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U.S. SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-KSB
 ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006.
 COMMISSION FILE NUMBER 00-29266
 CVF TECHNOLOGIES CORPORATION
  NEVADA
    
    87-0429335(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)8604 Main Street, Suite 1WILLIAMSVILLE, NEW YORK
    
    14221(Address of principal executive offices)
    
    (Zip Code)
  
    o
  þ o
  o þ
 þ
     o þ




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TABLE OF CONTENTS  PART IITEM 1. DESCRIPTION OF BUSINESSITEM 2 DESCRIPTION OF PROPERTYITEM 3 LEGAL PROCEEDINGSITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSPART IIITEM 5 MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIESITEM 6 MANAGEMENTS DISCUSSION AND ANALYSISITEM 7 FINANCIAL STATEMENTSITEM 8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREITEM 8A CONTROLS AND PROCEDURESITEM 8B OTHER INFORMATIONPART IIIITEM 9 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACTITEM 10 EXECUTIVE COMPENSATIONITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEITEM 13 EXHIBITSITEM 14 PRINCIPAL ACCOUNTANT FEES AND SERVICESSIGNATUREEXHIBIT INDEXEX-21EX-31.1EX-31.2EX-32    Table of Contents  
  
    
  CVFs PERCENTAGEOWNERSHIP OFVOTING SECURITIESCORPORATION
    
    OF ACTIVE COMPANIES1. Ecoval Corporation
    
    
    85
    %2. G.P. Royalty Distribution Corporation
(formerly Gemprint Corporation)
    
    
    65
    %3. Xylodyne Corporation
    
    
    40
    %4. Petrozyme Technologies Inc.
    
    
    50
    %5. Biorem Inc. (formerly Biorem Technologies Inc.)
    
    
    24
    %
 The Corporations




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tm tm tm
  tm




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TM




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TM ® TM




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LOW
    
    HIGH2006 - 1st Quarter
    
    
    0.28
    
    
    
    0.39- 2nd Quarter
    
    
    0.32
    
    
    
    0.50- 3rd Quarter
    
    
    0.22
    
    
    
    0.32- 4th Quarter
    
    
    0.16
    
    
    
    0.222005 - 1st Quarter
    
    
    0.32
    
    
    
    0.51- 2nd Quarter
    
    
    0.15
    
    
    
    0.38- 3rd Quarter
    
    
    0.17
    
    
    
    0.28- 4th Quarter
    
    
    0.15
    
    
    
    0.35




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Number of securitiesremaining availableWeighted-
    
    forNumber of
    
    average
    
    future issuancesecurities to
    
    exercise price
    
    underbe issued upon
    
    of
    
    equity compensationexercise of
    
    outstanding
    
    plans (excludingoutstanding
    
    options,
    
    securitiesoptions, warrants
    
    warrants
    
    reflected in columnPlan category
    
    and rights
    
    and rights
    
    (a)(a)
    
    (b)
    
    (c)Equity compensation
plans
approved by
security holders
    
    
    70,000
    
    
    
    0.16
    
    
    
    - 0 -Equity compensation
plans not
approved by
security holders
    
    
    275,000
    
    
    
    0.30
    
    
    
    - 0 -Total
    
    
    345,000
    
    
    
    0.27
    
    
    
    - 0 -




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Small Business Issuer Purchases of Equity Securities
 Maximum Approximate DollarTotal No. of shares
    
    Value of shares that mayTotal Number
    
    Average
    
    purchased as part of
    
    yet be purchased underof Shares
    
    Price Paid
    
    publicly announced
    
    publicly announced plans orPERIOD
    
    Purchased
    
    per Share
    
    plans or programs
    
    programsJanuary 2006
    
    
    84,100
    
    
    $
    0.33
    
    
    
    84,100
    
    
    $
    470,543.00February 2006
    
    
    49,300
    
    
    $
    0.36
    
    
    
    49,300
    
    
    $
    451,889.50March 2006
    
    
    38,100
    
    
    $
    0.38
    
    
    
    38,100
    
    
    $
    436,875.60April 2006
    
    
    879,961
    
    
    $
    0.40
    
    
    
    879,961
    
    
    $
    82,733.95May 2006
    
    
    89,800
    
    
    $
    0.37
    
    
    
    89,800
    
    
    $
    47,940.14June 2006
    
    
    4,600
    
    
    $
    0.33
    
    
    
    4,600
    
    
    $
    46,445.14September 2006
    
    
    16,800
    
    
    $
    0.23
    
    
    
    16,800
    
    
    $
    42,581.14October 2006
    
    
    4,200
    
    
    $
    0.19
    
    
    
    4,200
    
    
    $
    41,783.14November 2006
    
    
    15,800
    
    
    $
    0.19
    
    
    
    15,800
    
    
    $
    38,781.14December 2006
    
    
    -0-
    
    
    
    -0-
    
    
    
    -0-
    
    
    $
    38,781.14TOTAL
    
    
    1,182,661
    
    
    $
    0.38
    
    
    
    1,182,661
    
    
    $
    38,781.14
 
    tm
 TM TM TM TM TM TM TM TM




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1.
    
    The Company continued to invest in sales staff and research and development
activities. In 2006, the new MytilusTM biotrickling filter was introduced into
the field with 5 installations now completed or in construction. The successful
introduction of this product line has significantly broadened the sales opportunities for
the Company. BIOREM is now the only biological odor management company that has a
comprehensive line of both biofilters and biotrickling filters for the growing market.2.
    
    Two new patent applications were filed for the use of a novel filter media in
biofilters and biotrickling filters. In addition, new municipal SynergyTM
products were introduced that incorporate combined biological processes for reliable
treatment results over a broad range of air inlet conditions.3.
    
    Progress was made in new markets areas in industry as well as internationally. Two
projects worth in excess of $2 million total were completed or in progress in 2006 for
odor control in new municipal solid waste composting installations. Additionally, two
municipal biofilter systems were installed in Israel with high customer satisfaction,
further demonstrating Biorems ability to compete for and expand its business
internationally.4.
    
    In 2006 Biorem strengthened both the management team and the Board of Directors. New
positions of Director of Municipal Sales and VP of Research were added, recognizing the
importance of these two functions in both near term and short term growth. Sales managers
located in each US sales region and a program to proactively manage the network of 26
manufacturers reps provides improved representation across the continent that is expected
to result in increased sales productivity. Internally, applications engineering and
customer service groups were created to improve customer response and satisfaction.5.
    
    Two new board members were added in 2006 who provided excellent supplementary
guidance to the Company in strategic direction for augmenting development of sales growth.




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
    
    general economic and business conditions;




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
    
    foreign currency fluctuations, particularly involving Canadian dollars;
    
    the Companys ability to find additional suitable investments and the ability of those
investments to generate an acceptable return on invested capital;
    
    the uncertainties and risks involved in investing in early-stage development companies
which can arise because of the lack of a customer base, lack of name recognition and
credibility, the need to bring in experienced management and
the need to develop and refine the business and its operations, among other reasons;
    
    the Companys ability to obtain capital to fund its operations and those of its investees,
if those expenses were to increase significantly.




