UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C. 20549


                                FORM 10-KSB


              Annual Report Pursuant to Section 13 or 15(d) of
                     The Securities Exchange Act of 1934


                      Date of Report: September 30, 2001
                                      ------------------

                                 MED GEN, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


        NEVADA                                        65-0703559
------------------------                 ------------------------------------
(State of incorporation)                 (I.R.S. Employer Identification No.)

7284 W. Palmetto Park Road, Suite 106, Boca Raton, Florida          33433
----------------------------------------------------------        ----------
(Address of principal executive offices)                          (Zip code)


Registrant's telephone number:	(561) 750-1100
                              -------------------


SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:  (None)

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Common Stock, par value $.001 per share

Check whether Registrant (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), and (2) has been subject to such filing requirements for the
past 90 days.   Yes [X]                 No [ ]

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

Registrant's revenues for its fiscal year ended September 30, 2001
were $2,275,607. As of September 30, 2001, Registrant had 8,073,916
shares of its $.001 par value Common Stock issued and outstanding with
an aggregate market value of the common stock held by non-affiliates
of $1,019,876. This calculation is based upon the 5,665,980 shares
held by non-affiliates and a price of $0.18 per share, which was the
bid price at the close of trading September 28, 2001.  Transitional
Small Business Disclosure Format (check one).     Yes [ ]  No [X]



<PAGE>                                                               1



TABLE OF CONTENTS                                               PAGE
-----------------                                               ----


                                  PART I
                                  ------

Item 1    Description of Business                                  3

Item 2    Historical Quarterly Operating Results                   4

Item 3    Description of Products                                  4

Item 4    Competition, Market Share and Industry Environment       8

Item 5    Description of Property                                 11

Item 6    Legal Proceedings                                       11

Item 7    Submission of Matters to a Vote of Security Holders     11

                                 PART II
                                 -------

Item 8    Market for Registrant's Common Equity and Related
          Stockholder Matters                                     11

Item 9    Management's Discussion and Analysis of Financial
          Condition and Results of Operations                     12

Item 10   Financial Statements                                    14

Item 11   Changes in and Disagreements with Accountants on
          Accounting and Financial Disclosure                     14

                                PART III
                                --------

Item 12   Directors, Executive Officers, and Control Persons;
          Compliance with Section 16(a) of the Exchange Act       14

Item 13   Executive Compensation                                  15

Item 14   Security Ownership of Certain Beneficial Owners and
          Management                                              16

          Financial Statements and Notes
            to Financial Statements                             17 - 39


<PAGE>                                                               2

                                  PART I
                                  ------

ITEM 1   DESCRIPTION OF BUSINESS
         -----------------------

Company Background
------------------

Med Gen, Inc. (the "Company") was established under the laws of the
State of Nevada in October 1996. Executive offices are located at 7284
W. Palmetto Park Road, Suite 106, Boca Raton, Florida 33433. The
Company's phone number is (561) 750-1100. The Company currently
operates two Web sites: www.medgen.com and www.snorenz.com.  The
Company's common stock trades on the OTC Bulletin Board under the
symbol "MGNI.OB"

The Company was established to manufacture, sell and license
healthcare products, specifically to the market for alternative
therapies (health self-care).  One out of two households practice some
form of alternative therapies. Industry observers estimate this
market's size at $27 billion a year, a level of consumer expenditure
almost triple the level of expenditure in 1990. The two most prominent
factors contributing to this robust growth are (i) increased levels of
education among consumers; and (ii) changing patterns of primary care
(both in cost and in delivery).

The Company's flagship product has been SNORenz[R], a throat spray which
reduces or eliminates the sounds ordinarily associated with snoring.
SNORenz[R] is free of artificial colors, flavors or preservatives. Its
patented ingredients, technology and Liposomer manufacturing process,
delivers consistent and measured droplet spray mists directly to the
back of the throat, lubricating the uvula and soft palate that vibrate
with each breath. Each application lasts about six to eight hours.
Moreover, the all-natural peppermint taste further provides the
satisfaction of fresher morning breath.

SNORenz[R] is currently sold through a number of Fortune 100 retailers
representing a marketing network in excess of 25,000 stores
nationwide. The Company has accelerated its timetable to introduce
additional products that either deploy its proprietary technology or
otherwise address the $27 billion Alternative Therapy  Market: (i)
4in1[TM], a topical analgesic for joint and muscle aches; (ii) Snore
Quell[TM], GlucoFree snoring relief for people with Type-2 diabetes; and
(iii) ComfortCare[TM], a line of pain relief products that are topically-
applied magnetic compression wraps.

Prior to fiscal year 2001, the Company lacked the capital necessary to
successfully market all four products and due to the costs associated
with entering the retail markets in the health and nutrition industry,
the Company opted to concentrate its entire resources heretofore on
the launch of its flagship brand, SNORenz[R].  Given early successes
with selected retailers in the first quarter of fiscal 2002, the
Company has accelerated the planned introduction of ComfortCare[TM] to
its second fiscal quarter (January-March 2002), Snore Quell[TM] to the
third fiscal quarter (April-June) and 4in1[TM] to the fourth fiscal
quarter (July-September).

Initial development of the SNORenz[R] product was completed in the
spring of 1997, when several test infomercials were produced and aired
with modest success. Changes were then made in the formulation, the
label design and the spray applicator. The newly designed product was



<PAGE>                                                               3



introduced in the fall of 1998, and sales grew modestly until an
infomercial featuring the Company Chairman and Chief Executive, Paul
B. Kravitz, began airing in the Spring of 1999 (April-June),
significantly increased sales and resulted in a materially higher
level of earnings.

ITEM 2   HISTORICAL QUARTERLY OPERATING RESULTS
         ---------------------------------------

<TABLE>
<CAPTION>

                                  GROSS        PRETAX     EARNINGS (LOSS)
                        SALES     PROFIT       INCOME        PER SHARE
                        -----     ------       ------     ---------------
                        --------000's Omitted--------
<S>                     <C>       <C>         <C>         <C>
Fiscal  Year 1999
-----------------
First Qtr (DEC)         $ 179      $ 100       $  35          $ 0.02
Second Qtr (MAR)          190         93        ( 75)          (0.04)
Third Qtr (JUN)           798        449         215            0.08
Fourth QTR (SEP)          237         81        (284)          (0.10)
                        -----      -----       -----          ------
       Year             1,404        723        (109)          (0.04)

Fiscal Year 2000
----------------
First Qtr                 508        345          36            nil
Second Qtr                377        291          30            nil
Third Qtr                 265        224        (108)          (0.02)
Fourth Qtr                369        222        (138)          (0.03)
                        -----      -----       -----          ------
       Year             1,519      1,082        (181)          (0.05)

Fiscal Year 2001
----------------
First Qtr                 405        278          30            0.01
Second Qtr                362        271        ( 82)          (0.02)
Third Qtr                 845        508          51            0.01
Fourth Qtr                664        413      (1,414)          (0.27)
                        -----      -----       -----          ------
       Year             2,276      1,470      (1,515)          (0.27)

</TABLE>


ITEM 3   DESCRIPTION OF PRODUCTS
         -----------------------

SNORenz[R]
----------

SNORenz[R] is an original and innovative entry into the anti-snoring
industry. Never before has a company introduced a liquid throat spray
to prevent or quiet the noise of snoring. The Company was awarded a
patent on the ingredients and formula during fiscal 2001 (on February
13, 2001, to be precise). The medical and psychological communities
have studied the causes and symptoms of sleep deprivation for many
years.



<PAGE>                                                               4



Sleep clinics can be found internationally at the largest hospitals
and universities, and there is a large body of published work on the
subject of snoring. It has been documented in clinical tests that much
of sleep deprivation is caused by snoring. Not only is the snorer
disturbed, but those within close proximity of the noise are disturbed
as well. As the muscles relax during sleep, air flows in and out of
the mouth causing the vibration of the tongue, soft palate and uvula
which produces the sound commonly referred to as snoring.

Traditional snoring remedies include surgical procedures, mechanical
devices and dental appliances. During surgery, portions of the
vibrating tissue are cut away by scalpel or laser in an attempt to
remove the noise-making tissues. This type of procedure is painful,
takes months to heal, and may not offer a long-term solution.
Mechanical devices primarily attempt to increase the volume of air or
create positive air pressure using some type of breathing apparatus
connected to an air pump. This is not only uncomfortable, but also
limits one's sleeping positions. Dental appliances also attempt to
increase the volume of air by expanding the opening of the mouth or by
repositioning the lower jaw and/or the tongue to decrease the
vibration effect. Again, wearing one of these is not the most
comfortable way to sleep. The costs of these methods can be
considerable and may not be covered by basic medical insurance
programs.

