<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, 2001
                                            -----------------

     [_]  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) 618-9034
     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: $4,421,859.

As of March 25, 2002, there were 16,845,338 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.yahoo.com on March 25, 2002, the aggregate
market value of Common Stock held by non-affiliates of the Registrant was
approximately $8,262,165.

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"). In connection with a redevelopment plan,
in December 1997 the Company acquired a privately owned retail store called the
Cigar Box, Inc.

     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"). 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 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. In December 1998 the
selling shareholders advised the Company of their intent to exercise the put. As
of December 31, 2001 there are 10,000 shares subject to the put option for which
the Company owes the shareholders a total of $50,000.

     After the acquisition of NY Fast Ferry, the Company's core business changed
from the redevelopment of the Property to the operation of existing fast ferry
service and the development of new ferry 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 2000, the Company closed all non-core businesses
and listed the Property for sale. On December 5, 2001, the Company sold the
Property to an unrelated third party for the sum of $1,150,000 less related
fees, expenses and liabilities.

     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. In June 2001, the Company acquired 4% of the remaining issued
and outstanding shares of Fast Ferry Holding Corporation from a former
shareholder for a cash payment of $4,140 and 16,363 shares of the Company's
common stock. Management expects to finalize the transaction with the holders of
the remaining 16% of Fast Ferry Holding Corporation in the second quarter of
2002.

                                       2
<PAGE>

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

     The Company is in the business of operating high-speed, passenger ferries.
Currently, 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 markets being served by NY Fast Ferry
include the Rumson-Red Bank peninsula immediately south of Highlands, New Jersey
in Monmouth County and Matawan-Middletown-Holmdel area in the north and
northwestern sections of Monmouth County, both of which have excellent market
potential to support present and expanded ferry service. According to the New
Jersey Department of Transportation, approximately 22,000 commuters travel daily
to Manhattan from Monmouth County, New Jersey alone.

     The Company, through its subsidiary NY Fast Ferry, operates a commuter
ferry service from two separate leased facilities in Highlands, New Jersey. The
primary facility known as the Aragon Marina ("Aragon") is located on Willow
Street, Highlands, New Jersey. The Company leases the site on a passenger trip
basis. Under this lease, which has a remaining term of approximately two years,
the property owner provides and maintains all landside facilities, including
parking attendants in the morning, snow plowing, lighting, docks, and shuttle
bus to an offsite lot. It is Aragon's obligation to provide 300 parking spaces,
but only 250 are available, and the Company has reduced payment accordingly for
the unavailable parking spaces. The monthly lease payment to Aragon averaged
$30,400 over the last 12 months.

     On December 15, 2000 the Company executed a one-year lease agreement for an
additional site in Highlands, NJ. The terms of the lease provide the Company
with the right to use 125 of the parking spaces at the site, the pier and the
outbuilding at the foot of the pier as a ticket booth from Monday to Friday
until December 31, 2001 for a fee of approximately $6,000 per month. The Company
began ferry service from the site on December 11, 2000. The lease is renewable
at the end of each period in keeping with the requirements of the municipality
and with terms to be decided upon renewal. In December 2001, the Company renewed
the lease for another one-year period.

     Effective October 15, 2001, the Company commenced high-speed ferry service
from Keyport, NJ, also in Monmouth County, to Manhattan and now operates two
chartered high-speed vessels from that location. The Keyport ferry site is
operated under a joint venture agreement between NY Fast Ferry and Keyport Fast
Ferry, an unrelated entity. Keyport Fast Ferry is responsible for the landside
operations while the Company is responsible for the waterside operations,
primarily providing and operating the vessels. The Company collects all revenues
in the form of ticket sales. The Company pays to Keyport Fast Ferry a monthly
amount based on a declining scale from $1.50 to $1.30 for each passenger
embarking or debarking at the Keyport ferry site. The agreement is for a one-
year term with automatic extensions commensurate with approvals issued by the
municipality. The joint venture partners have exclusive, non-compete agreements
with respect to Keyport ferry service.

                                       3
<PAGE>

     The Company's vessels travel 17 nautical miles across New York Harbor from
Highlands, New Jersey to Pier 11 in downtown Manhattan and the East 34/th/
Street Pier in midtown Manhattan and from Keyport, NJ to both Pier 11 and East
34/th/ Street Pier in Manhattan. Pier 11 is located about two blocks from the
Wall Street financial district. The East 34/th/ Street Pier is on the eastside
of midtown Manhattan. The trip to Pier 11 takes approximately 40 minutes with an
additional 10 minutes to the East 34/th/ Street dock. Each day, the Company
operates three peak-time trips in the morning and four peak-time return trips at
the end of the business day, and makes one off-peak morning trip and one off-
peak return trip in the evening four days a week from both its Highlands and
Keyport sites. Passengers are primarily commuters, the majority of whom purchase
40-trip tickets at the current cost of $450. For the twelve months ended
December 31, 2001, the Company provided ferry service for approximately 297,775
passenger trips at its Highlands, NJ location as compared to 280,884 passenger
trips in 2000. After only two and a half months of operations, Keyport averaged
between 600 and 650 passenger trips per day. Between its Highland and Keyport
locations the Company averages approximately 2,000 passenger trips per day.

     NY Fast Ferry also runs excursions during non-commuter times and on
holidays and weekends when the vessels are not operating scheduled trips. These
excursions include summer sunset cruises in New York Harbor and fall foliage
tours up the Hudson River. 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 July 4/th/ fireworks in New York Harbor.
Additionally, the Company rents its vessels for private charters and parties.

Expansion Plans
---------------

     Since the tragic events of September 11, 2001 ferry service has been
recognized to be an effective and efficient solution for the commuting public in
the metropolitan New York area. The City of New York and Port Authority of New
York and New Jersey have expanded and accelerated plans to increase ferry
terminal facilities. City and state governments are faced with unprecedented
congestion on the roads and rails and now recognize that ferry service offers a
real and immediate solution to the commuter problem. Through the efforts of New
Jersey Senators Torricelli and Corzine, $100 million has been allocated to the
U.S. Department of Defense specifically to expand existing ferry service and to
identify and develop new ferry sites in the New Jersey - New York market. A
study issued in January 2000 by the New Jersey Department of Transportation
concluded that new and expanded ferry service for NJ commuters could potentially
carry 5.3 million riders per year by 2010.

     Prior to September 11, the Company's expansion plans included Keyport,
which commenced service in October 2001, Perth Amboy, NJ, which the Company
expects to be operational in Fall 2002, and Stamford, CT, which subject to the
outcome of the litigation discussed in Item 3, can be operational in 2003.
Subsequent to September 11, the Company has identified other sites to
specifically address the commuting needs of the lower Manhattan and Jersey City,
NJ business communities.

                                       4
<PAGE>

     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 four-acre 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 between Stamford and Manhattan and Stamford and
LaGuardia Airport. Prior to commencing operation from the site the Company was
required to obtain various governmental approvals and construct a ferry terminal
and piers. In approximately July 2000 a dispute arose with the Landlord
concerning the lease. On August 7, 2000, the Landlord issued a notice
terminating the lease. The Company disputed the Landlord's right to terminate
the lease and filed legal action to enforce the lease. Trial of the issues
commenced in August 2001 before the Connecticut Superior Court. The trial was
concluded in February 2002. Briefs are due to be filed by April 22, 2002 and the
court's decision is expected in late April 2002. See Item 3, Legal Proceedings,
below.

     After conclusion of the trial and prior to the court rendering a decision,
the Company and a third-party, who is under contract to purchase the Stamford
Property and who has been an obstacle in achieving a settlement of the matter,
met in an effort to resolve the outstanding issues. While progress has been made
in these recent settlement discussions, a final settlement has not been
achieved. The Company has a reasonable expectation that a resolution will be
achieved, which would permit the Company to operate ferry service from the
Stamford Property. The Company is prepared to renew its permit applications
immediately upon achieving a workable resolution.

     Should a favorable resolution be achieved, the Company plans to operate
high-speed ferry service from the Stamford Property to LaGuardia Airport and to
Manhattan stopping at Pier 11 in downtown Manhattan. For its Stamford to
Manhattan operation, the Company plans to utilize a newly designed aluminum hull
catamaran with 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 additional vessels.
All of the design work has been completed and construction of the first vessel
will commence immediately upon the Company favorably resolving the legal matter
and obtaining a commitment for construction and permanent financing. The Company
is confident that financing for the vessels will be obtained when the legal
matter is resolved.

     Before service can begin from the Stamford Property, the Company must
obtain various governmental and environmental approvals and complete site
improvements. Until the Company has concluded the Legal Proceedings, it cannot
make application to various governmental entities for various permits and
approvals needed to commence operations. As a result of informal discussions
with various governmental officials, the Company believes that upon filing of
the necessary applications and expert reports the governmental approvals needed
to conduct a ferry operation from the Stamford Property will be forthcoming. The
Company is prepared to proceed with the application and approvals process
immediately upon a definitive agreement with the contract purchaser and the
execution of the Landlord Lease. The approval process takes approximately six
months after all of the documents are properly filed.

          In June 2001 the Company entered into an agreement with the Perth
Amboy Redevelopment Agency ("PARA") to develop a fast ferry service to be
operated from an approximately five-acre

                                       5
<PAGE>

riverfront site in Perth Amboy, New Jersey. The agreement includes exclusive
rights to operate a fast ferry service from Perth Amboy and eight-year lease
with renewal options for three additional consecutive terms of five years and a
final renewal term of two years. At the end of the initial eight-year term the
Company has the option to purchase the leased property for $1,000,000.

     The Company and PARA are in the process of modifying the lease agreement so
as to permit the issuance of tax-free bonds for the purchase of two high-speed
ferry vessels and the development of the Perth Amboy ferry site, including but
not limited to, a parking lot, ferry terminal and piers. The modified and
amended agreement will provide for PARA to own the vessels and the ferry site
and the Company will act as the exclusive manager and operator of the site and
the vessels. At the end of the initial eight-year term the Company will have the
right to purchase the property and the vessels.

     The Company plans to operate high-speed ferry service from Perth Amboy to
Manhattan stopping at Pier 11 in downtown Manhattan and the East 34/th/ Street
Pier. The Company is in the process of obtaining the necessary governmental
approvals and permits. Upon receipt of those approvals and permits, the Company
will commence the rehabilitation of the site and the construction of the
terminal and piers, which the Company anticipates will take six to nine months
from receipt. The Company expects to begin operating the ferry service in early
2003.

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 has increased parking capacity at its Highlands facility,
expanded its off-peak and weekend schedules and plans to 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. Seastreak has begun operating two new
vessels, which are comparable to the Company's vessels. In February 2002
Seastreak commenced operations from South Amboy in Middlesex County, New Jersey
to Manhattan.

     Monmouth County has constructed a high-speed ferry facility in Belford,
Monmouth County, New Jersey, which is located about seven miles northwest of the
Company's site in the Highlands. New York Waterways, a privately owned company
that runs primarily a short-haul service in the Hudson and East Rivers is under
contract to operate this ferry service. The date for commencement of service has
been extended twice and current information indicates that the facility may be
operational in late 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.

                                       6
<PAGE>

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).

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

     The operations of the ferry vessels come under the jurisdiction of the
United States Coast Guard ("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 the New York Department of
Transportation for docking at city-owned ferry terminals. To date the Company
has not encountered any difficulty in obtaining these permits.

Employees
---------

     As of December 31, 2001 the Company had 28 full-time employees and 5 part-
time employees. Fast Ferry Holding Corporation employs 24 of the 28 full-time
employees and 4 of the part-time employees. The number of employees will
increase as additional ferries become operational and the Perth Amboy, NJ and
Stamford, CT services become 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 24, 2001. The contract runs through September 24, 2004.
The contract contains a no-strike clause, specified pay rates, medical benefit
guarantee and union shop provision. Annual pay increases of 4% are specified
with an increase of 5% 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. On December 5, 2001 the Company concluded the sale of the
Shrewsbury Property for the sum of $1,150,000, less related fees, expenses and
liabilities.

                                       7
<PAGE>

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

     The Company's corporate offices are located at 195 Fairfield Avenue, Suite
3C, West Caldwell, New Jersey 07006, phone number 973-618-9034, and are being
occupied by the Company under a sublease agreement with Anthony Colasanti, an
officer and director of the Company, at a cost of $2,750 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 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 that adversely impacted NY Fast Ferry's business. NY Fast
Ferry is seeking compensatory damages and other relief. 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. The Company intends to continue to
pursue its legal remedies in this matter.

     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. Further, 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.

                                       8
<PAGE>

     During 2001 the discovery phase of the litigation was completed. Upon
completion of discovery, Weckstein filed a motion for summary judgment,
affidavits and briefs were filed. The parties are awaiting the Court's decision
on Weckstein's motion. If the motion is denied, a trial date will be scheduled.

     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.

     In March 2001 the Company negotiated a settlement of the Legal Proceeding
with the Landlord, which modified and extended the previous lease. The amended
and modified lease was subject to and contingent upon the Landlord and the
Company obtaining the approval of a third party ("Contract Purchaser") who was
under contract to purchase from the Landlord an approximately 30-acre parcel,
which included the ferry site. Subsequently a dispute arose over terms and
conditions that significantly impacted the Company's ability to operate at the
site and the parties were unable to resolve the issues. The Landlord and the
Company were unable to obtain the consent of the Contract Purchaser. As a result
the legal remedies sought by both the Landlord and the Company were pursued.
Trial of the issues commenced in August 2001 before the Connecticut Superior
Court. The trial was concluded in February 2002. Briefs are due to be filed by
April 22, 2002 and the court's decision is expected in late April 2002.

