================================================================================

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


                                    FORM 20-F


 [_]    REGISTRATION STATEMENT PURSUANT TO SECTION 12(g) OF THE SECURITIES
        EXCHANGE ACT OF 1934

                                       or

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

                                       or

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

 For the fiscal year ended December 31, 2001 Commission file number ___________


                        DURA PRODUCTS INTERNATIONAL INC.
             ------------------------------------------------------
             (Exact name of Registrant as specified in its charter)


             ------------------------------------------------------
                 (Translation of Registrant's name into English)


                           Province of Ontario, Canada
             ------------------------------------------------------
                 (Jurisdiction of incorporation or organization)


              60 Carrier Drive, Etobicoke, Ontario, Canada. M9W 5R1
             ------------------------------------------------------
                    (Address of principal executive offices)


 Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class                    Name of each exchange on which registered
--------------------------------------------------------------------------------


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

                           Common Shares. no par value

  -----------------------------------------------------------------------------
                                (Title of Class)


================================================================================
<PAGE>
                                       -2-



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

 -----------------------------------------------------------------------------
                                (Title of Class)

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

                            47,097,619 Common Shares

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                                  Yes [_]     No [X]

Indicate by check mark which financial statement item the registrant has elected
to follow:

                                              Item 17 [X]   Item 18 [_]

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST
FIVE YEARS) Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court.

                                                  Yes [_]     No [_]

<PAGE>
                                       -3-


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                                    FORM 20-F

CURRENCY TRANSLATION

The Company publishes its financial statements in Canadian dollars. Unless
otherwise specified, all references to "Cdn dollars", "dollars", "$", or Cdn $"
are to Canadian dollars and references to "US$" are to United States dollars. As
of August 1, 2002, the US dollar equivalent for Canadian dollars as based on the
Noon Buying Rate (as defined below) was US 0.6302 per Cdn$1.00. No
representation is made that the Canadian dollar or US$ amounts shown in this
registration statement could have been or could be converted into US$, as the
case may be, at any particular rate or at all.

Fluctuations in the exchange rate between the Canadian dollar and the U.S.
dollar may affect the Company's earnings, the book value of its assets and
shareholders' equity as expressed in Canadian dollars and U.S. dollars.

The following table sets forth, for each period indicated, the high and low
exchange rates for one Canadian dollar expressed in United States dollars, based
on the Bank of Canada nominal noon exchange rate (the "Noon Buying Rate"), the
average of such rates for each period (calculated, in the case of each annual or
quarterly period, by using the average of the exchange rates on the last day of
each month during the period and, in the case of monthly periods, by using the
average of the exchange rates on each day in the period), and the exchange rate
at the end of such period:

                                  AVERAGE     HIGH       LOW     PERIOD END
                                  -------    ------    ------    ----------
Jan. 1 to Dec. 31, 1997             0.73     0.7489    0.6948      0.6997
Jan. 1 to Dec. 31, 1998             0.68     0.7105    0.6343      0.6534
Jan. 1 to Dec. 31, 1999             0.67     0.6929    0.6537      0.6929
Jan. 1 to Dec. 31, 2000             0.67     0.6973    0.6413      0.6666
Jan. 1 to Dec. 31, 2001             0.65     0.6695    0.6242      0.6279
Jan. 1 to Mar. 31, 2002             0.65     0.6695    0.6340      0.6340
April 2002                          0.63     0.6512    0.6334      0.6512
May 2002                            0.65     0.6532    0.6435      0.6470
June 2002                           0.65     0.6603    0.6512      0.6589
July 2002                           0.65     0.6623    0.6473      0.6535
<PAGE>
                                       -4-


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Report constitute "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform
Act"). Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company, or industry results, to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements.
<PAGE>
                                       -5-

PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

GENERAL

Dura Products International Inc. ("DPI" or the "Company") is a public company,
with 47,097,619 issued and outstanding common shares, as of December 31, 2001,
trading on the TSX - Venture Exchange (formerly, the Canadian Venture Exchange)
under the symbol "DURP" and over-the-counter on the NASDAQ Bulletin Board under
the symbol "DRPDF". DPI was incorporated on August 19, 1983 under the laws of
the Province of Ontario, Canada as Transway Exploration Inc. On July 7, 1993 the
name was changed to Transway Capital Inc. and on February 6, 1997 the Company
changed its name to Dura Products International Inc. DPI has one active
wholly-owned subsidiary, Dura Skid Inc. ("Duraskid"). Duraskid was incorporated
on July 13, 1995 under the laws of the Province of Ontario, Canada as CanTech
Investments Inc. On January 15, 1996 the name was changed to CanTech Composites
Inc. ("CanTech"), the date on which the Company concluded its acquisition of
CanTech for $400,000. The purchase price was settled by the issuance of
1,000,000 common shares of the Company and the issuance of warrants exercisable
for 500,000 common shares at $0.40 per share (See "Business Overview" and
"Outlook" below and "Management's Discussion and Analysis of Financial Condition
and Results of Operations"). On February 7, 1997, Cantech changed its name to
its current name. DPI is currently engaged in the manufacture of a composite
material which is further manufactured into specialty pallets, decking,
anti-static flooring and other products.

In the discussion that follows, DPI or the Company refers to the operations of
Dura Products International Inc. and its subsidiaries, Dura Skid Inc. and
Duraskid and Products, Inc. as well as Duraskid (New England) L.L.C. Duraskid
refers to the operations of Dura Skid Inc. The operations of Duraskid (New
England) L.L.C. were terminated on March 31, 1999. The assets, liabilities and
operating results of Duraskid (New England) L.L.C. have been consolidated in the
financial statements as of December 31, 2001.

THE COMPANY

The Company has developed a proprietary process that produces a composite
material made from a combination of post industrial cellulose fibre and post
consumer plastics. The use of fibre gives the composite material its strength
and the use of high-density plastic provides durability to the material. The
development of the composite material focused on the suitability of recycled
plastics, use of different cellulose fibres, use of different bonding agents,
morphology of mixing and extrusion, and enhancing stiffness and toughness of the
materials. The result is a material whose mechanical properties are comparable
to that of hardwood.

The manufacturing process of the composite material is as follows: post-consumer
plastics are received into the plant, either flaked or baled. If baled, the
plastic is then ground into a flake. The fibre material is similar to a flour
mixture. The plastics and fibre are then fed into a weighting machine. This
machine automatically weighs the amount of plastics and fibre according to a
specified formula for feeding into a high intensity mixer. The compound is then
dumped onto a conveyor for cooling and grinding into a uniform size. The
material is then ready to be extruded into profiles that are assembled as part
of other products or used on a stand-alone basis. At this point the compound
material is subjected to quality control procedures.
<PAGE>
                                       -6-


Currently, the Company relies upon trade secrets to protect its proprietary
technology. However, the Company has initiated procedures for patenting the
process.

The Company intends to develop, manufacture, and sell a number of commercially
viable products incorporating its proprietary composite material based on
"green" design principles. Currently, management has specifically targeted the
pallet market for the first commercial introduction of its technology. The
pallet the Company has designed and developed is the Duraskid(R). Duraskid has
been trademarked in Canada and the United States.

In 1998, the Company focused its efforts primarily on research and development
and spent approximately $2,950,499 pursuing these efforts. During 1999, the
efforts of the Company were focused on commercialization of its products. The
Company did not invest any capital in research and development in 1999.

DPI's primary functions are the development of corporate strategy, research and
development of new products, ongoing process and product improvement, securing
investment capital and partner development. Each new product or product group
will be organized into a separate subsidiary with its own management. This will
enable management to focus on its distribution channel and customer base.

PRODUCTS

A. The Duraskid
   -------------

Duraskid pallets are manufactured in the following manner. The composite
material is loaded into the extruder hopper that allows the material to be drawn
into the extruder barrel as the extruder screw turns. At the end of the barrel,
the extrusion profile die shapes the molten compound into the specific profile
shape, then cools it down and delivers it into a cooling water tank. The
extruded profile emerges from the water tank as a solid and strong profile,
which is then automatically cut to length by a traveling cut-off saw. The
Company's extrusion system is a state-of-the-art system with fully computerized
control and monitoring systems. Processing temperature, pressure, speed, and
load, are all automatically controlled and monitored with automatic shutdown if
preset safety thresholds are exceeded.

Manufactured profiles are subjected to strict quality control procedures.
Rejected profiles are reground and reprocessed. The stringer profiles are then
"notched" providing for four-way access. The top board, stringer, and bottom
board profiles are then loaded into an assembly jig, which automatically drills
all the screw holes and semi-automatically tightens the screws. The assembled
pallets are then sandblasted to rough up the surfaces, a bar code is then laser
etched onto the pallet, and finally the completed pallet is shipped to the
customer.

BENEFITS OF THE DURASKID

The Duraskid pallet is manufactured to engineered designs and material
specifications. It is heat tested at 45(degree)C (113(degree)F) and cold tested
at -25(degree)C (-13(degree)F). The
<PAGE>
                                       -7-


standard 48"x40" Duraskid pallet has a static load of 12,000 lbs., dynamic load
of 5,000 lbs., and a rackable load of 3,000+ lbs. The following table reflects
the Company's comparison of the Duraskid pallet to wood and plastic pallets.

---------------------------- -------------- -------------- --------------
                             DURASKID       WOOD           PLASTIC
---------------------------- -------------- -------------- --------------
Cost per Use                 Lowest         High           Lower
---------------------------- -------------- -------------- --------------
Dimensional Stability        High           Limited        High
---------------------------- -------------- -------------- --------------
Durability                   High           Limited        High
---------------------------- -------------- -------------- --------------
Strength                     High           High           Low
---------------------------- -------------- -------------- --------------
Rackable                     High           High           None
---------------------------- -------------- -------------- --------------
Disposable                   DPI buys       Customer pays  Customer Pays
---------------------------- -------------- -------------- --------------
Water Absorption             None           High           None
---------------------------- -------------- -------------- --------------
Contamination                None           High           None
---------------------------- -------------- -------------- --------------
Recyclability                Total          Low            Low
---------------------------- -------------- -------------- --------------
Safety (nails/splinters)     High           Low            High
---------------------------- -------------- -------------- --------------
Repair Required              Low            High           Unavailable
---------------------------- -------------- -------------- --------------
Customization                High           High           None
---------------------------- -------------- -------------- --------------


MARKETING STRATEGY

The marketing of the Duraskid pallet is currently focused on creating brand name
awareness. Sales of the Duraskid pallet are generated by the Company's own sales
force and through a network of independent sales agents. A national and regional
marketing program is being implemented in North America.

The Company has targeted the warehousing and manufacturing industries where the
benefits of the Duraskid pallet are readily apparent.

The Company has implemented strict quality control guidelines to ensure each
Duraskid pallet will meet the customers' needs. In addition, the Company plans
to institute a customer satisfaction program.

THE PALLET INDUSTRY

The pallet industry is considered part of the overall transportation packaging
industry and is critical to global commerce. The Company views this industry as
fragmented, substantially free from government regulation and with no one
company dominating the market. Considered a "staple" industry, pallets are an
integral part of industrial production. Nearly every item manufactured or
processed is shipped and/or stored on pallets. According to the National Wood
<PAGE>
                                       -8-


Pallet and Container Association, in North America the annual demand for pallets
is estimated at approximately US$7 billion in the United States and US$700
million in Canada. Currently, over 90% of the pallet market uses wood pallets.

