<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, 2001.

                         COMMISSION FILE NUMBER 00-29266

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

<TABLE>
<S>                                         <C>
               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)
</TABLE>

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

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

<TABLE>
<S>                                    <C>
Title of each class                    Name of each exchange on which registered
--------------------------------       -----------------------------------------
Common Stock ($0.001 par value)        American Stock Exchange
</TABLE>

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: $12,351,334.

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) on
March 15, 2002 was approximately $1,381,664. 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 15,
2002 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 15, 2002:

                         Common Stock: 10,201,219 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") is
involved in the business of developing and managing start-up and early stage
companies primarily engaged in the information technology and environmental
technology sectors. CVF's mandate is to acquire significant holdings in new and
emerging technology companies and then to assist them in their management, and
through them to engage in their respective businesses. CVF's current holdings
include investments made in its investee companies during the period from 1989
to the present.

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

After CVF's initial investment, an investee company often requires additional
capital to meet its business plan. Consequently, the Company actively assists
its investee companies in obtaining additional capital which is usually sourced
through CVF's own resources or via other participants. CVF's ability to continue
to provide assistance to its investees is subject to the limitations of its own
financial resources. CVF has incurred losses over the past year and the past
three years. These losses have depleted the Company's cash reserve which
significantly limits the Company's ability to assist its investees. 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
CORPORATION                                         VOTING SECURITIES
-----------                                         -----------------
<S>                                                 <C>
 1. SRE Controls Inc.                                      75%
 2. Dantec Corporation                                     54%
 3. Biorem Technologies Inc.                               69%
 4. Gemprint(TM)Corporation                                65%
 5. Ecoval Corporation                                     88%
 6. CVF Capital Management Corporation                    100%
 7. CVF Technologies International, Inc.                  100%
 8. Eastview Marketing One LLC                            100%
 9. Grand Island Marketing Two LLC                        100%
10. Grand Island Marketing Inc.                           100%
11. Petrozyme Technologies Inc.                            50%
12. IMT Systems Inc.                                       47%
13. TurboSonic Technologies, Inc.                           9%
14. RDM Corporation                                         5%
15. WZ.COM INC.                                             4%
</TABLE>

The Corporations

With the exception of TurboSonic Technologies, Inc. and RDM Corporation, 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
<PAGE>
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. Some of the Corporations are not actively involved in
operating a technology business, but provide management services to other
Corporations, act as holding companies or are inactive.

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

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, 2001 and in the comparative
balances for the previous two years as shown in the Financial Statements
included in Part II, Item 7 of this Form 10-KSB.

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

1. SRE Controls Inc. ("SRE")

SRE (www.srecontrols.com), based in Waterloo, Ontario, designs, manufactures and
markets a range of high efficiency programmable electronic motor speed control
products for electric vehicles. Examples of the kind of vehicles that use SRE's
products are material handling equipment (e.g. forklift trucks), aircraft Ground
Support Equipment (GSE), and Neighborhood Electric Vehicles (NEVs). SRE supplies
its controller products to both Original Equipment Manufacturers (OEMs) of
vehicles through direct sales and to the aftermarket through 60 dealers with
over 200 locations throughout North America.

SRE continuously improves and adds to its product line in order to bring the
latest technological benefits to its customers. As a result of several years of
product development effort, SRE plans to bring unique new motor controller
products to market in 2002.These new products are expected to generate
significant revenue gains in 2002 and subsequent years. SRE's ongoing investment
in research and development continues, with joint development work planned with
several fuel cell company as the automotive industry moves toward alternate
energy sources.

2. Dantec Corporation ("Dantec")

Dantec (www.dantec.com), a technology company based in Waterloo, Ontario,
specializes in on-line product and total process optimization through the
development and implementation of advanced process controls. Dantec's technology
utilizes proprietary sophisticated process control systems. Dantec's technology
has been applied to many different processes in the food processing industry
from natural grains to aquaculture, breads and snack foods. Other industrial
applications include engineered wood, pharmaceutical and petrochemical products.
Dantec's strategy is to provide turnkey, fully automated processes, advanced
control solutions and enterprise-wide information systems to its customers
worldwide.

In 2001, Dantec continued to focus on growing its business in the food
processing industry and industrial market sectors mentioned above. It will
continue this focus in 2002 and will continue to develop its strategy of
delivering a turnkey approach to its clients on an exclusive basis.

On April 12, 2002 the Company agreed to sell its interest in Dantec. The agreed
selling price approximates CVF's carrying value for Dantec.

3. Biorem Technologies Inc. ("Biorem")

Biorem (www.biorem.biz), an industrial biotech company based in Guelph, Ontario,
is engaged in the business of applying bioconversion and biotransformation
technology to municipal and industrial environmental
<PAGE>
applications. The business 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 numerous large-scale biofilter installations in
the U.S. and Canada and established a network of manufacturers representatives
to provide effective coverage of the rapidly growing U.S. municipal odor control
market.

In 2000, Biorem introduced a new, superior biofilter media. Biorem also
introduced a modular product series 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. Building on its recent advances in market access and demonstrated
product effectiveness, Biorem expects strong revenue and income growth in 2002.

4. Gemprint(TM)Corporation ("Gemprint")

Gemprint (www.gemprint.com), a Toronto, Ontario based company, is in the
business of providing products and services to the jewelry industry to enable
diamonds and other precious gems to be uniquely identified non-invasively
(fingerprinted) using a patented low power laser imaging system. The results are
stored in a data base for later verification and recovery of lost or stolen
gems. Gemprint's Isi system has application with all segments of the diamond
supply chain (i.e. cutter/polishers, grading laboratories, manufacturers,
wholesalers, retailers and Internet traders). Gemprint's Isi system sells for
approximately $7,500. A $15.00 fee is 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).

In 2000 Gemprint signed three important agreements employing the use of its
technology: (1) a contract with the Government of the Northwest Territories of
Canada to design a 'Northern' diamond certificate, to establish an on-site data
base and to Gemprint northern diamonds with two major diamond manufacturers
involved in the program; (2) an exclusive distribution agreement with Breebaart
Group of Rotterdam covering the territory of Europe; and (3) a contract to
develop a unique brand of diamond using a special application of the Gemprint
technology. In addition, Gemprint has a contract in effect with Stuller Settings
of Lafayette, LA under which Gemprint certificates are offered as a value add-on
for all diamonds sold by Stuller. Gemprint is also used by several Internet
diamond traders.

5. Ecoval Corporation ("Ecoval")

Ecoval (www.naturesglory.com), was incorporated as a Delaware company on
December 21, 2000, with its headquarters located in Williamsville, N.Y. Ecoval
participated in a series of restructuring transactions involving the Ecoval
group of companies that took place during the period from December, 2000 to
February, 2001. As a result of these transactions, Ecoval replaced Ecoval Inc. a
Canadian company, as the parent company of the Ecoval group and CVF increased
its equity ownership from 31% to 88%. Ecoval carries on its operations through
its Canadian operating subsidiary, Ecoval International 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. Pesticide world wide
industry sales were $37 billion ( $11.9 billion in the U.S.) in 1997.

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

6. 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.

7. CVF Technologies International, Inc. ("CVF International")

CVF International was incorporated in the State of Delaware on January 29, 1999
for the purpose of providing a base for the expansion of the sales and marketing
efforts of the Corporations into the large and rapidly growing markets of the
southeastern U.S. CVF International is a wholly owned subsidiary of CVF.

8. Eastview Marketing One LLC ("Eastview")

Eastview was incorporated in the State of New York on December 19, 1997 for the
purpose of developing an infomercial to market in the U.S. natural fertilizers
and environmentally safe organic herbicides manufactured by Ecoval. The
commercial was completed and tested in 1998 and may be re-used in selective
markets in the future. Eastview is not currently active.

9. Grand Island Marketing Two LLC ("Grand Island 2")

Grand Island 2 was incorporated on December 17, 1997 in the State of New York.
Grand Island 2 is not currently active.

10. Grand Island Marketing Inc. ("Grand Inc.")

Grand Inc. was incorporated in the State of Delaware on January 28, 1998. Grand
Inc. holds a 61% interest in an Ontario partnership known as `Elements'.

Elements (www.Healthyelements.com), based in Toronto, Ontario, carried on the
business of operating retail stores and an internet site offering natural health
products and health services including naturopathic and homeopathic medicine,
registered massage therapy and a juice bar. In September 2001, Elements decided
to discontinue its operations. The retail store and internet site were closed
but will not be sold and the discontinuance is complete.

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 the net incomes
or losses of the Equity Investees are included in CVF's financial statements
only to the extent of CVF's percentage holdings of these entities. The net
equity positions, after share of losses, of all other investors have been
reduced to nil. As such, the Company has included 100% of the investee losses in
income rather than the percentage owned by the Company. It should be noted that
prior to December 13, 2000, CVF held only a 31% equity ownership in the Ecoval
group, which is therefore accorded accounting treatment as an Equity Investee up
to such date. From December 13, 2000 onwards, Ecoval is treated for accounting
purposes as a Consolidated Entity (see Item 6 below).
<PAGE>
CVF's two Equity Investee's are described below:

11. 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 $1.75 billion
per year.

12. IMT Systems Inc. ("IMT")

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

Less Than 20% Owned:

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

The three Less Than 20% Owned investee Corporations are as follows:

13. TurboSonic Technologies, Inc. ("TurboSonic")

TurboSonic (www.turbosonic.com), a Waterloo, Ontario public company (OTC
Bulletin Board: TSTA), designs and markets integrated pollution control and
industrial gas cooling/ conditioning systems including liquid atomization
technology and dust suppression systems to ameliorate or abate industrial
environmental problems. TurboSonic's proprietary technology is designed to
control a wide variety of air pollution control problems for industries
including pulp and paper, wood products, mining, non-ferrous metallurgical, iron
and steel, chemical, food and beverage, waste processing, hazardous and
municipal solid waste (MSW) incineration, power generation, automotive and
cement. TurboSonic believes its products, which are designed to meet the
strictest emission regulations for gaseous and particulate emissions, afford
economic and technical advantages over conventional air pollution equipment.

CVF held at December 31, 2001 949,217 common shares of TurboSonic (representing
a 9% ownership interest) which were acquired prior to 1999 at a cost of $250,235
(or approximately $.264 per share). At April 10, 2002, based on the closing
market per share price of $0.65, the market value of CVF's holding of 154,717
common shares in TurboSonic was $100,566.

14. RDM Corporation ("RDM")

RDM (www.rdmcorp.com), a Waterloo, Ontario public company (CDNX: RC), is a
leading developer of specialized software and hardware products for both
Internet e-commerce and paper payment processing. RDM provides its technologies
and solutions to banks, printers and payment processors in over 35 countries. In
2000, RDM spun off its e-Check division into Xign, Inc., a Silicon Valley-based
private company.

CVF held at December 31, 2001 971,472 common shares of RDM (representing a 5%
ownership interest) which were acquired in late 1997, early 1998, early 1999,
late
<PAGE>
2000 and early 2001 at a cost of $433,712 (or approximately US $.446 per share).
At April 10, 2002, based on the closing market per share price of US $0.628, the
market value of CVF's holding of 528,272 common shares in RDM was $331,861.

15. WZ.COM INC. ("WZ.COM")

WZ.COM (www.WZ.com), a private company incorporated in the State of Delaware, is
in the business of providing products over its website. In January, 1999, CVF
invested a total of $250,000 in the predecessor company known as NETrageous. In
February 2001 the shares in NETrageous were exchanged at no cost for 500,000
common shares in WZ.COM INC.

Number of Employees

As of December 31, 2001, CVF and its Consolidated Entities had a total of 65
full-time employees.

ITEM 2 DESCRIPTION OF PROPERTY

CVF leases premises in which its principal executive office is located at 8604
Main Street, Suite 1, Williamsville, New York on a two year lease (commencing
December 2001) with lease payments equal to $17,343 annually. All of the
business premises and facilities used by the Consolidated Entities are leased.
These facilities serve as administrative offices and manufacturing (where
appropriate) facilities. The facilities generally range in size from 2,000 to
14,000 square feet. The lease terms expire in 2002 to 2004.

ITEM 3 LEGAL PROCEEDINGS

The Company is not aware of any material pending proceedings.

ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the fourth quarter of 2001 no matter was submitted to a vote of security
holders, through the solicitation of proxies or otherwise.

                                     PART II

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

(a) Market Information

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

<TABLE>
<CAPTION>
                                                LOW            HIGH
                                               ------         ------
<S>                                            <C>            <C>
      2000  - 1st Quarter                      2.5625         6.50
            - 2nd Quarter                      2.00           4.125
            - 3rd Quarter                      2.375          3.125
            - 4th Quarter                      0.75           2.2375

      2001  - 1st Quarter                      0.50           1.93
            - 2nd Quarter                      0.55           1.04
            - 3rd Quarter                      0.25           0.95
            - 4th Quarter                      0.17           0.35
</TABLE>

(b) Holders of Record

At March 15, 2002, there were approximately 314 holders of record of CVF's
common stock.
<PAGE>
(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.

(d) Recent Sales of Unregistered Securities

In February 2001, CVF issued 18,034 of its common shares to Meighen Demers for
legal services rendered for Gemprint.

In March and April, 2001, CVF issued 41,333 of its common shares to The Equity
Group for services rendered.

In March 2001, CVF issued 25,000 of its common shares to IBM Canada Limited to
settle a lawsuit of Gemprint's.

In April 2001, CVF issued 26,899 of its common shares to Chatsworth Securities
LLC for services rendered.

In April 2001, CVF issued 27,000 of its common shares to Leo Hirsch for services
rendered.

In October 2001, CVF issued 50,000 of its common shares to Steven Gladstone for
services rendered.

In October 2001, CVF issued 50,000 of its common shares to Steven Danz for
services rendered.

In October 2001, CVF issued 3,000 of its common shares to Lesley Goldman for
services rendered.

All of the above transactions were exempt from registration under Section 4(2)
of the Securities Act of 1933, as amended.

(e) Purchase of Treasury Stock

In October 1996, CVF instituted a stock repurchase program pursuant to which it
commenced the repurchase in the marketplace or otherwise, in accordance with all
applicable securities laws, up to 300,000 of its common shares. In the fall of
1997 CVF announced plans to purchase up to an additional 100,000 shares. On
September 16, 1998 the Board of Directors of CVF approved the repurchase of up
to an additional 100,000 common shares bringing the total number of common
shares under the repurchase program to 500,000.

During 1998, 1999, 2000 and 2001, CVF repurchased 162,500 common shares, 10,800
common shares, 4,500 common shares, and 36,000 common shares respectively. The
total amount of shares repurchased by CVF to December 31, 2001 was 476,700
common shares.

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
<PAGE>
statements. Given these uncertainties, prospective investors are cautioned not
to place undo reliance on such forward-looking statements.

Factors That May Affect Future Results

CVF's current financial condition raises substantial doubt about its ability to
continue in the normal course of business as a going concern. The Company's
primary need for cash is to maintain its ability to support the operations and
ultimately the carrying values, of its individual investee companies. The
Company is actively pursuing the sale of its interests in five of its investee
companies and has retained investment bankers in order to realize value and
focus its efforts and resources. In addition, the Company is using its holdings
in public companies available for sale (which had a market value of $1,240,170
as of December 31, 2001) as a source of liquidity. Since December 31, 2001 (to
April 10, 2002) the Company has liquidated 1,238,700 shares in its public
holdings for proceeds of $ 614,860. The proceeds of such sales are being used to
increase cash reserves. In addition, 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. 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.

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 2001. It will continue its efforts to assist all of its investee companies to
realize their full potential. The ability of investee companies 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 five Consolidated Entities which are active technology businesses, namely
Ecoval, SRE, Biorem, Gemprint and Dantec, each made progress in 2001 and each
are positioned to consolidate and expand in 2002.

