UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-KSB

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


                   For the fiscal year ended December 31, 2004

                        Commission File Number 001-14898

                        ROSEDALE DECORATIVE PRODUCTS LTD
                     ---------------------------------------

             (Exact name of registrant as specified in its charter)

       Ontario, Canada                                            N/A
----------------------------                              --------------------
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                             Identification No.)

     184 Courtland Avenue
  Concord, Ontario, Canada                                      L4K 4L3
--------------------------------                          -------------------
(Address of principal executive                               (Zip Code)
           offices)

                                 (905) 669-8909
                                ----------------
              (Registrant's telephone number, including area code)

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

                           Common Stock, no par value
                    Redeemable Common Stock Purchase Warrants
                    -----------------------------------------
                                (Title of Class)

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

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



<PAGE>
     Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
           Yes    X   No

The  Company's  revenues  for the year ended December 31, 2004, were $8,358,884.

As  of  July  12,  2005,  the aggregate market value of the voting stock held by
non-affiliates  of the registrant (based on the last sale price of $0.045 on May
16,  2005)  was  $56,485.

As of May 16, 2005, there were 2,755,214 shares of the registrant's common stock
outstanding.



                                     - 2 -

<PAGE>
PART I.

Item 1. HISTORY OF THE COMPANY

     Rosedale  Decorative Products, Ltd. (the "Company") commenced operations as
a  single  retail  store,  Ontario  Paint  &  Wallpaper Limited, in 1913 and has
operated as a family owned business since its inception. In its early years, the
Company  focused  on  the sale of paint to homeowners and major contractors. The
retail  store  is  still  in operation in its original location and has become a
well-known  landmark.  In  the  early  1970's, Ontario Paint & Wallpaper Limited
("Ontario")  diversified  into  wallpaper  distribution.  In 1981, the Company's
subsidiary  Rosedale  Wallcoverings  and  Fabrics,  Inc.  ("Rosedale") commenced
operations  under  the  name  Desart  Wallcoverings  Inc.  In  1988,  Desart
Wallcoverings  Inc.  changed its name to Rosedale Wallcoverings Inc. and in 1995
its  name  was  changed to Rosedale Wallcoverings & Fabrics Inc. Over the years,
the  Company  has  become  one  of  the  largest independent wholesale wallpaper
distributors  in Canada. In the early 1990's, the Company continued to diversify
by  designing  wallcovering  collections  for distribution in Canada, the United
States,  Europe,  South  America  and  Asia.

     On May 14, 1998, the Company was formed by the shareholders of Rosedale and
Ontario  for  the purpose of consolidating the business of the two subsidiaries.

     In  July  2003, the Company filed a Proxy-Statement with the Securities and
Exchange  Commission  (SEC)  for  the  approval by shareholders of the sale of a
wholly  owned  subsidiary, Rosedale Wallcoverings & Fabrics Inc. ("Rosedale") to
the  Chairman  of  the  Board  and Chief Executive Officer, Alan Fine.  The sale
received  Shareholder  approval  on March 14, 2004 and the transaction closed on
March  24,  2004.



                                     - 3 -

<PAGE>
General

     The  Company designs, markets and distributes residential wallcoverings and
ceiling  panels.  The Company also operates one retail paint and wallpaper store
located  in  downtown  Toronto,  Canada,  which has been in continuous operation
since  1913.  The  Company's  products  include  wallpaper and wallpaper borders
(which are collectively referred to as wallcoverings), ceiling panels and paint.

     The  Company  designs  and  distributes  its  owned  branded  wallcovering
collections,  as  well  as  distributing other manufacturers' wallcoverings on a
wholesale  basis.  Wallcoverings sold under Company brand names are manufactured
for  the  Company  on  an  outsource  basis  by  third  party  manufacturers

          Sales  of  the  Company's  name  brand  wallcoverings  account  for
approximately  37% of the Company's total revenues and wholesale distribution of
wallcoverings  under  non-company  brand names accounts for approximately 36% of
the  Company's  total  revenues.  The Company's retail paint and wallpaper store
generates  approximately  27%  of  the  Company's  annual  revenues.

     In  2004,  the  Company  distributed  approximately  15  Company  brand
wallcovering  collections to approximately 10,000 to 20,000 retail wallpaper and
paint  stores worldwide.  In addition, in 2004, the Company's Ontario subsidiary
distributed  approximately  60  non-Company  brand  wallcovering  collections to
approximately  1,500-2,000  home  decorating  stores  in  Canada.

     The  Company  believes  that  its  product mix of wallcoverings and paints,
along  with  its  wooden  window  blinds  and  ceiling  tile  offerings presents
significant  cross  marketing  opportunities.



                                     - 4 -

<PAGE>
Company  Brands

     The  Company designs and distributes approximately three different lines of
wallcoverings sold under the Company's own brand names each year. A selection of
wallcovering are sold under each of the Company's brand names. Each wallcovering
collection  sold  by the Company consists of a variety of coordinated wallpapers
and  borders.  Collections  take  approximately twelve months to develop and are
generally  available  in  the  marketplace  for  a  minimum of three years after
launch.  These products are distributed to approximately 10,000 to 20,000 retail
stores  and  interior  designers  worldwide.

     Wallcovering  collections are developed by the Company's design staff using
a  variety  of color schemes to create thematically consistent collections. Each
collection  is  tailored  to fit the particular target market for the brand name
for  which  the  collection  is being created. The Company's management, design,
marketing  and  sales staff approves collections for production based upon their
assessment  of  the  commercial  potential  of  those collections in each of the
Company's  target  markets.

      The  Company's  Ontario  subsidiary  maintains  a design studio in London,
England.

     Company brand name Wallcoverings include; Concord, Bridle Path, Sweetwater,
Caledon,  Glenayr  and  Ridley  Nash. The Company's brand name wallcoverings are
targeted  for  middle and upper-middle income consumers, as well as the high-end
interior  designer  market  where the Company's wallcoverings compete based upon
quality and design. The Company does not design wallcovering collections for the
lower  end  of  the  market  where  competition  is  based primarily upon price.


     The  Concord,  Glenayr  and  Ridley  Nash  brands  were  established by the
Company's  Ontario  subsidiary to provide the subsidiary with its own brand name
of  wallpaper  products  for  introduction  into the United States market. These
brands are created in London, England by the Company's design staff. The Company
designs  and  distributes  one  wallcovering collection per year. These lines of
wallcoverings  are  targeted  for  middle  to  upper  income  consumers.



                                      - 5 -
<PAGE>
     The Company's  various  brands enable the Company to take  advantage of the
changing nature of the North American wholesale distribution business, including
the growth of large  national  distributors  and a trend  towards  consolidation
among smaller regional distributors. Our broad product mix also covers all major
price categories with the market except the low margin,  mass merchant  business
segment.




Third  Party  Manufacturing

     Wallcovering  manufacturers  in  the  United Kingdom and Canada manufacture
company brand wallcoverings for the Company.  In the United Kingdom, collections
are manufactured  by CWV Group and Zen Wallcoverings Ltd. ("Zen"), and in Canada
by  Norwall  Group Inc.  Although the Company does have contracts with the third
party  manufacturers  it uses, there are numerous other manufacturers available,
including others, which presently do work for the Company.  The Company believes
that  it  could  replace  the  services of the contracted manufacturer without a
material  impact  on the Company's business or operations.  The Company does not
believe  that  such  contract  is  material  to  an  investor.



                                     - 6 -
<PAGE>
     The  Company  generally  enters  into  contracts  with its manufacturers to
produce  designs  to the Company's specifications on a "make and ship" basis, so
that  the  manufacturers  hold  no  inventory  of  the  Company's  products. The
Company's products are manufactured on a pattern by pattern basis. The terms and
conditions  of  production  are  outlined by the Company in written instructions
provided to the manufacturers for each new design that the Company produces. The
Company  maintains  the  exclusive  copyrights  to  each  of its designs and the
manufacturers  do not have rights to sell the Company's designs unless permitted
by  the  Company.


Wholesale  Distribution  of  Wallcoverings  Manufactured  by  Third  Parties

     The  Company  is  a  wholesale  distributor  of  wallcoverings designed and
produced  by  manufacturers  located  in  the  United Kingdom, United States and
Canada.  The  Company  markets  wallcovering collections produced by third party
manufactures  under  each  manufacturer's  brand  names.  The  Company  has
distribution  agreements  with  Walquest  and Olney located in the U.S. and with
Norwall  Group  Inc.  ("Norwall"), located in Canada. The Company's distribution
agreements  with  Walquest,  Olney  and  Norwall  provide  the  Company with the
exclusive  Canadian  distribution  rights  for  each manufacturers' wallcovering
lines.  The  Company  believes  that  its  position  as one of the few remaining
distributors  not  owned  by  a  manufacturing  facility  makes it an attractive
distributor  to  manufacturers  that  do  not  want to distribute their products
through  competing  manufacturers.


New  Products

     The  Company has expanded the products offered by its Ontario subsidiary to
include  a  line  of  retro  art  decorative  ceiling  tiles  for commercial and
residential  customers.  The  decorative  ceiling tiles are designed to fit into
standard  suspension  ceiling  frameworks  and  are  embossed  with designs that
emulate  ceilings  found  in  many  turn of the century buildings. This provides
commercial  and  residential  customers  with the ability to add Victorian style
ceilings  to their decor. The Company believes that its decorative ceiling tiles
will  be attractive to commercial users, such as restaurants looking to recreate
the  look  of  the  late  1800's.  The decorative ceiling tiles were launched in
Canada in the fourth quarter of 2000 and will be introduced into the U.S. market
in  early 2005.  The Ontario subsidiary has also obtained distribution rights to
a  new line of wooden window treatments, which they began to distribute in early
2002.  They  have  also started distributing a new product called Wallpapers for
Windows,  which has received world-wide interest.  The Company has also obtained
exclusive  distribution  rights  for  a  plastic product called Mirroflex, which
includes  a  backsplash  program  which  has generated much interest from retail
stores.  It  is  anticipated  that  the  Company  will  do  very well with these
additional  products.

Retail  Operation

     The  Company's  retail  operation,  Ontario  Paint & Wallpaper, has been in
continuous  operation  since 1913 and the store has become a well-known landmark
in  metropolitan  Toronto. The retail store sells Benjamin Moore and Para paints
and  related  sundry products, including wallcoverings to customers ranging from
individual homeowners to large industrial accounts. The store offers a full line
of  wallcoverings, including all brands distributed by the Company. The majority
of  Ontario  Paint & Wallpaper's paint sales are made to local movie studios for
set  designs  and  to  commercial  customers for apartment and office buildings.
Sales  to  commercial  customers  have been growing steadily over the past three
years.  The  retail  store  is the largest single source distributor of Benjamin
Moore  Paints  in  Canada.



                                     - 7 -
<PAGE>
     The retail store offers special services to attract and maintain commercial
customers. The store maintains detailed records of paint purchases by commercial
customers.  Commercial customers that have purchased paint in the past can order
additional  paint  simply  by telephoning the store and indicating which area of
their  building  requires  paint.  The  store  manager then retrieves the stored
information  about  the  building,  selects  the  correct  paint  colors for the
commercial  customer,  and  delivers the paint to the customer. In addition, the
Company has a portable paint scanner, which provides retail store employees with
the ability to visit a building and scan the building's paints and return to the
store  where the scanned information is transferred to a paint mixer, which then
mixes  matching  paint  colors.

     In  the  fourth  quarter  of 2000, decorative hardware and gift accessories
were  added  to  the  product  lines  carried  by  the retail store.  Management
believes  that  further  growth  in  2005  will  occur.


Marketing and Distribution (Company Brands)

     The  Company  distributes its brand name wallcoverings in the United States
and  Canada  through  national  distributors.  The  Company  appoints  a  single
distributor to a particular geographical area, so that distributors' territories
generally  do  not  overlap.  The  Company does not maintain formal distribution
agreements  with  its  distributors,  which  is customary in the industry. It is
common  practice  in  the  industry  that  neither  the  distributor  nor  the
manufacturer  is obligated to maintain a relationship other than on a collection
by collection basis. It is the Company's policy that each of its distributors is
obligated  to purchase every collection the Company markets or forfeit its right
to  be  a  Company  distributor.

