<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, 2003.

                         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: $8,704,069.

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 12, 2004: $4,008,202. 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 12, 2004 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 12, 2004:

                         Common Stock: 12,216,269 shares

Transitional Small Business Disclosure Format: Yes [ ]  No [X]

<PAGE>

PART I

ITEM 1. DESCRIPTION OF BUSINESS

CVF Technologies Corporation (www.cvfcorp.com) ("CVF" or the "Company") was
incorporated in 1995 and is involved in the business of managing 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 generates 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 the investee company going public at the appropriate
time. This has been done with CVF's former investee companies Certicom
Corporation and TurboSonic Technologies, Inc. CVF will endeavor 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 one of the investee companies has been
profitable in 2003, CVF, on a consolidated basis, has incurred losses over the
past year and the past six years. These losses have depleted the Company's cash
reserve which significantly limits the Company's ability to assist its investees
with its own capital. 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:

<TABLE>
<CAPTION>
                                                 CVF's PERCENTAGE
                                                   OWNERSHIP OF
                                                 VOTING SECURITIES
             CORPORATION                        OF ACTIVE COMPANIES
             -----------                        -------------------
<S>                                             <C>
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%
</TABLE>

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 marketing and sales
capability to enable the entity to realize its commercial potential over the
next two to three 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, one of the holdings, Biorem, was profitable in 2002 and 2003. The
ability of those investees which are

<PAGE>

unprofitable 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, 2003 and in the comparative
balances for the previous year 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 and alternative powered vehicle (ex. hybrid fuel-cell)
applications. These markets include material handling equipment (e.g. forklift
trucks), airport Ground Support Equipment (GSE), Automated Guided Vehicles
(AGV), Neighborhood Electric Vehicles (NEV), golf carts and lower-end products
such as scooters, sweepers and scrubbers. SRE supplies its controller products
to Original Equipment Manufacturers (OEMs) of vehicles through direct sales and
to the aftermarket through distribution channels that provide access to a
network of over 2000 dealers throughout North America. Additionally, SRE has
established strategic alliances with companies that can help SRE open up new
markets for its existing products and to bring new products to new markets
especially on an international basis.

SRE continuously enhances 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 and
complete, "integrated electronic solutions" to market in 2003 and plans to
expand their product-mix in 2004 to include additional, leading-edge,
internationally accepted products. These new products are expected to generate
significant revenue gains in 2004 and beyond. SRE's ongoing investment in
research and development continues, with joint development work planned with
several alternate energy customers/ providers to Asian markets and an expanding
electric vehicle market.

2. BIOREM Technologies Inc. ("BIOREM")

BIOREM (www.biorem.biz), an industrial biotech company based in Guelph, Ontario,
is engaged in the business of applying industrial microbiological technology to
municipal and industrial environmental applications. The 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 70 biofilter installations in the U.S. and Canada. BIOREM has a
network of 22 manufacturers' representatives to provide effective coverage of
the rapidly growing U.S. and Canadian 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 security systems 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
and for gem inventory management. Gemprint's Isi system has application with all
segments of the diamond supply chain (i.e. cutters/polishers, grading
laboratories, manufacturers, wholesalers, retailers and Internet traders).
Gemprint's Isi system sells for approximately $7,500. Gemprint also sells a more
sophisticated system for verification of memo goods for inventory management at
a selling price of $30,000. 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 Gemprint signed 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 three major diamond
manufacturers involved in the program; (2) a contract with a major Italian
diamond merchant launching Gemprint(TM) as the "DNA" of Diamonds, a new brand of
Diamonds and using Gemprint as the core technology; and (3) an agreement with an
Antwerp corporation (ADIS) to set up and operate a Gemprint service center in
the Antwerp diamond district. Gemprint is also used by several Internet diamond
traders as well as Zales Corporation, the largest U.S. retailer of jewelry.

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 environmentally friendly organic herbicides, targeted primarily for
the lawn and garden retail/consumer market, municipalities and parks
departments, institutional markets and specialty agricultural markets. Ecoval
has also developed a non-toxic insecticide, a fungicide and a moss-cleaner. The
world wide industry sales for pesticides (which include herbicides, insecticides
and fungicides) was $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. Research results show the herbicide to be efficacious, non-toxic,
biodegradable and faster acting than conventional chemical products. Ecoval's
herbicides have received regulatory approval in Canada through the PMRA
(Pesticide Management Regulatory Agency) and through the Environmental
Protection Agency (EPA) in the United States.

To be cost-effective, Ecoval out-sources its production, packaging and some of
its shipping functions. Ecoval's principal focus is to expand sales through a
number of major distributors and licensees. Ecoval is currently in discussions
regarding licensing of its patented products with a small number of potential
distributors. It is also pursuing sales to government agencies at the municipal,
state and federal levels. 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. The
herbicide product is sold in both a Ready-to-Use version and in concentrate
form.

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

<PAGE>

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.

CVF's two Equity Investees 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. Petrozyme's low cost onsite process is well positioned to penetrate this
market.

2. IMT Systems Inc. ("IMT")

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, RDM
Corporation and TurboSonic Technologies, Inc. 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.

Number of Employees

As of December 31, 2003, CVF and its Consolidated Entities had a total of 46
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 one year lease (commencing
December 2003) with lease payments equal to $17,589 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 2004 to 2006.

ITEM 3 LEGAL PROCEEDINGS

Litigation has commenced in the civil courts in Ontario, Canada in early 2004 by
a minority shareholder of Biorem concerning the restructuring of convertible
debt instruments that CVF holds in Biorem. This litigation names CVF, Biorem,
Robert Nally, and Brian Herner (CEO of Biorem) as defendants. CVF views this
litigation as totally without merit and plans to vigorously defend against it,
including the launching of a significant counter claim. CVF does not anticipate
any material adverse consequence as a result of this lawsuit.

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

<PAGE>

ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the fourth quarter of 2003 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 ("AMEX") for the periods indicated:

<TABLE>
<CAPTION>
                                         LOW            HIGH
                                        ------         ------
<S>                                     <C>            <C>
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

2003  - 1st Quarter                      0.12           0.18
      - 2nd Quarter                      0.14           0.50
      - 3rd Quarter                      0.24           0.45
      - 4th Quarter                      0.26           0.55
</TABLE>

CVF has been advised by the AMEX that in order to maintain its eligibility for
listing privileges it must present its financial statements on a
non-consolidated basis, which presents the fair market value of its investments.
CVF has agreed to this requirement and is reviewing several alternative means of
compliance, including registering as an investment company or electing to be
regulated as a business development company under the Investment Company Act of
1940 or, with SEC approval, maintaining the registration of its common stock
under the Securities Exchange Act of 1934 while presenting its financial
statements using a fair market value of its investees.

(b) Holders of Record

At March 12, 2004, there were approximately 321 holders of record of CVF's
common stock.

(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 were dividends accrued and unpaid on the
Company's former Series B Preferred Stock. The terms of the Series B Preferred
Stock prohibited 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. Subsequent to December 31, 2003, the holder of the
Series B Convertible Preferred Stock exchanged its Series B Convertible
Preferred Stock with a stated value of $3,385,000 and accrued dividends of
approximately $673,600 for 1,000,000 shares of CVF common stock and a new Series
C 6% Convertible Preferred Stock with a stated value of $1,000,000, convertible
into common stock at $1 per share. The Series C Preferred will be subject to
mandatory redemption on February 27, 2006, at which time accrued dividends are
payable; however, CVF's obligation to redeem will be limited to cash available
to it at that time in excess of one year's prospective working capital. The
Company also issued to the former Series B holder a three-year warrant to
purchase 100,000 shares of CVF's common stock at an exercise price of $0.35 per
share.

<PAGE>

(d) Recent Sales of Unregistered Securities

In March 2003, an aggregate of 149,500 shares of common stock were issued to
Joan Dreben and Robert Nally in consideration of their contribution to CVF of
proceeds of the sale of the same number of CVF common shares.

In 2003, CVF issued 57,316 common shares to a consultant in consideration of
services rendered.

In June 2003, CVF issued six-month warrants to acquire 100,000 common shares to
a lender at an exercise price of $.030 per share.

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.

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

Equity compensation plans not
approved by security holders             2,352,784                      $0.19                           N/A
                                         ---------                      -----                        ------
Total                                    3,042,784                      $0.18                        60,000
</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. During 2003 505,000 options were granted at
the market price on the day of approval of $0.30 per share.

         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.

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

<PAGE>

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, 2003 the cash reserve and other liquid resources was
$781,000. The Company has operating cash requirements in 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 from potential investors in CVF. The indications of interest
suggest that the Company could raise funds 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 relate 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

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 2003. 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
(excluding Biorem which has been profitable for the past two fiscal years),
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 2003 and each are
positioned to expand in 2004.

BIOREM's 2003 sales revenues were at a record $6,189,500 and net income of
$1,333,000. This included the results of expansion of sales activities into the
US Southwest with new sales in Texas and California. The installation of a $3
million biofilter in the food processing industry was completed in 2003 and
contracts have been initiated for a second system of the same magnitude in 2004.
Two new sales managers were hired in 2003 to continue concentrated efforts in
new business development in the municipal market. The appointment of an
industrial business manager in 2004 will provide concerted effort in continued
growth in the agri-food

<PAGE>

and forest products industry as well as the hydrocarbon and surface coatings
industries. BIOREM has been working closely with leading municipal consulting
engineers on pre-selection of large biofilter systems at three locations for
inclusion in the construction of new municipal treatment facilities in VA and
GA.

A patent application was filed in 2003 for an improvement to the long lasting
and fast acting BIOSORBENS(TM) filter media. Continued research is aimed at
improving performance of removal of low level complex organic compounds that
continue to plague the industry. Programs are underway for further
characterization of odor constituents and the removal efficiencies of target
components. Strategic research collaboration has been initiated with leading
universities in Canada and the US to broaden and accelerate the development of
the empirical knowledge base of biofilter kinetics.

BIOREM has plans to expand geographically and to market applications in 2004.
New international business was initiated in 2003 with an order for supply of a
biofilter to Riyadh, Saudi Arabia. Several other projects in Saudi Arabia are
being advanced. Other international opportunities will be explored in 2004 and a
strategic, multi year program will be developed.

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

Ecoval expanded its product line with the addition of a moss cleaner. Patents
have also been granted in North America on an improved herbicidal composition
and insecticidal composition. 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. In 2004, Ecoval will
continue to generate sales revenues by establishing key distributor
relationships in North America, establishing potential licensees to generate
royalty income and by working to expand sales to its current customer base.