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CVF Technologies Corporation




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CVF Technologies Corporation
 INDEX TO FINANCIAL STATEMENTS
 Page numberREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    
    F-2CONSOLIDATED BALANCE SHEETS
    
    F-3CONSOLIDATED STATEMENTS OF OPERATIONS
    
    F-5CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
    
    F-7CONSOLIDATED STATEMENTS OF CASH FLOWS
    
    F-9CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
    
    F-10NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    
    F-11




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    /s/ Sherb & Co., LLPCertified Public Accountants
   F-2




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CVF Technologies Corporation
 CONSOLIDATED BALANCE SHEETS
 As at December 31
    
    [Expressed in U.S. Currency]
 2006
    
    2005$
    
    $ASSETSCurrent AssetsCash and cash equivalents
    
    
    1,164,736
    
    
    
    3,793,577Restricted cash
    
    
    1,167,954
    
    
    
    2,724,316Trade receivables, net
    
    
    401,714
    
    
    
    11,005Inventory
    
    
    62,126
    
    
    
    9,932Prepaid expenses and other
    
    
    37,148
    
    
    
    31,660Total current assets
    
    
    2,833,678
    
    
    
    6,570,490Property and equipment, net of accumulated depreciation
    
    
    12,167
    
    
    
    5,699Loans receivable  related party
    
    
    142,251
    
    
    
    142,251Equity investment in Biorem
    
    
    487,546
    
    
    
    626,000Holdings available for sale, at market
    
    
    18,628
    
    
    
    1,058Security Deposit, long-term
    
    
    1,426
    
    
    
    Note receivable
    
    
    406,461
    
    
    
    Total assets
    
    
    3,902,157
    
    
    
    7,345,498
 See accompanying notes
 F-3




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CVF Technologies Corporation
 CONSOLIDATED BALANCE SHEETS contd
 As at December 31
    
    [Expressed in U.S. Currency]
 2006
    
    2005$
    
    $LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt
    
    
    
    
    
    
    25,000Accounts payables and accrued liabilities
    
    
    2,322,857
    
    
    
    2,260,153Total current liabilities
    
    
    2,322,857
    
    
    
    2,285,153Long-term liabilitiesDeferred income taxes
    
    
    87,195
    
    
    
    87,424Minority interest
    
    
    832,111
    
    
    
    916,936Pension obligation
    
    
    588,540
    
    
    
    614,898Total long-term liabilities
    
    
    1,507,846
    
    
    
    1,619,258Redeemable Series A preferred stock, $0.001 par value,
redeemable at $18.25 per share, authorized 500,000 shares,
issued and outstanding shares 1,592 [2005; 3,477]
    
    
    29,054
    
    
    
    63,4553,859,757
    
    
    
    3,967,866Commitments and contingenciesStockholders equitySeries C convertible preferred stock
$0.001 par value, issued and outstanding nil shares,
Stated value $1,000,000 [2005; 100,000]
    
    
    
    
    
    
    100Common stock, $0.001 par value, authorized 50,000,000 shares,
outstanding 12,637,735 [2005; 13,820,396]
and in treasury 1,664,361 [2005; 481,700]
    
    
    15,962
    
    
    
    14,302Warrants
    
    
    111,094
    
    
    
    111,094Additional paid-in capital
    
    
    29,643,702
    
    
    
    30,620,178Treasury stock
    
    
    (3,208,392
    )
    
    
    (2,747,174
    )Accumulated other comprehensive loss
    
    
    (271,606
    )
    
    
    (220,190
    )Accumulated deficit
    
    
    (26,248,360
    )
    
    
    (24,400,678
    )Total stockholders equity
    
    
    42,400
    
    
    
    3,377,632Total liabilities and stockholders equity
    
    
    3,902,157
    
    
    
    7,345,498
 See accompanying notes
 F-4




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CVF Technologies Corporation
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Year ended December 31
    
    [Expressed in U.S. Currency]
 2006
    
    2005$
    
    $SALES
    
    
    1,478,454
    
    
    
    456,947Royalty Income
    
    
    33,184
    
    
    
    Cost of sales
    
    
    1,214,518
    
    
    
    154,412Gross margin
    
    
    297,120
    
    
    
    302,535EXPENSESSelling, general and administrative
    
    
    2,291,670
    
    
    
    2,251,616Total expenses
    
    
    2,291,670
    
    
    
    2,251,616Loss from continuing operations
before under noted items
    
    
    (1,994,550
    )
    
    
    (1,949,081
    )Other income (expenses)Interest income (expense), net
    
    
    102,042
    
    
    
    1,272,217Other income (expense)
    
    
    
    
    
    
    11,113Gain on Gemprint Note
    
    
    567,712
    
    
    
    (Loss) Income from equity investees
    
    
    (188,077
    )
    
    
    90,044Gain on sale of Biorem
    
    
    
    
    
    
    1,541,630Income from sale of asset  Gemprint
    
    
    
    
    
    
    6,361,304Goodwill impairment write-off
    
    
    
    
    
    
    (1,200,108
    )Minority interest  Gemprint
    
    
    101,257
    
    
    
    (916,936
    )Realized currency translation gain (loss)
    
    
    (417,660
    )
    
    
    8,629Total other income
    
    
    165,274
    
    
    
    7,167,893(Loss) income from operations before
income taxes
    
    
    (1,829,276
    )
    
    
    5,218,812Income taxes (recovery)
    
    
    15,815
    
    
    
    (81,003
    )Net (loss) income
    
    
    (1,845,091
    )
    
    
    5,299,815
 See accompanying notes
 F-5




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CVF Technologies Corporation
 CONSOLIDATED STATEMENTS OF OPERATIONS contd
 Year ended December 31
    
    [Expressed in U.S. Currency]
 2006
    
    2005$
    
    $Net income (loss) attributable to common
stockholders
    
    
    (1,847,682
    )
    
    
    5,296,720Basic weighted average number of
shares
    
    
    12,915,659
    
    
    
    13,818,289Diluted weighted average number of
shares
    
    
    12,915,659
    
    
    
    14,565,420Basic earnings (loss) per share
    
    
    (0.14
    )
    
    
    0.38Diluted earnings (loss) per share
    
    
    (0.14
    )
    
    
    0.36
 See accompanying notes
 F-6




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CVF Technologies Corporation
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY contd
 Year ended December 31
    
    [Expressed in U.S. Currency]
 Series C
    
    
    
    
    
    
    
    
    
    
    
    
    
    AccumulatedConvertible
    
    Additional
    
    
    
    
    
    
    
    
    
    otherCommon stock
    
    
    
    
    
    Preferred
    
    paid-in
    
    Accumulated
    
    Treasury
    
    comprehensive
    
    TotalShares
    
    Amount
    
    Warrants
    
    Stock
    
    capital
    
    deficit
    
    stock
    
    income
    
    equity$
    
    $
    
    $
    
    $
    
    $
    
    $
    
    $
    
    $
    
    $Balance  December 31, 2004
    
    
    14,242,925
    
    
    
    14,243
    
    
    
    111,094
    
    
    
    100
    
    
    
    30,632,237
    
    
    
    (29,697,398
    )
    
    
    (2,747,174
    )
    
    
    (409,594
    )
    
    
    (2,096,492
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,299,815
    
    
    
    
    
    
    
    
    
    
    
    5,299,815Dividends on Series A preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,095
    )
    
    
    
    
    
    
    
    
    
    
    (3,095
    )Unrealized loss on securities available
for sale, net of reclassification
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (306
    )
    
    
    (306
    )Shares exercised in options
    
    
    59,171
    
    
    
    59
    
    
    
    
    