The Company believes that the fragmentation of the industry, together with
widespread dissatisfaction regarding performance, quality and handling
difficulties associated with wood pallets has become increasingly frustrating to
pallet users. Customers are recognizing the significant benefits of returnable
packaging and are demanding an integrated system approach to meet their needs.

MANUFACTURING AND DISTRIBUTION

Duraskid's only operating facility is located in Etobicoke, Ontario, Canada.
This facility consists of 8 operating lines of equipment and, based on the
Company's current capacity, is capable of producing up to 240,000 Duraskid
pallets per year.

Each operating line of equipment consists of a material feeding system,
state-of-the-art extrusion machine, profile die, water-cooling table, and
traveling cut-off saw.

As of December 31, 2001, the Company had 28 full-time employees, 22 of whom were
in manufacturing, one in research and development, two in sales and marketing,
and three in finance and administration.

B. Composite Lumber
   ----------------

THE PRODUCT

In 2000, the Company introduced its composite wood product to the marketplace.
The composite lumber is used primarily in the construction of decks, docks and
walkways. The material enjoys the same benefit characteristics as its pallet
product. The lumber may be custom cut as to length.

The market for composite lumber is expected to grow at a rate in exces of 10%
for the foreseeable future. The demand for composite lumber exceeds 600 million
pounds per year of which approximately 57% was used as decking. There are over
50 companies involved in the manufacture of wood and plastic composites. The
largest competitors are TREX, US Plastics and Anderson Co.

DISTRIBUTION

The Company distributes its products directly and through two major
distributors. In the United States, the composite lumber product is distributed
through Freemont Forest Group of Whittier, California. Freemont is a
wholly-owned subsidiary of Marubeni Corporation. In Canada, the product is
distributed through Canwell Distribution Limited of Vancouver, British Columbia.
<PAGE>
                                       -9-


ENVIRONMENTAL CONSIDERATIONS

Corporate responsibility for the environment exists throughout the product life
cycle. DPI is committed to the goal of being an "eco-efficient" manufacturer of
products that incorporate the principles of "green" design, satisfying customer
requirements at competitive prices and creating substantial shareholder value.

In order to prevent pollution, eco-efficient manufacturing requires efficient
use of materials, substitution of recycled materials for virgin materials
whenever possible, and minimal production of waste through internal reuse. The
Company's production processes are designed to meet these requirements. For
example, in the Company's manufacturing process, cooling water is continuously
recycled and particulate generated by cutting and notching is returned to feed
stock.

"Green" design principles require that the Company's products be reusable,
repairable and recyclable. The fundamental building block that supports all of
our product development efforts is our proprietary composite technology.
Ninety-eight percent of the Company's composite material is made from recycled
materials, post industrial cellulose fibre and post consumer plastics.
Additionally, at the end of a Duraskid pallet's useful life, the Company will
offer a customer credit towards the purchase of a new Duraskid pallet. The old
Duraskid pallet will be ground up and made into a new Duraskid.

ITEM 2. DESCRIPTION OF PROPERTY

The Company's corporate offices and only manufacturing facility is located at 60
Carrier Drive, Etobicoke, Ontario, Canada M9W 5R1, a 65,000 square foot
facility. Approximately 5,000 square feet is being used for executive and
administrative offices and the balance for manufacturing. The facility is leased
for a five-year term expiring in October 2005 and the Company has the option to
renew for an additional five year period.

ITEM 3. LEGAL PROCEEDINGS

From time to time the Company encounters lawsuits arising from business
activities, which are discussed below.

1. During 1996, the Company acquired through its acquisition of Dura Skid a
licensing agreement with SRP Industries Ltd. ("SRP") the right to utilize
certain SRP technologies. The licensing agreement required the payment of
certain minimum royalties and potential additional royalties based upon future
sales. During early 1997, the Company determined that SRP's technology was not
commercially viable as it relates to the production process used by the Company,
requiring the Company to develop and commercialize its own technology at
significant cost and time to the Company. In addition, SRP was unable to provide
any of the required technical support services under the terms of the agreement
and management thereby concluded that SRP was in breach of this agreement.

Accordingly, the Company filed a claim against SRP in April 1997 to seek damages
of approximately $5 million and to terminate the agreement. In October 1997, SRP
filed a counterclaim against the Company for $10 million, claiming that the
Company inappropriately
<PAGE>
                                      -10-


terminated the agreement, enriched itself with SRP's technology with no
compensation to SRP, and induced key employees of SRP to accept employment with
the Company.

Management of the Company is of the opinion that it has acted appropriately in
terminating this agreement, and that the counterclaim by SRP is without merit.
However, the final outcome of these matters is uncertain and the potential
effect, whether material or not, on the Company's consolidated financial
position is not reasonably determinable at this time. Accordingly, no provision
has been recorded in the accounts of the Company as at December 31, 2001.

2. In September 1998, a former shareholder of the Company filed a statement of
claim against the Company for $1.5 million. The claim was also filed against a
Director of the Company and a third party. The former shareholder is claiming
that as part of the transaction between him and a Director of the Company and
the third party, whereby the former shareholder privately sold his shareholding,
the Company agreed to transfer its ownership in 15 mining claims to him. The
Company wrote off its investment in the 15 mining claims as at December 31, 1995
and in 1996 sold the subsidiary that held the mining claims for $2.00. The final
outcome of this matter is uncertain but the management of the Company believes
that any effect would not be material to the Company's consolidated financial
position. Accordingly no provision has been recorded in the accounts of the
Company as at December 31, 2001.

3. An action has been launched against the Company by a former employee,
claiming wrongful dismissal, unpaid wages, vacation pay, and expenses totaling
approximately $180,000. The former employee also claims that the Company is in
possession of certain intellectual property, which is the property of the former
employee. The Company has accrued an amount, which is not material to the
consolidated financial position of the Company for unpaid wages and expenses.
The Company is of the opinion that the remainder of the claim is without merit.
The final outcome of this matter is uncertain and the potential effect on the
Company's consolidated financial position is not reasonably determinable at this
time.

4. In November 1998, a supplier filed a statement of claim against the Company
for approximately $140,000 for goods delivered. The Company is of the opinion
that approximately $116,000 of this claim relates to goods provided to Duraskid
(New England) LLC for which the Company was not a guarantor. The remainder of
the claim has been accrued by the Company. The final outcome of this matter is
uncertain and the potential effect on the Company's consolidated financial
position is not reasonably determinable at this time.

5. In December 1998, the Company was named in an action brought by a supplier in
the amount of approximately $550,000 for non-payment of production equipment.
The Company is of the opinion that this claim related to Duraskid (New England)
LLC for which the Company was not a guarantor. The Company has accrued $100,000
in relation to this lawsuit. The final outcome of this matter is uncertain and
the potential effect on the Company's consolidated financial position is not
reasonably determinable at this time.

6. In February 1999, a supplier filed a statement of claim against the Company
for approximately $50,000 for services rendered. The Company has accrued $20,000
with respect to this lawsuit. The Company is of the opinion that the remainder
of the claim is without merit. The
<PAGE>
                                      -11-


final outcome of this matter is uncertain and the potential effect on the
Company's consolidated financial position is not reasonably determinable at this
time.

7. In May 1999, the Company was named as a co-defendant in an action by an
investor against a related party. The investor is claiming damages of $520,000
for breach of a loan agreement and $40,000 in commissions. The Company is of the
opinion that the claim is without merit and, consequently, the company has not
recorded any costs in relation to this lawsuit. The final outcome of this matter
is uncertain and the potential effect on the Company's consolidated financial
position is not reasonably determinable at this time.

8. In August 1999, the Company received a judgment against it for approximately
US$1,151,000. The plaintiff claimed damages resulting from the non-fulfilment of
Duraskid (New England) LLC's lease of the Andover premises. The Company acted as
a guarantor on the lease, whereas the minority interest partner has guaranteed
the Company for these lease payments. The Company is of the opinion that they
will be able to settle this judgment and has accrued the estimated costs. The
remainder of the claim has not been accrued by the Company. However, the
minority interest partner has provided a guarantee to the Company for their 49%
share of the guarantee for the facilities operating lease. The final outcome of
this matter is uncertain and additional material provisions could be required in
future periods.

9. In December 1999, the Company received a judgment against it for
approximately US$3,600,000. The plaintiff claimed damages resulting from the
non-fulfilment of Duraskid (New England) LLC's lease of production equipment.
The Company acted as guarantor on the lease. The equipment was repossessed by
the lessor and is being sold with any proceeds less related costs being offset
against the judgment owed. The Company has accrued the eventual costs, in its
opinion, to dispose of this judgment. The final outcome of this matter is
uncertain and the potential effect on the Company's consolidated financial
position is not reasonably determinable at this time.

10. In November 2000, the Company received a judgment against it for
approximately $100,000 for services rendered. The Company has accrued this
amount with respect to this judgment.

11. In December 2000, the Company received a judgment against it for
approximately US$500,000. The plaintiff claimed damages resulting from the
termination of a consulting contract. The Company is of the opinion that it will
be able to settle this judgment and has accrued the estimated costs. The
remainder of the claim has not been accrued by the Company. The final outcome of
this matter is uncertain and additional material provisions may be required in
future periods.

In addition to the lawsuits described above, the Company is the defendant in
actions launched by a number of creditors totaling approximately $1.8 million,
which are currently reflected as liabilities in the consolidated balance sheet.
The Company will vigorously defend these actions but if the creditors were to be
successful in obtaining a judgment against the Company, it would have a material
adverse effect on the Company's ability to continue as a going concern.
<PAGE>
                                      -12-


ITEM 4. CONTROL OF REGISTRANT

(a) Direct or Indirect Control by Another

To the best of the Company's knowledge, the Company is not directly or
indirectly owned or controlled by a single person, a group of persons or by
another corporation or by any foreign government.

(b) Ownership of Voting Securities

As of December 31, 2001, 47,097,619 common shares of the Company were issued and
outstanding. At such date, the persons or groups known to the Company to own
more than 10% of the Company's issued and outstanding shares and the number of
common shares owned by officers and directors of the Registrant as a group are
as follows:

TITLE OF CLASS    IDENTITY OF PERSON OR GROUP   AMOUNT OWNED   PERCENT OF CLASS
--------------    ---------------------------   ------------   ----------------
Common Shares     Officers and directors as a   2,435,389 (1)      5.2% (2)
                  group

Notes:

      (1)  Common shares owned by officers and directors include options to
           purchase 2,300,000 common shares held by directors and officers of
           the Company.

      (2)  The percentage of class is calculated based on the 47,097,619 issued
           and outstanding common shares of the Company, on a non-diluted basis,
           as of December 31, 2001.

(c) Change of Control Arrangements

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

ITEM 5. NATURE OF TRADING MARKET

The common shares of the Company trade on the TSX - Venture Exchange (formerly,
the Canadian Dealing Network Inc. and the Canadian Venture Exchange) under the
symbol "DURP" and on the NASDAQ Bulletin Board under the symbol "DRPDF". The
CUSIP number for the Company's common shares is 265904102. The Company has no
other class of securities which are publicly traded.