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

     (a)  On October 3, 2001 the Company held an annual meeting of shareholders
at which the following matters were submitted for voting:

     (b)  The following two persons were elected as directors to hold office
until the next annual meeting of shareholders and until their successors have
been elected and qualified:

               Gregory J. Hauke
               Richard D. King

                                       9
<PAGE>

The tabulation with respect to each nominee was as follows:

                                          % of                          % of
                                         Shares       Withhold         Shares
                            For       Represented     Authority     Represented

Gregory Hauke            3,638,646       99.5%           500          0.015%
Group A

Richard D. King          3,638,646       99.5%           500          0.015%
Group A


     (c)  The other matter voted on at the shareholders' meeting and the number
of votes cast for, against or withheld as well as the number of abstentions are
set forth as follows:

     Proposal Two:  Extension of Anthony Colasanti's term of office as a
     ------------
Director of the Company for an additional year, to expire in 2003.

                 % of                          % of                     % of
                Shares                        Shares                   Shares
   FOR       Represented      AGAINST      Represented     ABSTAIN   Represented


3,638,636       99.5%           510           0.015%          -0-         -0-

                                       10
<PAGE>

                                    PART II

ITEM 5.   MARKET FOR COMMON EQUITY 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. Prior to October 20, 2000 the Company's
stock traded under the symbol LGHT. 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 sources www.cnbc.com and www.aol.com.
                                 ------------     -----------

                    Calendar           High Bid Price         Low Bid Price
                    --------           --------------         -------------
2001      4/th/ Quarter           $          2.15         $        1.50
          3/rd/ Quarter                      1.70                  1.17
          2/nd/ Quarter                      1.70                  0.52
          1/st/ Quarter                      1.80                  1.00

2000      4/th/ Quarter           $         2.250         $        1.75
          3/rd/ Quarter                     2.950                  1.70
          2/nd/ Quarter                      3.00                  1.25
          1/st/ Quarter                     3.062                  0.50

     The closing bid price of the Common Stock as reported on March 25, 2002,
was $1.43 per share.

Holders
-------

     As of March 25, 2002, there were 175 holders of the Company's Common Stock,
who collectively held 16,845,338 issued (or issuable) and outstanding shares.

Dividends
---------

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

                                       11
<PAGE>

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

     Following are descriptions of all unregistered equity securities of the
Company sold during the period covered by this Form 10-KSB, excluding
transactions that were previously reported in a quarterly report.

     In March 2001 the Company issued 150,000 shares of its restricted common
stock with an allocated fair market value of $195,000 to Lancer Offshore Inc. as
additional consideration for a $275,000 senior convertible promissory note in
reliance on Section 4(2) of the Securities Act of 1933 (the "Act").

     In March 2001, the Company issued five-year warrants to purchase 50,000
shares of the Company's common stock at a price of $1.30 per share to a
financial consultant in partial satisfaction of the quarterly retainer fee for
services rendered. The offering was conducted in reliance on Section 4(2) of the
Act.

     In May 2001, the Company issued 60,000 shares of its restricted common
stock having an allocated fair market value at date of issuance of $86,500 to
two financial consultants as partial consideration for services rendered in
reliance on Section 4(2) of the Act:

     In June 2001, the Company issued five-year warrants to purchase 50,000
shares of the Company's common stock at a price of $1.65 per share to Capital
Research Ltd. in partial satisfaction of the quarterly retainer fee for services
rendered. The offering was conducted in reliance on Section 4(2) of the Act.

     In June 2001, the Company also issued the following shares of its
restricted common shares in reliance on Section 4(2) of the Act:

     (i)   40,000 shares of its restricted common stock with an allocated fair
market value of $68,000 to Capital Research as consideration for its efforts in
obtaining a $700,000 senior convertible promissory note.

     (ii)  50,000 shares of restricted common stock which had an allocated fair
market value at date of issuance of $85,000 to Capital Research Ltd. in
consideration for negotiating the extension of certain senior promissory notes
which matured on June 30, 2001.

     In July 2001, the Company issued to a financial consultant warrants to
purchase a total of 97,500 shares of the Company's common stock exercisable for
a period of five years at a price of $1.25 per share in connection with the
issuance of certain senior promissory notes proceeds of which were received in
April and June 2001. The offering was conducted in reliance on Section 4(2) of
the Act.

     In September 2001, the Company issued five-year warrants to purchase 50,000
shares of the Company's common stock at a price of $1.40 per share to Capital
Research Ltd. in partial satisfaction of the quarterly retainer fee for services
rendered. The offering was conducted in reliance on Section 4(2) of the Act.

     In September 2001, the Company issued the following shares of its
restricted common stock

                                       12
<PAGE>

in reliance on Section 4(2) of the Act:

     (i)   1,500 shares of its restricted common shares having an allocated fair
market value $2,142 on issuance date to a holder of the Company's convertible
promissory notes in consideration for a one-year note extension.

     (ii)  1,125 shares, having an allocated fair market value on the date of
issuance of $1,375 to the following purchasers of the Company's convertible
promissory note bearing interest at 10.5% per annum and maturing one year from
issuance.

           Name                    Principal Amount of Note     Number of Shares


           Joseph Bruno                     $20,000                 1,000
           Lowell Kupfer                      5,000                   125


     In October 2001, the Company sold 30,000 shares of its restricted common
stock having a fair market value on the date of issuance $24,000 to the
following accredited investor. The offering was conducted in reliance on Section
4(2) of the Act.


           Name                                          Number of Shares

           Herbert and Lois Rake                              30,000

                                                              30,000

     In October 2001, the Company issued six-year warrants to purchase 150,000
shares of its common stock at $1.50 per share. The warrants were issued as
additional consideration for a $350,000 mortgage note payable bearing interest
at 18% maturing on April 1, 2002. The offering was conducted in reliance on
Section 4(2) of the Act.

     In October 2001, the Company entered into an Amendment to Senior Promissory
Note Agreement whereby the Company agreed to issue a total of 2,136,500 shares
with an aggregate allocated fair market value of $2,350,150 to the following
entities: 1,100,000 to Lancer Offshore, Inc.; 250,000 shares to The Viator Fund,
Ltd.; 275,000 shares to Lancer Partners, L.P.; 150,000 shares to Joseph
Giamanco; 50,000 shares to James Kelly; 50,000 shares to Joseph Roselle; and
261,500 shares to Capital Research Ltd. in consideration of the extension of the
maturity dates of certain Senior Convertible Promissory.  The offering was
conducted in reliance on Section 4(2) of the Act.

     In October 2001, the Company issued the following shares of its restricted
common stock in reliance on Section 4(2) of the Act:

     (i)   5,236 shares of restricted common stock to Anthony Colasanti in lieu
of cash payment for deferred salary in the amount of $8,000.

     (ii)  50,000 shares of restricted common stock, which had an allocated fair
market value at date of issuance of $55,000 to Capital Research Ltd. in
consideration for negotiating the extension of certain senior promissory notes
that matured on October 31, 2001.

                                       13
<PAGE>

     (iii)  2,500 shares, having an allocated fair market value on the date of
issuance of $3,855 to the following purchasers of the Company's convertible
promissory note bearing interest at 10.5% per annum and maturing one year from
issuance.

            Name                   Principal Amount of Note     Number of Shares


            Herman Vaden                   $20,000                    1,000
            Gary Von Bargen                  5,000                      250
            Nick Paleologos                 25,000                    1,250

     (iv)   625 shares of restricted common stock having an allocated fair
market value $1,029 on issuance date to holders of the Company's convertible
promissory notes in consideration for a one-year note extension.

     (v)    20,000 shares of restricted common stock having a fair market value
of $30,000 on issuance date to a financial consultant as partial consideration
for his efforts in raising capital funds.

     In November 2001, the Company issued the following shares of its restricted
common stock in reliance on Section 4(2) of the Act:

     (i)    10,000 shares of restricted common stock, 5,000 shares each, having
a fair market value at issuance date of $11,000 to the outside members of the
Board of Directors as compensation for services rendered as Board members.

     (ii)   10,000 shares of restricted common stock having a fair market value
of $11,000 on issuance date to a financial consultant as partial consideration
for his efforts in raising capital funds.

     (iii)  10,000 shares of restricted common stock having an allocated fair
market value at issuance date of $11,000 as consideration for a short-term loan
in the amount of $150,000.

     In December 2001, the Company sold 10,000 shares of its restricted common
stock having a fair market value on the date of issuance $10,000 to the
following accredited investor.  The offering was conducted in reliance on
Section 4(2) of the Act.

            Name                                          Number of Shares


            Herbert and Lois Rake                              10,000

                                                               10,000


     In December 2001, the Company issued the following shares of its restricted
common stock in reliance on Section 4(2) and Rule 506 of the Act:

     (i)    3,375 shares, having an allocated fair market value on the date of
issuance of $3,713 to the following purchasers of the Company's convertible
promissory note bearing interest at 10.5% per annum and maturing one year from
issuance.

                                       14
<PAGE>

<TABLE>
<CAPTION>
            Name                            Principal Amount of Note       Number of Shares
           <S>                              <C>                            <C>

            Nan Davidson and Alicia Gall             $20,000                     1,000
            Gary Von Bargen                            5,000                       125
            Paul Goodman                              20,000                     1,000
            Louise Wright                             25,000                     1,250
</TABLE>

     (ii)   600,000 shares of its restricted common stock with an allocated fair
market value of $660,000 to The Orbiter Fund as additional consideration for a
$600,000 senior convertible promissory note bearing interest at 10.0% per annum
due May 31, 2002. This note is convertible into the Company's common stock at
$1.00 per share. The note must be repaid out of any financing greater than
$3,000,000 that the Company receives.

     (iii)  60,000 shares of its restricted common stock with an allocated fair
market value of $66,000 to Capital Research as consideration for its efforts in
obtaining a $600,000 senior convertible promissory note.

     (iv)   10,000 shares of restricted common stock having an allocated fair
market value on issuance date of $11,000 to the holder of a short-term mortgage
note in consideration for release of the mortgage and extension of the unpaid
balance of $90,000.

     (v)    20,000 shares of restricted common stock having an allocated fair
market value of $22,000 issued to Anthony Cappaze as consideration for pledging
certain of his shares of common stock as collateral to secure for the Company a
short-term debt obligation.

     In December 2001, the Company issued five-year warrants to purchase 50,000
shares of the Company's common stock at a price of $1.56 per share to Capital
Research Ltd. in partial satisfaction of the quarterly retainer fee for services
rendered. The offering was conducted in reliance on Section 4(2) of the Act.

     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.

                                       15
<PAGE>

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

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, 2001 and December 31, 2000
is as follows.

RESULTS OF OPERATIONS
---------------------

Revenues - NYFF's operations consolidated revenues increased by 10.04% to
--------
$4,421,859 for the twelve months ended December 31, 2001, compared to $4,018,323
for the comparable period in 2000. The overall increase net of decreases are
explained as follows:

     Passenger Ticket Sales - Revenues from passenger ticket sales totaled
$3,897,260 as compared to approximately $3,370,690 in the prior year, a 15.62%
increase. The increase is attributable to an increase in daily ridership at the
Company's Highlands, New Jersey site and the commencement of new service at
Keyport, New Jersey. Total annual ridership at Highlands for this period was
297,775 an increase of 16,900 over the year ended December 31, 2000. From
commencement of service on October 15, 2001 through December 31, 2001, the
ridership at the Keyport site totaled 24,693.

     Galley Sales - Revenues from galley sales totaled $234,577 as compared to
$215,790 in the prior year, an 8.71% increase. The increase is directly
attributable to the increased ridership at the Company's Highlands, New Jersey
site and the commencement of new service at Keyport, New Jersey in the year
ended December 31, 2001.

     Charter Sales - Charter sales declined $156,437 from $431,841 in 2000 to
$275,404 in 2001, a 36.23% decline.  The decline is primarily attributable to
the fact that during OpSail 2000 held over the four day July 4th holiday, the
Company increased nearly fourfold its scheduled holiday excursion trips into and
around Manhattan and the New York Harbor.

Cost of Services - NYFF's cost of services increased by $790,304, or 20.75%, to
----------------
$4,598,739 for the twelve months ended December 31, 2001, compared to $3,808,435
for the comparable period in 2000. The overall changes are detailed follows:

     Salary and Related Benefits - Salary and related benefits increased by
17.49% to $860,838 for the twelve months ended December 31, 2001, compared to
$732,709 for the comparable period in 2000.  The increase is attributable to an
increase in headcount related to the new operations at Keyport, a 4% wage
increase for union employees and an increase in the premiums for group health
insurance.

     Fuel and Oil Related Costs - Fuel and oil related costs increased by 4.30%
to $709,430 for the twelve months ended December 31, 2001, compared to $680,183
for the same period in 2000.  The net increase is attributable to an increase in
the scheduled runs from Highlands and the new service in Keyport with one vessel
commencing operation on October15, 2001 and a second vessel commencing operation
in early November 2001.  The increase in fuel and oil usage is offset by a

                                       16
<PAGE>

decline in the price of fuel over the first half of 2001 from a range per gallon
of $0.97 to $1.09 to a range of $0.68 to $0.79 in the second half of the 2001.

     Boat Maintenance and Related Supplies - Boat maintenance and related costs
increased by 23.21% to $581,549 for the twelve months ended December 31, 2001,
compared to $472,001 for the comparable period in 2000. The increase in Boat
maintenance and related costs is attributable to unscheduled maintenance, which
resulted from increased debris in the water after the events of September
11,2001, and the addition of two vessels for the Keyport operations.

     Docking and Parking Related Fees - Docking and parking related fees
increased by 8.73% to $536,848 for the twelve months ended December 31, 2001,
compared to $493,735 for the comparable period in 2000. The increase in docking
and parking related fees are a result of increased ridership, the addition of an
second parking and docking site in Highlands commencing December 15, 2000 and
the commencement of operations in Keyport. The docking and parking related fees
are primarily based on the number of passengers embarking and debarking from
each ferry site.

     Ferry and Barge Rental - For the twelve months ended 2001, ferry and barge
rental totaled $467,787 as compared to $56,175 in 2000. The expense is primarily
related to the charter of two vessels for the Keyport service and the charter of
vessels to be used at highlands to provide a continuation of service during
scheduled dry dock maintenance of the M/V Bravest and M/V Finest.

