`SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                 ---------------
                                  Form 10-KSB/A

     [X]  Annual  Report  pursuant  to  Section  13 or 15 (d) of the  Securities
          Exchange Act of 1934 for the Fiscal Year Ended June 30,  2002.  or

     [ ]  Transition  report pursuant  to Section 13 or 15 (d) of the Securities
          Act of 1934 for the transition period from ________ to __________.

                        Commission File Number 001-31260
                                ----------------
                                 Decorize, Inc.
             (Exact name of registrant as specified in its charter)
                                ----------------

                 Delaware                            43-193180
        (State of Incorporation)        (IRS Employer Identification Number)

                                 1938 E. Phelps
                              Springfield, MO 65802
                                 (417) 879-3326
        (Address, zip code and telephone number, including area code, of
                    registrant's principal executive offices)
                             ----------------------

        Securities registered pursuant to Section 12 (b) of the Act: None

          Securities registered pursuant to Section 12 (g) of the Act:
                         Common Stock, $0.001 par value

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

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

          At September 25, 2002, there were 10,432,774 outstanding shares of the
registrant's  Common Stock.  At September 25, 2002, the total  aggregate  market
value of the  4,305,715  shares of voting  stock held by  non-affiliates  of the
registrant was $8,396,144,  based upon a closing bid of the registrant's  Common
Stock as  reported  by The  American  Stock  Exchange  on that date of $1.95 per
share.  The term  affiliates  is  deemed,  for this  purpose  only,  to refer to
directors,  officers  and  holders  of 5% or more  of the  Common  Stock  of the
registrant.

                      Documents Incorporated By Reference:
          Portions of the Registrant's Proxy Statement for the Annual Meeting of
          Shareholders to be held on November 25, 2002 - Part III`

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`Decorize, Inc.

PART I
    Item 1.   Description of Business..........................................1
    Item 2.   Description of Properties.......................................12
    Item 3.   Legal Proceedings...............................................13
    Item 4.   Submission of Matters to a Vote of Security Holders.............13

PART II
    Item 5.   Market for Common Equity and Related Stockholder Matters........13
    Item 6.   Management's Discussion and Analysis or Plan of Operations......14
    Item 7.   Financial Statements...........................................F-1
    Item 8.   Change in and Disagreements with Accountants on Accounting
              and Financial Disclosure........................................19


PART III
    Item 9.   Directors and Executive Officers of the Registrant..............19
    Item 10.  Executive Compensation..........................................19
    Item 11.  Security Ownership of Certain Beneficial Owners and Management..19
    Item 12.  Certain Relationships and Related Transactions..................19

PART IV
    Item 13.  Exhibits and Reports on Form 8-K................................19

SIGNATURES    ................................................................20


                                Explanatory Note

Decorize, Inc. hereby amends and restates in its entirety its Annual Report on
Form 10-KSB for the period ending September 30, 2002, which was filed on October
2, 2003, and amended on December 5, 2003, by filing this amended annual report
as provided by the applicable rules under the Securities and Exchange Act of
1934. The Company has revised portions of its financial statements and legal
disclosure in response to comments made by the staff of the Securities and
Exchange Commission during their review of the Company's Registration Statement
on Form SB-2, which registers the resale of shares of the Company's common stock
owned by certain stockholders. This Form 10-KSB/A contains a restatement of the
Company's annual financial statements and related disclosure to reflect its
responses to those comments.`

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`FORWARD-LOOKING STATEMENTS

          This Annual Report on Form 10-KSB contains forward-looking statements.
The words "intend,"  "anticipate,"  "believe,"  "estimate," "plan" and "expect,"
and similar  expressions  as they relate to us, are  included to identify  these
forward-looking  statements.   Forward-looking  statements  include  those  that
address activities,  developments or events that we expect or anticipate will or
may occur in the future.  All  statements  other than  statements  of historical
facts contained in this Annual Report, including statements regarding our future
financial position,  business strategy,  budgets,  projected costs and plans and
objectives of management for future operations, are forward-looking  statements.
The actual outcome of the events described in these  forward-looking  statements
could differ materially.  Risks,  uncertainties and assumptions that could cause
actual  results to differ  materially  from the  expectations  reflected  in the
forward-looking statements include, among other things:

                   the risks associated with growth;

                   our  inability to purchase and  manufacture  merchandise  at
                    attractive prices;

                   changes in consumer demand and preferences that cause people
                    to desire products other than those traditionally offered by
                    Decorize; and

                   risks associated with our lack of liquidity.

These factors expressly qualify all subsequent oral and written  forward-looking
statements attributable to us or persons acting on our behalf.

          A forward-looking statement may include a statement of the assumptions
or bases  underlying the  forward-looking  statement.  We believe we have chosen
these assumptions or bases in good faith and that they are reasonable.  However,
we caution  you that  assumed  facts or bases  almost  always  vary from  actual
results,  and the differences  between assumed facts or bases and actual results
can  be   material,   depending   on   the   circumstances.   When   considering
forward-looking  statements,  you should keep in mind the risk factors and other
cautionary  statements in this Annual Report. Except for our ongoing obligations
to disclose material  information as required by the federal securities laws, we
do not have any  intention or obligation  to update  forward-looking  statements
after we distribute this Annual Report.

          Readers are referred to the caption  "Risk  Factors"  appearing at the
end of  Item I of this  report  for  additional  factors  that  may  affect  our
forward-looking   statements.  In  light  of  these  risks,   uncertainties  and
assumptions,  the  forward-looking  events  discussed  in this report  might not
occur.  We  undertake  no  obligation  to update or revise  our  forward-looking
statements, whether as a result of new information, future events or otherwise.


                                     PART I
Item 1.  BUSINESS


          General

          Our company, headquartered in Springfield, Missouri, is a manufacturer
and  wholesaler of imported home  furnishings  and home accent items.  Decorize,
Inc.  does business  under the names  "decorize.com,"  "GuildMaster"  and "Faith
Walk."

          We became a publicly  traded  company  in July 2001  through a reverse
merger with a reporting  company named  Guidelocator.com  and adopted its fiscal
year end of June 30.  Guidelocator.com  was a development stage company that was
formed to provide an internet database containing  information on fishing guides
around the


                                       1`

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`world. The merger has been accounted for as a  recapitalization  of Decorate,  a
predecessor of Decorize. After the merger, Decorize's common stock traded on the
over-the-counter market until it became listed for trading on the American Stock
Exchange in March 2002.  We did not pursue any fishing  guide  related  business
after the merger,  and our company has focused on the sale of furniture and home
decor  products to our  wholesale  customers  since that time.  We completed the
acquisition of  GuildMaster  in June 2001, and the  acquisition of Faith Walk in
July 2001, following the Guidelocator.com  merger, which expanded our operations
in the home accents and accessories business.

          The operations and the product focus of decorize.com, GuildMaster, and
Faith Walk were separate and distinct in mid-2001,  but since our  completion of
the acquisition and merger transactions,  all three entities have combined their
activities  into one company  and all have  migrated  to the  Decorize  business
model, which relies on manufacturing and importing our home furnishings products
direct from the Far East to our retailers' sites in the United States. More than
80% of the  products  we  sold  during  our  most  recent  fiscal  quarter  were
manufactured  by suppliers  located in the Far East.  Our direct  shipping model
allows us to minimize  the use of  intermediate  warehousing  facilities,  which
significantly reduces our cost of delivering products to our customers. Reducing
those  costs gives us greater  flexibility  in pricing  and  improves  our gross
margins.  Decorize  continues to  manufacture a small amount of its  GuildMaster
product in its Springfield, Missouri facility, but it is gradually replacing the
product volume in those  facilities with goods from our overseas  suppliers.  We
have  maintained the separate brand  identities of GuildMaster and Faith Walk so
that we can continue to build on the customer  awareness of those  brands.  Even
though there is substantial  commonality  in product  categories and in business
practices between the three Decorize  companies,  each of them has its own areas
of concentration:

     *    Faith  Walk   focuses  on   designing   hand-painted   furniture   and
          accessories;

     *    GuildMaster  focuses  on  designing  wall  art  and  special  designer
          collections; and

     *    decorize.com  focuses on designing and customizing  furniture,  accent
          pieces and accessories to meet the design needs of large retailers.

          We founded  decorize.com,  the company that became Decorize,  in March
2000  with  the  intention  of  creating  a direct  "source  to  business"  home
furnishings  and accents company that was designed to serve both large and small
United States retail  customers  with products  delivered  directly from the Far
East to those  United  States  retailers  on  orders  as small  as  $1,000.  Our
objective in evaluating our shipping  methods,  pricing,  product  offerings and
other  aspects of our  business  model is to enable our  operating  companies to
surpass competitors in our industry on product value, item uniqueness, selection
and delivery options of imported home furnishings  products by improving our use
of information technology,  logistics processes and our direct sourcing business
model. We believe that our customers focus on those factors when choosing a home
furnishings supplier, and if we can exceed the offerings of our competitors,  we
will continue increasing market share at the cost of our competitors.

          We use our "source to  business"  model to serve two  distinct  market
segments,  the source to large business segment and the source to small business
segment.  The source to large business  segment is comprised of large  retailers
that we believe can benefit from our pricing,  delivery  times and custom design
capability.  The small business segment includes small retailers,  designers and
decorators  that,  in our  experience,  have paid  premium  prices and have been
unable to directly source home furnishings and accents from overseas. We provide
products to those small retailers at lower prices on an  "international  freight
included"  basis that we believe has not previously  been made available to them
by our competitors in the home furnishings  industry.  The price of our products
includes the cost of freight to the United  States port of entry,  which reduces
the uncertainty about ocean freight costs that would otherwise be borne directly
by the small retailer.  Also,  because we have a significantly  higher volume of
shipping  orders  than  our  individual  customers  would  have,  we are able to
negotiate  lower per item  shipping  rates on the ocean freight that we arrange,
allowing us to pass through a lower cost than a small  retailer  would obtain on
its own account.


                                       2`

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`Our current customer revenue mix for all three Decorize business units
is  approximately  twenty  percent from small  business and eighty  percent from
large business  customers.  Based on our limited operating history, we expect to
experience  commensurate  levels of sales  increases in both our large and small
business segments.  As a result, we do not anticipate any significant changes in
our customer mix in the  foreseeable  future,  however,  we cannot  predict with
certainty whether or how our business mix will change in the future.

          decorize.com

          Our  decorize.com  brand  sources  its  products  from  a  network  of
manufacturing  partners in the Far East,  principally  China,  the  Philippines,
Thailand,  Indonesia  and  Vietnam.  Working  in  concert  with our  third-party
logistics providers,  we stage products in facilities located in those countries
for shipment directly to our retail customers in the United States. We call this
our "source to business"  model,  which enables us to provide our customers with
pricing that we believe is substantially  below traditional  wholesale levels in
the  home  furnishings  industry.  We are able to pass on  lower  prices  to our
customers  because we eliminate or reduce the additional costs that are required
in the traditional model for building substantial product inventories,  multiple
stage  warehousing and multiple  handling  levels by a third-party.  We estimate
that if we transitioned our delivery methods back to the more traditional model,
which is still used by a majority of our  competitors,  that increased  delivery
costs would cause our costs of goods sold to increase by up to 15%,  which would
likely result in a significant increase in the prices that would have to be paid
by our customers and a decrease in our operating margins.

          GuildMaster

          GuildMaster is a Missouri  corporation  that we acquired in June 2001.
When we acquired  GuildMaster,  all of the stock of GuildMaster was owned by Jon
T. Baker,  one of our  directors,  James K.  Parsons,  our  President  and Chief
Executive  Officer,  and Ellen  Parsons,  his  spouse.  The  purchase  price for
GuildMaster  was $2.5  million,  which we paid by issuing a $375,000  promissory
note to Mr. Baker and by issuing common stock worth approximately  $2,125,000 to
Mr. Baker, Mr. Parsons and Mrs. Parsons. We also assumed a $925,000 debt owed by
GuildMaster to Mr. Parsons, by issuing a $925,000 promissory note. The notes are
due in full on July 31, 2004 (pursuant to modifications  made soon after the end
of fiscal year 2002).  As part of the GuildMaster  transaction,  we entered into
employment agreements with Mr. Baker and Mr. Parsons.

          The GuildMaster brand includes custom,  high-end, home accent products
that are either produced to its  specifications by manufacturers  located in the
Far East or are manufactured in our Springfield,  Missouri facility. GuildMaster
ships a major part of its  products  directly  to  customers  from the  overseas
factories  of those  manufacturers.  It also  warehouses  some  products  at the
Springfield  facility and ships available inventory to retailers  throughout the
country.

          Decorize has  substantially  increased  the level of product  obtained
from the Far East by  GuildMaster  since it was  acquired  in June 2001,  and we
estimate that this  production  shift will  continue in the near future.  During
fiscal 2002, GuildMaster produced approximately 30% of its products domestically
in its  Springfield  facilities  (calculated  on the  portion  of sales  revenue
attributable  to such  products),  which in turn  represented  8% of our overall
product  revenues.  Decorize  estimates  that  during  the most  recently  ended
quarter,  domestic  production of  GuildMaster's  items was less than 30% of its
overall production, and less than 10% of Decorize's production on a consolidated
basis for that time period.  Our current business plan  contemplates a continued
shift of  GuildMaster's  production from its domestic  suppliers to suppliers in
the Far East, but we cannot  provide an exact  timetable for when all production
will be transferred  overseas.  Decorize intends to push production to suppliers
based on cost,  reliability and product  quality,  and if those factors shift to
the  advantage of certain  other  suppliers  in the future,  then our demand for
third-party production is anticipated to shift in the same manner to those other
suppliers.


                                       3`

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`Faith Walk

          Faith Walk is a Missouri  corporation  that we  acquired in July 2001.
Prior to the  acquisition,  Faith  Walk was owned by J.  Michael  Sandel and his
spouse. The purchase price for Faith Walk was $1.1 million.  We paid $284,000 of
the purchase  price in cash.  The  remainder  of the purchase  price was paid by
issuing  a  $216,000   promissory  note,  and  by  issuing  common  stock  worth
approximately  $510,000 to Mr. Sandel and his spouse. The note is due in full on
July 31, 2004 (pursuant to  modifications  made  subsequent to the end of fiscal
year 2002). As part of the Faith Walk transaction, we entered into an employment
agreement with Mr. Sandel.

          Faith Walk has  historically  sourced its products in  unpainted  form
from United States  suppliers and added design  finishing in its Houston,  Texas
manufacturing  facility.  Under our new "source to business" strategy, the Faith
Walk brand is creating  designs to be manufactured  entirely by our suppliers in
the Far East and then directly  shipping finished products to our retail clients
in the United  States.  We believe  that our direct  shipping  method will allow
Decorize to reduce  prices for Faith Walk items to its customers for its current
product  offerings,  while still  increasing its gross  margins,  by eliminating
unnecessary  third  party  warehousing  and  handling  costs.  Faith  Walk began
transitioning  its product  offerings to our "source to business"  model in late
2001,  and we expect to complete  moving all of its product  sourcing to the Far
East in fiscal 2003.

         Business Strategy

          The Decorize "source to business" model  eliminates  several layers of
handling and warehousing by importers and retailers. Products are sourced in the
Far East and shipped  directly to  retailers in the United  States.  We estimate
that a majority of our industry  competitors ship product through several levels
of third  party  warehouse  facilities,  which our  management  estimates  would
increase the cost of our products by up to 15%. Our  objectives in designing our
business model are based on the assumption that our competitors are experiencing
similar  impacts on the cost and timing of the  shipping  of their  products  to
retail and wholesale customers in the United States.

          We have developed support systems for manufacturing of our products in
the Far East, which provide product  development  support and quality  assurance
supervision  in the  production,  packaging  and  shipping of our private  label
products.  A very important  element of the Decorize model is a concentration on
designing and customizing  proprietary  product lines to meet specific  customer
needs.  The  Decorize  model  enables us to provide  high-volume,  high  quality
proprietary  products to large  retailers at attractive  prices and offers small
retailers  access to a broad range of accessories and accent furniture which was
previously not available to them.

          Our support systems consist primarily of quality control personnel who
oversee our manufacturing  done by our suppliers in the Far East.  Although they
are new to the Decorize team,  our overseas  employees are viewed by Decorize as
an integral part of our successful transition to the direct shipping method that
we prefer.  We do not believe that our transition could be accomplished  without
the  oversight,  management  and  first-hand  knowledge of our foreign  regional
suppliers  provided by our overseas  manufacturing  support  team.  Our overseas
support  team is headed by a manager  who  recently  relocated  to China,  after
spending several years at our headquarters as a key member of our operations and
logistic teams. Recently, Decorize has begun to expand the roles of our overseas
support team beyond mere quality  control into areas of product  development and
product procurement of items that are available in the Far East, and which would
not likely have become part of our product offerings without our overseas staff.
Currently,  Decorize  employs  eight  persons  overseas,  but we  intend to hire
several  more this year.  The focus  will  continue  to be on  quality  control,
regarding items such as consistency to design  requests,  manufacturing  quality
and packaging and delivery  issues,  but we will continue to seek  opportunities
for them to provide  assistance  on  procurement  and  development  of  possible
product offerings.

          We are expanding our product  sourcing,  development  and  warehousing
operations in the Far East to support the increasing  volumes of product sourced
there under our business model. At the same time, we are continuing to build our
sales staff in the United  States in order to improve our ability to present our
products and services to a growing customer base.


                                       4`

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`On the  operational  level,  we  continue  to  implement  and  improve
technology  solutions that enable us to work closely with suppliers,  as well as
customers to plan and track orders, production status and deliveries in order to
meet demanding  production and delivery timelines.  We are currently  installing
new telephony and information  systems at a cost in excess of $150,000.  Our new
information  systems are designed to increase our internal operating  efficiency
and  improve  internal  communication  capabilities,  to track the status of our
products  and to improve  communications  with our overseas  vendors,  our third
party logistics suppliers,  and our United States customers.  One example of our
communications  improvements  is the  process  developed  by  Decorize  and  our
third-party  logistics  suppliers that makes it possible to track orders and the
delivery of merchandise to our customers,  which is essential to our direct ship
business  model since we have little retail or warehousing  capabilities  of our
own to rely upon. See "- - Warehousing  and  Distribution".  We will continue to
seek  upgrades  in  our  technology   infrastructure   that  improve   operating
efficiencies,  improve customer service  capabilities and/or improve quality and
cost control in our operations. There are no specific upgrades currently planned
for 2003,  however,  our current  forecasts  call for us to spend up to $100,000
toward technology upgrades for each fiscal year.