SRE extended the range of OEM customers served in 2003 and expanded its dealer
network as well as identifying a significant number of target aftermarket
accounts. Also, SRE is developing working relationships with certain electric
vehicle manufacturers to supply electrical subsystems to expand its product
offering in the marketplace. At the end of 2003 SRE hired a stronger sales
force, expanded marketing activities and expanded engineering staff, all
intended to increase sales revenue, quality, new technology and customer appeal.
All these activities are expected to have a positive impact on future financial
results.

CVF's Equity Investee, Petrozyme, advanced in 2003 and is positioned to make
further progress in 2004.

CVF, when possible, will continue to work to provide equity investment and/or
debt financing, based on the progress made by the 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:

<PAGE>

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 six
years, which have reduced the Company's cash reserves, and depleted
stockholders' equity. Further, the Company has a contingent liability described
in item 5.

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, as well as
reducing its cash flow needs. In addition the Company has borrowed $385,700 from
one of its investee directors. 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 2003 one of its investee companies, Biorem, had 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.

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, 2003.

<PAGE>

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 licensing and
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. The Company considers its intangible assets to
have a finite life and as such is continuing to amortize these assets.

Contingencies - The Company is currently under an audit by the Internal Revenue
Service ("IRS"). As part of the routine audit, the IRS indicated that they
reviewed the treatment of capital losses claimed in the prior year and refunds
of $2,532,000 received in 2001. A proposed deficiency in federal income tax was
issued by the IRS on December 1, 2003 totaling $2,969,123. On February 5, 2004
CVF issued a formal protest to the proposed deficiency and it is expected that
this will now go before appeals at the IRS. If it is not resolved at the appeals
level of the IRS, CVF intends to challenge the IRS ruling in federal tax court,
as CVF and its legal counsel strongly believes its original deductions were
correctly taken. This process could take up to 2 more years to be resolved.

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 FASB interpretation #44 of 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, 2003 was $0.41, $351,250 of additional
compensation expense was recorded in expense during 2003.

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.

Comparison of Consolidated Results 2003 and 2002

Consolidated sales of CVF for the fiscal year amounted to $8,704,069,
representing an increase of $2,780,557 (47%) compared to sales of $5,923,512 for
2002. 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 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 are Petrozyme and IMT.

Biorem achieved an increase in sales in 2003 of $3,475,517 or 128% compared to
2002. This increase was due to a major installation at a food processing plant
in Ontario, Canada. Gemprint's sales increased by $98,799 (16%) compared to 2002
due to increased GEMPRINT(TM) registrations by new customers and also due to the
selling, beginning in 2003, of a more sophisticated system for verification of
memo goods at a selling price of $30,000. SRE's sales decreased in 2003 by
$752,250 (33%). Prior to April 1, 2002, the company was required to supply
machine parts (at no mark-up)

<PAGE>

and the SRE manufactured controller with mark-up under this arrangement with an
OEM manufacturer. The agreement with the OEM was amended at the beginning of the
2002 second quarter, such that SRE was no longer required to supply the machine
parts but continued to supply the manufactured controller. As a result of this
change in the business arrangement, CVF no longer recorded the value of the
machine parts in its sales or cost of sales. Had this arrangement changed at the
beginning of the 2002 first quarter, the Company's sales and cost of sales for
the 2002 quarter would each have been $1,321,935 lower than the reported amount.
(or SRE's sales would be $584,581 or 62% higher in 2003 compared to 2002). The
change in this arrangement has had no effect on the Company's gross margin
dollars. Ecoval's sales decreased by $41,509 (13%) as fertilizer orders from
some customers were not received and shipments of fertilizer in the second half
of 2003 to U.S. customers were halted due to concerns related to mad cow
disease.

CVF's gross margin of $3,574,259 for 2003 represents an increase of $1,505,818
(72.8%) from 2002. Gross margin as a percentage of sales increased to 41.1% for
2003 compared to 34.9% in 2002. This percentage increase in 2003 is due mainly
to the change in the business arrangement at SRE with one of its customers (as
previously discussed) which had an effect of increasing the gross margin
percentage. If this change had occurred at the beginning of the first quarter
2002 the overall gross margin percentage for 2002 would have been 45.0% instead
of 34.9%.

Selling, general and administrative expenses on a consolidated basis amounted to
$5,716,107 for 2003 representing an increase of $1,093,216 or 23.6% compared to
2002. The increase in expenses generally relate to the sales increase at Biorem,
Gemprint and SRE. Of this increase, $351,250 is due to stock option related
compensation expense recorded due to the increase in the market price of CVF
common stock and $144,200 related to the increase in the valuation of Biorem. An
additional $112,650 of the increase is due to one of the Company's subsidiaries
settling a claim with a former officer. 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.

Research and development expenses for 2003 amounted to $504,613 compared to
$386,773 for 2002 (a 30.5% increase). This increase in R & D spending was
attributable to Biorem where additional R & D work is being performed.

Loss from continuing operations decreased to $2,646,461 in 2003 from $2,941,223
in 2002, a decrease of $294,762 (or 10.0%). This decrease can be attributed to
profitability in Biorem. Also, the loss in 2003 would have been $495,450 lower
if the effect of stock option repricing had not taken place.

Net interest expense increased to $246,371 in 2003 from $138,599 in 2002. This
increase in expense is due to increased borrowings during 2003.

Losses of CVF from equity investees (entities in which CVF has a 50% or less
ownership) decreased to $nil in 2003 from $48,702 in 2002. CVF's investment in
its equity holdings was reduced to zero in prior periods and CVF did not invest
or guarantee any additional amounts in respect to these companies in 2003.

Gain or loss on sale of holdings represented a gain of $7,461 in 2003 from a
loss of $72,082 in 2002. In 2002 the Company sold some shares of its holdings in
RDM and TurboSonic producing a gain of $253,478 and in 2002 CVF wrote off its
investment in WZ.COM totaling $240,675 as that company was liquidated and no
distributions were 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.

Other expense of $89,825 in 2003 represents foreign exchange loss of $196,924
offset somewhat by other income mainly at Biorem totaling $107,099.

Recovery of income taxes amounted to $526,386 in 2003 compared to a recovery of
$796,824 in 2002. In 2003, Biorem was able to claim a carry back totaling $
474,378. 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 decreased to $171,286 in 2003 from $219,667 in the
comparable 2002 period.

<PAGE>

Loss from operations of discontinued business was a $111,764 loss in 2002. This
reflects Dantec's 2002 loss for the 2002 fiscal year.

Gain on discontinuance of business in 2002 reflects the gain recorded on the
sale of CVF's interest in Dantec on April 19, 2002.

As a result of the operations described above, CVF recorded a net loss of
$2,286,606 in 2003 as compared to a net loss of $1,779,634 incurred in 2002.
Also, the loss in 2003 would have been $495,450 lower if the effect of stock
option repricing had not taken place.

LIQUIDITY AND CAPITAL RESOURCES

Total Stockholders' equity as of December 31, 2003 was in a deficit position of
$3,732,580 compared to a deficit of $966,775 as of December 31, 2002. The net
decrease is primarily attributable to the net loss of $2,286,606 incurred in
2003.

The current ratio of CVF as at December 31, 2003 is .55 to 1, which has
increased from .51 to 1 as at December 31, 2002.

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, and the 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 limited outside debt and a line of credit could be sought.
The Company has been successful in obtaining $ 1 million Canadian in financing
through an investment in one of its holdings in September 2003, and in 2003
received $961,000 as repayment of back interest and dividends from one of its
investee companies.

Over the past two and a half years 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.
The use of consultants has been significantly reduced 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. Subsequent to
December 31, 2003, CVF and the holder of CVF's Series B Convertible Preferred
Stock entered into a transaction whereby the holder exchanged its Series B
Convertible Preferred Stock with a stated value of $3,385,000 and accrued
dividends of approximately $673,600 for 1,000,000 shares of CVF's common stock
and a new Series C 6% Convertible Preferred Stock with a stated value of
$1,000,000, convertible into common stock at $1 per share. The Series C
Preferred and all accrued dividends thereon will be subject to mandatory
redemption on February 27, 2006; however, CVF's obligation to redeem will be
limited to cash available to it at that time in excess of one year's prospective
working capital. The Company also issued to the former Series B holder a
three-year warrant to purchase 100,000 shares of CVF's common stock at an
exercise price of $0.35 per share.

The Company no longer anticipates having to fund Gemprint or Biorem as both are
currently operating on positive cash flow, although no assurances can be given
that this trend will continue.

As at December 31, 2003, CVF's cash balance was $225,535 which is an increase of
$7,532 compared to December 31, 2002. The primary source of cash for the Company
is expected to be from sale of a portion of its investments in its subsidiaries
or from CVF issuing additional securities. The company is pursuing opportunities
to raise funds from potential investors in CVF. In addition, certain
subsidiaries are producing a positive cash flow and will be able to supplement
other cash requirements of the Company. If the above mentioned liquidity events
do not occur, the Company estimates that it could run out of operating cash in
the second quarter of 2004, if other sources of cash are not available. 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.

<PAGE>

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 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.

AMEX Listing. CVF has been advised by the AMEX that in order to maintain its
listing privileges it will need to present its financial statements on a
non-consolidated basis, which presents the fair market value of its investments.
CVF is considering various alternative means of complying with the AMEX's
requirement as discussed in Item 5. In the event CVF is unable to comply with
the AMEX's requirement or determines that it is inadvisable to do so, CVF will
be delisted from the AMEX. In such an event, CVF would seek to have its common
stock quoted on the National Association of Securities Dealers' Over-the-Counter
Bulletin Board, or OTCBB. This may adversely affect shareholders' ability to
trade CVF common stock, as the OTCBB market is generally less liquid and more
volatile than the AMEX. In addition, any such delisting of CVF's common stock
could result in a decline in CVF's stock price. In the event CVF determines to
register or elects to be regulated as an investment company under the Investment
Company Act of 1940, its ability to raise capital and otherwise operate its
business consistent with past practice may be significantly affected. In
addition, the costs of compliance and registration under the Investment Company
Act may be substantial.