Snoring is a problem that affects over 60% of males and 40% of
females.  In the United States alone, it is documented that there are
over 94 million people who suffer with and from the effects of
snoring.  Snoring causes a poor quality of sleep. The medical
implications of snoring usually are not life threatening, except for a
malady called Sleep Apnea, which is not as yet curable. Therapy has
been increasing in response to demand to solve the side effects of
snoring noise.

Experiments with weight loss, the avoidance of alcoholic beverages and
the changing of sleep positions have largely proven ineffective.
Sufferers who demand some relief are now seeking more aggressive
methods.  Invasive surgery, continuous positive airway pressures
(PAP), or other "appliances" are currently being used. These methods
have had variable success in improving the quality of sleep and
reducing snoring.  Due to the discomfort and cost of these methods,
less invasive and alternative solutions are now being evaluated.
SNORenz[R] is among those alternatives.

The Biotechnology underlying Med Gen's Products
-----------------------------------------------

One of the most promising of all these new methods is the use of a
natural blend of oils and vitamins specially formulated to be used as
a spray.  After years of research, such a product was developed by a
medical specialist in Brazil with encouraging initial results. The
Company acquired this technology, the trade secrets and proprietary
formulations for worldwide commercial marketing.  The Company has
spent considerable capital, management time and other Company
resources to further improve the delivery of this spray by using, as
its manufacturing technology, the patented technology called
Liposomer, which enables the blend of oils to remain equally disbursed
and suspended in a vesicle in solution. This and other trade secrets
comprise the underlying biotechnology of SNORenz[R].



<PAGE>                                                               5


In other words, there is never a need to shake the bottle as the
solution is permanently blended. The Company intends to market other
over-the-counter products for alternative therapies, such as 4in1[TM] and
Snore Quell[TM].

By way of explanation, Lipoceuticals are liposomes in a multiphasic
system that contains an active ingredient in each phase.  The ability
to encapsulate a variety of lipophilic and hydrophilic ingredients,
peptides and proteins are the obvious advantages needed to enhance
delivery, improve quality and sustain product performance of SNORenz[R].
This technology is far superior and much more expensive than other
emulsion type delivery systems and insures the highest possible
quality available in the market today.

The advantages and benefits of this technology and delivery system are
that the SNORenz[R] LipoSpray is absorbed transmucosally to provide
systemic distribution; has a higher concentration of active ingredient
in the mucosal tissue; has longer residence time of active ingredient
in the mucosal tissue; and, has a high encapsulation rate for improved
performance of the active ingredient. It also has greater
bioavailability, which means that it has faster onset of effect,
greater overall absorption, sustained administration, improved
convenience and no pills, water or swallowing problems.

SNORenz[R] attempts to reduce or eliminate the sounds associated with
snoring by simply lubricating the vibrating tissues in the throat with
a combination of five natural oils, vitamins, and trade secret trace
ingredients. The product is formulated to adhere to the soft tissues
in the back of the throat for an extended period of time, and may be
reapplied as needed. Clinical studies, "Double Blind" studies and
scores of testimonials and repeat sales indicate a high level of
success for SNORenz[R] users. SNORenz[R] is not effective where users have
consumed a large amount of alcoholic beverages shortly before
application, as the alcohol tends to break down the chemical bonds of
the natural oils. It should also be noted that SNORenz[R] is not a cure
for APNEA, a condition for which there is no known cure. SNORenz[R]
carries a 30-day money back guarantee. The Company has experienced
negligible product return rates over the past two fiscal years.

4in1[TM]
--------

4in1[TM] (formerly sold as PAINenz[TM]), a recently commercialized product
in the Company's family of products, is a topical analgesic sold over-
the-counter. It significantly reduces the pain common to arthritis
sufferers, normal aches and pains due to exercise and other muscle
stress, simple backache pain and muscle sprains. The product comes in
a roll-on applicator. The market for over-the-counter pain relief
products is estimated to exceed $2.5 billion per year.

The active ingredients in 4in1[TM]  are, Glucosamine, Chondroitin, Cetyl
Myrist Oleate(CMO) and Capsaicin (kap SAY ih sihn), a derivative of
the hot pepper plant. When applied as an external analgesic, Capsaicin
depletes and prevents reaccumulation of substance P in peripheral
sensory neurons. Substance P is found in slow-conducting neurons in
the outer and inner skin layers and joint tissues, and is thought to
be the primary chemical mediator of pain impulses from the periphery
to the central nervous system. By depleting substance P, Capsaicin
renders skin and joints insensitive to pain since impulses cannot be
transmitted to the brain.



<PAGE>                                                               6


Capsaicin has been approved by the United States Food and Drug
Administration ("FDA") for use without a prescription in topical
preparations marketed for the temporary relief of pain from arthritis,
or for the relief of minor aches and pains of muscles and joints.
Information on both Capsaicin and Liposome is available on the
Internet (www.capsaicin.com and www.liposomes.com ).

Snore Quell[TM]
---------------

Snoring turns restful slumber into a nightmare for sleep-deprived
partners. Its distress has been clinically shown to aggravate blood
sugar levels of people with diabetes, especially at nighttime when
glucose levels are hard to detect.  GlucoFree Snore Quell[TM] is sugar-
free and can be used as a diabetic-friendly alternative to alleviate
disturbing snoring noises, along with the related effects due to
sleep-deprivation and elevated glucose levels. The formula is a basic
redesign of SNORenz[R] and thus is a proven snoring noise reducer and at
times, eliminator.  Approximately 16 million adults have Type-2
Diabetes in the USA; another 13 million suffer from Impaired Fasting
Glucose Symptoms.a precursor to the advent of Type-2 Diabetes.
Industry observers estimate that there will be 70 million adults with
Type-2 Diabetes by 2010 spending in excess of $1 billion annually on
ethical drugs, however, the annual expenditure on Type-2 Diabetic-
friendly alternatives has not been effectively measured.

ComfortCare[TM] (Compression Support with Magnets)
--------------------------------------------------

Compression with magnets is designed to provide relief of minor
physical discomfort that originate in stress or strain from repetitive
actions and vigorous movements associated with workplace, at-home, or
energetic activities.  Each magnet compression wrap (fitment) is
designed for application to a specific body part (back, knee, elbow,
wrist, ankle and foot-insole.six components within this product line).
Absorbtek fabric in intersliced within each fitment to absorb and
vent moisture in addition to providing anti-microbial protection.  Med
Gen is the first company to have packaged such a combination of
benefits under one product label---and has just received clearance
from the FDA to market all six product components based on its Section
510(k) pre-market notification submission to that Agency. Industry
observers estimate sales of magnetic products approximate $600 million
annually.

Marketing
---------

SNORenz[R] is currently sold over the counter by more than 25,000 retail
stores nationwide and approximately 5,000 stores outside the USA. A
partial list of retailers that carry SNORenz[R] in the United States
are: Ahold USA; Albertsons Supermarkets, American Stores (a division
of Albertsons which includes Jewel Stores, Jewel T Stores, Osco Drugs
and Sav-On Drugs), Brooks Pharmacy, Dillon Stores (a division of
Kroger), Discount Drug Mart, Fedco, Genovese Drug, Giant Eagle,
Hannaford Brothers, Kmart, Longs, Wakefern Food, Walgreen and Wal-
Mart.

Distribution Agreement
----------------------

SNORenz[R], 4in1[TM] and Snore Quell are all manufactured by contract
manufacturers under secret and protected manufacturing agreements
signed on behalf of the Company. Through a distribution agreement a
principal  of a manufacturer and the Company's two principals share



<PAGE>                                                               7



patent rights to the formulas. The Company's ComfortCareT line of
Compression Wrap Magnets are manufactured under a special Agreement
with the manufacturer in China.

Not including international sales generated from its Internet site,
the Company has distributors to sell its alternate brands of the
snoring spray in Canada, the United Kingdom, Germany, France,
Switzerland, Portugal, Turkey, Australia, New Zealand, Japan, China
and Korea.  The Company fully expects to be able to piggyback
additional products through this international distribution network in
the near future.