Ecoval continued to develop its Nature's Glory(TM) product line in 2001 with the
submission of several new patent applications including one for a herbicide
composition, a plant growth regulator, and a pre-emergent herbicide. Ecoval also
has pending patent applications for its new insecticide and fungicide
compositions. Ecoval expects that new patents will be granted during 2002. In
addition, three submissions were made to the EPA relating to registration of the
insecticide and fungicide products. Ecoval also developed an insecticide
formulation that is exempt from U.S. registration because it is composed of
ingredients that the EPA has determined pose minimal risk to the public. In
2000, a European distributor for Ecoval's herbicide obtained registration in
Sweden. In 2002, Ecoval will continue to generate sales revenues through direct
marketing efforts and by establishing key distributor relationships in North
America and abroad.

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

Biorem's sales efforts in 2001 resulted in record bookings of new sales for
Biorem. Biorem ended the business year with orders or commitments at an all time
high level in excess of $3 million. These bookings include repeat orders from
satisfied customers in the Southeast US, and the largest single order of
$850,000 in Alabama, which continue to be primary marketing areas for Biorem.
Strong bookings will carry business through the 2002 and 2003 business years and
offset the long lead cycle typical in the municipal market. The base load of
business will provide the cash flow required to continue with marketing
development in the municipal market and enable
<PAGE>
development of industrial applications. In 2001, two pilot plant trials were
implemented for the removal of organic compounds from industrial chemical
processes in the manufacturing and surface coating industries utilizing the
unique SynergyTM biofilter process. Success in these areas will develop a second
marketing front that will broaden the business base and provide additional
growth opportunity.

Gemprint's strategy of targeting all links in the diamond supply chain bore
fruit in 1999 with the completion of the Canadian Northwest Territories
Agreements and the commencement of Gemprinting of cut diamonds sourced in the
new Canadian diamond fields. Leveraging on this success, Gemprint is working to
increase sales to wholesalers, major retailers, laboratories and manufacturers
in North America, Europe and the Far East. At the same time Gemprint is working
to capitalize on its identification technology and its international data base
to become the preferred enabler for securely trading diamonds over the Internet.
In 2000 and 2001, international concern over the issue of `conflict diamonds'
heightened. The Clean Diamonds Act recently introduced in the U.S. Congress
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.

Dantec in 2001 added several major accounts with high growth potential to a
client list that already includes Weston's, Frito-Lay, Cargill, Kraft General
Foods, Kelloggs, Ralston Purina, Mars and Maple Leaf Foods. In 2002, Dantec
intends to continue sales expansion through its expanded base of major
industrial companies with worldwide multi-plant operations. CVF agreed to the
sale of Dantec on April 12, 2002. The selling price approximates CVF's
carrying value for Dantec.

CVF's Equity Investee, Petrozyme, also showed steady development in 2001 and is
positioned to make further progress in 2002.

Petrozyme has developed a process that allows oily sludges to be treated onsite.
This reduces both the treatment cost and liability associated with safely
managing these wastes. Very often these wastes are hazardous, and after
treatment with Petrozyme's technology, the treated residuals meet the EPA levels
for non-hazardous classification.

Petrozyme's process is still operational at refineries in Venezuela (5th year)
and Washington State (2nd year). Petrozyme has renewed its membership in the
Petroleum Environmental Research Forum (PERF), a cooperative environmental
research association operated by the world's leading oil companies.

While Petrozyme is an early-stage developing company and has not generated
significant revenue, it is in discussions with several global environmental
services company about a strategic alliance. If an alliance is consummated, it
will significantly increase the company's revenues and reputation.

In September of 2001, the world's largest oil company, Saudi Aramco, invited
Petrozyme to present an overview of its technology at Aramco's annual Technical
Exchange Meeting in Dhahran, Saudi Arabia. Aramco wants its waste management
practices to meet the same level of environmental safety as the EPA. While oil
service companies from around the world were in attendance to present their
various technologies and services, Petrozyme was the only oily waste treatment
company invited.

Petrozyme now has three U.S. patents and one Canadian patent, with applications
in other countries pending.

IMT continues to work on developing a traction motor for industrial electric
vehicles.

CVF's two Less Than 20% Owned Corporations which are public companies, namely
TurboSonic and RDM, both continued to make dramatic progress in 2001, continuing
into 2002. CVF is currently liquidating its positions in RDM and TurboSonic.

TurboSonic accomplished a 128% increase in sales in fiscal 2001 to $14,114,870
from $6,181,562 in 2000. Although most of TurboSonic's revenue was generated in
U.S. markets, orders were received from all over the world. TurboSonic has
announced that it has a large backlog of orders which should
<PAGE>
make fiscal 2002 another record year.

TurboSonic also announced it formed a strategic alliance with Hamon
Research-Cottrell, Inc., a major international company, with the belief that
such a partner, with established sales channels, can better market TurboSonic's
products on a global basis and that the strategic partner will benefit from
access to TurboSonic's advanced air pollution control technologies such as the
SonicKleen(TM) WESP, TurboTak Wet Scrubber and TurboSOx SO2 Recovery System.

RDM, under the leadership of its new President and CEO, Douglas Newman, achieved
record revenues in fiscal 2001 of $4,459,714. Revenues included income from
RDM's Payment Archive Service (PAS). PAS is a complementary software package to
RDM's check imaging and scanning products that provide RDM with a
transaction-fee revenue stream.

CVF will continue to provide equity and debt financing to its group of investee
companies as it assesses their needs. CVF will accomplish this with its own
funds or by assisting its investee companies in completing private placements or
public offerings for themselves, as and when appropriate.

In regards to those shares which CVF holds in its public investee companies, RDM
and TurboSonic, CVF will continue to monitor the market value of these holdings
with the view to gaining from their future sale.

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

Going concern - The 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 (which do
not include its publicly traded marketable securities) and the consolidated
company has incurred losses over the year and for the past several years, which
have reduced the company's cash reserves.

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 its individual investee
companies. The company is actively pursuing the sale of its interests in five of
its investee companies and has retained investment bankers in order to realize
value and focus its efforts and resources. In addition, the company is using its
marketable securities (which had a market value of $1,240,170 as of December 31,
2001) as a source of liquidity. The proceeds of any such sales will be used to
increase cash reserves. In addition, 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. 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.

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
<PAGE>
billings in excess of costs and accrued profit margins are included as deferred
revenue and included in 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 - Goodwill is recorded in connection with the acquisition of
subsidiaries. Goodwill also exists in connection with the acquisition of equity
basis holdings, representing the difference between the fair value of
identifiable net assets of the underlying equity interest purchased and the
amount paid for the interest. Goodwill is amortized over a period of 10 years.
Amounts amortized in connection with subsidiaries are charged to amortization
expense. The amortization of goodwill implied in the cost of equity investments
is charged to gain or loss from equity investees. The Company assesses the
recoverability of goodwill by determining whether the amortization of goodwill
over its remaining life can be recovered through projected, undiscounted, future
cash flows of the related companies. Goodwill is written down to the extent that
the carrying value exceeds fair value.

Contingencies - 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.

In 2001, the Company has been made aware that the Internal Revenue Service may
challenge the treatment of certain capital losses claimed in the prior year. The
amount claimed and received for those losses was approximately $2.53 million.
Management believes that such a claim would be without merit and accordingly has
made no provision in the accounts or in these financial statements with respect
to this matter. Should a claim be filed, management intends to defend the claim
vigorously and the resolution of such a potential claim could take several years
to resolve.

Comparison of Consolidated Results 2001 and 2000

Consolidated sales of CVF for the fiscal year amounted to $12,351,334,
representing a decrease of $4,020,254 (25%) compared to sales of $16,371,588 for
2000. 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 Eastview, Grand Island 2, Elements (results for 2001 for
Elements are included in the income statement in the lines "loss from operations
of discontinued segment" and "loss on closing of discontinued segment"), Ecoval,
SRE, Biorem, Gemprint and Dantec. (Note that Ecoval is consolidated only from
December 13, 2000 when CVF gained control).

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

Gemprint achieved an increase in sales in 2001 of $244,548 (103%) compared to
2000 due to increased Gemprint registrations by new customers. Ecoval's sales
increased by $375,427 compared to 2000 due to the company only being
consolidated from December 13, 2000 when CVF gained control. SRE's sales
decreased in 2001 by $2,698,977 (22%) from 2000 and was due to the economic
downturn. It is expected that as a result of the introduction of new products in
2002 that there will be a significant increase in sales. In 2001, SRE continued
full production on a strategic relationship contract with a major original
equipment manufacturer that began in the third quarter of 1998. Biorem's sales
decreased by $1,459,374 (65%) compared to 2000 as Biorem's business strategy was
shifted from industrial segment customers to municipality segment customers
during the year. This conversion will lead to significantly enhanced gross
profits for Biorem in the future. Dantec's sales decreased by $481,877 (31%) to
$1,098,540 in 2001 from $1,580,417 in 2000. This decrease was due to the focus
on a new system which was introduced in 2001 and pilots for this new system
placed in the field during 2001. This should result in increased sales at Dantec
in the future.
<PAGE>
CVF's gross profit of $1,572,364 for 2001 represents a decrease of $478,473
(23.3%) from 2000. This gross margin decrease is in line with the sales decline.
Gross profit as a percentage of sales increased from 12.5% in 2000 to 12.7% in
2001. SRE with a gross margin percentage of 2.1 % represented 67 % of the sales
decrease during the year. Additionally, SRE continued to reduce its usual gross
profit on the OEM relationship mentioned above in order to increase market
share. SRE plans to increase its margins on future contracts as it launches its
new products.

Selling, general and administrative expenses on a consolidated basis amounted to
$6,945,785 for 2001. This represents an increase of $500,563 or 7.8% compared to
2000. CVF's selling, general and administrative costs from Ecoval were
$1,108,202 higher compared to 2000 as that company was consolidated only from
December 13, 2000 when CVF gained control. This increase was offset somewhat by
reduced costs due to the overall decrease in sales and also decrease in investor
relations expense of $264,589 in 2001. Management continues to undertake a
concerted effort to effect an overall reduction in administrative costs.

Write down of goodwill in 2001 of $2,589,304 represents the write down taken of
the goodwill value of Dantec. A review of Dantec's operations indicated that the
goodwill would not be recovered at the level previously anticipated. In order to
achieve profits required to return goodwill at the level suggested by CVF's
investment, Dantec will require more capital. As CVF is not in a position to
provide such capital and Dantec's other resources are limited, CVF determined
that a write down of goodwill was required. The goodwill has been written down
to the estimated future cash flows from the Dantec investment, including an
estimate of the value on disposition of the position.

Research and development expenses for 2001 amounted to $816,575 compared to
$721,905 for 2000 (a 13.1% increase). Most of the increase in 2001 were due to
the results of Ecoval being consolidated in CVF's results beginning in December
2000.

Loss from operations increased to $8,779,300 in 2001 from $5,116,290 in 2000, an
increase of $3,663,010 (or 71.6%). This increase can be attributed somewhat to
lower sales but mainly to the increase in non cash expenses (i.e. goodwill
amortization, depreciation and the write down of goodwill associated with
Dantec). Loss from operations actually decreased from the prior year when
goodwill amortization, depreciation, the write down of goodwill associated with
Dantec and the consolidated loss from operations relating to Ecoval are deducted
from both the 2001 and 2000 loss from operations. When those are deducted the
loss from operations in 2001 was $4,128,295 compared to $4,541,255 or a $412,960
(9.1%) reduction.

Net interest expense increased to $168,153 in 2001 from $52,516 in 2000. This
increase in expense is due to lower average cash balances invested during 2001.

Other income of $64,369 in 2001 decreased from $124,802 in 2000. During 2000 CVF
earned a fee for assisting one of its investee companies to secure funding.

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

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

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

Minority interest portion of the loss increased to $2,821,622 in 2001 from
$249,107 in 2000. In 2001, the minority interest shared in the impairment and
write down of goodwill for Dantec.

Loss from Operations of Discontinued Segment decreased to $138,552 in 2001 from
$532,398 in 2000. This decrease in 2001 is due to the fact that Elements
operated fewer retail store and closed operations in September 2001.

Loss on Closing of Discontinued Segment is $102,367, which occurred in 2001 when
Elements discontinued operations.

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

Comparison of Consolidated Results 2000 and 1999

Consolidated sales of CVF for the fiscal year amounted to $16,371,588,
representing an increase of $550,824 (3%) compared to sales of $15,820,764 for
1999. CVF, on a stand-alone basis, has no sales from operations. Sales and gross
profit from sales reflect the operations of CVF's consolidated subsidiaries
only. These subsidiaries include Eastview, Grand Island 2, Elements, Ecoval,
SRE, Biorem, Gemprint and Dantec. (Note that Ecoval is consolidated only from
December 13, 2000 when CVF gained control).

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

Biorem enjoyed an increase in sales of $918,509 (69%) in 2000 compared to 1999
due to continued acceleration of new business in biofilter sales. Gemprint's
sales increased by $51,975 (28%) over 1999. SRE's sales decreased in 2000 by
$350,215 (3%)from 1999. In 2000, SRE continued full production on a strategic
relationship contract with a major original equipment manufacturer that began in
the third quarter of 1998.

CVF's gross profit of $2,050,837 for 2000 represents a decrease of $390,914
(16.0%) from 1999. Gross profit as a percentage of sales declined from 15.4% in
1999 to 12.5% in 2000. This decrease is due in part to Biorem realizing a lower
gross profit of 25.7% in 2000 on its increased sales as noted earlier, compared
to a gross margin of 32.8% in 1999. Additionally, SRE reduced its usual gross
profit on the OEM relationship mentioned above in order to increase market
share. SRE plans to increase its margins on future contracts as it launches its
new products.

Selling, general and administrative expenses on a consolidated basis amounted to
$6,445,222 for 2000. This represents an increase of $472,706 or 7.9% compared to
1999. The higher selling, general and administrative costs incurred in 2000 are
due to an increase in goodwill amortization expense of $431,934 which is mainly
due to the write-off period being shortened from 15 years to 10 years beginning
in 2000. Also, investor relations expense in 2000 increased by $165,423. These
increases are offset somewhat by legal fees which were $137,382 lower in 2000
than in 1999. Management continues to undertake a concerted effort to effect an
overall reduction in administrative costs.

Research and development expenses for 2000 amounted to $721,905 compared to
$638,146 for 1999 (a 13.1% increase). SRE, Gemprint and Dantec all have ongoing
new product development and product enhancement projects moving forward which
contributed to the increase.

Loss from operations increased to $5,116,290 in 2000 from $4,168,911 in 1999, an
increase of $947,379 (or 22%). This increase can be attributed to lower gross
margin percentages and higher expense levels.

Net interest expense increased to $52,516 in 2000 from $60,325 in 1999.
Investment of higher cash balances in 1999 gave rise to more interest income in
that year.

Other income decreased to $124,802 in 2000 from $282,395 in 1999. A general
decrease was partially offset by a fee earned by CVF in 2000 for assisting one
of its unconsolidated investee companies to secure funding.

Losses of CVF from equity holdings, entities in which CVF has a 50% or less
ownership, increased to $1,634,367 in 2000 from $1,292,600 in 1999. This
increase is attributable to the Company's increased share of the losses of
Ecoval (incurred prior to December 13, 2000 when CVF gained control) and
Petrozyme.

Gain on sale of holdings increased to a gain of $412,917 in 2000 from a loss of
$97,720 in 1999. In 2000 the Company sold some shares of its holdings in RDM.
<PAGE>
A tax recovery of $439,566 was booked for 2000. This is the result of CVF being
able to carry capital losses back to 1997 when the Company made significant
gains on the sale of shares of one of its investments. The tax benefit is based
on losses incurred by the consolidated wholly-owned U.S. entities being carried
back. Losses incurred by Canadian subsidiaries are not available to recover U.S.
taxes paid but will be utilized when each such entity has taxable income in
Canada.

Cumulative effect of a change in accounting principle for 1999 reflects a charge
of $253,154 net of tax, for the write off of previously recorded start-up costs.
The Accounting Standards Executive Committee issued Statement of Position (SOP)
98-5, which is effective for fiscal years commencing after December 15, 1998.
SOP 98-5, "Reporting on the Costs of Start-up Activities", prescribes that
start-up costs should be expensed as incurred. The SOP states that its adoption
should be reported as a cumulative effect of a change in accounting principle.

Minority interest portion of the loss deceased to $249,107 in 2000 from $395,780
in 1999. In 2000, minority interest shared in the increased net losses of SRE
and Dantec.