     The Company markets and promotes its products  through the distribution and
sale of sample books. The Company prepares a sample book for each of its Company
brand  collections of  wallcoverings  designs.  The majority of the sample books
prepared by the Company  contain  partial  sheets of wallpaper  and  coordinated
borders.  In addition,  sample books contain  photographs of model room settings
demonstrating how the Company's Wallcoverings and borders look in simulated home
environments.

     The  number  of  sample  books  that  the  Company  prepares  for any given
collection  is determined based upon orders from the Company's distributors. The
distributors  inform  the  Company  how  many  books  they will require for each
collection  and  the  Company  produces  the  sample books. The Company does not
produce  sample  books unless a distributor has requested them. The sample books
are  sold  to distributors and the distributors, in turn, place the sample books
with  retail  and  interior  design  customers who ultimately sell the Company's
products  to  consumers.  In  addition to purchasing the Company's sample books,
each distributor is also required to purchase inventory for each pattern in each
collection.  It  takes  between  10  to 12 months from the time that the Company
approves  design  for  a collection to the shipping of the sample books for that
collection.



                                     - 8 -
<PAGE>


Canadian Distribution

     The  Company sells approximately 60% of its wallcoverings in Canada.  These
sales  are  made  through  national  chains  such  as  Color  Your World and the
majority  of  the  independent  paint  and  wallpaper  stores  across  Canada.


United States Distribution

     Approximately  32%  of  the  Company's  wallcovering  sales are made in the
United  States.  The  Company distributes its wallcoverings in the United States
through  sales  to  national  distributors.  National  distributors  include The
Blonder  Company,  Patton  Wallcoverings  and  Olney  Wallcoverings.


Wallcovering Market

     Over  two  billion rolls of wallcoverings were sold worldwide in 1994, with
over 161 million rolls sold in Canada and the United States and over 500 million
rolls  of residential wallcoverings sold in Europe during the same period. Sales
of  wallcoverings  tend  to  have  a  direct  relationship  to the level of home
renovations  and  the  economy in general, but have a lesser relationship to new
housing  starts.  The market has been declining over the past few months with it
becoming  more  important  to  increase market share by staying in tune with the
needs  of  the  consumer.



                                      - 9 -
<PAGE>
     The Company competes primarily within the residential  wallcovering segment
of the home  decorative  industry,  which is a sector of the  building  supplies
industry that caters to the  do-it-yourself  market.  Currently the wallcovering
segment is controlled by a few large  companies with many small and medium sized
companies being forced to consolidate to survive.

     Industry  trends  suggest  a  market  shift toward distributors with higher
distribution  volumes.  The  Company  believes  that  it  has  developed  strong
relationships  with independent regional distributors. The Company also believes
it  is well positioned to take advantage of growth in mass merchandising through
relationships  with  its  national  distributors  and  large  retail  chains.

Patents  and  Trademarks

     The  Company  trademarks  the  names  of  each of its collections and brand
names.  In  addition,  the  Company  copyrights  designs  created  for its brand
Wallcoverings.


Government Regulation

     The  Company  is subject to various Canadian regulations relating to health
and  safety  standards  applicable warehouse operations. The Company must comply
with  Canadian  federal  regulations  administered by the Workman's Compensation
Board,  relating to worker safety issues in its warehouse facility. Although the
cost  of  compliance  with such regulations is not material, changes to existing
regulations  may  have  a  material adverse effect on the Company's business and
result  of  operations.  The Company is also subject to U.S. Federal Regulations
relating  to imports of goods and the North American Free Trade Agreement on its
products  that  it exports to the United States. Although the cost of compliance
with  such regulations is not material, changes to existing regulations may have
a  material  adverse  effect on the Company's business and result of operations.


Employees

     As  of  December 31, 2004, the Company employed 35(31 on a full time basis)
persons,  which  includes  2  senior executives, 23 sales staff persons (19 full
time, 4 part time), 4 support staff persons and 6 warehouse workers. The Company
has no unionized employees and believes that its relationship with its employees
is  satisfactory.



                                     - 10 -
<PAGE>
Item 2. DESCRIPTION OF PROPERTIES

     The  Company  leases facilities in Concord, Ontario of approximately 51,000
square  feet. The lease was signed on September 1, 2004, and expires on November
29,  2009,  with  an  annual base rent of Cdn. $222,227. The building houses the
Company's executive offices, warehouse and showroom and the executive offices of
Rosedale  Decorative  Products.

     The  Company  also  leases  space  for  its  retail paint store, located in
downtown  Toronto,  from  three  companies  owned by Sid Ackerman, the Company's
President.  These leases call for rental payments in the amount of Cdn. $36,000,
$36,000  and  $42,000  per  annum, plus property taxes, payable in equal monthly
installments  of  Cdn. $3,000,$3,000 and $3,500 respectively. The leases are for
ten-year  terms.

Item 3. LEGAL PROCEEDINGS

             None.

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

             None.



                                     - 11 -
<PAGE>
                                    PART II.


Item 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Our common stock is quoted on the pink sheets under the symbol "ROSD".  The
following  table sets forth the range of the high and low bid quotations for our
common  stock  for  the  periods  indicated.   Such  market  quotations  reflect
inter-dealer  prices,  without  mark-up,  mark-down  or  commission  and may not
necessarily represent actual transactions.

                                     High     Low
                                     ----     ---
                       2004
                       ----
                    First Quarter     .40     .10
                    Second Quarter    .33     .12
                    Third Quarter     .25     .07
                    Fourth Quarter    .11     .06

                                     High     Low
                                     ----     ---
                       2003
                       ----
                    First Quarter     .47     .12
                    Second Quarter    .20     .07
                    Third Quarter     .11     .07
                    Fourth Quarter    .15     .08


     The  transfer  agent of our common  stock is  Continental  Stock & Transfer
Company, New York, New York.

The Company has not paid dividends to date.



                                     - 12 -

<PAGE>
Item  6.    MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR  PLAN  OF  OPERATIONS

GENERAL

     The statements contained in this report that are not historical are forward
looking  statements  within the meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act,  including  statements  regarding the Company's
expectations,  intentions,  beliefs or  strategies  regarding  the  future.  All
forward-  looking   statements  include  the  Company's   statements   regarding
liquidity,  anticipated  cash needs and  availability  and  anticipated  expense
levels.  All  forward-looking  statements  included  in this report are based on
information available to the Company on the date hereof, and the Company assumes
no obligation to update any such forward-looking  statement.  It is important to
note that the Company's  actual  results could differ  materially  from those in
such forward-looking statements.

          The  wallcoverings  and  paint  markets  are  highly  competitive  and
          consist of foreign and domestic manufacturers and distributors most of
          who  are  larger  and  have  greater  resources  than the Company. The
          Company's future success as a designer and distributor of high quality
          wallcoverings  will  be  influenced  by  several factors including the
          ability  of  the  Company  to  efficiently meet the quality and design
          requirements  of  its  customers, management's ability to evaluate the
          public's  quality  and  design  requirements  and  to  achieve  market
          acceptance  of its wallcoverings and designer fabrics collections. The
          major  factor  affecting  the  industry  is consumer confidence in the
          economy.  Consumers  are  leery  to spend under present conditions and
          those who are spending are more cognizant of color, design and quality
          of  the  product they intend to purchase. The Company must continue to
          concentrate  its  efforts to evaluate and meet the requirements of its
          customers.  Further  factors  impacting  the  Company's operations are
          increases  in  expenses  associated  with  continued sales growth, the
          ability  of  the  Company  to  control costs, to develop products with
          satisfactory  profit margins and the ability to develop and manage the
          introduction of new product lines and competition.

MANAGEMENT'S PLANS FOR 2005

     The  Company will continue to take appropriate steps to continue to improve
performance in 2005.  The economy has continued to be slow, both in the U.S. and
Canada.   We  continue to source products for distribution, which complement our
existing  offering.   Selling  prices  on  collections  launched  in  2005  will
continue  to be increased to show a positive impact on margins.  It is difficult
to  quantify  what  impact  increasing the selling prices on the new collections
launched  in  2005  will have on total sales as the collections launched in 2004
and  prior  are  still  generating sales without any price increase.  The retail
prices  for  the  2005  collections were increased approximately 13%, which will
relate to a smaller percentage increase on over-all sales.  The retail operation
is  anticipated  to  maintain  sales  in  2005.

     Operating expenses have been dramatically cut by approximately $1.3 million
on an annualized basis to offset the significant drop in sales recorded over the
last  few  months.  The  full  impact of these savings will be realized in 2005.
Management  has  taken  sizable reductions in remuneration, which is included in
these  cost  saving  measures.  New facilities have been sourced which will save
the  Company approximately $150,000. It is management's intention to continue to
rationalize  the  efficiency  of  the  Company's operations and attain increased
profitability  in  2005  and  2006.



                                     - 13 -
<PAGE>

RESULTS OF OPERATIONS

     Fiscal year ended  December 31, 2004  compared to the fiscal year  December
31, 2003

     Revenues  for  the  fiscal  year ended December 31, 2004 were $8,358,884, a
31.8%  decrease  over  prior  year  revenues  of $12,263,554.  This decrease was
mainly  due  to  the  sale of the operating subsidiary, Rosedale Wallcoverings &
Fabrics  Inc.  Also,  there  has  been  an industry wide drop in home renovation
sales  in  North  America.  Retail  sales will continue to grow at a slower pace
than  previously  experienced.

Gross  Profit  for  the  Company for the fiscal year ended December 31, 2004 was
32.1%  of  sales,  a decrease as compared to the same period one-year ago, which
was  34.4%.  This  decrease  in  gross  profit  margin  can be attributed to the
selling  of  the  operating  subsidiary,  which  impacted  the sales mix for the
Company.  Slow and obsolete inventory continued to be cleared from the inventory
having  a  negative  impact on the gross margin.  Also affecting margins was the
drop  in  the  U.S.  dollar  against  the  Canadian  dollar.

Selling  expenses for the Company decreased by 9.1% to $1,883,286 for the fiscal
year ended December 31, 2004 as compared to $2,071,651 for the fiscal year ended
December  31,  2003.    Again,  the largest savings is attributed to the sale of
the  division.  Cut  backs  in  warehouse  staff,  advertising and promotion and
salary  reductions  were initiated when the market began to soften.  Further cut
backs  on  warehouse and sales staff occurred in 2004 to ensure that the Company
can  maintain  a  cash  positive  statement.

General  and  administrative  expenses  for  the  Company decreased by 22.5%, to
$1,753,100  for  the fiscal year ended December 31, 2004 from $2,262,340 for the
fiscal  year  ended  December  31,  2003.  Management  initiated  major  salary
reductions  in  2004  for  the  two  remaining  officers and directors.  Further
reductions  on  salaries  have  been  instituted  in  2005.

     Rosedale  develops  wallpaper  sample  books,  which  are  created for each
collection  and sold through distributors.  The majority of expenditures for the
creation  of sample books are incurred in the quarter before the introduction of
a collection.  Because expenditures are made in the quarter before the launch of
a collection, there is not always a matching of revenues and expenses e.g. costs
for  a  January  launch  would  be  recorded in the preceding year.  The Company
ensures  that  there  are firm orders in place from customers before significant
expenditures  are  incurred  to  produce  the sample books.  Therefore, there is
little  speculative  risk in their production.  Book development and subsidy for
the  fiscal  year ended December 31, 2004 was  $214,133 compared to $191,046 for
the  same  period  last year.   Book subsidies are now expensed in the financial
statements  rather  than  being amortized over the life of the collection.  This
method  provides  a more conservative approach to accounting for such costs.  As
the  market  has become much more competitive, customers are less willing to pay
higher  prices for these collections, therefore it is necessary to subsidize the
books  to  ensure  we  get  coverage  in our territories as books are our silent
salesman.

     Design  studio  expenses for the Company decreased by 76% to for the fiscal
year  ended  December  31, 2004, to $148,008 versus $614,179 for the fiscal year
ended December 31, 2003.  This decrease is a direct result of the closing of the
studio  in  Ontario.  Scaling  down our in house collections is part of the cost
savings  initiated  in  2004.  Design  costs are being expensed in the financial
statements  rather  than  accounted  for as prepaids and matched to the year the
collections  are launched.  This method provides a more conservative approach to
accounting  for  such  costs.