The U.S. Securities and Exchange Commission (the "Commission") has adopted
regulations which generally define "penny stock" to be any equity security that
has a market price (as defined) less than $5.00 per share or an exercise price
of less than $5.00 per share, subject to certain exceptions. The Company's
securities are covered by the penny stock rules, which impose additional sales
practice requirements on broker-dealers who sell such securities to persons
other than established customers and accredited investors (generally
institutions with assets in excess
<PAGE>
                                      -13-


of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouse). For
transactions covered by the rule, the broker-dealers must make a special
suitability determination for the purchase and receive the purchaser's written
agreement of the transaction prior to the sale. Consequently, the rule may
affect the ability of purchasers to sell their common shares of the Company in
the secondary market.

The trading history of the Company's common shares on the Exchange is as
follows:

  --------------------      --------------------      --------------------
     Quarter ended           High sales prices          Low sales prices
  --------------------      --------------------      --------------------
       03/31/97                    $4.40                     $0.75
  --------------------      --------------------      --------------------
       06/30/97                    $2.45                     $1.75
  --------------------      --------------------      --------------------
       09/30/97                    $3.15                     $1.80
  --------------------      --------------------      --------------------
       12/31/97                    $4.20                     $2.25
  --------------------      --------------------      --------------------
       03/31/98                    $5.50                     $3.50
  --------------------      --------------------      --------------------
       06/30/98                    $5.50                     $3.25
  --------------------      --------------------      --------------------
       09/30/98                    $3.45                     $2.10
  --------------------      --------------------      --------------------
       12/31/98                    $2.95                     $1.40
  --------------------      --------------------      --------------------
       03/31/99                    $1.50                     $0.43
  --------------------      --------------------      --------------------
       06/30/99                    $0.63                     $0.30
  --------------------      --------------------      --------------------
       09/30/99                    $0.36                     $0.23
  --------------------      --------------------      --------------------
       12/31/99                    $0.24                     $0.13
  --------------------      --------------------      --------------------
       03/31/00                    $0.23                     $0.12
  --------------------      --------------------      --------------------
<PAGE>
                                      -14-


       06/30/00                    $0.28                     $0.20
  --------------------      --------------------      --------------------
       09/30/00                    $0.17                     $0.14
  --------------------      --------------------      --------------------
       12/31/00                    $0.14                     $0.08
  --------------------      --------------------      --------------------
       03/31/01                    $0.27                     $0.11
  --------------------      --------------------      --------------------
       06/30/01                    $0.25                     $0.10
  --------------------      --------------------      --------------------
       09/30/01                    $0.17                     $0.095
  --------------------      --------------------      --------------------
       12/31/01                    $0.185                    $0.05
  --------------------      --------------------      --------------------

ITEM 6. EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS

(a) Governmental Laws or Decrees

There is no law, governmental decree or regulation in Canada that restricts the
export or import of capital, including foreign exchange controls, or that
affects the remittance of dividends, interest or other payments to non-resident
holders of common shares, other than withholding tax requirements and potential
capital gains on the disposition of the common shares under certain
circumstances. (See "Item 7. Taxation").

(b) Limitation on Voting Rights

There is no limitation imposed by Canadian law or by the charter or other
constituent documents of the Company on the right of a non-resident to hold or
vote common shares of the Company, other than as provided in the Investment
Canada Act (Canada) (the "Investment Act"). The following discussion summarizes
the principal features of the Investment Act for a non-resident who proposes to
acquire common shares of the Company. It is general only, it is not a substitute
for independent advice from an investor's own advisor, and it does not
anticipate statutory or regulatory amendments. To the Company's knowledge, no
amendments are pending or contemplated at this time.

The Investment Act generally prohibits implementation of a reviewable investment
by an individual, government or agency thereof, corporation, partnership, trust
or joint venture that is not a "Canadian" as defined in the Investment Act (a
"non-Canadian"), unless after review the minister responsible for the Investment
Act (the "Minister") is satisfied that the investment is likely to be of net
benefit to Canada.

An investment in common shares of a company by a non-Canadian other than an
"American" (as that term is defined in the Investment Act and used in this
discussion) when a company was not
<PAGE>
                                      -15-


controlled by an American, would be reviewable under the Investment Act if it
was an investment to acquire control of a company and the value of the assets of
a company was $5,000,000 or more, or if an order for review was made by the
federal cabinet on the grounds that the investment related to Canada's cultural
heritage or national identity.

An investment in common shares of a company by an American, or by a non-Canadian
when a company is controlled by an American, would be reviewable under the
Investment Act if it were an investment to acquire control of a company and the
value of the assets of a company was not less than a specified amount which for
1994 is $150,000,000, and for subsequent years is $153,000,000 in terms of
"constant 1992 dollars". A non-Canadian would acquire control of a company for
the purposes of the Investment Act if he acquired a majority of the common
shares of that company. The acquisition of less than a majority but one third or
more of the common shares of a company would be presumed to be an acquisition of
control of that company unless it could be established that, on the acquisition,
a company was not controlled in fact by the acquiror through the ownership of
common shares.

Certain transactions relating to common shares of a company would be exempt from
the Investment Act, including:

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

           (b)  acquisition of control of a company in connection with the
                realization of security granted for a loan or other financial
                assistance and not for a purpose related to the provisions of
                the Investment Act; and

           (c)  acquisition of control of a company by reason of an
                amalgamation, merger, consolidation or corporate reorganization
                following the ultimate direct or indirect control in fact of a
                company.

ITEM 7. TAXATION

The following is a summary of certain material Canadian federal income tax
provisions applicable to United States corporations, citizens and resident alien
individuals purchasing, holding and disposing of common shares. The discussion
is only a general summary and does not purport to deal with all aspects of
Canadian federal taxation that may be relevant to shareholders, including those
subject to special treatment under the income tax laws. Shareholders are advised
to consult their own tax advisors regarding the Canadian federal income tax
consequences of holding and disposing of the Company's common shares, as well as
any consequences arising under U.S. federal, state or local tax laws of other
jurisdictions outside the United States. The summary is based on the assumption
that, for Canadian tax purposes, the purchasers or shareholders: (i) deal at
arm's length with the Company; (ii) are not residents of Canada; (iii) hold the
common shares as capital property; and (iv) do not use or hold common shares in,
or in the course of, carrying on business in Canada (a "Non-Resident Holder").

This summary is not exhaustive of all possible income tax considerations and
shareholders and prospective purchasers of the Company's shares of Common Stock
are advised to consult with their own tax advisors with respect to their
particular circumstances.
<PAGE>
                                      -16-


Dividends paid to U.S. residents by the Company on the common shares generally
will be subject to Canadian non-resident withholding taxes. For this purpose,
dividends will include amounts paid by the Company in excess of the paid-up
capital of the common shares on a redemption or a purchase for cancellation of
such shares by the Company (other than purchases on the open market). For U.S.
corporations owning at least 10% of the voting stock of the Company, the
dividends paid by the Company are subject to a withholding tax of 5% under the
Canada-U.S. Income Tax Convention (1980), as amended by Protocol signed on March
17, 1995 (the "Treaty"). For all other U.S. shareholders, the Treaty reduces the
withholding tax rate from 25% to 15% of the gross dividend. Other applicable tax
treaties may reduce the Canadian tax rate for other Non-Resident Holders. Any
amounts paid for Canadian withholding taxes may be taken as a credit against
U.S. taxes.

A Non-Resident Holder will generally not be subject to tax in Canada on capital
gains realized from disposition of common shares, unless such shares are
"taxable Canadian property" within the meaning of the Income Tax Act (Canada).
Generally, the common shares would not be taxable Canadian property unless the
Non-Resident Holder, together with related parties, at any time during the five
years prior to the disposition of the common shares owned not less than 25% of
the issued shares of any class of the capital stock of the Company. Under the
Treaty, a resident of the United States will not be subject to tax under the
Income Tax Act (Canada) in respect of gains realized on the sale of common
shares which constitute "taxable Canadian property", provided that the value of
the common shares at the time of disposition is not derived principally from
real property located in Canada.

ITEM 8. SELECTED FINANCIAL DATA

The selected financial data set forth in the following table is expressed in
Canadian dollars. For a history of the exchange rates for Canadian dollars in
terms of U.S. Dollars see Item 1, "Description of Business", above. The
financial information set forth in the following table includes the accounts of
the Company and subsidiaries on a consolidated basis. This financial information
was prepared in accordance with accounting principles generally accepted in
Canada, the application of which conforms in all material respects for the
periods presented with accounting principles generally accepted in the United
States, except to the extent noted in Note 16 to the Consolidated Financial
Statements appearing elsewhere in this Registration Statement. The selected
financial data should be read in conjunction with and is qualified by such
Consolidated Financial Statements and the Notes thereto.
<PAGE>
                                      -17-


<TABLE><CAPTION>
------------------------ ------------------- ------------------- ------------------- ------------------- -------------------
                         YEAR ENDED DEC. 31, YEAR ENDED DEC. 31, YEAR ENDED DEC. 31, YEAR ENDED DEC. 31, YEAR ENDED DEC. 31,
                                 2001                2000                1999                1998                1997
                         $                   $                   $                   $                   $
------------------------ ------------------- ------------------- ------------------- ------------------- -------------------
<S>                      <C>                 <C>                 <C>                 <C>                 <C>
Revenue                  1,186,673           780,367             831,539             311,527             60,362
------------------------ ------------------- ------------------- ------------------- ------------------- -------------------
Net (loss)/ income       (3,251,959)         (3,072,656)         (9,669,951)         (8,673,172)         (2,995,559)
------------------------ ------------------- ------------------- ------------------- ------------------- -------------------
Net (loss)/  income per  (0.07)              (0.09)              (0.36)              (0.38)              (0.17)
share
------------------------ ------------------- ------------------- ------------------- ------------------- -------------------
Total assets             3,643,509           4,462,622           4,861,499           13,909,417          9,553,852
------------------------ ------------------- ------------------- ------------------- ------------------- -------------------
Capital stock            23,887,508          22,192,508          20,312,508          17,006,171          14,247,987
------------------------ ------------------- ------------------- ------------------- ------------------- -------------------
</TABLE>

ITEM 9. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Report constitute "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform
Act"). Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company, or industry results, to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements.

GENERAL

The following discussion and analysis of the financial condition of the Company
and the results of its operations for the years ended December 31, 2001 and 2000
should be read in conjunction with the Company's consolidated financial
statements. These financial statements have been prepared in accordance with
accounting principles generally accepted in Canada. For an explanation of the
differences between Canadian and US GAAP, reference should be made to note 16 of
the consolidated financial statements. The financial statements are prepared in
Canadian dollars.

DPI is engaged in the commercialization of its proprietary composite material
using recycled plastics and cellulose, and the development of commercially
viable products made from the composite material. To date, DPI has invested all
of its financial and human resources in the research and development of the
composite material. The Company intends to develop, manufacture, and sell a
number of commercially viable products incorporating its proprietary composite
material. Currently, management has specifically targeted the pallet market for
the first commercial introduction of its technology. The pallet designed and
developed by the Company has been trademarked in Canada and the United States as
the "Duraskid".
<PAGE>
                                      -18-


The Company's operating results were adversely affected by production equipment
failures and poor capacity utilization, which resulted in excessively high
production costs, which in turn have resulted in poor operating results. The
Company began a re-examination of its business model to address these problems.
Failure to resolve these problems may result in the cessation of operations. In
addition, the Company was adversely affected by a substantial write-down of
assets related to the closure of its Andover facility and the retrenchment of
operations in Toronto.

In addition to the lawsuits discussed (See Item 3 - "Legal Proceedings") in more
detail below under Risks and Uncertainties, the Company is the defendant in
actions launched by a number of creditors totaling approximately $1.8 million.
These are currently reflected as liabilities in the consolidated balance sheet.