          Although we are currently  focusing our efforts on limited  categories
and products which are most productive for us, our long-term  strategy  includes
the acquisition or in-house  development of additional  product  categories that
will  enable us to offer a broad  line of  accessories,  accent  furniture,  and
related  categories.  Potential product  categories into which we may expand our
product offerings include specialty lighting, gifts,  institutional furnishings,
ironwork  and  florals,  which are product  areas in which we are not  currently
well-represented. We also intend to develop our current staff and management and
operational  infrastructure in order to pursue marketing  opportunities  that we
have  identified  in new  product  areas  in  customer  markets  that we are not
currently  pursuing.  In that regard, we intend for our overseas support systems
to  increasingly  be  responsible  for  developing  new  product   offerings  by
researching  items that may be available  in the overseas  market for which they
are responsible.  We expect that we will need to raise additional external funds
to implement our growth strategy in a timely fashion.  To that end, we expect to
evaluate various  financing  opportunities in private or public markets and will
arrange financing when appropriate terms are available.

          Merchandise

          We  manufacture  and sell  imported home  furnishings  and home accent
items such as chests, tables, chairs, painted furniture,  paintings,  sculpture,
tapestries,  other fine art pieces,  various hand-made ceramics,  candles, lamps
and similar accessory items.  Products designed and manufactured by us include a
broad  array of home  furnishings,  including  larger  furniture  items  such as
hand-painted  or  traditionally  finished  armoires,  chests,  large  tables and
chairs.  Accent furniture  includes items such as occasional tables, end tables,
mirrors, wicker chairs and tables, and ottomans.  Accessories include items such
as  wood,  rattan,  glass or  ceramic  bowls,  statuettes,  vases,  candles  and
candleholders, baskets, boxes, lamps and bath items. Wall art includes a variety
of traditional art such as framed oil paintings or prints,  but it includes many
other types of materials  and designs  including  fabrics,  woven  materials and
collages.   Faith  Walk  focuses  on  designing   hand-painted   furniture   and
accessories,  GuildMaster  focuses on  designing  wall art and special  designer
collections,  and decorize.com  focuses on designing and customizing  furniture,
accent pieces and accessories to meet the design needs of large retailers.

          Currently, decorize.com focuses on the following product lines:

               - the  design  and  supply  of  custom  furniture,  such  as
          traditionally  finished  armoires,  tables,  chairs  and  storage
          units, which are intended for frequent use by the consumer;

               - the design and supply of accent pieces for the home,  such
          as mirrors, wicker chairs and tables,  ottomans, and lamps, which
          are  designed  as much for  their  aesthetic  value as for  their
          actual utility; and

               - the design and supply of accessory  items,  such as lamps,
          candles, glass and ceramic bowls and figurines,  vases and boxes,
          which primarily fulfill the design needs of the retail customer.


                                       5`

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`The main customers of decorize.com are typically large retailers, who market the
products supplied by Decorize to the end user retail customers that shop at
their brick and mortar store locations. The product mix supplied to those
retailers depends upon their perception of customer demand of the consumers who
shop and purchase product at those store locations.

          The main product lines for GuildMaster are the following:

               -  the  design  and  manufacture  of  wall  art,   including
          tapestries,  paintings and  decorative  ceramic and glassware for
          the home; and

               - the design and production of special designer  collections
          of home accent  items,  such as candles,  glass and ceramic bowls
          and figurines, vases and boxes.

The main customers of GuildMaster are typically large retailers, who market the
products supplied by GuildMaster to the end user retail customers that shop at
their brick and mortar store locations. The product mix supplied to those
retailers depends upon their perception of customer demand of the consumers who
shop and purchase product at those store locations.

          Faith Walk's principal  product  offerings are hand painted  furniture
and accessories for the home.  Faith Walk products include  specialty  armoires,
chests,  large tables and chairs, which are typically used by home consumers who
wish a more  lively  decor  than may be offered  by more  traditional  furniture
products.  In  addition,  Faith Walk offers hand  painted  accessories  that are
purchased by more  high-end  consumers.  Some of these  accessory  items include
mirrors, vases, table lamps and candleholders. Faith Walk historically had those
items  manufactured for it in the United States, but completed the hand painting
and design of the specialty products itself.  However, under our direct shipping
model,  it has  transitioned  to a  supplier  base in Asia  that  completes  the
manufacture  and final  preparation  of those  hand  painted  items.  Faith Walk
supplies a substantial portion of its product to small retailers and independent
designers who market and sell the product directly to their clients.

          Since  our  inception,   we  have  not   experienced  any  significant
difficulty  in  manufacturing  or otherwise  obtaining  quality  merchandise  in
adequate volumes and at suitable prices.

          Suppliers

          We have developed a network of more than 30 supply  partners in China,
the  Philippines,  Thailand,  Indonesia and Vietnam that manufacture most of the
products we sell to our customers.  For the year ended June 30, 2002, Decorize's
top ten vendors accounted for  approximately 48% of our total purchases.  During
the  time  spent   arranging   the   production   of  our  goods  with  overseas
manufacturers,  Decorize  and  its  supply  partners  are  developing  a  better
understanding  of each other's needs and  requirements.  As our supply  partners
become more familiar with  Decorize's  business model and products,  they become
more adept at meeting our design and manufacturing needs, which gives us greater
confidence in continuing  to direct  orders to those  overseas  vendors who have
demonstrated  success  in  working  with  us  and  increasing  our  reliance  on
particular  supply  partners  for  meeting  our  overseas  manufacturing  needs.
However,  we believe  that none of our  suppliers  is material  to our  business
individually,  since there are a number of  alternative  suppliers  available to
manufacture  our products in both the Far East and other parts of the world.  We
currently  estimate that the largest of those suppliers will represent less than
38% of our product  purchases  during any fiscal year.  We work closely with our
overseas  suppliers to ensure that they  manufacture and ship products that meet
our requirements.

          The raw materials used by our suppliers, such as wood products, metal,
glass and ceramics are readily  available in many places  throughout  the world.
Because of the  availability of replacement raw materials,  we do not anticipate
any  significant  difficulties  in  obtaining  suitable  raw  materials  for the
manufacture of our products, even if there is ever a shortage of those materials
in any particular country or region in which our suppliers are located.


                                       6`

---

`Our  relationship  with  our  logistics  companies  provides  us  with
state-of-the-art  staging and  warehousing  facilities  in the  Philippines  and
China.  However, if it is necessary,  Decorize has alternative sources for those
staging and warehousing services.

          Customers

          The current customer base for our three brands includes  approximately
twelve large retailers and more than a thousand small  retailers,  designers and
decorators.  During the year ended June 30,  2002,  our customer  revenues  were
approximately  $14  million.  Although  our top five  customers in the past year
accounted for  approximately  35% of our revenues,  the continuing growth of our
business  and the  number of our  customers  is  expected  to result in  greater
revenue  diversification.  During fiscal 2002,  our top five  customers from the
standpoint  of  revenues  were  Home  Depot  Expo,  Sears - The  Great  Indoors,
Dillards,  Rooms  To Go and  Hancock  Fabrics.  Our  purchase  orders  with  our
customers are completed on a purchase-by-purchase basis, and we have not entered
into any long-term  purchase  agreements  with any customers,  nor are there any
formal volume commitments from any of them.

          Industry and Competition

          We estimate  that the premium  home  accents  and  accessories  market
segment  of the home  furnishings  industry  in which we  compete  accounts  for
approximately $40 billion of sales at the wholesale level, which is generated by
approximately 26,000 companies within this segment. We believe that there are no
dominant  competitors  within the premium  home accents and  accessories  market
segment of the home furnishings industry.  Furthermore,  we are not aware of any
other  competitor  in the  industry  that  relies  on the  Decorize  "source  to
business" model for delivery of its home furnishings products.

          There is intense competition in our industry. However, we believe that
our low-cost business model, the ability to provide highly customized  products,
our successful selection/design of fashion trends, our large number of products,
our low inventory  requirements and our intensive  customer  service  practices,
will  attract  a growing  number  of  customers  and will  allow us to  increase
revenues rapidly.  We also expect to have  opportunities to acquire companies in
the  industry  that  can  benefit  from our  business  model.  Our  model is not
protected from  duplication and it is possible that other companies will compete
with us by using a similar approach in conducting their business.

          Foreign Market Risks

          As an importer of manufactured  products from several countries in the
Far East,  our  business  is  subject  to  political  risks  that are beyond our
control.  Since our  inception,  we have perceived the greatest risk relative to
our supply chain to come from our suppliers  located in China.  This  perception
arises because most of our products are  manufactured  in China, as evidenced by
the fact that during fiscal 2002,  over 50% of the products  manufactured by our
third party suppliers were manufactured in China.  However,  we believe that the
globalization  movement  and the recent  focus on  reduction  of tariffs and the
planned ongoing  reductions should provide a beneficial  tariff  environment for
importers.  We  believe  that the  recent  entry of China  into the World  Trade
Organization  should  substantially  reduce  the  risk  that  China  might  take
political  actions that would  restrict its trade with the United  States or the
rest of the world.  Our strategy to minimize our exposure to the political risks
of any one  country  has been to  develop  manufacturing  partners  in  multiple
countries.  All of the products  offered by Decorize are available from multiple
supply sources in several different countries, which we believe protects us from
the political risks of any one country or region.

          We are also subject to governmental  regulations and tariff  policies,
which may change from time to time. We believe that the increased  globalization
of the United States retail  economy,  which has been spurred in part by the WTO
and also the  broadened  reach of consumers  because of the  expansion of retail
capabilities of the internet, are causing a global shift in attitudes toward the
preference  for a more open  world-wide  economy.  These trends should favor the
reduction of tariffs and expansion of international  trade, which should benefit
our business.


                                       7`

---

`Warehousing and Distribution

          An important  aspect of our success  involves our ability to reduce or
eliminate  warehousing  of our  products  and the related  direct  expenses  and
management  costs that would be required.  The greater part of the products sold
by our  operating  divisions are not  warehoused  at our expense,  since we have
those products  shipped  directly from our  manufacturers in the Far East to the
retailer stores or distribution  centers  operated by our retail  customers.  We
deliver goods via large shipping  containers to certain customers and use common
and contract  carriers to distribute  smaller  amounts of  merchandise  to other
customers.  Quick and efficient distribution is required to meet customer needs,
and we are continually pursuing improvements in the delivery process.

          Our ability to track orders and merchandise delivery in a detailed and
timely  manner is an essential  requirement  for us to eliminate  warehouse  and
retail  capacity  under our direct  ship  model.  In  response  to this need for
detailed  order  information,  Decorize  developed  a tracking  system  with our
third-party  logistics  suppliers that uses computer and internet  technology to
track  the  transport  and  storage  of our  goods  down to the SKU  level.  The
logistics  technology we use lets us know in real time where our  merchandise is
at all times and when those products will be delivered to our customers.  We can
also track costs in the same detailed and timely fashion using this  technology.
Since we first began  developing  our direct ship  model,  we have  consistently
sought the  services of those  third-party  logistics  providers  which have the
capabilities to make the technology  available to us, since the ability to track
our orders, merchandise and costs is such a significant benefit to that shipping
model.  Decorize has no intellectual  property rights in the tracking process or
the technology used in the tracking process,  however, we believe that there are
a significant number of other logistics  suppliers that would be able to provide
the same  technology and, with our  assistance,  duplicate the tracking  process
that we currently use.

          Management Information Systems

          We maintain a corporate  local area  network  computer  system,  which
integrates purchase orders, imports, transportation, distribution, and financial
systems.  Expenditures for continuing upgrades of management information systems
are anticipated in the foreseeable future to refine and update these systems.

          Trademarks and Tradenames

          We  completed  the  registration  for the  service  mark "The  World's
Décor...Right to your Door," on September 2, 2002, with the United States Patent
and Trademark office.  The registration for "The World's Decor ... Right to your
Door" will terminate in 10 years from grant,  or may be cancelled  after 6 years
if we do not file the appropriate documents evidencing our continued use of that
mark. Our application for the service mark "Decorize" was filed in April 2002.

          In  addition,  we have common law rights to the use of  "decorize.com"
and "The World's  Décor....Right to your Store," however,  we have not chosen to
complete an application for registration of those marks at this time.

          Employees

          As of June 30, 2002, we employed 62 persons, all of whom were employed
on a full-time  basis.  Our employees are not  represented by any union. We have
not experienced any work stoppage due to labor disagreements and we believe that
our employee relations are good.


                                       8`

---

`Risk Factors

Our limited  operating  history makes it difficult for us to evaluate our future
business  prospects and make  decisions  based on those  estimates of our future
performance.

          The concept for  Decorize's  business model was developed in 2000. The
acquisitions of our two operating  subsidiaries  were completed in June 2001 and
July 2001,  respectively.  Even though  these two  operating  subsidiaries  have
operated independently for some time, we have a limited operating history in our
current  combined form, which makes it difficult to evaluate our business on the
basis of historical  operations.  Also, our largest brand,  decorize.com,  which
accounted  for  approximately  47% of our  sales in fiscal  2002,  has only been
operational  since April 2000.  As a  consequence,  our past  results may not be
indicative of future  results.  Although  this is true for any  business,  it is
particularly true for us because of our limited operating  history.  Reliance on
historical  results may hinder our  ability to  anticipate  and timely  adapt to
increases  or  decreases in sales,  revenues or  expenses.  For  example,  if we
overestimate  our future sales for a particular  period or periods  based on our
historical  growth  rate,  we may  increase  our  overhead  and other  operating
expenses to a greater degree than we would have if we correctly  anticipated the
lower  sales  level  for that  period  and  reduced  our  controllable  expenses
accordingly.  If we make poor  budgetary  decisions  as a result  of  unreliable
historical  data, we could be less profitable or incur losses,  which may result
in a decline in our stock price.

We have  incurred  losses  historically,  and we may not be  able to  attain  or
maintain profitability.

          We  incurred  a net loss of  $665,881  for the  period  March 6,  2000
(inception)  to December 31, 2000, a net loss of $809,149 for the period January
1, 2001 to June 30, 2001 and a net loss of $2,016,842  for the fiscal year ended
June 30, 2002. We may incur additional operating losses in the future.  Although
our revenues increased significantly in fiscal year 2002, our operating expenses
also  increased  substantially.  We cannot assure you that our operating  losses
will continue to decline,  even if sales  continue to increase.  We will need to
generate greater  revenues to achieve and maintain  profitability in the future.
If our  operating  losses  continue  on a long-term  basis,  our stock price may
decline, perhaps significantly, and you could lose the value of your investment.

Our customers have no obligation to purchase from us, which may result in sudden
declines in sales.

          Our  customer mix  currently  consists of  approximately  twelve large
retailers,  and more than a thousand small retailers,  designers and decorators.
We do not have supply agreements or other volume commitments that are binding on
our customers,  and our sales originate  solely from individual  purchase orders
that we negotiate with our individual customers. As a consequence, our customers
are not  obligated to purchase any amount of our products and they may choose to
stop or decrease their level of product  purchases from us at any time,  without
giving us prior notice.  This could cause our sales to  fluctuate,  and we could
experience  a sudden  and  unexpected  decline  in  sales.  We could  experience
unexpected   operational   losses  if  our   customer   sales  were  to  decline
significantly without notice.  Furthermore,  our revenue projections are subject
to greater uncertainty than if we had volume commitments from one or more of our
largest customers. Although our top five customers in fiscal year 2002 accounted
for  approximately  35% of our revenues in that year,  we cannot assure you that
these customers, or any of our customers, will continue to purchase our products
in significant volume, or at all.

          We are implementing a strategy to grow and expand our business,  which
is expensive and may not generate increases in our revenues.

          We  intend to  expand  our  business,  and we are  incurring  expenses
associated  with our growth and  expansion.  Although we recently  raised  funds
through private offerings to implement our growth strategy,  these funds may not
be adequate to offset all of the expenses we incur in expanding our business. As
part of our growth strategy,  we have expanded our technology  infrastructure by
installing  new  telephony  and  information  systems  at a cost  in  excess  of
$150,000. In addition, during the last fiscal year we hired additional personnel
in the United  States and  overseas,  which  caused our  operating  expenses  to
increase.  We intend  to hire  additional  employees  overseas  and to  continue
upgrading our technological infrastructure to improve quality and cost controls,
operating efficiency


                                       9`

---

`and customer service capabilities.  We will need to generate greater revenues to
offset  expenses  associated  with our  growth,  and we may be  unsuccessful  in
achieving  greater revenues,  despite our attempts to grow our business.  If our
growth  strategies do not result in increased  revenues,  we may have to abandon
our plans for further growth or even reduce the current size of our operations.

We may need to raise additional funds, and these funds may not be available when
we need them.

          Based on our current plans, we are adjusting our operating expenses so
that cash generated from operations and from working capital financing and other
short term financing is expected to be sufficient for the foreseeable  future to
fund  our  operations  at  our  currently  forecasted  levels.  However,  if our
forecasts are inaccurate,  we will need to raise additional  funds. In addition,
we  expect  that we will need to raise  additional  funds if we decide to pursue
more rapid expansion,  the development of new or enhanced services and products,
appropriate   responses  to  competitive   pressures,   or  the  acquisition  of
complementary businesses or technologies, or if we must respond to unanticipated
events that require us to make additional investments. There can be no assurance
that additional  financing will be available when needed on favorable  terms, or
at all. If these funds are not available when we need them,  then we may need to
change our business strategy and reduce our rate of growth.

We must effectively  manage the growth of our operations,  or we may outgrow our
current infrastructure.

          During the period from June 1, 2001 to June 30, 2002, our total number
of employees  increased from 7 to 62. We experienced high sales growth in fiscal
year 2002,  which at times  exceeded  the  capacity  of our  infrastructure  and
resulted in a backlog of customer orders. We were able to resolve those capacity
issues  by  hiring   additional   personnel   and   upgrading   our   technology
infrastructure,  and we will continue  pursuing  additional sales growth for our
company.  If we expand too quickly,  or if our  infrastructure  does not improve
rapidly enough,  our customer orders could again outpace our ability to meet our
customers'  needs,  which  could  force us to delay or reduce  customer  orders.
Expanding our infrastructure will be expensive, and will require us to train our
workforce,  and improve our financial and managerial  controls to keep pace with
the growth of our operations.

We  may  engage  in  acquisitions,  which  will  consume  resources  and  may be
unsuccessful or unprofitable.