<PAGE>

ITEM 7 FINANCIAL STATEMENTS
<PAGE>
Consolidated Financial Statements

CVF TECHNOLOGIES CORPORATION
[Expressed in United States Currency]
December 31, 2003

<PAGE>

CVF TECHNOLOGIES CORPORATION

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                    PAGE NUMBER
<S>                                                 <C>
REPORT OF INDEPENDENT AUDITORS                           F-2

CONSOLIDATED BALANCE SHEETS                              F-4

CONSOLIDATED STATEMENTS OF OPERATIONS                    F-6

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT)

                  EQUITY                                 F-8

CONSOLIDATED STATEMENTS OF CASH FLOWS                   F-10

CONSOLIDATED STATEMENTS OF

                  COMPREHENSIVE (LOSS) INCOME           F-11

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS              F-12
</TABLE>

<PAGE>

                          INDEPENDENT AUDITOR'S REPORT

Stockholders and Directors
CVF Technologies Corporation

We have audited the accompanying consolidated balance sheets of CVF Technologies
Corporation as of December 31, 2003, and the related consolidated statements of
operations, stockholders' (deficit) equity, cash flows and comprehensive loss
for the year then ended December 31, 2003. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of CVF Technologies
Corporation as of December 31, 2003, and the results of its operations and its
cash flows for the year then ended December 31, 2003, in conformity with
accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has suffered recurring
losses from operations, including a net loss of approximately $2.2 million for
the year ended December 31, 2003, and has a working capital deficiency as of
December 31, 2003. These factors raise substantial doubt the Company's ability
to continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

                                              /s/ Radin, Glass & Co., LLP
                                              Certified Public Accountants

New York, New York
February 26, 2004

                                                                             F-2

<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
CVF TECHNOLOGIES CORPORATION

                                                                             F-3

<PAGE>

                      CONSOLIDATED BALANCE SHEETS [Note 2]

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

<TABLE>
<CAPTION>
                                                                       2003               2002
                                                                         $                  $
                                                                     ---------          ---------
<S>                                                                  <C>                <C>
ASSETS
CURRENT
Cash and cash equivalents                                              225,535            218,003
Trade receivables [note 3[d]]                                        2,461,980            940,559
Inventory [note 4]                                                     586,009            419,764
Prepaid expenses and other                                              75,669             56,794
Deferred tax asset and Income taxes receivable                         550,830            492,299
                                                                     ---------          ---------
TOTAL CURRENT ASSETS                                                 3,900,023          2,127,419
                                                                     ---------          ---------
Property and equipment, net of accumulated depreciation [note 3[f]]    220,889            201,327
Loans receivable [note 18]                                             142,251            144,399
Holdings available for sale, at market [note 5]                          4,772             62,505
Technology, net of accumulated amortization [note 6[a]]                228,001            529,152
Goodwill, net of accumulated amortization [note 6[b]]                1,405,222          1,405,222
                                                                     ---------          ---------
TOTAL ASSETS                                                         5,901,158          4,470,024
                                                                     =========          =========
</TABLE>

                                                                             F-4

<PAGE>

                       CONSOLIDATED BALANCE SHEETS CONT'D
                                    [Note 2]

<TABLE>
<CAPTION>
                                                                             2003               2002
                                                                               $                  $
                                                                          -----------        -----------
<S>                                                                       <C>                <C>
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
CURRENT LIABILITIES
Current portion of long-term debt [note 7]                                     82,297             85,860
Loans past due or in default [note 7]                                         221,269            182,431
Accounts payables and accrued liabilities [note 12[a]]                      6,212,368          3,762,186
Preferred and other non-voting stock of subsidiaries [note 12[b]]             192,850            159,000
                                                                          -----------        -----------
TOTAL CURRENT LIABILITIES                                                   6,708,784          4,189,477
                                                                          -----------        -----------
LONG-TERM LIABILITIES
Notes payable - officers and directors [note 7]                             1,836,256            241,680
Deferred income taxes [note 9]                                                368,566            259,454
Minority interest                                                              79,220            217,167
Pension obligation [note 8]                                                   577,457            465,566
                                                                          -----------        -----------
TOTAL LONG-TERM LIABILITIES                                                 2,861,499          1,183,867
                                                                          -----------        -----------
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 [2002; 3,477] [note 10[b]]              63,455             63,455
                                                                          -----------        -----------
                                                                            9,633,738          5,436,799
                                                                          -----------        -----------
Commitments and contingencies [notes 2, 16 and 17]
STOCKHOLDERS' (DEFICIT) EQUITY [note 2]
Common stock, $0.001 par value, authorized 50,000,000 shares,
   outstanding 10,855,549 [2002; 10,613,456]
   and in treasury 481,700 [2002; 481,700]                                     11,338             11,095
Series B convertible preferred stock
   $0.001 par value, liquidation preference of 25% of Stated Value,
   authorized, issued and outstanding 338,500 [2002; 338,500]
   [note 10[b]]                                                                   339                339
Warrants [note 10 [c]]                                                        111,094            111,094
Additional paid-in capital                                                 28,473,130         27,927,197
Treasury stock                                                             (2,747,174)        (2,747,174)
Accumulated other comprehensive loss                                       (1,750,291)        (1,066,589)
Accumulated deficit                                                       (27,831,016)       (25,202,737)
                                                                          -----------        -----------
TOTAL STOCKHOLDERS' (DEFICIT) EQUITY                                       (3,732,580)          (966,775)
                                                                          -----------        -----------
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT)  EQUITY                       5,901,158          4,470,024
                                                                          ===========        ===========
</TABLE>

See accompanying notes

                                                                             F-5

<PAGE>

CVF TECHNOLOGIES CORPORATION

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                    [Note 2]

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

<TABLE>
<CAPTION>
                                                                             2003               2002
                                                                               $                  $
                                                                          -----------        -----------
<S>                                                                       <C>                <C>
SALES [note 3[l]]                                                           8,704,069          5,923,512
Cost of sales                                                               5,129,810          3,855,071
                                                                          -----------        -----------
GROSS MARGIN                                                                3,574,259          2,068,441
                                                                          -----------        -----------
EXPENSES
Selling, general and administrative [note 6[a]]                             5,716,107          4,622,891
Research and development                                                      504,613            386,773
                                                                          -----------        -----------
TOTAL EXPENSES                                                              6,220,720          5,009,664
                                                                          -----------        -----------
Loss from continuing operations
   before under noted items                                                (2,646,461)        (2,941,223)
                                                                          -----------        -----------
OTHER (EXPENSES) INCOME
Interest (expense), net                                                      (246,371)          (138,599)
Loss from equity investees                                                         --            (48,702)
(Loss) gain on sale of holdings                                                (1,621)           (72,082)
Other (expense)                                                               (89,825)                --
                                                                          -----------        -----------
TOTAL OTHER (EXPENSES) INCOME                                                (337,817)          (259,383)
                                                                          -----------        -----------
Loss from continuing operations before
   income taxes                                                            (2,984,278)        (3,200,606)
Income taxes [note 9]                                                        (526,386)          (796,824)
                                                                          -----------        -----------
Loss from continuing operations before
   the following:                                                          (2,457,892)        (2,403,782)
Minority interest in loss                                                     171,286            219,667
                                                                          -----------        -----------
Net loss from continuing operations                                        (2,286,606)        (2,184,115)
Loss from operations of
   discontinued business [notes 12[c]                                              --           (111,764)
Gain (loss) on discontinuance of business
   [notes 12[c]                                                                    --            516,245
                                                                          -----------        -----------
NET LOSS                                                                   (2,286,606)        (1,779,634)
                                                                          ===========        ===========
</TABLE>

                                                                             F-6

<PAGE>

CVF TECHNOLOGIES CORPORATION

                  CONSOLIDATED STATEMENTS OF OPERATIONS CONT'D
                                    [Note 2]

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

<TABLE>
<CAPTION>
                                                                             2003               2002
                                                                               $                  $
                                                                          -----------        -----------
<S>                                                                       <C>                <C>
NET LOSS ATTRIBUTABLE TO COMMON
   STOCKHOLDERS [note 12]                                                  (2,628,279)        (2,054,087)
                                                                          -----------        -----------
BASIC AND DILUTED LOSS PER SHARE [note 11]
Loss from continuing operations                                                 (0.24)             (0.24)
Gain (loss) from discontinued business
   [notes 12 [b] and [d]]                                                          --               0.04
                                                                          -----------        -----------
BASIC AND DILUTED LOSS PER SHARE [note 11]                                      (0.24)             (0.20)
                                                                          ===========        ===========

BASIC AND DILUTED WEIGHTED AVERAGE
   SHARES [note 11]                                                        10,749,035         10,376,016
                                                                          ===========        ===========
</TABLE>

See accompanying notes

                                                                             F-7

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

<CAPTION>
                                                                                    ACCUMULATED
                                                                                      OTHER
                                                  ACCUMULATED       TREASURY       COMPREHENSIVE        TOTAL
                                                    DEFICIT           STOCK        INCOME (LOSS)       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 10[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 10[b]]                                            --               --               --           64,994
Unrealized loss on securities available for
   sale, net of reclassification adjustment
   [note 10[d]]                                            --               --         (327,938)        (327,938)
Shares issued in lieu of cash for services                 --               --               --           36,065
Shares issued for dividend on Series B
   preferred [note 10[b]]                                  --               --               --            6,143
Warrants issued during the year [note 10[c]]               --               --               --          111,094
Warrants expired during the year [note 10[c]]              --               --               --               --
Translation adjustment [note 10[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 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      ACCUMULATED
                                                  SHARES         AMOUNT       STOCK      WARRANTS        CAPITAL        DEFICIT
                                                                   $            $            $              $              $
                                                ----------       ------    -----------   --------       ----------    -----------
<S>                                             <C>              <C>       <C>           <C>            <C>           <C>
BALANCE - DECEMBER 31, 2002                     11,095,156       11,095            339    111,094       27,927,197    (25,202,737)
Net loss                                                                                                               (2,286,606)
Dividends on Series A preferred stock                                                                                      (3,173)
Dividends on Series B convertible
   preferred stock                                                                                                       (338,500)
Unrealized loss on securities available
   for sale, net of reclassification
   adjustment [note 10[d]]
Shares issued in lieu of cash for services          92,593           93                                     24,907
Shares issued for cash                             149,500          150                                     25,981
Change in market price - re priced options                                                                 495,045
                                                ----------       ------    -----------   --------       ----------    -----------
Translation adjustment [note 10[d]]
BALANCE - DECEMBER 31, 2003                     11,337,249       11,338            339    111,094       28,473,130    (27,831,016)
                                                ==========       ======    ===========   ========       ==========    ===========

<CAPTION>
                                                               ACCUMULATED
                                                                  OTHER
                                                 TREASURY     COMPREHENSIVE        TOTAL
                                                  STOCK           INCOME           EQUITY
                                                    $               $                 $
                                                ----------    -------------      ----------
<S>                                             <C>           <C>                <C>
BALANCE - DECEMBER 31, 2002                     (2,747,174)     (1,066,589)        (966,775)
Net loss                                                                         (2,286,606)
Dividends on Series A preferred stock                                                (3,173)
Dividends on Series B convertible
   preferred stock                                                                 (338,500)
Unrealized loss on securities available
   for sale, net of reclassification
   adjustment [note 10[d]]                                          (9,054)          (9,054)
Shares issued in lieu of cash for services                                           25,000
Shares issued for cash                                                               26,131
Change in market price - re priced options                                          495,045
Translation adjustment [note 10[d]]                               (674,648)        (674,648)
                                                ----------    ------------       ----------
BALANCE - DECEMBER 31, 2003                     (2,747,174)     (1,750,291)      (3,732,580)
                                                ==========    ============       ==========
</TABLE>