     Insurance - Insurance costs increased by 9.56% to $147,447 for the twelve
months ended December 31, 2001, compared to $134,578 for the comparable period
in 2000. The overall increase in insurance related costs is primarily a result
of higher insurance premiums.

     Charter and Excursion - The charter and excursion expenses declined by
18.28% to $66,278 for the twelve months ended December 31, 2001 as compared to
$81,104 for the comparable period in 2000. The decrease is primarily
attributable to a reduction in the number charter excursion trips offered during
July 4/th/ events in 2001 compared to the offering during the same holiday in
2000 when Opsail 2000 was held in New York harbor during the four-day July 4/th/
holiday weekend.

     Galley Cost of Goods Sold - The galley cost of goods sold increased by
1.64% to $159,513 for the twelve months ended December 31, 2001 as compared to
$156,939 for the comparable period in 2000.

     Other Direct Operating Costs - Other direct operating costs increased to
$139,540 for the year ended December 31, 2001 from $91,005 for same period in
2000, a 53.33% increase. The increase is primarily attributable to the
additional operation at Highlands and the new operation at Keyport plus
corresponding increases in personnel headcount.

     Depreciation - For the twelve months ended December 31, 2001, depreciation
increased by 2.14% to $929,509 as compared to $910,006 for the comparable period
in 2000, an increase of $19,503. The overall increase is attributable to an
increase in vessel equipment associated with upgraded equipment for the Finest
and Bravest and ticket machines and the purchase of new computer and office
equipment.

                                       17
<PAGE>

Selling, General and Administrative Expenses - The Company's selling, general
--------------------------------------------
and administrative expenses increased $185,708, or 10.92% to $1,885,850 for the
twelve months ended December 31, 2001, compared to $1,700,142 for the comparable
period in 2000. The changes for the period under review are comprised of the
following:

     Ferry Administration, Salary and Related Benefits - Salary and related
benefits for Ferry Administration increased by 31.70% to $371,073 for the twelve
months ended December 31, 2001, compared to $281,753 for the comparable period
in 2000.  The increase is attributable to additional personnel for the Keyport
ferry operation, salary increases for key personnel and an increase in the cost
of group health insurance premiums.

     Corporate Administration, Salary and Related Benefits - Salary and related
benefits for Corporate Administration increased by 29.61% to $586,604 for the
twelve months ended December 31, 2001, compared to $452,597 for the comparable
period in 2000. The increase is related to salary increases and an increase in
the cost of group health insurance premiums.

     Professional Services - Professional services, comprised of legal,
accounting and consulting services, decreased by 35.89% to $385,604 in the
twelve months ended December 31, 2001 compared to $601,453 for the comparable
period in 2000. The decrease is primarily related to expenses incurred in 2000
that did not recur in 2001 with respect to the Company's filing in 2000 of Form
10-SB and the related legal and audit expenses and expenses incurred in 2000 in
connection with financial consultants related to the Company's capital raising
efforts.

     Office Facility and Related Expenses- Office facility and related expenses
includes rent, utilities, maintenance and general office expenditures for the
Company's corporate office in West Caldwell, New Jersey and its operations
office in Highlands, New Jersey. For the twelve months ended December 31, 2001,
this category of expenses increased by 60.0% to $202,111 as compared to $126,321
for the comparable period in 2000. The increased expenses are primarily
attributable to upgraded computer and network equipment and systems and
increases in telephone, utilities and office supplies, a direct result of
increases in headcount and the addition of the Keyport operations.

     Travel and Related Automobile Expenses - Travel and related automobile
expenses increased by 29.57% to $88,567 for the twelve months ended December 31,
2001 as compared to $68,357 for the comparable period in 2000. The increase is
attributable to travel between the marina operations and headquarters, travel
associated with the Company's capital raising efforts and travel connected with
acquiring vessels for the Keyport operation.

     Depreciation Expense - Depreciation expense decreased in the twelve months
ended December 31,2001 to $5,496 from $5,868 for the comparable period in 2000,
a 6.34% decrease. The decrease is related to assets that have been fully
depreciated.

     Corporate Expense - Other - Other corporate related expenses increased by
50.43% to $246,395 for the twelve months ended December 31, 2001 as compared to
$163,793 for the comparable period in 2000. The net increase is related
primarily to cost of Directors and Officers insurance, the accrual of a
contingent liability related to the Weckstein lawsuit and offset by a reduction
in public company costs.

New Business Development Costs - For the twelve months the consolidated
------------------------------
company's new

                                       18
<PAGE>

business development costs increased by $611,566 to $712,243, as compared to
$100,677 for the comparable period in 2000. The changes for the period under
review are comprised of the following:

     Stamford Direct Operating Costs - Stamford direct operating costs totaled
$367,522 for the twelve months ended December 31, 2001, compared to $100,677 for
the comparable period in 2000, an increase of 265.05%. The increase in 2001 is
primarily attributable to legal costs associated with the lease dispute related
to the site for the planned Stamford, CT to Manhattan ferry service, while the
expenses in 2000 were primarily for rent and engineering fees.

     Other New Business Development Costs - For the twelve months ended December
31, 2001, the Company incurred $344,721 as compared to $0 in the previous period
under review. These expenditures are comprised of legal, engineering and other
professional services fees related to the development of ferry service in
Keyport and Perth Amboy, New Jersey.

Marketing Expenses - Marketing expenses decreased to $53,976 for the twelve
------------------
months ended December 31, 2001 as compared to $75,243 for the comparable period
in 2000, a reduction of $21,267, or 28.26%. The decrease is related to a
reduction in expenditures related to corporate activities aimed at increasing
the company's exposure in the financial markets

Interest Expense and Financing Costs - Interest expense and financing costs are
------------------------------------
attributable to the mortgages on the vessels and debt financing of the Company's
current operations and business development. Interest expense and financing
costs increased by 198.52% to $9,049,807 for the twelve months ended
December 31, 2001, compared to $3,031,568 for the comparable period in 2000. The
increase relates primarily to the issuance of shares of common stock and
warrants as additional consideration for new financing entered into during 2001
and extension of debt that became due in 2001.

Net Loss - For the twelve months ended December 31, 2001, net loss increased by
--------
$6,743,807, or 134.41%, to $11,761,214 from a loss of $5,017,407 for the same
period of 2000. The increased net loss is the result of an increase in cost of
operations of approximately $1,382,000, which is primarily attributable to (i)
an increase in costs related to the development of new ferry sites of
approximately $612,000, (ii) costs of operations of new ferry service such as
ferry charter and rent expenses; and (iii) an increase of $6,018,239 in interest
and amortization of financing costs, primarily a non-cash expense resulting from
the issuance of common stock as consideration for the issuance of new
convertible promissory notes and other debt instruments and extensions of
maturing debt. Allocated fair market value of the shares is charged to
operations as a financing cost over the term of the notes and extensions.


LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

     Since inception, the Company has funded its operations primarily through
funds generated from private placements of equity securities and debt, including
convertible promissory notes, and institutional financing. In the twelve months
ended December 31, 2001, the Company raised proceeds in the amount of $276,500
through the private placement of 294,295 shares of restricted common stock to
accredited investors, $2,130,000 from the issuance of convertible promissory
notes to accredited investors and $550,000 from the issuance of other short-term
financing arrangements. Additionally, the Company realized approximately
$600,000, net of related fees, expenses and liabilities, from the sale of its
Shrewsbury Avenue Property.

                                       19
<PAGE>

     Also, in 2001 the Company received proceeds of $350,000 from a term note
secured by a second mortgage on the Company's two ferry vessels. The note bears
an annual interest rate of 18% with principal of $30,000 and interest to be paid
monthly commencing November 1, 2001. The note matures on April 1, 2002 with a
final payment due of $200,000. In March 2002, at management's request the lender
modified and extended the terms of the note with interest payments only for
three months and principal and interest payments payable over a twelve-month
term thereafter.

     The combined cash proceeds received through its capital raising efforts,
the cash flow from operations and the sale of the Property in calendar year 2001
was sufficient to meet the Company's obligations as they became due, to fund its
expansion and to implement its strategic business objectives with the exception
primarily of its vessel mortgage payments in the fourth quarter of 2001.

     While NY Fast Ferry operationally generates sufficient net cash flow to
cover its direct operating costs, it does not consistently generate cash flow
sufficient to cover principal and interest payments for both vessel mortgages or
to repay its line of credit. In the three weeks immediately after the events of
September 11, 2001, the Company's revenues were adversely affected by the
closing of lower New York harbor for several days and intermittent closings
thereafter, as well as the time it took for businesses in lower Manhattan to
reopen or relocate. Consequently, the Company fell into a delinquent status with
these payments.

     As of December 31, 2001, the outstanding balances of the two preferred ship
mortgages notes payable held by debis Financial Services, Inc. ("Debis"), on the
vessels M/V Finest and M/V Bravest, were $4,856,784 and $4,798,573,
respectively. The ship mortgages each require monthly payments of principal and
interest in the amount of $56,719. The Company is currently delinquent in these
payments.

     The line of credit held by Debis and assumed by the Company in the
acquisition of NY Fast Ferry had an outstanding balance at December 31, 2001 of
approximately $919,000. The line of credit, also secured by mortgages on the two
vessels, originally required a final payment of $934,000 on December 10, 2000,
which the company was unable to make. 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. The Company
and Debis are presently in negotiation to restructure the payment of the debt.

     The Company, as of December 31, 2001, had a working capital deficiency of
$8,862,460. The holders of senior convertible promissory notes totaling
$5,083,000 plus accrued interest of approximately $800,000 have indicated to the
Company their intention to convert their debt on a dollar for dollar basis if
the Company is able to obtain a significant equity infusion. Additionally, the
holder of a secondary mortgage on the vessels with a balance of $290,000 at
December 31, 2001 and a principal payment of $200,000 due on April 1, 2002
agreed to modify the terms of the loan and accept interest payments only during
the second quarter of 2002 and payments of principal and interest of
approximately $20,000 a month for twelve months thereafter. To date upon request
from the Company it has received extensions from substantially all lenders and
note holders. In consideration for the extensions in 2001, the Company issued to
such lenders and note holders shares of its restricted common stock and charged
the allocated fair market value of the shares, approximately $5,500,000 to
operations as financing costs.

                                       20
<PAGE>

     In the planned development of its commercial operations, the Company's
combined losses are expected to continue as the Company expands its ferry routes
and until each new site becomes fully operational.  The Company's ability to
meet its obligations in the ordinary course of business is dependent upon it
achieving operational profitability and continuing to obtain adequate funding.
The Company's ability to fulfill its expansion objectives is also dependent upon
its ability to secure financing for the acquisition of additional vessels.  The
Company is currently in discussions with several financial entities that provide
funding for such equipment and it believes that it will be able to secure such
financing on terms acceptable to the Company.  Moreover, the acquisition of
additional ferry vessels and the improvement of landside ferry facilities will
require significant capital funding, if the Company is unsuccessful in obtaining
federal funding that is currently available for expansion of ferry service.

     The Company is aggressively pursuing federal funding that is presently
available for ferry service operators in the metropolitan New York area.  A
federally sponsored bill through an emergency appropriations funding included in
the Department of Defense Appropriations, secured by New Jersey Senators
Torricelli and Corzine, has allocated $100 million specifically to expand ferry
service between New Jersey and New York.  Federal funds are also available
through the Federal Emergency Management Agency ("FEMA") for any costs or
expenses incurred as a result of the September 11/th/ attacks as well as for the
development of ferry services in certain designated municipalities which include
Perth Amboy.

     Additionally, the Perth Amboy Redevelopment Agency has authorized the sale
of $14 million in tax-free municipal bonds to be used specifically for the
development of high-speed ferry service that will be provided exclusively by the
Company through its operating subsidiary.  These funds will be used for the
development of the landside facilities and the acquisition of two ferry vessels.

     Although there can be no assurances that the Company will be successful in
obtaining funding from any of these sources, it is confident that as a currently
operating ferry service with over three years of operational history, it is
favorably positioned to secure some funding from these sources.

     Although the Company has been successful to date in its efforts to raise
funds and negotiate extensions, there can be no assurances that the Company will
continue to be successful in its efforts to obtain funds and extensions.
However, it is management's opinion, that through the sales of its common stock
and other financing arrangements combined with cash flow from operations, the
Company will continue to be successful in raising sufficient funds to meet its
anticipated cash needs for working capital and capital expenditures for at least
the next twelve months.

     In the event the Company's plans change, its assumptions change or prove to
be inaccurate or 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

                                       21
<PAGE>

respond to unanticipated competitive pressures. Such inability could have a
material adverse effect on the Company's business, financial condition and
results of operations.

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

     In February 2002, holders of certain senior promissory notes totaling
$4,373,000, due on February 28, 2002, extended the maturity dates for such notes
to August 31, 2002.  In consideration for the extension, the Company issued to
the note holders 2,236,500 shares of its restricted common stock.  In
consideration for the services of a financial consultant in negotiating the
extension the Company issued the consultant a senior convertible promissory note
in the amount of $100,000 and 50,000 shares of restricted common stock.

     In February and March 2002, the Company received proceeds from four 10.5%
convertible promissory note totaling $30,000.  Each convertible promissory note
carries a simple interest rate of 10.5%, with interest payable quarterly, and
matures one year from date of issuance.  In connection therewith, the Company
issued to the note holders 600 shares of its restricted common stock.

     In March 2002, the Company received proceeds from senior convertible
promissory notes totaling $650,000.  Each senior convertible promissory note
carries a simple interest rate of 10%, with interest payable quarterly. Notes in
the amount of $500,000 mature July 31, 2002 and a note in the amount of $150,000
matures on September 22, 2002.  In connection therewith, the Company issued to
the note holders 650,000 shares of its restricted common stock.  The Company
issued a promissory note in the amount of $50,000 to a financial consultant who
arranged the loan in lieu of a fee.

