United States Securities and Exchange Commission
                             Washington, D.C. 20549

Form 10-KSB/A
(Mark One)
   [X]     ANNUAL  REPORT PURSUANT TO SECTION 13 OR 15(d)
           OF THE SECURITIES EXCHANGE ACT OF 1934
           For the fiscal year ended December 31, 2001

   [ ]     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
                   For the transition period from ___________ to __________

                        Commission file number : 0-29509

               ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
               ---------------------------------------------------
                 (Exact name of business issuer in its charter)

         UTAH                                                82-0520055
------------------------------                           ------------------
State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                           Identification No.)

         2801 Brandt Avenue, Nampa, Idaho                       83687
--------------------------------------------------------------------------------
         (Address of principal executive offices)             (Zip Code)

Issuer's telephone number:    (208)-463-0063      Fax:     (208)463-7601
                              --------------               -------------

Securities registered under Section 12(b) of the Exchange Act:
         Title of each class                        Name of each exchange
                                                    on which registered

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

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

Securities registered under 12(g) of the Exchange Act:

                            Common Stock no par value
                          -----------------------------
                                (Title of Class)


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

     Check if there is no 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. [ ]


State issuer's revenues for its most recent fiscal year. $1,258,099


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State the aggregate market value of the voting and non-voting common equity held
by non-affiliates  computed by reference to the price at which the common equity
was sold,  or the average bid and asked  prices of such common  equity,  as of a
specified  date within the past 60 days:  The  aggregate  market value of equity
held by  non-affiliates  on March 27, 2002,  at the price of $0.17 per share was
$9,423,382.

(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Check  whether the issuer has filed all  documents  and  reports  required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court. Yes[ ] No[ ].

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
State the  number of shares  outstanding  of each of the  Issuers's  classes  of
common equity, as of the latest practicable date. December 31, 2001,  73,220,116
shares of no par value common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference,  briefly describe them
and  identify  the part of the Form 10-KSB  (e.g.,  Part I, Part II,  etc.) into
which the documents is incorporated;  (1) any annual report to security holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933 ("Securities  Act"). The listed
documents should be clearly described for identification  purposes (e.g., annual
report to security holders for fiscal year ended December 24, 1990).

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










                                   The following  Item 7,  Financial  Statements
                                   have  been  modified  from  those  previously
                                   filed in the December 31,  2001,  10KSB,  and
                                   Item 6, Management's Discussion and Analysis'
                                   numbers in the same report have been modified
                                   accordingly.




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<PAGE>


                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

History and Business Development.

Environmental Oil Processing Technology Corporation (EVOP) is a Utah corporation
with an Idaho subsidiary  corporation,  Environmental Oil Processing Technology,
Inc. The principal offices of both corporations and the pilot refining plant are
located at 2801 Brandt Avenue, Nampa, Idaho 83687. The location is approximately
16 miles West of Boise, Idaho. The primary business of the Company is to design,
fabricate and develop  processing  plants that will re-refine waste  lubricating
oil into petroleum  products  including naphtha  (gasoline),  diesel for fuel to
power motors, and residuum to be used in asphalt products and as burner fuel.

The on site  pilot  plant  started  test  operations  in  December  of 1999  and
continued testing during 2000 and 2001, and, from time to time, produced refined
petroleum products as designed. During the latter part of 2001 Management,  with
the assistance of new consulting engineers,  redesigned portions of the plant to
improve  efficiency,  continuity and quality of petroleum  products.  Making the
improvements   to  the  plant  required   shutting  the  plant  down  until  the
improvements are completed. Management expects the improvements and revisions in
the plant to be  completed  by the end of May,  2002,  and  expects the plant to
resume producing petroleum products at that time.  Management intends to operate
the Nampa processing  plant as a pilot and experimental  plant, and to build and
operate additional plants as Company owned projects.

In order to gather used  lubricating  oil to feed the Nampa plant,  the Company,
and its  predecessors,  developed a gathering and collecting system which it has
been continuously operating since 1994.

Growth and Expansion.

To grow the Company Management during 2001 commenced the following operations:

         1.   The  acquisition  in May of the assets of Artesian  Oil  Recovery,
              Inc., a Nevada corporation, doing business in Oakland, California.
              The Company  formed a subsidiary  corporation  EOPT Oil  Recovery,
              Inc., a California corporation,  to operate the business under the
              fictitious  business  name  of  Artesian  Oil  Recovery.  The  oil
              recovered  from  Artesian  is  being   transported  by  commercial
              trucking  companies  to Nampa  for  treatment  and for  resale  to
              customers  using used oil for burner  and  bunker  fuel.  When the
              Nampa plant is reconditioned, the oil from Artesian is expected to
              be refined in the plant into petroleum products.



                                       3
<PAGE>




         2.   The  organization  in August of EOPT  Refining of Nevada,  Inc., a
              subsidiary corporation to purchase the real property and develop a
              refining  facility  in the  Reno,  Nevada,  area  to  refine  used
              lubricating  oil  gathered  in both  Nevada  and  California.  The
              corporation acquired approximately 20 acres in the Reno Industrial
              park, and is currently  preparing  approximately  15 acres of such
              land for a used oil  refining  facility.  The site is  planned  to
              include  two  refining  plants,  and a tank farm and  transporting
              facility for both  trucking and railroad  transfers.  PC&E, of St.
              Louis, a subsidiary of Emerson (formerly Emerson  Electric),  with
              the  cooperation  of  Redd  Engineering  of  Salt  Lake  City,  is
              preparing  the   engineering  and   construction   plans  for  the
              improvements  to be located on the Reno site. The Company does not
              now have a source of financing to proceed with the  fabrication of
              the refining plants.

         3.   The  organization  in April of EOPT Power Group  Nevada,  Inc.,  a
              subsidiary  corporation  to develop  the  remaining 5 acres on the
              Reno site for generation of electricity.  Management intended that
              the power plant would use fuel from the  refining  site to run the
              power plant. The power  corporation  successfully  obtained all of
              the  required  permits  from the State of Nevada  and the  Federal
              agencies for the  construction of a power plant,  and the property
              is considered a "fully  permitted"  site. The  manufacturer of the
              electric  generators was not able to timely deliver the generating
              equipment.  The Company is currently  involved in litigation  with
              the  manufacturer  who was to provide the  equipment.  (See "Legal
              Proceedings"  page 8, Item 3).  The  Company  has the  "permitted"
              property  for sale for an  asking  price of $20.5  Million  and is
              negotiating with several companies for the sale thereof. Until the
              property is sold, the Company is not ruling out the development of
              the site for the production of electricity.

Overall Purpose of the Company.

The design of the  Company's  processing  plant is to produce  useful  petroleum
based  products  from  used  motor  lubricating  oil that is now  considered  an
environmental  hazard in most  parts of the  developed  world.  In  addition  to
eliminating any  environmental  hazard from the accumulation of used lubricating
oil the resulting  petroleum products will (a) fuel diesel and gasoline engines,
(b) provide  burner fuel to generate  heat for many  applications  including the
production of electrical  energy in  co-generating  systems,  and (c) add usable
ingredients to different asphalt  applications.  Management's long range outlook
includes  building and operating  refining plants and  co-generating  electrical
plants located in both the  continental  United States and in foreign  countries
where there is access to used  lubricating  oil. The Company has been approached
by several  continental and international  firms who have expressed  interest in
having a processing  plant in their locality to manage the used  lubricating oil
surpluses and to provide petroleum products and electrical power.

History of Business:

Environmental Oil Services Company,  LLC, a predecessor  company,  was organized
and  financed in 1994 for the purpose of (i)  locating in  Southwestern  Idaho a
plant for re-refining used lubricating oil into usable petroleum  products,  and
(ii) establishing a system to gather the used oil for the plant. The predecessor
company (i) purchased four vacuum tank trucks, installed a tank farm to contain,
separate and  circulate  the used oil and began  gathering  used oil  throughout
southern  Idaho,  eastern  Oregon and eastern  Washington,  and (ii) purchased a
processing  plant from a manufacturing  company in the East, which was installed
at the present  location.  After  several  months of  continuous  efforts by the
manufacturer  and the  predecessor  company,  the  plant was  unable to  perform
according to the manufacturer's claims, the plant was demolished and removed. In
order to maintain its sources for used lubricating oil, the predecessor  company
continued  the  waste  oil  gathering  business,  and sold the oil to local  and
coastal used-oil consumers, even though operating at a loss.

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<PAGE>


In early 1995 the  predecessor  company  retained  Jacobs  Engineering  Group in
Denver,  Colorado,  to design and develop a plant to process and re-refine  used
lubricating  oil  into  petroleum   products.   Following  Jacob's  design,  the
predecessor  company  constructed  the presently  existing  processing  plant in
compliance with all EPA and other governmental regulations.  The plant conducted
initial test runs in April and May of 1997, and established  that the production
of naphtha,  diesel and other  by-products  was possible.  After  evaluating the
estimated cost of completing  and  implementing  equipment for producing  diesel
fuel meeting road specifications, the predecessor company elected to discontinue
the completion of the plant.

In December of 1997,  Environmental  Oil Services,  Inc.,  ("EOS") organized and
owned  by  Mr.  N.  Tod  Tripple,  acquired  all  of the  existing  business  of
Environmental Oil Services Company,  LLC, with the issuance of its stock. During
the calendar year 1998,  EOS continued  gathering used  lubricating  oil and the
handling of related  hazardous waste materials,  and continued the evaluation of
the processing plant with the intent of producing marketable petroleum products.
In  March  of 1999 EOS  merged  with  EOPT,  (also  principally  owned by N. Tod
Tripple) the Company,  that is presently  operating the business and  completing
the processing plant.

Presently the  processing  plant is a fully  "permitted  plant"  meeting all the
requirements of the EPA and all Federal and State air quality  requirements  and
all other governmental agencies.

Description of Current Business.

The Company  intends to continue to gather used  lubricating  oil,  and includes
gathering used oil filters, collecting waste water for treatment, and collecting
antifreeze for recycling through other processors. The gathering system operates
in the geographical areas commonly known as southwestern and southeastern Idaho,
the tri-cities area of eastern Washington,  and eastern Oregon. In addition, the
same type of oil  gathering  and related  services are performed in the Oakland,
California area, through the facilities of EOPT Oil Recovery,  Inc. dba Artesian
Oil Recovery.  The Company has enlarged its oil  gathering  capacity by entering
into specific  contracts for acquiring  sizable  quantities of used  lubricating
oil,  contaminated diesel, other fuels, and related products from large users of
such products.  Presently the Company gathers in excess of 2,400,000  gallons of
used-oil  annually,  and  maintains  in storage in excess of 800,000  gallons of
waste oil inventory for the anticipated  operation of the processing  plant. The
used oil that is gathered is cleaned, dewatered, and prepared as plant feed oil.
Any residual oil not used as feed oil, or residual oil that is not  processed by
the plant is resold  to  customers  who are able to burn  clean  used-oil.  Such
companies  usually  are  asphalt  manufacturing  plants and remote  construction
products manufacturers who require heat in their production processes. Some fuel
has been  marketed to western  coastal areas for use as bunker fuel in the ocean
shipping industry. In October of 1999, the Company completed the installation of
a reconditioned water cleaning plant
to purify  the  water  from the  processing  plant  operation,  as well as other
contaminated  water  collected  from  customers.  The treated water is then of a
quality acceptable for introduction into the local sewer system.

Management  considers the plant  operational,  although  currently shut down for
modification  and  improvements.  The plant is  designed  to refine in excess of
5,000,000  gallons of used-oil  annually,  and to produce in excess of 3,500,000
gallons of naphtha,  diesel and residuum  (burner) fuels. The plant uses the non




                                       5
<PAGE>


liquid  gasses that are  produced in the process of refining for the purposes of
generating  the heat required in operating  the  processing  plant.  The Company
continues to expand its gathering system and enter into  arrangements to acquire
used motor lubricating oil from other commercial gatherers. Management is of the
present  opinion  that  it  will be able to  acquire  the  additional  feed  oil
necessary  to  operate  the  processing  plant on a full  time  basis,  which is
approximately eleven months out of the year.