See accompanying notes

                                                                             F-9
<PAGE>

CVF TECHNOLOGIES CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    [Note 2]

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

<TABLE>
<CAPTION>
                                                           2003          2002
                                                            $             $
                                                        ----------    ----------
<S>                                                     <C>           <C>
OPERATING ACTIVITIES
Net loss from continuing operations                     (2,286,606)   (2,184,115)
Adjustments to reconcile net loss
    from continuing operations  [note 14]                  289,536       387,895
Changes in operating assets and liabilities [note 14]      270,319       110,016
                                                        ----------    ----------
CASH (APPLIED TO) OPERATING ACTIVITIES                  (1,726,751)   (1,686,204)
                                                        ----------    ----------
INVESTING ACTIVITIES
Purchase of property and equipment                         (30,122)      (55,045)
Investments in and advances to equity investees                 --       (28,656)
Proceeds from sale of holdings                              46,724       902,667
Proceeds from sale of subsidiary                                --       494,878
                                                        ----------    ----------
CASH PROVIDED BY (APPLIED TO) INVESTING ACTIVITIES          16,602     1,313,844
                                                        ----------    ----------
FINANCING ACTIVITIES
(Decrease) increase in bank indebtedness                     4,796      (290,539)
Borrowings of debt                                       1,477,886       241,680
Repayments of debt                                              --       (15,920)
Reductions of restricted cash                                   --       128,466
Purchase of treasury stock                                      --        (1,045)
                                                        ----------    ----------
CASH PROVIDED BY FINANCING ACTIVITIES                    1,482,682        62,642
                                                        ----------    ----------
NET CASH PROVIDED BY (APPLIED TO) DISCONTINUED
   OPERATIONS                                                   --       131,853
                                                        ----------    ----------
Effect of exchange rate changes on
   cash and cash equivalents                               234,999        (6,304)
                                                        ----------    ----------
CASH AND CASH EQUIVALENTS (APPLIED) DURING YEAR              7,532      (184,169)
Cash and cash equivalents, beginning of year               218,003       402,172
                                                        ----------    ----------
CASH AND CASH EQUIVALENTS, END OF YEAR                     225,535       218,003
                                                        ==========    ==========
Cash paid during the year for interest                      38,364        47,401
                                                        ----------    ----------
Cash paid during the year for income taxes                   1,611         3,925
                                                        ----------    ----------
</TABLE>

See accompanying notes

                                                                            F-10
<PAGE>

CVF TECHNOLOGIES CORPORATION

                    CONSOLIDATED STATEMENTS OF COMPREHENSIVE
                                 LOSS [Note 2]

Year ended                                          [Expressed in U.S. Currency]

<TABLE>
<CAPTION>
                                                                                      2003         2002
                                                                                       $             $
                                                                                   ----------    ----------
<S>                                                                                <C>           <C>
NET LOSS                                                                           (2,286,606)   (1,779,634)
                                                                                   ----------    ----------
OTHER COMPREHENSIVE (LOSS) INCOME,
   NET OF TAX [note 10[d]]

Foreign currency translation adjustments
    [net of tax effect]                                                              (674,648)      (62,018)
                                                                                   ----------    ----------
Unrealized holding (losses) gains:

Unrealized holding losses (gains) arising during year [net of taxes of $nil, and
    $nil for the years ended
    December 31, 2003 and 2002]                                                        12,001         8,012

Reclassification adjustments for previously recognized unrealized holding
    (gains) [net of taxes of $6,188 and $223,967 for the years ended December
    31, 2003 and 2002]                                                                (21,055)     (335,950)
                                                                                   ----------    ----------
                                                                                       (9,054)     (327,938)
                                                                                   ----------    ----------
Total other comprehensive loss                                                       (683,702)     (389,956)
                                                                                   ----------    ----------
COMPREHENSIVE LOSS DURING YEAR                                                     (2,970,308)   (2,169,590)
                                                                                   ==========    ==========
</TABLE>

See accompanying notes

                                                                            F-11
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                   [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,
2003, the Company has a 69% [69% in 2002] 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, 2003, the Company has an 85% [85% in 2002]
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, 2003, the Company
had a 65% [65% in 2002] 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-12
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                   [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, 2003, the Company had a 75% [75% in 2002] 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 2002] economic interest in a partnership, known as "Elements". In
September 2001, Elements discontinued its operations [note 12[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 17].

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. 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-13
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                   [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-14
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                   [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 $144,164 at December 31, 2003 [$121,935 at December
         31, 2002]. Bad debt expense was $36,935 during the year ended December
         31, 2003 [$82,972 in 2002].

         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]      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, 2003 was $683,394 [$517,527 at
         December 31, 2002]. Depreciation expense was $51,254 [$81,052 in 2002].

                                                                            F-15
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                   [Expressed in U.S. Currency]

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT'D

[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>
                                                   2003       2002
                                                     $          $
                                                 ---------   -------
<S>                                              <C>         <C>
Cash and cash equivalents                            1,665   111,705
Trade receivables                                  674,339   240,647
Bank indebtedness                                    5,157        --
Trade payables                                   1,306,340   635,609
Long-term debt                                   1,836,256   509,971
Pension obligation                                 577,457   465,566
Preferred and non voting stock of subsidiaries     192,850   159,000
</TABLE>

                                                                            F-16
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                   [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-17
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                   [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 2002
         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

We account for our stock-based compensation plans under Accounting Principles
Board Opinion 25, (APB 25) Accounting for Stock Issued to Employees and the
related interpretation, for which no compensation cost is of the grant and
recorded in the statement of operations for the estimated fair value of stock
options issued with an exercise price equal to the fair value of the common
stock on the date of 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 the grant and
the option exercise price. When the market price at the date of the grant
exceeds the exercise price of the underlying shares, compensation expense is
recorded. Statement of Financial Accounting Standards No. 123 (SFAS 123)
Accounting for Stock-Based Compensation, as amended by Statement of Financial
Accounting Standards No. 148 (SFAS 148) Accounting for Stock-Based Compensation
- Transition and Disclosure, requires that companies, which do not elect to
account for stock-based compensation as prescribed by this statement,

                                                                            F-18
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                   [Expressed in U.S. Currency]

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT'D

[m]      STOCK-BASED COMPENSATION CONT'D

disclose the pro-forma effects on earnings and earnings per share as if SFAS 123
has been adopted.

During 2002 and 2003, the Company repriced options of the registrant and certain
of its subsidiaries, resulting in the "variable" method for determining
compensation expense being applied to the options subject to repricing. Under
this method, expense is recorded for the difference between the stock's quoted
market price on the date of the 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 results in a change in
the measurement of the compensation for the award.

If we applied the recognition provisions of SFAS 123 using the Black-Scholes
option pricing model, the resulting pro-forma net income (loss) available to
common shareholders, and pro-forma net income (loss) available to common
shareholders per share would be as follows:

<TABLE>
<CAPTION>
                                                                     For the year ended December 31,
                                                                     -------------------------------
                                                                        2003                2002
                                                                     -----------         -----------
<S>                                                                  <C>                 <C>
Net loss available to common shareholders, as reported               $(2,628,279)        $(2,054,087)
Add: Stock-based compensation expense included in the reported net
income, net of related tax effects
                                                                         495,045
Deduct: Stock-based compensation, net of tax                             581,703              92,974
                                                                     -----------         -----------
Net loss available to common shareholders, pro-forma                 $(2,714,937)        $(2,147,061)
                                                                     ===========         ===========

Basic earnings per share:
                                                    As reported -    $      (.24)        $      (.20)
                                                      Pro-forma -    $      (.25)        $      (.21)
</TABLE>

The above stock-based employee compensation expense has been determined
utilizing a fair value method, the Black-Scholes option-pricing model.

The recorded compensation expense for repriced stock options granted to
employees during the years ended December 31, 2003 and 2002 was $495,045 and $0,
respectively.

                                                                            F-19
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                   [Expressed in U.S. Currency]

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT'D

[m]      STOCK-BASED COMPENSATION CONT'D

In accordance with SFAS 123, the fair value of each option grant has been
estimated as of the date of the grant using the Blach-Scholes option pricing
model with the following weighted average assumptions:

<TABLE>
<CAPTION>
                          For Years Ended December 31,
                          ----------------------------
                           2003                 2002
                          ------              --------
<S>                      <C>                  <C>
Risk free interest rate     5.00%                 5.00%
Expected life            5 years               5 years
Dividend rate               0.00%                 0.00%
Expected volatility        124.3%                 95.2%
</TABLE>

[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-20
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                   [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

CONSOLIDATION OF VARIABLE INTEREST ENTITIES

In January 2003, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 46, "Consolidation of Variable Entities", (FIN No. 46) an
interpretation of Accounting Research Bulletin No. 51. FIN No. 46 requires that
variable interest entities be consolidated by a company if that company is
subject to a majority of the risk and loss from the variable interest entity's
activities or is entitled to receive a majority of the entity's residual returns
or both. FIN No. 46 requires disclosures about variable interest entities that
companies are not required to consolidate but which the company has a
significant variable interest. The consolidation requirements will apply
immediately for newly formed variable interest entities created after January
31, 2003 and entities established prior to January 31, 2003, in the first fiscal
year or interim period beginning after June 30, 2003. The Company does have
investments in unconsolidated entities, but such entities are virtually inactive
and CVF does not support them financially. The adoption of FIN No. 46 will not
have a material impact on our consolidated results of operations and financial
position.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

In April 2003, the FASB issued Statements of Financial Accounting Standards No.
149 ("SFAS No. 149"), an amendment to SFAS No. 133. SFAS No. 149 clarifies under
what circumstances a contract with initial investments meets the characteristics
of a derivative and when a derivative contains a financing component. This SFAS
is effective for contracts entered into or modified after June 30, 2003. The
adoption of SFAS No. 149 will not have a material impact on our consolidated
results of operations and financial position.

ACCOUNTING FOR CERTAIN FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF BOTH
LIABILITIES AND EQUITY

In May 2003, the FASB issued Statements of Financial Accounting Standards No.
150 ("SFAS No. 150"), SFAS No. 150 established standards for how an issuer
classifies and measures in its statement of financial position certain financial
instruments with characteristics of both liabilities and equity. It requires
that an issuer classify a financial instrument that is within its scope as a
liability (or an asset in some circumstances) because that financial instrument
embodies an

                                                                            F-21
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                   [Expressed in U.S. Currency]

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT'D

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

obligation of the issuer. This SFAS is effective for financial instruments
entered into or modified after May 31, 2003 and otherwise is effective at the
beginning of the first interim period beginning after June 15, 2003. It is to be
implemented by reporting the cumulative effect of a change in accounting
principle for financial instruments created before the issuance date of SFAS No.
150 and still existing at the beginning of the interim period of adoption.
Restatement is not permitted. The adoption of SFAS No. 150 will not have a
material effect on the financial statements.

