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

                                    FORM 20-F



(Mark One)
[ ]    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 January 31, 2002

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

For the transition period from ________ to ________.

Commission File Number:  0-22270
                         -------



                           Frisco Bay Industries Ltd.
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             (Exact name of Registrant as specified in its charter)



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                 (Translation of Registrant's name into English)



                                     Canada
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                 (Jurisdiction of incorporation or organization)



                                  160 Graveline
                       St. Laurent, Quebec, Canada H4T 1R7
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                    (Address of principal executive offices)



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 Stock, no par value
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                                (Title of Class)



Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act.

                                      None.

            As of January 31, 2002, the Registrant had 1,540,428 shares of
Common Stock and 799,967 shares of Class A Common Stock, no par value,
outstanding.

            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 requirement 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>

                                TABLE OF CONTENTS

                                                                           PAGE
                                                                           ----

   Item 1.   Identity of Directors, Senior Management and Advisors...........2
   Item 2.   Offer Statistics and Expected Timetable.........................2
   Item 3.   Key Information.................................................2
   Item 4.   Information on the Company......................................6
   Item 5.   Operating and Financial Review and Prospects...................16
   Item 6.   Directors, Senior Management and Employees.....................24
   Item 7.   Major Shareholders and Related Party Transactions..............31
   Item 8.   Financial Information..........................................33
   Item 9.   The Offer and Listing..........................................34
   Item 10.  Additional Information.........................................35
   Item 11.  Quantitative and Qualitative Disclosures About Market Risk.....45
   Item 12.  Description of Securities Other Than Equity Securities.........45
   Item 13.  Defaults, Dividend Arrearages and Delinquencies................45
   Item 14.  Material Modifications to the Rights of Security Holders
               and Use of Proceeds..........................................45
   Item 15.  [Reserved].....................................................45
   Item 16.  [Reserved].....................................................45
   Item 17.  Financial Statements...........................................46
   Item 18.  Financial Statements...........................................46
   Item 19.  Exhibits.......................................................46



<PAGE>

SAFE HARBOR FORWARD-LOOKING STATEMENTS UNDER
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

            This Annual Report contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements involve known and unknown risks and uncertainties that may cause the
Company's actual results or outcomes to be materially different from those
anticipated and discussed herein. These factors include, among others, those
listed under the caption "Item 3.(D) Risk Factors" or described elsewhere in
this Annual Report and in the risk factors described in the Company's previous
filings with the Securities and Exchange Commission. In assessing
forward-looking statements contained herein, readers are urged to read carefully
all cautionary statements contained in this Annual Report and in those other
filings with the Securities and Exchange Commission. Although we believe that
the expectations reflected in our forward-looking statements are reasonable, we
cannot guarantee future results, levels of activity, performance or achievements
or other future events. We are under no duty to update any of our
forward-looking statements after the date of this annual report, other than as
required by law.

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

            Unless the context indicates otherwise, the terms "Frisco Bay
Industries Ltd.," the "Company" and "Frisco Bay" are used interchangeably in
this Annual Report and include Frisco Bay Industries Ltd.'s wholly-owned
subsidiaries Frisco Bay Industries, Ltd. ("Frisco Bay U.S.") (formerly Camtron
Electronics International, Ltd) and Intivid Solutions, Inc. (both Maryland
corporations) through which the Company coordinates its operations outside of
Canada, Intivid Solutions Inc., CDP Protection Inc. ("CDP"), the operations of
which were sold on May 29, 1998, and ATMS/Frisco Bay and Company, Limited
Partnership ("Frisco/ATMS"), in which the Company has a 50% interest, and all
other subsidiaries of the Company and the Company's predecessor businesses.

            The financial information presented in this Annual Report is
expressed in Canadian dollars ("CDN $"), unless stated in United States dollars
("US $"), and except as otherwise noted, financial data in this Annual Report is
presented in accordance with accounting principles generally accepted in Canada
("Can. GAAP"). Such financial data conforms in all material respects with
accounting principles generally accepted in the United States ("U.S. GAAP"),
except as disclosed in Note 20 of the Notes to Consolidated Financial Statements
contained herein. The exchange rate of Canadian dollars for United States
dollars, based upon the noon buying rate in New York City for cable transfers in
foreign currencies as certified for customs purposes by the Federal Reserve Bank
of New York, on June 11, 2002, was CDN $1.00 = U.S. $0.6500.
<PAGE>
                                     PART I


            ITEM 1.     IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

            Not applicable.

            ITEM 2.     OFFER STATISTICS AND EXPECTED TIMETABLE

            Not applicable.

            ITEM 3.     KEY INFORMATION

            (A)   SELECTED FINANCIAL DATA

            The selected consolidated financial data presented below for the
years ended January 31, 1998, 1999, 2000, 2001, and 2002 has been derived from
the Company's Consolidated Financial Statements. These Consolidated Financial
Statements have been prepared in accordance with generally accepted accounting
principles in Canada, which conform to accounting principles in the U.S., except
as described in Note 20 of Notes to Consolidated Financial Statements. The data
below should be read in conjunction with information contained under the caption
"Item 5. Operating and Financial Review and Prospects" below, the Consolidated
Financial Statements and Notes thereto and other financial information appearing
elsewhere in this Annual Report.

<TABLE>
<CAPTION>
                                                                   FISCAL YEAR ENDED JANUARY 31,
                                           --------------------------------------------------------------------------
CANADIAN GAAP DATA                                1998          1999           2000            2001          2002
------------------                                ----          ----           ----            ----          ----
<S>                                          <C>            <C>            <C>            <C>            <C>

STATEMENT OF OPERATIONS DATA:                          (In thousands of CDN $, except per share data)

Revenue from continuing operations......     $  23,819      $  32,687      $  37,136      $  35,847      $  43,092

Earnings (loss) from continuing
     operations.........................     $  (3,360)     $     940      $     498      $    (202)     $   1,768

Net earnings (loss).....................     $  (3,302)     $   2,092      $     498      $    (202)     $   1,768

PER SHARE DATA:

Earnings (loss) from continuing
     operations.........................     $   (1.51)     $    0.42      $    0.22      $   (0.09)     $    0.76

Net earnings (loss) ....................     $   (1.49)     $    0.93      $    0.22      $   (0.09)     $    0.76

Weighted average number of Class A
     Stock and Common Stock
     outstanding........................     2,219,684      2,238,048      2,265,630      2,298,153      2,330,753

BALANCE SHEET DATA:

Working capital..........................    $   3,658      $   7,044      $   7,177      $   6,491      $   7,012

Total assets.............................    $  12,815      $  17,217      $  19,187      $  20,810      $  26,340

Obligations under capital leases, less
     current portion.....................           -              -       $     235      $     573      $     924

Shareholders' equity.....................    $   6,006      $   8,120      $   8,744      $   8,617      $  10,435
</TABLE>
                                       -2-
<PAGE>

            The amounts set forth in the table above are consistent with those
that would be reported under U.S. GAAP for the fiscal years ended January 31,
1998, 1999, 2000, 2001, and 2002, except those listed in the following table.



<TABLE>
<CAPTION>
                                                                    FISCAL YEAR ENDED JANUARY 31,
                                         --------------------------------------------------------------------------
U.S. GAAP DATA                                1998            1999           2000            2001          2002
--------------                                ----            ----           ----            ----          ----
<S>                                       <C>            <C>            <C>           <C>            <C>
STATEMENT OF OPERATIONS DATA:                         (In thousands of CDN $, except per share data)


Earnings (loss) from continuing
     operations........................   $   (2,400)    $      891     $      380    $    (324)    $    1,834

Net Earnings (loss)....................   $   (2,343)    $    2,043     $      380    $    (324)    $    1,834

PER SHARE DATA:

Earnings (loss) from continuing
      operations.......................   $    (1.08)    $     0.40     $     0.17    $   (0.14)    $     0.79

Net Earnings (loss)....................   $    (1.06)    $     0.91     $     0.17    $   (0.14)    $     0.79

Weighted average number of Class A
     Stock and Common Stock
     outstanding.......................    2,219,684      2,238,048      2,265,630    2,298,153      2,330,753

BALANCE SHEET DATA:

Total assets...........................   $   12,752     $   17,217     $   19,120    $  20,682     $   26,279

Shareholders' equity...................   $    5,944     $    8,112     $    8,669    $   8,418     $   10,502
</TABLE>


EXCHANGE RATES

            The following tables sets forth, for the periods indicated, certain
exchange rates based on the high and low 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. Such rates are quoted as U.S. dollars per
Canadian dollar and are the inverse of rates quoted by the Federal Reserve Bank
of New York for Canadian dollars per U.S. $1.00.

                          TWELVE MONTH PERIOD ENDED JANUARY 31,
                   --------------------------------------------------
                     1998      1999       2000       2001      2002
                     ----      ----       ----       ----      ----

High..............  .7446     .7106      .6969      .6936     .6630
Low...............  .6832     .6327      .6550      .6410     .6190
Average*..........  .7153     .6703      .6766      .6711     .6416
Period End........  .6867     .6619      .6888      .6669     .6289
----------------------------

(1) *    The average rate means the average of the exchange rates on the last
         day of each month during the applicable period.

                                      -3-
<PAGE>

            As of June 11, 2002, the exchange rate was CDN $1.00 = U.S. $0.6500.
The high and low exchange rates for the previous six months are as follows:

            MONTH                        HIGH                  LOW
            -----                        ----                  ---
            December 2001               .6402                 .6255
            January 2002                .6297                 .6190
            February 2002               .6296                 .6214
            March 2002                  .6343                 .6268
            April 2002                  .6401                 .6250
            May 2002                    .6545                 .6362

            (B)   CAPITALIZATION AND INDEBTEDNESS

            Not applicable.

            (C)   REASONS FOR THE OFFER AND USE OF PROCEEDS

            Not applicable.

            (D)   RISK FACTORS

            Dependence on Suppliers. The Company relies on outside sources to
manufacture and supply most of the components included in the Company's systems
and products, none of which sources are contractually obligated to meet the
long-term requirements of the Company. Furthermore, in those situations in which
the Company is the sole distributor for certain of its suppliers, those
arrangements are typically restricted geographically to Canada only. There can
be no assurance that current or alternative sources will be able to supply all
of the Company's demands on a timely basis. The Company currently relies upon a
single, separate supplier for each of its cash dispensing units, rolled coin
dispensers, currency sorters and automatic deposit systems. Although the Company
believes that alternative sources are available for those components, any
interruption in its supply from any supplier that currently serves as the
Company's sole source could delay product and system shipments and adversely
affect the Company's business, financial condition, operating results and
prospects.

            Dependence on Significant Customers. The Company's sales to its five
largest customers accounted, in the aggregate, for approximately 40%, 25%, and
34% of the Company's total sales during the fiscal years ended January 31, 2000,
2001, and 2002, respectively, and sales to the Company's two largest customers
for each of those periods accounted for approximately 15%, 8%, and 13%, and 14%,
5%, and 7%, respectively, of total sales during those periods. There can be no
assurance that any of the Company's principal customers will maintain its volume
of business with the Company or that a similar volume of business would be
forthcoming from new or existing customers to replace lost business, if any. The
loss of one or more of the Company's existing significant customers without
replacement by a customer or customers of similar volume would have a material
adverse effect on the Company's business, financial condition, operating results
and prospects.

            Competition. The Company's competitors include numerous financial
equipment manufacturers and distributors and computer companies, many of which
have greater research, development, financial and personnel resources or name
recognition than the Company. There

                                      -4-
<PAGE>

can be no assurance that the Company will be able to maintain its market share
in Canada, or that it will be able to compete successfully in the United States
or other markets.

            Control of Company by Management and Affiliates. As of May 31, 2002,
the executive officers and Directors of the Company beneficially owned or
controlled approximately 42.37% of the outstanding combined shares of Common
Stock and Class A Stock, representing approximately 71.46% of the combined
voting power of these classes. As a result of the magnitude of their holdings
and their contractual arrangements, the Company's current principal shareholders
could hinder or preclude an unsolicited acquisition of the Company and that fact
could have an adverse effect on the market price of the Common Stock. Further,
the current principal shareholders have the ability to elect all the Company's
Directors and to control the outcome of all other issues submitted to the
Company's shareholders for the foreseeable future.

            Dependence on Key Individuals and Qualified Personnel. Barry E.
Katsof, Chairman of the Board of Directors and Chief Executive Officer of the
Company, and Ronald G. Waxman, Vice-Chairman of the Board of Directors, have
been primarily responsible for the development and expansion of the Company's
business, and the loss of the services of either of or both those individuals
could have a material adverse effect on the Company. The Company currently has
three-year employment agreements with each of Messrs. Katsof and Waxman,
expiring on April 30, 2003. In addition, the Company has purchased and is the
beneficiary of $1 million key-man insurance policies on the lives of each of
Messrs. Katsof and Waxman. Because of the specialized technical nature of the
Company's business, the Company is dependent upon its ability to continue to
attract and retain qualified management, marketing, engineering and technical
personnel. There is intense competition for qualified personnel in the Company's
business and in related businesses and there can be no assurance that the
Company will be able to continue to attract and retain the qualified personnel
necessary for the development of its business.

            Absence of Dividends. The Company has not paid any cash dividends
and does not anticipate paying any dividends on its Common Stock or Class A
Stock in the foreseeable future. The Company anticipates that earnings, if any,
will be retained to finance future growth.

            Anti-Takeover Provisions. In addition to the voting control held by
officers, Directors and principal shareholders, the Company is subject to
agreements and provisions that could hinder or preclude an unsolicited
acquisition of the Company. The Company's Articles of Amalgamation authorize the
Board of Directors to issue, without shareholder authorization, shares of
preferred stock, in one or more designated series or classes. The Articles of
Amalgamation also provide for the Board of Directors to be divided into three
classes which serve for staggered three-year terms and include a "fair price
provision" which requires that 85% of the voting power of the Company approve
any merger, or similar extraordinary transaction, with an acquirer who owns 10%
or more of the voting power of the Company where the merger has not previously
been approved by independent Directors of the Company. Any of these agreements
or provisions could discourage, hinder or preclude an unsolicited acquisition of
the Company and could make it less likely that shareholders receive a premium
for their shares as a result of any unsolicited acquisition attempt. These
provisions may also have a depressive effect on the market price of the Common
Stock.

                                      -5-
<PAGE>

            Exchange Rate Risk. The Company records its transactions and
prepares its financial statements in Canadian dollars. During the Company's 2002
fiscal year, a material percentage of the Company's business, including
approximately 6% of its sales and approximately 50% of the Company's purchases
of equipment, parts and supplies, was transacted in currencies other than the
Canadian dollar. Any change in the value of, for example, the United States
dollar against the Canadian dollar would affect United States revenues and
earnings of the Company when translated into Canadian dollars. The same result
might be recognized if sales were made by the Company in countries other than
Canada at material levels.

            However, as the Company monitors exchange rate fluctuations on a
regular basis, makes corresponding changes as necessary to the price of its
products and services, and partially hedges its exchange rate risk through the
purchase of currency options contracts, the Company does not anticipate that
exchange rate fluctuations would have a material effect on future Company
earnings. However, there can be no assurance that the Company will be able to
hedge successfully against all exchange rate risk in the future.

            Service of Legal Process and Enforcement of Judgments. It may be
difficult for investors to effect service of process and to enforce judgments
against the Company or those of its officers and Directors who are not resident
in or citizens of the United States. The Company is a Canadian federal
corporation. All of its Directors and officers, except two Directors, are
residents of Canada and all or a substantial portion of the assets of each of
those persons and a substantial portion of the assets of the Company are located
outside the United States. Consequently, it may be difficult for United States
investors to effect service within the United States upon the Company or upon
Directors or officers of the Company, or to satisfy judgments of courts of the
United States predicated upon civil liabilities under United States federal
securities laws.

            ITEM 4.     INFORMATION ON THE COMPANY

            (A)   HISTORY AND DEVELOPMENT OF THE COMPANY

            The Company and its predecessors have been in business continuously
since 1972. In August, 1993, the Company changed its legal and commercial name
from "Frisco Bay Industries of Canada Ltd." to "Frisco Bay Industries Ltd." in
order to more appropriately reflect its current business strategy. The Company
was constituted in 1989 as the successor corporation to its merged predecessors
under the Canada Business Corporations Act. Its principal executive offices are
located in the Montreal metropolitan area at 160 Graveline Street, St. Laurent,
Quebec, Canada H4T 1R7 (telephone number: 514-738-7300; fax number:
514-735-7039). The Company has appointed its United States subsidiary, Frisco
Bay Industries, Ltd., a Maryland corporation, as the Company's agent to receive
service of process in any action against the Company brought in any federal or
state court sitting in New York County, State of New York, which arise solely
out of or in connection with United States federal securities laws. The address
of Frisco Bay Industries, Ltd. is 1055 Parsippany Blvd., Parsippany, New Jersey
07054. The Company can be reached over the Internet through www.friscobay.com.

                                      -6-
<PAGE>

CAPITAL EXPENDITURES

            Our principal capital expenditures for each of fiscal 2000, 2001,
and 2002 were for automated teller machines, equipment and furniture, computer
equipment and leasehold improvements. We have largely financed capital
expenditures through working capital except for automated teller machines which
are financed through capital leases.

            In fiscal 2000, we spent approximately $821,819, $18,546, $162,378
and $60,267, respectively for automated teller machines, equipment and
furniture, computer equipment and leasehold improvements. In fiscal 2001, we
spent approximately $742,156, $20,406, $49,005 and $15,560, respectively for
automated teller machines, equipment and furniture, computer equipment and
leasehold improvements. In fiscal 2002, we spent approximately $1,480,301,
$19,238, $150,429 and $16,500, respectively for automated teller machines,
equipment and furniture, computer equipment and leasehold improvements.

            During fiscal 2003, we expect to continue to make capital
expenditures to expand our business in Canada, the United States and targeted
European markets. The Company also plans to spend approximately $650,000 over
the next two years in changing its Enterprise Resource Planning (ERP) System. We
anticipate financing these expenditures through working capital except for
automated teller machines and the ERP System which will be financed through
capital leases.

            (B)   BUSINESS OVERVIEW

            Frisco Bay designs, develops, markets and installs integrated
systems and products predominantly for financial institutions, government
agencies and major industrial corporations. The Company also provides service
and support for its products and systems. The Company's systems include
self-service and financial transaction processing systems, computerized time
management systems and integrated security systems. Frisco Bay believes that its
customers are shifting towards a "self-service" environment and are embracing
technology to improve efficiency and reduce costs. The Company's products,
systems and services are designed to help its clients improve their
competitiveness and the cost effectiveness of their operations.

            The Company has been engaged in business in Canada for three decades
and its customers include Canada's seven largest banks (based on published
aggregate asset values), as well as many large corporations and government
agencies. In addition, the Company has sold time management and certain
financial transaction processing and security systems in the United States,
Mexico and targeted European countries. Frisco Bay's customers outside of Canada
primarily include dealers, banks and large institutions.

            Management operates and evaluates the Company's business in two
major segments, one dealing with product sales and the other dealing with
product support and service fees. Product revenues include the sale and
installation of equipment and integrated systems. Service revenues include
maintenance agreement revenues and ATM service fees. The expenses that can be
identified within each of these segments are disclosed in the Consolidated
Statements of Earnings and Deficit. The assets are common to both segments and
cannot be allocated.

                                      -7-
<PAGE>

            The Company's principal products, systems and services include:

            Integrated Security Systems that are offered primarily in Canada and
feature surveillance cameras and computer-based access systems controlled by
identification cards. The Company's surveillance systems are enhanced by
in-house processing and storage of image media, and the Company's ability, in
certain cases, to provide photographic evidence to, and cooperate with, its
customers and law enforcement agencies. The Company believes that the demand for
quality low cost video photographs is increasing. To respond to this demand, the
Company developed and is currently marketing its computer-based video
surveillance recording and retrieval system. The Video Image Processing System
("VIP") offers a state-of-the-art method of digitizing video images and
recording this information on a PC hard drive. The files can then be retrieved
on-site or off-site, using VIP retrieval software. The system is currently
marketed throughout Canada, the U.S. and in certain European countries, through
Intivid Solutions Inc., a wholly-owned subsidiary of Frisco Bay.

            Self-Service and Financial Transaction Processing Systems that are
engineered and designed to bring increased efficiency and cost savings through
the automation of customer transactions. These systems are typically stand-alone
units, and include deposit and receipt systems, coin sorting, counting, wrapping
and dispensing systems, cash sorting systems, and secure cash dispensing
systems.

            Time Management Systems that provide queuing control and transaction
time management. These systems, which include line wait monitoring and
directional systems, are designed both to reduce customer waiting time and to
improve labor efficiency.

            Overall, the Company develops and markets a wide range of products
and systems, and offers a broad array of support and other services to its
customers. Prices charged by the Company to its customers range widely, from
several dollars for small components to several hundreds of thousands of dollars
for large integrated systems. In addition, the Company's prices tend to vary
from application to application because in many instances the Company designs
customized systems for its customers. Sales of the Company's products and
systems are effected primarily through standard purchase orders, and are not
pursuant to customized, negotiated contracts. Information concerning the terms
of the Company's service agreements is set forth in the "Service, Support and
Training" section below.

