<PAGE>
                     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, 2002.

                         COMMISSION FILE NUMBER 00-29266

                          CVF TECHNOLOGIES CORPORATION
     -----------------------------------------------------------------------
                 (Name of Small Business Issuer in its charter)

                NEVADA                                 87-0429335
   ----------------------------------         -----------------------------
     (State or other jurisdiction of       (I.R.S. Employer Identification No.)
      incorporation or organization)

         8604 Main Street, Suite 1
         WILLIAMSVILLE, NEW YORK                          14221
    -----------------------------------         -----------------------
 (Address of principal executive offices)               (Zip Code)

                                   (716) 565-4711
                         ----------------------------------
                           (Issuer's telephone number)

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

Title of each class                    Name of each exchange on which registered
--------------------------------       -----------------------------------------
Common Stock ($0.001 par value)        American Stock Exchange

Securities registered under Section 12(g) of the Act:   NONE

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

                                    Yes  X   No
                                       -----   -----

Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]
                 -----

State issuer's revenues for most recent fiscal year: $5,923,512.

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates (based on the closing price on the American Stock Exchange) as
of March 14, 2003: $1,096,378. For purposes of determining this amount only,
Registrant has defined affiliates as including (a) the executive officers named
in Part III of this 10-KSB report, (b) all directors of Registrant, and (c) each
shareholder that has informed Registrant by March 14, 2003 that it is the
beneficial owner of 10% or more of the outstanding common stock of Registrant.

Indicate the number of shares outstanding of each of the Registrant's classes of
Common Stock, as of March 14, 2003:

                         Common Stock: 10,706,049 shares

Transitional Small Business Disclosure Format: Yes      No   X
                                                  -----    -----


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PART I

ITEM 1.         DESCRIPTION OF BUSINESS

CVF Technologies Corporation (www.cvfcorp.com) ("CVF" or the "Company") is a "C"
Corporation that was incorporated in 1995 and is involved in the business of
developing and managing start-up and early stage companies primarily engaged in
the information technology and environmental technology sectors. CVF's mandate
is to acquire significant holdings in new and emerging technology companies and
then to assist them in their management, and through them to engage in their
respective businesses. CVF's current holdings include investments made in its
investee companies during the period from 1990 to the present.

CVF is to generate revenues and profits through consolidation of the operating
results of its investee companies. CVF also endeavors to realize gains through
the eventual sale of all or a portion of its holdings in these companies at such
time as management determines that CVF's funds can be better deployed in other
industries or companies. CVF's goal is to maximize the value of its holdings in
its investee companies for the Company's shareholders. One important way that
CVF accomplishes this is by taking an investee company public at the appropriate
time. This has been done with the investee companies Certicom Corporation and
TurboSonic Technologies, Inc. CVF plans to offer its shareholders the
opportunity to directly participate in public offerings of its investee
companies, where this is considered appropriate.

After CVF's initial investment, an investee company often requires additional
capital to meet its business plan. Consequently, the Company actively assists
its investee companies in obtaining additional capital which is usually sourced
through CVF's own resources or via other participants. CVF's ability to continue
to provide assistance to its investees is subject to the limitations of its own
financial resources. Even though two of the investees have been profitable in
2002, CVF, on a consolidated basis, has incurred losses over the past year and
the past five years. These losses have depleted the Company's cash reserve which
significantly limits the Company's ability to assist its investees. There are
also other companies looking for development stage technology investments.
Certain of these companies may have more financial resources and/or better means
of identifying opportunities. See "Factors That May Affect Future Results."

The following is a list of CVF's investee companies (the "Corporations"),
showing CVF's percentage ownership in each:

                                                    CVF's PERCENTAGE
                                                       OWNERSHIP OF
                                                    VOTING SECURITIES
CORPORATION                                        OF ACTIVE COMPANIES
-----------                                        -------------------

 1.    SRE Controls Inc.                                    75%
 2.    Biorem Technologies Inc.                             69%
 3.    Gemprint(TM)Corporation                              65%
 4.    Ecoval Corporation                                   85%
 5.    CVF Capital Management Corporation                  100%
 6.    Petrozyme Technologies Inc.                          50%
 7.    IMT Systems Inc.                                     47%


The Corporations
----------------

All of the Corporations are private companies. The following paragraphs provide
a brief description of each Corporation. Each Corporation that is actively
involved in operating a technology business has its own business plan, history
and financial statements and has put effective management teams in place,
completed the development of its own products, established markets and
distribution channels and sold its products.

Proceeds from any additional funding received by CVF's Corporations will be
utilized, in each case, primarily for expansion of production and sales
capability to enable the holding to realize its commercial potential over the
next three to five years. As is common with early stage technology companies,
some of these holdings have historically operated at a loss or at break-even and
some of them may continue to operate at a loss for the foreseeable future.
However, two of the

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holdings, Biorem and Gemprint were profitable in 2002. The ability of those
investees which are profitable to meet their business goals may be subject to
limitations of CVF's ability to provide continued financial assistance - see
"Factors That May Affect Future Results." However the investee companies have
the option to seek third party financing.

Consolidated Entities:

"Consolidated Entities" refers to those Corporations in which CVF has a greater
than 50% ownership of the voting stock. The total assets and liabilities of each
of the Consolidated Entities are included within the financial results and
position of CVF for the year ended December 31, 2002 and in the comparative
balances for the previous two years as shown in the Financial Statements
included in Part II, Item 7 of this Form 10-KSB. The Company has provided loans
to its subsidiaries which have been eliminated for accounting purposes in
consolidation and are not reflected in our financial statements. These loans
represent amounts owed to the parent Company by the Corporations.

The five Consolidated Entities that are consolidated within the financial
results of CVF are as follows:

1.  SRE Controls Inc. ("SRE")

SRE (www.srecontrols.com), based in Waterloo, Ontario, designs, manufactures and
markets a range of high efficiency, programmable electronic motor speed control
products for electric vehicles as well as for certain fuel-cell applications.
Examples of the kind of vehicles that use SRE's products are material handling
equipment (e.g. forklift trucks), aircraft Ground Support Equipment (GSE),
Neighborhood Electric Vehicles (NEVs), golf carts and lower-end products such as
sweepers and scrubbers. SRE supplies its controller products to both Original
Equipment Manufacturers (OEMs) of vehicles through direct sales and to the
aftermarket through 60 dealers with over 200 locations throughout North America.
Furthermore, strategic alliances exist with large, dealer-rep organizations and
distribution channels further expanding SRE's product marketability.

SRE continuously improves and adds to its product line in order to bring the
latest technological benefits to its customers. As a result of several years of
product development effort, SRE has brought unique new motor controller products
to market in 2002 and will expand their product-mix in 2003 to include
additional, leading-edge, internationally accepted products. These new products
are expected to generate significant revenue gains in 2003 and subsequent years.
SRE's ongoing investment in research and development continues, with joint
development work planned with several hybrid car manufacturers as the automotive
industry moves toward alternate energy sources.

2.BIOREM Technologies Inc. ("BIOREM")

BIOREM (www.biorem.biz), an industrial biotech company based in Guelph, Ontario,
is engaged in the business of applying bioconversion and biotransformation
technology to municipal and industrial environmental applications. The current
business focus of BIOREM is the design and installation of biological air
filters, or biofilters, for the removal of odor and other air pollutants from
municipal and industrial sources. Since 1999, BIOREM has made significant
progress in the commercialization of its biofilter technology, having
successfully completed more than 50 large-scale biofilter installations in the
U.S. and Canada and established a network of 15 manufacturers' representatives
to provide effective coverage of the rapidly growing U.S. municipal odor control
market.

In 2000, BIOREM introduced BIOSORBENS(TM) a new, long lasting, superior
biofilter media. BIOREM also introduced the BASYS(TM) biofilter, a patented,
modular unit adapted for catalogue item type purchases. Both product
developments specifically address the dramatically increasing demand for easy to
use, highly efficient biofilter systems for air emission control. Continued
technical and service support to clients has earned BIOREM a reputation as the
leading biofilter supplier in the North American market for municipal odor
control.





<PAGE>

3. Gemprint(TM)Corporation ("Gemprint")

Gemprint(TM) (www.gemprint.com), a Toronto, Ontario based company, is in the
business of providing products and services to the jewelry industry to enable
diamonds and other precious gems to be uniquely identified non-invasively
(fingerprinted) using a patented low power laser imaging system. The results are
stored in a data base for later verification and recovery of lost or stolen
gems. Gemprint's Isi system has application with all segments of the diamond
supply chain (i.e. cutter/polishers, grading laboratories, manufacturers,
wholesalers, retailers and Internet traders). Gemprint's Isi system sells for
approximately $7,500. A $15.00 fee is normally charged to the user for each
registration on the international database, which Gemprint owns and maintains.
Law enforcement agencies and many insurance companies support the Gemprint
system (approximately 25 insurance companies offer a 10% discount on diamond
insurance policies if the insured gem is Gemprinted over the last several
years).

Over the last several years Gemprint signed three important agreements employing
the use of its technology: (1) a contract with the Government of the Northwest
Territories of Canada to design a 'Northern' diamond certificate, to establish
an on-site data base and to Gemprint northern diamonds with two major diamond
manufacturers involved in the program; (2) an exclusive distribution agreement
with Breebaart Group of Rotterdam covering the territory of Europe; and (3) a
contract to develop a unique brand of diamond using a special application of the
Gemprint technology. In addition, Gemprint has a contract in effect with Stuller
Settings of Lafayette, LA under which Gemprint certificates are offered as a
value add-on for certain diamonds sold by Stuller. Gemprint is also used by
several Internet diamond traders as well as Zales Corporation, the largest U.S.
retailer of jewelery.

4. Ecoval Corporation ("Ecoval")

Ecoval (www.naturesglory.com), which has its headquarters located in
Williamsville, N.Y. is in the business of developing, manufacturing and
marketing of a variety of 100% natural fertilizers, environmentally friendly
organic herbicides and tree recovery systems targeted primarily for the lawn and
garden retail/consumer market and specialty agricultural markets. Ecoval's
fertilizers and herbicides have recently received Organic Certification from the
Ontario Crop Producers Association (OCPA) meaning that the products meet or
exceed the organic standards of the US, Canada and the European community,
allowing it to enter the market for organic agriculture. This Ontario
certification is a recognized standard under ISO and is recognized by the USDA
as well as by European Community. This enables Ecoval to sell its products with
the Certified Organic label in the US, Canada and Europe. Ecoval has also
developed a non-toxic Insecticide. Pesticide world wide industry sales were
$33.5 billion ($11.0 billion in the U.S.) in 1999.

Ecoval owns U.S., European, Canadian and other international patents for its
herbicide and its 4-4-8 tree recovery fertilizer. Research results show the
herbicide to be efficacious, non-toxic, biodegradable and faster acting than
conventional chemical products. Ecoval's herbicide has received regulatory
approval in Canada and through the Environmental Protection Agency in the United
States. To be cost-effective, Ecoval out-sources its production, packaging and
shipping functions. Ecoval's principal focus is to expand product sales into
national retail chains through mass merchants in both the United States and
Canada. It is also aggressively pursuing sales to governments at the municipal,
state and federal levels as well as organic farms. The brand name for both U.S.
and Canadian products is Nature's Glory(TM) and the Herbicide is also sold under
the brand name Ecoclear; the products are also sold under private label by a
number of distributors. At present, Ecoval is expanding product distribution in
several regions of the United States, especially the Northwest and Northeast and
broadly throughout Canada. Ecoval's natural fertilizers and herbicide have been
approved for sale, at both the retail and commercial level, in over 40 states in
the United States and all provinces in Canada. Customers include national retail
chains, garden centers, nurseries, landscapers, estate caretakers,
municipalities, and golf courses.



<PAGE>

5. CVF Capital Management Corporation ("CVF Capital Management")

CVF Capital Management was incorporated in the Province of Ontario, Canada on
February 1, 2001 in order to provide management services to certain of the
Corporations based in southern Ontario. CVF Capital Management is a wholly-owned
subsidiary of CVF and is staffed by members of the management team of CVF. Its
office is located in Oakville, Ontario.

Equity Investees:

"Equity Investees" are investee Corporations in which CVF holds 50% or less
equity ownership but more than or equal to 20% ownership. The Equity Investees'
accounts are not consolidated in CVF's financial statements and generally the
net incomes or losses of the Equity Investees would be included in CVF's
financial statements only to the extent of CVF's percentage holdings of these
entities. The net equity positions, after share of losses, of all other
investors have been reduced to nil. As such, the Company has included 100% of
the investee losses in income (until CVF's investment is reduced to zero) rather
than the percentage owned by the Company. It should be noted that prior to
December 13, 2000, CVF held only a 31% equity ownership in the Ecoval group,
which is therefore accorded accounting treatment as an Equity Investee up to
such date. Since December 13, 2000, Ecoval has been treated for accounting
purposes as a Consolidated Entity (see Item 6 below).

CVF's two Equity Investee's are described below:

1. Petrozyme Technologies Inc. ("Petrozyme")

Petrozyme (www.petrozyme.com), is a Guelph, Ontario based company engaged in the
business of developing and marketing its proprietary processes utilizing
industrial bio-reactors for the degradation and recovery of petroleum and
organic wastes. The exploration, production and refinement of oil generate
significant quantities of oily wastes. According to estimates from the American
Petroleum Institute (API), the U.S. Environmental Protection Agency (EPA) and
the U.S. Department of Energy, based on data between 1996 and 1998, the cost to
safely manage oily wastes produced in the United States exceeds $1.0 billion per
year.

2. IMT Systems Inc. ("IMT")

IMT Systems, Inc. ["IMT"], is a Waterloo, Canada, private company in the
business of developing a traction motor for industrial electric vehicles.

Less Than 20% Owned:

'Less Than 20% Owned' refers to those investee Corporations in which CVF has a
less than 20% ownership interest. The direct financial results of the Less Than
20% Owned Corporations are not included in CVF's consolidated financial results.
The two Less Than 20% Owned corporations which are publicly traded are carried
at market value. It is the intention of CVF to hold its positions in these
companies until it is considered that the invested funds can be better utilized
in other holdings.

The Company also had a less than 10% position in WZ.COM (www.WZ.com), a private
company incorporated in the State of Delaware. This Company was in the business
of providing products over its website. In January, 1999, CVF invested a total
of $250,000 in the predecessor company known as NETrageous. In February 2001 the
shares in NETrageous were exchanged at no cost for 500,000 common shares in
WZ.COM INC. In October 2002 WZ.COM ceased operations and dissolved. Since
shareholders will not be receiving any proceeds from the dissolution the
investment was written off at December 31, 2002.


<PAGE>

Number of Employees

As of December 31, 2002, CVF and its Consolidated Entities had a total of 56
full-time employees.


ITEM 2          DESCRIPTION OF PROPERTY

CVF leases premises in which its principal executive office is located at 8604
Main Street, Suite 1, Williamsville, New York on a two year lease (commencing
December 2001) with lease payments equal to $17,466 annually. All of the
business premises and facilities used by the Consolidated Entities are leased.
These facilities serve as administrative offices and manufacturing (where
appropriate) facilities. The facilities generally range in size from 2,000 to
14,000 square feet. The lease terms expire in 2002 to 2006.

ITEM 3           LEGAL PROCEEDINGS

A claim has been filed against the Company by a former officer of Ecoval
Corporation. This individual has claimed wrongful dismissal and severance costs.
The amount claimed is $110,722. This matter is at an early stage and the amount
of probability of any loss on the matter is indeterminable. The Company will
account for any loss on this claim in the event that such amount is probable and
determinable.

The Company is currently under an audit by the Internal Revenue Service ("IRS").
As part of the routine audit, the IRS has indicated that they will review the
treatment of capital losses claimed in the prior year and refunds of $2,532,000
received in 2001. No assessments have been issued in this matter.

The Company is not aware of any other material pending proceedings.

ITEM 4           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the fourth quarter of 2002 no matter was submitted to a vote of security
holders, through the solicitation of proxies or otherwise.


PART II

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

(a)     Market Information

The following table sets forth the high and low sales prices per Common Share on
the American Stock Exchange for the periods indicated:

                                                LOW            HIGH
                                               ------         ------
       2001  - 1st Quarter                      0.50           1.93
             - 2nd Quarter                      0.55           1.04
             - 3rd Quarter                      0.25           0.95
             - 4th Quarter                      0.17           0.35

       2002  - 1st Quarter                      0.11           0.29
             - 2nd Quarter                      0.13           0.27
             - 3rd Quarter                      0.10           0.44
             - 4th Quarter                      0.15           0.31


(b)     Holders of Record

At March 14, 2003, there were approximately 319 holders of record of CVF's
common stock.


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(c)     Dividends

CVF has never paid a dividend on the common stock. The payment of any future
dividends will be at the sole discretion of CVF's Board of Directors. CVF
intends to retain earnings to finance the expansion of its business but may
consider paying dividends of its common stock if it receives a large profit from
the sale of one of its holdings. There are dividends accrued and unpaid on the
Company's outstanding Series B Preferred Stock. The terms of the Series B
Preferred Stock prohibit the payment of dividends on the Common Stock or any
other stock of the Company ranking below the Series B Preferred Stock at any
time when dividends are unpaid thereon.


(d)      Recent Sales of Unregistered Securities

In February 2002, CVF issued 76,896 of its common shares to Leo Hirsch for
consulting services rendered.

In February 2002, CVF issued 24,280 of its common shares to James Sbrolla for
consulting services rendered.

In October 2002, CVF issued 75,000 of its common shares to Rubenstein Investor
Relations for investor relations services rendered.


All of the above transactions were exempt from registration under Section 4(2)
of the Securities Act of 1933, as amended, as transactions not involving a
public offering.


                      Equity Compensation Plan Information
<TABLE>
<CAPTION>
                                             a                            b                             c
                                --------------------------   --------------------------   ---------------------------
                                                                                              Number of securities
                                Number of securities to be                                   remaining available for
                                  issued upon exercise of     Weighted average exercise   future issuance under equity
                                 outstanding options and        price of outstanding           compensation plans
                                         warrants               options and warrants         (excluding column (a))
                                 -------------------------    -------------------------    --------------------------
<S>                              <C>                           <C>                          <C>
Plan Category
Equity compensation plans                 690,000                       $0.16                        60,000
approved by security holders

Equity compensation plans not
approved by security holders             1,847,784                      $0.16                          N/A
                                      ---------------              ---------------               ---------------
                                         2,537,784                      $0.16                        60,000
Total
</TABLE>


         The Company has outstanding 690,000 options to acquire shares of common
stock issued under its 2000 Stock Option Plan and 715,000 options to acquire
shares of common stock under individual stock option agreements. The non-plan
options were granted to employees, officers and directors of CVF and its
investees, are currently exercisable in full, have exercise prices of $0.16 per
share and expire on April 16, 2007.

         The Company also has outstanding 1,132,784 warrants to acquire common
stock issued to officers and service providers of the Company. These warrants
have an exercise price of $0.16 per share and expire on April 16, 2007.

<PAGE>

ITEM 6          MANAGEMENT'S DISCUSSION AND ANALYSIS

Special Note Regarding Forward-Looking Statements

Certain statements in this Annual Report on Form 10-KSB, under the captions "The
Corporations," "Financial Considerations" and elsewhere, constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act"). Such forward-looking
statements involve unknown and uncertain risks, uncertainties and other factors
which may cause the actual results, performance or achievements of CVF, or
industry results, to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Given these uncertainties, prospective investors are cautioned not
to place undo reliance on such forward-looking statements.

Factors That May Affect Future Results

CVF's current financial condition raises substantial doubt about its ability to
continue in the normal course of business as a going concern. The Company's
primary need for cash is to maintain its ability to support the operations and
ultimately the carrying values, of certain of its individual investee companies.

The Company's cash resources have been significantly depleted by operating
losses. As at December 31, 2002 the cash reserve and other liquid resources was
$773,000. The Company has taken steps to reduce its operating cash requirements
to the range of $120,000 monthly. Accordingly, the Company estimates that it
could run out of operating cash in the second or third quarter, if other sources
of cash are not available. The primary source of cash for the Company is
expected to be from sale of a portion of its investments in it subsidiaries or
from CVF issuing additional securities. The company has received indications of
serious interest in a portion of one of its subsidiaries and is pursuing other
opportunities to raise funds as well as from potential investors in CVF. The
indications of interest suggest that the Company could raise funds in the range
of $1,000,000 to $1,500,000 from this source over the next 6 months. In
addition, certain subsidiaries are producing a cash flow and will be able to
supplement other cash requirements. The Company will also continue to assist its
investee companies in their efforts to obtain outside financing in order to fund
their growth and development of their business plans. Certain of the Company's
financial obligations included in current liabilities related to items that will
not be paid in the near term. The Company will carefully manage its cash
payments on such obligations.

There is no assurance that all or any of these initiatives will be successful,
and the Company and certain of its investees may not have sufficient cash
resources or capital resources to continue as going concerns.

The Company's ability to continue to realize assets and discharge liabilities in
the normal course is uncertain and dependent on these and other initiatives. The
Company's financial statements do not include any of the adjustments to the
amounts or classification of assets and liabilities that might be necessary
should the Company be unable to continue its business in the normal course.
Other factors that may affect CVF's future results include:

-    general economic and business conditions;

-    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; and

<PAGE>
-    the Company's ability to satisfy or otherwise manage some of the conditions
     under its Series B Preferred Stock including the holders request to convert
     such stock to common shares and pay dividends thereon.

The Company will not update any forward-looking statements to reflect actual
results or changes in the factors affecting the forward-looking statements.