Extraordinary gain in 2000 of $216,095 represents settlement of Gemprint's loan
from ISM Information Systems Management Corporation.

As a result of the operations described above, CVF recorded a net loss of
$5,893,081 in 2000 as compared to a net loss of $5,086,153 incurred in 1999.

LIQUIDITY AND CAPITAL RESOURCES

Stockholder's equity as of December 31, 2001 amounted to $1,260,017 compared to
$8,732,852 as of December 31, 2000. The net decrease of $7,472,835 is primarily
attributable to the net loss of $5,929,961 incurred in 2001. These decreases are
also due to a decrease in unrealized gains on investment holdings in 2001 of
$1,455,481.

The current ratio of CVF as at December 31, 2001 is .61 to 1., which has
declined from 1.3 to 1 as at December 31, 2000. This decline in the current
ratio is attributable to the use in 2001 of cash and cash equivalents to fund
ongoing operations. If the holdings in public companies available for sale were
classified as a current asset, then the current ratio would improve to .91 to 1.

CVF has accepted an offer for its investment in Dantec, one of its investee
companies for gross proceeds of approximately $900,000 Cdn. In addition, CVF is
using its publicly traded marketable securities (which are not included in its
current assets but which had a market value of $1,240,170 as of December 31,
2001) as a source of liquidity.

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 and marketable securities available for sale at March 31, 2002, plus the
anticipated sale and closing of Dantec (which is anticipated to take place in
April 2002) and the potential sales of a portion of its holdings in certain
investee companies, the Company expects to have enough cash to fund itself and
its investee companies. Additionally, the parent company has no outside debt and
a line of credit will be sought.

The Company's anticipated cash resources are set out below:

(Unaudited)
Cash on hand as at March 31, 2002                    $   144,000
Marketable securities as at March 31, 2002               463,000
Anticipated cash from Dantec sale in April 2002          564,000
                                                     -----------
                                                     $ 1,171,000
Anticipated cash outflow from operations
         Q2                                          $  (623,000)
         Q3                                             (403,000)
         Q4                                             (374,000)
         Q1 2003                                        (345,000)
                                                     -----------
                                                     $(1,745,000)
                                                     -----------

Anticipated net cash outflow for next 12 months      $  (574,000)

The Company intends to mitigate the net cash outflow by selling one or more of
its holdings or a portion of its holdings in certain investee companies.

Over the past 6 months CVF has undertaken many initiatives to lower the parent
company's expenses. These initiatives have included lowering the head count of
its office staff as well as the elimination of one executive position. Also, the
office in Charlotte was closed and the headquarters office relocated resulting
in lower costs. The office closing/relocation and manpower reduction itself
should save CVF approximately $200,000 per year going forward. The use of
consultants has virtually been eliminated except those consultants who have been
satisfied to receive their fee in CVF common shares. Travel and entertainment
has been significantly reduced over the last few months and will continue at the
reduced level going forward. CVF management has adopted a very aggressive cost
and expenditure controls and monitoring policy.

The Company will no longer be required to fund Dantec as the investment in
Dantec is being sold in April 2002. Also, Gemprint had a record sales month
in March 2002 and expects positive cash flow for the first time in the first
quarter 2002. The changes in Ecoval have also resulted in significantly lower
costs and Biorem is expected to report higher sales activity in the first
quarter of 2002 then all of 2001. This entity also expects to provide cash to
the Company later in 2002. The Elements operation was shut down totally in
September 2001 requiring zero cash after that date from CVF.
<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 and CVF expects that it will report losses
in many quarters and annually in the future. While 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.
<PAGE>
ITEM 7 FINANCIAL STATEMENTS
<PAGE>
Consolidated Financial Statements
CVF TECHNOLOGIES CORPORATION
[Expressed in United States Currency]
December 31, 2001
<PAGE>
CVF TECHNOLOGIES CORPORATION

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                     PAGE NUMBER
<S>                                                                  <C>
REPORT OF INDEPENDENT AUDITORS'                                              F-1

CONSOLIDATED BALANCE SHEETS                                                  F-2

CONSOLIDATED STATEMENTS OF OPERATIONS                                        F-4

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY                              F-6

CONSOLIDATED STATEMENTS OF CASH FLOWS                                        F-9

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME                      F-10

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                  F-11
</TABLE>
<PAGE>
                         REPORT OF INDEPENDENT AUDITORS'

To the Stockholders and
Board of Directors of
CVF TECHNOLOGIES CORPORATION

We have audited the accompanying consolidated balance sheets of CVF TECHNOLOGIES
CORPORATION as of December 31, 2001 and 2000 and the related consolidated
statements of operations, stockholders' equity, cash flows, and comprehensive
(loss) income for each of the three years in the period ended December 31, 2001.
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 as of December 31, 2001 and 2000, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended December 31, 2001 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 almost exhausted stockholders' equity and the consolidated Company has
incurred losses over the year and the past three years, which have significantly
reduced the Company's cash reserves. 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.

Kitchener, Canada,                                             Ernst & Young LLP
February 18, 2002, except note 21                          Chartered Accountants
which is as at April 12, 2002.


                                                                             F-1
<PAGE>
CVF TECHNOLOGIES CORPORATION

                           CONSOLIDATED BALANCE SHEETS

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

<TABLE>
<CAPTION>
                                                                           2001            2000
                                                                             $               $
--------------------------------------------------------------------------------------------------
                                                                         [Note 2]
<S>                                                                      <C>            <C>
ASSETS
CURRENT
Cash and cash equivalents                                                  422,538         495,642
Short-term investments [note 3[d]]                                              --         261,866
Restricted cash [note 7[a]]                                                126,748         185,501
Trade receivables [note 3[e]]                                            1,141,758       2,370,247
Inventory [note 4]                                                         972,804       1,488,466
Prepaid expenses and other                                                  82,640          87,852
Income taxes receivable                                                         --       2,532,003
                                                                         ---------      ----------
TOTAL CURRENT ASSETS                                                     2,746,488       7,421,577
                                                                         ---------      ----------
Property and equipment, net of accumulated depreciation [note 3[h]]        247,625         347,533
Holdings, carried at cost or equity [note 5]                               276,634         491,904
Holdings available for sale, at market [note 5]                          1,338,753       4,524,422
Technology, net of accumulated amortization [note 6[a]]                  1,348,645       1,900,497
Goodwill, net of accumulated amortization [note 6[b]]                    1,886,710       6,134,929
                                                                         ---------      ----------
TOTAL ASSETS                                                             7,844,855      20,820,862
                                                                         =========      ==========
</TABLE>


                                                                             F-2
<PAGE>
<TABLE>
<CAPTION>
                                                                                         2001             2000
                                                                                           $                $
------------------------------------------------------------------------------------------------------------------
                                                                                       [Note 2]
<S>                                                                                  <C>               <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank indebtedness [note 7]                                                               287,417           188,150
Current portion of long-term debt [note 8]                                               100,512           281,259
Loans past due or in default [note 8]                                                    305,834           309,324
Trade payables and accrued liabilities [notes 12[b] and 14[b]]                         3,381,094         4,371,543
Debt equivalent [note 9]                                                                 439,740           487,056
                                                                                     -----------       -----------
TOTAL CURRENT LIABILITIES                                                              4,514,597         5,637,332
                                                                                     -----------       -----------
Long-term debt [note 8]                                                                       --            66,720
Deferred income taxes [note 11]                                                          776,583         1,917,060
Minority interest                                                                        578,024         3,662,770
Pension obligation [note 10]                                                             455,285           491,794
Preferred and other non-voting stock of subsidiaries [note 14[e]]                        196,894           245,813
                                                                                     -----------       -----------
                                                                                       2,006,786         6,384,157
                                                                                     -----------       -----------
Redeemable Series A preferred stock, $0.001 par value, redeemable
  at $18.25 per shares, authorized 500,000 shares,
  issued and outstanding 3,477 shares [2000; 3,645] [note 12[b]]                          63,455            66,521
                                                                                     -----------       -----------
                                                                                       6,584,838        12,088,010
                                                                                     -----------       -----------
Commitments and contingencies [notes 19 and 20]
                                                                                     -----------       -----------
STOCKHOLDERS' EQUITY [note 12]
Common stock, $0.001 par value, authorized 50,000,000 shares,
  Outstanding 9,925,502 [2000; 8,935,296]
  and in treasury 476,700 [2000; 440,700]                                                 10,399             9,376
Series B convertible preferred stock
  $0.001 par value, liquidation preference of 30% of Stated Value,
  authorized, issued and outstanding 345,000 [2000; 350,000]                                 345               350
Warrants                                                                                 629,447           629,447
Additional paid-in capital                                                            27,191,238        26,638,313
Treasury stock                                                                        (2,746,129)       (2,711,889)
Accumulated other comprehensive (loss) income                                           (676,633)        1,173,596
Accumulated deficit                                                                  (23,148,650)      (17,006,341)
                                                                                     -----------       -----------
TOTAL STOCKHOLDERS' EQUITY                                                             1,260,017         8,732,852
                                                                                     -----------       -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                             7,844,855        20,820,862
                                                                                     ===========       ===========
</TABLE>

See accompanying notes


                                                                             F-3
<PAGE>
CVF TECHNOLOGIES CORPORATION

                      CONSOLIDATED STATEMENTS OF OPERATIONS

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

<TABLE>
<CAPTION>
                                                      2001               2000             1999
                                                        $                  $                $
-------------------------------------------------------------------------------------------------
                                                     [note 2]        [note 14[c]]      [note 14[c]]
<S>                                                <C>               <C>               <C>
SALES                                              12,351,334        16,371,588        15,820,764
Cost of sales                                      10,778,970        14,320,751        13,379,013
                                                   ----------        ----------        ----------
GROSS MARGIN                                        1,572,364         2,050,837         2,441,751
                                                   ----------        ----------        ----------

EXPENSES
Selling, general and administrative                 6,945,785         6,445,222         5,972,516
Write down of goodwill [note 6[b]]                  2,589,304                --                --
Research and development                              816,575           721,905           638,146
                                                   ----------        ----------        ----------
TOTAL EXPENSES                                     10,351,664         7,167,127         6,610,662
                                                   ==========        ==========        ==========
(Loss) from continuing operations
    before under noted items                       (8,779,300)       (5,116,290)       (4,168,911)
                                                   ----------        ----------        ----------
OTHER INCOME AND (EXPENSES)
Interest (expense), net                              (168,243)          (52,513)          (60,325)
Other income, net                                      64,369           124,802           282,395
(Loss) from equity investees                         (244,153)       (1,634,367)       (1,292,600)
Gain (loss) on sale of holdings                       501,040           412,917           (97,720)
                                                   ----------        ----------        ----------
TOTAL OTHER INCOME AND (EXPENSES)                     153,013        (1,149,161)       (1,168,250)
                                                   ==========        ==========        ==========
(Loss) from continuing operations before
     (recovery of) income taxes                    (8,626,287)       (6,265,451)       (5,337,161)
(Recovery of) income taxes [note 11]                 (115,623)         (439,566)         (920,467)
                                                   ----------        ----------        ----------
(Loss) from continuing operations before
   the following:                                  (8,510,664)       (5,825,885)       (4,416,694)
Minority interest in loss                           2,821,622           249,107           395,780
                                                   ----------        ----------        ----------
Net (loss) from continuing operations              (5,689,042)       (5,576,778)       (4,020,914)
(Loss) from operations of
   discontinued segment [note 14[c]]                 (138,552)         (532,398)         (812,085)
(Loss) on closing of discontinued segment
   [note 14[c]]                                      (102,367)               --                --
                                                   ----------        ----------        ----------
Net (loss) before extraordinary items and
   cumulative change in accounting principle       (5,929,961)       (6,109,176)       (4,832,999)
Extraordinary gain [note 16]                               --           216,095                --
                                                   ----------        ----------        ----------
Net (loss) before cumulative change
   in accounting principle                         (5,929,961)       (5,893,081)       (4,832,999)
Cumulative change in accounting principle
   [note 3[r]]                                             --                --          (253,154)
                                                   ----------        ----------        ----------
NET (LOSS)                                         (5,929,961)       (5,893,081)       (5,086,153)
                                                   ==========        ==========        ==========
</TABLE>


                                                                             F-4
<PAGE>
CVF TECHNOLOGIES CORPORATION

                  CONSOLIDATED STATEMENTS OF OPERATIONS CONT'D

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

<TABLE>
<CAPTION>
                                                       2001               2000              1999
                                                         $                  $                 $
----------------------------------------------------------------------------------------------------
                                                     [Note 2]         [Note 14[c]]       [Note 14[c]]
<S>                                                 <C>               <C>                <C>
NET (LOSS) AVAILABLE TO COMMON
    STOCKHOLDERS [note 13]                          (6,142,309)        (6,747,753)        (5,157,267)
                                                    ----------         ----------         ----------

BASIC (LOSS) PER SHARE [note 13]
(Loss) from continuing operations                        (0.64)             (0.85)             (0.61)
(Loss) from discontinued operations                      (0.02)             (0.07)             (0.12)
                                                    ----------         ----------         ----------
(Loss) before extraordinary item and
   cumulative change in accounting principle             (0.66)             (0.92)             (0.73)
Extraordinary gain                                          --               0.03                 --
                                                    ----------         ----------         ----------
(Loss) before cumulative change in
    accounting principles                                (0.66)             (0.89)             (0.73)
Cumulative change in accounting principle                   --                 --              (0.04)
                                                    ----------         ----------         ----------
NET (LOSS) PER SHARE [note 13]                           (0.66)             (0.89)             (0.77)
                                                    ==========         ==========         ==========

DILUTED (LOSS) PER SHARE [note 13]                       (0.66)             (0.89)             (0.77)
                                                    ==========         ==========         ==========

BASIC WEIGHTED AVERAGE SHARES [note 13]              9,263,042          7,543,336          6,722,997
                                                    ==========         ==========         ==========

DILUTED WEIGHTED AVERAGE SHARES [note 13]            9,263,042          7,543,336          6,722,997
                                                    ==========         ==========         ==========
</TABLE>

See accompanying notes


                                                                             F-5
<PAGE>
CVF TECHNOLOGIES CORPORATION

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

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 - JANUARY 1, 1999                              7,155,328          7,155           --               --           18,951,228
Purchase of treasury stock                                    --             --           --               --                   --
Net (loss)                                                    --             --           --               --                   --
Dividends on Series A preferred stock                         --             --           --               --                   --
Dividends on Series B convertible
  preferred stock                                             --             --           --               --                   --
Issuance of Series B convertible
  preferred stock                                             --             --          350          504,351            2,995,299
Fees on issuance of Series B preferred stock                  --             --           --               --             (410,000)
Shares on acquisition of interest in Gemprint            137,500            138           --               --              541,268
Unrealized gain on securities
  available for sale, net of reclassification
  adjustment                                                  --             --           --               --                   --
Translation adjustment                                        --             --           --               --                   --
                                                       ---------          -----          ---          -------           ----------
BALANCE - DECEMBER 31, 1999                            7,292,828          7,293          350          504,351           22,077,795
                                                       =========          =====          ===          =======           ==========
</TABLE>

<TABLE>
<CAPTION>
                                                                                                 ACCUMULATED
                                                                                                    OTHER
                                                        ACCUMULATED           TREASURY          COMPREHENSIVE            TOTAL
                                                          DEFICIT               STOCK              INCOME               EQUITY
                                                             $                    $                   $                    $
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>                   <C>                <C>                   <C>
BALANCE - JANUARY 1, 1999                               (5,101,321)          (2,662,194)          (655,736)           10,539,132
Purchase of treasury stock                                      --              (37,585)                --               (37,585)
Net (loss)                                              (5,086,153)                  --                 --            (5,086,153)
Dividends on Series A preferred stock                      (22,814)                  --                 --               (22,814)
Dividends on Series B convertible
  preferred stock                                          (48,300)                  --                 --               (48,300)
Issuance of Series B convertible
  preferred stock                                               --                   --                 --             3,500,000
Fees on issuance of Series B preferred stock                    --                   --                 --              (410,000)
Shares on acquisition of interest in Gemprint                   --                   --                 --               541,406
Unrealized gain on securities
  available for sale, net of reclassification
  adjustment                                                    --                   --            371,152               371,152
Translation adjustment                                          --                   --            307,547               307,547
                                                       -----------           ----------           --------            ----------
BALANCE - DECEMBER 31, 1999                            (10,258,588)          (2,699,779)            22,963             9,654,385
                                                       ===========           ==========           ========            ==========
</TABLE>