The Company's ability to operate as a going concern is dependent upon obtaining
additional capital, the continued financial support of its creditors, the
achievement of profitable operations, and the satisfactory resolution of
litigation matters. The outcome of these matters cannot be predicted at this
time. The consolidated financial statements do not give effect to any
adjustments which would be necessary should the Company be unable to continue as
a going concern and, therefore, be required to realize its assets and discharge
its liabilities in other than the normal course of business and at amounts
different from those reflected in reflected in the accompanying consolidated
financial statements.

2001 OPERATING RESULTS

2001 was a difficult year for the Company. Sales recovered slowly once
production resumed in March. The inability to produce for ten months negatively
affected the Company's customer relationships. Staff was added to increase
selling and marketing efforts. These efforts began to show results towards the
end of the year, and especially in the first quarter of 2002.

Cash flow was a continuing problem throughout the year. The Company's ability to
obtain the goods and services required to maintain a steady rate of production
as well as invest in sales and marketing efforts was severely hindered by a
shortage of cash.

As a result, working capital continued to decline, due to the increase in
accounts payable and increases in loans from a shareholder. This was partially
offset by a sale of surplus production equipment, which resulted in reduction in
capital lease obligations.

On January 15, 2002, Michael Zuk was replaced as President by Franco P. Guido,
who has experience in turnaround management.

Revenue for 2001 increased 52% from $780,367 in 2000 to $1,186,673 in 2001 as a
result of the resumption of production after a fire caused the suspension of
production operations from June, 2000 to March, 2001.

The year 2001 net loss from operations increased 5.8% from $3,072,656 in 2000 to
3,251,959 in 2001. The increased operating loss is attributable to both higher
plant costs and increased selling
<PAGE>
                                      -19-


marketing and administrative expenses, which together increased 19.8% from
3,058,270 in 2000 to $3,664,700 in 2001.

Amortization of capital assets was approximately $657,000 versus $612,000 in
2000.

Interest expense amounted to $117,264 in 2001 versus $182,896 in 2000. The
decline was due to matters relating to the sale of redundant production
equipment.

The loss per share decreased 22% from $0.09 per share in 2000 to $0.07 per share
in 2001. The decrease in the loss per share amount was due to the increase in
the weighted average number of common shares outstanding during the year from
approximately 35.8 million in 2000 to approximately 42.7 million in 2001.

2000 OPERATING RESULTS

2000 was a turnaround year for the Company; however, the turnaround was
interrupted by a fire in the compounding room, which caused a stoppage in the
production of compound, which in turn caused a stoppage in the production of
extruded profiles. Compound production was halted in early June and did not
resume until the middle of March, 2001. Extrusion operations resumed shortly
thereafter. The production interruption adversely affected sales for the next
ten months and caused the Company to miss the important summer sales of decking
products as well as the winter inventory stocking programs of its distributors
for the 2001 spring selling season.

Revenue for 2000 declined 6% to $780,367 from $831,539 in 1999 as a result of
the production interruption described above. Management estimates that revenue
would have increased in the period to approximately $1.7 million had the fire
not interrupted production. The successful introduction of our decking products
and the focus on higher margin specialty pallets fuels our optimism for the
future.

The year 2000 loss from operations declined 68% or $6.6 million to $3,072,656
from $9,669,951 for 1999. The reduced operating loss is attributable to a severe
cost reduction program and the fact that there were no asset write-downs during
the year. Cost of sales, sales and marketing, and general and administrative
expenses were reduced by $1.1 million or 25% and the elimination of asset
write-downs.

The loss per share in 2000 declined 75% to $0.09 from $0.36 as a result of a 68%
decline in the operating loss and a 32% increase in the weighted average common
shares outstanding to 35,753,783 from 27,093,742 in 1999.

CAPITAL INVESTMENTS

In 2001, the Company repaired and improved production equipment damaged in the
fire in 2000. There was a net investment in equipment in excess of the insurance
proceeds. In addition, some redundant production equipment was sold and the net
proceeds were used to reduce the capital lease obligations relating to this
equipment.
<PAGE>
                                      -20-


LIQUIDITY AND CAPITAL RESOURCES

In 2001, the working capital deficiency declined to $31.7 million from $28.5
million in 2000. The deterioration in working capital was attributable to
operating losses and increased accounts payable.

The Company is highly dependent for its continued survival on its ability to
raise additional cash from the sale of shares and the continued support of
creditors.

RISKS AND UNCERTAINTIES

A) GENERAL

The profitability of the Company is subject to a number of risk factors
including: achievement of breakeven sales and production levels. successful
commencement of commercial market acceptance of the Company's products;
competition; effectively meeting the challenges set out below in the Outlook
section, the ability to raise additional capital; the ability to attract
additional key individuals; and continued improvement upon and protection of the
Company's intellectual property.

B) LEGAL MATTERS

From time to time the Company encounters lawsuits arising from business
activities. Material lawsuits are enumerated and described above in Item 3. In
addition to those enumerated lawsuits described above, the Company is the
defendant in actions launched by a number of creditors totaling approximately
$1.8 million, which are currently reflected as liabilities in the consolidated
balance sheet. The Company will vigorously defend these actions but if these
creditors were to be successful in obtaining and enforcing judgments against the
Company, this would have a material adverse effect on the Company's ability to
continue as a going concern.

OUTLOOK

The challenges for 2002 include the following:

-   Settling for less than face value the Company's debts owed to creditors;

-   Raising a minimum of $2.5 million to improve balance sheet liquidity;

-   Purchasing up to $2.0 million in new capital equipment in order to add
      additional production lines;

-   Purchasing for $3.0 million the Company's currently leased Etobicoke,
      Ontario (Toronto) operating facility;

-   Expanding sales by leveraging previous decking sales and marketing efforts
      that commenced in 2001;
<PAGE>
                                      -21-



-   Building up to $1.0 million in decking inventory;

-   Spending up to $500,000 on research and development;

-   Spending up to $500,000 on advertising including trade shows; and

-   Adopting new corporate governance and disclosure policies designed to
      support the Company's ongoing efforts to strengthen the Board of Directors
      by adding individuals with significant experience related to the business
      activities of the Company.

The Company is actively seeking additional equity capital in order to strengthen
working capital, reduce liabilities and purchase additional production
equipment.

2002 will be a year of continued focus on the core business. Management is
dedicated to resolving the issues identified above; however, the failure to
resolve these issues will cause the Company to fail and the Company to be
liquidated. The Company faces many challenges to its survival, however,
management of the Company is guardedly optimistic that these challenges will be
successfully overcome.

ITEM 10.  DIRECTORS AND OFFICERS OF REGISTRANT

As of the date hereof, the executive officers and directors of the Company are
as follows:

NAME               POSITION                            TERM
----               --------                            ----
Michael Zuk        Director                            Since September 1998
Franco P. Guido    Director, President and Chief       Since January 2002
                   Executive Officer
Paul Frustaglio    Director                            Since November 1999
John Perrotta      Executive Vice President - Chief    Since March 2002
                   Operating Officer


All directors hold office until the next annual meeting of the shareholders of
the Company and until their successors have been elected and qualified. Officers
of the Company serve at the discretion of the Board of Directors.

There are no arrangements or understandings between any of the directors or
officers of the Company and any other person pursuant to which they were
selected as a director or officer of the Company. There are no family
arrangements between any director or officer of the Company and any other
director or officer of the Company.
<PAGE>
                                      -22-



ITEM 11.  COMPENSATION OF DIRECTORS AND OFFICERS

Compensation Summary

The table below sets forth information, concerning the compensation of the
Company's chief executive officer and for all officers as a group for the
Company's financial years ended December 31, 2001, 2000 and 1999:

<TABLE><CAPTION>
                                                  ----------------------------------------- ------------------------- --------------
                                                                                            LONG-TERM
                                                  ANNUAL COMPENSATION                       COMPENSATION AWARDS (1)
--------------------------------------- --------- ----------------------------------------- ------------------------- --------------
                                                                              OTHER ANNUAL      SECURITIES UNDER        ALL OTHER
NAME AND                                  YEAR        SALARY         BONUS    COMPENSATION          OPTIONS            COMPENSATION
PRINCIPAL POSITION                                      ($)           ($)          ($)                (#)                  ($)
--------------------------------------- --------- ---------------- --------- -------------- ------------------------- --------------
<S>                                      <C>           <C>           <C>          <C>             <C>                     <C>
Michael Zuk, President (2)                2001          Nil           Nil          Nil             1,300,000               Nil
                                        --------- ---------------- --------- -------------- ------------------------- --------------
                                          2000        90,000          Nil          Nil              450,000                Nil
                                        --------- ---------------- --------- -------------- ------------------------- --------------
                                          1999        75,000          Nil          Nil                Nil                  Nil
--------------------------------------- --------- ---------------- --------- -------------- ------------------------- --------------
Officers as a group                       2001      283,600 (3)       Nil          Nil             1,750,000               Nil
                                        --------- ---------------- --------- -------------- ------------------------- --------------
                                          2000      216,600 (3)       Nil          Nil              500,000                Nil
                                        --------- ---------------- --------- -------------- ------------------------- --------------
                                          1999        195,000         Nil          Nil              150,000                Nil
--------------------------------------- --------- ---------------- --------- -------------- ------------------------- --------------
</TABLE>
Notes:

(1) The Company does not have any stock appreciation rights, long-term incentive
    payment or other long-term compensation plans.

(2) Mr. Zuk resigned as President of the Company and was succeeded by Franco P.
    Guido on January 15, 2002.

(3) This figure represents all administrative salaries for the period.

For each of the financial years ended December 31, 2001, 2000 and 1999, there
were no standard arrangements by which directors of the Company were compensated
for their services to the Company as directors. Directors participate in the
Company's stock option plan.

ITEM 12. OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES

(a) Stock Option Plan

The Corporation maintains a stock option plan (the "Stock Option Plan") for
directors, officers, employees and consultants of the Corporation and its
affiliates. Eligibility for participation in
<PAGE>
                                      -23-


the Stock Option Plan is restricted to directors, officers, employees and
consultants of the Company and its affiliates and other designated persons and
their personal holding companies and registered retirement savings plan
("RRSP's"). The number of Common Shares subject to options granted under the
Stock Option Plan (and under all other management options and employee stock
purchase plans) is limited, in the aggregate, to 13,020,615. Of that number and
as at December 31, 2001, options to acquire 1,510,000 Common Shares were
outstanding and an additional 4,982,560 Common Shares were available for future
option grants. The maximum number of Common Shares which may be reserved for
issuance to any one person, including insiders of the Company under the Stock
Option Plan, is not limited except to the extent that at no time may such number
exceed 5% of the number of issued and outstanding Common Shares. The exercise
price of any option granted under the Stock Option Plan may not be less than the
fair market value (e.g., the prevailing market price) of the Common Shares at
the time the option is granted.

Options issued under the Stock Option Plan may be exercised during a period
determined by the board of directors which cannot exceed five years and are
subject to earlier termination upon the termination of the optionee's
employment, upon the optionee ceasing to be a director and/or officer of the
Company or any subsidiary, or upon the retirement, permanent disability or death
of an optionee. The options issued under the Stock Option Plan are
non-transferable. The Company does not provide any financial assistance to
participants under the Stock Option Plan to facilitate the purchase of Common
Shares.