          We may explore the possibility of acquiring other businesses; however,
acquisitions are not always  successful or profitable.  Any future  acquisitions
could expose us to risks,  including  risks  associated  with  assimilating  new
operations, technologies and personnel; diversion of resources from our existing
businesses;  inability  to generate  revenues  sufficient  to offset  associated
acquisition  costs;  and  risks  associated  with  the  maintenance  of  uniform
standards,  controls,  procedures and policies.  Acquisitions may also result in
additional expenses from amortizing acquired intangible assets. If we attempt an
acquisition  and  are  unsuccessful  in its  completion,  we will  likely  incur
significant expenses without any benefit to our company. If we are successful in
completing an  acquisition,  the risks and other problems we face may ultimately
make  the  acquisition   unprofitable.   Failed  acquisition   transactions  and
underperforming  completed  acquisitions  would burden us with significant costs
without any  corresponding  benefits to us, which could cause our stock price to
decrease, perhaps significantly.

We face substantial competition from numerous sources, many of which have access
to better resources.

          Competition in the wholesale  market for home  furnishings is intense.
We compete with a diverse group of wholesalers  ranging from internet businesses
to traditional  brick-and-mortar companies, many of which have greater resources
than Decorize.  We believe that barriers to entry in the wholesale furniture and
home  furnishings  market are not  significant and start-up costs are relatively
low, so our  competition  may increase in the future.  Our belief that there are
minimal  barriers to entry is based on our  observation  that operations such as
Decorize's  do not require the  wholesalers  to own  warehouses,  showrooms  and
factories  to operate,  which we think is because  (i) our direct ship  business
model can be  operated  with  minimal  warehousing  needs and  costs,  which are
significantly less than traditional models, (ii) wholesale product orders can be
placed after receipt of customer orders, in order to further reduce  warehousing
needs, (iii) samples can be shown to customers at little or no cost, without the
necessity  of showroom  space for actual  product,  (iv) if a  competitor  wants
showroom space, it is typically available for lease at


                                       10`

---

`competitive  rates in most United States markets,  and (v) all manufacturing can
be done  by  third  party  suppliers,  so  there  is no  need to own or  lease a
manufacturing  facility.  New  competitors  may be able to launch new businesses
similar to ours, and current  competitors may replicate our business model, at a
relatively low cost. If wholesalers with  significantly  greater  resources than
Decorize  decide to replicate  our business  model,  they may be able to quickly
gain  recognition and acceptance of their business  methods and products through
marketing and  promotion.  We may not have the resources to compete  effectively
with current or future competitors.  If we are unable to effectively compete, we
will lose sales to our competitors and our revenues will decline.

Our  directors  have the ability to  significantly  influence  any matters to be
decided by the  stockholders,  which may prevent or delay a change in control of
our company.

          The current members of our Board of Directors beneficially own, in the
aggregate, approximately 58% of our common stock, on a fully diluted basis. As a
result,  if they choose to vote in concert,  our directors are collectively able
to significantly influence the outcome of any corporate matters submitted to our
stockholders  for approval,  including any transaction that might cause a change
in control, such as a merger or acquisition. It is unlikely that stockholders in
favor of a matter  that is opposed by the board of  directors,  would be able to
obtain the number of votes necessary to overrule the board.

Because we do not  manufacture  or warehouse  most of our products in the United
States,  a disruption  in the  delivery of imported  products may have a greater
effect on us than on our competitors.

          We  primarily   import   products  that  we  have   purchased  or  had
manufactured for us overseas.  Merchandise imported directly from these overseas
manufacturers  currently  accounts for approximately 85% of our total purchases.
Because we import the majority of our products and deliver them  directly to our
customers, we believe that disruptions in shipping deliveries may have a greater
effect on us than on competitors  who  manufacture or warehouse  products in the
United States.  Deliveries of our products may be disrupted through factors such
as:

          (i)  raw  material   shortages,   work  stoppages,   strikes  and
               political unrest;
          (ii) problems with ocean  shipping,  including work stoppages and
               shipping container shortages;
          (iii)increased  inspections of import  shipments or other factors
               causing  delays  in  shipments;  and
          (iv) economic crises, international disputes and wars.

          The delays  from this  dispute  resulted in the  cancellation  of some
customer  orders,  since we could not obtain  products from overseas in a timely
manner.  Although  we managed to  minimize  the impact of the  delays,  a longer
dispute  could  have  placed  us  at a  serious  disadvantage  to  some  of  our
competitors.  Most of our competitors  warehouse  products that they import from
overseas,  which  allows  them to continue  delivering  their  products  despite
overseas  shipping  disruptions,  at least in the short term. If our competitors
are able to deliver  products when we cannot,  our reputation may be damaged and
we may lose customers to our competitors.

If we were  required to purchase  our  imported  products in foreign  currencies
instead  of  United  States  dollars,  we  would be  subject  to  currency  rate
fluctuations.

          Currently,  the  products  we buy abroad  are priced in United  States
dollars,  so we are not directly  affected by changes in foreign exchange rates.
If we are required to pay for goods in foreign currencies in the future, then we
would be affected by fluctuating currency exchange rates. In that event, we will
attempt to enter into foreign currency  exchange  contracts with major financial
institutions to hedge the overseas purchase  transactions and limit our exposure
to those  fluctuations.  If we were not able to successfully  protect  ourselves
against  those  currency  rate  fluctuations,  then our profits on the  products
subject to those fluctuations would also fluctuate and could cause us to be less
profitable or incur losses, even if our business is doing well.


                                       11`

---

`We may need to substantially increase our marketing efforts in order to grow our
business, which is expensive.

          In order to grow our  business,  we will need to develop and  maintain
widespread  recognition and acceptance of Decorize,  our business model, and our
products. We believe that we have presented our product offering to only a small
percentage of the large and medium sized  retailer  market.  Currently,  we rely
primarily on word of mouth from our existing  customers  and contacts we develop
personally  through industry events to promote and market Decorize.  In order to
successfully grow Decorize, we may need to significantly  increase our financial
commitment to creating  awareness and  acceptance of Decorize  among  retailers,
which  would be  expensive.  If we fail to  successfully  market and promote our
business,  we could lose  current  customers to our  competitors,  or our growth
efforts may be  ineffective.  If we incur  significant  expenses  promoting  and
marketing Decorize, it could cause our profitability to decline.

Our  businesses  are  not   diversified,   which  could  result  in  significant
fluctuations in our operating results.

          All of our business is involved in the retail and wholesale  marketing
of furniture and other home products,  and  accordingly is dependent upon trends
in the home furnishings  sector.  Downturns in the home furnishings sector could
have a  material  adverse  effect  on  our  business.  A  downturn  in the  home
furnishings  sector  may  reduce  our  stock  price,  even  if our  business  is
successful.

We have not paid dividends in the past, and do not anticipate  paying  dividends
in the future.

          We have not paid or  declared  cash  dividends  to the  holders of our
common stock, and do not intend to do so in the foreseeable future. We intend to
use any excess funds from our operations to operate and grow Decorize. We cannot
assure you that we will ever pay dividends to the holders of our common stock.

Our forward-looking statements may prove to be inaccurate.

          This Annual Report contains  "forward-looking  statements"  within the
meaning of Section 27A of the  Securities  Act and  Section 21E of the  Exchange
Act, including  statements about Decorize's  forecasts,  expectations,  beliefs,
performance,  plans, strategy,  objectives, and intentions.  Although we believe
that  the  forecasts,  expectations,   beliefs,  performance,  plans,  strategy,
objectives and intentions  reflected in, or suggested by, those  forward-looking
statements are reasonable, it is possible that one or more, or even all, of them
may not be achieved or  realized.  Factors  that could cause  actual  results to
differ  materially from the  forward-looking  statements made in this prospectus
are set forth in this "Risk Factors"  section.  All  forward-looking  statements
attributable  to Decorize are  qualified in their  entirety by those  cautionary
statements. Forecasts are particularly likely to be inaccurate,  especially over
long periods of time.

Item 2. DESCRIPTION OF PROPERTIES

          We operate each of our businesses in leased facilities.  Our corporate
headquarters   and  the  operations  of  decorize.com  are  housed  together  in
approximately  9,600 square feet in one building in Springfield,  Missouri.  Our
rent for this space is $3,500 per month.  The facilities are in good  condition.
The initial term of the lease for our corporate headquarters terminates on April
15, 2003. We have an option to renew the lease for two renewal terms of one-year
each  following  the current term.  We  anticipate  that if additional  space is
required  within  the  next 12  months  for our  headquarters  and  decorize.com
operations,  then such  space will be  available  in the  Springfield  area on a
reasonable  commercial  basis. In addition,  we lease two spaces of 1,600 square
feet and 2,400 square feet in one building in  Springfield,  Missouri.  Our rent
for these two spaces is $860 and $1,100  per  month,  respectively.  Each of the
leases terminates on April 30, 2003.

          Decorize  manufactures  and warehouses  GuildMaster  items in a 41,250
square feet facility in Springfield,  Missouri.  The lease  agreement  currently
provides  for a monthly  rent  payment  of  $9,860.  The  lease on the  building
terminates  on November 30,  2006,  and there are options to renew the lease for
two additional five-year periods.


                                       12`

---

`The  Springfield  facility  is in good  condition,  and we believe  the space is
adequate for GuildMaster's operations for the foreseeable future.

          GuildMaster also leases two showroom  facilities at furniture markets,
one of which is 8,951 square feet of showroom in High Point, North Carolina, and
the other is approximately 760 square feet in Atlanta,  Georgia.  The High Point
showroom lease  terminates on April 30, 2008. The rent for the period  beginning
May 1, 2002 and ending April 30, 2005,  is $10,070 per month with an increase to
$11,189 per month for the remaining  three years of the lease. We have an option
to renew the lease for one five-year period. The Atlanta showroom is leased on a
month-to-month  basis for $1,074 per month with a 30-day cancellation notice. We
believe  adequate  space  is  available  in the  Atlanta  area  on a  reasonable
commercial basis should the current lease not be renewed.

          Faith Walk's offices are located in a leased  facility of 9,000 square
feet in Houston,  Texas.  Our rent for this facility is $3,630 per month and the
lease terminates on July 31, 2003. The facility is in good condition. We believe
the space is adequate for Faith Walk  operations for the current  period.  We do
not have a renewal  option as part of this lease.  We believe  adequate space is
available  within the Houston area on a reasonable  commercial  basis should the
current lease not be renewed.  However,  we are in the process of  transitioning
all of Faith Walk's  operations to Springfield,  Missouri,  so we do not plan to
maintain facilities in Houston following the expiration of this lease.

          Faith  Walk  also  leases   showroom   space  from  a   manufacturer's
representative  group  in  Atlanta,  Georgia  on a  month-to-month  basis.  This
showroom, which is approximately 790 square feet, is leased for $1,255 per month
with a 30-day cancellation notice period.

          We maintain  insurance for physical loss on all  properties  described
above,  and we  believe  that the  amount of this  insurance  coverage  provides
adequate protection.

Item 3. LEGAL PROCEEDINGS

          We are not  aware  of any  legal  proceedings  pending  or  threatened
against us that we expect would have a material  adverse effect on our financial
condition or results of operations.

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

          No matters were submitted to a vote of our security holders during the
year ended June 30, 2002.

                                     PART II

Item 5. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

          Shares  of our  common  stock  began  trading  on The  American  Stock
Exchange  on  March 8,  2002,  under  the  symbol  "DCZ".  The  following  table
summarizes  the highest and lowest  reported  sales price per share for the last
two fiscal quarters of 2002 following the listing of the common stock on AMEX.

                                                       High              Low

          Fourth Quarter                               4.38              3.10
          Third Quarter (March 8-March 31)             4.49              3.50

          Previously,  our  common  stock  was  traded  on the  over-the-counter
bulletin board under the symbol "DCRZ".  The following table summarizes the high
and low historical bid quotes reported by the OTCBB  Historical Data Service for
the periods indicated.


                                       13`

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`High                  Low

Third Quarter 2002 (through                    4.10                  3.10
   March 7, 2002)
Second Quarter 2002                            4.45                  1.80
First Quarter 2002                             3.90                  1.50
Fourth Quarter 2001                             .03                   .03
Third Quarter 2001                            .0413                 .0413
Second Quarter 2001                             **                    **
First Quarter 2001                            .0075                 .0030

**       No trades reported by the OTCBB

          We had  approximately  250 beneficial  owners of its common stock,  as
well as 85, which were of record as of September 15, 2002.

          We have  not  paid  cash  dividends  on its  common  stock  since  its
inception.  The  Board of  Directors  does not  anticipate  payment  of any cash
dividends in the  foreseeable  future and intends to continue its present policy
of retaining earnings for reinvestment in our operations.

Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

          Critical Accounting Policies

          The preparation of financial  statements in conformity with accounting
principles  generally accepted in the United States requires  management to make
estimates and assumptions  that effect the amounts  reported in the accompanying
financial  statements and related footnotes.  Management bases its estimates and
assumptions on historical experience,  observance of industry trends and various
other sources of information and factors. Actual results could differ from these
estimates. Critical accounting policies are defined as those that are reflective
of significant  judgments and  uncertainties,  and  potentially  could result in
materially  different  results  under  differing   assumptions  and  conditions.
Decorize   believes  the  following   critical   accounting   policies   require
management's most difficult, subjective and complex judgments.

          Goodwill - Effective July 2001, we adopted the provisions of Statement
of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible
Assets",  which was issued by the Financial Accounting Standards Board (FASB) in
July 2001. SFAS NO. 142 required that an intangible asset that is acquired shall
be initially  recognized and measured based on its fair value. SFAS No. 142 also
provided  that  goodwill  should  not be  amortized,  but  shall be  tested  for
impairment  annually,  or more frequently if  circumstances  indicate  potential
impairment,  through a comparison of fair value to its carrying amount. Decorize
did not  identify  or  record  any  impairment  with  the  adoption  of this new
standard.

          Revenue  Recognition - Revenue is recognized when the earnings process
is complete and the risks and rewards of ownership of the goods have transferred
to the customer,  which is generally considered to have occurred upon receipt of
the products by the customer.

          Allowances for Doubtful Accounts - We maintain allowances for doubtful
accounts for estimated  losses  resulting from the inability of our customers to
make required  payments.  We perform ongoing credit evaluation of our customers'
financial  condition  and if the financial  condition of our  customers  were to
deteriorate,  resulting  in an  impairment  of their  ability to make  payments,
additional allowances would likely be required.  Actual collections could differ
materially from our estimates.

          Accounting  for Business  Combinations  - The  companies  that we have
acquired  have  all been  accounted  for as  business  combinations.  Under  the
purchase  method of  accounting,  the cost,  including  transaction  costs,  are


                                       14`

---

`allocated to the underlying net assets, based on their respective estimated fair
values.  The excess of the purchase  price over the estimated fair values of the
net assets acquired is recorded as goodwill.

          The  judgments  made in  determining  the  estimated  fair  value  and
expected useful lives assigned to each class of assets and liabilities  acquired
can significantly  impact net income.  For example,  different classes of assets
will have useful lives that differ.  Consequently,  to the extent a longer-lived
asset is ascribed  greater value under the purchase  method than a shorter-lived
asset, there may be less amortization recorded in a given period.

          Stock Options - In accordance with Accounting  Principles  Board (APB)
No. 25 and related interpretations,  we use the intrinsic value-based method for
measuring  stock-based  compensation cost with required pro forma disclosures of
compensation  expense  determined  under the fair value  method of SFAS No. 123,
Accounting for Stock-Based Compensation.  For options that have been modified we
have applied Financial  Accounting  Standards Board  Interpretation  No. 44 (Fin
44),  Accounting  for Certain  Transactions  Involving  Stock  Compensation,  an
Interpretation  of APB No. 25, effective July 1, 2000. We have also adopted SFAS
No. 148, Accounting for Stock-based Compensation - Transition and Disclosure.

Results of Operations and Comparison of Prior Year Periods

          The following  table  presents  certain  items  included in Decorize's
consolidated  statements  of  operations,  a copy of which is  included  in this
prospectus,  and the percentage of total revenues for the periods indicated. All
such data should be read in conjunction with, and is qualified in their entirety
by reference to, our financial statements and accompanying notes.

   Fiscal Year Ended June 30, 2002 and Twelve Month Period Ended June 30, 2001

                           2002                           2001                     Change

Sales (net)             14,081,833      100.0%     1,126,581       100.0%                   -%
Cost of sales            9,140,368        64.9       805,964         71.5     8,334,404    (6.6)
Gross profit             4,941,465        35.1       320,617         28.5     4,620,848      6.6
Operating expenses       6,561,754        46.6     1,694,167        150.4     4,867,587  (103.8)
Operating loss         (1,620,289)      (11.5)   (1,373,550)      (121.9)       246,739    110.4
Total other expense      (363,853)       (2.6)     (134,180)       (11.9)       229,673      9.3
Income tax expense        (32,700)       (0.2)        32,700          2.9            --      3.1
Net loss               (2,016,842)      (14.3)   (1,475,030)      (130.9)       541,812    116.6

Sales

          Our sales are derived  primarily from the sale of home  furnishing and
home decor products to large and small retailers. During fiscal year 2002, sales
increased  approximately $13.0 million to $14.1 million from $1.1 million in the
period from March 6, 2000 (inception) through June 30, 2001.  Approximately $5.2
million of the increase is attributable to the purchase of GuildMaster, and $2.3
million  resulted from the purchase of Faith Walk.  Sales from our  decorize.com
division increased to $6.6 million from $1.0 million in the period from March 6,
2000 (inception) through June 30, 2001.

Cost of Sales

          Cost of sales  decreased as a percentage  of sales to 64.9% for fiscal
year 2002 from 71.5% in the period from March 6, 2000  (inception)  through June
30, 2001. The decrease in our cost of sales was due primarily to better purchase
prices because of our increased volume of purchases. The decrease in our cost of
sales  resulted in an increase in our gross  margin to 35.1% in fiscal year 2002
compared to 28.5% in the period from March 6, 2000 (inception ) through June 30,
2001.


                                       15`

---

`Operating Expenses

          Operating  expenses increased to $6.6 million in fiscal year 2002 from
$1.7 million in fiscal year 2001, an increase of $4.9 million.  The increases in
these expenses were primarily  attributable  to the  acquisitions of GuildMaster
and Faith Walk.  In  addition,  fiscal year 2002  included  $754,000 of non-cash
charges for stock  option  expense.  As a  percentage  of sales,  our  operating
expenses  decreased to 46.6% in fiscal year 2002, from 150.4% in the period from
March 6, 2000  (inception)  to June 30, 2001,  due to the effects of significant
sales volume increases.

Other Expenses

          Depreciation  and  amortization  was $125,000 for the fiscal year 2002
and $45,000 for the period from March 6, 2000 (inception) to June 30, 2001. This
increase resulted primarily form the acquisitions of GuildMaster and Faith Walk.