Plan of Operation

Subject to the limitations of its financial position as discussed above, CVF
plans to build on the successes and advances achieved by its investee companies
in 2002. It will continue its efforts to assist all of its investee companies to
realize their full potential. The ability of certain of the investee companies,
which currently are not profitable to meet the goals included in the plan of
operation may be limited by CVF's ability to continue in the normal course of
business as described in "Factors That May Affect Future Results".

The four Consolidated Entities which are active technology businesses, namely
Ecoval, SRE, Biorem, and Gemprint, each made progress in 2002 and each are
positioned to consolidate and expand in 2003.

Ecoval continued to develop its product line in 2002 with a non-toxic fungicide
(patent pending). Patents are also pending on an improved herbicidal composition
and insecticidal composition. Ecoval also has pending patent applications for
its new insecticide and fungicide compositions. In addition, three submissions
were made to the EPA relating to registration of the insecticide and fungicide
products. Ecoval also developed an insecticide formulation that is exempt from
U.S. registration because it is composed of ingredients that the EPA has
determined pose minimal risk to the public. A European distributor is marketing
Ecoval's herbicide and fertilizers in Norway, Sweden and Denmark. In 2003,
Ecoval will continue to generate sales revenues through direct marketing efforts
and by establishing key distributor relationships in North America and abroad.

SRE extended the range of OEM customers served in 2002 and expanded its dealer
network as well as identifying a significant number of target aftermarket
accounts. Also, SRE is developing working relationships with certain vehicle
electrical subsystem manufacturers for additional leverage in the marketplace.
At the end of 2001 SRE started to invest in a stronger sales and marketing
effort to exploit the new products available in 2002. These sales and marketing
activities are expected to have a positive impact on future financial results.

BIOREM's sales efforts in 2001 generated record bookings of new sales for supply
in 2002 and resulted in sales of $2,714,000. Sales development continued at an
aggressive pace in 2002 and BIOREM ended the business year with orders or
commitments in excess of $7,150,000 for delivery in 2003. Orders include a
single project valued at approximately $2,700,000 for odor control at a food
processing plant in Ontario, Canada and an order for $685,000 for a municipal
installation in Atlanta, GA. Numerous other large municipal orders are pending
contract finalization. Margin generation using the advanced biofilter media has
been strong, providing positive cash flow and profitability for Biorem.

Significant resources continue to be invested in research and applied
technology. Research developments have produced improvements in the biofilter
media that further outperform competitive materials and provide smaller, more
compact systems at lower overall cost to the owner. The biofilter market is
continuing to expand at an accelerated rate and BIOREM will continue to strive
to be in a leadership position to supply this demand.

Gemprint's strategy of targeting all links in the diamond supply chain bore
fruit in 1999 with the completion of the Canadian Northwest Territories
Agreements and the commencement of Gemprinting of cut diamonds sourced in the
new Canadian diamond fields. Leveraging on this success, Gemprint is working to
increase sales to wholesalers, major retailers, laboratories and manufacturers
in North America, Europe and the Far East. At the same time Gemprint is working
to capitalize on its identification technology and its international data base
to become the preferred enabler for securely trading diamonds over the Internet.
Over the past few years international concern over the issue of `conflict
diamonds' has heightened. "Clean Diamonds" legislation has recently been enacted
by the U.S. Congress and demonstrates public interest in the certification of
the origin of diamonds imported into the U.S. Gemprint's technology has already
provided the basis for diamond

<PAGE>

tracking systems in Canada and may well find wider application as such systems
proliferate.

CVF's Equity Investee, Petrozyme, also showed development in 2002 and is
positioned to make further progress in 2003.

Petrozyme has developed a number of processes. Its first process (the Petrozyme
Process CDN Patent #2,229,761) allows oily sludges to be treated onsite. This
reduces both the treatment cost and liability associated with safely managing
these wastes. Very often these wastes are hazardous, and after treatment with
Petrozyme's technology, the treated residuals meet the EPA levels for
non-hazardous classification. Other processes recover oil from slop oil
emulsions (Emulsyme Process - US Patent# 6,171,500) and separate PCBs from
contaminated soil (Remsep - US Patent# 6,251,058).

CVF will continue to work to provide equity and; based on the progress made by
the investee companies, debt financing to its group of investee companies as it
assesses their needs. CVF will accomplish this within the limits of its own
funds or by assisting its investee companies in completing private placements or
public offerings for themselves, as and when appropriate.

Individual investee companies are expected to continue approximately the same
level of research and development that they have performed in the past two
years. There are no expectations for significant increases in plant or equipment
or in the number of employees for these companies over the next 12 months.

Critical Accounting Policies

An understanding of CVF's accounting policies is necessary for a complete
analysis of our results, financial position, liquidity and trends. We focus your
attention on the following accounting policies of the Company:

Going concern - These consolidated financial statements have been prepared on a
going concern basis, which presumes that assets will be realized and liabilities
discharged in the normal course of business over the foreseeable future. The
consolidated Company's current liabilities exceed its current assets. The
consolidated Company has incurred losses over the year and for the past five
years, which have reduced the Company's cash reserves, and depleted
stockholders' equity. Further, the Company has several contingent liabilities.

These conditions raise substantial doubt about the consolidated Company's
ability to continue in the normal course of business as a going concern.

The Company's primary need for cash is to maintain its ability to support the
operations and ultimately the carrying values of certain of its individual
investee companies. The Company is actively pursuing the sale of a portion of
its interests in two of its investee companies as a source of funds, and
reduction of cash flow needs. In addition, the Company is using its holdings
available for sale [which had a market value of $62,505 as at December 31, 2002]
and has borrowed against expected tax refunds as a source of liquidity. The
Company will continue to assist its investee companies in their efforts to
obtain outside financing in order to fund the growth and development of their
respective businesses and has taken steps to reduce the operating cash
requirements of the parent company and its investees. The Company is also
seeking outside investment. There is no assurance that these initiatives will be
successful or that the Company or certain of its investees will continue to have
adequate cash resources and capital to be able to continue as going concerns.

The Company's ability to continue to realize assets and discharge liabilities in
the normal course is uncertain and dependent on these and other initiatives.
These financial statements do not include any of the adjustments to the amounts
or classification of assets and liabilities that might be necessary should the
Company be unable to continue its business in the normal course.

During 2002 two of its investee companies, Biorem and Gemprint achieved
operating profitability and also had positive cash flow. Both Biorem and
Gemprint are currently operating on a positive cash flow basis and do not
currently require any cash support from CVF. The Company will continue to assist
its investee companies in their efforts to obtain outside financing in order to
fund the growth and development of their respective businesses.

<PAGE>
Revenue recognition - Revenue from the sale of manufactured products is
recognized when the goods are shipped and accepted by the customer. The Company
recognizes revenue on long-term contracts on the percentage of completion basis,
based on costs incurred relative to the estimated total contract costs. Losses
on such contracts are accrued when the estimate of total costs indicates that a
loss will be realized. Contract billings in excess of costs and accrued profit
margins are included as deferred revenue, which is part of current liabilities.
Service revenue is recognized when the services are performed.

Inventory - Finished goods are stated at the lower of cost or market using the
first-in, first-out method of costing. Raw materials are stated at the lower of
cost or replacement value, using the first-in, first-out method.

Goodwill - In June 2001, the FASB issued SFAS No. 141, "Business Combinations"
and SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS No. 141 requires
that the purchase method of accounting be used for all business combinations
initiated after June 30, 2001. SFAS No. 141 also specifies criteria which
intangible assets acquired in purchase method business combinations after June
30, 2001 must meet to be recognized and reported apart from goodwill. SFAS No.
142 addresses the initial recognition and measurement of intangible assets
acquired outside of a business combination and the accounting for goodwill and
other intangible assets subsequent to their acquisition. SFAS No. 142 requires
that intangible assets with finite useful lives be amortized, and that goodwill
and intangible assets with indefinite lives no longer be amortized, but instead
be tested for impairment at least annually.

The Company adopted the provisions of SFAS No. 141 on July 1, 2001. Such
adoption had no effect on the Company's financial position or results of
operations. The Company adopted the provisions of SFAS No. 142 effective January
1, 2002, at which time the amortization of the Company's existing goodwill
ceased. The new standard also required that the Company test the goodwill for
impairment before June 30, 2002. Any impairment, arising from the test, is
charged to income. The Company's goodwill has been tested and the Company has
calculated that no impairment exists as at December 31, 2002.

The amortization expense related to goodwill that was recorded during 2001 was
$1,316,737. Therefore if this change had been adopted in 2001 the loss for 2001
would have decreased to $4,613,224 or $.50 per share (an improvement of $.16 per
share).

The Company has reviewed the carrying value of the intangible assets associated
with its subsidiary, Ecoval. Although Ecoval has successfully developed natural
pesticide, herbicide and fertilizer products, and patented certain technologies
related to these products, sales of these products and related cashflows are
still being developed, as the Company works to expand its marketing
partnerships. In addition, the Company's resources available to support the
expansion of Ecoval are currently limited. Accordingly, the Company has revised
its estimates of near term future cashflows and the value assigned to the
related intangible assets. In addition to the normal amortization of the
intangibles, the Company has written these assets down by $495,067 ($nil in 2001
and 2000). This write down is included in expense for the year. The Company
considers its intangible assets to have a finite life and as such is continuing
to amortize these assets.

Contingencies - A claim has been filed against the Company by a former officer
of Ecoval Corporation. This individual has claimed wrongful dismissal and
severance costs. The amount claimed is $110,722. This matter is at an early
stage and the amount of probability of any loss on the matter is indeterminable.
The Company will account for any loss on this claim in the event that such
amount is probable and determinable.

The Company is currently under an audit by the Internal Revenue Service ("IRS").
As part of the routine audit, the IRS has indicated that they will review the
treatment of capital losses claimed in the prior year and refunds of $2,532,000
received in 2001. No assessments have been issued in this matter and the Company
is unable to determine the likelihood of adjustments if any to prior year tax
refunds. Should an adjustment be proposed or assessed, management intends to
defend the matter vigorously. The resolution of this matter may require several
years.

As the Company has not converted its outstanding Series B shares to common
stock, and the Company has not paid all dividends on the Series B shares, the
holder of the Company's Series B preferred stock has attempted to require that
the Company redeem

<PAGE>
the shares for $4,569,750. The Company has denied the
redemption request on the basis that the holder does not have a right to require
such redemption. The ultimate right of the holder may become disputed and the
Company may be required to defend its position. While the Company believes that
it has the right to deny such redemption, the ultimate outcome of any such a
dispute is not determinable with certainty. Any redemptions of preferred shares
would be subject to the limitations imposed by Nevada corporate law. These laws
would prevent cash payment on redemption, based on the Company's current
financial position.

The Company is involved from time to time in litigation, which arises in the
normal course of business. In respect of these claims the Company believes it
has valid defenses and/or appropriate insurance coverage in place. In
management's judgment, no material exposure exists on the eventual settlement of
such litigation, and accordingly, no provision has been made in the accompanying
financial statements.

Stock Options/Warrants - The Compensation Committee of the Board of Directors
approved an adjustment to the exercise price for all options held by our
employees, including executive officers, as well as certain consultants. The
revised exercise price was established by reference to the closing bid price of
the Company's common stock on April 16, 2002, which was $0.16. Options to
purchase approximately 1,405,000 shares of common stock were repriced, resulting
in the "variable" method for determining compensation expense being enacted
under APB 25. Under this method, expense is recorded for the quoted market price
of the stock issued or, in the case of options, for the difference between the
stock's quoted market price on the date of grant and the option exercise price.
Increases and decreases (but not below the exercise price) in the quoted market
price of the stock between the date of grant and the measurement date result in
a change in the measure of compensation for the award. As the stock price at
December 31, 2002 was $0.16, no additional compensation expense was recorded
during the year.

The Company also issued warrants which were priced at $0.16 on April 16, 2002.
The warrants are fully vested and subject to fair value accounting in accordance
with SFAS 123. The charge to income for the warrants issued was $111,094 during
2002 and was recorded as receivable from certain directors.

Comparison of Consolidated Results 2002 and 2001

Consolidated sales of CVF for the fiscal year amounted to $5,923,512,
representing a decrease of $5,329,282 (47%) compared to sales of $11,252,794 for
2001. CVF, on a stand-alone basis, has no sales from operations. Sales and gross
profit reflect the operations of CVF's consolidated subsidiaries only. These
subsidiaries include Ecoval, SRE, Biorem, Gemprint, Dantec and Elements.
(results for 2002 and 2001 for Dantec and Elements for 2001 and 2000 are
included in the income statement in the line "loss from operations of
discontinued business"). (Dantec's results are consolidated through April 19,
2002, the date CVF sold its interest in Dantec).

Investee companies in which CVF has less than 50% or less ownership are not
included in the consolidation. These companies include Petrozyme, TurboSonic,
RDM, WZ.COM, and IMT.

Biorem achieved an increase in sales in 2002 of $1,929,065 or 246% compared to
2001. This increase was due to: 1) the result of accelerated bookings at the end
of 2001, 2) a major biofilter media replacement project at a plant in Quebec was
completed, 3) the manufacture of six modular BASYS units for a large odor
control project in Alabama. Gemprint's sales increased by $132,328 (28%)
compared to 2001 due to increased GEMPRINTTM registrations by new customers and
a large order for gemprinting by a manufacturer of diamond rings, multi-stone
bands and other items of jewelry. SRE's sales decreased in 2002 by $7,330,428
(76%). SRE develops and manufactures certain controls that are added to machine
parts and supplied to an original equipment manufacturer (OEM). Prior to April
1, 2002, the company was required to supply the machine parts (at no mark-up)
and the SRE manufactured controller with mark-up under this arrangement. The
agreement with the OEM was amended at the beginning of the second quarter in
2002, such that SRE is no longer required to supply the machine parts but
continues to supply the manufactured controller. As a result of this change in
the business arrangement, CVF no longer records the value of the machine parts
in its sales or cost of sales. Had this arrangement not changed, the Company's
sales and cost of sales for 2002 would each have been $4,316,898 greater than
the reported amount. The change in this arrangement has had no effect on the
Company's gross margin.

<PAGE>

CVF's gross margin of $2,068,441 for 2002 represents an increase of $1,002,803
(94.1%) from 2001. Gross margin as a percentage of sales increased to 34.9% for
2002 compared to 9.5% in 2001. This increase in 2002 is partly due to Biorem
attaining higher gross margins than in the previous year due to improved cost
factors and significantly higher sales volumes. The change in the business
arrangement at SRE with one of its customers (as previously discussed) had an
effect of increasing the gross margin percentage. If this change had not
occurred the overall gross margin percentage for 2002 would have been 20.2%
instead of 34.9%.

Selling, general and administrative expenses on a consolidated basis amounted to
$4,622,891 for 2002 representing a decrease of $1,093,827 or 19.1% compared to
2001. Included in 2002 expenses was the write down of the intangible asset in
2002 of $495,690 representing the write down taken due to impairment of the
intangible asset of Ecoval. Of the remaining decrease, $378,690 is due to
decreased amortization of goodwill which ceased in accordance with SFAS No. 142.
Also, consulting fees were reduced by $331,320 (43%). Other declines in expenses
relate to the overall sales decrease in 2002. Management continues to undertake
a concerted effort to effect an overall reduction in administrative costs. Over
the year CVF has undertaken many initiatives to lower its expenses. (See further
discussion under Liquidity and Capital Resources section).

Research and development expenses for 2002 amounted to $386,773 compared to
$742,302 for 2001 (a 47.9% decrease). R & D spending was decreased at all the
investee companies. However, most of the decrease was at SRE ($145,341 or a 36%
decrease) and Ecoval ($136,730 or a 66% decrease).

Loss from continuing operations decreased to $2,941,223 in 2002 from $5,393,382
in 2001, a decrease of $2,452,159 (or 45.5%). This decrease can be attributed to
profitability in Biorem and Gemprint and to the decrease in non cash expenses
(i.e. goodwill amortization and depreciation).

Net interest expense decreased to $138,599 in 2002 from $155,820 in 2001. This
decrease in expense is due to lower average cash balances invested during 2001.

Losses of CVF from equity investees (entities in which CVF has a 50% or less
ownership) decreased to $48,702 in 2002 compared to $244,153 in 2001. This
decrease is attributable to lower losses incurred in 2002 period for both
Petrozyme and IMT.

Loss on sale of holdings represented a loss of $72,082 in 2002 from a gain of
$501,040 in 2001. In 2002 the Company sold some shares of its holdings in RDM
and TurboSonic producing a gain of $253,478 compared to a gain in 2001 of
$501,040. In 2002 CVF wrote off its investment in WZ.COM totaling $240,675 as
that company was liquidated and no distributions are being made to shareholders.
Also the investment in PowerTrusion was written down to $10,000 due to
impairment of this investment which represented $84,885 of the increase in loss.

Recovery of income taxes amounted to $796,824 in 2002 compared to a recovery of
$115,623 in 2001. During 2002 the Job Creation and Worker Assistance Act of 2002
was signed into law which included changing the carry back period for net
operating losses from 2 years to 5 years.

Minority interest in the loss increased to $219,667 in 2002 from $167,740 in the
comparable 2001 period. This increase was due to higher losses from SRE in 2002.

Loss from Operations of Discontinued business in 2002 was $111,764 compared to
$818,642 in 2001. This represents the operations of Dantec which was sold in
2002 and Elements which ceased operations in September 2001.

Gain on discontinuance of business in 2002 reflects the gain recorded on the
sale of CVF's interest in Dantec on April 19, 2002. Loss on discontinuance of
business in 2001 was $102,367 which represented the costs to Elements of
discontinuing its operations during 2001.

As a result of the operations described above, CVF recorded a net loss of
$1,779,634 in 2002 as compared to a net loss of $5,929,961 incurred in 2001.

<PAGE>

Comparison of Consolidated Results 2001 and 2000

Consolidated sales of CVF for the fiscal year amounted to $11,252,794,
representing a decrease of $3,538,377 (23.9%) compared to sales of $14,791,171
for 2000. CVF, on a stand-alone basis, has no sales from operations. Sales and
gross profit reflects the operations of CVF's consolidated subsidiaries only.
These subsidiaries include Elements (results for 2001 and 2000 for Elements are
included in the income statement in the lines "loss from operations of
discontinued business" and "gain/loss on discontinuance of business"), Ecoval,
SRE, Biorem, Gemprint and Dantec (results for 2001 and 2000 for Dantec are
included in the income statement in the lines "loss from operations of
discontinued segment"). (Note that Ecoval is consolidated only from December 13,
2000 when CVF gained control).

Investee companies in which CVF has less than 50% or less ownership are not
included in the consolidation. These companies include Petrozyme, TurboSonic,
RDM, WZ.COM, IMT and Ecoval (only until December 13, 2000, after which CVF
gained control).

Gemprint achieved an increase in sales in 2001 of $244,548 (103.1%) compared to
2000 due to increased Gemprint registrations by new customers. Ecoval's sales
increased in 2001 compared to 2000 by $375,427 due to the company only being
consolidated from December 13, 2000 when CVF gained control. SRE's sales
decreased in 2001 by $2,698,977 (22.3%) from 2000 and was due to the economic
downturn. In 2001, SRE continued full production on a strategic relationship
contract with a major original equipment manufacturer that began in the third
quarter of 1998. Biorem's sales decreased by $1,459,374 (64.9%) compared to 2000
as Biorem's business strategy was shifted from industrial segment customers to
municipality segment customers during the year.

CVF's gross margin of $1,065,638 for 2001 represents a decrease of $279,186
(20.8%) from 2000. This gross margin decrease is in line with the sales decline.
Gross margin as a percentage of sales increased from 9.1% in 2000 to 9.5% in
2001. SRE with a gross margin percentage of 2.1% represented 67% of the sales
decrease during the year. Additionally, SRE continued to reduce its usual gross
profit on the OEM relationship mentioned above in order to increase market
share.

Selling, general and administrative expenses on a consolidated basis amounted to
$5,716,718 for 2001. This represents an increase of $720,125 or 14.4% compared
to 2000. CVF's selling, general and administrative costs from Ecoval were
$1,108,202 higher compared to 2000 as that company was consolidated only from
December 13, 2000 when CVF gained control. This increase was offset somewhat by
reduced costs due to the overall decrease in sales and also decrease in investor
relations expense of $264,589 in 2001.

Research and development expenses for 2001 amounted to $742,302 compared to
$658,094 for 2000 (a 12.8% increase). Most of the increase in 2001 was due to
the results of Ecoval being consolidated in CVF's results beginning in December
2000.

Loss from continuing operations increased to $5,008,952 in 2001 from $4,949,258
in 2000, an increase of $59,694 (or 1.2%). This increase can be attributed to
lower sales and the consolidation of Ecoval in the results beginning in the
later part of 2000.

Net interest expense increased to $155,820 in 2001 from $20,707 in 2000. This
increase in expense is due to lower average cash balances invested during 2001.

Losses of CVF from equity investees, entities in which CVF has a 50% or less
ownership, decreased to $244,153 in 2001 from $1,634,367 in 2000. This decrease
is mainly attributable to the inclusion of Ecoval in consolidated operations
effective from December 2000.

Gain on sale of holdings increased to a gain of $501,040 in 2001 from a gain of
$412,917 in 2000. In 2001 the Company sold some shares of its holdings in RDM
and TurboSonic while in 2000 it sold some of its holdings in RDM.

A tax recovery of $115,623 was recorded in 2001 compared to $439,566 for 2000.
The 2000 benefit was the result of CVF being able to carry capital losses back
to 1997 when the Company made significant gains on the sale of shares of one of
its investments. The tax benefit is based on losses incurred by the consolidated
wholly-owned U.S. entities being carried back. Losses incurred by Canadian
subsidiaries are not available to recover U.S. taxes paid but will be utilized
when each such entity has taxable income in Canada.