As of December 31, 2001, the following options were outstanding:

      NUMBER OF OPTIONS             EXPIRY DATE            PURCHASE PRICE
      -----------------             -----------            --------------
            15,000                  July 9, 2002                $2.00
           450,000                December 1, 2004              $0.25
           300,000                 April 26, 2004               $0.28
           745,000                 April 26, 2004               $0.30

As of December 31, 2001, directors and officers as a group held options to
purchase up to 850,000 common shares of the Company.

ITEM 13. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS

(a) Material Transactions

In 1999, a loan of $585,034 advanced by a director of the Company in 1998 was
converted to common shares of the Company by way of a private placement.
<PAGE>
                                      -24-




(b) Indebtedness of Directors and Officers

No director or officer of the Company, at any time during the fiscal year ended
December 31, 2001 was indebted to the Company. No director or officer of the
Company, at any time during the fiscal year ended December 31, 2000 was indebted
to the Company.

Key Employee Agreements

There are no written agreements with key employees.




<PAGE>
                                      -25-



PART II

ITEM 14. DESCRIPTION OF SECURITIES TO BE REGISTERED

Not Applicable

PART III

ITEM 15. DEFAULTS UPON SENIOR SECURITIES

Certain of the Company's production equipment was financed by equipment leases
as follows:

                                                 2001          2000
                                               --------      --------
Equipment obligation, bearing interest
  at 11.4% per annum, monthly blended
  payments of $22,709 ($31,984 - 2000)
  due September 2002                           $478,696      $816,964

Less: Current portion                          (478,696)     (816,964)
                                               --------      --------
                                               $      -      $      -
                                               ========      ========

As at December 31, 2001, the Company was not in compliance with the financial
covenants of this facility which continued subsequent to year end. As a result,
the lender could elect to accelerate demand of this lease and, accordingly, the
total amount owing has been classified as current in the consolidated balance
sheets. During 2001, certain leased production equipment was disposed of and the
proceeds therefrom utilized to partially satisfy this obligation.

ITEM 16. CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED SECURITIES

Not applicable.


PART IV

ITEM 17. FINANCIAL STATEMENTS

Not applicable.

ITEM 18. FINANCIAL STATEMENTS

The consolidated financial statements of the Company, the accompanying notes
thereto and the independent auditors' reports are included as part of this Form
20-F and immediately follow the signature page of this Form 20-F.
<PAGE>
                                      -26-




ITEM 19. FINANCIAL STATEMENTS AND EXHIBITS

(A) FINANCIAL STATEMENTS

The following financial statements are filed herewith:

     1.   Consolidated Balance Sheets as of December 31, 2001 and December 31,
          2000.

     2.   Consolidated Statements of Operations and Deficit for the years ended
          December 31, 2001, 2000 and 1999.

     3.   Consolidated Statements of Cash Flows for the years ended December 31,
          2001, 2000 and 1999.

     4.   Notes to Consolidated Financial Statements.

(B)  FINANCIAL STATEMENT SCHEDULES

     Not Applicable

(C)  EXHIBITS

There are no exhibits, other than the financial statements, filed herewith.
<PAGE>
                                      -27-



SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant certifies that it meets all of the requirements for filing
on Form 20-F and has duly caused this Annual Report to be signed on its behalf
by the undersigned, thereunto duly authorized.



DURA PRODUCTS INTERNATIONAL INC.                August 2, 2002
----------------------------------              ------------------------------
(Registrant)                                    (Date)



/s/ Franco P. Guido                             /s/ John Perrotta
----------------------------------              ------------------------------
(Signature)                                     (Signature)
President and Chief Executive Officer,          Executive Vice President -
Director                                        Chief Operating Officer
<PAGE>












                        DURA PRODUCTS INTERNATIONAL INC.

                       CONSOLIDATED FINANCIAL STATEMENTS

                               DECEMBER 31, 2001
















<PAGE>

                        DURA PRODUCTS INTERNATIONAL INC.

                                     INDEX

                               DECEMBER 31, 2001

                                                                      Page

AUDITORS' REPORT                                                        1

COMMENTS BY AUDITORS FOR U.S READERS
  ON CANADA - U.S REPORTING DIFFERENCES                                 2

CONSOLIDATED FINANCIAL STATEMENTS

  Consolidated Balance Sheet                                            3

  Consolidated Statement of Operations and Deficit                      4

  Consolidated Statement of Cash Flows                                  5

  Notes to the Consolidated Financial Statements                      6-23


<PAGE>

                                AUDITORS' REPORT

To the Shareholders of
Dura Products International Inc.

We have audited the consolidated balance sheet of Dura Products International
Inc. as at December 31, 2001, and the consolidated statements of operations and
deficit, and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

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

In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at December 31, 2001 and the
results of operations and changes in cash flows of the Company for the year then
ended, in accordance with generally accepted accounting principles in Canada. As
required by the Company Act of British Columbia, we report that, in our opinion,
these principles have been applied on a basis consistent with that of the
preceding year.

The financial statements for the years ended December 31, 1999 and December 31,
2000 were audited by another firm of Chartered Accountants, who expressed
opinions without reservation on those financial statements in their reports
dated March 25, 2000 and June 25, 2001 respectively.


                                                 "Sloan Paskowitz Adelman LLP"
                                                     Chartered Accountants
May 15, 2002

                                                                          Page 1
<PAGE>

COMMENTS BY AUDITORS FOR U.S READERS ON CANADA - U.S REPORTING DIFFERENCES

In the United States, reporting standards for auditors require the addition of
an explanatory paragraph (following the opinion paragraph) when the consolidated
financial statements are affected by conditions and events that cast substantial
doubt on the Company's ability to continue as a going concern, such as those
described in Note 1 to the consolidated financial statements. The opinion on
page 1 is expressed in accordance with Canadian reporting standards which do not
permit a reference to such events and conditions in the auditors' report when
these are adequately disclosed in the consolidated financial statements.

                                                 "Sloan Paskowitz Adelman LLP"
                                                     Chartered Accountants
May 15, 2002





















                                                                          Page 2
<PAGE>

                        DURA PRODUCTS INTERNATIONAL INC.
                           CONSOLIDATED BALANCE SHEET

December 31                                             2001           2000
-------------------------------------------------------------------------------
ASSETS
Current
  Accounts receivable                               $     81,937   $     78,880
  Subscription receivable                                      -        300,000
  Prepaid expenses and sundry assets (note 3)             66,825         66,369
  Inventory (note 4)                                     299,453        153,809
                                                    ------------   ------------
                                                         448,215        599,058

Capital assets (note 5)                                3,195,294      3,863,565
                                                    ------------   ------------
                                                    $  3,643,509   $  4,462,623
                                                    ============   ============

LIABILITIES
Current
  Accounts payable and accrued liabilities          $  6,249,524   $  5,717,767
  Capital lease obligations (note 9(a))                  478,696        816,964
  Accrual for capital asset purchases                  2,636,533      2,636,533
  Short term loans payable (note 13)                     250,000        100,000
  Bank indebtedness                                       37,110         30,591
  Due to shareholder                                     387,837              -
  Advances from minority interest (note 14(ii))          317,895        317,895
                                                    ------------   ------------
                                                      10,357,595      9,619,750
Subordinated debenture minority interest
  (note 14(i))                                         1,149,975      1,149,975
                                                    ------------   ------------
                                                      11,507,570     10,769,725
                                                    ------------   ------------

SHAREHOLDERS' DEFICIENCY
Capital stock (note 6)                                23,887,508     22,192,508
Deficit                                              (31,751,569)   (28,499,610)
                                                    ------------   ------------
                                                      (7,864,061)    (6,307,102)
                                                    ------------   ------------
                                                    $  3,643,509   $  4,462,623
                                                    ============   ============
APPROVED ON BEHALF OF THE BOARD:

"Franco Guido"          Director
-----------------------

"Paul Frustaglio"       Director
-----------------------

The accompanying notes form an integral part of these financial statements.

                                                                          Page 3
<PAGE>

                        DURA PRODUCTS INTERNATIONAL INC.
                CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT

Year ended December 31                   2001           2000           1999
-------------------------------------------------------------------------------
REVENUE                              $  1,186,673   $    780,367   $    831,539

EXPENSES
  Cost of sales, marketing and
    administrative                      3,664,700      3,058,270      4,242,973
  Interest expense                        117,264        182,896        136,201
  Write-down of assets and
    provisions (note 7)                         -              -      5,425,660
  Amortization                            656,668        611,857        696,656
                                     ------------   ------------   ------------
                                        4,438,632      3,853,023     10,501,490
                                     ------------   ------------   ------------

NET LOSS FOR THE YEAR                  (3,251,959)    (3,072,656)    (9,669,951)

DEFICIT, beginning of the year        (28,499,610)   (25,426,954)   (15,757,003)
                                     ------------   ------------   ------------
DEFICIT, end of the year             $(31,751,569)  $(28,499,610)  $(25,426,954)
                                     ============   ============   ============
Loss per share for the year          $      (0.07)  $      (0.09)  $      (0.36)
                                     ============   ============   ============
Weighted average common shares
  outstanding                          42,696,227     35,753,783     27,093,742
                                     ============   ============   ============

The accompanying notes form an integral part of these financial statements.

                                                                          Page 4
<PAGE>

                        DURA PRODUCTS INTERNATIONAL INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS

Year ended December 31                   2001           2000           1999
-------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss for the year              $ (3,251,959)  $ (3,072,656)  $ (9,669,951)
  Items not affecting cash:
    Amortization                          656,668        611,857        696,656
    Write-down of assets                        -              -      4,225,660
                                     ------------   ------------   ------------
                                       (2,595,291)    (2,460,799)    (4,747,635)

Net change in non-cash working
 capital items
  Accounts receivable                      (3,057)        29,389        (30,354)
  Subscription receivable                 300,000       (300,000)             -
  Inventory                              (145,644)       (18,453)        96,098
  Prepaid expenses and sundry assets         (456)         1,115        152,375
  Accounts payable and accrued
    liabilities                         1,826,757      1,001,518      1,911,471
                                     ------------   ------------   ------------
                                         (617,691)    (1,747,230)    (2,618,045)
                                     ------------   ------------   ------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Issuance of common shares                     -      1,850,000      2,721,303
  Short-term loans payable                150,000              -        (36,497)
  Bank indebtedness                         6,519         30,591        (81,689)
  Capital lease payments                 (338,268)      (208,330)      (242,408)
  Due to shareholder                      537,837              -              -
  Due to director                         250,000              -              -
                                     ------------   ------------   ------------
                                          606,088      1,672,261      2,360,709
                                     ------------   ------------   ------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Disposals of capital assets, net         11,603         72,496        168,822

DECREASE IN CASH                                -         (2,473)       (88,514)

CASH AND EQUIVALENTS, beginning
  of the year                                   -          2,473         90,987
                                     ------------   ------------   ------------

CASH AND EQUIVALENTS, end of
  the year                           $          -   $          -   $      2,473
                                     ============   ============   ============

Interest paid                        $     26,303   $     90,491   $    135,013
                                     ============   ============   ============

Income taxes paid                    $          -   $          -   $          -
                                     ============   ============   ============

The accompanying notes form an integral part of these financial statements.