On a larger scale the Company continues to negotiate for other locations for the
construction of additional  plants for providing the same or similar services as
the Nampa facility, with the added potential of generating electrical power.

During the third  quarter  of 2001 it became  apparent  that  other  engineering
capability  was  available to the Company and that  management  of the Company's
subsidiary Project Development Industries,  L.L.C. ("PDI") was discontent,  as a
result of which litigation was entered into (See Item 3) and PDI and the Company
parted and are no longer  affiliated.  Management of the Company is pleased with
the availability of engineering and other consulting  services in replacement of
the services previously provided by PDI.

Competition.  Management  is not aware of any  competitors  who  re-refine  used
lubricating oil, however,  there are other entities that gather used lubricating
oil  for  the  purpose  of  filtering  and   otherwise   cleaning  the  oil  for
re-distribution  as  lubricating  oil.  Such  businesses  may be  considered  as
competitors  for the used  lubricating  market,  however,  Management  is of the
opinion that as a result of the greater margin or profit available to re-refined
petroleum  products,  that such filtering and cleaning  businesses will not be a
material factor in the operating of the Company's business.

Employees.

Effective the date of this report,  Registrant  has 1 part time and 30 full time
employees.

Forward Looking Statements.

The  foregoing  statements  in this  "Description  of Business"  concerning  the
development and growth of the Company,  and particularly the planned development
of  the  Reno  facilities  and  the  future  of  the  "permitted  property"  are
forward-looking  statements  as  well  as any  other  statements  that  are  not
historical  in  context..  The  statements  provided  are  based on  information
available  to  Management  as of the date  hereof,  and the  Company  assumes no
obligation  to revise or update  such  forward-looking  statements.  Readers are
cautioned that such  forward-looking  statements  involve risk and uncertainties
that may cause the  Company's  actual  results  to differ  materially  from such
forward-looking statements.

ITEM 2.  DESCRIPTION OF PROPERTY.

1.       Company Principal Office.

         The Company's administrative offices, oil gathering headquarters,  tank
farm and processing plant including ancillary structures, are located on Company
owned  property at 2801 Brandt Avenue,  Nampa,  Idaho,  83687.  Nampa is located
about 16 miles West of Boise, Idaho.

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<PAGE>

         In  stock  recapitalization   transactions  the  Company  acquired  the
property,  buildings  and other  improvements,  tank farm,  vacuum tank  trucks,
office facilities and waste oil processing plant from predecessor  companies who
originally  purchased the bare ground and constructed  all of the  improvements,
tank farm, processing plant, and all ancillary buildings and improvements.

         The properties include:

         a.   The real  property  consists  of 6.09  acres of  industrial  zoned
              property in three  industrial  lots, with all of the  improvements
              constructed  and presently  contained on two of the lots,  and the
              other is unimproved.

         b.   The  administration  building includes  approximately  3300 square
              feet with  approximately  1800 square feet of office  space on two
              floors,  and approximately  1400 square feet of shop and warehouse
              area for storage and inventory of parts and equipment.

         c.   The tank farm  consists  of a concrete  floor  area and  retaining
              walls to control any spillage, and now has 25 metal storage tanks,
              together  with  piping,  pumps and controls  for  circulating  the
              contents of the tanks.  The present  storage  area of the tanks is
              approximately  477,769  gallons  and will be used to  contain  and
              store used oil, water, diesel, naphtha, and residuum.

         d.   The  processing  plant is the  Company's  Model  600,  which has a
              design flow rate of approximately  365 BPD  (approximately  15,370
              gallons  per  day),  and is known in the  industry  as a  "thermal
              cracking vacuum distillation process plant".

         e.   The Company's rolling stock (trucks and trailers) consists of four
              10-wheeler vacuum trucks,  two transport trucks and trailers,  one
              dump truck and two cargo trucks.

         f.   The Company has under lease 5 additional  storage tanks located in
              different  parts of the service area to  facilitate  the gathering
              and  storing  of waste  oil.  The  monthly  cost of such  tanks is
              $2,475.

         g.   The real estate, improvements, and processing plant are subject to
              a deed of  trust in favor  of  Lewis & Clark  College  securing  a
              promissory note and interest  earned,  in the principal  amount of
              $10,500,000.

2.       EOPT Reno Project.

         The Company has  acquired  fee title to  approximately  20 acres in the
Reno Industrial Park located in the Reno, Nevada, vicinity. The real property is
unimproved with on site developmentpresently in progress. Approximately 15 acres
is planned for oil refining plants and related  equipment,  and  approximately 5
acres is planned and permitted for the generation of  electricity.  The property
is  subject  to a deed of trust in favor  of Lewis & Clark  College  securing  a
promissory note and interest earned, in the principal amount of $10,500,000.

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3.       Artesian Oil Recovery.

         In May of  2001  the  Company  acquired  the  assets  of  Artesian  Oil
Recovery,  Inc. located in Oakland,  California.  The assets included a lease on
the premises at 2306 Magnolia Street, Oakland, California, which lease continues
until September  2005.  Tenant has the option to extend the lease for two 5 year
periods.  The rent on the  premises  is $1,250  per month.  Other  assets of the
Company include a 1985 GMC 7000 Tanker Truck,  1979  International  S1854 Tanker
Truck,  office  equipment,  four storage tanks i.e. 9400 gal, 2-2,000 gal. and a
1,500 gal tank, and miscellaneous operating equipment.
..

ITEM  3. LEGAL PROCEEDINGS.

1.       On September 14, 2001, Project  Development  Industries,  L.L.C. (PDI),
         the Company's wholly owned subsidiary and several  individuals who were
         former owners of PDI,  including former director Grayson Evans, filed a
         federal  district  court  complaint  against  the Company in the United
         States  Court of  Colorado,  Case No.  EDCV01WM-1714.  PDI was  seeking
         rescission of the Company's purchase of PDI for 7 million shares of the
         Company's stock and a $6 million  promissory note. The Company asserted
         counterclaims  for breach of contract and negligent  misrepresentation.
         The matter was dismissed with  prejudice on March 4, 2002,  following a
         settlement under which the Company paid a $155,000  invoice  previously
         tendered by PDI and the former owners of PDI returned 4 million  shares
         of stock and cancelled the $6 million promissory note.

2.       On  September  24, 2001,  the Company  filed a federal  district  court
         complaint  against LM  Alternative,  Inc.  (LMA) in the  United  States
         District Court, Central District of California,  Eastern Division, Case
         Ano.  EDCV  01-0699 VAP  (SGLx).  The  Company  seeks a money  judgment
         against  LMA  for  breach  of  contract  for  failure  to   manufacture
         generators in accordance  with contract  specifications  and failure to
         deliver the  products.  The Company seeks  compensatory  damages in the
         amount of  $2,620,000,  incidental  damages  incurred  in the amount of
         $1,035,340, and consequential damages in the amount of $16,000,000. The
         Complaint  was served on LMA on September  28, 2001. On March 20, 2002,
         LMA filed its Answer denying any liability arising from the allegations
         in the Complaint,  and counterclaims for $10,000,000 in damages arising
         from the  alleged  breach of contract  by the  Company.  The Company is
         unable to comment on the  probability  of a mutual  settlement  at this
         time.

3.       On February 25, 2002, American Moistening Company,  Inc. (AMCO) filed a
         Complaint  in  North   Carolina  in  the  Superior  Court  Division  of
         Mecklenburg County, Case No. 01- CVS-3321.  AMCO seeks a money judgment
         against the Company  for  $165,840  for  services  and goods  allegedly
         performed or  manufactured  for the Company  during 2001. The Complaint
         was  served on the  Company on March 4, 2002.  The  Company  intends to
         timely file an answer and will assert  that the  Company  canceled  its
         purchase order and that AMCO failed to mitigate its damages.

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

                  None

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                                     PART II

ITEM  5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS.

         1. Market for Common Stock.  Registrant's  common stock started trading
in January 2001 and is currently traded on the NASDAQ over-the-counter  Bulletin
Board under the symbol  "EVOP".The  following  quotations  reflect  inter-dealer
prices,  without retail  mark-up,  mark-down or commission and may not represent
actual transactions. The source of the quotes is Big Charts, Tabular Java Chart.

         Year 2001                         High             Low
         ---------                         ----             ---

         First Quarter.................... $9.10            $0.30
         Second Quarter................... $1.42            $0.30
         Third Quarter.................... $0.65            $0.16
         Fourth Quarter................... $0.35            $0.16

         b. Holders of Common Stock. The approximate number of holders of record
of the Registrant's common stock was 5,550 as of March 22, 2002. A number of the
Company's record  shareholders are  broker/dealers  who are holding record title
for other customers,  and accordingly  management  believes the actual number of
beneficial   holders  of  its  common  stock  is  greater  than  the  number  of
shareholders of record.

         c.  Dividends.

         There have been no cash or other distributions or dividends.

         d. Unregistered  Equity Securities Sold by Registrant During the Fourth
            Quarter of 2001.

         There  were no sales  of  unregistered  securities  during  the  Fourth
Quarter of 2001.

ITEM  6. MANAGEMENT'S DISCUSSION AND PLAN OF OPERATION.

During 2001 Registrant secured a $10,500,000 loan from a non-shareholder private
lender  which was used to purchase  and begin  development  and  engineering  of
approximately  20  acres  in the Reno  Industrial  Park  for the  Reno  Project,
approximately  $500,000 to acquire  Artesian  Oil  Recovery  company in Oakland,
California,  to recover  oil for the Reno  Project,  and to finance  the the new
fractionating column and other modifications in the Nampa refining plant.

The Reno Project  presently  consists of completing land development on 15 acres
of land for the refining plants and preliminary  engineering for construction of
two refining  plants.  The site  preparation  has been nearly  completed and the
engineering and design work is in the advanced stages.  Engineering for the Reno
project  is being  completed  by PC&E of St.  Louis,  a  subsidiary  of  Emerson
(formerly  Emerson  Electric)  and Redd  Engineering  in Salt Lake  City,  Utah.
Approximately  $30,000,000  is needed to construct,  locate and start up the two
plants which could be  operating  by the second  quarter of 2003 if financing is
soon  obtained.  . Management  plans on raising  $55,000,000  from either a debt
offering or from an offering of common stock to retire the original  $10,500,000
loan and raise the funds necessary to complete the Reno Project. The remaining 5
acres originally  intended for the generation of electricity is presently "fully
permitted" for that purpose both on the state and federal level.  The 5 acres is
presently for sale for $20,500,000 with several  inquiring  parties.  Registrant
has not totally ruled out proceeding with the co-generation facility, contingent
on the most favorable source of financing.

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<PAGE>

Approximately  $500,000  was used to acquire the assets of Artesian Oil Recovery
in Oakland California, to gather oil for the Reno Project. Pending completion of
the Reno plant,  the oil is being  transported to Nampa for processing  when the
plant is operational,  and until that time, the oil is being resold to customers
who burn oil.

The modifications of the Nampa plant are expected to be completed by mid 2002 at
which  time the  plant  will  commence  refining  the  used  oil into  petroleum
products,  which  will  enhance  the  revenues.  Management  anticipates  having
positive cash flow from operations when the plant is operating.

Registrant's  former  subsidiary  PDI was disposed of in 2001. The former owners
filed  a  lawsuit  for  rescission  of  the  acquisition  of  PDI  based  on the
acquisition  agreements,  and a  settlement  agreement  was reached  under which
Registrant  received back  4,000,000  shares of the 7,000,000  shares issued for
PDI. (See "Legal  Proceedings"  page 8, Item 3). As a result of the  disposition
Registrant's   financial  statements  have  been  restated  to  reflect  PDI  as
discontinued operations.  This means that Registrant's financial statements only
reflect its core business of used oil gathering and refining after recognizing a
significant loss for discontinued operations.