<PAGE>
Minority interest in the loss increased to $167,740 in 2001 from $163,196 in
2000.

Loss from Operations of Discontinued Business was $818,642 in 2001 and
$1,159,918 in 2000. These figures reflect the operations of Dantec, which was
sold in 2002, and Elements, which closed operations in September 2001.

Loss on discontinuance of business is $102,367, which occurred in 2001 when
Elements discontinued operations.

As a result of the operations described above, CVF recorded a net loss of
$5,929,961 in 2001 as compared to a net loss of $5,893,081 incurred in 2000.

LIQUIDITY AND CAPITAL RESOURCES

Total Stockholders' accounts as of December 31, 2002 were in a deficit position
of $966,775 compared to equity of $1,260,017 as of December 31, 2001. The net
decrease is primarily attributable to the net loss of $1,779,634 incurred in
2002. This decrease is also due to a decrease in unrealized gains on investment
holdings in 2002 of $327,938.

The current ratio of CVF as at December 31, 2002 is .51 to 1, which has
decreased from .59 to 1 as at December 31, 2001.

CVF management anticipates that over the next twelve month period CVF should
have sufficient cash from various sources to sustain itself. Between cash on
hand, the issuance of new securities if required, and the potential sales of a
portion of its holdings in certain investee companies, the company expects to
have enough cash to fund itself and certain of its investee companies that are
currently not profitable. Additionally, CVF has minimal outside debt and a line
of credit could be sought. An outside director of CVF, George Khouri made a debt
investment totaling $200,000 in 2003 in CVF.

Over the past 18 months CVF has undertaken many initiatives to lower the parent
company's expenses. These initiatives have included lowering the head count of
its office staff as well as the elimination of one executive position. Also, the
Company's office in Charlotte was closed and the headquarters office relocated,
resulting in lower costs. The office closing/relocation and manpower reduction
itself should save CVF approximately $200,000 per year going forward. The use of
consultants has virtually been eliminated except those consultants who have been
satisfied to receive their fee in CVF common shares. Travel and entertainment
has been significantly reduced over the last year and will continue at the
reduced level going forward. CVF management has adopted a very aggressive cost
and expenditure controls and monitoring policy. The Company has not paid certain
dividends on its Series B Preferred shares and has declined the request of the
holder for conversion or redemption of such shares. The Company believes that
the position it is currently taking concerning the Series B Preferred is
contractually correct and also correct under Nevada law.

The Company no longer anticipates having to fund Gemprint or Biorem as both are
currently operating on positive cash flow. Changes in Ecoval have also resulted
in significantly lower cash needs.


FINANCIAL CONSIDERATIONS

Early Stage Development Companies. Each of the Corporations is an early stage
development company with a limited relevant operating history upon which an
evaluation of its prospects can be made. As such, there can be no assurance of
the future success of any of the Corporations.

Quarterly Fluctuations. CVF's financial results have historically been, and will
continue to be, subject to quarterly and annual fluctuations due to a variety of
factors, primarily resulting from the nature of the technology companies in
which it invests. Any shortfall in revenues in a given quarter may impact CVF's
results of operations due to an inability to adjust expenses during the quarter
to match the level of revenues for the quarter. There can be no assurance that
CVF will report income in any period in the future. While some of the
Corporations have consistently reported losses, CVF has recorded income in
certain fiscal periods and experienced

<PAGE>
fluctuations from period to period due to
the sale of some of its holdings, other one-time transactions and similar
events.

Rapid Technological Change. The markets for the Corporations' products are
generally characterized by rapidly changing technology, evolving industry
standards, changes in customer needs and frequent new product introductions. The
future success of the Corporations will depend on their ability to enhance
current products, develop new products on a timely and cost-effective basis that
meet changing customer needs and to respond to emerging industry standards and
other technological changes. There can be no assurance that the Corporations
will be successful in developing new products or enhancing their existing
products on a timely basis, or that such new products or product enhancements
will achieve market acceptance.

ITEM 7          FINANCIAL STATEMENTS



<PAGE>


Consolidated Financial Statements

CVF TECHNOLOGIES CORPORATION
[Expressed in United States Currency]
December 31, 2002




<PAGE>





CVF TECHNOLOGIES CORPORATION


                          INDEX TO FINANCIAL STATEMENTS


                                                                    PAGE NUMBER




REPORT OF INDEPENDENT AUDITORS                                          F-1

CONSOLIDATED BALANCE SHEETS                                             F-2

CONSOLIDATED STATEMENTS OF OPERATIONS                                   F-4

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT)
    EQUITY                                                              F-6

CONSOLIDATED STATEMENTS OF CASH FLOWS                                   F-9

CONSOLIDATED STATEMENTS OF
    COMPREHENSIVE (LOSS) INCOME                                        F-10

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                             F-11






<PAGE>

                         REPORT OF INDEPENDENT AUDITORS



To the Board of Directors of
CVF TECHNOLOGIES CORPORATION

We have audited the accompanying consolidated balance sheets of CVF TECHNOLOGIES
CORPORATION as of December 31, 2002 and 2001 and the related consolidated
statements of operations, stockholders' (deficit) equity, cash flows, and
comprehensive loss income for each of the three years in the period ended
December 31, 2002. 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 audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of CVF TECHNOLOGIES
CORPORATION AND SUBSIDIARIES as of December 31, 2002 and 2001, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended December 31, 2002 in conformity with accounting
principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming that the CVF
TECHNOLOGIES CORPORATION will continue as a going concern. As more fully
described in Note 2, the Company's current liabilities exceed its current
assets, and the Company has incurred losses over the past five years, which have
significantly reduced cash reserves and depleted stockholders' equity. Further,
the Company has a number of contingent liabilities. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 2. The
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the outcome of this
uncertainty.

As discussed in Note 3 to the consolidated financial statements, CVF
TECHNOLOGIES CORPORATION changed its method of accounting for goodwill and
intangibles in 2002.


Kitchener, Canada,                                          Ernst & Young LLP
February 12, 2003.                                      Chartered Accountants


                                      F-1
<PAGE>

CVF TECHNOLOGIES CORPORATION


                      CONSOLIDATED BALANCE SHEETS [Note 2]


As at December 31                                  [Expressed in U.S. Currency]



<TABLE>
<CAPTION>
                                                                          2002               2001
                                                                            $                  $
-----------------------------------------------------------------------------------------------------
                                                                                        [Notes 13[b]
                                                                                         and [d]]
<S>                                                                 <C>                <C>
ASSETS
CURRENT
Cash and cash equivalents                                              218,003            402,172
Restricted cash [note 7[a]]                                                 --            126,748
Trade receivables [note 3[d]]                                          940,559            959,968
Inventory [note 4]                                                     419,764            726,373
Prepaid expenses and other                                              56,794             74,047
Income taxes receivable                                                492,299                 --
Current assets of discontinued business [note 13[d]]                        --            388,719
-----------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS                                                 2,127,419          2,678,027
-----------------------------------------------------------------------------------------------------
Property and equipment, net of accumulated depreciation [note 3[f]]    201,327            212,547
Property and equipment of discontinued business, net [note 13[d]]           --             35,077
Loans receivable [note 21]                                             144,399             68,461
Holdings, carried at cost or equity [note 5]                                --            276,634
Holdings available for sale, at market [note 5]                         62,505          1,338,753
Technology, net of accumulated amortization [note 6[a]]                529,152          1,348,645
Goodwill, net of accumulated amortization [note 6[b]]                1,405,222          1,405,222
Other assets of discontinued business [note 13[d]]                          --            481,489
-----------------------------------------------------------------------------------------------------
TOTAL ASSETS                                                         4,470,024          7,844,855
-----------------------------------------------------------------------------------------------------

</TABLE>



                                      F-2
<PAGE>


<TABLE>
<CAPTION>
                                                                          2002               2001
                                                                            $                  $
-----------------------------------------------------------------------------------------------------
                                                                                        [Notes 13[b]
                                                                                         and [d]]
<S>                                                                  <C>               <C>
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
CURRENT LIABILITIES
Bank indebtedness [note 7]                                                  --            287,417
Current portion of long-term debt [note 8]                              85,860            100,512
Loans past due or in default [note 8]                                  182,431            180,194
Accounts payables and accrued liabilities [note 13[a]]               3,762,186          3,236,051
Preferred and other non-voting stock of subsidiaries [note 13[c]]      159,000            157,050
Current liabilities of discontinued business [note 13[d]]                   --            584,783
-----------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES                                            4,189,477          4,546,007
-----------------------------------------------------------------------------------------------------
Notes payable - officers and directors [note 8]                        241,680                 --
Deferred income taxes [note 10]                                        259,454            776,583
Minority interest                                                      217,167            431,204
Minority interest in discontinued business [note 13[d]]                     --            146,820
Pension obligation [note 9]                                            465,566            455,285
Other liabilities of discontinued business [note 13[d]]                     --            165,484
-----------------------------------------------------------------------------------------------------
                                                                     1,183,867          1,975,376
-----------------------------------------------------------------------------------------------------
Redeemable Series A preferred stock, $0.001 par value, redeemable
   at $18.25 per share, authorized 500,000 shares,
   issued and outstanding shares 3,477 [2001; 3,477] [note 11[b]]       63,455             63,455
-----------------------------------------------------------------------------------------------------
                                                                     5,436,799          6,584,838
-----------------------------------------------------------------------------------------------------
Commitments and contingencies [notes 2, 18 and 19]
-----------------------------------------------------------------------------------------------------
STOCKHOLDERS' (DEFICIT) EQUITY [note 2]
Common stock, $0.001 par value, authorized 50,000,000 shares,
   outstanding 10,613,456 [2001; 9,925,502]
   and in treasury 481,700 [2001; 476,700]                              11,095             10,399
Series B convertible preferred stock
   $0.001 par value, liquidation preference of 25% of Stated Value,
   authorized, issued and outstanding 338,500 [2001; 345,000]
   [note 11[b]]                                                            339                345
Warrants [note 11 [c]]                                                 111,094            629,447
Additional paid-in capital                                          27,927,197         27,191,238
Treasury stock                                                      (2,747,174)        (2,746,129)
Accumulated other comprehensive loss                                (1,066,589)          (676,633)
Accumulated deficit                                                (25,202,737)       (23,148,650)
-----------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' (DEFICIT) EQUITY                                  (966,775)         1,260,017
-----------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT)  EQUITY                4,470,024          7,844,855
-----------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes


                                      F-3
<PAGE>



CVF TECHNOLOGIES CORPORATION


                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                    [Note 2]

Year ended December 31                            [Expressed in U.S. Currency]


<TABLE>
<CAPTION>
                                                        2002              2001               2000
                                                          $                 $                  $
-----------------------------------------------------------------------------------------------------
                                                                     [Notes 13          [Notes 13
                                                                    [b] and [d]]      [b] and[ d]]
<S>                                               <C>              <C>                <C>
SALES [note 3[l]]                                  5,923,512        11,252,794         14,791,171
Cost of sales                                      3,855,071        10,187,156         13,446,347
-----------------------------------------------------------------------------------------------------
GROSS MARGIN                                       2,068,441         1,065,638          1,344,824
-----------------------------------------------------------------------------------------------------

EXPENSES
Selling, general and administrative [note 6[a]]    4,622,891         5,716,718          4,996,593
Research and development                             386,773           742,302            658,094
-----------------------------------------------------------------------------------------------------
TOTAL EXPENSES                                     5,009,664         6,459,020          5,654,687
-----------------------------------------------------------------------------------------------------
Loss from continuing operations
   before under noted items                       (2,941,223)       (5,393,382)        (4,309,863)
-----------------------------------------------------------------------------------------------------
OTHER (EXPENSES) INCOME
Interest (expense), net                             (138,599)         (155,820)           (20,707)
Loss from equity investees                           (48,702)         (244,153)        (1,634,367)
(Loss) gain on sale of holdings                      (72,082)          501,040            412,917
-----------------------------------------------------------------------------------------------------
TOTAL OTHER (EXPENSES) INCOME                       (259,383)          101,067         (1,242,157)
-----------------------------------------------------------------------------------------------------
Loss from continuing operations before
   recovery of income taxes                       (3,200,606)       (5,292,315)        (5,552,020)
Recovery of income taxes [note 10]                  (796,824)         (115,623)          (439,566)
-----------------------------------------------------------------------------------------------------
Loss from continuing operations before
   the following:                                 (2,403,782)       (5,176,692)        (5,112,454)
Minority interest in loss                            219,667           167,740            163,196
-----------------------------------------------------------------------------------------------------
Net loss from continuing operations               (2,184,115)       (5,008,952)        (4,949,258)
Loss from operations of
   discontinued business [notes 13[b] and [d]]      (111,764)         (818,642)        (1,159,918)
Gain (loss) on discontinuance of business
   [notes 13[b] and [d]]                             516,245          (102,367)                --
-----------------------------------------------------------------------------------------------------
Net loss before extraordinary items               (1,779,634)       (5,929,961)        (6,109,176)
Extraordinary gain [note 15]                              --                --            216,095
-----------------------------------------------------------------------------------------------------
NET LOSS                                          (1,779,634)       (5,929,961)        (5,893,081)
-----------------------------------------------------------------------------------------------------
</TABLE>



                                      F-4
<PAGE>

CVF TECHNOLOGIES CORPORATION


                  CONSOLIDATED STATEMENTS OF OPERATIONS CONT'D
                                    [Note 2]

Year ended December 31                             [Expressed in U.S. Currency]


<TABLE>
<CAPTION>
                                                        2002              2001               2000
                                                          $                 $                  $
---------------------------------------------------------------------------------------------------
<S>                                             <C>                 <C>               <C>
NET LOSS ATTRIBUTABLE TO COMMON
   STOCKHOLDERS [note 12]                         (2,054,087)        (6,142,309)       (6,747,753)
---------------------------------------------------------------------------------------------------

BASIC AND DILUTED LOSS PER SHARE [note 12]
Loss from continuing operations                        (0.24)             (0.56)            (0.77)
Gain (loss) from discontinued business
   [notes 13 [b] and [d]]                               0.04              (0.10)            (0.15)
---------------------------------------------------------------------------------------------------
Loss before extraordinary item                         (0.20)             (0.66)            (0.92)
Extraordinary gain [note 15]                              --                 --              0.03
---------------------------------------------------------------------------------------------------
BASIC AND DILUTED LOSS PER SHARE [note 12]             (0.20)             (0.66)            (0.89)
---------------------------------------------------------------------------------------------------

BASIC AND DILUTED WEIGHTED AVERAGE
   SHARES [note 12]                               10,376,016          9,263,042         7,543,336
---------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes


                                      F-5
<PAGE>


CVF TECHNOLOGIES CORPORATION


            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
                                    [Note 2]

Year ended December 31                             [Expressed in U.S. Currency]

<TABLE>
<CAPTION>
                                                                            SERIES B
                                                                           CONVERTIBLE                  ADDITIONAL
                                                       COMMON STOCK         PREFERRED                    PAID-IN
                                                  SHARES         AMOUNT       STOCK      WARRANTS        CAPITAL
                                                                   $           $            $               $
-------------------------------------------------------------------------------------------------------------------
<S>                                             <C>              <C>          <C>        <C>           <C>
BALANCE - DECEMBER 31, 1999                      7,292,828        7,293        350        504,351       22,077,795
Purchase of treasury stock                              --           --         --             --               --
Net loss                                                --           --         --             --               --
Dividends on Series A preferred stock                   --           --         --             --               --
Dividends on Series B convertible
  preferred stock                                       --           --         --             --               --
Redemption of Series A preferred stock             242,390          242                                    484,537
Issuance of warrants related to Series B
  preferred stock                                       --           --         --        125,096         (125,096)
Amortization of beneficial conversion feature
  on Series B preferred stock                           --           --         --             --          629,447
Unrealized gain on securities available for
  sale, net of reclassification adjustment              --           --         --             --               --
Private placement sale of shares for cash          636,365          636         --             --        1,749,364
Shares on acquisition of interest in Ecoval        866,820          867         --             --        1,028,482
Shares issued in lieu of cash for services         115,000          115         --             --          338,947
Shares issued for dividend on Series B preferred   137,593          138         --             --          258,162
Shares issued as partial settlement for
  bank loan of Dantec                               70,000           70         --             --          139,930
Shares issued for warrants                          15,000           15         --             --           56,745
Translation adjustment                                  --           --         --             --               --
-------------------------------------------------------------------------------------------------------------------
BALANCE - DECEMBER 31, 2000                      9,375,996        9,376        350        629,447       26,638,313
-------------------------------------------------------------------------------------------------------------------
</TABLE>


<TABLE>
<CAPTION>
                                                                                  ACCUMULATED
                                                                                     OTHER
                                                    ACCUMULATED     TREASURY     COMPREHENSIVE         TOTAL
                                                      DEFICIT         STOCK          INCOME            EQUITY
                                                         $              $               $                $
---------------------------------------------------------------------------------------------------------------
<S>                                                <C>            <C>                 <C>           <C>
BALANCE - DECEMBER 31, 1999                         (10,258,588)   (2,699,779)         22,963        9,654,385
Purchase of treasury stock                                   --       (12,110)             --          (12,110)
Net loss                                             (5,893,081)           --              --       (5,893,081)
Dividends on Series A preferred stock                   (15,225)           --              --          (15,225)
Dividends on Series B convertible
  preferred stock                                      (210,000)           --              --         (210,000)
Redemption of Series A preferred stock                                                                 484,779
Issuance of warrants related to Series B
  preferred stock                                            --            --              --               --
Amortization of beneficial conversion feature
  on Series B preferred stock                          (629,447)           --              --               --
Unrealized gain on securities available for
  sale, net of reclassification adjustment                   --            --       1,435,184        1,435,184
Private placement sale of shares for cash                    --            --              --        1,750,000
Shares on acquisition of interest in Ecoval                  --            --              --        1,029,349
Shares issued in lieu of cash for services                   --            --              --          339,062
Shares issued for dividend on Series B preferred             --            --              --          258,300
Shares issued as partial settlement for
  bank loan of Dantec                                        --            --              --          140,000
Shares issued for warrants                                   --            --              --           56,760
Translation adjustment                                       --            --        (284,551)        (284,551)
---------------------------------------------------------------------------------------------------------------
BALANCE - DECEMBER 31, 2000                         (17,006,341)   (2,711,889)      1,173,596        8,732,852
---------------------------------------------------------------------------------------------------------------
</Table>

                                      F-6
<PAGE>




CVF TECHNOLOGIES CORPORATION


            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
                                    [Note 2]


Year ended December 31                             [Expressed in U.S. Currency]




<TABLE>
<CAPTION>
                                                                            SERIES B
                                                                           CONVERTIBLE                 ADDITIONAL
                                                       COMMON STOCK         PREFERRED                    PAID-IN
                                                  SHARES         AMOUNT       STOCK      WARRANTS        CAPITAL
                                                                    $           $            $              $
-------------------------------------------------------------------------------------------------------------------
<S>                                             <C>              <C>          <C>        <C>           <C>
BALANCE - DECEMBER 31, 2000                      9,375,996        9,376        350        629,447       26,638,313
Purchase of treasury stock [note 11[a]]                 --           --         --             --               --
Net loss                                                --           --         --             --               --
Dividends on Series A preferred stock                   --           --         --             --               --
Dividends on Series B convertible
   preferred stock                                      --           --         --             --               --
Conversion of Series A preferred stock
   [note 11[b]]                                      1,906            2         --             --            3,812
Conversion of Series B preferred stock
   [note 11[b]]                                     43,504           44         (5)            --           50,248
Unrealized loss on securities available for
   sale, net of reclassification adjustment
   [note 11[d]]                                         --           --         --             --               --
Shares issued in lieu of cash for services         241,266          240         --             --          205,856
Shares issued for dividend on Series B
   preferred [note 11[b]]                          636,530          637         --             --          206,363
Shares issued as partial settlement for
   bank loan of Dantec                             100,000          100         --             --           86,646
Translation adjustment [note 11[d]]                     --           --         --             --               --
-------------------------------------------------------------------------------------------------------------------
BALANCE - DECEMBER 31, 2001                     10,399,202       10,399        345        629,447       27,191,238
-------------------------------------------------------------------------------------------------------------------
</TABLE>


<TABLE>
<CAPTION>
                                                                                 ACCUMULATED
                                                                                    OTHER
                                                 ACCUMULATED       TREASURY     COMPREHENSIVE         TOTAL
                                                   DEFICIT           STOCK      INCOME (LOSS)        EQUITY
                                                       $               $               $                $
-------------------------------------------------------------------------------------------------------------
<S>                                              <C>            <C>              <C>              <C>
BALANCE - DECEMBER 31, 2000                       (17,006,341)   (2,711,889)      1,173,596        8,732,852
Purchase of treasury stock [note 11[a]]                    --       (34,240)             --          (34,240)
Net loss                                           (5,929,961)           --              --       (5,929,961)
Dividends on Series A preferred stock                  (2,348)           --              --           (2,348)
Dividends on Series B convertible
   preferred stock                                   (210,000)           --              --         (210,000)
Conversion of Series A preferred stock
   [note 11[b]]                                            --            --              --            3,814
Conversion of Series B preferred stock
   [note 11[b]]                                            --            --              --           50,287
Unrealized loss on securities available for
   sale, net of reclassification adjustment
   [note 11[d]]                                            --            --      (1,455,481)      (1,455,481)
Shares issued in lieu of cash for services                               --              --          206,096
Shares issued for dividend on Series B
   preferred [note 11[b]]                                  --            --              --          207,000
Shares issued as partial settlement for
   bank loan of Dantec                                     --            --              --           86,746
Translation adjustment [note 11[d]]                        --            --        (394,748)        (394,748)
-------------------------------------------------------------------------------------------------------------
BALANCE - DECEMBER 31, 2001                       (23,148,650)   (2,746,129)       (676,633)       1,260,017
-------------------------------------------------------------------------------------------------------------
</TABLE>