                                     - 14 -
<PAGE>
The  operating  loss  for the fiscal year ended December 31, 2004 was $2,169,696
compared  to  $1,500,006  for  the fiscal year ended December 31, 2003.  The two
main areas creating this loss were the significant drop in sales and the drop in
gross  margins.  We  anticipate  our  margins  in  2005  to regain some of their
previous  strength  with  increased  selling prices and the weakening of foreign
currencies  versus  the  Canadian  dollar.

     Interest expense and bank charges for the Company for the fiscal year ended
December  31,  2004 decreased 12.7% to $204,857 from $234,538 for the year ended
December  31,  2003.  This  decrease  in  interest  expense  is  attributable to
decreased  borrowings  and  lower  interest  rates  during  the  year.

The  exchange  gain on foreign exchange contracts of $76,371 relates to the FASB
requirement  that the ineffective portion of gain or losses attributable to cash
flow  hedges  be  reported  in  earnings.  As  the  U.S.  dollar  has  weakened
dramatically  in  2004,  the contracts we engaged to protect our margins on U.S.
sales  had  a  positive  impact  on  net  income.

A loss on the sale of Rosedale Wallcoverings was recorded in 2003 in the amount
of $1,323,715.   The shareholders approved the sale of the wholly-owned
subsidiary, Rosedale Wallcoverings & Fabrics Inc. to our former Chairman of the
Board and Chief Executive Officer, Alan Fine.  The terms of the transaction are
as follows:

     The  total purchase price to be paid was $1,224,000 (Cdn.) ($768,458 U.S.).
Such  amount  was  paid  by  the  assumption  of  our  obligation  for severance
obligations  to  Mr. Fine in the amount of $1,100,250 Cdn ($690,765 U.S.), and a
cash  payment of $123,750 Cdn ($77,693 U.S.). Upon closing of the sale, Mr. Fine
resigned  as  an  officer  and  member  of  the  Board  of Directors of Rosedale
Decorative  Products Ltd. The pre-existing inter-company term loan due and owing
by  Rosedale  Wallcoverings  and  Fabrics to Rosedale Decorative Products in the
principal  amount  of  approximately  $696,000 Cdn ($437,000 U.S.) was repaid by
Rosedale  Wallcoverings  & Fabrics Inc. by delivery of a lump-sum payment on the
closing  date in full settlement thereof in the amount of $400,000 Cdn ($251,130
U.S.), being the present value of the term loan accelerated to the closing date.
The  pre-existing  loan due and owing by Rosedale Wallcovering & Fabrics Inc. to
Sidney Ackerman in the face amount of approximately $486,000 Cdn ($305,000 U.S.)
was repaid in full by Rosedale Wallcoverings & Fabrics Inc. on the closing date.
The  pre-existing  loan  due  and  owing by our wholly-owned subsidiary, Ontario
Paint  &  Wallpaper  Limited  to  Mr.  Fine  in the face amount of approximately
$250,000  Cdn ($157,000 U.S.) was repaid by Ontario Paint & Wallpaper Limited in
full  on  the closing date. In connection with the sale, Mr. Ackerman has agreed
to  purchase  375,000  shares  of our common stock from Mr. Fine. As a result of
such  purchase, Mr. Ackerman will then be the beneficial owner of 923,781 shares
of  common  stock  representing  33.5%  of  the  total  shares  outstanding. The
background  of  the  proposed  transaction  is  rooted  in  disagreements in the
direction  of  our  businesses,  growth and development as between Alan Fine and
Sidney Ackerman. As Rosedale Decorative Products Ltd. was essentially created as
a  holding  company  for  its two independently operating subsidiaries, Rosedale
Wallcoverings  &  Fabrics  Inc. and Ontario Paint & Wallpaper Limited, with both
having responsibilities to the Board of Directors, it was determined that it was
in  the  best  interest  of  Rosedale  Decorative  Products  to divest itself of
Rosedale Wallcoverings & Fabrics, which would reduce the debt and also eliminate
the contingent tax liability of approximately $830,000. The sale of the Rosedale
Wallcoverings  &  Fabrics Inc. to Mr. Fine will significantly reduce the product
lines  and  lines of business which we conduct. This decrease in diversification
of  our  business could serve to magnify any downturns in the remaining business
lines.  In  particular:  Our  ability to adjust to changes in consumer demand or
economic  shifts  could  be  materially  impacted.  Although  we  received  an
independent  evaluation  of  the value of Rosedale Wallcoverings & Fabrics Inc.,
there  can be no assurance that the value may not be higher to other purchasers.
We did not seek bids from any purchaser other than Mr. Fine.



                                     - 15 -
<PAGE>
The net loss for the fiscal  year ended  December  31, 2004 was  $1,992,993,  as
compared to $2,994,178 for the fiscal year ended December 31, 2003.

     The  loss  per  share for the fiscal year ended December 31, 2004 was $0.72
compared  to  $1.09  for  the fiscal year ended December 31, 2003.  Earnings per
share  were  calculated for both periods based on the weighted average number of
shares  issued in each year.  The weighted average number of shares for 2004 was
2,755,214  and  2,755,331  for  2003.


LIQUIDITY AND CAPITAL RESOURCES

     The  Company had a net change in cash of $539,041 for the fiscal year ended
December 31, 2004. This was attributable to capital additions.

     Cash  flows used in investing activities for the fiscal year ended December
31,  2004 were $321,408. This reflected the capital addition for renovations and
additions to the Queen Street location and acquisition of designs and engravings
for new collections.

     The  Company  has  reviewed their position on all guarantees that they have
issued  and  have  determined  that  they  have no exposure on the contingencies
referred  to  in the financial statements. The Company has also done an in depth
study  to review the useful life of our assets and have determined that there is
no impairment.

     The  Company's  main currency is Canadian dollars even though we have sales
made  in  U.S.  dollars.  As  purchases  are  normally made in Canadian dollars,
profitabilty  can be affected by the fluctuation in the rate of exchange between
the  currencies.  The  stronger  the  U.S. dollar, the better the margin on U.S.
sales  will  be. This is why the Company will sell forward on the U.S. dollar to
protect their margin.


Item 7. FINANCIAL STATEMENTS

     The  Financial  Statements are included with this report commencing on page
F-1.


Item  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

None.

ITEM 8A  CONTROLS AND PROCEDURES

Evaluation  of  disclosure  controls and procedures. An evaluation was performed
under  the  supervision  and with the participation of our management, including
the  chief  executive  officer  and  the  chief  financial  officer,  of  the
effectiveness of the design and operation of our disclosure procedures. Based on
management's  evaluation  as  of  the  end  of the period covered by this Annual
Report,  our  principal  executive  officer  and  chief  financial  officer have
concluded  that  our  disclosure  controls  and  procedures (as defined in Rules
13a-14(c)  and  15d-14(c)  under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) were sufficiently effective to ensure that the information
required  to  be  disclosed by us in the reports that we file under the Exchange
Act  is  gathered, analyzed and disclosed with adequate timeliness, accuracy and
completeness.  Changes  in  internal  controls.  There  have been no significant



                                     - 16 -
<PAGE>
changes  in  our  internal controls or in other factors that could significantly
affect  these  controls  subsequent  to  the  date of the evaluation referred to
above, nor were there any significant deficiencies or material weaknesses in our
internal  controls.  Accordingly,  no  corrective  actions  were  required  or
undertaken.

ITEM 8B - OTHER INFORMATION
None.

                                     - 17 -

<PAGE>
                                    PART III.


Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT

Directors  and  Executive  Officers

     The following table sets forth certain information concerning the Directors
and  Executive  Officers  of  the  Company:


NAME                AGE     POSITION
----                ---     --------


Sidney Ackerman     60     President and Director

Norman G. Maxwell   57     Chief Financial Officer and Director

Ken Page            42     Director

Janet Hendry        66     Director


     Set  forth  below  is  a  biographical  description  of  each  director and
executive  officer of the Company based on information supplied by each of them.

     Sidney  Ackerman  has  served  as  the  President  of the Company since its
inception in May 1997. In 1971, Mr. Ackerman was responsible for the development
of Ontario Wallcoverings, which became the wallpaper distribution arm of Ontario
Paint  &  Wallpaper  Ltd.  In  June  1978, Mr. Ackerman was elected Director and
Treasurer  of Ontario Paint & Wallpaper Ltd. Since 1994, Mr. Ackerman has served
as  the  President  of  Ontario  Paint  &  Wallpaper  Ltd.

     Norman  G.  Maxwell has been Chief Financial Officer and Operations Manager
of  the  Company since its inception in May 1997 and has served as a director of
the Company since May 1997. Prior thereto, since 1992, Mr. Maxwell has served as
the  Vice  President  of  Finance  with  Ontario. From 1989 to 1992, Mr. Maxwell
served  as  the  Controller of Ontario. Mr. Maxwell has been in the wallcovering
industry  for over 20 years and has been a Certified Management Accountant since
1977.

     Ken Page has been a Director of the Company since June 2000. Since 1992 Mr.
Page  has  been  a  partner  of the law firm of Page Arnold in Toronto, Ontario,
Canada.  Mr.  Page  graduated from the University of Western Ontario with an LLB
in  1986  and  was  admitted  to  the  bar  in  Ontario  1988.

     Janet  Hendry  has  been  a  Director of the Company since March 2004.  Ms.
Hendry has been employed as a legal secretary for a lawyer involved in corporate
and  securities  law  for  over  30  years.  She is currently the Administrative
Assistant  to  a  private  company  engaged  in mortgage financing.  She is also
Corporate  Secretary  of  Sterling  Centrecorp Inc., a public company listed for
trading  on  the  Toronto Stock Exchange, involved in real estate investment and
management  services.



                                     - 18 -
<PAGE>
Committees  of  the  Board  of  Directors

     The Board of Directors has a Compensation Committee and an Audit Committee.

     The  Compensation  Committee  presently consists of, Ken Page, Janet Hendry
and  Sid  Ackerman.  Mr.  Page and Ms. Hendry are  independent directors who are
not  salaried officers of the Company. The purpose of the Compensation Committee
is  to  review  the  Company's  compensation  of  its  executives,  to  make
determinations  relative  thereto  and to submit recommendations to the Board of
Directors  with  respect  thereto.  The  Compensation Committee also selects the
persons  to  whom options to purchase shares of the Company's Common Stock under
the  1998  Stock  Option  Plan  will  be  granted  and  to  make  various  other
determinations  with  respect  to  such  Plan.

     The  Audit  Committee  consists of Ken Page, Janet Hendry and Sid Ackerman.
The  purpose  of  the  Audit Committee is to provide general oversight of audit,
legal  compliance  and  potential  conflict  of  interest  matters.


Compensation  of  Directors

     The Company did not pay  compensation  to any  director  for acting in such
capacity.



SECTION  16(A)  BENEFICIAL  OWNERSHIP  REPORTING  COMPLIANCE

     Based  solely  upon  a  review of Forms 3, 4 and 5, and amendments thereto,
furnished  to  the  Company during fiscal year 2004, the Company is not aware of
any  director,  officer  or  beneficial  owner  of  more than ten percent of the
Company's Common Stock that, during fiscal year 2004, failed to file on a timely
basis  reports required by Section 16(a) of the Securities Exchange Act of 1934.



                                     - 19 -
<PAGE>
Item 10. EXECUTIVE COMPENSATION

     The  following  table sets forth certain information regarding compensation
paid  by the Company during each of the last three fiscal years to the Company's
Chief  Executive  Officer  and  to  each of the Company's executive officers who
earned  in  excess  of  $100,000.

                           SUMMARY COMPENSATION TABLE


                             LONG-TERM COMPENSATION
                             ----------------------

<TABLE>
<CAPTION>


                                                                            AWARDS               PAYOUTS
                                                                            ------               -------
                                                                                 SECURITIES         ALL OTHER
                                                                      RESTRICTED UNDERLYING           COMPEN-
                                                     OTHER              STOCK      OPTIONS/    LTIP   SATION
                                                    COMPEN             AWARD(S)    SARS      PAYOUTS   ($)
    NAME          POSITION     YEAR (1)  SALARY     -SATION     BONUS    ($)     (#)(1)(2)     ($)
<S>                 <C>        <C>        <C>        <C>        <C>        <C>        <C>     <C>        <C>
Alan Fine(1)       Chief       2004       ----       ----       ----     ----     ----         ----    ----
                   Executive   2003       ----       ----       ----     ----     ----         ----    ----
                   Officer     2002     $195,822     ----       ----     ----     ----         ----    ----
Sidney Ackerman(1) President   2004     $ 157,727    $6,523     ----     ----     ----         ----    ----
                               2003     $ 197,466    $5,427     ----     ----     ----         ----    ----
                               2002     $195,822     $4,784     ----     ----     ----         ----    ----
-----------------------------------------------------------------------------------------------------------
</TABLE>
(1)     Reflects total compensation received from both the Company's Ontario and
Rosedale  subsidiaries.  As  the Company is located in Canada, the executive has
been  paid  a  salary  of  $205,250  Canadian  dollar  in  2004,

                       STOCK OPTIONS GRANTS AND EXERCISES

     Stock  options granted to the named executive officers in 1999 were reduced
in  2000  to  25,000  each  from  125,750  each.