The Company's  operations as of the year end December 31, 2001,  reflected sales
of used oil products of approximately  $1,258,000  compared to $783,000 in 2000.
Cost of sales were approximately  $262,000 in 2001, which relates to the cost of
collecting oil in California and  transporting  it to Idaho. In 2000 the Company
did not  collect  used oil in  California.  This is an increase in sales of 61%,
which is the result of  approximately  $273,000  of new  revenues  generated  by
Artesian and $202,000 of additional revenues from the Nampa refinery.  Operating
expenses increased by approximately $10,918,000 in 2001 over 2000. $9,372,000 of
this  increase is the value of 1,200,000  shares of the  Company's  common stock
which were issued to a  consultant  for  consulting  services,  $373,000 for the
value of options issued to non-employees,  and $561,000 for the value of options
issued to employees.  Generally Accepted Accounting  Principles require that the
issuance  of non cash  compensation  in the form of stock and stock  options  be
valued at fair value, which approximates market value.  Excluding these non cash
expenses  Operating  Expenses  increased  by  approximately  $612,000.  Material
components of this increase are legal fees of about $150,000 in connection  with
the PDI termination and $275,000  increased payroll.  Approximately  $157,000 of
the  increased  Operating  Expenses  relate to  Artesian,  of which  $74,000 was
payroll.  The balance of the  increased  overhead is due to the operation of the
Nampa refinery in 2001, which was not at full time capacity.

The Company  recorded a loss of  discontinued  operations  of $2,570,000 in 2001
compared  to  $355,000  in  2000.  The 2001  loss  includes  $3,047,000  for the
impairment  of  goodwill  and its net  assets in excess of  liabilities  of PDI.
Subsequently in 2002, the Company recovered 4,000,000 shares of its common stock
from the former owners of PDI.

Liquidity and Capital Resources.

The Company  used  $120,000 of cash in its  operations  during 2001  compared to
$1,432,000 in 2000. This reduction is due to an increase in accounts payable and
accrued  expenses of  $1,455,001  compared to a decrease of $50,000 in the prior
year.  Accounts  receivable  increased  by $353,000 and  inventory  increased by
$177,000 due to the addition of Artesian and the increased operations in Nampa.

                                       10
<PAGE>

The Company used cash in its investing activities of $8,435,000 in 2001 compared
to $128,000 in 2000. The $128,000 was used in 2000 for improvements at the Nampa
facility. In 2001 $1,674,000 was used for Nampa plant improvements,  $485,000 to
purchase Artesian and $6,239,000 was invested in the Reno Project.

The source of these funds was primarily  $10,500,000  borrowed from a college in
2001. The Company received $1,490,000 from the issuance of common stock in 2000.
The Company used  $533,000 to  repayment of outside  loans and $759,000 to repay
shareholder loans in 2001.

The  Company  had  approximately  $1,000,000  in cash at the  end of  2001.  The
Company's negative cash flow from operations averaged $15,000 per month in 2001,
and is expected to be positive  by mid 2002.  Accordingly,  Management  believes
that it has sufficient  reserves to meet its operating needs for the next twelve
months.  However, in order to complete the Reno Project an estimated $30,000,000
is  required.  The  Company  is  seeking  these  funds  through a debt or equity
financing as explained above. Also the $10,500,000  borrowed from the college is
due on March 31, 2002. Preliminary discussion with the College indicate that the
loan term will be extended.  There is no assurance that the funds the Company is
seeking will be available or that if available will be under terms acceptable to
the Company. If the investment funds are not received, Management intends to use
the sale proceeds from the excess property in Reno to repay the college loan.

Forward Looking Statements.

The foregoing  statements in this MD&A  concerning the activity,  operations and
plans of the  Company,  and  particularly  the planned  development  of the Reno
facilities  and the  future  of the  "permitted  property"  are  forward-looking
statements as well as any other  statements that are not historical in context..
The statements  provided are based on information  available to Management as of
the date hereof,  and the Company assumes no obligation to revise or update such
forward-  looking  statements.  Readers are cautioned that such  forward-looking
statements  involve risk and  uncertainties  that may cause the Company's actual
results to differ materially from such forward- looking statements.

ITEM  7.          FINANCIAL STATEMENTS.

         Included  herewith are the audited  Financial  Statements of Registrant
for the years ended  December 31, 2001,  and December 31, 2000, as modified from
those previously filed in the 10KSB for December 31, 2001.

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

         None.

                                       11
<PAGE>

                                    PART III

ITEM  9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.

         The  Management  of EVOP is  under  the  direct  control  of a board of
directors consisting of three directors who are elected at the annual meeting of
shareholders. Following the annual meeting of shareholders after the election of
the directors,  the board of directors is to hold the organizational  meeting at
which time the officers are appointed.

         9.1  Directors and Officers.
<TABLE>
<CAPTION>

               Name         Age              Position                      Date
               -----        ---              --------                      ----
Appointed
---------
<S>                          <C>                                             <C> <C>
Norvin T. (Tod) Tripple      65    Director, President and CEO      February 14, 2000
Leo B. (Tony) Tripple        59    Director  and Vice Pres.         February 14, 2000
Marilyn J. Tripple           65    Director and Secretary           February 14, 2000
</TABLE>

The  directors  of the  Company  are  elected  to serve  until  the next  annual
shareholder's  meeting or until  their  respective  successors  are  elected and
qualified. Officers of the Company hold office until the meeting of the Board of
Directors after the next annual  shareholders's  meeting or until removal by the
Board of  Directors.  There  are no  arrangements  or  understandings  among the
Officers  and  Directors  pursuant to which any of them were elected as Officers
and Directors.

Family Relationships:

         Tod Tripple and Marilyn  Tripple are husband and wife,  and Tod Tripple
and Tony Tripple are brothers.

Business Experience of Officers and Directors:
----------------------------------------------

Norvin T. (Tod)  Tripple.  Mr. Tod Tripple has been in senior  management of the
Company and its  predecessors  since the latter  part of 1994,  and has been the
President and CEO of the Company and its immediate  predecessor  since  December
1997.  He was Idaho  Division  Sales  Manager  for Harbor Oil of  Portland  from
1992-1994, and President of Touch Technologies, Inc. from 1984-1992.

Leo B. (Tony) Tripple. Mr. Tony Tripple is Vice President and CFO of the Company
and its predecessor  effective  September of 1999. He was comptroller of Graphic
Arts  Publishing of Boise from January 1999 to September 1999. He had a leave of
absence for illness from November 1994 to January of 1999. Mr. Tripple served as
President and CEO of predecessor  Environmental Oil Services  Company,  LLC from
December 1993 to November  1994, and was President of Harbor Oil Co. in Portland
from  January  1992  to  February  1993.  Mr.  Tripple  is  a  Certified  Public
Accountant, and graduated from BYU with a BS degree in 1965.

Marilyn J.  Tripple.  Mrs.  Tripple has served as Office  Manager and  Executive
Secretary  for the  Company  and  its  predecessors  since  inception  in  1994.
Previously  she was Office  Manager and  Secretary  for  Rangen's,  Buhl,  Idaho
1993-1994,  and for H & A Land & Cattle,  Inc.,  of  Dietrich,  Idaho  from 1988
-1993.

                                       12
<PAGE>

Compliance with Section 16(a) of the Exchange Act:

         No officer,  director or 10% holder (all 10% holders are  officers  and
directors) filed either Form 4 or Form 5 for calendar year 2001.

ITEM 10. EXECUTIVE COMPENSATION.

         The year 2001 salary and stock  remuneration paid or accrued by EVOP to
the officers and directors and other  benefits  received by each of them are set
forth below:

         The financial statements do not reflect any executive  compensation for
N. Tod Tripple nor for Marilyn  Tripple for the fiscal year ended  December  31,
2001, nor is there any executive  compensation  presently established for either
of them for the current year 2002.  During the twelve months ended  December 31,
2001,  Environmental  Oil Processing  Technology,  Inc.  ("EOPT" a subsidiary of
Registrant)  paid  $759,055  to Mr.  Tod  Tripple in  payment  of  interest  and
repayment of loans he previously made to EOPT. The Company paid  compensation of
$36,000 to Leo B. (Tony) Tripple.

         There is no agreement for the payment of any salary or  compensation at
this time for the directors of EOPT, or for the executive  officers or directors
of Environmental Oil Processing  Technology  Corporation (the parent company). .
However,  the Company  anticipates  that any out of pocket expenses of directors
will be paid,  and that directors who are not employed by either the EOPT or the
Registrant will receive  compensation  for attendance and other duties performed
as directors.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:

         The following table reflects the ownership by the persons  indicated as
of December 31, 2001.

         a: Beneficial  Owners,  known  to Registrant,  owning  more than 5%  of
voting securities:
<TABLE>
<CAPTION>

         Name and Address              Amount & Nature
         of Beneficial Owner           of Benef. Owner        Category              Percent
         -------------------           ---------------        --------              -------
<S>                                    <C>                   <C>                    <C>
         N. Tod and Marilyn Tripple    8,254,634              Director, Officer     11.27%
         2801 Brandt Ave.
         Nampa, Idaho 83687

         Leo B. (Tony) Tripple         9,533,822              Director, Officer     12.87%
         2801 Brandt Ave.
         Nampa, Idaho 83687


         Officers and Directors
           as a Group                 17,788,456                                    24.29%
</TABLE>

Note:    On October 1, 2001,  N. Tod  Tripple  was granted an option to purchase
         3,600,000  shares  of  common  stock at the  strike  price of $0.17 per
         share, said option to expire on November 1, 2004.


                                       13
<PAGE>


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:

Management is not aware of any material transaction,  or a proposed transaction,
to  which  the  Registrant  was or is to be a  party,  in  which  any  director,
executive officer, nominee for directorship, security-holder or immediate family
member  had a direct or  indirect  material  interest  as defined by Rule 404 of
Regulation S-B, except for the transaction between  Environmental Oil Processing
Technology, Inc.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

There are no exhibits and there were no Form 8Ks filed during the 4th quarter.


SIGNATURES

         In accordance  with  requirements  of the Exchange Act, the  registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                             Environmental Oil Processing Technology Corporation

 Date: November 11,  2002    By /s/ Norvin T. (Tod) Tripple
                                --------------------------------------
                                    Norvin T. (Tod) Tripple, President

         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>

<S>                                       <C>                             <C>

         /s/ Norvin T. (Tod) Tripple
         ---------------------------
             Norvin T. (Tod) Tripple      President, CEO & Director       November 11, 2002.