                                      F-7
<PAGE>


CVF TECHNOLOGIES CORPORATION


        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY CONT'D
                                    [Note 2]


Year ended December 31                             [Expressed in U.S. Currency]

<TABLE>
<CAPTION>
                                                                             SERIES B
                                                                            CONVERTIBLE                ADDITIONAL
                                                       COMMON STOCK          PREFERRED                   PAID-IN
                                                  SHARES        AMOUNT         STOCK      WARRANTS       CAPITAL
                                                                     $           $            $              $
-------------------------------------------------------------------------------------------------------------------
<S>                                            <C>              <C>           <C>        <C>           <C>
BALANCE - DECEMBER 31, 2001                     10,399,202       10,399        345        629,447       27,191,238
Purchase of treasury stock [note 11[a]]
Net loss
Dividends on Series A preferred stock
Dividends on Series B convertible
   preferred stock
Conversion of Series B preferred stock
   [note 11[b]]                                    478,492          479         (6)                         64,521
Unrealized loss on securities available
   for sale, net of reclassification
   adjustment[note 11[d]]
Shares issued in lieu of cash for services         176,176          176                                     35,889
Shares issued for dividend on Series B preferred    41,286           41                                      6,102
Warrants issued during the year [note 11[c]]                                              111,094
Warrants expired during the year [note 11[c]]                                            (629,447)         629,447
Translation adjustment [note 11[d]]
-------------------------------------------------------------------------------------------------------------------
BALANCE - DECEMBER 31, 2002                     11,095,156       11,095        339        111,094       27,927,197
-------------------------------------------------------------------------------------------------------------------
</TABLE>


<TABLE>
<CAPTION>
                                                                                  ACCUMULATED
                                                                                     OTHER
                                                  ACCUMULATED       TREASURY     COMPREHENSIVE         TOTAL
                                                    DEFICIT           STOCK         INCOME            EQUITY
                                                        $               $               $                $
---------------------------------------------------------------------------------------------------------------
<S>                                               <C>            <C>               <C>             <C>
BALANCE - DECEMBER 31, 2001                        (23,148,650)   (2,746,129)       (676,633)       1,260,017
Purchase of treasury stock [note 11[a]]                               (1,045)                          (1,045)
Net loss                                            (1,779,634)                                    (1,779,634)
Dividends on Series A preferred stock                   (3,096)                                        (3,096)
Dividends on Series B convertible
   preferred stock                                    (271,357)                                      (271,357)
Conversion of Series B preferred stock
   [note 11[b]]                                                                                        64,994
Unrealized loss on securities available
   for sale, net of reclassification
   adjustment[note 11[d]]                                                           (327,938)        (327,938)
Shares issued in lieu of cash for services                                                             36,065
Shares issued for dividend on Series B preferred                                                        6,143
Warrants issued during the year [note 11[c]]                                                          111,094
Warrants expired during the year [note 11[c]]                                                              --
Translation adjustment [note 11[d]]                                                  (62,018)         (62,018)
---------------------------------------------------------------------------------------------------------------
BALANCE - DECEMBER 31, 2002                        (25,202,737)   (2,747,174)     (1,066,589)        (966,775)
---------------------------------------------------------------------------------------------------------------
</TABLE>


See accompanying notes


                                      F-8
<PAGE>


CVF TECHNOLOGIES CORPORATION


                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    [Note 2]

Year ended December 31                             [Expressed in U.S. Currency]



<TABLE>
<CAPTION>
                                                            2002            2001            2000
                                                              $               $               $
---------------------------------------------------------------------------------------------------
                                                                          [Notes 13     [Notes 13
                                                                        [b] and [d]]   [b] and [d]]
<S>                                                     <C>              <C>           <C>
OPERATING ACTIVITIES
Net loss from continuing operations                     (2,184,115)      (5,008,952)   (4,949,258)
Adjustments to reconcile net loss
   from continuing operations  [note 16]                   387,895          384,595     2,176,121
Changes in operating assets and liabilities [note 16]      110,016        3,320,772       725,596
---------------------------------------------------------------------------------------------------
CASH (APPLIED TO) OPERATING ACTIVITIES                  (1,686,204)      (1,303,585)   (2,047,541)
---------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES
Purchase of property and equipment                         (55,045)         (16,829)     (187,680)
Decrease (increase) in short-term investments                   --          261,866      (264,417)
Investments in and advances to equity investees            (28,656)         (88,516)   (2,320,209)
Purchase of holdings available for sale                         --          (18,010)     (240,107)
Proceeds from sale of holdings                             902,667        1,032,198       695,911
Proceeds from sale of subsidiary                           494,878               --            --
---------------------------------------------------------------------------------------------------
CASH PROVIDED BY (APPLIED TO) INVESTING ACTIVITIES       1,313,844        1,170,709    (2,316,502)
---------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
(Decrease) increase in bank indebtedness                  (290,539)         156,488      (117,505)
Borrowings of debt                                         241,680           38,766        67,370
Repayments of debt                                         (15,920)              --       (53,234)
Issuance of common stock                                        --               --     1,806,760
Reductions of restricted cash                              128,466           49,275            --
Purchase of treasury stock                                  (1,045)         (34,240)      (12,110)
Redemption of preferred and other non-voting
   stock of subsidiaries                                        --          (19,383)      (60,633)
---------------------------------------------------------------------------------------------------
CASH PROVIDED BY FINANCING ACTIVITIES                       62,642          190,906     1,630,648
---------------------------------------------------------------------------------------------------

NET CASH PROVIDED BY (APPLIED TO) DISCONTINUED
   OPERATIONS                                              131,853         (160,520)     (424,671)
---------------------------------------------------------------------------------------------------
Effect of exchange rate changes on
   cash and cash equivalents                                (6,304)           9,020        95,999
---------------------------------------------------------------------------------------------------

CASH AND CASH EQUIVALENTS (APPLIED) DURING YEAR           (184,169)         (93,470)   (3,062,067)
Cash and cash equivalents, beginning of year               402,172          495,642     3,557,709
---------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF YEAR                     218,003          402,172       495,642
---------------------------------------------------------------------------------------------------

Cash paid during the year for interest                      47,401           34,093       165,404
---------------------------------------------------------------------------------------------------
Cash paid during the year for income taxes                   3,925            6,271        37,283
---------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes


                                      F-9
<PAGE>



CVF TECHNOLOGIES CORPORATION

             CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS [Note 2]

Year ended                                         [Expressed in U.S. Currency]


<TABLE>
<CAPTION>
                                                            2002            2001            2000
                                                              $               $               $
---------------------------------------------------------------------------------------------------
<S>                                                     <C>             <C>            <C>
NET LOSS                                                (1,779,634)     (5,929,961)    (5,893,081)
---------------------------------------------------------------------------------------------------

OTHER COMPREHENSIVE (LOSS) INCOME,
   NET OF TAX [note 11[d]]

Foreign currency translation adjustments
   [net of tax effect]                                     (62,018)       (394,748)      (284,551)
---------------------------------------------------------------------------------------------------

Unrealized holding (losses) gains:

Unrealized holding losses (gains) arising during
   year [net of taxes of $nil, 171,798, and
   $1,197,988 for the years ended
   December 31, 2002, 2001 and 2000]                         8,012        (599,770)     1,796,982

Reclassification adjustments for previously
   recognized unrealized holding (gains)
   [net of taxes of $223,967, $342,284, and 241,199
   for the years ended December 31, 2002, 2001
   and 2000]                                              (335,950)       (855,711)      (361,798)
---------------------------------------------------------------------------------------------------
                                                          (327,938)     (1,455,481)     1,435,184
---------------------------------------------------------------------------------------------------
Total other comprehensive loss                            (389,956)     (1,850,229)     1,150,633
---------------------------------------------------------------------------------------------------
COMPREHENSIVE LOSS DURING YEAR                          (2,169,590)     (7,780,190)    (4,742,448)
---------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes





                                      F-10
<PAGE>


CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]




1. ORGANIZATION AND BUSINESS DESCRIPTION

CVF Technologies Corporation [the "Company" or "CVF"] is incorporated under the
laws of the State of Nevada.

The Company is engaged primarily in the business of developing and managing
early stage and start-up companies engaged in the information and environmental
technologies areas. The Company's mandate is to acquire significant holdings in
new and emerging companies primarily in the technology area, with a focus on
e-commerce, to assist in the management of such companies and through them to
engage in businesses. The Company's mandate is also to gain income from the
operations of its investees and the ultimate proceeds of disposal of such
investments. The Company holds majority ownership positions directly or
indirectly in the following companies:

CVF Capital Management Corporation ["Management"], a wholly owned subsidiary,
provides funding to various investees of the Company.

Biorem Technologies, Inc. ["Biorem"] an industrial biotech company based in
Guelph, Ontario, is engaged in the business of applying bioconversion and
biotransformation technology to municipal and industrial environmental
applications. The current business focus of Biorem is the design and
installation of biological air filters, or biofilters, for the removal of odor
and other air pollutants from municipal and industrial sources. At December 31,
2002, the Company has a 69% [69% in 2001] ownership interest in Biorem.

Ecoval Corporation ["Ecoval"], located in Williamsville, New York, was formed in
December 2000 on the insolvency of Ecoval Inc. Ecoval's business involves the
development, manufacture and marketing of a variety of 100% natural fertilizers,
environmentally friendly organic herbicides and tree recovery systems, targeted
primarily for the lawn and garden retail/consumer market and specialty
agricultural markets. At December 31, 2002, the Company has an 85% ownership
interest [88% in 2001] ownership interest in Ecoval.

Gemprint Corporation ["Gemprint"] is a Toronto, Canada, company in the business
of providing products and services to the jewelry industry to enable diamonds
and other precious gems to be uniquely identified non-invasively
[fingerprinted], using a patented low power laser imaging system. The results
are stored in a database for later verification and recovery of lost or stolen
gems. Gemprint's Isi system has application with all segments of the diamond
supply chain [i.e. cutter/polishers, grading laboratories, manufacturers,
wholesalers, retailers and Internet traders]. At December 31, 2002, the Company
had a 65% [65% in 2001] ownership interest in Gemprint.

SRE Controls Inc. ["SRE"] is a Waterloo, Canada, company in the business of
designing, manufacturing and marketing a range of high efficiency, programmable
electronic motor speed control products for electric vehicles. Examples of the
kind of vehicles that use SRE's products are material handling equipment [e.g.
forklift trucks], aircraft Ground Support Equipment [GSE],



                                      F-11
<PAGE>
CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]


1. ORGANIZATION AND BUSINESS DESCRIPTION CONT'D

Neighborhood Electric Vehicles [NEVs], Golf carts and lower-end products such as
sweepers and scrubbers. SRE supplies its controller products to both Original
Equipment Manufacturers [OEMs] of vehicles through direct sales and to the
aftermarket. At December 31, 2002, the Company had a 75% [75% in 2001] ownership
interest in SRE.

Eastview Marketing, One, LLC ["Eastview"] an inactive wholly owned subsidiary.

Grand Island Marketing, Two, LLC ["Grand Island2"] an inactive wholly owned
subsidiary.

Grand Island Marketing, Inc. ["Grand Inc."] a wholly owned subsidiary holds a
61% [61% in 2000] economic interest in a partnership, known as "Elements". In
September 2001, Elements discontinued its operations [note 13[b]].

2. GOING CONCERN

These consolidated financial statements have been prepared on a going concern
basis, which presumes that assets will be realized and liabilities discharged in
the normal course of business over the foreseeable future. The consolidated
Company's current liabilities exceed its current assets. The Company has
incurred losses over the year and for the past five years, which have reduced
the Company's cash reserves, and depleted stockholders' equity. Further, the
Company has several contingent liabilities [note 19].

These conditions raise substantial doubt about the Company's ability to continue
in the normal course of business as a going concern.

The Company's primary need for cash is to maintain its ability to support the
operations and ultimately the carrying values of certain of its individual
investee companies. The Company is actively pursuing the sale of a portion of
its interests in two of its investee companies as a source of funds, and
reduction of cash flow needs. In addition, the Company is using its holdings
available for sale [which had a market value of $62,505 as at December 31, 2002]
[note 5] and has borrowed against expected tax refunds [notes 10 and 20] as a
source of liquidity. The Company will continue to assist its investee companies
in their efforts to obtain outside financing in order to fund the growth and
development of their respective businesses and has taken steps to reduce the
operating cash requirements of the parent company and its investees. The Company
is also seeking outside investment. There is no assurance that these initiatives
will be successful or that the Company or certain of its investees will continue
to have adequate cash resources and capital to be able to continue as going
concerns.

The Company's ability to continue to realize assets and discharge liabilities in
the normal course is uncertain and dependent on these and other initiatives.
These financial statements do not include any of the adjustments to the amounts
or classification of assets and liabilities that might be necessary should the
Company be unable to continue its business in the normal course.




                                      F-12
<PAGE>
CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]




3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These consolidated financial statements have been prepared by management in
accordance with accounting principles generally accepted in the United States
and are within the framework of the significant accounting policies summarized
below:

[a]  PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements include the accounts of the Company
     and its majority-owned subsidiaries. All material intercompany accounts and
     transactions have been eliminated on consolidation.

     Holdings in which the Company has a 20-50% ownership position and
     significant influence are accounted for under the equity method of
     accounting, such that the Company records losses to the extent of the
     Company's total holdings in the investee, comprising its equity interest,
     advances and loans and guarantees.

     The Company accounts for holdings of less than 20% ownership position as
     "available for sale". These holdings are revalued to quoted market prices
     at each period end with the unrealized gain or loss, net of tax effect,
     recorded in accumulated other comprehensive income, an element of
     stockholders' equity. The available for sale classification includes debt
     and equity securities which are carried at fair value. The Company accounts
     for holdings of less than 20% ownership for which market value is not
     readily available at cost less provisions for declines in value which are
     considered other than temporary. Such provisions are charged to earnings
     when recognized.

     Gains or losses on sales of securities are recognized by the specific
     identification method.

[b]  FOREIGN CURRENCY TRANSLATION

     The Company uses the U.S. dollar as the reporting currency of its
     consolidated financial statements. However, the functional currency of the
     Company and its Canadian subsidiaries is the Canadian dollar. Accordingly,
     all balance sheet amounts of the Company and its Canadian subsidiaries are
     translated to U.S. dollars using the exchange rates in effect at the
     applicable year-end. Income statement amounts of the Company and its
     Canadian subsidiaries are translated to U.S. dollars at the average
     exchange rate for the applicable year. The gains and losses resulting from
     the translation of the Company's financial statements into U.S. currency
     are recorded in accumulated other comprehensive loss.



                                      F-13
<PAGE>
CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]


3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT'D

[b]  FOREIGN CURRENCY TRANSLATION CONT'D

     Transactions and balances denominated in currencies other than the
     functional currency of the Company or its subsidiaries are re-measured in
     the Company's functional currency using the exchange rate in effect on the
     date of the transaction. Translation adjustments arising on such
     re-measurement are included in the determination of net (loss) income.

[c]  CASH AND CASH EQUIVALENTS

     The Company considers all highly liquid temporary cash investments, with a
     maturity of three months or less when purchased, to be cash equivalents.

[d]  TRADE RECEIVABLES

     Trade receivables are presented net of allowance for doubtful accounts. The
     allowance was $121,935 at December 31, 2002 [$153,469 at December 31,
     2001]. Bad debt expense was $82,972 during the year ended December 31, 2002
     [$80,957 in 2001; $253,689 in 2000].

     The allowance for doubtful accounts is determined at the subsidiary company
     level, and includes specifically identified accounts where there is doubt
     as to collection.

[e]  INVENTORY

     Finished goods are stated at the lower of cost or net realizable value
     using the first-in, first-out method of costing. Raw materials are stated
     at the lower of cost or replacement value, using the first-in, first-out
     method.





                                      F-14
<PAGE>
CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]



3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT'D

[f]  PROPERTY AND EQUIPMENT

     Property and equipment are recorded at cost. Depreciation is calculated
     using the straight-line and declining balance methods over the estimated
     useful lives of the assets as follows:

     Property                                                    5-10 years
     Equipment                                                   5-10 years

     Accumulated depreciation at December 31, 2002 was $517,527 [$508,380 at
     December 31, 2001]. Depreciation expense was $81,052 [$73,460 in 2001;
     $107,127 in 2000].

[g]  FINANCIAL INSTRUMENTS

     The fair values of cash and cash equivalents, restricted cash, trade
     receivables, income taxes receivable, bank indebtedness, trade payables and
     accrued liabilities, and preferred and other non-voting stock of
     subsidiaries approximate their carrying values due to the short-term
     maturity of these instruments. The fair values of the Company's pension
     obligation approximates the carrying value, as the debt bears interest at
     rates approximating current market rates. The fair value of the Company's
     long term debt is not readily determinable due to the Company's financial
     condition. Holdings available for sale at market are valued at the
     published stock market values. Those values are subject to market value
     risks, as stock prices may fluctuate from day to day. Those holdings
     carried at cost or equity and the non-voting stock of subsidiaries are
     related to private companies, whose fair market value is not readily
     determinable.

     Financial instruments, which are denominated in currencies other than U.S.
     dollars, are subject to exchange rate risk. At December 31, the Company had
     the following Canadian dollar denominated financial instruments [converted
     to the U.S. dollar equivalents]:

<TABLE>
<CAPTION>
                                                                          2002               2001
                                                                            $                  $
     -----------------------------------------------------------------------------------------------
<S>                                                                    <C>                <C>
     Cash and cash equivalents                                         111,705            236,093
     Trade receivables                                                 240,647            260,051
     Bank indebtedness                                                      --            287,417
     Trade payables                                                    635,609            691,672
     Long-term debt                                                    509,971            280,706
     Pension obligation                                                465,566            455,285
     Preferred and non voting stock of subsidiaries                    159,000            157,050
</TABLE>

                                      F-15
<PAGE>

CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]


3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT'D

[h]  GOODWILL

     Goodwill is recorded in connection with the acquisition of subsidiaries
     representing the difference between the fair value of identifiable net
     assets of the underlying equity interest purchased and the amount paid for
     the interest. Effective January 1, 2002, the Company applied the provisions
     of SFAS 142 with respect to goodwill and ceased amortization of the
     carrying value of goodwill. Prior to 2002 goodwill was amortized.

[i]  INTANGIBLE ASSETS

     Intangible assets with finite useful lives are amortized over their
     estimated useful lives. Intangible assets are reviewed for impairment when
     there are indications that the carrying value of an asset may not be
     recoverable over its estimated useful life. The Company's only intangible
     asset is acquired technology of Ecoval which is amortized over 5 years.

[j]  MINORITY INTEREST

     Minority common equity interests are charged (credited) with their
     proportionate share of subsidiary losses (net income). When minority
     interests are reduced to zero by the allocable share of investee losses,
     any additional losses from such investee are charged entirely to the
     Company. Where excess losses are recorded by the Company, they will be
     charged against minority interests in the event future income becomes
     available or minority interests contribute additional equity.

[k]  LOSS PER SHARE

     Basic loss per share is computed by dividing net loss attributable to
     common stockholders by the weighted average number of common shares
     outstanding during the year. The net loss attributable to common
     stockholders consists of net loss increased by the dividends on the
     Company's Series A and B preferred stock. Diluted earnings per share would
     be calculated as the per share amount that would have resulted if dilutive
     potential stock had been converted to common stock, as prescribed by SFAS
     128. The Company has not presented diluted per share amounts as the
     dilution would reduce the loss per share.


                                      F-16
<PAGE>

CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]


3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT'D

[l]  REVENUE RECOGNITION

     Revenue from the sale of manufactured products is recognized when the goods
     are shipped and accepted by the customer.

     The Company recognizes revenue on long-term contracts on the percentage of
     completion basis, based on costs incurred relative to the estimated total
     contract costs. Losses on such contracts are accrued when the estimate of
     total costs indicates that a loss will be realized. Contract billings in
     excess of costs and accrued profit margins are recorded as deferred revenue
     and included in current liabilities. Contract costs and margins earned in
     excess of progress billings are carried in accounts receivable.

     Service revenue is recognized when the services are performed.

     A significant portion of the Company's revenue has been derived from sales
     by its subsidiary SRE. SRE develops and manufactures certain controls that
     are added to machine parts and supplied to an original equipment
     manufacturer [OEM]. Prior to April 1, 2002, the Company was required to
     supply the machine parts [at no mark-up] and the SRE manufactured
     controller with mark-up under this arrangement. The agreement with the OEM
     was amended at the beginning of the second quarter 2002, such that SRE is
     no longer required to supply the machine parts but continues to supply the
     manufactured controller. As a result of this change in the business
     arrangement, CVF no longer records the value of the machine parts in its
     sales or cost of sales. Had this arrangement not changed, the Company's
     sales and cost of sales for the year would each have been $4,316,898
     respectively greater than the reported amount. The change in this
     arrangement has had no effect on the amount of the Company's gross margin.

[m] STOCK-BASED COMPENSATION

     The Company and its subsidiaries account for stock and options issued to
     employees for services in accordance with APB Opinion 25, Accounting for
     Stock Issued to Employees, by reference to the fair market value of the
     Company's stock on the date of stock issuance or option grant. The Company
     uses the "intrinsic" method for determining compensation expense for new
     options whereby expense is recorded for the quoted market price of the
     stock issued, or in the case of options, for the difference between the
     stock's quoted market price on the date of grant and the option exercise
     price. When the market price at the date of grant exceeds the exercise
     price of the underlying shares, compensation expense is recorded.