          Other expense  increased to $364,000 in fiscal year 2002 from $134,000
in the period from March 6, 2000  (inception) to June 30, 2001. Of this increase
$125,000  was  attributable  to the  amortization  of debt  discount  related to
conversion  rights  and  warrants  attached  to the  $750,000  convertible  note
financing completed in February 2002. The balance of the increase was mostly due
to the interest expense associated with the stockholders' notes payable.

Net Income (Loss)

          Loss from  operations  increased  to $1.6  million in fiscal year 2002
from $1.4 million in the period from March 6, 2000 (inception) to June 30, 2001.
As a percentage of sales, the loss from operations  decreased to 11.5% in fiscal
year 2002  compared  to 121.9% in the period from March 6, 2000  (inception)  to
June 30, 2001 due to the effects of significant sales volume increases.

          We recorded a net loss of $2.0  million in fiscal year 2002,  compared
to $1.5 million in the period from March 6, 2000  (inception)  to June 30, 2001.
As a percentage of sales,  our net loss  decreased to 14.3% in fiscal year 2002,
compared  to 130.9% in the  period  from March 6, 2000  (inception)  to June 30,
2001. Our losses are considered to be a normal part of our expanding  operations
as a  start-up  business.  As we  continue  to grow,  we expect  to become  more
profitable.  A significant  portion of our fiscal year 2002 losses were non-cash
charges of $754,000 for stock compensation expense and $125,000 for amortization
of debt discount related to conversion  rights and warrants  associated with the
$750,000 convertible note financing completed in February 2002.

          Net loss per share  decreased  to $0.20 per share in fiscal year 2002,
from $0.32 per share in the period  from March 6, 2000  (inception)  to June 30,
2001.

Liquidity and Capital Resources

          We had net working capital of $1.8 million at June 30, 2002,  compared
with $2.1 million at June 30, 2001.  Cash and cash  equivalents  and  short-term
investments  were  $148,000  at June 30,  2002,  compared to $89,000 at June 30,
2001.  Cash used in  operating  activities  decreased  from $1.5  million in the
period  from March 6, 2000  (inception)  to June 30,  2001 to $886,000 in fiscal
year 2002. The principal  operating uses of cash were  attributable  to the $2.0
million net loss, increased inventories and decreased accrued expenses, less the
effects of $754,000 of non-cash stock  compensation  expense,  and a decrease in
accounts receivable due to increased use of factoring arrangements.

          Our  investing  activities  for the  year  ended  June 30,  2002  used
$411,000 in cash. The acquisition of Faith Walk used $296,000 while $130,000 was
used to acquire property and equipment.

          For  the  year  ended  June  30,  2002,  cash  provided  by  financing
activities  amounted to $1.4  million,  principally  related to $1.1  million in
proceeds from the issuance of long-term debt and  stockholder  notes payable


                                       16`

---

`and $668,000 in proceeds  from the issuance of common stock and stock  warrants,
less $408,000 in principal payments on our debt obligations.

          We acquired Faith Walk in July 2001 for a total  consideration of $1.0
million.  The  components  of  this  consideration  were a  promissory  note  of
approximately  $216,000, a cash payment of approximately  $296,000,  and 161,443
shares of our common stock valued at $510,000.

          As a result of our  GuildMaster and Faith Walk  acquisitions,  we have
issued three promissory  notes in an aggregate  principal amount of $1.5 million
to Mr. Parsons,  Mr. Baker, Mr. Sandel and his spouse, which are all due on July
31, 2003. Subsequent to year end, these notes were modified and are all due July
31,  2004.  Each of  Messrs.  Parsons,  Baker and Sandel  are  directors  of the
company. In addition, we issued a demand loan due to an unaffiliated stockholder
for an original principal amount of $181,464, and we have repaid $50,000 of this
loan's principal amount as of June 30, 2002.

          We intend to fund the payment of the foregoing  seller debt related to
the  acquisitions  of  GuildMaster  and Faith Walk through cash  generated  from
profitable operations and from additional external financing. However, if we are
for any reason unable to refinance  these debts in this manner,  we would expect
to be able to further  extend the due dates of the debts because the holders are
all major  stockholders,  and, except in one case, officers and directors of our
company.

          During  fiscal year 2002,  certain of our  stockholders  purchased  at
$0.10 per warrant, warrants to acquire our shares at a price of $2.00 per share.
The aggregate purchase price of the warrants amounted to $44,000.

          In October,  2001, a director  exercised  warrants to purchase  30,000
shares of common stock, for an aggregate amount of $60,000.

          In May,  2002, a director  purchased  20,000 shares of common stock at
$2.50 for an aggregate amount of $50,000.

          On August 16, 2001, we borrowed $150,150 for 90 days from a commercial
bank for working capital requirements. This loan was guaranteed by our President
and Chief Executive Officer, Jon T. Baker, and was repaid in November 2001.

          In February  2002,  we  completed  a private  placement  financing  of
$525,000 of  restricted  securities  consisting of common stock and common stock
warrants to accredited investors, which was exempt from registration pursuant to
Rule 506 of Regulation D of the Securities  Act. We sold the shares and warrants
as  units  at a  price  equal  to  $2.50  per  unit,  however,  we  granted  one
institutional  investor who purchased 100,000 units a discount equal to $25,000.
Each unit  consisted of one share of our common stock and one five-year  warrant
to  purchase  one share of our  common  stock for $4.00 per share.  The  minimum
purchase  was 20,000 units for  $50,000.  On February  28,  2002,  we closed the
private  placement  subscriptions  for 220,000 units at a total selling price of
$525,000.

          On February 26, 2002, we completed a private placement  financing of a
$750,000  Convertible  Term Note,  convertible into 535,714 (as adjusted from an
initial  300,000 shares in accordance with the  antidilution  provisions of such
instrument  due to the private  placement  completed in November and December of
2002) shares of common stock,  with 300,000  warrants  exercisable  at $2.50 per
share.

          We  anticipate  that our working  capital  needs will  increase as our
business  grows. As of September 30, 2002, our working capital was $2.3 million.
In  particular,  we  require  cash to fund the  purchase  and  manufacturing  of
products  for  shipment  to  customers.  We expect  that these  working  capital
requirements  can be met  through  our ongoing  relationships  with  asset-based
lenders  that  have  provided  similar  funding  to us in the  form of  factored
accounts receivable.


                                       17`

---

`Unless there are major declines in the economy,  we anticipate that we
will be  profitable  on a  consolidated  basis in the current  fiscal year (less
non-cash stock  compensation  expense and expense related to the amortization of
debt  discount),  which will end on June 30, 2003.  We believe  that  additional
financing  may be needed to meet the capital  requirements  associated  with our
growth objectives. We will evaluate possible alternatives for obtaining debt and
equity  financing  to meet our capital  requirements,  or to retire debt we have
incurred  in  the  acquisition  of  GuildMaster  and  Faith  Walk,  as  we  deem
appropriate.  We may choose to forego any further  financing  altogether.  If we
pursue  additional  financing  alternatives,  there is no  assurance  that  such
financing  will be  available  on  terms  that  will be  acceptable  to us.  The
inability to secure such financing  could have a material  adverse effect on our
ability to achieve our growth objectives.

          Total Contractual Cash and Other Obligations

          The  following  table  summarizes  our long-term  debt,  capital lease
obligations, and operating lease obligations as of June 30, 2002.

                                                          Less than                                    After 5
                                            Total           1 Year       1-3 Years     4 - 5 Years      Years
                                            -----           ------       ---------     -----------      -----
Aggregate amount of principal to be paid
   on the outstanding long-term debt        $2,854,866     $552,804     $2,261,299       $40,763           --
Future minimum lease payments under
   capital leases                               74,419       35,056         39,363            --           --
Future minimum lease payments under
   noncancelable operating leases            1,486,812      371,479        567,287       436,156      111,890
                                             ---------      -------        -------       -------      -------

Totals                                      $4,416,097     $959,339     $2,867,949      $476,919     $111,890


                                       18`

---

`Item 7. FINANCIAL STATEMENTS


                                                                                    Page(s)

  Independent Accountants Report of BKD, LLP                                          F-2
  Consolidated Balance Sheet at June 30, 2002                                         F-3
  Consolidated Statement of Income for the year ended                                 F-5
           June 30, 2002
  Consolidated Statement of Changes in Stockholders' Equity for the year ended        F-6
           June 30, 2002
  Consolidated Statement of Cash Flows for the year ended                             F-7
           June 30, 2002
  Notes to the June 30, 2002 Consolidated Financial Statements                        F-8
  Independent Auditors Report of Kirkpatrick, Phillips & Miller, CPA's, P.C.          F-20
  Consolidated Statements of Operations for the period from January 1, 2001 to        F-21
           June 30, 2001 and the period March 6, 2000 to December 31, 2000
  Consolidated Statements of Changes in Stockholders' Equity for the period from      F-22
           January 1, 2001 to June 30, 2001 and the period
           March 6, 2000 to December 31, 2000
  Consolidated Statements of Cash Flows for the period from January 1, 2001           F-23
           to June 30, 2001 and the period March 6, 2000 to December 31, 2000
  Notes to Audited Consolidated Financial Statements                                  F-24


                                      F-1`

---

`Independent Accountants' Report



Board of Directors
Decorize, Inc.
Springfield, Missouri


We have audited the accompanying consolidated balance sheet of Decorize, Inc. as
of June 30, 2002, and the related consolidated statements of operations,
stockholders' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Decorize, Inc. as of
June 30, 2002, and the results of its operations and its cash flows for the year
then ended in conformity with accounting principles generally accepted in the
United States of America.

As discussed in Note 1, the Company changed its method of accounting for
goodwill by adopting the provisions of Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets, in 2002.



                                   /s/BKD, LLP

Springfield, MO
September 3, 2003, except for Note 12 as to which the date is September 24, 2003


                                      F-2`

---

`Decorize, Inc.
                           Consolidated Balance Sheet
                                  June 30, 2002


Assets

                                                                             2002
                                                                     --------------------
 Current Assets

   Cash and cash equivalents                                         $        148,072

   Receivable:
        Trade accounts receivable, net of allowance of $215,158                94,300
        Due from factor, net of advances of $1,182,788                        951,118
        Other                                                                  54,304

   Inventories                                                              2,252,372

   Prepaid expenses and other                                                  77,630
                                                                        -------------

          Total current assets                                              3,577,796
                                                                        -------------

   Property and equipment, net                                                403,921

   Goodwill                                                                 3,258,938

   Other                                                                       90,343
                                                                        -------------

                                                                            3,753,202

                                                                     $      7,330,998
                                                                        =============


See Notes to Consolidated Financial Statements


                                      F-3`

---

`Decorize, Inc.
                           Consolidated Balance Sheet
                                  June 30, 2002


Liabilities and Stockholders' Equity

                                                                            2002
                                                                    ------------------
Current Liabilities
    Accounts payable                                                $       818,366

    Accrued salaries and commissions                                        245,974

    Other accrued expenses                                                  183,155

    Current portion of long-term debt                                       462,970

    Current portion of capital lease obligations                             27,447
                                                                     --------------

           Total current liabilities                                      1,737,912
                                                                     --------------

Capital lease obligation, less current portion                               34,712

Long-term debt, less current portion                                        121,193

Notes payable to stockholders                                             1,645,703
                                                                     --------------

           Total liabilities                                              3,539,520
                                                                     --------------

Stockholders' Equity

 Preferred stock, $.001 par value; authorized 10,000,000 shares;
   none issued                                                                    -

 Common stock, $.001 par value; 50,000,000 authorized, issued
   11,270,693 shares                                                         10,433

 Additional paid-in capital                                               5,976,542

 Accumulated deficit                                                    (2,195,497)
                                                                     --------------

            Total stockholders' equity                                    3,791,478
                                                                     --------------

                                                                    $     7,330,998
                                                                     ==============


                                      F-4`

---

`Decorize, Inc.
                        Consolidated Statement of Income
                            Year Ended June 30, 2002

                                                                        2002
                                                                  --------------

    Net Sales                                                     $   14,081,833

    Cost of Goods Sold                                                 9,140,368
                                                                  --------------

    Gross Profit                                                       4,941,465
                                                                  --------------

    Operating Expenses
        Selling, general and administrative                            5,682,428
        Stock compensation expense                                       753,893
        Depreciation and amortization                                    125,433
                                                                  --------------

                                                                       6,561,754

    Operating Loss                                                   (1,620,289)
                                                                  --------------

    Other Income (Expense)
        Interest income                                                    4,573
        Interest expense                                               (204,778)
        Amortization of debt discount                                  (125,000)
        Other                                                           (38,648)
                                                                 ---------------

                                                                       (363,853)

    Loss Before Income Taxes                                         (1,984,142)
                                                                 ---------------

    Provision for Income Taxes                                            32,700
                                                                 ---------------

    Net Loss                                                     $   (2,016,842)
                                                                 ===============

    Basic and Diluted Loss Per Share                             $        (0.20)
                                                                 ===============

    Basic and Diluted Weighted-Average Shares Outstanding             10,306,274
                                                                 ===============


See Notes to Consolidated Financial Statements


                                      F-5`

---

`Decorize, Inc.
                 Consolidated Statement of Stockholders' Equity
                            Year Ended June 30, 2002


                                       Common Stock                 Additional          Accumulated
                                  Shares        Par Value        Paid-in Capital          Deficit             Total
                                  ------        ---------        ---------------          -------             -----

Balance, June 30, 2001            10,000,000      $10,000             $3,214,761         $(178,655)         $3,046,106

Issuance of common stock in
   connection with the
   acquisition of Faith
   Walk Designs, Inc.                161,443          162                509,838                  -            510,000
Issuance of stock warrants                 -            -                124,000                  -            124,000
Allocation of proceeds from
   issuance of convertible
   note payable to warrants
   and beneficial conversion               -            -                750,000                  -            750,000
Compensation related to
   issuance of stock
   options to a non-employee               -            -                 45,000                  -             45,000
Net proceeds from sale of
   common stock, net of
   offering costs $10,679            270,000          270                624,051                  -            624,321
Issuance of common stock
   for services                        1,331            1                  2,999                  -              3,000
Stock compensation expense
   related to stock options
   issued under Equity
   Incentive Plan                          -            -                705,893                  -            705,893
Net loss
                                           -            -                      -         (2,016,842)       (2,016,842)
                                  ----------    ---------        ---------------        ------------       -----------

Balance, June 30, 2002            10,432,774      $10,433             $5,976,542        $(2,195,497)       $ 3,791,478
                                  ==========    =========        ===============        ============       ===========



See Notes to Consolidated Financial Statements


                                      F-6`

---

`Decorize, Inc.
                      Consolidated Statement of Cash Flows
                            Year Ended June 30, 2002

                                                                             2002
                                                                     ----------------------
Operating Activities
    Net loss                                                           $     (2,016,842)
    Items not requiring (providing) cash
       Deferred income taxes                                                     32,700
       Depreciation and amortization                                            125,433
       Compensatory issuance of common stock and stock options                  753,893
       Amortization of debt discount included in interest expense               125,000
       Gain on disposal of property and equipment                                (1,266)
    Changes in
       Trade accounts receivable                                              1,091,465
       Due from factor                                                       (1,730,802)
       Inventories                                                             (305,303)
       Prepaid expenses and other current assets                                 30,615
       Accounts payable                                                         174,617
       Accrued expenses and other                                              (174,194)
                                                                        ---------------
           Net cash used in operating activities                             (1,894,684)
                                                                        ---------------

Investing Activities
    Purchase of property and equipment                                         (129,534)
    Proceeds from disposal of property and equipment                             14,197
    Acquisition of Faith Walk Designs, Inc., net of cash acquired              (295,812)
                                                                        ---------------
       Net cash used in investing activities                                   (411,149)
                                                                        ---------------

Financing Activities
    Principal payments on long-term debt                                       (338,507)
    Proceeds from issuance of long-term debt                                    933,391
    Principal payments of stockholders' notes payable                           (51,505)
    Proceeds from issuance of stockholders' notes payable                       162,167
    Principal payments on capital lease obligations                             (17,514)
    Issuance of common stock, net of related expenses                           624,321
    Proceeds from issuance of common stock warrants                              44,000
    Advances from factor, net                                                 1,008,372
                                                                        ---------------
           Net cash provided by financing activities                          2,364,725
                                                                        ---------------

Increase in Cash and Cash Equivalents                                            58,892

Cash and Cash Equivalents, Beginning of Year                                     89,180
                                                                        ---------------

Cash and Cash Equivalents, End of Year                                  $       148,072
                                                                        ===============

Supplemental Cash Flows Information
    Interest paid                                                              $178,402
    Common stock warrants issued in connection with note payable               $276,515
    Beneficial conversion option associated with note payable                  $473,485
    Capital lease obligations incurred for property and equipment               $60,173


                                      F-7`

---

`Decorize, Inc.
                   Notes to Consolidated Financial Statements
                                  June 30, 2002


Note 1: Nature of Operations and Summary of Significant Accounting Policies


     Nature of Operations

          Decorize, Inc. (Decorize) and its subsidiaries, collectively (the
          "Company"), is a manufacturer and wholesaler of imported home
          furnishings and home accent items. Products are sold primarily to
          retailers in the United States.


     Principles of Consolidation

          The consolidated financial statements include the accounts of
          Decorize, Inc. and its wholly owned subsidiaries, GuildMaster, Inc.
          and Faith Walk Designs, Inc. ("Faith Walk"). The results of operations
          of Faith Walk Designs, Inc. have been included in the consolidated
          financial statements from the effective date of the acquisition
          transaction (see Note 2). All significant intercompany accounts and
          transactions have been eliminated in consolidation.


     Use of Estimates

          The preparation of financial statements in conformity with accounting
          principles generally accepted in the United States of America requires
          management to make estimates and assumptions that affect the reported
          amounts of assets and liabilities and disclosure of contingent assets
          and liabilities at the date of the financial statements and the
          reported amounts of revenues and expenses during the reporting period.
          Actual results could differ from those estimates.


     Cash Equivalents

          The Company considers all liquid investments with original maturities
          of three months or less to be cash equivalents. At June 30, 2002, cash
          equivalents consisted primarily of certificates of deposit.


     Accounts Receivable

          Accounts receivable are stated at the amount billed to customers. The
          Company provides an allowance for doubtful accounts, which is based
          upon a review of outstanding receivables, historical collection
          information and existing economic conditions. Accounts receivable are
          ordinarily due 30 to 60 days after the issuance of the invoice.
          Delinquent receivables are written off based on individual credit
          evaluation and specific circumstances of the customer. Provision
          (credit) for bad debts was $178,402 for the year ended June 30, 2002.