    
    
    
    
    
    
    23,141
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,200Stock Option   change in market value
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (35,200
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (35,200
    )Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    189,710
    
    
    
    189,710Balance  December 31, 2005
    
    
    14,302,096
    
    
    
    14,302
    
    
    
    111,094
    
    
    
    100
    
    
    
    30,620,178
    
    
    
    (24,400,678
    )
    
    
    (2,747,174
    )
    
    
    (220,190
    )
    
    
    3,377,632
 See accompanying notes
 F-7




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CVF Technologies Corporation
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY contd
 Year ended December 31
    
    [Expressed in U.S. Currency]
 Series C
    
    
    
    
    
    
    
    
    
    
    
    
    
    AccumulatedConvertible
    
    Additional
    
    
    
    
    
    
    
    
    
    otherCommon stock
    
    
    
    
    
    Preferred
    
    paid-in
    
    Accumulated
    
    Treasury
    
    comprehensive
    
    TotalShares
    
    Amount
    
    Warrants
    
    Stock
    
    capital
    
    deficit
    
    stock
    
    income
    
    equity$
    
    $
    
    $
    
    $
    
    $
    
    $
    
    $
    
    $
    
    $Balance  December 31, 2005
    
    
    14,302,096
    
    
    
    14,302
    
    
    
    111,094
    
    
    
    100
    
    
    
    30,620,178
    
    
    
    (24,400,678
    )
    
    
    (2,747,174
    )
    
    
    (220,190
    )
    
    
    3,377,632Net (Loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,845,091
    )
    
    
    
    
    
    
    
    
    
    
    (1,845,091
    )Dividends on Series A preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,591
    )
    
    
    
    
    
    
    
    
    
    
    (2,591
    )Treasury shares purchased
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (461,218
    )
    
    
    
    
    
    
    (461,218
    )Unrealized loss on securities available
for sale, net of reclassification
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (58
    )
    
    
    (58
    )Redemption of Series C
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (100
    )
    
    
    (1,130,667
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,130,767
    )Restricted Shares issued
    
    
    1,660,000
    
    
    
    1,660
    
    
    
    
    
    
    
    
    
    
    
    160,190
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    161,850Warrants expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,999
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,999
    )Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (51,358
    )
    
    
    (51,358
    )Balance  December 31, 2006
    
    
    15,962,096
    
    
    
    15,962
    
    
    
    111,094
    
    
    
    0
    
    
    
    29,643,702
    
    
    
    (26,248,360
    )
    
    
    (3,208,392
    )
    
    
    (271,606
    )
    
    
    42,400
 See accompanying notes
 F-8




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CVF Technologies Corporation
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year ended December 31
    
    [Expressed in U.S. Currency]
 2006
    
    2005$
    
    $OPERATING ACTIVITIESNet income (loss) to cash used in operating activities
    
    
    (1,845,091
    )
    
    
    5,299,815Adjustments
to reconcile net loss from continuing operationsDepreciation and amortization
    
    
    3,315
    
    
    
    13,305Gemprint goodwill impairment
    
    
    
    
    
    
    1,200,108Loss (Income) from equity investees
    
    
    188,077
    
    
    
    (90,044
    )Minority interest in income
    
    
    (101,257
    )
    
    
    916,936Gain on Gemprint note
    
    
    (406,461
    )
    
    
    Issuance of stock and exercise of options for services
    
    
    
    
    
    
    23,200Compensation expense for variable accounting for options
    
    
    
    
    
    
    (35,200
    )Deferred income tax expense
    
    
    (229
    )
    
    
    (154,468
    )Amortization of shares issued for services
    
    
    161,843
    
    
    
    Changes in operating assets and liabilitiesDecrease (increase) in trade receivables
    
    
    (390,709
    )
    
    
    128,308Decrease (increase) in inventory and other
    
    
    (52,194
    )
    
    
    48,886Prepaid expenses
    
    
    (5,488
    )
    
    
    (1,574
    )Increase (decrease) in accounts payable and accrued liabilities
    
    
    62,704
    
    
    
    (967,936
    )Deferred income taxes payable
    
    
    
    
    
    
    (154,468
    )Security Deposit
    
    
    (1,426
    )
    
    
    Pension expense
    
    
    (26,358
    )
    
    
    (4,018
    )Cash provided by (applied to) operating activities
    
    
    (2,413,274
    )
    
    
    6,222,850INVESTING ACTIVITIESProceeds from sales of Biorem shares
    
    
    
    
    
    
    273,159Investment in investee companies
    
    
    (60,369
    )
    
    
    Cash provided by (applied to) investing activities
    
    
    (60,369
    )
    
    
    273,159FINANCING ACTIVITIESRepayment of debt
    
    
    (25,000
    )
    
    
    239,139Redemption of Series A preferred shares
    
    
    (34,401
    )
    
    
    Redemption of Series C preferred shares
    
    
    (1,130,767
    )
    
    
    Purchase of treasury stock
    
    
    (461,218
    )
    
    
    Exercise of options for cash
    
    
    
    
    
    
    23,200Gemprint preferred shares redeemed
    
    
    
    
    
    
    (208,425
    )Cash provided by (applied to) financing activities
    
    
    (1,651,386
    )
    
    
    53,914Effect of exchange rate changes on
cash and cash equivalents
    
    
    (60,174
    )
    
    
    (144,678
    )Cash and cash equivalents (applied) during year
    
    
    (4,185,203
    )
    
    
    6,405,245Cash and cash equivalents, beginning of year
    
    
    6,517,893
    
    
    
    112,648Cash and cash equivalents, end of year
    
    
    2,332,690
    
    
    
    6,517,893Cash paid during the year for interest
    
    
    655
    
    
    
    76,565Cash paid during the year for income taxes
    
    
    5,071
    
    
    
    75,992
 See accompanying notes
 F-9




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##### Table of Contents



CVF Technologies Corporation
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 Year ended December 31
    
    [Expressed in U.S. Currency]
 2006
    
    2005$
    
    $Net income( loss)
    
    
    (1,845,091
    )
    
    
    5,299,815Other comprehensive income (loss),
net of taxForeign currency translation adjustments
[net of tax effect]
    
    
    (51,358
    )
    
    
    189,710Unrealized holding (losses) gains:Reclassification adjustments for previously
recognized unrealized holding (gains)
[net of taxes of ( $39) and ( $204)
for the years ended December 31, 2006
and 2005]
    
    
    (58
    )
    
    
    (306
    )(58
    )
    
    
    (306
    )Total other comprehensive income (loss)
    
    
    (51,416
    )
    
    
    189,404Comprehensive income (loss) during year
    
    
    (1,896,507
    )
    
    
    5,489,219
 See accompanying notes
 F-10




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##### Table of Contents



CVF Technologies Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the years ending December 31, 2006 and 2005
    
    [Expressed in U.S. Currency]
 1. ORGANIZATION AND BUSINESS DESCRIPTION
    Ecoval Corporation [Ecoval]
 G.P. Royalty Distribution Corporation (formerly Gemprint Corporation) [Gemprint]
    F-11




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##### Table of Contents



CVF Technologies Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the years ending December 31, 2006 and 2005
    
    [Expressed in U.S. Currency]
 1. ORGANIZATION AND BUSINESS DESCRIPTION
  Xylodyne Corporation (Xylodyne),
 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  [a] Principles of consolidation
     F-12