EMPLOYER'S DISCLOSURE ABOUT PENSIONS AND OTHER POSTRETIREMENT BENEFITS

In December 2003, the FASB revised SFAS No. 132 Employers' Disclosures about
Pensions and Other Post Retirement Benefits. This revision requires additional
disclosures to those in the original SFAS No. 132 about assets, obligations,
cash flows and net periodic benefit cost of deferred benefit pension plans and
other deferred benefit post-retirement plans. The required information should be
provided separately for pension plans and for other post-retirement benefit
plans. This statement revision is effective for fiscal year ending after
December 14, 2003 and interim periods beginning after December 15, 2003. The
adoption of this revision will not have a material impact on our results of
operations, financial position or disclosures.

4. INVENTORY

Inventory consists of the following:

<TABLE>
<CAPTION>
                                   2003      2002
                                    $          $
                                 -------    -------
<S>                              <C>        <C>
Raw material                     568,364    263,237
Finished goods                    87,071    156,527
Less reserve for obsolescence    (69,426)        --
                                 -------    -------
                                 586,009    419,764
                                 =======    =======
</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, 2003                                   [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, 2003:

<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]                        --           --            2,876
                                                      ---------    ---------    -------------
RDM
          272     common shares [iv]                         --           --              233
                                                      ---------    ---------    -------------
wz.COM
      500,000     common shares [v]                           4%          --               --
                                                      ---------    ---------    -------------
Other notes and holdings                                     --           --            1,663
                                                      ---------    ---------    -------------
TOTAL                                                                     --            4,772
                                                      =========    =========    =============
</TABLE>

                                                                            F-23
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                   [Expressed in U.S. Currency]

5. HOLDINGS CONT'D

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-24
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                   [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 had been reduced to zero during
         2002.

[iii]    At December 31, 2003, the market value of the shares was U.S. $0.35
         [U.S. $0.26 in 2002] per share. As at December 31, 2003, the common
         shares of TurboSonic have an original cost of $3,938. Accordingly,
         aggregate unrealized losses of $1,041 have been recorded as an element
         of accumulated other comprehensive income as at December 31, 2003.

[iv]     At December 31, 2003, the quoted market value of shares of RDM listed
         on the Canadian Venture Exchange was Cdn. $1.11 [U.S. $0.86 [2002 -
         Cdn. $0.81 [U.S. $0.515]] per share. As at December 31, 2003, the
         shares have an original cost of $147. Accordingly, aggregate unrealized
         gains of $67 have been recorded as an element of accumulated other
         comprehensive income as at December 31, 2003.

[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, 2003                                   [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>
                                            2003          2002
                                              $             $
                                         ----------    ----------
<S>                                      <C>           <C>
INCOME STATEMENT DATA
Net sales                                   183,569       129,666
Gross profit (loss) on sales                 58,075        90,940
Net (loss)                                 (195,370)     (203,279)
                                         ----------    ----------
CVF'S SHARE OF NET (LOSS)                   (96,936)      (48,702)
                                         ==========    ==========
BALANCE SHEET DATA
Current assets                              113,364        93,932
TOTAL ASSETS                                113,364        93,932
                                         ==========    ==========
Current liabilities                         269,546       199,637
Non-current liabilities                   2,311,613     1,755,728
(Deficit)                                (2,467,795)   (1,861,433)
                                         ----------    ----------
TOTAL LIABILITIES AND EQUITY                113,364        93,932
                                         ==========    ==========

CVF's SHARE OF (ACCUMULATED DEFICIT)     (1,230,036)     (928,197)
                                         ==========    ==========
CVF's SHARE OF NON-CURRENT LIABILITIES    2,311,613     1,755,728
                                         ==========    ==========
</TABLE>

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, 2003                                   [Expressed in U.S. Currency]

6. TECHNOLOGY AND GOODWILL

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

<TABLE>
<CAPTION>
                                    2003        2002
                                     $           $
                                 ---------   ---------
<S>                              <C>         <C>
Cost                             1,210,132   1,705,822
Write down of intangible asset          --     495,690
Accumulated amortization           982,131     680,980
                                 ---------   ---------
                                   228,001     529,152
                                 =========   =========
</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. 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, 2003                                   [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
  2003         $            $             $
--------   ---------   ------------   ---------
<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
  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>

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.

                                                                            F-28
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                   [Expressed in U.S. Currency]

7. LONG-TERM DEBT

Long-term debt comprises the following:

<TABLE>
<CAPTION>
                                                                        2003      2002
                                                                         $         $
                                                                     ---------  --------
<S>                                                                  <C>        <C>
Convertible debenture issued by Gemprint, for Cdn. $286,841
    [2002- $286,841], bearing interest at 5% per annum.
    The loan has matured and is past due.                              221,269   182,431

Loans from a Biorem employee to Biorem of Cdn. $100,000
    [2002 - $125,000] and CVF officers of Cdn $nil [2002 -
    $25,000]. The loans are payable on demand upon the consent
    of CVF and bear interest at Canadian prime plus  4.0%.              77,140    85,860

Loans from an SRE officer to SRE of Cdn. $80,000
    [2002 - $80,000] and an SRE director of Cdn $840,000 [2002 -
    $300,000]. Loan terms as outlined below.                           709,688   241,680

Loans from a Biorem director to Biorem of Cdn. $960,420
     [2002 - $nil]. Loan terms as outlined below.                      740,868        --

Loan from a SRE director to CVF of Cdn. $500,000
    [2002 - $nil]. Loan terms as outlined below.                       385,700        --

                                                                     ---------  --------
Total long-term debt                                                 2,134,665   509,971
Less: current portion of long-term debt                                (77,140)  (85,860)
    loans past due or in default                                      (221,269) (182,431)
                                                                     ---------  --------
LONG-TERM DEBT EXCLUDING CURRENT PORTION AND LOANS PAST
    DUE OR IN DEFAULT                                                1,836,256   241,680
                                                                     =========  ========
</TABLE>

Interest expense on long-term debt during the year was $27,743 [$25,187 in
2002].

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-29
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                   [Expressed in U.S. Currency]

7. LONG-TERM DEBT CONT'D

Loan from Biorem director - this amount is due in September 2006 and consists of
a convertible term note. Under the conversion terms, $1.76 of indebtedness can
be exchanged for one common share of the Company at the option of the holder.
The note bears interest at 10% per annum, and is payable quarterly.

Loan from SRE director - this amount is due in January 2005. The holder also
received 100,000 warrants to purchase CVF common stock at $0.30 per share. The
note bears interest at 10% per annum and is payable at the end of the term.

8. 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. $4,628 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.

9. INCOME TAXES

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

<TABLE>
<CAPTION>
                                                                  2003          2002
                                                                   $             $
                                                               ----------    ----------
<S>                                                            <C>           <C>
Current:
    U.S.
         Benefit of operating loss carryback                           --      (432,617)
         Income taxes on operating income of subsidiary            82,358            --
                                                               ----------    ----------
                                                                   82,358      (432,617)
                                                               ==========    ==========
    Foreign                                                      (134,366)      (59,682)
                                                               ----------    ----------
Total current taxes                                               (52,008)     (492,299)
                                                               ----------    ----------
Deferred:
    U.S.                                                               --      (304,525)
    Foreign                                                      (474,378)           --
                                                               ----------    ----------
Total deferred taxes                                             (474,378)     (304,525)
                                                               ----------    ----------
INCOME TAX (RECOVERY)                                            (526,386)     (796,824)
                                                               ==========    ==========

(Loss) before (recovery of) income taxes:
    U.S.                                                       (1,241,810)   (2,684,546)
    Foreign                                                    (1,742,468)     (516,060)
                                                               ----------    ----------
(LOSS) BEFORE (RECOVERY OF) INCOME TAXES                       (2,984,278)   (3,200,606)
                                                               ==========    ==========
</TABLE>

                                                                            F-30
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                   [Expressed in U.S. Currency]

9. INCOME TAXES CONT'D

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

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>
                                                                      2003    2002
                                                                        %       %
                                                                      -----   -----
<S>                                                                   <C>     <C>
U.S. statutory income tax rate                                        (35.0)  (34.0)
                                                                      =====   =====
(Decrease) increase in income tax resulting from:
    Non-deductible equity compensation                                 (3.5)     --
    Loss in subsidiaries not recognized for tax purposes                1.5    (6.8)
    Recognized tax benefit of subsidiary foreign loss carryforwards    19.0      --
    Unrecognized loss carryback and carryforward
      benefits of CVF                                                    --     4.5
    Other                                                                .4    (2.2)
                                                                      -----   -----
EFFECTIVE INCOME TAX RATE                                             (17.6)  (24.9)
                                                                      =====   =====
</TABLE>

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

<TABLE>
<CAPTION>
                                                                            2003              2002
                                                                              $                 $
                                                                           --------        ----------
<S>                                                                       <C>               <C>
Change in:
    Operating Tax loss carryforward, CVF Corporation                       (684,381)        1,810,062
    Operating tax loss carryforward, subsidiaries                          (368,355)          218,742
    Capital tax loss carryforward, CVF Corporation                               --          (757,416)
    Pension obligation                                                       38,043            (3,512)
    Change in accounting principal                                           86,444             5,722
    Lack of tax basis for technology                                       (102,392)         (296,245)
    Other                                                                   211,504            (5,265)
    Change in valuation allowance                                           476,030        (1,276,613)
                                                                           --------        ----------
                                                                           (340,107)         (304,525)
                                                                           --------        ----------
</TABLE>

                                                                            F-31
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                   [Expressed in U.S. Currency]

9. 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>
                                                                                         2003           2002
                                                                                           $              $
                                                                                      ----------      ----------
<S>                                                                                   <C>             <C>
Deferred tax assets:
U.S.
    Operating tax loss carryforward                                                      827,319         142,938
    Capital loss carry-forward                                                           757,416         757,416
    Related to pension obligation                                                        196,335         158,292
    Related to a change in accounting principle                                               --          86,444
    Related to the unrealized loss attributable to
       securities available for sale valued at market                                      4,080           3,015
    Less: Valuation allowance                                                         (1,785,150)     (1,148,105)
                                                                                      ----------      ----------
                                                                                              --              --
                                                                                      ----------      ----------
Deferred tax liabilities:
U.S.
    Related to lack of tax basis for technology                                           77,520         179,912
    Other                                                                                291,046          79,542
                                                                                      ----------      ----------
                                                                                         368,566         259,454
                                                                                      ----------      ----------
NET DEFERRED TAX (LIABILITY)                                                            (368,566)       (259,454)
                                                                                      ==========      ==========

Deferred tax assets:
Foreign
    Income tax losses available for carryforward in subsidiaries                       3,497,702       3,129,347
    Less: Valuation allowance                                                         (2,968,332)     (3,129,347)
                                                                                      ----------      ----------
NET DEFERRED TAX ASSET - FOREIGN                                                         529,370              --
                                                                                      ==========      ==========
</TABLE>

                                                                            F-32
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                   [Expressed in U.S. Currency]

9. INCOME TAXES CONT'D

At December 31, 2003, the Company has losses available for carryforward in
certain of its Canadian subsidiaries of approximately $11,698,000 [$10,473,000
in 2002] available to reduce future years' income for tax purposes in these
subsidiaries. These losses expire as follows:

<TABLE>
<CAPTION>
             $
        ----------
<S>     <C>
2004     2,379,000
2005     1,451,000
2006     2,387,000
2007     1,434,000
Beyond   4,047,000
        ----------
        11,698,000
        ==========
</TABLE>

At December 31, 2003, the Company has U.S. losses available for carryforward of
approximately $2,433,000 available to reduce future years' income for tax
purposes through 2023.