     In March 2002, the Company received proceeds of convertible promissory
notes totaling $50,000, maturing in 90 days and bearing interest at the rate of
12% per annum.  In consideration for such loan, the Company issued to the note
holders a total of 15,000 shares of its restricted common stock.  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 $1.00 of the
indebtedness then due and owing.

     In the three months of January through March 2002, holders of convertible
promissory notes aggregating $35,000 extended the notes' maturity dates for an
additional term of one year.  In consideration thereof, the Company issued such
note holders a total of 875 shares of its restricted common stock.

                                       22
<PAGE>

     In February 2002, the Company's litigation in the Stamford, CT lease matter
was completed. A decision is expected by late April 2002.

     On February 28, 2002 the Company's lease for its corporate offices at 195
Fairfield Avenue, West Caldwell, New Jersey expired.  The Company executed a new
lease with CEC Realty, LLC, an entity in which an officer and director of the
Company is a principal.  The new lease is for a two-year term commencing March
1, 2002 and provides for the Company to occupy additional space. The monthly
rental for the two-year period is $3,150.

     In March 2002, the Company negotiated a modification of a short-term
mortgage note having a $200,000 principal payment due on April 1, 2002.  The
modified terms of the note permit interest only payments in the second quarter
of 2002 and principal and interest payments of approximately $20,000 per month
for the following twelve months.  In consideration for the extension, the
Company issued 100,000 shares of its restricted common stock, the fair market
value of which will be charged to operations over the term of the extension as
financing costs.

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.

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

     On October 16, 2001, the Company's Board of Director's dismissed its
     accountants, Weinick Sanders, Leventhal & Co. LLP, Certified Public
     Accountants and on October 18, 2001 engaged Rothstein, Kass & Company, P.C.
     as its independent auditor.  On October 18, the Company filed a Current
     Report on Form 8-K to report the change in accountants.

                                       23
<PAGE>

                                   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 March 25, 2002 are as follows:


<TABLE>
<CAPTION>
        Name, Age and
    Municipality Residence                  Office                  Other Business Experience
    ----------------------                  ------                  -------------------------
<S>                             <C>                              <C>
Anthony Cappaze                 Chairman, Chief Executive        President of Trinity Group
Short Hills, NJ                 Officer of the Company and       since 1998; Regional Manager
Age: 58                         Director since its inception.    for Northern Telecom 1983 -
                                                                 1998.

Anthony Colasanti               Vice President, General          Partner in the law firm of
West Orange, NJ                 Counsel and Director of the      Colasanti and Scott July 1998
Age: 59                         Company since 1996. Secretary    - 1999; partner in the law
                                of the Company since January     firm Colasanti, Ermel & Cosale
                                1999.                            1994 - 1998.

Gregory J. Hauke                Director of the Company since    President of Hauke Realty,
Freehold, NJ                    June 2000.                       Inc. since 1985.  Chief
Age: 51                                                          Financial Officer of Phoenix
                                                                 Funding since 1996.

Richard King                    Director of the Company since    Engineering and project
West Orange, NJ                 October 2001.                    management consultant since
Age: 63                                                          2000; Con Edison 1963 - 2000;
                                                                 Chief Engineer 1997 -2000.

Patricia Beene                  Chief Financial Officer of the   Partner in consulting firm -
Summit, NJ                      Company since October 2001.      Inferential Focus 1999 - 2001;
Age: 47                                                          Chief Financial Officer of
                                                                 Beau Dietl & Associates 1996 -
                                                                 1999.
</TABLE>

     Messrs. Hauke and King serve as the Company's Audit Committee.

                                       24
<PAGE>

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,
2001 other than Joseph Giamanco, who failed to timely file a Form 3, and 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 calendar
years December 31, 2001, 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").

                          SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
            FISCAL YEAR COMPENSATION                                              LONG TERM COMPENSATION

                                                                               Awards                     Payouts
                                                                               ------                     -------
                                                                                          Restricted
                                                                                            Shares
     Name and                                     Other Annual                                or               All other
Principal Position                                Compensation    Securities underlying  Restricted   LTIP      Compen-
------------------           Salary/(1)/  Bonus   ------------        Option/SARs            Share   Payouts    sation
                      Year       ($)       ($)                          Granted             Units      ($)        ($)
                      ----       ---       ---                          -------             -----      ---        ---
<S>                   <C>    <C>          <C>     <C>             <C>                    <C>         <C>       <C>
Anthony Cappaze/      2001     150,000      0           0               200,000                                 12,500
Chairman              2000     150,000      0           0               300,000              0          0            0
and CEO               1999     100,000      0           0               300,000              0          0        5,700


Anthony Colasanti     2001     133,793      0           0               200,000              0          0        9,000
VP,General            2000     114,334      0           0               250,000              0          0            0
Council &
Secretary

John Ferreira/(2)/    2001     88,542       0           0                  0                 0          0        5,000
CFO                   2000     71,667       0           0                  0                 0          0        5,000

Patricia Beene/(3)/   2001     31,250       0           0               175,000              0          0        1,500
CFO
</TABLE>

_______________________
/(1)/  The base compensation is recorded and accrued, but some payments are
deferred in the interest of optimizing the Company's cash flow for the calendar
years ended December 31, 1999, 2000 and 2001. At various times during 2000

                                       25
<PAGE>

and 2001 Colasanti elected to receive stock in lieu cash payment of deferred
salary.

(2) Mr. Ferreira's was employed by the Company from May 31, 2000 through July
11, 2001.
(3) Ms. Beene's employment commenced October 1, 2001.


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 December 31, 2001, no options have been
granted under the stock option plan.

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

     Mr. Cappaze, Chairman and CEO, signed an employment agreement in January
2000, which runs for a three-year term through December 31, 2002 and provides
for an annual base salary of $150,000.  The employment agreement grants him
warrants for the purchase of an aggregate of 300,000 shares of common stock at
$1.00 per share vesting and exercisable in equal portions at the anniversary
dates of the agreement.  Mr. Cappaze was also granted 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 exercisable as of January 1, 2002, and the
remainder become exercisable on January 1, 2003.

     Mr. Colasanti, Vice President-Secretary and General Counsel, previously an
outside consultant, signed an employment agreement dated February 2000 for a
period of thirty-five months through December 31, 2002.  The agreement provides
for a base salary of $120,000 per year and grants him warrants for the purchase
of an aggregate of 150,000 shares of common stock at $1.00 per share vesting and
exercisable in equal portions at the anniversary dates of the agreement.  Mr.
Colasanti was also granted 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 exercisable as of January 1, 2002, and the remainder become exercisable on
January 1, 2003.

     In May 2001, the Board of Directors elected to renew and extend both
Cappaze's and Colasanti's contracts through December 31, 2004 and to accelerate
the vesting and exercisable provisions of the warrants granted under said
contracts so that the warrants become exercisable immediately.  Colasanti's base
salary was increased to $144,000 annually and the warrants granted under his
contract were modified to increase the number of shares granted from 150,000 to
300,000 with 100,000 exercisable at each anniversary date.

     Effective October 1, 2001, the Company entered into a two-year employment
agreement with Patricia Beene to serve in the capacity of Chief Financial
Officer.  For the period from October 1, 2001 to September 30, 2002, Ms. Beene
will receive a salary at the rate of $125,000 per annum.  The agreement also
grants warrants to purchase 175,000 shares of the Company's common stock at
$1.00 per share with 50,000 shares vesting and exercisable upon execution of the
contract and on the first anniversary of the agreement and 75,000 shares vesting
and exercisable upon execution of the contract and on the second anniversary of
the agreement.

                                       26
<PAGE>

     Messrs. Cappaze and Colasanti and Ms. Beene 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 Company may terminate
the employment of the Employees for death, disability or due cause.  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 Cappaze and Colasanti
warrants to purchase 200,000 shares of the Company's common stock at $1.00 per
share exercisable for period of five (5) years from the date of termination and
Beene warrants to purchase 25,000 shares of the Company's common stock at $1.10
per share exercisable for period of five (5) years from the date of termination.

     In the event of a change in control of the Company, the Employees have the
option to terminate their respective employment agreements within one year of
the event and be entitled to an amount equal to two times the Employee's annual
salary and Cappaze and Colasanti would be granted warrants to purchase 200,000
shares of the Company's common stock at $1.00 per share exercisable for period
of five (5) years from the date of termination and Beene granted warrants to
purchase 25,000 shares of the Company's common stock at $1.10 per share
exercisable for period of five (5) years from the date of termination.

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 2001 to the Named Executive
Officers of the Company.  The following amounts include options that were
granted prior to 2001 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            100,000              15.4%                  $1.00                $1.00                1/1/2006
                           100,000              15.4%                  $1.10                $1.10                5/1/2006

Anthony Colasanti          100,000               7.7%                  $1.00                $1.00                1/1/2006
                           150,000              23.1%                  $1.10                $1.10                5/1/2006

Patricia Beene             175,000              26.9%                  $1.00                $1.00               10/1/2006
</TABLE>

_________________



                                       27
<PAGE>

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.

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

<TABLE>
<CAPTION>

                                                                        Number of Securities
                                                                             Underlying
                                                                             Unexercised                Value of
                                                                         Options/SARs at FY-           Unexercised
                                                                               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-                 600,000 exercisable           $215,000

Anthony Colasanti                -0-                    -0-                 650,000 exercisable           $185,000

Patricia Beene                   -0-                    -0-                  50,000 exercisable           $ 25,000
                                                                            125,000 unexercisable         $ 87,500
</TABLE>


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

     Outside Directors of the Company are paid $500 per meeting for their
services rendered. Additionally, the outside directors are reimbursed for all
expenses incurred by them in attending board meetings. Effective with the
election of Directors in October 2001, all outside directors shall receive 5,000
shares of common stock per year, in consideration for serving on the Company's
Board of Directors.

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 health insurance plan and a 401(k) plan for its
employees. The Company's employees participate in NY Fast Ferry's health
insurance plan.

                                       28
<PAGE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth, as of March 25, 2002, 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.

<TABLE>
<CAPTION>

Name and Address                                 Amount and Nature of               Percent of
Of Beneficial Owner                              Beneficial Ownership              Common Stock
-------------------                              --------------------              ------------
<S>                                              <C>                               <C>
Anthony Cappaze                                      1,780,850/(1)/                   10.09%
195 Fairfield Avenue, Suite 3C
West Caldwell, NJ 07006

Anthony Colasanti                                      730,838/(2)/                    4.18%
195 Fairfield Avenue, Suite 3C
West Caldwell, NJ 07006

Patricia Beene                                          65,000/(3)/                       *
195 Fairfield Avenue, Suite 3C
West Caldwell, NJ 07006

Gregory J. Hauke                                        34,250                            *
195 Fairfield Avenue, Suite 3C
West Caldwell, NJ 07006

Richard King                                             5,000                            *
195 Fairfield Avenue, Suite 3C
West Caldwell, NJ 07006

All current directors and executive                  2,615,938/(4)/                   14.26%
 officers as a group (five persons)
</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 6/11/2005; warrants to purchase 100,000
shares at $1.25 per share until 10/27/2007; warrants to purchase 100,000 shares
at $1.00 per share until January 2006; warrants to purchase 200,000 shares at
$1.25 per share until 1/1/07; warrants to purchase 100,000 shares at $1.00 until
1/1/07; and warrants to purchase 100,000 shares at $1.10 until 5/16/07.
(2)  Includes options to acquire 100,000 shares at $1.50 per share until
12/20/2006; warrants to purchase 100,000 shares at $1.25 per share until
10/27/2006; warrants to purchase 200,000 shares at $1.25 per share until January
2005; warrants

                                       29
<PAGE>

to purchase 50,000 shares at $1.00 per share until January 2006; and warrants to
purchase 150,000 shares at $1.10 until 5/16/07.
(3)  Includes options to acquire 50,000 shares at $1.00 per share until 9/30/04.
Does not include options to acquire 50,000 shares at $1.00 per share until
9/30/05 and options to acquire 75,000 shares at $1.00 per share until 9/30/06,
which are not exercisable until 10/01/02 and 10/01/03, respectively.
(4)  Includes footnotes (1) through (3).

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

     To the knowledge of the Directors and officers of the Company, as of March
25, 2002, 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:

<TABLE>
<CAPTION>

Name and Address                                 Amount and Nature of              Percent of
of Beneficial Owner                              Beneficial Ownership             Common Stock
-------------------                              --------------------             ------------
<S>                                              <C>                              <C>
Capital Research Ltd.                               2,417,250/(1)/                   13.93%
27241 Paseo Peregrino
San Juan Capistrano, CA 92675

Joseph Giamanco                                     1,650,000/(2)/                    9.35%
c/o Henry Kramer
GHM, Inc.
74 Trinity Place
New York, NY 10006

Michael Lauer                                      13,716,667/(3)/                   63.03%
c/o The Lancer Group
375 Park Avenue
New York, NY 10152
</TABLE>

__________________________
(1)  Includes warrants to purchase 497,500 shares between $1.25 and $1.65 per
share expiring at various dates through December 2006; approximately 733,000
shares underlying a currently convertible promissory note, such notes being
convertible into shares of common stock at the rate of one share for each $1.00
of indebtedness due and owing (number reflects indebtedness under the notes as
of March 31, 2002).
(2)  Includes warrants to purchase 350,000 shares at $1.00 per share until July
2004; 450,000 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 (number reflects indebtedness under the notes
as of March 31, 2002).
(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 7,716,667 shares beneficially owned by Lancer Offshore, Inc.;
3,325,000 shares and warrants beneficially owned by The Viator Fund, Ltd.;
375,000 shares beneficially owned by The Orbitor Fund; 2,050,000 shares
beneficially owned by Lancer Partners, L.P.; and 250,000 shares owned directly
by Mr. Lauer

                                       30
<PAGE>

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Anthony Cappaze, Chairman and CEO, signed a new Employment Agreement as of
January 2000, which grants him warrants to purchase 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, Vice President - Secretary and Board member, signed an
employment agreement with the Company as of February 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 lives in Mr.
Colasanti's household, and none of the other individuals are related to Mr.
Colasanti or reside in his household. Mr. Colasanti disclaims beneficial
ownership 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 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.