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##### Table of Contents



CVF Technologies Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the years ending December 31, 2006 and 2005
    
    [Expressed in U.S. Currency]
 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  contd
 [b] Foreign currency translation
   [c] Cash and cash equivalents
  [d] Trade receivables
    [e] Inventory
  F-13




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##### Table of Contents



CVF Technologies Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the years ending December 31, 2006 and 2005
    
    [Expressed in U.S. Currency]
 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  contd
 [f] Property and equipment
  
  [g] Financial instruments
    2006
    
    2005$
    
    $Cash and cash equivalents
    
    
    121,925
    
    
    
    34,161Trade receivables
    
    
    
    
    
    
    4,717Trade payables
    
    
    345,850
    
    
    
    522,930Pension obligation
    
    
    588,540
    
    
    
    614,898
 F-14




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##### Table of Contents



CVF Technologies Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the years ending December 31, 2006 and 2005
    
    [Expressed in U.S. Currency]
 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  contd
 [h] Goodwill
  [i] Impairment of Long-Lived Assets
  [j] Minority interest
  [k] Income (Loss) per share
   F-15




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##### Table of Contents



CVF Technologies Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the years ending December 31, 2006 and 2005
    
    [Expressed in U.S. Currency]
 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  contd
 [l] Revenue recognition
    [m] Stock-based compensation
    F-16




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##### Table of Contents



CVF Technologies Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the years ending December 31, 2006 and 2005
    
    [Expressed in U.S. Currency]
 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  contd
 [n] Income taxes
  [o] Use of estimates
  [p] Credit risk
  [q] Impact of recently issued accounting standards
 FASB 155  Accounting for Certain Hybrid Financial Instruments
  F-17




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##### Table of Contents



CVF Technologies Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the years ending December 31, 2006 and 2005
    
    [Expressed in U.S. Currency]
 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  contd
 [q] Impact of recently issued accounting standards  contd
  FASB 156  Accounting for Servicing of Financial Assets
  FIN 48  Accounting for Uncertainty in Income Taxes
  F-18




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##### Table of Contents



CVF Technologies Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the years ending December 31, 2006 and 2005
    
    [Expressed in U.S. Currency]
 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  cont
 FASB 157  Fair Value Measures
  3. INVENTORY
  2006
    
    2005$
    
    $Finished goods
    
    
    62,126
    
    
    
    75,935Less reserve for obsolescence
    
    
    
    
    
    
    (66,003
    )62,126
    
    
    
    9,932
 4. HOLDINGS
  [a]
    
    Petrozyme Technologies, Inc. [Petrozyme], a Guelph, Canada, private company
in the business of developing and marketing processes for the degradation of
petroleum waste products.[b]
    
    Biorem Technologies Inc. [Biorem], a Guelph, Canada, public company at
December 31, 2006 and December 31, 2005 (private company at December 31, 2004),
which went public in January 2005, is an industrial biotech company engaged in
the business of applying industrial air pollution control applications.
    
    In addition, the Company has other holdings available for sale, other notes and
other holdings which are not individually significant.
 F-19




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##### Table of Contents



CVF Technologies Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the years ending December 31, 2006 and 2005
    
    [Expressed in U.S. Currency]
 4. HOLDINGS  contd
  HoldingsHoldings
    
    available forat cost
    
    for sale atPercentage
    
    or equity
    
    fair valueownership
    
    $
    
    $Petrozyme50 common shares
    
    
    50
    %
    
    
    
    
    
    
    250,000
Class C non-voting shares notes and advances [net of equity
in losses] [i]
    
    
    100
    %
    
    
    
    
    
    
    Biorem2,819,100 effective common shares [ii]
    
    
    23.5
    %
    
    
    487,546
    
    
    
    Other notes and holdings
    
    
    
    
    
    
    
    
    
    
    18,628Total
    
    
    
    
    
    
    487,546
    
    
    
    18,628
  HoldingsHoldings
    
    available forat cost
    
    for sale atPercentage
    
    or equity
    
    fair valueownership
    
    $
    
    $Petrozyme50 common shares
    
    
    50
    %
    
    
    
    
    
    
    250,000
Class C non-voting shares notes and advances [net of equity
in losses] [i]
    
    
    100
    %
    
    
    
    
    
    
    Biorem2,795,500 effective common shares [ii]
    
    
    27.2
    %
    
    
    626,000
    
    
    
    Other notes and holdings
    
    
    
    
    
    
    
    
    
    
    1,058Total
    
    
    
    
    
    
    626,000
    
    
    
    1,058
 F-20




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##### Table of Contents



CVF Technologies Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the years ending December 31, 2006 and 2005
    
    [Expressed in U.S. Currency]
 4. HOLDINGS  contd
    2006
    
    2005Income Statement Data (Unaudited)
    
    $
    
    $Net sales
    
    
    135,528
    
    
    
    190,126Gross profit (loss) on sales
    
    
    111,365
    
    
    
    63,426Net (loss)
    
    
    (222,432
    )
    
    
    (163,417
    )CVFs share of net (loss)
    
    
    (111,216
    )
    
    
    (81,709
    )Balance Sheet DataCurrent assets
    
    
    26,801
    
    
    
    31,661Total assets
    
    
    26,801
    
    
    
    31,661Current liabilities
    
    
    28,165
    
    
    
    57,800Non-current liabilities
    
    
    3,150,997
    
    
    
    2,915,755(Deficit)
    
    (
    3,152,361
    )
    
    
    (2,941,894
    )Total liabilities and equity
    
    
    26,801
    
    
    
    31,661CVFs share of (accumulated deficit)
    
    (
    1,576,180
    )
    
    
    (1,470,947
    )CVFs share of non-current liabilities
    
    
    3,150,997
    
    
    
    2,915,755
 F-21




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##### Table of Contents



CVF Technologies Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the years ending December 31, 2006 and 2005
    
    [Expressed in U.S. Currency]
 4. HOLDINGS  contd
   Year ended December 31, 2006
BioremIncome Statement Data (Unaudited)
$Net sales

10,597,336Gross profit on sales
3,646,252Net (loss)
(679,237
    )CVFs share of net (loss)
(188,077
    )Balance Sheet DataCurrent assets
7,798,695Total assets
12,529,672Current liabilities
2,806,735Equity
    9,722,937Total liabilities and equity
12,529,672CVFs share of equity
2,591,163
 Year ended December 31, 2005
    
    Biorem
    
    SREIncome Statement Data (Unaudited)
    
    $
    
    $Net sales
    
    
    8,848,817
    
    
    
    590,453Gross profit (loss) on sales
    
    
    3,918,000
    
    
    
    191,473Net income (loss)
    
    
    284,050
    
    
    
    (91,723
    )CVFs share of net income (loss)
    
    
    90,044
    
    
    
    (33,937
    )Balance Sheet DataCurrent assets
    
    
    5,699,943
    
    
    
    Total assets
    
    
    10,291,284
    
    
    
    Current liabilities
    
    
    2,867,558
    
    
    
    Equity (Deficit in assets)
    
    
    7,423,726
    
    
    
    Total liabilities and equity
    
    
    10,291,284CVFs share of equity (accumulated deficit)
    
    
    2,353,321
    
    
    
    
  F-22




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##### Table of Contents



CVF Technologies Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the years ending December 31, 2006 and 2005
    
    [Expressed in U.S. Currency]
 4. HOLDINGS  contd
        F-23




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##### Table of Contents



CVF Technologies Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the years ending December 31, 2006 and 2005
    