No  stock  options  were granted during the fiscal year ending December 31, 2001
and  2002.  In  2003  all  stock  options  that  were  issued  to employees were
cancelled.

          The  following  table  shows  the  value  at  December  31,  2004  of
unexercised  options  held  by  the  named  executive  officers:

    AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUESAGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
                                     VALUES

<TABLE>
<CAPTION>
                                                    NUMBER OF SECURITIES            VALUE OF UNEXERCISED IN-THE
                                                   UNDERLYING UNEXERCISED         -MONEY OPTIONS AT FISCAL YEAR-
                                                      OPTIONS AT FISCAL                       END ($)
                                                         YEAR-END (#)

NAME     SHARES ACQUIRED ON      VALUE REALIZED
            EXERCISE (#)              ($)            EXERCISABLE/UNEXERCISABLE     EXERCISABLE/UNEXERCISABLE

<S>              <C>                   <C>                      <C>                         <C>
Sidney Ackerman,
President        0                     0                        0                           $0/0


</TABLE>
                                     - 20 -
<PAGE>
Employment Agreements

     On  the  effective  date  of  the  Company's Registration Statement, Sidney
Ackerman  entered into a five year employment agreement with the Company. Sidney
Ackerman  is  retained  as  President  of  the  Company  at  an annual salary of
$205,000.  The  compensation  committee  presented to the board an annual salary
increase to $205,000 for both executive officers retroactive to January 1, 2003.
The  board unanimously approved the increase.  On January 1, 2003 the employment
contract for Sidney Ackerman was renewed for a period of one year under the same
terms.  On  January  13,  2004,  the employment contract for Sidney Ackerman was
renewed  for  a  period  of  three  years  under  the  same  terms.

     The  employment  agreement with Sidney Ackerman provide that upon his death
that three years full salary will be paid to the employee's estate in a lump sum
payment.  The  agreement  also provides for reimbursement of reasonable business
expenses.

     Sidney  Ackerman is entitled to bonuses of up to $10,000 per annum based on
achieving  sales,  profitability  and  management  goals as predetermined by the
Board  of  Directors  or compensation committee and other subjective criteria as
determined  by  the  Board  of  Directors  or  Compensation  Committee.

     Sidney  Ackerman  shall  receive  $20,000 per year additional compensation,
including  car  allowance,  insurance  and  retirement  savings  with  matched
contributions  by  the  Company  and  such  other  perquisites.

     Upon  the  resignation,  or exercise of retirement option upon reaching the
age  of  60, the Company shall pay the employee a lump sum resignation allowance
equal to three years salary plus equivalent in benefits. Based upon any wrongful
termination, the Company shall pay the employee a lump sum resignation allowance
of  5  years  salary  and  equivalent  in  benefits.

     In  the  event that there is a change in control of the Company, through an
acquisition  where  any  person  acquires  more  than  50%  of the shares of the
Company,  an  amalgamation,  consolidation  or  merger  with another corporation
resulting  in  at  least  50%  of the voting shares of the surviving corporation
being  controlled  by a new acquirer or the sale directly or otherwise of all of
the assets of the Company to a third party in a non-distress situation, then the
Company  shall pay to Sidney Ackerman a lump sum payment equal to the sum of one
and  one-half  times his respective annual salary  paid or payable in respect of
the  most  recently  completed  fiscal  year.


Stock Option Plan

     The  Company has adopted a Stock Option Plan (the "1998 Plan"), pursuant to
which  750,000  shares  of  Common  Stock  are  reserved  for  issuance.

     The 1998 Plan is administered by the Compensation Committee of the board of
directors,  who  determine,  among  other  things,  those  individuals who shall
receive  options,  the  time period during which the options may be partially or
fully exercised, the number of shares of Common Stock issuable upon the exercise
of  the  options  and  the  option  exercise  price.



                                     - 21 -
<PAGE>
     The  1998  Plan  is  for  a period for ten years. Options may be granted to
officers,  directors,  consultants,  key employees, advisors and similar parties
who provide their skills and expertise to the Company. Options granted under the
1998 Plan may be exercisable for up to ten years, may require vesting, and shall
be  at  an  exercise  price  all  as  determined  by  the board. Options will be
non-transferable  except  to  an  option  holder's  personal  holding company or
registered  retirement  savings  plan  and  will  be  exercisable  only  by  the
participant during his or her lifetime.

     If  a  participant  ceases affiliation with the Company by reason of death,
permanent  disability  or  retirement  at  or  after  age 70, the option remains
exercisable  for  three  months from such occurrence but not beyond the option's
expiration  date.  Other  termination  gives  the  participant  three  months to
exercise,  except  for  termination  for  cause,  which  results  in  immediate
termination  of  the  option.

     Options  granted under the 1998 Plan, at the discretion of the compensation
committee or the board, may be exercised either with cash, Common Stock having a
fair  market  equal  to  the  cash  exercise  price,  the participant's personal
recourse  note, or with an assignment to the Company of sufficient proceeds from
the  sale  of  the  Common  Stock  acquired upon exercise of the Options with an
authorization  to the broker or selling agent to pay that amount to the Company,
or  any  combination  of  the  above.

     The  exercise price of an option may not be less than the fair market value
per  share  of  Common  Stock on the date that the option is granted in order to
receive certain tax benefits under the Income Tax Act of Canada (the "ITA"). The
exercise  price  of  all  future options will be at least 85% of the fair market
value  of  the Common Stock on the date of grant of the options. A benefit equal
to  the  amount  by  which  the  fair market value of the shares at the time the
employee  acquires  them  exceeds the total of the amount paid for the shares or
the  amount  paid  for  the  right  to  acquire the shares shall be deemed to be
received  by  the  employee  in  the  year  the  shares are acquired pursuant to
paragraph  7(1)  of  the ITA. Where the exercise price of the option is equal to
the fair market value of the shares at the time the option is granted, paragraph
110(1)(d)  of the ITA allows a deduction from income equal to one quarter of the
benefit  as  calculated  above. If the exercise price of the option is less than
the  fair  market  value at the time it is granted, no deduction under paragraph
110(1)(d)  is permitted. Options granted to any non-employees, whether directors
or  consultants  or  otherwise will confer a tax benefit in contemplation of the
person  becoming  a  shareholder  pursuant  to  subsection  15(1)  of  the  ITA.

     Options  under  the 1998  Plan must be  issued  within  ten years  from the
effective date of the 1998 Plan.

     Any  unexercised  options that expire or that  terminate upon an employee's
ceasing to be employed by the Company become  available again for issuance under
the 1998 Plan.

     The  1998  Plan  may  be  terminated or amended at any time by the board of
directors,  except  that  the  number  of  shares  of  Common Stock reserved for
issuance  upon  the  exercise  of options granted under the 1998 Plan may not be
increased  without  the  consent  of  the  shareholders  of  the  Company.



                              -  22  -
<PAGE>
     Information  regarding executive compensation will appear under the caption
"Executive Compensation" in the Information Statement and is incorporated herein
by  reference.



Item 11.  SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

PRINCIPAL STOCKHOLDERS

     The  following  table sets forth certain information, as of the date hereof
by  the  Company with respect to the beneficial ownership of the Common Stock by
each beneficial owner of more than 5% of the outstanding shares thereof, by each
director,  each  nominee  to  become  a director and each executive named in the
Summary Compensation Table and by all executive officers, directors and nominees
to  become  directors  of  the  Company  as  a  group.


                                       SHARES OF
                                        COMMON      APPROXIMATE
                                         STOCK      PERCENTAGE OF
                                      BENEFICIALLY  COMMON STOCK
NAME                                     OWNED      OUTSTANDING
----                                  ------------  --------------
Sidney Ackerman(2)                       891,726      32.4%
Rosalyn Fine                             375,000      13.6%
Janis Ackerman                            77,758       2.8%
Robert Ackerman                           77,758       2.8%
Lauren Ackerman                           77,758       2.8%
All Executive Officers and Directors
as a Group (one person)                  891,726      32.4%
---------------------
(1)  Unless  otherwise  indicated,  the  address  is  c/o  Rosedale  Decorative
     Products Ltd., 184 Courtland Avenue, Concord, Ontario, Canada L4K 4L3.
(2)  Does  not  include  233,274  shares  of  Common  Stock  held  by  Janis
     Ackerman,  Robert  Ackerman and Lauren Ackerman. Includes 228,574 shares of
     Common  Stock  owned  by  1369597  Ontario  Inc.,  which is owned by Sidney
     Ackerman, Janis Ackerman, Robert Ackerman and Lauren Ackerman.



                                     - 23 -
<PAGE>
     The  securities  "beneficially  owned"  by  a  person  are  determined  in
accordance  with the definition of "beneficial ownership" set forth in the rules
and  regulations  promulgated  under  the  Securities  Exchange  Act  of  1934.
Beneficially  owned  securities  may  include securities owned by and for, among
others, the spouse and/or minor children of an individual and any other relative
who has the same home as such individual. Beneficially owned securities may also
include  other  securities  as  to  which the individual has or shares voting or
investment  power  or  which such person has the right to acquire within 60 days
pursuant  to  the  conversion  of  convertible  equity,  exercise of options, or
otherwise.  Beneficial  ownership  may  be  disclaimed  as  to  certain  of  the
securities.

     The  foregoing  table  is  based  upon  2,755,214  shares  of  common stock
outstanding as of December 31, 2004, assuming no other changes in the beneficial
ownership of the securities, except the tax-free reorganization of share capital
held  by  the  principal  stockholders.  The total number of shares beneficially
owned  by  the  principal  stockholders,  1,500,000  shares,  did  not  change.

EQUITY COMPENSATION PLAN INFORMATION

     The  following  table  sets  forth  information  about  the  shares  of the
Company's  common  Stock that may be issued upon the exercise of options granted
to  employees under the 1998 Stock Option Plan, which were approved by the Board
of  Directors  as well as shares that may be issued upon the exercise of options
under  the  1998  Stock Option Plan, that were issued to consultants, which were
not approved by the Board of Directors

<TABLE>
<CAPTION>
                                                            (c)
                                                                 Number of securities
                               (a)                 (b)           remaining available for
                      Number of securities    Weighted-average   future issuance under
                      to be issued upon     exercise price of     equity compensation
                         exercise of            outstanding         plans excluding
                      outstanding options,   options, warrants   securities reflected in
 Plan Category         warrants and rights       and rights          column (a) (1)
----------------------------------------------------------------------------------------
<S>                           <C>                  <C>                    <C>
Equity compensation
plans approved by
security holders

Equity compensation
plans not approved
by security holders

Total                         NIL                  NIL                     NIL
                              ---                  ---                     ---

</TABLE>

Item  12.     CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS



                                     - 24 -
<PAGE>
     Sidney  Ackerman,  President  of  the  Company,  owns all of the issued and
outstanding  capital  stock  of  966578  Ontario  Inc., 1216748 Ontario Inc. and
1217576  Ontario  Inc.  Sid  Ackerman controls all of the issued and outstanding
capital  stock  of  1369597 Ontario Inc. The Company leases space for its retail
store,  located  in  downtown Toronto, from 966578 Ontario Inc., 1216748 Ontario
Inc.  and 1369597 Ontario Inc. The leases call for rental payments in the amount
of  $27,665  per  annum,  plus  general property taxes, payable in equal monthly
installments  of  $2,305  for the property leased from 1216748 Ontario Inc.  The
lease  for  966578  Ontario  Inc.  calls  for  rental  payments in the amount of
$27,665  per  annum  plus  general  property  taxes,  payable  in  equal monthly
installments  of  $2,305.  The  lease  for 1369597 Ontario Inc. calls for rental
payments in the amount of $32,275 per annum plus general property taxes, payable
in  equal  monthly  installments  of $2,690. The leases are for a ten-year term.