     In January 2001, in accordance with the terms of their employment
agreements, warrants held by Messrs. Cappaze and Colasanti to purchase at a
price of $1.00 per share 100,000 shares and

                                       31
<PAGE>

50,000 shares, respectively, vested and became exercisable.

     In March 2001 the Company issued 150,000 shares of its restricted common
stock with a fair market value of $195,000 to Lancer Offshore Inc. as additional
consideration for a $275,000 senior convertible promissory note. This note is
convertible into the Company's common stock at $1.50 per share.

     In April 2001, the Company issued 150,000 shares of its restricted common
stock with a fair market value of $157,500 to Lancer Offshore Inc. as additional
consideration for a $275,000 senior convertible promissory note. This note is
convertible into the Company's common stock at $1.50 per share.

     In March, June, September and December 2001, under the terms of a
consulting agreement the Company issued Capital Research a total of four
warrants, each to purchase 50,000 shares of the Company's common stock,
exercisable for a period of five years from date of grant. The warrants are
issued at fair market value of the Company's common stock on date of grant or
$1.30, $1.65, $1.40 and $1.56, respectively.

     In May 2001, the Board of Directors elected to accelerate the vesting and
exercisable provisions of the warrants granted to Cappaze's and Colasanti's
under said contracts so that the warrants become exercisable immediately. The
warrants granted to Colasanti under his contract were modified to increase the
number of shares exercisable from 50,000 to 100,000 at each anniversary date.

     In June 2001, the Company issued 6,600 shares of its common stock to
Anthony Colasanti in lieu of payment of deferred salary in the amount of $6,667.

     In June 2001, the Company issued 400,000 shares of its restricted common
stock with a fair market value of $680,000 to Lancer Offshore Inc. as additional
consideration for a $700,000 senior convertible promissory note due October 31,
2001. This note is convertible into the Company's common stock at $1.00 per
share. The note must be repaid out of any financing greater than $3,000,000 that
the Company receives.

     In June 2001, the Company issued 40,000 shares of its restricted common
stock with a fair market value of $68,000 to Capital Research as consideration
for its efforts in obtaining a $700,000 senior convertible promissory note.

     In June 2001, the Company entered into an Amendment to Senior Promissory
Note Agreement whereby the Company agreed to issue a total of 1,326,500 shares
with an aggregate fair market value of $2,188,725 to the following entities:
475,000 to Lancer Offshore, Inc.; 250,000 shares to The Viator Fund, Ltd.;
275,000 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.

     In June 2001, Capital Research was issued 50,000 shares of the Company's
restricted common stock which had a fair market value at date of issuance of
$85,000 in consideration for negotiating the extension of certain senior
promissory notes which matured on June 30, 2001.

     In July 2001, Capital Research was granted warrants to purchase a total of
97,500 shares of

                                       32
<PAGE>

the Company's common stock exercisable for a period of five years at a price of
$1.25 per share in connection with the issuance of certain senior promissory
notes proceeds of which were received in April and June 2001.

     In September 2001, the Company issued 4,000 shares of its common stock to
Anthony Colasanti in lieu of payment of deferred salary in the amount of $5,000.

     In October 2001, the Company entered into an Amendment to Senior Promissory
Note Agreement whereby the Company agreed to issue a total of 2,086,500 shares
with an aggregate fair market value of $2,295,150 to the following entities:
1,1,000 to Lancer Offshore, Inc.; 250,000 shares to The Viator Fund, Ltd.;
275,000 shares to Lancer Partners, L.P.; 150,000 shares to Joseph Giamanco; and
261,500 shares to Capital Research Ltd. in consideration of the extension of the
maturity dates of certain Senior Convertible Promissory Notes.

     In October 2001, Capital Research was issued 50,000 shares of the Company's
restricted common stock which had a fair market value at date of issuance of
$55,000 in consideration for negotiating the extension of certain senior
promissory notes which matured on October 31, 2001.

     In October 2001, the Company issued 5,000 shares of its restricted common
stock to both Messrs. Hauke and King, outside members of the Board of Directors,
as part of the annual compensation for their services on the Board. The shares
have a combined fair market value on date of issuance of $11,000.

     In October 2001, Cappaze Associates, LP, a New Jersey limited partnership,
of which Anthony Cappaze is the Sole General Partner, agreed to pledge 350,000
of its shares of common stock of the Company to secure the payments of the
obligations of the Company, Fast Ferry I Corp. and Fast Ferry II Corp. under a
Loan and Security Agreement, pursuant to which the Company borrowed $350,000.

     In December 2001, the Company issued a total of 600,000 shares of its
restricted common stock to Lancer Offshore, Inc. and The Orbiter Fund, Ltd.,
500,000 shares and 100,000 shares, respectively, as additional consideration for
a $600,000 senior convertible promissory note. This note is due May 31, 2002 and
is convertible into the Company's common stock at $1.00 per share.

     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.

                                       33
<PAGE>

                                   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)/

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

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

10.5.2    Amended Agreement with Anthony Cappaze. Filed herewith.

10.5.3    Amended Agreement with Anthony Colasanti. Filed herewith.

10.5.4    Employment Agreement with Patricia Beene. Filed herewith,

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)/

10.12     Agreement for Sale of Highlands Property dated March 29, 2001(4)

10.13     PARA Redevelopment/Land Lease Agreement dated 6/12/01./(5)/

10.14     Collective Bargaining Agreement with Local 333, United Marine Division
          of the

                                       34
<PAGE>

International Longshoreman Association, AFL-CIO, dated September 24, 2001. Filed
herewith.

10.15             Keyport Joint Venture Agreement dated 10/01/01. Filed
                  herewith.

10.16.1           Solakian Loan and Security Agreement. Filed herewith.

10.16.2           Solakian Pledge Agreement with Cappaze Associates. Filed
                  herewith.

10.16.3           Solakian Term Note. Filed herewith.

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.
(4)  Incorporated by reference from the Company's Form 10-QSB for the quarter
     ended March 31, 2001.
(5)  Incorporated by reference form the Company's 8-K dated June 22, 2001.

____________

(b)     Reports on Form 8-K
        -------------------

A Form 8-K was filed on October 19, 2001 reporting a change in accountants.

                                       35
<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 11, 2002             By:  /s/ Anthony Cappaze
                                    --------------------------------------------
                                    Anthony Cappaze, President, Chief
                                    Executive Officer and Director


Date: April 11, 2002             By:  /s/ Patricia Beene
                                    --------------------------------------------
                                    Patricia Beene, Chief Financial Officer


Date: April 11, 2002             By:  /s/ Anthony Colasanti
                                    --------------------------------------------
                                    Anthony Colasanti, Vice President,
                                    Secretary and Director


Date: April 11, 2002             By:  /s/ Gregory J. Hauke
                                    --------------------------------------------
                                    Gregory J. Hauke, Director


Date: April 11, 2002             By:  /s/ Richard King
                                    --------------------------------------------
                                    Richard King, Director

                                       36
<PAGE>

                                 EXHIBIT INDEX

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

                                   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)/

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

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

10.5.2     Amended Agreement with Anthony Cappaze. Filed herewith.

10.5.3     Amended Agreement with Anthony Colasanti. Filed herewith.

10.5.4     Employment Agreement with Patricia Beene. Filed herewith,

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)/

10.12      Agreement for Sale of Highlands Property dated March 29, 2001 (4)

<PAGE>

10.13      PARA Redevelopment/Land Lease Agreement dated 6/12/01./(5)/

10.14      Collective Bargaining Agreement with Local 333, United Marine
Division of the International Longshoreman Association, AFL-CIO, dated September
24, 2001. Filed herewith.

10.15      Keyport Joint Venture Agreement dated 10/01/01. Filed herewith.

10.16.1    Solakian Loan and Security Agreement. Filed herewith.

10.16.2    Solakian Pledge Agreement with Cappaze Associates. Filed herewith.

10.16.3    Solakian Term Note. Filed herewith.

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
(4)  Incorporated by reference from the Company's Form 10-QSB for the quarter
ended March 31, 2001.
(5)  Incorporated by reference form the Company's 8-K dated June 22, 2001.

____________

<PAGE>

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

                             FINANCIAL STATEMENTS

                               DECEMBER 31, 2001
<PAGE>

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


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


<TABLE>
<CAPTION>
                                                                                                         Page No.
                                                                                                         --------
<S>                                                                                                     <C>
Reports of Independent Certified Public Accountants .............................................       F-1 - F-2

Consolidated Balance Sheet at December 31, 2001..................................................          F-3

Consolidated Statements of Operations For the Years Ended
  December 31, 2001 and 2000.....................................................................          F-4

Consolidated Statements of Changes in Stockholders' Deficiency
  For the Years Ended December 31, 2001 and 2000.................................................          F-5

Consolidated Statements of Cash Flows
  For the Years Ended December 31, 2001 and 2000.................................................       F-6 - F-7

Notes to Consolidated Financial Statements.......................................................       F-8 - F-25
</TABLE>
<PAGE>

                         INDEPENDENT AUDITORS' REPORT


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


We have audited the accompanying consolidated balance sheet of Lighthouse Fast
Ferry, Inc. and Subsidiaries (the "Company") as of December 31, 2001, and the
related consolidated statements of operations, changes in stockholders'
deficiency, and cash flows for the year 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 audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the 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 audit provides a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Lighthouse Fast
Ferry, Inc. and Subsidiaries as of December 31, 2001, and the results of their
operations and their cash flows for the year 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 a working capital deficit, an
accumulated deficit and a stockholders' deficit, has incurred losses since its
inception and is in default of certain loan agreements. These matters raise
substantial doubt about the Company's ability to continue as a going concern.
Further, the Company's growth strategy will require substantial additional
funds. Management's plans in regard to these matters are also described in Note
1. The accompanying consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.


                                             /s/ Rothstein, Kass & Company, P.C.

Roseland, New Jersey
March 15, 2002

                                      F-1
<PAGE>

             [LETTERHEAD OF WEINICK SANDERS LEVENTHAL & CO., LLP]


                        INDEPENDENT ACCOUNTANTS' REPORT

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

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

   We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the 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 audit provides a
reasonable basis for our opinion.


   In our opinion the consolidated financial statements referred to above
present fairly, in all material respects, the results of operations and cash
flows of Lighthouse Fast Ferry, Inc. and Subsidiaries for the year ended
December 31, 2000 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 year ended December 31, 2000.  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


                                      F-2
<PAGE>

              (Formerly Lighthouse Landings, Inc. and Subsidiaries)

                           CONSOLIDATED BALANCE SHEET

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

<TABLE>
<CAPTION>



                                                                                        December 31,
                                                                                      ---------------
                                                                                           2001
                                                                                      ---------------
<S>                                                                                   <C>
Current assets:
  Cash                                                                                  $    646,660
  Inventories                                                                                106,302
  Deferred financing costs                                                                 1,044,303
  Prepaid expenses and other current assets                                                  112,607
                                                                                        ------------
      Total current assets                                                                 1,909,872

Property and equipment - at cost,
  less accumulated depreciation                                                           10,651,012
Goodwill - net of accumulated
  amortization of $263,128                                                                   975,640
Other assets                                                                                 385,563
                                                                                        ------------
        Total Assets                                                                    $ 13,922,087
                                                                                        ============

                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY
                    ----------------------------------------

Current liabilities:
  Convertible promissory notes                                                          $  5,763,000
  Current maturities of long-term debt                                                     1,478,423
  Notes payable - short-term                                                                 310,000
  Notes payable - stockholders                                                               186,755
  Accounts payable                                                                         1,074,818
  Accrued expenses                                                                         1,491,831
  Deferred revenues                                                                          189,132
  Due to officers                                                                            278,373
                                                                                        ------------
     Total current liabilities                                                            10,772,332

Long-term debt - net of current maturities                                                 9,096,253
                                                                                        ------------
      Total liabilities                                                                   19,868,585
                                                                                        ------------
Stockholders' 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 - 14,042,463 shares                                               140,425
  Additional paid-in capital                                                              15,836,069
  Accumulated deficit                                                                    (21,922,992)
                                                                                       -------------
     Total stockholders' deficiency                                                       (5,946,498)
                                                                                       -------------

        Total Liabilities and Stockholders' Deficiency                                 $  13,922,087
                                                                                       =============
</TABLE>

         See accompanying notes to consolidated financial statements.