                                                                          Page 5

                        DURA PRODUCTS INTERNATIONAL INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2001

1. BASIS OF PRESENTATION AND GOING CONCERN

General

The consolidated financial statements of the Company have been prepared by
management in accordance with Canadian generally accepted accounting principles
on a going concern basis, which contemplates the realization of assets and the
discharge of liabilities in the normal course of business for the foreseeable
future.

During 1998, 1999 and 2000, the Company encountered significant operational
difficulties in its Toronto facility principally related to the automated
assembly of pallets. In addition, the operations in Toronto were further
curtailed during 2000 due to a fire in the production area.

During 1998 and 1999, the Company's Andover, Massachusetts facility owned by
Duraskid (New England) LLC experienced significant cost overruns and delayed
startup and similar operational issues as the Toronto facility. The capacity
constraints at the Toronto facility and the problems related to the
Massachusetts facility adversely impacted sales, earnings and cash flows, which
in turn reduced working capital and overall liquidity.

The Company has incurred significant consolidated losses of $3,251,959,
$3,072,656, $9,669,951 and $8,673,172 for each of the years ended December 31,
2001, 2000, 1999 and 1998 respectively. The Company had a consolidated working
capital deficiency of $9,909,380 as at December 31, 2001 ($9,020,692 - 2000). At
December 31, 2001, the Company was in breach of the minimum revenue requirement
relating to loans provided for equipment, which has continued subsequent to year
end (note 9).

During the 1999 fiscal year, the Company undertook a review of its capital
assets to identify any surplus and/or obsolete equipment. As a result, a
write-down of $4,225,660 was taken for the capital assets in 1999. A write-down
of $1,654,957 was taken in 1998 for both the technology and capital assets.

Duraskid (New England) LLC

As a result of the production issues in its Massachusetts facility and Company's
lack of adequate financial resources, the Company and its minority interest
partners decided to abandon that facility during 1999. As a result, certain
creditors of Duraskid (New England) LLC have repossessed certain capital assets
with a carrying value of $5,391,490 (US$ 3,594,327) (note 12 (i)), and a
creditor has obtained a judgment against the Company for damages resulting from
the non-fulfillments of the lease (note 12(h)). The repossessed capital assets
have been written off against their corresponding liabilities. The remaining
capital assets have been written down to estimated net realizable value.

A condensed balance sheet as at December 31, 2001, in Canadian dollars,
disclosing the assets and liabilities of Duraskid (New England) LLC, all of
which are included in the consolidated balance sheet of the Company, is as
follows:

                                                                          Page 6
<PAGE>

                        DURA PRODUCTS INTERNATIONAL INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2001

1. BASIS OF PRESENTATION AND GOING CONCERN (continued)

   Capital assets                                                  $        NIL
                                                                   ------------
   Total assets                                                    $        NIL
                                                                   ============

   Other current liabilities                                       $  2,970,655
   Subordinated debenture to minority interest                        1,149,975
   Advances from minority interest                                      317,895
                                                                   ------------
   Total liabilities                                               $  4,438,525
                                                                   ============
   Loss recognized in excess of the Company's investment           $  3,725,660
                                                                   ============

Dura Products International Inc. provided a guarantee for the equipment capital
lease and the facilities operating lease (note 9). The minority interest partner
has also provided a guarantee for the capital lease and has provided a guarantee
to Dura Products International Inc. for their 49% share of the guarantee for the
facilities operating lease.

Management has recorded in these consolidated financial statements management's
best estimate of the costs to Dura Products International Inc. of the decision
to abandon the facility in Massachusetts. However, such costs will be dependent
on the amounts creditors will recover through sale of capital assets, sublet of
the operating facility, or recovery from the minority interest partner.
Accordingly, additional provisions, which could be material, may be required in
future periods.

Creditor Lawsuits

In addition to the lawsuits, which are described in Note 12, the Company is
currently defending claims from a number of creditors totaling approximately
$1,800,000, which are currently reflected as liabilities in the consolidated
balance sheet. The Company will vigorously defend these actions but if the
creditors are successful in obtaining a judgment against the Company, it will
have a material adverse effect on the Company's ability to continue as a going
concern.

                                                                          Page 7
<PAGE>

DURA PRODUCTS INTERNATIONAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2001

1. BASIS OF PRESENTATION AND GOING CONCERN (continued)

Future Plans

The Company installed new management in January 2002. The Company has developed
a business plan to restructure its financial liabilities and improve operations
with the goal of sustaining Company operations for the next twelve months and
beyond. The plan includes: (i) settling debt obligations; (ii) directing sales
and marketing efforts to specified target markets; (iii) implementing process
improvements; (iv) raising additional capital funds for working capital; and (v)
controlling overheads and eliminating unnecessary expenses. There is no
assurance that the Company can achieve profitable operations in the future.

Conclusion

The Company's ability to operate, as a going concern is dependent upon obtaining
additional capital, the continued financial support of its creditors, the
achievement of profitable operations and the satisfactory resolution of the
matters described above. The outcome of these matters cannot be predicted at
this time.

These consolidated financial statements do not give effect to any adjustments
which would be necessary should the Company be unable to continue as a going
concern and, therefore, be required to realize its assets and discharge its
liabilities in other than the normal course of business and at amounts different
from those reflected in the accompanying consolidated financial statements.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a) Basis of Presentation

These consolidated financial statements are prepared in Canadian dollars in
accordance with accounting principles generally accepted in Canada (note 1),
which conform, in all material respects, with accounting principles generally
accepted in the United States, except as disclosed in note 16.

b) Principles of Consolidation

The consolidated financial statements include the accounts of Dura Products
International Inc. (The "Company") and its significant subsidiaries, Dura Skid
Inc. ("Dura Skid") and Duraskid (New England) LLC. All significant intercompany
accounts and transactions have been eliminated on consolidation.

c) Revenue Recognition

Revenue is recognized when goods are shipped and the title has passed to the
customer.

                                                                          Page 8
<PAGE>

                        DURA PRODUCTS INTERNATIONAL INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2001

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

d) Inventory

Inventory of raw materials is valued at the lower of average cost and
replacement cost or net realizable value. Inventory of work in process and
finished goods is valued at the lower of standard cost, which approximates cost
on a first-in, first-out basis, and net realizable value.

e) Capital Assets

Capital assets are recorded at cost, with amortization being provided on
straight-line basis as follows:

  Furniture and fixtures             5 years
  Leasehold improvements             Term of the lease plus one renewal period
  Production equipment               10 years
  Equipment under capital lease      10 years

Amortization in the year of acquisition is calculated at one-half of the annual
rate.

f) Research and Development Costs

Research costs are expensed as incurred. Development costs are expensed in the
year incurred unless management believes that the development project meets the
generally accepted accounting principles for deferral and amortization. All
development costs to date have been expensed as incurred.

g) Income Taxes

The liability method of tax allocation is used accounting for income taxes.
Under this method, future tax assets and liabilities are based on differences
between the financial reporting and tax bases of assets and liabilities, and
measured using the substantively enacted tax rates and legislation that will be
in effect when the differences are expected to reverse.

Investment tax credits relating to capital asset purchases and scientific
research and experimental development ("SRED") expenditures are accounted for as
a reduction of the cost of such assets and expenses, respectively, when the
company has reasonable assurance as to realization. To date, no investment tax
credits have been recorded in the accounts of the Company.

                                                                          Page 9
<PAGE>

                        DURA PRODUCTS INTERNATIONAL INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2001

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

h) Foreign Currency Translation

Assets and liabilities denominated in foreign currencies, as well as the
accounts of Duraskid (New England) LLC, are translated as follows:

  Monetary assets and liabilities                     at year-end exchange rates
  Non-monetary assets, liabilities and amortization   at historic exchange rates
  Revenue and expenses other than amortization        at average exchange rates

Foreign exchange gains and losses on transactions during the year and on
year-end translation accounts are reflected in income.

i) Loss Per Share

The loss per share has been calculated using the weighted average number of
shares outstanding during the year.

j) Cash and Cash Equivalents

The Company considers all highly liquid instruments with a maturity of three
months or less when purchased to be cash equivalents and are grouped with "Cash"
on the consolidated balance sheet.

k) Leases

The Company leases certain of its production assets. Assets rented under capital
lease arrangements, where substantially all of the benefits of ownership are
transferred to the Company, are accounted for as capital asset acquisitions and
are amortized over their estimated useful lives, on a straight-line basis.
Obligations under the terms of capital leases are disclosed as liabilities of
the Company.

l) Use of Estimates

The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions and that affect the reported amounts of assets and liabilities
and disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses during the
reporting periods. Actual amounts could differ from those estimates.

                                                                         Page 10
<PAGE>

                        DURA PRODUCTS INTERNATIONAL INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2001

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

m) Financial Instruments

Due to the nature of the Company's current financial condition (note 1), it is
not practicable to make a determination of fair values of the Company's
financial instruments.

n) Comparative Figures

Certain prior years' comparative figures have been reclassified to conform to
the current year's presentation.

The financial statements of prior years were reported on without reservation by
another firm of Chartered Accountants.

3. PREPAID EXPENSES AND SUNDRY ASSETS

The following item is included in prepaid expenses and sundry assets:

                                                        2001           2000
                                                    ------------   ------------
GST Receivable                                      $     27,792   $     27,928
                                                    ============   ============

4. INVENTORY

Inventory consists of:

Finished goods                                      $    224,428   $     15,105
Raw materials                                             75,025        138,704
                                                    ------------   ------------
                                                    $    299,453   $    153,809
                                                    ============   ============

5. CAPITAL ASSETS

Capital assets consist of:
December 31, 2001
                                                     Accumulated
                                         Cost       Amortization        Net
                                     ------------   ------------   ------------
Furniture and fixtures               $     68,789   $     68,060   $        729
Leasehold improvements                    482,769        255,636        227,133
Production equipment                    3,647,569      1,447,282      2,200,287
Equipment under capital lease           1,292,905        525,760        767,145
                                     ------------   ------------   ------------
                                     $  5,492,032   $  2,296,738   $  3,195,294
                                     ============   ============   ============

                                                                         Page 11
<PAGE>

                        DURA PRODUCTS INTERNATIONAL INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2001

5. CAPITAL ASSETS (continued)

Capital assets consist of:
December 31, 2000
                                                     Accumulated
                                         Cost       Amortization        Net
                                     ------------   ------------   ------------
Furniture and fixtures               $     68,789   $     53,876   $     14,913
Leasehold improvements                    482,769        159,083        323,686
Production equipment                    3,424,046      1,131,680      2,292,366
Equipment under capital lease           1,777,745        545,145      1,232,600
                                     ------------   ------------   ------------
                                     $  5,753,349   $  1,889,784   $  3,863,565
                                     ============   ============   ============

6. SHARE CAPITAL

Class A Special shares; unlimited authorized

The Class A Special shares are voting and may be issued in one or more series.
The Directors of the Company may establish, before an issue, the number of
shares to comprise each series and the designation, rights, privileges,
restrictions and conditions attached to each series, and without limiting the
generally of the foregoing, the rate or amount of dividends or the method of
calculating dividends, the dates of payment, the redemption, purchase and/or
conversion prices and terms and conditions of redemption and any sinking fund or
other provisions. As at December 31, 2001 and 2000, no Class A Special shares
have been issued.

Class B Special shares; unlimited authorized

The Class B special shares are designated as redeemable, voting,
non-participating shares. No dividends shall be declared, set aside or paid on
the Class B Special shares. As at December 31, 2001 and 2000, no Class B Special
shares have been issued.

