<PAGE>

                    U.S. SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                  FORM 10-KSB

     (Mark One)

     [X]  ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
          OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
                                            -----------------

     [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
          EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD OF _________ TO
          _________.

     Commission File Number:  0-29205
                              -------


         Lighthouse Fast Ferry, Inc. (f/k/a Lighthouse Landings, Inc.)
        -------------------------------------------------------------
                (Name of small business issuer in its charter)


                       New Jersey                      22-3241823
          ------------------------------           -------------------
          State or other jurisdiction of           (I.R.S. Employer
          incorporation or organization            Identification No.)


       195 Fairfield Avenue, Suite 3C, West Caldwell, New Jersey  07006
       ----------------------------------------------------------------
                   (Address of principal executive offices)

     Issuer's telephone number: (973) 618-9036
     Securities registered under Section 12(b) of the Act:   None
                                                             ----

                 Securities registered under Section 12(g) of the Act:

                          Common Stock, $.01 Par Value
                          ----------------------------
                                (Title of Class)

Check whether the Issuer (1) 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 [ ]

Check here if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.  [ ]

Issuer's revenues for its most recent fiscal year: $4,018,323

As of April 11, 2001, there were 8,348,637 shares of the Registrant's $.01 par
value Common Stock ("Common Stock"), the only outstanding class of voting
securities, outstanding.  Based on the closing price of the Common Stock as
reported on the internet source www.cnbc.com on April 11, 2001, the aggregate
market value of Common Stock held by non-affiliates of the Registrant was
approximately $3,402,732.

Transitional Small Business Disclosure Format (check one):    Yes [ ]    No [X]


<PAGE>

                       Lighthouse Fast Ferry, Inc., Inc.
                                  FORM 10-KSB

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

History of the Company
----------------------

     Lighthouse Fast Ferry, Inc., (the "Company") is a New Jersey corporation
formed on May 12, 1993 under the name Drydock Cafe, Inc.  On September 21, 1994,
the Company changed its name to Lighthouse Landings, Inc.  On September 19,
2000, the Company changed its name to Lighthouse Fast Ferry, Inc.

     Through 1997 the Company's principal business was the redevelopment of a
marina facility on a 2  1/2 acre site located on the Shrewsbury River in
Highlands, New Jersey (the "Property"), which it acquired in September 1993.
The Property is a mostly vacant parcel of land with 463 linear feet of
waterfront and has on its premises a 4,000 square foot building on the water's
edge and a small office building.  The Property has preliminary zoning approval
for a restaurant facility, retail building, bait and tackle shop, 23 slip
marina, concrete parking area and deep water boat fueling pier.

     In September 1993 the Company purchased the Property at a Sheriff's sale
for $1,000,000. Currently, the Property is encumbered by a promissory note and
mortgage with the remaining principal balance of $28,575 at December 31, 2000.

     In December 1997, the Company purchased all outstanding shares of a
privately-owned company called The Cigar Box, Inc. ("Cigar Box"), a retail cigar
and accessories store, located in Ramsey, New Jersey.  The Cigar Box
stockholders received 75,000 shares of the Company's common stock.  The
acquisition was contemplated and consummated at a time when cigars were
increasingly popular and the Cigar Box was to be used to supply retail outlets
at ferry locations in New Jersey.  The Company had planned to operate additional
Cigar Box retail outlets, one of which would be included as part of a private
club at the Property's restaurant facility.

     In October 1998, the Company acquired 80% of the issued and outstanding
shares of the capital stock of Fast Ferry Holding Corporation, a New York
corporation, and its wholly owned subsidiaries, Fast Ferry I Corporation, Fast
Ferry II Corporation and New York Fast Ferry Services, Inc., all New York
corporations (collectively "NY Fast Ferry").  In July 2000, the Company entered
into an oral agreement with the holders of the remaining 20% of issued and
outstanding shares of Fast Ferry Holding Corporation for the purchase by the
Company of the remaining NY Fast Ferry shares for a combination of $28,753 in
cash and 102,271 restricted common shares of the Company. Management expects
that the parties will finalize and execute a written stock purchase agreement in
the second quarter of 2001.

     NY Fast Ferry owns two vessels, the M/V Finest and the M/V Bravest, and is
in the business of operating high-speed commuter ferry services in the greater
New York City harbor area.  The

                                       2

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Company issued 454,545 shares of its common stock to the NY Fast Ferry
shareholders. Of the 454,545 shares issued, 70,000 shares were subject to a put
under which two of the three selling shareholders can require the Company to
purchase an aggregate of 70,000 shares at a price of $5.00 per share. As of
December 31, 2000 there are 10,000 shares still subject to a put option.

     As a result of the acquisition of NY Fast Ferry, the Company's primary
business changed from the redevelopment of the Property to the operation of
existing fast ferry service and the development of new routes.  Accordingly, the
Company reevaluated all other business strategies and decided to sell all non-
core business assets and operations so it could focus solely on developing its
core business of ferry services.  In October 1999 the Company listed both the
Cigar Box and the Property for sale.  Efforts to sell the Cigar Box business
were unsuccessful.  The Company closed the Cigar Box on March 31, 2000.  On
March 29, 2001, the Company executed an agreement for the sale of the Property
for the sum of $1,150,000.

Current Business; Markets
-------------------------

     The Company is in the business of operating high-speed, passenger ferries.
At present, it owns two high-speed passenger ferries: the M/V Finest and the M/V
Bravest.  These ferries are 38-meter aluminum hull, low wake catamarans that
travel at speeds averaging 35 knots.  These vessels each have a capacity of 340
passengers and are equipped with TV monitors and a public announcement and
stereo system.  Both vessels also have a refreshment concession area onboard.

     The Company's primary passenger is the executive commuter.  The Company's
fast ferry service offers the executive commuter a fast, convenient, reliable,
clean and comfortable alternative to the crowded public transportation available
via train or bus, not to mention the congestion and stress faced by those
choosing to commute via automobile.  The market being served by NY Fast Ferry
includes the Rumson-Red Bank peninsula immediately south of Highlands, New
Jersey in Monmouth County which has an excellent market potential to support
present and expanded ferry service.  According to the New Jersey Department of
Transportation, there are approximately 22,000 Manhattan bound daily commuters
from Monmouth County, New Jersey alone.

     The Company's vessels travel 17 nautical miles across New York Harbor from
Highlands, New Jersey to Pier 11 in downtown Manhattan, New York.  Pier 11 is
located about two blocks from Wall Street.  The company's vessels also make a
stop at the East 34th Street Pier on the eastside of midtown Manhattan.  The
trip to Pier 11 is approximately 40 minutes with an additional 10 minutes to the
East 34th Street dock.  Each day, the vessels make three peak trips in the
morning and four peak return trips at the end of the business day, and make one
off-peak morning trip and one off-peak return trip in the evening four days a
week.  Passengers on these trips are primarily commuters, the majority of whom
purchase 40-trip tickets at the current cost of $450.

     The M/V Finest was under a bareboat charter arrangement until October 31,
1999 to the Massachusetts Steamship Authority, which operates a fast ferry
service in Massachusetts.  In January 2000 the M/V Finest underwent a scheduled
engine overhaul and is now used full-time for the NY Fast Ferry operation.  The
M/V Finest is used for the seven a.m. run to and from Manhattan at a second
Highlands site known as the "Clam Hut" site.  On December 15, 2000 the Company
executed a Parking License Agreement, Docking Permit and Lease of Dock and
Office Space (the "Clam Hut


                                       3
<PAGE>

Lease) for the Clam Hut site. Pursuant to the terms of the Clam Hut Lease, the
Company has the right to use 125 of the parking spaces at the Clam Hut site from
Monday to Friday until December 31, 2001 for a fee of $1,250 per week plus 5% of
gross revenues of all excursions/charters originating and/or terminating at the
landlord's pier. The Clam Hut Lease is renewable at the end of each period with
terms to be decided upon renewal and in keeping with the requirements of the
municipality. In addition, pursuant to the terms of the Clam Hut Lease, the
Company has the right to use the pier and to use the outbuilding at the foot of
the pier for $400 per month as a ticket booth. The terms of use for the pier and
outbuilding are coincident with the terms of the parking space license. The
Company began ferry service from the site on December 11, 2000.

     As of December 11, 2000, the Company offers regular, daily ferry service
from both the Clam Hut and the Aragon sites.  Each weekday morning, the Company
offers a 6:00 a.m. and an 8:00 a.m. departure from the Aragon site and a 6:55
a.m. departure from the Clam Hut site.  Each weekday afternoon, the Company
offers one return to the Clam Hut site at 5:00 p.m.  All of the remaining
afternoon runs dock at the Aragon site.

     NY Fast Ferry also runs excursions during non-commuter times and on
holidays and weekends when the vessel is not operating scheduled trips.  These
excursions include summer sunset cruises in New York Harbor, and fall foliage
tours up the Hudson River Valley.  The ferries also make trips to sporting
events including baseball games at Shea Stadium and football games at West
Point, and for special events such as 4th of July fireworks.  The Company also
rents its vessels for charters and private parties.

     The Property is not in operational condition for fast ferry service because
of the condition of the bulkhead, the surface of the parking area, and the
site's limited parking capacity.  Accordingly, NY Fast Ferry operates from a
leased facility known as the Aragon Marina ("Aragon") located on Willow Street,
Highlands, New Jersey.  The site is leased by NY Fast Ferry on a passenger trip
basis, with a remaining term of approximately two years.  Under this lease, the
property owner provides and maintains all land side facilities, including
providing parking attendants in the morning, snow plowing, lighting, docks,
shuttle bus to offsite lot, etc.  It is Aragon's obligation to provide 300
parking spaces, but only 250 are available, and there are payment reductions for
the lost parking spaces.  The monthly lease payment to Aragon has averaged
$35,600 over the last 12 months.

     The Company is actively seeking other sites in the New York, New Jersey and
Connecticut areas suitable for providing fast ferry service to commuters to
Manhattan, in order to maximize ferry capacity.

     In November 1999 the Company entered into a five-year lease agreement,
renewable for a further five-year term, with The Connecticut Light and Power
Authority (the "Landlord") for an approximate 3.6 acres waterfront site together
with a docking facility located at Atlantic Street and Washington Boulevard in
Stamford, Connecticut (the "Stamford Property") for the purpose of operating a
high-speed ferry service.  The lease commenced on November 1, 1999 with rent
payments commencing on March 1, 2000.  Rent for the first six months (March
through August) was based on an annual rate of $100,000 or $8,333 per month, and
for the seventh through the twenty-fourth month, rent is based on an annual rate
of $150,000 or $12,500 per month.  On August 7, 2000, the Company received a
notice from its Landlord terminating the lease.  The Company disputed the
Landlord's right to terminate the lease and filed legal action to enforce the
lease.  See Item 3, Legal

                                       4

<PAGE>

Proceedings, below.

     The Company has negotiated a settlement of the Legal Proceeding with the
Landlord, which provides for a new Lease (the "Landlord Lease") with Landlord
for the Stamford Property.  The Landlord Lease will be for a term of five (5)
years, with three (3) five year options.  The Landlord Lease will be subject to
an existing Contract of Sale for the entire 30 acre parcel (the "Parcel") of
which the Stamford Property is a small part.  Further, the Company has
negotiated a Lease (the "Contract Purchaser Lease") with the Landlord's contract
purchaser, which shall take effect immediately upon the sale of the Parcel by
Landlord to the contract purchaser.  The Contract Purchaser Lease will also be
for a term of five (5) years with three (3) five year options and provides that
the Company may utilize the Parcel for parking, a ferry terminal and to operate
its high speed ferry service.  The Contract Purchaser Lease will further provide
that upon development and construction of the Parcel the contract purchaser will
construct a parking garage and allocate to the Company for its exclusive use 500
parking spaces.  The Company is awaiting the Lease documents from both Landlord
and the contract purchaser and expects both Leases to be executed by May 1,
2001.

     The Company plans to operate high speed ferry service from the Stamford
Property to the LaGuardia Airport and to Manhattan stopping at the East 34th
Street ferry terminal and Pier 11 in Downtown Manhattan.

     For its Stamford to Manhattan operation, the Company plans to utilize a
newly designed aluminum hull catamaran, having a 275 passenger capacity and a 38
knot service speed.  In July 2000, the Company executed a contract and paid a
deposit of $287,500 to Derecktor Shipyards for the construction of the newly
designed vessel.  The contract permits the Company to expand the Contract for
two (2) additional vessels.  All of the design work has been completed and
construction of the first vessel will commence immediately upon the Company
obtaining a commitment for construction and permanent financing.  The Company is
presently in discussions with a number of lenders for financing of the vessels.
The Company hopes to obtain financing by May 1, 2001 so that the first vessel
can be completed and be ready for service early in 2002.

     Before service can begin from the Stamford Property, the Company must
obtain various governmental and environmental approvals and complete site
improvements.   Now that the Company has concluded the Legal Proceedings, it
will make application to various governmental entities for various permits and
approvals immediately upon the execution of the Landlord Lease.

     The Company believes that as a result of informal discussions with various
governmental officials that upon filing all of the necessary applications and
expert reports that the governmental approvals needed to conduct a ferry
operation from the Stamford Property will be forthcoming.  The Company expects
to complete the approval process by, the fourth quarter of 2001.

     The operation of ferry vessels requires U.S. Coast Guard (USCG)
certificates of inspection (See Government Regulations) and permits to dock.
New York City has recently expanded its facilities at Pier 11 located at the
South Street Seaport in the Wall Street area of lower Manhattan. This provides
more times for ferries to dock and disembark passengers.  In order to dock the
ferry vessels at any pier under the City's control, the Company must obtain a
permit and will then be given specific docking times around which it can
schedule its trips to and from Manhattan.  The Company

                                       5

<PAGE>

plans to apply for the docking permit immediately upon obtaining a vessel to
operate from Stamford. The Company believes it will not take more than 30 days
to obtain the permit once the vessel is acquired.

     After the requisite site improvements are completed and operations have
commenced from Stamford, the Company plans to construct a small terminal,
consisting of a totally enclosed waiting room, a ticket office and necessary
facilities, including rest rooms.

Competition
-----------

     The Company currently operates in the Monmouth County, New Jersey area.  In
that market its main competitor is Seastreak, a well-capitalized, wholly-owned
subsidiary of Sea Container Corporation, a United Kingdom based corporation.
This ferry service operates from a nearby site on the Shrewsbury River, the
former Connors Hotel property, and from Atlantic Highlands Yacht Harbor
approximately a mile west.  Seastreak has undertaken an improvement and
expansion program whereby it will increase parking capacity at its Highlands
facility, expand its off-peak and weekend schedules and construct a new
Highlands terminal.  Seastreak has substantially greater financial resources
through its parent corporation, Sea Container, and the use of those resources
could adversely impact the Company.  In addition, Seastreak has ordered two new
vessels, which are comparable to the Company's vessels, one of which is expected
to be completed in April  2001 and the other is expected to be completed three
months thereafter.

     Monmouth County has indicated it is contemplating an additional high speed
ferry terminal and operation in a town about seven miles northwest of the
Company's site in the Highlands.  Current information indicates that the
facility may be operational in 2002.

     The Company's competitors have longer and profitable operating histories,
and substantially greater financial resources than the Company.  The Company's
inability to fund the necessary site and facilities improvements, to purchase
additional ferries, or to take advantage of opportunities as they might arise,
could have a significant adverse impact on its results of operations.

Dependence on Suppliers
-----------------------

     Parking at docking sites is the Company's biggest issue.  The Company
currently is dependent on the lease with Aragon (on which approximately two
years remain).

                                       6

<PAGE>

Government Regulation
---------------------

     The operations of the ferry vessels is under the jurisdiction of the USCG.
The vessels are required to pass an inspection and must have valid certificates
of inspection from the USCG.  The USCG conducts an in-water inspection of the
vessel annually and an out-of-water inspection about every 18 months.  If a
violation or other problem is found, the Company is given a period within which
it can correct the problem, during which time the vessels are free to operate.
If the USCG deems it to be a safety hazard, the certificate of inspection is
suspended immediately and the ferry cannot be operated until the necessary
repairs/corrections are made.  The vessels' captains and mates must also have
required USCG licenses.  To date, the Company has an excellent safety record and
maintains the only boats in the Greater New York harbor that are American Bureau
of Shipping (ABS) classified.

     The Company also obtains permits from New York - New Jersey Port authority
for docking at city-owned ferry terminals.  Obtaining these permits has not been
a problem.

Employees
---------

     As of December 31, 2000 the Company had 24 full-time employees and 5 part-
time employees.  Fast Ferry Holding Corporation employs 19 of the 24 full-time
employees and 4 of the part-time employees.  The number of employees will
increase as additional ferries become operational and the Stamford Property
service becomes operational.

     Fast Ferry Holding Corporation has a collective bargaining agreement with
Local 333, United Marine Division of the International Longshoreman Association,
AFL-CIO, dated September 9, 1997.  The contract runs through September 15, 2001.
The contract contains a no-strike clause, specified pay rates, medical benefit
guarantee and union shop provision.  Pay increases of 3% are specified in the
year following any year in which a profit is made.

     Management believes its relationship with its union and non-union employees
is good.

ITEM 2.  DESCRIPTION OF PROPERTY

     The Property, located on the Shrewsbury River in Highlands, New Jersey,
which the Company acquired in September 1993, is a mostly vacant parcel of land
with 463 linear feet of waterfront and has on its premises, a 4,000 square foot
vacant building on the water's edge and a small office building.  The Company
has preliminary zoning approval for a restaurant facility, retail building, bait
and tackle shop, a 23 slip marina, a concrete parking area and deep water boat
fueling capacity.

     The Property is subject to a mortgage lien related to a note payable to
Ashley North Fairfield, Inc. ("ANF Note").  The current outstanding principal
balance of the ANF Note is $28,575 with an annual interest rate of 18%.  The
Company made monthly principal and interest payments in the amount of $10,000
through December 1999, and made payments of $15,000 through May 10, 2000.  Prior
to June 10, 2000, the original due date, the Company renegotiated the terms of
the note, such that the Company will make interest only payments on the balance
until a final payment is made on or


                                       7

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before April 30, 2001. To date, the Company is current in its obligation. The
Property is also subject to real estate tax liens due to the non-payment of
property taxes.

     The total sum due and outstanding on all tax liens as of December 31, 2000
was approximately $447,843.  This amount includes principal and interest.  The
lien holder cannot proceed with foreclosure for a period of two years after the
purchase of the liens.  After the two year period, a foreclosure complaint can
be filed, which would afford the Company an approximate three to six month
period to satisfy the liens.  As of this date, foreclosure papers have not been
filed, nor has there been a threat of foreclosure.

     On March 29, 2001 the Company executed a contract for the sale of the
Shrewsbury Property for the sum of $1,150,000.  The closing is to be on or
before June 15, 2001, subject to the purchaser obtaining environmental and
operational use permits.