                                      F-3
<PAGE>

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

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                  For the Years Ended
                                                                                      December 31,
                                                                          ----------------------------------
                                                                                 2001                2000
                                                                          ----------------------------------
<S>                                                                       <C>                    <C>
Revenues                                                                  $   4,421,859          $ 4,018,323
                                                                          ----------------------------------

Costs of service:
  Ferry operations                                                            3,669,230            2,898,429
  Depreciation                                                                  929,509              910,006
                                                                          ----------------------------------
Total costs of service                                                        4,598,739            3,808,435
                                                                          ----------------------------------
                                                                               (176,880)             209,888
                                                                          ----------------------------------

Operating expenses:
  Selling, general and administrative                                         1,885,850            1,700,142
  New business development                                                      712,243              100,677
  Marketing                                                                      53,976               75,243
  Amortization of goodwill                                                       80,944               80,945
                                                                          ----------------------------------
Total operating expenses                                                      2,733,013            1,957,007
                                                                          ----------------------------------
Loss from Operations                                                         (2,909,893)          (1,747,119)
                                                                          ----------------------------------

Other expenses:
  Interest and amortization of financing costs                                9,049,807            3,031,568
  Other                                                                           2,157                3,250
                                                                          ----------------------------------
Total other expenses                                                          9,051,964            3,034,818
                                                                          ----------------------------------
                                                                          ----------------------------------
Loss from continuing operations                                             (11,961,857)          (4,781,937)
                                                                          ----------------------------------

Discontinued operations:
  Loss from discontinued operations                                                                 (235,470)
  Gain on disposal                                                              200,643                    -
                                                                          ----------------------------------
Gain (loss) from discontinued operations                                        200,643             (235,470)
                                                                          ----------------------------------

Net loss                                                                   ($11,761,214)         ($5,017,407)
                                                                          ==================================
Per share data:
  Basic and diluted:
   Loss from continuing operations                                                (1.18)               (0.75)
   Gain (loss) from discontinued operations                                        0.02                (0.04)
                                                                          ----------------------------------
   Net loss                                                                       (1.16)               (0.79)
                                                                          ==================================

Weight average number of shares outstanding:
      Basic and diluted                                                      10,147,468            6,331,329
                                                                          ==================================
</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 CHANGES IN STOCKHOLDERS' DEFICIENCY
                    Years Ended December 31, 2001 and 2000

<TABLE>
<CAPTION>
                                            Common Stock          Additional                       Total
                                     ------------------------      Paid-In       Accumulated   Stockholders'
                                        Number        Amount       Capital         Deficit      Deficiency
                                     ------------    --------    -----------    ------------   -------------
<S>                                  <C>             <C>         <C>            <C>            <C>
Balance at January 1, 2000              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 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    $ 9,028,766    ($10,161,778)    ($1,051,161)

Increase of shares for cash               294,295       2,943        273,557                         276,500

Shares issued for:

   Satisfaction of liabilities            190,838       1,909        157,759                         159,668

   Services rendered and financing      5,372,243      53,722      5,822,376                       5,876,098

Warrants issued for financing                               -        553,611                         553,611

Net loss for 2001                               -           -              -     (11,761,214)   ( 11,761,214)
                                     ------------    --------    -----------    ------------   -------------

Balance at December 31, 2001           14,042,463    $140,425    $15,836,069    ($21,922,992)    ($5,946,498)
                                     ============    ========    ===========    ============   =============
</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

<TABLE>
<CAPTION>
                                                                                             For the Years Ended
                                                                                                  December 31,
                                                                                      -------------------------------------
                                                                                          2001                    2000
                                                                                      --------------         --------------
<S>                                                                                   <C>                    <C>
Cash flows from operating activities:
  Loss from continuing operations                                                      ($11,961,857)           ($4,781,937)
                                                                                      -------------          -------------
  Adjustments to reconcile loss from continuing
      operations to net cash used in operating
      activities of continuing operations:
    Depreciation                                                                            929,509                908,314
    Amortization of goodwill                                                                 80,944                 80,945
    Accrued interest                                                                        628,672                 34,031
    Amortization of deferred finance costs                                                7,364,820              1,463,497
    Imputed interest                                                                              -                 30,763
    Stock issued for services rendered and interest                                          57,356                 46,825
    Non-employee stock option                                                                     -                137,500
    Increase (decrease) in cash flows as a result of
        changes in assets and liabilities net of assets
      Inventories                                                                           (46,996)               (18,358)
      Prepaid expenses and other current assets                                            (102,728)                53,569
      Other assets                                                                          (81,156)                34,860
      Accounts payable                                                                      758,802                156,176
      Accrued expenses                                                                       50,850                  4,481
      Deferred revenues                                                                     102,514                 17,853
      Due to officers                                                                        77,488               ( 34,032)
                                                                                      -------------          -------------
                                                                                          9,820,075              2,916,424
                                                                                      -------------          -------------
Net cash used in operating
  activities of continuing operations                                                    (2,141,782)            (1,865,513)
Net cash provided by (used in) discontinued operations                                            -               (302,651)
                                                                                      -------------          -------------
Net cash flows used in operating activities                                              (2,141,782)            (2,168,164)
                                                                                      -------------          -------------

Cash flows from investing activities:
  Acquisition of property and equipment                                                    (195,560)                (8,483)
  Construction in process                                                                         -               (287,500)
  Sale of assets                                                                            645,512
  Acquisition of minority interest                                                           (4,140)                     -
                                                                                      -------------          -------------
Net cash used in investing activities                                                       445,812               (295,983)
                                                                                      -------------          -------------

Cash flows from financing activities:
  Proceeds from notes payable - stockholders                                                180,000
  Payments of notes payable - stockholders                                                  (85,000)               (75,000)
  Proceeds from convertible promissory notes                                              2,130,000              2,950,000
  Repayment of convertible promissory notes                                                 (60,000)
  Proceeds from short term debt obligations                                                 370,000
  Repayment of short term debt obligations                                                  (60,000)
  Repayments of long-term debt                                                             (475,448)              (924,830)
  Proceeds from issuance of common stock                                                    276,500                482,598
                                                                                      -------------          -------------
Net cash provided by financing activities                                                 2,276,052              2,432,768
                                                                                      -------------          -------------

Net increase (decrease) in cash                                                             580,082                (31,379)
Cash at beginning of year                                                                    66,578                 97,957
                                                                                      -------------          -------------
                                                                                      $     646,660          $      66,578
                                                                                      =============          =============
</TABLE>

         See accompanying notes to consolidated financial statements.

                                      F-6

<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,
                                                                                      ------------------------------------------
                                                                                             2001                    2000
                                                                                      ------------------        ----------------
<S>                                                                                   <C>                       <C>
Supplemental Disclosures of Cash Flow Information:

  Cash paid during the year for:
    Interest                                                                          $     1,679,948           $   1,222,270
                                                                                      ===============           =============

Supplemental Schedules of Noncash
  Operating and Financing Activities:

  Common stock and warrants issued as financing costs                                 $     6,351,900           $   2,460,435
                                                                                      ===============           =============

  Common stock issued as payment of liabilities:
    Related parties                                                                   $        19,667           $     214,625
                                                                                      ===============           =============

    Others                                                                            $             -           $     125,000
                                                                                      ===============           =============

  Common stock issued on conversion of
    convertible promissory note                                                       $       140,000           $           -
                                                                                      ===============           =============

  Common stock issued in purchase of minority interest                                $        20,454           $           -
                                                                                      ===============           =============

  Convertible promissory note issued as payment
    of financing costs                                                                $       330,000           $     353,000
                                                                                      ===============           =============

  Note issued as payment of a mortgage on
    discontinued operations                                                           $             -           $     200,000
                                                                                      ===============           =============
</TABLE>

         See accompanying notes to consolidated financial statements.

                                      F-7

<PAGE>

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

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               DECEMBER 31, 2001

NOTE 1 -  GOING CONCERN.

               The accompanying consolidated financial statements have been
          prepared in conformity with accounting principles generally accepted
          in the United States of America, 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, 2001 and 2000. In addition, at December 31, 2001 the
          Company has working capital and stockholders' capital deficiencies of
          $8,862,460 and $5,946,498, respectively.

               Future viability of the Company is dependent upon the Company's
          ability to obtain additional funding and obtain profitable operations.
          During 2000, the Company received cash of $482,598 through sales of
          its common stock and $2,950,000 from convertible promissory notes.
          During 2001, the Company obtained $2,680,000 through convertible
          promissory notes and short-term loans and $276,500 in cash from the
          sale of its common stock. The proceeds were used to provide working
          capital for the Company's ongoing operations and capital to meet
          certain obligations and to fund its expansion plans.

               Management is aggressively pursuing federal funding that is
          presently available for ferry service operators in the metropolitan
          New York area. A federally sponsored bill through an emergency
          appropriations funding included in the Department of Defense
          Appropriations, secured by New Jersey Senators Torricelli and Corzine,
          has allocated $100 million specifically to expand ferry service
          between New York and New Jersey. Federal funds are also available
          through the Federal Emergency Management Agency (FEMA). Additionally,
          the Perth Amboy Redevelopment Agency has authorized the sale of $14
          million in tax-free municipal bonds to be used specifically for the
          development of high-speed ferry service that will be provided
          exclusively by the Company through its operating subsidiary. Although
          there can be no assurances that the Company will be successful in
          obtaining funding from any of these sources, management is confident
          that as a currently operating ferry service with over three years of
          operational history, it is favorably positioned to secure some funding
          from these sources.

               It is management's opinion that through the sales of its common
          stock and other financing arrangements the Company will be successful
          in raising sufficient funds 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.

                                      F-8
<PAGE>

         (a)  Description of Business:

               Lighthouse Fast Ferry, Inc. (the "Company"), a New Jersey
         corporation, through its subsidiary New York Fast Ferry Holding Corp.
         ("NYFF"), operates high speed, commuter passenger ferry vessels in the
         New York City metropolitan region.

         (b)  Principles of Consolidation:

               The consolidated financial statements include the accounts of
         Lighthouse Fast Ferry, Inc. and its subsidiaries. All significant
         intercompany balances and transactions have been eliminated in
         consolidation.

         (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)  Fair Value of Financial Instruments:

               The fair value of the Company's assets and liabilities, which
         qualify as financial instruments under Statement Of Financial
         Accounting Standards (SFAS) No. 107,"Disclosures About Fair Value of
         Financial Instruments," approximate the carrying amounts presented in
         the consolidated balance sheets.

         (f)  Inventories:

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

         (g)  Property and Equipment:

               Property and equipment is recorded at cost. The cost of the
         ferries obtained through the acquisition of Fast Ferries Holding Corp.
         in October 1998 has been determined as an allocation of the purchase
         price of the business acquired based upon an independent appraisal.
         Depreciation is computed using the straight-line method. Depreciation
         on equipment is calculated principally over its estimated useful lives
         as follows: fifteen years for ferry vessels; five and ten years for
         vessel equipment; leasehold improvements over the term of the lease and
         all other equipment for three 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)

                                      F-9
<PAGE>

         (h)  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. 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.
         In 2001, the Company acquired from one of NYFF's founders his remaining
         four percent share in NYFF for $24,595. Amortization of goodwill
         charged to operations was $80,944 and $80,945 for the years ended
         December 31, 2001 and 2000, respectively.

         (i)  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 nonrefundable and
         nonextendable. Accordingly, the Company determines the unused portion
         of ticket sales and defers that value to future periods. Deferred
         revenues aggregated $189,132 and $86,618 at December 31, 2001 and 2000,
         respectively.

               Revenues generated by the Company for galley sales of snacks and
         beverages at the ferries' snack bars and revenues from charters and
         excursion trips are recognized in the period services are rendered.

         (j)  Income Taxes:

               The Company complies with 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.
         Management has fully reserved the net deferred tax assets as it is more
         likely than not that the deferred tax asset will not be utilized in the
         future.

         (k)  Impairment of Long-lived Asset:

               The Company accounts for impairment of long-lived assets in
         accordance with 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, 2000 and 2001, the Company evaluated the long-term assets of its
         continuing operations, which at December 31, 2001 were comprised of
         property and equipment (principally two (2) ferries) with a cost, net
         of depreciation, of $ 10,418,347 and goodwill on the acquisition of the
         Fast Ferry Holding Corp. with a cost, net of amortization, of $975,640.
         Based upon an estimate of the future undiscounted net cash flows of the
         related asset or asset grouping over the remaining life, it was

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

                                     F-10
<PAGE>

         determined that there was no impairment in either the net book value of
         the ferries or the goodwill.

               In October 2001, the Financial Accounting Standards Board (FASB)
         issued SFAS No. 144, "Accounting for the Impairment or Disposal of
         Long-Lived Assets." This statement creates one accounting model, based
         on the framework established in SFAS No. 121, to be applied to all
         long-lived assets including discontinued operations. SFAS No. 144 is
         effective for fiscal years beginning after December 15, 2001. The
         Company determined that its current accounting policy for the
         impairment of long-lived assets is consistent with SFAS No. 144.

         (l)  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.

         (m)  Loss Per Common Share:

               Loss per common share is based on the weighted average number of
         common shares outstanding. The Company complies with SFAS No. 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 effects 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.

         (n)  Stock Based Compensation:

               The Company accounts for employee stock options in accordance
         with Accounting Principles Board Opinion No. 25 (APB 25),"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.


         (o)  Stock Issued to Nonemployees for Services:

               The Company accounts for stock issued to nonemployees for
         services in accordance with 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 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. (Continued)

                                     F-11
<PAGE>

         (p)   New Accounting Pronouncements:

               In June 2001, the FASB issued SFAS No. 141, "Accounting For
         Business Combinations", and SFAS No. 142, "Goodwill And Other
         Intangible Assets". These Statements modify accounting for business
         combinations after June 30, 2001 and will affect the Company's
         treatment of goodwill at the start of fiscal year 2002. SFAS No. 142
         requires that goodwill existing at the date of adoption be reviewed for
         possible impairment and the impairment tests be periodically repeated,
         with impaired assets written-down to fair value. Additionally, existing
         goodwill must be assessed and classified consistent with the
         Statements' criteria. Amortization of goodwill will cease on January 1,
         2002.

         (q)   Reclassifications:

                 Certain prior years amounts have been reclassified to conform
         to the current year presentations.

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 are recorded as
         current assets in the accompanying consolidated balance sheet under the
         caption "Net assets of discontinued operations".

                 On March 29, 2001 management entered into an agreement to sell
         the real property, free of related liabilities, for $1,150,000 less
         fees and related expenses. Prior to the closing of the sale, which
         occurred on December 5, 2001, the net assets and liabilities aggregated
         $444,869. The Company realized a net gain of $200,643 on the disposal
         of discontinued operations.

NOTE 4 - PROPERTY AND EQUIPMENT.

         Property and equipment is summarized as follows:

                                                        December 31,
                                                       -------------
                                                            2001
                                                        -----------
            Ferries                                     $13,300,000
            Computers and office equipment                   60,553
            Furniture and fixtures                          288,621
                                                        -----------
                                                         13,649,174
            Less: Accumulated depreciation                2,998,162
                                                        -----------
                                                        $10,651,012
                                                        ===========

NOTE 5 - INCOME TAXES.