10. 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 nil [5,000 in 2002] common
         shares for aggregate cash consideration $nil [$1,045 in 2002]. These
         shares are held in treasury for possible reissuance.

                                                                            F-33
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                   [Expressed in U.S. Currency]

10. 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, 2003, an amount of $20,001 [$16,828 at December 31,
         2002] has been accrued in respect of cumulative unpaid dividends.

         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, 2003, an amount of
         $338,500 [$271,357 at December 31, 2002] has been accrued in respect of
         cumulative unpaid dividends on the Series B Preferred. During the year,
         nil common shares [2002. 34,131] of the Company were issued to holders
         of the Series B Preferred as payment for cumulative dividends on the
         Series B Preferred.

                                                                            F-34
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                   [Expressed in U.S. Currency]

10.  STOCKHOLDERS' EQUITY CONT'D

[b]  PREFERRED STOCK CONT'D

     SERIES B CONVERTIBLE PREFERRED STOCK CONT'D

     During the year, nil Series B shares were converted to nil common shares
     [during 2002, 6,500 Series B shares were converted to 478,492 common
     shares]. The transaction was valued at $nil [2002- $65,000] 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
     [See note 19 for renegotiated terms subsequent to year end.]

[c]  WARRANTS

     There are 1,132,784 Warrants outstanding at December 31, 2003 [1,132,784 at
     December 31, 2002].

     The Warrants outstanding at December 31, 2002, included 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.

                                                                            F-35
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                   [Expressed in U.S. Currency]

10.  STOCKHOLDERS' EQUITY CONT'D

[c]  WARRANTS CONT'D

     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 - 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)

Current year other comprehensive (loss)       (9,054)      (674,648)      (683,702)
                                            --------     ----------     ----------
BALANCE - DECEMBER 31, 2003                    4,509     (1,754,800)    (1,750,291)
                                            ========     ==========     ==========
</TABLE>

                                                                            F-36
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                   [Expressed in U.S. Currency]

10.  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>
2002                  --         (551,905)        223,967      (327,938)
2003                  --          (15,242)          6,188        (9,054)
</TABLE>

11.  LOSS PER SHARE

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

<TABLE>
<CAPTION>
                                                         2003           2002
                                                           $              $
                                                      ----------     ----------
<S>                                                   <C>            <C>
Numerator:
  Net (loss)                                          (2,286,606)    (1,779,634)
  Dividends on Series A preferred stock                   (3,173)        (3,096)
  Dividends on Series B preferred stock                 (338,500)      (271,357)

                                                      ----------     ----------
  Numerator for basic and diluted (loss) per share
     (loss) attributable to common stockholders       (2,628,279)    (2,054,087)
                                                      ----------     ----------
Denominator:
  Denominator for basic and diluted (loss) per
     share - weighted average shares outstanding      10,749,035     10,376,016

                                                      ----------     ----------
Basic and diluted (loss) per share                         (0.24)         (0.20)

                                                      ----------     ----------
</TABLE>

                                                                            F-37
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                   [Expressed in U.S. Currency]

12.  BUSINESS AQUISITION AND SUPPLEMENTARY SUBSIDIARY INFORMATION

[a]  GEMPRINT

     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, 2003 Cdn. $250,000, U.S. $192,850 [at December 31, 2002 Cdn.
     $250,000, U.S. $159,000]. 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 $529,180 [$388,596 in 2002] have been accrued in
     these consolidated statements and included in trade payables and accrued
     liabilities.

                                                                            F-38
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                   [Expressed in U.S. Currency]

12.  BUSINESS AQUISITION AND SUPPLEMENTARY SUBSIDIARY INFORMATION CONT'D

[b]  PREFERRED AND NON-VOTING STOCK OF SUBSIDIARIES

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

<TABLE>
<CAPTION>
                                                                   2003               2002
                                                                     $                  $
                                                                  -------            -------
<S>                                                               <C>                <C>
Gemprint Class B and C voting shares                              192,850            159,000
                                                                  -------            -------
                                                                  192,850            159,000
                                                                  =======            =======
</TABLE>

[c]  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. 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].

13.  STOCK BASED COMPENSATION

During 2003, the Company granted 505,000 [nil in 2002] 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, 2003 was $0.41
($0.16 at December 31, 2002), additional compensation expense of $351,250 (nil
in 2002) was recorded.

                                                                            F-39
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                   [Expressed in U.S. Currency]

13.  STOCK BASED COMPENSATION - CONT'D

The following is a summary of stock option activity:

<TABLE>
<CAPTION>
                                                           WEIGHTED
                                                            AVERAGE
                                                           EXERCISE
                                                            PRICE
                                                  SHARES      $
                                                ---------  --------
<S>                                             <C>        <C>
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
                                                ---------    ----
   Granted during the year                        505,000    0.30
   Expired during the year                             --      --
                                                ---------    ----
OUTSTANDING DECEMBER 31, 2003                   1,920,500    0.20
                                                ---------    ----
</TABLE>

All of the 1,920,500 stock options outstanding at year-end are exercisable.

At December 31, 2003, the weighted average life of outstanding and exercisable
options was 5.0 years [5.0 in 2002 and 5.0 in 2001].

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.

                                                                            F-40
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                   [Expressed in U.S. Currency]

13.  STOCK BASED COMPENSATION CONT'D

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, 2003 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, 4,218,000 of which are exercisable at December 31, 2003. These
     options have a weighted average price of Cdn. $0.05 per share which were
     repriced during 2003 from $0.20 per share. Of the options outstanding, none
     were granted in 2003 or 2002. Gemprint has a total of 47,653,161 shares
     outstanding as at December 31, 2003. These options are now subject to
     variable plan accounting using the intrinsic value method. No additional
     compensation expense was recorded in 2003, since there was no intrinsic
     value with these options at December 31, 2003.

[b]  A total of up to 1,690,002 options to purchase shares of Biorem, subject to
     certain future events are outstanding. These options are exercisable
     under certain conditions relating to anti-dilution clauses, 1,690,002 of
     which are exercisable at December 31, 2003. These options have a weighted
     average exercise price of Cdn. $0.40 per share. Up to 1,187,002 option
     shares were granted to the employees of the company, subject to the
     finalization of the future events and the previous options granted were
     repriced at $0.40 per share. Biorem has a total of 1,421,431 shares
     outstanding as at December 31, 2003. These options are now subject to
     variable plan accounting using the intrinsic value method. An additional
     $143,795 of additional compensation expense was recorded for 2003, the
     estimated intrinsic value of such 503,000 repriced options.

[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, 14,740 are exercisable at
     December 31, 2003. SRE has a total of 1,566,149 shares outstanding as at
     December 31, 2003.

                                                                            F-41
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                   [Expressed in U.S. Currency]

14.  SUPPLEMENTARY INFORMATION ON CASH FLOWS

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

<TABLE>
<CAPTION>
                                                   2003        2002
                                                     $          $
                                                ----------   --------
<S>                                             <C>          <C>
Depreciation and amortization                      436,090    404,855
Impairment of intangible asset                          --    495,690
Loss from equity investees                              --     48,702
Impairment of holdings                                  --    325,560
Shares issued in lieu of cash                           --     36,065
Gain on sale of holdings                            (7,461)  (253,478)
Minority interest in losses of subsidiaries       (171,286)  (219,667)
Warrants compensation                                   --     34,767
Deferred income tax expense                       (526,386)  (532,210)
Pension expense                                     63,534     47,611
Stock option compensation                          495,045         --
                                                ----------   --------
                                                   289,536    387,895
                                                ==========   ========
</TABLE>

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

<TABLE>
<CAPTION>
                                                   2003        2002
                                                     $          $
                                                ----------   --------
<S>                                             <C>          <C>
Decrease (increase) in trade receivables        (1,228,697)   100,766
Decrease (increase) in inventory and other         (77,809)   334,220
(Increase) decrease in income taxes receivable      43,037   (492,918)
Increase (decrease) in accounts payables and
   accrued liabilities                           1,533,788    167,948
                                                ----------   --------
                                                   270,319    110,016
                                                ==========   ========
</TABLE>

                                                                            F-42
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                   [Expressed in U.S. Currency]

14.  SUPPLEMENTARY INFORMATION ON CASH FLOWS CONT'D

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

[a]  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.

15.  SEGMENTED INFORMATION

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.

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.