            Although certain of the Company's customers, including,
particularly, banking institutions, insurance institutions and gaming casinos,
are in industries that are subject to various forms of governmental regulation,
historically the Company's business has not been adversely affected by
regulations applicable to those industries. Further, although the Company is not
aware of any new or contemplated regulations that could materially affect its
customers' businesses, and, hence, the Company's business, there can be no
assurance that such regulations will not be adopted in the future. The Company's
business could be materially affected by the adoption of new regulations or
changes in existing regulations which could affect the business of all, or
material groups of similar types of businesses, of its customers. Further,
because of the Company's intent to expand its business outside of Canada, its
customer base could be subject to different regulations. A diversity of
regulations could affect the Company's ability to offer uniform products and
services and could, therefore, adversely affect its business.

                                      -8-
<PAGE>

BUSINESS STRATEGY

            The Company's business strategy is to capitalize on its existing
customer base and Canadian experience to expand its markets in the United States
as well as to penetrate targeted European markets with its proprietary products.
The Company intends to distribute its products to these markets through direct
sales to select accounts and through strategic partnerships. The Company also
intends to continue to modify the systems, products and services offered to its
existing Canadian customers, as well as to expand its Canadian customer base.
The Company will also continue to focus its sales effort on product lines that
provide an opportunity for ongoing revenue after the initial sale in the form of
supplies, service revenue and ATM transaction fee revenue. Frisco Bay believes
that its competitive advantage is its ability to customize products and related
applications software to produce systems that meet customer needs and are
aligned to changes in the marketplace.

            The Company's strategy includes the following principal components:

            Penetration of the VIP Market in the United States and Europe. The
Company is continuing its penetration into the U.S. market for its VIP product
through a strategic agreement it signed with Diebold, Inc., a global provider of
security solutions, and through other dealers and original equipment
manufacturer arrangements. Additionally, marketing efforts are underway in
Europe with potential dealers.

            Expansion of Canadian Customer Base For Self-Service and Financial
Transaction Processing, Time Management and Integrated Security Systems. The
Company intends to expand its Canadian operations by building on its current
base of established clients and through the introduction of new products and
enhancements to existing products and systems. In the late 1990s, the Company
expanded its product offering to include White Label (non-financial institution
owned) ATMs, and entered into a limited partnership agreement with G.M.
Automated Teller Machine Services Inc. (ATMS Canada) to service the Eastern
Canadian market. The partnership markets the machines as Frisco/ATMS. The
Company believes it has developed a reputation in Canada for designing,
customizing and assembling quality, automated systems and products under the
Frisco Bay(TM) label for the unique applications and requirements of its
customers, as well as for providing a high level of customer service and
support.

            Modification and Adaptation of Products and Systems to Provide
Customized Products and Services to Customers. The Company intends to work
closely with its customers and prospective customers to determine their
requirements and thereby to seek to be in a position to deliver products that
will better meet their needs. The Company also intends to continuously seek to
modify and adapt its existing systems and products to meet new applications in
existing and potential new markets. Frisco Bay intends to further develop and
improve its "application engineering" capabilities, which the Company believes
provide it with the technological flexibility and ability to provide customers
with customized products and services.

AUTOMATED SYSTEMS AND PRODUCTS

            The Company believes that in response to growing competition and
increased costs in the financial services marketplace, banks and other financial
institutions are turning to automation to improve the quality and efficiency of,
and to reduce the costs associated with, the

                                      -9-
<PAGE>

services they provide to their retail and commercial customers. The self-service
and financial transaction processing systems and time management systems that
Frisco Bay has developed and is marketing under the Frisco Bay(TM) label are
designed to enhance an institution's product offerings and to improve that
institution's productivity, efficiency and accuracy.

            Integrated Security Systems are typically customized security
systems and, except for the Company's VIP system, are presently sold by the
Company in Canada only. The Company's integrated security systems can include
sophisticated surveillance cameras and related security equipment, and/or
computer-based access and alarm monitoring systems usually controlled by
identification cards. Access and alarm monitoring can be as simple as a card
recognition system for an automated banking machine vestibule, or as complex as
a computerized network that could control entrances to hundreds of facilities at
various places throughout the world.

            The camera based security systems include a comprehensive laboratory
service at which the Company processes and stores image media that may document
frauds and holdups and may assist law enforcement agencies by providing them
necessary courtroom evidence. The Company maintains laboratories for this
purpose in most of its regional sales and service offices in Canada. Frisco
Bay's systems may include a wide variety of customized and specialized
accessories.

            The Company's proprietary VIP System incorporates advanced digital
image capturing, compression, retrieval and reproduction technology. The Company
believes the system is competitively priced so as to replace the existing video
recording systems which presently deliver a lesser grade of image quality. A
target marketplace for VIP are institutions utilizing ATMs where the system
records transactions at ATMs for use in fraud investigations. In this
environment it is combined with a proprietary device that transfers transaction
information onto the image captured at the time of the event. As a result,
retrieval of the image is immediate and image to transaction correlation is
assured. VIP can also be used to monitor the lobby or other branch areas.
Additionally, VIP is being marketed to other organizations whose businesses
include high-cost, high-risk transactions and which commonly attract fraud.

            Self-Service and Financial Transaction Processing Systems are
typically stand-alone units engineered and designed to bring increased
efficiency and cost savings through the automation of customer transactions and
the processing of those transactions. The products that Frisco Bay markets
within this product group can be generally categorized as follows:

            Self-Service Banking Systems which are automated machines that
supplement and complement automated teller machines ("ATMs") by performing
functions normally performed by tellers. Frisco Bay's products and systems in
this category include the following:

            o  Deposit Machines that, unlike traditional night depositories,
accept both personal and commercial deposits and give the customer a receipt for
each transaction. The Company's deposit machines improve overall quality of
service by eliminating the need for customers to wait in teller lines when a
receipt is required and by providing 24-hour access for both personal and
commercial deposits.

                                      -10-
<PAGE>

            o  Rolled Coin and Note Dispensers that dispense up to six different
coin denominations or a combination of rolled coin and ATM quality notes. The
rolled coin and note dispensers eliminate the need for customers who operate
retail establishments to enter a branch to obtain change, and provide access to
services after normal banking hours. The machines also provide patrons of gaming
casinos with access to change or casino chips without waiting in cashier lines.

            o  Commercial Kiosk, which incorporates the latest technology in
self-service banking. This is a multi-function, stand-alone self-service center
that allows commercial clients to obtain rolls of coin and ATM quality notes,
and to make daily deposits and obtain a receipt without having to enter a
branch. The service is available 24 hours a day, 7 days a week and these centers
can be located in environments where bank branches do not exist.

            o ATMs, that due to a change in banking regulations in Canada in the
fall of 1997, can now be owned by any person or business. This non-bank
environment for ATMs is called the "White Label" market. Frisco Bay not only
receives revenues from the sale, installation and servicing of the ATM units,
but also generates a recurring revenue stream from transaction fees charged to
users of the machine.

            Teller Operated Banking Systems are computer-linked cash dispensing
systems designed to increase teller efficiency and productivity, reduce errors
in transactions and provide increased security through the use of safe-type
encasings. The Company also markets other teller-operated systems and products
that simplify labor-intensive tasks such as sorting, counting and wrapping
coins. The following is an example of a teller operated banking system:

            o  Cash Dispensers automatically dispense the correct amount of cash
and enable banks to improve customer service by making transfer transactions
more efficient and faster. Utilizing the Company's proprietary software, the
systems can be linked to the bank's computer system and can download transaction
data directly into its database for storage. Accuracy is maintained by a
microprocessor-controlled system that eliminates the need for a teller to count
bills manually. In addition, cash dispensers dispense currency denominations at
very high speeds, thereby reducing transaction time, enabling tellers to
accurately handle more business, while facilitating end-of-the-day
reconciliation procedures.

            Administrative Support Systems automate the processing of
transactions in the "back office" of banks or other financial institutions.
These products simplify and expedite labor-intensive tasks such as sorting,
processing and recording customer transactions, and prepare the currency and
coins required for the institution's teller operations and ATM-type machines.
Administrative support systems include the following:

            o  Bank Note and Coin Sorting, Counting, Authenticating and Wrapping
machines make up a full line of products that have been designed to assist
personnel in the performance of certain labor-intensive tasks with greater
speed, efficiency and accuracy to meet the requirements of a bank's teller
operations, as well as the supply requirements of ATMs and similar machines.

            Time Management Systems are designed to enhance the quality and
efficiency of customer service and to reduce customer waiting time. These
systems, among other things,

                                      -11-
<PAGE>

provide line monitoring and directional functions as well as the measurement of
transaction times to allow for efficient staff scheduling.

SERVICE, SUPPORT AND TRAINING

            Frisco Bay believes that customer service, technical support and
training are important to the success of its business. The Company currently has
a service, installation and support staff of approximately eighty-five persons
operating from the Company's eight regional sales and/or service facilities in
Canada and two in the United States. Additionally, the Company engages dealers
and/or subcontractors who are trained to provide these services in certain
remote areas or to supplement staff. Service and technical support offered by
the Company to its customers include system planning and support, coordination
and evaluation of product performance data, evaluation of existing equipment and
systems specifications, site preparation, installation and user training. Frisco
Bay's service and support staff are available to its customers 7 days per week,
24 hours per day.

            The Company typically offers service and support contracts to its
customers providing for maintenance and support after installation or sale. As
part of the Company's technical and operation support program, the Company
provides in-house training courses for its clients to ensure that individuals
operating a system not only understand how it functions, but how it is
integrated into the work environment.

            The Company generally offers warranties on its products ranging from
three months to one year. Through January 31, 2002, warranty expense to the
Company historically has been minimal.

PRODUCT ASSEMBLY AND SOURCES OF SUPPLY

            The Company's assembly operations consist of designing and
developing its products and systems, assembling various equipment, related
hardware and software components and finished products, most of which are
purchased from outside sources, and conducting quality control and final
testing. The Company staffs a quality assurance team that participates in the
design, assembly and testing of the Company's products and systems, including
the inspection of components, subassemblies and final tests. All assembly
operations are currently performed at the Company's facility in Montreal or
through contracted suppliers.

            Most of the equipment, hardware, components and other supplies used
by the Company in its product and system assembly processes are available from
multiple suppliers, and it is the Company's policy to secure, whenever possible,
second and third sources of the supplies and materials it needs. Although Frisco
Bay generally relies upon separate, single suppliers for each of its cash
dispensing units, rolled coin dispensers, currency sorters and automatic deposit
systems, alternative sources are available, and the Company believes it is not
materially dependent upon any single source for any of its supply needs. Any
interruption in the supply of components from any supplier that serves currently
as a sole source, however, could delay product or system shipments and adversely
affect the Company's business unless and until new sources are developed and on
line or the interruption was otherwise resolved. The Company believes it
maintains a sufficient inventory of its supplies to meet current needs.

                                      -12-
<PAGE>

            A significant portion of the systems Frisco Bay sells to its
customers are comprised of products it acquires from outside sources pursuant to
distribution agreements that customarily grant to the Company, for terms
typically ranging from one to five years, rights to distribute products and to
provide warranty support. Certain of the Company's distribution agreements may
be terminated by either party without cause. While the Company does not consider
any single distribution agreement to be material to its business, the Company
generally relies upon distribution agreements with separate, individual sources
for its supply of certain products.

SALES, DISTRIBUTION AND MARKETING

            Frisco Bay's sales force currently includes approximately twenty
Company employed representatives who operate on a regional basis from the
Company's sales and/or service facilities in Canada and in the United States. In
Canada, the Company maintains sales and/or service facilities in Quebec City,
Montreal, Ottawa, Toronto, Winnipeg, Calgary, Edmonton and Vancouver. In the
United States, Frisco Bay maintains sales and/or service facilities in
Parsippany, New Jersey, which is located in the New York City metropolitan area,
and in New Castle, Delaware. Most of the Company's sales force is compensated by
a combination of base salary and incentive payments that are based on achieving
or exceeding sales quotas. The Company markets its products and systems
principally through the direct efforts of its in-house sales personnel. The
Company is also marketing ATMs to the White Label market in Eastern Canada
through Frisco/ATMS, the partnership formed between Frisco Bay and G.M.
Automated Teller Machines Inc. (ATMS Canada) in May 1999. Frisco Bay supplements
these sales efforts by attendance at major trade shows and advertising through
print media in a variety of trade magazines. In addition, the Company markets
and sells its financial transaction processing, time management and VIP products
through dealers in certain geographic areas that do not require the Company's
physical presence.

            The Company's integrated security systems are marketed to financial
institutions and banks, commercial real estate developers, industrial facility
occupants, government facilities, airports, and large companies that utilize the
systems in a variety of applications, including manufacturing facilities,
distribution facilities and front office applications.

            The Company markets its self-service and financial transaction
processing systems to banks, financial institutions, shopping malls and other
retail institutions, such as department stores, supermarkets, fast food
establishments and other merchandisers whose businesses involve a large number
of frequent financial transactions with customers. The Company also markets some
of these products to gaming casinos in order to enhance productivity in the
counting and wrapping of coin, the counting of paper currency, and the
dispensing of cash.

            Frisco Bay markets its time management systems to banks and
financial institutions, government agencies, airlines, post offices and other
businesses and organizations whose businesses include the physical "processing"
of people through lines, service counters and other waiting areas.

                                      -13-
<PAGE>

            The Company's systems and products are assembled at, and distributed
from, its 30,000 square foot facility in Montreal, Quebec, Canada. Frisco Bay
believes that its facilities are adequate for its current assembly and
distribution needs.

            The Company maintains insurance, including product liability and
business interruption insurance, in a scope and amount management considers to
be adequate and customary under the circumstances, but there is no assurance
that the Company will not incur losses beyond the limits of, or outside the
coverage of, its existing insurance. In addition, the Company seeks to protect
itself against claims for product liability by offering express limited product
warranties that warrant the replacement or repair of the particular product or
system, and not against consequential damages resulting from the malfunction or
failure to perform. Historically, the Company has not experienced material
claims or been subject to material litigation regarding product liability claims
from its customers.

SIGNIFICANT CUSTOMERS AND ORDER BACKLOG

            The Company's sales to its five largest customers accounted, in the
aggregate, for approximately 40%, 25%, and 34% of the Company's total sales
during the fiscal years ended January 31, 2000, 2001, and 2002, respectively,
and sales to the Company's two largest customers for each of those periods
accounted for approximately 15%, 8%, and 13%, and 14%, 5%, and 7%, respectively,
of total sales during those periods. There can be no assurance that any of the
Company's principal customers will maintain their volume of business with the
Company or that a similar volume of business would be forthcoming from new or
existing customers to replace lost business, if any. The loss of one or more of
the Company's existing significant customers without replacement by a customer
or customers of similar volume would have a material adverse effect on the
Company's business, financial condition, operating results and prospects.

            Frisco Bay's backlog of firm orders at May 15, 2002, was
approximately CDN $7.7 million, compared to CDN $6.9 million at May 15, 2001.
Management expects to ship all the orders included in the May 15, 2002, backlog
by January 31, 2003. Additional information is contained under the caption "Item
5. Operating and Financial Review and Prospects" below.

COMPETITION

            Frisco Bay believes that the principal factors affecting competition
in its markets are (i) the ability to customize products and application
software to meet customer needs and solve problems, (ii) product functionality,
price and ease of use, and (iii) customer service and support. Several
companies, including Banking Automation and Diebold, Inc. in the United States,
and NCR Corporation of Canada, presently compete in the market of self-service
and financial transaction processing systems. The Company believes that national
financial institutions desire standardization of their systems, service and
support and, therefore, are most likely to purchase systems from larger,
national companies who can provide the desired quality and scope of sales and
service. However, many smaller companies do compete with the Company in
non-financial markets on a regional basis.

                                      -14-
<PAGE>

            For similar reasons, the Company faces national competition in
Canada in its integrated security systems market from a few large competitors,
including Chubb Security Systems and ADT Security Systems and from many small to
midsized competitors on a regional basis.

            The competition for time management systems includes accounting
firms and consulting groups that perform time and motion studies and staffing
analyses and a number of smaller companies who compete with the Company for
stand-alone products and limited systems in the United States and Canada on a
regional basis. The Company is not aware of any national competitors, except for
QMatic Corp., or regional competitors who offer full-line time management
systems as does Frisco Bay.

            Many of the Company's competitors and potential competitors have
greater research, development, financial and personnel resources or name
recognition than Frisco Bay. There can be no assurance that the Company will be
able to maintain its market share in Canada, or that it will be able to compete
successfully in the United States or elsewhere.

PATENTS AND TRADEMARKS

            As a result of its ongoing development efforts, the Company has
developed proprietary technology. Frisco Bay currently holds two patents in
Canada. These patents expire in 2002 and 2006. It is the Company's policy to
defend its patents, although there can be no assurance that it will have the
resources to defend, or that it will be successful in defending, any such
patents. Except as described above, management believes that none of Frisco
Bay's current systems or products is materially dependent upon a single patent
or license or group of related patents or licenses, and that timely introduction
of products that incorporate new technologies and that are particularly suited
to meet the needs of a specific market or customer group is the more important
factor in influencing the Company's results of operations. There can be no
assurance that the Company's present or future competitors will not develop
technologies that are substantially equivalent or superior to the Company's
technology, or that the Company's issued patents will be upheld if challenged.

            The Company regards its trademark "Frisco Bay" as valuable to its
business. The Company has registered that trademark in Canada and in the United
States, and has not granted any rights to use its name to any unaffiliated third
party. Registration of the trademarks "VIP" and "Commercial Kiosk" have been
granted in Canada and in the United States. Copyright protection for the base
software related to VIP has been granted in Canada and is pending in the
United States. Trademark and copyright protection for the remote diagnostic
software related to VIP is pending in both countries.

            (C)   ORGANIZATIONAL STRUCTURE

            The Company's wholly-owned subsidiaries Frisco Bay Industries, Ltd.
and Intivid Solutions, Inc. (both Maryland corporations) coordinate the
Company's operations outside Canada. In addition, the Company has a 50% interest
in ATMS/Frisco Bay and Company, Limited Partnership.

                                      -15-
<PAGE>

            (D)   PROPERTY, PLANTS AND EQUIPMENT

            The Company believes that its facilities, including its machinery
and equipment, are generally in good condition and well maintained. The Company
believes that its product assembly and sales and service facilities have
adequate capacity to accommodate the Company's present needs and foreseeable
business growth. The Company's principal properties are described in the
following table.

                                                              APPROXIMATE
                                                             SQUARE FOOTAGE
            LOCATION                TYPE OF PROPERTY          OF FACILITY
     ----------------------      ------------------------   ---------------

      Montreal, Quebec           Executive Offices,            30,000(1)
                                 Product Assembly, Sales
                                 and Service, Laboratory

      Toronto, Ontario           Sales and Service,            14,034(2)
                                 Laboratory, Research and
                                 Development

      Vancouver, British         Sales and Service,             5,100(2)
      Columbia                   Laboratory

      Calgary, Alberta           Sales and Service,             4,037(2)
                                 Laboratory

      Winnipeg, Manitoba         Sales and Service,             2,120(2)
                                 Laboratory

      Edmonton, Alberta          Sales and Service                700(2)

      Ottawa, Ontario            Sales and Service              1,210(2)

      Parsippany, New Jersey     Sales                            200(2)

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

1)    Leased from an affiliate of the Company for a term expiring in 2007, with
      an option to renew for an additional ten-year period on substantially the
      same terms. Additional information is contained under the caption "Item 7.
      Major Shareholders and Related Party Transactions" below and in Note 13 of
      Notes to Consolidated Financial Statements.

(2)   Leased under leases with landlords that expire at various times through
      2007. See Note 13 of Notes to Consolidated Financial Statements for
      additional information.

            ITEM 5.     OPERATING AND FINANCIAL REVIEW AND PROSPECTS

            The following discussion and analysis should be read together with
the Consolidated Financial Statements of the Company including the Notes
thereto. The Company prepares its Consolidated Financial Statements in
accordance with accounting principles generally accepted in Canada. For a
reconciliation of differences to accounting principles generally accepted in the
United States, see Note 20 of Notes to Consolidated Financial Statements. All
dollar amounts discussed in this section are in Canadian dollars.

            Management operates and evaluates the Company's business in two
major segments, one dealing with product sales and the other dealing with
product support services. Product revenues include the sale and installation of
equipment and integrated systems. Service

                                      -16-
<PAGE>

revenues include maintenance agreement revenues and ATM service fees. The
expenses that can be identified within each of these segments are disclosed in
the Consolidated Statements of Earnings and Deficit. The assets are common to
both segments and cannot be allocated.