                                                                             F-6
<PAGE>
CVF TECHNOLOGIES CORPORATION

             CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY CONT'D

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

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

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


                                                                             F-7
<PAGE>

CVF TECHNOLOGIES CORPORATION

             CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY CONT'D

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

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

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

See accompanying notes


                                                                             F-8
<PAGE>

CVF TECHNOLOGIES CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

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

<TABLE>
<CAPTION>
                                                              2001             2000             1999
                                                                $                $                $
-------------------------------------------------------------------------------------------------------
                                                            [Note 2]
<S>                                                        <C>              <C>              <C>
OPERATING ACTIVITIES
Net (loss)                                                 (5,929,961)      (5,893,081)      (5,086,153)
Adjustments to reconcile net (loss)
  from operating activities [note 17]                       1,030,671        2,376,660        2,191,717
Changes in operating assets and liabilities [note 17]       3,498,632          854,652          400,445
                                                           ----------       ----------       ----------
CASH (APPLIED TO) OPERATING ACTIVITIES                     (1,400,658)      (2,661,769)      (2,493,991)
                                                           ----------       ----------       ----------
INVESTING ACTIVITIES
Purchase of property and equipment                            (16,829)        (187,680)         (46,217)
Decrease (increase) in short-term investments                 261,866         (264,417)              --
Investments in and advances to equity investees               (88,516)      (2,320,209)      (1,585,175)
Purchase of holdings available for sale                       (18,010)        (240,107)        (557,296)
Proceeds from sale of holdings                              1,032,198          695,911          229,616
                                                           ----------       ----------       ----------
CASH PROVIDED BY (APPLIED TO) INVESTING ACTIVITIES          1,170,709       (2,316,502)      (1,959,072)
                                                           ----------       ----------       ----------
FINANCING ACTIVITIES
Increase (decrease) in bank indebtedness                      113,407          (36,048)         232,873
Borrowings of debt                                             38,766          181,899               --
(Payments) of debt                                                 --          (53,234)        (221,477)
Issuance of common stock                                           --        1,806,760               --
Issuance of preferred stock, net of expenses                       --               --        3,090,000
Reductions (deposits) of restricted cash                       49,275           (6,429)          (5,682)
Purchase of treasury stock                                    (34,240)         (12,110)         (37,585)
Minority investments in subsidiaries                               --               --          731,085
Redemption of preferred and other non-voting
  stock of subsidiaries                                       (19,383)         (60,633)         (20,214)
                                                           ----------       ----------       ----------
CASH PROVIDED BY FINANCING ACTIVITIES                         147,825        1,820,205        3,769,000
                                                           ----------       ----------       ----------
Effect of exchange rate changes on
  cash and cash equivalents                                     9,020           96,002          (55,408)
                                                           ----------       ----------       ----------

CASH AND CASH EQUIVALENTS (APPLIED)
  DURING YEAR                                                 (73,104)      (3,062,064)        (739,471)
Cash and cash equivalents, beginning of year                  495,642        3,557,706        4,297,177
                                                           ----------       ----------       ----------
CASH AND CASH EQUIVALENTS, END OF YEAR                        422,538          495,642        3,557,706
                                                           ==========       ==========       ==========

Cash paid during the year for interest                         34,093          165,404          102,361
                                                           ----------       ----------       ----------
Cash paid during the year for income taxes                      6,271           37,283          242,326
                                                           ----------       ----------       ----------
</TABLE>

See accompanying notes


                                                                             F-9
<PAGE>
CVF TECHNOLOGIES CORPORATION

                           CONSOLIDATED STATEMENTS OF
                           COMPREHENSIVE (LOSS) INCOME

Year ended                                          [Expressed in U.S. Currency]

<TABLE>
<CAPTION>
                                                                2001             2000             1999
                                                                  $                $                $
---------------------------------------------------------------------------------------------------------
                                                              [Note 2]
<S>                                                          <C>              <C>              <C>
NET (LOSS)                                                   (5,929,961)      (5,893,081)      (5,086,153)
                                                             ----------       ----------       ----------

OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX [note 12]

Foreign currency translation adjustments
  [net of tax effect]                                          (394,748)        (284,551)         307,547
                                                             ----------       ----------       ----------

Unrealized holding gains (losses):

Unrealized holding gains (losses) arising during
    year [net of taxes of $171,798, $1,197,988
    and $234,139 for the years ended
    December 31, 2001, 2000 and 1999]                          (599,770)       1,796,982          361,043

  Reclassification adjustments for previously
    recognized unrealized holding (losses) gains
    [net of taxes of $342,284, 241,199 and $6,556
    for the years ended December 31, 2001, 2000
    and 1999]                                                  (855,711)       (361,798)          10,109
                                                             ----------       ----------       ----------
                                                             (1,455,481)       1,435,184          371,152
                                                             ----------       ----------       ----------
Total other comprehensive (loss) income                      (1,850,229)       1,150,633          678,699
                                                             ----------       ----------       ----------
COMPREHENSIVE (LOSS) DURING YEAR                             (7,780,190)      (4,742,448)      (4,407,454)
                                                             ==========       ==========       ==========
</TABLE>

See accompanying notes


                                                                            F-10
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001                                   [Expressed in U.S. Currency]

1. ORGANIZATION AND BUSINESS DESCRIPTION

CVF Technologies Corporation [the "Company" or "CVF"] is a company 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 the businesses engaged in by such companies. 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:

Canadian Venture Founders Leasing Corp. ["Leasing"], a wholly-owned subsidiary,
formed to provide funding to various investees of the Company. Effective
November 30, 2000, Leasing resolved to dissolve and distributed its assets and
liabilities to its parent, CVF Technologies Corporation.

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

Biorem Technologies, Inc. ["Biorem"] is an industrial biotech company located in
Guelph, Canada, engaged in the business of applying bioconversion and
biotransformation technology to a variety of industrial applications such as the
treatment or clean-up of organic toxic chemicals in soil or groundwater, the
treatment of industrial waste streams for liquids or air [bio-filters] and for
use in the food processing, agriculture and pharmaceutical manufacturing
industries. At December 31, 2001, the Company had a 69% [69% in 2000] ownership
interest in Biorem.

Ecoval Corporation ["Ecoval"], located in Williamsville, New York, was formed in
December 2000 on the insolvency of Ecoval Inc. At December 31, 2001 and 2000 the
Company has a 88% ownership interest in Ecoval. Ecoval licenses the manufacture
and distribution of proprietary natural fertilizers and environmentally-safe
organic herbicides.

Gemprint Corporation ["Gemprint"] is a Toronto, Canada, company in the business
of providing products and services to the consumer and wholesale jewelry markets
to enable diamonds and other precious gems to be uniquely identified,
non-invasively, using a low power laser imaging system unique to Gemprint. The
results are stored in a database for later verification and recovery of lost or
stolen gems. At December 31, 2001, the Company had a 65% [56% in 2000] ownership
interest in Gemprint.


                                                                            F-11
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

1. ORGANIZATION AND BUSINESS DESCRIPTION CONT'D

SRE Controls Inc. ["SRE"] is a Waterloo, Canada, company in the business of
developing, manufacturing and marketing a line of electronic motor speed control
products for industrial electric vehicles. At December 31, 2001, the Company had
a 75% [75% in 2000] ownership interest in SRE.

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

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

Grand Island Marketing, Inc. ["Grand Inc."] a wholly-owned subsidiary holds a
61% [61% in 2000] economic interest in a partnership, known as "Elements". In
September 2001, Elements decided to discontinue its operations [note 14c]. The
related retail store and internet site were closed but will not be sold and the
discontinuance is complete.

Dantec Corporation ["Dantec"] located in Waterloo, Canada, manufactures and
sells advanced process control systems for a variety of industrial applications.
At December 31, 2001, the Company had a 54% [54% in 2000] ownership interest in
Dantec. (Note 21(c))

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 consolidated
company has incurred losses over the year and for the past three years, which
have reduced the Company's cash reserves, and almost exhausted stockholders'
equity.


                                                                            F-12
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

2. GOING CONCERN CONT'D

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 its individual investee
companies. The Company is actively pursuing the sale of its interests in five of
its investee companies and has retained investment bankers in order to realize
value and focus its efforts and resources.

In addition, the Company is using certain of its holdings available for sale
(which had a market value of $1,240,170 as of December 31, 2001 [note 21[a]] as
a source of liquidity. The proceeds of any such sales will be used to increase
cash reserves. 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.

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.

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 in consolidation.

      The fiscal year-ends of the subsidiaries vary, in some cases, from those
      of the Company. The consolidated financial statements combine periods
      which are within three months of the Company's fiscal year-end, for all
      the companies.


                                                                            F-13
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT'D

      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.

      The Company accounts for holdings of less than 20% ownership position for
      which market value is readily determinable according to SFAS 115, as
      follows:

      -     Holdings in debt securities are classified as "held to maturity", if
            the Company has the intent and ability to hold the security to
            maturity. Holdings held to maturity are carried at amortized cost.

      -     Other holdings are classified as "available for sale", and are
            revalued at each year-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.

      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 income.


                                                                            F-14
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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. 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]   SHORT-TERM INVESTMENTS

      Short-term investments have a maturity of three months or more when
      purchased.

[e]   TRADE RECEIVABLES

      Trade receivables are presented net of allowance for doubtful accounts.
      The allowance was $166,205 at December 31, 2001 [$92,249 at December 31,
      2000]. Bad debt expense was $80,957 during the year ended December 31,
      2001 [$274,875 in 2000; $197,560 in 1999].

[f]   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.

[g]   ADVERTISING

      Advertising costs are expensed as incurred. Total advertising expenses
      were $nil [$31,004 in 2000; $76,881 in 1999].


                                                                            F-15
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT'D

[h]   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:

<TABLE>
<S>                                                                   <C>
      Property                                                        5-10 years
      Equipment                                                       5-10 years
</TABLE>

      Accumulated depreciation at December 31, 2001 was $785,880 [$766,770 at
      December 31, 2000]. Depreciation expense was $51,506 [$282,308 in 2000;
      $147,716 in 1999].

[i]   FINANCIAL INSTRUMENTS

      The fair values of cash and cash equivalents, short-term investments,
      restricted cash, trade receivables, income taxes receivable, bank
      indebtedness, trade payables and accrued liabilities, dividends payable,
      and income taxes payable approximate their carrying values due to the
      short-term maturity of these instruments. The fair values of the Company's
      long-term debt and pension obligations approximate the carrying values, as
      the debt bears interest at rates approximating current market rates.
      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>
                                                      2001              2000
                                                        $                 $
      --------------------------------------------------------------------------
<S>                                                  <C>              <C>
      Cash and cash equivalents                      247,005            187,577
      Short-term investments                              --            261,866
      Trade receivables                              373,380            599,389
      Bank indebtedness                              287,417            188,150
      Trade payables                                 812,746          1,250,110
      Long-term debt                                 406,346            632,303
      Debt equivalent                                439,740            487,056
</TABLE>


                                                                            F-16
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT'D

[j]   GOODWILL

      Goodwill is recorded in connection with the acquisition of subsidiaries.
      Goodwill also exists in connection with the acquisition of equity basis
      holdings, representing the difference between the fair value of
      identifiable net assets of the underlying equity interest purchased and
      the amount paid for the interest. Goodwill is amortized over a period of
      10 years. Amounts amortized in connection with subsidiaries are charged to
      amortization expense. The amortization of goodwill implied in the cost of
      equity investments is charged to gain or loss from equity investees.

      Effective January 1, 2000, the Company changed the period over which
      goodwill is amortized from 15 years to 10 years. The change in the
      amortization period for goodwill is due to a change in estimate. The
      effect of this change on net loss for the year ended December 31, 2000,
      was an increase in the loss by $456,035 [$0.06 per share].

      The Company assesses the recoverability of goodwill by determining whether
      the amortization of goodwill over its remaining life can be recovered
      through projected, undiscounted, future cash flows of the related
      companies, including the ultimate proceeds of disposal of the interests in
      subsidiary companies. Goodwill is written down to fair value, to the
      extent that the carrying value has been impaired.

[k]   MINORITY INTEREST

      Minority common equity interests are charged (credited) with their
      proportionate share of subsidiary losses (net income) to the extent
      positive equity-adjusted holdings are available. 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.

[l]   EARNINGS (LOSS) PER SHARE

      Basic earnings (loss) per share is computed by dividing net income (loss)
      available to common stockholders by the weighted average number of common
      shares outstanding during the year. The net income (loss) available to
      common stockholders consists of net income (loss) reduced by the dividends
      on the Company's Series A and B preferred stock. Diluted earnings (loss)
      per share reflects the per share amount that would have resulted if
      dilutive potential common stock had been converted to common stock, as
      prescribed by SFAS 128.


                                                                            F-17
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT'D

[m]   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.

      Service revenue is recognized when the services are performed.

[n]   STOCK-BASED COMPENSATION

      The Company and its subsidiaries account for stock and options issued for
      services in accordance with APB Opinion 25, Accounting for Stock Issued to
      Employees, by reference to the fair market value of the Company's stock on
      the date of stock issuance or option grant. The Company uses the
      "intrinsic value" method for determining compensation expense whereby
      expense is recorded for the quoted market price of the stock issued, or in
      the case of options, for the difference between the stock's quoted market
      price on the date of grant and the option exercise price. Where the
      exercise price equals the market price of the underlying shares, no
      compensation expense is recorded. All options issued by the Company and
      its subsidiaries have been issued with an exercise price greater than or
      equal to the market price of the share at the date of grant.

[o]   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.

[p]   INCOME TAXES

      The Company accounts for income taxes using the liability method in which
      a deferred tax asset or liability is determined based upon the tax effect
      of the differences between the financial statement and tax basis of assets
      and liabilities, as measured by the enacted rates which will be in effect
      when these differences 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 the applicable
      costs when qualifying expenditures are incurred and such credits are
      recognized as more likely than not to be realized.


                                                                            F-18
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT'D

[q]   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.

[r]   STANDARDS IMPLEMENTED

      The Company implemented new accounting standards in 2001, 2000 and 1999.
      These standards did not have a material effect on the financial position
      or results of operations of the Company.

      DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

      On January 1, 2001, the Company adopted SFAS No. 133, "Accounting for
      Derivative Instruments and Hedging Activities," as amended by SFAS No.
      138, "Accounting for Certain Derivative Instruments and Certain Hedging
      Activities." SFAS No. 133, as amended, establishes accounting and
      reporting standards for derivative instruments. Specifically, SFAS No. 133
      requires an entity to recognize all derivatives as either assets or
      liabilities in the Statement of Financial Position and to measure those
      instruments at fair value. Additionally, the fair value adjustments will
      affect either stockholders' equity or net income depending on whether the
      derivative instrument qualifies as a hedge for accounting purposes and, if
      so, the nature of the hedging activity. The Company has determined that
      the adoption of SFAS 133 has not had a material affect on its financial
      statements.

      COST OF START-UP ACTIVITIES

      During 1999, the Company adopted Statement of Position 98-5 [issued by the
      Accounting Standards Executive Committee of the American Institute of
      Certified Public Accountants]: "Reporting on the Cost of Start-up
      Activities", prescribing that start-up costs should be expensed as
      incurred. A cumulative catch-up charge of $253,154, net of tax of
      $130,414, was recorded during 1999.

      STOCK-BASED COMPENSATION

      In March 2001, the Financial Accounting Standards Board released
      Interpretation No. 44 [FIN 44]: "Accounting for Certain Transactions
      Involving Stock Compensation", which was effective for the Company's
      fiscal 2001 year-end. The implementation of FIN 44 did not have a material
      affect on the Company's financial statements.


                                                                            F-19
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT'D

      REVENUE RECOGNITION

      In December 1999, the SEC released Staff Accounting Bulletin No. 101 [SAB
      101]: "Revenue Recognition in Financial Statements", which is effective
      for the Company's fiscal 2001 year-end. The implementation of SAB 101 did
      not have a material affect on the Company's financial statements.

      ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND
      EXTINGUISHMENTS OF LIABILITIES

      In September 2000, the Financial Accounting Standards Board released
      Interpretation SFAS 140: "Accounting for Transfers and Servicing of
      Financial Assets and Extinguishments of Liabilities", which is required to
      be adopted for the Company's fiscal 2000 year-end. The implementation of
      SFAS 140 did not have a material affect on the Company's financial
      statements.

[s]   IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

      BUSINESS COMBINATIONS AND GOODWILL AND OTHER INTANGIBLE ASSETS

      In July 2001, the FASB issued SFAS No. 141, "Business Combinations," and
      SFAS No. 142, "Goodwill and Intangible Assets." SFAS No. 141 requires the
      use of the purchase method of accounting for business combinations and
      prohibits the use of the pooling of interests method. Under the previous
      rules, the Company used the purchase method of accounting. SFAS No. 141
      also refines the definition of intangible assets acquired in a purchase
      business combination. As a result, the purchase price allocation of future
      business combinations may be different than the allocation that would have
      resulted under the old rules. Business combinations must be accounted for
      using SFAS No. 141 beginning on July 1, 2001.

      SFAS No. 142 eliminates the amortization of goodwill, requires annual
      impairment testing of goodwill and introduces the concept of indefinite
      life intangible assets. It was adopted on January 1, 2002. The new rules
      also prohibit the amortization of goodwill associated with business
      combinations that close after June 30, 2001.

      These new requirements will impact future period net income by an amount
      equal to the discontinued goodwill amortization offset by goodwill
      impairment charges, if any, and adjusted for any differences between the
      old and new rules for defining intangible assets on future business
      combinations. The Company is evaluating the effect of these new standards
      on its financial statements.


                                                                            F-20
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT'D

      ACCOUNTING FOR ASSET RETIREMENT OBLIGATIONS

      In June 2001, the FASB issued SFAS 143, "Accounting for Asset Retirement
      Obligations" SFAS 143 addresses financial accounting and reporting for
      obligations associated with the retirement of tangible long-lived assets
      and the associated asset retirement costs. It requires recognition of the
      fair value of a liability for an asset retirement obligation in the period
      in which it is incurred if a reasonable estimate of fair value can be
      made. The Company is currently assessing SFAS 143 and the impact that
      adoption, in 2003, will have on the consolidated financial statements.

      ACCOUNTING FOR IMPAIRMENT OF DISPOSAL OF LONG-LIVED ASSETS

      In August 2001, the FASB issued SFAS 144, "Accounting for the Impairment
      of Disposal of Long-Lived Assets". SFAS 144 established a single model for
      the impairment of long-lived asset and broadens the presentation of
      discontinued operations to include more disposal transactions. SFAS 144 is
      effective for 2002. Adoption may change the nature and extent of
      disclosure of the Company's future asset disposals, and allocations
      between accounting periods.

[t]   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. One customer represents 54% of trade
      receivables at December 31, 2001 [one customer represented 44% in 2000].

4. INVENTORY

Inventory consists of the following:

<TABLE>
<CAPTION>
                                                      2001              2000
                                                        $                 $
--------------------------------------------------------------------------------
<S>                                                  <C>              <C>
Raw material                                         687,168          1,110,156
Finished goods                                       285,636            378,310
                                                     -------          ---------
                                                     972,804          1,488,466
                                                     =======          =========
</TABLE>


                                                                            F-21
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

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.

      In addition, the Company has holdings in debt and equity securities of the
      following companies:

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

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

      [iii] WZ.COM Inc. (wz.com), a private company incorporated in the State of
            Delaware, is in the business of providing products over its website.
            In January, 1999, CVF invested a total of $250,000 in the
            predecessor company known as NETrageous. In February 2001 the shares
            in NETrageous were exchanged at no cost for 500,000 common shares in
            WZ.COM INC.


                                                                            F-22
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

5. HOLDINGS CONT'D

Holdings consisted of the following at December 31, 2001:

<TABLE>
                                                                                          HOLDINGS
                                                                         HOLDINGS       AVAILABLE FOR
                                                                          AT COST        FOR SALE AT
                                                         PERCENTAGE      OR EQUITY       FAIR VALUE
                                                         OWNERSHIP           $                $
---------------------------------------------------------------------------------------------------
<S>              <C>                                     <C>             <C>            <C>
Petrozyme
            50   common shares                              50%                --                --
       250,000   Class C non-voting shares                 100%                --                --
                 notes and advances [net of equity
                 in losses of Petrozyme][vi]                                   --                --
                                                         -----            -------         ---------
                                                                               --                --
                                                                          -------         ---------

TurboSonic
       949,217   common shares [i]                           9%                --           465,116
                                                         -----            -------         ---------

RDM
       971,472   common shares [ii]                          5%                --           775,054
                                                         -----            -------         ---------

WZ.com
       500,000   common shares [iii]                         4%           250,000                --
                                                         -----            -------         ---------

IMT
           485   common shares [iv]                         47%            19,775                --
                 notes and advances [iv]
                                                         -----            -------         ---------
                                                                           19,775                --
                                                         -----            -------         ---------

Other notes and holdings [v]                                                6,859            98,583
                                                         -----            -------         ---------
Total                                                                     276,634         1,338,753
                                                         =====            =======         =========
</TABLE>


                                                                            F-23
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

5. HOLDINGS CONT'D

Holdings consisted of the following at December 31, 2000:

<TABLE>
                                                                                          HOLDINGS
                                                                         HOLDINGS       AVAILABLE FOR
                                                                          AT COST        FOR SALE AT
                                                         PERCENTAGE      OR EQUITY       FAIR VALUE
                                                         OWNERSHIP           $                $
---------------------------------------------------------------------------------------------------
<S>              <C>                                     <C>             <C>            <C>
Petrozyme
            50   common shares                              50%                --                --
       250,000   Class C non-voting shares                 100%                --                --
                 notes and advances [net of equity
                 in losses of Petrozyme][vi]                              116,166                --
                                                                          -------         ---------
                                                                          116,166                --
                                                         -----            -------         ---------

TurboSonic
     1,337,979   common shares [i]                          13%                --           584,697
                                                         -----            -------         ---------

RDM
     1,855,572   common shares [ii]                         13%                --         3,776,015
                                                         -----            -------         ---------

NETrageous
       500,000   common shares [iii]                         3%           250,000                --
                                                         -----            -------         ---------

IMT
           485   common shares [iv]                         47%            92,246                --
                 notes and advances [iv]                                   23,352                --
                                                         -----            -------         ---------

                                                                          115,598                --
                                                         -----            -------         ---------

Other notes and holdings [v]                                               10,140           163,710
                                                         -----            -------         ---------

Total                                                                     491,904         4,524,422
                                                         =====            =======         =========
</TABLE>


                                                                            F-24
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

5. HOLDINGS CONT'D

[i]   At December 31, 2001, the market value of the shares was U.S. $0.49 [U.S.
      $0.44 in 2000] per share. As at December 31, 2001, the common shares of
      TurboSonic have an original cost of $250,235. Accordingly, aggregate
      unrealized gains of $137,440 [net of deferred income tax of $91,627] have
      been recorded as an element of accumulated other comprehensive income as
      at December 31, 2001.

[ii]  At December 31, 2001, the market value of shares of RDM listed on the
      Canadian Venture Exchange was Cdn. $1,233,769 [U.S. $775,054 [2001 - Cdn.
      $1.27 [U.S. $.80]] per share. As at December 31, 2001, the shares have an
      original cost of $433,712. Accordingly, aggregate unrealized gains of
      $204,805 [net of deferred income taxes of $136,536] have been recorded as
      an element of accumulated other comprehensive income as at December 31,
      2001.

[iii] 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%.

[iv]  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 ,, 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.

[v]   The notes and advances to others bear interest at prime plus 2%, are
      unsecured, payable on demand, some denominated in Canadian currency and
      others in U.S. currency. Canadian prime rate at December 31, 2001 was 4.0%
      [7.5% in 2000]. U.S. prime rate at December 31, 2001 was 4.75% [9.5% in
      2000]. The Company does not intend to demand repayment of these notes in
      the next year.


                                                                            F-25
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

5. HOLDINGS CONT'D

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

<TABLE>
<CAPTION>
                                                              2001            2000             1999
             INCOME STATEMENT DATA                              $               $                $
             -----------------------------------------------------------------------------------------
<S>                                                        <C>             <C>              <C>
             Net sales                                       100,725          236,006          758,933
             Gross profit (loss) on sales                     99,042         (136,100)         152,168
             Net (loss)                                     (319,305)      (1,618,142)      (1,705,928)
                                                          ----------       ----------       ----------
             CVF'S SHARE
                 OF NET (LOSS)                              (230,056)      (1,548,498)      (1,052,462)
                                                          ==========       ==========       ==========

             BALANCE SHEET DATA
             Current assets                                  127,397          167,546        1,120,435
             Non-current assets                                2,150            2,978          524,904
                                                          ----------       ----------       ----------
             TOTAL ASSETS                                    129,547          170,524        1,645,339
                                                          ==========       ==========       ==========

             Current liabilities                             142,195           65,423          960,728
             Non-current liabilities                       1,625,422        1,515,133        3,134,934
             (Deficit)                                    (1,638,070)      (1,410,032)      (2,450,323)
                                                          ----------       ----------       ----------
             TOTAL LIABILITIES AND EQUITY                    129,547          170,524        1,645,339
                                                          ==========       ==========       ==========

             CVF'S SHARE OF (ACCUMULATED DEFICIT)           (817,745)        (706,332)      (1,346,882)
                                                          ==========       ==========       ==========

             CVF'S SHARE OF NON-CURRENT LIABILITIES        1,625,422        1,515,133        3,134,934
                                                          ==========       ==========       ==========
</TABLE>


                                                                            F-26
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

5. HOLDINGS CONT'D

The amount of CVF's above share of net loss differs from loss from equity
investees appearing in the statements of operations primarily due to
amortization of goodwill of $14,098 [$85,869 in 2000; $240,138 in 1999].

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.

The net equity positions, after share of losses, of all other investors in
Petrozyme have been reduced to nil. As such, the Company has included 100% of
the losses of Petrozyme in income rather than the percentage owned by the
Company. The Company's carrying value of the investment in Petrozyme has been
reduced to nil [$116,166 in 2000].

6. TECHNOLOGY AND GOODWILL

a]    The details of technology are as follows:

<TABLE>
<CAPTION>
                                                      2001               2000
                                                        $                  $
--------------------------------------------------------------------------------
<S>                                                 <C>                <C>
Cost [note 14[a]]                                   1,705,822          1,900,497
Accumulated amortization                              357,177                 --
                                                    ---------          ---------
                                                    1,348,645          1,900,497
                                                    =========          =========
</TABLE>


                                                                            F-27
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

6. GOODWILL AND TECHNOLOGY CONT'D

b]    The goodwill of subsidiaries consists of:

<TABLE>
<CAPTION>
                                                       ACCUMULATED      NET BOOK
                                          COST        AMORTIZATION       VALUE
AS AT DECEMBER 31, 2001                    $                $              $
--------------------------------------------------------------------------------
<S>                                    <C>            <C>              <C>

Elements [note 14[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
Dantec [ii]                            5,123,094       4,641,606         481,488
                                       ---------       ---------       ---------
                                       8,253,704       6,366,994       1,886,710
                                       =========       =========       =========
</TABLE>

<TABLE>
<CAPTION>
                                                       ACCUMULATED      NET BOOK
                                          COST        AMORTIZATION       VALUE
AS AT DECEMBER 31, 2000                    $                $              $
--------------------------------------------------------------------------------
<S>                                    <C>            <C>              <C>

Elements                                 678,252         141,684         536,568
SRE                                      556,335         369,168         187,167
Biorem                                   172,512          93,232          79,280
Gemprint                               2,612,291       1,005,641       1,606,650
Dantec                                 5,441,146       1,715,882       3,725,264
                                       ---------       ---------       ---------
                                       9,460,536       3,325,607       6,134,929
                                       =========       =========       =========
</TABLE>

i]    During 2001, amortization of goodwill in subsidiaries totaled $922,481
      [$1,052,355 in 2000; $618,936 in 1999].

ii]   Dantec has been unable to achieve the revenue expectations that supported
      the Company's carrying value of related goodwill. The Company has
      determined that it will not fund the revisions to the Dantec business plan
      that would be required to attain such revenue levels and has, therefore,
      re-evaluated goodwill based on its current outlook for Dantec. Goodwill
      has been written down by $2,589,304 to reflect the re-evaluation.


                                                                            F-28
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

7. BANK INDEBTEDNESS

<TABLE>
<CAPTION>
                                                      2001                 2000
                                                        $                    $
--------------------------------------------------------------------------------
<S>                                                 <C>                  <C>
Gemprint [a]                                        119,659              127,087
Dantec [b]                                               --               54,547
SRE [c]                                             167,758                6,516
                                                    -------              -------
                                                    287,417              188,150
                                                    =======              =======
</TABLE>

The weighted average interest rate on bank indebtedness during 2001 was 8.4%
[8.7% in 2000].

[a]   Gemprint has bank indebtedness of Cdn. $190,479 [U.S. $119,659] [Cdn.
      $190,479 [U.S. $127,087] in 2000] with a Canadian chartered bank. The
      demand operating loan bears interest at Canadian prime plus 1%. The loan
      is guaranteed by CVF and is collateralized by a term deposit of Cdn.
      $200,768 [U.S. $126,748] [Cdn. $278,029 [U.S. $185,501] in 2000]. In
      2001 the bank notified Gemprint that they were calling the loan [note
      21[b]].

[b]   During 2001 and 2000, CVF issued 100,000 and 70,000 common shares
      respectively to Dantec's bank to retire a portion of Dantec's line of
      credit and the line of credit was not renewed. The outstanding balance at
      December 31, 2000 represented a bank overdraft.

[c]   SRE has a line of credit with a Canadian chartered bank which is
      available, based on a fixed percentage of accounts receivable, to a limit
      of Cdn. $250,000. Loans against this line bear interest at Canadian prime
      plus 0.5%. SRE has pledged a general security agreement as collateral.


                                                                            F-29
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

8. LONG-TERM DEBT

Long-term debt comprises the following:

<TABLE>
<CAPTION>
                                                                                       2001           2000
                                                                                         $              $
------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>            <C>

Convertible debenture issued by Gemprint, for Cdn. $286,841
  [2000- $384,081], bearing interest at 5% per annum and due
  May 1, 2001.  The loan has matured and is past due.                                 180,194        256,259
Due to ISM [Information Systems Management].
  Corporation by Gemprint.  During 2000, Gemprint agreed
  with ISM to settle the amount at U.S. $25,000,                                           --         25,000
  paid March 2001
Small business loan issued by a Canadian chartered bank to
  Elements, of Cdn. $nil [2000- $124,990], interest
  at Canadian prime plus 2.5%. [note 14[c]]                                                --         83,393
Small business loan issued by a Canadian chartered bank to
  Elements of Cdn. $nil [2000- $168,625], interest
  at Canadian prime plus 2.25%. [note 14[c]]                                               --        112,507
Loans from a Biorem employee to Biorem of Cdn. $125,000
  [2000 - $100,000] and CVF officers of Cdn $25,000
  [2000 - nil]. The loans are payable on demand upon the
  consent of CVF and bear interest at Canadian prime plus
  3.0% to 4.0%. In the 2000 year, the lenders extended these
  debts for a period exceeding 12 months past the year end.                           100,512         66,720
Promissory notes payable owing to a shareholder of Dantec,
  in the amounts of  Cdn. $20,000, $30,000 and $150,000.  The
  promissory notes in the amount of Cdn. $20,000 are non- interest
  bearing, the $30,000 bears interest at 15% and the promissory note
  of $150,000 accrues interest at 10% per annum until
  repayment.  The maturity dates are November 3, 2000 and
  July 3, 2000, respectively.                                                         125,640        113,424
                                                                                     --------       --------
Total long-term debt                                                                  406,346        657,303
Less: current portion of long-term debt                                              (100,512)      (281,259)
      loans past due or in default                                                   (305,834)      (309,324)
                                                                                     --------       --------
LONG-TERM DEBT EXCLUDING CURRENT PORTION AND LOANS PAST
  DUE OR IN DEFAULT                                                                        --         66,720
                                                                                     ========       ========
</TABLE>


                                                                            F-30
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

8. LONG-TERM DEBT CONT'D

During the year, the holder of the Dantec promissory note demanded repayment.
CVF has a senior security interest on the assets of Dantec and no further action
has been initiated by the note holder.