     The  Company  has  second  collateral mortgages from two related companies,
1216748 Ontario Inc. and 1217576 Ontario Inc., both of which are owned by Sidney
Ackerman, President. The principal amount of the loans from 1216748 Ontario Inc.
and  1217576  Ontario  Inc. are $28,096 and $91,270, respectively. The mortgages
are  secured  by  land  and buildings and bear interest at 9% per annum and were
paid  in  full  in  February  2005.

     The  Company  currently  has available credit facilities up to a maximum of
$3,328,000,  which  bear  interest at  the bank's prime rate plus 4%. The credit
facilities are secured by general assignments of book debts, pledge of inventory
under  Section  427  of  the  Bank  Act  of  Canada, general security agreements
providing  a  first floating charge over all assets, guarantees and postponement
of  claims  to  a  maximum  of $1,040,000 from the Company and its subsidiaries,
guarantees  from  affiliated  companies  up  to  $2,787,000,  assignment of life
insurance  of  $1,248,000  on  the  life of a key officer and assignment of fire
insurance.  Sidney  Ackerman has a personal guarantee in the amount of $832,000.

     Information  regarding  Certain  Transaction  will appear under the caption
"Certain Transaction" in the Information Statement and is incorporated herein by
reference.

Item  13.     EXHIBITS

         (a)  Exhibits
              --------

     3.1     Articles  of  Incorporation  of  the  Registrant(1)
     3.2     By-laws  of  Registrant(1)
     4.1     Form  of  Underwriters'  Warrant(3)
     4.2     Form  of  Warrant  Agreement(1)
     4.3     Specimen  Common  Stock  Certificate(3)
     4.4     Specimen  Redeemable  Common  Stock  Purchase
             Warrant  Certificate(4)
     10.2    1998  Stock  Option  Plan(3)
     10.4    Form  of  Employment  Agreement  with  Sidney  Ackerman(3)
     10.5    Form  of  Employment  Agreement  with  Alan  Fine(3)
     21      List  of  Subsidiaries  of  Registrant*

31.1 Certification  of  Principal  Executive  Officer  pursuant  to  Rule 13a-14
     and  Rule  15d-14(a),  promulgated under the Securities and Exchange Act of
     1934, as amended
31.2 Certification  of  Principal  Financial  Officer  pursuant  to  Rule 13a-14
     and  Rule  15d-14(a),  promulgated under the Securities and Exchange Act of
     1934, as amended
32.1 Certification  pursuant  to  18  U.S.C.  Section  1350, as adopted pursuant
     to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer)
32.2 Certification  pursuant  to  18  U.S.C.  Section  1350, as adopted pursuant
     to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer)

     ----------------
     *  Previously  filed.
     *



                                     - 25 -
<PAGE>
     (1)  Incorporated  by  reference  from  registrant's  Registration
          Statement on Form SB-2, filed on January 22, 1998.

     (2)  Incorporated  by  reference  from  registrant's  Registration
          Statement on Form SB-2, Amendment No. 1, filed on April 23, 1998.

     (3)  Incorporated  by  reference  from  registrant's  Registration
          Statement on Form SB-2, Amendment No. 2, filed on May 28, 1998.

     (4)  Incorporated  by  reference  from  registrant's  Registration
          Statement on Form SB-2, Amendment No. 3, filed on June 11, 1998.


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

     Audit  Fees.  The  aggregate  fees billed by our auditors, for professional
services rendered for the audit of our annual financial statements for the years
ended  December  31,  2004  and  2003,  and  for  the  reviews  of the financial
statements  included  in our Quarterly Reports on Form 10-QSB during that fiscal
year were $ 79,598, and $ 77,858, respectively.

     Audit  Related  Fees.  We  incurred  fees  to  auditors of $ 6,156and $Nil,
respectively,  for audit related fees during the fiscal years ended December 31,
2004 and 2003.

     Tax  Fees.  We incurred fees to auditors of $ Nil and $ Nil , respectively,
for  tax  compliance,  tax  advice and tax compliance services during the fiscal
years ended December 31, 2004 and 2003.

     The  Audit  Committee  has  considered  whether  the provision of non-audit
services is compatible with maintaining the principal accountant's independence.



                                     - 26 -
<PAGE>
                                   SIGNATURES

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

                                  ROSEDALE  DECORATIVE  PRODUCTS  LTD.


                                       By/s/  SIDNEY  ACKERMAN
                                         ---------------------
                                       President and Director

                                       Date: January 25, 2006

     Pursuant  to  the requirements of the Securities Exchange Act of 1934, this
report  has  been signed below by the following persons in the capacities and on
the  dates  indicated.


NAME                              POSITION                          DATE
----                              --------                          ----

/s/ SIDNEY  ACKERMAN       President and Director               January 25, 2006
---------------------
Sidney  Ackerman

/s/ NORMAN G. MAXWELL      Director, Chief Financial Officer,
------------------------   Principal Accounting Officer         January 25, 2006
Norman  G.  Maxwell

/s/ KEN PAGE               Director                             January 25, 2006
--------------
Ken  Page

/s/ JANET HENDRY           Director                             January 25, 2006
------------------





                                     - 27 -
<PAGE>
                      ROSEDALE DECORATIVE PRODUCTS LIMITED

                        CONSOLIDATED FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2004 AND 2003

                                  TOGETHER WITH
                         REPORT OF INDEPENDENT AUDITORS

                        (Amounts expressed in US dollars)






                                    CONTENTS

Report of Independent Registered Public Accounting Firm                    1

Consolidated Balance Sheets                                                2

Consolidated Statements of Operations and Comprehensive Loss               3

Consolidated Statements of Changes in Stockholders' Equity                 4

Consolidated Statements of Cash Flows                                      5

Notes to Consolidated Financial Statements                            6 - 20



<PAGE>





                REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM



To the Board of Directors and Stockholders of
Rosedale Decorative Products Limited


     We have audited the  accompanying  consolidated  balance sheets of Rosedale
Decorative Products Limited (incorporated in Canada) as at December 31, 2004 and
2003 and the related  consolidated  statements of operations  and  comprehensive
loss,  changes in stockholders'  equity and cash flows for the years then ended.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audit.

     We  conducted  our audit in  accordance  with the  standards  of the Public
Company Accounting Oversight Board (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.  We believe our audit
provides a reasonable basis for our opinion.

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly,  in all material  respects,  the financial  position of Rosedale
Decorative Products Limited, as at December 31, 2004 and 2003 and the results of
its operations and comprehensive loss and cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.





                                    /s/ SF PARTNERSHIP, LLP
                                    -----------------------
                                    SF PARTNERSHIP, LLP
Toronto, Canada                     CHARTERED ACCOUNTANTS


March 25, 2005



                                       F-1
<PAGE>
ROSEDALE DECORATIVE PRODUCTS LIMITED
Consolidated Balance Sheets December 31,
2004 and 2003 (Amounts expressed in US dollars)

<TABLE>
<CAPTION>
                                                                                             2004             2003
                                     ASSETS
Current
<S>                                                                              <C>               <C>
    Cash                                                                         $        773,493  $     1,312,534
    Accounts receivable (note 2)                                                        1,253,990        1,399,731
    Inventories (note 3)                                                                3,343,675        3,565,498
    Prepaid and sundry assets                                                              63,707          240,150
    Income taxes recoverable                                                               10,151                -
    Mortgages receivable (note 4)                                                         119,367          380,625
-----------------------------------------------------------------------------------------------------------------------------------


Total Current Assets                                                                    5,564,383        6,898,538

Advances to Related Party (note 5)                                                         39,608           21,154

Equipment (note 6)                                                                      2,271,983        2,390,858
-----------------------------------------------------------------------------------------------------------------------------------


Total Assets                                                                     $      7,875,974  $     9,310,550
-----------------------------------------------------------------------------------------------------------------------------------

                                   LIABILITIES
Current
    Bank indebtedness (note 7)                                                   $      3,452,630  $     3,676,960
    Accounts payable                                                                    3,205,033        2,302,407
-----------------------------------------------------------------------------------------------------------------------------------


Total Current Liabilities                                                               6,657,663        5,979,367

Deferred Income Taxes (note 8)                                                             10,801          187,373
-----------------------------------------------------------------------------------------------------------------------------------


Total Liabilities                                                                       6,668,464        6,166,740
-----------------------------------------------------------------------------------------------------------------------------------


Commitments and Contingencies (note 13)
                              STOCKHOLDERS' EQUITY

Capital Stock (note 9)                                                                  5,029,282        5,029,282

Additional Paid-In Capital                                                                142,314          142,314

Accumulated Other Comprehensive Loss                                                      344,835          288,142

Accumulated Deficit                                                                    (4,308,921)      (2,315,928)
-----------------------------------------------------------------------------------------------------------------------------------


Total Stockholders' Equity                                                              1,207,510        3,143,810
-----------------------------------------------------------------------------------------------------------------------------------


Total Liabilities and Stockholders' Equity                                       $      7,875,974  $     9,310,550
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


APPROVED ON BEHALF OF THE BOARD


    ---------------------------           -----------------------
              Director                            Director




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



                                       F-2
<PAGE>
ROSEDALE DECORATIVE PRODUCTS LIMITED
Consolidated Statements of Operations and Comprehensive Loss
Years Ended December 31, 2004 and 2003
(Amounts expressed in US dollars)

<TABLE>
<CAPTION>

                                                                                             2004             2003

<S>                                                                                  <C>                  <C>
Sales                                                                            $      8,358,884     $ 12,263,554

Cost of Sales                                                                           5,674,538        8,050,123
-----------------------------------------------------------------------------------------------------------------------------------

Gross Profit                                                                            2,684,346        4,213,431
-----------------------------------------------------------------------------------------------------------------------------------

Expenses
    Selling and delivery                                                                1,883,286        2,071,651
    General and administrative                                                          1,753,100        2,262,340
    Financial expense                                                                     204,857          234,538
    Design studio                                                                         148,008          614,179
    Exchange (gain) loss                                                                   73,385          (88,359)
    Exchange gain on foreign exchange contracts                                           (76,371)        (206,712)
    Moving expenses                                                                       103,315             -
    Consulting and refinancing expenses                                                    62,921             -
    Amortization                                                                          701,541          825,800
-----------------------------------------------------------------------------------------------------------------------------------

                                                                                        4,854,042        5,713,437
-----------------------------------------------------------------------------------------------------------------------------------

Loss Before the Undernoted                                                             (2,169,696)      (1,500,006)

    Loss on sale of subsidiary                                                               -           1,323,715
-----------------------------------------------------------------------------------------------------------------------------------

Loss Before Income Taxes                                                               (2,169,696)      (2,823,721)
-----------------------------------------------------------------------------------------------------------------------------------

    Current income taxes                                                                     -                (879)
    Deferred income taxes                                                                (176,703)         171,336
-----------------------------------------------------------------------------------------------------------------------------------

                                                                                         (176,703)         170,457
-----------------------------------------------------------------------------------------------------------------------------------

Net Loss                                                                               (1,992,993)      (2,994,178)

Foreign Currency Translation Adjustment                                                    56,693          748,139
-----------------------------------------------------------------------------------------------------------------------------------

Comprehensive Loss                                                               $     (1,936,300)    $ (2,246,039)
-----------------------------------------------------------------------------------------------------------------------------------

Loss per weighted average number of
shares outstanding - basic and diluted                                           $          (0.72)    $      (1.09)
-----------------------------------------------------------------------------------------------------------------------------------

Weighted average number of shares
outstanding - basic and diluted                                                         2,755,214         2,755,331
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>



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


                                       F-3
<PAGE>
ROSEDALE DECORATIVE PRODUCTS LIMITED
Consolidated Statements of Changes in Stockholders' Equity
Years Ended December 31, 2004 and 2003
(Amounts expressed in US dollars)


<TABLE>
<CAPTION>




                                                                         Accumulated    Accumulated
                                                         Additional            Other       Retained          Total
                                Number of     Capital       Paid In    Comprehensive       Earnings  Stockholders'
                                   Shares       Stock       Capital             Loss      (Deficit)         Equity
----------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>       <C>            <C>             <C>          <C>              <C>
Balance, January 1, 2003        2,755,514 $  5,029,355   $  142,314      $  (459,997) $   678,250      $  5,389,922