ITEM 4   COMPETITION, MARKET SHARE AND INDUSTRY ENVIRONMENT
         --------------------------------------------------

Chicago-based Information Resources Inc. (IRI) is arguably the seminal
research organization regarding consumer products research. The
category, Sleeping Remedies, is a $161 million market. In 1998, a sub-
category, Sleeping Aids-Liquids, was created.

The data available for this category is for the 52 week period through
July. In general, the Liquids category approximates only 1% of the
overall category, however, as illustrated in the table below, it is
growing at 103%. As of the date of this data, it is factually correct
to state that Med Gen has a commanding 78% share of this market. At
the same time, SNORenz[R] exhibits actual sales growth at a 50% faster
clip.  Indeed, were it not for SNORenz[R], the product category Sleeping
Aids-Liquids would not be growing at all.  Based upon Med Gen's
accelerated sales growth since July, Med Gen's penetration of this
consumer product market has increased, probably substantially.

                                    Sales, 52 weeks            Change from
                                    To July 31st                Year Ago
CATEGORY:                           ---------------            -----------
    Sleeping Remedies               $ 161,402,200                   6.5%
    Sleeping Aids-Liquids               1,492,934                 103.2%
Brands:
    SNORenz[R]                          1,171,397 (78.4%)         149.7%
    Private Label Brands                  221,225                   0.0
    SNORP Sleeping Aid Liquid              41,032                 (81.6)%
    Elix Sleeping Aid Liquids              25,927                   2.0%
    Y-Snore Sleeping Aid Liquids           21,767                 359.5%

    SNORE Stop Liquid                      14,637                   0.0
    Nature's Way     Silent Night           2,911                 (20.9)%
    Aromafloria Sleeping Aid Liquid         2,211                   1.6%
    EKO Sleeping Aid                        1,023                   5.3%
    Serenitas Sleeping Aid Liquid             362                 (71.4)%

SNORenz[R] alone:  $ 1,171,397
Brands # 2 - #10:  331,095 (Brands 2 through 10 = 28% of SNORenz[R] alone)

Source: IRI (312-726-1221)



<PAGE>                                                               8


Dominant Customers
------------------

In fiscal year 2001, the Company's three largest customers were Wal-
Mart, Walgreen and Kmart which collectively represented 40% of the
Company's annual sales that year. The Company's three largest
customers in fiscal year 2000 were Nutrition for Life, Vello
Scandinavia and Albertsons and represented 43% of annual sales that
year. In fiscal year 1999, Tru-Vantage International, Nutrition For
Life, and Passion For Life were the Company's three largest customers
and represented over 86% of the Company's annual sales that year.
Over the past three years, not only has the Company broadened its
customer base but has improved upon the caliber and size of retailer
handling its product(s).  As the Company matures, management does not
believe that any one customer will represent more than 5% of total
sales. Hence, the top three customers are unlikely to account for more
than 15% of consolidated sales volume for FY 2002.

Internet Sales
--------------

With the conversion of the Company's marketing strategy in 1999 from
Direct Marketing to consumer retail store sales, Internet pricing was
dramatically reduced by 50% to be consistent with unit pricing in the
retail network. Therefore, although unit sales remained steady, and
have even slightly increased, dollar sales have dropped.  The Company
operates two e-commerce web sites, www.snorenz.com and www.medgen.com.
Orders from these sites average over $15,000 per month in retail
sales. Future enhancements to the Company's web sites are planned.

The Company expects to show steady and important increases in future
sales on its internet site.  During the second quarter of fiscal 2002
(January to March), the web site will be re-designed to increase "user
friendly" utilization and to offer new company products. In addition,
the company has appointed an executive to head-up the Internet Sales
so that there will be a concentrated effort made in this important
media. Investor Relations will also be included and enhanced on the
web site with more frequent up-dates than previously given.  Although
no sales figures can be given or estimated, the Company expects that
these efforts will produce substantial increases in e-commerce sales
in fiscal 2002.

Patents, Trademarks and Licenses
--------------------------------

The name "SNORenz" is a registered trademark of the Company with the
United States Patent and Trademark Office (Reg. No. 2,210,381 -
12/15/98). An application for trademark of the name "Snore QuellT",
"4in1[TM]" and ComfortCareT has been made. The Company has also taken
steps to trademark its product names and safeguard its formulations
internationally.

Government Regulation
---------------------

The manufacturing, processing, formulation, packaging, labeling and
advertising of the Company's products may be subject to regulation by
one or more federal agencies, including the FDA, the Federal Trade
Commission ("FTC"), the Consumer Product Safety Commission, the United
States Department of Agriculture, the United States Postal Service,
the United States Environmental Protection Agency and the Occupational
Safety and Health Administration. The Company's products may also be
regulated by various agencies of the states and localities in which



<PAGE>                                                               9



Med Gen products will be sold. In particular, the FDA regulates the
safety, labeling and distribution of dietary supplements, including
vitamins, minerals, herbs, food, OTC and prescription drugs and
cosmetics.

The regulations that are promulgated by the FDA relating to the
manufacturing process are known as Current Good Manufacturing
Practices ("CGMPs"), and are different for drug and food products. The
FTC has overlapping jurisdiction with the FDA to regulate the
labeling, promotion and advertising of vitamins, OTC drugs, cosmetics
and foods. FDA is generally prohibited from regulating the active
ingredients in dietary supplements as drugs unless product claims,
such as claims that a product may heal, mitigate, cure or prevent an
illness, disease or malady.

Governmental regulations in foreign countries where the Company may
sell its products may prevent or delay entry into a market or prevent
or delay the introduction, or require the reformulation, of certain of
our products. In addition, the Company cannot predict whether new
domestic or foreign legislation regulating its activities will be
enacted. Such new legislation could have a material adverse effect on
the Company.

Federal Trade Commission
------------------------

The Company's product packaging and advertised claims strictly adhere
to Federal Trade Commission regulations and guidelines. The FTC has
been conducting an investigation as to a customers claims and its own
claims and packaging. The Company expects the result of this
investigation to be completed by the second quarter, and since it has
already cooperated with the FTC in revamping and redesigning its
packaging and labels with "APNEA" warnings that meet all new
compliance issues does not expect any further or significant claims to
result from this investigation. Failure to follow such regulations
could lead to fines, suspension of sales, or product recalls. The
Company intends to comply with all government regulations, both in
domestic and foreign markets, regarding the distribution and marketing
of its product lines.

Reports to Security Holders
---------------------------

The Company periodically prepares and publishes News Releases and
other significant reports that are deemed newsworthy. These reports
are sent to Business Wire for wide distribution. In addition,
shareholder reports are mailed to all shareholders, as the Company
deems necessary.  Notices of yearly shareholders' meetings, proxy
statements and events of this nature are distributed with the help of
Liberty Transfer Company, the Company's transfer agent, and with
information obtained from ADP Investor Communication in regard to
street name accounts.

Employees
---------

The Company currently has nine full-time employees. Paul Kravitz is
the Chairman and Chief Executive Officer of the Company; Paul S.
Mitchell is President, Treasurer and Chief Operating Officer; Tom
Heysek is VP Finance and Chief Compliance Officer; and Jack Chien is
Chief Financial Officer.




<PAGE>                                                               10



The Company has entered into employment agreements with Mr. Paul B.
Kravitz and Mr. Paul S. Mitchell. Both Employment Agreements provide
for 5 year automatically renewable terms, buyout provisions and other
normally included terms. The Company has no other Employment
Agreements with any of its executives and will only gradually add
support staff as prudently needed to accommodate future growth
domestically and expansion overseas. The Company out-sources the
manufacture of its products and relies upon distributors and brokers
to sell its products; hence, it is unlikely the corporate office will
number more than one dozen employees.


ITEM 5.  DESCRIPTION OF PROPERTY
         -----------------------

Effective December 10, 1999, the Company signed a five (5) year lease
and is occupying a 4,500 square foot executive office complex located
at 7284 W. Palmetto Park Road, Suite 106, Boca Raton, Florida 33433.
The monthly rent is $12,519.  The telephone number at this address is
(561) 750-1100. In November 1999, the Company also agreed to rent
expandable warehouse space (space as needed) located in Buffalo, New
York on the premises of its prime sub-contractor. This location will
significantly reduce the duplicity of handling and its related costs
as well as reduce overhead. It will also simplify inventory controls.

ITEM 6.  LEGAL PROCEEDINGS
         -----------------

The FTC, as a result of claims against one of the Company's customers,
opened up an investigation into the claims made by the Company on its
packaging and labels. The Company has substantially answered these
claims by re-doing its packaging and labels to conform to the
suggested guidelines given to it by the FTC. The Company expects this
investigation to be settled before the end of the second fiscal
quarter of fiscal year 2002.