                                                                         Page 12
<PAGE>

                        DURA PRODUCTS INTERNATIONAL INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2001

6. SHARE CAPITAL (continued)

Common shares; unlimited authorized

a) Common Shares Issued
                                                       Number         Amount
                                                    ------------   ------------
Balance, December 31, 1997                            21,983,764   $ 14,247,987
  Exercise of stock options                            1,275,835      1,847,834
  Exercise of warrants                                   357,000        910,350
                                                    ------------   ------------
Balance, December 31, 1998                            23,616,599     17,006,171
  Issued for cash                                      3,524,943      1,634,966
  Issued for repayment of debt                           975,057        585,034
  Exercise of stock options                            1,431,020        756,337
  Exercise of warrants                                 1,000,000        330,000
                                                    ------------   ------------
Balance, December 31, 1999                            30,547,619     20,312,508
  Issued for cash                                      4,000,000        800,000
  Exercise of stock options                              250,000         55,000
  Exercise of warrants                                 4,500,000      1,025,000
                                                    ------------   ------------
Balance, December 31, 2000                            39,297,619     22,192,508
  Issued for repayment of debt                         2,000,000        400,000
  Exercise of stock options                            2,550,000        572,500
  Exercise of warrants                                 3,250,000        722,500
                                                    ------------   ------------
Balance, December 31, 2001                            47,097,619   $ 23,887,508
                                                    ============   ============
b) Stock options

The Company has issued stock options pursuant to the following plans:

(i) The 1996 stock option plan was limited to 1 million shares in the aggregate,
and restricted to Directors, officers, employees and consultants of the Company.
The exercise price of any options granted might not be less than the fair market
value at the time the option is granted. Vesting provisions are at the
discretion of the Board. The term of the options cannot exceed five years. All
options have been granted and exercised pursuant to this plan.

(ii) The 1996 replacement stock option plan was initially limited to 2.5 million
shares in the aggregate, and restricted to directors, officers, employees and
consultants of the Company and its subsidiaries and other designated persons as
designated from time to time by the Board. The exercise price of any options
granted might not be less than the fair market value at the time the options are
granted. Vesting provisions are at the discretion of the Board. The term of the
options cannot exceed five years. This plan was subsequently amended to increase
the limit of shares to 7.0 million and then to 13.0 million shares in the
aggregate. As at December 31, 2001 approximately 4.9 million options are
available to be granted.

                                                                         Page 13
<PAGE>

                        DURA PRODUCTS INTERNATIONAL INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2001

6. SHARE CAPITAL (continued)

The following is a continuity of stock options outstanding:

                                   Weighted Average                  Aggregate
                                    Exercise Price     Number      Option Price
                                    --------------  ------------   ------------
Balance, December 31, 1998                             1,073,405   $  1,948,259
  Granted during 1999                                  3,056,080      1,478,339
  Exercised during 1999                               (1,431,020)      (756,337)
  Expired during 1999                                 (1,065,425)    (1,405,133)
                                                    ------------   ------------
Balance, December 31, 1999                             1,633,040      1,265,128
  Granted during 2000                                    150,000         30,000
  Exercised during 2000                                 (250,000)       (55,000)
  Expired during 2000                                 (1,018,040)    (1,085,128)
                                                    ------------   ------------
Balance, December 31, 2000                               515,000        155,000
  Granted during 2001                                  3,545,000        867,500
  Exercised during 2001                               (2,550,000)      (572,500)
                                                    ------------   ------------
Balance, December 31, 2001           $      0.225      1,510,000   $    450,000
                                     ============   ============   ============

Of the total options outstanding, 15,000 issued at $2.00 expire on July 9, 2002;
300,000 issued at $0.28 expire on April 26, 2004, 450,000 issued at $0.25 expire
on December 1, 2004 and 745,000 issued at $0.30 expire on April 26, 2004.

c) Common share purchase warrants

The following is a continuity of warrants outstanding:

                                   Weighted Average                  Aggregate
                                    Exercise Price     Number     Warrant Price
                                    --------------  ------------  -------------
Balance, December 31, 1998                             1,634,428   $  4,903,284
  Issued during 1999                                   3,500,000        830,000
  Exercised during 1999                               (1,634,428)    (4,903,284)
  Expired during 1999                                 (1,000,000)      (330,000)
                                                    ------------   ------------
Balance, December 31, 1999                             2,500,000        500,000
  Issued during 2000                                   4,000,000      1,000,000
  Exercised during 2000                                 (500,000)      (100,000)
  Expired during 2000                                 (4,500,000)    (1,025,000)
                                                    ------------   ------------
Balance, December 31, 2000                             1,500,000        375,000
  Issued during 2001                                   2,000,000        400,000
  Exercised during 2001                               (3,250,000)      (722,500)
                                                    ------------   ------------
Balance, December 31, 2001           $      0.222        250,000   $     52,500
                                     ============   ============   ============

Each common share purchase warrant outstanding as at December 31, 2001 entitles
the warrant holder to purchase one common share of the Company at $0.25 per
share, expiring on June 28, 2002.

                                                                         Page 14
<PAGE>

                        DURA PRODUCTS INTERNATIONAL INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2001

7. WRITE DOWN OF ASSETS AND PROVISIONS
Write down of assets and provisions are
comprised as follows:
                                         2001           2000           1999
                                     ------------   ------------   ------------
Provisions for guarantee of
  obligations of Duraskid (New
  England) LLC                       $          -   $          -   $  1,200,000

8. INCOME TAXES

The components of future income tax assets and liabilities are approximately
as follows:
                                         2001           2000           1999
                                     ------------   ------------   ------------
Future tax assets

Net operating loss carryforwards     $  6,554,816   $  5,516,700   $  4,721,813
Net capital loss carryforwards            899,572        882,000        676,636
SRED expenditure                        1,123,412      1,123,412      1,123,412
SRED ITC's recoverable                    673,416        673,416        673,416
Amortization                            1,560,667      1,298,000        953,874
                                     ------------   ------------   ------------
Total future tax assets                10,811,883      9,493,528      8,149,151
Less: Valuation allowance             (10,811,883)    (9,493,528)    (8,149,151)
                                     ------------   ------------   ------------
Net future tax assets                $          -   $          -   $          -
                                     ============   ============   ============

                                                                         Page 15
<PAGE>

                        DURA PRODUCTS INTERNATIONAL INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2001

8. INCOME TAXES (continued)

As at December 31, 2001, the Company has net operating loss carry forwards of
approximately $16,398,000 for income tax purposes that expire as follows:

        2002                                                       $     94,000
        2003                                                            907,000
        2004                                                          1,883,000
        2005                                                          3,033,000
        2006                                                          4,748,000
        2007                                                          2,138,000
        2008                                                          3,595,000
                                                                   ------------
                                                                   $ 16,398,000
                                                                   ============

In addition, as at December 31, 2001, the Company has net capital loss carry
forwards of approximately $2.1 million, which may be used to offset any future
capital gains, and SRED expenditure pool carry forwards, which may be used to
offset future income, of approximately $3.1 million that do not expire. Duraskid
(New England) LLC has net operating loss carry forwards of $1.5 million, which
expire in 2008. The potential tax savings of these losses have not been
recognized in these consolidated financial statements.

9. LEASE OBLIGATIONS

a) Production equipment capital leases consist of:

                                                        2001           2000
                                                    ------------   ------------
Equipment obligation, bearing interest at 11.4%
 per annum, monthly blended payments of $22,709,
 ($31,984 - 2000) due September, 2002               $    478,696   $    816,964

Less: Current portion                                   (478,696)      (816,964)
                                                    ------------   ------------
                                                    $          -   $          -
                                                    ============   ============

The lease agreement contains covenants, which restrict the ability of Dura Skid
to transfer any assets to its parent Company, Dura Products International Inc.,
without the approval of the lender. As at December 31, 2001, the Company was not
in compliance with the financial covenants of this facility (note 1) which
continued subsequent to year end. As a result the lender could elect to
accelerate demand of this lease and, accordingly, the total amount owing has
been classified as current in the consolidated balance sheets. During 2001,
certain leased production equipment was disposed of and the proceeds therefrom
utilized to partially satisfy this obligation.

As a result of the restrictive nature of this binding agreement, substantially
all of the net assets of the Company which are owned by the subsidiaries are,
therefore, restricted and are not available to the parent Company, Dura Products
International Inc.

                                                                         Page 16
<PAGE>

                        DURA PRODUCTS INTERNATIONAL INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2001

9. LEASE OBLIGATIONS (continued)

The future minimum scheduled lease payments are as follows:

For the year ending December 31, 2002                              $    309,278
Less: imputed interest                                                  (18,843)
                                                                   ------------
                                                                   $    290,435
                                                                   ============
b) Premises Lease

In addition, the Company leases its premises under an operating lease agreement.
There is no renewal period specified. The minimum annual lease payments for the
remaining term of the lease is as follows:

        2002                                                       $    235,741
        2003                                                            249,431
        2004                                                            249,431
        2005                                                            208,359
                                                                   ------------
                                                                   $    942,962
                                                                   ============

10. NON-CASH TRANSACTIONS

Effective December 31, 1998, the Company adopted the new recommendations of The
Canadian Institute of Chartered Accountants with respect to Statement of Cash
Flow disclosures. This change has been adopted retroactively and has no impact
on the consolidated financial statements other than presentation. Under the new
recommendations, non-cash transactions are excluded from the consolidated
statements of cash flows.

In each of the years ended December 31, 2001, 2000 and 1999, several non-cash
transactions occurred, which are excluded from the consolidated statements of
cash flows.

2001 transactions include:

(i)   Common shares were issued in lieu of repayment of short-term loans payable
      to a Director of $250,000

(ii)  Common shares were issued in lieu of repayment of short-term loans payable
      to a shareholder of $150,000

(iii) Common shares were issued in lieu of payment of consulting fees of $65,000

(iv)  Common shares were issued in lieu of a termination payment of $37,500

                                                                         Page 17
<PAGE>

                        DURA PRODUCTS INTERNATIONAL INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2001

10. NON-CASH TRANSACTIONS (continued)

2001 transactions (continued)

(v)  Common shares were issued in lieu of payment of interest of $15,000

(vi) Common shares were issued in lieu of payment of expenses of $1,177,500

2000 transactions include:

(i)  Common shares were issued in lieu of payment of $30,000 in the settlement
     of a lawsuit

1999 transactions include:

(i)  Common shares were issued in lieu of repayment of short-term loans payable
     to a Director of $585,034

11. SEGMENTED INFORMATION

The Company has reportable segment, which includes the manufacture of pallets
from its proprietary composite material.

a) Geographic segmented information is as follows:
                                                       United
                                        Canada         States         Total
                                     ------------   ------------   ------------
2001
  Revenue                            $    715,679   $    470,448   $  1,186,127
  Loss for the year                  $ (1,962,150)  $ (1,289,809)  $ (3,251,959)
  Capital assets                     $  3,195,294   $        nil   $  3,195,294
2000
  Revenue                            $    429,177   $    351,190   $    780,367
  Loss for the year                  $ (1,689,863)  $ (1,382,793)  $ (3,072,656)
  Capital assets                     $  3,863,565   $        nil   $  3,863,565

b) Sales to major customers are as follows:
                                                        2001           2000
                                                    ------------   ------------
Sales                                               $    606,732   $    357,814
Percent of Total Sales                                       51%            46%
Amount included in Accounts Receivable              $     18,113   $     38,715

c) Purchases from major suppliers are as follows:
                                                        2001           2000
                                                    ------------   ------------
Purchases                                           $    190,757   $     96,728
Percent of Total Purchases                                   44%            31%
Amount included in Accounts Payable                 $    128,768   $     54,792


                                                                         Page 18
<PAGE>

                        DURA PRODUCTS INTERNATIONAL INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2001

12. CONTINGENCIES

In addition to contingencies described in note 1, the Company, without the
assistance of legal counsel as a result of the deficiency in financial
resources, is actively defending itself against the following items:

a)   During 1996, the Company acquired, through its acquisition of Dura Skid, a
     licensing agreement with SRP Industries Ltd. ("SRP") the right to utilize
     certain SRP technologies. The licensing agreement required the payment of
     certain minimum royalties and potential additional royalties based upon
     future sales. During early 1997, the Company determined that SRP's
     technology was not commercially viable as it relates to the production
     process used by the Company, requiring the Company to develop and
     commercialize its own technology at significant cost and time to the
     Company. In addition, SRP was unable to provide any of the required
     technical support services under the terms of the agreement and management
     thereby concluded that SRP was in breach of this agreement.