          The Company has established relationships with several major
          customers. Sales to one customer accounted for 19.9% of total sales
          for the year ended June 30, 2002. The Company grants credit to
          customers who meet the Company's pre-established credit requirements
          and generally does not require collateral to secure payment of
          accounts receivable.


     Due From Factor

          Decorize and its subsidiaries regularly sell the majority of their
          accounts on a pre-approved, non-recourse basis under global factoring
          agreements. Accounts receivable sold are subject to pre-approval by
          the factor. The Company does not retain any interest in, or control
          of, the accounts receivable sold. The Company does not bear any credit
          risk relating to the sold receivables other than with regard to
          customer disputes that may require the Company to reacquire the
          disputed receivables from the factor. A portion of the sale proceeds
          is withheld by the factor for a period of time pursuant to the
          factoring agreement, which is reflected as due from factor on the
          consolidated balance sheet. Advances of amounts due from factor bear
          interest at prime, and may be offset against amounts due to the
          Company at the factor's option.


     Inventory Pricing


                                      F-8`

---

`Decorize, Inc.
                   Notes to Consolidated Financial Statements
                                  June 30, 2002


          Inventories consist primarily of finished and unfinished home
          furnishings and accessories. Inventories are stated at the lower of
          cost or market. Cost is determined using the first-in, first-out
          (FIFO) method and includes the cost of ocean freight and docking fees.

     Property and Equipment

          Property and equipment are stated at cost less accumulated
          depreciation and are depreciated over the estimated useful life of
          each asset. Leasehold improvements are amortized over the shorter of
          the lease term or the estimated useful lives of the improvements. As
          required by Statement of Position 98-1, Accounting for Costs of
          Computer Software Developed or Obtained for Internal Use, the Company
          capitalized $167,088 related to computer software developed or
          obtained for internal use in 2002. Depreciation has been computed by
          applying the straight-line method to each asset category over their
          estimated lives, as follows:

                                                                       Balance at
                        Category                 Estimated Life       June 30, 2002
           ----------------------------------    --------------       -------------

           Automobiles                               5 years          $      14,718
           Warehouse and production equipment       5-7 years                62,939
           Computer software                         3 years                167,088
           Office and computer equipment            3-7 years               241,323
           Leasehold improvements                  Lease term                71,606
                                                                      -------------

           Total                                                            557,674
           Less accumulated depreciation                                    153,753
                                                                      -------------

           Property and equipment, net                                $     403,921
                                                                      =============

     Impairment of Long-lived Assets

          Long-lived assets are reviewed for impairment whenever events or
          changes in circumstances indicate the carrying amount of an asset may
          not be recoverable. When events or changes in circumstances indicate
          an asset may not be recoverable, the Company estimates the future cash
          flows expected to result from the use of the asset. If the sum of the
          expected undiscounted future cash flows is less than the carrying
          value of the asset, an impairment loss is recognized. The impairment
          loss is recognized by measuring the difference between the carrying
          value of the assets and the estimated fair value of the assets. The
          Company's estimates of fair values are based on the best information
          available and require the use of estimates, judgments and projections
          as considered necessary. The actual results may vary significantly. No
          impairment losses have been recorded in 2002.


     Goodwill

          Effective July 1, 2001, the Company adopted the provisions of
          Statement of Financial Accounting Standards No. 142, Goodwill and
          Other Intangible Assets (SFAS No. 142), which was issued by the
          Financial Accounting Standards Board (FASB) in July 2001. SFAS No. 142
          requires that an intangible asset that is acquired shall be initially
          recognized and measured based on its fair value. SFAS No. 142 also
          provides that goodwill should not be amortized, but shall be tested
          for impairment annually, or more frequently if circumstances indicate
          potential impairment, through a comparison of fair value to its
          carrying amount. The Company has not recorded a charge as a result of
          the required impairment tests in 2002, nor was amortization of
          goodwill recorded in any prior period.


     Income Taxes


                                      F-9`

---

`Decorize, Inc.
                   Notes to Consolidated Financial Statements
                                  June 30, 2002


          Deferred tax assets and liabilities are recognized for the tax effects
          of differences between the financial statement and tax bases of assets
          and liabilities. A valuation allowance is established to reduce
          deferred tax assets if it is more likely than not that a deferred tax
          asset will not be realized. The Company files consolidated income tax
          returns with its subsidiaries.


     Revenue Recognition

          Revenue from the sale of the Company's products is recognized as
          products are delivered to customers. Any customer deposits relate to
          amounts received in advance from customers for unshipped orders.


     Advertising Costs

          The Company expenses advertising costs as they are incurred.
          Advertising expense for the year ended June 30, 2002 was $349,086.


     Loss Per Share

          Basic and diluted loss per share are computed by dividing the net loss
          by the weighted-average number of common shares outstanding during the
          period and excludes the otherwise dilutive effects of outstanding
          stock options and warrants as their effects would be anti-dilutive.


     Stock-based Compensation

          At June 30, 2002, the Company had a stock-based employee compensation
          plan, as more fully described in Note 11. The Company accounts for
          this plan under the recognition and measurement principles of APB
          Opinion No. 25, Accounting for Stock Issued to Employees, and related
          Interpretations. Stock-based employee compensation cost is reflected
          in net income, as some options granted under those plans had an
          exercise price below the market value of the underlying common stock
          on the grant date. The following table illustrates the effect on net
          income and earnings per share if the Company had applied the fair
          value provisions of FASB Statement No. 123, Accounting for Stock-Based
          Compensation, to stock-based employee compensation.

                                                                             Year Ended
                                                                            June 30, 2002
                                                                        --------------------

            Net loss, as reported                                       $        (2,016,842)
            Add stock-based employee compensation expense included in
              reported net income, net of  tax effects                              734,390
            Less total stock-based employee compensation expense
              determined under the fair value based method                       (1,254,590)
                                                                         ------------------

            Pro forma net loss                                          $        (2,537,042)
                                                                         ==================

            Loss per share

            Basic - as reported                                         $             (0.20)
                                                                         ==================

            Basic - pro forma                                           $             (0.25)
                                                                         ==================

            Diluted - as reported                                       $             (0.20)
                                                                         ==================

            Diluted - pro forma                                         $             (0.25)
                                                                         ==================


                                      F-10`

---

`Decorize, Inc.
                   Notes to Consolidated Financial Statements
                                 June 30, 2002



        The Company adopted Financial Accounting Standards Board Interpretation
        No. 44 (FIN 44), Accounting for Certain Transactions Involving Stock
        Compensation, an Interpretation of APB No. 25, effective July 1, 2000.
        In accordance with FIN 44, when an award is modified to accelerate
        vesting, a new measurement date results (see Note 9).


    Financial Instruments

        The carrying amounts of the Company's financial instruments, which
        consist principally of cash, accounts receivable, accounts payable and
        notes payable, approximate fair value.


    Recent Accounting Standards

        In August 2001, the FASB issued SFAS No. 144, Accounting for the
        Impairment or Disposal of Long-lived Assets and for Long-lived Assets to
        Be Disposed Of, which resolves significant implementation issues that
        had evolved since the issuance of SFAS No. 121. SFAS No. 144 also
        establishes a single accounting model for long-lived assets to be
        disposed of by sale. The Company will adopt SFAS No. 144 in the first
        quarter of fiscal 2003. Adoption of SFAS No. 144 is not expected to have
        a significant impact on the Company's consolidated results of operation
        or financial position.

        The Company adopted SFAS No. 148, Accounting for Stock-Based
        Compensation-Transition and Disclosure, in 2002. This standard amends
        the disclosure requirements of SFAS No. 123, requiring additional
        disclosures about stock-based compensation in the Company's financial
        statements. The adoption of SFAS No. 148 had no significant impact on
        the Company's results of operations or financial position.

Note 2:  Acquisition of Faith Walk Designs, Inc.

        On July 31, 2001, Faith Walk Designs, Inc. was merged with and into Step
        of Faith, Inc., a wholly owned subsidiary of Decorize, Inc. Step of
        Faith, Inc. then changed its name to Faith Walk Designs, Inc. Faith Walk
        has historically sourced its products in unpainted form from United
        States suppliers and added design finishing to them in Faith Walk's
        Houston, Texas manufacturing facility. However, under the Company's
        "direct ship" strategy, Faith Walk is creating designs and then sourcing
        finished products from the Company's suppliers in the far east and
        phasing out its domestic manufacturing operations.

        The purchase price was comprised of a 6.75% promissory note due July 31,
        2003 in the principal amount of $215,744, cash of $295,812 and 161,443
        shares in Decorize, Inc. common stock (valued at $510,000.) The
        acquisition was accounted for as a purchase, and the results of
        operations of Faith Walk Designs, Inc. have been included in the
        consolidated results of the Company since the acquisition date. The
        total cost of this acquisition, which was based on fair values of the
        net assets acquired is as follows:

           Accounts receivable                       $        327,467
           Inventories                                        514,679
           Prepaid expenses and other                          13,156
           Property and equipment                              70,945
           Goodwill                                         1,132,989
           Accounts payable                                  (463,303)
           Accrued expenses                                    (5,709)
           Other liabilities                                  (81,492)
           Debt                                              (487,177)
                                                       ---------------

           Total cost of net assets acquired          $      1,021,555
                                                       ===============

        Pro forma results for the year ended June 30, 2002, would not be
        materially different from the actual results of operations due to the
        date of the Faith Walk acquisition, and are therefore not presented.


                                      F-11`

---

`Decorize, Inc.
                   Notes to Consolidated Financial Statements
                                 June 30, 2002


Note 3:  Inventories

                                                                 2002
                                                        --------------------

           Raw materials                                  $        556,858
           Work-in-process                                           4,289
           Finished units                                        1,691,225
                                                           ---------------

                                                          $      2,252,372
                                                           ===============                                                        ---------------

Note 4:  Debt

                                                                 2002
                                                        --------------------

           Note payable, bank (A)                         $        132,499
           Convertible note payable, net of discount (B)           125,000
           Note payable, bank (C)                                  176,648
           Note payable, bank (D)                                  150,016
                                                           ---------------
                                                                   584,163
           Less current maturities                                 462,970
                                                           ---------------

                                                           $       121,193
                                                           ===============

         (A)   Note payable to bank in monthly installments of $3,201, including
               interest at the bank's prime rate plus 1% (4.75% at June 30,
               2002), through June 2007, secured by inventories and accounts
               receivable.

         (B)   The Company entered into a securities purchase agreement on
               February 26, 2002 with NestUSA. Under this agreement the Company
               issued a convertible term note in the amount of $750,000 and
               warrants to purchase an aggregate of 300,000 shares of common
               stock. The note accrues interest at 6% and requires equal monthly
               installments of principal and interest of $68,423 to be paid on
               the last day of each calendar month beginning on March 31, 2003,
               through February 2004. Within one year the holder of this note
               may convert all or any portion of the outstanding balance of this
               note, including accrued but unpaid interest, into shares of
               common stock. The price at which the note is convertible is $2.50
               per share. The warrants have an exercise price of $3.00 per
               share. If the Company does not obtain certain financing by
               December 31, 2002, the warrant exercise price will be reduced to
               $1.50 per share. The warrants are exercisable until February 26,
               2005.

               The estimated fair value of the warrants and beneficial
               conversion terms related to this convertible note payable issued
               on February 26, 2002, amounted to $276,515 and $473,485,
               respectively and were recorded as a discount on the note. The
               discount is being amortized to interest expense over the two-year
               term of the convertible note payable using the interest method.

               On January 1, 2003, the $750,000 convertible term note was
               changed by the issuance of an amended and restated convertible
               term note. The amended and restated note created new payment
               terms, extended the conversion option through December 31, 2003,
               and required issuance of three year warrants for an additional
               216,000 shares of the Company's common stock at an exercise price
               of $2.80 per share that expire February 26, 2005. Interest
               accrues at the initial rate of 6.00% per annum, accrued and
               compounded annually. Principal and interest are payable monthly
               in the amount of $17,500 commencing on January 31, 2003,
               continuing until January 31, 2004, when the monthly payments
               increase to $53,351 through December 31, 2004, at which time the
               note is to be fully paid. In April 2003, the note holder agreed
               to defer $5,000 of the monthly payments of principal for April,


                                      F-12`

---

`Decorize, Inc.
                   Notes to Consolidated Financial Statements
                                 June 30, 2002



               May and June, which shall be paid as additional $5,000 principal
               payments in July, August and September of 2003.

               As of January 1, 2003, the estimated fair values of the warrants
               and beneficial conversion terms related to this convertible note
               were recognized as additional discounts to the carrying value of
               the note of $113,126 and $199,374, respectively, with an
               offsetting credit to paid-in capital. The aggregate discount on
               the convertible note as of January 1, 2003, was equal to its
               $750,000 face value. This discount is being amortized to interest
               expense over the revised note term using the interest method.
               During the years ended June 30, 2003 and 2002, $463,625 and
               $125,000 was charged to interest expense relating to the
               amortization of discounts on this convertible note.

         (C)   Note payable to bank in monthly installments of $1,111 plus
               interest, at the bank's prime rate plus 1.25%, through September
               2002, secured by substantially all assets. This note was paid in
               full by a stockholder on behalf of the Company during fiscal
               2003.

         (D)   Note payable to bank in monthly installments of $10,000, plus
               interest at the bank's prime rate plus 1%, through September
               2002, secured by substantially all assets. This note was paid in
               full by a stockholder on behalf of the Company during fiscal
               2003.

     The aggregate annual maturities of long-term debt at June 30, 2002, are as
follows:

                                                                 Aggregate
                                                                 Principal
                            Year Ended June 30                   Maturities
           ---------------------------------------------------------------------

                 2003                                        $       552,804
                 2004                                                583,196
                 2005                                                 32,400
                 2006                                                 34,400
                 2007                                                  6,363
                                                             ---------------

                 Total aggregate principal payments                1,209,163

                 Less current portion                                462,970
                 Less unamortized portion of debt discount           625,000
                                                             ---------------

                 Long-term debt                              $       121,193
                                                             ===============

     Notes payable to stockholders at June 30, 2002, consists of the following
unsecured notes:

                                                                     2002
                                                             -------------------

           Note payable (E)                                  $       925,000
           Note payable (E)                                          375,000
           Note payable (F)                                          214,240
           Note payable (G)                                          131,463
                                                             ---------------

                                                             $     1,645,703
                                                             ===============

         (E)   Stockholder notes payable, interest at prime plus 1%, due at
               maturity, July 31, 2004.

         (F)   Stockholder note payable, interest at 6.75% due at maturity,
               July 31, 2004.

         (G)   Stockholder note payable, interest at prime, due at maturity,
               July 31, 2004.


                                      F-13`

---

`Decorize, Inc.
                   Notes to Consolidated Financial Statements
                                 June 30, 2002



               The prime rate of interest at June 30, 2002 was 4.75%.

        A bank loan agreement requires the Company to maintain certain
        covenants, the more important of which restricts the purchase of its
        stock and payment of dividends.

Note 5:  Leases

        The Company leases various plant, office and showroom facilities and
        certain other equipment under agreements accounted for as operating
        leases. These leases expire through April 2008 and certain leases
        contain renewal options.

        The Company also leases equipment under agreements accounted for as
        capital leases. The assets under capital leases are amortized on a
        straight-line basis over the term of the lease, and lease amortization
        is included in depreciation expense. Property and equipment included
        $87,970 of assets under capital lease less $19,008 of accumulated
        depreciation at June 30, 2002.

        Future minimum payments for noncancelable capital and operating leases
        with initial or remaining terms of one year or more at June 30, 2002,
        are as follows:

                                                    Operating          Capital
                                                      Leases           Leases
                                                 -------------------------------

           2003                                   $     371,479     $     35,056
           2004                                         292,639           26,345
           2005                                         274,648           13,018
           2006                                         252,588                0
           2007 and beyond                              295,458                0
                                                  -------------     ------------

                                                  $   1,486,812     $     74,419
                                                  ==============    ============

           Less amount representing interest                              12,260
                                                                    ------------

           Present value of future minimum lease payments                 62,159

           Less current portion                                           27,447
                                                                    ------------

                                                                    $     34,712
                                                                    ============

        Total rent expense incurred under operating leases amounted to $365,227
        for the year ended June 30, 2002.

Note 6:  Stockholders' Equity

        On August 4, 2001, the Decorize, Inc. board of directors authorized the
        issuance of up to 500,000 common stock purchase warrants to 11 former
        holders of Class B Units in Decorize.com, L.L.C. The warrants were
        exercisable for $2.00 per share. During 2002, 30,000 warrants were
        exercised for consideration of $60,000. The remaining 470,000 warrants
        expire on June 30, 2003.

        In February 2002, the Company completed a private placement financing of
        $525,000 of restricted securities consisting of common stock and common
        stock warrants to accredited investors, which was exempt from
        registration pursuant to Rule 506 of Regulation D of the Securities Act.
        The Company sold the shares and warrants as Units at prices between
        $2.25 and $2.50 per Unit, with each Unit consisting of one share of our
        common stock and one five-year warrant to purchase one share of our
        common stock for $4.00 per share. The minimum purchase was 20,000 Units
        for $50,000. On February 28, 2002 the Company closed the private
        placement subscriptions for 220,000 Units at a total selling price of
        $525,000.

        Also during fiscal 2002, the Company issued 20,000 shares of common
        stock for aggregate proceeds of $50,000.


                                      F-14`

---

`Decorize, Inc.
                   Notes to Consolidated Financial Statements
                                 June 30, 2002


        The Company agreed to prepare a registration statement covering the
        common stock issued pursuant to sale of the Units and the associated
        warrants. The Company further pledged to use its best efforts to cause
        the registration statement for the common stock to be made effective by
        the SEC and to maintain the effectiveness of the registration statement
        until all such common stock has been resold by the initial owners.