     The Cigar Box in Ramsey, New Jersey was located in a strip mall complex.
The Cigar Box, Inc. had approximately 1  1/2 years remaining on the lease, for
approximately 1,500 square feet at $2,000 per month. The Company surrendered the
premises to the Landlord in March  2000.  By virtue of the surrender of the
premises to the Landlord, the Company has no further liability for lease
payments on the premises, and the Landlord has not sought further payments from
the Company.

Corporate Offices
-----------------

     The Company's corporate offices are located at 195 Fairfield Avenue, Suite
3C, West Caldwell, New Jersey 07006, phone number 973-618-9036, and are being
occupied by the Company under a sublease agreement with Anthony Colasanti, a
director of the Company, at a cost of $2,750 per month.  For the six months
prior to March 1, 2000, the Company leased smaller office space in Summit, New
Jersey, with fewer amenities, at a base cost of $2,038 per month.

ITEM 3.  LEGAL PROCEEDINGS

     On November 25, 1997 New York Fast Ferry Services, Inc. ("NY Fast Ferry")
filed suit, in the Supreme Court of the State and County of New York, against
the City of New York (the "City") alleging, among other things, breach of
agreement by the City for a lease of a ferry franchise agreement (the
"Agreement").

     In September 1993, based on NY Fast Ferry's response to the City's Request
for Proposal ("RFP"), NY Fast Ferry was awarded the ferry route contemplated in
the RFP.  As part of the RFP process, the City solicited NY Fast Ferry to spend
approximately $12,000,000 to build two ferries to serve the route.  The City
provided data to NY Fast Ferry related to the economic viability of the service.
Continuation of the fundamental premises in the data was necessary for the
service to be economical for NY Fast Ferry.  The Agreement between NY Fast Ferry
and the City stated that the City intended to construct landing and terminal
facilities at one end of the route, and to make improvements to the terminals at
the other end of the route.  The City also agreed to use its "best efforts" to
provide connecting transit links to one of the terminals on the route.

     NY Fast Ferry claims that the City, for the most part, has not made the
improvements on the


                                       8

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terminals. NY Fast Ferry also claims that the City has breached its duty under
the Agreement to act in good faith, and instead, has acted in a manner to
undermine or destroy NY Fast Ferry's business. NY Fast Ferry is seeking
$4,000,000 in compensatory damages or, alternatively, rescission of the
Agreement. The proceeds, if any, of the suit are pledged 50% to the original
shareholders of NY Fast Ferry and 50% to debis Financial Services, Inc. as a
pledge of collateral against amounts owing to them pursuant to a note payable.

     On June 30, 2000, D. Weckstein & Co., Inc. ("Weckstein") filed suit against
the Company in the Supreme Court of the State of New York.  The Complaint
alleges that the Company owes Weckstein $360,000 for services rendered by
Weckstein in connection with the Company's purchase of The Cigar Box, pursuant
to a letter agreement between Weckstein and the Company.  In the alternative, if
the Court finds that Weckstein is not entitled to damages for breach of the
letter agreement, Weckstein seeks an award in quantum meruit for services
rendered.  Weckstein also seeks an award of its costs and disbursements.

     On July 28, 2000, the Company filed an Answer, denying that the Company
owes Weckstein damages for breach of contract or in quantum meruit; raising
several defenses, including that Weckstein failed to perform its obligations
under the letter agreement; and seeking dismissal of the Complaint and an award
of the Company's attorney's fees, costs and further relief that the Court deems
just and equitable.

     On July 28, 2000, the Company filed a Notice of Removal, and the case has
been removed from the Supreme Court of the State of New York to the United
States District Court for the Southern District of New York, based on the
diversity jurisdiction of the Federal Court.

     On August 3, 2000, the Company received a notice from a subsidiary of The
Connecticut Light & Power Co. (the "Landlord"), terminating its lease for the
property that is the proposed site for the Company's Stamford, Connecticut ferry
terminal.  The Landlord based the termination of the lease on the failure of the
Company to get certain necessary permits for its use of the site.  The Company
disputes the Landlord's right to terminate the lease.

     The Company has negotiated a settlement of the Legal Proceeding with the
Landlord, which provides for a new Lease (the "Landlord Lease") with Landlord
for the Stamford Property.  The Landlord Lease will be for a term of five (5)
years, with three (3) five year options.  The Landlord Lease will be subject to
an existing Contract of Sale for the entire 30 acre parcel (the "Parcel") of
which the Stamford Property is a small part.  Further, the Company has
negotiated a Lease (the "Contract Purchaser Lease") with the Landlord's contract
purchaser, which shall take effect immediately upon the sale of the Parcel by
Landlord to the contract purchaser.  The Contract Purchaser Lease will also be
for a term of five (5) years with three (3) five year options and provides that
the Company may utilize the Parcel for parking, a ferry terminal and to operate
its high speed ferry service.  The Contract Purchaser Lease will further provide
that upon development and construction of the Parcel the contract purchaser will
construct a parking garage and allocate to the Company for its exclusive use 500
parking spaces.  The Company is awaiting the Lease documents from both Landlord
and the contract purchaser and expects both Leases to be executed by May 1,
2001.


                                       9

<PAGE>

                                    PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
         MATTERS

Market Information
------------------

     The Company's Common Stock is traded on the NASD Over-the-Counter Bulletin
Board under the symbol LHFF, except that from 2000 to March 2001, the Common
Stock was listed on the Pink Sheets. The following table sets forth the high and
low bid prices of the Company's common stock during the periods indicated as
reported by the internet source www.cnbc.com.

           Calendar         High Bid Price      Low Bid Price
         -----------        ---------------     -------------
2000     4th Quarter          $     2.250        $      1.75
         3rd Quarter                2.950               1.70
         2nd Quarter                 3.00               1.25
         1st Quarter                3.062               0.50

1999     4th Quarter          $      3.50        $      1.50
         3rd Quarter                 5.3125             1.625
         2nd Quarter                 4.00               1.50
         1st Quarter                 4.75               2.00

     The closing bid price of the Common Stock as reported on April 11, 2001,
was $0.90 per share.

Holders
-------

     As of April 11, 2000, there were 127 holders of the Company's Common Stock,
who collectively held 8,348,637 issued and outstanding shares.

                                       10

<PAGE>

Dividends
---------

     The Company did not declare or pay cash or other dividends on its Common
Stock during the last two fiscal years.  The Company has no plans to pay any
dividends, although it may do so if its financial position changes.

Recent Sales of Unregistered Securities.
---------------------------------------

     In April 1998 the Company issued 30,000 shares of its common stock to
Robert Corey and Oscar Perez for $3.25 per share in a transaction exempt under
Section 4(2) of the Act.  No commissions or finder's fees were paid on the
transaction.

     In October 1998 the Company issued an aggregate of 454,545 shares of its
common stock to the three shareholders of Fast Ferry Holding Corp. (John Koenig,
Paul Derecktor, and John Davis) in exchange for 80% of the outstanding shares of
Fast Ferry Holding Corp. in a transaction exempt under Section 4(2) of the Act.
No commissions or finder's fees were paid on the transaction.

     In October 1998 the Company granted one of its noteholders (debis Financial
Services, Inc.), as part of refinancing negotiations, warrants to purchase
200,000 shares of its common stock exercisable at $2.60 per share until March
16, 2004.  The transaction was exempt under Section 4(2) of the Act.  No
commissions or finder's fees were paid on the transaction.

     In October 1998 the Company granted an option to purchase 10,000 shares of
common stock to John Koenig.  The option was exercisable at $2.53 per share
until October 6, 2001.  The transaction was exempt under Section 4(2) of the
Act.  No commissions or finder's fees were paid on the transaction.  Those
options were cancelled.

     In June 1999, the Company entered into a loan agreement with Ashley North,
Inc., and in connection with that loan, issued a promissory note and 25,000
shares of its common stock in June 1999 and an additional 25,000 shares in
December 1999.  The transaction was exempt under Section 4(2) of the Act.  No
commissions or finder's fees were paid on the transaction.

     In June 1999, the Company issued 100,000 shares of its common stock to
Anthony F. Cappaze, an accredited investor, for $50,000.  The transaction was
exempt under Section 4(2) of the Act.

     In July 1999, the Company issued a $200,000 promissory note, and warrants
to purchase 200,000 shares of common stock at $1.00 per share exercisable for
three years, for a $200,000 investment by Joseph Giamanco, an accredited
investor.  The note is convertible to common stock at the option of the holder.
The transaction was exempt under Section 4(2) of the Act.  No commissions or
finder's fees were paid on the transaction.

     In September 1999, a consultant (Raymond Wright) purchased 50,000 shares of
common stock at a price of $0.10 per share in a transaction exempt under Section
4(2) of the Act.  No commissions or finder's fees were paid on the transaction.

     In October 1999, the Company granted an option to purchase 20,000 shares of
common stock to John Koenig, as part of his employment agreement.  The option is
excisable at $1.50 per share

                                       11

<PAGE>

until October 6, 2001. The transaction was exempt under Section 4(2) of the Act.
No commissions or finder's fees were paid on the transaction.

     In October 1999, the Company issued, as a bonus to an employee (Judi
Herkloz), warrants to purchase 5,000 shares of common stock at $1.00 per share,
exercisable for one year.

     In October 1999, the Company issued an aggregate of 1,250,000 shares to
Michael Lauer and two companies controlled by that investor (Lancer Offshore and
the Viator Fund, Ltd.), all of them accredited investors, for gross proceeds of
$1,250,000 or $1.00 per share.  The Viator Fund also received warrants to
purchase an aggregate of 750,000 shares of common stock exercisable at $1.25 per
share until October 31, 2002.  A finder's fee was paid to Hermitage Corp on this
portion of the offering in the amount of $125,000 and warrants to acquire 75,000
shares of common stock exercisable at $1.25 per share for five years.

     The Company also issued 150,000 shares of common stock for gross  proceeds
of $150,000. The investors, all accredited, also received warrants to purchase
an aggregate of 150,000 shares of common stock, exercisable at $1.25 per share
for one year.  Aggregate commissions of $15,000 were paid on this portion of the
offering.  The offering was conducted in reliance on Section 4(2) of the Act and
Rule 506 promulgated thereunder.  The month of the issuance, the investors'
names, and the shares issued are as follows:

     Stock issued in October 1999:

                                       Number of Shares
              Name                       and Warrants
              -----                    ----------------

              Joseph Roselle                 50,000

              Anthony R. Mautone             15,000

              Christopher Colasanti          15,000

              Michael Hunt                   15,000

              Vincent Bonomo                  7,500

              Catherine Bonomo                7,500

                                       12

<PAGE>

     Stock issued in November 1999:


                                       Number of Shares
              Name                       and Warrants
              ----                     ----------------

              Dennis Mautone                 15,000

              Joseph Capozza                 12,500

              Daniel Coiro                   12,500


     In January 2000, the Company sold 97,500 shares of common stock at $1.00
per share, less a finder's fee of $8,500, and an equal number of warrants good
for purchasing shares of common stock for $1.25 per share, exercisable for one
year, to the following accredited investors:

                                       Number of Shares
              Name                       and Warrants
              ----                     ----------------

              Joseph Pontoriero              25,000

              Anthony R. Mautone             15,000

              Joseph Capozza                 25,000

              Daniel Coiro                   25,000

              Andrew Scott                    7,500


     The offering was conducted in reliance on Section 4(2) of the Act and Rule
506.  No commissions or finder's fees were paid on the transactions.

     In February 2000, the Company sold 50,000 shares of common stock at $1.00
per share, and an equal number of warrants good for purchasing shares of common
stock at $1.25 per share, exercisable for one year, to the following accredited
investors:

                                                   Number of Shares
         Name                                        and Warrants
         ----                                      ----------------

         Arthur Anastasia and David Del Monaco           10,000

         Trebor Trading & Investment Limited             25,000

         Andrew Scott                                     5,000

         John Gluszak                                    10,000


     The offering was conducted in reliance on Section 4(2) of the Act and Rule
506.

                                       13

<PAGE>

     In March 2000, the Company sold 450,000 shares of common stock at $0.50 per
share, and an equal number of warrants good for purchasing shares of common
stock at $1.00 per share, exercisable for two years, to the following accredited
investors:

                                       Number of Shares
              Name                       and Warrants
              -----                    ----------------

              Joseph Roselle                150,000

              Joseph Giamanco               150,000

              Gary Herman                   150,000


     The offering was conducted in reliance on Section 4(2) of the Act and Rule
506.

     In March 2000, the Company sold 25,000 shares of common stock at $0.50 per
share, and an equal number of warrants good for purchasing common stock at $1.25
per share, exercisable for one year, to Trebor Trading & Investment Limited, an
accredited investor.  The offering was conducted in reliance on Section 4(2) of
the Act and Rule 506.

     In March 2000, the Company issued 10,000 shares of its common stock to Fred
Ferguson and 2,000 shares to William Mills, both accredited investors, at $1.00
per share, with an equal number of warrants at $1.00 per share, exercisable for
one year.  The offering was conducted in reliance on Section 4(2) of the Act and
Rule 506.

     In March 2000, the Company issued 125,000 shares of its common stock to The
Orbiter Fund and 125,000 shares to The Viator Fund, both accredited investors,
in consideration of a $1,000,000 convertible promissory notes to the Company.
Capital Research, Ltd., which acted as the finder in the transaction, received
25,000 shares.  The transaction was conducted in reliance on Section 4(2) of the
Act and Rule 506.

     In May 2000, the Company sold 29,000 shares of common stock, at $1.00 and
$1.25 per share, to the following accredited investors.  The offering was
conducted in reliance on Section 4(2) of the Act and Rule 506.

                                       Number of Shares
              Name                       and Warrants
              -----                    ----------------

              Christopher Karounos            7,000

              Jason Karounos                  7,000

              Peter Karounos                  7,000

              Dana Schwartz                   8,000
                                             ------
                                             29,000
                                             ======

     During June 2000, the Company issued 3,500 shares, having a fair market
value on the date of issuance of $4,375, to the following purchasers of the
Company's convertible promissory notes. Each convertible promissory note holder
was issued 125 shares of common stock for each $5,000

                                       14

<PAGE>

of indebtedness owed to the convertible promissory note holder at the date of
issuance. The offering was conducted in reliance on Section 4(2) of the Act and
Rule 506.


Name                           Principal Amount of Note    Number of Shares
----                           ------------------------    ----------------

Robert Powless                         $20,000                    500
Arthur Klowden                         $ 5,000                    125
Herman and Danny Vaden                 $20,000                    500
Steve Carcaterra                       $20,000                    500
Edward Holst                           $ 5,000                    125
Lowell Kupfer                          $10,000                    250
Frederick Keifer                       $20,000                    500
Herbert and Lois Rake                  $20,000                    500
Loren and Judith Hanson                $20,000                    500
                                                                 ----
                                                                 3500
                                                                 ====

     During June 2000, the Company issued 20,000 shares of common stock, having
a fair market value on the date of issuance of $40,000, to providers of
professional services.  The shares were issued as follows: 10,000 were issued to
Colasanti & Scott, L.L.P. for outside legal services and 10,000 were issued to
Patricia Beene, CPA, for financial services rendered.

     In June 2000, the Company sold 12,500 shares of common stock at $1.25 per
share, to the following accredited investor. The offering was conducted in
reliance on Section 4(2) of the Act and Rule 506.


              Name                     Number of Shares
              -----                    ----------------

              Dana Schwartz                 12,500
                                            ======

     In June 2000, the Company sold 12,500 shares of common stock at $1.00 per
share, to the following accredited investor.  The offering was conducted in
reliance on Section 4(2) of the Act and Rule 506.

              Name                     Number of Shares
              -----                    ----------------
              Felice Barone                 10,000
                                            ======

     In June 2000, the Company issued 100,000 shares of common stock, in
satisfaction of debt outstanding on the discontinued operation, to the following
accredited investor. The offering was conducted in reliance on Section 4(2) of
the Act and Rule 506.

                                       15

<PAGE>

              Name                     Number of Shares
              ----                     ----------------

              Nathan Plafsky               100,000
                                           =======


     During July 2000, the Company issued 2,000 shares, having a fair market
value on the date of issuance of $4,000, to the following purchasers of the
Company's convertible promissory notes and returned $5,000, in exchange for the
cancellation of 125 shares, to Edward Holst.  Each convertible promissory note
holder was issued 125 shares of common stock for each $5,000 of indebtedness
owed to the convertible promissory note holder at the date of issuance.  The
offering was conducted in reliance on Section 4(2) of the Act and Rule 506.


Name                           Principal Amount of Note    Number of Shares
----                           ------------------------    ----------------

Frederick Keifer                        $ 40,000                 1,000
Charles Consagra                        $ 40,000                 1,000
Edward Holst                             ($5,000)                 (125)
                                                                 -----
                                                                 1,875
                                                                 =====

     During July 2000, the Company issued 272,000 shares, having a fair market
value on the date of issuance of $544,000, to the following purchasers of the
Company's senior convertible promissory notes.  Joseph Giamanco received 75,000
shares in consideration for his modification and conversion of his $200,000
secured convertible promissory note of the Company to an unsecured convertible
promissory note of the Company and in consideration for his lending an
additional $100,000 to the Company.  The offering was conducted in reliance on
Section 4(2) of the Act and Rule 506.


       Name                    Principal Amount of Note    Number of Shares
       ----                    ------------------------    ----------------

       Joseph Giamanco                 $300,000                75,000
       Lancer Offshore, Inc.           $500,000               125,000
       Capital Research, Ltd.          $ 88,000                22,000
       James Kelly                     $100,000                25,000
       Joseph Roselle                  $100,000                25,000
                                                              -------
                                                              272,000
                                                              =======

     During August 2000, the Company sold 6,667 common shares and warrants to
acquire 6,667 common shares at $2.00 per share to Thomas Coleman for $10,000 and
sold 20,000 shares to Robert Garcia for $25,000.  Both investors were accredited
investors. The offering was conducted in reliance on Section 4(2) of the Act and
Rule 506.

                                       16

<PAGE>

     During August 2000, the Company issued 3,125 shares, having a fair market
value on the date of issuance of $4,375, to the following purchasers of the
Company's 10.5% convertible promissory notes.  The number of shares issued in
connection with the convertible promissory notes was negotiated on an individual
investor basis.  The offering was conducted in reliance on Section 4(2) of the
Act and Rule 506.

        Name                   Principal Amount of Note    Number of Shares
        ----                   ------------------------    ----------------

        Frederick Keifer                $40,000                 2,000
        Lowell Kupfer                   $10,000                   250
        Gary Von Bargen                 $15,000                   750
        Arthur Klowden                  $ 5,000                   125
                                                                -----
                                                                3,125
                                                                =====

     During September 2000, the Company issued 2,500 shares, having a fair
market value on the date of issuance of $5,000, to the following purchasers of
the Company's 10.5% convertible promissory notes.  Each convertible promissory
note holder was issued 125 shares of common stock for each $5,000 of
indebtedness owed to the convertible promissory note holder at the date of
issuance.  The number of shares issued in connection with the convertible
promissory notes was negotiated on an individual investor basis.  The offering
was conducted in reliance on Section 4(2) of the Act and Rule 506.