The Company is being sued by its former Master Distributor, Global
Health Laboratories Inc., ("GHL") after GHL was terminated due to a
breach of its contract with the Company. The Company believes this
lawsuit is without merit, has filed for a dismissal and will
vigorously defend against this action, should there be an action. A
counter-claim is being contemplated.

The Company does not know of any other pending or threatened lawsuits.

ITEM 7.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
         ---------------------------------------------------

         None.


                               PART II
                               -------

ITEM 8.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
         --------------------------------------------------------

As of September 30, 2001, there were approximately 82 Common Stock
shareholders consisting of both registered shareholders and those
being held by the Deposit Trust Corporation in street name. Of the
8,073,916 shares outstanding, 2,407,936 were restricted and 5,665,980
were non-restricted. The Company's Common Stock is traded on the NASD
OTC Bulletin Board under the symbol "MGNI.OB". Shares first began
trading on the OTC Bulletin Board in May of 2000 (prior to May, the
Company's Common Stock was traded in the Pink Sheets).



<PAGE>                                                               11



The following table sets forth the high and low bid prices by month
for the Company's Common Stock for fiscal years 2000 and 2001. The
following high and low bid prices reflect inter-dealer prices without
retail markup, markdown or commission, and may not represent actual
transactions.

Common Stock: Historical Price Data
-----------------------------------

	Fiscal 2000:
        ------------
                                                  High Bid       Low Bid
                                                  --------       -------
October         1999                               0.4375        0.3125
November        1999                               0.40625       0.3125
December        1999 (end first quarter)           0.375         0.28125
January         2000                               0.4375        0.28125
February        2000                               0.375         0.05
March           2000 (end second quarter)          0.125         0.05
April           2000                               0.1875        0.05
May             2000                               0.25          0.10
June            2000 (end third quarter)           0.375         0.125
July            2000                               0.375         0.1875
August          2000                               0.1875        0.15625
September       2000                               0.1875        0.15625

	Fiscal 2001
        -----------

October         2000                               0.312         0.15625
November        2000                               1.01          0.16
December        2000 (end first quarter)           1.01          0.19
January         2001                               1.03          0.25
February        2001                               1.375         0.51
March           2001 (end second quarter)          1.00          0.343
April           2001                               0.45          0.22
May             2001                               0.55          0.25
June            2001 (end third quarter)           0.55          0.33
July            2001                               0.46          0.27
August          2001                               0.37          0.22
September       2001                               0.33          0.175

On September 28, 2001, the bid price of MGNI shares was $0.18 and the
asked price was $0.21.

The transfer agent for the Company's Common Stock is Liberty Transfer
Co., 191 New York Ave, Huntington, NY 11743-2711  Tel. (631) 385-1616.



<PAGE>                                                               12


ITEM 9   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATION
         -----------------------------------------------------------

Results of Operations
---------------------

                  MANAGEMENT'S DISCUSSION AND ANALYSIS
                  ------------------------------------

Operating Results, Fiscal Year 2001 versus Fiscal Year 2000
-----------------------------------------------------------

Sales for the fiscal year ended September 30, 2001 increased 49.8% to
$2,275,607 from $1,519,336 in sales last fiscal year. Gross Profit of
$1,469,563 increased 35.8% in fiscal 2001, up from $1,082,078 last
fiscal year. Total operating expenses include Non-Cash Compensation
for stock and stock option issuance and increased 131.5% to $2,971,417
in fiscal 2001.

The cash-only portion of expenses increased 68.4% to $2,067,232 as
compared with $1,227,850 from the previous fiscal year. The increase
in Selling, General and Administrative expenses of $852,353 was mainly
due to a "gearing up" of staff, telecommunications and computer
technology, all of which are necessary to (i) operate at a higher
level of sales volume, (ii) meet the data transmission requirements
for Wal-Mart, K-Mart and Walgreen and (iii) commercialize
international markets (Europe, Asia and Australia).

Non-Cash Stock Compensation was $904,185 in fiscal 2001 versus $31,758
last fiscal year. This compensation was for stock in lieu of salaries,
consultant fees and expenses in exchange for professional services
rendered, both domestically and overseas. Legal expenses decreased
$12,971 to $218,249 in fiscal 2001. Interest expense increased to
$13,014 in fiscal 2001 versus $3,785 the fiscal year before. For the
full 2001 fiscal year, the Net Loss was $1,514,868, or $0.27 per share
versus a Net Loss in fiscal year 2000 of $181,315 or $0.05 per share.

Liquidity and Capital Resources
-------------------------------

Cash on hand at the end of fiscal 2001 increased by $7,960 from fiscal
2000. Current Assets increased $353,946 to $820,560 of which $433,609
are current account receivables and all due within the next 90 days.
Current Liabilities increased $703,898 to $1,133,071. Net Working
Capital declined $275,070. The Company has negotiated a $1,000,000
credit facility collateralized by the Company's accounts receivable.
The Company maintains significant cash resources reflecting this
credit facility, increased sales and growing accounts receivable to
provide for all general corporate operations in the future.

The Company believes FY 2002 will be a commercially robust year, with
additional customers domestically reducing our three largest customers
to no more than 15% of sales (from 40% currently), and garnering
market share in newly emerging markets overseas. In order to prepare
the balance sheet foundation to accommodate this growth, the Company
has written-off more than $100,000 in accounts receivable, quintupled
the Allowance for Doubtful Accounts (to $60,000) and developed
alternative manufacturing capabilities (to ensure timely product
delivery without capitalizing these expenses) to ensure uninterrupted
growth.

Accordingly, management believes its balance sheet is conservatively
capitalized.



<PAGE>                                                               13


Forward Looking  Statements
---------------------------

When used throughout in this Form 10-KSB filing, the words "believe",
"should",  "would" and similar expressions that are not historical are
intended to identify forward-looking statements that involve risks and
uncertainties.  Such statements include, without limitation,
expectations with respect to the results for the next fiscal year, the
Company's beliefs and its views about the long-term future of the
industry and the Company, its suppliers or its other strategic
business partners.  In addition to factors that may be described in
the Company's other Securities and Exchange Commission ("SEC")
filings, unforeseen circumstances or events could cause the Company's
financial performance to differ materially from that expressed in any
forward-looking statements made by, or on behalf of, the Company.  The
Company does not undertake any responsibility to update the forward-
looking statements contained in this Form 10-KSB filing.


ITEM 10.   FINANCIAL STATEMENTS
           --------------------

The Financial Statements that constitute Item 10 appear at the end of
this report (page 17).

ITEM 11.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
           ---------------------------------------------

           None.

                                PART III
                                --------

ITEM 12.   DIRECTORS, EXECUTIVE OFFICERS, AND CONTROL PERSONS
           --------------------------------------------------

     Name                Age                  Position
     ----                ---                  --------
Paul B. Kravitz          69         Chairman; Chief Executive Officer
                                    and Director
Paul S. Mitchell         48         President, Treasurer, Chief Operating
                                    Officer and Director

All directors hold office until the next annual meeting of
stockholders and the election and qualification of their successors.
Officers are elected annually by the Board of Directors ("Board) and,
subject to existing employment and consulting contracts and
agreements, serve at the discretion of the Board. The Company intends
to conduct an annual shareholders meeting in accordance with Nevada
state law at its principal office location at 7284 West Palmetto Park
Road, Boca Raton, Florida during which Messrs. Kravitz and Mitchell
will stand for re-election as Directors.

Paul B. Kravitz (69) is Chairman and Chief Executive Officer.  He has
been a member of the Board of Directors since company inception.
Prior to founding Med Gen, Mr. Kravitz was the President and CEO of a
public company (AppleTree Companies) engaged in the manufacture and
distribution of food supplies to convenience stores in 24 states.
Annual Sales exceeded $38 million. Mr. Kravitz retired from that
company in 1996.

From 1986 until 1992, Mr. Kravitz was the CEO and principal
shareholder of The Landon Group, a financial services company. In
1990/1991, Mr. Kravitz through the Landon Group) was also appointed
Chairman of the Southeast Bank's Leasing Division, an appointment made



<PAGE>                                                               14



by the Federal Deposit Insurance Corporation which was in the process
of liquidating that bank. From 1960 until the mid-1980's, Mr. Kravitz
was the CEO of several furniture companies (American Furniture
Company, Inc., and Furniture Resources International, Inc.) whose
operations encompassed manufacturing of and marketing to retail
showrooms nationwide. Mr. Kravitz is a graduate of Boston University
with a BS Degree. Mr. Kravitz is a veteran of the Korean War and
served honorably as an officer in the United States Air Force. Mr.
Kravitz was honorably discharged in 1955 and was retired as a 1st Lt.
USAF in 1972 after 20 years of reserve service.