         /s/ Leo B. (Tony) Tripple
         ---------------------------
             Leo B. (Tony) Tripple        Vice President & Director       November 11, 2002


         /s/ Marilyn J. Tripple
         ---------------------------
             Marilyn J. Tripple           Secretary & Director            November 11, 2002

</TABLE>

                                       14
<PAGE>



                                 CERTIFICATION
                                       BY
                             CHIEF EXECUTIVE OFFICER
                                       AND
                             CHIEF FINANCIAL OFFICER

In  compliance  with  Section  906  of  the  Sarbanes-Oxley  Act  of  2002,  the
undersigned Chief Executive Officer and Chief Financial Officer of Environmental
Oil  Processing  Technology  Corporation  hereby certify that the report on Form
10KSB/A for the period ending  December 31, 2001,  as filed with the  Securities
and Exchange Commission

         (i)  fully complies with the requirements of Section 13(a) or 15 (d) of
              the Securities Exchange act of 1934, and

         (ii) the information  contained in the report fairly  presents,  in all
              material  respects,   the  financial   condition  and  results  of
              operations of the Company

November 11, 2002               /s/ N. Tod Tripple
                                -------------------------------------
                                    N. Tod Tripple, President and CEO

                                /s/ Leo (Tony) Tripple
                                -------------------------------------
                                    Leo (Tony) Tripple, CFO



                                       15

<PAGE>

                          ENVIRONMENTAL OIL PROCESSING
                             TECHNOLOGY CORPORATION
                                AND SUBSIDIARIES

                   RESTATED CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2001





                                       F-1
<PAGE>







                                 C O N T E N T S


Independent Auditors' Report.............................................   F-3

Consolidated Balance Sheet...............................................   F-4

Consolidated Statements of Operations....................................   F-6

Consolidated Statements of Stockholders' Equity (Deficit)................   F-7

Consolidated Statements of Cash Flows....................................   F-8

Notes to Consolidated Financial Statements...............................   F-10



                                       F-2
<PAGE>










                          INDEPENDENT AUDITORS' REPORT



To the Board of Directors
Environmental Oil Processing Technology Corporation and Subsidiaries
Nampa, Idaho

We have audited the accompanying consolidated balance sheet of Environmental Oil
Processing  Technology  Corporation and Subsidiaries as of December 31, 2001 and
the  related  consolidated   statements  of  operations,   stockholders'  equity
(deficit) and cash flows for the years ended  December 31, 2001 and 2000.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
Environmental  Oil Processing  Technology  Corporation  and  Subsidiaries  as of
December  31,  2001  and  the   consolidated   results  of  their  operations  ,
stockholders' equity (deficit) and their cash flows for the years ended December
31, 2001 and 2000, in conformity with accounting  principles  generally accepted
in the United States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated  financial statements,  the Company has incurred significant losses
and has a working capital deficit of $11,033,264, which raises substantial doubt
about its ability to continue as a going concern.  Management's  plans in regard
to these  matters  are also  described  in Note 2.  The  consolidated  financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.

As discussed in Note 15 to the consolidated financial statements, certain errors
were  discovered  by  management  during  the  current  year  resulting  in  the
understatement  of  previously  reported  amounts in  construction  in progress,
accounts  payable,  and  common  stock as of  December  31,  2001.  Accordingly,
adjustments have been made to the above mentioned  accounts.  These  adjustments
had no effect  on the net loss and  accumulated  deficit  as of and for the year
ended December 31, 2001.



HJ & Associates, LLC
Salt Lake City, Utah
March 20, 2002,  except for the third paragraph under the litigation  heading in
Note 7 as to which  the date is March 26,  2002,  and  except  for Note 15 as to
which the date is May 24, 2002


                                       F-3
<PAGE>


<TABLE>
<CAPTION>

               ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
                                AND SUBSIDIARIES
                           Consolidated Balance Sheet
                           (As Restated - See Note 15)



                                     ASSETS
                                     ------

                                                                       December 31,
                                                                           2001
                                                                  ------------------
CURRENT ASSETS

<S>                                                                        <C>
   Cash                                                                    1,076,799
   Trade accounts receivable, less allowance for
     doubtful accounts of $10,000                                            129,285
   Inventories                                                               190,943
   Other current assets                                                       48,358
                                                                  ------------------

     Total Current Assets                                                  1,445,385
                                                                  ------------------

PROPERTY, PLANT AND EQUIPMENT (Note 3)                                     3,878,670
   Less accumulated depreciation                           )                (237,193)
                                                                  ------------------

     Property, Plant and Equipment, Net                                    3,641,477
                                                                  ------------------

OTHER ASSETS

   Construction in progress (Note 4)                                       6,238,550
   Deposits                                                                  40
   Intangible assets, net (Note 5)                                           394,800
   Net assets in excess of liabilities of
     discontinued operations (Note 13)                                            --
   Unamortized debt issue costs (Note 6)                                      52,500
                                                                  ------------------

     Total Other Assets                                                    6,685,890
                                                                  ------------------

     TOTAL ASSETS                                                 $       11,772,752
                                                                  ==================

</TABLE>

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











                                       F-4
<PAGE>



<TABLE>
<CAPTION>
               ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
                                AND SUBSIDIARIES
                     Consolidated Balance Sheet (Continued)
                           (As Restated - See Note 15)


                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

                                                                      December 31,
                                                                          2001
                                                                   ------------------
CURRENT LIABILITIES
<S>                                                                <C>
   Accounts payable                                                $          694,176
   Accrued expenses                                                         1,236,081
   Notes payable - related parties (Note 9)                                   210,000
   Notes payable (Note 8)                                                  10,525,892
                                                                   ------------------

     Total Current Liabilities                                             12,666,149
                                                                   ------------------

COMMITMENTS AND CONTINGENCIES (Note 7)

STOCKHOLDERS' EQUITY (DEFICIT)

   Common stock, no par value; 200,000,000
     shares authorized; and 73,220,116 shares
     issued and outstanding                                                23,249,988
   Accumulated deficit                                                    (24,143,385)
                                                                   ------------------

     Total Stockholders' Equity (Deficit)                                    (893,397)
                                                                   ------------------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                $ 11,772,752
                                                                   ==================

</TABLE>

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


                                       F-5
<PAGE>

<TABLE>
<CAPTION>


               ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
                                AND SUBSIDIARIES
                      Consolidated Statements of Operations


                                                         For the Years Ended
                                                             December 31,
                                                   ----------------------------
                                                        2001             2000
                                                   ------------    ------------
<S>                                                   <C>               <C>
NET SALES                                          $  1,258,099    $    782,765

COST OF GOODS                                           262,274            --
                                                   ------------    ------------
GROSS MARGIN                                            995,825         782,765
                                                   ------------    ------------
OPERATING EXPENSES

   Amortization of debt issue costs                     157,500            --
   Consulting                                         9,428,502          40,869
   Depreciation and amortization                        122,209          77,448
   Selling, general and administrative                3,574,651       2,246,664
                                                   ------------    ------------
     Total Operating Expenses                        13,282,862       2,364,981
                                                   ------------    ------------
LOSS FROM OPERATIONS                                (12,287,037)     (1,582,216)
                                                   ------------    ------------
OTHER INCOME (EXPENSES)

   Interest expense                                     (42,832)        (38,971)
   Interest income                                       11,826          17,288
                                                   ------------    ------------
     Total Other Income (Expense)                       (31,006)        (21,683)

INCOME TAX EXPENSE                                         --              --

LOSS FROM CONTINUING OPERATIONS                     (12,318,043)     (1,603,899)

LOSS FROM DISCONTINUED OPERATIONS (Note 13)          (2,570,226)       (354,898)
                                                   ------------    ------------
NET LOSS                                           $(14,888,269)   $ (1,958,797)
                                                   ============    ============
BASIC LOSS PER SHARE

   Loss from continuing operations                 $      (0.17)   $       0.02)
   Loss from discontinued operations                      (0.03)          (0.01)
                                                   ------------    ------------
   Basic loss per share                            $      (0.20)   $      (0.03)
                                                   ============    ============
WEIGHTED AVERAGE SHARES OUTSTANDING                  73,203,678      70,746,911
                                                   ============    ============
</TABLE>


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


                                       F-6
<PAGE>

<TABLE>
<CAPTION>

               ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
                                AND SUBSIDIARIES
            Consolidated Statements of Stockholders' Equity (Deficit)
                           (As Restated - See Note 15)



                                          Common Stock                 Stock                           Stockholders'
                                  ----------------------------      Subscription      Accumulated          Equity
                                     Shares           Amount         Receivable         Deficit           (Deficit)
                                  -----------      -----------      -----------       -----------       -----------
<S>                               <C>              <C>                <C>             <C>                <C>
Balance, December 31, 1999         69,683,870       11,443,277         (400,000)       (7,296,319)        3,746,958

Performance on stock
   subscription                          --               --            400,000              --             400,000

Fractional shares issued                  116             --               --                --                --

Common stock issued for cash        2,106,130        1,090,000             --                --           1,090,000

Common stock issued for
   services                           230,000          230,000             --                --             230,000

Forgiveness of note payable
   as contribution of capital            --            179,934             --                --             179,934

Net loss for the year ended
   December 31, 2000                     --               --               --          (1,958,797)       (1,958,797)
                                  -----------      -----------      -----------       -----------       -----------

Balance, December 31, 2000         72,020,116       12,943,211             --          (9,255,116)        3,688,095

Common stock issued
   for services                     1,200,000        9,372,000             --                --           9,372,000

Stock options issued to
   employees below market value          --            561,400             --                --             561,400

Stock options issued to
   nonemployees below
   market value                          --            373,377             --                --             373,377

Net loss for the year ended
   December 31, 2001                     --               --               --         (14,888,269)      (14,888,269)
                                  -----------      -----------      -----------       -----------       -----------

Balance, December 31, 2001         73,220,116       23,249,988             --         (24,143,385)         (893,397)
                                  ===========      ===========      ===========       ===========       ===========

</TABLE>

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



                                       F-7
<PAGE>

<TABLE>
<CAPTION>

               ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
                                AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                           (As Restated - See Note 15)



                                                                                        For the Years Ended
                                                                                            December 31,
                                                                                --------------------------------
                                                                                     2001               2000
                                                                                -------------      -------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                             <C>                <C>
   Net loss                                                                     $ (14,888,269)     $  (1,958,797)
   Adjustments to reconcile net loss to net cash
    used by operating activities:
     Amortization of debt issue costs                                                 157,500               --
     Depreciation and amortization                                                    299,773            449,611
     Loss on impairment of goodwill                                                 2,752,222               --
     Loss on impairment of net assets in excess of liabilities
       of Project Development Industries                                              294,746               --
     Common stock issued for services                                               9,372,000            230,000
     Stock options issued below market value                                          934,777               --
   Changes in operating assets and liabilities:
     Accounts receivable                                                             (352,621)                58
     Inventories                                                                     (177,395)            (7,084)
     Other assets                                                                      32,589            (95,763)
     Accounts payable and accrued expenses                                          1,455,001            (49,898)
                                                                                -------------      -------------

       Net Cash (Used) by Operating Activities                                       (119,677)        (1,431,873)
                                                                                -------------      -------------

CASH FLOWS USED IN INVESTING ACTIVITIES

   Cash forfeited in disposal of Project Development Industries                       (37,932)              --
   Construction in progress                                                        (6,238,550)              --
   Capital expenditures                                                            (1,673,943)          (127,993)
   Purchase of Artesian Oil Recovery                                                 (485,000)              --
                                                                                -------------      -------------

       Net Cash (Used) by Investing Activities                                     (8,435,425)          (127,993)
                                                                                -------------      -------------

CASH FLOWS FROM FINANCING ACTIVITIES

   Issuance of common stock for cash                                                     --            1,490,000
   Borrowings from notes payable - related parties                                    125,055            179,934
   Payments on notes payable - related parties                                       (759,055)              --
   Proceeds from notes payable                                                     10,525,892               --
   Payments on notes payable                                                         (533,206)           (29,860)
                                                                                -------------      -------------

       Net Cash Provided by Financing Activities                                    9,358,686          1,640,074
                                                                                -------------      -------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                             803,584             80,208

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                        273,215            193,007
                                                                                -------------      -------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                        $   1,076,799      $     273,215
                                                                                =============      =============
</TABLE>


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



                                       F-8
<PAGE>
<PAGE>

<TABLE>
<CAPTION>

               ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
                                AND SUBSIDIARIES
                Consolidated Statements of Cash Flows (Continued)
                           (As Restated - See Note 15)


                                                                                        For the Years Ended
                                                                                            December 31,
                                                                                - ------------------------------
                                                                                     2001               2000
                                                                                -------------      -------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION
<S>                                                                             <C>                <C>
   Cash paid for interest                                                       $    $32,730       $   $ 77,929
   Cash paid for taxes                                                          $       --         $       --
</TABLE>


SUPPLEMENTAL DISCLOSURE OF NON-CASH
   FINANCING ACTIVITIES

Year ended December 31, 2000:
-----------------------------
   The  President  of the Company  forgave a $179,934  note  payable to him as a
contribution of capital to the Company.

Year ended December 31, 2001:
-----------------------------
   The Company entered into a $210,000 promissory note for debt issue costs paid
   on behalf of the Company by the President of the Company.