        Name                   Principal Amount of Note    Number of Shares
        ----                   ------------------------    ----------------
        Herman and Danny Vaden          $20,000                 1,000
        Herbert and Lois Rake           $20,000                   500
        Dorothy Bushnell                $10,000                   250
        Dorothy Bushnell                $10,000                   250
        John Head                       $20,000                   500
                                                                -----
                                                                2,500
                                                                =====

     During October 2000, the Company issued 138,750 shares, having a fair
market value on the date of issuance of $208,125, to the following purchasers of
the Company's senior convertible promissory notes.  The offering was conducted
in reliance on Section 4(2) of the Act and Rule 506.

                                       17

<PAGE>

        Name                     Principal Amount of Note    Number of Shares
        ----                     ------------------------    ----------------

        Capital Research, Ltd.           $ 55,000                 13,750
        Lancer Offshore, Inc.            $200,000                 50,000
        Lancer Partner, L.P.             $300,000                 75,000
                                                                 -------
                                                                 138,750
                                                                 =======


     During October of 2000, the Company issued 2,375 shares, having a fair
market value on the date of issuance of $3,126, to the following purchasers of
the Company's 10.5% convertible promissory notes.  Each convertible promissory
note holder was issued 125 shares of common stock for each $5,000 of
indebtedness owed to the convertible promissory note holder at the date of
issuance.  The offering was conducted in reliance on Section 4(2) of the Act and
Rule 506.




    Name                        Principal Amount of Note    Number of Shares
    ----                        ------------------------    ----------------

    Gary Von Bargen                      $ 5,000                   125
    Dorothy Bushnell                     $40,000                 1,000
    Frederick Keifer                     $40,000                 1,000
    Lynn J. or Raymond M. Flower         $10,000                   250
                                                                 -----
                                                                 2,375
                                                                 =====


     During November of 2000, the Company issued 36,500 shares, having a fair
market value on the date of issuance of $54,750, to the following purchasers of
the Company's 10.5% convertible promissory notes.  The number of shares issued
in connection with the convertible promissory notes was negotiated on an
individual investor basis.  The offering was conducted in reliance on Section
4(2) of the Act and Rule 506.


        Name                     Principal Amount of Note    Number of Shares
        ----                     ------------------------    ----------------

        Frederick Keifer                   $60,000                20,000
        Dorothy Bushnell                   $60,000                 1,500
        Dorothy Bushnell                   $20,000                15,000
                                                                  ------
                                                                  36,500
                                                                  ======

     In December 2000, the Company sold 16,000 shares to the following two
accredited investors at $1.25 per share.  The offering was conducted in reliance
on Section 4(2) of the Act.

                                       18

<PAGE>

              Name                        Number of Shares
              -----                       ----------------

              Michael and Eileen Graham         16,000
                                                ------
                                                16,000
                                                ======


     In all transactions above, the stock was issued for an amount that the
Board of Directors of the Company believed was a fair market value for
restricted securities of the Company.


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

The following discussion should be read in conjunction with the Consolidated
Financial Statements and the Notes thereto, along with the other information
contained elsewhere in this Form 10-KSB.

Comparison of  twelve month periods ended December 31, 2000 compared to the
twelve month period ended December 31, 1999 are as follows.

REVENUES - NYFF's operations consolidated revenues increased by 22.29% to
--------
$4,018,323 for the twelve months ended December 31, 2000, compared to $3,285,978
for the comparable period in 1999. The overall increase net of decreases are
explained as follows:

     PASSENGERS TICKET SALES - Passenger ticket sales increased by 52.18% to
$3,370,691 for the twelve months ended December 31, 2000, compared to $2,214,884
for the comparable period in 1999.

     The increase is the result of adding additional scheduled runs with the M/V
Finest. The M/V Finest was originally chartered to the Massachusetts Steamship
Authority. This charter terminated in October 1999.

     GALLEY SALES - Galley sales increased by 16.58% to $215,791 for the twelve
months ended December 31, 2000, compared to $185,101 for the comparable period
in 1999.

     The increase is primarily the result of adding the M/V Finest as a commuter
passenger ferry.

     CHARTER SALES - Charter sales decreased by 51.26% to $431,841 for the
twelve months ended December 31, 2000, compared to $885,993 for the comparable
period in 1999.

     The decrease is the result of terminating the charter business of the M/V
Finest and utilizing this vessel for commuter transportation.

COST OF SERVICES - NYFF's cost of services increased by 56.77% to $3,909,112 for
----------------
the twelve months ended December 31, 2000, compared to $2,493,582 for the
comparable period in 1999. The overall changes are detailed follows:

     SALARY and RELATED BENEFITS - Salary and related benefits increased by
58.73% to $732,709 for the twelve months ended December 31, 2000, compared to
$461,599 for the

                                       19
<PAGE>

comparable period in 1999.

     The increase is the result of adding a crew for additional scheduled runs
with the Motor Vessel (M/V) Finest. The M/V Finest was originally chartered to
the Massachusetts Steamship Authority. This charter terminated in October 1999.

     FUEL and OIL RELATED COSTS - Fuel and oil related costs increased by
139.51% to $680,183 for the twelve months ended December 31, 2000, compared to
$283,993 for the comparable period in 1999.

     The increase is attributable to an increase in the cost of fuel, an
increase in the scheduled runs and the operation of the M/V Finest.

     BOAT MAINTENANCE and RELATED SUPPLIES - Boat maintenance and related costs
increased by 91.58% to $472,001 for the twelve months ended December 31, 2000,
compared to $246,368 for the comparable period in 1999.

     The increase in Boat maintenance and related costs, which included a
scheduled engine overhaul and other unscheduled maintenance, is the result of an
increase in the scheduled runs and the operation of the M/V Finest.

     DOCKING and PARKING RELATED FEES - Docking and parking related fees
increased by 42.08% to $493,735 for the twelve months ended December 31, 2000,
compared to $347,500 for the comparable period in 1999.

     The increase in docking and parking related fees are the result of an
increase in the scheduled runs and the operation of the M/V Finest translating
to more passengers traveled. The number of passengers traveled is a component of
the parking fee calculation charged by the owner of the parking facility in
Highlands, New Jersey.

     INSURANCE - Insurance costs increased by 35.04% to $134,578 for the twelve
months ended December 31, 2000, compared to $99,659 for the comparable period in
1999.

     The overall increase in insurance related costs is primarily the result of
the operation of the Motor Vessel M/V Finest, as well as a general price
increase in the insurance premiums.

     GALLEY COST of GOODS SOLD - The galley cost of goods sold increased by
68.86% to $156,939 for the twelve months ended December 31, 2000, compared to
$92,939 for the comparable period in 1999.

     The increase is attributable to an increase in the number of scheduled runs
and the operation of the M/V Finest, translating into more passengers traveled
aboard the boats.


     CHARTER AND EXCURSION - The charter and excursion expenses  increased by
167.43% to $81,104 for the twelve months ended December 31, 2000, compared to
$30,327 for the

                                       20
<PAGE>

comparable period in 1999.

     The increase is attributable to an increase in the number events (Opsail
2000 and July 4th) completed as a result of having two vessels available versus
one vessel over the same time period.

STAMFORD DIRECT OPERATING COSTS - Stamford direct operating costs totaled
$100,677 for the twelve months ended December 31, 2000, compared to $0 for the
comparable period in 1999.

     The increase is attributable to an investment in start up costs associated
with a planned run from Stamford, CT. to Manhattan, N.Y.

OTHER DIRECT OPERATING COSTS - Other direct operating costs increased by 318.26%
to $147,180 for the twelve months ended December 31, 2000, compared to $35,189
for the comparable period in 1999.

     The increase is attributable to an increase in the number of scheduled runs
and the operation of the M/V Finest.

DEPRECIATION - Depreciation decreased by 1.56% to $910,006 for the twelve months
ended December 31, 2000, compared to $896,008 for the comparable period in 1999.

     The overall increase is attributable to an increase in other boat equipment
associated with operation of the M/V Finest and continued upgrades of equipment
on the Bravest.

SELLING, GENERAL and ADMINISTRATIVE EXPENSES - The consolidated company's
--------------------------------------------
selling, general and administrative expenses increased by 42.15% to $1,700,142
for the twelve months ended December 31, 2000, compared to $1,196,037 for the
comparable period in 1999. The overall changes are detailed as follows:

     FERRY ADMINISTRATION, SALARY and RELATED BENEFITS - Salary and related
benefits for the Ferry Administration decreased by 1.19% to $281,753 for the
twelve months ended December 31, 2000, compared to $285,150 for the comparable
period in 1999.

     The decrease is an immaterial amount.

     CORPORATE ADMINISTRATION, SALARY and RELATED BENEFITS - Salary and related
benefits for the Corporate Administration increased by 20.94% to $452,597 for
the twelve months ended December 31, 2000, compared to $374,229 for the
comparable period in 1999.

     The increase is related to salary increases associated with the addition of
the VP Secretary and the new Chief Financial Officer. These new head-count
related salary increases were off-set by decreases  in the employment agreements
with certain current and former officers.

     PROFESSIONAL SERVICES - Professional services, which include legal,
accounting and consulting services, increased by 96.38% to $601,453 compared to
$306,267 for the comparable period in 1999.


                                       21

<PAGE>

     The increase is related to the 10-KSB audits and 10-QSB reviews of the
company's financial statements, as well as various SEC filings requiring both
legal and accounting services.  In addition, there were various engineering and
related expenses associated with the new planned departure time in Highlands, NJ
from a new site in Highlands.

     TRAVEL and RELATED AUTOMOBILE EXPENSES - Travel and related automobile
expenses increased by 13.35% to $68,357 for the twelve months ended December 31,
2000, travel compared to $60,308 for the comparable period in 1999.

     The increase is related to increased with travel between the marina
operations and Head quarters as well as travel associated with raising
additional capital for the company.

     OFFICE FACILITY RELATED EXPENSES- Office facility related expenses includes
rent, utilities, maintenance and general office expenditures for the Company's
corporate office in West Caldwell, New Jersey and the NYFF marina office in
Highlands, New Jersey.

These office facility related expenses increased by 53.67% to $126,321 for the
twelve months ended December 31, 2000, compared to $82,205 for the comparable
period in 1999.

     The increase primarily relates to the establishment of a new corporate
headquarters in West Caldwell, New Jersey as well as increased costs associated
with the maintenance of the marina office located in Highlands, New Jersey.

     DEPRECIATION EXPENSE - Depreciation expense decreased by 37.83% to $5,868
for the twelve months ended December 31, 2000, compared to $9,439 for the
comparable period in 1999.

     The decrease is related to assets that have been fully depreciated.

     CORPORATE EXPENSE - OTHER - Other corporate related expenses increased by
56.76% to $163,703 for the twelve months ended December 31, 2000, compared to
$105,776 for the comparable period in 1999.

The increase is related to the expenses associated with filing the 10-KSB and
10-QSB with the company's financials statements, as well as various other SEC
filings.

MARKETING EXPENSES - Marketing expenses increased by 175.24% to $75,243 for the
------------------
twelve months ended December 31, 2000, compared to $27,337 for the comparable
period in 1999.

     The increase is related to increased efforts to attract new passengers as
well as costs associated with attracting new investors.

GOODWILL AMORTIZATION - In each of the quarters ended December 31, 2000 and
---------------------
1999, the Company recorded amortization of goodwill expense of $20,236, which
was related to its acquisition of NYFF.

                                       22

<PAGE>

INTEREST EXPENSE - Interest expense primarily relates to meeting the current
----------------
obligations of the NYFF, including the mortgages on the vessels and debt
financing of the Company's current operations and business development.

Interest expense increased by 105.71% to $3,031,568 for the twelve months ended
December 31, 2000, compared to $1,473,735 for the comparable period in 1999.

 The increase relates to new bridge financing entered into during 2000.

NET INCOME/LOSS - Net Loss increased by 98.87% from ($2,522,911) for the twelve
---------------
months ended December 31, 1999 to ($5,017,407) for the twelve months ended
December 31, 2000. The increase in net loss is primarily the result of a
decrease in charter sales which resulted when M/V Finest came off charter from
the Massachusetts Steamship Authority. These charter sales were not fully
replaced by passenger ticket sales because the operation was not yet able to
absorb the additional passenger capacity of the M/V Finest until late in 2000.
However, the Company still had to incur operational expense of the M/V Finest.
In addition, there was an increase in bridge financing in 2000, resulting in
additional interest and financing costs.

Liquidity and Capital Resources
-------------------------------

     Since inception, the Company has funded its operations primarily through
cash generated from private placements of debt and equity securities and
institutional financing.  In October 1998, the Company acquired 80% of the stock
of NY Fast Ferry and commenced operating fast ferry service from Highlands, New
Jersey.  As part of the transaction, the Company guaranteed payment and
satisfaction of NY Fast Ferry's outstanding liabilities, which included
mortgages on its two ferry vessels and a line of credit.  In July 2000, the
Company entered into an oral agreement with the holders of the remaining 20% of
issued and outstanding shares of Fast Ferry Holding Corporation for the purchase
by the Company of the remaining NY Fast Ferry shares for a combination of
$28,753 in cash and 102,271 restricted common shares of the Company. Management
expects that the parties will finalize and execute a written stock purchase
agreement in the second quarter of 2001. The NY Fast Ferry operation generates
sufficient cash-flow to cover its direct operating costs.  However, the NY Fast
Ferry operation does not yet generate enough cash to make principal and interest
payments for both boat mortgages, carry its other debt, to fund the capital
improvements and capital expenditures necessary for the Company to expand its
operations and to implement its strategic business objectives.

     On March 1, 2000 the company received a total of $1,000,000 in proceeds
from senior convertible promissory notes from two investment funds, originally
due December 11, 2000 with interest at 10% per annum, and is payable quarterly.
The Company issued a $110,000 senior convertible promissory note to a third
investment fund a finder's fee.  In addition to the 10% interest, the Company
issued 250,000 common shares, which the Company valued at $0.50 per share, as
additional consideration. Further shares are issuable in the event of a default.
In December 2000 the Company and the investment funds agreed to extend the
maturity date of the notes to June 30, 2001 and in consideration therefor, the
Company agreed to issue to the investment funds shares of the Company's Common
Stock at a rate of one share for each $2.00 of the outstanding indebtedness then
due and owing.  Further, the Company agreed to reduce the conversion price from
$1.50 per share to $1.00 per share and upon a ninety day default, the conversion
price is reduced from $1.00 per share to $0.75 per share.  Each lender has the
right at its sole and exclusive option to convert the outstanding indebtedness
under the notes to common stock of the Company at any time prior to the Company
making payment and should such conversion rights be exercised, the Company shall
issue common stock to the lender at the rate of one share for each $1.00 of
indebtedness then due and owing.  The loans may be prepaid at any time, but must
be repaid out of the proceeds of any financing in excess of $2,000,000.

     As of December 31, 2000, two outstanding notes payable and preferred ship
mortgages held


                                       23
<PAGE>

by debis Financial Services, Inc. ("Debis"), one on the ferry M/V Finest and one
on the ferry M/V Bravest, were $4,975,313 and $4,940,492, respectively, which
bear interest at 9.25% per annum. Both ship mortgages each require monthly
payments of principal and interest in the amount of $56,719 through September
10, 2005, with final payments of $3,626,691 and $3,572,971, respectively, due on
October 10, 2005. The Company is current in these payments.

     The line of credit held by Debis assumed by the Company had an outstanding
balance at December 31, 2000 of $934,000 with the same financial institution
that holds the preferred ship mortgages.  The line of credit, secured by the M/V
Finest and the M/V Bravest, required monthly payments of $15,000 through April
10, 2000, plus principal payments of $45,000 in January 1999, $920,410 on May 1,
1999 and October 1, 1999, a payment of $343,333 on March 1, 2000, and originally
required a final payment of $934,000 on December 10, 2000.  The Company and
Debis are in negotiation to  restructure the payment of the debt, so that the
remaining  principal balance on the line of credit would be paid through eight
quarterly principal payments, plus accrued interest.    In consideration of
negotiation of the restructuring of the debt payment, Debis received a
restructure fee of $50,000, which was paid by the company. The Company was
unable to make the first of such payments in the first quarter of 2001, and is
negotiating with Debis to extend the first payment to June 30 , 2001.  If the
Company is successful in these negotiations, quarterly principal and interest
payments will be equal.  The note carries no interest, but has been discounted
to a net present value using a discount rate of 9.25% per annum.  These two
preferred ship mortgages and the line of credit are further secured by cross
collateralization agreements, assignment of personal property, a pledge of a
potential receivable arising out of a lawsuit against the City of New York, and
a Company guarantee.  Moreover, the financial institution was granted warrants
to purchase 200,000 shares of Company stock at $2.60 per share exercisable
through March 16, 2004.

     During June 2000 the Company received proceeds from eight 10.5% convertible
promissory notes, (six for $20,000, one for $10,000 and one for $5,000),
totaling $135,000.  During July 2000 the Company received proceeds from two
10.5% convertible promissory notes (two for $40,000) totaling $80,000.  During
August 2000 the Company received proceeds from four 10.5% convertible promissory
notes (one for $40,000, one for $10,000, one for $15,000 and one for $5,000)
totaling $70,000.  During September 2000 the Company received proceeds from five
10.5% convertible promissory notes (three for $20,000 and two for $10,000)
totaling $80,000.  Each convertible promissory note carries a simple interest
rate of 10.5%, interest only is payable quarterly, and matures one-year from
date of issuance.

     The lender has the right, at its sole and exclusive option, to convert the
outstanding indebtedness to common shares (the "Conversion Rights") of the
company at any time prior to borrower making payment.  Should such Conversion
Rights be exercised, the Company shall issue such shares to the Lender at the
rate of one share of common stock for each $2.00 of the indebtedness then due
and owing.  The shares issued by the company through the exercise of the
Conversion Rights will be restricted securities.  The option and conversion will
be exercised by the lender issuing written notice to the borrower.

     On June 14, 2000, New York Fast Ferry Services Inc. received proceeds of
two bridge loans aggregating $60,000.  New York Fast Ferry Services Inc. has
since paid off the balance on the loans. The loans were paid with funds from
ferry operations.


                                       24
<PAGE>

     In July 2000, the Company received a total of $1,000,000 in proceeds from
senior convertible promissory notes from four lenders, originally due January
14, 2001 with interest at 10% per annum, payable quarterly, and paid a finder's
fee by issuance of an $88,000 note.  One of these lenders exchanged a $200,000
note for its $200,000 mortgage note receivable.  In December 2000 the Company
and the lenders agreed to extend the maturity date of the notes to June 30, 2001
and in consideration therefor, the Company agreed to issue to the lenders shares
of the Company's common stock at a rate of one share for each $2.00 of
outstanding indebtedness then due and owing.  Further, the Company agreed to
reduce the conversion price from $1.50 per share to $1.00 per share and upon a
ninety day default, the conversion price is reduced from $1.00 per share to
$0.75 per share.  Each lender has the right at its sole and exclusive option to
convert the outstanding indebtedness under the notes to common stock of the
Company at any time prior to the Company making payment and should such
conversion rights be exercised, the Company shall issue common stock to the
lender at the rate of one share for each $1.00 of indebtedness then due and
owing.  The loans may be prepaid at any time, but must be repaid out of the
proceeds of any financing in excess of $2,000,000.