Paul S. Mitchell (48) is the President and Chief Operation Officer. He
has also been a Director of the Company since 1997.  In 1995, Mr.
Mitchell sold his food services company (the Sandwich Makers) to
AppleTree, becoming that company's Chief Operating Officer.  From
$135,000 in sales in 1987, sales had increased to almost $5 million by
the time it was sold to AppleTree. Prior to 1987, Mr. Mitchell worked
for Tasty Baking Company based in Pennsylvania, and for whom he held
several positions nationwide.


ITEM 13.   EXECUTIVE COMPENSATION
           ----------------------

The following table shows that for the fiscal years ended September
30, 1999, September 30, 2000 and September 30, 2001 the cash and other
compensation paid to each of the executive officers and directors of
the Company.

                         Annual Compensation
                         -------------------
<TABLE>
<CAPTION>

Name and                                Other          Award         Other
Position Held   Year    Salary  Bonus   Compensat'n    Restricted    Stock
                                                       Stock         Awards
---------------------------------------------------------------------------
<S>             <C>     <C>     <C>     <C>            <C>           <C>

Paul B.         2001     -0-     -0-    Options(1)      -0-           -0-
Kravitz,
Chairman &      2001    9,000    -0-       -0-        100,000         -0-
CEO,
Director        1999     -0-     -0-       -0-          -0-           -0-
---------------------------------------------------------------------------
Paul S.         2001     -0-     -0-    Options(2)      -0-           -0-
Mitchell
President &     2000    9,000    -0-       -0-        100,000         -0-
COO,
Director        1999     -0-     -0-       -0-         88,968         -0-
---------------------------------------------------------------------------
</TABLE>


---------------------------
(1)  Options to purchase 1,000,000 shares of common stock for a period of
     five years at a purchase price of $0.30 per share.compensation in
     lieu of salary.

(2)  Options to purchase 1,000,000 shares of common stock for a period of
     five years at a purchase price of $0.30 per share.compensation in
     lieu of salary.


<PAGE>                                                               15


ITEM 14.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
           MANAGEMENT
           ---------------------------------------------------

<TABLE>
<CAPTION>

----------------------------------------------------------------------------
    (1)                 (2)                   (3)                 (4)
----------------------------------------------------------------------------
                Name and Address of    Amount and Nature
Title of Class  Beneficial Owner       of Beneficial Owner  Percent of Class
----------------------------------------------------------------------------
<S>             <C>                    <C>                 <C>
                Paul B. Kravitz
Common Stock    4320 NW 101 Drive         1,203,968[3]           14.91%
                Coral Springs, FL 33065
----------------------------------------------------------------------------
                Paul S. Mitchell
Common Stock    7284 W. Palmetto Pk Rd    1,203,968[4]           14.91%
                Boca Raton, FL  33433
----------------------------------------------------------------------------
Directors and Executive Officers
as a group (2 persons)                    2,407,936              29.82%
----------------------------------------------------------------------------
</TABLE>


(3)  Di-Su Holding Corp. holds 1,896,000 Common shares, of which
     Mr. Kravitz is a 50% owner. Mr Kravitz also holds 255,968 Common
     shares in his name. All shares are restricted and subject to
     Rule 144.

(4)  Di-Su Holding Corp. holds 1,896,000 Common shares, of which
     Mr. Mitchell is a 50% owner. Mr. Mitchell also holds 255,968
     Common shares in his name.  All shares are restricted and subject
     to Rule 144.


                             SIGNATURES
                             ----------

Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto
duly authorized.



MED GEN, INC.
-------------
(Registrant)


Date: December 19, 2001



By:    /s/ Paul B. Kravitz
   -------------------------------
            (Signature)

          Chairman and CEO
   ----------------------------------
        (Print name and title
          of signing officer)




<PAGE>                                                               16



                                MED GEN, INC.
                                -------------

                            FINANCIAL STATEMENTS
                            --------------------

                             SEPTEMBER 30, 2001
                             ------------------




<PAGE>                                                               17



                                MED GEN, INC.
                                -------------


                               C O N T E N T S
                               ---------------


Independent Auditor's Report......................................... 19

Financial Statements:

   Balance Sheet..................................................... 20

   Statements of Operations.......................................... 21

   Statement of Changes in Stockholders' (Deficit)................... 22

   Statements of Cash Flows.......................................... 23

   Notes to Financial Statements.....................................25-39



<PAGE>                                                               18



To The Board of Directors and Stockholders
Med Gen, Inc.


We have audited the accompanying balance sheet of Med Gen, Inc. as of
September 30, 2001, and the related statements of operations, changes
in stockholders' (deficit) and cash flows for each of the two years
then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Med Gen,
Inc., as of September 30, 2001, and the results of its operations and
cash flows for each of the two years then ended, in conformity with
accounting principles generally accepted in the United States of
America.


RICHARD H. HARRIS & ASSOCIATES, P.A.


     /s/Richard H. Harris & Associates, P.A.


Fort Lauderdale, Florida
December 7, 2001



<PAGE>                                                               19



                                MED GEN, INC.
                                -------------

                                BALANCE SHEET
                                -------------

                              SEPTEMBER 30, 2001
                              ------------------

                                   ASSETS
                                   ------
CURRENT ASSETS
        Cash                                               $     7,987
        Subscription receivable                                 55,000
        Accounts receivable, net                               433,609
        Inventory                                              212,875
        Prepaid expenses                                        47,367
        Officer advances                                        10,908
        Other current assets                                    52,814
                                                           -----------
                Total current assets                           820,560

PROPERTY AND EQUIPMENT, net                                     48,586

INTANGIBLE ASSETS, net                                          13,339

SECURITY DEPOSITS                                               87,109
                                                           -----------
TOTAL ASSETS                                               $   969,594
                                                           ===========

                   LIABILITIES AND STOCKHOLDERS' (DEFICIT)
                   ---------------------------------------

CURRENT LIABILITIES
        Accounts payable and accrued expenses              $   776,471
        Loans payable                                          150,000
        Notes payable                                           47,100
        Convertible debentures                                 159,500
                                                           -----------
                Total current liabilities                    1,133,071

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' (DEFICIT)
	Preferred stock, $.001 par value
         5,000,000 shares authorized, -0-
         shares issued and outstanding                           -
	Common stock, $.001 par value
	 20,000,000 shares authorized,
	 8,073,916 issued and 8,063,916
         outstanding                                             8,074
        Additional paid-in capital                           2,947,860
        Accumulated deficit                                 (3,109,411)
                                                           -----------
                                                            (  153,477)
TREASURY STOCK - at cost, 20,000 shares                     (   10,000)
                                                           -----------
TOTAL STOCKHOLDERS' (DEFICIT)                               (  163,477)
                                                           -----------
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT)              $   969,594
                                                           ===========



            See accompanying notes to the financial statements.


<PAGE>                                                               20

                                MED GEN, INC.
                                -------------

                          STATEMENTS OF OPERATIONS
                          ------------------------

                   YEARS ENDED SEPTEMBER 30, 2001 AND 2000
                   ---------------------------------------
<TABLE>
<CAPTION>

                                                      2001            2000
                                                  -----------     -----------
<S>                                               <C>             <C>

NET SALES                                         $ 2,275,607     $ 1,519,336

COST OF GOODS SOLD                                    806,044         437,258
                                                  -----------     -----------
GROSS PROFIT                                        1,469,563       1,082,078
                                                  -----------     -----------

OPERATING EXPENSES
        Non cash stock compensation                   904,185          31,758
        Selling, general and administrative         1,848,989         996,636
        Legal                                         218,243         231,214
                                                  -----------     -----------
                Total operating expenses            2,971,417       1,259,608
                                                  -----------     -----------
LOSS FROM OPERATIONS                               (1,501,854)     (  177,530)
                                                  -----------     -----------
OTHER (EXPENSE) INCOME
        Interest expense                           (   13,014)     (    3,785)
                                                  -----------     -----------
NET LOSS                                          $(1,514,868)    $(  181,315)
                                                  ===========     ===========

LOSS PER SHARE - BASIC AND FULLY
        DILUTED                                   $(      .27)    $(      .05)
                                                  ===========     ===========
WEIGHTED AVERAGE SHARES
	OUTSTANDING - BASIC AND FULLY
        DILUTED                                     5,599,267       3,664,181
                                                  ===========     ===========

</TABLE>



              See accompanying notes to the financial statements.