            The following table sets forth, for the three most recent fiscal
years, the percentage relationship to total revenues of principal items in the
Company's Statement of Continuing Operations:

                                            YEAR ENDED JANUARY 31,
                                    ---------------------------------------
                                        2000         2001         2002
                                        ----         ----         ----
  REVENUES

   Products                              73%          67%          68%
   Services:
      Maintenance Agreements             20%          21%          11%
      ATM Service Fees                    7%          12%          21%
                                    ------------  ------------  -----------
   Total Services                        27%          33%          32%
                                    ============  ============  ===========
                                        100%         100%         100%

  COSTS AND EXPENSES

   Costs of products                     52%          52%          45%
   Costs of services                     20%          22%          22%
   Selling, general and
     administrative                      26%          25%          26%
   Amortization                           1%           2%           2%
   Interest and bank charges              0%           1%           1%
   Income taxes                           0%          (1)%          0%

  NET EARNINGS (LOSS) FROM
  CONTINUING OPERATIONS                   1%          (1)%          4%
                                    ============  ============  ===========
                                        100%         100%         100%

            The following table sets forth, for the three most recent fiscal
years, a breakdown by category of the Company's revenues, in thousands of
dollars, and the percentage increase (decrease) over the previous year:

<TABLE>
<CAPTION>
                                           YEAR ENDED JANUARY 31,                       % INCREASE (DECREASE)
                             ---------------------------------------------------    -------------------------------
                                 2000               2001                2002         2001 OVER        2002 OVER
                                 ----               ----                ----         ----------       ---------
                                                                                        2000             2001
                                                                                        ----             ----

<S>                              <C>                <C>                <C>               <C>               <C>
Products                         $27,273            $23,963            $29,349           (12%)             22%

Services:

   Maintenance Agreements        $ 7,429            $ 7,554            $ 4,815             2%             (36%)

   ATM Service Fees              $ 2,435            $ 4,330            $ 8,928            78%             106%
                             ---------------     --------------     ------------
Total Services                   $ 9,864            $11,884            $13,743            20%              16%
                             ===============     ==============     ============
TOTAL REVENUES                   $37,137            $35,847            $43,092            (3%)             20%
</TABLE>

                                      -17-
<PAGE>

            The following table provides a breakdown of the Company's revenues
by geographic areas in thousands of dollars for the periods indicated:
<TABLE>
<CAPTION>


                                                     CANADA                                  UNITED STATES
                                              YEAR ENDED JANUARY 31,                      YEAR ENDED JANUARY 31,
                                    ----------------------------------------  --------------------------------------
                                          2000         2001          2002          2000           2001          2002
                                          ----         ----          ----          ----           ----          ----
<S>                                  <C>          <C>           <C>           <C>            <C>           <C>
Products                             $  26,104    $  21,584     $  27,160     $   1,168      $   2,379     $   2,189

Services:

   Maintenance Agreements            $   7,179    $   7,337     $   4,598     $     251      $     217     $     217

   ATM Service Fees                  $   2,435    $   4,330     $   8,928            -              -             -
                                     ---------    ---------     ---------     ---------      ---------     ---------
Total Services                       $   9,614    $  11,667     $  13,526     $     251      $     217     $     217
                                     =========    =========     =========     =========      =========     =========
TOTAL                                $  35,718    $  33,251     $  40,686     $   1,419      $   2,596       $ 2,406

% of Total Revenues by
Geographic Area                            96%          93%           94%            4%             7%            6%
</TABLE>

            (A)   OPERATING RESULTS

FISCAL YEAR ENDED JANUARY 31, 2002 COMPARED TO FISCAL YEAR ENDED JANUARY 31,
2001

            Revenues: Consolidated revenues for the year ended January 31, 2002
("Fiscal 2002") amounted to $43,091,872 compared to $35,847,437 for the year
ended January 31, 2001 ("Fiscal 2001"), representing an increase of 20%.

            Product revenues: Product revenues increased by 22% from $23,963,480
in Fiscal 2001 to $29,349,186 in Fiscal 2002. Sales of integrated security
systems were 22% higher than last year primarily due to the increased
penetration of the digital video image processing (VIP) product line in the
Canadian and U.S. markets.

            The Company has continued to allocate additional financial and human
resources to the integrated security segment of its business. The Company has
also continued to expand its product offering to provide a comprehensive range
to its customers. For example, the VIP equipment division was spun off into its
own operating unit, Intivid Solutions Inc. This structure gives Intivid the
necessary focus and resources to continue improving the VIP product line to
ensure it maintains its technological edge.

            As a percentage of total product revenues, integrated security
amounted to 61% in Fiscal 2002, compared to 60% in Fiscal 2001.

            Sales of financial transaction products in Fiscal 2002 were 21%
higher than the previous year primarily due to an increase in sales of cash
dispensing equipment to financial institutions, including a large order from a
major chartered bank, and the casino industry.

            As a percentage of total product revenues, financial transactions
amounted to 39% in Fiscal 2002, compared to 40% in Fiscal 2001.

            Service Revenues: In Fiscal 2002, service revenues increased by 16%
from $11,883,957 to $13,742, 686. Revenues from service contracts decreased by
36% to $4,814,949 from $7,553,674 in Fiscal 2001. This decrease was due, in
part, to a reclassification of maintenance contract revenue pursuant to which

                                      -18-
<PAGE>

approximately $500,000 in maintenance contract revenue was transferred to
product sales (for sales of parts) and approximately $500,000 in maintenance
contract revenue was transferred to ATM service fees (for ATM-related revenue).
The most significant portion of the decrease, however, is attributed to changes
in the Company's business operations and practices related to the incurring of
costs on its service contracts. As costs incurred on its service contracts are
now spread out more evenly over the term of the contract, the Company is now
recognizing the corresponding revenue evenly over the same term. This resulted
in an adjustment of approximately $300,000 being processed in the second quarter
of 2002 on some of the Company's main contracts, and an additional $1,200,000 in
the fourth quarter of 2002.

            ATM service fees reached $8,927,737, more than double the levels
achieved in the preceding year. ATM service fees increased primarily due to
additional revenue generated by a higher number of owned machines than the prior
year.

            As a percentage of total revenue, service revenues decreased from
33% in Fiscal 2001 to 32% in Fiscal 2002.


            Geographic Distribution of Revenues: Revenues generated in Canada in
Fiscal 2002 at $40,686,168 were 22% higher than the previous year. Revenues
generated in the United States in Fiscal 2002 at $2,405,704 were 7% lower than
the previous year. In Fiscal 2002, non-Canadian revenues represented 6% of total
revenues compared to 7% reported in Fiscal 2001.

            Costs and Expenses: Gross profits for the Company in Fiscal 2002
were $14,404,499, or 33% of revenues, compared to $9,167,646, or 26% of
revenues, in Fiscal 2001.

            Gross profit as a percentage of product sales improved to 35% in
Fiscal 2002 from 22% in Fiscal 2001 as a result of improved product mix and the
implementation of margin-driven incentives for managers throughout the
organization.

            Gross margin on service revenues decreased to 31% in Fiscal 2002
from 34% in Fiscal 2001. The decrease is mainly attributable to the change in
estimate on the recognition of service contract revenue explained above.

            Selling, General and Administrative (SG&A) costs increased by 27% to
$11,363,290 in Fiscal 2002 from $8,957,828 in Fiscal 2001. As a percentage of
sales, SG&A increased from 25% in Fiscal 2001 to 26% in Fiscal 2002. The
increase was due to increased provisions for bad debt and inventory obsolescence
as well as increased commissions resulting from the sales growth. The Company
continues to review its overhead structure to ensure that it remains in line
with the level of business activity.

            Financial Costs: Interest expense and bank charges in Fiscal 2002
amounted to $449,531, a 57% increase over the level of the previous year. The
increase was due to the higher level of average short-term borrowings during the
year compared to the previous year and increased interest on obligations under
capital leases.

            Income Taxes: An income tax expense of $36,000 was recorded in
Fiscal 2002 compared to a recovery of $474,000 in Fiscal 2001. In Fiscal 2002, a
current tax expense of $262,000 was partially offset by a future income tax
recovery of $226,000. In Fiscal 2001, the recovery of $474,000 was recorded
entirely against future income taxes. The future income tax recovery recorded in
both years is based on management's estimates of the future tax benefits
available from capital cost allowance claims in excess of net book value of
capital assets, investment tax credits and losses carried forward.

                                      -19-
<PAGE>

            Net Earnings: The Company generated net earnings of $1,767,618, or
$0.76 per share, a $1,969,674 improvement over last year's loss of $202,056, or
$0.09 per share.

FISCAL YEAR ENDED JANUARY 31, 2001 COMPARED TO FISCAL YEAR ENDED JANUARY 31,
2000

            Revenues: Consolidated revenues for the year ended January 31, 2001
("Fiscal 2001"), amounted to $35,847,437 compared to $37,136,784 for the year
ended January 31, 2000 ("Fiscal 2000"), representing a decrease of 3%.

            Product revenues: Product revenues decreased by 12% from $27,272,533
in Fiscal 2000 to $23,963,480 in Fiscal 2001. Sales of integrated security
systems were 14% lower than last year primarily due to the slowdown in the first
quarter as a result of customers' Y2K issues.

            In Fiscal 1999, the Company negotiated and commenced work on a
multi-location security project which spanned three years for a major
communications client. Revenues for this project amounted to $2,660,373 in
Fiscal 2001 as compared to $5,572,000 in Fiscal 2000, the peak year of the
project.

            The Company has continued to allocate additional financial and human
resources to the integrated security segment of its business. The Company has
also continued to expand its product offering to provide a comprehensive range
to its customers. For example, the digital video image processing (VIP)
equipment division was spun off into its own operating unit, Intivid Solutions
Inc. The Company believes this structure gives Intivid the necessary focus and
resources to continue improving the VIP product line and to maintain its
technological edge.

            As a percentage of total product revenues, integrated security
amounted to 60% in Fiscal 2001, compared to 62% in Fiscal 2000.

            Sales of financial transaction processing products in Fiscal 2001
were 9% lower than the previous year primarily due to the Company's strategy of
owning White Label ATMs and moving away from selling the equipment. As a result,
the service revenue stream from White Label ATMs over the next 5 years is
expected to be substantially greater.

            As a percentage of total product revenues, financial transaction
processing amounted to 39% in Fiscal 2001, compared to 38% in Fiscal 2000.

            Service Revenues: In Fiscal 2001, service revenues increased by 20%
from $9,864,251 to $11,883,957. Revenues from maintenance contracts increased 2%
to $7,553,674 from $7,428,855 in Fiscal 2000. ATM service fees at $4,330,283
were 78% higher than the preceding year. ATM service fees increased due to
additional revenue generated by a higher number of owned machines than the prior
year.

            As a percentage of total revenue, service revenues increased from
27% in Fiscal 2000 to 33% in Fiscal 2001.

            Geographic Distribution of Revenues: Revenues generated in Canada in
Fiscal 2001 at $33,251,103 were 7% lower than the previous year. Revenues
generated in the United States in Fiscal 2001 at $2,596,334 were 83% higher than
the previous year due primarily
                                      -20-
<PAGE>

to the increased market penetration of the Company's VIP product line. In Fiscal
2001, non-Canadian revenues represented 7% of total revenues compared to 4%
reported in Fiscal 2000.

            Costs and Expenses: Gross profits for the Company in Fiscal 2001
were $9,167,646, or 26% of revenues, compared to $10,402,393, or 28% of
revenues, in Fiscal 2000. The decline in gross profit resulted from the
following factors.

            Gross profit as a percentage of product sales declined to 22% in
Fiscal 2001 from 29% in Fiscal 2000 as a result of reduced revenues from the
contract with a major communications client and reduced sales of higher margin
White Label ATM equipment.

            Gross margin on service revenues increased to 34% in Fiscal 2001
from 25% in Fiscal 2000. The increase is attributable to the growth in White
Label ATM service fees and maintenance agreement revenues.

            Selling, General and Administrative (SG&A) costs, including
amortization and interest on obligations under capital leases, decreased by 1%
to $9,636,851 in Fiscal 2001 from $9,765,571 in Fiscal 2000. As a percentage of
sales, SG&A increased from 26% in Fiscal 2000 to 27% in Fiscal 2001. The Company
continues to review its overhead structure to ensure that it remains in line
with the level of business activity.

            Financial Costs: Interest expense and bank charges in Fiscal 2001
amounted to $206,851, a 72% increase over the level of the previous year. The
increase was primarily due to the higher level of average short-term borrowings
during the year compared to the previous year.

            The proceeds from the disposal of CDP Protection Inc. ("CDP") in
Fiscal 1999 remain invested in interest bearing financial instruments. The
interest income of $185,872 generated from these investments has been netted
against interest expense on short-term borrowings.

            Income Taxes: Income tax recovery of $474,000 was recorded in Fiscal
2001 compared to an expense of $19,087 in Fiscal 2000. The amount recognized in
Fiscal 2001 is based on management's estimates of the future tax benefits
available from capital cost allowance claims in excess of net book value of
capital assets, investment tax credits and losses carried forward.

            Net Earnings: The Company reported a net loss of $202,056, or $0.09
per share, in Fiscal 2001 compared to earnings of $497,809, or $0.22 per share,
in Fiscal 2000.

EXCHANGE RATE RISK

            The Company records its transactions and prepares its financial
statements in Canadian dollars. During Fiscal 2002, approximately 6% of sales
and 50% of purchases of equipment, parts and supplies were transacted in
currencies other than the Canadian dollar. During Fiscal 2002, most foreign
currencies with which the Company deals appreciated in comparison to the
Canadian dollar. The appreciation of the U.S. dollar relative to the Canadian
dollar is tabled under the caption "Item 3. Key Information-Exchange Rates"
above.

                                      -21-
<PAGE>

            As of May 31, 2002, the Company had entered into foreign exchange
contracts to purchase US $200,000 (CDN $316,340) in the month of June and US
$300,000 (CDN $464,190) in the month of July. The contracts can be exercised at
any time during the respective months.

            (B)   LIQUIDITY AND CAPITAL RESOURCES

            The Company's cash requirements are for capital expenditures and
working capital. The Company believes that cash flow from operating activities,
cash on hand (including the $4.8 million invested in short-term deposits,
bankers' acceptances, provincial bonds and cash), and periodic short-term
borrowings will be adequate to meet its operating cash requirements for the next
12 months.

            The Company has negotiated a revolving operating facility of $5
million at rates ranging from bank prime to bank prime plus 3/4%. At January 31,
2002, the Company had utilized its operating line to the extent of $2,700,000,
including the issuance of Letters of Credit to suppliers. At January 31, 2001,
the Company had utilized its operating line to the extent of $4,507,739,
including the issuance of Letters of Credit to suppliers.

            In November 2001, Frisco/ATMS, the Company's joint venture,
negotiated an operating demand line of credit of $5 million at a rate of bank
prime plus 1/2%. This line is used to finance cash loaded into the Joint
Venture's ATMs. At January 31, 2002, the Joint Venture had utilized its
operating line of credit to the extent of $1,173,071.

            Working capital as at January 31, 2002 and 2001 was $7,012,266 and
$6,491,060, respectively.

            (C) RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

            The Company has invested continuously in research and development to
produce new and improved products to satisfy customer needs and requirements.
The Company continues to develop the software that forms part of various systems
acquired from foreign suppliers used in a new generation of self-service
processing systems. These modifications are being made to tailor the software to
the specific needs and requirements of individual customers.

            The Company's research and development expenditures for the fiscal
years ended January 31, 2000, 2001, and 2002, were $350,756, $294,999, and
$311,439, respectively.

            Under accounting principles generally accepted in Canada,
development costs may be capitalized upon meeting certain specific criteria,
including the establishment of technological feasibility. The Company had
capitalized development expenditures of $132,899 and $127,818 during fiscal
years 2000 and 2001, respectively. The Company had no capitalized development
expenditures in its 2002 fiscal year. Amortization of these capitalized costs is
presented separately on the statement of earnings. Development costs include the
salaries and benefits of certain employees who work full time on new product
development, as well as costs of materials and labor related to new prototypes.
These costs also include miscellaneous travel and other expenses related to
specific development activities. Once a product is commercialized, the
capitalized development costs related to that product are amortized over a
two-year period.
                                      -22-
<PAGE>

The Company evaluates the viability of products on an annualized basis and
deferred costs relating to products that are no longer expected to attain
commercial success are written off immediately. As at January 31, 2002, the
Company had unamortized deferred development costs of $61,362. Under United
States generally accepted accounting principles, development costs are expensed
as incurred. See Note 20 of Notes to Consolidated Financial Statements for
additional information.

            The Company is continuing its policy of investing in development
programs and has budgeted $350,000 for development for its fiscal year ending
January 31, 2003. There can be no assurance, however, that such expenditures
will result in any short-term or long-term benefits to the Company.

            (D)   TREND INFORMATION

            Because of the consolidation within the financial industry in the
United States and Canada, both in terms of industry concentration and internal
reorganization, Frisco Bay has, in recent years, focused on increasing sales of
its integrated security systems and its financial processing products outside of
the financial industry.

            The Company has been successful at increasing its level of business
to other industries including global retail chains, auto manufacturers and
information technology organizations as well as casinos. Consequently, although
still extremely important to the Company, orders from financial institutions
represent a lesser percentage of total orders than previously. These
institutions typically place orders for a major portion of their capital budgets
in the latter part of the calendar year.

            The Company's operations have historically been seasonal, with
significantly higher revenues and earnings in the second half of its fiscal
year. However, the distribution of total revenues and earnings between Frisco
Bay's fiscal quarters has changed such that in the last three years there was a
predominance of both revenues and earnings in the first half of the Company's
fiscal year. Management believes that this new trend is a direct consequence of
its increased penetration into the integrated security market, which has
lessened the impact that the financial institutions' business had on the
Company's operating results.

            The Company also expects that, as its recurring service revenue
grows, it will dampen any seasonal factor generated from its product segment. In
addition, since the Company is now recognizing service contract revenue evenly
over the term of the contract, there will be little seasonality generated by
this segment.

                                      -23-
<PAGE>

            ITEM 6.     DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

            (A)   DIRECTORS AND SENIOR MANAGEMENT

            The following table sets forth, as of May 31, 2002, the Directors
and executive officers of the Company:

                                                           DATE FIRST BECAME AN
                                                                 EXECUTIVE
        NAME                    POSITION                   OFFICER OR DIRECTOR
-------------------         ---------------------------    ---------------------
Barry E. Katsof (1)(2)      Chief Executive Officer and
                            Chairman of the Board of
                            Directors                      February, 1987

Ronald G. Waxman(3)         Vice Chairman and
                            Director                       December, 1988

Robert Gagnon               Vice President, Finance and
                            Information Technology
                            and Assistant Secretary        April 2001

Heather Halickman           Vice President, Human
                            Resources and Secretary        April, 1992

Dominique Mimeault          Vice President,
                            Special Projects               September, 1997

Abraham Nozetz(2)(4)(5)     Director                       June, 1993

Brahm M. Gelfand(1)(2)(5)   Director                       June, 1993

Jan Westlund(4)             Director                       July, 1995

James G. Spencer(1)         Director                       July, 1999


      __________________________________

(1)   Class III Director, current term of office expires at the Annual Meeting
      of Shareholders in 2002.

(2)   Member of the audit committee.

(3)   Class II Director, current term of office expires at the Annual Meeting of
      Shareholders in 2004.

(4)   Class I Director, current term of office expires at the Annual Meeting of
      Shareholders in 2003.

(5)   Member of the compensation committee.

            Set forth below is information regarding the relevant business
experience of our Directors and executive officers.

            Barry E. Katsof

            Age: 54. Co-founded the Company in 1972 and Chief Executive Officer
and Chairman of the Board of Directors since February 1987. Mr. Katsof has been
a director of Quebec Blue Cross since 1992, and was previously a director of
Promatek Industries Ltd., an electronic copy control manufacturer. Mr. Katsof
received a Bachelor of Commerce degree (the equivalent in the United States of
an under-graduate business degree) from Sir George Williams University, a
predecessor of Concordia University, in 1970.

                                      -24-
<PAGE>

            Ronald G. Waxman

            Age: 52. A co-founder of Camtron Electronics International Ltd. in
1977, a company which prior to its amalgamation with Frisco Bay, was a
subsidiary of the Company. Previously, the President and C.O.O. of the Company
and currently Vice Chairman since August 1995 and a Director since December
1988. Mr. Waxman received a Bachelor of Commerce degree from Sir George Williams
University in 1971.

            Robert Gagnon

            Age: 43. Vice President Finance and Information Technology and
Assistant Secretary since April 2001. Mr. Gagnon was employed by Saturn
(Solutions) Inc. as Vice President from 1999 to 2001 and Corporate Controller
from 1997 to 2001. From 1995 to 1997, he was Director of Finance of the vaccine
subsidiary of BioChem Pharma Inc. From 1989 to 1994, he was employed by Domtar
Inc. where he held various positions including Director - Financial Planning and
Management Reporting. Mr. Gagnon received his Bachelor in Accounting and
Business Administration from the University of Montreal (H.E.C.) in 1991. He
qualified as a Certified General Accountant in Canada in 1984.