Note 7:  Income Taxes

        The provision for income taxes includes these components:

                                                                       2002
                                                                 ---------------

           Taxes currently payable                                $         ---
           Deferred income taxes                                         32,700
                                                                   ------------

                  Income tax expense                              $      32,700
                                                                   ============

        A reconciliation of income tax expense at the statutory rate to the
        Company's actual income tax expense is shown below:

                                                                       2002
                                                                 ---------------

           Computed at the statutory rate (34%)                   $    (674,608)
           Increase (decrease) resulting from
               Nondeductible expenses                                   258,648
               State income taxes                                       (48,447)
               Changes in the deferred tax asset valuation allowance    520,700
               Other                                                    (23,593)
                                                                  -------------

                  Actual tax expense                              $      32,700
                                                                   ============

        The tax effects of temporary differences related to deferred taxes shown
        on the balance sheets were:

                                                                        2002
                                                                 ---------------
           Deferred tax assets
               Allowance for doubtful accounts                    $      81,760
               Accrued compensated absences                              20,154
               Inventories                                               49,102
               Capital lease obligations                                 22,121
               Net operating loss carryforwards                         403,615
               Charitable contribution carryforwards and other            1,095
                                                                   ------------
                                                                        577,847
                                                                   ------------

           Deferred tax liabilities
               Property and equipment                                   (39,562)
               Prepaid expenses                                         (17,585)
                                                                   ------------
                                                                        (57,147)
                                                                   ------------

                 Net deferred tax asset before valuation allowance      520,700
                                                                   ------------

           Valuation allowance
               Beginning balance                                            ---
               (Increase) decrease during the period                   (520,700)
                                                                   ------------

               Ending balance                                          (520,700)
                                                                   ------------

                  Net deferred tax asset                           $          0
                                                                    ===========


                                      F-15`

---

`Decorize, Inc.
                   Notes to Consolidated Financial Statements
                                 June 30, 2002



        For the year ended June 30, 2002, the Company recorded a valuation
        allowance for the full amount of the net deferred tax asset otherwise
        recorded due to the losses causing uncertainty as to the realizability
        of the deferred tax assets in future years. As of June 30, 2002, the
        Company had approximately $1,060,000 of net operating loss carryforwards
        available to offset future federal income taxes. The carryforwards
        expire in varying amounts from 2021 to 2023, if unused. Utilization of
        the net operating loss carryforwards may be subject to certain
        limitations as a result of changes in ownership of the Company.

Note 8:           Profit-sharing Plan


    Profit-sharing Plan

        The Company has a 401(k) profit-sharing plan covering substantially all
        employees. The Company's contributions to the plan are determined
        annually by the Board of Directors. There were no Company contributions
        to the plan for 2002.

Note 9:           Employee Stock Plans


    Stock Option Plan

        The Company has elected to follow APB Opinion No. 25, Accounting for
        Stock Issued to Employees, and related interpretations in accounting for
        its employee stock options rather than the alternative fair value
        accounting provided under SFAS No. 123.

        The Company has a stock options plan (1999 Equity Incentive Plan)
        providing for incentive and nonqualified stock options up to which
        3,000,000 shares of common stock are available to issuance to employees,
        officers, directors, and consultants. Options granted under this plan
        may expire as much as 10 years from the date of the grant at prices
        determined by the Board of Directors.

        A summary of the Company's stock option activity and related information
        for the year ended June 30, 2002 is presented below:


                                                          2002

                                                                 Weighted
                                                             Average Exercise
                                                Shares             Price
                                         --------------------------------------

       Outstanding, beginning of year               344,823       $  .99
           Granted                                  454,700         2.73
           Exercised                                     --          --
           Forfeited                                (14,525)        2.26
                                            ---------------

     Outstanding, end of year                       784,998         1.97
                                            ===============

       Options exercisable, end of year             547,675         1.68


        The fair value of options granted is estimated on the date of the grant
        using the Black-Scholes option-pricing model with the following weighted
        average assumptions:


                                      F-16`

---

`Decorize, Inc.
                   Notes to Consolidated Financial Statements
                                 June 30, 2002


                                                                    2002
                                                            --------------------

           Dividend per share                                 $            --
           Risk-free interest rate                                 4.4% to 6%
           Weighted average expected life of options             5 to 7 years
           Expected volatility of the Company's common
              stock market price                               0.516 to 0.463

           Weighted average fair value of options granted
              during the year                                           $1.58


        The following table summarizes information about stock options under the
        plan outstanding at June 30, 2002:

                                 Options Outstanding              Options Exercisable
    Range of               Weighted-Average     Weighted                      Weighted
    Exercise      Number      Remaining      Average Exercise   Number    Average Exercise
     Prices    Outstanding Contractual Life      Price        Exercisable      Price
------------------------------------------------------------------------------------------

$0.80 to $1.80   339,498         6 years         $0.98          339,498        $0.98
$2.60 to $2.70   420,500      6.66 years         $2.66          183,174        $2.66
$3.95 to $4.20     2,500      3.63 years         $4.00          25,000         $4.00


        The Company applies APB Opinion 25 and related Interpretations in
        accounting for its plans, and no compensation cost has been recognized
        for the plan. Had compensation cost for the Company's plan been
        determined based on the fair value at the grant dates using Statement of
        Financial Accounting Standards No. 123, the Company's net income would
        have decreased by $520,197 for the year ended June 30, 2002. Basic and
        diluted earnings per share would have decreased by $0.05 at June 30,
        2002.

        The Company granted stock options to certain executives, employees and
        directors on October 8, 2001, November 21, 2001 and May 6, 2002. The
        exercise price of these options granted equals the market price on the
        date of the grant. There is no recorded expense related to grants of
        these options.

        On January 16, 2002, the Company granted options to an executive with an
        exercise price below the market price on the date of the grant. The
        Company has recorded $87,500 of stock compensation expense related to
        these options in fiscal 2002.

        On October 3, 2001, the Board of Directors approved the acceleration of
        vesting of 339,498 options granted June 29, 2001, held by certain
        current employees, including officers of the Company. These options have
        a 7-year life and originally vested on certain performance requirements
        being met. With the Board approval these options became fully vested as
        of June 29, 2002. Other than the changes in the vesting period, there
        was no other change in the terms of the original options as granted.

        FIN 44 requires, among other things, that stock options, which have been
        modified after December 15, 1998, to accelerate vesting, be accounted
        for with a new measurement date. Compensation is measured based on the
        award's intrinsic value at the date of modification and expenses over
        the new expected vesting period. As a result of the application of FIN
        44, the Company recorded a non-cash stock compensation expense of
        $618,394 in fiscal 2002. In future periods, the Company will not have to
        record any additional stock compensation related to these options as
        they became fully vested on June 29, 2002.


                                      F-17`

---

`Decorize, Inc.
                   Notes to Consolidated Financial Statements
                                 June 30, 2002


        The Company issued a warrant to purchase 150,000 shares of its common
        stock to an outside consultant for services rendered. The warrant has an
        exercise price of $3.00 per share and expires in November 2004.

Note 10:          Significant Estimates and Concentrations

        Accounting principles generally accepted in the United States of America
        require disclosure of certain significant estimates and current
        vulnerabilities due to certain concentrations. Those matters include the
        following:


    General Litigation

        The Company is subject to claims and lawsuits that arise primarily in
        the ordinary course of business. It is the opinion of management that
        the disposition or ultimate resolution of such claims and lawsuits will
        not have a material adverse effect on the consolidated financial
        position of the Company.


    Major Supplier

        The Company purchases approximately 37% of its principal products from
        one supplier. There are a limited number of suppliers for these
        products.

Note 11:          Employment Agreements

        As part of the GuildMaster, Inc. merger, employment agreements were
        entered into with two officers of the Company. The agreements are
        effective through June 2004 and prohibit the officers from competing
        against the corporation for two years after voluntarily terminating
        employment.

        In connection with the acquisition of Faith Walk (see Note 2) the
        Company entered into an employment agreement with a former officer of
        Faith Walk, dated July 31, 2001, with a term of four years which
        includes a two-year covenant-not-to-compete clause in the event that the
        officer voluntarily terminates employment. Bonuses, if any, are to be
        paid at the sole discretion of the Board of Directors.

Note 12:   Future Liquidity Needs

        The Company has incurred losses and recurring negative cash flows since
        formation. Management is considering several alternatives for mitigating
        these conditions during the next year. These include establishing and
        expanding relationships with key customers, selective reductions of
        operating overhead and seeking additional sources of equity and debt
        financing. On September 24, 2003, the Company received a commitment for
        an unsecured line of credit with maximum borrowings of $800,000, bearing
        interest at prime plus 1.25% and maturing September 30, 2004, from an
        officer of the Company and his wife.

Note 13:   Subsequent Events

        On July 9, 2003, the Company established a $150,000 90-day bank line of
        credit personally guaranteed by an officer of the Company.

        On July 17, 2003, a promissory note for $150,000 bearing interest at
        prime, due October 11, 2003 was issued to an officer of the Company in
        exchange for a loan of $150,000 cash from the officer.

        An officer voluntarily ended his employment with the Company effective
        August 25, 2003. The Company has agreed to pay a total of approximately
        $36,000 plus 65,000 shares of common stock in severance benefits to the
        officer between September 1, 2003, and March 1, 2004.


                                      F-18`

---

`INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders
Decorize, Inc. (Successor to Guidelocator.com, Inc.) and Subsidiary
Springfield, Missouri


We have audited the accompanying consolidated statements of operations,  changes
in stockholders' equity, and cash flows of Decorize, Inc. and Subsidiary for the
six months  ended June 30,  2001 and the period  March 6, 2000 to  December  31,
2000. These  consolidated  financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audits.

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

In  our  opinion,  the  consolidated   statements  of  operations,   changes  in
stockholders'  equity and cash flows  referred to above present  fairly,  in all
material  respects,  the results of operations and cash flows of Decorize,  Inc.
and  Subsidiary  for the six months  ended June 30, 2001 and the period March 6,
2000 to December 31, 2000, in conformity  with accounting  principles  generally
accepted in the United States of America.

As  discussed  in  note 2,  the  company  restated  its  consolidated  financial
statements to reclassify  Decorize.com,  L.L.C.'s accumulated deficit to paid-in
capital as of the date Decorize.com,  L.L.C. was merged into Decorate,  Inc. and
to  correct  the  presentation  of   Guidelocator.com,   Inc.'s   (Guidelocator)
outstanding common stock prior to the merger with Decorate, Inc.


                    /s/  Kirkpatrick, Phillips & Miller, CPA's, P.C.


September 7, 2001, except for note 2 as to which the date is August 4, 2003
Springfield, Missouri





                                      F-20`

---

`DECORIZE, INC. (SUCCESSOR TO GUIDELOCATOR.COM, INC.) AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (RESTATED)


                                                               Period
                                            Six Months Ended   March 6, 2000
                                            June 30, 2001      December 31, 2000
                                            -------------      -----------------

Sales                                        $842,274           $284,307

Cost of sales                                585,135            220,829
                                             -------            -------

Gross profit                                 257,139             63,478
                                            --------             ------

Operating expenses:
     Selling, general and administrative     994,566            654,866
     Depreciation and amortization           27,545              17,190
                                             ------              ------
     Total operating expenses                1,022,111          672,056
                                             ---------          -------

Net loss from operations                     (764,972)          (608,578)

Other income (expense):
Interest income                              7,822              15,475
     Interest expense                        (4,699)            (485)
     Other                                   (80,000)           (72,293)
                                             --------           --------
     Total other income (expense)            (76,877)           (57,303)
                                             --------           --------

Net loss before income taxes                 (841,849)          (665,881)

Income tax benefit                           (32,700)                   -
                                             --------           ---------

Net loss                                     $(809,149)         $(665,881)
                                             ==========         ==========

Basic and diluted loss
         per share                           $(0.17)            $(0.15)
                                            =========           =======

Basic and diluted weighted-average
         shares outstanding                  4,701,206          4,396,672
                                            ==========          =========





                                      F-21`

---

`DECORIZE, INC. (SUCCESSOR TO GUIDELOCATOR.COM, INC.) AND SUBSIDIARY
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
  PERIOD MARCH 6, 2000 TO DECEMBER 31, 2000 AND SIX MONTHS ENDED JUNE 30, 2001

                                   (RESTATED)

                                                                               Receivables
                                                                                 from
                                Common Stock                                  Stockholders
                                            Par     Paid-in     Accumulated       for
                               Shares      Value    Capital       Deficit    Stock Issuance   Total
Net proceeds from issuance of
    common stock               4,396,672   $4,397  $1,770,603        $  --     $ (330,000)  $1,445,000

Net loss                               -        -           -     (665,881)              -   (665,881)
                               ---------   ------  ----------     ---------    -----------  ----------

Balances, December 31, 2000    4,396,672    4,397   1,770,603     (665,881)      (330,000)     779,119

Net loss                               -        -           -     (809,149)              -   (809,149)

Exercise of stock options        109,864      110      41,555             -              -      41,665

Collection of receivables for
    stock issuance                     -        -           -             -        330,000     330,000

Merger of Decorize.com,
    L.L.C., into Decorate,
    Inc.                               -        -  (1,296,375)    1,296,375              -           -

Issuance of common stock for
    acquisition of
    Guildmaster, Inc.          3,193,464    3,193    2,049,284            -              -   2,052,477

Net proceeds from issuance
    of common stock              876,000      876      651,118            -              -     651,994

Issuance of common stock
    from merger with
    Guidelocator               1,424,000    1,424      (1,424)            -              -           -
                               ---------    -----     --------   ----------    -----------  ----------

Balances, June 30, 2001       10,000,000  $10,000    $3,214,761  $(178,655)           $  -  $3,046,106
                              ==========  =======    ==========  ==========           ====  ==========


The accompanying notes are an integral part of the consolidated financial
statements.




                                      F-22`

---

`DECORIZE, INC. (SUCCESSOR TO GUIDELOCATOR.COM, INC.) AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                             Period
                                                           Six Months Ended  March 6, 2000 to
                                                           June 30, 2001     December 31, 2000
                                                           -------------     -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                   $(809,149)        $(665,881)
Adjustments to reconcile net loss to cash provided
by operating activities:
         Depreciation                                      27,756            17,190
         Common stock issued for services                  -                 50,000
         Loss on abandonment of property
         and equipment                                     -                 72,293
         Exercise of stock options                         41,665            -
Changes in certain assets and liabilities:
         Receivables                                       (140,799)         (22,970)
         Inventories                                       (146,793)         (61,055)
         Prepaid expenses and other                        (12,825)          (125,445)
         Deferred tax benefits                             (32,700)          -
         Accounts payable                                  52,627            86,679
         Accrued expenses                                  170,292           35,710
                                                           -------           ------
             Net cash used in operating activities         (849,926)         (613,479)
                                                           ---------         ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
         Acquisition of property and equipment             (29,824)          (222,448)
         Other receivables                                 (69,537)
         Acquisition of Guildmaster, Inc., net of cash     300               -
                                                           ----------        ---------
                  Net cash used in investing activities    (99,061)          (222,448)
                                                           --------          ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
         Principal payments under capital lease obligation (1,568)           (2,108)
         Proceeds from receivables  for issuance of
           common stock                                     330,000          -
         Issuance of common stock, net of related expenses  152,770          1,395,000
                                                            -------          ---------
                  Net cash from financing activities        481,202          1,392,892
                                                            -------          ---------
                  Net increase (decrease) in cash
                  and cash equivalents                      (467,785)        556,965

CASH AND CASH EQUIVALENTS, beginning of period              556,965          -
                                                            ------           --------
CASH AND CASH EQUIVALENTS, end of period                    $89,180          $556,965
                                                            =======          ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

CASH PAID FOR INTEREST                                      $4,699           $485
                                                            =======          ====

NON-CASH INVESTING AND FINANCING ACTIVITIES:

During the period March 6, 2000 to December 31, 2000, the Company entered into a
capital lease for a phone system. The Company recorded the phone system and
corresponding lease obligation at its market value of $10,204. The Company
issued common stock in exchange for $50,000 of services during the same period.
The Company acquired Guildmaster, Inc. on June 18, 2001. See Note 3 for details
of that transaction. On June 29, 2001 the Company issued 876,000 shares of
common stock for $230,000 and a receivable of $470,000 (See Note 11).

         The accompanying notes are an integral part of the consolidated
                             financial statements.


                                      F-23`

---

`DECORIZE, INC. (SUCCESSOR TO GUIDELOCATOR.COM, INC.) AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          Nature of business - The Company is a  manufacturer  and wholesaler of
               imported home furnishings and home accent items. The consolidated
               financial  statements  include  the  accounts  of  the  Company's
               wholly-owned  subsidiary,  Decorate,  Inc. and  Decorate,  Inc.'s
               wholly-owned subsidiary, Guildmaster, Inc.

          Principles of  consolidation  - The Company is a holding company whose
               assets consist of its investment in its subsidiary.  The business
               of the consolidated group is conducted through Decorate, Inc. and
               Guildmaster,  Inc. The results of companies acquired are included
               in the consolidated  financial statements from the effective date
               of  acquisition  (see  Note  3).  All  significant   intercompany
               balances and transactions have been eliminated in consolidation.

          Inventories -  Inventories  have  been  valued at the lower of cost or
               market, as determined by the first-in first-out (FIFO) method.

          Depreciation  -  Depreciation   has  been  computed  by  applying  the
               straight-line method over the following estimated lives:

                            Category                         Estimated Life
                    ---------------------------            -----------------
                    Automobiles                                   5 years
                    Warehouse and production equipment            7 years
                    Developed technology                          3 years
                    Office and computer equipment               3-7 years
                    Leasehold improvements                    10-20 years

               Depreciation  charged to expense  amounted to $27,756 and $17,190
               for the six months  ended June 30,  2001 and the period  March 6,
               2000 to December 31, 2000, respectively.

          Goodwill - Goodwill  has been  recorded by the  Company in  connection
               with the  acquisition  of the net  assets of  Guildmaster,  Inc.,
               which  is  discussed  further  in  Note  (3).   Goodwill,   which
               represents  the excess of the purchase  price over the  estimated
               market  value of net assets  acquired,  is being  amortized  on a
               straight-line basis over fifteen years.  Amortization expense was
               not charged to operations  for the period from the merger date to
               June  30,  2001,  because  the  amount  was not  material  to the
               consolidated financial statements.

          Income taxes - Deferred tax  liabilities and assets are recognized for
               the  expected  future tax  consequences  of events that have been
               included in the consolidated financial statements or tax returns.
               Deferred tax liabilities  and assets are determined  based on the
               differences between the consolidated financial statements and the
               tax basis of assets  and  liabilities,  using tax rates in effect
               for the years in which the differences are expected to reverse. A
               valuation  allowance  is provided to offset any net  deferred tax
               assets if, based upon the available  evidence,  it is more likely
               than not that some or all of the  deferred tax assets will not be
               realized.

               As discussed in Note 3, Decorate,  Inc. merged with Decorize.com,
               L.L.C. on June 18, 2001. Because Decorize.com, L.L.C. operated as
               a limited  liability  company,  any net losses  incurred  between
               March 6, 2000 and June 18,  2001 will be passed  through  to each
               member  of the  limited  liability  company  with no  income  tax
               benefit resulting to the Company.