                                      F-17
<PAGE>
CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]


3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT'D

[m]  STOCK-BASED COMPENSATION CONT'D

     During 2002, the Company's options were repriced, resulting in the
     "variable" method for determining compensation expense being applied to the
     options subsequent to their repricing. Under this method, expense is
     recorded for the quoted market price of the stock issued, or in the case of
     options, for the difference between the stock's quoted market price on the
     date of grant and the option exercise price. Increases and decreases [but
     not below the exercise price] in the quoted market price of the stock
     between the grant date and the measurement date result in a change in the
     measure of compensation for the award.

[n]  RESEARCH AND DEVELOPMENT

     Research costs and development costs are expensed as incurred. Research and
     development expenditures are reduced by any related investment tax credits
     and government grants.

[o]  INCOME TAXES

     The Company accounts for income taxes using the liability method under
     which a deferred tax asset or liability is recognized based upon the tax
     effect of the differences between the financial statement and tax basis of
     assets and liabilities, as measured at the enacted rates which will be in
     effect when these differences are expected to reverse. Provision is made
     for all applicable U.S. and foreign income taxes pursuant to this standard.
     Canadian research and development tax credits of subsidiaries are credited
     to research and development expense when qualifying expenditures are
     incurred and realization of such credits is reasonably assured.

[p]  USE OF ESTIMATES

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


                                      F-18
<PAGE>

CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]



3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT'D

[q]  CREDIT RISK

     The Company performs ongoing credit evaluations of its customers' financial
     condition and generally does not require collateral. The Company maintains
     allowances for potential losses, and such losses have been within
     management's expectations.

[r] IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

     The Company has implemented new accounting standards as follows.




                                      F-19
<PAGE>
CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT'D

[r]  IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS CONT'D

     BUSINESS COMBINATIONS AND GOODWILL AND OTHER INTANGIBLE ASSETS

     In July 2001, the FASB issued SFAS 141, "Business Combinations," and SFAS
     142, "Goodwill and Intangible Assets." SFAS 141 requires the use of the
     purchase method of accounting for business combinations and prohibits the
     use of the pooling of interests method. Under the previous rules, the
     Company used the purchase method of accounting. SFAS 141 also refines the
     definition of intangible assets acquired in a purchase business
     combination. As a result, the purchase price allocation of future business
     combinations may be different than the allocation that would have resulted
     under the old rules. Business combinations occurring subsequent to July 1,
     2001 must be accounted for using SFAS 141. The Company has not had business
     combinations subsequent to adoption of this standard.

     SFAS 142 eliminates the amortization of goodwill, requires annual
     impairment testing of goodwill and introduces the concept of indefinite
     life intangible assets. This standard was adopted by the Company on January
     1, 2002. The Company completes its annual goodwill impairment tests as of
     December 31 of each year for all of its reporting units. Based on an
     analysis of economic characteristics and how the Company operates its
     business, the Company has designated each investee company as a separate
     reporting unit. As required by the statement, intangible assets that meet
     the criteria for recognition apart from goodwill must be reclassified. The
     Company has concluded that there are no such intangible assets. The
     application of SFAS 142 resulted in reduction of amortization expense and
     reduction in the loss for the year by $378,690.

     ACCOUNTING FOR IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS

     In August 2001, the FASB issued SFAS 144, "Accounting for the Impairment or
     Disposal of Long-Lived Assets". SFAS 144 established a single model for the
     impairment of long-lived asset and broadens the presentation of
     discontinued operations to include a component of an entity or defined by
     APB 30. SFAS 144 is effective for years beginning after December 15, 2001.



                                      F-20
<PAGE>
CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]


3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT'D

[r] IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS CONT'D

     GUARANTOR'S ACCOUNTING AND DISCLOSURE REQUIREMENTS FOR GUARANTEES,
     INCLUDING INDIRECT GUARANTEES OF INDEBTEDNESS OF OTHERS

     In November 2002, the FASB issued FASB Interpretation 45, "Guarantor's
     Accounting and Disclosure Requirements for Guarantees, Including Indirect
     Guarantees of Indebtedness of Others." This interpretation significantly
     changes current practice in the accounting for, and disclosure of,
     guarantees. The adoption of this interpretation did not have a material
     impact on the consolidated financial statements.

     ACCOUNTING FOR STOCK BASED COMPENSATION-TRANSITION AND DISCLOSURE

     In December 2002, the FASB issued SFAS 148, "Accounting for Stock-Based
     Compensation Transition and Disclosure." SFAS 148 is effective for 2003,
     and increases the disclosure requirements for stock based compensation
     plans. The impact of implementation of SFAS 148 in 2002 was to increase the
     Company's proforma stock compensation disclosure [note 14].


     New accounting standards that have been issued but not yet adopted by the
     Company and which may have a material effect on the financial statements
     are as follows.

     CONSOLIDATION OF VARIABLE INTEREST ENTITIES

     In January of 2003, FASB issued Interpretation No. 46 (FIN 46),
     "Consolidation of Variable Interest Entities." FIN 46 requires investors
     with a majority of the variable interests in a variable interest entity
     ("VIE") to consolidate the entity and also requires majority and
     significant variable interest investors to provide certain disclosures
     about their involvement with entities that qualify as a VIE. A VIE is an
     entity in which the equity investors do not have a controlling interest or
     in which the equity at risk is insufficient to finance the entity's
     activities without receiving subordinated financial support from other
     parties. CVF is currently reviewing its portfolio of investments to
     determine whether any of its investees qualify as a VIE. It is possible
     that the Company's investments in Petrozyme and IMT will require
     consolidation as a VIE, on adoption of this standard in the third quarter
     of 2003. The operations of each of these companies, and the Company's
     combined financial exposure to these companies are discussed in note 5.

     ACCOUNTING FOR ASSET RETIREMENT OBLIGATIONS

     In June 2001, the FASB issued SFAS 143, "Accounting for Asset Retirement
     Obligations" SFAS 143 addresses financial accounting and reporting for
     obligations associated with the


                                      F-21
<PAGE>
CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]


3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT'D

[r]  IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS CONT'D

     retirement of tangible long-lived assets and the associated asset
     retirement costs. It requires recognition of the fair value of a liability
     for an asset retirement obligation in the period in which it is incurred if
     a reasonable estimate of fair value can be made. This standard will be
     effective for the Company's 2003 year. The Company is evaluating the effect
     of this new standard on its financial statements.


4. INVENTORY

Inventory consists of the following:

<TABLE>
<CAPTION>
                                                     2002               2001
                                                       $                  $
------------------------------------------------------------------------------
<S>                                               <C>                <C>
Raw material                                      263,237            618,547
Finished goods                                    156,527            107,826
------------------------------------------------------------------------------
                                                  419,764            726,373
------------------------------------------------------------------------------
</TABLE>

5. HOLDINGS

The Company accounts for its holdings in the following companies using the
equity method:

[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]  IMT Systems, Inc. ["IMT"], a Waterloo, Canada, private company in the
     business of developing a traction motor for industrial electric vehicles.



                                      F-22
<PAGE>
CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]


5. HOLDINGS CONT'D

In addition, the Company has holdings available for sale of the following
companies:

-    TurboSonic Technologies, Inc. ["TurboSonic"], a Waterloo, Canada, public
     company, which is in the business of air pollution control products.

-    RDM Corporation ["RDM"], a Waterloo, Canada, public company in the business
     of developing and supplying technologies for both paper and electronic
     based payment systems.

-    WZ.COM Inc. [wz.com], a private company incorporated in the State of
     Delaware, to market products over its website.

-    The Company has other notes and holdings which are not individually
     significant.

Holdings consisted of the following at December 31, 2002:
<TABLE>
<CAPTION>
                                                                                          HOLDINGS
                                                                        HOLDINGS         AVAILABLE FOR
                                                                         AT COST          FOR SALE AT
                                                     PERCENTAGE         OR EQUITY         FAIR VALUE
                                                      OWNERSHIP             $                  $
--------------------------------------------------------------------------------------------------------
<S>                                                    <C>              <C>               <C>
Petrozyme
            50   common shares                           50%                  --               --
       250,000   Class C non-voting shares              100%                  --               --
                 notes and advances [net of equity
                 in losses] [i]
--------------------------------------------------------------------------------------------------------
IMT
           485   common shares [ii]                      47%                  --               --
                 notes and advances [net of equity
                 in losses] [ii]
--------------------------------------------------------------------------------------------------------
TurboSonic
         8,217   common shares [iii]                      --                  --            2,136
--------------------------------------------------------------------------------------------------------
RDM
        88,772   common shares [iv]                       --                  --           45,732
--------------------------------------------------------------------------------------------------------
wz.COM
       500,000   common shares [v]                        4%                  --               --
--------------------------------------------------------------------------------------------------------
Other notes and holdings                                  --                  --           14,637
--------------------------------------------------------------------------------------------------------
TOTAL                                                                         --           62,505
--------------------------------------------------------------------------------------------------------
</TABLE>

                                      F-23
<PAGE>

CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]


5. HOLDINGS CONT'D

Holdings consisted of the following at December 31, 2001:
<TABLE>
<CAPTION>
                                                                                          HOLDINGS
                                                                       HOLDINGS         AVAILABLE FOR
                                                                        AT COST          FOR SALE AT
                                                     PERCENTAGE        OR EQUITY         FAIR VALUE
                                                      OWNERSHIP            $                  $
------------------------------------------------------------------------------------------------------
<S>                                                  <C>                <C>              <C>
Petrozyme
            50   common shares                           50%                  --               --
       250,000   Class C non-voting shares              100%                  --               --
                 notes and advances [net of equity
                 in losses] [i]                                               --               --
------------------------------------------------------------------------------------------------------
IMT
           485   common shares [ii]                      47%              19,775               --
                 notes and advances [net of equity
------------------------------------------------------------------------------------------------------
                 in losses] [ii]
------------------------------------------------------------------------------------------------------
TurboSonic
       949,217   common shares [iii]                      9%                  --          465,116
------------------------------------------------------------------------------------------------------
RDM
       971,472   common shares [iv]                       5%                  --          775,054
------------------------------------------------------------------------------------------------------
wz.COM
       500,000   common shares [v]                        4%             250,000               --
------------------------------------------------------------------------------------------------------
Other notes and holdings                                                   6,859           98,583
------------------------------------------------------------------------------------------------------
Total                                                                    276,634        1,338,753
------------------------------------------------------------------------------------------------------
</TABLE>



                                      F-24
<PAGE>
CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]


5. HOLDINGS CONT'D

[i]    The notes and advances to Petrozyme bear interest at prime plus 2%, are
       unsecured, payable on demand, some are denominated in Canadian currency
       and others in U.S. currency. The Company does not intend to demand
       repayment of these notes during the year. The carrying value of these
       assets has been reduced to zero by the Company's share of losses of
       Petrozyme.

[ii]   During 2000, the Company purchased 485 shares of IMT to acquire
       approximately 47% ownership interest. The total consideration paid for
       the shares was Cdn. $230,512 [U.S. $153,798]. Also during 2000, the
       Company advanced Cdn. $35,000 [U.S. $23,352] to IMT. This note bears
       interest at prime plus 2% and is assessed and payable on demand. The
       Company does not intend to demand repayment of the note during the next
       year.

       The carrying value of IMT has been reduced by the Company's equity in the
       losses of IMT. The carrying value has been reduced to zero during 2002.

[iii]  At December 31, 2002, the market value of the shares was U.S. $0.26 [U.S.
       $0.49 in 2001] per share. As at December 31, 2002, the common shares of
       TurboSonic have an original cost of $3,938. Accordingly, aggregate
       unrealized losses of $1,802 have been recorded as an element of
       accumulated other comprehensive income as at December 31, 2002.

[iv]   At December 31, 2002, the quoted market value of shares of RDM listed on
       the Canadian Venture Exchange was Cdn. $0.81 [U.S. $0.515 [2001 - Cdn.
       $1.27 [U.S. $0.80]] per share. As at December 31, 2002, the shares have
       an original cost of $39,522. Accordingly, aggregate unrealized gains of
       $6,210 have been recorded as an element of accumulated other
       comprehensive income as at December 31, 2002.

[v]    On January 22, 1999, the Company purchased 500,000 shares of NETrageous
       Inc. to acquire approximately 3% ownership interest. The total
       consideration paid for the shares was $250,000. In February 2001 the
       shares in NETrageous were exchanged at no cost for 500,000 common shares
       in WZ.COM INC. The transaction resulted in CVF increasing its ownership
       interest to 4%. In October 2002 the business was dissolved with no
       proceeds left for distribution to shareholders and the investment was
       written off at December 31, 2002.



                                      F-25
<PAGE>
CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]

5. HOLDINGS CONT'D

The following table gives certain combined summarized financial information
related to the Company's equity holdings:

<TABLE>
<CAPTION>
                                                         2002               2001             2000
INCOME STATEMENT DATA                                      $                 $                 $
----------------------------------------------------------------------------------------------------
<S>                                                  <C>               <C>             <C>
Net sales                                               129,666           100,725         236,006
Gross profit (loss) on sales                             90,940            99,042        (136,100)
Net (loss)                                             (203,279)         (319,305)     (1,618,142)
----------------------------------------------------------------------------------------------------
CVF'S SHARE OF NET (LOSS)                               (48,702)         (230,056)     (1,548,498)
----------------------------------------------------------------------------------------------------
BALANCE SHEET DATA
Current assets                                           93,932           127,397         167,546
Non-current assets                                           --             2,150           2,978
----------------------------------------------------------------------------------------------------
TOTAL ASSETS                                             93,932           129,547         170,524
----------------------------------------------------------------------------------------------------
Current liabilities                                     199,637           142,195          65,423
Non-current liabilities                               1,755,728         1,625,422       1,515,133
(Deficit)                                            (1,861,433)       (1,638,070)     (1,410,032)
----------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND EQUITY                             93,932           129,547         170,524
----------------------------------------------------------------------------------------------------
CVF'S SHARE OF (ACCUMULATED DEFICIT)                   (928,197)         (817,745)       (706,332)
----------------------------------------------------------------------------------------------------
CVF'S SHARE OF NON-CURRENT LIABILITIES                1,755,728         1,625,422       1,515,133
----------------------------------------------------------------------------------------------------
</TABLE>

CVF's share of net loss of equity investees appearing in the statements of
operations includes amounts loaned to Petrozyme to fund operating losses and
amortization of goodwill. Amortization of goodwill amounted to $14,097 in 2001
and $85,869 in 2000.

The investee companies have various debt and equity securities and options
outstanding, which are convertible into common stock of the respective investee
companies. Such conversions, except where noted, would not materially decrease
or increase the Company's interest in the earnings or net assets of any
investee.


                                      F-26
<PAGE>

CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]


6. TECHNOLOGY AND GOODWILL

[a]  The details of purchased technology are as follows:

<TABLE>
<CAPTION>
                                                              2002               2001
                                                                $                  $
     ----------------------------------------------------------------------------------
<S>                                                      <C>                <C>
     Cost                                                1,705,822          1,705,822
     Write down of intangible asset                        495,690                 --
     Accumulated amortization                              680,980            357,177
     ----------------------------------------------------------------------------------
                                                           529,152          1,348,645
     ----------------------------------------------------------------------------------

</TABLE>

     In 2002, the Company reviewed the carrying value of the intangible assets
     associated with Ecoval. Although Ecoval has successfully developed natural
     pesticide, herbicide and fertilizer products, and patented certain
     technologies related to these products, sales of these products and related
     cashflows are still being developed. The Company is working to expand its
     marketing partnerships. The cash flows from this business have fallen below
     earlier expectations and the Company's resources available to support the
     expansion of Ecoval are currently limited. Accordingly, the Company has
     revised its estimates of near term future cashflows and the value assigned
     to the related intangible assets. In addition to the normal amortization of
     the intangibles, the Company has written these assets down by $495,690
     [$nil in 2001 and 2000]. This write down is included in amortization
     expense for the year.

     In connection with this write-down, the Company recorded a reduction of
     future taxes of $168,535, which future taxes are associated with the lack
     of a tax base on these assets.


                                      F-27
<PAGE>

CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]


6. TECHNOLOGY AND GOODWILL CONT'D

[b]  The goodwill of subsidiaries consists of:

<TABLE>
<CAPTION>
                                                                       ACCUMULATED       NET BOOK
                                                            COST      AMORTIZATION         VALUE
     2002                                                     $             $                $
     -----------------------------------------------------------------------------------------------
<S>                                                    <C>             <C>             <C>
     SRE                                                  523,816         369,346         154,470
     Biorem                                               162,428         111,784          50,644
     Gemprint                                           2,444,366       1,244,258       1,200,108
     -----------------------------------------------------------------------------------------------
                                                        3,130,610       1,725,388       1,405,222
     -----------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                                                       ACCUMULATED       NET BOOK
                                                            COST      AMORTIZATION         VALUE
     2001                                                     $             $                $
     -----------------------------------------------------------------------------------------------
<S>                                                   <C>             <C>             <C>
     SRE                                                  523,816         369,346         154,470
     Biorem                                               162,428         111,784          50,644
     Gemprint                                           2,444,366       1,244,258       1,200,108
     -----------------------------------------------------------------------------------------------
                                                        3,130,610       1,725,388       1,405,222
     -----------------------------------------------------------------------------------------------
</TABLE>

     The Company adopted the provisions of SFAS No. 142 effective January 1,
     2002, at which time the amortization of the Company's existing goodwill
     ceased. During 2001 and 2000, amortization of goodwill of subsidiaries
     totaled $257,347 and $357,802 respectively.

     The following information is provided for comparative purposes.

<TABLE>
<CAPTION>
                                                        2002             2001             2000
                                                          $                $                $
     ----------------------------------------------------------------------------------------------
<S>                                                  <C>               <C>             <C>
     Net (loss)                                      (1,779,634)       (5,929,961)     (5,893,081)

     Goodwill amortization:
                  Subsidiaries                               --           257,347         357,802
                  Equity investees                           --            14,098          85,869
                  Discontinued business                      --           665,134         694,553
                                                     ----------------------------------------------
     Net (loss) before goodwill amortization         (1,779,634)       (4,993,382)     (4,754,857)
                                                     ----------------------------------------------
     Extraordinary gain                                      --               --          216,095
                                                     ----------------------------------------------
     Net (loss) before goodwill amortization
          and extraordinary item                     (1,779,634)       (4,993,382)     (4,970,952)
                                                     ----------------------------------------------
     Net (loss) per share before goodwill
          amortization (basic and diluted)                 0.20              0.56            0.85
                                                     ----------------------------------------------
</TABLE>

                                      F-28
<PAGE>


CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]


7. BANK INDEBTEDNESS

<TABLE>
<CAPTION>
                                                   2002               2001
                                                     $                  $
----------------------------------------------------------------------------
<S>                                               <C>            <C>
Gemprint [a]                                         --            119,659
SRE [b]                                              --            167,758
----------------------------------------------------------------------------
                                                     --            287,417
----------------------------------------------------------------------------
</TABLE>

The weighted average interest rate on bank indebtedness during 2002 was 6.4%
[8.4% in 2001].

[a]  Gemprint had bank indebtedness of Cdn. $190,479 [U.S. $119,659] in 2001
     with a Canadian chartered bank. In 2002 the loan was repaid by CVF. In 2001
     the loan was collateralized by a term deposit of Cdn. $200,768 [U.S.
     $126,748].

[b]  SRE has a line of credit with a Canadian chartered bank which is available,
     based on a fixed percentage of accounts receivable, to a limit of Cdn.
     $250,000 [U.S. $159,000]. Loans against this line bear interest at its
     bank's prime lending rate plus 0.5%. SRE has pledged a general security
     agreement as collateral. No amounts were drawn on this line of credit at
     December 31, 2002.



                                      F-29
<PAGE>

CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]

8. LONG-TERM DEBT

Long-term debt comprises the following:

<TABLE>
<CAPTION>
                                                                          2002               2001
                                                                            $                  $
---------------------------------------------------------------------------------------------------
<S>                                                                  <C>                <C>
Convertible debenture issued by Gemprint, for Cdn. $286,841
   [2001- $286,841], bearing interest at 5% per annum.
    The loan has matured and is past due.                              182,431            180,194

Loans from a Biorem employee to Biorem of Cdn. $125,000
   [2001 - $125,000] and CVF officers of Cdn $10,000 [2001 -
   $25,000]. The loans are payable on demand upon the consent
   of CVF and bear interest at Canadian prime plus 3.0% to 4.0%.        85,860            100,512

Loans from an SRE officer to SRE of Cdn. $80,000
   [2001 - $nil] and an SRE director of Cdn $300,000 [2001 -
   $nil]. Loan terms as outlined below.                                241,680                 --
---------------------------------------------------------------------------------------------------
Total long-term debt                                                   509,971            280,706
Less: current portion of long-term debt                                (85,860)          (100,512)
   loans past due or in default                                       (182,431)          (180,194)
---------------------------------------------------------------------------------------------------
LONG-TERM DEBT EXCLUDING CURRENT PORTION AND LOANS PAST
   DUE OR IN DEFAULT                                                   241,680                 --
---------------------------------------------------------------------------------------------------
</TABLE>


Interest expense on long-term debt during the year was $25,187 [$50,592 in 2001;
$81,338 in 2000].

Loan from SRE officer - this amount is payable on or before the 1st day of
October, 2004. Should SRE obtain either senior debt financing or equity
financing of at least $1 million prior to October 1, 2004, all outstanding
principal and interest due shall be due and payable as of the closing date of
such financing. The note bears interest at the rate of 12% per annum.