            Heather Halickman

            Age: 54. Vice President, Human Resources since 1992 and Secretary of
the Company since 1993. Ms. Halickman joined the Company in April 1978 and
previously served as Personnel Manager from 1985 to 1989 and as Marketing
Manager from 1989 until 1992. Ms. Halickman received a teaching diploma from
MacDonald College in 1966, at that time the education faculty of McGill
University in Montreal, and was an elementary school teacher until 1975.

            Dominique Mimeault

            Age: 50. Vice President, Special Projects since August 2000,
previously Vice President, Service and Product Delivery since November 1997. Mr.
Mimeault joined the Company in 1986 and served as account manager from 1986 to
1989, and as Vice President and General Manager for the Eastern Region from 1989
until 1997. Prior to joining Frisco Bay Mr. Mimeault spent 14 years with the
Royal Bank of Canada where he held various management positions.

            Abraham Nozetz

            Age: 66. A Director of the Company since June 1993. Prior to his
retirement Mr. Nozetz was a partner in the firm of Fuller Landau, independent
chartered accountants, and its predecessors.

            Brahm M. Gelfand

            Age: 65. A Director of the Company since June 1993 and previously
served as Secretary from January 1992 to September 1993. Mr. Gelfand has been a
partner in the law firm of Lapointe Rosenstein, the Company's Canadian legal
counsel, for over ten years. Mr. Gelfand is currently a member of the Board of
Governors of Dynamic Mutual Funds. He serves as a

                                      -25-
<PAGE>

director of Innovium Capital Corp., the Roasters' Foundation, the Sir Mortimer
B. Davis-Jewish General Hospital, and the Hospital's Foundation. He earned a
Bachelor of Arts degree in 1957 and a Bachelor-Civil Law degree in 1960 from
McGill University in Montreal. He is a member of the Bar of the Province of
Quebec. Additional information regarding Mr. Gelfand's relationship with the
Company is contained under the caption "Item 7.(B) Related Party Transactions"
below.

            Jan Westlund

            Age: 60. A Director of the Company since July 1995, Mr. Westlund is
an international business consultant and is founder and Chairman of Business
Support Systems, a consulting firm located in Sweden. Mr. Westlund was
previously Managing Director of Inter-Innovation, the world's largest
manufacturer of cash dispensing machines, that was subsequently sold to De La
Rue Systems of England.

            James G. Spencer

            Age: 59. A Director of the Company since July 1999, Mr. Spencer is
semi-retired but serves as President of The Tartan Group Inc., a
business-consulting firm located in Boca Raton, Florida. Mr. Spencer was
previously Vice President and part owner of Casi Rusco, Inc., currently a
division of Interlogix. He has also held multiple sales and marketing management
positions with IBM. Mr. Spencer is a graduate of Pace University in New York,
where he earned BBA and MBA degrees.

            (B)   COMPENSATION

            For the fiscal year ended January 31, 2002, all Directors, executive
officers, and one former officer of the Company as a group (10 persons) received
total compensation of approximately $875,000.

            Directors who are not officers of the Company receive an annual fee
of $4,000 and a participation fee of $500 for each meeting of the Board of
Directors attended, except for Brahm M. Gelfand, a partner of Lapointe
Rosenstein, the Company's Canadian legal counsel that receives a fee for the
services Mr. Gelfand renders as a Director of the Company, and Jan Westlund, who
upon his appointment to the Board of Directors in July 1995 received options to
purchase 7,515 shares of Common Stock of the Company at a price of US $4.00 per
share which vested immediately and which are exercisable at any time before July
28, 2005. Additional information regarding Mr. Gelfand's relationship with the
Company is contained under the caption "Item 7.(B) Related Party Transactions"
below. The Company also reimburses Directors for their actual out-of-pocket
expenses.

            Information regarding options held by Directors, executive officers,
and former officers, who served for all or part of the fiscal year, is contained
under the caption "Item 6.(E) Share Ownership" below.

                                      -26-
<PAGE>

            (C)   BOARD PRACTICES

            The Board of Directors is divided into three classes. Members of
each class are elected to hold office for three-year staggered terms. Additional
information is contained under the caption "Item 6.(A) Directors and Senior
Management" above.

            Our Directors do not have service contracts with us providing for
benefits upon the cessation of their service. Each outside Director is entitled
to receive an annual retainer of $4,000 plus meeting fees for their service on
our board except for Brahm M. Gelfand, a partner of Lapointe Rosenstein, the
Company's Canadian legal counsel that receives a fee for the services Mr.
Gelfand renders as a Director of the Company. Additional information regarding
Mr. Gelfand's relationship with the Company is contained under the caption "Item
7.(B) Related Party Transactions" below. Directors are also eligible to receive
grants of options under the Company's Stock Incentive Plan.

EMPLOYMENT AGREEMENTS

            Executive officers serve at the discretion of the Board of
Directors, subject to the terms of any agreement between an officer and the
Company. Additional information is contained under the caption "Item 3.(D) Risk
Factors" above.

AUDIT COMMITTEE

            The members of the audit committee consist of Barry E. Katsof, Brahm
M. Gelfand and Abraham Nozetz. The audit committee is charged with overseeing
the Company's accounting and financial reporting policies, practices and
internal controls. The committee reviews significant financial and accounting
issues and the services performed by and the reports of our independent auditors
and makes recommendations to our Board of Directors with respect to these and
related matters.

COMPENSATION COMMITTEE

            The Company's compensation committee is responsible for making
determinations regarding salaries, bonuses, option grants and other remuneration
for the Company's officers and key employees. The members of the compensation
committee consist of Brahm M. Gelfand and Abraham Nozetz.

            (D)   EMPLOYEES

            As of January 31, 2002, Frisco Bay had approximately one hundred
sixty-five full-time employees. Functionally, approximately eleven employees are
engaged in product assembly, shipping and warehousing operations, one hundred
eighteen in marketing, sales, service and support, two in research and
development and thirty-four in general and administrative activities. Two of the
Company's full-time employees are employed in operations outside of Canada.

                                      -27-
<PAGE>

            (E)   SHARE OWNERSHIP

            The following information with respect to the outstanding shares of
Class A Common Stock and Common Stock beneficially owned by each Director of the
Company, each nominee for Director of the Company, each executive officer named
under the caption "6.(A) Directors and Senior Management" above, each former
executive officer who served for all or part of the fiscal year and all
Directors and executive officers of the Company as a group, is furnished as of
May 31, 2002. Except as otherwise noted, each person listed in the table owns
all shares directly and has sole voting and investment power.

<TABLE>
<CAPTION>
                                                                          NUMBER OF SHARES OF
                                                   NUMBER OF SHARES OF   COMMON STOCK THAT MAY
                            NUMBER OF SHARES OF       COMMON STOCK       BE ACQUIRED WITHIN 60     PERCENT OF
                           CLASS A COMMON STOCK    BENEFICIALLY OWNED        DAYS BY OPTION      CLASS A COMMON     PERCENT OF
          NAME              BENEFICIALLY OWNED             (1)                  EXERCISE              STOCK        COMMON STOCK
------------------------   --------------------    -------------------   ---------------------   --------------    ------------

<S>                               <C>                    <C>                     <C>                 <C>               <C>
Barry E. Katsof                   546,793                45,000                  45,000              68.35%            2.90%

Ronald G. Waxman                  252,707                45,000                  45,000              31.59%            2.90%

Robert Gagnon                           -                 2,333                   2,333                   -                *

Malcolm Matthew(2)                      -                     -                       -                   -                -

Heather Halickman                     200                18,484                  18,484                   *            1.19%

Dominique Mimeault                    200                   150                     150                   *                *

Abraham Nozetz                          -                22,500                  22,500                   -            1.45%

Brahm M. Gelfand                        -                22,500                  22,500                   -            1.45%

Jan Westlund                            -                30,015                  30,015                   -            1.93%

James G. Spencer                        -                11,000                  10,000                   -                *

All Directors and
executive officers
as a group

(10 persons)............          799,900               196,982                 195,982              99.99%           12.68%

---------------------------------
</TABLE>

* Indicates less than one percent.

(1)  Amounts include the shares shown in the next column, which are not
     currently outstanding but are deemed beneficially owned because of the
     right to acquire them pursuant to options exercisable within 60 days (on or
     before July 31, 2002).

(2)  Mr. Matthew stepped down as the Company's Vice President, Finance and MIS
     and Assistant Secretary in March 2001.

                                      -28-
<PAGE>

AGGREGATE OPTIONS TO PURCHASE SECURITIES

                  As of May 31, 2002, each Director of the Company, each nominee
for Director of the Company, each executive officer named under the caption
"6.(A) Directors and Senior Management" above and each former executive officer
who served for all or part of the fiscal year held the following options to
purchase Common Stock of the Company.

<TABLE>
<CAPTION>
          NAME                NUMBER OF OPTIONS       EXERCISE PRICE PER SHARE        EXPIRATION DATE
-------------------------     -----------------       ------------------------        ---------------
<S>                               <C>                    <C>                          <C>
Barry E. Katsof                   25,000                      $2.938                     May 20, 2009

                                  20,000                      $5.300                     May 8, 2012

Ronald G. Waxman                  25,000                      $2.938                     May 20, 2009

                                  20,000                      $5.300                     May 8, 2012

Robert Gagnon                      9,000                      $3.250                    April 9, 2011

Heather Halickman                 15,000                      $1.810                  September 18, 2007

                                  15,000                      $2.500                    March 1, 2011

                                   1,484                 CDN. $6.495                     July 1, 2003

Dominique Mimeault                 2,000                      $1.810                  September 18, 2007

                                     150                 CDN. $6.495                     July 1, 2003

Abraham Nozetz                     7,500                      $2.630                     May 1, 2007

                                   5,000                      $2.938                     May 20, 2009

                                  10,000                      $5.300                     May 8, 2012

Brahm M. Gelfand                   7,500                      $2.630                     May 1, 2007

                                   5,000                      $2.938                     May 20, 2009

                                  10,000                      $5.300                     May 8, 2012

Jan Westlund                       7,515                      $4.000                    July 28, 2005

                                   7,500                      $2.630                     May 1, 2007

                                   5,000                      $2.938                     May 20, 2009

                                  10,000                      $5.300                     May 8, 2012

Jim Spencer                       10,000                      $5.300                     May 8, 2012
</TABLE>

STOCK INCENTIVE PLAN

            In 1993, the Company amended and restated its Stock Incentive Plan.
The purpose of the Stock Incentive Plan is to promote the interests of the
Company, its affiliates and its shareholders by providing the Company's
officers, Directors, consultants and key employees an opportunity to acquire a
proprietary interest in the Company. Under the Stock Incentive Plan, the Company
has reserved for issuance 450,000 shares of Common Stock. No award may be
granted under the Stock Incentive Plan after June 22, 2004.

            The Stock Incentive Plan is administered by the Board of Directors
or any appropriate committee thereof. Subject to the terms of the Stock
Incentive Plan, the Committee

                                      -29-
<PAGE>

determines the persons to whom awards are granted, the number of shares covered
by an award, the type of option awarded, whether the exercise of a stock
appreciation right awarded is in tandem or in lieu of the exercise of an option,
the vesting of an award, the type of consideration to be paid to the Company
upon exercise, the term of any award (which generally cannot exceed ten years)
and other terms.

            Under the Stock Incentive Plan, the Company may grant both incentive
stock options ("ISOs") intended to qualify under Section 422 of the United
States Internal Revenue Code of 1986, as amended (the "Code"), and options that
are not qualified as incentive stock options. ISOs may not be granted under the
Stock Incentive Plan at an exercise price of less than the fair market value of
the Common Stock on the date of grant.

            ISOs under the amended Stock Incentive Plan may not be granted to
non-employees. The exercise price of ISOs granted to any holder of more than 10%
of the voting power of all classes of stock of the Company or a parent or
subsidiary must be at least 110% of the fair market value of the Common Stock on
the date of grant, and the term of those ISOs cannot exceed five years.

            Unless the Board of Directors of the Company decides otherwise,
options granted pursuant to the Stock Incentive Plan may not be exercised more
than three months after the option holder ceases to be an officer, Director,
consultant or employee of the Company, except that in the event of the death or
permanent and total disability of the option holder, the option may be exercised
by the holder (or his estate, as the case may be), for a period of up to one
year after the date of death or permanent or total disability or retirement. The
exercise price may be paid in cash, in shares of Common Stock (valued at fair
market value at the date of exercise), in installments, or by a combination of
such means of payment, as may be determined by the Compensation Committee.
Options granted under the Stock Incentive Plan may include the right to purchase
shares of Common Stock equal to the shares tendered upon the exercise of the
option or withheld by the Company for withholding taxes.

            The Stock Incentive Plan also provides for the grant of stock
appreciation rights ("SARs"). SARs permit the participant to receive a payment
representing the excess of the fair market value of one share of Common Stock on
the date of exercise over the share's fair market value as of the date of grant.
Amounts payable upon exercise of SARs may, at the discretion of the Compensation
Committee, be made in cash, shares of Common Stock, or a combination thereof.
SARs granted in tandem with an option expire upon the exercise of the option.

            The Stock Incentive Plan also provides for the award of restricted
Common Stock outright for no consideration. Such stock awards may contain
restrictions regarding voting rights, dividend rights and transferability.

            Unless otherwise specified in the award agreement, an award will
vest over a period of five years. The Stock Incentive Plan also provides that
all outstanding awards shall vest immediately upon the acquisition of 40% or
more of the Company's outstanding stock without prior Board approval or upon the
election or appointment within a 12-month period of new Board members
constituting a majority of the Board who were not approved by a majority of the
Board members at the beginning of the period.

                                      -30-
<PAGE>

            Awards of options and SARs and awards of restricted stock, to the
extent the restriction period has not expired, are not transferable other than
by will or the laws of descent and distribution in the event of the awardee's
death. Shares of Common Stock subject to awards that were granted, but that
later terminate or expire, may again be made subject to awards.

            The Board of Directors may from time to time amend or terminate the
Stock Incentive Plan, except that it may not take any action that would
adversely affect the rights and obligations with respect to outstanding awards
without the consent of the awardee. The Board may not, without approval of the
Company's shareholders, materially increase the benefits accruing to
participants under the Stock Incentive Plan, materially increase the maximum
number of shares of Common Stock that may be made subject to awards under the
Stock Incentive Plan or materially modify the requirements as to eligibility for
participation in the Stock Incentive Plan.

            At May 31, 2002, options to purchase an aggregate of 2,217 shares of
Common Stock, at a price of CDN $6.495 per share, and options to purchase an
aggregate of 277,815 shares of Common Stock, at prices ranging from U.S. $1.81
to U.S. $8.20 per share, were currently outstanding under the Stock Incentive
Plan. In addition, an aggregate of 2,050 SARs, not in tandem with options with a
value of U.S. $1.00 per SAR, were outstanding at that date.

            Included in the foregoing are options for an aggregate of 1,634
shares of Common Stock at a price of CDN $6.495 per share and options for an
aggregate of 216,015 shares of Common Stock at prices ranging from U.S. $1.81 to
U.S. $5.30 per share, held by all Directors, officers and former officers as a
group (10 persons).

            During Fiscal 2002, certain of the Company's management were granted
an aggregate of 6,910 shares of Common Stock for no consideration based on the
achievement of specific financial and other objectives.

            ITEM 7.     MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

            (A)   MAJOR SHAREHOLDERS

            The following table sets forth as of May 31, 2002, all persons known
to the Company to be the owner of more than five percent of the Company's Common
Stock or Class A Common Stock. Except as disclosed in the footnotes below, the
Company, to the best of its knowledge, is not directly or indirectly owned or
controlled by another corporation, any foreign government or by any other
natural or legal person.

                                                         AGGREGATE VOTING
                                                        POWER OF COMBINED
                                                         CLASS A COMMON
  TITLE        IDENTITY OF      AMOUNT       PERCENT     STOCK AND COMMON
OF CLASS     PERSON OR GROUP     OWNED      OF CLASS          STOCK
----------  -----------------  ---------  ------------  ---------------------
Class A
Common      Barry E. Katsof
Stock       (1)(2)              546,793     68.35%          46.02%

Class A
Common      Ronald G. Waxman
Stock       (3)(4)              252,707     31.59%          21.27%


                                 -31-
<PAGE>
                                                         AGGREGATE VOTING
                                                        POWER OF COMBINED
                                                         CLASS A COMMON
  TITLE        IDENTITY OF      AMOUNT       PERCENT     STOCK AND COMMON
OF CLASS     PERSON OR GROUP     OWNED      OF CLASS          STOCK
----------  -----------------  ---------  ------------  ---------------------
Common
Stock       Robert A. Garrett   116,400      77.50%          2.45%

Common      Summit Capital
Stock       Management          211,450     113.62%          4.45%

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

(1)   Held by 92324 Canada Ltd. ("Katsco"), a company controlled by Mr. Katsof.

(2)   In addition, pursuant to an agreement entered into among Katsco, 126909
      Canada Inc. ("Waxco"), Ronald G. Waxman, Barry E. Katsof and Brahm M.
      Gelfand (as escrow agent), Mr. Katsof, through Katsco, is currently
      entitled to exercise the voting rights attached to the 252,707 shares of
      Class A Common Stock held by Waxco.

(3)   Held by Waxco, a company controlled by Mr. Waxman.

(4)   The voting rights attached to these shares of Class A Common Stock may
      currently be exercised by Mr. Katsof through Katsco, pursuant to the
      agreement described in Note 2 to this table.

            Shares of Common Stock are entitled to one vote per share and shares
of Class A Common Stock are entitled to four votes per share. Shares of Class A
Common Stock convert automatically into shares of Common Stock upon transfer of
ownership on a one-for-one basis, except for sales to certain permitted
transferees. The Common Stock and Class A Common Stock rank pari passu in all
other respects.

            At May 31, 2002, the Company had 1,552,931 shares of Common Stock
outstanding, which, to the best of the Company's knowledge, were held by
forty-six record holders, nineteen of which, holding an aggregate of
approximately 1,544,646 shares of Common Stock, were in the United States. Based
on the number of proxy statements distributed in connection with the Company's
2001 Annual Meeting of Shareholders, the Company believes it has more than 800
beneficial holders. In addition, as of May 31, 2002, the Company had 799,967
shares of Class A Common Stock, no par value, outstanding.

            There are no arrangements, known to the Company, the operation of
which may at a subsequent date result in a change in control of the Company.

            (B)   RELATED PARTY TRANSACTIONS

            The Company leases its executive headquarters in Montreal, Quebec,
for an annual rent of $165,000 pursuant to two lease agreements with 151185
Canada Inc., a corporation controlled by Barry E. Katsof and Ronald G. Waxman,
two of the Company's officers and Directors, and a third individual who
previously was an officer and Director of the Company. The Company believes that
the terms of these leases are at least as favorable as those it could have
obtained for comparable property from an unaffiliated landlord.

                                      -32-
<PAGE>

            From February 1987 to February 1995, the Company made annual
advances to 92324 Canada Inc. and 126909 Canada Inc., corporations currently
controlled by Messrs. Katsof and Waxman, to fund those corporations' shareholder
buy-out arrangements. As of May 31, 2002, the remaining balance of such advances
aggregated approximately $93,000. The advances are interest free and are
repayable at any time upon demand of the Company, but are otherwise repayable in
equal annual installments over a 10-year period that commenced October 13, 1993.
The Company does not intend to demand immediate repayment of the advances due.

            Brahm M. Gelfand, a Director of the Company, may be deemed to
benefit indirectly from the fact that the Company engages the law firm of which
he is a partner for advice and legal services in the ordinary course of
business.

            (C)   INTERESTS OF EXPERTS AND COUNSEL

            Not applicable.

            ITEM 8.     FINANCIAL INFORMATION

            (A)   CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

            Information regarding our financial statements is contained under
the caption "Item 18. Financial Statements" below.

            DIVIDEND POLICY

            The Company has not paid any dividends on its Common Stock or Class
A Common Stock during the previous five-year period and does not currently
intend to declare and pay dividends on its Common Stock or Class A Common Stock
in the foreseeable future.

            LEGAL PROCEEDINGS

            Various claims and legal proceedings have been instituted against
the Company in the normal course of its business operations. In Management's
opinion, these claims and proceedings are unfounded. Management believes that
the Company does not have an exposure in excess of amounts recorded in its
Consolidated Financial Statements and that any payments resulting from their
outcome are not likely to have a material impact on its financial position.

            Pursuant to its joint venture agreement with ATMS/Frisco Bay and
Company, Limited Partnership, ("Frisco/ATMS") the Company is contingently liable
for Frisco/ATMS's share of the obligations of the joint venture. In the event
that the Company had to meet any of these contingencies, it would have a claim
on the assets of the joint venture.

            (B)   SIGNIFICANT CHANGES

            There have been no significant changes since the date of the
financial statements included in this annual report.