<PAGE>                                                               21


                               MED GEN, INC.
                               -------------

               STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT)
               -----------------------------------------------

                  YEARS ENDED SEPTEMBER 30, 2001 AND 2000
                  ---------------------------------------

<TABLE>
<CAPTION>
                                    COMMON STOCK
                                --------------------
                                                       PAID-IN         TREASURY       ACCUMULATED
                                  SHARES      AMOUNT   CAPITAL          STOCK           DEFICIT         TOTAL
                                ---------     ------  ---------       ---------      ------------    -----------
<S>                             <C>           <C>     <C>             <C>            <C>             <C>

BALANCE, SEPTEMBER 30, 1999     3,256,716     $3,257  $1,508,134      $   -          $(1,413,228)    $    98,163

Issuance of shares for cash       340,000        340     120,910          -                  -           121,250

Issuance of shares for services   348,000        348      31,410          -                  -            31,758

Issuance of shares for payment
 of loan                          500,000        500      99,500          -                  -           100,000

Net (loss) for the year               -          -           -            -           (  181,315)     (  181,315)
                                ---------     ------   ---------      -------        -----------     -----------
BALANCE, SEPTEMBER 30, 2000     4,444,716      4,445   1,759,954          -           (1,594,543)        169,856

Issuance of shares for
 services                         901,500        901     164,209          -                  -           165,110

Issuance of shares for
 payment of loan                  170,000        170      84,830          -                  -            85,000

Exercise of stock options       2,285,000      2,285     140,965          -                  -           143,250

Repurchase of shares                  -          -           -        (10,000)               -        (   10,000)

Conversion of shares to
 debenture                      (  50,850)     (  51)  (  16,949)         -                  -        (   17,000)

Issuance of shares for cash       323,550        324     107,526          -                  -           107,850

Value attributed to options
 issued                               -          -        89,700          -                  -            89,700

Value attributed to repriced
 options                              -          -       617,625          -                  -           617,625

Net (loss) for the year               -          -           -            -           (1,514,868)     (1,514,868)
                                ---------     ------  ----------     --------        -----------     -----------
BALANCE, SEPTEMBER 30, 2001     8,073,916     $8,074  $2,947,860     $(10,000)       $(3,109,411)    $(  163,477)
                                =========     ======  ==========     ========        ===========     ===========
</TABLE>



               See accompanying notes to the financial statements.



<PAGE>                                                               22

                                MED GEN, INC.
                                -------------

                           STATEMENTS OF CASH FLOWS
                           ------------------------

                    YEARS ENDED SEPTEMBER 30, 2001 AND 2000
                    ---------------------------------------
<TABLE>
<CAPTION>
                                                   2001            2000
                                                -----------     -----------
<S>                                             <C>             <C>

CASH FLOWS FROM OPERATING ACTIVITIES
    Net (loss)                                  $(1,514,868)    $(  181,315)
    Adjustments to reconcile (net
       Loss) to net cash (used in)
       operating activities:
        Write off of receivable from
         affiliates                                 116,235             -
        Depreciation and amortization                14,349          12,837
        Stock issued in repayment of
         short term loan                                -           100,000
        Stock issued for services                 1,015,726          31,758
        Allowance for doubtful accounts              50,000           5,000
    (Increase) decrease in:
       Subscription receivable                   (   55,000)            -
       Inventory                                 (  146,324)     (   35,495)
       Prepaid expenses                          (   36,874)     (   10,493)
       Accounts receivable                       (  221,209)     (  159,590)
       Deposits                                  (    6,799)         12,526
       Other current assets                      (   52,814)            -
     Increase (decrease) in:
       Cash overdraft                                   -        (    1,592)
       Accounts payable and accrued
         expenses                                   397,298         209,848
       Customer deposits                                -        (   38,428)
                                                 ----------      ----------
NET CASH (USED IN)
    OPERATING ACTIVITIES                         (  440,280)     (   54,944)
                                                 ----------      ----------
CASH FLOWS FROM INVESTING
    ACTIVITIES
    Purchase of treasury shares                  (   10,000)            -
    Purchase of property and equipment           (   14,048)     (   35,240)
    Increase in officer advances                        -        (   12,959)
    Increase in intangible assets                (   10,162)     (    7,036)
    Increase in due from related parties                -        (   27,771)
                                                 ----------      ----------
NET CASH (USED IN)
    INVESTING ACTIVITIES                         (   34,210)     (   83,006)
                                                 ----------      ----------

</TABLE>



              See accompanying notes to the financial statements.



<PAGE>                                                               23


                              MED GEN, INC.
                              -------------

                          STATEMENTS OF CASH FLOWS
                          ------------------------

              YEARS ENDED SEPTEMBER 30, 2001 AND 2000 (CONTINUED)
              ---------------------------------------------------
<TABLE>
<CAPTION>
                                                   2001            2000
                                                ----------      ---------
<S>                                             <C>             <C>

CASH FLOWS FROM FINANCING ACTIVITIES
    Net proceeds from issuance of
      common stock                                 107,850         121,250
    Proceeds from loans payable                    235,000             -
    Proceeds from note payable                         -            50,000
    Proceeds from convertible debentures           142,500             -
    Payments on note payable                    (    2,900)     (   33,273)
                                                ----------      ----------
NET CASH PROVIDED BY FINANCING
    ACTIVITIES                                     482,450         137,977
                                                ----------      ----------
NET INCREASE IN CASH AND CASH
    EQUIVALENTS                                      7,960              27

CASH AND CASH EQUIVALENTS -
    BEGINNING                                           27            -
                                                ----------      ----------
CASH AND CASH EQUIVALENTS -
    ENDING                                      $    7,987      $       27
                                                ==========      ==========
Supplemental Disclosures of
  Cash Flow Information:

    Cash paid during the year:
      Income taxes                             $       -        $      -
      Interest                                 $    10,945           3,785

Supplemental Schedule of Non-Cash
  Investing and Financing Activities:

    Issuance of common stock in
      payment of short term loan               $       -        $  100,000

    Common stock converted to debentures       $    17,000      $      -


</TABLE>



               See accompanying notes to the financial statements.



<PAGE>                                                               24


                               MED GEN, INC.
                               -------------

                       NOTES TO FINANCIAL STATEMENTS
                       -----------------------------

                       SEPTEMBER 30, 2001 AND 2000
                       ---------------------------


NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        ------------------------------------------

	Description and Nature of Business
        ----------------------------------

        Med Gen, Inc. the (Company) was incorporated October 22,
        1996 under the laws of the State of Nevada and began
        operations in the State of Florida on November 12, 1996.
        The Company currently markets an all natural product,
        SNORENZ, which is designed to aid in the prevention of
        snoring.

        The Company also plans to offer additional products dealing
        with alternative nutritionals as well as other health
        related items.

        Inventory
        ---------

        Inventory is stated at the lower of cost, determined on the
        first-in, first-out (FIFO) method, or net realizable market
        value. Inventory at September 30, 2001 consisted of
        finished goods and packaging materials.

        Revenue Recognition
        -------------------

        Revenue is recognized when products are shipped and are
        presented net of returns.

        Property and Equipment
        ----------------------

        Property and equipment is recorded at cost. Expenditures
        for major improvements and additions are added to the
        property and equipment accounts while replacements,
        maintenance and repairs which do not extend the life of the
        assets are expensed.

        Intangible Assets
        -----------------

        Intangible assets are amortized on a straight-line basis
        over their estimated useful lives. Amortization expense for
        the years ended September 30, 2001 and 2000 was $2,259 and
        $1,600, respectively.



<PAGE>                                                               25


                               MED GEN, INC.
                               -------------

                        NOTES TO FINANCIAL STATEMENTS
                        -----------------------------

                         SEPTEMBER 30, 2001 AND 2000
                         ---------------------------


NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
        ------------------------------------------------------

        Reclassifications
        -----------------

        Certain items included in the 2000 financial statements
        have been reclassified to conform to current year
        presentation.