                 The Company has deferred net tax assets consisting of the
         following temporary differences at December 31, 2001.

                                     F-12
<PAGE>

         Net operating loss carryforward              $   7,551,000
         Differences between assigned values
           and tax bases of the assets                   (1,124,000)
                                                      -------------

                                                          6,427,000
         Valuation allowance                             (6,427,000)
                                                      -------------

                                                      $           -
                                                      =============


         At December 31, 2001, the Company has net operating loss carryforwards
         ("NOLs") of approximately $18,878,000, which expire between 2009 and
         2021. The statutory federal income tax rate differs from the effective
         tax rate due to the change in the deferred tax asset valuation
         allowance.

NOTE 6 - CONVERTIBLE PROMISSORY NOTES.

                    The Company has issued convertible promissory notes (CPNs)
         that are convertible at the holders' option into shares of the
         Company's restricted common stock. Certain CPNs carry simple interest
         at the rate of 10.5% per annum. Interest is payable quarterly, and the
         notes mature one-year from date of issuance. Certain other CPNs,
         referred to as Senior CPNs, carry simple interest at the rate of 10%
         per annum and mature in the range of four to nine months with principal
         and interest payable at maturity.

         CPNs are summarized as follows at December 31, 2001:

                                     F-13
<PAGE>

<TABLE>
<CAPTION>
                                                                    10.5%              10.0%
                                                                    CPNs            Senior CPNs
         <S>                                <C>                  <C>                <C>
         CPNs issued for cash               $ 3,150,000          $  650,000         $ 2,500,000
         CPNs issued for services               353,000                   -             353,000
                                            -----------          ----------         -----------
         Balance at December 31, 2000         3,503,000             650,000           2,853,000

         CPNs issued for cash                 2,130,000             230,000           1,900,000
         CPNs issued for services               330,000                                 330,000

         Conversions                           (140,000)           (140,000)                  -
         Payments                               (60,000)            (60,000)                  -
                                            -----------          ----------         -----------
                                              2,260,000              30,000           2,230,000

         Balance at December 31, 2001       $ 5,763,000          $  680,000         $ 5,083,000
                                            ===========          ==========         ===========
</TABLE>

NOTE 6 - CONVERTIBLE PROMISSORY NOTES. (Continued)

               As additional consideration for the CPNs and senior CPNs issued
         in 2000 and 2001, the Company issued to the note holders 1,312,000 and
         1,557,005 shares, respectively, of its restricted common stock. In
         2000, the Company charged $2,322,438 to operations as financing costs
         over the terms of the notes. In 2001, the Company charged $833,000 to
         operations as financing costs over the term of the notes.

               During 2001, CPNs totaling $450,000 became due and holders of the
         notes extended the maturity dates for a one-year term. In consideration
         for these extensions, the Company issued to the note holders a total of
         5,875 shares with a fair market value on the dates of extensions of
         $8,826, which is charged to operations as financing costs over the term
         of the extensions.

               In connection with the Senior CPNs, in 2000 and 2001 the Company
         issued to a financial consultant senior CPNs totaling $253,000 and
         $130,000, respectively, in lieu of a cash fee as consideration for
         services rendered in obtaining the loans. Additionally, in 2000 the
         consultant received 162,250 shares of the Company's restricted common
         stock for which $219,312 was charged to operations as financing costs
         over the term of the notes. In 2001 the Company issued the consultant
         100,000 shares of its restricted common stock and five-year warrants to
         purchase, a total of 97,500 shares of its restricted common stock at a
         price of $1.25 per share. The allocated amounts of the notes, common
         stock and warrants were charged to operations as financing costs over
         the term of the related notes.

               In June 2001 and October 2001, the Company requested the
         extension of senior CPNs totaling $2,853,000 and $4,273,000,
         respectively, with original maturity dates of March, July and October
         2000 and January 2001. The notes maturity dates were extended to
         October 31, 2001 and then to February 28, 2002. In consideration for
         the extension, the Company issued to the note holders an aggregate of

                                     F-14
<PAGE>

         3,563,000 shares of its restricted common stock for which the allocated
         fair market value was charged to operations as financing costs over the
         terms of the extensions.

               As consideration for services rendered in obtaining the
         extensions in 2001 and in lieu of a cash fee, the Company issued to a
         financial consultant senior CPNs totaling $200,000 and 100,000 shares
         of its restricted common stock, the allocated value of which was
         charged to operations as financing costs over the term of the
         extensions.

               In December 2000, the Company requested the extension of senior
         CPNs totaling $2,753,000 with original maturity dates of March, July
         and October 2000 and December 2000. The notes maturity dates were
         extended to June 30, 2001. In consideration for the extension, the
         Company issued to the note holders an aggregate of 1,376,500 shares of
         its restricted common stock with a total fair market value of
         $1,720,625, which was charged to operations as financing costs over the
         terms of the extensions.

               As consideration for services rendered in obtaining the December
         2000 extensions, in lieu of a cash fee the Company issued to a
         financial consultant a senior CPN totaling $100,000, which was charged
         to operations as financing costs over the term of the extensions and
         50,000 shares of its common stock having a fair market value at
         issuance date of $62,500, which was charged to operations as financing
         costs over the term of the extension.

NOTE 7 - NOTES PAYABLE - SHORT-TERM.

               In October 2001, the Company received proceeds of $350,000 from a
         term note secured by a second mortgage on the Company's two ferry
         vessels. The note bears an annual interest rate of 18% with principal
         of $30,000 and interest to be paid monthly commencing November 1, 2001.
         The note matures on April 1, 2002 with a final payment due of $200,000.
         As consideration for the loan, the Company issued to the note holder
         warrants to purchase 150,000 shares of its restricted common stock at a
         purchase price of $1.50 per share exercisable for a period of six years
         from date of issuance. In March 2002, the lender modified and extended
         the terms of the note with interest payments only for six months and
         principal and interest payments payable over a one-year term
         thereafter.

               In December 2001 the Company received proceeds in the amount of
         $20,000 from a short-term promissory note that bears interest at 18%
         per annum. Interest is payable monthly. The outstanding principal and
         all accrued interest is due on December 19, 2002.

NOTE 8 - NOTES PAYABLE - STOCKHOLDERS.

               In October 1998,the Company issued 454,545 shares of its common
         stock to the three former shareholders of a wholly-owned subsidiary of
         the Company. Of the 454,545 shares issued, 70,000 shares were subject
         to a put under which two of the three selling shareholders could
         require the Company to purchase an aggregate of 70,000 shares at a
         price of $5.00 per share. The two individuals notified the Company in
         December 1998 of their intention to exercise

                                     F-15
<PAGE>

         their puts. Since the Company was unable to pay the demand in full at
         the time, it agreed to pay the individuals interest on the unpaid
         balances at an annual rate of 12%. As of December 31, 2001 the balance
         owed to the two parties totaled $91,755 of which $20,000 and $30,000,
         respectively, is principal and $18,976 and $22,779, respectively,
         represents interest due.

               In February 2001, the Company received $30,000 in proceeds from a
         sixty-day promissory note bearing interest at the rate of 12% per
         annum. Principal and interest was due originally on April 26, 2001. The
         Company repaid $15,000 of the principal in April and requested an
         extension for the balance of $15,000, which was granted. A payment of
         $10,000 was made in December 2001 and the balance due on the note at
         December 31, 2001 was $5,000.

               In April and June 2001, the Company received a total of $150,000
         in cash as proceeds for a note secured by a mortgage on property
         located at 52 Shrewsbury Avenue, Highlands. The note carries interest
         at the rate of 14% per annum. Principal and interest was due at the
         time of the closing of the sale of the property. As consideration for
         the mortgage loan, the Company issued to the note holder 7,500 shares
         of its restricted common stock. Additionally, the

NOTE 8 - NOTES PAYABLE - STOCKHOLDERS. (Continued)

         Company issued the note holder warrants to purchase 25,000 shares of
         its restricted common stock. In December 2001, the note holder released
         the mortgage lien in exchange for a payment of $60,000 and 10,000
         shares of the Company's restricted common stock. The value of the stock
         was charged to operations as financing costs. The remaining note in the
         amount of $90,000 was extended for a six-month period.

NOTE 9 - DUE TO OFFICERS.

               Since inception, two current officers and one former officer of
         the Company from time to time have voluntarily elected to defer payroll
         payments and expense reimbursements. The deferred payroll and expenses
         are recorded as notes due to the officers and interest is accrued at
         the rate of 4% per annum. The note principal and interest due at
         December 31, 2001 aggregated approximately $213,000 and $65,000,
         respectively.

NOTE 10 -  LONG-TERM DEBT.

         Long-term debt is as follows at December 31, 2001:

                                     F-16
<PAGE>

<TABLE>
<S>                                                                                  <C>   <C>     <C>
Mortgage note payable, secured by the
     vessel "Finest" due in monthly install-
     ments of $56,719 through September 10, 2005,
     including interest at 9.25% per annum, with a
     final payment of $3,773,905 due October 10, 2005.                               (a)   (b)     $ 4,856,784

Mortgage note payable, secured by the vessel
     "Bravest" due in monthly installments of
     $56,719 through September 10, 2005, including
     interest at 9.25% per annum, with a final
     payment of $3,774,112 due October 10, 2005.                                     (a)   (b)       4,798,573

Note payable, secured by the vessel "Finest"
     and "Bravest", principal payable in eight
     quarterly installments of $116,790 commencing
     on March 10, 2001 bearing interest at the prime
     rate, which was 4.75% at December 31, 2001.                                           (b)         919,319
                                                                                                             -
                                                                                                    10,574,676
                                                                                                   -----------
Portion due within one year                                                                          1,478,423
                                                                                                   -----------

Long-term debt - less current maturities                                                           $ 9,096,253
                                                                                                   ===========
</TABLE>


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

     (b)  The Company is in default of these notes and is in negotiations with
       the lender to restructure the debt.


       NOTE 10 -  LONG-TERM DEBT. (Continued)

          The secured debt obligations mature as follows:

                 2002                     $ 1,478,423
                 2003                         498,653
                 2004                         549,354
                 2005                       8,048,246
                                          -----------

                                          $10,574,676
                                          ===========



NOTE 11 - CAPITAL STOCK.

          (a)  Stock Issued for Consideration Other Than Cash:

                 During 2001, the Company issued 4,361,705 shares of it
          restricted common stock with a fair market value of approximately
          $5,540,255 in lieu of cash payments for additional interest, financing
          costs and consultant fees related to the extensions of senior and
          convertible promissory notes. This amount is charged to operations as
          financing costs over the term of the extensions of the convertible
          promissory notes.

                                     F-17
<PAGE>

                  During 2001, the Company issued 964,175 shares of it
           restricted common stock with an allocated fair market value of
           approximately $833,000 in lieu of cash payments for financing costs
           and consultants' fees related to proceeds of senior and convertible
           promissory notes received in 2001. This amount is charged to
           operations as financing costs over the applicable term of the notes.

                  During 2001, the company issued 175,000 shares of its
           restricted common stock in connection with the conversion of $140,000
           of convertible promissory notes.

                  During 2001, the Company issued 15,838 shares having a fair
           market value on the date of issuance of $19,667 to an
           officer/director in lieu of cash payment for accrued salary.

                  During 2001, the Company issued 10,000 shares having a fair
           market value on the date of issuance of $11,000 to two outside
           directors of the Company as partial annual compensation for their
           services rendered. This amount is charged to operations as directors'
           fees in 2001.

                  During 2001, the Company issued 20,000 shares with a fair
           market value on the date of issuance of $25,000 to two outside
           consultants for services rendered and 18,705 shares with a fair
           market value of $21,306 in lieu of cash payments as satisfaction of
           interest payable.

                  During 2001, the Company issued 16,363 shares with a fair
           market value on the date of issuance of $20,454 and cash of $4,140 to
           acquire a 4% minority interest in its subsidiary Fast Ferry Holdings.

                  During 2000, the Company issued 2,169,125 shares having a fair
           market value on the date of issuance of $2,736,748 in lieu of cash
           payments for financing costs and as payment of a consultant's fee.
           This amount is being charged to operations over the term of the
           convertible promissory notes issued throughout 2000.

                  During 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 and
           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 term of the loan.

                  During 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 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.

           (b)  Common Stock Issued for Cash:

                  During 2001, the Company sold 294,295 shares of its common
           stock for $276,500. During 2000, the Company sold 712,667 shares of
           its common stock for $482,598.

NOTE 12 -  STOCK OPTIONS AND WARRANTS.

                                     F-18
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                                               Weighted
                                                                                                                Average
                                                                                         Exercise Price        Exercise
                                                      Options           Warrants              Range              Price
                                                      -------          ---------              -----              -----
<S>                                                  <C>             <C>                <C>                    <C>
Outstanding at January 1, 2000                        420,000          1,530,000         $1.00 to $2.60         $1.44
Granted during 2000                                   210,000          1,206,167         $.50 to  $2.00          1.26
Expired in 2000                                        10,000                  -              2.53               2.53
                                                      -------          ---------                                -----
Outstanding at December 31, 2000                      620,000          2,736,167         $.50 to  $2.60          1.36
Granted during 2001                                                    1,381,795         $1.00 to $2.00          1.32
Cancelled in 2001                                           -           ( 50,000)             $1.25              1.25
                                                      -------          ---------                                -----

Outstanding at December 31, 2001                      620,000          4,067,962         $.50 to  $2.60         $1.35
                                                      =======          =========                                =====

Exercisable at December 31, 2001                      620,000          3,942,962         $.50 to  $2.60         $1.36
                                                      =======          =========                                =====
</TABLE>


           The weighted average remaining contractual life of warrants and
           options outstanding at December 31, 2001 is 2.5 years.