                                      -33-
<PAGE>

            ITEM 9.     THE OFFER AND LISTING

            (A)   OFFER AND LISTING DETAILS

            The following table sets forth (in U.S. dollars) the high and low
closing prices as reported by Nasdaq for the Company's Common Stock for each of
the indicated periods:

          ANNUAL HIGH-LOW PRICE HISTORY FOR PREVIOUS FIVE FISCAL YEARS

            FISCAL YEAR ENDED           HIGH                  LOW
            -----------------           ----                  ---
            January 31, 1998            3.50                  1.25
            January 31, 1999            3.375                 1.25
            January 31, 2000            3.688                 1.719
            January 31, 2001            7.50                  1.375
            January 31, 2002            7.370                 1.625

       QUARTERLY HIGH-LOW PRICE HISTORY FOR PREVIOUS TWO FISCAL YEARS AND
                     THE MOST RECENT FULL FINANCIAL QUARTER

            QUARTER ENDED               HIGH                  LOW
            -------------               ----                  ---
            April 30, 2000              7.50                  2.75
            July 31, 2000               5.25                  2.75
            October 31, 2000            3.50                  2.00
            January 31, 2001            2.50                  1.375
            April 30, 2001              4.00                  1.688
            July 31, 2001               4.490                 2.530
            October 31, 2001            4.550                 2.060
            January 31, 2002            7.370                 3.910
            April 30, 2002              6.500                 3.950

             MONTHLY HIGH-LOW PRICE HISTORY FOR PREVIOUS SIX MONTHS

            MONTH                       HIGH                  LOW
            -----                       ----                  ---
            December 2001               7.370                 5.100
            January 2002                6.460                 4.600
            February 2002               6.380                 3.950
            March 2002                  6.500                 5.360
            April 2002                  5.769                 4.600
            May 2002                    10.250                4.940



            (B)   PLAN OF DISTRIBUTION

            Not applicable.

            (C)   MARKETS

            The Company's Common Stock had been listed on the National Market of
The Nasdaq Stock Market, Inc. ("Nasdaq") since October 13, 1993. Effective
November 16, 1998, as a result of changes in Nasdaq listing requirements, the
Company's Common Stock commenced trading on Nasdaq's SmallCap Market. The symbol
for the Company's Common Stock is "FBAY".

                                      -34-
<PAGE>

            (D)   SELLING SHAREHOLDERS

            Not applicable.

            (E)   DILUTION

            Not applicable.

            (F)   EXPENSES OF THE ISSUE

            Not applicable.

            ITEM 10.    ADDITIONAL INFORMATION

            (A)   SHARE CAPITAL

            Not applicable.

            (B)   MEMORANDUM AND ARTICLES OF ASSOCIATION

ARTICLES OF AMALGAMATION

            The Company is governed by its Articles of Amalgamation (the
"Articles") under the Canada Business Corporations Act ("CBCA") and by its
by-laws (the "By-laws"). The Articles are filed with Industry Canada under
Corporation Number 243613-2. The Articles do not include stated objects or
purposes and do not place any restrictions on the business that the Company may
carry on.

DIRECTORS

            The minimum number of Directors of the Company is three (3) and the
maximum number is fifteen (15). In accordance with the By-laws, a majority of
the Directors must be residents of Canada. There is no requirement for the
Directors to hold stock of the Company or to retire pursuant to an age limit.

            Pursuant to the provisions of the CBCA, a Director who is party to a
material contract or transaction with the Company or who has a material interest
in any person who is party to a material contract or transaction with the
Company must disclose to the Company the nature and extent of such interest in
writing or request to have such interest noted in the minutes of meetings of the
Directors. Furthermore, a Director who has a material interest in a proposal or
contract may not vote on any resolution to approve the proposal or contract
unless the proposal or contract (i) relates primarily to the Director's
remuneration as a Director, officer, employee or agent of the Company or an
affiliate, (ii) is for indemnity or insurance for the Director against liability
incurred by the Director acting in his or her capacity as Director, or (iii) is
with an affiliate. Absent an appropriate quorum, Directors are precluded from
voting on any matters concerning remuneration.

            The Board of Directors may (i) borrow money on the Company's credit,
(ii) issue, re-issue, sell or pledge debt obligations of the Company, (iii) give
a guarantee on behalf of the Company to secure performance of any present or
future indebtedness, liability or obligation of

                                      -35-
<PAGE>

any person and, (iv) charge, mortgage, hypothecate, pledge or otherwise create a
security interest in all or any currently owned or subsequently acquired real or
personal, movable or immovable, property of the Company to secure any present or
future indebtedness, liabilities or other obligations of the Company. The CBCA
directs that the Board of Directors may vary these borrowing powers by passing a
resolution to that effect and subsequently submitting the amendment to the
shareholders of the Company at the next meeting of shareholders.

COMMON STOCK AND CLASS A COMMON STOCK

            Shares of Common Stock are entitled to one vote per share and shares
of Class A Common Stock are entitled to four votes per share. Shares of Class A
Common Stock convert automatically into shares of Common Stock upon transfer of
ownership on a one-for-one basis, except for sales to certain permitted
transferees. The Common Stock and Class A Common Stock rank pari passu in all
other respects.

PREFERRED STOCK

            Our Board of Directors is authorized, without further action by the
shareholders, to issue Preferred Shares in one or more series and to set the
number of shares constituting any such series and the designation, rights,
privileges, restrictions and conditions attaching to the shares of such series
including dividend rights and rates, redemption provisions (including sinking
fund provisions), rights of conversion or exchange, liquidation preferences and
voting rights, if any. The Preferred Shares as a class are entitled to priority
over the Common Stock and Class A Common Stock if our Board of Directors decides
to pay any dividends, and, if we are dissolved, liquidated or wound up, the
Preferred Shares are entitled as a class to priority in respect of return of
capital. Except as required by law or the provisions of any designated series of
Preferred Shares, the holders of Preferred Shares as a class are not entitled to
receive notice of, attend or vote at any meeting of our shareholders. As of July
2, 2001, no Preferred Shares have been issued by the Company.

CHANGES TO RIGHTS OF SHAREHOLDERS

            In order to change the rights of our shareholders, the Company would
need to amend its Articles to effect the change. Such an amendment would require
the approval of not less than two-thirds of the votes attached to the shares of
Common Stock and Class A Common Stock voting together as one class at a duly
called special meeting. However, any changes to the manner by which members of
the Board of Directors are elected or hold office would require the approval of
not less than 85% of the outstanding shares of the capital stock of the Company
having the right to vote on such matters.

MEETINGS OF SHAREHOLDERS

            An annual meeting of shareholders is held each year for the purpose
of considering the financial statements and reports, electing Directors,
appointing auditors and for the transaction of other business as may be brought
before the meeting. The Board of Directors has the power to call a special
meeting of shareholders at any time.

            Notice of the time and place of each meeting of shareholders must be
given not less than 21 days, nor more than 50 days, before the date of each
meeting to each Director, to the

                                      -36-
<PAGE>

auditor and to each shareholder who at the close of business on the record date
for notice is entered in the securities register as the holder of one or more
shares carrying the right to vote at the meeting. Notice of meeting of
shareholders called for any other purpose other than consideration of the
minutes of an earlier meeting, financial statements and auditor's report,
election of Directors and reappointment of the incumbent auditor, must state the
nature of the business in sufficient detail to permit the shareholder to form a
reasoned judgement on and must state the text of any special resolution or
by-law to be submitted to the meeting.

            The only persons entitled to be present at a meeting of shareholders
are those entitled to vote, the Directors of the Company and the auditor of the
Company. Any other person may be admitted only on the invitation of the chairman
of the meeting or with the consent of the meeting. In circumstances where a
court orders a meeting of shareholders, the court may direct how the meeting may
be held, including who may attend the meeting.

LIMITATIONS ON SHARE OWNERSHIP

            Our By-laws do provide for any limitations on the rights to own
securities.

SHAREHOLDER OWNERSHIP DISCLOSURE

            Our By-laws do not contain any provision governing the ownership
threshold above which shareholder ownership must be disclosed.

            (C)   MATERIAL CONTRACTS

            Except for contracts entered into in the ordinary course of
business, the Company has not entered into any material contracts in the
preceding two years.

            (D)   EXCHANGE CONTROLS

            There is no law, governmental decree or regulation in Canada that
restricts the export or import of capital, or that affects the remittance of
dividends, interest or other payment to non-resident holders of Common Stock,
other than withholding tax requirements. Additional information is contained
under the caption "Item 10.(E) Taxation" below.

            There is no limitation imposed by Canadian law or by the Articles of
Amalgamation or other constituent documents of the Company on the right of a
non-resident to hold or vote Common Stock, other than as provided by the
Investment Canada Act (Canada), as amended, including as amended by the
Canada-United States Free Trade Agreement Implementation Act (Canada) and the
World Trade Organization Agreement Implementation Act (Canada). The following
summarizes the principal features of the Investment Canada Act for non-residents
who propose to acquire Common Stock.

            The Investment Canada Act (the "Act"), enacted on June 20, 1985, as
amended up to February 13, 2002, including as amended by the North American Free
Trade Agreement Implementation Act (Canada) and the World Trade Organization
Agreement Implementation Act (Canada), requires the prior notification and, in
certain cases, advance review and approval by the Government of Canada of the
acquisition by a "non-Canadian" of "control" of a "Canadian business," all as
defined in the Act. For purposes of the Act, "control" can be acquired through

                                      -37-
<PAGE>

the acquisition of all or substantially all of the assets used in the Canadian
business, or the direct or indirect acquisition of voting interests or shares in
an entity that carries on a Canadian business or which controls the entity which
carries on the Canadian business whether or not that controlling entity is
Canadian. Under the Act, control of a corporation is deemed to be acquired
through the acquisition of a majority of the voting shares of a corporation, and
is presumed to be acquired where at least one-third, but less than a majority,
of the voting shares of a corporation or of an equivalent undivided ownership
interest in the voting shares of a corporation are acquired, unless it can be
established that the corporation is not controlled in fact through the ownership
of voting shares. Other rules apply with respect to the acquisition of
non-corporate entities.

            Investments requiring review and approval include (i) a direct
acquisition of control of a Canadian business with assets with a value of CDN
$5,000,000 or more, (ii) an indirect acquisition of control of a Canadian
business where the value of the assets of the Canadian business and of all other
Canadian entities the control of which is acquired directly or indirectly is CDN
$50,000,000 or more; and (iii) an indirect acquisition of control of a Canadian
business where the value of the assets of the Canadian business and of all other
Canadian entities the control of which is acquired directly or indirectly is CDN
$5,000,000 or more and represents greater than 50% of the total value of the
assets of all of the entities, control of which is being acquired. Subject to
certain exceptions, where an investment is made by a "WTO investor" or the
Canadian business is controlled by a WTO investor (as defined in the Act), the
monetary thresholds discussed above are higher. In these circumstances the
monetary threshold with regard to the acquisitions discussed in (i) and (iii)
above for 2002 is CDN $218,000,000 multiplied by the quotient obtained by
dividing the current nominal gross domestic product of Canada ("GDP") by the
previous year's GDP, as determined in accordance with the Act. Other indirect
acquisitions of Canadian businesses by or from WTO investors are not subject to
review. A "WTO investor", as defined under the Act, includes an individual who
is a national of a member of the World Trade Organization or who has the right
of permanent residence in relation to such member, and an entity that is
controlled by a WTO investor in accordance with the Act. Certain other
corporations, limited partnerships and trusts may also qualify as WTO investors.
Special rules apply with respect to investments by non-Canadians to acquire
control of Canadian businesses that engage in certain specified activities,
including financial services, transportation services and activities relating to
Canada's cultural heritage or national identity.

            If an investment is reviewable, an application for review in the
form prescribed by regulation is normally required to be filed with the Director
of Investments, established by the Act, prior to the investment taking place and
the investment may not normally be consummated until the review has been
completed and ministerial approval obtained.

            The Director of Investments will submit the application for review
to the Minister, together with any other information or written undertakings
given by the acquirer and any representation submitted to the Director of
Investments by a province that is likely to be significantly affected by the
investment. The Minister will then determine whether the investment is likely to
be of "net benefit to Canada", taking into account the information provided and
having regard to certain factors of assessment prescribed under the Act. Among
the factors to be considered are: (i) the effect of the investment on the level
and nature of economic activity in Canada, including the effect on employment,
on resource processing, on the

                                      -38-
<PAGE>

utilization of parts, components and services produced in Canada, and on exports
from Canada; (ii) the degree and significance of participation by Canadians in
the Canadian business and in any industry in Canada of which it forms a part;
(iii) the effect of the investment on productivity, industrial efficiency,
technological development, product innovation and product variety in Canada;
(iv) the effect of the investment on competition within any industry or
industries in Canada; (v) the compatibility of the investment with national,
industrial, economic and cultural objectives enunciated by the government or
legislature of any province likely to be significantly affected by the
investment; and (vi) the contribution of the investment to Canada's ability to
compete in world markets.

            Within 45 days after a completed application for review has been
received, the Minister must notify the investor that (a) he is satisfied that
the investment is likely to be of "net benefit to Canada," or (b) he is unable
to complete his review in which case he shall have 30 additional days to
complete his review (unless the investor agrees to a longer period) or (c) he is
not satisfied that the investment is likely to be of "net benefit to Canada."

            If the Minister is unable to complete his review and no decision has
been taken within the prescribed or agreed upon time, the Minister is deemed to
be satisfied that the investment is likely to be of "net benefit to Canada."

            Where the Minister has advised the investor that he is not satisfied
that the investment is likely to be of "net benefit to Canada," the acquirer has
the right to make representations and submit undertakings within 30 days of the
date of the notice (or any further period that is agreed upon between the
investor and the Minister). On the expiration of the 30-day period (or an agreed
extension), the Minister must notify the investor whether or not he is satisfied
that the investment is likely to be of "net benefit to Canada." In the latter
case, the investor may not proceed with the investment or, if the investment has
already been consummated, must divest itself of control of the Canadian
business.

            (E)   TAXATION

            The following summary describes the principal U.S. federal income
and Canadian tax consequences of the beneficial ownership and disposition of
Common Stock. This summary does not purport to be a comprehensive description of
all the tax considerations that may be relevant. This summary is not intended as
tax advice and is limited to U.S. Holders and Non-U.S. Holders (as defined
below) who hold the Common Stock as a capital asset, whose functional currency
is the U.S. dollar and who do not own Common Stock in carrying on a business
through a permanent establishment, or in connection with a fixed base, in
Canada. This summary does not address the tax treatment of U.S. Holders that may
be subject to special U.S. federal income tax rules, such as regulated
investment companies, real estate investment trusts, banks, tax-exempt entities,
insurance companies, U.S. Holders subject to the alternative minimum tax,
brokers or dealers in securities or currencies, and persons holding the Common
Stock as part of a "hedging," "straddle," "conversion transaction," "synthetic
security" or "integrated investment" for federal income tax purposes or other
risk-reduction transaction, or U.S. Holders who own (directly, indirectly or
constructively by attribution) 10% or more of the total combined voting power of
all classes of the Company's stock entitled to vote.

                                      -39-
<PAGE>

            For purposes of this summary, the term "U.S. Holder" means a
beneficial owner of Common Stock that is, for U.S. federal income tax purposes,
(i) a citizen or resident of the U.S., (ii) a corporation or other entity
created or organized under the laws of the U.S. or any political subdivision
thereof, (iii) an estate the income of which is subject to U.S. federal income
tax regardless of its source, or (iv) a trust if a U.S. court can exercise
primary supervision over the administration of such trust and one or more U.S.
persons has the authority to control all substantial decisions of the trust. A
"Non-U.S. Holder" is such a beneficial owner that is not a U.S. Holder.

            The summary of U.S. tax considerations is based on the Internal
Revenue Code of 1986, as amended (the "Code"), Treasury regulations, rulings and
judicial decisions in effect as of the date of hereof, all of which are subject
to change, with possible retroactive effect. No ruling from the Internal Revenue
Service (the "IRS") will be sought with respect to the Common Stock, and the IRS
could take a contrary view with respect to the matters described below. Holders
should consult their tax advisors as to the U.S. federal, state, local, and
other tax consequences to them of the purchase, ownership and disposition of
Common Stock.

            The discussion of Canadian Tax considerations is based upon the
provisions of the Income Tax Act (Canada) (the "Tax Act"), all proposed
amendments to the Act and the regulations thereto as of the date hereof, the
Convention and counsel's understanding of published administrative practices of
the Canada Customs and Revenue Agency and judicial decisions, all of which are
subject to change. The discussion does not take into account the tax laws of the
various provinces or territories of Canada or the tax laws of the various state
and local jurisdictions in the United States.

            THIS DISCUSSION IS GENERAL IN NATURE AND IS NOT INTENDED TO BE NOR
SHOULD IT BE CONSTRUED AS LEGAL OR TAX ADVICE TO ANY PARTICULAR SECURITYHOLDER.
THEREFORE, SECURITYHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES OF THEIR INVESTMENT IN THE COMMON STOCK.

CANADIAN TAX CONSIDERATIONS

            Dividends paid or credited on the Common Stock to Unconnected U.S.
Shareholders will be subject to a Canadian withholding tax. Under the
Convention, the rate of withholding tax generally applicable to dividends paid
to Unconnected U.S. Shareholders that beneficially own Common Stock is 15%. In
the case of Unconnected U.S. Shareholders that are U.S. corporations that
beneficially own 10% or more of the voting shares of the Company, the applicable
withholding tax rate is 5%.

            Gains recognized by Unconnected U.S. Shareholders on the disposition
of Common Stock generally will not be subject to tax in Canada. If the holder,
persons with whom the holder did not deal at arm's length, or the holder
together with all such persons, owned at any time during the five-year period
immediately preceding the disposition, 25% or more of the issued shares of any
class of the capital stock of the Company, certain Canadian reporting
requirements must be complied with. Furthermore, gain recognized on the
disposition of a share of the capital stock of a company that is a resident of
Canada, the value of whose shares is derived principally from real property
situated in Canada will be subject to tax in Canada. The

                                      -40-
<PAGE>

Company believes that the value of its shares does not derive principally from
real property situated in Canada.

UNITED STATES TAX CONSIDERATIONS

U.S. HOLDERS
------------

      TAX CONSEQUENCES IN RESPECT OF COMMON STOCK

            Taxation of Dividends on Common Stock. The gross amount of a
distribution with respect to Common Stock (other than a distribution in
redemption or liquidation) will be treated as a taxable dividend to the extent
of the Company's current and accumulated earnings and profits, computed in
accordance with U.S. federal income tax principles. For these purposes,
distributions to U.S. Holders in Canadian dollars must be translated into U.S.
dollars at the spot rate on the date the distribution is received. U.S. Holders
should consult their tax advisor regarding potential recognition of foreign
currency gain or loss for U.S. federal income tax purposes upon the conversion
Canadian dollars received into U.S. dollars. Distributions in excess of the
Company's current and accumulated earnings and profits will be applied against
and will reduce the U.S. Holder's tax basis in the Common Stock. To the extent a
distribution exceeds the U.S. Holder's tax basis, the excess will be treated as
gain from a sale or exchange of such Common Stock. For special rules regarding
certain distributions from "passive foreign investment companies", see "Passive
Foreign Investment Company" below.

            Subject to the limitations set forth in Section 904 of the Code
(which limits the extent to which a U.S. taxpayer may credit against its U.S.
federal income tax liability, any taxes paid by it to a foreign country), the
Canadian tax withheld or paid with respect to distributions on the Common Stock
generally may be credited against the U.S. federal income tax liability of a
U.S. Holder if such U.S. Holder makes an appropriate election for the taxable
year in which such taxes are paid or accrued; alternatively, a U.S. Holder who
does not elect to credit any foreign taxes paid during the taxable year may
deduct such taxes in such taxable year. In addition, a U.S. Holder that owns 10%
of more of the Common Stock who receives a dividend is deemed to have received
(and to have paid as a foreign tax eligible for the foreign tax credit, subject
to the limitations of Section 904 of the Code) a portion of the foreign taxes
paid by the Company. Because the foreign tax credit provisions of the Code are
very complex (particularly the provisions relating to the deemed paid foreign
tax credit and the limitations on the claiming of the credit), U.S. Holders
should consult their own tax advisors with respect to the claiming of foreign
tax credits.

            Corporate U.S. Holders will not be entitled to claim a dividends
received deduction in respect of dividends distributed on the Common Stock.

            Taxation on Sale or Exchange of Common Stock. A U.S. Holder will
generally recognize gain or loss on the sale, exchange or other disposition of
Common Stock in an amount equal to the difference between the amount realized on
the sale or exchange and the U.S. Holder's adjusted tax basis in such Common
Stock. Gain or loss upon the sale of the Common Stock will be capital gain or
loss if the Common Stock is a capital asset in the hands of the U.S. Holder and
will be long-term capital gain or loss if at the time of sale or exchange the
Common Stock has been held for more than one year. Under current law, long-term
capital gain of individuals are generally taxed at lower rates than items of

                                      -41-
<PAGE>

ordinary income. Capital losses recognized on a sale or exchange of Common Stock
are subject to certain deductibility limitations. For special rules regarding
the sale or exchange of stock in a "passive foreign investment company" see
"Passive Foreign Investment Company" below.