Repurchase of treasury stock         (300)         (73)        -                -            -                  (73)

Foreign exchange on translation        -          -            -             748,139         -              748,139

Net loss                               -          -            -                -      (2,994,178)       (2,994,178)
----------------------------------------------------------------------------------------------------------------------------------


Balance, December 31, 2003      2,755,214 $  5,029,282   $  142,314      $   288,142  $(2,315,928)     $  3,143,810
==================================================================================================================================

Balance, January 1, 2004        2,755,214 $  5,029,282   $  142,314      $   288,142  $(2,315,928)     $  3,143,810

Foreign exchange on translation      -            -            -              56,693         -               56,693

Net loss                             -            -            -                -      (1,992,993)       (1,992,993)
----------------------------------------------------------------------------------------------------------------------------------


Balance, December 31, 2004      2,755,214 $  5,029,282   $  142,314      $   344,835  $(4,308,921)     $  1,207,510
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


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



                                       F-4
<PAGE>
ROSEDALE DECORATIVE PRODUCTS LIMITED
Consolidated Statements of Cash Flows Years
Ended December 31, 2004 and 2003
(Amounts expressed in US dollars)

<TABLE>
<CAPTION>

                                                                                             2004             2003
Cash Flows from (Used In) Operating Activities
    Net loss                                                                     $     (1,992,993) $    (2,994,178)
----------------------------------------------------------------------------------------------------------------------------------

    Adjustments to reconcile net loss to net cash provided by operating
activities:
<S>                                                                                          <C>              <C>
      Amortization of equipment                                                           701,541          825,800
      Loss on sale of subsidiary                                                             -           1,323,715
      Net assets of subsidiary                                                               -          (1,652,274)
      Exchange (gain) on foreign exchange contracts                                        (76,371)       (206,712)
      Accounts receivable                                                                 145,741        2,573,871
      Inventory                                                                           221,823        2,320,963
      Prepaid expenses and sundry assets                                                  176,443           91,881
      Accounts payable and accrued charges                                                978,997       (2,069,124)
      Income taxes recoverable                                                            (10,151)          (4,145)
      Deferred income taxes                                                              (176,572)        (223,250)
----------------------------------------------------------------------------------------------------------------------------------


      Net cash used in operating activities                                               (31,542)         (13,453)
----------------------------------------------------------------------------------------------------------------------------------


Cash Flows from (Used In) Investing Activities
      Acquisition of equipment                                                           (582,666)      (1,457,413)
      Proceeds on disposal of equipment                                                      -           2,520,444
      Mortgages receivable                                                                261,258          (67,822)
      Proceeds from sale of subsidiary                                                       -             328,554
----------------------------------------------------------------------------------------------------------------------------------


      Net cash from (used in) investing activities                                       (321,408)       1,323,763
----------------------------------------------------------------------------------------------------------------------------------


Cash Flows from (Used In) Financing Activities
      Repayment of bank indebtedness                                                     (224,330)      (1,033,676)
      Repayment of advances from directors                                                   -            (919,423)
      Proceeds from (repayment of) advances from related party                            (18,454)          20,821
      Purchase of treasury stock                                                             -                 (73)
      Foreign currency exchange rate changes                                               56,693          748,139
----------------------------------------------------------------------------------------------------------------------------------


      Net cash used in financing activities                                              (186,091)      (1,184,212)
----------------------------------------------------------------------------------------------------------------------------------


Net (Decrease) Increase in Cash                                                          (539,041)         126,098

Cash - beginning of  year                                                               1,312,534        1,186,436
----------------------------------------------------------------------------------------------------------------------------------


Cash - end of year                                                               $        773,493  $     1,312,534
----------------------------------------------------------------------------------------------------------------------------------


Interest and Income Taxes Paid

During the year, the company had cash flows arising from interest and income
    taxes paid as follows:

    Interest paid                                                                $        214,651   $      201,616
----------------------------------------------------------------------------------------------------------------------------------

    Income taxes paid                                                            $           -      $         -
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


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



                                       F-5
<PAGE>
ROSEDALE DECORATIVE PRODUCTS LIMITED
Notes to Consolidated Financial Statements
December 31, 2004 and 2003 (Amounts
expressed in US dollars)





1. Summary of Significant Accounting Policies

The  accounting  policies  of the  Company  are in  accordance  with  accounting
principles generally accepted in the United States of America and their basis of
application  is consistent  with that of the previous  year.  Outlined below are
those policies considered particularly significant:

a)   Basis of Presentation

     The  consolidated  financial  statements  include the  accounts of Rosedale
     Decorative  Products Ltd. ("the Company") and its wholly owned  subsidiary,
     Ontario Paint and Wallpaper Limited ("Ontario").

     All material inter-company accounts and transactions have been eliminated.

b)   Principal Activities

     The  Company,  which  was  incorporated  in  Canada  on May  14,  1997,  is
     principally  engaged  in the  designing,  manufacturing  and  marketing  of
     wallpapers  and decorative  fabrics in Canada,  U.S. and Europe through its
     operating  subsidiary,  Ontario.  Ontario  was  incorporated  in  Canada on
     December 31, 1971.

c)   Cash and Cash Equivalents (Bank Indebtedness)

     Cash  and  cash  equivalents  (bank  indebtedness)  includes  cash on hand,
     amounts  due from and to banks,  and any other  highly  liquid  investments
     purchased  with a maturity of three months or less.  The  carrying  amounts
     approximate fair values because of the short maturity of those instruments.

d)   Other Financial Instruments

     The  carrying  amount of the  Companies'  accounts  receivable  and payable
     approximates fair value because of the short maturity of these instruments.

e)   Long-Term Financial Instruments

     The fair value of each of the Company' long-term  financial assets and debt
     instruments  is based on the amount of future  cash flows  associated  with
     each instrument discounted using an estimate of what the companies' current
     borrowing rate for similar instruments of comparable maturity would be.

f)   Inventory

     Inventory is valued at the lower of cost and net realizable  value. Cost is
     determined on the first-in, first-out basis.



                                       F-6
<PAGE>
ROSEDALE DECORATIVE PRODUCTS LIMITED
Notes to Consolidated Financial Statements
December 31, 2004 and 2003 (Amounts
expressed in US dollars)




1. Summary of Significant Accounting Policies (cont'd)

g)   Equipment and Amortization

     Equipment is stated at cost less  accumulated  amortization.  Amortization,
     based on the estimated useful lives of the assets, is provided as follows:

  Furniture and equipment                    20%   declining balance
  Computer equipment                         30%   declining balance
  Automobile                                 30%   declining balance
  Leasehold improvements                           straight-line over 10 years
  Cylinders and designs                            straight-line over 5 years

h)   Income Taxes

     The  Company  accounts  for  income  taxes  pursuant  to the  Statement  of
     Financial  Accounting  Standards  ("SFAS") No. 109,  "Accounting for Income
     Taxes".  Deferred tax assets and  liabilities  are recorded for differences
     between the financial statement and tax basis of the assets and liabilities
     that will result in taxable or  deductible  amounts in the future  based on
     enacted  tax  laws  and  rates  applicable  to the  periods  in  which  the
     differences are expected to affect taxable income. Valuation allowances are
     established  when  necessary  to reduce  deferred  tax assets to the amount
     expected to be  realized.  Income tax expense is recorded for the amount of
     income tax payable or refundable  for the period  increased or decreased by
     the change in deferred tax assets and liabilities during the period.

i)   Foreign Currency Translation

     The Company is a foreign private issuer and maintains its books and records
     in Canadian dollars (the functional currency). The financial statements are
     converted  to US dollars as the Company has elected to report in US dollars
     consistent with  Regulation S-X, Rule 3-20. The translation  method used is
     the current rate method  which is the method  mandated by SFAS No. 52 where
     the functional  currency is the foreign currency.  Under the current method
     all  assets  and   liabilities   are   translated   at  the  current  rate,
     stockholders'  equity  accounts  are  translated  at  historical  rates and
     revenues and expenses are translated at average rates for the year.

     Unrealised   foreign  exchange  amounts   resulting  from  translations  at
     different rates according to their nature are included in accumulated other
     comprehensive income.

     Realized  foreign currency  transaction  gains and losses are recognized in
     operations.



                                       F-7
<PAGE>
ROSEDALE DECORATIVE PRODUCTS LIMITED
Notes to Consolidated Financial Statements
December 31, 2004 and 2003 (Amounts
expressed in US dollars)



1. Summary of Significant Accounting Policies (cont'd)

j)   Earnings or Loss Per Share

     The Company accounts for earnings per share pursuant to SFAS No. 128, which
     requires  disclosure on the  financial  statements of "basic" and "diluted"
     earnings  (loss) per share.  Basic earnings (loss) per share is computed by
     dividing net income (loss) by the weighted  average number of common shares
     outstanding for the year.  Diluted earnings (loss) per share is computed by
     dividing net income (loss) by the weighted  average number of common shares
     outstanding  plus common stock  equivalents (if dilutive)  related to stock
     options and warrants for each year.  The stock options  discussed in Note 9
     could  potentially  dilute  earnings  per share in the  future but were not
     included in diluted  loss per share since they would be  anti-dilutive  for
     the periods presented.

k)   Revenue Recognition

     Sales  represent the invoiced value of goods  supplied to customers.  Sales
     are  recognized  upon the passage of title to the  customers,  which occurs
     upon delivery.

l)   Use of Estimates

     The  preparation  of financial  statements  in conformity  with  accounting
     principles  generally accepted in the United States requires  management to
     make estimates and assumptions  that affect the reported  amounts of assets
     and liabilities and the disclosure of contingent  assets and liabilities at
     the date of the financial  statements and the reported  amounts of revenues
     and expenses during the reporting period.  Actual results could differ from
     those  estimates.  These  estimates  are  reviewed  periodically,  and,  as
     adjustments  become necessary,  they are reported in earnings in the period
     in which they become known.

m)   Asset Impairments

     The  Company  evaluates  the  propriety  of  the  carrying  amounts  of its
     long-lived   assets  at  least   annually,   or  when  current  events  and
     circumstances  indicate a potential  impairment.  The Company believes that
     there are no significant impairments of the carrying amounts of such assets
     and no reduction in their estimated useful lives is warranted.

n)   Stock-Based Compensation

     In accordance with SFAS No. 123 "Accounting for Stock-Based  Compensation",
     any transactions the Company enters into in which goods or services are the
     consideration received for the issuance of equity instruments, the value of
     these  transactions  are measured and accounted for based on the fair value
     of the  equity  instrument  issued or the  value of the goods or  services,
     whichever  is more  reliably  measured.  The  services  are expensed in the
     periods during which the services are rendered.



                                       F-8
<PAGE>
ROSEDALE DECORATIVE PRODUCTS LIMITED
Notes to Consolidated Financial Statements
December 31, 2004 and 2003 (Amounts
expressed in US dollars)




1. Summary of Significant Accounting Policies (cont'd)

o)   Derivative Instruments and Hedging Activities

     The Company uses derivative financial instruments to reduce the exposure to
     adverse  fluctuations  in foreign  exchange  rates.  When entered into, the
     Company  formally  designates  and documents the financial  instrument as a
     hedge of a specific  underlying  exposure,  as well as the risk  management
     objectives and  strategies  for  undertaking  the hedge  transactions.  The
     Company  formally  assesses,  both at the inception and at least  quarterly
     thereafter,  whether  the  financial  instruments  that are used in hedging
     transactions  are effective at offsetting  changes in either the fair value
     or cash  flows of the  related  underlying  exposure.  Because  of the high
     degree of effectiveness  between the hedging  instrument and the underlying
     exposure  being  hedged,  fluctuations  in  the  value  of  the  derivative
     instruments  are  generally  offset by changes  in the fair  values or cash
     flows of the underlying  exposures being hedged. Any ineffective portion of
     a financial  instrument's change in fair value is immediately recognized in
     earnings.   All   of  the   Companies   derivatives   are   straightforward
     over-the-counter  instruments  with liquid  markets.  The Company  does not
     enter into derivative financial instruments for trading purposes.