     In June 1999, the Company obtained financing in the net amount of $300,000
from a then unrelated third party that was secured by a second mortgage on the
property of the Shrewsbury River, subject to a real estate tax lien, and by a
personal guarantee of a major shareholder.  The note carried an annual interest
rate of 18% and was payable in monthly installments of $10,000 per month,
applied first to interest, from July 10, 1999 through December 10, 1999.  During
2000 the company paid principal of $161,641 and interest of $16,982 leaving a
principal balance of $28,575 at December 31, 2000.  The parties have extended
the due date to April 30, 2001.

     In October, the Company received a total of $500,000 in proceeds from
senior convertible promissory notes from two lenders, originally due January 30,
2001 with interest at 10% per annum, payable quarterly, and issued a $55,000
note as a finder's fee.  In December 2000 the Company and the lenders agreed to
extend the maturity date of the loans to June 30, 2001 and in consideration
therefor, the Company agreed to issue to the lenders shares of the Company's
common stock at a rate of one share for each $2.00 of outstanding indebtedness
then due and owing.  Further, the Company agreed to reduce the conversion price
from $1.50 per share to $1.00 per share and upon a ninety day default, the
conversion price is reduced from $1.00 per share to $0.75 per share.  Each
lender has the right at its sole and exclusive option to convert the outstanding
indebtedness under the notes to common stock of the Company at any time prior to
the Company making payment and should such conversion rights to exercised, the
Company shall issue common stock to the lender at the rate of one share for each
$1.00 of indebtedness then due and owing.  The loans may be prepaid at any time,
but must be repaid out of the proceeds of any financing in excess of $2,000,000.

     In addition, during the month of October, the Company received proceeds
from four 10.5% convertible promissory notes (one for $5,000, two for $40,000
and one for $10,000) totaling $95,000.  During the month of November, the
Company received proceeds from three 10.5% convertible promissory notes (two for
$60,000 and one for $20,000) totaling $140,000.  During the month of December,
the Company proceeds from one 10.5% convertible promissory note for $50,000.
Each convertible promissory note carries a simple interest rate of 10.5%,
interest only is payable quarterly, and matures one-year from date of issuance.

                                       25

<PAGE>

     Additionally, during the month of December 2000, the Company employed the
services of a financial consultant to arrange for the modification of certain
senior convertible promissory notes.  The consultant received as payment for
this service a 10% interest bearing note totaling $100,000.

     The lender has the right, at its sole and exclusive option, to convert the
outstanding indebtedness to common shares (the "Conversion Rights") of the
company at any time prior to borrower making payment.  Should such Conversion
Rights be exercised, the Company shall issue such shares to the Lender at the
rate of one share of common stock for each $2.00 of the indebtedness then due
and owing.  The shares issued by the company through the exercise of the
Conversion Rights will be restricted securities.  The option and conversion will
be exercised by the lender issuing written notice to the borrower.

     In the twelve months ended December 31, 2000, the Company had raised
proceeds of $482,598 through the private placement of 712,667 shares of
restricted common stock to accredited investors. The Company also issued 252,500
shares of restricted common stock to three directors and officers in
satisfaction of unpaid compensation amounting to $214,625.  In addition, the
company issued 100,000 shares of restricted common stock on June 13, 2000 and
$25,000 on July 11, 2000 to a mortgage holder of the discounted operation in
satisfaction of $150,000 of debt.

     The Company, as of December 31, 2000, had a working capital deficiency of
$4,324,309 Furthermore, in the planned development of its commercial operations,
the Company's combined losses are expected to continue as the Company divests
its non-core assets and until it increases its ferry service when each of its
sites become fully operational.  The Company's ability to meet its obligations
in the ordinary course of business is dependent upon its ability to continue to
obtain adequate financing and/or to successfully expand its ferry operations.
Furthermore, capital expenditures to acquire additional fast ferry vessels and
improve and expand its landside ferry facilities will require significant
funding.

     The Company has been successful to date in its efforts to raise funds and
believes that proceeds from interim financing from convertible promissory notes
sold during the second, third and fourth quarters, together with available funds
and cash flows expected to be generated by operations will be sufficient to meet
its anticipated cash needs for working capital and capital expenditures for at
least the next twelve months.  As of December 31, 2000, $2,950,000 was raised
from the sale of convertible promissory notes.  Furthermore, the Company has
negotiated more favorable terms with certain creditors, and is negotiating more
favorable payment terms with other creditors, that require significant principal
payments in the next twelve months.  In the event the Company's plans change,
its assumptions change or prove to be inaccurate or if the proceeds of the
interim financing or cash flows prove to be insufficient to fund operations, the
Company may find it necessary or desirable to reallocate funds within the above
described business strategies, seek additional financing or curtail its
activities.  There can be no assurance that additional financing will be
available on terms favorable to the Company, or at all, or that the Company will
be able to negotiate more favorable payment terms with its existing creditors.
If adequate funds are not available or are not available on acceptable terms,
the Company may not be able to meet its current obligations, take advantage of
unanticipated opportunities, develop new services or otherwise respond to
unanticipated competitive pressures.  Such inability could have a material
adverse effect on the Company's business, financial condition and results of
operations.

                                       26

<PAGE>

Subsequent Events
-------------------

     In January 2001, the Company received proceeds from one 10.5% convertible
promissory note totaling $20,000.  In February 2001, the Company received
proceeds from four 10.5% convertible promissory notes (one for $50,000, one for
$25,000, and two for $5,000) totaling $85,000.  During March 2001, the Company
received proceeds from one 10.5% convertible promissory note totaling $5,000 and
one 10% senior convertible promissory note totaling $275,000.  Each convertible
promissory note carries a simple interest rate of 10.5%, interest only is
payable quarterly, and matures one year from date of issuance.  Each senior
convertible promissory note carries a simple interest rate of 10%, interest only
is payable quarterly, and matures four months from date of issuance.

     The lender has the right, at its sole and exclusive option, to convert the
outstanding indebtedness to common shares (the "Conversion Rights") of the
Company at any time prior to borrower making payment.  Should such Conversion
Rights be exercised, the Company shall issue such shares to the Lender at the
rate of one share of common stock for each $2.00 of the indebtedness then due
and owing.  The shares issued by the Company through the exercise of the
Conversion Rights will be restricted securities.  The option and conversion will
be exercised by the lender issuing written notice to the borrower.

     On March 29, 2001 the Company executed an agreement for the sale of the
Shrewsbury Property for $1,150,000.  The closing is to be on or before June 15,
2001, subject to the purchaser obtaining environmental and operational use
permits.

Forward-Looking Statements
--------------------------

     Discussions and information in this document which are not historical facts
should be considered forward-looking statements.  With regard to forward-looking
statements, including those regarding the potential revenues from the additional
ferry operations from the Stamford Property, and the business prospects or any
other aspect of the Company, actual results and business performance may differ
materially from that projected or estimated in such forward-looking statements.
The Company has attempted to identify in this document certain of the factors
that it currently believes may cause actual future experience and results to
differ from its current expectations.  In addition to the risks cited above
specific to the ferry business, differences may be caused by a variety of
factors, including but not limited to, adverse economic conditions, entry of new
and stronger competitors in the ferry business, insufficient parking space for
potential ferry customers, inadequate capital and the inability to obtain
funding from third parties, unexpected costs and the inability to obtain or keep
qualified personnel.

ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     See Financial Statements and Supplementary Data immediately preceding the
signature page of this Form 10-KSB.


                                       27
<PAGE>

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

         None.


                                    PART III

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

     The names, ages, municipalities of residence, positions with the
Registrant, and principal occupations of the directors and executive officers of
the Registrant as of April 13, 2001 are as follows:


<TABLE>
<CAPTION>
       Name, Age and
  Municipality Residence                   Office                        Other Business Experience
-------------------------   ------------------------------------    -----------------------------------
<S>                         <C>                                     <C>

Anthony Cappaze             Chairman, Chief Executive Officer of    President of Trinity Group since
Short Hills, NJ             the Company and Director since its      1998; Regional Manager for Northern
Age:   56                   inception.                              Telecom 1983 - 1998.


Anthony Colasanti           Vice President, General Counsel and     Partner in the law firm of Colasanti
West Orange, NJ             Director of the Company since 1996.     and Scott July 1998 - 1999; partner
Age:   57                   Secretary of the Company since          in the law firm Colasanti, Ermel &
                            January 1999.                           Cosale 1994 - 1998.


Francis Matusek             Director of the Company since its       Partner in the accounting and tax
Matawan, NJ                 inception; Officer of the Company       consulting firm of Matusek & Company
Age:   48                   from its inception until January 1999.  since 1974.


Gregory J. Hauke            Director of the Company since June      President of Hauke Realty, Inc. since
Freehold, NJ                2000.                                   1985.  Chief Financial Officer of
Age:   50                                                           Phoenix Funding since 1996.


John Ferreira, Jr.          Chief Financial Officer of the          Corporate Controller of ESC Sharplan
Washington Township, NJ     Company since May 2000.                 Medical Systems, North American
Age:   37                                                           Operations from November 1995 to
                                                                    April 2000.  Senior Financial and
                                                                    Operating Analyst for Volvo Car
                                                                    Finance from August 1994 to November
                                                                    1995.
</TABLE>

                                       28
<PAGE>

     The Board of Directors currently serves as the Company's Audit Committee.
The Company may appoint a separate committee before the end of the year.

Compliance with Section 16(a) of the Securities Exchange Act of 1934.
--------------------------------------------------------------------

     Section 16 (a) of the Securities Exchange Act of 1934 requires the
Company's directors and certain of its officers to file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange
Commission and NASDAQ.  Executive officers and directors are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.  Based solely on a review of the copies of such forms furnished to the
Company and written representations from the Company's executive officers and
directors, the Company believes that all reports on Forms 3, 4 or 5 required to
be filed were filed on a timely basis for the fiscal year ended December 31,
2000 other than Capital Research, Ltd., which failed to timely file a Form 3 and
Form 4, Joseph Giamanco, who failed to timely file a Form 3 and Michael Lauer,
Joseph Giamanco, and Francis Matusek, who failed to timely file Forms 5.

ITEM 10. EXECUTIVE COMPENSATION

Compensation and other Benefits of Executive Officers.
-----------------------------------------------------

     The following table sets out the compensation received for the fiscal years
ended April 30, 1997 and 1998, and December 31, 2000 and 1999 in respect to each
of the individuals who were the Company's chief executive officer at any time
during the last fiscal year and the Company's four most highly compensated
executive officers whose total salary and bonus exceeded $100,000 (the "Named
Executive Officers").

<TABLE>
<CAPTION>
                                      SUMMARY COMPENSATION TABLE

      FISCAL YEAR COMPENSATION                                              LONG TERM COMPENSATION

                                                        Awards                            Payouts
                                                        ------                            -------

                                                                              Restricted
                                                                                Shares
                                                                                  or
                                                            Securities under  Restricted   LTIP     All other
     Namne and            Salary/(1)/  Bonus  Other Annual    Option/SARs        Share    Payouts  Compensation
Principal Position  Year      ($)       ($)   Compensation      Granted          Units      ($)        ($)
------------------  ----  -----------  -----  ------------  ----------------  ----------  -------  ------------
<S>                 <C>   <C>          <C>    <C>           <C>               <C>         <C>      <C>
Anthony Cappaze/    2000    150,000      0          0             100,000          0         0             0
Chairman            1999    100,000      0          0             300,000          0         0         5,700
and CEO             1998     75,000      0          0                   0          0         0             0
                    1997     75,000      0          0                   0          0         0             0


Anthony Colasanti   2000    114,334      0          0             150,000          0         0             0
VP,General
Council &
Secretary
</TABLE>

(1)  The base compensation is recorded and accrued, but payment is deferred in
the interest of optimizing the Company's cash flow for the fiscal years ended
April 30, 1997, 1998 and December 31, 1999

                                       29

<PAGE>

Stock Option Plan.
-----------------

     The Board of Directors of the Company has adopted a stock option plan
effective March 10, 2000, which was approved by the shareholders on August 21,
2000.  The stock option plan was adopted in order to attract and retain the best
available personnel for positions of substantial responsibility, to provide
additional incentive to the Company's employees and to promote the success of
the Company's business.  The Company has reserved 1,115,000 shares of its common
stock under the stock option plan.  As of September 22, 2000, no options have
been granted under the stock option plan.

Agreements with Management.
--------------------------

     The Company had employment agreements with Messrs. Cappaze and Matusek that
provided for annual salaries of $75,000 each through April 30, 1998 and $100,000
each, thereafter.  Mr. Cappaze signed a new employment agreement in January
2000.  Mr. Colasanti signed a new employment agreement in February 2000, and Mr.
Matusek's agreement ended March 31, 1999.

     The term of Mr. Cappaze's employment agreement dated  January 2000 is for a
period of three years through December 31, 2002.  The term of Mr. Colasanti's
employment agreement dated February 1, 2000 is for a period of thirty-five
months through December 31, 2002.  Mr. Cappaze's base salary under his
employment agreement is $150,000 per year and Mr. Colasanti's base salary under
his employment agreement is $120,000 per year.  Mr. Cappaze and Colasanti are
individually referred to from time to time as "Employee" or collectively as
"Employees" in this section.  In addition to the base salaries, the Employees
are entitled to merit increases in salaries during the term of the agreements in
amounts and at such times as determined by the Board of Directors of the
Company.  The employment agreements provide that the employment of each Employee
may be terminated in the event of the death of the Employee, in which case the
Company shall pay to the estate or other legal representative of the Employee
his base salary (at the annual rate then in effect) accrued to that date which
is six months after the Employee's date of death and not theretofore paid. The
employment agreements provide that the employment of each Employee may also be
terminated if the Employee becomes incapacitated and is unable to perform his
normal duties under the agreements for ninety (90) consecutive days.  Promptly
after such termination, the Company shall pay to the Employee his base salary
(at the annual rate then in effect) accrued to the date of termination and not
theretofore paid.  The employment of the Employees may also be terminated at any
time for due cause (as that term is defined in the agreements) and in such
event, the Company shall pay to the Employee his base salary at the annual rate
then in effect  accrued to the date of such termination and not theretofore paid
to Employee.  The Company may also terminate the employment of the Employees for
any reason other than the above for whatever reason it deems appropriate and in
that event, the Company shall (i) pay to the Employee a lump sum one and one
half times his annual base salary at the annual rate then in effect and (ii)
give employee warrants granting Employee the right to purchase 150,000 shares of
the Company's common stock at $1.00 per share over a period of five (5) years
from the date of termination.  The Employees may also resign from employment
with the Company upon 30 days prior written notice to the Company.

     Mr. Cappaze's employment agreement dated January 2000 provides that he
receive warrants

                                       30

<PAGE>

for the purchase of 100,000 shares of common stock at $1.00 per
share for each of three years and options, which expire on 1/1/07, to acquire
200,000 shares of common stock at $1.00 per share, of which options for 100,000
shares are not exercisable until 1/1/02, and the remainder are exercisable
beginning 1/1/03.  Mr. Colasanti's employment agreement dated January 2000
provides that he receive warrants for the purchase of 100,000 shares of common
stock at $1.00 per share for each of three years and options, which expire on
1/1/07, for 100,000 shares of common stock at $1.00 per share, of which 50% are
exercisable commencing 1/1/02, and the remainder are exercisable beginning
1/1/03.  Mr. Cappaze and Mr. Matusek have deferred a significant portion of
their compensation under these agreements.  This deferred compensation carries
an interest rate of 4% per annum.  As of December 31, 2000, the total deferred
compensation, including interest due, was $186,112.

     The Company entered into an employment agreement with John Ferreira on
April 30, 2000. For the period from May 1, 2000 to December 31, 2000, Mr.
Ferreira will receive a salary at the rate of $100,000 per annum. Beginning
January 1, 2001, Mr. Ferreira's salary will be $125,000 per year.

Option/Stock Appreciation Rights ("SAR") Grants during the most recently
------------------------------------------------------------------------
completed Fiscal Year.
---------------------

     The following table sets out the stock options and stock warrants granted
as bonuses which were granted by the Company during the previous fiscal year to
the Named Executive Officers of the Company.  The following amounts include
options that were granted prior to the previous fiscal year but were repriced
during that year.

<TABLE>
<CAPTION>
                                     OPTION/SAR GRANTS IN PREVIOUS YEAR
                                              INDIVIDUAL GAINS

                   Number of      % of Total
                   Securities    Options/SARs
                   Underlying     Granted to
                  Options/SARs   Employees in   Exercise or Base   Market Price on
Name              Granted (#)     Fiscal Year     Price ($/Sh)      Date of Grant    Expiration Date
----              ------------   ------------   ----------------   ---------------   ---------------
<S>               <C>            <C>            <C>                <C>               <C>

Anthony Cappaze      200,000          32%              $1.75             $1.75           06/11/02
                     100,000          16%              $1.25             $1.25           10/27/01
Anthony Colasanti    100,000          16%              $1.50             $1.50           12/20/01
                     100,000          16%              $ 125             $1.25           10/27/01
</TABLE>



Aggregated Option/SAR Exercised in Last Financial Year and Fiscal Year-End
--------------------------------------------------------------------------
Option/SAR Values.
-----------------

     The following table sets out all option/SARs and warrants granted as
bonuses which were exercised by the Named Executive Officers during the most
recently completed fiscal year and the values of options/SARs and warrants for
such persons as of the end of the most recently completed fiscal year.


                                       31
<PAGE>

Aggregated Option/SAR Exercised in Last Fiscal Year and FY-End Option/SAR Values

<TABLE>
<CAPTION>
                                                                Number of Securities       Value of
                                                               Underlying Unexercised     Unexercised
                                                               Options/SARs at FY-End   Options/SARs at
                                                                         (#)               FY-End ($)

                     Shares Acquired on                             Exercisable/         Exercisable/
Name                   Exercise (#)       Value Realized ($)        Unexercisable       Unexercisable
----                 ------------------   ------------------   -----------------------  --------------
<S>                  <C>                  <C>                  <C>                      <C>
Anthony Cappaze             -0-                  -0-           200,000 all exercisable       N/A
                                                               100,000 all exercisable     $16,000

Anthony Colasanti           -0-                  -0-           100,000 all exercisable       N/A
                                                               100,000 all exercisable     $16,000
------------------------
</TABLE>

Compensation of Directors.
-------------------------

     Directors of the Company are paid $500 per meeting for their services as
such. Furthermore, the directors are reimbursed for all expenses incurred by
them in attending board meetings.