      PASSIVE FOREIGN INVESTMENT COMPANY

            The Code contains special rules for the taxation of U.S. persons who
own shares in a "passive foreign investment company" (a "PFIC"). A PFIC is a
non-U.S. corporation that meets an income test and/or an asset test. The income
test is met if 75% or more of the corporation's gross income is "passive income"
(generally, dividends, interest, rents, royalties, and gains from the
disposition of assets producing passive income, such as shares of stock, subject
to certain exceptions). The asset test is met if at least 50% of the average
value of the corporation's assets produce, or are held for the production of,
passive income. U.S. persons are denied capital gain treatment upon a sale or
exchange of stock in a PFIC and are subject to other special tax rules upon an
"excess distribution" in respect of stock in a PFIC, unless a "qualified
electing fund" election pursuant to Section 1295 of the Code, is made in the
first year that the foreign corporation constitutes a PFIC with respect to a
U.S. Holder. Based on its income, assets and activities, the Company believes
that it has not been a PFIC in the past and that it will not be treated as a
PFIC for the current taxable year. Although the Company intends to conduct its
business and investment activities in a manner that avoids classification as a
PFIC, no assurance can be given that the Company will not become a PFIC for the
current taxable year or any subsequent taxable year. U.S. Holders should consult
with their tax advisors regarding the U.S. federal income tax consequences under
the PFIC rules and carefully consider whether to make a qualified electing fund
election with respect to the Common Stock if the Company becomes a PFIC.

      CONTROLLED FOREIGN CORPORATION AND FOREIGN PERSONAL HOLDING COMPANY

            U.S. persons owning (directly, indirectly or by attribution) shares
representing 10% or more of the voting power of the shares of a "controlled
foreign corporation" ("CFC") are required to include as ordinary income their
pro rata share of the "Subpart F Income" derived by the CFC (as well as certain
income of its subsidiaries). Among other items, and subject to certain
exceptions, "Subpart F Income" includes dividends, interest, annuities, gains
from the sale or shares and securities, certain gains from commodities
transactions, certain types of insurance income and income from certain
transactions with related parties. A foreign corporation is a CFC if more than
50% of its stock (by vote or value) is owned (directly, indirectly, or by
attribution) by U.S. persons who each own (directly, indirectly or by
attribution) 10% or more of the total combined voting power of its shares. The
Company has not been and does not expect to be a CFC for the current year.
However, future changes of ownership of the Company's stock could cause the
Company to become a CFC in the future. U.S. Holders should consult their tax
advisors regarding the U.S. federal income tax consequences of owning Common
Stock in a CFC.

            Similarly, U.S. persons who own shares (directly or indirectly) of a
foreign corporation that is a "foreign personal holding company" ("FPHC") on the
last day of the foreign corporation's taxable year must include in their gross
income, for the shareholder's taxable year in which or with which the taxable
year of the FPHC ends, a pro rata share of the FPHC's undistributed "foreign

                                      -42-
<PAGE>

personal holding company income" (or "FPHCI"). A foreign corporation will
constitute an FPHC if more than 50% of its stock (by vote or value) is owned
(directly, indirectly or by attribution) by five or fewer individuals who are
U.S. citizens or residents and at least 60% (50% in certain years following the
year in which the corporation becomes an FPHC) of its gross income consists of
FPHCI. FPHCI generally consists of passive income such as interest, dividends,
royalties, certain rents, and gain from the sale of stock or securities, from
whatever geographic source derived. The Company does not expect to meet the FPHC
stock ownership test and, therefore, the Company does not expect to be an FPHC.
However, future changes in ownership could cause the Company to become an FPHC
if the FPHC gross income test is then also met. U.S. Holders should consult
their tax advisors regarding the U.S. federal tax income consequences of owning
Common Stock in an FPHC.

NON-U.S. HOLDERS
----------------

            A Non-U.S. Holder should not be subject to U.S. federal income,
withholding, or capital gains taxes with respect to the sale, disposition or any
distribution in respect of the Common Stock, unless (i) such income is
effectively connected with trade or business conducted by such Non-U.S. holder
within the United States, or (ii) in the case of an individual, such Non-U.S.
Holder is a nonresident alien who holds the Common Stock as a capital asset and
is present in the United States for 183 days or more during a taxable year and
certain other conditions are satisfied.

      UNITED STATES INFORMATION REPORTING AND BACKUP WITHHOLDING

            For each calendar year in which the Common Stock is outstanding, the
Company, its agents or paying agents or a broker may be required to provide the
IRS with certain information, including the Holder's name, address and taxpayer
identification number, information concerning distributions on the Common Stock
during the calendar year and the amount of tax withheld, if any. This obligation
however, does not apply with respect to certain Holders, including corporations,
tax-exempt organizations, qualified pension and profit sharing trusts and
individual retirement accounts. A backup withholding tax will apply to payments
if a U.S. Holder fails to provide a taxpayer identification number. Backup
withholding is applied at a rate not to exceed 31%.

            Backup withholding and information reporting generally will not
apply to distributions made to a Non-U.S. Holder that provides an IRS Form
W-8BEN to the relevant withholding agent, paying agent or broker, together with
all appropriate attachments, signed under penalties of perjury, identifying the
Non-U.S. Holder and stating that the Non-U.S. Holder is not a U.S. person or
otherwise qualifies for an exemption.

            The payment of the proceeds on the disposition of Common Stock by a
Holder to or through the U.S. office of a broker generally will be subject to
information reporting and backup withholding unless the Holder either certifies
its status as a Non-U.S. Holder as described above or otherwise establishes an
exemption. The payment of the proceeds on the disposition of Common Stock by a
Non-U.S. Holder to or through a non-U.S. office of a non-U.S. broker will not be
subject to backup withholding or information reporting unless the non-U.S.
broker is a "U.S. related person" (as defined below). The payment of proceeds on
the disposition of Common Stock by a Non-U.S. Holder to or through a Non-U.S.
office of a U.S. broker or a U.S. related person generally will be subject to

                                      -43-
<PAGE>

information reporting (but not backup withholding) unless the Holder establishes
an exemption as described above or the broker has certain documentary evidence
in its files as to a Non-U.S. Holder's foreign status and the broker has no
actual knowledge to the contrary.

            For purposes of the preceding paragraph, a "U.S. related person" is
(i) a CFC, (ii) a foreign person 50% or more of whose gross income from all
sources for the three-year period ending with the close of its taxable year
preceding the payment (or for such part of the period that the broker has been
in existence) is derived from activities that are effectively connected with the
conduct of a U.S. trade or business, or (iii) for payments made on or after
January 1, 2001, a foreign partnership if at any time during its tax year one or
more of its partners are U.S. persons who, in the aggregate, hold more than 50
percent of the income or capital interest of the partnership or if, at any time
during its taxable year, the partnership is engaged in the conduct of a U.S.
trade or business.

            Backup withholding is not an additional tax and may be refunded (or
credited against the Holder's U.S. federal income tax liability, if any),
provided the required information is furnished to the IRS. The information
reporting requirements may apply regardless of whether withholding is required.
Copies of information returns and withholding information also may be made
available to the tax authorities in the country in which a Non-U.S. Holder is a
resident under the provisions of an applicable income tax treaty or agreement.

            THE FOREGOING SUMMARY DOES NOT DISCUSS ALL ASPECTS OF CANADIAN OR
U.S. FEDERAL INCOME TAXATION THAT MAY BE RELEVANT TO A PARTICULAR HOLDER OF
COMMON STOCK IN LIGHT OF SUCH HOLDER'S PARTICULAR CIRCUMSTANCES AND INCOME TAX
SITUATION. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX
CONSEQUENCES THAT WOULD RESULT FROM THEIR OWNERSHIP AND DISPOSITION OF COMMON
STOCK OF THE COMPANY, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR
OTHER TAX LAWS.

            (F)   DIVIDENDS AND PAYING AGENTS

            Not applicable.

            (G)   STATEMENT BY EXPERTS

            Not applicable.

            (H)   DOCUMENTS ON DISPLAY

            The documents concerning the Company referred to in this Annual
Report may be inspected at the Company's office at 160 Graveline Street, St.
Laurent, Quebec H4T 1R7 Canada. The Company may be reached at (514) 738-7300.
Documents filed with the Securities and Exchange Commission ("SEC") may also be
read and copied at the SEC's public reference rooms located at 450 Fifth Street,
N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms.

                                      -44-
<PAGE>

            (I)   SUBSIDIARY INFORMATION

            Not applicable.

            ITEM 11.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
                        RISK

            The Company records its transactions and prepares its financial
statements in Canadian dollars. During the Company's 2002 fiscal year, a
material percentage of the Company's business, including approximately 6% of its
sales and approximately 50% of the Company's purchases of equipment, parts and
supplies, was transacted in currencies other than the Canadian dollar. Any
change in the value of, for example, the United States dollar against the
Canadian dollar would affect United States revenues and earnings of the Company
when translated into Canadian dollars. The same result might be recognized if
sales were made by the Company in countries other than Canada at material
levels.

            However, as the Company monitors exchange rate fluctuations on a
regular basis, makes corresponding changes as necessary to the price of its
products and services, and partially hedges its exchange rate risk through the
purchase of currency options contracts, the Company does not anticipate that
exchange rate fluctuations would have a material effect on future Company
earnings. However, there can be no assurance that the Company will be able to
hedge successfully against all exchange rate risk in the future.

            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]

                                      -45-
<PAGE>




                                    PART III

            ITEM 17.    FINANCIAL STATEMENTS

            Information regarding our financial statements is contained under
            the caption "Item 18. Financial Statements" below.

            ITEM 18.    FINANCIAL STATEMENTS

            The following documents are filed as part of this Annual Report on
            Form 20-F beginning on page F-1.

            Document Title:                                               Page
            --------------                                                ----

            Report of Richter, Usher & Vineberg, General Partnership       F-1

            Report of Ernst & Young, LLP                                   F-2

            Consolidated Balance Sheet as at January 31, 2002              F-3

            Consolidated Statement of Earnings and Deficit
            for the years ended January 31, 2000, 2001 and 2002            F-5

            Consolidated Statement of Cash Flows
            for the years ended January 31, 2000, 2001 and 2002            F-6

            Notes to Consolidated Financial Statements                     F-7

            ITEM 19.    EXHIBITS

            Exhibit Number          Description of Document
            --------------          -----------------------

            1.1                     Articles of Amalgamation of the Company
                                    dated February 1, 1989 as amended by
                                    Articles of Amendment dated October 4, 1993.
                                    (1)

            1.2                     By-laws of the Company. (1)

            4.1                     Frisco Bay Industries Ltd. Stock Incentive
                                    Plan. (2)

            4.2                     Employment Agreement, dated October 23,
                                    1993, between the Company and Barry Katsof.
                                    (1)

            4.3                     Amendment, dated June 25, 1996, to
                                    Employment Agreement between the Company and
                                    Barry Katsof. (3)

            4.4                     Employment Agreement, dated October 23,
                                    1993, between the Company and Ronald G.
                                    Waxman. (1)

                                      -46-
<PAGE>

            4.5                     Amendment, dated June 25, 1996, to
                                    Employment Agreement between the Company and
                                    Ronald G. Waxman. (3)

            4.6                     Employment Agreement, effective April 9,
                                    2001, between the Company and Robert Gagnon.
                                    (3)

            4.7                     Employment Agreement, effective February 1,
                                    1998, as amended March 8, 2001, between the
                                    Company and Heather Halickman. (3)

            4.8                     Employment Agreement, effective February 1,
                                    1998, as amended April 2, 2001, between the
                                    Company and Dominique Mimeault. (3)

            10.1                    Consent of Richter, Usher & Vineberg

            10.2                    Consent of Ernst & Young

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

            (1)   Incorporated by reference to the Registrant's Registration
                  Statement on Form F-1 (file no. 33-66616) and any amendments
                  thereto.

            (2)   Incorporated by reference to the Registrant's Registration
                  Statement on Form S-8 (file no. 333-01002) and any amendments
                  thereto.

            (3)   Incorporated by reference to the Registrant's Annual Report on
                  Form 20-F for the fiscal year ended January 31, 2001.

                                      -47-
<PAGE>

                                   SIGNATURES

            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.

                                    FRISCO BAY INDUSTRIES LTD.



                                    By:  /s/  Robert Gagnon
                                       -----------------------------------------
                                        Name:   Robert Gagnon
                                        Title:  Vice President, Finance and
                                                Information Technology
                                                and Assistant Secretary

Date:  June 25, 2002

                                      -48-
<PAGE>

AUDITORS' REPORT


To the Shareholders of
FRISCO BAY INDUSTRIES LTD.


We have audited the consolidated balance sheet of Frisco Bay Industries Ltd. as
at January 31, 2002 and the consolidated statements of earnings and deficit and
cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States. 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 January 31, 2002
and the results of its operations and its cash flows for the year then ended in
accordance with Canadian generally accepted accounting principles.

Canadian generally accepted accounting principles vary in certain significant
respects from accounting principles generally accepted in the United States.
Application of accounting principles generally accepted in the United States
would have affected results of operations for the year ended January 31, 2002 to
the extent summarized in note 20 to the consolidated financial statements.

/s/ RICHTER, USHER & VINEBERG
GENERAL PARTNERSHIP
CHARTERED ACCOUNTANTS

Montreal, Quebec
April 19, 2002

                                      F-1
<PAGE>

AUDITORS' REPORT


To the Shareholders of
FRISCO BAY INDUSTRIES LTD.

We have audited the consolidated balance sheets of FRISCO BAY INDUSTRIES LTD. as
at January 31, 2001 and 2000, and the consolidated statements of earnings (loss)
and deficit and cash flows for each of the years in the two-year period ended
January 31, 2001. Our audits also included the information as at and for the
years ended January 31, 2001, and 2000, included in the financial statement
schedule listed under the caption "Item 18 Financial Statements" of this Form
20-F Annual Report. These consolidated financial statements and schedule are the
responsibility of the company's management. Our responsibility is to express an
opinion on these consolidated financial statements and schedule based on our
audits.

We conducted our audits in accordance with Canadian and United States generally
accepted auditing standards. 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 January 31, 2001
and 2000, and the results of its operations and its cash flows for each of the
years in the two-year period ended January 31, 2001, in accordance with Canadian
generally accepted accounting principles. Also in our opinion, the information
as at and for the years ended January 31, 2001 and 2000, included in the
financial statement schedule referred to above, when considered in relation to
the basic 2001 and 2000 financial statements taken as a whole, is presented
fairly in all material respects.


                                             /s/ ERNST & YOUNG LLP
Montreal, Canada,
May 11, 2001.                                Chartered Accountants

                                      F-2
<PAGE>

FRISCO BAY INDUSTRIES LTD.

CONSOLIDATED BALANCE SHEET
AS AT JANUARY 31, 2002
(EXPRESSED IN CANADIAN FUNDS)

                                                  2002                 2001
                                                                     (note 21)
--------------------------------------------------------------------------------

ASSETS

CURRENT

  Cash                                           $ 1,964,962      $   189,517
  Marketable securities, at cost
   which approximates quoted values (note 5)       2,815,762        3,310,396
  Accounts receivable and other assets (note 6)   11,202,050        9,401,518
  Inventories (note 7)                             5,581,417        5,208,763
  Future income taxes                                288,000             -
--------------------------------------------------------------------------------
                                                  21,852,191       18,110,194

LOANS RECEIVABLE, CONTROLLING SHAREHOLDERS
(note 8)                                              93,020           93,020

FIXED ASSETS (note 9)                              3,884,188        1,948,163

FUTURE INCOME TAXES                                  412,000          474,000

DEVELOPMENT COSTS, unamortized balance (note 16)      61,362          127,818

GOODWILL, net of accumulated amortization
  of $55,568 (2001 - $36,748)                         37,642           56,462
--------------------------------------------------------------------------------

                                                 $26,340,403      $20,809,657
--------------------------------------------------------------------------------

See accompanying notes


                                      F-3
<PAGE>


                                                      2002             2001
                                                                    (note 21)
--------------------------------------------------------------------------------

LIABILITIES

CURRENT

  Bank indebtedness (note 10)                    $ 3,873,071      $ 5,351,399
  Accounts payable and accrued liabilities
    (note 11)                                      7,445,978        4,623,478
  Income taxes payable                                67,000           97,649
  Current maturity of obligations under capital
    leases                                           969,264          493,889
  Deferred revenue (note 2)                        2,484,612        1,052,719
--------------------------------------------------------------------------------
                                                  14,839,925       11,619,134
--------------------------------------------------------------------------------

DEFERRED REVENUE (note 2)                            141,013             -
--------------------------------------------------------------------------------

OBLIGATIONS UNDER CAPITAL LEASES (note 12)           924,241          573,424

COMMITMENTS AND CONTINGENCIES (note 13)

SHAREHOLDERS' EQUITY

CAPITAL STOCK (note 14)                           15,115,644       15,065,137

CONTRIBUTED SURPLUS                                   97,605           97,605

DEFICIT                                           (4,778,025)      (6,545,643)
--------------------------------------------------------------------------------

                                                  10,435,224        8,617,099
--------------------------------------------------------------------------------

                                                 $26,340,403      $20,809,657
--------------------------------------------------------------------------------

See accompanying notes

                                      F-4
<PAGE>

FRISCO BAY INDUSTRIES LTD.

STATEMENT OF EARNINGS AND DEFICIT
FOR THE YEAR ENDED JANUARY 31, 2002
(EXPRESSED IN CANADIAN FUNDS)

                                             2002         2001         2000
                                                       (note 21)     (note 21)
--------------------------------------------------------------------------------

REVENUES

   Products                             $ 29,349,186  $23,963,480  $27,272,533
   Services
    Maintenance contracts                  4,814,949    7,553,674    7,428,855
    ATMS service fees                      8,927,737    4,330,283    2,435,396
--------------------------------------------------------------------------------
                                          43,091,872   35,847,437   37,136,784
--------------------------------------------------------------------------------

COSTS AND EXPENSES

   Costs of products                      19,212,675   18,788,066   19,292,400
   Costs of services                       9,474,698    7,891,725    7,441,991
   Selling, general and administration    11,363,290    8,957,828    9,249,585
   Amortization of fixed assets              702,784      508,312      406,882
   Amortization of development costs          66,456       66,449       66,450
   Amortization of goodwill                   18,820       24,452       11,767
   Interest on obligations under capital
     leases                                  123,018       79,810       30,887
   Other interest                            326,513      206,851      119,926
--------------------------------------------------------------------------------
                                          41,288,254   36,523,493   36,619,888
--------------------------------------------------------------------------------

EARNINGS (LOSS) BEFORE INCOME TAXES        1,803,618     (676,056)     516,896
--------------------------------------------------------------------------------

Income taxes (note 15)
   Current                                   262,000         -          19,087
   Future                                   (226,000)    (474,000)        -
--------------------------------------------------------------------------------
                                              36,000     (474,000)      19,087
--------------------------------------------------------------------------------

NET EARNINGS (LOSS)                        1,767,618     (202,056)     497,809

DEFICIT - BEGINNING OF YEAR               (6,545,643)  (6,343,587)  (6,841,396)
--------------------------------------------------------------------------------

DEFICIT - END OF YEAR                    $(4,778,025) $(6,545,643) $(6,343,587)
--------------------------------------------------------------------------------

EARNINGS (LOSS) PER SHARE (note 17)      $      0.76  $     (0.09) $      0.22
--------------------------------------------------------------------------------
DILUTED EARNINGS (LOSS)
  PER SHARE (note 17)                    $      0.74  $     (0.09) $      0.21
--------------------------------------------------------------------------------

See accompanying notes

                                      F-5
<PAGE>

FRISCO BAY INDUSTRIES LTD.

STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JANUARY 31, 2002
(EXPRESSED IN CANADIAN FUNDS)

                                             2002         2001         2000
                                                       (note 21)     (note 21)
--------------------------------------------------------------------------------

FUNDS PROVIDED (USED) -

   OPERATING ACTIVITIES

      Net earnings (loss)                $1,767,618   $(202,056    $497,809
      Future income taxes                  (226,000)   (474,000)       -
      Common stock awarded                   26,267      30,664     115,687
      Amortization of fixed assets          702,784     508,312     406,882
      Amortization of development costs      66,456      66,449      66,450
      Amortization of goodwill               18,820      24,452      11,767
--------------------------------------------------------------------------------

                                          2,355,945     (46,179)  1,098,595
      Change in non-cash operating
        elements of working capital       2,191,571    (832,751) (2,954,447)
        (note 19)
--------------------------------------------------------------------------------
                                          4,547,516    (878,930) (1,855,852)
--------------------------------------------------------------------------------

   FINANCING ACTIVITIES

      Bank indebtedness                  (1,478,328)  1,413,609   2,884,729
      Repayment of obligations under       (682,247)   (309,699)    (82,984)
        capital leases
      Increase in obligations under       1,513,148     149,060        -
        capital leases
      Issue of common shares                 24,240      44,433      10,498
--------------------------------------------------------------------------------
                                           (623,187)  1,297,403   2,812,243
--------------------------------------------------------------------------------

   INVESTING ACTIVITIES

      Marketable securities                 494,634    (185,872)   (404,993)
      Additions to fixed assets          (2,771,105)    (82,115)   (594,761)
      Proceeds on disposal of fixed         127,587      91,226      63,087
        assets
      Goodwill on acquisition of               -        (14,119)    (78,561)
        business
      Additions to deferred charges            -       (127,818)   (132,899)
--------------------------------------------------------------------------------
                                         (2,148,884)   (318,698) (1,148,127)
--------------------------------------------------------------------------------

INCREASE (DECREASE) IN CASH               1,775,445      99,775    (191,736)

CASH - BEGINNING OF YEAR                    189,517      89,742     281,478
--------------------------------------------------------------------------------

CASH - END OF YEAR                       $1,964,962    $189,517     $89,742
--------------------------------------------------------------------------------

See accompanying notes

ADDITIONAL CASH FLOW INFORMATION
--------------------------------------------------------------------------------

      Interest paid                        $519,617    $346,302    $184,715
      Income taxes paid                      97,649      35,236      50,888

                                      F-6
<PAGE>

FRISCO BAY INDUSTRIES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2002
(EXPRESSED IN CANADIAN FUNDS)

1.   NATURE OF BUSINESS

     The Company was incorporated under the Canada Business Corporation Act. The
     Company designs, develops, markets and installs integrated systems and
     products primarily for financial institutions, government agencies and
     major corporations in both Canada and the United States. These systems
     include self-service and financial transaction processing systems, time
     management systems and integrated security systems and are included as
     product revenues. The Company also provides service and maintenance for
     their systems and products as well as automated teller machine services.
     These services are included in service revenues.