                                                                            F-43
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003                                   [Expressed in U.S. Currency]

15.  SEGMENTED INFORMATION CONT'D

Sales of approximately $1,265,100 [$2,092,000 in 2002] 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, 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% in 2002; 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-44
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

15. SEGMENTED INFORMATION CONT'D

<TABLE>
<CAPTION>
                                                                  MACHINE     IDENTIFICATION    NATURAL     CORPORATE
                                                 BIOREMEDIATION   CONTROLS       SYSTEMS      FERTILIZER  ADMINISTRATION    TOTAL
                   2003                                &              $            $             $             $              $
-----------------------------------------------  --------------  ----------   --------------  ----------  -------------- -----------
<S>                                              <C>             <C>          <C>             <C>         <C>            <C>
SALES                                               6,189,488     1,518,323       712,592        283,666           --     8,704,069
                                                    ---------    ----------     ---------       --------   ----------    ----------
Income (loss) from operations before
 depreciation and research and development          1,142,041      (659,278)      (69,241)      (672,194)  (1,831,922)   (2,090,594)
Depreciation                                           23,237        15,281         7,564             --        5,172        51,254
Research and development                              168,505       278,555         8,392         49,161           --       504,613
                                                    ---------    ----------     ---------       --------   ----------    ----------
Income (loss) from operations before other
 income (expenses)                                    950,299      (953,114)      (85,197)      (721,355)  (1,837,094)   (2,646,461)
Interest income                                            --            --         2,463             --        3,422         5,885
Interest (expense)                                    (90,436)      (20,015)      (82,591)            --      (59,214)     (252,256)
Other income (expense)                                 (1,204)      (66,309)       11,447        195,614     (229,374)      (89,825)
(Loss) gain on sale of holdings                            --            --            --             --       (1,621)       (1,621)
                                                    ---------    ----------     ---------       --------   ----------    ----------
Segment income (loss) before (recovery) of
 income taxes                                         858,659    (1,039,438)     (153,878)      (525,741)  (2,123,881)   (2,984,278)
                                                    ---------    ----------     ---------       --------   ----------    ----------
(Recovery) of income taxes                           (474,378)           --            --       (134,389)      82,381      (526,386)
                                                    ---------    ----------     ---------       --------   ----------    ----------
Net income (loss)                                   1,333,037    (1,039,438)     (153,878)      (391,352)  (2,206,262)   (2,457,892)
Minority interest                                          --        74,288        96,998             --           --       171,286
                                                    ---------    ----------     ---------       --------   ----------    ----------
NET INCOME (LOSS) FROM CONTINUING OPERATIONS        1,333,037      (965,150)      (56,880)      (391,352)  (2,206,262)   (2,286,606)
                                                    =========    ==========     =========       ========   ==========    ==========

Depreciation and amortization                          23,237        15,281         7,564        384,836        5,172       436,090
Capital expenditures                                   27,161         5,668          (440)            --           --        32,389
Segment assets                                        152,366       212,348     1,258,548        229,340        1,509     1,854,111
Segment goodwill (included in segment assets)          50,644       154,470     1,200,108             --           --     1,405,222
Segment technology (included in segment assets)            --            --            --        228,001           --       228,001
</TABLE>

                                                                            F-45
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

15.  SEGMENTED INFORMATION CONT'D

<TABLE>
<CAPTION>
                                                                  MACHINE     IDENTIFICATION    NATURAL     CORPORATE
                                                 BIOREMEDIATION   CONTROLS       SYSTEMS      FERTILIZER  ADMINISTRATION    TOTAL
                   2002                                &              $            $             $             $              $
-----------------------------------------------  --------------  ----------   --------------  ----------  -------------- -----------
<S>                                              <C>             <C>          <C>             <C>         <C>            <C>
SALES                                               2,713,971     2,270,573        613,793       325,175          --      5,923,512
                                                    ---------     ---------      ---------    ----------   ----------    ----------
(Loss) income from operations before
 depreciation and research and development            564,350      (517,256)        49,534    (1,197,323)  (1,390,500)   (2,491,195)
Depreciation                                           29,631        17,525          7,107            --        8,992        63,255
Research and development                               83,446       259,704        (28,216)       71,839           --       386,773
                                                    ---------     ---------      ---------    ----------   ----------    ----------
(Loss) from operations before other income
 (expenses)                                           451,273      (794,485)        70,643    (1,269,162)  (1,399,492)   (2,941,223)
Interest income                                            --         1,886          1,061            --        2,196         5,143
Interest (expense)                                    (33,411)       (8,723)       (75,476)           --      (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                                         417,862      (801,322)        (3,772)   (1,269,162)  (1,544,212)   (3,200,606)
                                                    ---------     ---------      ---------    ----------   ----------    ----------
(Recovery) of income taxes                                 --            --         (4,776)     (120,068)    (671,980)     (796,824)
                                                    ---------     ---------      ---------    ----------   ----------    ----------
Net (loss)                                            417,862      (801,322)         1,004    (1,149,094)    (872,232)   (2,403,782)
Minority interest                                          --       219,667             --            --           --       219,667
                                                    ---------     ---------      ---------    ----------   ----------    ----------
NET INCOME (LOSS) FROM CONTINUING OPERATIONS          417,862      (581,655)         1,004    (1,149,094)    (872,232)   (2,184,115)
                                                    =========     =========      =========    ==========   ==========    ==========

Depreciation and amortization                          29,632        17,525          7,107       341,600        8,992       404,855
Capital expenditures                                   17,311            --         37,734            --           --        55,045
Segment assets                                        132,717       211,063      1,255,358       530,733        5,830     2,135,701
Segment goodwill (included in segment assets)          50,644       154,470      1,200,108            --           --     1,405,222
Segment technology (included in segment assets)            --            --             --       529,152           --       529,152
</TABLE>

                                                                            F-46
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003

16. COMMITMENTS

The Company leases office equipment and property under operating leases expiring
in various years through 2008.

Minimum future rental payments under non-cancelable operating leases having
remaining terms in excess of one year as of December 31, 2003 for each of the
next four years and in aggregate are:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31                                           $
----------------------                                        -------
<S>                                                           <C>
2004                                                          163,634
2005                                                          111,487
2006                                                           72,321
2007                                                            8,014
Beyond                                                          4,306
                                                              -------
TOTAL MINIMUM FUTURE RENTAL PAYMENTS                          359,762
                                                              =======
</TABLE>

Rental expense for the year was $195,750 [$177,881 for 2002].

17. CONTINGENCIES

The Company is currently under an audit by the Internal Revenue Service ("IRS").
As part of the routine audit, the IRS indicated that they reviewed the treatment
of capital losses claimed in the prior year and refunds of $2,532,000 received
in 2001. A proposed deficiency in federal income tax was issued by the IRS on
December 1, 2003 totaling $2,969,123. On February 5, 2004 CVF issued a formal
protest to the proposed reassessment and it is expected that this will now go
before appeals at the IRS. If it is not resolved at the appeals level of the
IRS, CVF intends to challenge the IRS ruling in federal tax court, as CVF and
its legal counsel strongly believes its original deductions were correctly
taken. This process could take up to 2 more years to be resolved.

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

Litigation has commenced in the civil courts in Ontario, Canada in early 2004 by
a minority shareholder of Biorem concerning the restructuring of convertible
debt instruments that CVF holds in Biorem. This litigation names CVF, Biorem,
Robert Nally, and Brian Herner (CEO of Biorem) as defendants. CVF views this
litigation as totally without merit and plans to vigorously defend against it.
CVF does not anticipate any material adverse consequence as a result of this
lawsuit.


                                                                            F-47
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003

17. CONTINGENCIES CONT'D

financial position. See Note 19. (Subsequent Event) for restructuring of this
after December 31, 2003.

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.

18. 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.

19. SUBSEQUENT EVENTS

In February 2004 the Company's outstanding Series B Convertible Preferred Stock
was restructured in a transaction agreed to with the holder of this stock. The
holder exchanged its Series B Convertible Preferred Stock with a stated value of
$3,385,000 and accrued dividends of approximately $673,600 for 1,000,000 shares
of the Company's common stock and a new Series C 6% Convertible Preferred Stock
with a stated value of $1,000,000, convertible into common stock at $1 per
share. The Series C Preferred will be subject to mandatory redemption on
February 27, 2006; however, the Company's obligation to redeem will be limited
to cash available to it at that time in excess of one year's prospective working
capital. The Company also issued to the former Series B holder a three-year
warrant to purchase 100,000 shares of the Company's common stock at an exercise
price of $0.35 per share.

As of March 23, 2004 SRE as a result of signing a Memorandum of Agreement has
received $500,000 Cdn investment in new equity into the Company. As part of the
requirements of the new investment all debt in the Company excluding $390,000
Cdn held by other shareholders of the Company is converted into equity. The net
result of the new investment and the restructuring of the debt is that CVF will
hold approximately 37% of the current shares of SRE.

                                                                            F-48
<PAGE>

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

Previously reported.

ITEM 8A          CONTROLS AND PROCEDURES

     (a)  The Company carried out an evaluation, under the supervision and with
          the participation of the Company's management, including the Company's
          Chief Executive Office and Chief Financial Officer, of the
          effectiveness of the design and operation of the Company's disclosure
          controls and procedures. Based upon that evaluation, the Company's
          Chief Executive Officer and Chief Financial Officer concluded that the
          Company's disclosure controls and procedures are effective as of the
          period covered by this report. 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 changes in the Company's internal control over
          financial reporting in the last fiscal quarter that has materially
          affected or is reasonably likely to materially affect the Company's
          internal control over financial reporting.

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:

<TABLE>
<CAPTION>
NAME                     AGE                       POSITION
-----------------        ---       ---------------------------------------------
<S>                      <C>       <C>
Jeffrey I. Dreben         58       Director; Chairman, Chief Executive
                                   Officer; and President
Robert B. Nally           56       Director; Chief Operating Officer, Chief
                                   Technology Officer, Secretary; and Treasurer
Robert L. Miller          52       Chief Financial Officer
Lawrence M. Casse         47       Vice President
George A. Khouri          57       Director; Consultant
Robert H. Glazier         55       Director
</TABLE>

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

<PAGE>

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 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. 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.

Although all members of the Company's audit committee are financially literate
and have substantial experience with analyzing and evaluating financial
statements, the Board of Directors has determined that no one member has all of
the attributes necessary to qualify as an audit committee financial expert as
defined by the SEC. The Company believes the audit committee has sufficient
expertise to perform its functions notwithstanding the absence of an audit
committee financial expert. Furthermore, the Company believes it would be
impractical to add a member to the audit committee who would qualify as such an
expert given the Company's small size and the limited resources it possesses to
compensate such an expert.

CVF has adopted a Code of Business Conduct and Ethics covering its financial
officers and CEO. Interested parties can write to the Company at its
Williamsville, New York office to obtain a copy at no cost.