        Depreciation and Amortization
        -----------------------------

        Depreciation and amortization are computed by using the
        straight-line method over the estimated useful lives of the
        assets. The estimated useful lives are summarized as
        follows:

                  Furniture and fixtures              7 years
                  Office and computer equipment       5 years
                  Computer software                   3 years
                  Leasehold improvements              5 years

        Income Taxes
        ------------

        Deferred tax assets and liabilities are classified in
        accordance with Statement of Financial Accounting Standards
        No. 109 (SFAS 109), which generally requires the use of an
        asset and liability approach for financial accounting and
        reporting for income taxes. If it is more likely than not
        that some portion or all of a deferred tax asset will not
        be realized, a valuation allowance is recognized.

        Allowance for Doubtful Accounts
        -------------------------------

        The Company has established a reserve for certain accounts
        receivable for which it deems collection to be uncertain.
        The allowance for doubtful accounts was $60,000 and
        $10,000, at September 30, 2001 and 2000, respectively.

        Statements of Cash Flows
        ------------------------

        The Company considers all investments with an original
        maturity of three months or less to be cash equivalents.



<PAGE>                                                               26


                                MED GEN, INC.
                                -------------

                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------

                           SEPTEMBER 30, 2001 AND 2000
                           ---------------------------

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
        ------------------------------------------------------

        Use of Estimates
        ----------------
        Management uses estimates and assumptions in preparing
        financial statements in accordance with generally accepted
        accounting principles. Those estimates and assumptions
        affect the reported amounts of assets and liabilities, the
        disclosure of contingent assets and liabilities, and the
        reported revenues and expenses. Accordingly, actual results
        could vary from the estimates used in preparing the
        financial statements.

        Fair Value
        ----------

        Statement of Financial Accounting Standards No. 107,
        "Disclosures about Fair Value of Financial Instruments"
        requires disclosure of information about the fair value of
        certain financial instruments for which it is practicable
        to estimate that value. For purposes of this disclosure,
        the fair value of a financial instrument is the amount at
        which the instrument could be exchanged in a current
        transaction between willing parties, other than in a forced
        sale or liquidation.

        The carrying amounts of the Company's financial
        instruments, including receivables, accounts payable and
        accrued liabilities, approximates fair value due to the
        relatively short period to maturity for these instruments.
        The carrying value of the Company's notes payable
        approximates fair value based on the current rates offered
        to the Company for debt of the same remaining maturities.

        Advertising Costs
        -----------------

        Advertising costs are charged to expense as incurred.
        Advertising costs charged to expense included in selling,
        general and administrative expenses, amounted to $41,091
        and $212,887 for the years ended September 30, 2001 and
        2000, respectively.

        Segment Information
        -------------------

        The Company follows SFAS No. 131, Disclosures about
        Segments of an Enterprise and Related Information". Certain
        information is disclosed, per SFAS No. 131, based on the
        way management organizes financial information for making
        operating decisions and assessing performance.  The Company



<PAGE>                                                               27


                               MED GEN, INC.
                               -------------

                         NOTES TO FINANCIAL STATEMENTS
                         ----------------------------

                          SEPTEMBER 30, 2001 AND 2000
                          ---------------------------


NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
        ------------------------------------------------------

        Segment Information (Continued)
        -------------------------------

        currently operates in a single segment and will evaluate
        additional segment disclosure requirements as it expands
        its operations.

        Stock-Based Compensation
        ------------------------

        The Company accounts for equity instruments issued to
        employees for services based on the fair value of the
        equity instruments issued and accounts for equity
        instruments issued to other than employees based on the
        fair value of the consideration received or the fair of the
        equity instruments, whichever is more reliably measurable.

        The Company accounts for stock based compensation in
        accordance with SFAS No. 123, "Accounting for Stock-Based
        Compensation". The provisions of SFAS No. 123 allow
        companies to either expense the estimated fair value of
        stock options or to continue to follow the intrinsic value
        method set forth in APB Opinion 25, "Accounting for Stock
        Issued to Employees" ("APB 25") but disclose the proforma
        effects on net income (loss) had the fair value of the
        options been expensed. The Company has elected to continue
        to apply APB 25 in accounting for its stock option
        incentive plans.

        Net Income (Loss) per Common Share
        ----------------------------------

        The Company calculates net income (loss) per share as
        required by SFAS No. 128, "Earnings per Share". Basic
        earnings (loss) per share is calculated by dividing net
        income (loss) by the weighted average number of common
        shares outstanding for the period. Diluted earnings (loss)
        per share is calculated by dividing net income (loss) by
        the weighted average number of common shares and dilutive
        common stock equivalents outstanding. Common stock
        equivalents, if any, are excluded from the computation if
        their effect would be anti dilutive.



<PAGE>                                                               28


                               MED GEN, INC.
                               -------------

                       NOTES TO FINANCIAL STATEMENTS
                       -----------------------------

                         SEPTEMBER 30, 2001 AND 2000
                         ---------------------------


NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
        ------------------------------------------------------

        Recent Pronouncements
        ---------------------

        In December 1999, the Securities and Exchange Commission
        issued Bulletin No. 101 ("SAB 101"). SAB 101 provides
        guidance on applying accounting principles generally
        accepted in the United States of America to revenue
        recognition in financial statements. The implementation of
        SAB 101 did not have an impact on the company's operating
        results.

        In July, 2001, the Financial Accounting Standards Board
        (FASB) issued Statement of Financial Accounting Standards
        (SFAS) 141, Business Combinations, and SFAS 142, Goodwill
        and Intangible Assets. SFAS 141 is effective for all
        business combinations completed after June 30, 2001. SFAS
        142 is effective for the year beginning January 1, 2002;
        however certain provisions of that Statement apply to
        goodwill and other intangible assets acquired between July
        1, 2001, and the effective date of SFAS 142. The Company
        does not believe the adoption of these standards will have
        a material impact on the Company's financial statements.

        In July 2001, the Financial Accounting Standards Board
        (FASB) issued Statement of Financial Accounting Standards
        (SFAS) No. 143, Accounting for Asset Retirement
        Obligations. This statement addresses financial accounting
        and reporting for obligations associated with the
        retirement of tangible long-lived assets that result from
        the acquisition, construction, development and (or) the
        normal operation of a long-lived asset, except for certain
        obligations of lessees. This Statement is effective for
        financial statements issued for fiscal years beginning
        after June 15, 2002. The Company is evaluating the impact
        of the adoption of this standard and has not yet determined
        the effect of adoption on its financial position and
        results of operations.

        In August 2001, the FASB issued SFAS No. 144, Accounting
        for the Impairment or Disposal of Long-Lived Assets. This
        statement addresses financial accounting and reporting for
        the impairment or disposal of long-lived assets and
        supersedes FASB Statement No. 121, Accounting for the
        Impairment of Long-Lived Assets and for Long-Lived Assets
        to Be Disposed of. The provisions of the statement are
        effective for financial statements issued for fiscal years



<PAGE>                                                               29


                               MED GEN, INC.
                               -------------

                       NOTES TO FINANCIAL STATEMENTS
                       -----------------------------

                        SEPTEMBER 30, 2001 AND 2000
                        ---------------------------


NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
        ------------------------------------------------------

        Recent Pronouncements (Continued)
        ---------------------------------

        beginning after December 15, 2001. The Company is
        evaluating the impact of the adoption of this standard and
        has not yet determined the effect of adoption on its
        financial position and results of operations.

NOTE 2. PROPERTY AND EQUIPMENT
        ----------------------

        Property and equipment at September 30, 2001 consisted of
        the following:

                                                   2001
                                                ---------
   		   Furniture and office
                     equipment                  $  38,668
                   Computer equipment and
                     software                      42,902
		   Leasehold improvements	    3,700
                                                ---------
                                                   85,270
		   Accumulated depreciation
                     and amortization            ( 36,684)
                                                ---------
                         Total                  $  48,586
                                                =========

        Depreciation and amortization expense for the years ended
        September 30, 2001 and 2000 was $12,090 and $11,237,
        respectively.


NOTE 3. INCOME TAXES
        ------------

        The provision for income taxes consisted of the following:

                                                  2001            2000
                                                --------        --------

		Gross deferred tax asset	$491,830	$ 57,400

                Valuation allowance             (491,830)       ( 57,400)
                                                --------        --------
                Provision for income taxes      $  -0-          $  -0-
                                                ========        ========

        The difference between income taxes computed at the federal
        statutory rate and income tax expense results from the net
        operating loss.