    [Expressed in U.S. Currency]
 5. CONCENTRATION OF CREDIT RISK
  6. DEPENDENCY ON SUPPLIER
  7. TECHNOLOGY AND GOODWILL
  2006
    
    2005$
    
    $Cost
    
    
    
    
    
    
    1,210,132Accumulated amortization
    
    
    
    
    
    
    (1,210,132
    )
    
    
    
    
  F-24




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##### Table of Contents



CVF Technologies Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the years ending December 31, 2006 and 2005
    
    [Expressed in U.S. Currency]
 7. TECHNOLOGY AND GOODWILL  contd
   Accumulated
    
    Net bookCost
    
    amortization*
    
    value2006
    
    $
    
    $
    
    $Gemprint
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 Accumulated
    
    Net bookCost
    
    amortization
    
    value2005
    
    $
    
    $
    
    $Gemprint
    
    
    2,444,366
    
    
    
    2,444,366
    
    
    
    2,444,366
    
    
    
    2,444,366
    
    
    
    
  
 F-25




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##### Table of Contents



CVF Technologies Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the years ending December 31, 2006 and 2005
    
    [Expressed in U.S. Currency]
 8. LONG-TERM DEBT
  2006
    
    2005$
    
    $Loan from an unrelated party to CVF of $25,000Loan terms as outlined below.
    
    
    
    
    
    
    25,000Total long-term debt
    
    
    
    
    
    
    25,000Less: current portion of long-term debt
    
    
    
    
    
    
    (25,000
    )Long-term debt excluding current portion and loans past
due or in default
    
    
    
    
    
    
    
  9. PENSION OBLIGATION
  F-26




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##### Table of Contents



CVF Technologies Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the years ending December 31, 2006 and 2005
    
    [Expressed in U.S. Currency]
 10. INCOME TAXES
  2006
    
    2005$
    
    $Current:U.S.Income taxes on interest income from subsidiary
    
    
    
    
    
    
    71,552ForeignTaxes (net of recovery) on operations of subsidiaries
    
    
    15,815
    
    
    
    Total current taxes
    
    
    15,815
    
    
    
    71,552Deferred:U.S.
    
    
    
    
    
    
    (152,555
    )Total deferred taxes
    
    
    15,85
    
    
    
    (152,555
    )Income tax (recovery)
    
    
    15,815
    
    
    
    (81,003
    )Income (loss) before (recovery of) income taxes:U.S.
    
    
    (1,281,157
    )
    
    
    1,346,892Foreign
    
    
    (548,119
    )
    
    
    3,871,920Income (loss) before (recovery of) income taxes
    
    
    (1,829,276
    )
    
    
    5,218,812
   2006
    
    2005%
    
    %U.S. statutory income tax rate
    
    
    (35.0
    )
    
    
    (35.0
    )(Decrease) increase in income tax resulting from:Non-deductible equity compensation
    
    
    
    
    
    
    .6Loss in subsidiaries not recognized for tax purposes
    
    
    
    
    
    
    Recognized tax benefit of subsidiary foreign loss carryforwards
    
    
    3.33
    
    
    
    29.5Change in allowance
    
    
    14.92
    
    
    
    Net operating loss carryforward utilized for foreign distributions
    
    
    16.75
    
    
    
    Other
    
    
    
    
    
    
    3.3Effective income tax rate
    
    
    
    
    
    
    (1.6
    )
 F-27




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##### Table of Contents



CVF Technologies Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the years ending December 31, 2006 and 2005
    
    [Expressed in U.S. Currency]
 10. INCOME TAXES  contd
  2006
    
    2005$
    
    $Change in:Operating Tax loss carryforward, CVF Corporation
    
    
    370,962
    
    
    
    294,763Operating tax loss carryforward, subsidiaries
    
    
    (119,799
    )
    
    
    1,901,370Capital tax loss carryforward, CVF Corporation
    
    
    (142,082
    )
    
    
    (861,674
    )Difference in basis in subsidiary
    
    
    (224,721
    )
    
    
    (1,168,372
    )Pension obligation
    
    
    8,994
    
    
    
    1,394Other
    
    
    
    
    
    
    (152,555
    )Change in valuation allowance
    
    
    106,646
    
    
    
    (167,481
    )
    
    
    
    (152,555
    )
  2006
    
    2005$
    
    $Deferred tax assets:U.S.Operating tax loss carryforward
    
    
    484,625
    
    
    
    855,587Capital loss carry-forward
    
    
    1,479,214
    
    
    
    1,337,132Difference in basis in subsidiary
    
    
    1,393,093
    
    
    
    1,168,372Related to pension obligation
    
    
    200,043
    
    
    
    209,037Less: Valuation allowance
    
    
    (3,556,975
    )
    
    
    (3,570,128
    )
    
    
    
    Deferred tax liabilities:U.S.Investment & notes in investees
    
    
    87,195
    
    
    
    87,42487,195
    
    
    
    87,424Net deferred tax (liability)
    
    
    (87,195
    )
    
    
    (87,424
    )Deferred tax assets:ForeignIncome tax losses available for carryforward in subsidiaries
    
    
    246,390
    
    
    
    126,591Less: Valuation allowance
    
    
    (246,390
    )
    
    
    (126,591
    )Net deferred tax asset  foreign
    
    
    
    
    
    
    
 F-28




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##### Table of Contents



CVF Technologies Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the years ending December 31, 2006 and 2005
    
    [Expressed in U.S. Currency]
 10. INCOME TAXES  contd
   11. STOCKHOLDERS EQUITY
 [a] Common shares
   [b] Preferred stock
  Redeemable Series A preferred stock
  F-29




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##### Table of Contents



CVF Technologies Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the years ending December 31, 2006 and 2005
    
    [Expressed in U.S. Currency]
 11. STOCKHOLDERS EQUITY  contd
 [b] Preferred stock  contd
 Redeemable Series A preferred stock  contd
  
 Series B & C convertible preferred stock
   F-30




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##### Table of Contents



CVF Technologies Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the years ending December 31, 2006 and 2005
    
    [Expressed in U.S. Currency]
 11. STOCKHOLDERS EQUITY  contd
 [c] Warrants
  [d] Comprehensive income (loss)
   Unrealized
    
    
    
    
    
    Accumulatedgains (losses)
    
    Foreign
    
    otheron securities
    
    currency
    
    comprehensive[net of tax]
    
    translation
    
    income (losses)$
    
    $
    
    $Balance  December 31, 2004
    
    
    4,541
    
    
    
    (414,135
    )
    
    
    (409,594
    )Current year other comprehensive (loss)
    
    
    (306
    )
    
    
    189,710
    
    
    
    189,404Balance  December 31, 2005
    
    
    4,235
    
    
    
    (224,425
    )
    
    
    (220,190
    )Current year other comprehensive (loss)
    
    
    (58
    )
    
    
    (51,358
    )
    
    
    (51,416
    )Balance  December 31, 2006
    
    
    4,177
    
    
    
    (275,783
    )
    
    
    (271,606
    )
  Gains
    
    (Losses)
    
    Taxes
    
    Net$
    
    $
    
    $
    
    $2005
    
    
    (510
    )
    
    
    
    
    
    
    204
    
    
    
    (306
    )2006
    
    
    (97
    )
    
    
    
    
    
    
    39
    
    
    