Benefit Plans.
-------------

     The Company currently has no retirement, pension, profit-sharing or
insurance or medical reimbursement plans covering its officers and directors,
but does contemplate implementing group health, term life insurance and 401(k)
plans once additional full-time management employees are hired. The NY Fast
Ferry group has a group medical health plan and a 401(k) plan for its employees.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth, as of April 11, 2001, the number of shares
of the Company's outstanding $0.01 par value common stock beneficially owned by
each of the Company's current directors and the Company's executive officers,
the number of shares beneficially owned by all of the Company's current
directors and named executive officers as a group, and the number of shares
owned by each person who owned of record, or was known to own beneficially, more
than 5% of the Company's outstanding shares of common stock:

                                       32
<PAGE>

<TABLE>
<CAPTION>

Name and Address                                           Amount and Nature of         Percent of
Of Beneficial Owner                                        Beneficial Ownership        Common Stock
-------------------                                        --------------------        ------------
<S>                                                        <C>                         <C>
Anthony Cappaze                                                 1,509,850(1)               17.26%
195 Fairfield Avenue, Suite 3C
West Caldwell, NJ  07006

Anthony Colasanti                                                 390,000(2)                4.48%
195 Fairfield Avenue, Suite 3C
West Caldwell, NJ  07006

Francis P. Matusek                                                931,124(3)               11.15%
186 Highway 34
Matawan, New Jersey 07747

Ray Wright                                                        150,000(4)                1.78%
One Springfield Avenue
Summit NJ  07901

John Ferreira, Jr.                                                      0                      *
195 Fairfield Avenue, Suite 3C
West Caldwell, NJ  07006

Gregory J. Hauke                                                   29,250                      *
195 Fairfield Avenue, Suite 3C
West Caldwell, NJ  07006

All current directors and executive officers as a
group (five persons)                                            2,860,224(5)               31.09%
</TABLE>

----------------------------
*Less than one percent.

(1)  Includes 718,700 shares owned by Cappaze Associates, L.P., of which Mr.
Cappaze is the General Partner; 78,000 shares owned by Elchanan Dulitz FBO
Ashley North Ave. Inc., to which Mr. Cappaze pledged stock to secure a loan to
the Company; 15,000 shares owned by Mr. Cappaze's spouse; options to acquire
200,000 shares at $1.75 per share until 6/11/2002; warrants to purchase 100,000
shares at $1.25 per share until 10/27/2001; and warrants to purchase 100,000
shares at $1.00 per share until January 2003.  Does not include options to
acquire 200,000 shares at $1.00 per share until 1/1/07, which are not
exercisable before 1/1/02.

(2)  Includes options to acquire 100,000 shares at $1.50 per share until
12/20/2001; warrants to purchase 100,000 shares at $1.25 per share until
10/27/2001; warrants to purchase 100,000 shares at $1.00 per share until January
2003, and warrants to purchase 50,000 shares at $1.00 per share until January
2002.  Does not include options to acquire 100,000 shares at $1.00 per share
until 1/1/07, which are not exercisable before 1/1/02.

(3)  Includes 2,250 shares owned by Mr. Matusek's spouse.

(4)  Includes options to acquire 100,000 shares at $1.00 per share until 12/04.
Raymond F. Wright tendered his resignation as Treasurer, effective 03/15/00.

(5)  Includes footnotes 1 through 3.

                                       33
<PAGE>

Other Owners.
------------

     To the knowledge of the Directors and Senior Officers of the Company, as of
April 11, 2001, there are no persons and/or companies who or which beneficially
own, directly or indirectly, shares carrying more than 5% of the voting rights
attached to all outstanding shares of the Company, other than the following:


 Name and Address                Amount and Nature of         Percent of
Of Beneficial Owner              Beneficial Ownership        Common Stock
-------------------              --------------------        ------------
Capital Research Ltd.                  740,206(1)                8.36%
27241 Paseo Peregrino
San Juan Capistrano, CA  92675

Joseph Giamanco                      1,345,134(2)               14.71%
c/o Henry Kramer
GHM, Inc.
74 Trinity Place
New York, NY  10006

Michael Lauer                        4,172,518(3)               42.38%
c/o The Lancer Group
375 Park Avenue
New York, NY  10152

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

(1)  Includes warrants to purchase 75,000 shares at $1.25 per share until
October 2004; approximately 59,905 shares underlying a currently convertible
promissory note, such notes being convertible into shares of common stock at the
rate of one share for each $1.50 of indebtedness due and owing (number reflects
indebtedness under the notes as of March 31, 2001); approximately 44,746 shares
underlying a currently convertible promissory note, such note being convertible
into shares of common stock at the rate of one share for each $1.25 of
indebtedness due and owing (number reflects indebtedness under the notes as of
March 31, 2001) and 183,333 shares underlying a convertible promissory note,
such note being convertible into shares of common stock at the rate of one share
for each $1.50 of indebtedness due and owing (number reflects indebtedness under
the notes as of March 31, 2001).

(2)  Includes warrants to purchase 200,000 shares at $1.00 per share until July
2002; 200,000 shares underlying a convertible promissory note, such note being
convertible into shares of common stock at the rate of one share for each $1.00
of indebtedness then due and owing; warrants to purchase 150,000 shares at $0.50
per share until March 2002; and approximately 245,134 shares underlying a
convertible promissory note, such note being convertible into shares of common
stock at the rate of one share for each $1.25 of indebtedness then due and owing
(number reflects indebtedness as of March 31, 2001).

(3)  Mr. Lauer is Managing Director of Lancer Offshore, Inc., The Viator Fund
Ltd. and The Orbiter Fund, and managing partner of Lancer Partners, L.P.  This
total includes 1,528,452 shares beneficially owned by Lancer Offshore, Inc.;
1,625,000 shares and warrants beneficially owned by The Viator Fund, Ltd.;
375,000 shares beneficially owned by The Orbitor Fund; 394,066 shares
beneficially owned by Lancer Partners, L.P.; and 250,000 shares owned directly
by Mr. Lauer.

                                      34
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     In June 1999 Anthony Cappaze, an officer and director of the Company, was
granted options to purchase 200,000 shares of common stock exercisable at $1.75
per share for three years.  In October 1999, Mr. Cappaze was granted warrants to
purchase 100,000 shares of common stock at $1.00 per share for two years.  Mr.
Cappaze signed a new Employment Agreement as of January 2000, which provides
that he receives warrants for the purchase of 100,000 shares of common stock at
$1.00 per share for three years, and options, which expire on 1/1/07, to acquire
200,000 shares of common stock at $1.00 per share, of which options for 100,000
shares are not exercisable until 1/1/02 and the remainder are exercisable
beginning 1/1/03.  In January 2000, the Board of Directors voted to issue
120,000 shares to Mr. Cappaze in lieu of outstanding salary for 1996 and 1997 of
$102,000.

     Anthony Colasanti, an officer and director of the Company, also serves as
general legal counsel for the Company.  Mr. Colasanti's law firm, Colasanti &
Scott, LLP, was paid approximately $5,000 in 1997, approximately $10,000 in 1998
and approximately $30,000 in 1999 by the Company for legal services rendered by
his firm to the Company.

     Mr. Colasanti also received as an annual retainer for consulting services,
10,000 shares of common stock in May 1997 and 10,000 shares in May 1998.  He
received 25,000 shares in May 1999 for legal services in negotiating and closing
a loan for the Company.  In December 1999, Mr. Colasanti was granted an option
to purchase 100,000 shares of common stock at $1.50 per share for two years.  In
October 1999, Mr. Colasanti was granted warrants to purchase 100,000 shares of
common stock at $1.25 per share for two years.  Mr. Colasanti signed an
employment agreement as of January 2000, which provides that he receives
warrants for the purchase of 100,000 shares of common stock at $1.00 for each of
three years, and options, which expire on 1/1/07, for 100,000 shares of common
stock at $1.00 per share, of which 50% are exercisable commencing 1/1/02, and
the remainder beginning 1/1/03.  In January 2000, Mr. Colasanti was also granted
warrants for the purchase of 100,000 shares of common stock at $1.00 per share
for each of two years.  These warrants were granted to Mr. Colasanti for
services rendered in raising capital for the Company.

     In January 2000, the Board of Directors voted to issue 12,500 shares to Mr.
Colasanti in lieu of outstanding salary of $10,625.  Mr. Colasanti directed the
Company to issue the 12,500 shares to several individuals as gifts from Mr.
Colasanti.  Of the 12,500 shares, Mr. Colasanti gave a total of 5,000 shares to
his two adult sons (2,500 shares each).  Neither of these sons live in Mr.
Colasanti's household, and none of the other individuals are related to Mr.
Colasanti or reside in his household. Thus, Mr. Colasanti is not the beneficial
owner of these shares.

     In January 2000, the Board of Directors voted to issue 120,000 shares to
Francis Matusek, a director and officer of the Company, in lieu of outstanding
compensation of $102,000.

     In October 1999, the Company issued an aggregate of 1,250,000 shares to
Michael Lauer and two companies controlled by that investor (Lancer Offshore,
Inc. and the Viator Fund Ltd.), all of them accredited investors, for gross
proceeds of $1,250,000 or $1.00 per share.  The Viator Fund


                                      35
<PAGE>

also received warrants to purchase an aggregate of 750,000 shares of common
stock exercisable at $1.25 per share until December 31, 2002. A finder's fee was
paid to Capital Research on this portion of the offering in the amount of
$125,000 and warrants to acquire 75,000 shares of common stock exercisable at
$1.25 per share for five years.

     In March 2000, the Company issued 125,000 shares to the Viator Fund and
125,000 shares to another entity in consideration of a $1,000,000 bridge loan to
the Company.

     In July 2000, the Company issued 125,000 shares, having a fair market value
on the date of issuance of $2.00 per share, to Lancer Offshore, Inc. in
connection with its purchaser of a senior convertible promissory note of the
Company in the amount of $500,000.

     In October 2000, the Company issued 75,000 shares, having a fair market
value on the date of issuance of $1.50 per share, to Lancer Offshore, Inc. in
connection with its purchaser of a senior convertible promissory note of the
Company in the amount of $200,000.

     In December 2000, the Company entered into an Amendment to Senior
Promissory Note Agreement whereby the Company agreed to issue 350,000 shares to
Lancer Offshore, Inc.; 250,000 shares to The Orbiter Fund, Ltd.; 250,000 shares
to The Viator Fund, Ltd.; 150,000 shares to Lancer Partners, L.P.; 150,000
shares to Joseph Giamanco; and 176,650 shares to Capital Research Ltd. in
consideration of the extension of the maturity dates of certain Senior
Convertible Promissory Notes and the reduction of the conversion prices.

     Other than the transactions stated herein, none of the directors or
executive officers of the Company, nor any 5% owner of the Company, has been
involved in any transaction with the Company exceeding $60,000 that has occurred
in the last two years.


                                    PART IV
                                    -------

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

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

3.1.a    Certificate of Incorporation, as amended.  /(1)/

3.1.b    Certificate of Amendment effective September 19, 2000. /(1)/

3.2      Bylaws. /(1)/

10.1     Stock Purchase Agreement dated 9/9/98 for acquisition of Fast Ferry
         Holding Corp. /(1)/

10.2     Lease Agreement dated 3/30/98 for Aragon Marina. /(1)/

10.3     Lease Agreement dated October 1999 for Stamford Property Marina. /(1)/


                                      36

<PAGE>

10.4     Letter of Intent for vessel construction. /(2)/

10.5.1   Employment Agreement with John Ferreira. /(1)/

10.5.2   Employment Agreement with Anthony Cappaze. /(1)/

10.5.3   Employment Agreement with Anthony Colasanti. /(1)/

10.6     Agreement with Robert E. Derecktor, Inc. for vessel construction. /(1)/

10.7     Lease Agreement for Clam Hut site dated 12/15/00. /(1)/

10.8     Form of 10% Senior Promissory Notes. /(3)/

10.9     Form of 10.5% Convertible Promissory Notes. /(3)/

10.10    Amendment to Senior Promissory Notes. /(1)/

10.11    Form of Note Modification Agreement with 10% Senior Promissory Note
         holders. /(3)/

21.1     Subsidiaries of the Registrant. /(1)/

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

(1)  Incorporated by reference from the Company's Registration Statement on Form
     10-SB, as amended.

(2)  Incorporated by reference from the Company's Form 10-KSB/A No. 4 for the
     fiscal year ended December 31, 1999, File No. 0-29205.

(3)  Incorporated by reference from the Company's Form 10-KSB/A No. 5 for the
     fiscal year ended December 31,1999, File No. 0-29205.


(b)  Reports on Form 8-K  No reports on Form 8-K were filed during the last
     -------------------
quarter of the fiscal year covered by this report.


                                      37

<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 Form 10-KSB to be
signed on its behalf by the undersigned, thereunto duly authorized.

                                LIGHTHOUSE FAST FERRY, INC.,


Date: April 13, 2001      By:   /s/ Anthony Cappaze
                             ---------------------------------------------------
                                    Anthony Cappaze, President, Chief
                                    Executive Officer and Director


Date: April 13, 2001      By:   /s/ John Ferreira
                             ---------------------------------------------------
                                    John Ferreira, Chief Financial Officer


Date: April 13, 2001      By:   /s/ Anthony Colasanti
                             ---------------------------------------------------
                                    Anthony Colasanti, Vice President, Secretary
                                    and Director


Date: April 13, 2001      By:
                             ---------------------------------------------------
                                    Francis P. Matusek, Director



Date: April 13, 2001      By:   /s/ Gregory J. Hauke
                             ---------------------------------------------------
                                    Gregory J. Hauke




<PAGE>

                                 EXHIBIT INDEX

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

3.1.a    Certificate of Incorporation, as amended.  /(1)/

3.1.b    Certificate of Amendment effective September 19, 2000. /(1)/

3.2      Bylaws. /(1)/

10.1     Stock Purchase Agreement dated 9/9/98 for acquisition of Fast Ferry
         Holding Corp. /(1)/

10.2     Lease Agreement dated 3/30/98 for Aragon Marina. /(1)/

10.3     Lease Agreement dated October 1999 for Stamford Property Marina. /(1)/

10.4     Letter of Intent for vessel construction. /(2)/

10.5.1   Employment Agreement with John Ferreira. /(1)/

10.5.2   Employment Agreement with Anthony Cappaze. /(1)/

10.5.3   Employment Agreement with Anthony Colasanti. /(1)/

10.6     Agreement with Robert E. Derecktor, Inc. for vessel construction. /(1)/

10.7     Lease Agreement for Clam Hut site dated 12/15/00. /(1)/

10.8     Form of 10% Senior Promissory Notes. /(3)/

10.9     Form of 10.5% Convertible Promissory Notes. /(3)/

10.10    Amendment to Senior Promissory Notes. /(1)/

10.11    Form of Note Modification Agreement with 10% Senior Promissory Note
         holders. /(3)/

21.1     Subsidiaries of the Registrant. /(1)/

------------------
(1)  Incorporated by reference from the Company's Registration Statement on Form
     10-SB, as amended.

(2)  Incorporated by reference from the Company's Form 10-KSB/A No. 4 for the
     fiscal year ended December 31, 1999, File No. 0-29205.

(3)  Incorporated by reference from the Company's Form 10-KSB/A No. 5 for the
     fiscal year ended December 31, 1999, File No. 0-29205.
<PAGE>

                  LIGHTHOUSE FAST FERRY, INC. AND SUBSIDIARIES
             (Formerly Lighthouse Landings, Inc. and Subsidiaries)

                              FINANCIAL STATEMENTS

                               DECEMBER 31, 2000

<PAGE>

                  LIGHTHOUSE FAST FERRY, INC. AND SUBSIDIARIES
             (Formerly Lighthouse Landings, Inc. and subsidiaries)



                         INDEX TO FINANCIAL STATEMENTS
                         -----------------------------




                                                                      Page No.
                                                                     -----------


Report of Independent Certified Public Accountants................       F-1


Consolidated Balance Sheets As at December 31, 2000 and 1999......       F-2


Consolidated Statements of Operations For the Years Ended
   December 31, 2000 and 1999.....................................       F-3


Consolidated Statements of Changes in Stockholders' Equity
   (Capital Deficiency) For the Years Ended
   December 31, 2000 and 1999.....................................       F-4


Consolidated Statements of Cash Flows
   For the Years Ended December 31, 2000 and 1999.................    F-5 - F-6

Notes to Consolidated Financial Statements........................    F-7 - F 27

<PAGE>

               WEINICK
[WSL LOGO]      SANDERS                                            1515 Broadway
                 LEVENTHAL & CO., LLP                 NEW YORK, N.Y.  10036-5788
               -----------------------------------------------------------------
                 CERTIFIED PUBLIC ACCOUNTANTS                       212-869-3333
                                                                FAX 212-764-3080
                                                                   WWW.WSLCO.COM


                        INDEPENDENT ACCOUNTANTS' REPORT
                        -------------------------------

To the Board of Directors and Stockholders
Lighthouse Fast Ferry, Inc.

We have audited the accompanying consolidated balance sheets of Lighthouse Fast
Ferry, Inc. and Subsidiaries as at December 31, 2000 and 1999, and the related
consolidated statements of operations, cash flows and changes in stockholders'
equity (capital deficiency) for the years then ended.  These consolidated
financial statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  We believe that our
audits provide 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 Lighthouse Fast
Ferry, Inc. and Subsidiaries as at December 31, 2000 and 1999, and the results
of their operations and their cash flows for the years then ended in conformity
with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern.  As discussed in Note 1 to
the consolidated financial statements, the Company has sustained substantial
losses for the years ended December 31, 2000 and 1999.  In addition at December
31, 2000 the Company has working capital and stockholder capital deficiencies of
$4,324,309 and $1,051,161, respectively.  These conditions raise substantial
doubt about its ability to continue as a going concern. Management's plans
regarding those matters are also described in Note 1.  The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.