     On January 1, 2001,  the Company  adopted  SFAS No. 133, as amended by SFAS
     No. 137 and SFAS No. 138. SFAS No. 133 was further amended by SFAS No. 149.
     SFAS No. 149, which did not have a material  impact effect on our financial
     statements,  became  effective  beginning  July 1, 2003.  These  statements
     require the  Company to  recognize  all  derivative  instruments  as either
     assets or liabilities  in our balance sheets at fair value.  The accounting
     for changes in the fair value of a derivative instrument depends on whether
     it has been designated and qualifies as part of a hedging relationship and,
     further,  on the type of  hedging  relationship.  At the  inception  of the
     hedging relationship,  the Company must designate the derivative instrument
     as a fair value hedge,  a cash flow hedge or a hedge of a net investment in
     a foreign  operation.  This  designation  is based upon the exposure  being
     hedged.

p)   Comprehensive Income

     The Company adopted SFAS No. 130,  "Reporting  Comprehensive  Income." SFAS
     No.  130   establishes   standards  for  reporting  and   presentation   of
     comprehensive  income  and  its  components  in a  full  set  of  financial
     statements.  Comprehensive income is presented in the statements of changes
     in  stockholders'  equity,  and consists of net loss and  unrealised  gains
     (loss)  on  available  for sale  marketable  securities;  foreign  currency
     translation  adjustments  and changes in market  value of future  contracts
     that qualify as a hedge;  and negative  equity  adjustments  recognized  in
     accordance  with  SFAS  No.  87.  SFAS No.  130  requires  only  additional
     disclosures  in the financial  statements and does not affect the Company's
     financial position or results of operations.



                                      F-9
<PAGE>
ROSEDALE DECORATIVE PRODUCTS LIMITED
Notes to Consolidated Financial Statements
December 31, 2004 and 2003 (Amounts
expressed in US dollars)



1. Summary of Significant Accounting Policies (cont'd)

q)   Concentration of Credit Risk

     SFAS No. 105,  "Disclosure of Information About Financial  Instruments with
     Off-Balance  Sheet Risk and Financial  Instruments with  Concentrations  of
     Credit Risk", requires disclosure of any significant off-balance sheet risk
     and  credit  risk  concentration.  The  Company  does not have  significant
     off-balance sheet risk.

     The  Company  provides  credit  to its  clients  in the  normal  course  of
     operations.  It carries out, on a continuing  basis,  credit  checks on its
     clients and maintains  provisions for contingent  credit losses which, once
     they materialize, are consistent with managements' forecasts.

     For other  debts,  the  Company  determines,  on a  continuing  basis,  the
     probable  losses and sets up a provision  for losses based on the estimated
     realizable value.

     Concentration  of  credit  risk  arises  when a group of  clients  having a
     similar characteristic such that their ability to meet their obligations is
     expected  to be  affected  similarly  by  changes in  economic  conditions.
     Approximately 13% of the Company's sales were made to one customer. (2003 -
     approximately 29% to two customers)

r)   Segment Reporting

     The company  has  adopted  SFAS No. 131 -  "Disclosures  About  Segments of
     Enterprise  and Related  Information".  Ontario is engaged in the marketing
     and  distribution of wallpaper and other similar  products.  These products
     are regarded as one segment by the  company.  As the  company's  reportable
     segment has been  organized  around its principal  products,  disclosure of
     revenue by product is not required.

s)   Recent Accounting Pronouncements

     In December 2004, the Financial  Accounting Standards Board ("FASB") issued
     SFAS No. 153, "Exchanges of Non-monetary Assets, an amendment of Accounting
     Principles  Board  ("APB")  Opinion  No.  29".  SFAS No. 153  replaces  the
     exception   from  fair  value   measurement  in  APB  Opinion  No.  29  for
     non-monetary   exchanges  of  similar  productive  assets  with  a  general
     exception from fair value measurement for exchanges of non-monetary  assets
     that  do  not  have  commercial  substance.  A  non-monetary  exchange  has
     commercial substance if the future cash flows of the entity are expected to
     change  significantly  as a result of the  exchange.  SFAS No. 153 is to be
     applied  prospectively,  and is effective for non-monetary  asset exchanges
     occurring in fiscal  periods  after the December  2004 issuance of SFAS No.
     153.  The  Company  does not believe the impact of adoption of SFAS No. 153
     will be  significant  to the overall  results of  operations  or  financial
     position.



                                       F-10
<PAGE>
ROSEDALE DECORATIVE PRODUCTS LIMITED
Notes to Consolidated Financial Statements
December 31, 2004 and 2003 (Amounts
expressed in US dollars)



1. Summary of Significant Accounting Policies (cont'd)

s)   Recent Accounting Pronouncements (cont'd)

     In December 2004, the FASB issued a revision to SFAS No. 123,  "Share Based
     Payment".  This  Statement  requires a public entity to measure the cost of
     employee services  received in exchange for an award of equity  instruments
     based on the grant date fair value of the award (with limited  exceptions).
     That cost will be  recognized  over the period during which the employee is
     required to provide  service in exchange  for the award  requisite  service
     period (usually the vesting period). No compensation cost is recognized for
     equity instruments for which employees do not render the requisite service.
     Employee   share   purchase   plans  will  not  result  in  recognition  of
     compensation cost if certain  conditions are met; those conditions are much
     the same as the related  conditions  in Statement  123.  This  Statement is
     effective for public entities that do not file as a small business  issuers
     as of the  beginning of the first interim or annual  reporting  period that
     begins after June 15, 2005.  This  Statement  applies to all awards granted
     after the required effective date and to awards modified,  repurchased,  or
     cancelled after that date. The cumulative effect of initially applying this
     Statement,  if any, is recognized as of the required  effective date and is
     not  expected  to have a  material  impact  on the  Company's  consolidated
     financial statements.


2.    Accounts Receivable

The activity for the allowance for doubtful accounts is as follows for the years
ended December 31, 2004 and 2003:

                                                   2004              2003

      Beginning balance                       $ 475,738        $  342,970
      (Recovery)/provision                     (394,549)          166,756
      Write-offs, net of recoveries              (8,577)          (33,988)
--------------------------------------------------------------------------------

      Ending balance                          $  72,612        $  475,738
--------------------------------------------------------------------------------

The  Company  carries  accounts  receivable  at  the  amounts  it  deems  to  be
collectible.   Accordingly,   the  Company  provides   allowances  for  accounts
receivable it deems to be  uncollectible  based on management's  best estimates.
Recoveries are recognized in the period they are received.  The ultimate  amount
of  accounts  receivable  that  become  uncollectible  could  differ  from those
estimated.


3.    Inventories
                                                      2004              2003

      Finished goods {net of accumulated
      obsolescence provision of $776,461
      (2003 - $534,177)}                          $3,343,675        $3,565,498
--------------------------------------------------------------------------------



                                       F-11
<PAGE>
ROSEDALE DECORATIVE PRODUCTS LIMITED
Notes to Consolidated Financial Statements
December 31, 2004 and 2003 (Amounts
expressed in US dollars)



4.   Mortgages Receivable

     The mortgages  receivable are due from two companies owned by a shareholder
     of the parent  company.  The mortgages  bear interest at 9%, are secured by
     second  collateral  mortgages over real property and are payable on demand.
     Subsequent to the year end, on February 9, 2005,  the mortgages  receivable
     were fully collected.


5.    Advances to Related Party

     The advances to 1369597  Ontario Inc, a company owned by a  shareholder  of
     the parent company,  are non-interest bearing and are expected to be repaid
     during 2005.


6.    Equipment

<TABLE>
<CAPTION>

                                                       2004                               2003
                                                Accumulated                        Accumulated
                                     Cost      Amortization             Cost      Amortization
--------------------------------------------------------------------------------------------------
<S>                                 <C>              <C>               <C>              <C>
      Furniture and equipment   $  486,444       $  383,359        $  425,684       $  334,686
      Computer equipment           494,985          411,579           444,900          351,440
      Automobile                    53,797           45,673            49,876           39,116
      Leasehold improvements       840,150          160,631           575,473          118,069
      Cylinders and designs      3,432,284        2,034,435         3,633,929        1,895,693
--------------------------------------------------------------------------------------------------
                                $5,307,660       $3,035,677        $5,129,862       $2,739,004
--------------------------------------------------------------------------------------------------
      Net carrying amount                        $2,271,983                         $2,390,858
                                                 ----------                          ----------
</TABLE>


7.    Bank Indebtedness

     The  Company  had  available  an  operating  line of credit to a maximum of
     $4,160,000  ($5,000,000  Canadian) of which  $3,411,000 (2003 - $3,538,000)
     was utilized at year end. The operating  line bears  interest at either the
     National Bank of Canada's  ("bank")  Canadian prime rate or the bank's U.S.
     base rate plus 2.00%.  The debt is secured by a general  assignment of book
     debts, a pledge of inventories under section 427 of the Bank Act, a general
     security agreement providing a first floating charge over all assets of the
     Company,  a  guarantee  and  postponement  of claim of up to a  maximum  of
     $1,040,000  ($1,250,000  Canadian) from the parent company  supported by an
     assignment of a $212,000 ($255,000 Canadian) cash deposit,  guarantees from
     related companies of up to a maximum of $707,000  ($850,000  Canadian),  an
     assignment  of life  insurance of $1,248,000  ($1,500,000  Canadian) on the
     life of a key  director,  personal  guarantee  from a key director of up to
     $416,000 ($500,000 Canadian),  postponement of claim from this director and
     an assignment of fire insurance.



                                       F-12
<PAGE>
ROSEDALE DECORATIVE PRODUCTS LIMITED
Notes to Consolidated Financial Statements
December 31, 2004 and 2003 (Amounts
expressed in US dollars)



7. Bank Indebtedness (cont'd)

     The  provisions  under  the  banking   agreement  require  the  Company  to
     periodically  meet  certain  restrictive  financial  covenants  and  margin
     requirements.  As at December 31, 2004,  the Company was not in  compliance
     with  certain  covenants  and  requirements,  some of which are the current
     ratio,  debt to tangible net worth ratio,  capital  expenditure  and margin
     requirements.

     The bank is aware that the Company is in breach of the covenants and margin
     requirements  and in March 2005 extended new terms to the Company (see note
     15).


8.    Income Taxes

     Deferred  income tax assets and  liabilities  are  recognized  on temporary
     differences between the financial and tax bases of the equipment in note 6.

     The provision for income taxes has been computed as follows:
<TABLE>
<CAPTION>

                                                                                      2004              2003

      Expected income tax recovery at the
        statutory rate of 36.12%
<S>                                                                                 <C>                  <C>
        (2003 - 33.12%)                                                         $  (783,694)         $(583,946)

      Tax effect of expenses that are not
        deductible for income tax purposes
        (net of other amounts deductible
        for tax purposes)                                                             4,718              8,169

      Tax effect of differences in the
        timing of deductibility of items
        for income tax purposes:

        Differences between amortization
          and capital cost allowance                                                 59,782            (32,342)

        Previously recognized non-capital tax
          losses                                                                       -               145,558

        Rate change                                                                  16,912            (26,098)

        Loss on disposal of subsidiary                                                 -                40,815

        Other                                                                           (15)              -
                                                                                -------------------------------

                                                                                   (702,297)          (447,844)
      Utilization of non-capital tax losses to
       offset current taxable income                                                   -                  -

      Non-capital tax losses available to
        offset future taxable income, as
        described below                                                             525,594            618,301
                                                                                -------------------------------

      Provision for income taxes                                                $  (176,703)         $ 170,457
                                                                                ===============================
</TABLE>



                                       F-13
<PAGE>
ROSEDALE DECORATIVE PRODUCTS LIMITED
Notes to Consolidated Financial Statements
December 31, 2004 and 2003 (Amounts
expressed in US dollars)



8. Income Taxes (cont'd)

      The components of deferred income taxes are as follows:

                                                  2004              2003

      Deferred income tax liabilities:
        Equipment                         $        381,863      $   502,817
      Deferred income tax assets:
        Unused financing fee deductions           (371,062)        (315,444)
        Deferred income tax losses               2,212,803        1,547,074
        Valuation allowance                     (2,212,803)      (1,547,074)
                                          ----------------------------------
      Deferred income taxes               $         10,801      $   187,373
                                          ==================================



     Due to the losses  incurred in the current  year,  the  deferred  tax asset
     resulting from the non-capital tax losses  available for  carryforward,  as
     recognized in the prior year, do not meet the criteria that the realization
     of such assets is "more likely than not".  The unused tax losses  available
     for carryforward expire as follows:

                              2006         $        572,817
                              2007                  301,983
                              2008                1,435,135
                              2009                  550,543
                              2010                1,810,640
                              2014                1,455,136
                                           ----------------

                                           $      6,126,254


9.    Capital Stock

      Authorized

An unlimited amount of common and preference shares

     The preference shares are issuable in series upon approval by the directors
     with  the  appropriate  designation,   rights,  privileges  and  conditions
     attaching to each share of such series.