    (58
    )
 F-31




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##### Table of Contents



CVF Technologies Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the years ending December 31, 2006 and 2005
    
    [Expressed in U.S. Currency]
 12. INCOME (LOSS) PER SHARE
  2006
    
    2005$
    
    $Numerator:Net income (loss)
    
    
    (1,845,091
    )
    
    
    5,299,815Dividends on Series A preferred stock
    
    
    (2,591
    )
    
    
    (3,095
    )Numerator for basic and diluted earnings
(loss) per share (loss) attributable to
common stockholders
    
    
    (1,847,682
    )
    
    
    5,296,720Denominator:Denominator for basic earnings or loss per
share  weighted average shares outstanding
    
    
    12,915,659
    
    
    
    13,818,289Effect of dilutive securities
    
    
    
    
    
    
    345,000Warrants
    
    
    
    
    
    
    402,131Dilutive potential common shares denominator
for diluted earnings per share adjusted
weighted-average shares and assumed conversion
    
    
    12,915,659
    
    
    
    14,565,420Basic earnings (loss) per share
    
    
    (0.14
    )
    
    
    0.38Diluted earnings (loss) per share
    
    
    (0.14
    )
    
    
    0.36
 F-32




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##### Table of Contents



CVF Technologies Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the years ending December 31, 2006 and 2005
    
    [Expressed in U.S. Currency]
 13.
    
    BUSINESS AQUISITION AND SUPPLEMENTARY
SUBSIDIARY INFORMATION
 [a] G.P. Royalty Distribution Corporation  Gemprint
  Staff Accounting Bulletin Topic 5E
 14. STOCK BASED COMPENSATION
   WeightedaverageexercisepriceShares
    
    $Outstanding December 31, 2004
    
    
    450,000
    
    
    
    0.25Granted during the year
    
    
    
    
    
    
    Expired during the year
    
    
    
    
    
    
    Exercised during the year
    
    
    (105,000
    )
    
    
    (0.20
    )Outstanding December 31, 2005
    
    
    345,000
    
    
    
    0.27Granted during the year
    
    
    
    
    
    
    Expired during the year
    
    
    
    
    
    
    Exercised during the year
    
    
    
    
    
    
    Outstanding December 31, 2006
    
    
    345,000
    
    
    
    0.27
 F-33




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##### Table of Contents



CVF Technologies Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the years ending December 31, 2006 and 2005
    
    [Expressed in U.S. Currency]
 14. STOCK BASED COMPENSATION  contd
   Outstanding and ExercisableWeighted-
    
    Weighted-average
    
    AverageNumber
    
    remaining life
    
    Exercise
    
    NumberOutstanding
    
    in years
    
    Price
    
    ExercisableRange of exercise prices:$0.16
    
    
    70,000
    
    
    
    0.29
    
    
    $
    0.16
    
    
    
    70,000$0.30
    
    
    275,000
    
    
    
    3.67
    
    
    
    0.30
    
    
    
    275,000345,000
    
    
    
    
    
    
    
    
    
    
    
    345,000
 15. SEGMENTED INFORMATION
    F-34




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##### Table of Contents



CVF Technologies Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the years ending December 31, 2006 and 2005
    
    [Expressed in U.S. Currency]
 15. SEGMENTED INFORMATION  contd
      F-35




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CVF Technologies Corporation
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 Year ended December 31
    
    [Expressed in U.S. Currency]
 15. SEGMENTED INFORMATION  contd
 Electric
    
    Identification
    
    Natural
    
    Corporatevehicle
    
    systems
    
    fertilizer
    
    administration
    
    Total2006
    
    $
    
    $
    
    $
    
    $
    
    $Sales
    
    
    1,330,641
    
    
    
    
    
    
    
    180,997
    
    
    
    
    
    
    
    1,511,638Income (loss) from operations before depreciation
    
    
    (164,192
    )
    
    
    (176,983
    )
    
    
    (221,067
    )
    
    
    (1,428,993
    )
    
    
    (1,991,235
    )Depreciation
    
    
    943
    
    
    
    
    
    
    
    
    
    
    
    2,372
    
    
    
    3,315(Loss) from operations before other income (expenses)
    
    
    (165,135
    )
    
    
    (176,983
    )
    
    
    (221,067
    )
    
    
    (1,431,365
    )
    
    
    (1,994,550
    )Interest income
    
    
    
    
    
    
    102,446
    
    
    
    
    
    
    
    43,828
    
    
    
    146,274Interest (expense)
    
    
    (8,276
    )
    
    
    
    
    
    
    
    
    
    
    (35,956
    )
    
    
    (44,232
    )Other income (expense)
    
    
    
    
    
    
    6,273
    
    
    
    
    
    
    
    154,978
    
    
    
    161,251(Loss) from equity investees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (188,077
    )
    
    
    (188,077
    )Minority interest
    
    
    15,885
    
    
    
    491,833
    
    
    
    
    
    
    
    
    
    
    
    507,718Realized currency translation income (loss)
    
    
    553
    
    
    
    (185,136
    )
    
    
    (12,699
    )
    
    
    (220,378
    )
    
    
    (417,660
    )Segment income (loss) before (recovery) of income taxes
    
    
    (156,973
    )
    
    
    238,433
    
    
    
    (233,766
    )
    
    
    (1,676,970
    )
    
    
    (1,829,276
    )Income taxes
    
    
    4,275
    
    
    
    
    
    
    
    3,960
    
    
    
    7,580
    
    
    
    15,815Net income (loss)
    
    
    (161,248
    )
    
    
    238,433
    
    
    
    (237,726
    )
    
    
    (1,684,550
    )
    
    
    (1,845,091
    )Depreciation and amortization
    
    
    943
    
    
    
    
    
    
    
    
    
    
    
    2,372
    
    
    
    3,315Capital expenditures
    
    
    8,511
    
    
    
    
    
    
    
    657
    
    
    
    600
    
    
    
    9,768Segment assets
    
    
    7,595
    
    
    
    
    
    
    
    591
    
    
    
    3,981
    
    
    
    12,167
 F-36




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CVF Technologies Corporation
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 Identification
    
    Natural
    
    Corporatesystems
    
    fertilizer
    
    administration
    
    Total2005
    
    $
    
    $
    
    $Sales
    
    
    411,971
    
    
    
    44,976
    
    
    
    
    
    
    
    456,947Income (loss) from operations before depreciation
and research and development
    
    
    (327,264
    )
    
    
    (85,027
    )
    
    
    (1,523,485
    )
    
    
    (1,935,776
    )Depreciation
    
    
    11,348
    
    
    
    
    
    
    
    1,957
    
    
    
    13,305Research and development
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income (loss) from operations before other income (expenses)
    
    
    (338,612
    )
    
    
    (85,027
    )
    
    
    (1,525,442
    )
    
    
    (1,949,081
    )Interest income
    
    
    2,846
    
    
    
    
    
    
    
    1,309,050
    
    
    
    1,311,896Interest (expense)
    
    
    (44,937
    )
    
    
    (274
    )
    
    
    5,532
    
    
    
    (39,679
    )Other income (expense)
    
    
    
    
    
    
    12,411
    
    
    
    (1,298
    )
    
    
    11,113Income from equity investees
    
    
    
    
    
    
    
    
    
    
    90,044
    
    
    
    90,044Gain on sale of holdings
    
    
    
    
    
    
    
    
    
    
    1,541,630
    
    
    