Interest expense on long-term debt during the year was $50,592 [$81,338 in 2000;
$37,209 in 1999].

9. DEBT EQUIVALENT

In 1999, Dantec entered into an agreement with a Dantec shareholder holding
850,000 Class A special shares to redeem a minimum of 10,000 Class A special
shares per month, at Cdn. $1 per share, commencing October 30, 1999. Each month,
the shareholder is entitled to redeem additional shares in an amount equal to
20% of the preceding month's net profits before taxes. The shareholder has the
right to call upon Dantec to satisfy its obligation in full at any time should
it be deemed necessary by the shareholder. Should Dantec become a publicly
traded company during the period of redemption, the shareholder will be entitled
to convert any non-redeemed shares to free trading stock. At December 31, 2001,
there were 700,000 Class A special shares outstanding [730,000 outstanding at
December 31, 2000]. Based on payment terms, the amount owing of Cdn. $700,000
[U.S. $439,740] at December 31, 2001 has been classified as a debt equivalent in
these consolidated financial statements [U.S. $487,056 at December 31, 2000].

10. 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. $4,000] monthly pension
benefit for life. The accrued pension obligation represents the actuarial value
of a life annuity using a discount rate of 6%. This obligation is adjusted
annually based on payments made and changes in actuarial assumptions.


                                                                            F-31
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

11. INCOME TAXES

Details of the income tax (recovery) are as follows:

<TABLE>
<CAPTION>
                                     2001             2000              1999
                                       $                $                 $
--------------------------------------------------------------------------------
<S>                                <C>              <C>              <C>

Current:
  U.S                                42,485         (718,996)          (950,562)
  Foreign                                --               --                 --
                                   --------         --------         ----------
Total current taxes                  42,485         (718,996)          (950,562)
                                   --------         --------         ----------
Deferred:
  U.S                              (158,108)         279,430           (100,319)
  Foreign                                --               --                 --
                                   --------         --------         ----------
Total deferred taxes               (158,108)         279,430           (100,319)
                                   --------         --------         ----------
INCOME TAX (RECOVERY)              (115,623)        (439,566)        (1,050,881)
                                   ========         ========         ==========
</TABLE>

Income tax (recovery) reconciles to the statements of operations as follows:

<TABLE>
<CAPTION>
                                                       2001             2000           1999
                                                         $                $              $
----------------------------------------------------------------------------------------------
<S>                                                  <C>              <C>           <C>

(Recovery of) income taxes                           (115,623)        (439,566)       (920,467)
Tax related to cumulative effect of a change in
  accounting principle [note 3r]                           --               --        (130,414)
                                                     --------         --------      ----------
                                                     (115,623)        (439,566)     (1,050,881)
                                                     ========         ========      ==========
</TABLE>


                                                                            F-32
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

11. INCOME TAXES CONT'D

<TABLE>
<CAPTION>
                                                              2001             2000              1999
                                                                $                $                 $
--------------------------------------------------------------------------------------------------------
<S>                                                        <C>              <C>               <C>

(Loss) before (recovery of) income taxes:
  U.S                                                      (4,455,525)      (3,380,226)       (2,200,136)
  Foreign                                                  (4,411,681)      (3,417,623)       (3,949,110)
                                                           ----------       ----------        ----------
(LOSS) BEFORE (RECOVERY OF) INCOME TAXES                   (8,867,206)      (6,797,849)       (6,149,246)
                                                           ==========       ==========        ==========
</TABLE>

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>
                                                                  2001             2000             1999

--------------------------------------------------------------------------------------------------------
<S>                                                              <C>              <C>               <C>

U.S. statutory income tax rate                                   34.0%            34.0%            34.0%
                                                                -----            -----             ----
 (Decrease) increase in income tax resulting from:
  Non-deductible goodwill amortization                           -6.1%            -5.4%            -4.3%
  Loss in subsidiaries not recognized for tax purposes          -24.7%           -19.5%            -8.4%
  Other                                                          -1.6%            -3.0%            -4.2%
                                                                -----            -----             ----
EFFECTIVE INCOME TAX RATE                                         1.6%             6.1%            17.1%
                                                                =====            =====             ====
</TABLE>

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

<TABLE>
<CAPTION>
                                                               2001            2000            1999
                                                                 $               $               $
-----------------------------------------------------------------------------------------------------
<S>                                                        <C>              <C>              <C>

Change in:
Lack of basis for technology                                 (152,843)              --             --
Pension obligation                                             17,348            9,119         (3,985)
Accounting principle                                            5,722           32,526       (130,414)
Exchange of shares upon the
  amalgamation forming Dantec                                  (5,265)          (3,402)         5,251
Operating tax loss carryforward                              (634,000)      (1,299,000)            --
Income tax losses available for
  carryforward in subsidiaries                               (422,000)       1,399,000        758,000
Other                                                              --          (28,829)        28,829
Valuation allowance                                         1,032,930          170,016       (758,000)
                                                           ----------       ----------       --------
                                                             (158,108)         279,430       (100,319)
                                                           ==========       ==========       ========
</TABLE>


                                                                            F-33
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

11. 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>
                                                                       2001             2000
                                                                         $                $
-----------------------------------------------------------------------------------------------
<S>                                                                 <C>              <C>

Deferred tax assets:
U.S.
  Operating tax loss carryforward                                    1,933,000        1,299,000
  Related to pension obligation                                        154,780          172,128
  Related to a change in accounting principle                           92,166           97,888
  Less: Valuation allowance                                         (2,179,946)      (1,569,016)
                                                                    ----------       ----------
                                                                            --               --
                                                                    ----------       ----------
Deferred tax liabilities:
U.S.
  Related to lack of tax basis for technology                          476,157          629,000
  Related to the exchange of shares upon the
    amalgamation forming Dantec                                         84,807           90,072
  Related to the unrealized gains attributable to
    securities available for sale valued at market                     215,619        1,197,988
                                                                    ----------       ----------
                                                                       776,583        1,917,060
                                                                    ----------       ----------
NET DEFERRED TAX (LIABILITY)                                          (776,583)      (1,917,060)
                                                                    ==========       ==========

Deferred tax assets:
Foreign
  Income tax losses available for carryforward in subsidiaries       3,856,000        3,434,000
  Less: Valuation allowance                                         (3,856,000)      (3,434,000)
                                                                    ----------       ----------
NET DEFERRED TAX ASSET - FOREIGN                                            --               --
                                                                    ==========       ==========
</TABLE>


                                                                            F-34
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

11. INCOME TAXES CONT'D

At December 31, 2001, the Company had losses available for carryforward in
certain of its Canadian subsidiaries of approximately $11,017,118 [$9,810,695 in
2000] available to reduce future years' income for tax purposes in these
subsidiaries. These losses expire as follows:

<TABLE>
<CAPTION>
                                                                          $
--------------------------------------------------------------------------------
<S>                                                                   <C>

2002                                                                   1,374,522
2003                                                                   1,412,637
2004                                                                   2,393,348
2005                                                                   1,441,557
2006                                                                   2,190,430
Beyond                                                                 2,204,624
                                                                      ----------
                                                                      11,017,118
                                                                      ==========
</TABLE>

12. 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 36,000 [4,500 in 2000] common
      shares for aggregate cash consideration $34,240 [$12,110 in 2000].


                                                                            F-35
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

12. 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 by reference to the noon spot rate for conversion of Canadian
      dollars into U.S. dollars as published by the National Bank of Canada on
      the business day immediately preceding 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, 2001, an amount of $13,732 [$11,384 at December 31, 2000] has been
      accrued in respect of cumulative unpaid dividends.

      During 2001 and 2000, 168 and 21,355 shares of Series A Preferred were
      redeemed respectively into common shares. 1,906 and 242,390 common shares
      were issued respectively in regard to their conversion.


                                                                            F-36
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

12. STOCKHOLDERS' EQUITY CONT'D

[b]   PREFERRED STOCK CONT'D

      SERIES B CONVERTIBLE PREFERRED STOCK

      In 1999, the Company issued 350,000 shares of newly created Series B, 6%
      cumulative, Convertible Preferred Stock ["Series B Preferred"]. The Series
      B Preferred is senior to each other class of the Company's capital stock,
      including the Company's common stock and Series A Preferred, 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, 2001, an amount of $210,000 [$210,000 at December 31, 2000]
      has been accrued in respect of cumulative unpaid dividends on the Series B
      Preferred. During 2000, 137,593 common shares of the Company were issued
      to holders of the Series B Preferred as payment for cumulative dividends
      on the Series B Preferred.

      In March, 2000, the terms of the Series B Preferred were amended by
      agreement between CVF and the holder of the Series B Preferred. The
      amendments included extending the non-convertible period of the Series B
      Preferred to September 1, 2000 and setting a price cap of $4.00 per common
      share on the conversion amount. During the year, 5,000 Series B shares
      were converted to 43,504 common shares. The transaction was valued at
      $50,287 based on the average of the last 10 day's trading price of the
      common shares before the conversion date.

[c]   WARRANTS

      There are 386,818 Warrants outstanding at December 31, 2001 [1,339,602 at
      December 31, 2000].


                                                                            F-37
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

12. STOCKHOLDERS' EQUITY CONT'D

[c]   WARRANTS CONT'D

      302,202 of the Warrants outstanding at December 31, 2001 [1,339,602 at
      December 31, 2000] relate to the Series B 6% Convertible Preferred [the
      Series B Warrants] issued in 1999. The Series B Warrants are exercisable
      until October 8, 2002, at a price of U.S. $3.78. All shares issuable upon
      exercise of the Series B Warrants will be restricted securities as that
      term is defined in Rule 144 under the 1933 Securities Act of the United
      States. 15,000 of these Warrants were exercised in 2000.

      The Series B Warrants issued in 1999 were fair valued as a discount on the
      Series B Preferred using the Black Scholes model. This value was amortized
      as a beneficial conversion feature on the Series B Preferred during 2000
      over the expected period of the Series B Preferred, as a debit to retained
      earnings (deficit).

      In March 2000, 84,616 Warrants were issued in connection with the
      amendments to the Series B Preferred. None of these Warrants were
      exercised during the year. The Warrants have the same terms as the Series
      B Warrants issued in 1999.

      The Warrants issued in 2000 were fair valued using the Black Scholes
      model. This value was amortized as a beneficial conversion feature on the
      Series B Preferred during 2000 over the expected period of the Series B
      Preferred, as a debit to retained earnings (deficit).

      During the year, 952,784 warrants issued on the formation of the Company
      expired. There was no capital value associated with these warrants.


                                                                            F-38
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

12. STOCKHOLDERS' EQUITY CONT'D

[d]   COMPREHENSIVE INCOME (LOSS)

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

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

<TABLE>
<CAPTION>
                                                       UNREALIZED                               ACCUMULATED
                                                      GAINS (LOSSES)         FOREIGN               OTHER
                                                      ON SECURITIES          CURRENCY          COMPREHENSIVE
                                                       [NET OF TAX]         TRANSLATION       INCOME (LOSSES)
                                                            $                    $                   $
           ------------------------------------------------------------------------------------------------
<S>                                                   <C>                   <C>               <C>

           BALANCE - JANUARY 1, 1999                       (9,354)            (646,382)            (655,736)

           Current year other comprehensive income        371,152              307,547              678,699
                                                       ----------           ----------           ----------
           BALANCE - DECEMBER 31, 1999                    361,798             (338,835)              22,963

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

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

      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>

      1999                626,833         (14,986)        240,695       371,152
      2000              2,391,973              --         956,789     1,435,184
      2001                     --      (1,969,563)        514,082    (1,455,481)
</TABLE>


                                                                            F-39
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

13. EARNINGS PER SHARE

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

<TABLE>
<CAPTION>
                                                             2001             2000             1999
                                                               $                $                $
------------------------------------------------------------------------------------------------------
<S>                                                       <C>              <C>              <C>
Numerator:
  Net (loss)                                              (5,929,961)      (5,893,081)      (5,086,153)
  Dividends on Series A preferred stock                       (2,348)         (15,225)         (22,814)
  Dividends on Series B preferred stock                     (210,000)        (210,000)         (48,300)
  Amortization of beneficial conversion feature on
    Series B preferred stock                                      --         (629,447)              --
                                                          ----------       ----------       ----------
  Numerator for basic and diluted (loss) per share
    -- (loss) available to common stockholders            (6,142,309)      (6,747,753)      (5,157,267)
                                                          ----------       ----------       ----------
Denominator:
  Denominator for basic (loss) per share -- weighted
   average shares outstanding                              9,263,042        7,543,336        6,722,997
  Effect of dilutive securities
   Warrants                                                       --               --               --
                                                          ----------       ----------       ----------
  Dilutive potential common shares
    Denominator for diluted (loss) per share --
      adjusted weighted-average shares and assumed
      conversions                                          9,263,042        7,543,336        6,722,997
                                                          ----------       ----------       ----------
Basic (loss) per share                                         (0.66)           (0.89)           (0.77)
Diluted (loss) per share                                       (0.66)           (0.89)           (0.77)
</TABLE>


                                                                            F-40
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

14. BUSINESS AQUISITION AND SUPPLEMENTARY SUBSIDIARY INFORMATION

[a]   ECOVAL

      During 2000, the Company increased its interest in Ecoval to 88% through
      the purchase of key assets. Details of the Ecoval transactions during 2000
      are as follows:

<TABLE>
<CAPTION>
                                                                        2000
                                                                          $
      -------------------------------------------------------------------------
<S>                                                                  <C>

      Carrying value of equity investment, beginning of year          1,554,757
      Additional share purchased prior to acquiring control           1,050,001
      Funds advanced prior to acquiring control                         756,064
      Equity in losses prior to increase in percentage holding       (1,205,462)
      Additional investment to bring investment to 88% interest
        [CVF shares issued as consideration]                            935,772
      CVF shares issued for transaction costs                            93,577
                                                                     ----------
      TOTAL INVESTMENT                                                3,184,709
                                                                     ==========
</TABLE>

      The costs of this position have been assigned as follows:

<TABLE>
<CAPTION>
                                                                        2000
                                                                          $
      -------------------------------------------------------------------------
<S>                                                                   <C>

      Taxes recoverable                                               1,963,000
      Working capital                                                   (49,788)
      Technology                                                      1,900,497
      Future tax liability                                             (629,000)
                                                                      ---------
      TOTAL                                                           3,184,709
                                                                      =========
</TABLE>

      During the 2001 year, the purchase price of the investment was reduced by
      $194,675. This was credited to technology and the related future tax
      liability was reduced by $66,190.


                                                                            F-41
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

14. BUSINESS AQUISITION AND SUPPLEMENTARY SUBSIDIARY INFORMATION CONT'D

[b]   GEMPRINT

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

      During 2000, the Company sold a portion of its holdings in Gemprint to a
      corporation formed for the benefit of certain Gemprint employees. The sale
      involved 5,614,743 common shares of Gemprint reducing CVF's interest from
      73% to 56.1%. Consideration received was a demand promissory note in the
      amount of $333,600 [Cdn. $500,000], bearing interest at 5% per annum. CVF
      has given an undertaking to the purchaser not to demand repayment during
      the next fiscal year.

      Pursuant to Staff Accounting Bulletin Topic 5E, the Company will not
      recognize this transaction until 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, 2001 Cdn. $250,000, U.S. $157,050]. The remaining Class B and
      all of the Class C shares are held by CVF. The timing of these retractions
      are restricted to specific time periods and Gemprint has received a notice
      to retract Cdn. $250,000 by a third-party investor. Cumulative dividends
      payable to third-party investees of $336,715 [$307,579 in 2000] have been
      accrued in these consolidated statements and included in trade payables
      and accrued liabilities.