                                        /s/ WEINICK SANDERS LEVENTHAL & CO., LLP


New York, N. Y.
March 19, 2001, except for Note 3,
 as to which the date is March 29, 2001

                                      F-1
<PAGE>

                 LIGHTHOUSE FAST FERRY, INC. AND SUBSIDIARIES
             (Formerly Lighthouse Landings, Inc. and Subsidiaries)
                          CONSOLIDATED BALANCE SHEETS


                                   A S S E T S
                                   -----------

                                                           December 31
                                                     --------------------------
                                                         2000          1999
                                                     ------------  ------------
Current assets:
  Cash                                                $    66,578   $    97,957
  Inventories                                              59,306        40,948
  Net assets of discontinued operations                   424,763        32,582
  Prepaid expenses and other current assets             1,706,351       127,994
        Total current assets                            2,256,998       299,481

Property and equipment - at cost,
  less accumulated depreciation                        11,389,049    12,288,880
Goodwill net of accumulated amortization
  of $182,184 and $101,239, respectively                1,031,990     1,112,935

Other assets                                              304,404        51,764
                                                      -----------   -----------
                                                      $14,982,441   $13,753,060
                                                      ===========   ===========

           LIABILITIES AND STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY)
           ---------------------------------------------------------

Current liabilities:
  Convertible promissory notes                        $ 3,503,000   $        --
  Current maturities of long-term debt                  1,597,510     1,879,764
  Notes payable - stockholders                             85,755       125,000
  Accounts payable and accrued expenses                 1,107,540       948,606
  Deferred revenues                                        86,618        68,765
  Due to officers/stockholders                            200,884       449,540
                                                      -----------   -----------
        Total current liabilities                       6,581,307     3,471,675

Long-term debt - net of current maturities              9,452,295    10,064,110
                                                      -----------   -----------
        Total liabilities                              16,033,602    13,535,785
                                                      -----------   -----------

Stockholders' equity (capital deficiency):
  Preferred stock - $.01 par value
    Authorized and unissued 10,000,000 shares
  Common stock - $.01 par value
    Authorized - 40,000,000 shares
    Issued and outstanding - 8,185,087 (includes
     1,524,500 to be issued) shares
     in 2000 and 4,905,795 shares in 1999                  81,851        49,058
  Additional paid-in capital                            8,891,266     5,312,588
  Additional paid-in capital - stock options              137,500            --
  Accumulated deficit                                ( 10,161,778) (  5,144,371)
                                                      -----------   -----------
        Total stockholders' equity
           (capital deficiency)                      (  1,051,161)      217,275
                                                      -----------   -----------
                                                      $14,982,441   $13,753,060
                                                      ===========   ===========

         See accompanying notes to consolidated financial statements.

                                      F-2
<PAGE>

                 LIGHTHOUSE FAST FERRY, INC. AND SUBSIDIARIES
             (Formerly Lighthouse Landings, Inc. and Subsidiaries)

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                                                        For the Years Ended
                                                            December 31,
                                                    ---------------------------
                                                       2000             1999
                                                    ----------       ----------

Revenues                                            $4,018,323       $3,285,978
                                                    ----------       ----------
Costs of service:
  Ferry operations                                   2,999,106        1,597,574
  Depreciation                                         910,006          896,008
                                                    ----------       ----------
Total costs of service                               3,909,112        2,493,582
                                                    ----------       ----------

                                                       109,211          792,396
                                                    ----------       ----------
Operating expenses:
  Selling, General and Administrative                1,700,142        1,196,037
  Marketing                                             75,243           27,337
  Amortization of goodwill                              80,945           80,945
                                                    ----------       ----------
Total operating expenses                             1,856,330        1,304,319
                                                    ----------       ----------
Loss from Operations                               ( 1,747,119)     (   511,923)
                                                    ----------       ----------
Other expenses:
  Interest and amortization of financing costs       3,031,568        1,473,735
  Provision for state and local income taxes             3,250            1,323
                                                    ----------       ----------
Total other expenses                                 3,034,818        1,475,058
                                                    ----------       ----------
Loss from continuing operations before
  minority share in loss of subsidiary             ( 4,781,937)     ( 1,986,981)
Minority share in loss of subsidiary                         -           11,071
                                                    ----------       ----------
Loss from continuing operations                    ( 4,781,937)     ( 1,975,910)
                                                    ----------       ----------
Discontinued operations:
  Loss from discontinued operations                (   235,470)     (   155,347)
  Estimated loss on disposal                                 -      (   391,654)

Loss from discontinued operations                  (   235,470)     (   547,001)
                                                    ----------       ----------
Net loss                                           ($5,017,407)     ($2,522,911)
                                                    ==========       ==========
Per share data:
  Basic and diluted:
    Loss from continuing operations                      (0.75)           (0.55)
    Loss from discontinued operations                    (0.04)           (0.15)
                                                    ----------       ----------
    Net loss                                             (0.79            (0.70)
                                                    ==========       ==========
Weight average number of shares outstanding:

      Basic and diluted                              6,331,329        3,591,138
                                                    ==========       ==========

         See accompanying notes to consolidated financial statements.

                                      F-3
<PAGE>

                 LIGHTHOUSE FAST FERRY, INC. AND SUBSIDIARIES
             (Formerly Lighthouse Landing, Inc. and Subsidiaries)

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY)

                FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
<TABLE>
<CAPTION>

                                                                                                                         Total
                                                                                                                     Stockholders'
                                          Common Stock     Additional    Additional                       Stock         Equity
                                       ------------------   Paid-In    Paid-In Capital  (Accumulated  Subscriptions    (Capital
                                        Number    Amount    Capital     Stock Options     Deficit      Receivable     Deficiency)
                                       ---------  -------  ----------  ---------------  ------------  -------------  -------------
<S>                                    <C>        <C>      <C>         <C>              <C>           <C>            <C>

Balance at January 1, 1999             3,250,795  $32,508  $3,809,138  $            --  ($ 2,621,460)     ($250,000)  $    970,186
Payments for shares                                                                                         250,000        250,000
  subscribed for
Increase of shares for cash            1,550,000   15,500   1,304,500               --            --             --      1,320,000
Shares issued for:                                                                                                              --
   Interest to noteholder                 50,000      500      99,500               --            --             --        100,000
   Services rendered                      55,000      550      99,450               --            --             --        100,000
Net loss for 1999                             --       --          --               --  (  2,522,911)            --  (   2,522,911)
                                       ---------  -------  ----------  ---------------  ------------  -------------  -------------
Balance at December 31, 1999           4,905,795   49,058   5,312,588               --  (  5,144,371)            --        217,275
Increase of shares for cash              712,667    7,127     475,471               --            --             --        482,598
Shares issued and issuable for:
   Satisfaction of liabilities           352,500    3,525     336,100               --            --             --        339,625
   Services rendered and financing     2,214,125   22,141   2,767,107               --            --      2,789,248
Non - employee stock options                  --       --          --          137,500            --             --        137,500
Net loss for 2000                             --       --          --               --  (  5,017,407)            --  (   5,017,407)
                                       ---------  -------  ----------  ---------------  ------------  -------------  -------------
Balance at December 31, 2000           8,185,087  $81,851  $8,891,266  $       137,500  ($10,161,778) $          --  ($  1,051,161)
                                       =========  =======  ==========  ===============  ============  =============  =============
</TABLE>

         See accompanying notes to consolidated financial statements.

                                      F-4
<PAGE>

                 LIGHTHOUSE FAST FERRY, INC. AND SUBSIDIARIES
             (Formerly Lighthouse Landings, Inc. and Subsidiaries)

                     CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>


                                                                                                     For the Years Ended
                                                                                                          December 31,
                                                                                               --------------------------------
                                                                                                   2000                1999
                                                                                               ------------        ------------
<S>                                                                                            <C>                 <C>
Cash flows from operating activities:
  Net loss continuing operations                                                                ($4,781,937)        ($1,975,910)
                                                                                               ------------        ------------

  Adjustments to reconcile net loss to net cash
      provided by (used in) operating activities:
    Minority interests                                                                                  -          (     11,071)
    Depreciation                                                                                    908,314             904,837
    Amortization of goodwill                                                                         80,945              80,945
    Accrued interest                                                                                 34,031                   -
    Amortization of deferred finance costs                                                        1,463,497               4,000
    Imputed interest                                                                                 30,763             156,909
    Stock issued for services rendered and interest                                                  46,825             200,000
    Non-employee stock option                                                                       137,500                   -
    Deferred revenues                                                                                17,853              22,199
    Increase (decrease) in cash flows as a result of
        changes in assets and liabilities net of assets
        and liabilities acquired in an acquisition:
      Inventories                                                                              (     18,358)         (   39,891)
      Prepaid expenses and other current assets                                                      53,569          (   55,686)
      Other assets                                                                                   34,860                   -
      Accounts payable and accrued expenses                                                         160,657             264,654
      Due to officers/stockholders                                                             (     34,032)         (   34,602)
      Other taxes                                                                                         -          (   36,673)
                                                                                               ------------        ------------
                                                                                                  2,916,424           1,455,621
                                                                                               ------------        ------------
Net cash used in operating
  activities of continuing operations                                                          (  1,865,513)         (  520,289)
Net cash provided by (used in) discontinued operations                                         (    302,651)            147,923
                                                                                               ------------        ------------
Net cash flows used in operating activities                                                    (  2,168,164)         (  372,366)
                                                                                               ------------        ------------
Cash flows from investing activities:
  Acquisition of property and equipment                                                        (      8,483)         (   90,192)
  Construction in process                                                                      (    287,500)                  -
                                                                                               ------------        ------------
Net cash used in investing activities                                                          (    295,983)         (   90,192)
                                                                                               ------------        ------------
Cash flows from financing activities:
  Payments of note payable - stockholders                                                      (     75,000)                  -
  Proceeds from covertible promissory notes                                                       2,950,000             400,000
  Repayments of redeemable stock obligations                                                              -          (  225,000)
  Proceeds from stock subscription                                                                        -             250,000
  Repayments of long-term debt                                                                 (    924,830)         (1,247,091)
  Proceeds from issuance of common stock                                                            482,598           1,320,000
Net cash provided by (used in) financing
  activities of continuing operations                                                             2,432,768             497,909
                                                                                               ------------        ------------

Net increase (decrease) in cash                                                                (     31,379)             35,351

Cash at beginning of year                                                                            97,957              62,606
                                                                                               ------------        ------------

Cash at end of year                                                                            $     66,578          $   97,957
                                                                                               ============        ============
</TABLE>
         See accompanying notes to consolidated financial statements.

                                      F-5
<PAGE>

                 LIGHTHOUSE FAST FERRY, INC. AND SUBSIDIARIES
             (Formerly Lighthouse Landings, Inc. and Subsidiaries)

               CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

<TABLE>
<CAPTION>
                                                                                            For the Years Ended
                                                                                                December 31,
                                                                                      ---------------------------------
                                                                                         2000                   1999
                                                                                      ----------             ----------
<S>                                                                                   <C>                    <C>
Supplemental Disclosures of Cash Flow Information:

  Cash paid during the year for:
    Interest                                                                          $1,222,270             $1,072,251
                                                                                      ==========             ==========
    Income taxes                                                                      $        -             $    1,323
                                                                                      ==========             ==========

Supplemental Schedules of Noncash

  Operating and Financing Activities:

  Common stock issued as additional interest                                          $2,460,435             $        -
                                                                                      ==========             ==========
  Common stock issued in payment of consulting
    and legal fees                                                                    $  328,813             $        -
                                                                                      ==========             ==========
  Common stock issued as payment of liabilities:

    Related parties                                                                   $  214,625             $        -
                                                                                      ==========             ==========
    Others                                                                            $  125,000             $        -
                                                                                      ==========             ==========
  Convertible promissory note issued as payment
    of deferred financing costs                                                       $  353,000             $        -
                                                                                      ==========             ==========
  Note issued as payment of a mortgage on
    discontinued operations                                                           $  200,000             $        -
                                                                                      ==========             ==========
</TABLE>

         See accompanying notes to consolidated financial statements.

                                      F-6
<PAGE>

                  LIGHTHOUSE FAST FERRY, INC. AND SUBSIDIARIES
             (Formerly Lighthouse Landings, Inc. and Subsidiaries)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               DECEMBER 31, 2000


NOTE 1 - REALIZATION OF ASSETS - GOING CONCERN.

               The accompanying consolidated financial statements have been
         prepared in conformity with generally accepted accounting principles,
         which contemplate continuation of the Company as a going concern.
         Lighthouse Fast Ferry, Inc. (the "Company") has sustained substantial
         losses for the years ended December 31, 2000 and 1999.  In addition, at
         December 31, 2000 the Company has working capital and stockholders'
         capital deficiencies of $4,324,309 and $1,051,161, respectively.

               Future viability of the Company is dependent upon the Company's
         obtaining additional funding.  During 1999, the Company arranged
         private placements of its common stock for net cash proceeds of
         $1,570,000 and obtained short-term loans in the amount of $700,000 for
         both its continuing and discontinued segments.    The proceeds were
         used to provide funds for the payment of certain obligations and
         ongoing operations.  During 2000, the Company received cash of $482,598
         through the sale of its securities and $2,950,000 from convertible
         promissory notes.

               It is management's opinion that the funds to be raised by the
         sales of its securities and borrowings plus the funds anticipated to be
         raised through the sale of net assets of the discontinued segments (See
         Note 3 for subsequent sale) will be sufficient to meet the Company's
         obligations as they become due.

               The conditions previously mentioned raise substantial doubt about
         the Company's ability to continue as a going concern.  The financial
         statements do not include any adjustments that might result from the
         outcome of this uncertainty.



NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.

         (a)   Description of Business:

               Lighthouse Fast Ferry, Inc. (the "Company"), is a New Jersey
         corporation formed on May 12, 1993 under the name Drydock Cafe, Inc. On
         September 21, 1994, the Company changed its name to Lighthouse
         Landings, Inc.  On September 19, 2000, the Company changed its name to
         Lighthouse Fast Ferry, Inc.  The Company, through its subsidiary New
         York Fast Ferry Holding Corp. ("NYFF"), is an operator of high speed,
         commuter passenger ferry boats in the New York City metropolitan
         region.



NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. (Continued)

         (b)   Principles of Consolidation:

               The consolidated financial statements include the accounts of
         Lighthouse Fast Ferry, Inc. and its subsidiaries.  Inclusion of the
         results of subsidiary companies' operations is on the "Purchase"
         method, from the dates of their respective acquisition.  All
         significant intercompany balances and transactions have been eliminated
         in consolidation.  As discussed more thoroughly in Note 3, the retail
         and marina segments are presented as discontinued operations.

                                      F-7

<PAGE>

         (c)   Basis of Presentation:

               The accompanying consolidated financial statements have been
         prepared in accordance with accounting principles generally accepted in
         the United States of America.


         (d)   Use of Estimates:

               The preparation of financial statements in conformity with
         accounting principles generally accepted in the United States of
         America requires management to make estimates and assumptions that
         affect certain reported amounts and disclosures.  Accordingly, actual
         results could differ from those estimates.


         (e)   Inventories:

               Inventories, which consist of parts inventory and cafeteria
         products, are stated at the lower of cost or market on the first-in,
         first-out method.


         (f)   Property and Equipment:

               Property and equipment is recorded at cost.  The cost of the
         ferries obtained through the Fast Ferries Holding Corp. acquisition in
         December 1998 has been determined as an allocation of the purchase
         price of the business acquired based upon an appraisal.  Depreciation
         is computed using the straight-line method.  Depreciation on equipment,
         including the ferries, is calculated principally over their estimated
         useful lives of fifteen years.

               Expenditures that substantially increase estimated useful lives
         are capitalized.  Maintenance, repairs and minor renewals are expensed
         as incurred.  When assets are sold or otherwise disposed of, their
         costs and accumulated depreciation are removed from the accounts and
         any resulting gain or loss is recorded in operations.



NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.  (Continued)

         (g)   Goodwill:

               Goodwill arising from acquisitions initially represents the
         excess of the purchase cost over the fair value of identifiable assets
         less identifiable liabilities.  Goodwill is reviewed on an ongoing
         basis to determine that the value has not been impaired. In 1999 it was
         determined that the value of the goodwill arising from the purchase of
         The Cigar Box, Inc. was impaired and accordingly the remaining
         unamortized goodwill of $198,654 has been written off to discontinued
         operations during 1999.  The goodwill arising from the acquisition of
         Fast Ferry Holding Corp. and its wholly owned subsidiaries aggregating
         $1,214,174 is being amortized over 15 years.  Amortization of goodwill
         charged to operations was $80,945 for the years ended December 31, 2000
         and 1999, respectively.


         (h)   Revenue Recognition:

               Revenue is recognized when earned.  The Company's ferry business
         sells the majority of commuter tickets in advance of use.  The tickets,
         which expire ninety (90) days after issuance, are

                                      F-8

<PAGE>

         nonrefundable and nonextendable. Accordingly, the Company determines
         the unused portion of ticket sales and defers that value to future
         periods. Deferred revenues aggregated $86,618 and $68,765 at December
         31, 2000 and 1999, respectively.

               The other revenues generated by the Company, for example the sale
         of food through the ferries' concession stands, are recognized when the
         services have been rendered.  To date, other revenues have not been
         significant.


         (i)   Income Taxes:

               The Company complies with Statement of Financial Accounting
         Standards No. ("SFAS 109"), "Accounting for Income Taxes", which
         requires an asset and liability approach to financial accounting and
         reporting for income taxes.  Deferred income tax assets are computed
         for differences between financial statement and tax bases of assets and
         liabilities that will result in future taxable or deductible amounts,
         based on the enacted tax laws and rates in the periods in which
         differences are expected to affect taxable income.  The principal asset
         and liability differences are deferred revenues, valuation allowances
         for long-term assets, the estimated loss on the disposal of
         discontinued operations, and utilization of the Company's tax loss
         carry forwards.  Management has fully reserved the net deferred tax
         assets as it is more likely than not that the deferred tax asset will
         be utilized in the future.


                                      F-9
<PAGE>

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.  (Continued)

         (j)   Impairment of Long-lived Asset:

               The Company accounts for impairment of long-lived assets in
         accordance with Statement of Financial Accounting Standards (SFAS) No.
         121, "Accounting for the Impairments of Long-Lived Assets and for Long-
         Lived Assets to be Disposed of" SFAS No. 121 requires that long-lived
         assets be reviewed for impairment whenever events or changes in
         circumstances indicate that the book value of the asset may not be
         recoverable.  Due to significant losses incurred during 1999 and 2000,
         the Company evaluated its long-term assets of its continuing
         operations, which at December 31, 2000 were comprised of property and
         equipment (principally two (2) ferries) with a depreciated cost of
         $11,389,049 and goodwill on the acquisition of the Fast Ferry Holding
         Corp. with an unamortized cost of $1,031,990.  Based upon an estimate
         of the future undiscounted net cash flows of the related asset or asset
         grouping over the remaining life, it was determined that there was no
         impairment in either the net book value of the ferries or the goodwill.


         (k)   Concentrations of Credit Risk:

               Financial instruments, which potentially subject the Company to
         concentrations of credit risk, consist primarily of cash.  The Company
         places its cash with high credit quality financial institutions which
         at times may be in excess of the FDIC insurance limit.


         (l)   Loss Per Common Share:

               Loss per common share is based on the weighted average number of
         common shares outstanding including common shares issuable subject to
         convertible promissory note agreements.  Such common shares will be
         physically issued in 2001.  In March 1997, the Financial Accounting
         Standards Broad issued Statement No. 128 ("SFAS 128"), "Earnings Per
         Share," which requires dual presentation of basic and diluted earnings
         per share on the face of the statements of operations, which the
         Company has adopted.  Basic loss per share excludes dilution and is
         computed by dividing income available to common stockholders by the
         weighted-average common shares outstanding for the period.  Diluted
         loss per share reflects the potential dilution that could occur if
         convertible debentures, options and warrants were to be exercised or
         converted or otherwise resulted in the issuance of common stock that
         then shared in the earnings of the entity.