    1,541,630Income from sale of asset  Gemprint
    
    
    6,361,304
    
    
    
    
    
    
    
    
    
    
    
    6,361,304Goodwill impairment
    
    
    (1,200,108
    )
    
    
    
    
    
    
    
    
    
    
    (1,200,108
    )Minority interest
    
    
    (916,936
    )
    
    
    
    
    
    
    
    
    
    
    (916,936
    )Realized currency translation loss
    
    
    (248
    )
    
    
    27,893
    
    
    
    (19,016
    )
    
    
    8,629Segment income (loss) before (recovery) of income taxes
    
    
    3,863,309
    
    
    
    (44,997
    )
    
    
    1,400,500
    
    
    
    5,218,812(Recovery) of income taxes
    
    
    
    
    
    
    (152,555
    )
    
    
    71,552
    
    
    
    (81,003
    )Net income (loss)
    
    
    3,863,309
    
    
    
    107,558
    
    
    
    1,328,948
    
    
    
    5,299,815Depreciation and amortization
    
    
    11,348
    
    
    
    
    
    
    
    1,957
    
    
    
    13,305Capital expenditures
    
    
    (197,996
    )
    
    
    
    
    
    
    5,890
    
    
    
    (192,106
    )Segment assets
    
    
    
    
    
    
    
    
    
    
    5,699
    
    
    
    5,699Segment goodwill (included in segment assets)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Segment technology (included in segment assets)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 F-37




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##### Table of Contents



CVF Technologies Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the years ending December 31, 2005 and 2004
    
    [Expressed in U.S.Currency]
 16. COMMITMENTS
   Year ended December 31
    
    $2006
    
    
    62,5992007
    
    
    47,9342008
    
    
    9,6612009
    
    
    Beyond
    
    
    Total minimum future rental payments
    
    
    120,194
  17. CONTINGENCIES
   F-38




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##### Table of Contents



CVF Technologies Corporation
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the years ending December 31, 2005 and 2004
    
    [Expressed in U.S.Currency]
 17. CONTINGENCIES  contd
   18. LOANS RECEIVABLE
  19. RELATED PARTY TRANSACTIONS
  F-39




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##### Table of Contents



(a)
    
    The Company carried out an evaluation, under the supervision and with the
participation of the Companys management, including the Companys Chief Executive Office
and Chief Financial Officer, of the effectiveness of the design and operation of the
Companys disclosure controls and procedures as defined in Rule 13a-15(e), promulgated
under the Securities Exchange Act. Based upon that evaluation, the Companys Chief
Executive Officer and Chief Financial Officer concluded that the Companys disclosure
controls and procedures are effective as of the period covered by this report.(b)
    
    There have been no changes in the Companys internal control over financial reporting
in the last fiscal quarter that has materially affected or is reasonably likely to
materially affect the Companys internal control over financial reporting.
 
   
  
 
 (a)
    
    Directors and Executive Officers
  NAME
    
    AGE
    
    POSITIONJeffrey I. Dreben
    
    
    61
    
    
    Director; Chairman, Chief Executive
Officer; and PresidentRobert B. Nally
    
    
    59
    
    
    Director; Chief Operating Officer, Chief
Technology Officer, Secretary; and TreasurerRobert L. Miller
    
    
    55
    
    
    Chief Financial OfficerRobert H. Glazier
    
    
    58
    
    
    Director




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##### Table of Contents



NonqualifiedNon-Equity
    
    
    DeferredName and
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock
    
    
    Option
    
    
    Incentive Plan
    
    
    Compensation
    
    
    All OtherPrincipal
    
    
    
    
    
    Salary
    
    
    Bonus
    
    
    Awards
    
    
    Awards
    
    
    Compensation
    
    
    Earnings
    
    
    Compensation
    
    
    TotalPosition
    
    Year
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)(a)
    
    (b)
    
    
    (c) (1)
    
    
    (d) (1)
    
    
    (e) (2)
    
    
    (f)
    
    
    (g)
    
    
    (h)
    
    
    (i) (3)
    
    
    (j)Jeffrey I. Dreben
Chairman, President
and Chief Executive
Officer
    
    
    2006
    
    
    
    136,000
    
    
    
    23,500
    
    
    
    73,125
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,644
    
    
    
    248,269Robert B. Nally
Chief Operating
Officer, Chief
Technology Officer,
Secretary,
Treasurer
    
    
    2006
    
    
    
    186,966
    
    
    
    16,326
    
    
    
    73,125
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,943
    
    
    
    284,360
 
 (1)
    
    Paid in Canadian currency but translated in the table to U.S. Currency.
Based on the average exchange rate for 2006 of CND $1 = US $.8825(2)
    
    Represents a portion of the restricted CVF common shares that will begin to
vest in April 2007. Restricted CVF common shares were granted in April 2006
and vest over the following 3 year period.(3)
    
    This amount consists of: (i) Executive Disability insurance premium
totaling $ 8,924 and automobile allowance totaling $6,720 to Mr. Dreben and (ii) $7,943
automobile allowance paid to Mr. Nally.




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##### Table of Contents



OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
 Stock AwardsEquityIncentivePlanOption Awards
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Awards:Equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Market orIncentive
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    PayoutPlan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Value ofAwards:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equity Incentive
    
    
    UnearnedNumber of
    
    
    Number of
    
    
    Number of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Plan Awards:
    
    
    Shares,Securities
    
    
    Securities
    
    
    Securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Number of
    
    
    Units orUnderlying
    
    
    Underlying
    
    
    Underlying
    
    
    
    
    
    
    
    
    
    
    Number of
    
    
    Market Value of
    
    
    Unearned Shares,
    
    
    OtherUnexercised
    
    
    Unexercised
    
    
    Unexercised
    
    
    Option
    
    
    
    
    
    
    Shares or Units
    
    
    Shares or Units
    
    
    Units or Other
    
    
    Rights ThatOptions
    
    
    Options
    
    
    Unearned
    
    
    Exercise
    
    
    Option
    
    
    of Stock That
    
    
    of Stock That
    
    
    Rights That Have
    
    
    Have Not(#)
    
    
    (#)
    
    
    Options
    
    
    Price
    
    
    Expiration
    
    
    Have Not Vested
    
    
    Have Not Vested
    
    
    Not Vested
    
    
    VestedName
    
    Exercisable
    
    
    Unexercisable
    
    
    (#)
    
    
    ($)
    
    
    Date
    
    
    (#)
    
    
    ($)
    
    
    (#)
    
    
    ($)(a)
    
    (b)
    
    
    (c)
    
    
    (d)
    
    
    (e)
    
    
    (f)
    
    
    (g)
    
    
    (h) (1)
    
    
    (i)
    
    
    (j)Jeffrey I. Dreben
    
    
    100,000
    
    
    
    
    
    
    
    
    
    
    
    0.30
    
    
    
    8/28/2010
    
    
    
    750,000
    
    
    
    142,500
    
    
    
    
    
    
    
    Robert B. Nally
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    750,000
    
    
    
    142,500
    
    
    
    
    
    
    
    
 
 (1)
    
    Represents 750,000 shares at the market value on December 31, 2006 of $0.19
per share.
 DIRECTOR COMPENSATION
 NonqualifiedNon-Equity
    
    
    DeferredFees Earned or
    
    
    Stock
    
    
    Option
    
    
    Incentive Plan
    
    
    Compensation
    
    
    All OtherPaid in Cash
    
    
    Awards
    
    
    Awards
    
    
    Compensation
    
    
    Earnings
    
    
    Compensation
    
    
    TotalName
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)(a)
    
    (b)
    
    
    (c) (1)
    
    
    (d)
    
    
    (e)
    
    
    (f)
    
    
    (g)
    
    
    (h)Robert H. Glazier
    
    
    1,400
    
    
    
    4,875
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,275Jeffrey I. Dreben
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Robert B. Nally
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    Represents the amount recognized for financial statement reporting purposes in 2006
related to the April 2006 grant of 50,000 shares of restricted stock vesting over 3 years.