Loan from SRE director - this amount is due on December 31, 2004 and consists of
a convertible term note. Under the conversion terms, $4.00 of indebtedness can
be exchanged for one common share of the Company at the option of the holder.
The note bears interest at 5% per annum, calculated daily, and is payable at the
end of the term.



                                      F-30
<PAGE>

CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]


9. PENSION OBLIGATION

In recognition of past service contributions by a retired executive officer, the
Company has agreed to provide a Cdn. $6,000 [U.S. $3,816 at current exchange
rates] monthly pension benefit for life. The accrued pension obligation
represents the actuarial value of this benefit. This obligation is adjusted
annually based on payments made and changes in actuarial assumptions.

10. INCOME TAXES

Details of the income tax (recovery) related to income from continuing
operations are as follows:

<TABLE>
<CAPTION>
                                                                 2002          2001          2000
                                                                  $              $             $
----------------------------------------------------------------------------------------------------
<S>                                                        <C>          <C>           <C>
Current:
   U.S.
        Benefit of operating loss carryback                   (432,617)           --     (718,996)
        Income taxes on operating income of subsidiary              --        42,485           --
----------------------------------------------------------------------------------------------------
                                                              (432,617)       42,485     (718,996)
----------------------------------------------------------------------------------------------------
   Foreign                                                     (59,682)           --           --
----------------------------------------------------------------------------------------------------
Total current taxes                                           (492,299)       42,485     (718,996)
----------------------------------------------------------------------------------------------------
Deferred:
   U.S.                                                       (304,525)     (158,108)     279,430
   Foreign                                                          --            --           --
----------------------------------------------------------------------------------------------------
Total deferred taxes                                          (304,525)     (158,108)     279,430
----------------------------------------------------------------------------------------------------
INCOME TAX (RECOVERY)                                         (796,824)     (115,623)    (439,566)
----------------------------------------------------------------------------------------------------
(Loss) before (recovery of) income taxes:
   U.S.                                                     (2,684,546)   (3,380,226)  (2,200,136)
   Foreign                                                    (516,060)   (1,912,089)  (3,351,884)
----------------------------------------------------------------------------------------------------
(LOSS) BEFORE (RECOVERY OF) INCOME TAXES                    (3,200,606)   (5,292,315)  (5,552,020)
----------------------------------------------------------------------------------------------------
</TABLE>

No income tax provisions or recoveries are allocable to operations of
discontinued business, or extraordinary items.


                                      F-31
<PAGE>
CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]

10. INCOME TAXES CONT'D

The recovery of income taxes differs from the amount computed by applying the
statutory income tax rate to net loss before recovery of income taxes as
follows:

<TABLE>
<CAPTION>
                                                              2002            2001          2000
                                                                %               %             %
---------------------------------------------------------------------------------------------------
<S>                                                          <C>             <C>           <C>
U.S. statutory income tax rate                                34.0            34.0          34.0
---------------------------------------------------------------------------------------------------
(Decrease) increase in income tax resulting from:
   Non-deductible goodwill amortization                         --            (0.8)         (5.8)
   Loss in subsidiaries not recognized for tax purposes       (6.8)          (12.3)        (20.5)
   Unrecognized loss carryback and carryforward
      benefits of CVF                                         (4.5)          (19.5)           --
   Other                                                       2.2             0.8           0.2
---------------------------------------------------------------------------------------------------
EFFECTIVE INCOME TAX RATE                                     24.9             2.2           7.9
---------------------------------------------------------------------------------------------------
</TABLE>

The components of the temporary differences which created the deferred tax
(recovery) provision are as follows:

<TABLE>
<CAPTION>
                                                               2002          2001          2000
                                                                $              $             $
---------------------------------------------------------------------------------------------------
<S>                                                       <C>            <C>           <C>
Change in:
   Operating Tax loss carryforward, CVF Corporation         1,810,062      (654,000)   (1,299,000)
   Operating tax loss carryforward, subsidiaries              218,742      (243,858)    1,138,164
   Capital tax loss carryforward, CVF Corporation            (757,416)           --            --
   Pension obligation                                          (3,512)       17,348         9,119
   Change in accounting principal                               5,722         5,722        32,526
   Lack of tax basis for technology                          (296,245)     (152,843)           --
   Other                                                       (5,265)       (5,265)      (32,231)
   Change in valuation allowance                           (1,276,613)      874,788       430,852
---------------------------------------------------------------------------------------------------
                                                             (304,525)     (158,108)      279,430
---------------------------------------------------------------------------------------------------
</TABLE>


                                      F-32
<PAGE>

CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]


10. INCOME TAXES CONT'D

The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and liabilities are presented below:

<TABLE>
<CAPTION>
                                                                          2002               2001
                                                                            $                  $
---------------------------------------------------------------------------------------------------
<S>                                                               <C>                  <C>
Deferred tax assets:
U.S.
   Operating tax loss carryforward                                     142,938          1,953,000
   Capital loss carry-forward                                          757,416                 --
   Related to pension obligation                                       158,292            154,780
   Related to a change in accounting principle                          86,444             92,166
   Related to the unrealized loss attributable to
      securities available for sale valued at market                     3,015                 --
   Less: Valuation allowance                                        (1,148,105)        (2,199,946)
---------------------------------------------------------------------------------------------------
                                                                            --                 --
---------------------------------------------------------------------------------------------------
Deferred tax liabilities:
U.S.
   Related to lack of tax basis for technology                         179,912            476,157
   Other                                                                79,542             84,807
   Related to the unrealized gains attributable to
      securities available for sale valued at market                        --            215,619
---------------------------------------------------------------------------------------------------
                                                                       259,454            776,583
---------------------------------------------------------------------------------------------------
NET DEFERRED TAX (LIABILITY)                                          (259,454)          (776,583)
---------------------------------------------------------------------------------------------------

Deferred tax assets:
Foreign
   Income tax losses available for carryforward in subsidiaries      3,129,347          3,348,089
   Less: Valuation allowance                                        (3,129,347)        (3,348,089)
---------------------------------------------------------------------------------------------------
NET DEFERRED TAX ASSET - FOREIGN                                            --                 --
---------------------------------------------------------------------------------------------------
</TABLE>


                                      F-33
<PAGE>

CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]



10. INCOME TAXES CONT'D

At December 31, 2002, the Company has losses available for carryforward in
certain of its Canadian subsidiaries of approximately $10,473,000 [$11,017,000
in 2001] available to reduce future years' income for tax purposes in these
subsidiaries. These losses expire as follows:

                                                                           $
------------------------------------------------------------------------------

2003                                                                1,095,000
2004                                                                2,193,000
2005                                                                1,431,000
2006                                                                1,968,000
Beyond                                                              3,786,000
------------------------------------------------------------------------------
                                                                   10,473,000
------------------------------------------------------------------------------

11. STOCKHOLDERS' EQUITY

[a]  COMMON SHARES

     Holders of the common shares are entitled to one vote per share on each
     matter submitted to vote at any meeting of the shareholders. Common shares
     do not carry cumulative voting rights, and, therefore, holders of a
     majority of the outstanding shares of common shares will be able to elect
     the entire Board of Directors, and, if they do so, minority shareholders
     would not be able to elect any members to the Board of Directors. The
     Company's Board of Directors has authority, without the action by the
     Company's shareholders, to issue all or any portion of the authorized but
     unissued common shares, which would reduce the percentage ownership of the
     Company of its shareholders and which may dilute the book value of the
     common shares. Dividends declared on the common shares are payable in U.S.
     dollars.

     During the year, the Company repurchased 5,000 [36,000 in 2001] common
     shares for aggregate cash consideration $1,045 [$34,240 in 2001]. These
     shares are held in treasury for possible reissuance.




                                      F-34
<PAGE>

CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]


11. STOCKHOLDERS' EQUITY CONT'D

[b]  PREFERRED STOCK

     Preferred shares may be issued in one or more series as may from time to
     time be determined by the Board of Directors. Each series shall be
     distinctly designated.

     REDEEMABLE SERIES A PREFERRED STOCK

     The Company currently has outstanding a series of non-voting Preferred
     Stock designated as Series "A" Preferred Stock ["Series A Preferred"]. Each
     share of Series A Preferred has a stated value [the "Stated Value"] of the
     U.S. dollar equivalent of Cdn. $25 determined at the date of issuance. The
     holders of Series A Preferred are entitled to cumulative dividends at the
     rate of 5% annually of the Stated Value plus accrued but unpaid dividends,
     to be paid in U.S. dollars. The dividends have priority over any payments
     of dividends on common shares and on all other shares of preferred stock
     ranking junior to the Series A Preferred.

     The Company may, at its option and at any time, redeem all or part of the
     Series A Preferred from the holders thereof. Additionally, at any time
     after August 20, 2000, a holder of the Series A Preferred may require the
     Company to redeem any or all of the Series A Preferred held by such holder.
     The redemption price shall be the Stated Value plus all accrued but unpaid
     dividends. In light of the mandatory redemption feature, the preferred
     stock is classified outside of permanent equity. As at December 31, 2002,
     an amount of $16,828 [$13,732 at December 31, 2001] has been accrued in
     respect of cumulative unpaid dividends.

     During 2001, 168 shares of Series A Preferred were redeemed for 1,906
     common shares.

     SERIES B CONVERTIBLE PREFERRED STOCK

     The Series B Preferred stock is convertible to common shares of the Company
     at a maximum conversion price of $4 per common share, and is senior to each
     other class of the Company's capital stock, and has a preference on
     dividends and on liquidation. The liquidation preference is 30% of the
     Stated Value [Stated Value is $10 per share]. In addition, the holders of
     the Series B Preferred have the right to vote as a class on certain
     matters, including any action that would change the rights and preferences
     of the Series B Preferred and any action that would create a new class or
     series of capital stock having a preference over the Series B Preferred or
     increase the authorized number of Series B Preferred. As at December 31,
     2002, an amount of $271,357 [$207,740 at December 31, 2001] has been
     accrued in respect of cumulative unpaid dividends on the Series B
     Preferred. During the year, 34,131 common shares [2001: 636,530] of the
     Company were issued to holders of the Series B Preferred as payment for
     cumulative dividends on the Series B Preferred.


                                      F-35
<PAGE>
CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]


11. STOCKHOLDERS' EQUITY CONT'D

[b]  PREFERRED STOCK CONT'D

     SERIES B CONVERTIBLE PREFERRED STOCK CONT'D

     During the year, 6,500 Series B shares were converted to 478,492 common
     shares [during 2001, 5,000 Series B shares were converted to 43,504 common
     shares]. The transaction was valued at $65,000 [2001- $50,287] based on the
     average of the last 10 day's trading price of the common shares before the
     conversion date.

     As of June 30, 2002, in accordance with their terms the holder of all the
     Series B preferred stock was entitled to receive when dividends, as and if
     declared by the board of directors out of funds legally available for the
     payment of dividends, in the aggregate amount of $100,715 payable in cash
     or shares of common stock at the option of the Company. The terms of the
     Series B Preferred limited the number of shares that may be issued in
     payment of this dividend to 34,131 shares as of June 30, 2002. In
     accordance with their terms, no further common shares may be issued in
     payment of dividends on the Series B Preferred stock. The Company has
     determined that in accordance with the Nevada General Corporation Law with
     respect to the remaining dividend due as of June 30, 2002, $94,571, there
     are no funds legally available for the payment of this dividend. By the
     terms of the Series B Preferred stock, the dividend rate computed on the
     liquidation preference thereof [$3.42 million at June 30, 2002] increases
     from 6% to 10% per annum until all accrued and unpaid dividends are paid in
     full.

     The terms of the Series B shares provided that any such shares outstanding
     on the third anniversary of issue [October 2002] [the "Mandatory Conversion
     Date"], were to be converted to common stock of the Company. However, the
     terms of the shares also limit the number of shares that can be converted.
     As the number of shares that may be converted was reached before the
     Mandatory Conversion Date, no conversion occurred under this provision
     [note 19].

[c]  WARRANTS

     There are 1,132,784 Warrants outstanding at December 31, 2002 [386,818 at
     December 31, 2001].

     Of the Warrants outstanding at December 31, 2001, 302,202 related to the
     Series B 6% Convertible Preferred [the Series B Warrants] issued in 1999.
     The Series B Warrants were exercisable until October 8, 2002, at a price of
     U.S. $3.78. 15,000 of these Warrants were exercised in 2000.

     The fair value of Series B Warrants issued in 1999 and 2000 was determined
     using the Black Scholes model and treated as a discount on the Series B
     Preferred. This value was amortized



                                      F-36
<PAGE>
CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]

11. STOCKHOLDERS' EQUITY CONT'D

[c]  WARRANTS CONT'D
     as a beneficial conversion featured on the Series B Preferred over the
     expected period of the Series B Preferred, as a debit to retained (deficit)
     earnings.

     In 2002, 180,000 warrants were issued for consulting services performed.
     The Company also issued 952,784 warrants at an exercise price of $0.16 on
     April 16, 2002. The warrants are fully vested and subject to fair value
     accounting in accordance with SFAS 123 using the Black-Scholes option
     pricing model to determine fair value. The weighted average assumptions
     used were the same as those used in determining the fair value of stock
     options granted to employees on the same date and at the same exercise
     price [note 14]. A portion of these warrants were issued for services in
     the amount $34,767. The balance of these warrants were issued for
     consideration of $76,327.

[d]  COMPREHENSIVE INCOME (LOSS)

     SFAS 130 requires unrealized gains or losses on the Company's
     available-for-sale securities and foreign currency translation adjustments
     to be included in other comprehensive income.

     Disclosure of accumulated balances related to each component of other
     comprehensive income (loss) is as follows:

<TABLE>
<CAPTION>
                                                UNREALIZED                           ACCUMULATED
                                              GAINS (LOSSES)        FOREIGN             OTHER
                                               ON SECURITIES       CURRENCY         COMPREHENSIVE
                                               [NET OF TAX]       TRANSLATION      INCOME (LOSSES)
                                                     $                 $                  $
--------------------------------------------------------------------------------------------------
<S>                                             <C>             <C>                    <C>
     BALANCE - JANUARY 1, 1999                     361,798         (338,835)              22,963

--------------------------------------------------------------------------------------------------
     Current year other comprehensive
        income (loss)                            1,435,184         (284,551)           1,150,633
--------------------------------------------------------------------------------------------------
     BALANCE - DECEMBER 31, 2000                 1,796,982         (623,386)           1,173,596

--------------------------------------------------------------------------------------------------
     Current year other comprehensive (loss)    (1,455,481)        (394,748)          (1,850,229)
--------------------------------------------------------------------------------------------------
     BALANCE - DECEMBER 31, 2001                   341,501       (1,018,134)            (676,633)

     Current year other comprehensive (loss)      (327,938)         (62,018)            (389,956)
--------------------------------------------------------------------------------------------------
     BALANCE - DECEMBER 31, 2002                    13,563       (1,080,152)          (1,066,589)
--------------------------------------------------------------------------------------------------
</TABLE>


                                      F-37
<PAGE>

CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]


11. STOCKHOLDERS' EQUITY CONT'D

[d]  COMPREHENSIVE INCOME (LOSS) CONT'D

     The details of unrealized holding gains and losses included in
     comprehensive income net of reclassification adjustments are as follows:

<TABLE>
<CAPTION>
                                            GAINS        (LOSSES)           TAXES          NET
                                              $              $                $             $
---------------------------------------------------------------------------------------------------
<S>                                      <C>             <C>               <C>         <C>
     2000                                 2,391,973              --         956,789     1,435,184
     2001                                        --      (1,969,563)        514,082    (1,455,481)
     2002                                        --        (551,905)        223,967      (327,938)
</TABLE>


12. LOSS PER SHARE

The following table sets forth the computation of basic and diluted loss per
share:

<TABLE>
<CAPTION>
                                                           2002           2001           2000
                                                            $               $              $
---------------------------------------------------------------------------------------------------
<S>                                                   <C>              <C>           <C>
Numerator:
  Net (loss)                                           (1,779,634)     (5,929,961)    (5,893,081)
  Dividends on Series A preferred stock                    (3,096)         (2,348)       (15,225)
  Dividends on Series B preferred stock                  (271,357)       (210,000)      (210,000)
  Amortization of beneficial conversion feature on
     Series B preferred stock                                  --              --       (629,447)
---------------------------------------------------------------------------------------------------
  Numerator for basic and diluted (loss) per share
     (loss) attributable to common stockholders        (2,054,087)     (6,142,309)    (6,747,753)
---------------------------------------------------------------------------------------------------
Denominator:
  Denominator for basic and diluted (loss) per
     share - weighted average shares outstanding       10,376,016       9,263,042      7,543,336
---------------------------------------------------------------------------------------------------
Basic and diluted (loss) per share                         (0.20)          (0.66)         (0.89)
---------------------------------------------------------------------------------------------------
</TABLE>


                                      F-38
<PAGE>

CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]


13. BUSINESS AQUISITION AND SUPPLEMENTARY SUBSIDIARY INFORMATION

[a]  GEMPRINT

     During April 2001, Gemprint converted a portion of its indebtedness to CVF
     into new common shares of Gemprint. This conversion of debt to shares
     resulted in CVF's equity interest in Gemprint - increasing from 56.1% to
     64.9%.

     During 2000, the Company sold a portion of its holdings in Gemprint to a
     corporation formed for the benefit of certain Gemprint employees. The sale
     involved 5,614,743 common shares of Gemprint reducing CVF's interest from
     73% to 56.1%. Consideration received was a demand promissory note in the
     amount of $333,600 [Cdn. $500,000], bearing interest at 5% per annum.

     Pursuant to SEC Staff Accounting Bulletin Topic 5E, the Company will
     recognize the gain/loss from this transaction when the related note has
     been paid.

     In addition to Class A voting shares [common], Gemprint has issued Class B
     and C voting shares which have cumulative dividend rates of 10%, are
     retractable by the holder at face value plus dividends in arrears, and are
     convertible to Class A common shares on a one-to-one basis. The Class B
     shares held by third parties have been classified as a liability at
     December 31, 2002 Cdn. $250,000, U.S. $159,000 [at December 31, 2001 Cdn.
     $250,000, U.S. $157,050]. The remaining Class B and all of the Class C
     shares are held by CVF. The timing of these retractions are restricted to
     specific time periods and Gemprint has received a notice to retract Cdn.
     $250,000 by a third-party investor. Cumulative dividends payable to
     third-party investees of $388,596 [$336,715 in 2001] have been accrued in
     these consolidated statements and included in trade payables and accrued
     liabilities.


                                      F-39
<PAGE>
CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]


13. BUSINESS AQUISITION AND SUPPLEMENTARY SUBSIDIARY INFORMATION CONT'D

[b]  ELEMENTS

     In September 2001, Elements ["Retail Products"], a subsidiary company of
     which CVF has a beneficial 61% interest, discontinued its operations. The
     related retail store and internet site were closed. Sales of the segment
     for 2001 and 2000 were $220,813 and $629,602 respectively. Due to the
     closing of the operations, CVF's goodwill in Elements of $470,398 was
     written off during 2001. Revenue from Elements from January 2001 to
     September 2001 was $220,813 [2000: $629,602]. Pre-tax loss from Elements
     from January 2001 to September 2001 was $138,552 [2000: $532,398].

     The loss on closing of Elements was calculated as follows:

<TABLE>
<CAPTION>
                                                                                              $
     ----------------------------------------------------------------------------------------------
<S>                                                                                    <C>
     Gain on settlement of net current liabilities                                        142,195
     Gain on settlement of loans                                                          140,540
     Loss on goodwill                                                                    (470,398)
     ----------------------------------------------------------------------------------------------
                                                                                         (187,663)
     Less minority interest                                                                85,296
     ----------------------------------------------------------------------------------------------
     NET (LOSS)                                                                          (102,367)
     ----------------------------------------------------------------------------------------------
</TABLE>

[c]  PREFERRED AND NON-VOTING STOCK OF SUBSIDIARIES

     Preferred and other non-voting stock of subsidiaries includes the
     following:

<TABLE>
<CAPTION>
                                                                          2002               2001
                                                                            $                  $
     ----------------------------------------------------------------------------------------------
<S>                                                                  <C>                <C>
     Gemprint Class B and C voting shares                              159,000            157,050
     ----------------------------------------------------------------------------------------------
                                                                       159,000            157,050
     ----------------------------------------------------------------------------------------------
</TABLE>

[d]  DANTEC

     On April 19, 2002, as part of its business plan, the Company completed the
     sale of its interests in its subsidiary Dantec Corporation [Dantec]. Prior
     to the sale, CVF held a 54% interest in the common voting shares of Dantec.
     The proceeds on sale of CVF's interests was $494,878 and the Company
     recorded a gain on the sale of $516,245. As a result of the sale, Dantec
     has been accounted for as a discontinued operation. The sale has been
     accounted for as a discontinued operation. In prior years, Dantec was
     reported as a component of the "all other" business segment. Revenue from
     Dantec to April 19, 2002 was $103,364 [2001 - $1,098,540, 2000 -
     $1,580,417]. The Company's interest in the pre-tax loss from Dantec to
     April 19, 2002 was $111,764 [2001 - $680,090 loss, 2000 - $627,520 loss].



                                      F-40
<PAGE>
CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]

14. STOCK BASED COMPENSATION

During 2002, the Company granted nil [530,000 in 2001] stock options to certain
officers, employees and directors. The exercise price of all options issued was
equal to the market value of the underlying stock on the date on which options
were granted.