     Accordingly, the Company filed a claim against SRP in April 1997 to seek
     damages of approximately $5 million and to terminate the agreement. In
     October 1997, SRP filed a counterclaim against the Company for $10 million,
     claiming that the Company inappropriately terminated the agreement,
     enriched itself with SRP's technology with no Compensation to SRP, and
     induced key employees of SRP to accept employment with the Company.

     Management of the Company is of the opinion that it has acted appropriately
     in terminating this agreement, and that the counterclaim by SRP is without
     merit. However, the final outcome of these matters is uncertain and the
     potential effect, whether material or not, on the Company's consolidated
     financial position is not reasonably determinable at this time.
     Accordingly, no provision has been recorded in the accounts of the Company
     as at December 31, 2001. No action occurred during 2001 or subsequent to
     year-end on this claim or counterclaim.

b)   In September 1998, a former shareholder of the Company filed a statement of
     claim against the Company for $1.5 million. The claim was also filed
     against a former Director of the Company and a third party. The former
     shareholder is claiming that as part of the transaction between him and the
     former Director and the third party, whereby the former shareholder
     privately sold his shareholding, the Company agreed to transfer its
     ownership in 15 mining claims to him. The Company wrote off its investment
     in the 15 mining claims as at December 31, 1995 and in 1996 sold the
     subsidiary that held the mining claims for $2.00.

                                                                         Page 19
<PAGE>

                        DURA PRODUCTS INTERNATIONAL INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2001

12. CONTINGENCIES (continued)

b)   (continued) The final outcome of this matter is uncertain but the
     management of the Company believes that any effect would not be material to
     the Company's consolidated financial position. Accordingly no provision has
     been recorded in the accounts of the Company as at December 31, 2001.

c)   In May 1999, an action was commenced against the Company by a former
     employee, claiming wrongful dismissal, unpaid wages, vacation pay, and
     expenses totaling approximately $180,000. The former employee also claims
     that the Company is in possession of certain intellectual property, which
     is the property of the former employee. The Company has accrued $40,000 for
     unpaid wages and expenses. The Company is of the opinion that the remainder
     of the claim is without merit. The final outcome of this matter is
     uncertain and the potential effect on the Company's consolidated financial
     position is not reasonably determinable at this time.

d)   In November 1998, a supplier filed a statement of claim against the Company
     for approximately $140,000 for goods delivered. The Company is of the
     opinion that approximately $116,000 of this claim relates to goods provided
     to Duraskid (New England) LLC for which the Company was not a guarantor.
     The remainder of the claim has been accrued by the Company. The final
     outcome of this matter is uncertain and the potential effect on the
     Company's consolidated financial position is not reasonably determinable at
     this time.

e)   In December 1998, the Company was named in an action brought by a supplier
     in the amount of approximately $550,000 for non-payment of production
     equipment. The Company is of the opinion that this claim related to
     Duraskid (New England) LLC for which the Company was not a guarantor. The
     Company has accrued $100,000 in relation to this lawsuit. The final outcome
     of this matter is uncertain and potential effect on the Company's
     consolidated financial position is not reasonably determinable at this
     time.

f)   In February 1999, a supplier filed a statement of claim against Company for
     approximately $50,000 for services rendered. The Company has accrued
     $20,000 with respect to this lawsuit. The Company is of the opinion that
     the remainder of the claim is without merit. The final outcome of this
     matter is uncertain and the potential effect on the Company's consolidated
     financial position is not reasonably determinable at this time.

g)   In May 1999, the Company was named as a co-defendant in an action by an
     investor against a related party. The investor is claiming damages of
     $520,000 for breach of loan agreement and $40,000 in commissions. The
     Company is of the opinion that the claim is without merit and,
     consequently, the company has not recorded any costs in relation to this
     lawsuit. The final outcome of this matter is uncertain and the potential
     effect on the Company's consolidated financial position is not reasonably
     determinable at this time.

                                                                         Page 20
<PAGE>

                        DURA PRODUCTS INTERNATIONAL INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2001

12. CONTINGENCIES (continued)

h)   In August 1999, the Company received a judgment against it for
     approximately US$1,500,000. The plaintiff claimed damages resulting from
     the non-fulfillment of Duraskid (New England) LLC's lease of the
     Massachusetts premises. The Company acted as a guarantor of the lease, and
     the minority interest partner provided a guarantee to the Company for the
     lease payments. The Company is of the opinion that they will be able to
     settle this judgment and has accrued the estimated costs. The remainder of
     the claim has not been accrued by the Company. The final outcome of this
     matter is uncertain and additional material provisions may be required in
     future periods.

i)   In December 1999, the Company received a judgment against it for
     approximately US$3,600,000. The plaintiff claimed damages resulting from
     the non-fulfillment of Duraskid (New England) LLC's lease of production
     equipment. The Company and the minority interest partner in Duraskid (New
     England) LLC both acted as guarantors on the lease. The equipment was
     repossessed by the lessor and sold. Proceeds less related costs may be
     offset against the judgment owed. The Company has accrued the eventual
     costs, in its opinion, to dispose of this judgment. The final outcome of
     this matter is uncertain and the potential effect on the Company's
     consolidated financial position is not reasonably determinable at this
     time.

j)   In November 2000, the Company received a judgment against it for
     approximately $100,000 for services rendered. The Company has accrued this
     amount with respect to the judgment.

k)   In December 2000, the Company received a judgment against it for
     approximately US$500,000. The plaintiff claimed damages resulting from the
     termination of a consulting contract. The Company is of the opinion that
     they will be able to settle this judgment and has accrued the estimated
     costs. The remainder of the claim has not been accrued by the Company. The
     final outcome of this matter is uncertain and additional material
     provisions may be required in future periods.

13. SHORT TERM LOANS PAYABLE
                                                        2001           2000
                                                    ------------   ------------
Loan bearing interest at 10% per annum,
  due on demand                                     $    100,000   $    100,000
Loan bearing interest at 2% per month,
  due on demand                                          150,000              -
                                                    ------------   ------------
                                                    $    250,000   $    100,000
                                                    ============   ============

                                                                         Page 21
<PAGE>

                        DURA PRODUCTS INTERNATIONAL INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2001

14. FINANCING FROM MINORITY INTEREST PARTNER

Minority interest advances consist of:

(i) Subordinated debenture: Under the terms of the Duraskid (New England) LLC
agreement, the minority interest partner was required to provide subordinated
debenture debt to Duraskid (New England) LLC. The balance bears interest at a
rate of 9% per annum and is payable quarterly in arrears. Payments of US$25,000
are due quarterly, commencing December 1, 2000. Any unpaid balance is due
October 15, 2007. Neither Dura Products International Inc. nor Dura Skid Inc.
has guaranteed this debt. This debt has continued to be treated as a long-term
liability.

(ii) Advances by the minority interest partner are non-interest bearing and not
subject to specified term of repayment.

15. RELATED PARTY TRANSACTION

In 1999, a loan of $585,034 advanced by a Director to the Company in 1998 was
converted to common shares by way of private placement.

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

The Company's accounting principles do not differ materially from accounting
principles generally accepted in the United States ("US GAAP") except as
follows: Business Acquisition

The acquisition of Dura Skid in January 1996 was settled by way of common shares
and share purchase warrants. Under US GAAP, the share purchase warrants must be
valued and included in the purchase price. The value ascribed to the warrants,
as determined under the Black-Scholes model, was $85,000, which would be added
to technology and other intangible assets. For the year ended December 31, 1997,
$1,417 was amortized and for the year ended December 31, 1998 the remaining
balance of $83,583 was written off as the corresponding asset on the
consolidated balance sheet was written down.

Subscription Receivable

US GAAP requires that subscription receivable be presented as deductions from
shareholders' equity not as assets. Accordingly, in order to comply with US
GAAP, shareholders' deficiency would have been increased by $300,000 as at
December 31, 2000.

                                                                         Page 22
<PAGE>

                        DURA PRODUCTS INTERNATIONAL INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2001

16. RECONCILIATION OF ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN CANADA AND THE
UNITED STATES (continued)

Stock Options

The Company has elected to follow APB Opinion No.25, "Accounting for Stock
Issued to Employees" ("APB 25") in accounting for its stock option plans. Under
APB 25 no compensation expense has been recognized. Statement of Financial
Accounting Standards No. 123 ("FAS 123"), Accounting and Disclosure of
Stock-Based Compensation, requires the fair value of options issued be measured
as compensation expense. For a description of the option plans, reference should
be made to note 6. The assumptions used in the Black-Scholes model are as
follows: the risk-free interest rate used was 4%, expected dividends were 0%;
expected life of 5 years; and expected volatility ranged from 21% to 25%. The
weighted- average grant date fair value of options granted during 2001 was
$0.29, 2000 was $nil and 1999 was $1.48. There were 925,000 stock options issued
to employees during 2001. The pro-forma impact of this is as follows:

                                               Year ended December 31,
                                         2001           2000           1999
                                     ------------   ------------   ------------
Pro-forma disclosures under FAS 123
Loss for the year                    $  3,523,459   $  3,072,656   $ 10,524,171
Loss per share                       $       0.08   $       0.09   $       0.39

Recently Issued Pronouncements

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101 ("SAB 101"), "Revenue Recognition in financial Statements". SAB
101 provides guidance on applying generally accepted accounting principles to
revenue recognition issues. The adoption of this standard would not have a
material impact on the Company's financial position, results of operations or
cash flows.

In June 2000, the Financial Standards Board ("FASB") issued statement NO. 138.
"Accounting for Certain Derivative Instruments and Certain Hedging Activities,
An Amendment of FASB Statement No.133". SFAS No. 133, as amended, is effective
for fiscal periods beginning after June 15, 2000 and establishes accounting and
reporting standards for derivative instruments and hedging activities. The
adoption of this standard would not have a material impact on the company's
financial position, results of operations or cash flows.

In September 2000, FASB issued SFAS No. 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities". This
statement is effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after March 31, 2001. SFAS No. 140 also
includes provisions that require additional disclosures in the financial
statements for fiscal years ending after December 15, 2000. The adoption of this
standard would not have a material impact on the company's financial position,
results of operations or cash flows.

                                                                         Page 23