2.   CHANGE IN ACCOUNTING ESTIMATES AND POLICIES

     CHANGE IN ACCOUNTING ESTIMATES

     As a result of changes in the Company's business operations and practices,
     costs on its service contracts are now incurred more evenly over the term
     of the contract. Accordingly, the Company is now recognizing the
     corresponding revenue on a straight-line basis over the term of the
     contract. This change in estimate had the effect of decreasing earnings
     before income taxes by approximately $1,200,000.

     FUTURE INCOME TAXES

     In 2000, the Company adopted the new recommendations of the Canadian
     Institute of Chartered Accountants' Handbook with respect to accounting for
     income taxes. Under the new recommendations, the liability method is used
     whereby future tax assets and liabilities are determined based on
     differences between the carrying amount and the tax basis of assets and
     liabilities (temporary differences). Future income tax assets and
     liabilities are measured using the enacted tax rates that will be in effect
     when these differences are expected to reverse. Future income tax assets,
     if any, are recognized only to the extent that, in the opinion of
     management, it is more likely than not that these assets will be realized.

     As a result of the retroactive application of the new standard, no
     adjustment was made to the balance of retained earnings as at February 1,
     1999. Prior to 2000, the Company used the deferral method of accounting for
     income taxes.

     EARNINGS PER SHARE

     In 2002, the Company adopted the new recommendations of the Canadian
     Institute of Chartered Accountants' Handbook with respect to earnings per
     share. Under the new recommendations, the diluted earnings per share are
     calculated based on the weighted average number of common shares
     outstanding during the year plus the effects of dilutive common share
     equivalents such as options. This method requires that diluted earnings per
     share be calculated using the treasury stock method, as if all common share
     equivalents had been exercised at the beginning of the reporting period or
     at the date of issue as the case may be, and that the funds obtained
     thereby were used to purchase common shares of the Company at the average
     trading price of the common shares during the period. The comparative
     diluted earnings per share has been restated.

                                      F-7
<PAGE>

FRISCO BAY INDUSTRIES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2002
(EXPRESSED IN CANADIAN FUNDS)

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     These consolidated financial statements have been prepared by management in
     accordance with Canadian generally accepted accounting principles and
     conform, in all material respects, with generally accepted accounting
     principles in the United States, except as disclosed in note 20.

     PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements include the accounts of Frisco Bay
     Industries Ltd., its subsidiary companies, Frisco Bay Industries, Ltd.,
     First Frisco Financial Corp., Intivid Solutions Inc., and its proportionate
     share of the assets and liabilities, revenues and expenses of its
     investment in ATMS / Frisco Bay and Company, Limited Partnership, a joint
     venture. On consolidation, all material intercompany balances and
     transactions have been eliminated.

     USE OF ESTIMATES

     In preparing the Company's financial statements, management is required to
     make estimates and assumptions that affect the reported amounts of assets
     and liabilities, the disclosure of contingent assets and liabilities at the
     date of the financial statements and reported amounts of revenues and
     expenses during the period. Actual results could differ from these
     estimates.

     INVENTORY VALUATION

     Inventory is valued at the lower of cost and net realizable value for
     finished goods and lower of cost and replacement cost for spare parts,
     supplies and raw materials. Cost is determined using the first-in,
     first-out method.

     AMORTIZATION OF FIXED ASSETS

     On the declining balance method -

        Automated teller machines                           30%
        Equipment and furniture                       20% - 30%
        Computer equipment                                  30%

     On the straight-line method -

        Leasehold improvements              over the lease term

     Fixed assets include amounts paid with respect to the purchase of rights to
     fees generated from automated teller machines under interchange contracts.
     These assets are amortized on a straight-line basis over the term of the
     underlying interchange contract.

     DEVELOPMENT COSTS

     Research costs are expensed as incurred. Development costs incurred for
     product development for product lines for which the Company has an
     identified market and are considered technically and financially feasible,
     are deferred and amortized. Amortization is charged to operations on a
     straight-line basis over two years commencing with the product's
     commercialization. Development costs for products that are no longer
     expected to attain commercial success are written off.

                                      F-8
<PAGE>

FRISCO BAY INDUSTRIES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2002
(EXPRESSED IN CANADIAN FUNDS)

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)

     GOODWILL

     Goodwill is recorded at cost and is being amortized on a straight-line
     basis over five years. Management reviews on a regular basis the carrying
     amount of goodwill for possible permanent impairment by evaluating
     undiscounted expected cash flows. Goodwill would be written-down to its
     estimated fair value when a permanent decline is identified.

     REVENUE RECOGNITION

     Product revenue is recognized when persuasive evidence of an arrangement
     exists, delivery and installation has occurred, there are no future
     performance obligations, the purchase price is fixed and determinable and
     collectibility is reasonably assured.

     Service contract revenue is recognized on a straight-line basis over the
     term of the contract.

     INVESTMENT TAX CREDITS

     Investment tax credits related to expenditures for development costs are
     recorded as a reduction of these costs. Investment tax credits related to
     research and development costs are recorded as a reduction of the related
     costs.

     FAIR VALUE

     Accounts receivable, bank indebtedness and accounts payable and accrued
     liabilities are all short-term in nature and as such, their carrying values
     approximate fair values.

     The estimated fair value of marketable securities is based upon quoted
     value and the obligations under capital leases is based upon discounted
     future cash flows, using current market rates for similar debt. The fair
     value of these financial instruments approximate their carrying values.

     FOREIGN CURRENCY TRANSLATION

     Accounts in foreign currency, covered by forward exchange contracts, have
     been translated as follows:

     Assets, liabilities, revenues and expenses, at rates prevailing in such
     contracts.

     Integrated foreign operations and other foreign currency accounts not
     covered by foreign exchange contracts have been translated as follows:

        Monetary items - at exchange rates in effect at the balance sheet date;

        Non-monetary items - at exchange rates in effect on the dates of the
        transactions;

        Revenue and expenses - at average exchange rates prevailing during the
        year, except for inventories and amortization which are translated at
        rates prevailing when the assets were acquired.

     Gains and losses arising from foreign currency translation are included in
     income except for unrealized exchange gains and losses arising from the
     translation of long-term monetary items which are deferred and amortized
     over the remaining life of the monetary items.

                                      F-9
<PAGE>

FRISCO BAY INDUSTRIES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2002
(EXPRESSED IN CANADIAN FUNDS)

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)

     STOCK-BASED COMPENSATION PLAN

     The Company has a stock-based compensation plan which is described in note
     14. No compensation expense is recognized for this plan when stock options
     or stock appreciation rights are issued to employees, but an expense is
     recorded upon the direct award of Common Shares at the fair value of the
     shares at the time of award. Any consideration paid by employees on
     exercise of stock options or purchase of stock is credited to share
     capital. If stock options are repurchased from employees, the excess of the
     consideration paid over the carrying amount of the share or stock options
     cancelled is charged to retained earnings.

4.   JOINT VENTURE

     On May 1, 1999, the Company entered into a joint venture agreement to form
     ATMS / Frisco Bay and Company, Limited Partnership. The Company owns 50% of
     the Joint Venture and has proportionally consolidated the following:

                                                      2002           2001
                                                                   (note 21)
--------------------------------------------------------------------------------


     Current assets                              $ 1,650,023      $ 307,130
     Fixed Assets                                    934,688        477,190
     Current liabilities                           1,775,796        142,089
     Long-term portion of capital lease
       obligations                                   151,007        509,628
     Revenues                                      2,757,106      2,016,334
     Expenses                                      2,088,402      1,628,742
     Net income                                      668,704        387,592
     Cash flows provided by operating activities   1,061,177        148,885
     Cash flows provided by financing activities     567,189        344,807
     Cash flows used in investing activities        (481,155)      (238,809)

     The Company's share in commitments of the Joint Venture is disclosed in
     note 13.

5.   MARKETABLE SECURITIES

     Marketable securities consist of bankers' acceptances, commercial paper and
     corporate and government bonds. As at January 31, 2002, the securities had
     maturity dates ranging from February 5, 2002 to September 4, 2003 with an
     approximate weighted average yield of 3.4%.

                                      F-10
<PAGE>

FRISCO BAY INDUSTRIES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2002
(EXPRESSED IN CANADIAN FUNDS)

6.   ACCOUNTS RECEIVABLE AND OTHER ASSETS

     The components of accounts receivable and other assets are as follows:

                                                     2002             2001
                                                                   (note 21)
--------------------------------------------------------------------------------

     Accounts receivable                         $11,223,771      $9,352,534
     Prepaid and other assets                        159,377         107,576
     Allowance for doubtful accounts                (181,098)        (58,592)
--------------------------------------------------------------------------------

                                                 $11,202,050      $9,401,518
--------------------------------------------------------------------------------

     In 2002, the Company's revenues included transactions with a major customer
     which represented 13% of revenues and 20% of accounts receivable at year
     end. In 2001, no customer represented over 10% of the Company's revenues
     and one customer represented 15% of accounts receivable.

     Included in accounts receivable is approximately $492,000 (2001 - $894,000)
     receivable in U.S. currency (U.S.$309,000; 2001 - U.S.$583,000)

7.   INVENTORIES

                                                    2002              2001
                                                                    (note 21)
--------------------------------------------------------------------------------
     Spare parts and supplies                   $  965,242        $1,291,309
     Raw materials                                 437,062           193,050
     Finished goods                              4,179,113         3,724,404
--------------------------------------------------------------------------------

                                                $5,581,417        $5,208,763
--------------------------------------------------------------------------------

8.   LOANS RECEIVABLE, CONTROLLING SHAREHOLDERS

     Loans to controlling shareholders are unsecured, non-interest bearing and
     are due in equal annual installments over 10 years until fiscal 2004. No
     repayments have been made since fiscal 1997.

                                      F-11
<PAGE>

FRISCO BAY INDUSTRIES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2002
(EXPRESSED IN CANADIAN FUNDS)

9.   FIXED ASSETS

     2002

                                                       Accumulated  NET CARRYING
                                             Cost     Amortization     AMOUNT
--------------------------------------------------------------------------------
     Automated teller machines           $3,842,684   $  983,624    $2,859,060
     Equipment and furniture              1,632,403    1,191,021       441,382
     Computer equipment                   1,826,704    1,403,184       423,520
     Leasehold improvements                 606,888      529,163        77,725
     Interchange contract rights            121,242       38,741        82,501
                                         $8,029,921   $4,145,733    $3,884,188
--------------------------------------------------------------------------------


     2001

                                                       Accumulated  Net Carrying
                                             Cost     Amortization     Amount
                                                                     (note 21)
--------------------------------------------------------------------------------
     Automated teller machines           $1,739,823   $  500,368    $1,239,455
     Equipment and furniture              1,315,184    1,146,642       168,542
     Computer equipment                   1,671,892    1,282,729       389,163
     Leasehold improvements                 590,386      521,499        68,887
     Interchange contract rights             93,409       11,293        82,116
--------------------------------------------------------------------------------
                                         $5,410,694   $3,462,531    $1,948,163
--------------------------------------------------------------------------------

     Included in automated teller machines is equipment under capital leases
     having an approximate cost of $2,783,000 (2001 - $1,275,000) and an
     approximate accumulated amortization of $768,000 (2001 - $434,000).

10.  BANK INDEBTEDNESS

     The Company's $5,000,000 credit facility is subject to review annually and
     consists of an operating demand line of credit. Borrowings under the
     operating demand line of credit bear interest at rates ranging from prime
     to prime plus 0.75% per annum on Canadian borrowings and from U.S. base
     rate to U.S. base rate plus 0.75% on U.S. borrowings. As security for the
     credit facility, the Company has pledged a $4,000,000 moveable hypothec on
     accounts receivable, inventory and other moveable property. The Company has
     also provided a $1,000,000 moveable hypothec on marketable securities (note
     5), an assignment of fire insurance on the Company's assets and life
     insurance on the Company's executives.

     The terms of the banking agreement require the Company to comply with
     certain financial ratios.

     The Joint Venture has an operating demand line of credit of $5,000,000 in
     aggregate. Borrowings under the demand line of credit bear interest at
     prime rate plus 0.50%. As security for the credit facility, the Joint
     Venture has provided a $6,000,000 moveable hypothec on all of its assets.

     The terms of the banking agreement require the Joint Venture to comply with
     certain covenants.

                                      F-12
<PAGE>

FRISCO BAY INDUSTRIES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2002
(EXPRESSED IN CANADIAN FUNDS)

11.  ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

     The components of accounts payable and accrued liabilities are as follows:

                                                     2002              2001
                                                                    (note 21)
--------------------------------------------------------------------------------

     Trade payables                               $4,298,969       $2,643,978
     Accrued compensation                          1,719,111          716,826
     Other accrued liabilities                     1,427,898        1,262,674
--------------------------------------------------------------------------------

                                                  $7,445,978       $4,623,478
--------------------------------------------------------------------------------

     Included in accounts payable and accrued liabilities is approximately
     $1,529,000 (2001 - $488,000) payable in U.S. currency (U.S.$960,000; 2001 -
     U.S.$320,000).

12.  OBLIGATIONS UNDER CAPITAL LEASES

     The following is a schedule of future minimum capital lease payments for
     leases expiring in 2005:

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

     2003                                              $ 1,085,588
     2004                                                  754,482
     2005                                                  217,838
--------------------------------------------------------------------------------
                                                         2,057,908
     Less imputed interest at rates varying between
       5.2% and 10.1%                                      164,403
--------------------------------------------------------------------------------
                                                         1,893,505
     Less current maturity                                 969,264
--------------------------------------------------------------------------------

                                                         $ 924,241
--------------------------------------------------------------------------------

13.  COMMITMENTS AND CONTINGENCIES

     COMMITMENTS

     The aggregate minimum rentals (exclusive of other occupancy charges) for
     leases in effect as at January 31, 2002 are approximately as follows:

     2003                                                $ 608,000
     2004                                                  504,000
     2005                                                  448,000
     2006                                                  338,000
     2007                                                  194,000
     2008                                                    3,000

     Office space is leased from a company controlled by the controlling
     shareholders of the Company. The lease, which expires in 2007, provides for
     annual rent of $165,000. This amount has been included in the above
     operating lease amounts. This transaction has been recorded at the exchange
     amount which is the amount of consideration established and agreed to by
     the related parties.

                                      F-13
<PAGE>

FRISCO BAY INDUSTRIES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2002
(EXPRESSED IN CANADIAN FUNDS)

13.  COMMITMENTS AND CONTINGENCIES (CONT'D)

     COMMITMENTS

     As at January 31, 2002, the Company had foreign currency exchange contracts
     to buy U.S.$800,000 for approximately $1,271,000 Canadian. Based on the
     rates as at January 31, 2002, the cost to the Company to exercise these
     commitments would be approximately $1,270,000 Canadian.

     CONTINGENCIES

     Various claims and legal proceedings have been instituted against the
     Company in the normal course of its business operations. In Management's
     opinion, these claims and proceedings are unfounded. Management believes
     that the Company does not have an exposure in excess of amounts recorded in
     the financial statements and that any payments resulting from their outcome
     are not likely to have a material impact on its financial position.

     The Company is contingently liable for the co-venturer's share of the
     obligations of the Joint Venture. In the event that the Company had to meet
     any of these contingencies, it would have a claim on the assets of the
     Joint Venture.

14.  CAPITAL STOCK

--------------------------------------------------------------------------------
     Authorized without par value -

     Unlimited Preferred Shares, issuable in one or more series
     Unlimited Common Stock, entitled to one vote per share
     799,967 Class A Common Shares entitled to four votes per share,
       convertible automatically into Common Stock upon transfer of
       ownership on a one-for-one basis, except for sales to certain
       permitted transferees
     Common Stock and Class A Common Stock rank pari passu in all
     other respects

                                      F-14
<PAGE>

FRISCO BAY INDUSTRIES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2002
(EXPRESSED IN CANADIAN FUNDS)

14.  CAPITAL STOCK (CONT'D)

     Issued-

<TABLE>
<CAPTION>
                                                                CLASS A
                                       COMMON SHARES         COMMON SHARES         TOTAL
                                      #            $         #           $           $
    --------------------------------------------------------------------------------------

    <S>                          <C>         <C>          <C>       <C>        <C>
    Balance, January 31, 2000    1,475,902   11,294,872   799,967   3,695,188  14,990,060
    Common Shares awarded            5,864       30,644      -           -         30,644
    Stock options exercised         12,584       44,433      -           -         44,433
    Common Shares issued on
      exercise of stock
      appreciation rights           26,120         -         -           -           -
    -------------------------------------------------------------------------------------

    Balance, January 31, 2001    1,520,470   11,369,949   799,967   3,695,188  15,065,137
    Common Shares awarded            6,910       26,267      -           -         26,267
    Stock options exercised          8,000       24,240      -           -         24,240
    Common Shares issued on
      exercise of stock
      appreciation rights            5,048         -         -           -           -
    -------------------------------------------------------------------------------------

    Balance, January 31, 2002    1,540,428   11,420,456   799,967   3,695,188  15,115,644
    -------------------------------------------------------------------------------------
</TABLE>

     During 2002, the Company awarded and issued 6,910 Common Shares (2001 -
     5,864) as compensation to key employees. Common Shares were increased by
     $26,267 (2001 - $30,644) and an equivalent amount of compensation expense
     was recorded.

     STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

     The Company has a Stock Incentive Plan which provides for the issue of
     stock options and stock appreciation rights to the Company's officers,
     directors, consultants and employees. The maximum number of Common Shares
     issuable under the Stock Incentive Plan is 450,000.

                                      F-15
<PAGE>

FRISCO BAY INDUSTRIES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2002
(EXPRESSED IN CANADIAN FUNDS)

14.  CAPITAL STOCK (CONT'D)

     As at January 31, 2002, aggregate options were outstanding for the purchase
     of 198,548 Common Shares (2001 - 159,362). During fiscal 2002, 65,000
     options (2001 - 5,500) were granted with exercise prices of U.S.$2.25 to
     U.S.$3.25 (2001 - U.S.$3.00 to U.S.$4.00). During fiscal 2002, 17,814
     options were forfeited (2001 - 11,399). During fiscal 2002, 8,000 (2001 -
     12,584) options were exercised. The options outstanding at January 31, 2002
     have the following terms:

                                                               Number of
    Total Outstanding      Exercise        Weighted Average     Options
                            Price          Months to Expiry   Exercisable
    -----------------------------------------------------------------------

        2,217          $         6.50             17            2,217
        7,515                    4.00             42            7,515
       22,500                    2.63             65           22,500
       17,000                    1.81             69           12,000
        4,316                    2.88             81            4,316
        2,000                    2.50             86              500
       65,000                    2.94             89           65,000
        5,000                    3.00             90            2,000
        2,500                    2.19             96            1,000
        2,500                    4.00            101              500
        1,500                    3.00            104              300
        1,500                    3.00            105              300
       10,000                    3.25            112                -
       10,000                    3.25            112                -
       45,000                    2.50            111                -
    -----------------------------------------------------------------------

      198,548                                                 118,148
    -----------------------------------------------------------------------

     The Company awards stock appreciation rights to its employees under the
     Stock Incentive Plan which entitles recipients to rewards representing the
     excess of the fair market value of one share of Common Stock on the date of
     exercise over the share's fair market value as of the date of the grant.
     Amounts may be paid in cash, Common Shares or a combination thereof, at the
     option of the Company. The initial stock appreciation rights were awarded
     at the fair value of the Company's Common Stock which was U.S.$1.00 per
     share.