During 2002, the Compensation Committee of the Board of Directors approved an
adjustment to the exercise price for all options held by employees, including
executive officers, as well as certain consultants. The revised exercise price
was established by reference to the closing bid price of the Company's common
stock on April 16, 2002, which was $0.16. Options to purchase approximately
1,415,500 shares of common stock were repriced. The repriced options are all
fully vested. These options are subject to variable plan accounting using the
intrinsic value method. As the Company's stock as at December 31, 2002 was
$0.16, no additional compensation expense was recorded.

The following is a summary of stock option activity:

<TABLE>
<CAPTION>
                                                                     WEIGHTED
                                                                      AVERAGE
                                                                     EXERCISE
                                                      SHARES           PRICE
                                                                         $
-------------------------------------------------------------------------------
<S>                                                 <C>                <C>
Outstanding January 1, 1999                           385,000            3.25
   Granted during the year                            530,000            2.88
-------------------------------------------------------------------------------
Outstanding December 31, 1999                         915,000            3.04
   Granted during the year                            275,000            2.88
-------------------------------------------------------------------------------
   Expired during the year                            (22,500)           3.25
Outstanding December 31, 2000                       1,167,500            3.00
   Granted during the year                            530,000            0.55
-------------------------------------------------------------------------------
   Expired during the year                           (282,000)           2.41
-------------------------------------------------------------------------------
Outstanding December 31, 2001                       1,415,500            2.20
-------------------------------------------------------------------------------
   Repriced during the year                         1,415,500            0.16
   Granted during the year                                --
   Expired during the year                                --
-------------------------------------------------------------------------------
OUTSTANDING DECEMBER 31, 2002                       1,415,500            0.16
-------------------------------------------------------------------------------
</TABLE>



                                      F-41
<PAGE>

CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]

14. STOCK BASED COMPENSATION CONT'D

As required by SFAS 124, which is an Amendment of SFAS 123, the following table
outlines the differences between the intrinsic value method [Opinion 25] and the
fair value method [SFAS 123]:

<TABLE>
<CAPTION>
                                                      2002               2001               2000
                                                        $                   $                  $
------------------------------------------------------------------------------------------------------
<S>                                             <C>                <C>                <C>
Net loss attributed to common
   stockholders, as reported                     (2,054,087)        (6,142,309)        (6,747,753)

Basic and diluted loss per share,
   as reported                                        (0.20)             (0.66)             (0.89)

Stock-based employee
   compensation expense, net of
   tax, included in net loss
   if fair value method had been
   applied                                          (92,974)        (1,394,729)          (379,335)

Pro forma net loss available
   to common stockholders, if
   fair value method had been
   applied                                       (2,147,061)        (7,534,778)        (7,127,088)

Pro forma basic and diluted loss per
   share if fair value method had been
   applied                                            (0.21)             (0.81)             (0.94)
</TABLE>

All of the 1,415,500 stock options outstanding at year-end are exercisable.

At December 31, 2002, the weighted average life of outstanding and exercisable
options was 5.0 years [5.0 in 2001 and 4.9 in 2000].

The per share weighted average fair value of stock options repriced on April 16,
2002 to $0.16 was $0.06 using the Black-Scholes option-pricing model. No
additional stock options were granted during the year to employees. The per
share weighted average fair value of stock options granted during 2001 was $0.55
[$2.09 in 2000] on the date of grant using the Black-Scholes option-pricing
model.



                                      F-42
<PAGE>
CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]


14. STOCK BASED COMPENSATION CONT'D

The following weighted average assumptions are used in the Black-Scholes
option-pricing model:

o        Expected dividend yield - none
o        Risk-free interest rate - 5% [5% in 2001 and 5% in 2000]
o        Volatility - 95.2% [112.8% in 2001 and 90.7% in 2000]
o        Expected life - 5 years

Certain of the Company's subsidiaries have outstanding compensatory options
granted to employees and directors, as described below. In the event the options
granted by its subsidiaries are exercised, the Company's interest in those
subsidiaries will be diluted. A summary of the stock options and shares
outstanding at December 31, 2002 for those consolidated entities which have
issued options are as follows:

[a]  A total of 4,218,000 options to purchase shares of Gemprint are
     outstanding, 3,909,664 of which are exercisable at December 31, 2002. These
     options have a weighted average price of Cdn. $0.20 per share. Of the
     options outstanding, none were granted in 2002 or 2001, and 3,428,000 were
     granted in 2000. Gemprint has a total of 47,653,161 shares outstanding as
     at December 31, 2002.

[b]  A total of 420,500 options to purchase shares of Biorem are outstanding,
     318,125 of which are exercisable at December 31, 2002. These options have a
     weighted average exercise price of Cdn. $1.82 per share. During 2002,
     78,500 option shares were granted. Biorem has a total of 1,421,431 shares
     outstanding as at December 31, 2002.

[c]  In 2000, SRE granted 14,740 options to purchase its common shares at a
     price of Cdn. $3.28 per share. Of these options, 12,898 are exercisable at
     December 31, 2002. SRE has a total of 1,566,149 shares outstanding as at
     December 31, 2002.

15. EXTRAORDINARY ITEM

An extraordinary gain of $216,095 [after taxes of $nil] or $0.03 per common
share arose from the settlement of a Gemprint loan for an amount less than the
face value in 2000.



                                      F-43
<PAGE>
CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]



16. SUPPLEMENTARY INFORMATION ON CASH FLOWS

Adjustments to reconcile net loss from operating activities for the years ending
December 31 are as follows:

<TABLE>
<CAPTION>
                                                       2002              2001                2000
                                                        $                  $                   $
---------------------------------------------------------------------------------------------------
<S>                                                <C>                 <C>              <C>
Depreciation and amortization                        404,855             722,877          464,929
Impairment of intangible asset                       495,690                  --               --
Loss from equity investees                            48,702             244,153        1,634,367
Impairment of holdings                               325,560                  --               --
Shares issued in lieu of cash                         36,065             206,096          339,063
Gain on sale of holdings                            (253,478)           (501,040)       (412,917)
Minority interest in losses of subsidiaries         (219,667)           (167,740)       (163,196)
---------------------------------------------------------------------------------------------------
Warrants compensation                                 34,767                  --               --
---------------------------------------------------------------------------------------------------
Deferred income tax expense                         (532,210)           (158,108)         279,430
Pension expense                                       47,611              38,357           34,445
---------------------------------------------------------------------------------------------------
                                                     387,895             384,595        2,176,121
---------------------------------------------------------------------------------------------------
</TABLE>

Changes in operating assets and liabilities for the years ending December 31,
are as follows:

<TABLE>
<CAPTION>
                                                       2002              2001                2000
                                                        $                  $                   $
---------------------------------------------------------------------------------------------------
<S>                                                 <C>               <C>              <C>
Decrease (increase) in trade receivables             100,766           1,082,920        (629,748)
Decrease (increase) in inventory and other           334,220             391,023        (709,315)
(Increase) decrease in income taxes receivable      (492,918)          2,451,929          516,443
(Increase) decrease in accounts payables and
   accrued liabilities                               167,948            (605,100)       1,548,216
---------------------------------------------------------------------------------------------------
                                                     110,016           3,320,772          725,596
---------------------------------------------------------------------------------------------------
</TABLE>


                                      F-44
<PAGE>

CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]


16. SUPPLEMENTARY INFORMATION ON CASH FLOWS CONT'D

The Company has entered into the following non-cash transactions:

[a]  During 2001, CVF's subsidiary Gemprint converted a portion of its
     indebtedness to CVF into new common shares of Gemprint. This conversion of
     debt to shares resulted in CVF's equity interest in Gemprint increasing
     from 56.1% to 64.9%.

[b]  In a prior year CVF provided a Cdn. $200,000 guarantee and a pledge of
     170,000 common shares of CVF to a Canadian chartered bank as security for a
     line of credit for Dantec. During 2001, the bank disposed of 100,000 of the
     170,000 shares pledged [the other 70,000 shares were disposed of in 2000].
     The proceeds of U.S. $86,646 were applied to Dantec's line of credit.

17. SEGMENTED INFORMATION

In 2002, as a result of growth in the natural fertilizer segment, the Company
reallocated business units to business segments to more appropriately group
units for chief operating decision purposes and reporting in accordance with
SFAS 131. This change was applied on a retroactive basis. During 2001, the
Company discontinued the operations of its retail products segment [Elements].
During 2002 the Company sold its interest in Dantec. The comparative information
in this note has been restated to remove Dantec and Elements from continuing
operations.

The Company has five reportable segments: bioremediation, machine controls,
precious gem identification, natural fertilizer, and general corporate. The
bioremediation segment consists of one company that is engaged in bioconversion
and biotransformation of industrial contamination of soil or groundwater. The
machine controls segment consists of one company that designs, manufactures and
sells electric motor controls to machine manufacturers. The gem identification
segment consists of one company that has developed identification and database
systems, and markets its products and services to the companies in the precious
gem business, including producers, cutters, distributors and retailers. The
natural fertilizer segment consists of one company that develops, manufactures
and markets natural fertilizers, insecticides and herbicides. The Company's
general corporate segment provides funding and management overview services to
the holdings. This segment's results also include interest income and expense,
and gains and losses on sales of its various holdings.


                                      F-45
<PAGE>

CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002                                 [Expressed in U.S. Currency]


17. SEGMENTED INFORMATION CONT'D

Segment assets consist of capital assets and goodwill.

The Company evaluates performance and allocates resources based on profit or
loss from operations before income taxes, depreciation, and research and
development. The accounting policies of the reportable segments are the same as
those described in the summary of significant accounting policies.

There are no intersegment sales, transfers or profit or loss.

The Company's reportable segments are business units that offer different
products and services. The reportable segments are each managed separately
because they develop, manufacture and distribute different products and
services.

Sales of approximately $2,092,000 [$9,410,000 in 2001; $11,985,000 in 2000] of
the machine controls segment were to customers in the U.S. The remainder of the
consolidated sales were primarily to customers in Canada. The basis for
attributing revenues from external customers to individual countries is the
location of the customer. Virtually all of the long-lived assets of the Company
are located in Canada.

During the years ended December 31, 2002, 2001 and 2000, the Company, through
one of its subsidiaries, was economically dependent on one key customer for its
revenues such that sales from this customer in the machine controls segment
represents approximately 32% [76% in 2001; 68% in 2000] of the Company's
consolidated sales. In addition, consistent with the nature and business plans
of the Company, many of its subsidiaries and equity holdings are dependent on
the general corporate segment for funding to enable them to meet their business
objectives.



                                      F-46
<PAGE>


CVF TECHNOLOGIES CORPORATION


                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


Year ended December 31                             [Expressed in U.S. Currency]



17. SEGMENTED INFORMATION CONT'D

<TABLE>
<CAPTION>
                                                                                                MACHINE       IDENTIFICATION
                                                                            BIOREMEDIATION     CONTROLS           SYSTEMS
2002                                                                               $               $                 $
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>              <C>                <C>
SALES                                                                         2,713,971        2,270,573          613,793
-----------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations before depreciation
   and research and development                                                 564,350         (517,256)          49,534
Depreciation                                                                     29,631           17,525            7,107
-----------------------------------------------------------------------------------------------------------------------------
Research and development                                                         83,446          259,704          (28,216)
-----------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations before other income (expenses)                    451,273         (794,485)          70,643
Interest income                                                                      --            1,886            1,061
Interest (expense)                                                              (33,411)          (8,723)         (75,476)
(Loss) from equity investees                                                         --               --               --
(Loss) gain on sale of holdings                                                      --               --               --
-----------------------------------------------------------------------------------------------------------------------------
Segment income (loss) before (recovery) of income taxes                         417,862         (801,322)          (3,772)
-----------------------------------------------------------------------------------------------------------------------------
(Recovery) of income taxes                                                           --               --           (4,776)
-----------------------------------------------------------------------------------------------------------------------------
Net income (loss)                                                               417,862         (801,322)           1,004
Minority interest                                                                    --          219,667               --
-----------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) FROM CONTINUING OPERATIONS                                    417,862         (581,655)           1,004
-----------------------------------------------------------------------------------------------------------------------------

Depreciation and amortization                                                    29,632           17,525            7,107
Capital expenditures                                                             17,311               --           37,734
Segment assets                                                                  132,717          211,063        1,255,358
Segment goodwill (included in segment assets)                                    50,644          154,470        1,200,108
Segment technology (included in segment assets)                                      --               --               --

</TABLE>


<TABLE>
<CAPTION>
                                                                              NATURAL            CORPORATE
                                                                            FERTILIZER        ADMINISTRATION         TOTAL
2002                                                                             $                   $                 $
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>               <C>              <C>
SALES                                                                           325,175                --         5,923,512
-----------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations before depreciation
   and research and development                                              (1,197,323)       (1,390,500)       (2,491,195)
Depreciation                                                                         --             8,992            63,255
-----------------------------------------------------------------------------------------------------------------------------
Research and development                                                         71,839                --           386,773
-----------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations before other income (expenses)                 (1,269,162)       (1,399,492)       (2,941,223)
Interest income                                                                      --             2,196             5,143
Interest (expense)                                                                   --           (26,132)         (143,742)
(Loss) from equity investees                                                         --           (48,702)          (48,702)
(Loss) gain on sale of holdings                                                      --           (72,082)          (72,082)
-----------------------------------------------------------------------------------------------------------------------------
Segment income (loss) before (recovery) of income taxes                      (1,269,162)       (1,544,212)       (3,200,606)
-----------------------------------------------------------------------------------------------------------------------------
(Recovery) of income taxes                                                     (120,068)         (671,980)         (796,824)
-----------------------------------------------------------------------------------------------------------------------------
Net income (loss)                                                            (1,149,094)         (872,232)       (2,403,782)
Minority interest                                                                    --                --           219,667
-----------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) FROM CONTINUING OPERATIONS                                 (1,149,094)         (872,232)       (2,184,115)
-----------------------------------------------------------------------------------------------------------------------------

Depreciation and amortization                                                   341,600             8,992           404,855
Capital expenditures                                                                 --                --            55,045
Segment assets                                                                  530,733             5,830         2,135,701
Segment goodwill (included in segment assets)                                        --                --         1.405,222
Segment technology (included in segment assets)                                 529,152                --           529,152
</TABLE>


                                      F-47
<PAGE>




CVF TECHNOLOGIES CORPORATION


                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


Year ended December 31                            [Expressed in U.S. Currency]




17. SEGMENTED INFORMATION CONT'D

<TABLE>
<CAPTION>
                                                                                                MACHINE       IDENTIFICATION
                                                                            BIOREMEDIATION     CONTROLS           SYSTEMS
2001                                                                               $               $                 $
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>             <C>               <C>
SALES                                                                           784,906        9,601,001          481,465
-----------------------------------------------------------------------------------------------------------------------------
(Loss) income from operations before depreciation
   and research and development                                                (203,718)        (502,444)        (482,233)
Depreciation                                                                     14,164           14,867            7,490
-----------------------------------------------------------------------------------------------------------------------------
Research and development                                                        124,318          405,045            4,369
-----------------------------------------------------------------------------------------------------------------------------
(Loss) from operations before other income (expenses)                          (342,200)        (922,356)        (494,092)
Interest income                                                                      --            9,824               --
Interest (expense)                                                              (13,489)          (8,682)        (167,156)
(Loss) from equity investees                                                         --               --               --
Gain on sale of holdings                                                             --               --               --
-----------------------------------------------------------------------------------------------------------------------------
Segment (loss) before (recovery) of income taxes                               (355,689)        (921,214)        (661,248)
-----------------------------------------------------------------------------------------------------------------------------
(Recovery) provision for income taxes                                                --               --               --
-----------------------------------------------------------------------------------------------------------------------------
Net (loss)                                                                     (355,689)        (921,214)        (661,248)
Minority interest                                                                    --          206,560            9,598
-----------------------------------------------------------------------------------------------------------------------------
NET (LOSS) FROM CONTINUING OPERATIONS                                          (355,689)        (714,654)        (651,650)
-----------------------------------------------------------------------------------------------------------------------------

Depreciation and amortization                                                    48,850           48,244          313,363
Capital expenditures                                                              5,280            5,046            4,163
Segment assets                                                                  143,845          227,657        1,220,743
Segment goodwill (included in segment assets)                                    50,644          154,470        1,200,108
Segment technology (included in segment assets)                                      --               --               --
</TABLE>

<TABLE>
<CAPTION>
                                                                               NATURAL            CORPORATE
                                                                             FERTILIZER        ADMINISTRATION         TOTAL
2001                                                                              $                   $
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>               <C>             <C>
SALES                                                                            385,422                --        11,252,794
-----------------------------------------------------------------------------------------------------------------------------
(Loss) income from operations before depreciation
   and research and development                                               (1,036,414)       (2,352,812)       (4,577,621)
Depreciation                                                                      29,359             7,580            73,460
-----------------------------------------------------------------------------------------------------------------------------
Research and development                                                         208,569                --           742,301
-----------------------------------------------------------------------------------------------------------------------------
(Loss) from operations before other income (expenses)                         (1,274,342)       (2,360,392)       (5,393,382)
Interest income                                                                       --            26,630            36,454
Interest (expense)                                                                (2,947)               --          (192,274)
(Loss) from equity investees                                                          --          (244,153)         (244,153)
Gain on sale of holdings                                                              --           501,040           501,040
-----------------------------------------------------------------------------------------------------------------------------
Segment (loss) before (recovery) of income taxes                              (1,277,289)       (2,076,875)       (5,292,315)
-----------------------------------------------------------------------------------------------------------------------------
(Recovery) provision for income taxes                                           (121,821)            6,198          (115,623)
-----------------------------------------------------------------------------------------------------------------------------
Net (loss)                                                                    (1,155,468)       (2,083,073)       (5,176,692)
Minority interest                                                                (48,418)               --           167,740
-----------------------------------------------------------------------------------------------------------------------------
NET (LOSS) FROM CONTINUING OPERATIONS                                         (1,203,886)       (2,083,073)       (5,008,952)
-----------------------------------------------------------------------------------------------------------------------------

Depreciation and amortization                                                    370,714            12,580           793,751
Capital expenditures                                                                 699             1,641            16,829
Segment assets                                                                 1,359,540            14,629         2,966,414
Segment goodwill (included in segment assets)                                         --                --         1.405,222
Segment technology (included in segment assets)                                1,348,645                --         1,348,645
</TABLE>


                                      F-48
<PAGE>


CVF TECHNOLOGIES CORPORATION


                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


Year ended December 31                            [Expressed in U.S. Currency]



17. SEGMENTED INFORMATION CONT'D

<TABLE>
<CAPTION>
                                                                                                MACHINE       IDENTIFICATION
                                                                            BIOREMEDIATION     CONTROLS           SYSTEMS
2000                                                                               $               $                 $
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>             <C>               <C>
SALES                                                                         2,244,280       12,299,978          236,917
-----------------------------------------------------------------------------------------------------------------------------
(Loss) from operations before depreciation
   and research and development                                                 (89,608)        (118,503)        (700,683)
Depreciation                                                                     18,055           34,142           34,483
-----------------------------------------------------------------------------------------------------------------------------
Research and development                                                         81,686          555,993            6,028
-----------------------------------------------------------------------------------------------------------------------------
(Loss) from operations before other income (expenses)                          (189,349)        (708,638)        (741,194)
Interest income                                                                      --           45,174              977
Interest (expense)                                                               (4,892)         (22,924)         (85,602)
(Loss) from equity investees                                                         --               --               --
Gain on sale of holdings                                                             --               --               --
-----------------------------------------------------------------------------------------------------------------------------
Segment (loss) before (recovery) of income taxes                               (194,241)        (686,388)        (825,819)
-----------------------------------------------------------------------------------------------------------------------------
(Recovery) of income taxes                                                           --               --               --
-----------------------------------------------------------------------------------------------------------------------------
Net (loss) from continuing operations                                          (194,241)        (686,388)        (825,819)
Minority interest                                                                    --          163,196               --
-----------------------------------------------------------------------------------------------------------------------------
Net (loss)                                                                     (194,241)        (523,192)        (825,819)
Extraordinary gain                                                                   --               --          216,095
-----------------------------------------------------------------------------------------------------------------------------
NET (LOSS) FROM SEGMENTS                                                       (194,241)        (523,192)        (609,724)
-----------------------------------------------------------------------------------------------------------------------------

Depreciation and amortization                                                    43,795           39,482          355,730
Capital expenditures                                                             98,704           58,461            8,331
Segment assets                                                                  197,613          286,250        1,631,878
Segment goodwill (included in segment assets)                                    79,280          187,167        1,606,650
Segment technology (included in segment assets)                                      --               --               --
</TABLE>

<TABLE>
<CAPTION>
                                                                               NATURAL            CORPORATE
                                                                             FERTILIZER        ADMINISTRATION         TOTAL
2000                                                                              $                   $
------------------------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>             <C>               <C>
SALES                                                                              9,996                --        14,791,171
------------------------------------------------------------------------------------------------------------------------------
(Loss) from operations before depreciation
   and research and development                                                 (328,647)       (2,307,201)       (3,544,642)
Depreciation                                                                          --            20,447           107,127
------------------------------------------------------------------------------------------------------------------------------
Research and development                                                          14,387                --           658,094
------------------------------------------------------------------------------------------------------------------------------
(Loss) from operations before other income (expenses)                           (343,034)       (2,327,648)       (4,309,863)
Interest income                                                                       --            60,384           106,535
Interest (expense)                                                               (13,824)               --          (127,242)
(Loss) from equity investees                                                          --        (1,634,367)       (1,634,367)
Gain on sale of holdings                                                              --           412,917           412,917
------------------------------------------------------------------------------------------------------------------------------
Segment (loss) before (recovery) of income taxes                                (356,858)       (3,488,714)       (5,552,020)
------------------------------------------------------------------------------------------------------------------------------
(Recovery) of income taxes                                                            --          (439,566)         (439,566)
------------------------------------------------------------------------------------------------------------------------------
Net (loss) from continuing operations                                           (356,858)       (3,049,148)       (5,112,454)
Minority interest                                                                     --                --           163,196
------------------------------------------------------------------------------------------------------------------------------
Net (loss)                                                                      (356,858)       (3,049,148)       (4,949,258)
Extraordinary gain                                                                    --                --           216,095
------------------------------------------------------------------------------------------------------------------------------
NET (LOSS) FROM SEGMENTS                                                        (356,858)       (3,049,148)       (4,733,163)
------------------------------------------------------------------------------------------------------------------------------

Depreciation and amortization                                                      5,474            20,448           464,929
Capital expenditures                                                              15,572             6,612           187,680
Segment assets                                                                    14,249            26,774         2,156,764
Segment goodwill (included in segment assets)                                         --                --         1.873,097
Segment technology (included in segment assets)                                1,900,497                --         1,900,497
</TABLE>


                                      F-49
<PAGE>



CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002


18. COMMITMENTS

The Company leases office equipment and property under operating leases expiring
in various years through 2006.