                                                                            F-42
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

14. BUSINESS AQUISITION AND SUPPLEMENTARY SUBSIDIARY INFORMATION CONT'D

[c]   ELEMENTS

      In September 2001, Elements ("Retail Products"), a subsidiary company of
      which CVF has a beneficial 61% interest, discontinued its operations. The
      related retail store and internet site were closed but will not be sold
      and the discontinuance is complete. Sales of the segment for 2001, 2000
      and 1999 were $220,813, $629,602 and $868,596 respectively. Due to the
      closing of the operations, CVF's goodwill in Elements of $470,398 has been
      written off.

      The loss on closing of Elements was calculated as follows:

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

[d]   DANTEC

      Dantec has outstanding to third-parties 755,000 [2000 - 848,425] Special
      Class A non-voting shares with a value of $474,291. 55,000 of these shares
      have been included in Preferred and other non-voting stock of subsidiaries
      [at December 31, 2001 Cdn. $55,000, U.S. $34,551]. The remaining 700,000
      [2000 - 730,000] shares are included in Debt equivalent [note 9]. The
      shares have no interest or dividend provisions but are convertible to
      either cash or an equal number of common shares depending on the
      occurrence and timing of a public offering of Dantec. Should a conversion
      to common shares occur, the Company's 54% ownership position would be
      diluted to approximately 49%.

[e]   PREFERRED AND NON-VOTING STOCK OF SUBSIDIARIES

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

<TABLE>
<CAPTION>
                                                       2001               2000
                                                         $                  $
      --------------------------------------------------------------------------
<S>                                                   <C>                <C>

      Dantec Special Class A non-voting shares         34,551             79,013
      Gemprint Class B and C voting shares            162,343            166,800
                                                      -------            -------
                                                      196,894            245,813
                                                      =======            =======
</TABLE>


                                                                            F-43
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

15. STOCK BASED COMPENSATION

During 2001, the Company granted 530,000 [275,000 in 2000] stock options to
certain officers, employees and directors. The option exercise price equals the
fair market value at the date of grant. A summary of stock option activity
follows:

<TABLE>
<CAPTION>
                                                                        WEIGHTED
                                                                        AVERAGE
                                                                        EXERCISE
                                                 SHARES                  PRICE
--------------------------------------------------------------------------------
<S>                                             <C>                     <C>

Outstanding January 1, 1999                       385,000                $3.25
  Granted during the year                         530,000                $2.88
                                                ---------                -----
Outstanding December 31, 1999                     915,000                $3.04
  Granted during the year                         275,000                $2.88
  Expired during the year                         (22,500)               $3.25
                                                ---------                -----
Outstanding December 31, 2000                   1,167,500                $3.00
  Granted during the year                         530,000                $0.55
  Expired during the year                        (282,000)               $2.41
                                                ---------                -----
OUTSTANDING DECEMBER 31, 2001                   1,415,500                $2.21
                                                =========                =====
</TABLE>

1,415,500 stock options are exercisable at year-end.

At December 31, 2001, the weighted average life of outstanding and exercisable
options was 5.0 years [4.9 in 2000]. The per share weighted average fair value
of stock options granted during 2001 was $0.55 [$2.09 in 2000, $1.88 in 1999] on
the date of grant using the Black Scholes option-pricing model with the
following weighted average assumptions: expected dividend yield - none,
risk-free interest rate of 5% [5% in 2000, 5% in 1999], volatility of 112.8%
[90.7% in 2000, 76.2% in 1999] and an expected life of five years. If these
options were valued, as prescribed by SFAS 123, pro forma net loss would have
been approximately $7,324,690 [$6,272,416 for 2000, $5,236,153 for 1999] and
loss per share would have been $0.76 for 2001 [$0.94 in 2000, $0.76 in 1999].

No compensation expense is recognized for this plan when options are issued.


                                                                            F-44
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

15. STOCK BASED COMPENSATION CONT'D

A summary of the status of the Company's stock option plan as of December 31,
2001 is presented below.

<TABLE>
<CAPTION>
                                 OPTIONS OUTSTANDING                       OPTIONS EXERCISABLE
                --------------------------------------------------    -----------------------------
                                      WEIGHTED-
                    NUMBER             AVERAGE           WEIGHTED-        NUMBER          WEIGHTED-
                OUTSTANDING AT        REMAINING           AVERAGE     EXERCISABLE AT       AVERAGE
EXERCISE         DECEMBER 31         CONTRACTUAL         EXERCISE       DECEMBER 31       EXERCISE
PRICES              2001             LIFE (YEARS)          PRICE           2001             PRICE
---------------------------------------------------------------------------------------------------
<S>             <C>                  <C>                 <C>          <C>                 <C>

$0.55             530,000                5.0              $0.55          530,000            $0.55
$2.88             500,000                5.0              $2.88          500,000            $2.88
$3.25             385,000                4.9              $3.25          385,000            $3.25
</TABLE>

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, 2001 for those consolidated entities which have
issued options are as follows:


                                                                            F-45
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

15. STOCK BASED COMPENSATION CONT'D

[a]   Dantec granted employee options prior to 2001 to acquire 369,200 common
      shares, at prices ranging from Cdn. $0.89 to Cdn. $1.14 per share, all of
      which are exercisable at December 31, 2001.

[b]   A total of 4,428,000 options to purchase shares of Gemprint are
      outstanding, 3,374,664 of which are exercisable at December 31, 2001.
      These options have a weighted average price of Cdn. $0.20 per share. Of
      the options outstanding, nil were granted in 2001, 3,428,000 were granted
      in 2000 and nil were granted in 1999. Gemprint has a total of 47,653,161
      shares outstanding as at December 31, 2001.

[c]   A total of 336,000 options to purchase shares of Biorem are outstanding,
      177,999 of which are exercisable at December 31, 2001. These options have
      a weighted average exercise price of Cdn. $1.82 per share. No options were
      granted either in 2001 or in 2000. Biorem has a total of 1,402,529 shares
      outstanding as at December 31, 2001.

[d]   In 2000, SRE granted 14,740 options to purchase its common shares at a
      price of Cdn. $3.28 per share. Of these options, 5,528 are exercisable at
      December 31, 2001. SRE has a total of 1,566,149 shares outstanding as at
      December 31, 2001.

16. EXTRAORDINARY ITEM

An extraordinary gain of $216,095 [after taxes of $nil] or $0.03 per common
share arose from the settlement of Gemprint's loan from ISM in 2000. [note 8].


                                                                            F-46
<PAGE>

CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SUPPORT FOR NOTES

December 31, 2001

17. SUPPLEMENTARY INFORMATION ON CASH FLOWS

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

<TABLE>
<CAPTION>
                                                    2001             2000             1999
                                                      $                $                $
---------------------------------------------------------------------------------------------
<S>                                               <C>              <C>              <C>
Loss on discontinuance of segment [note 14(c)]      102,367               --               --
Depreciation and amortization                     1,331,164        1,351,952          986,613
Write down of goodwill                            2,589,304               --               --
Loss from equity investees                          244,153        1,634,367        1,292,600
Shares issued in lieu of cash                       206,096          339,063               --
Cumulative effect of change in
  accounting principle                                   --               --          253,154
(Gain) loss on sale of holdings                    (501,040)        (412,917)          97,720
Minority interest in losses of subsidiaries      (2,821,622)        (633,585)        (395,780)
Deferred income tax expense                        (158,108)         279,430         (100,319)
Pension expense                                      38,357           34,445           57,729
Loss (gain) on debt settlement                           --         (216,095)              --
                                                 ----------        ---------        ---------
                                                  1,030,671        2,376,660        2,191,717
                                                 ==========        =========        =========
</TABLE>

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

<TABLE>
<CAPTION>
                                                    2001             2000             1999
                                                      $                $                $
---------------------------------------------------------------------------------------------
<S>                                               <C>              <C>              <C>
Decrease in trading securities                           --               --          112,357
Decrease (increase) in trade receivables          1,120,998         (337,914)       1,171,356
Decrease (increase) in inventory and other          440,949         (575,802)         142,612
Decrease (increase) in income taxes receivable    2,451,929          537,193         (163,503)
(Decrease) increase in trade payables and
 accrued liabilities                               (515,244)       1,231,175         (862,377)
                                                  ---------        ---------        ---------
                                                  3,498,632          854,652          400,445
                                                  =========        =========        =========
</TABLE>


                                                                            F-47


<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

17. SUPPLEMENTARY INFORMATION ON CASH FLOWS CONT'D

During the year, the Company entered into the following non-cash transactions:

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

[b]   During 1999, 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 the line of credit
      [note 7].

[c]   In September 2001, Elements, decided to discontinue its operations. The
      retail store and internet site were closed but will not be sold and the
      discontinuance is complete. Due to the closing of the operations, CVF's
      goodwill in Elements of $470,398 was written off during 2001.

18. SEGMENTED INFORMATION

In 2000, as a result of growth in the bioremediation segment, the Company
reallocated business units to business segments to more appropriately group
units for chief operation decision purposes and reporting in accordance with
SFAS 131. This change was applied on a retroactive basis. During 2001, the
Company discontinued the operations of its retail products segment (Elements).
The comparative information in this note has been restated to remove the retail
segment from continuing operations.

The Company has four reportable segments: bioremediation, machine controls,
precious gem identification, 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
division 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 Company's general corporate segment
includes one company which provides funding and management overview services to
the holdings. This segment's results also include interest income and gains on
sales of its various holdings.

Segment assets consist of capital assets and goodwill.


                                                                            F-48
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

18. SEGMENTED INFORMATION CONT'D

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

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

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

Sales of approximately $9,410,000 [$11,985,000 in 2000; $12,300,000 in 1999] 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, 2001, 2000 and 1999, 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 76% [68% in 2000; 73% in 1999] 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 companies in the general corporate segment for funding to enable them to
meet their business objectives. Other income includes income from government
grants and leasing income.


                                                                            F-49
<PAGE>
CVF TECHNOLOGIES CORPORATION

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

18. SEGMENTED INFORMATION CONT'D

<TABLE>
<CAPTION>
                                                                                    MACHINE           IDENTIFICATION
                                                            BIOREMEDIATION         CONTROLS               SYSTEMS
2001                                                               $                   $                     $
--------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>                    <C>                <C>
SALES                                                           784,906            9,601,001              481,465
                                                               --------            ---------            ---------

(Loss) income from operations before
  depreciation and research and development                    (237,563)            (553,331)            (505,137)
Depreciation                                                     14,164               14,867                7,490
Research and development                                        124,318              405,045                4,369
                                                               --------            ---------            ---------
(Loss) from operations before other income (expenses)          (376,045)            (973,243)            (516,996)
Interest income                                                      --                9,824                   --
Interest expense                                                (13,489)              (8,682)            (167,156)
Other income (expenses), net                                     33,845               50,887               22,904
(Loss) from equity investees                                         --                   --                   --
(Loss) gain on sale of holdings                                      --                   --                   --
                                                               --------            ---------            ---------
Segment (loss) before (recovery) of income taxes               (355,689)            (921,214)            (661,248)
                                                               --------            ---------            ---------
(Recovery) of income taxes                                           --                   --                   --
                                                               --------            ---------            ---------
Net (loss)                                                     (355,689)            (921,214)            (661,248)
Minority interest                                                    --              206,560               9,598
                                                               --------            ---------            ---------
NET (LOSS) FROM CONTINUING OPERATIONS                          (355,689)            (714,654)            (651,650)
                                                               ========            =========            =========

Depreciation and amortization                                    48,850               48,244              313,363
Write down of goodwill                                               --                   --                   --
Capital expenditures                                              5,280                5,046                4,163
Segment assets                                                  143,845              227,657            1,220,743
</TABLE>

<TABLE>
<CAPTION>
                                                              CORPORATE
                                                            ADMINISTRATION        ALL OTHER               TOTAL
2001                                                              $                   $
------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>                   <C>                   <C>
SALES                                                                --            1,483,962            12,351,334
                                                             ----------           ----------            ----------

(Loss) income from operations before
  depreciation and research and development                  (2,302,511)          (4,312,677)           (7,911,219)
Depreciation                                                      7,580                7,405                51,506
Research and development                                             --              282,843               816,575
                                                             ----------           ----------            ----------
(Loss) from operations before other income (expenses)        (2,310,091)          (4,602,925)           (8,779,300)
Interest income                                                  26,630                   --                36,454
Interest expense                                                     --              (15,370)             (204,697)
Other income (expenses), net                                    (50,301)               7,034                64,369
(Loss) from equity investees                                   (244,153)                  --              (244,153)
(Loss) gain on sale of holdings                                 501,040                   --               501,040
                                                             ----------           ----------            ----------
Segment (loss) before (recovery) of income taxes             (2,076,875)          (4,611,261)           (8,626,287)
                                                             ----------           ----------            ----------
(Recovery) of income taxes                                        6,198             (121,821)             (115,623)
                                                             ----------           ----------            ----------
Net (loss) before minority interest                          (2,083,073)          (4,489,440)           (8,510,664)
Minority interest                                                    --            2,605,464             2,821,622
                                                             ----------           ----------            ----------
NET (LOSS) FROM CONTINUING OPERATIONS                        (2,083,073)          (1,883,976)           (5,689,042)
                                                             ==========           ==========            ==========

Depreciation and amortization                                    12,580            1,378,525             1,801,562
Write down of goodwill                                               --            2,589,304             2,589,304
Capital expenditures                                              1,641                  699                16,829
Segment assets                                                   14,629            2,894,147             4,501,021
</TABLE>


                                                                            F-50
<PAGE>
CVF TECHNOLOGIES CORPORATION

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

18. SEGMENTED INFORMATION CONT'D

<TABLE>
<CAPTION>
                                                                                    MACHINE           IDENTIFICATION
                                                            BIOREMEDIATION         CONTROLS               SYSTEMS
2000                                                               $                   $                     $
--------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>                    <C>                <C>
SALES                                                          2,244,280           12,299,978              236,917
                                                               ---------           ----------            ---------
(Loss) income from operations before
  depreciation and research and development                     (109,526)            (152,662)            (701,876)
Depreciation                                                      18,055               34,142               34,483
Research and development                                          81,686              555,993                6,028
                                                               ---------           ----------            ---------
(Loss) from operations before other income (expenses)           (209,267)            (742,797)            (742,387)
Interest income                                                       --               45,174                  977
Interest expense                                                  (4,892)             (22,924)             (85,602)
Other income, net                                                 19,918               34,159                1,193
(Loss) from equity investees                                          --                   --                   --
Gain on sale of holdings                                              --                   --                   --
                                                               ---------           ----------            ---------
Segment (loss) before (recovery) of income taxes                (194,241)            (686,388)            (825,819)
                                                               ---------           ----------            ---------
(Recovery) of income taxes                                            --                   --                   --
                                                               ---------           ----------            ---------
Net (loss) before minority interest                             (194,241)            (686,388)            (825,819)
Minority interest                                                     --              163,196                   --
                                                               ---------           ----------            ---------
Net (loss) from continuing operations                           (194,241)            (523,192)            (825,819)
Extraordinary gain                                                    --                   --              216,095
                                                               ---------           ----------            ---------
NET (LOSS) FROM SEGMENTS                                        (194,241)            (523,192)            (609,724)
                                                               =========           ==========            =========

Depreciation and amortization                                     43,795               39,482              355,730
Capital expenditures                                              98,704               58,461                8,331
Segment assets                                                   197,613              286,250            1,631,878
</TABLE>