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


                                       F-9
<PAGE>



               ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
                                AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2001 and 2000
                           (As Restated - See Note 15)



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         a. Organization

         The   consolidated   financial   statements   presented  are  those  of
         Environmental  Oil  Processing   Technology   Corporation  (EOPT),  its
         wholly-owned  subsidiaries,  Environmental  Oil Processing  Technology,
         Inc. (EOPTI), EOPT Power Group-Nevada, Inc. (Power), EOPT Oil Recovery,
         Inc. (Recovery) and EOPT Refining of Nevada, Inc.  (Refining).  Project
         Development  Industries,  LLC  (PDI) is a  wholly-owned  subsidiary  of
         EOPTI. Collectively, they are referred to herein as the "Company."

         On February 7, 2000,  EOPT and EOPTI completed an Agreement and Plan of
         Reorganization  whereby  EOPT  issued  64,083,870  shares of its common
         stock in exchange  for all of the  outstanding  common  stock of EOPTI.
         Immediately prior to the Agreement and Plan of Reorganization, EOPT had
         5,600,000 shares of common stock issued and outstanding.

         The  acquisition  was  accounted  for as a  recapitalization  of  EOPTI
         because the  shareholders of EOPTI control EOPT after the  acquisition.
         Therefore,  EOPTI is  treated  as the  acquiring  entity.  There was no
         adjustment to the carrying  value of the assets or liabilities of EOPTI
         in the exchange.  EOPT is the acquiring  entity for legal  purposes and
         EOPTI is the surviving entity for accounting purposes. Accordingly, the
         historical  financial  statements  of EOPTI are  presented  as those of
         EOPT. EOPT has adopted a December 31, year end.

         On May 4, 2001, the Company entered into an Asset Purchase Agreement to
         only  purchase   certain  assets  from  Artesian  Oil  Recovery,   Inc.
         (Artesian) for $485,000. The assets are located in Oakland, California.
         These assets acquired were transferred into the Company's  wholly-owned
         subsidiary,  Recovery. The assets acquired were inventory, property and
         equipment, and intangible assets that included an oil transfer facility
         permit,  customer lists,  marketing and mailing lists,  supplier lists,
         product literature and sales material, and the Artesian name. The asset
         acquisition was accounted for as a purchase and qualifies as a business
         combination. (see Note 11)

         Subsidiaries:

         EOPT was  incorporated  in the State of Utah on December 21, 1999 under
         the name of TMI Holding  Corporation for the purpose of holding records
         and documents relating to a specific oil and gas project. In July 2000,
         EOPT  amended  its  articles of  incorporation  and changed its name to
         Environmental Oil Processing Technology Corporation.

         EOPTI is a reseller of waste oil products.  The EOPTI  customer base is
         in Idaho,  Washington  and Oregon.  EOPTI operates a waste oil refinery
         plant to produce naphtha and diesel fuel and other  petroleum  products
         from waste oil.


                                       F-10
<PAGE>

               ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
                                AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2001 and 2000
                           (As Restated - See Note 15)



         NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         a. Organization (Continued)

         Subsidiaries (Continued):

         PDI was  formed and began  operations  in  September  1993 as a Project
         Development,  Inc. At January 1, 1995,  PDI was  reorganized as an LLC.
         PDI performs professional engineering, design, procurement, fabrication
         and installation  services.  Services are provided to the oil refining,
         natural  gas,  pipeline,   chemical,  minerals,  and  power  generation
         industries. PDI is a wholly-owned subsidiary of EOPTI. (see Note 13)

         Power was  incorporated in the State of Nevada on April 24, 2001. Power
         was  incorporated to engage in any lawful activity  permitted under the
         laws of the State of  Nevada.  Power has had  minimal  activity  during
         2001.

         Recovery was  incorporated  in the State of  California on May 23, 2001
         for the purpose of acquiring  all of the assets of  Artesian.  Recovery
         has a facility in Oakland,  California  where it collects waste oil and
         transports it to the Company's  Nampa,  Idaho facility from where it is
         resold and  transported  to other users.  Recovery is doing business as
         Artesian Oil Recovery.

         Refining  was  incorporated  in the State of Nevada on August 7,  2001.
         Refining was  incorporated to engage in any lawful  activity  permitted
         under  the  laws of the  State  of  Nevada.  Refining  has had  minimal
         activity during 2001.

         b. Merger

         In August  1999,  EOPTI  acquired  substantially  all of the assets and
         liabilities  of PDI in exchange for  7,000,000  shares of EOPT's common
         stock.  All of the PDI  shareholders  became  shareholders in EOPT. The
         acquisition was accounted for as a purchase. These financial statements
         include the  operations of PDI from the effective  date of the purchase
         of March 31, 1999.  The assets and  liabilities of PDI were recorded at
         their  fair  value  with  the  excess  recorded  as  goodwill.  PDI has
         subsequently been returned to its original owners. (see Note 13)

         c. Accounting Method

         The Company's  consolidated financial statements are prepared using the
         accrual  method of  accounting.  The  Company has elected a December 31
         year end.

         d. Cash & Cash Equivalents

         Cash equivalents  include  short-term,  highly liquid  investments with
         maturities of three months or less at the time of acquisition.



                                       F-11
<PAGE>


               ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
                                AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2001 and 2000
                           (As Restated - See Note 15)



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         e. Basic Loss Per Share

         The  basic  loss per  share of  common  stock is based on the  weighted
         average number of shares issued and outstanding during the period.

<TABLE>
<CAPTION>

                                                                                For the Years Ended
                                                                                    December 31,
                                                                         --------------------------------
                                                                             2001                 2000
                                                                         --------------     -------------
              Loss per share from continuing operations:
<S>                                                                      <C>                <C>
                 Loss (numerator)                                        $  (12,318,043)    $  (1,603,899)
                 Shares (denominator)                                        73,203,678        70,746,911
                 Per share amount                                        $        (0.17)    $       (0.02)

</TABLE>


<TABLE>
<CAPTION>

                                                                               For the Years Ended
                                                                                    December 31,
                                                                         --------------------------------
                                                                             2001                 2000
                                                                         --------------     -------------
              Loss per share from discontinued operations:
<S>                                                                      <C>                <C>
                 Loss (numerator)                                        $   (2,570,226)    $    (354,898)
                 Shares (denominator)                                        73,203,678        70,746,911
                 Per share amount                                        $        (0.03)    $       (0.01)
</TABLE>

         Potential  shares  that could be issued  from the  exercise  of options
         (6,450,000  and -0- options  outstanding at December 31, 2001 and 2000,
         respectively)  are not included in the  computation of the diluted loss
         per share  because  they would have an  antidilutive  effect on the net
         loss per common  share.  As a result,  basic and diluted loss per share
         are the same for the years ended December 31, 2001 and 2000.

         f. Use of Estimates

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



                                       F-12
<PAGE>



               ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
                                AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2001 and 2000
                           (As Restated - See Note 15)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         g. Provision for Taxes

         No provision for income taxes has been accrued  because the Company has
         net  operating  losses from  inception.  The net  operating  loss carry
         forwards of  approximately  $8,910,000  at December  31, 2001 expire in
         2021.  No tax benefit has been  reported  in the  financial  statements
         because  the  Company is  uncertain  if the  carryforwards  will expire
         unused.  Accordingly,  the  potential  tax  benefits  are  offset  by a
         valuation  account of the same amount.  The income tax benefit  differs
         from the amount computed at federal  statutory  rates of  approximately
         39% as follows:
<TABLE>
<CAPTION>

                                                                               For the Years Ended
                                                                                    December 31,
                                                                         --------------------------------
                                                                             2001                 2000
                                                                         --------------     -------------
 <S>                                                                     <C>                <C>
              Income tax benefit at statutory rate                       $    1,814,000     $     586,000
              Change in valuation allowance                                  (1,814,000)         (586,000)
                                                                         --------------     -------------

                                                                         $         --       $        --
                                                                         ==============     =============
</TABLE>

         Deferred tax assets (liabilities) are comprised of the following:
<TABLE>
<CAPTION>

                                                                               For the Years Ended
                                                                                    December 31,
                                                                         --------------------------------
                                                                             2001                 2000
                                                                         --------------     -------------
<S>                                                                      <C>                <C>
              Income tax benefit at statutory rate                       $    3,475,000     $   1,662,000
              Change in valuation allowance                                  (3,475,000)       (1,662,000)
                                                                         --------------     -------------

                                                                         $        --        $        --
                                                                         ==============     =============
</TABLE>

         Due to the  change in  ownership  provisions  of the Tax  Reform Act of
         1986, net operating loss carryforwards for Federal income tax reporting
         purposes  are  subject  to  annual  limitations.  Should  a  change  in
         ownership occur, net operating loss  carryforwards may be limited as to
         use in future years.

         h. Inventory

         Inventory,  valued at lower of cost or market,  consists  of  unrefined
         waste oil products and related  supplies and is accounted for using the
         average cost method of accounting.



                                       F-13
<PAGE>



               ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
                                AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2001 and 2000
                           (As Restated - See Note 15)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         i. Concentrations of Risk

         The Company maintains several accounts with financial institutions. The
         accounts are insured by the Federal Deposit Insurance Corporation up to
         $100,000.  The Company's  cash balances  exceeded the insured amount by
         $974,799 as of December 31, 2001.

         Credit  losses,  if any,  have been  provided  for in the  consolidated
         financial  statements and are based on management's  expectations.  The
         Company's accounts  receivable are subject to potential  concentrations
         of credit risk.  The Company does not believe that it is subject to any
         unusual, or significant risks in the normal course of its business.

         j. Operating Segment Information

         For years ended December 31, 2001 and 2000, the Company operated in two
         industry segments, (1) waste oil products at the Company's headquarters
         in  Nampa,  Idaho,  and  (2)  petroleum  engineering  services  at  the
         Company's offices in Denver,  Colorado. The operations of the Company's
         subsidiary   located  in  Denver,   Colorado  have  been  reflected  as
         discontinued  operations  (see Note 13).  Accordingly,  at December 31,
         2001, the Company only operated in one industry segment.
<TABLE>
<CAPTION>

                              For the
                            Year Ended
                            December 31,         PDI               EOPTI                Total
                            ------------     -----------        -----------         ------------
<S>                             <C>           <C>                   <C>               <C>
Net Sales                       2000          2,934,018             782,765           3,716,783
                                2001               --             1,258,099           1,258,099

Operating income (loss)
  Applicable to industry        2000           (290,206)         (1,582,216)         (1,872,422)
                                2001               --           (12,287,037)        (12,287,037)

General corporate               2000               --                  --                  --
                                2001               --                  --                  --

Other Income (Expense)          2000            (64,692)            (21,683)            (86,375)
                                2001               --               (31,006)            (31,006)

Operating Assets                2000          3,356,104           2,408,454           5,764,558
                                2001               --            11,512,214          11,512,214

</TABLE>


                                       F-14
<PAGE>


               ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
                                AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2001 and 2000
                           (As Restated - See Note 15)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         k. Property, Plant and Equipment

         Property and  equipment  are stated at cost.  The refinery  facility is
         stated at fair market value as of the date that it was acquired by EOS,
         Inc.  (June 1998),  based upon an  independent  third party  appraisal.
         Additions to the refinery  facility after June 1998 are stated at cost.
         Depreciation   on  property  and   equipment  is   calculated   on  the
         straight-line method over the estimated useful lives of the assets.