Minimum future rental payments under non-cancelable operating leases having
remaining terms in excess of one year as of December 31, 2002 for each of the
next four years and in aggregate are:

YEAR ENDED DECEMBER 31
                                                                           $
------------------------------------------------------------------------------

2003                                                                  128,945
------------------------------------------------------------------------------
2004                                                                  101,650
------------------------------------------------------------------------------
2005                                                                   72,470
2006                                                                   48,360
------------------------------------------------------------------------------
TOTAL MINIMUM FUTURE RENTAL PAYMENTS                                  351,425
------------------------------------------------------------------------------

Rental expense for the year was $177,881 [$252,761 for 2001; $227,331 for 2000].

19. CONTINGENCIES

A claim has been filed against the Company by a former officer of Ecoval
Corporation. This individual has claimed wrongful dismissal and severance costs.
The amount claimed is $110,722. This matter is at an early stage and the amount
or probability of any loss on the matter is indeterminable. The Company will
account for any loss on this claim in the event that such amount is probable and
determinable.

The Company is currently under a routine audit by the Internal Revenue Service
["IRS"]. Although the audit is routine, the IRS has indicated that it will
review the treatment of capital loss benefits of $2,532,000 claimed in a prior
year. No assessments have been issued in this matter and the Company believes
that it has adequately provided for its tax liabilities. Should an adjustment be
proposed or assessed, the Company would plan to vigorously oppose any material
revisions to its refunds. Any loss arising from such matter will be recorded
when determinable.


                                      F-50
<PAGE>
CVF TECHNOLOGIES CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2002


19. CONTINGENCIES CONT'D

As the Company has not converted its outstanding Series B shares to common
stock, and the Company has not paid all dividends on the Series B shares, the
holder of the Company's Series B preferred stock has attempted to require that
the Company redeem the shares for $4,569,750. The Company has denied the
redemption request on the basis that the holder does not have a right to require
such redemption. The right of the holder may become disputed and the Company may
be required to defend its position. While the Company believes that it has the
right to deny such redemption, the outcome of any such a dispute is not
determinable with certainty. Any redemptions of preferred shares would be
subject to the limitations imposed by Nevada corporate law. These laws would
prevent cash payment on redemption, based on the Company's current financial
position.

The Company is involved from time to time in other litigation, which arises in
the normal course of business. In respect of these claims the Company believes
it has valid defenses and/or appropriate insurance coverage in place. In
management's judgment, no material exposure exists on the eventual settlement of
such litigation.

20. SUBSEQUENT EVENTS

In January 2003, an independent director of the Company loaned to the Company
$200,000 evidenced by a promissory note. This loan is payable upon receipt of
the income tax refund related to the 2002 year. This loan carries interest at
20% per annum.

21. LOANS RECEIVABLE

Loans receivable pertain to loans advanced to certain Company officers. The
loans are denominated in Canadian dollars, and bear an effective interest rate
of 6%. These loans have no repayment terms.

22. COMPARATIVE FIGURES

Certain comparative figures have been reclassified to conform with the
presentations adopted for 2002.



                                      F-51
<PAGE>

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

Not applicable.
                                    PART III


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

(a)     Directors and Executive Officers

The directors and executive officers of CVF are as follows:


NAME                     AGE      POSITION
------------------       ---      ----------------------------------------------

Jeffrey I. Dreben         57       Director; Chairman, Chief Executive
                                   Officer; and President
Robert B. Nally           55       Director; Chief Operating Officer, Chief
                                   Technology Officer, Secretary; and Treasurer
Robert L. Miller          51       Chief Financial Officer
Lawrence M. Casse         46       Vice President
George A. Khouri          56       Director; Consultant
Robert H. Glazier         54       Director

Jeffrey I. Dreben has been President, Chief Executive Officer and Director of
the Company since September 1995. From 1989 until September 1995, Mr. Dreben was
Vice President and Treasurer of Canadian Venture Founders Management Limited
("CVF Management") and was its original founder. Mr. Dreben has been working in
the investment industry since 1979, beginning his career with Merrill Lynch and
subsequently founding his own firm. Mr. Dreben has been working in the venture
capital industry in the United States and Canada since 1985. Mr. Dreben received
an Honors Bachelor of Arts degree from Loyola College of the University of
Montreal.

Robert B. Nally has been Secretary, Treasurer and Director of CVF since
September 1995. From 1989 until 1995, Mr. Nally was Vice President and Secretary
of CVF Management and one of its cofounders. Prior to that time, Mr. Nally
provided commercial development consulting services to the University of
Waterloo as Technology Transfer and Commercial Development Officer. Prior to
joining the University of Waterloo, he worked for NCR Canada, LTD. for 10 years
as Manager of Strategic Planning and New Business Development and Director of
Engineering. He earned a Bachelor of Science degree in electrical engineering
and a Master of Science degree from the University of Waterloo.

Robert L. Miller has been Chief Financial Officer of CVF since June 1999. Mr.
Miller was previously Vice President of Finance/Controller for U.S. Appraisal,
Inc. a national real estate appraisal firm. Prior to that he was with Pratt &
Lambert United, Inc. for seventeen years, most recently as Vice
President/Controller of their Consumer Group. From 1973 to 1979 he was with KPMG
Peat Marwick in Buffalo, New York. Mr. Miller, a New York State Certified Public
Accountant has a Bachelor of Science degree from Fairleigh Dickinson University.

Lawrence M. Casse has been a special consultant devoting his full time efforts
to the Company since March 1997 and was appointed as Vice President in April
1998. From December 1993 to March 1997, Mr. Casse was President of Resonance
Capital Corporation, a company involved in the business of advising and
financing technology based companies in Canada and the United States. Mr. Casse
has been actively involved in numerous technology-based companies as an
investment banker, investor and consultant. Prior to December 1993, Mr. Casse
was an investment analyst at Credifinance Securities Limited specializing in
technology-based companies and had worked for a number of Canadian investment
firms. Mr. Casse earned a Bachelor of Arts degree from the University of Toronto
and has since taken numerous courses in electronics and software programming.

George A. Khouri has been a consultant to and an outside Director of CVF since
April 1997. Since March 31, 2003 Mr. Khouri is a Managing Director of Growth
Capital Partners. From February 1999 until March 2003 Mr. Khouri acted in the
role of Managing Director of Avalon Group Ltd. From 1993 until September 1996,
Mr. Khouri was Managing Director-Capital Markets for Nomura Securities
International Inc.




<PAGE>

Prior to that time, Mr. Khouri was a member of Trigon Group, an investment
Banking boutique, and has served as President of Prudential Bache Capital
Partners. Mr. Khouri received a Bachelor of Arts degree from Tufts University
and a Masters degree in Business Administration, Investments, from New York
University.

Robert H. Glazier has been an outside Director of CVF since January 1998. Mr.
Glazier is founder, President and CEO of Donatech Corporation, an Iowa-based
computer software consulting company. Before founding Donatech in 1986, Mr.
Glazier was a manager on the Cruise Missile Program with General Dynamics
Corporation for 3 years. He also held management positions at Oak Industries,
California. Mr. Glazier holds a Masters Degree in Engineering from the
University of California Berkley and a Bachelors degree in Engineering from
Purdue University.

Section 16(a) Beneficial Ownership Reporting Compliance

During the fiscal year 2002 none of the officers and directors of CVF were late
in filing a report under section 16(a) of the Exchange Act.

ITEM 10 EXECUTIVE COMPENSATION

The following is a summary of the remuneration paid to the chief executive
officer and all other executive officers and others whose total annual salary
and bonus exceeds $100,000 for the period ending December 31, 2002 (the "Named
Executive Officers").

SUMMARY COMPENSATION TABLE

Name and                                                              Other
Principal                        Salary             Bonus          Compensation
Position              Year         $                  $                  $
----------------      -----     -------------    ------------     --------------

Jeffrey I. Dreben      2000      $200,000         $   0                $ 0
  CEO and              2001      $200,000         $ 30,000 (4)         $ 0
  President            2002      $162,167         $   0                $ 0

Robert B. Nally        2000      $134,740 (1)     $   0                $ 0
  COO, CTO,            2001      $129,220 (2)     $ 30,000 (4)         $ 0
  Secretary and        2002      $134,920 (3)     $   0                $ 0
  Treasurer


(1)     Paid in Canadian currency but translated in the table to U.S. Currency.
        Based on the average exchange rate for 2000 of CND $1 = US $.6737

(2)     Paid in Canadian currency but translated in the table to U.S. Currency.
        Based on the average exchange rate for 2001 of CND $1 = US $.6461

(3)     Paid in Canadian currency but translated in the table to U.S. Currency.
        Based on the average exchange rate for 2002 of CND $1 = US $.6368

(4)     This bonus was paid in recognition of progress made during the year
        2000.


OPTION/SAR GRANT TABLE

        There were no individual issuances of stock options to acquire common
shares of CVF granted during the fiscal year ended December 31, 2002 to each of
the Named Executive Officers. However all stock options outstanding were
re-priced during 2002 at an exercise price of $0.16 per share.


<PAGE>



AGGREGATED OPTION/SAR EXERCISE AND FISCAL YEAR END OPTION/SAR VALUE TABLE

                                                                    Value of
                                                                  Unexercised
                                               Unexercised        In-the-money
                                                Options at         Options at
                      Shares                   Dec. 31, 2002     Dec. 31, 2002
                     Acquired      Value       Exercisable/        Exercisable/
Name                On Exercise   Realized     Unexercisable      Unexercisable
------------------  -----------   --------    ----------------   ---------------

Jeffrey I. Dreben       NIL         NIL        460,000/NIL          $NIL/NIL
Robert B. Nally         NIL         NIL        460,000/NIL          $NIL/NIL


Director's Fees. CVF does not currently pay any additional fees to the directors
who are also officers of or consultants to CVF. Mr. Khouri became a consultant
to CVF in June 1997 and is paid $2,500 per month in consulting fees. See
"Certain Transactions and Relationships." Mr. Glazier, appointed a director of
CVF in January 1998, is entitled to receive $750 per Board of Directors meeting
attended in person and $375 per telephonic Board meeting in which he
participates. Directors do receive share options in connection with their
services as directors of the corporation.


ITEM 11         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Voting Securities and Principal Holders

The following table sets forth, as of March 14, 2003, the approximate number of
common shares of CVF owned of record or beneficially by each person who owned of
record, or was known by CVF to own beneficially, more than 5% of CVF's common
stock and the name and shareholdings of each officer and director, and all
officers and directors as a group.

                                                NUMBER OF       PERCENTAGE OF
                                             COMMON SHARES      COMMON SHARES
NAME AND ADDRESS                           BENEFICIALLY OWNED       OWNED
--------------------                       ------------------   -------------

Jeffrey I. Dreben (1)                             925,923               7.3%
8604 Main Street, Suite 1
Williamsville, NY 14221


Robert B. Nally (1)                               976,567               7.7%
189 Mary Street
Waterloo, Ontario
Canada, N2J 1S1


Brant Investments Limited                       1,235,731               9.8%
c/o Royal Trust Corporation
 of Canada
Global Bank Plaza
200 Bay Street
Toronto, Ontario M5J 2J5



Prudential Insurance                              647,128               5.1%
Company of America
751 Broad Street
Newark, NY 07102

Directors and Officers                          2,282,490              18.0%
as a Group (6 persons) (1)(2)(3)(4)(5)


<PAGE>


(1) Each of Messrs. Dreben and Nally amounts include 460,000 options held by
each of Mr. Dreben and Mr. Nally to acquire CVF's common shares at an option
price of $0.16 and 324,326 warrants to acquire CVF's common shares at a price of
$0.16 per common share.

(2) Mr. Robert L. Miller, Chief Financial Officer of CVF, has been issued
115,000 Options to acquire common shares of CVF at an exercise price of $0.16
per Share.

(3) Mr. Lawrence M. Casse, a Vice President of CVF, has been issued 40,000
options to acquire common shares of CVF at an exercise price of $0.16 per share.

(4) Mr. Khouri has been issued 125,000 options to acquire CVF common shares at
an option price of $0.16 per share.

(5) Mr. Glazier has been issued 100,000 options to acquire CVF common shares at
an option price of $0.16.

ITEM 12         CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Service Agreement with D and N Consulting. CVF entered into a Service Agreement
dated February 10, 1997 with D and N Consulting Corporation ("D and N"),
(replacing a similar agreement it had with CVF Inc. from September 1995)
pursuant to which D and N are to provide a variety of administrative, managerial
and clerical services to CVF. Under the Service Agreement, D and N would be
responsible for all administrative requirements of CVF, including, but not
limited to, maintaining the books of CVF, preparing periodic reports to the
Board of Directors of CVF and providing office facilities and travel expenses.
In return for the above services, D and N is to be paid a service fee based on
an annual budget prepared by D and N and approved by the Board of Directors of
CVF. In May, 2002 the Service Agreement was replaced by a new Service Agreement
dated May 1, 2002 containing substantially the same terms and conditions as the
prior agreement and expiring May 27, 2005. The new Service Agreement renews
automatically for successive one year periods thereafter unless either party
provides 12-months prior written notice of non-renewal. Upon a change in control
of CVF, the term of the Service Agreement is automatically extended for an
additional period of five years. Messrs. Dreben and Nally are each officers and
50% shareholders of D and N. CVF and D and N have mutually agreed to defer
operation of the Service Agreement. Instead, the services continue to be
provided by officers, employees and consultants of CVF. CVF has neither paid nor
accrued service fees under the Service Agreement. D and N Consulting maintains
the right to begin the operation of the Service Agreement at any time.

Consulting arrangement with Mr. Khouri. Effective December 1, 1999, there was an
agreement with Mr. Khouri pursuant to which Mr. Khouri, reporting directly to
the President, provided CVF with consulting services in exchange for which he
received $5,802 per month and no other compensation other than share options as
a director. In November, 2000, the monthly fee payable to Mr. Khouri under this
consulting agreement was reduced to $2,500. The current agreement is for a
one-year term and is renewable, if mutually agreed to by the parties. Upon
termination of the current agreement, Mr. Khouri is to resign as a director.

Services Agreement with Michael Dreben. CVF entered into a Services Agreement
dated October 2, 2001 with Michael Dreben, the son of Jeffrey I. Dreben, CVF's
President, Chairman and Chief Executive Officer. Pursuant to the Services
Agreement, Michael Dreben will identify and assist in closing funding and merger
and acquisition opportunities for CVF and the Corporations. In return for these
services, Michael Dreben received warrants to purchase 180,000 shares of CVF's
common stock. These warrants vest monthly over the term of the agreement. The
Services Agreement also entitles Michael Dreben to receive a cash fee upon the
closing of such funding and merger and acquisition opportunities. The Services
Agreement terminates upon 30 days' prior written notice by either party.
Effective June 2002 Michael Dreben is paid a salary by CVF at an annual rate of
$106,000.

Loan from George Khouri. In January 2003 George Khouri an independent director
of the Company loaned the Company $200,000 evidenced by a promissory note. This
loan is payable upon receipt of the income tax refund which was received in
March 2003. This loan carries interest at 20% per annum.



<PAGE>

ITEM 13         EXHIBITS AND REPORTS ON FORM 8-K

         a) Exhibits

(3)(i)    Articles of Incorporation
          Incorporated by reference to the filing on Form 10SB dated May 29,
          1997

(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
          Incorporated by reference to the filing on Form 10SB dated May 29,
          1997

(10)      2000 Stock Option Plan, filed as an exhibit to CVF's Schedule 14A on
          May 12, 2000 and incorporated by reference herein.

(21)      Subsidiaries of the Registrant, filed herewith.

(99)      Certification Pursuant to 18 U.S.C. 1350 As Adopted Pursuant to
          Section 906 of the Sarbanes Oxley Act of 2002.

      (b) Reports on Form 8-K.
            None.

ITEM 14          Controls and procedures

(a)  Within the 90 days prior to the filing date of this report, 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. 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. Disclosure controls and procedures are controls and procedures
     that are designed to ensure that information required to be disclosed in
     Company reports filed or submitted under the Exchange Act is recorded,
     processed, summarized and reported within the time periods specified in the
     SEC rules and forms.

(b)  There have been no significant changes in the Company's internal controls
     or in other factors that could significantly affect those controls
     subsequent to the date of their evaluation.


SIGNATURE

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized:

CVF Technologies Corporation

by: /s/ Jeffrey I. Dreben
   ------------------------------------
   Jeffrey I. Dreben, CEO and President
   (Principal Executive Officer)
date: April 15, 2003






<PAGE>

In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

Signature                             Title                       Date
---------                             -----                       ----

/s/ Jeffrey I. Dreben                 Director                    April 15, 2003
------------------------
Jeffrey I. Dreben

/s/ Robert B. Nally                   Director                    April 15, 2003
------------------------
Robert B. Nally

/s/ Robert H. Glazier                 Director                    April 15, 2003
------------------------
Robert H. Glazier

/s/ George A. Khouri                  Director                    April 15, 2003
------------------------
George A. Khouri

/s/ Robert L. Miller                  Chief Financial Officer     April 15, 2003
------------------------              (Principal Financial
Robert L. Miller                      and Accounting Officer)


<PAGE>

                                  CERTIFICATION

I, Jeffrey I. Dreben, certify that:

1.   I have reviewed this annual report on Form 10-KSB of CVF Technologies
     Corporation;

2.   Based on my knowledge, this annual report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this annual report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a.   designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which annual report is
          being prepared;

     b.   evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

     c.   presented in this annual report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent functions):

     a.   all significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and

     b.   any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          controls; and

6.   The registrant's other certifying officers and I have indicated in this
     annual report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.



Date: April 15, 2003



                                                        /s/ Jeffrey I. Dreben
                                                        ---------------------
                                                        Jeffrey I. Dreben,
                                                        Chief Executive Officer

<PAGE>
                                  CERTIFICATION

I, Robert L. Miller, certify that:

     1.   I have reviewed this annual report on Form 10-QSB of CVF Technologies
          Corporation;

     2.   Based on my knowledge, this annual report does not contain any untrue
          statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this annual report;

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this annual report, fairly present in all
          material respects the financial condition, results of operations and
          cash flows of the registrant as of, and for, the periods presented in
          this annual report;

     4.   The registrant's other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
          and have:

          a.   designed such disclosure controls and procedures to ensure that
               material information relating to the registrant, including its
               consolidated subsidiaries, is made known to us by others within
               those entities, particularly during the period in which annual
               reports is being prepared;

          b.   evaluated the effectiveness of the registrant's disclosure
               controls and procedures as of a date within 90 days prior to the
               filing date of this annual report (the "Evaluation Date"); and

          c.   presented in this annual report our conclusions about the
               effectiveness of the disclosure controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent evaluation, to the registrant's auditors and the
          audit committee of registrant's board of directors (or persons
          performing the equivalent functions):

          a.   all significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors any material
               weaknesses in internal controls; and

          b.   any fraud, whether or not material, that involves management or
               other employees who have a significant role in the registrant's
               internal controls; and

     6.   The registrant's other certifying officers and I have indicated in
          this annual report whether or not there were significant changes in
          internal controls or in other factors that could significantly affect
          internal controls subsequent to the date of our most recent
          evaluation, including any corrective actions with regard to
          significant deficiencies and material weaknesses.


Date: April 15, 2003


                                                        /s/ Robert L. Miller
                                                        --------------------
                                                        Robert L. Miller,
                                                        Chief Financial Officer

<PAGE>

                                  EXHIBIT INDEX

Exhibit No.                Name
-----------                ----

(3)(i)    Articles of Incorporation
          Incorporated by reference to the filing on Form 10SB dated May 29,
          1997

(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
          Incorporated by reference to the filing on Form 10SB dated May 29,
          1997

(10)      2000 Stock Option Plan, filed as an exhibit to CVF's Schedule 14A on
          May 12, 2000 and incorporated by reference herein.

(21)      Subsidiaries of the Registrant, filed herewith.

(99)      Certification Pursuant to 18 U.S.C. 1350 As Adopted Pursuant to
          Section 906 of the Sarbanes Oxley Act of 2002.


      (b) Reports on Form 8-K.
            None.


EXHIBIT 21


SUBSIDIARIES OF CVF TECHNOLOGIES CORPORATION


1.       SRE Controls Inc
2.       Biorem Technologies Inc.
3.       Gemprint(TM)Corporation
4.       Ecoval Corporation
5.       CVF Capital Management Corporation
6.       Petrozyme Technologies Inc.
7.       IMT Systems Inc.