                                      F-24`

---

`DECORIZE, INC. (SUCCESSOR TO GUIDELOCATOR.COM, INC.) AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     Accounting  estimates  -  Management  uses  estimates  and  assumptions  in
          preparing  these  financial  statements in accordance  with  generally
          accepted accounting principles. Those estimates and assumptions affect
          the disclosure of contingent assets and liabilities,  and the reported
          revenues and  expenses.  Actual  results could vary from the estimates
          that were used.

     Consolidated  statements  of cash flows - For purposes of the  Consolidated
          Statements of Cash Flows, cash equivalents  include money market funds
          and all highly liquid debt instruments with maturities of three months
          or less at the date of their acquisition.

     Advertising costs - The Company expenses  non-direct  response  advertising
          costs as they are incurred.

     Revenue  Recognition - Revenue from the sale of the  Company's  products is
          recognized as products are delivered to customers.

     Loss per share - Basic loss per share excludes  dilution and is computed by
          dividing net loss available to  stockholders  by the  weighted-average
          number of shares outstanding during the period. Diluted loss per share
          reflects the  potential  dilution  that could occur if  securities  or
          other  contracts  to issue  shares were  exercised  or resulted in the
          issuance  of shares  that would  share in the  losses of the  Company.
          Dilutive potential shares are added to weighted-average shares used to
          compute basic loss per share.

     New  accounting   standards  -  In  July  2001,  the  Financial  Accounting
          Standards Board issued SFAS No. 141, "Business  Combinations" and SFAS
          No. 142, "Goodwill and other Intangible Assets." SFAS No. 141 requires
          the  use of  the  purchase  method  of  accounting  for  all  business
          combinations  initiated after June 30, 2001,  thereby  eliminating the
          pooling-of-interests  method.  SFAS No. 141 also provides new criteria
          that  determine  whether  an  acquired   intangible  asset  should  be
          recognized separately from goodwill. SFAS No. 142 provides guidance on
          how to account for  goodwill  and  intangible  assets after a business
          combination  has been  completed.  Under  SFAS No.  142  goodwill  and
          certain other  intangible  assets will no longer be amortized and will
          be tested for impairment at least annually.  Intangible  assets with a
          definite life will continue to be amortized.  The  nonamortization and
          impairment rules will apply to existing goodwill and intangible assets
          beginning  with the fiscal  years  starting  after  December 15, 2001.
          Early  adoption is permitted for entities with fiscal years  beginning
          after March 15, 2001.  The Company  believes that the adoption of SFAS
          No. 141 and 142 will have an impact on the results of  operations  and
          the financial condition of the Company. The significance of the impact
          has not been determined.

(2)  RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS

     In connection with our filing of Form SB-2 with the Securities and Exchange
     Commission  (SEC),  the SEC has requested the Company  restate the 2001 and
     2000 financial  statements.  The restatement reflects adjustments which are
     corrections of errors made in the  application of U.S.  generally  accepted
     accounting  principles  (GAAP) and  includes  (i) the  reclassification  of
     Decorize.com,  L.L.C.'s  accumulated  deficit to paid-in  capital as of the
     date  Decorize.com,  L.L.C.  was merged into  Decorate,  Inc.  and (ii) the
     presentation of Guidelocator's outstanding common stock prior to the merger
     with Decorate, Inc.



                                      F-25`

---

`DECORIZE, INC. (SUCCESSOR TO GUIDELOCATOR.COM, INC.) AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(2)  RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     (i)  Reclassification of Decorize.com, L.L.C.'s accumulated deficit

          Decorate, Inc. was incorporated on March 28, 2001 for the sole purpose
          of  merging  with  Decorize.com,  L.L.C.  to change the  formation  of
          Decorize.com  from a limited  liability  company to a corporation.  On
          June 18, 2001 Decorize.com, L.L.C. merged into Decorate, Inc. The same
          individuals owned the two entities, therefore the merger was accounted
          for  as  a  recapitalization   of  Decorize.com,   L.L.C.  The  ending
          accumulated deficit of Decorize.com, L.L.C. was originally reported as
          the beginning  accumulated  deficit of Decorate,  Inc. The restatement
          closed the  accumulated  deficit of  Decorize.com,  L.L.C. on June 18,
          2001  into  paid-in  capital.  The  accumulated  deficit  amounted  to
          $1,296,375. This change is reflected in the consolidated statements of
          changes in stockholders' equity. After this change, paid-in capital is
          $3,214,761 instead of $4,511,136 and accumulated deficit is $(178,655)
          instead of $(1,475,030) at June 30, 2001. This change had no effect on
          total assets, total liabilities,  total stockholders' equity, net loss
          or loss per share.

     (ii) Presentation of Guidelocator.com, Inc.'s outstanding common stock

          Decorate,  Inc.  was  acquired on June 29, 2001,  by  Guidelocator,  a
          public   shell   company  with  no  assets  or   operations.   Because
          Guidelocator was a public shell company, the transaction was accounted
          for as a  recapitalization,  rather  than as a  business  combination.
          Immediately  before the transaction on June 29, 2001  Guidelocator had
          1,424,000 shares of common stock  outstanding.  These shares continued
          to be outstanding  after the  transaction  with  Decorate,  Inc. Since
          Guidelocator had no operations, assets or liabilities,  Guidelocator's
          outstanding  common  stock was  treated as if it had been  outstanding
          since  Decorate,  Inc.  and  its  predecessors  were  organized.   The
          restatement   changes  this   presentation   to  show   Guidelocator's
          outstanding  common  stock  as if it were  issued  on June  29,  2001.
          Outstanding  common  stock  reported as of December  31, 2000 has been
          reduced by 1,424,000 shares.  This change had the following effects on
          the consolidated financial statements:


                                                       As Originally      As
                                                         Reported      Restated
       Shares of common stock outstanding at
            December 31, 2000                              5,820,672   4,396,672
       Common stock par value at December 31, 2000        $    5,821  $    4,397
       Paid-in Capital at December 31, 2000               $1,769,179  $1,770,603
       Loss per share - six months ended June 30, 2001    $   (0.13)  $   (0.17)
       Weighted-average shares outstanding - six months
         ended June 30, 2001                               6,117,338   4,701,206
       Loss per share - period March 6, 2000 to
         December 31, 2000                                $   (0.11)  $   (0.15)
       Weighted-average shares outstanding - period
         March 6, 2000 to December 31, 2000                5,820,672   4,396,672

          This change had no effect on total assets, total liabilities,
                     total stockholders' equity or net loss.




                                      F-26`

---

`DECORIZE, INC. (SUCCESSOR TO GUIDELOCATOR.COM, INC.) AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(3)  MERGERS AND ACQUISITION

     Far East Direct, L.L.C., a Missouri limited liability company was formed on
     February 7, 2000.  This company began  operating on March 6, 2000. On March
     29, 2000, Far East Direct, L.L.C. changed its name to Decorize.com,  L.L.C.
     On  March  28,  2001,  Decorate,   Inc.  was  incorporated  as  a  Missouri
     corporation  for the  purpose of changing  the legal form of  Decorize.com,
     L.L.C.  Decorize.com,  L.L.C.  was merged into  Decorate,  Inc. on June 18,
     2001.  Since  the two  entities  were  owned  by the same  individuals,  no
     adjustments to the carrying value of assets or liabilities were recorded.

     Decorate,  Inc.  was acquired on June 29, 2001,  by  Guidelocator,  a Texas
     corporation.  Guidelocator  was a public  shell  company  with no assets or
     operations.   Guidelocator  issued  7,700,000  shares  (77%  of  the  total
     outstanding  shares after the  acquisition) of its common stock in exchange
     for all of the outstanding shares of Decorate, Inc. common stock. After the
     acquisition,  the  shareholders of Decorate,  Inc. held the majority of the
     outstanding common stock of Guidelocator. Because Guidelocator was a public
     shell company,  the  transaction  was accounted for as a  recapitalization,
     rather than as a business combination. On July 6, 2001, Guidelocator merged
     into Decorize,  Inc., a Delaware corporation and wholly-owned subsidiary of
     Guidelocator  formed solely for that purpose.  Because this merger occurred
     after June 30, 2001,  stockholders'  equity  reflected in the  consolidated
     statements of changes in stockholders' equity is that of Guidelocator.

          At the same time Decorate, Inc. was incorporated,  JB Express, Inc., a
     wholly-owned  subsidiary  of  Decorate,  Inc.  was  formed  as  a  Missouri
     corporation.  JB Express,  Inc. merged with  Guildmaster,  Inc. on June 18,
     2001,  and then changed its name to  Guildmaster,  Inc. The  acquisition of
     Guildmaster,  Inc.  was  accounted  for as a  purchase,  and the results of
     operations of  Guildmaster,  Inc.  have been  included in the  consolidated
     results  of the  Company  since the  acquisition  date.  Guildmaster,  Inc.
     incurred  a net loss of $3,941 for the period  June 18,  2001,  to June 30,
     2001.

          The purchase  price was  comprised  of 223,210  shares of common stock
     (subsequently exchanged for 3,193,464 shares of the Company's common stock)
     valued at $2,052,477,  a $375,000 promissory note to selling  stockholders,
     and  acquisition  costs.  Prior to the  acquisition,  two  individuals  who
     together controlled 47.26% of Decorate, Inc.'s outstanding common stock and
     represented  a  minority  of  the  Decorate,   Inc.   board  owned  all  of
     Guildmaster's   outstanding  common  stock.  The  $2,500,000  cost  of  the
     acquisition  was allocated based on the following fair market values of the
     net assets acquired:

                 Cash                                         $    300
                 Accounts receivables                          437,984
                 Other receivables                              43,299
                 Inventories                                 1,225,262
                 Prepaid expenses and
                   Other                                        60,737
                 Property and equipment                        122,821
                 Goodwill                                    2,125,949
                 Accounts payable                              (41,140)
                 Accrued expenses                             (122,680)
                 Other liabilities                            (268,160)
                 Debt                                         (159,372)
                 Notes payable to
                   Stockholders                               (925,000)
                                                           ------------
                   Total cost of net
                     assets acquired                        $ 2,500,000
                                                           ============


                                      F-27`

---

`DECORIZE, INC. (SUCCESSOR TO GUIDELOCATOR.COM, INC.) AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(3)  MERGERS AND ACQUISITION (CONTINUED)

     The following  unaudited pro forma  information  summarizes  the results of
     operations  for  the  periods  indicated  as if the  acquisition  had  been
     completed as of the beginning of the periods presented.  The pro forma data
     gives  effect  to  actual  operating  results  prior  to  the  acquisition.
     Adjustments to interest expense, goodwill amortization and income taxes are
     reflected  in the  pro  forma  data.  No  effect  has  been  given  to cost
     reductions  or operating  synergies in this  presentation.  These pro forma
     amounts do not  purport to be  indicative  of the  results  that would have
     actually been obtained if the  acquisition had occurred as of the beginning
     of the periods presented or that may be obtained in the future.

                                         Six Months               Period
                                           Ended               March 6, 2000
                                       June 30, 2001       to December 31, 2000
                                      ---------------     ----------------------
                                        (Restated)              (Restated)

  Sales                            $           2,984,671    $       4,806,617
  Cost of sales                                1,932,197            3,010,577
                                    --------------------     ----------------
  Gross profit                                 1,052,474            1,796,040
  Operating expenses                           1,930,879            2,013,357
                                    --------------------     ----------------
  Net loss from operations                     878,405)             (217,317)
  Other income (expense)                       (148,728)            (188,721)
                                     ------------------      ---------------
  Net loss before income taxes                 (1,027,133)          (406,038)
  Income tax benefit                           (184,884)            (73,087)
                                     ------------------      --------------
  Net loss                          $          (842,249)    $       (332,951)
                                     ==================      ===============

  Basic and diluted
    loss per share                  $          (0.11)       $       (0.04)
                                     ===============         ============


(4)  LEASES

     Decorate,  Inc. leases two offices in Springfield,  Missouri. The leases on
     the office space are accounted for as operating  leases in accordance  with
     SFAS No. 13. One lease has a term of 3 years expiring on April 30, 2003 and
     a monthly  rental of $860. The other lease has a term of 2.5 years expiring
     on April 30, 2003 and a monthly rental of $1,100.

     Guildmaster,  Inc.,  leases a plant and  office  facility  in  Springfield,
     Missouri,  a showroom  in High  Point,  North  Carolina,  and a showroom in
     Atlanta,  Georgia.  The leases are  accounted  for as  operating  leases in
     accordance with SFAS No. 13. The plant and office facility lease has a term
     of 5 years expiring November 30, 2001, with three five-year renewal options
     and monthly  rental of $8,766.  The High Point,  North Carolina lease has a
     term of five years  expiring  April 30, 2002, and monthly rental of $8,235.
     The  Atlanta,  Georgia  showroom is leased on a  month-to-month  basis with
     monthly rental of $773.

     The Company leases equipment, which meets the criteria of capital leases as
     defined by SFAS No. 13. Accordingly, minimum rentals have been capitalized,
     and the  related  asset and  obligation  have been  recorded  at their fair
     market  value at the  inception  of the lease.  The asset is amortized on a
     straight-line  basis over the term of the lease, and interest is accrued on
     the basis of the outstanding lease obligation.



                                      F-28`

---

`DECORIZE, INC. (SUCCESSOR TO GUIDELOCATOR.COM, INC.) AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(4)  LEASES (CONTINUED)

     Future minimum payments for noncancelable  leases with initial or remaining
     terms of one year or more at June 30, 2001, are as follows:

                                                  Capital            Operating
        Year Ended                                Leases               Leases
        ----------                              ----------         -------------
        June 30, 2002                           $    3,941         $     149,700
         June 30, 2003                               3,613                19,600
                                                ----------         -------------
         Total minimum lease payments                7,554         $     169,300
                                                                   =============
         Less amount representing interest           1,026
                                                ----------
         Present value of net obligation             6,528
         Less current maturities                     3,400
                                                ----------
         Non-current obligations
          under capital leases                  $    3,128
                                                ==========

     Total rent expense  incurred under operating leases amounted to $22,470 and
     $13,128 for the six months ended June 30, 2001 and the period March 6, 2000
     to December 31, 2000, respectively.

(5)  ADVERTISING COSTS

     The  Company   incurred   $74,601  and  $145,246  in  non-direct   response
     advertising  costs for the six months  ended  June 30,  2001 and the period
     March 6, 2000 to December 31, 2000,  respectively.  The company incurred no
     direct response advertising costs during the periods.

(6)  CONCENTRATIONS OF CREDIT RISK

     The Company has  established  a  relationship  with one major  customer who
     accounted for 20.5% of the Company's sales in the six months ended June 30,
     2001.  This customer  accounted  for 93.4% of the  Company's  sales for the
     period March 6, 2000 to December 31, 2000.

     The Company extends  unsecured  credit to several  exclusive  private label
     customers under approved credit terms and arrangements.

(7)  RETIREMENT PLAN

     Effective  January 1994,  Guildmaster,  Inc. adopted a 401(K) plan covering
     all full-time employees.  Contributions to the plan for any fiscal year, as
     determined by the Board of Directors,  are discretionary  but, in no event,
     will exceed 15 percent of the annual aggregate  salaries of those employees
     eligible for participation in the plan plus carryovers from prior years. No
     employer  amounts were  contributed to the plan for any period presented in
     these consolidated financial statements.




                                      F-29`

---

`DECORIZE, INC. (SUCCESSOR TO GUIDELOCATOR.COM, INC.) AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(8)  INCOME TAXES

     The provision for income tax expense is as follows:

                                                            Six months ended
                                                              June 30, 2001
                                                            ----------------
              Current                                        $            -
              Deferred                                              (32,700)
                                                             --------------
                   Total                                     $      (32,700)
                                                             ==============

     The  provision for income taxes differs from that computed at the statutory
     corporate rate of 34% as follows:

                                                            Six months ended
                                                              June 30, 2001
                                                            ----------------
              Tax at statutory rate                          $      (286,229)
              Increase (decrease) in taxes resulting from:
              Losses passed through
                to Decorize.com, L.L.C.
                members                                              262,868
              Non-deductible expenses                                    265
              Other                                                   (9,604)
                                                             ---------------
        Provision for income taxes                           $       (32,700)
                                                             ===============

     As of June  30,  2001,  the  Company  had  approximately  $66,000  of a net
     operating loss carryforward.  The loss carryforward will expire in the year
     ending June 30, 2021


(9)  LOSS PER SHARE - RESTATED

     The  following  information  shows the amounts used in  computing  loss per
     share and the effect on income and the weighted-average number of shares of
     dilutive  potential  common  stock.  The  amounts  in  the  income  columns
     represent the numerator and the amounts in the shares columns represent the
     denominator.



                                      F-30`

---

`DECORIZE, INC. (SUCCESSOR TO GUIDELOCATOR.COM, INC.) AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(9)  LOSS PER SHARE - RESTATED (CONTINUED)


                                                                           Period
                                Six Months Ended                      March 6, 2000 to
                                 June 30, 2001                       December 31, 2000
                     ---------------------------------------------------------------------------
Basic loss                                      Per Share                            Per Share
  per share:              Loss        Shares       Amt.         Loss       Shares       Amt.
                          ----        ------       ----         ----       ------       ----
Loss available
to Common
Stockholders         $ (809,149      4,701,206     (.17)     $(665,881)   4,396,672   $ (.15)
                     ---------------------------------------------------------------------------

Effect of
  dilutive securities     -             -                       -             -
                     ---------------------------           --------------------------

Diluted loss per
  share:
Loss available to
  Stockholders plus
  stock options      $ (809,149)    4,701,206      (.17)     $(665,881)   4,396,672   $ (.15)
                     ===========================================================================











       The computation of diluted loss per share excludes the effect of the
       assumed exercise of 344,823 stock options that were outstanding as of
       June 30, 2001 because the effect would be anti-dilutive.

(10) STOCK OPTION PLAN

       The Company has elected to follow APB Opinion No. 25, accounting for
       stock issued to employees, and related interpretations in accounting for
       its employee stock options because, as described below, the


                                      F-31`

---

`alternative fair value accounting provided under SFAS No. 123 requires use
       of option valuation models that were not developed for use in valuing
       employee stock options.

       The Company granted stock options to employees on June 29, 2001 under the
       Company's 1999 equity incentive plan. The grants were done with the
       knowledge that Guidelocator would merge with Decorize, Inc. on July 6,
       2001. The merger created additional authorized but unissued common stock.
       The 1999 equity incentive plan authorizes the grant of options to key
       employees and consultants of the Company of up to 3,000,000 shares of the
       Company's common stock. No options were granted during the period from
       March 6, 2000 to December 31, 2000.