<TABLE>
<CAPTION>
                                                              CORPORATE
                                                            ADMINISTRATION        ALL OTHER               TOTAL
2000                                                              $                   $
------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>                   <C>                   <C>
SALES                                                                 --           1,590,412            16,371,587
                                                              ----------          ----------            ----------
(Loss) income from operations before
  depreciation and research and development                   (2,367,005)           (781,008)           (4,112,077)
Depreciation                                                      20,447             175,181               282,308
Research and development                                              --              78,198               721,905
                                                              ----------          ----------            ----------
(Loss) from operations before other income (expenses)         (2,387,452)         (1,034,387)           (5,116,290)
Interest income                                                   60,384               1,403               107,938
Interest expense                                                      --             (47,033)             (160,451)
Other income, net                                                 59,804               9,728               124,802
(Loss) from equity investees                                  (1,634,367)                 --            (1,634,367)
Gain on sale of holdings                                         412,917                  --               412,917
                                                              ----------          ----------            ----------
Segment (loss) before (recovery) of income taxes              (3,488,714)         (1,070,289)           (6,265,451)
                                                              ----------          ----------            ----------
(Recovery) of income taxes                                      (439,566)                 --              (439,566)
                                                              ----------          ----------            ----------
Net (loss) before minority interest                           (3,049,148)         (1,070,289)           (5,825,885)
Minority interest                                                     --              85,911               249,107
                                                              ----------          ----------            ----------
Net (loss) from continuing operations                         (3,049,148)           (984,378)           (5,576,778)
Extraordinary gain                                                    --                  --               216,095
                                                              ----------          ----------            ----------
NET (LOSS) FROM SEGMENTS                                      (3,049,148)           (984,378)           (5,360,683)
                                                              ==========          ==========            ==========

Depreciation and amortization                                     20,448             892,497             1,351,952
Capital expenditures                                               6,612              15,572               187,680
Segment assets                                                    26,774           3,788,996             5,931,511
</TABLE>


                                                                            F-51
<PAGE>
CVF TECHNOLOGIES CORPORATION

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

18. SEGMENTED INFORMATION CONT'D
<TABLE>
<CAPTION>
                                                                                    MACHINE           IDENTIFICATION
                                                            BIOREMEDIATION         CONTROLS               SYSTEMS
1999                                                               $                   $                     $
--------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>                    <C>                <C>

SALES                                                          1,325,771           12,650,194              184,943
                                                               ---------           ----------            ---------
(Loss) income from operations before
  depreciation and research and development                      (89,100)             267,541             (652,734)
Depreciation                                                       9,434               32,761                9,558
Research and development                                           2,944              466,952               72,670
                                                               ---------           ----------            ---------
(Loss) from operations before other income (expenses)           (101,478)            (232,172)            (734,962)
Interest income                                                      147               11,364                  914
Interest expense                                                  (1,289)             (17,568)             (63,070)
Other income, net                                                 86,673               20,919                   --
(Loss) from equity investees                                          --                   --                   --
(Loss) on sale of holdings                                            --                   --                   --
                                                               ---------           ----------            ---------
Segment (loss) before provision for income taxes                 (15,947)            (217,457)            (797,118)
                                                               ---------           ----------            ---------
(Recovery) of income taxes                                            --                   --                   --
                                                               ---------           ----------            ---------
Net (loss) before minority interest                              (15,947)            (217,457)            (797,118)
                                                               ---------           ----------            ---------
Minority interest                                                     --                   --                   --
                                                               ---------           ----------            ---------
NET (LOSS) FROM CONTINUING OPERATIONS                            (15,947)            (217,457)            (797,118)
                                                               =========           ==========            =========

Depreciation and amortization                                     21,051               59,761              183,135
Capital expenditures                                                  --                3,567                   --
Segment assets                                                   147,655              338,051            2,050,474
</TABLE>

<TABLE>
<CAPTION>
                                                              CORPORATE
                                                            ADMINISTRATION        ALL OTHER               TOTAL
1999                                                              $                   $
------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>                   <C>                   <C>
SALES                                                                 --           1,659,856            15,820,764
                                                              ----------           ---------            ----------
(Loss) income from operations before
  depreciation and research and development                   (2,099,781)           (808,975)           (3,383,049)
Depreciation                                                      22,068              73,895               147,716
Research and development                                              --              95,580               638,146
                                                              ----------           ---------            ----------
(Loss) from operations before other income (expenses)         (2,121,849)           (978,450)           (4,168,911)
Interest income                                                   87,519              11,924               111,868
Interest expense                                                 (52,361)            (37,905)             (172,193)
Other income, net                                                163,390              11,413               282,395
(Loss) from equity investees                                  (1,292,600)                 --            (1,292,600)
(Loss) on sale of holdings                                       (97,720)                 --               (97,720)
                                                              ----------           ---------            ----------
Segment (loss) before provision for income taxes              (3,313,621)           (993,018)           (5,337,161)
                                                              ----------           ---------            ----------
(Recovery) of income taxes                                      (882,696)            (37,771)             (920,467)
                                                              ----------           ---------            ----------
Net (loss) before minority interest                           (2,430,925)           (955,247)           (4,416,694)
                                                              ----------           ---------            ----------
Minority interest                                                395,780                                   395,780
                                                              ----------           ---------            ----------
NET (LOSS) FROM CONTINUING OPERATIONS                         (2,035,145)           (955,247)           (4,020,914)
                                                              ==========           =========            ==========

Depreciation and amortization                                     22,068             700,598               986,613
Capital expenditures                                               4,296              16,046                23,909
Segment assets                                                    39,398           4,614,339             7,189,917
</TABLE>


                                                                            F-52
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001                                   [Expressed in U.S. Currency]

19. COMMITMENTS

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

Minimum future rental payments under non-cancelable operating leases having
remaining terms in excess of one year as of December 31, 2001 for each of the
next five years and in aggregate are:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31                                                      $
--------------------------------------------------------------------------------
<S>                                                                      <C>
2002                                                                     160,224
2003                                                                     118,585
2004                                                                      86,719
2005                                                                      59,964
2006                                                                      49,128
                                                                         -------
TOTAL MINIMUM FUTURE RENTAL PAYMENTS                                     474,620
                                                                         =======
</TABLE>

Rental expense for the year was $252,761 [$227,331 for 2000; $253,030 for 1999].

20. CONTINGENCIES

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.

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


                                                                            F-53
<PAGE>
CVF TECHNOLOGIES CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

21. SUBSEQUENT EVENTS

a]    HOLDINGS AVAILABLE FOR SALE.

      Subsequent to the year end, the Company continued to dispose of a portion
      of its holdings for sale. The proceeds of disposals from January 1, 2002
      to April 10, 2002 were $614,859. The gain realized on disposals to that
      date was $224,237. The market value of holdings available for sale of RDM
      and Turbonsonic was $ 432,427 at April 10, 2002.

b]    GEMPRINT BANK LOAN.

      After year end, the Company agreed to settle the outstanding bank loan of
      Gemprint with the funds available from a term deposit, which the bank held
      as collateral. No gain or loss arose on the transaction.

c]    DANTEC.

      Subsequent to the year end, the Company approved a plan to dispose of its
      interest in Dantec. The Company accepted an offer to purchase its interest
      in Dantec and expects the net proceeds of sale will approximate the
      carrying value of its investment in Dantec. The reported revenue and loss
      of Dantec included in these financial statements for the 2001 year was
      $1,098,540 and $538,878 respectively. The consolidated balance sheet
      includes the following amounts in connection with Dantec.

                         Current Assets           $388,721
                         Fixed Assets               35,077
                         Goodwill                  481,488
                                                  --------
                                                  $905,286
                                                  ========

                         Current Liabilities      $710,426
                         Minority Interest         160,309
                         Preferred Stock            34,551
                                                  --------
                                                  $905,286
                                                  ========

22. COMPARATIVE FIGURES

     Certain comparative figures have been reclassified to conform with the
     presentations adopted for 2001.


                                                                            F-54
<PAGE>
ITEM 8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
       DISCLOSURE

Not applicable.

                                    PART III

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

(a)   Directors and Executive Officers

The directors and executive officers of CVF are as follows:

<TABLE>
<CAPTION>
NAME                     AGE      POSITION
------------------       ---      ----------------------------------------------
<S>                      <C>      <C>
Jeffrey I. Dreben        56       Director; Chairman, Chief Executive
                                  Officer; and President
Robert B. Nally          54       Director; Chief Operating Officer, Chief
                                  Technology Officer, Secretary; and Treasurer
Robert L. Miller         50       Chief Financial Officer
Lawrence M. Casse        45       Vice President
George A. Khouri         55       Director; Consultant
Robert H. Glazier        53       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 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.
<PAGE>
George A. Khouri has been a consultant to and a Director of CVF since April
1997. Since February 1999 Mr. Khouri has 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.

Section 16(a) Beneficial Ownership Reporting Compliance

During the fiscal year 2001 none of the officers and directors of CVF were late
in filing a report under section 16(a) of the Exchange Act, except that Jeffrey
I. Dreben failed to timely file a report on Form 5 with respect to a donation
transaction by his spouse and Robert B. Nally failed to timely file a report on
Form 4 with respect to a purchase by his spouse.

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, 2001 (the "Named
Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
Name and                                                               Other
Principal                        Salary           Bonus            Compensation
Position              Year          $               $                    $
-----------------     ----      --------         -------           ------------
<S>                   <C>       <C>              <C>               <C>
Jeffrey I. Dreben     1999      $200,000         $25,000                $0
  CEO and             2000      $200,000         $     0                $0
  President           2001      $200,000         $30,000 (4)            $0

Robert B. Nally       1999      $134,762 (1)     $25,000                $0
  COO, CTO,           2000      $134,740 (2)     $     0                $0
  Secretary and       2001      $129,220 (3)     $30,000 (4)            $0
  Treasurer

J. Murray Kierans     1999      $120,000         $     0                $0
  Vice President      2000      $120,000         $     0                $0
                      2001      $120,000 (5)     $10,000                $0
</TABLE>

(1)   Paid in Canadian currency but translated in the table to U.S. Currency.
      Based on the average exchange rate for 1999 of CND $1 - US $.6738

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

(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

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

(5)   Mr. Kierans served as an executive officer until December 2001.
<PAGE>
OPTION/SAR GRANT TABLE

      The following table sets forth individual issuances of stock options to
      acquire common shares of CVF granted during the fiscal year ended December
      31, 2001 to each of the Named Executive Officers.

<TABLE>
<CAPTION>
                                         Percent of
                        Number of       Total options
                       Securities        Granted to
                       Underlying       Employees in     Exercise    Expiration
Name                 Options granted     Fiscal Year      Price         Date
-----------------    ---------------    -------------    --------   ------------
<S>                  <C>                <C>              <C>        <C>
Jeffrey I. Dreben        160,000           32.7%           $0.55    May 29, 2006
Robert B. Nally          160,000           32.7%           $0.55    May 29, 2006
J. Murray Kierans         40,000            8.2%           $0.55    May 29, 2006
</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, 2001      Dec. 31, 2001
                      Acquired      Value      Exercisable/        Exercisable/
Name                 On Exercise   Realized    Unexercisable      Unexercisable
------------------   -----------   --------   ----------------   ---------------
<S>                  <C>           <C>        <C>                <C>
Jeffrey I. Dreben        NIL         NIL        460,000/NIL         $NIL/NIL
Robert B. Nally          NIL         NIL        460,000/NIL         $NIL/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. Mr. Khouri became a consultant
to CVF in June 1997 and is paid $2,500 per month in consulting fees. See
"Certain Transactions and Relationships." Mr. Glazier, appointed a director of
CVF in January 1998, is entitled to receive $750 per Board of Directors meeting
attended in person and $375 per telephonic Board meeting in which he
participates. Directors do receive share options in connection with their
services as directors of the corporation.

ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Voting Securities and Principal Holders

The following table sets forth, as of March 15, 2002, 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.
<PAGE>
<TABLE>
<CAPTION>
                                                NUMBER OF          PERCENTAGE OF
                                              COMMON SHARES        COMMON SHARES
NAME AND ADDRESS                           BENEFICIALLY OWNED          OWNED
--------------------                       ------------------      -------------
<S>                                        <C>                     <C>
Jeffrey I. Dreben (1)                             650,644               6.4%
8604 Main Street, Suite 1
Williamsville, NY 14221

Robert B. Nally (1)                               661,644               6.5%
189 Mary Street
Waterloo, Ontario
Canada, N2J 1S1

Brant Investments Limited                       1,235,731              12.1%
c/o Royal Trust Corporation
 of Canada
Global Bank Plaza
200 Bay Street
Toronto, Ontario M5J 2J5

Prudential Insurance                              647,128               6.3%
Company of America
751 Broad Street
Newark, NY 07102

Laurence W. Lytton                                577,700               5.7%
28 Sherwood Place
Scarsdale, NY 10583

Directors and Officers                          1,647,288              16.1%
as a Group (6 persons) (1)(2)(3)(4)(5)
</TABLE>

(1) Each of Messrs. Dreben and Nally amounts include 100,000 options held by
each of Mr. Dreben and Mr. Nally to acquire CVF's common shares at an option
price of $3.25; 100,000 options held by each of Mr. Dreben and Mr. Nally to
acquire CVF's common shares at an option price of $2.88 per share; 100,000
options held by each of Mr. Dreben and Mr. Nally to acquire CVF's common shares
at an option price of $2.875 per share and 160,000 options held by each of Mr.
Dreben and Mr. Nally to acquire CVF's common shares at an option price of $.55
per share.

(2) Mr. Robert L. Miller, Chief Financial Officer of CVF, has been issued 75,000
Options to acquire common shares of CVF at an exercise price of $2.88 per Share
and an additional 40,000 options to acquire CVF common shares at an option price
of $.55 per share.

(3) Mr. Lawrence M. Casse, a Vice President of CVF, has been issued 20,000
options to acquire common shares of CVF at an exercise price of $3.25 per share
and an additional 20,000 options to acquire CVF common shares at an option price
of $.55 per share.

(4) Mr. Khouri has been issued 30,000 options to acquire CVF common shares at an
option price of $2.88 per share; an additional 30,000 options to acquire CVF
common shares at an option price of $2.875 per share; and an additional 20,000
options to acquire CVF common shares at an option price of $.55 per share.

(5) Mr. Glazier has been issued 20,000 options to acquire CVF common shares at
an option price of $3.25; an additional 30,000 options to acquire CVF common
shares at an option price of $2.88 per share; an additional 30,000 options to
acquire CVF common shares at an option price of $2.875 per share; and an
additional 20,000 options to acquire CVF common shares at an option price of
$.55 per share.

ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Arrangements with Mr. Gissing. In connection with the resignation of Mr. Malcolm
Gissing in May 1997, CVF agreed to pay Mr. Gissing a deferred retirement benefit
of CN$6,000 per month for life.

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"),
pursuant to which D and N are to provide a variety of administrative, managerial
<PAGE>
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 March, 2000 the term of the Service Agreement was extended to Mach 27,
2005. 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.

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

Transactions with RDM Corporation. In September 2000, CVF purchased 270,000
warrants in RDM for a total price of CN$356,400 (US$237,184) based on the
conversion price on September 29, 2000 of US$1.00 to CN$1.50. In April 2001, CVF
purchased 25,000 additional common shares of RDM for a total price of CN$27,875
(US$17,687) on the open market. During 2000 CVF sold 282,500 common shares of
RDM at an average price of US$2.41 resulting in a total gain of US$474,334.
During 2001 CVF sold 909,100 common shares of RDM at an average price of
US$0.915 resulting in a total gain of US$292,800. As of December 31, 2001 the
total number of shares owned by CVF in RDM was 971,472 shares (approximately 5%
of RDM's outstanding shares). Mr. Nally, an officer, director and nominee of CVF
has been Chairman of RDM since 1995 and beneficially owns 1,909,383 common
shares {approximately 10.4% of the outstanding shares) of RDM.

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

ITEM 13 EXHIBITS AND REPORTS ON FORM 8-K

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

(3)(ii)     Amended and Restated Certificate of Designation of Series B 6%
            Convertible Preferred Stock, filed as an exhibit to CVF's
            Registration Statement on Form S-3 on December 30, 1999 and
            incorporated herein by reference.

(3)(iii)    By-laws Incorporated by reference to the filing on Form 10SB dated
            May 29, 1997

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

(21)        Subsidiaries of the Registrant, filed herewith.
<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: April 15, 2002

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                    April 15, 2002
------------------------
Jeffrey I. Dreben

/s/ Robert B. Nally                   Director                    April 15, 2002
------------------------
Robert B. Nally

/s/ Robert H. Glazier                 Director                    April 15, 2002
------------------------
Robert H. Glazier

/s/ George A. Khouri                  Director                    April 15, 2002
------------------------
George A. Khouri

/s/ Robert L. Miller                  Chief Financial Officer     April 15, 2002
------------------------              (Principal Financial
Robert L. Miller                      and Accounting Officer)
</TABLE>