                  Manufacturing equipment and Machinery         5 to 40 years
                  Office furniture and equipment                7 to 10 years
                  Vehicles                                      3 to 10 years
                  Leasehold Improvements                        39 years
                  Real Property                                 40 to 50 years

         Depreciation expense for the years ended December 31, 2001 and 2000 was
         $89,009 and $77,448, respectively.

         l. Revenue Recognition

         The Company  recognizes  revenues and the related costs for its oil and
         gas  sales  and  collection  fees  when   persuasive   evidence  of  an
         arrangement  exists,  delivery or collection  has occurred,  the fee is
         fixed or  determinable,  and collection of the resulting  receivable is
         probable. Amounts invoiced and collected in advance of product delivery
         or collection  would be recorded as deferred  revenue.  The Company has
         not  experienced  returns and  allowances in the past and therefore has
         not accrued for any returns and other allowances at this time.

         m. Fair Value of Financial Instruments

         Based on borrowing  rates  currently  available to the Company for bank
         loans  with  similar  terms  and  maturities,  the  fair  value  of the
         Company's long-term debt approximates the carrying value.  Furthermore,
         the  carrying  value of all  other  financial  instruments  potentially
         subject to valuation risk principally consisting of accounts receivable
         and accounts payable also approximates fair value.

         n. Goodwill

         The excess of the purchase  price over the fair value of the assets and
         liabilities  acquired  in the  purchase of PDI of  $3,551,256  has been
         recorded as goodwill. The goodwill is amortized using the straight-line
         method over 10 years.  Amortization  expense was  $355,126 for the year
         ended  December 31, 2000.  During the year ended December 31, 2001, the
         Company recorded an impairment loss of $2,752,222. The Company recorded
         the loss because it had  determined  that the value of its goodwill had
         become impaired due to the discontinued operations of PDI.


                                       F-15
<PAGE>



               ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
                                AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2001 and 2000
                           (As Restated - See Note 15)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         o. Advertising

         The Company  follows the policy of charging the costs of advertising to
         expense as incurred.  Advertising  expense for the years ended December
         31, 2001 and 2000 was $15,684 and $13,650, respectively.

         p. Principles of Consolidation

         The consolidated  financial  statements  include those of Environmental
         Oil   Processing   Technology    Corporation   and   its   wholly-owned
         subsidiaries,  Environmental Oil Processing  Technology,  Inc. (EOPTI),
         EOPT Power  Group-Nevada,  Inc.  (Power),  and EOPT Refining of Nevada,
         Inc.  (Refining).  Project  Development  Industries,  LLC  (PDI)  is  a
         wholly-owned subsidiary of EOPTI. All significant intercompany accounts
         and transactions have been eliminated.

         q. Newly Issued Accounting Pronouncements

         SFAS  No.'s  141 and  142 -- In June  2001,  the  Financial  Accounting
         Standards  Board  (FASB)  adopted  Statement  of  Financial  Accounting
         Standards  SFAS No. 141 is  effective  as to any  business  combination
         occurring  after June 30, 2001 and certain  transition  provisions that
         affect accounting for business  combinations prior to June 30, 2001 are
         effective  as of the date that SFAS No.142 is applied in its  entirety,
         which was September 30, 2001.

         SFAS  No.  141  provides   standards   for   accounting   for  business
         combinations.  Among other  things,  it requires that only the purchase
         method  of  accounting  be used  and  that  certain  intangible  assets
         acquired  in a  business  combination  (i.e.  those  that  result  from
         contractual  or other legal rights or are  separable) be recorded as an
         asset apart from goodwill.  The transition  provisions  require that an
         assessment  be  made  of  previous   business   combinations   and,  if
         appropriate,  reclassifications  be made to or from  goodwill to adjust
         the recording of intangible assets such that the criteria for recording
         intangible  assets  apart from  goodwill  is  applied  to the  previous
         business  combinations  The adoption of this  principle had no material
         effect on the company's financial statements.



                                       F-16
<PAGE>



               ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
                                AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2001 and 2000
                           (As Restated - See Note 15)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         q. Newly Issued Accounting Pronouncements (Continued)

         SFAS No. 142 provides, among other things, that goodwill and intangible
         assets with indeterminate lives shall not be amortized.  Goodwill shall
         be assigned to a reporting unit and annually  assessed for  impairment.
         Intangible  assets with determinate lives shall be amortized over their
         estimated useful lives, with the useful lives reassessed  continuously,
         and shall be assessed for  impairment  under the provisions of SFAS No.
         121, "Accounting for the Impairment of Long-Lived Assets to be Disposed
         of." Goodwill is also assessed for  impairment on an interim basis when
         events and  circumstances  warrant.  Upon adoption of SFAS No. 142, the
         Company will assess whether an impairment loss should be recognized and
         measured by  comparing  the fair value of the  "reporting  unit" to the
         carrying value,  including goodwill. If the carrying value exceeds fair
         value,  then the Company  will  compare  the implied  fair value of the
         goodwill  (as  defined in SFAS No. 142) to the  carrying  amount of the
         goodwill.  If the carrying  amount of the goodwill  exceeds the implied
         fair value, then the goodwill be adjusted to the implied fair value.

         SFAS No. 143 -- On August  16,  2001,  the FASB  issued  SFAS No.  143,
         "Accounting for Asset Retirement  Obligations,"  which is effective for
         fiscal  years   beginning   after  June  15,  2002.  It  requires  that
         obligations  associated  with the  retirement of a tangible  long-lived
         asset be recorded as a liability when those  obligations  are incurred,
         with the amount of the liability initially measured at fair value. Upon
         initially recognizing for an accrued retirement  obligation,  an entity
         must  capitalize  the cost by  recognizing  an increase in the carrying
         amount of the related  long-lived  asset.  Over time,  the liability is
         accreted to its present value each period,  and the capitalized cost is
         depreciated over the useful life of the related asset.  Upon settlement
         of the  liability,  an entity  either  settles the  obligation  for its
         recorded amount or incurs a gain or loss upon settlement.

         While the Company has not  completed  the  process of  determining  the
         effect  of  this  new  accounting  pronouncement  on  its  consolidated
         financial statements,  the Company currently expects that the effect of
         SFAS No. 143 on the  Company's  financial  statements,  when it becomes
         effective, will not be significant.

         SFAS No. 144 - On October 3, 2001, the Financial  Accounting  Standards
         Board issued SFAS No. 144,  "Accounting  for the Impairment or Disposal
         of  Long-Lived  Assets"  which is effective  for  financial  statements
         issued  for  fiscal  years  beginning  after  December  15,  2001  and,
         generally,  its  provisions are to be applied  prospectively.  SFAS 144
         supercedes  SFAS  Statement  No.  121 (FAS  121),  "Accounting  for the
         Impairment  of  Long-Lived  Assets  and  for  Long-Lived  Assets  to Be
         Disposed  Of." SFAS 144  applies to all  long-lived  assets  (including
         discontinued  operations) and consequently amends Accounting Principles
         Board  Opinion  No. 30 (APB 30),  "Reporting  Results of  Operations  -
         Reporting the Effects of Disposal of a Segment of a Business."



                                       F-17
<PAGE>



               ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
                                AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2001 and 2000
                           (As Restated - See Note 15)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         SFAS 144 develops one accounting model (based on the model in SFAS 121)
         for  long-lived  assets that are to be disposed of by sale,  as well as
         addresses the principal  implementation  issues. SFAS 144 requires that
         long-lived assets that are to be disposed of by sale be measured at the
         lower of book value or fair value less cost to sell.  That  requirement
         eliminates the  requirement of APB 30 that  discontinued  operations be
         measured  at net  realizable  value  or  that  entities  include  under
         "discontinued  operations"  in the  financial  statements  amounts  for
         operating  losses that have not yet  occurred.  Additionally,  SFAS 144
         expands the scope of discontinued  operations to include all components
         of an entity with  operations  that (1) can be  distinguished  from the
         rest  of the  entity  and (2)  will  be  eliminated  from  the  ongoing
         operations of the entity in a disposal transaction.

         While the Company has not  completed  the  process of  determining  the
         effect  of  this  new  accounting  pronouncement  on  its  consolidated
         financial statements,  the Company currently expects that the effect of
         SFAS No. 144 on the Company's consolidated  financial statements,  when
         it becomes effective, will not be significant.

         r. Impairment of Long-Lived Assets

         The Company  reviews  long-lived  assets and  identifiable  intangibles
         whenever events or circumstances  indicate that the carrying amounts of
         such assets may not be fully  recoverable.  The Company  evaluates  the
         recoverability  of long-lived  assets by measuring the carrying amounts
         of the assets against the estimated  undiscounted cash flows associated
         with  these  assets.  At the time such  evaluation  indicates  that the
         future  undiscounted  cash flows of certain  long-lived  assets are not
         sufficient  to  recover  the  assets'  carrying  value,  the assets are
         adjusted  to their fair  values  (based upon  discounted  cash  flows).
         During the year ended  December  31,  2001,  the  Company  recorded  an
         impairment loss of $3,046,968. The Company recorded the loss because it
         had determined that the value of its goodwill  ($2,752,222) and its net
         assets in excess of liabilities  of PDI ($294,746) had become  impaired
         due to the discontinued operations of PDI.

         s. Stock Options and Warrants

         As  permitted  by  FASB  Statement  123  "Accounting  for  Stock  Based
         Compensation" (SFAS No. 123), the Company elected to measure and record
         compensation  cost relative to employee  stock option and warrant costs
         in accordance  with  Accounting  Principles  Board ("APB")  Opinion 25,
         "Accounting for Stock Issued to Employees," and related interpretations
         and make proforma  disclosures  of net income and earnings per share as
         if the fair value method of valuing stock options and warrants had been
         applied.  Under APB Opinion 25,  compensation  cost is  recognized  for
         stock  options and  warrants  granted to  employees  when the option or
         warrant  price is less than the market price of the  underlying  common
         stock on the date of grant.



                                       F-18
<PAGE>



               ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
                                AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2001 and 2000
                           (As Restated - See Note 15)


NOTE 2 -      GOING CONCERN

              The Company  presently has in the bank  approximately  $1,000,000.
              The Company's negative cash flow from operations  averages $15,000
              per month.  Therefore  the  Company is  currently  able to pay its
              bills from its reserves.  As oil collection by Artesian  continues
              to grow the Company  expects  this will  increase  oil sales.  The
              Company is modifying its refining plant in Nampa, Idaho and adding
              a new column  that is expected to be  completed  in May 2002,  the
              Company   expects  this  to  produce   positive  cash  flows  from
              operations by mid 2002.  The  Company's  loan with Lewis and Clark
              College is due on March 31, 2002 but the  agreement  provides that
              the college may extend the loan.  The  Company  believes  that the
              college  will  extend the loan based upon  conversations  with the
              college's  president.  The Company is building an additional plant
              in Reno,  Nevada.  The Company is seeking financing for the plant.
              If the financing  does not become  available  soon enough then the
              construction  will be slowed so that the  Company  does not become
              over extended. However, there can be no assurance that the Company
              will  be  successful  in  its  plans.   Because  the  Company  has
              experienced  substantial  losses from operations and has a working
              capital deficit of $11,033,264,  there is substantial  doubt about
              the Company's ability to continue as a going concern.

NOTE 3 - PROPERTY, PLANT AND EQUIPMENT

         Property, plant and equipment consist of: December 31, 2001

              Office equipment                             $      21,871
              Refinery equipment                               1,819,672
              Vehicles                                           118,982
              Land                                             1,789,336
              Buildings                                          110,263
              Leasehold improvements                              18,546
                                                           -------------

              Total property and equipment                     3,878,670
              Less accumulated depreciation                     (237,193)
                                                           -------------

              Property and equipment, net                  $   3,641,477
                                                           =============

NOTE 4 - INTEREST COST

         The total  interest cost incurred  during the years ended  December 31,
         2001 and 2000  was  $1,631,851  and  $103,681,  respectively,  of which
         $1,562,732 and $-0-, respectively,  was capitalized as part of the cost
         of the Reno, Nevada project.



                                       F-19
<PAGE>
               ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
                                AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2001 and 2000
                           (As Restated - See Note 15)


NOTE 5 - INTANGIBLE ASSETS

         Intangible assets consist of:
                                                             December 31,
                                                                 2001
                                                            -------------

              Waste oil transfer facility permit            $     144,000
              Other intangible assets                             284,000
                                                            -------------

              Total intangible assets                             428,000
              Less accumulated amortization                       (33,200)
                                                            -------------

              Intangible assets, net                        $     394,800
                                                            =============

         Other intangible  assets include customer lists,  marketing and mailing
         lists,  supplier lists,  product  literature,  sales material,  and the
         Artesian name.

