
    4.8        Share Purchase Agreement between MFC and Frederick Wong
               dated June 6, 1996.(1)
    4.9        Subscription Agreement between MFC and Drummond Financial
               Corporation dated June 20, 1996. Incorporated by reference
               to Drummond Financial Corporation's Form 8-K dated June 27,
               1996.
    4.10       Share Purchase Agreement between MFC and Med Net
               International Ltd. dated June 20, 1996.(3)
    4.11       Share Purchase Agreement among MFC and various shareholders
               of Logan International Corp. dated June 20, 1996.(3)
    4.12       Subscription Agreement between Drummond Financial
               Corporation and Logan International Corp. dated June 20,
               1996. Incorporated by reference to Logan International
               Corp.'s Form 8-K dated June 27, 1996.
    4.13       Share Purchase Agreement between Lehman Brothers Bankhaus AG
               and MFC dated October 3, 1996.(1)
    4.14       Purchase Agreement between MFC and Robabond Holding AG dated
               June 27, 1997.(1)
    4.15       Share Purchase Agreement between MFC and Procom Holding AG
               dated September 22, 1997.(1)
</Table>

                                        62
<PAGE>

<Table>
<Caption>
EXHIBIT NO.                       DESCRIPTION OF EXHIBIT
-----------                       ----------------------
<C>            <S>
    4.16       Supplementary Agreement to Share Purchase Agreement between
               MFC and Procom Holding AG dated September 22, 1997.(1)
    4.17       Agreement between MFC and the holders of MFC's Class A
               Preferred Shares dated December 1, 1996.(1)
    4.18       Subscription Agreement between MFC and Logan International
               Corp. dated December 2, 1996. Incorporated by reference to
               MFC's Schedule 13D/A (Amendment No. 1) dated December 16,
               1996 with respect to Logan International Corp.
    4.19       Shareholder Protection Rights Plan Agreement between MFC and
               Montreal Trust Company of Canada dated as of May 18,
               1993.(1)
    4.20       Amended 1997 Stock Option Plan of MFC.
    4.21       Amended and Restated Employment Agreement between MFC and
               Michael J. Smith made effective as of November 20, 2000.(1)
    4.22       Director's Indemnity Agreement between MFC and Michael J.
               Smith dated for reference November 20, 2000.(1)
    4.23       Amended and Restated Employment Agreement between MFC and
               Roy Zanatta made effective as of November 20, 2000.(1)
    4.24       Director's Indemnity Agreement between MFC and Roy Zanatta
               dated for reference November 20, 2000.(1)
    4.25       Investment and Restructuring Agreement among Sutton Park
               International Limited, Garda Investments Corp., MFC, Glamiox
               Beteiligungsverwaltungs GmbH, Hovis GmbH, Jurriaan J. Hovis,
               Johannes Hovis and Ferdinand Steinbauer dated for reference
               October 1, 2001.
    4.26       Owners' Agreement among Garda Investments Corp., Glamiox
               Beteiligungsverwaltungs GmbH, Jurriaan J. Hovis and
               Ferdinand Steinbauer dated for reference October 1, 2002.
    4.27       Dividend Trust Settlement Agreement between MFC and The
               Dividend Trust Committee of the Board of Directors of MFC
               Bancorp Ltd. dated for reference December 21, 2001.
    8.1        Subsidiaries of MFC.
</Table>

---------------
(1) Incorporated by reference to MFC's Form 20-Fs filed in prior years.
(2) Incorporated by reference to MFC's Form 10-K for the year ended December 31,
    1989.
(3) Incorporated by reference to MFC's Schedule 13D dated June 27, 1996 with
    respect to Logan International Corp.

                                        63
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant hereby certifies that it meets all of the requirements
for filing on Form 20-F and that it has duly caused and authorized the
undersigned to sign this annual report on its behalf.

                                          MFC BANCORP LTD.

                                          By:     /s/ MICHAEL J. SMITH
                                            ------------------------------------
                                                      Michael J. Smith
                                                  Chief Executive Officer

Dated this 9th day of April, 2002.

                                        64