NOTE 12 -  STOCK OPTIONS AND WARRANTS. (Continued)

               Assuming the fair market value of the stock at the date of grant
           to be equal to option/warrant exercise price, the expected life of
           the options to be 3 years the expected volatility at 90% and 200%,
           respectively, expected dividends are none, and the risk-free interest
           rate of 5%, the Company would have recorded compensation expense of
           $97,690 and $277,118 for the years ended December 31, 2001 and
           December 31, 2000, 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,
                                              ---------------------------------
                                                  2001                 2000
                                              ------------         ------------
             Net loss as reported             ($11,761,214)         ($5,017,407)

             Additional compensation                97,690              277,118
                                              ------------         ------------
             Adjusted net loss                ($11,858,904)         ($5,294,525)
                                              ============         ============
             Loss per share as reported             ($1.16)               ($.79)
                                              ============         ============
             Adjusted loss per share                ($1.17)               ($.84)
                                              ============         ============

                                     F-19
<PAGE>

           (a)  Stock Options:

                 (i)     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, respectively, 100,000 and 100,000 shares of common stock at
           $1.00 per share, the fair market value at the date of grant, through
           January 2007.

                 The Company granted an option to an 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.

                 (ii)    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. As of December 31, 2001 the Company had not
           granted any stock options under the Employee Stock Option Plan.

           (b)  Warrants:

                 (i)     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. Of these warrants 306,667 were for a two-year period in
           consideration of loan extensions and modifications.

                 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.

                 (ii)    Warrants Granted in 2001:

                 As an inducement to purchase shares of the Company's common
           stock, warrants to purchase 216,795 shares were granted to
           individuals who purchased stock in 2001. The warrants are exercisable
           at various times through August 31, 2004 at prices ranging from $1.50
           to $2.00, the fair market value of the common stock at the date of
           grant.

                 In 2001 the Company granted its CEO, Vice President-Secretary
           and President of its operating subsidiary warrants to purchase,
           respectively, 200,000, 200,000 and 75,000 shares of its common stock
           at prices of $1.00 and $1.10 per share, which was the fair market

                                     F-20
<PAGE>

           value at the date of grant. The warrants are exercisable for three
           years from date of grant. Also in October 2001, in accordance with
           the terms of her employment agreement, the Company issued the new CFO
           warrants to purchase a total of 175,000 shares of common stock at a
           price of $1.00 per share, which was the fair market value at the date
           of grant, with warrants to purchase 50,000 shares exercisable upon
           execution of employment agreement, 50,000 on the first anniversary of
           employment and 75,000 upon the second anniversary of employment and
           terminating three years from the date the warrant is exercisable.

               In 2001 in connection with certain promissory notes, other loans
           and equity raising, the Company issued warrants to note holders and
           financial consultants to purchase a total of 510,000 shares of its
           restricted common stock. The warrants are exercisable at various
           times through October 1, 2007 at prices ranging from $1.25 to $1.65,
           which was the fair value of the common stock on the date of grant. In
           connection with the granting of the above warrants approximately
           $553,000, the allocated fair value of the warrants at date of grant,
           was capitalized to deferred financing costs and is being amortized as
           financing costs over the maturity of the related debt.






NOTE 13 -  COMMITMENTS AND CONTINGENCIES.

           (a) Leases:

           (i)      The Company's corporate offices are located at a facility
                    under a sublease agreement with Anthony Colasanti, an
                    officer and director of the Company, at a cost of $2,750 per
                    month through February 2002.

           (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 based on daily
                    passenger volume at the leased property, and averaged
                    approximately $30,400 per month during 2001. 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 lease for
                    additional parking, docking and office space at a site in
                    Highlands, NJ. Pursuant to the terms of the lease, the
                    Company has the right to use 125 of the parking spaces at
                    the site from Monday to Friday until December 31, 2001 for a
                    fee of $1,250 per week. The 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, the terms of the lease provide the Company with
                    the right to use the pier and a building at the foot of the
                    pier as a ticket booth for $400 per month according to the
                    same terms of use for the parking space. The Company began
                    ferry service from the site on December 11, 2000. In
                    December

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                    2001, the Company's lease was extended for a one-year period
                    expiring December 31, 2002.

          (iv)      In October 2001, the Company entered into an agreement with
                    Keyport Fast Ferry Inc., an unrelated entity, to act as the
                    exclusive ferry operator. Under the terms of the agreement
                    Keyport Fast Ferry is responsible for the landside
                    operations and the Company is solely responsible for
                    waterside and ferry operations. The Company pays Keyport
                    Fast Ferry a monthly amount based on a declining scale from
                    $1.50 to $1.30 per passenger embarking or debarking at the
                    Keyport ferry site. The agreement is for a term of one year
                    with automatic extensions commensurate with approvals issued
                    by the municipality. The parties have exclusive, non-compete
                    agreements with to respect to Keyport ferry service.

          The total amount of rent paid to above entities under the described
          lease agreements totaled $528,073 in 2001 and $476,391 in 2000.


          (v)       On June 12, 2001 the Company entered into an agreement with
                    the Perth Amboy Redevelopment Agency ("PARA") to develop a
                    fast ferry service to be operated from an approximately 5
                    acre site on the riverfront in Perth Amboy. The agreement
                    includes the exclusive rights to operate a fast ferry
                    service from Perth Amboy and an eight-year lease with
                    renewal options for three additional consecutive terms of 5
                    years and a final term of a two-year period. At the end of
                    the initial eight-year term the Company has the option to
                    purchase the leased property for $1,000,000. The Company and
                    PARA are modifying the Lease Agreement so as to permit the
                    issuance of tax-free bonds for the purchase of two high-
                    speed vessels and the development of the Perth Amboy ferry
                    site. The modified and amended agreement will provide for
                    PARA to own the vessels and the ferry site with the Company
                    acting as the exclusive manager and operator of the site and
                    vessels. At the end of the initial eight-year term the
                    Company will have the right to purchase the property and the
                    vessels.

          (vi)      In October 2001, the Company entered into a six-month Vessel
                    Management Agreement with New England Aquarium Corporation
                    for the use of a fast ferry vessel for the Company's
                    Keyport, NJ operation. The agreement also includes one
                    captain and up to three crewmembers to operate the vessel.
                    For the use of the vessel the Company pays the vessel owner
                    on a monthly basis an amount equal to $3.75 per passenger
                    carried on the vessel in either direction between Keyport
                    and Manhattan, which amounts to approximately $50,000 per
                    month. The agreement expires on April 1, 2002 at which time
                    the vessel will be returned to its owner.

             (vii)  In October 2001, the Company entered into a Charter
                    Agreement with Bay State Cruise Company for a seven-month
                    term for the use of a fast ferry vessel to be used at the
                    Company's Keyport site. The monthly charter fee is $33,000.
                    The agreement also includes certain crewmembers for whom the
                    Company pays $200 per man per day. The charter agreement
                    terminates on May 15, 2002 at which time the vessel will be
                    returned to its owner.

           (b)   Employment Contracts:

                    The Company entered into new employment agreements with its
                 executive officer, Anthony Cappaze, in January 2000 and its
                 Vice President-Secretary, Anthony Colasanti, in February 2000.

                                     F-22
<PAGE>

           The agreements provide for a base salary of $150,000 and $120,000 per
           year, respectively, for three years. Under these agreements Mr.
           Cappaze and Mr. Colasanti, respectively, were granted warrants to
           purchase a total of 300,000 and 150,000 shares of the Company's
           common shares at the fair market value of the common stock on the
           date of grant of $1.00 per share, which are exercisable as follow:
           one-third upon execution of agreement and one-third on the first and
           second anniversary dates of the respective agreements. The warrants
           are exercisable for a three-year period from grant dates. Both
           Messrs. Cappaze and Colasanti also received as a condition of their
           contract options to purchase 200,000 shares of common stock at $1.00
           per share through January 2007, with half of these options
           exercisable in January 2002 and half exercisable in January 2003. Mr.
           Colasanti also received a warrant to acquire 100,000 common shares
           for two years at $1.00 per share.

               In May 2001 the Board of Directors of the Company reviewed the
           Employment Agreements of Messrs. Colasanti and Cappaze and their job
           performance. The Board concluded, that as the result of efforts of
           Cappaze and Colasanti, the Company was achieving its growth
           objectives and had raised substantial capital and was poised to
           significantly expand service for calendar year 2001. The Board also
           found that both Cappaze and Colasanti often had foregone receipt of
           their base salary for up to two months at a time to afford the
           Company the opportunity to utilize its limited cash resources for
           operations and expansion. The Board also found that Cappaze and
           Colasanti personally guaranteed debt obligations of the Company
           totaling approximately $200,000. On the resolution of an independent
           Board member, with Cappaze and Colasanti abstaining, the Board agreed
           to extend both Cappaze and Colasanti contracts for a four-year period
           through December 31, 2005. All of the options and warrants provided
           under the previous contract were immediately vested to Cappaze and
           Colasanti, respectively, and the new contracts provide that on each
           anniversary date of the contract Cappaze and Colasanti receive a
           minimum of 150,000 warrants. It further provides that effective July
           1, 2001 Colasanti's base salary increases to $144,000.

               The Company entered into a two-year employment agreement with
           Patricia Beene effective October 1, 2001 to serve as its Chief
           Financial Officer at an annual salary of $125,000 per year. In
           addition, Ms. Beene was granted warrants to purchase a total of
           175,000 warrants of the Company's common stock at $1.00 per share
           exercisable as follows: warrants to 50,000 shares exercisable upon
           execution of agreement, warrants to purchase 50,000 and 75,000
           exercisable on the first and second anniversaries, respectively, of
           the agreement. The agreement provides for reviews, including bonuses
           and salary increases annually or as determined by the Board of
           Directors.

               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 with annual increases of 10%. 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

                                     F-23
<PAGE>

           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 mortgage note payable. The discovery phase of pre-
           trial proceedings has not been completed. A trial date will be set
           when discovery is completed. The Company intends to pursue its legal
           remedies in this matter.

               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 a particular subsidiary, 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. To
           date, no settlement proposals have been exchanged. The Company is
           awaiting a trial date. Management is of the opinion that the
           plaintiff's case is without merit. The Company will not settle

                                     F-24
<PAGE>

               this action prior to trial unless the settlement amount is
               insignificant.

                    In November 1999 the Company completed negotiations and
               executed a lease for an approximate four-acre waterfront parcel
               of property in Stamford, Connecticut. The parcel was to be used
               as the Company's Stamford ferry site and included approximately
               450 on-site parking spaces. In approximately July 2000 a dispute
               arose between the Company and the Landlord relating to the
               issuances of various governmental permits and approvals. Landlord
               took the position that the Company's failure to obtain permits
               and approvals afforded the Landlord the opportunity to cancel the
               lease. The Company argued that the Landlord did not have the
               right to cancel the lease, that all contingencies had been waived
               and that the permits and approvals needed to operate a ferry
               service were forthcoming. On August 3, 2000 the Company received
               a notice from the Landlord terminating the lease.

                    The Company filed an action to reaffirm the lease and to
               regain use, possession and occupancy of the premises. The
               Landlord filed an action for possession of the premises. In March
               2001 the dispute as between the Landlord and the Company was
               resolved and a new lease was negotiated between the parties,
               which provided for a five-year lease and three (3) five-year
               renewal options. In order for the lease to take effect, however,
               both the Landlord and the Company needed the consent of
               Landlord's Contract Purchaser of the parcel. It appeared in
               approximately March 2001 that all of the parties had achieved
               resolution of this matter and that the Company would renew its
               permit applications and would commence commuter ferry operation
               immediately upon issuance of the required permits. Subsequently,
               a misunderstanding arose between the contract purchaser and the
               Company with respect to certain significant issues, which the
               parties were unable to resolve and prevented consummation of the
               tri parte settlement.

                    Continued negotiations with the contract purchaser proved
               fruitless and the Company pursued its legal remedies against the
               Landlord. As of December 31, 2001, the complaints as between the
               Landlord and the Company were being heard before the Connecticut
               Superior Court. In February 2002, the Company's litigation in the
               Stamford, CT lease matter was completed. A decision is expected
               by late April 2002.

NOTE 14 -  SUBSEQUENT EVENTS.

               In the three months January to March 2002, holders of mCPNs
           aggregating $35,000 extended the maturity date for a one-year term.
           In consideration thereof, the Company issued such note holders a
           total of 875 shares of its restricted common stock. During the same
           period, holders of senior CPNs totaling $4,373,000, due on February
           28,2002, extended the maturity dates for such notes to August 31,
           2002. In consideration for the extension, the Company issued to the
           note holders 2,236,500 shares of its restricted common stock. In
           consideration for the services of a financial consultant in
           negotiating the extension, the Company issued the consultant a senior
           CPN in the amount of $100,000 and 50,000 shares of its restricted
           common stock.

               In February and March 2002, the Company received proceeds from
           10.5% CPNs totaling $30,000. In connection therewith, the Company
           issued to the note holders 600 shares of its restricted common stock.

                                     F-25
<PAGE>

                    In March 2002, the Company received proceeds from 10.0%
               senior CPNs aggregating $650,000. Notes in the amount of $500,000
               mature July 31, 2002 and a note in the amount of $150,000 matures
               on September 22, 2002. In connection therewith, the Company
               issued to the note holders 650,000 shares of its restricted
               common stock. The Company issued a CPN in the amount of $50,000
               to a financial consultant who arranged the loan in lieu of a fee.

                    In March 2002, the Company received proceeds from CPNs
               totaling $50,000 maturing in 90 days and bearing interest at the
               rate of 12% per annum. In consideration for such loan, the
               Company issued to the note holders a total of 15,000 shares of
               its restricted common stock.

                    On February 28, 2002 the Company's lease for its corporate
               offices at 195 Fairfield Avenue, West Caldwell, New Jersey
               expired. The Company executed a new lease with CEC Realty, LLC,
               an entity in which an officer and director of the Company is a
               principal. The new lease is for a two-year term commencing March
               1, 2002 and provides for the Company to occupy additional space.
               The monthly rental for the two-year period is $3,150.