         Since the effect of outstanding options, warrants and convertible
         debenture conversions are antidilutive in all periods presented it has
         been excluded from the computation of loss per common share.


                                      F-10

<PAGE>

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.  (Continued)

         (m)   Stock Based Compensation:

               The Company accounts for employee stock options in accordance
         with Accounting Principles Board Opinion No. 25 (APB25),"Accounting for
         stock issued to employees."  Under APB 25, the Company recognizes no
         compensation expenses related to employee stock options, as no options
         are granted at price below the market price on the day of grant.


         (n)   Stock Issued to Nonemployees for Services:

               The Company accounts for stock issued to nonemployees for
         services in accordance with Statement of Financial Accounting Standards
         (SFAS) No. 123.  "Accounting for stock-based compensation".  SFAS No.
         123 requires that all transactions in which goods or services are the
         consideration received for the issuance of equity instruments shall be
         accounted for based on the fair value of the consideration received or
         the fair value of the equity instruments issued, which ever is more
         reliably measurable.



NOTE 3 - DISCONTINUED OPERATIONS.

               On October 28, 1999, the Company adopted a plan to sell its real
         estate and retail/wholesale segments.  Accordingly both segments have
         been accounted for as discontinued operations in the accompanying
         consolidated financial statements. The net assets to be disposed of as
         of December 31, 2000 aggregating $424,763 consists principally of real
         estate and its related secured indebtednesses. The net assets are
         recorded as current assets in the accompanying consolidated balance
         sheet under the caption "Net assets of discontinued operations".
         Management on March 29, 2001 entered into an agreement to sell the real
         property for $1,150,000.  The closing is to be on or before June 15,
         2001, subject to the lawyer obtaining environmental and operational use
         permits.

               In the second quarter of 2000 management became aware that its
         previous estimate of the time required to dispose of these segments was
         incorrect and accordingly the original estimate of the carrying charges
         of the real property - real estate taxes and interest - would have to
         be increased to reflect these charges through June 2001.  The
         accompanying financial statements reflect a charge for $110,000 for
         these costs incurred through June 2000 plus an estimate of an
         additional $125,000 for interest and taxes through June 2001.



NOTE 3 - DISCONTINUED OPERATIONS. (Continued)

               During the year ended December 31, 2000, $425,000 of these
         segments' liabilities was paid and a second mortgage was converted into
         a 10% interest bearing promissory note convertible into the Company's
         common stock initially at $1.50 per share.

               The net assets of discontinued operations, which have been
         segregated in the accompanying balance sheet, are summarized as
         follows:


                                      F-11

<PAGE>

                                                            December 31,
                                                      ------------------------
                                                         2000          1999
                                                      ----------    ----------
         Assets:
            Cash                                      $       --    $    3,129
            Inventory                                      2,000        27,401
            Prepaid expenses                                  --           100
            Property ssets, net (See Note 4)             931,181       974,359
                                                      ----------    ----------
                                                         933,181     1,004,989
                                                      ----------    ----------
         Liabilities:
            Accounts payable                              32,000       186,334
            Secured mortgage payable                      28,575       443,485
            Accrued real estate taxes (a)                447,843       342,588
                                                      ----------    ----------
                                                         508,418       972,407
                                                      ----------    ----------
         Net assets of discontinued operations        $  424,763    $   32,582
                                                      ==========    ==========

            (a)  Real estate taxes liens have been recorded by local
                 governmental authorities because of non-payment of said
                 property taxes arising from a dispute over property tax
                 valuations. The Company is currently attempting to resolve the
                 dispute.



NOTE 4 - PROPERTY AND EQUIPMENT.

               Property and equipment is summarized as follows:

                                                           December 31,
                                                    --------------------------
                                                        2000          1999
                                                    -----------    -----------
         Continuing operations:
            Ferries                                 $13,300,000    $13,300,000
            Computers and office equipment               47,622         38,887
            Furniture and fixtures                      105,992        106,244
                                                    -----------    -----------
                                                     13,453,614     13,445,131
                                                      2,064,565      1,156,251
                                                    -----------    -----------
                                                    $11,389,049    $12,288,880
                                                    ===========    ===========

         Discontinued operations:
            Land and buildings                      $   931,181    $   931,181
            Furniture and fixtures                           --         62,260
                                                    -----------    -----------
                                                        931,181        993,441
            Less: Accumulated depreciation                   --         19,082
                                                    -----------    -----------
                                                    $   931,181    $   974,359
                                                    ===========    ===========

NOTE 5 - INCOME TAXES.

               The components of the provision for income taxes are as follows:


                                      F-12

<PAGE>

                                                   Years Ending
                                                   December 31,
                                            --------------------------
                                                2000          1999
                                            -----------    -----------
               Currently payable:
                  Federal                     $   --         $   --
                  State and local              3,250          1,323
                                              ------         ------
                                               3,250          1,323
                                              ------         ------

               Deferred:
                  Federal                         --             --
                  State and local                 --             --
                                              ------         ------
                                                  --             --
                                              ------         ------
               Total provision
                  for income taxes            $3,250         $1,323
                                              ======         ======

               The deferred tax benefit results from differences in recognition
         of expense for tax and financial statement purposes and for minimum tax
         provision for the various state and local taxing authorities where the
         Company and its subsidiaries are subject to tax.  The Company has
         deferred tax assets consisting of the following temporary differences
         at December 31, 2000:


            Net operating loss carryforward              $1,925,000
            Differences between assigned values
               and tax bases of the assets                2,243,000
            Deferred financing costs                        557,000
            Goodwill                                        352,000
                                                         ----------
                                                          5,077,000
            Valuation allowance                          (5,077,000)
                                                         ----------
                                                         $       --
                                                         ==========

NOTE 5 - INCOME TAXES. (Continued)

               The components of the provision (benefit) for income taxes are as
         follows:


                                      F-13

<PAGE>

                                                For the Years Ended
                                                   December 31,
                                    -------------------------------------------
                                        2000         %         1999         %
                                    ------------   -----   ------------   -----

Loss from continuing operations
   before income taxes              ($ 4,778,687)          ($ 1,974,587)

Computed tax benefit
   at statutory rate                (  1,624,800)  (34.0)  (    671,100)  (34.0)

State income tax                           3,250      --          1,323      --

Non-deductible portion of
   Amortization of goodwill
      and finance costs                  525,100    11.0         28,900     1.5
   Depreciation of property assets       101,200     2.1         95,000     4.8

Compensatory element of
   stock issuances                       948,300    19.8         68,000     3.4

   Other                                      --      --         10,000     0.5

Reserve for operating loss
   carryforward tax asset                 50,200     1.1        469,200    23.8
                                    ------------   -----   ------------   -----
Income tax                          $      3,250      --   $      1,323      --
                                    ============   =====   ============   =====

               The net operating loss carryforwards at December 31, 2000 expire
         as follows:


                               2009      $   62,000
                               2010         107,000
                               2011          93,000
                               2012       1,228,000
                               2013       1,531,000
                               2014         665,000
                               2015       1,975,000
                                         ----------
                                         $5,661,000
                                         ==========

               The Tax Reform Act of 1986 enacted a complex set of rules
         limiting the utilization of net operating loss carryforwards to offset
         future taxable income following a corporate ownership change.  Among
         other things, the Company's ability to utilize the net operating loss
         carryforward of Fast Ferry Holding Corp. is limited following the
         change in ownership in excess of fifty percentage points in any three-
         year period which accrued at acquisition.  The effects, if any, of the
         change in ownership are not reflected in the foregoing tables.


                                      F-14

<PAGE>

NOTE 6 - CONVERTIBLE PROMISSORY NOTES.

               During the months of October through December 2000, the Company
         received proceeds from three senior convertible promissory notes, (one
         for $55,000, one for $200,000, and one for $300,000), totaling
         $555,000. Each senior convertible promissory note carries a simple
         interest rate of 10%. Principal and interest is payable at maturity,
         originally, three months from date of issuance. On December 10, 2000,
         at the request of the Company, the above note holders agreed to modify
         the Notes so that the due date will be extended from December 10, 2000
         to June 30, 2001. The company issued a total of 138,750 shares of its
         common stock to the note holders at the date of issuance. Additionally,
         the Company issued a total of 250,000 shares of its common stock to the
         note holders at the date of modification. These shares of stock are
         restricted securities. The fair value of the common shares on the dates
         of issuance aggregated $485,938 and will be charged to operations as
         additional interest over the life of the notes.

               Additionally, during the month of December, 2000, the Company
         employed that services of a financial consultant to arrange for the
         modification of certain senior convertible promissory notes. The
         consultant received as payment for this service (i) a 10% interest
         bearing note payable on June 30, 2001 in the amount of $100,000 (ii)
         50,000 shares of the Company's restricted common stock, with a fair
         market value at date of issuance of $62,500, and (iii) the same default
         remedies as the bridge loan holders and (iv) warrants to acquire 50,000
         common shares at $2.00 per share. The balance of the promissory note
         and interest accrued a of December 31, 2000 is $100,556.

               Also during the year the company received proceeds from twenty
         seven convertible promissory notes, (three for $5,000, five for
         $10,000, one for $15,000, ten for $20,000, five for $40,000, one for
         $50,000 and two for 60,000 ) totaling $650,000. Each convertible
         promissory note carries a simple interest rate of 10.5%. Interest only
         is payable quarterly, and the notes mature one-year from date of
         issuance. In addition, each convertible promissory note holder was
         issued shares of the company's common stock for each $5,000 dollars of
         indebtedness owed to the convertible promissory note holder at date of
         issuance. Two of the debt holders were issued additional shares
         totaling 35,000 shares to reflect their level of investment in the
         Company. These shares of stock are restricted securities. The fair
         value of the common shares on the dates of issuance aggregated $72,809
         and will be charged to operations as additional interest over the life
         of the notes.




NOTE 6 - CONVERTIBLE PROMISSORY NOTES. (Continued)

               The lenders have the right, at their sole and exclusive option,
         to convert the outstanding indebtedness to common shares (the
         "Conversion Rights") of the company at any time prior to borrower
         making payment. Should such "Conversion Rights" be exercised, the
         Company shall issue such shares to the Lender at the rate of one share
         of common stock for each two ($2.00) dollars of the indebtedness then
         due and owing on all convertible promissory notes and at the rate of
         one share of common stock for each one dollar and fifty cents ($1.50)
         of the indebtedness then due and owing on all senior convertible
         promissory notes. As a result of the modification of certain senior


                                      F-15

<PAGE>

         convertible promissory notes, should such Conversion Rights be
         exercised, the Company shall issue such shares to the Lender at the
         rate of one share of common stock for each one dollar ($1.00) of the
         Indebtedness due and outstanding. The shares issued by the company
         through the exercise of the "Conversion Rights" will be restricted
         securities. The option and conversion as provided herein shall be
         exercised by each lender issuing written notice to the borrower.

               The Company employed the services of a financial consultant to
         arrange for four convertible promissory loans, one dated July 10, and
         three dated July 14, 2000. The consultant received as payment for this
         service (i) a 10% interest bearing note payable on January 14, 2001 in
         the amount of $88,000 (ii) 22,000 shares of the Company's restricted
         common stock, with a fair market value at date of issuance of $44,000,
         and (iii) the same default remedies as the bridge loan holders and (iv)
         warrants to acquire 5,000 common shares at $2.00 per share. On December
         10, 2000, at the request of the Company, the above consultant agreed to
         modify the note so that the due date will be extended from January 14,
         2001 to June 30, 2001. The consultant also received per the terms of
         the note modification, 126,500 shares of the Company's restricted
         common stock, with a fair market value at date of issuance of $158,125.

               On July 10, 2000, the Company received proceeds of one of these
         convertible notes aggregating $500,000. The loan, which bears interest
         at 10% per annum payable quarterly, is payable six months from
         issuance. To obtain the loan, the Company issued to the loan holder
         125,000 shares of restricted common stock of the Company with on-demand
         registration and unlimited piggyback rights. The fair value of the
         shares at issuance aggregating $250,000 will be charged to operations
         as additional interest over the life of the notes. On December 10,
         2000, at the request of the Company, the above note holder agreed to
         modify the notes so that the due date will be extended from December
         10, 2000 to June 30, 2001. Additionally, the note holder received per
         the terms of the note modification, 250,000 shares of the Company's
         restricted common stock, with a fair market value at date of issuance
         of $312,500.




NOTE 6 - CONVERTIBLE PROMISSORY NOTES. (Continued)

               On July 14, 2000, the Company received proceeds from three of
         these convertible notes aggregating $300,000. Additionally, the Company
         issued another $200,000 convertible promissory notes to a stockholder
         in exchange for a $200,000 second mortgage on real property of the
         Company's discontinued operations. The notes, which bear interest at
         10% per annum payable quarterly, were originally payable six months
         from issuance. On December 10, 2000, at the request of the Company, the
         above note holders agreed to modify the notes so that the due date will
         be extended from December 14, 2000 to June 30, 2001. To obtain the
         notes, the Company issued a total of 125,000 shares of the Company's
         unregistered common stock with on-demand registration and unlimited
         piggyback rights. The fair value of the shares at issuance aggregating
         $250,000 will be charged to operations as additional interest over the
         life of the notes. Additionally, the note holders received, per the
         terms of the note modification, 250,000 shares of the Company's
         restricted common stock, with a fair market value at date of issuance
         of $312,500.

                                      F-16

<PAGE>

               The four convertible notes above may be repaid anytime within
         three months of issuance. However, the loans must be repaid out of the
         proceeds of a financing greater than $3,000,000. Initially, the notes
         are convertible into the Company's common stock at $1.50 per share. As
         a result of the note modification, the notes are convertible into the
         Company's common stock at the rate of $1.00 per share.

               On June 14, 2000, New York Fast Ferry Services Inc., received
         proceeds of two bridge loans aggregating $60,000. The loans bear
         interest at 14% per annum. Loans aggregating $45,000 plus accrued
         interest are payable on July 14, 2000, which were made, and the balance
         of the loans with accrued interest on or before September 14, 2000
         which was also paid.

               On March 11, 2000, the Company received proceeds of two
         convertible promissory notes aggregating $1,000,000. The notes, which
         bear interest at 10% per annum payable quarterly, were originally
         payable nine months from issuance. On December 10, 2000, at the request
         of the Company, the above note holders agreed to modify the notes so
         that the due date will be extended from December 11, 2000 to June 30,
         2001. To obtain the notes, the Company issued to each note holder
         125,000 shares of restricted common stock with on-demand registration
         and unlimited piggyback rights with a fair value at date of issuance of
         $125,000. Additionally, the note holders received, per the terms of the
         note modification, 500,000 shares of the Company's restricted common
         stock, with a fair market value at date of issuance of $625,000. The
         fair value of the shares will be charged to operations as additional
         interest over the life of the loans.





NOTE 6 - CONVERTIBLE PROMISSORY NOTES. (Continued)

               The notes may be repaid anytime within nine months of issuance;
         however, the notes must be repaid from the proceeds of a financing
         greater than $2,000,000. Initially the notes are convertible into
         common stock at $1.50 per share. As a result of the note modification,
         the notes are convertible into the Company's common stock at the rate
         of $1.00 per share.

               The Company employed the services of a financial consultant to
         arrange for the two March, 2000 convertible notes. The consultant
         received as payment for this service (i) a 10% interest bearing note
         payable on December 10, 2000 in the amount of $110,000, (ii) 25,000
         shares of the company's common stock whose fair market value at date of
         issuance was $12,500, and (iii) the same default remedies as the bridge
         note holders. On December 10, 2000, at the request of the Company, the
         above consultant agreed to modify the note so that the due date will be
         extended from December 10, 2000 to June 30, 2001. The outstanding
         balance including accrued interest as of December 31, 2000 is $110,611.
         The consultant also has agreed to perform consulting services for the
         Company and will receive payment for his services in the form of
         warrants to acquire 50,000 common shares at $2.00 per share for each
         three month period his services are required. The consultant was issued
         warrants to acquire 50,000 common shares at $2.00 per share in the
         second and third quarters. The fair value of the warrants aggregating
         $10,000 was charged to operations.

               The outstanding balance for the thirty-five convertible
         promissory notes as of December 31, 2000 is $3,503,000 and accrued
         interest of $74,438 is included in accounts payable and accrued
         expenses.

                                      F-17

<PAGE>

               In connection with the issuance of the convertible promissory
         notes the Company capitalized interest and financing expenses of
         $3,095,375 to be amortized over the life of the respective obligation.
         During the year ended December 31, 2000 amortization was $1,448,406,
         with the balance of $1,646,969 included with prepared expenses and
         other current assets.



NOTE 7 - LONG-TERM DEBT.

            Long-term debt is as follows:

                                                            December 31
                                                      -------------------------
                                                         2000          1999
                                                      -----------   -----------
Mortgage note payable, secured by the
  vessel "Finest" due in monthly install-
  ments of $61,875 through March 10, 1999,
  and $56,719 through September 10, 2005,
  including interest at 9.25% per annum, with a
  final payment of $3,626,691 due October 10,
  2005.                                          (a)  $ 4,975,313   $ 5,156,274

Mortgage note payable, secured by the vessel
  "Bravest" due in monthly installments of
  $59,063 through March 10, 1999 and
  $56,719 through September 10, 2005, including
  interest at 9.25% per annum, with a final
  payment of $3,572,971 due October 10, 2005.    (a)    4,940,492     5,127,461

Note payable, secured by the vessel "Finest"
  and "Bravest", payable in fifteen monthly
  installments of $15,000 commencing in
  February 1999, payment of $343,333 on
  March 31, 2000 and a final payment of
  $934,319 on December 10, 2000
  including imputed interest of 9.25%.           (a) (b)  934,000     1,254,913

10% interest bearing obligation payable in two
  installments of $100,000 each on March 15,
  2000 and July 15, 2000 and as final payment of
  $200,000 January 15, 2001.                              200,000       400,000
Other                                                          --         5,226
                                                      -----------   -----------
                                                       11,049,805    11,943,874
Portion due within one year                             1,597,510     1,879,764
                                                      -----------   -----------
Long-term debt - less current maturities              $ 9,452,295   $10,064,110
                                                      ===========   ===========

(a) The two first mortgages on the ships and note payable are secured through
(i) cross collateralization agreements; (ii) assignments of charter agreements
and other personal property, (iii) a pledge of a potential

                                     F-18
<PAGE>

receivable arising from a lawsuit against the City of New York and (iv) cross
corporate guarantees.

(b) The Company is in default of the note and is in negotiations with the lender
to restructure the debt. Additionally, the lender and management are discussing
renegotiation of the two ship mortgages.

         The secured debt obligations mature as follows:

                             2001     $ 1,597,510
                             2002         508,102
                             2003         557,146
                             2004         610,924
                             205        7,776,123
                                      -----------
                                      $11,049,805
                                      ===========


NOTE 8 - CAPITAL STOCK.