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##### Table of Contents



NUMBER OF
    
    PERCENTAGE OFCOMMON SHARES
    
    COMMON SHARESNAME AND ADDRESS
    
    BENEFICIALLY OWNED
    
    OWNEDJeffrey I. Dreben (1)
    
    
    1,610,321
    
    
    
    11.1
    %8604 Main Street, Suite 1
Williamsville, NY 14221Robert B. Nally (2)
    
    
    1,422,872
    
    
    
    9.8
    %8604 Main Street, Suite 1
Williamsville, NY 14221Robert L. Miller (3)
    
    
    231,190
    
    
    
    1.6
    %8604 Main Street, Suite 1
Williamsville, NY 14221Robert H. Glazier (4)
    
    
    202,941
    
    
    
    1.5
    %8604 Main Street, Suite 1
Williamsville, NY 14221The Shaar Fund Ltd. (5)
    
    
    1,259,165
    
    
    
    8.7
    %c/o Citco Funds Services, Curacao
Kaya Flamboyan 9
Curacao, Netherland Antilles




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##### Table of Contents



NUMBER OF
    
    PERCENTAGE OFCOMMON SHARES
    
    COMMON SHARESNAME AND ADDRESS
    
    BENEFICIALLY OWNED
    
    OWNEDBounty Equity Fund 2, LLC (6)
    
    
    885,000
    
    
    
    6.1
    %2 West Second Street, Suite 210
Tulsa, OK 74103Directors and Officers
    
    
    3,467,324
    
    
    
    24.0
    %as a Group (4 persons) (1)(2)(3)(4)
 
 (1)
    
    Mr. Drebens amount includes 100,000 options to acquire CVFs common shares at an option price
of $0.30 and 750,000 restricted shares (which vest over 3 years beginning April 2006). Included
under Mr. Dreben are 760,321 shares owned by his wife as to which he disclaims beneficial
ownership.(2)
    
    Mr. Nallys amount includes 750,000 restricted shares (which vest over 3 years beginning April
2006)and includes 205,144 shares owned by his wife as to which he disclaims beneficial ownership.(3)
    
    Mr. Millers amount includes 60,000 options to acquire CVFs common shares at an option price
of $0.30 and 100,000 restricted shares (which vest over 3 years beginning April 2006).(4)
    
    Mr. Glaziers amount includes 100,000 options to acquire CVFs common shares at an option price
of $0.30 and 50,000 restricted shares (which vest over 3 years beginning April 2006).(5)
    
    Based solely on a Schedule 13G dated March 20, 2006 filed with the SEC.(6)
    
    Based solely on a Schedule 13D/A dated June 27, 2006 filed with the SEC.




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##### Table of Contents



(3)(i)
    
    Articles of Incorporation, as amended, filed as an exhibit to CVFs Form
10-QSB on November 14, 1997, and incorporated by reference herein.(3)(ii)
    
    Amended and Restated Certificate of Designation of Series B 6% Convertible Preferred
Stock, filed as an exhibit to CVFs Registration Statement on Form S-3 on December 30, 1999
and incorporated herein by reference.(3)(iii)
    
    By-laws filed as an exhibit to CVFs Form 10-QSB on February 12, 1997,
and incorporated by reference herein.(10)(i)
    
    2000 Stock Option Plan, filed as an exhibit to CVFs Schedule 14A on
May 12, 2000 and incorporated by reference herein.(10)(iii)
    
    Exchange Agreement dated February 27, 2004 between CVF and The Shaar Fund Ltd. and
incorporated herein by reference.(10)(iv)
    
    Form of Change in Control Agreement between CVF and Jeffrey Dreben and Robert Nally filed
as an exhibit to CVFs Form 10-KSB on April 2, 2004 and
incorporated by reference herein.(10)(v)
    
    Employment Letter between CVF and Robert L Miller, as amended, filed as an
exhibit to CVFs Form 10-KSB on April 7, 2006 and incorporated by
reference herein.(21)
    
    Subsidiaries of the Registrant, filed herewith.(31.1)
    
    Certification of Chief Executive Officer Pursuant to Section 302 of the of the Sarbanes
Oxley Act of 2002.(31.2)
    
    Certification of Chief Financial Officer Pursuant to Section 302 of the of the Sarbanes
Oxley Act of 2002.(32)
    
    Certification Pursuant to 18 U.S.C. 1350 As Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.




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##### Table of Contents



by:
    
    /s/ Jeffrey I. DrebenJeffrey I. Dreben, CEO and President(Principal Executive Officer)
   Signature
    
    Title
    
    Date/s/ Jeffrey I. Dreben

Jeffrey I. Dreben
    
    Director
    
    April 13, 2007/s/ Robert B. Nally

Robert B. Nally
    
    Director
    
    April 13, 2007/s/ Robert H. Glazier

Robert H. Glazier
    
    Director
    
    April 13, 2007/s/ Robert L. Miller

Robert L. Miller
    
    Chief Financial Officer
(Principal Financial
and Accounting Officer)
    
    April 13, 2007




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##### Table of Contents



Exhibit No.
    
    Name(3)(i)
    
    Articles of Incorporation, as amended, filed as an exhibit to CVFs Form
10-QSB on November 14, 1997, and incorporated by reference herein.(3)(ii)
    
    Amended and Restated Certificate of Designation of Series B 6% Convertible Preferred
Stock, filed as an exhibit to CVFs Registration Statement on Form S-3 on December 30, 1999
and incorporated herein by reference.(3)(iii)
    
    By-laws filed as an exhibit to CVFs Form 10-QSB on February 12, 1997,
and incorporated by reference herein.(10)(i)
    
    2000 Stock Option Plan, filed as an exhibit to CVFs Schedule 14A on
May 12, 2000 and incorporated by reference herein.(10)(iii)
    
    Exchange Agreement dated February 27, 2004 between CVF and The Shaar Fund Ltd. and
incorporated herein by reference.(10)(iv)
    
    Form of Change in Control Agreement between CVF and Jeffrey Dreben and Robert Nally filed
as an exhibit to CVFs Form 10-KSB on April 2, 2004 and
incorporated by reference herein.(10)(v)
    
    Employment Letter between CVF and Robert L Miller, as amended, filed as an
exhibit to CVFs Form 10-KSB on April 7, 2006 and incorporated by
reference herein.(21)
    
    Subsidiaries of the Registrant, filed herewith.(31.1)
    
    Certification of Chief Executive Officer Pursuant to Section 302 of the of the Sarbanes
Oxley Act of 2002.(31.3)
    
    Certification of Chief Financial Officer Pursuant to Section 302 of the of the Sarbanes
Oxley Act of 2002.(32)
    
    Certification Pursuant to 18 U.S.C. 1350 As Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.