NOTE 6 - UNAMORTIZED DEBT ISSUE COSTS

         Costs  incurred  in  connection  with the  Lewis & Clark  College  note
         payable are  deferred  and  amortized  to expense  over the life of the
         corresponding note. The Company incurred costs of $210,000 that related
         to the fair market value of 600,000 shares of common stock  transferred
         from the  President of the Company to Lewis & Clark College which was a
         fee paid to enter into the loan. At December 31, 2001,  the Company had
         amortized  nine months and charged the amount to expense for a total of
         $157,500.  The remaining  unamortized  balance at December 31, 2001 was
         $52,500.

NOTE 7 - COMMITMENTS AND CONTINGENCIES

         Operating Leases
         ----------------

         The Company  leases  various oil storage tanks in Idaho and  Washington
         under five operating lease agreements.

         Four  of  the  five  leases  are   month-to-month   requiring  30  days
         cancellation  notice  by  either  party.  The four  agreements  require
         monthly payments totaling $2,125.

         Total lease expense under these  agreements was $33,542 and $29,360 for
         the years ended December 31, 2001 and 2000.

         The Company leases an oil transfer facility in Oakland, California. The
         facility has a five-year  lease that expires on September 30, 2005 with
         monthly  payments of $1,250.  The Company has two five year  options to
         extend the lease.



                                       F-20
<PAGE>


              ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
                                AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2001 and 2000
                           (As Restated - See Note 15)


NOTE 7 - COMMITMENTS AND CONTINGENCIES (Continued)

         Operating Leases (Continued)
         ----------------

         The  Company is  committed  to future  minimum  lease  payments  are as
         follows:

                         2002                           $     15,000
                         2003                                 15,000
                         2004                                 15,000
                         2005                                 11,250
                         2006                                      -
                         Thereafter                                -
                                                        ------------

                         Total                          $     56,250
                                                        ============

         Stock Bonus
         -----------

         The Company will grant a stock bonus of up to 220,000  shares of common
         stock to seven employees of the Company upon  successful  completion of
         the  construction  and commencement of operations of the two refineries
         in Reno, Nevada.

         The Company  will also grant a stock bonus of 100,000  shares of common
         stock to one employee of the Company upon successful  completion of the
         sale of the electrical power project in Reno, Nevada.

         Litigation
         ----------

         The Company is involved in various  lawsuits that management feels will
         not have a material outcome.

         On September 14, 2001, Project  Development  Industries,  L.L.C. (PDI),
         the Company's wholly-owned subsidiary,  and several individuals filed a
         federal  district court  complaint  against the Company,  in the United
         States Court of Colorado,  Case No. EDCV01WM-1714.  In their complaint,
         PDI was  seeking  rescission  of the  Company's  purchase  of PDI for 7
         million shares of the Company's stock and a $6 million promissory note.
         PDI argued that the terms of the purchase  agreement  permitted  PDI to
         rescind the  agreement  and keep all 7 million  shares of the Company's
         stock given in payment for PDI,  provided that no payments had yet been
         made on the promissory note. The Company asserted counterclaims for the
         breach of  contract  and  negligent  misrepresentation.  The matter was
         dismissed with prejudice on March 4, 2002 following a settlement  under
         which the Company paid a $155,000  invoice  previously  tendered by PDI
         and PDI returned 4 million shares of stock and cancelled the $6 million
         promissory note.

                                       F-21
<PAGE>
               ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
                                AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2001 and 2000
                           (As Restated - See Note 15)


NOTE 7 - COMMITMENTS AND CONTINGENCIES (Continued)

         Litigation (Continued)
         ----------

         On  September  24, 2001,  the Company  filed a federal  district  court
         complaint against LM Alternative,  Inc.,  ("LMA"), in the United States
         District Court, Central District of California,  Eastern Division, Case
         No. EDCV 01-0699 VAP (SGLx). The Company seeks a money judgment against
         LMA for breach of contract  for failure to  manufacture  generators  in
         accordance  with  contract  specifications  and  failure to deliver the
         products.  The  Company  seeks  compensatory  damages  in the amount of
         $2,620,000,  incidental  damages  incurred in the amount of $1,035,340,
         and consequential  damages in the amount of $16,000,000.  The complaint
         was served on LMA on September 28, 2001.  On March 20, 2002,  LMA filed
         its answer  denying any liability  arising from the  allegations in the
         complaint,  and  counterclaims  for $10,000,000 in damages arising from
         the alleged breach of contract by the Company. The Company is unable to
         comment on the probability of a mutual settlement at this time.

         Retirement Benefits
         -------------------

         PDI maintains a  participatory  profit  sharing plan under the rules of
         Internal  Revenue  Code  section  401 (k).  There  have been no Company
         contributions for the periods ended December 31, 2001 or 2000.

         Significant Contracts & Agreements
         ----------------------------------

         In January 2001 the Company entered into a consulting agreement whereby
         it agreed to issue 6,564,999  shares of its common stock and options to
         purchase an additional 1,250,000 shares at $3.00 per share. The Company
         has entered into an amended consulting agreement as of March 2001 where
         by  5,364,999  shares of its  common  stock  were  surrendered  and the
         options were cancelled upon termination of the consulting services. The
         remaining   shares   were  valued  at  $7.81  per  share  for  a  total
         consideration of $9,372,000.

         On October 3, 2001, the Company  entered into a contract with PC&E as a
         division of Emerson  (formerly  Emerson  Electric) for the  preliminary
         design  and  engineering  of two oil  processing  plants  for the  Reno
         Project.  The total  amount of the contract  shall not exceed  $300,000
         with monthly payments made as work is performed.

         On October 16,  2001,  the Company  entered  into a contract  with REDD
         Engineering  for the  engineering  and fabrication of three new columns
         designed for the  production of diesel and naphtha which are to be used
         in the  Nampa  plant  and  the two  Reno  Project  plants,  and for the
         redesign of the Nampa plant existing column for processing trans-mix as
         well as for a new column for  processing  trans-mix  in one of the Reno
         Project Plants.



                                       F-22
<PAGE>
               ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
                                AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2001 and 2000
                           (As Restated - See Note 15)


NOTE 8 - NOTES PAYABLE

         Notes payable are comprised of the following:
<TABLE>
<CAPTION>
                                                                                                  December 31,
                                                                                                      2001
<S>                           <C>                                                               <C>
              Note  payable  to  insurance   finance  company,   9.5%  interest,
                principal and interest payments of $8,760 due monthly
                through March 2002, unsecured.                                                  $       25,892

              Note payable to Lewis & Clark College, 12% interest, principal and
                accrued  interest  due on March 31,  2002,  secured by assets of
                Company including real property
                in Nampa, ID and Reno, NV and certain contract rights.                              10,500,000
                                                                                                --------------

              Less current portion                                                                 (10,525,892)
                                                                                                --------------

              Long-term portion                                                                 $         --
                                                                                                ==============
</TABLE>

              Interest  accrued for all notes  payable was  $594,082 at December
                31, 2001.

         Minimum  required  principal  payments on long-term debt as of December
         31, 2001 are as follows:

                         2002                           $   10,525,892
                         2003                                        -
                         2004                                        -
                         2005                                        -
                         2006                                        -
                         Thereafter                                  -
                                                        --------------

                         Total                          $   10,525,892
                                                        ==============

NOTE 9 - NOTES PAYABLE - RELATED PARTIES

         At December 31, 2001,  the Company has an unsecured  note payable to an
         officer of $210,000 that is due upon demand and bears  interest at 9.5%
         per annum.  The  Company has  accrued  interest  payable of $136,116 at
         December 31, 2001 that is included in accrued expenses.



                                       F-23
<PAGE>


               ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
                                AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2001 and 2000
                           (As Restated - See Note 15)


NOTE 10- MAJOR CUSTOMERS

         Net sales for the years ended  December 31, 2001 and 2000 include sales
         to the following major customers together with the receivables due from
         those customers:

                                                Amount of Net Sales
                                                 For the Year Ended
                                                    December 31,
                                         ----------------------------------
                                               2001                 2000
                                         -------------        -------------
              Customer A                 $     349,227        $        --
              Customer B                       219,481              157,486
              Customer C                       130,279               79,178
                                         -------------        -------------
                                         $     698,987        $     236,664
                                         =============        =============

                                                 Accounts Receivable
                                                    Balance as of
                                                    December 31,
                                         ----------------------------------
                                               2001                2000
                                         -------------        -------------

              Customer A                 $      48,029        $        --
              Customer B                        27,672               61,183
              Customer C                          --                   --
                                         -------------        -------------
                                          $     75,701       $       61,183
                                         =============        =============

         Because of the nature of the Company's  business,  the major  customers
         may vary between years.

NOTE 11- ASSET ACQUISITION OF ARTESIAN OIL RECOVERY

         On May 4, 2001, the Company entered into an Asset Purchase Agreement to
         only  purchase   certain  assets  from  Artesian  Oil  Recovery,   Inc.
         (Artesian) for $485,000. The assets are located in Oakland, California.
         The assets acquired were  transferred  into the Company's  wholly-owned
         subsidiary,  Recovery. The assets acquired were inventory, property and
         equipment, and intangible assets that included an oil transfer facility
         permit,  customer lists,  marketing and mailing lists,  supplier lists,
         product  literature,  sales material,  and the Artesian name. The asset
         acquisition was accounted for as a purchase and qualifies as a business
         combination. The allocation of the purchase price to the various assets
         are shown as follows:

         ACQUISITION OF SUBSIDIARY:

              Inventory                               $       1,000
              Property and Equipment                         56,000
              Intangible assets                             428,000
                                                      -------------

                  CASH USED FOR ACQUISITION           $     485,000
                                                      =============



                                       F-24
<PAGE>


               ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
                                AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2001 and 2000
                           (As Restated - See Note 15)


NOTE 11- ASSET ACQUISITION OF ARTESIAN OIL RECOVERY (Continued)

         Historical  consolidated  financial  statements and unaudited  proforma
         consolidated  financial statements relating to the asset acquisition of
         Artesian are not presented  because the acquired  business did not meet
         either of the ten or twenty  percent  requirements  of the  investment,
         asset, and income tests.

NOTE 12- OUTSTANDING STOCK OPTIONS

         The Company  applies  Accounting  Principles  Board ("APB") Opinion 25,
         "Accounting for Stock Issued to Employees," and related Interpretations
         in  accounting  for all  stock  option  plans.  Under APB  Opinion  25,
         compensation  cost is recognized for stock options granted to employees
         when the option price is less than the market  price of the  underlying
         common stock on the date of grant.

         As a result of  applying  APB  Opinion 25 to stock  options  granted to
         employees,  the Company  recorded  an expense of $561,400  for the year
         ended  December  31,  2001.  The expense is  included  in the  selling,
         general and administrative amount in the statement of operations.

         FASB Statement 123,  "Accounting for Stock-Based  Compensation"  ("SFAS
         No.  123"),  requires  the  Company  to  provide  proforma  information
         regarding net income and net income per share as if compensation  costs
         for the  Company's  stock  option plans and other stock awards had been
         determined in accordance with the fair value based method prescribed in
         SFAS No. 123. The Company  estimates the fair value of each stock award
         at the grant date by using the Black-Scholes  option pricing model with
         the   following   weighted   average   assumptions   used  for  grants,
         respectively;  dividend  yield of zero percent for all years;  expected
         volatility of 1.653% and 2.114%;  risk-free interest rates of 3.634 and
         2.869 percent and expected lives of 1.0 and 3.0 years.

         As a result of  applying  SFAS No. 123 to stock  options  granted  from
         April through  December  2001 to  consultants  in  connection  with the
         Company's Reno Project,  the Company capitalized an additional $73,038.
         The amount is included in the  construction  in progress  amount in the
         balance  sheet.  And as a result  of  applying  SFAS  No.  123 to stock
         options  granted  on  October  1,  2001 to  nonemployees,  the  Company
         recorded an expense of $300,339  for the year ended  December 31, 2001.
         The  expense is  included in the  selling,  general and  administrative
         amount in the statement of operations.