         (a)   Stock Issued for Consideration Other Than Cash:

               During the fourth quarter of 2000, the Company issued 1,636,500
         shares having a fair market value on the date of issuance of
         $2,048,281.  The shares were issued as additional interest and as
         payment of a consultant's fee. This amount is being charged to
         operations over the life of the convertible promissory notes issued
         through out the fourth quarter of 2000.  1,524,500 shares at December
         31, 2000 were not issued but are considered as outstanding in the
         accompanying financial statements.

               During the third quarter of 2000, the Company issued 279,500
         shares having a fair market value on the date of issuance of $559,092.
         The shares were issued as additional interest and as payment of a
         consultant's fee, and this amount is being charged to operations over
         the life of the convertible promissory notes issued through out the
         third quarter of 2000.

               During the second quarter of 2000, the Company issued 20,000 of
         its common shares having a fair market value on the date of issuance of
         $40,000 to outside legal and financial consultants for services
         rendered.

               During the second quarter of 2000, the Company issued 100,000
         shares having a fair market value on the date of issuance of $125,000.
         This issuance was for satisfaction of a note and other liabilities
         related to the discontinued operations.

               During the second quarter of 2000, the Company issued 3,125
         shares having a fair market value on the date of issuance of $4,375.
         The shares were issued as additional interest, and this amount is being
         charged to operations over the life of the convertible promissory notes
         issued in June 2000.

               During the first quarter of 2000, the Company issued 252,500
         shares having a fair market value on the date of issuance of $214,625
         to two officer/directors and another director for satisfaction for
         accrued compensation in the amount of $214,625.

               During the first quarter of 2000, a financial consultant was
         issued 25,000 shares having a fair market value on the date of issuance
         was $12,500 for service rendered in arranging a financing. This amount
         is being charged to operations over the life of the loan.

               During the first quarter of 2000, the Company issued 250,000 of
         its common shares having a fair market value on the date of issuance of
         $125,000 as additional interest.

               Pursuant to the provisions of a note payable obligation entered
         into in June 1999, the Company issued 50,000 shares of its

                                      F-19

<PAGE>

         common stock as additional interest whose fair value at the time of
         issuance was $100,000.

               During 1999, the Company issued 55,000 shares having a fair
         market value on the date of issuance of $55,000 to a director for
         services rendered.




NOTE 8 - CAPITAL STOCK. (Continued)

         (b)   Common Stock Issued for Cash:

               During 2000, the Company sold 712,667 shares of its common stock
         for $482,598.  During 1999, the Company sold 1,550,000 shares of its
         common stock for $1,320,000.  Of the shares sold in 1999 a consultant
         to the Company purchased 50,000 shares of common stock for $5,000 in
         cash.  The variance between the fair value of the shares issued and the
         cash proceeds aggregating $45,000 was charged to operations as
         compensation in fiscal 1999.



NOTE 9 - STOCK OPTIONS AND WARRANTS.

               A summary of activity related to non-qualifying stock options and
         warrants granted by the Company is as follows:

                                                                  Exercise Price
                                              Options  Warrants      Per Share
                                              -------  ---------  --------------

         Outstanding at January 1, 1999        10,000    200,000  $ .96 to $2.50
         Granted during 1999                  410,000  1,330,000  $1.00 to $1.75
                                              -------  ---------
         Outstanding at December 31, 1999     420,000  1,530,000  $1.00 to $2.60
         Granted during 2000                  210,000  1,206,167  $ .50 to $2.00
         Expired in 2000                       10,000         --
                                              -------  ---------
         Outstanding at December 31, 2000     620,000  2,736,167  $ .50 to $2.60
                                              =======  =========


         (a)   Stock Options:

               (i)   Stock Options Granted in 1999:

               The Company granted an option to an employee to purchase 10,000
         shares at a price of $1.50 per share, which was the fair value at date
         of grant.  Such option is exercisable through October 6, 2001.

               In June 1999, the Company's President was granted options to
         purchase 200,000 shares exercisable through October 6, 2002 at a $1.75
         per share, which was the fair value on the date of grant.  Such options
         were granted for his guaranteeing and securitising an obligation of the
         Company.

               Also in October an officer and a director each received options
         to purchase 100,000 common shares exercisable at $1.50 per share which
         was the fair value at the date of grant.  The officer's option expires
         on December 20, 2001 and the other expires on December 20, 2004.


                                      F-20

<PAGE>

NOTE 9 - STOCK OPTIONS AND WARRANTS. (Continued)

         (a)   Stock Options: (Continued)

               (ii)  Stock Options Granted in 2000:

               The company has entered into new employment agreements with its
         Chief Executive Officer and its V.P., Secretary in 2000.  These
         officers received as a condition of their contract options to purchase
         100,000 and 150,000, respectively, shares of common stock at $1.00 per
         share, the fair market value at the date of grant, through January
         2007.  Half of these options are exercisable in January 2002 and the
         officers are first able to exercise the other 50% in January 2003.

               The Company granted an option to a employee/stockholder to
         purchase 10,000 shares at a price of $1.50 per share, which was the
         fair market value at the date of grant.  Such option is exercisable
         through October 28, 2002.

               (iii) Employee Stock Option Plan:

               On March 10, 2000, the Board of Directors of the Company adopted
         the 2000 Employee Stock Option Plan, reserving a maximum of 1,115,000
         shares of common stock to be issued as bonuses or upon the exercise of
         options.  No stock options have been granted during the year 2000.

         (iv)  Assuming the fair market value of the stock at the date of
         grant to be equal to option exercise price, the life of the options to
         be from 1.3 years to 7 years the expected volatility at 200%, expected
         dividends are none, and the risk-free interest rate of 10%, the Company
         would have recorded compensation expense of $277,118 and $8,052 for the
         years ended December 31, 2000 and December 31, 1999, respectively, as
         calculated by the Black-Scholes option pricing model.  As such,
         proforma net loss and loss per share would be as follows:

                                                    For the Years Ended
                                                        December 31,
                                                 ---------------------------
                                                     2000           1999
                                                 ------------   ------------
           Net loss as reported                  ($5,017,407)   ($2,522,911)

           Additional compensation                   277,118          8,052
                                                 ------------   ------------
           Adjusted net loss                     ($5,294,525)   ($2,530,963)
                                                 ============   ============

           Loss per share as reported                ($.81)         ($.70)
                                                     ======         ======

           Adjusted loss per share                   ($.81)         ($.70)
                                                     ======         ======



         (b)   Warrants:

               (i)   Warrants Granted in 1999:

               In July 1999, as a part of a financing agreement, a lender was
         issued a warrant to acquire 200,000 common shares for three years at
         $1.00 per share.


NOTE 9 - STOCK OPTIONS AND WARRANTS. (Continued)

         (b)   Warrants: (Continue)

               As an inducement to purchase shares of the Company's common
         stock, warrants to purchase 850,000 shares were granted to individuals
         who purchased stock in 1999 and 75,000 warrants were issued to a
         financial consultant as a finder's fee relating to the sale.  These
         warrants are exercisable at various times through December 31, 2002 at
         prices ranging from $1.00 to $1.25.

                                      F-21

<PAGE>

               (i)   Warrants Granted in 1999:

               On October 27, 1999 warrants to purchase 100,000 common shares
         were granted to both of the Company's President and Secretary.  The
         warrants are exercisable through October 27, 2001 at $1.25 per share
         which was in excess of the fair market value of the Company's common
         stock at date of issuance.  An employee received a warrant to acquire
         5,000 common shares at $1.00 per share, the fair market value at
         issuance, exercisable for one year.

             Management and the recipients believe that the value of the
         warrants issued in 1999 was nominal and accordingly did not reflect any
         value to these issuances.

               (ii)  Warrants Granted in 2000:

               As an inducement to purchase shares of the Company's common
         stock, warrants to purchase 666,167 shares were granted to individuals
         who purchased stock in 2000.  The warrants are exercisable at various
         times through March 15, 2002 at prices ranging from $.50 to $2.00.

               Financial consultants were issued warrants to acquire 190,000
         common shares for services ranging from $1.25 to $2.00 per share which
         was the fair value of the common stock on the date of issuance.

               The Company's President and Vice President/Secretary were issued
         warrants to purchase 100,000 and 50,000 shares respectively as an
         employment bonus.  The warrants are exercisable through January 1, 2003
         at $1 per share, the fair market value at issuance.  Additionally, the
         Company's President and Vice President/Secretary were issued warrants
         to purchase 100,000 shares each as per their employment contracts.  The
         warrants are exercisable through January 2007 at $1 per share, the fair
         market value at issuance.



NOTE 10- COMMITMENTS AND CONTINGENCIES.

         (a)   Leases:

               (i)   The Company's corporate office is being occupied by the
                     Company under a sublease agreement with Anthony Colasanti,
                     a director of the Company, at a cost of $2,750 per month.

               (ii)  The NYFF Group operates from leased property in Highlands,
                     NJ (the Aragon site). The lease is for five years and
                     commenced May 1998. Lease payments are dependent on daily
                     passenger volume using the leased property, and averaged
                     approximately $35,600 per month during 2000. As the
                     passenger volume using the Aragon site increases, the lease
                     payments will increase proportionately. In addition, the
                     NYFF Group rents other facilities on short-term leases.
                     Rents under the short-term leases aggregate approximately
                     $2,500 per month.

               (iii) On December 15, 2000 the Company executed a Parking License
                     Agreement, Docking Permit and Lease of Dock and Office
                     Space (the "Clam Hut Lease") for the Clam Hut site.
                     Pursuant to the terms of the Clam Hut Lease, the Company
                     has the right to

                                      F-22

<PAGE>

                      use 125 of the parking spaces at the Clam Hut site from
                      Monday to Friday until December 31, 2001 for a fee of
                      $1,250 per week plus 5% of gross revenues of all
                      excursions/charters originating and/or terminating at the
                      landlord's pier. The Clam Hut Lease is renewable at the
                      end of each period with terms to be decided upon renewal
                      and in keeping with the requirements of the municipality.
                      In addition, pursuant to the terms of the Clam Hut Lease,
                      the Company has the right to use the pier and to use the
                      outbuilding at the foot of the pier for $400.00 per month
                      as a ticket booth. The terms of use for the pier and
                      outbuilding are coincident with the terms of the parking
                      space license. The Company began ferry service from the
                      site on December 11, 2000.

                (iv)  In November 1999, the Company completed negotiations and
                      executed a lease for a property in Stamford, CT as a base
                      for fast ferry service to an from Manhattan and LaGuardia
                      Airport. The site requires improvements and government
                      approvals. The Company has negotiated a settlement of the
                      Legal Proceeding with the Landlord, which provides for a
                      new Lease (the "Landlord Lease") with Landlord for the
                      Stamford Property. The Landlord Lease will be for a term
                      of five (5) years, with three (3) five year options. The
                      Landlord Lease will be subject to an existing Contract of
                      Sale for the entire 30 acre parcel (the "Parcel") of which
                      the Stamford Property is a small part. Further, the
                      Company has negotiated a Lease (the "Contract Purchaser
                      Lease") with the Landlord's contract purchaser, which
                      shall take effect immediately upon the sale of the Parcel
                      by Landlord to the contract purchaser. The Contract
                      Purchaser Lease will also be for a term of five (5) years
                      with three (3) five year options and provides that the
                      Company may utilize the Parcel for parking, a ferry
                      terminal and to operate its high speed ferry service. The
                      Contract Purchaser Lease will further provide that upon
                      development and construction of the Parcel the contract
                      purchaser will construct a parking garage and allocate to
                      the Company for its exclusive use 500 parking spaces. The
                      Company is awaiting Lease documents from both Landlord and
                      the contract purchaser and expects both Leases to be
                      executed by April 1, 2001.



NOTE 10 - COMMITMENTS AND CONTINGENCIES. (Continued)

          (b)   Employment Contracts:

                     The Company has entered into new employment agreements with
                its executive officer Anthony Cappaze and its Secretary, Anthony
                Colasanti in 2000. The agreements provide for a base salary of
                $150,000 and $120,000 per year, respectively, for three years.
                Under these agreements Mr. Cappaze received 100,000 warrants and
                Mr. Colasanti 50,000 warrants to purchase a like number of the
                Company's common shares exercisable through January 2003 at the
                fair market value of the common stock on the date of grant of
                $1.00 per share. Messrs. Cappaze and Colasanti also received as
                a condition of their contract options to purchase 200,000 and
                100,000, respectively, shares of common stock at $1.00 per share
                through January 2007. Half of these options are exercisable in
                January 2002 and the officers are first able to exercise the
                other 50% in January 2003. Mr. Colasanti also received a warrant
                to acquire 100,000 common shares for two years at $1.00 per
                share.

                The Company entered into an employment agreement with John
          Ferreira on April 30, 2000. For the period from May 1, 2000 to
          December 31, 2000, Mr. Ferreira will receive a salary at the rate of


                                     F-23
<PAGE>

          $100,000 per annum. Beginning January 1, 2001, Mr. Ferreira's salary
          will be $125,000 per year.

                The NYFF Group has entered into an employment contract with its
          President which provides for a salary of $90,000 each year through
          October 4, 2003. Pursuant to the contract, the President is to be
          granted an option to purchase 10,000 shares of the Company's common
          stock each year at the fair market value on the grant date.

          (c)   Litigation:

                On November 25, 1997 New York Fast Ferry Services, Inc. ("NY
          Fast Ferry") filed suit, in the Supreme Court of the State and County
          of New York, against the City of New York (the "City") alleging, among
          other things, breach of agreement by the City for a lease of a ferry
          franchise agreement (the "Agreement").

                In September 1993, based on NY Fast Ferry's response to the
          City's Request for Proposal ("RFP"), NY Fast Ferry was awarded the
          ferry route contemplated in the RFP. As part of the RFP process, the
          City solicited NY Fast Ferry to spend approximately $12,000,000 to
          build two ferries to serve the route. The City provided data to NY
          Fast Ferry related to the economic viability of the service.
          Continuation of the fundamental premises in the data was necessary for
          the service to be economical for NY Fast Ferry. The Agreement between
          NY Fast Ferry and the City stated that the City intended to construct
          landing and terminal facilities at one end of the route, and to make
          improvements to the terminals at the other end of the route. The City
          also agreed to use its "best efforts" to provide connecting transit
          links to one of the terminals on the route.

                NY Fast Ferry claims that the City, for the most part, has not
          made the improvements on the terminals. NY Fast Ferry also claims that
          the City has breached its duty under the Agreement to act in good
          faith, and instead, has acted in a manner to undermine or destroy NY
          Fast Ferry's business. NY Fast Ferry is seeking $4,000,000 in
          compensatory damages or, alternatively, rescission of the Agreement.
          The proceeds, if any, of the suit are pledged 50% to the original
          shareholders of NY Fast Ferry and 50% to debis Financial Services,
          Inc. as a pledge of collateral against amounts owing to them pursuant
          to a note payable.


NOTE 10 - COMMITMENTS AND CONTINGENCIES. (Continued)

          (c)   Litigation: (Continued)

                On June 30, 2000, D. Weckstein & Co., Inc. ("Weckstein") filed
          suit against the Company in the Supreme Court of the State of New
          York. The Complaint alleges that the Company owes Weckstein $360,000
          for services rendered by Weckstein in connection with the Company's
          purchase of The Cigar Box, pursuant to a letter agreement between
          Weckstein and the Company. In the alternative, if the Court finds that
          Weckstein is not entitled to damages for breach of the letter
          agreement, Weckstein seeks an award in quantum meruit for services
          rendered. Weckstein also seeks an award of its costs and
          disbursements.

                On July 28, 2000, the Company filed an Answer, denying that the
          Company owes Weckstein damages for breach of contract or in quantum
          meruit; raising several defenses, including that Weckstein failed to
          perform its obligations under the letter agreement; and seeking
          dismissal of the Complaint and an award of the Company's attorney's
          fees, costs and further relief that the Court deems just and
          equitable. On July 28, 2000, the Company filed a Notice of Removal,
          and the case has been removed from the Supreme Court of the State of
          New York to the United States District Court for the Southern District
          of New York, based on the diversity jurisdiction of the Federal Court.
          Counsel for Weckstein has indicated a desire to end the litigation
          prior to trial by way of a negotiated settlement. No settlement

                                      F-24
<PAGE>


          proposals have been exchanged as of March 19, 2001. Management is of
          the opinion that the plaintiff's case is without merit. The company
          will not settle this action prior to trial unless the settlement
          amount is insignificant.

                On August 3, 2000, the Company received a notice from a
          subsidiary of The Connecticut Light & Power Co. (the "Landlord"),
          terminating its lease for the property that is the proposed site for
          the Company's Stamford, Connecticut ferry terminal. The Landlord based
          the termination of the lease on the failure of the Company to get
          certain necessary permits for its use of the site. The Company
          disputes the Landlord's right to terminate the lease.

                The Company has negotiated a settlement of the Legal Proceeding
          with the Landlord, which provides for a new Lease (the "Landlord
          Lease") with Landlord for the Stamford Property. The Landlord Lease
          will be for a term of five (5) years, with three (3) five year
          options. The Landlord Lease will be subject to an existing Contract of
          Sale for the entire 30 acre parcel (the "Parcel") of which the
          Stamford Property is a small part. Further, the Company has negotiated
          a Lease (the "Contract Purchaser Lease") with the Landlord's contract
          purchaser, which shall take effect immediately upon the sale of the
          Parcel by Landlord to the contract purchaser. The Contract Purchaser
          Lease will also be for a term of five (5) years with three (3) five
          year options and provides that the Company may utilize the Parcel for
          parking, a ferry terminal and to operate its high speed ferry service.
          The Contract Purchaser Lease will further provide that upon
          development and construction of the Parcel the contract purchaser will
          construct a parking garage and allocate to the Company for its
          exclusive use 500 parking spaces. The Company is awaiting the Lease
          documents from both Landlord and the contract purchaser and expects
          both Leases to be executed by April 1, 2001.



NOTE 11 - SUBSEQUENT EVENTS.

                In January, the Company received proceeds from one 10.5%
          convertible promissory note totaling $20,000. In February, the Company
          received proceeds from four 10.5% convertible promissory notes (one
          for $50,000, one for $25,000, and two for $5,000) totaling $85,000.
          During the month of March, the company received proceeds from one
          10.5% convertible promissory note totaling $5,000 and one 10% senior
          convertible promissory note totaling $275,000. Each convertible
          promissory note carries a simple interest rate of 10.5%, interest only
          is payable quarterly, and matures one year from date of issuance. Each
          senior convertible promissory note carries a simple interest rate of
          10%, interest only is payable quarterly, and matures four months from
          date of issuance.

                The lender has the right, at its sole and exclusive option, to
          convert the outstanding indebtedness to common shares (the "Conversion
          Rights") of the Company at any time prior to borrower making payment.
          Should such Conversion Rights be exercised, the Company shall issue
          such shares to the Lender at the rate of one share of common stock for
          each $2.00 of the indebtedness then due and owing. The shares issued
          by the company through the exercise of the Conversion Rights will be
          restricted securities. The option and conversion will be exercised by
          the lender issuing written notice to the borrower.

                                      F-25