Section 16(a) Beneficial Ownership Reporting Compliance

During the fiscal year 2003 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, 2003 (the "Named
Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                            Long Term Compensation
                                                                             ---------------------
                                                 Annual Compensation                Awards Payouts
                                         ---------------------------------------------------------
                                                                 Restricted   Securities
    Name and        Year                           Other Annual    Stock      Underlying    LTIP    All Other
   Principal        Ended   Salary        Bonus    Compensation   Award(s)   Options/SARs  Payouts  Compensation
    Position       Dec 31     $             $           $             $          (#)         $           $
-----------------  ------  --------      --------  ------------  ----------    ----------  -------  ------------
<S>                <C>     <C>           <C>       <C>           <C>         <C>           <C>      <C>
Jeffrey I. Dreben   2003   $136,000      $      0  $          0  $        0     100,000    $     0  $          0
  CEO and           2002   $162,167      $      0  $          0  $        0           -    $     0  $          0
  President         2001   $200,000      $ 30,000  $          0  $        0           -    $     0  $          0

Robert B. Nally     2003   $151,988 (1)  $      0  $          0  $        0     100,000    $     0  $          0
  COO, CTO,         2002   $134,920 (2)  $      0  $          0  $        0           -    $     0  $          0
  Secretary and     2001   $129,220 (3)  $ 30,000  $          0  $        0           -    $     0  $          0
  Treasurer
</TABLE>

(1)     Paid in Canadian currency but translated in the table to U.S. Currency.
        Based on the average exchange rate for 2003 of CND $1 = US $.7174

<PAGE>

(2)     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

(3)     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

OPTION GRANT TABLE

<TABLE>
<CAPTION>
                         # Option      % to all   exercise price  expiration
       Name            Shares Granted  employees    per share        date
-----------------      --------------  ---------  --------------  ----------
<S>                    <C>             <C>        <C>             <C>
Jeffrey I. Dreben         100,000        32.8         $0.30        8/28/10
Robert B. Nally           100,000        32.8         $0.30        8/28/10
</TABLE>

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

<TABLE>
<CAPTION>
                                                                    Value of
                                                                  Unexercised
                                               Unexercised        In-the-money
                                                Options at         Options at
                      Shares                   Dec. 31, 2003     Dec. 31, 2003
                     Acquired      Value       Exercisable/        Exercisable/
     Name           On Exercise   Realized     Unexercisable      Unexercisable
------------------  -----------   --------    --------------     ---------------
<S>                 <C>           <C>         <C>                <C>
Jeffrey I. Dreben       NIL         NIL        560,000/NIL         $126,000/NIL
Robert B. Nally         NIL         NIL        560,000/NIL         $126,000/NIL
</TABLE>

Director's Fees. CVF does not currently pay any additional fees to the directors
who are also officers of or consultants to CVF except as disclosed below. 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. Messr Khouri and Glazier each received options
during 2003 to purchase 100,000 CVF common shares at an exercise price of $.32.

Change of Control Agreements. Messrs. Dreben and Nally are each a party to a
change of control agreement with CVF. These agreements provide that in the event
the executive's employment is terminated or the executive terminates employment
for good reason, in either case, within the three year period following a change
of control of CVF, then CVF is obligated to provide the executive (i) his
average annual base salary or consulting fees and bonuses during the five years
preceding the change of control for a continuing period of three years, (ii) up
to $25,000 for outplacement services, (iii) up to three years of continuing
benefits in effect on the date of the change of control, and (iv) immediate
vesting and extension of exercisability of any options or restricted stock.
Under these agreements, a "change of control" occurs on (i) the sale of all or
substantially all of CVF's assets, (ii) any person becoming the owner of more
than 20% of CVF's voting stock, (iii) the first day on which a majority of
directors of CVF are not directors in office on the date of the agreement,
directors nominated by such in-office directors or directors nominated by any
directors so nominated, or (iv) the first day on which Messrs. Dreben and Nally
constitute less than 50% of the board of directors. Under these agreements,
"good reason" means (i) the assignment to the executive of duties inconsistent
with his position or any diminishment of his position, authority or duties, (ii)
requiring the executive to be based in a location other than where he was based
prior to the change of control or requiring excess or inappropriate travel,
(iii) any purported termination of any employment or consulting arrangement
between the executive and CVF, or (iv) any failure by CVF or any successor to
comply with and satisfy the terms of the services agreement between CVF and D
and N Consulting. This description is just a summary. See exhibit 10 (iv) to
this Annual Report for a complete copy of the form of change of control
agreements.

<PAGE>

ITEM 11          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Voting Securities and Principal Holders

The following table sets forth, as of March 12, 2004, 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.

<TABLE>
<CAPTION>
                                            NUMBER OF       PERCENTAGE OF
                                          COMMON SHARES     COMMON SHARES
           NAME AND ADDRESS             BENEFICIALLY OWNED     OWNED
--------------------------------------  ------------------  -------------
<S>                                     <C>                 <C>
Jeffrey I. Dreben (1)                         919,327             6.4%
8604 Main Street, Suite 1
Williamsville, NY 14221

Robert B. Nally (1)                         1,087,423             7.6%
8604 Main Street, Suite 1
Williamsville, NY 14221

George Khouri (4)                             225,000             1.6%
8604 Main Street, Suite 1
Williamsville, NY 14221

Robert Glazier (5)                            200,000             1.4%
8604 Main Street, Suite 1
Williamsville, NY 14221

Brant Investments Limited                   1,235,731             8.6%
c/o Royal Trust Corporation
 of Canada
Global Bank Plaza
200 Bay Street
Toronto, Ontario M5J 2J5

The Shaar Fund Ltd. (6)                     1,192,785             8.3%
c/o Citco Funds Services, Curacao
Kaya Flamboyan 9
Curacao, Netherland Antilles

Directors and Officers                      2,671,750            18.7%
as a Group (6 persons) (1)(2)(3)(4)(5)
</TABLE>

(1) Messr. Dreben's amount includes 100,000 options and Messr. Nally's amounts
includes 560,000 options to acquire CVF's common shares at an option price of
$0.30 for 100,000 options, $0.16 for 460,000 options and 324,326 warrants to
acquire CVF's common shares at a price of $0.16 per common share. Included under
Messr. Dreben are 495,001 shares respectively owned by his wife to which he
disclaims beneficial ownership. Included under Messr. Nally are 149,144, 26,000
and 27,000 shares respectively owned by his wife, son and daughter to which he
disclaims beneficial ownership.

(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 and 60,000 options to acquire common stock of CVF at an exercise price
of $0.30 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
and 15,000 options to acquire common stock of CVF at an exercise price of $0.30
per share.

(4) Mr. Khouri, a Director of CVF, has been issued 125,000 options to acquire
CVF common shares at an option price of $0.16 per share and 100,000 options to
acquire common stock of CVF at an exercise price of $0.30 per share.

<PAGE>

(5) Mr. Glazier, a Director of CVF, has been issued 100,000 options to acquire
CVF common shares at an option price of $0.16 and 100,000 options to acquire
common stock of CVF at an exercise price of $0.30 per share.

(6) Based solely on a Schedule 13G dated March 5, 2004 filed with the SEC.

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 is 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. A failure
by CVF or any successor to comply with its obligations under the Services
Agreement following a change in control shall constitute grounds for Messr.
Dreben or Nally to terminate employment and invoke the benefits of their change
in control agreements described above.

Consulting arrangement with Mr. Khouri. The monthly fee payable to Mr. Khouri
under this consulting agreement is $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 Service 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 Service
Agreement, Michael Dreben will identify, analyze and assist in closing funding
and merger and acquisition opportunities for CVF and the Corporations. In return
for these services and instead of a salary Michael Dreben received warrants
over an 18 month period to purchase 180,000 shares of CVF's common stock. These
warrants vested monthly over the term of the agreement. The Service Agreement
also entitles Michael Dreben to receive a cash fee upon the closing of such
funding and merger and acquisition opportunities. Subsequently Michael Dreben
received an annual salary of $106,000 and has not received any additional
warrants, options or shares. The Service Agreement terminates upon 30 days'
prior written notice by either party. Michael Dreben brings to CVF 7 years of
experience in the investment field, most recently with Goldman Sachs.

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 was payable upon receipt of the income tax refund which was received in
March 2003 and the loan subsequently repaid. Mr. Khouri received interest of
$9,863 for this loan.

<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)  Certificate of Designation of Series C 6% Convertible Preferred Stock,
          as amended

(3)(iv)   By-laws

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

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

(10)(ii)  Common Stock Purchase Warrant dated February 27, 2004 in favor of The
          Shaar Fund Ltd.

(10)(iii) Exchange Agreement dated February 27, 2004 between CVF and The Shaar
          Fund Ltd.

(10)(iv)  Form of Change in Control Agreement between CVF and Jeffrey Dreben and
          Robert Nally

(21)      Subsidiaries of the Registrant, filed herewith.

(31.1)    Certification of Chief Executive Officer Pursuant to Section 302 of
          the of the Sarbanes Oxley Act of 2002.

(31.2)    Certification of Chief Financial Officer Pursuant to Section 302 of
          the of the Sarbanes Oxley Act of 2002.

(32)      Certificates 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          PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following paragraphs describe the aggregate fees that were charged by Ernst
& Young, and Radin Glass & Co. for the fiscal years ended December 31, 2002 and
December 31, 2003.

Audit Fees.

CVF was charged $192,713 and $19,730 respectively for the fiscal years ended
December 31, 2002 and December 31, 2003 by Ernst & Young for the audit of CVF
and the review of the financial statements included in CVF's quarterly reports.
CVF was charged $97,713 by Radin Glass & Co for the fiscal year ended December
31, 2003 for the audit of CVF and the review of the financial statements in
CVF's quarterly reports.

Tax Fees.

CVF was charged $30,275 for the tax return preparation by Ernst & Young for the
year ended December 31, 2002. CVF was charged $54,095 and $9,685 respectively
for the fiscal years ended December 31, 2002 and December 31, 2003 by Ernst &
Young for services rendered related to the on-going audit by the Internal
Revenue Service.

<PAGE>

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: March 30, 2004

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.

<TABLE>
<CAPTION>
Signature                                 Title                       Date
---------                                 -----                       ----
<S>                                   <C>                         <C>
/s/ Jeffrey I. Dreben                 Director                    March 30, 2004
------------------------
Jeffrey I. Dreben

/s/ Robert B. Nally                   Director                    March 30, 2004
------------------------
Robert B. Nally

/s/ Robert H. Glazier                 Director                    March 30, 2004
------------------------
Robert H. Glazier

/s/ George A. Khouri                  Director                    March 30, 2004
------------------------
George A. Khouri

/s/ Robert L. Miller                  Chief Financial Officer     March 30, 2004
------------------------              (Principal Financial
Robert L. Miller                      and Accounting Officer)
</TABLE>

<PAGE>

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit No.                              Name
-----------                              ----
<S>           <C>
(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)      Certificate of Designation of Series C 6% Convertible Preferred
              Stock, as amended

(3)(iv)       By-laws

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

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

(10)(ii)      Common Stock Purchase Warrant dated February 27, 2004 in favor of
              The Shaar Fund Ltd.

(10)(iii)     Exchange Agreement dated February 27, 2004 between CVF and The
              Shaar Fund Ltd.

(10)(iv)      Form of Change in Control Agreement between CVF and Jeffrey Dreben
              and Robert Nally

(21)          Subsidiaries of the Registrant, filed herewith.

(31.1)        Certification of Chief Executive Officer Pursuant to Section 302
              of the of the Sarbanes Oxley Act of 2002.

(31.2)        Certification of Chief Financial Officer Pursuant to Section 302
              of the of the Sarbanes Oxley Act of 2002.

(32)          Certificates Pursuant to 18 U.S.C. 1350 As Adopted Pursuant to
              Section 906 of the Sarbanes-Oxley Act of 2002.
</TABLE>