         Had  compensation  cost for the  Company's  stock  options  granted  to
         employees  been  determined  based on the fair  value at the grant date
         under the accounting provisions of SFAS No. 123, the Company would have
         recorded  an  additional  expense of  $56,313.  Also  under  these same
         provisions,  the Company's net income (loss) would have been changed by
         the pro forma amounts indicated below:



                                       F-25
<PAGE>


               ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
                                AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2001 and 2000
                           (As Restated - See Note 15)


NOTE 12 -     OUTSTANDING STOCK OPTIONS (Continued)
<TABLE>
<CAPTION>

                                                                December 31,
                                                     ----------------------------------
                                                          2001                2000
                                                     ------------------  --------------
<S>                                                  <C>                 <C>
              Net income (loss):
                As reported                          $ (14,888,269)      $  (1,958,797)
                Pro forma                            $ (14,944,582)      $  (1,958,797)

                                                                December 31,
                                                     ----------------------------------
                                                          2001                2000
                                                     --------------      --------------
              Basic income (loss) per share:
                As reported                          $       (0.20)      $      (0.03)
                Pro forma                            $       (0.20)      $      (0.03)

</TABLE>

         A summary  of the  status of the  Company's  stock  option  plans as of
         December 31, 2001 and changes during the year is presented below:

                                                                  Weighted
                                                                   Average
                                                  Shares        Exercise Price
                                                ---------       --------------
Outstanding, December 31, 2000                       --            --

    Granted                                     6,950,000         $   0.19
    Canceled                                         --            --
    Exercised                                        --            --
                                                ---------         ---------

Outstanding, December 31, 2001                  6,950,000         $   0.19
                                                ---------         ---------

Exercisable, December 31, 2001                  6,550,000         $   0.19
                                                ---------         ---------

<TABLE>
<CAPTION>

                                                           Outstanding                        Exercisable
                                         -------------------------------------------- --------------------------
                                                            Weighted
                                                             Average      Weighted                   Weighted
                                              Number       Remaining       Average       Number       Average
                                           Outstanding    Contractual     Exercise    Exercisable    Exercise
              Exercise Prices              at 12/31/01       Life          Price      at 12/31/01      Price
              ---------------              -----------    ------------   ----------   -----------    ---------
<S>           <C>                            <C>                  <C>    <C>           <C>           <C>
              $ 0.17                         6,270,000            3.00   $    0.17     5,960,000     $    0.17
                0.35                           180,000            3.00        0.35        90,000          0.35
                0.35                           500,000            1.00        0.35       500,000          0.35
                                           -----------    ------------   ---------    -----------    ---------

              $ 0.17 - 0.35                  6,950,000            2.86   $    0.19     6,550,000     $    0.19
                                           ===========    ============   =========    ===========    =========
</TABLE>


                                       F-26
<PAGE>



               ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
                                AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2001 and 2000
                           (As Restated - See Note 15)


NOTE 12- OUTSTANDING STOCK OPTIONS (Continued)

         During April through  December 2001, the Company  granted 500,000 stock
         options to consultants  in connection  with the Company's Reno Project.
         These  options  were issued with an exercise  price of $0.35 per share.
         These options vest immediately and have a maturity of one year from the
         grant date.

         On October 1, 2001, the Board of Directors of the Company  approved the
         2001 Stock Option Plan, under which employees,  consultants,  officers,
         directors,  and other  individuals  may be granted stock  options.  The
         total  number  of shares of  common  stock as to which  options  may be
         granted under the plan is 7,500,000.  The Company has granted 6,450,000
         options under this plan.

         On October 1, 2001,  the Company  granted  4,320,000  stock  options to
         officers and  employees of the Company.  These options were issued with
         an exercise  price of $0.17 per share.  4,010,000 of these options vest
         immediately and have a maturity of three years from the grant date. The
         remaining  310,000 options vest on October 1, 2002 and have maturity of
         three years from the vesting date.

         On October 1, 2001,  the Company  granted  1,950,000  stock  options to
         consultants  and other  individuals.  These options were issued with an
         exercise price of $0.17 per share.  These options vest  immediately and
         have maturity of three years from the grant date.

         On  October 1, 2001,  the  Company  granted  180,000  stock  options to
         employees  of the Company.  These  options were issued with an exercise
         price of $0.35 per share.  90,000 of these options vest immediately and
         have maturity of three years from the grant date. The remaining  90,000
         options  vest on October 1, 2002 and have  maturity of three years from
         the vesting date.



                                       F-27
<PAGE>


               ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
                                AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2001 and 2000
                           (As Restated - See Note 15)


NOTE 13- DISCONTINUED OPERATIONS

         On September 14, 2001, Project Development  Industries,  LLC (PDI), the
         Company's  wholly-owned  subsidiary,  and several  individuals  filed a
         complaint in a federal  district  court  against the Company.  In March
         2002,   the  Company  and  PDI  reached  an  agreement  of  separation,
         settlement  and mutual  release.  Both PDI and the  Company  agreed and
         consented  to separate PDI from the Company  completely  and to rescind
         the  original  share  purchase  agreement  subject  to  the  terms  and
         conditions  of the  settlement  (see Note 7). The Company has accounted
         for the operations of PDI as discontinued  and has used PDI's financial
         statements as of June 30, 2001. At June 30, 2001, PDI had net assets in
         excess of  liabilities of $294,746.  An allowance has been  established
         for the net assets in excess of  liabilities of PDI, thus, the value of
         the net assets of PDI at December 31, 2001 was $-0-. The following is a
         summary  of  loss  from  discontinued  operations  resulting  from  the
         litigation  between PDI and the  Company.  The  consolidated  financial
         statements have been retroactively restated to reflect this event.
<TABLE>
<CAPTION>

                                                                                        For the Years Ended
                                                                                           December 31,
                                                                                 -----------------------------
                                                                                      2001               2000
                                                                                 -------------  --------------
<S>                                                                              <C>            <C>
              NET SALES                                                          $   2,026,190  $    2,934,018

              COST OF SALES                                                               --              --
                                                                                 -------------  --------------

              GROSS MARGIN                                                           2,026,190       2,934,018
                                                                                 -------------  --------------

              OPERATING EXPENSES
                Consulting                                                              76,226         159,288
                Depreciation and amortization                                          183,888         372,162
                Selling, general and administrative                                  1,263,050       2,692,774
                                                                                 -------------  --------------

                Total Other Income (Expense)                                         1,523,164       3,224,224
                                                                                 -------------  --------------

              INCOME (LOSS) FROM OPERATIONS                                            503,026        (290,206)
                                                                                 -------------  --------------

              OTHER INCOME (EXPENSE)

                Interest expense                                                       (26,287)        (64,710)
                Interest income                                                              3              18
                Loss on impairment of goodwill                                      (2,752,222)           --
                Loss on impairment of net assets in excess
                  of liabilities of Project Development Industries                    (294,746)           --
                                                                                 -------------  --------------

                  Total Other Income (Expense)                                      (3,073,252)        (64,692)
                                                                                 -------------  --------------

              INCOME TAX EXPENSE                                                          --              --
                                                                                 -------------  --------------

              LOSS FROM DISCONTINUED OPERATIONS                                  $  (2,570,226) $     (354,898)
                                                                                 =============  ==============
</TABLE>



                                       F-28
<PAGE>


               ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
                                AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2001 and 2000
                           (As Restated - See Note 15)


NOTE 14- SUBSEQUENT EVENTS

         During  February 2002, the Company  issued  2,333,333  shares of common
         stock for the  conversion  of the note  payable  from an officer of the
         Company based on the market price on date of conversion  for a total of
         $210,000.

         On February 25, 2002, American Moistening Company,  Inc. (AMCO) filed a
         complaint  in  North   Carolina  in  the  Superior  Court  Division  of
         Mecklenburg  County,  Case  No.  01-CVS-3321.  AMCO  seeks  a  monetary
         judgment  against  the  Company  as  prayed  for in the  Complaint.  In
         particular, AMCO claims that the Company owes $165,840 for services and
         goods  performed or  manufactured  for the Company in 2001. The summons
         and complaint  were served on the Company on March 4, 2002. The Company
         will file an answer  within 30 days from  service  of the  summons  and
         complaint.  The  Company  will assert  that the  Company  canceled  its
         purchase  order  and that AMCO  failed  to  mitigate  the  damages.  In
         addition  to their  respective  underlying  causes of action,  both the
         Company and AMCO are seeking attorney's fees and costs of litigation as
         against  the  other.  The  Company  intends  to  vigorously  defend its
         position.  Due to the early stage of litigation,  it is not possible to
         evaluate  the  likelihood  of an  unfavorable  outcome or estimate  the
         extent of potential loss.

         On March 7, 2002,  Transwood,  Inc. filed an Idaho State District court
         complaint  against  the  Company  in the  District  Court of the  Third
         Judicial  District of the State of Idaho,  in Canyon  County,  Case No.
         CV02-2187.  Transwood claims that the Company owes it $18,689 for goods
         and  services  provided  to EOPT  during the period of August  2001 and
         November 2001.  Transwood seeks a monetary judgment against the Company
         as prayed for in the  complaint.  The summons and complaint were served
         on the Company on March 11,  2002.  The Company will file an answer and
         counterclaim  within 20 days from service of the summons and complaint.
         In  particular,  the Company will assert that the Company and Transwood
         reached an accord and satisfaction  with regard to all sums owed by the
         Company to Transwood, and that the Company suffered monetary damages as
         a result  of  Transwood's  breach of  contract.  In  addition  to their
         respective  underlying causes of action, both the Company and Transwood
         are  seeking  attorney's  fees and costs of  litigation  as against the
         other.  Transwood  has requested a jury trial.  The Company  intends to
         vigorously  defend its position.  Due to the early stage of litigation,
         it is not possible to evaluate the likelihood of an unfavorable outcome
         or estimate the extent of potential loss.

         Subsequent  to December 31, 2001,  the Company  issued 35,714 shares of
         its common stock for conversion of accounts  payable and 500,000 shares
         of its common stock for accounts  payable  applied to stock  options to
         its consultants on the Reno Project.



                                       F-29
<PAGE>



               ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
                                AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2001 and 2000
                           (As Restated - See Note 15)


NOTE 15- CORRECTION OF CERTAIN ERRORS

         The Company has  restated  its  consolidated  financial  statements  to
         reflect  adjustments made to properly record a liability and capitalize
         related amounts for stock options granted below market value as part of
         a consulting agreement. This consulting agreement was not considered in
         the December 31, 2001  financial  statements  previously  issued by the
         Company.  The Company  granted 500,000 stock options to nonemployees as
         part of this consulting agreement and as a result of applying SFAS 123,
         "Accounting for Stock-Based Compensation",  the Company has capitalized
         an additional $73,038 for the Company's Reno Project. These adjustments
         increased the previously reported  construction in progress at December
         31,  2001 by  $260,538,  increased  accounts  payable by  $187,500  and
         increased common stock by $73,038.  These  adjustments had no effect on
         the net loss and  accumulated  deficit for the year ended  December 31,
         2001. A summary of the changes is as follows:
<TABLE>
<CAPTION>

                                                         Originally           As
                                                          Reported         Restated         Difference
                                                      ---------------   ---------------  --------------
<S>                                                   <C>               <C>              <C>
               Construction in progress               $     5,978,012   $     6,238,550  $      260,538
               Accounts payable                               506,676           694,176         187,500
               Common stock (no par)                       23,176,950        23,249,988          73,038
               Stockholders' equity (deficit)                (966,435)         (893,397)         73,038
               Net loss                                   (14,888,269)      (14,888,269)           --
               Loss per share                                   (0.20)            (0.20)           --

</TABLE>
                                       F-30