                                                       2004              2003
Issued
    2,786,714  common shares (2003 - 2,786,714) $    5,061,956    $   5,061,956
    31,500 treasury shares   (2003 - 31,500)           (32,674)         (32,674)
                                                --------------------------------
                                                $    5,029,282    $   5,029,282
                                                ================================



                                      F-14
<PAGE>
ROSEDALE DECORATIVE PRODUCTS LIMITED
Notes to Consolidated Financial Statements
December 31, 2004 and 2003 (Amounts
expressed in US dollars)



9. Capital Stock (cont'd)

      The following transactions occurred during the period:

      a)    On May 8, 2000, the Company announced that it was implementing a
            repurchase program for up to 200,000 of its common shares. During
            2000, the Company re-purchased 22,400 of its common shares.

      b)    During 2001, the Company repurchased 8,800 of its common shares.

      c)    During 2003, the Company repurchased 300 of its common shares.

      d)    During 2003, the 1,265,000 warrants expired.

      Employee Stock Option Plan

     The Company has  adopted a Stock  Option Plan (the 1998 Plan),  pursuant to
     which 750,000 of common shares are reserved for issuance.

     The 1998 Plan is for a period  of ten  years.  Options  may be  granted  to
     officers,  directors,  consultants,  key  employees,  advisors  and similar
     parties who provide  their skills and  expertise  to the  company.  Options
     granted  under the 1998 Plan may be  exercisable  for up to ten years,  may
     require  vesting,  and shall be at an exercise price,  all as determined by
     the Board.  Options will be  non-transferable  except to an option holder's
     personal  holding  company or  registered  retirement  savings plan and are
     exercisable only by the participant during his or her lifetime.

     If a participant  ceases  affiliation  with the Company by reason of death,
     permanent  disability or retirement at or after age 70, the option  remains
     exercisable  for three  months  from such  occurrence  but not  beyond  the
     options  expiration date.  Other  termination  gives the participant  three
     months to exercise,  except for  termination  for cause,  which  results in
     immediate termination of the option.

     Options  granted under the 1998 Plan, by the directors of the  compensation
     committee or the board,  may be exercised  either with cash,  common shares
     having a fair market equal to the cash  exercise  price,  the  participants
     personal  recourse note, or with an assignment to the Company of sufficient
     proceeds from the sale of the common  shares  acquired upon exercise of the
     Options with an  authorization  to the broker or selling  agent to pay that
     amount to the Company, or any combination of the above.

     Options  under  the 1998  Plan must be  issued  within  ten years  from the
     effective date of the 1998 Plan.

     Any  unexercised  options that expire or that  terminate  upon an employees
     ceasing to be employed by the Company become  available  again for issuance
     under the 1998 Plan.



                                       F-15
<PAGE>
ROSEDALE DECORATIVE PRODUCTS LIMITED
Notes to Consolidated Financial Statements
December 31, 2004 and 2003 (Amounts
expressed in US dollars)



9. Capital Stock (cont'd)

      The 1998 Plan may be terminated or amended at any time by the board of
      directors, except that the number of shares of common shares reserved for
      issuance upon the exercise of options granted under the 1998 Plan may not
      be increased without the consent of the stockholders of the Company.

                                             Shares        Shares
                                          Available       Subject       Option
                                          for grant    to Options       Prices


      Outstanding at December 31, 2002      615,000       135,000    $   1.00
      Granted                                  -             -            -
      Exercised                                -             -            -
      Expired                                  -             -            -
      Cancelled                             135,000      (135,000)        -


      Outstanding at December 31, 2003      750,000          -       $   1.00
      Granted                                  -             -            -
      Exercised                                -             -            -
      Expired                                  -             -            -
      Cancelled                                -             -            -


      Outstanding at December 31, 2004      750,000          -       $   1.00


      During the fiscal year, no options were granted or exercised.

     The remaining  life of the stock option plan as of December 31, 2004 is 3.7
     years.

      Purchase Warrants

     During  1998,  Purchase  Warrants  ("Warrants")  were issued  pursuant to a
     Warrant  Agreement  between the Company and J.P.  Turner and Company.  Each
     Warrant  entitles  its  holders to  purchase,  during the four year  period
     commencing on June 18, 1999, one share of common stock at an exercise price
     of  $6.00  per  share,   subject  to  adjustment  in  accordance  with  the
     anti-dilution and other provision referred to below.

     The Warrants may be redeemed by the Company at any time commencing one year
     from June 18, 1998 (or earlier with the consent of the  representative) and
     prior to their expiration,  at a redemption price of $0.10 per Warrant,  on
     not less than 30 days prior written notice to the holders of such Warrants,
     provided  that the closing  bid price of the common  stock if traded on the
     Nasdaq  Small Cap Market,  or the last sale price of the common  stock,  if
     listed on the Nasdaq National Market or on a national exchange, is at least
     150% ($9.00 per share,  subject to adjustment) of the exercise price of the
     Warrants for a period of 10  consecutive  business days ending on the third
     day  prior to the date the  notice  of  redemption  is  given.  Holders  of
     Warrants  shall have  exercise  rights  until the close of the business day
     preceding the date fixed for redemption.



                                       F-16
<PAGE>
ROSEDALE DECORATIVE PRODUCTS LIMITED
Notes to Consolidated Financial Statements
December 31, 2004 and 2003 (Amounts
expressed in US dollars)



9. Capital Stock (cont'd)

     The  exercise  price and the number of shares of common  stock  purchasable
     upon the  exercise  of the  Warrants  are  subject to  adjustment  upon the
     occurrence of certain  events,  including  stock  dividends,  stock splits,
     combinations  or  classification  of the common stock.  The warrants do not
     confer upon holders any voting or any other rights of  shareholders  of the
     company.

     No Warrant will be  exercisable  unless at the time of exercise the Company
     has filed with the Commission a current prospectus covering the issuance of
     common stock  issuable upon the exercise of the Warrant and the issuance of
     shares has been  registered  or  qualified  or is deemed to be exempt  from
     registration  or  qualification  under the securities  laws of the state of
     residence of the holder of the Warrant.  The Company has  undertaken to use
     its best efforts to maintain a current prospectus  relating to the issuance
     of shares of common  stock  upon the  exercise  of the  Warrants  until the
     expiration of the Warrants,  subject to the terms of the Warrant Agreement.
     While it is the Company's intention to maintain a current prospectus, there
     is no assurance that it will be able to do so.

      These warrants expired in 2003.


10.   Related Party Transactions

The following table summarizes the Company's related party  transactions for the
year:

                                                      2004              2003
      Revenue
        Mortgage interest received from a
        company owned by a shareholder of
        the Company                                 $14,436          $31,680

      Expenses
        Rent paid to companies owned by
        a shareholder of the Company                110,659           87,406

        Insurance expense paid to a company
        owned by a shareholder of the Company
        for the life insurance policy which
        is used as collateral for the bank           29,205           27,117

These  transactions  are in the normal course of operations  and are measured at
the exchange amount, which is the amount of consideration established and agreed
to by the related parties.



                                       F-17
<PAGE>
ROSEDALE DECORATIVE PRODUCTS LIMITED
Notes to Consolidated Financial Statements
December 31, 2004 and 2003 (Amounts
expressed in US dollars)



11.   Segmented Information

      The breakdown of relevant financial information is as follows:

<TABLE>
<CAPTION>

                                                                            Consolidated
                           Domestic            Canada            Other             Total

      2004

<S>                         <C>              <C>                 <C>            <C>
      Assets             $ 1,543,359      $ 6,121,089         $ 211,526      $ 7,875,974
      Sales, net           1,646,705        6,486,488           225,691        8,358,884
      Net loss              (392,621)      (1,546,561)          (53,811)      (1,992,993)

      2003

      Assets             $   409,793      $ 8,031,639         $ 869,118      $ 9,310,550
      Sales, net           5,587,463        6,157,479           518,612       12,263,554
      Net earnings        (1,364,193)      (1,503,364)         (126,621)      (2,994,178)
</TABLE>

      Transactions with major customers and suppliers are as follows:

                                                2004              2003

      Sales                                   $1,084,715     $4,241,870
         % of total sales                          35%            35%
         Included in accounts receivable      $  112,985     $  325,756

      Purchases                               $1,837,038     $3,860,120
         % of total purchases                      63%            63%
         Included in accounts payable         $  655,155     $1,076,392


12.   Economic Dependence

     The Company is  economically  dependant  on Norwall  Group  Inc.,  its main
     supplier and manufacturer of wallpaper.  Approximately  24% (2003 - 32%) of
     the Company's purchases are made from this supplier.


13.   Commitments and Contingencies

     The Company has  guaranteed  the  indebtedness  of 1369597  Ontario Inc., a
     company owned by a shareholder of the Company by way of a general  security
     agreement  ranking behind the National Bank of Canada up to $1,113,000.  As
     at year end, the  indebtedness  of this company  amounted to  approximately
     $1,830,000.  These loans were made to purchase life insurance, a portion of
     which represents the key man life insurance  policies for which the Company
     is beneficiary.

     The Company has a standby letter of credit in favour of the Laurentian Bank
     in the amount of $197,000.



                                       F-18
<PAGE>
ROSEDALE DECORATIVE PRODUCTS LIMITED
Notes to Consolidated Financial Statements
December 31, 2004 and 2003 (Amounts
expressed in US dollars)



13. Commitments and Contingencies (cont'd)

      The Company is defending various legal actions, totaling approximately
      $250,000. Management and its legal counsel believe it is too early to
      assess the likelihood of success of the actions, however $33,000 has been
      accrued in the current year's consolidated financial statements in
      relation to these matters.

      The Company is committed to lease obligations for premises. Future minimum
      annual payments (exclusive of taxes, insurance and maintenance costs)
      under these leases are as follows:

                              2005            $        288,245
                              2006                     288,245
                              2007                     289,740
                              2008                     199,385
                              2009                     182,770
                                              ----------------

                                              $      1,248,385

      The lease on the warehouse expires November 29, 2009.

      The Company is committed to lease obligations for vehicles. Future minimum
annual payments under these leases are as follows:

                              2005            $         14,303
                              2006                      14,303
                              2007                      14,303
                              2008                       7,163
                                              ----------------

                                              $         50,072


14.   Financial Instruments

      Foreign Exchange Contracts

     As at December  31,  2004,  the Company had  outstanding  foreign  exchange
     contracts to sell U.S.  dollars to the  National  Bank of Canada and to buy
     British   pounds  from  the  National  Bank  of  Canada  to  hedge  against
     fluctuations  in foreign  currency.  The purpose of the  Company's  hedging
     activities is to protect it from the risk that the eventual dollar net cash
     inflows  resulting  from the sale  and  purchase  of  products  in  foreign
     currencies will not be adversely  affected by changes in exchange rates. It
     is the Company's policy to use derivative  financial  instruments to reduce
     foreign risks.  Fluctuations in the value of these hedging  instruments are
     offset by  fluctuations  in the  value of the  underlying  exposures  being
     hedged.  For the year ended  December 31, 2004,  the Company has identified
     that these contracts act as hedges against the anticipated  transactions to
     which they relate.  The related realized and unrealised gains or losses, if
     any, are reported in the statements of cash flows and operations.



                                       F-19
<PAGE>
ROSEDALE DECORATIVE PRODUCTS LIMITED
Notes to Consolidated Financial Statements
December 31, 2004 and 2003 (Amounts
expressed in US dollars)



15.   Subsequent Events

     In March 2005, the bank renewed the company's  credit facility (see note 7)
     subject to the following amendments:

     a)   The  authorized  limit of the operating  line of credit was reduced to
          $3,328,000 ($4,000,000 Canadian):

     b)   The interest rate has been increased to the bank's Canadian prime rate
          plus 4% or the bank's U.S. base rate plus 4%;

     c)   The  personal  guarantee  of a key  director  has  increased  to up to
          $832,000 ($1,000,000 Canadian):

     d)   The  guarantees  from  related  companies  have  increased  to  up  to
          $2,787,200 ($3,350,000 Canadian).



                                      F-20