     A summary of activity for the stock appreciation rights is as follows:


                                                        Outstanding stock
                                                       appreciation rights
    ----------------------------------------------------------------------------

    Balance, January 31, 2000                                43,385
    Exercised                                               (32,995)
    Forfeited                                                  (765)
    ----------------------------------------------------------------------------

    Balance, January 31, 2001                                 9,625
    Exercised                                                (6,450)
    Forfeited                                                  (225)
    ----------------------------------------------------------------------------

    Balance, January 31, 2002                                 2,950
    ----------------------------------------------------------------------------

                                      F-16
<PAGE>

FRISCO BAY INDUSTRIES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2002
(EXPRESSED IN CANADIAN FUNDS)

14.  CAPITAL STOCK (CONT'D)

     The outstanding stock appreciation rights expire on February 6, 2005 and
     are exercisable at 20% per year over the five year period commencing one
     year after the date of grant. As at January 31, 2002, 2,950 stock
     appreciation rights are exercisable (2001 - 9,625). During 2002, the
     Company issued 5,048 (2001 - 26,120) Common Shares upon the exercise of
     6,450 (2001 - 32,995) of the stock appreciation rights.

     As at January 31, 2002, the amount due to holders of vested stock
     appreciation rights upon their exercise is $11,800 (2001 -$12,031). Had the
     rights been exercised at January 31, 2002, this would have given rise to
     the issue of 2,360 shares (2001 - 5,348).

15.  INCOME TAXES

     Significant components of future income tax assets are as follows:

                                                 2002          2001
                                                            (note 21)
    ------------------------------------------------------------------

    Current future income tax               $   288,000   $     -
    Long term future income tax asset           412,000      474,000
    ------------------------------------------------------------------

    Total future income tax assets          $   700,000   $  474,000
    ------------------------------------------------------------------

    Tax loss carryforwards                      488,000      991,315
    Tax value of assets in excess of their      700,000      835,313
      carrying value
    ------------------------------------------------------------------
    Total future assets                       1,188,000    1,826,628
    Valuation allowance for future income       488,000    1,352,628
      tax assets
    ------------------------------------------------------------------

                                            $   700,000   $  474,000
    ------------------------------------------------------------------

     Current income tax expense reported differs from the amount computed by
     applying the statutory income tax rates to earnings (loss). The reasons are
     the following:

                                                 2002       2001        2000
                                                          (note 21)   (note 21)
    ---------------------------------------------------------------------------

    Statutory income tax rates                  40.51%      39.26%     39.76%
    Income taxes at the statutory rates       $730,611  $(249,716)  $ 205,518
    Unrecognized benefits of tax losses           -          -        126,877
    Recognized benefits of tax losses         (277,000)  (474,000)   (446,594)
    Tax value of assets in excess of their
      carrying value                          (412,000)      -           -
    Non-deductible expenses and other           (5,611)   249,716     133,286
    ---------------------------------------------------------------------------
    EFFECTIVE INCOME TAXES                    $ 36,000  $(474,000)  $  19,087
    ---------------------------------------------------------------------------

                                      F-17
<PAGE>

FRISCO BAY INDUSTRIES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2002
(EXPRESSED IN CANADIAN FUNDS)

15.  INCOME TAXES (CONT'D)

     As at January 31, 2002, there were Federal, Ontario and participating
     provinces and U.S. income tax losses of approximately $1,487,000, $794,000
     and $1,100,000 (U.S.$690,000).

     As at January 31, 2002, there were approximately $115,000 of unclaimed
     investment tax credits which may be applied against earnings of future
     years. The future income tax benefit of these unused investment tax credits
     is not recognized in the accounts. The loss carryforwards and investment
     tax credits may be applied against earnings of future years, not later than
     as follows:

                                                 Loss Carryforwards
                          Investment            Canada            United States
                          tax credits     Federal   Provincial
    ----------------------------------------------------------------------------

    2003               $          -    $  208,000      $      -     $        -
    2004                          -        95,000             -              -
    2005                          -     1,128,000       738,000              -
    2006                     70,000             -             -              -
    2007                     45,000             -             -              -
    2008                          -        56,000        56,000              -
    2010                          -             -             -        375,000
    2012                          -             -             -          6,000
    2013                          -             -             -        196,000
    2020                          -             -             -        319,000
    2021                          -             -             -         54,000
    2022                          -             -             -        150,000
    ----------------------------------------------------------------------------

                       $    115,000    $1,487,000      $794,000     $1,100,000
    ----------------------------------------------------------------------------

16.  RESEARCH AND DEVELOPMENT COSTS

     Research and development costs consist of the following:

                                        2002        2001        2000
                                                  (note 21)   (note 21)
    ---------------------------------------------------------------------

    Total costs incurred            $   16,453   $ 294,999   $ 350,756
    Less:  Development costs              -       (127,818)   (132,899)
      capitalized
    Plus:  Amortization of
      development costs                 66,453      66,449      66,450
    ---------------------------------------------------------------------
                                    $   82,909   $ 233,630   $ 284,307
    ---------------------------------------------------------------------

                                      F-18
<PAGE>

FRISCO BAY INDUSTRIES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2002
(EXPRESSED IN CANADIAN FUNDS)

17.  EARNINGS PER SHARE

     The calculation of basic earnings per share and diluted earnings per share
     is as follows:

                                        2002          2001         2000
                                                   (note 21)    (note 21)
    ---------------------------------------------------------------------

    BASIC EARNINGS (LOSS)
      AVAILABLE TO
      COMMON SHAREHOLDERS           $1,767,618  $  (202,056)  $   497,809
    ---------------------------------------------------------------------

    WEIGHTED AVERAGE NUMBER OF
      COMMON SHARES OUTSTANDING      2,330,753    2,298,153     2,265,630
    ---------------------------------------------------------------------
    BASIC EARNINGS (LOSS) PER SHARE $     0.76  $     (0.09)  $      0.22
    ---------------------------------------------------------------------

    Weighted average number of
      Common Shares outstanding      2,330,753    2,298,153     2,265,630
    Effects of dilutive securities:
      Stock options                     57,250        9,075        20,547
      Stock appreciation rights          1,770        5,347        44,238
    ---------------------------------------------------------------------

    WEIGHTED AVERAGE NUMBER OF
      COMMON SHARES AND COMMON
      SHARE EQUIVALENTS OUTSTANDING  2,389,773    2,312,575     2,330,415
    ---------------------------------------------------------------------

    DILUTED EARNINGS (LOSS) PER
      SHARE                         $     0.74  $     (0.09)  $      0.21
    ---------------------------------------------------------------------

                                      F-19
<PAGE>

FRISCO BAY INDUSTRIES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2002
(EXPRESSED IN CANADIAN FUNDS)

18.  SEGMENTED INFORMATION

     Management operates and evaluates the Company's business in two major
     segments, one dealing with product sales and the other dealing with product
     support and services fees. Product revenues include the sale and
     installation of equipment and integrated systems. Service revenues include
     maintenance contract revenues and ATM machine service fees. The expenses
     which can be identified within each of these segments are disclosed in the
     statement of earnings (loss) and deficit. The assets are common to both
     segments and cannot be allocated.

     The Company currently operates in Canada and the United States and revenues
     are allocated geographically based on customer location.

                                        2002        2001          2000
                                                  (note 21)     (note 21)
    ---------------------------------------------------------------------
    REVENUES

    Canada                        $40,686,168    $33,251,103  $35,717,939
    U.S.                            2,405,704      2,596,334    1,418,845
    ---------------------------------------------------------------------

    Total                         $43,091,872    $35,847,437  $37,136,784
    ---------------------------------------------------------------------

    FIXED ASSETS

    Canada                          3,884,188      1,948,163    1,592,568
    U.S.                                    -              -       30,352
    ---------------------------------------------------------------------

    Total                         $ 3,884,188    $ 1,948,163  $ 1,622,920
    ---------------------------------------------------------------------

    INTANGIBLE ASSETS

    Canada                             99,004        184,280      133,244
    U.S.                                    -              -            -
    ---------------------------------------------------------------------

    Total                         $    99,004    $   184,280  $   133,244
    ---------------------------------------------------------------------

     Segmented revenue is presented net of intersegment eliminations in the
     amount of $549,000 in fiscal 2002 (2001 - $379,000 and 2000 - $400,000),
     all of which are exports from Canada.

19.  ADDITIONAL CASH FLOW INFORMATION

     CHANGES IN NON-CASH OPERATING ELEMENTS OF WORKING CAPITAL

                                        2002          2001         2000
                                                    (note 21)    (note 21)
    -----------------------------------------------------------------------

    Accounts receivable and other
      assets                        $(1,800,532)  $   47,241   $(1,220,159)
    Inventories                        (372,654)    (397,768)      100,053
    Accounts payable and accrued
      liabilities                     2,822,500     (246,903)   (1,611,604)
    Other                             1,542,257     (235,301)     (222,737)
    -----------------------------------------------------------------------
                                   $  2,191,571   $ (832,731)  $(2,954,447)
    -----------------------------------------------------------------------

                                      F-20
<PAGE>

FRISCO BAY INDUSTRIES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2002
(EXPRESSED IN CANADIAN FUNDS)

19.  ADDITIONAL CASH FLOW INFORMATION (CONT'D)

     NON-CASH FINANCING AND INVESTING ACTIVITIES

     The following non-cash items have been excluded from the statement of cash
     flows:

     During the year,

     a) in 2001, the Company acquired assets under capital lease in the
     approximate amount of $1,010,000;
     b) the Company awarded and issued $26,267 (2001 - $30,644) of Common Shares
     as compensation to the employees; and
     c) the Company issued 5,048 (2001 - 26,120) common shares from the exercise
     of stock appreciation rights.

20.  RECONCILIATION OF ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN CANADA AND IN
     THE UNITED STATES

     The Company prepares the consolidated financial statements in accordance
     with accounting principles generally accepted in Canada (Canadian GAAP),
     which conform in all material respects to those in the United States (U.S.
     GAAP), except as follows:

     a) Under U.S. GAAP, development costs are written-off to earnings as
        incurred as opposed to being deferred as is the case under certain
        conditions under Canadian GAAP.

     b) For reconciliation purposes to U.S. GAAP, the Company has elected to
        continue to follow Accounting Principles Board Opinion No. 25,
        "Accounting for Stock Issued to Employees" (APB 25) and related
        interpretations in accounting for its employee stock options. The
        exercise price of the Company's employee stock options equals or is
        greater than the market price of the underlying stock on the date
        options were granted; accordingly, no compensation expense has been
        included in the Company's reconciliation of net income under U.S. GAAP.
        Compensation expense has been recognized in connection with the stock
        appreciation rights based on the current market value of the Common
        Share accrued over the vesting period of the rights.

     c) Effective February 1, 2001, the Company adopted FAS 133, which
        establishes accounting and reporting standards for derivative
        instruments, including certain derivative instruments embedded in other
        contracts and for hedging activities. All derivatives, whether
        designated in hedging relationships or not, are required to be recorded
        on the balance sheet at fair value. The cumulative effect of adopting
        FAS 133 as of January 31, 2002 is not material to the Company's
        financial statements.

     d) The Company's interest in a jointly controlled entity has been
        proportionately consolidated in the Company's financial statements. For
        purposes of U.S. GAAP, this interest would be accounted for by the
        equity method. Net earnings, earnings per share and shareholders' equity
        under U.S. GAAP are not impacted by proportionate consolidation of this
        interest in the jointly controlled entity. Differences on classification
        or display that result from using proportionate consolidation have been
        omitted.

     e) U.S. GAAP establishes standards for reporting and display of
        comprehensive income (loss) and its components. Comprehensive income is
        defined as the change in equity of a business enterprise during a period
        from transactions and other events and circumstances from non-owner
        sources. It includes all changes in equity during a period except those
        resulting from investments by owners and distributions to owners. Under
        U.S. GAAP, all components of comprehensive income must be reported in
        the financial statements in the period in which they are recognized. A
        total amount for comprehensive income shall be displayed in the
        financial statements where the components of other comprehensive income
        are reported. There are no significant items to be included in other
        comprehensive income.

                                      F-21
<PAGE>

FRISCO BAY INDUSTRIES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2002
(EXPRESSED IN CANADIAN FUNDS)

20.  RECONCILIATION OF ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN CANADA AND IN
     THE UNITED STATES (CONT'D)

     f) With respect to goodwill and other assets, if a permanent impairment in
        value is determined, the Company will measure the impairment in goodwill
        based on the expected discounted cash flows, calculated based on the
        appropriate interest rates at such time, from operations.

     g) Marketable securities are classified as "available for sale securities"
        in accordance with FAS 115. The impact on the financial statements is
        not significant.

     NEW ACCOUNTING PRONOUNCEMENTS

        1) In July 2001, the Financial Accounting Standards Board issued
           Statement 141, "Business Combinations" ("FAS 141") which requires all
           business combinations initiated after June 30, 2001 to be accounted
           for using the purchase method and eliminates the
           pooling-of-interests-method of accounting. Intangible assets that do
           not meet certain defined criteria in FAS 141 for recognition apart
           from goodwill shall be reclassified as goodwill as of the date FAS
           142 is initially adopted in its entirety. FAS 141 also requires
           companies, in fiscal years beginning on or after January 1, 2002, to
           reevaluate the amounts assigned to goodwill and intangible assets
           acquired in business combinations prior to July 1, 2001. The adoption
           of this standard for United States reporting purposes is not expected
           to have a material effect on the net assets, earnings and equity of
           the Company.

        2) In July 2001, the Financial Accounting Standard Board issued
           Statement 142, "Goodwill and Other intangible Assets" ("FAS 142)
           which provides guidance on accounting and disclosure requirements for
           goodwill and other intangible assets. The Statement requires that
           goodwill and other intangible assets with indefinite lives no longer
           be amortized, however, an annual impairment test must be performed.
           Intangible assets with definite lives will continue to be amortized
           under the new requirements. The adoption of this standard for United
           States reporting purposes is not expected to have a material effect
           on the net assets, earnings and equity of the Company.

        3) In August 2001, the Financial Accounting Standard Board issued
           Statement 143, "Accounting for Asset Retirement Obligations". This
           Statement addresses financial accounting and reporting for
           obligations associated with the retirement of tangible long-lived
           assets and the associated asset retirement costs. This Statement
           applies to legal obligations associated with the retirement of
           long-lived assets that result from the acquisition, construction,
           development or normal use of the asset. It also applies to legal
           obligations resulting from existing law, statute, ordinance, written
           or oral contract, or by legal construction of a contract under
           doctrine of promissory estoppel. This new standard is effective for
           fiscal years beginning on or after June 15, 2002. The adoption of
           this standard for United States reporting purposes is not expected to
           have a material effect on the net assets, earnings and equity of the
           Company.

        4) In October 2001, The Financial Accounting Standard Board issued
           Statement 144, "Accounting for the Impairment and Disposal of
           Long-Lived Assets" ("FAS 144"). FAS 144 supercedes FAS 121,
           "Accounting for Impairment of Long-Lived Assets and Long-Lived Assets
           to be Disposed of" and APB 30 "Reporting the Effects of Disposal of a
           Segment of a Business and Extraordinary, Unusual and Infrequently
           Occurring Events and Transactions". FAS 144 establishes a single
           accounting model for assets to be disposed of by sale whether
           previously held and used or newly acquired. This new standard is
           effective for fiscal years beginning on or after December 15, 2001
           and interim periods within those fiscal years. The adoption of this
           standard for United States reporting purposes is not expected to have
           a material effect on the net assets, earnings and equity of the
           Company.

                                      F-22
<PAGE>

FRISCO BAY INDUSTRIES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2002
(EXPRESSED IN CANADIAN FUNDS)

20.  RECONCILIATION OF ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN CANADA AND IN
     THE UNITED STATES (CONT'D)

     The effect of the above differences on the consolidated statement of
     earnings would be:

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

                                            2002          2001         2000
                                                       (note 21)    (note 21)
    --------------------------------------------------------------------------

    Net earnings (loss), Canadian GAAP   $1,767,618  $ (202,056)  $ 497,809
    Development costs (a)                    66,456     (61,369)    (66,449)
    Stock appreciation rights (b)              -        (60,090)    (51,795)
    Related income tax effect                 4,000      71,000      47,000
    Deferred income taxes, at current
      rates                                  (4,000)    (71,000)    (47,000)
    --------------------------------------------------------------------------

    Net earnings (loss), U.S. GAAP       $1,834,074  $ (323,515)  $ 379,565
    --------------------------------------------------------------------------

     The following table sets forth the computation of basic and diluted
     earnings (loss) per share:

                                            2002          2001         2000
                                                       (note 21)    (note 21)
    --------------------------------------------------------------------------

    Numerator for basic and diluted net
      earnings (loss) per share -
      earnings (loss) available to
      common stockholders, U.S. GAAP    $1,834,074   $ (323,515) $  379,565
    Denominator for basic earnings       2,330,753    2,298,153   2,265,630
      (loss) per share (note 17)
    Denominator for diluted earnings
      (loss) per share (note 17)         2,389,773    2,312,575   2,330,415
    ------------------------------------------------------------------------

    Basic earnings (loss) per share,
      U.S. GAAP                         $     0.79       (0.14)  $     0.17
    ------------------------------------------------------------------------

    Diluted earnings (loss) per share,
      U.S. GAAP                         $     0.77       (0.14)  $     0.16
    ------------------------------------------------------------------------

     If the above-mentioned adjustments were made, the following balance sheet
     amounts would have resulted:

                                            2002         2001          2000
                                                      (note 21)      (note 21)
    ----------------------------------------------------------------------------

    Development costs                  $      -     $       -     $      -
    Capital stock                       15,115,644   15,353,301    15,091,143
    Contributed surplus                     97,605      115,651       238,776
    Deficit                             (4,711,569)  (7,050,544)   (6,660,580)

                                      F-23
<PAGE>

FRISCO BAY INDUSTRIES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2002
(EXPRESSED IN CANADIAN FUNDS)

20.  RECONCILIATION OF ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN CANADA AND IN
     THE UNITED STATES (CONT'D)

     SUPPLEMENTARY INFORMATION

     STOCK-BASED COMPENSATION

     Pro-forma information regarding net earnings and earnings per share is
     required by Statement of Financial Accounting Standards No. 123 ("FAS
     123"), and has been determined as if the Company had accounted for its
     employee stock options and stock appreciation rights under the fair value
     method of that Statement. The fair value for these options and rights was
     estimated at the date of grant using the Black-Scholes option pricing model
     with the following weighted average assumptions for each respective year;
     risk-free interest rates of 4.9% (2001 - 3% ; 2000 - 3%); dividend yields
     of 0%; volatility factors of the expected market price of the Company's
     common stock of 0.776 (2001 - 0.791; 2000 - 0.593) and a weighted average
     expected life of the option of 10 years for employee stock options.

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

     For purposes of pro-forma disclosures, the estimated fair value of the
     options is amortized to expense over the options' vesting period. The
     Company's pro-forma information follows:

                                             2002         2001        2000
                                                        (note 21)   (note 21)
    ---------------------------------------------------------------------------

    Pro-forma net earnings (loss), U.S.
      GAAP                                 $1,763,517  $(355,622)  $141,178
    ---------------------------------------------------------------------------

    Pro-forma basic earnings (loss) per
      share, U.S. GAAP                     $     0.76  $   (0.15)  $   0.06
    ---------------------------------------------------------------------------

    Pro-forma diluted earnings (loss)
      per share, U.S. GAAP                 $     0.74  $   (0.15)  $   0.06
    ---------------------------------------------------------------------------

                                      F-24
<PAGE>

FRISCO BAY INDUSTRIES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2002
(EXPRESSED IN CANADIAN FUNDS)

20.  RECONCILIATION OF ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN CANADA AND IN
     THE UNITED STATES (CONT'D)

     VALUATION AND QUALIFYING ACCOUNTS

                                          Additions
                                   -----------------------
                        Balance -               Charged to             Balance -
                        Beginning   Charged to     Other                  End
                        of Period    Expense     Accounts  Deductions  of Period
    ----------------------------------------------------------------------------

    ALLOWANCE FOR
      DOUBTFUL ACCOUNTS

    Fiscal 2002        $  58,592   $  278,206   $    -    $ (155,700)   $181,098
    Fiscal 2001          120,351       60,000        -      (121,759)     58,592
    Fiscal 2000          290,374       60,000        -      (230,023)    120,351

    INVENTORY - PROVISION
      FOR OBSOLESCENCE

    Fiscal 2002        $  435,542  $  177,616   $    -    $ (272,872)   $340,286
    Fiscal 2001           363,564      71,978        -          -        435,542
    Fiscal 2000           307,533      56,031        -          -        363,564


21.  COMPARATIVE FIGURES

     The audited financial statements for 2001 and 2000, which are presented for
     comparative purposes only, were audited by other chartered accountants.

     Certain reclassifications of 2001 and 2000 amounts have been made to
     facilitate comparison with the current year.

                                      F-25
<PAGE>

                                  EXHIBIT INDEX

EXHIBIT NO.            DESCRIPTION
-----------            -----------

10.1                   Consent of Richter, Usher & Vineberg, General Partnership

10.2                   Consent of Ernst & Young, LLP