                                      F-32`

---

`DECORIZE, INC. (SUCCESSOR TO GUIDELOCATOR.COM, INC.) AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(10) STOCK OPTION PLAN (CONTINUED)

     A summary of the Company's stock option activity for the six months ended
     June 30, 2001 follows:

                                                                 Weighted-
                                                                  average
                                           Options             Exercise price
                                        ---------------     ---------------------

      Outstanding - beginning
         of period                               -                   -
      Granted                                 454,687              .74934
      Exercised                               109,864              .00376
      Forfeited                                  -                   -
                                        ---------------
      Outstanding - end
        of period                             344,823              .98690
                                        ===============

      Exercisable at end
        of period                                -                   -

      Weighted-average fair
        value  of options
        granted during the
        Period                           $       0.23
                                        ===============

     The exercise prices of the options granted on June 29, 2001 range from $.80
     to $1.88. The options have a 7-year life and vest based on certain
     performance requirements being met. The vesting periods are estimated to
     range from 6 months to 36 months.

     Pro forma information regarding net loss and loss per share is required by
     SFAS No. 123 using the fair value method of that statement. The fair value
     of each option was estimated on the date of grant using the Black-Scholes
     option-pricing model. The following weighted-average assumptions were used
     for the six months ended June 30, 2001:

             Expected stock price volatility                           46.3%
             Risk free interest rate                                    6.0%
             Expected annual dividend yield per share                   ----
             Expected life of options                              7.0 years

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

     For purposes of pro forma disclosures the pro forma results for the period
     from January 1, 2001 to June 30, 2001 would not have been materially
     different than actual results.


                                      F-33`

---

`DECORIZE, INC. (SUCCESSOR TO GUIDELOCATOR.COM, INC.) AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10)  STOCK OPTION PLAN (CONTINUED)

     In  February  2001,  Decorize.com,  L.L.C.  issued a total of  41,257  unit
     options to ten employees. These options were all exercised in February 2001
     at a price of $.01 per  unit.  The units  were  ultimately  converted  into
     109,864 shares of the Company's stock.

(11) RELATED PARTY TRANSACTIONS

     Notes payable to stockholders consists of:

                                                                 June 30, 2001
                                                             -------------------

                  Prime + 1%; unsecured; interest
                    due at maturity;  matures
                    June 15, 2002                                $       925,000

                  Prime + 1%; unsecured; interest
                    due at maturity;  matures
                    June 15, 2002                                        375,000
                                                             -------------------

                                                                 $     1,300,000
                                                             ===================



     Through a private offering of stock, 876,000 shares of the Company's common
     stock  were  sold for  $700,000  on June  29,  2001.  As of June 30,  2001,
     $230,000 of the  proceeds had been  received.  The  remaining  $470,000 was
     received in July 2001.

     A stockholder of the company owed the company  $39,537 as of June 30, 2001,
     for expenses paid by the Company.

(12) RESTRICTIONS IN LOAN AGREEMENTS

     A bank loan  agreement  requires  Guildmaster,  Inc.  to  maintain  certain
     covenants,  the more important of which restricts the purchase of its stock
     and the payment of dividends.

     Guildmaster, Inc. has obtained waivers from the bank on all known events of
     default.  Therefore, the Company is considered to be in compliance with all
     terms of the loan agreement at June 30, 2001.

(13) DEFERRED COMPENSATION

     In January 2001 the Company entered into a deferred compensation  agreement
     with one of its officers. The Company is deferring $40,000 of the officer's
     salary for the period  January 1, 2001 to December 31, 2001.  The agreement
     calls for the  payment of this  amount in January  2002.  The  Company  has
     recorded a $20,000 liability for this agreement as of June 30, 2001.

(14) EMPLOYMENT AGREEMENTS

     As part of the Guildmaster,  Inc.  acquisition,  employment agreements were
     entered into with two officers of the Company. The agreements are effective
     for a three-year period and contain a  covenant-not-to-compete


                                      F-34`

---

`clause that prohibits the officers from competing  against the  corporation
     for two years after the officers  voluntarily  terminate their  employment.
     The agreements  also state that if the officers are employed by the Company
     as of the second  anniversary date  (determination  date) of the agreements
     the officers  shall be issued  shares of common stock of the Company  based
     upon pre-tax profits of  Guildmaster.  The following table shows the market
     value of the shares to be issued:

              Cumulative Pre-tax Profits                   Market Value of
              of Guildmaster, Inc. as of                 Bonus Shares to be
                  Determination Date                     Issued to Employee
          ------------------------------------        --------------------------

          Less than $700,000                                 $              -
          $700,000 - $899,999                                           100,000
          $900,000 - $1,099,999                                         150,000
          $1,100,000 or more                                            250,000


(15) SUBSEQUENT EVENTS

     On July 27, 2001,  Decorate,  Inc. was merged into Decorize,  Inc. Upon the
     completion  of this  merger,  the  assets  and  liabilities  of the  former
     Decorize.com,  L.L.C.  were held  directly by Decorize,  Inc. and Decorize,
     Inc. had one wholly-owned subsidiary, Guildmaster, Inc.

     On July 31, 2001, Faith Walk Designs, Inc., a Texas corporation, was merged
     with  and  into  Step  of  Faith,  Inc.,  a  Missouri   corporation  and  a
     wholly-owned  subsidiary of Decorize, Inc. Step of Faith, Inc. then changed
     its name to Faith Walk Designs, Inc. The consideration given for Faith Walk
     Designs,  Inc.  was a 6.75%  promissory  note  due  March  31,  2002 in the
     principal  amount of  $215,744,  cash of $284,256 and $510,000 in Decorize,
     Inc. common stock for a total value of $1,010,000.  The number of shares of
     Decorize, Inc. stock was determined by dividing the average last sale price
     of such stock during the 30-day period  following  the closing date.  Faith
     Walk Designs, Inc. is a manufacturer of premium, hand painted furniture and
     home accents.

     In connection with the acquisition of Faith Walk Designs,  Inc.,  Decorize,
     Inc. entered into a four-year employment agreement with an officer of Faith
     Walk Designs,  Inc. Pursuant to the agreement,  the officer will serve as a
     vice  president  of  Decorize,  Inc.  and be  responsible  for its  product
     development. In addition, the officer was appointed a director of Decorize,
     Inc. to serve until the next annual meeting of stockholders.

     On August 4, 2001,  the Decorize,  Inc.  board of directors  authorized the
     issuance  of up to 500,000  common  stock  purchase  warrants  to 11 former
     holders of Class B Units in  Decorize.com,  L.L.C.  in  exchange  for up to
     $50,000  and the  waiver by such  holders  of any  claims  they  might have
     against Decorize, Inc. The warrants will be exercisable for $2.00 per share
     until June 30, 2003.

     In August 2001,  the Company began  offering up to $5,000,000 of restricted
     securities to accredited  investors through a private  placement  offering.
     The offering is exempt from registration pursuant to Rule 506 of Regulation
     D of the Securities Act. The Company is offering to sell up to an aggregate
     of 2,000,000  Units for $2.50 per Unit.  Each Unit consists of one share of
     the Company's common stock and one five-year  warrant to purchase one share
     of the Company's  common stock for $4.00 per share. The minimum purchase is
     20,000 Units at $50,000.  The Company has agreed to prepare a  registration
     statement  within 180 days of the initial  sale of the Units  covering  the
     common  stock  issued  pursuant  to sale of the  Units  and the  associated
     warrants.


                                      F-35`

---

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

         The information required by this Item 8 has been previously filed by
         the registrant in its Current Report on Form 8-K filed March 15, 2002,
         and amended on May 28, 2002.


                                    PART III

Item 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The information required by this Item 9 is incorporated by reference to
         the disclosure under the caption "Directors and Executive Officers" in
         our proxy statement for the Annual Meeting of Shareholders to be held
         on November 25, 2002.

Item 10. EXECUTIVE COMPENSATION

         The information required by this Item 10 is incorporated by reference
         to the disclosure under the captions "Executive Compensation" and
         "Report of the Compensation Committee" in our proxy statement for the
         Annual Meeting of Shareholders to be held on November 25, 2002.

Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information  required by  this Item 11 is incorporated by reference
         to the disclosure  under the  caption  "Beneficial  Ownership of Common
         Stock" in our  proxy  statement for the Annual Meeting of  Shareholders
         to be held on November 25, 2002.

Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information  required  by this Item 12 is incorporated by reference
         to the disclosure  under the caption "Certain Relationships and Related
         Transactions"  in  our  proxy  statement  for  the  Annual  Meeting  of
         Shareholders to be held on November 25, 2002.


                                     PART IV

Item 13.  EXHIBITS AND REPORTS ON FORM 8-K

          (a)  Exhibits
                    Reference  is made to the  Exhibit  Index  on page E-1 for a
                    list  of  all  exhibits  filed  or  incorporated  herein  by
                    reference as a part of this report.
          (b)  Reports on Form 8-K 
                    None.


                                       19`

---

`SIGNATURES

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

                                       DECORIZE, INC.


Date:   December 19, 2003               By:   /s/ James K. Parsons
                                          --------------------------------------
                                             James K. Parsons
                                             Chief Executive Officer, President
                                             and Chairman of the Board

          Pursuant to the  requirements of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities indicated on December 19, 2003.

           Name                                         Title

/s/ James K. Parsons
------------------------------------
James K. Parsons                           President and Chief Executive Officer
                                           (principal executive officer)


/s/ Alex Budzinsky
------------------------------------
Alex Budzinsky                             Executive Vice President and Chief Financial
                                           Officer (principal financial officer)

/s/ Brent Olson
------------------------------------
Brent Olson                                Vice President of Finance and Treasurer
                                           (principal accounting officer)

/s/ Kevin Bohren
------------------------------------
Kevin Bohren                               Chairman of the Board


/s/ J. Michael Sandel
------------------------------------
J. Michael Sandel                          Director and Vice President



------------------------------------
Timothy M. Dorgan                          Director


/s/ John E. Bagalay, Jr.
------------------------------------
John E. Bagalay, Jr.                       Director



------------------------------------
Fabian Garcia                              Director


                                       20`

---

`DECORIZE CORPORATION
                                Index to Exhibits
                                  (Item 14(a))

Exhibit
Number                                               Description
-------                                              -----------


2.1  Agreement  and Plan of Merger  between  Decorate,  Inc.  and  decorize.com,
     L.L.C., dated June 18, 2001.(1)
2.2  Agreement  and Plan of Merger by and among JB Express,  Inc.,  GuildMaster,
     Inc., James K. Parsons,  Ellen L. Parsons and Jon T. Baker,  dated June 18,
     2001.(1)
2.3  Securities  Exchange  Agreement  between  Guidelocator.com,  Inc.  and  the
     shareholders of Decorate, Inc., dated June 29, 2001.(2)
2.4  Certificate  of Merger  issued by the State of  Delaware  for the merger of
     Guidelocator.com with and into Decorize, Inc., dated July 5, 2001.(2)
2.5  Articles  of  Merger  issued  by the  State  of  Texas  for the  merger  of
     Guidelocator.com with and into Decorize, Inc., dated July 6, 2001.(2)
2.6  Agreement and Plan of Merger by and among  Decorize,  Inc.,  Step of Faith,
     Inc., Faith Walk Designs, Inc., John Michael Sandel and Kitty Sandel, dated
     July 31, 2001.(3)
2.7  Letter  Agreement  between John Michael Sandel,  Kitty Sandel and Decorize,
     Inc., dated July 31, 2001.(3)
2.8  Letter Agreement #2 between John Michael Sandel, Kitty Sandel and Decorize,
     Inc., dated July 31, 2001.(3)
2.9  Certificate of Ownership and Merger issued by the State of Delaware for the
     merger of  Decorate,  Inc.  with and into  Decorize,  Inc.,  dated July 27,
     2001.(1)
2.10 Articles  of  Merger  issued  by the State of  Missouri  for the  merger of
     Decorate, Inc. with and into Decorize, Inc., dated August 6, 2001.(1)
4.1  Form of  Securities  Purchase  Agreement  between  Decorize,  Inc.  and the
     Purchasers  set forth on the  signature  pages  thereto,  together with all
     exhibits and schedules.(4)
4.2  Securities  Purchase  Agreement,  dated as of  February  26,  2002,  by and
     between Decorize,  Inc. and NestUSA,  Inc.,  together with all exhibits and
     schedules.(5)
4.3  Subscription Agreement dated November 11, 2001, between Decorize,  Inc. and
     Fabian Garcia.(9)
4.4  Form of Decorize, Inc. Stock Certificate.(1)
10.1 Promissory  Note dated June 15,  2001  between  Decorate,  Inc.  and Jon T.
     Baker.(1)
10.2 Promissory  Note dated June 15, 2001  between  Decorate,  Inc. and James K.
     Parsons.(1)
10.3 Employment agreement between Decorate, Inc. and Jon T. Baker dated June 15,
     2001.(1)
10.4 Employment agreement between Decorate, Inc. and James K. Parsons dated June
     15, 2001.(1)
10.5 Promissory Note dated July 31, 2001 between Decorize, Inc. and John Michael
     Sandel and Kitty Sandel.(3)
10.6 Employment  Agreement between Decorize,  Inc. and John Michael Sandel dated
     July 31, 2001.(3)
10.7 Form of $2.00 Warrant expiring June 30, 2003.(3)
10.8 Decorize, Inc. 1999 Stock Option Plan.(6)
10.9 Form of Employee Incentive Stock Option Notice and Agreement.(1)
10.10 Lease  Agreement  between  decorize.com,  L.L.C.  and 211 Union,  LLC dated
      April 10, 2000 for Unit "F" at 211 Union Street, Springfield, Missouri.(1)
10.11 Lease  Agreement  between  decorize.com,  L.L.C.  and 211 Union,  LLC dated
      November  9,  2000  for  Unit  "H"  at  211  Union   Street,   Springfield,
      Missouri.(1)
10.12 Loan  Agreement  between  Decorize,  Inc. and Liberty Bank dated August 16,
      2001.(1)
10.13 Factoring   Contract  and  Security   Agreement   between   First   Factors
      Corporation and GuildMaster, Inc. dated June 25, 1998.(1)
10.14 Subordination  Agreement  by  and  between  GuildMaster,   Inc.,  James  K.
      Parsons, and First Factors Corporation dated June 25, 1998.(1)
10.15 Subordination  Agreement  by  and  between  GuildMaster,   Inc.,  James  K.
      parsons, and GE Capital Commercial Services, Inc. dated April 17, 2000.(1)


                                       21`

---

`10.16 Lease  Agreement  between  C. R.  Wehr,  Jr. and  GuildMaster,  Inc.  dated
      December 1, 1996 for land and  commercial  structure at 2655 North  Airport
      Commerce Avenue, Springfield, Missouri.(1)
10.17 Lease  dated June 23,  1997  between  Phoenix  Home Life  Mutual  Insurance
      Company and GuildMaster,  Inc. for furniture  showroom space in High Point,
      North Carolina.(1)
10.18 Sublease  agreement dated June 9, 1998 between Southern  Accessories Today,
      Inc. and  GuildMaster,  Inc. for showroom space in the Atlanta  Merchandise
      Mart, Atlanta, Georgia.(1)
10.19 Note and security  agreements  by and among  GuildMaster,  Inc.,  Sac River
      Valley Bank and the U.S.  Small  Business  Administration  dated August 13,
      1996.(1)
10.20 Loan  agreement  between  GuildMaster,  Inc. and Liberty Bank dated May 26,
      2001.(1)
10.21 Lease Agreement  between  Shepherd Turk, Inc. and Faith Walk Designs,  Inc.
      dated April 1, 2001 for office and  warehouse  space at 10825 Bareley Lane,
      Suite "D", Houston, Texas.(1)
10.22 Lease  Agreement  between Ed & Robin  Charlesworth  and John Michael Sandel
      dated  August 11,  1997 for retail  store  space at 10609  Grant,  Houston,
      Texas.(1)
10.23 Loan  Agreement  between Faith Walk  Designs,  Inc. and Sterling Bank dated
      June 19, 2000.(1)
10.24 Loan  Agreement  between Faith Walk  Designs,  Inc. and Sterling Bank dated
      February 22, 2000.(1)
10.25 Loan  Agreement  between Faith Walk  Designs,  Inc. and Sterling Bank dated
      December 1, 2000.(1)
10.26 Loan  Agreement  between Faith Walk  Designs,  Inc. and Sterling Bank dated
      September 24, 1999.(1)
10.27 Loan  Agreement  between Faith Walk  Designs,  Inc. and Sterling Bank dated
      November 16, 2000.(1)
10.28 Lease  Agreement  between  Faith Walk  Designs,  Inc. and Republic  Leasing
      Company dated May 18, 1998.(1)
10.29 Equipment  Lease between  Faith Walk Designs,  Inc. and Monex Leasing dated
      January 29, 1998.(1)
23.2  Consent of Hallett & Perrin, P.C. (included in Exhibit 5)
24    Power of Attorney (included on p. II-4)
31(a) Certification  by James K. Parsons,  President and Chief Executive  Officer
      of the  Registrant,  pursuant to 17 CFR 240.13a - 14(a) or 17 CFR 240.15d -
      14(a). (9)
31(b) Certification  by  Alex  Budzinsky,  Executive  Vice  President  and  Chief
      Financial Officer of the Registrant,  pursuant to 17 CFR 240.13a - 14(a) or
      17 CFR 240.15d - 14(a). (9)
32(a) Certification  of  CEO  pursuant  to 18  U.S.C.  Section  1350  as  adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (9)
32(b) Certification  of  CFO  pursuant  to 18  U.S.C.  Section  1350  as  adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (9)
99.1  Proxy Statement of Registrant. (10)

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

(1)  Incorporated  by  reference  to the  exhibits to the Annual  Report on Form
     10-KSB filed by Registrant on September 28, 2001.
(2)  Incorporated by reference to the exhibits to the Current Report on Form 8-K
     filed by Registrant on July 16, 2001.
(3)  Incorporated by reference to the exhibits to the Current Report on Form 8-K
     filed by Registrant on August 15, 2001.
(4)  Incorporated by reference to the exhibits to the Current Report on Form 8-K
     filed by Registrant on March 15, 2002.
(5)  Incorporated by reference to the exhibits to the Current Report on Form 8-K
     filed by Registrant on March 19, 2002.
(6)  Incorporated by reference to the exhibits to the Registration  Statement on
     Form  SB-2  filed by  Guidelocator.com  on  September  29,  1999  (File no.
     000-88083).
(7)  Incorporated by reference to the exhibits to the Current Report on Form 8-K
     filed by Registrant on August 1, 2001.
(8)  Incorporated by reference to the exhibits to the Current Report on Form 8-K
     filed by Registrant on April 12, 2002.
(9)  Filed herewith.
(10) Filed November 4, 2002.


                                       22`