<PAGE>                                                               30


                               MED GEN, INC.
                               -------------

                       NOTES TO FINANCIAL STATEMENTS
                       -----------------------------

                        SEPTEMBER 30, 2001 AND 2000
                        ---------------------------


NOTE 3. INCOME TAXES (CONTINUED)
        ------------------------

        The Company has federal and state net operating loss
        carryforwards of approximately $2,738,000 at September 30,
        2001. These net operating loss carryforwards, if not used,
        will expire in the year 2016. Due to the uncertainty that
        the Company will generate sufficient income in the future
        to utilize the entire deferred tax asset, a valuation
        allowance has been recorded for the entire amount.

NOTE 4. LOANS PAYABLE
        -------------

        Loans payable at September 30, 2001 consisted of two
        unsecured loans of $100,000 and $50,000 bearing interest at
        10% and 0%, respectively. On October 23, 2001, the $50,000
        loan was refinanced into a formal note as more fully
        explained in note 11.

NOTE 5. NOTE PAYABLE
        ------------

        Note payable consists of a $50,000 revolving credit line
        bearing interest at 3% above the prime rate. This note is
        due on demand and is collateralized by substantially all
        assets of the Company and is personally guaranteed by an
        officer of the Company. On October 23, 2001, the note was
        paid in full.

NOTE 6. CONVERTIBLE DEBENTURES
        ----------------------

        Convertible debentures, as of September 30, 2001, provide
        for 8% annual interest payable semi-annually maturing July
        31, 2002. Each 1,000 face value debenture is convertible
        into 2,000 shares of common stock. Additionally, each 1,000
        face value debenture includes 1,000 warrants which are
        convertible into 1,000 shares of common stock at $1.25 per
        share. The warrants are non-detachable and expire on July
        31, 2004.



<PAGE>                                                               31


                                MED GEN, INC.
                                -------------

                        NOTES TO FINANCIAL STATEMENTS
                        -----------------------------

                         SEPTEMBER 30, 2001 AND 2000
                         ---------------------------


NOTE 7. STOCKHOLDERS' (DEFICIT)
        -----------------------

        Common Stock
        ------------

        During October, 1999 the Company's Board of Directors
        approved increasing the number of authorized common shares
        to 20 million.

	During March 2000, the Company issued 100,000 shares of its
        common stock for cash aggregating $31,250.

	During April 2000, the Company issued an aggregate of
        328,000 shares of its common stock to certain employees and
        non-employees as compensation for services. The value
        ascribed to these shares of $25,518 was based on a discount
        from the quoted market price considering the restriction
        attached to the shares.

	During May 2000, the Company issued 500,000 shares of its
        common stock to repay a short term loan of $100,000.

	During August 2000, the Company issued 190,000 shares of
        its common stock for cash aggregating $70,000.

	During September 2000, the Company issued 50,000 shares of
        its common stock for cash aggregating $20,000.

	During September 2000, the Company issued 20,000 shares of
        its common stock to a consultant for services valued at
        $6,240.

        During January 2001 the Company issued an aggregate of
        470,000 shares of its common stock to certain employees and
        non-employees as compensation for services. The value
        ascribed to these shares of $88,135 was based on a discount
        from the quoted market price considering the restrictions
        attached to the shares.

        During March 2001 a consultant to the Company exercised
        285,000 stock options at $.24 per share or $68,250.

        During June 2001 the Company repurchased 20,000 shares of
        its common stock for cash aggregating $10,000.



<PAGE>                                                               32


                                MED GEN, INC.
                                -------------

                        NOTES TO FINANCIAL STATEMENTS
                        -----------------------------

                         SEPTEMBER 30, 2001 AND 2000
                         ---------------------------


NOTE 7. STOCKHOLDERS' (DEFICIT)
        -----------------------

        Common Stock (Continued)
        ------------------------

        During June 2001 the Company issued 170,000 shares of its
        common stock for the conversion of a loan aggregating
        $85,000. In conjunction with this issuance the Company
        issued 85,000 stock options convertible at $1.00 per share.
        These options expire during July 2004.

        During June 2001 the Company issued 323,550 shares of its
        common stock for cash aggregating $107,850.

        During June 2001 a consultant exercised 500,000 stock
        options at $.05 per share or $25,000.

        During August 2001 a consultant exercised 1,500,000 stock
        options for services valued at $50,000 and a stock
        subscription receivable of $55,000 which was subsequently
        paid in December 2001.

        During September 2001 a shareholder of the Company
        converted 50,850 shares of common stock into a debenture
        for $17,000.

        During September 2001 the Company issued 409,000 shares of
        its common stock to certain consultants for services valued
        at $71,575 and 22,500 shares of its common stock to an
        employee for services valued at $5,400. The value ascribed
        to these shares corresponds to the fair market value of the
        common shares on the date it was agreed that they would be
        issued.

        Options to Purchase Common Stock
        --------------------------------

        During December 2000 the Company issued 125,000 stock
        options exercisable at $.44 per share to certain
        consultants. These options expire during December 2003.



<PAGE>                                                               33


                                MED GEN, INC.
                                -------------

                         NOTES TO FINANCIAL STATEMENTS
                         -----------------------------

                          SEPTEMBER 30, 2001 AND 2000
                          ---------------------------


NOTE 7. STOCKHOLDERS' (DEFICIT) (CONTINUED)
        -----------------------------------

        Options to Purchase Common Stock (Continued)
        --------------------------------------------

        During January 2001 the Company issued 430,000 stock
        options exercisable at $.25 per share to certain employees.
        These options expire during January 2004. The Company
        charged $38,700 to operations related to the issuance of
        these options based upon the difference between the fair
        market value of the stock on the date the options were
        granted and the exercise price of the options.

        During January 2001 the Company issued 1,535,000 stock
        options pursuant to a Form S-8 Registration Statement, to
        consultants exercisable as follows: 460,000 options at $.50
        per share; 525,000 options at $1.00 per share and 550,000
        options at $1.50 per share. 785,000 of these options were
        exercised in 2001 and the balance of 750,000 options expire
        during January 2004. The Company has charged $51,000 to
        operations based on the fair market value of the services
        provided. These options were subsequently repriced (see
        below).

        During January 2001 the Company issued 1,500,000 stock
        options pursuant to an S-8 Registration Statement, to
        certain officers exercisable as follows: 500,000 options at
        $.50; 500,000 options at $1.00 and 500,000 options at $1.50
        per share. The options were subsequently transferred to a
        consultant and repriced (see below). These options were to
        expire in January 2004 but were exercised during 2001 by
        the consultant.

        During May 2001 the Company issued 107,850 stock options
        related to a private placement exercisable as follows:
        53,925 at $1.25 and 53,925 at $2.50. These options expire
        during July 2004.

        During June 2001 the Company issued 85,000 stock options in
        conjunction with conversion of a loan to common shares.
        These options are exercisable at 1.00 per share and expire
        in July 2004.



<PAGE>                                                               34


                               MED GEN, INC.
                               -------------

                       NOTES TO FINANCIAL STATEMENTS
                       -----------------------------

                       SEPTEMBER 30, 2001 AND 2000
                       ---------------------------


NOTE 7. STOCKHOLDERS' (DEFICIT) (CONTINUED)
        -----------------------------------

        Options to Purchase Common Stock (Continued)
        --------------------------------------------

        During September 2001 the Company issued 3,000,000 stock
        options to certain officers exercisable as follows:
        1,000,000 at $.30 and 2,000,000 at $.13. These options
        expire during September 2006.

        Certain options issued to, or transferred to, a consultant
        were repriced by the Company. The difference between the
        fair market value of the Company's common stock and the
        repriced exercise price at the date the options were
        repriced of $617,625 has been charged to operations. At
        September 30, 2001 the Company recorded a subscription
        receivable of $55,000 related to the unpaid amount due for
        the shares. The $55,000 was subsequently paid in December
        2001.

        Stock-based Compensation
        ------------------------

        Statement of Financial Accounting Standards No. 123 ("SFAS
        123"), Accounting for Stock-Based Compensation, requires
        the Company to provide proforma information regarding net
        income and earnings per share as if compensation cost for
        the Company's stock option plans had been determined in
        accordance with the fair value based method prescribed in
        SFAS 123. The fair value of the option grants is estimated
        on the date of grant utilizing the Black-Scholes option
        pricing model with the following weighted average
        assumptions for grants during the year ended September 30,
        2001: expected life of options of 3 to 5 years, expected
        volatility of 34% risk-free interest rate of 4.0% and no
        dividend yield. The weighted average fair value at the date
        of grant for options granted during the year ended
        September 30, 2001 approximated $.06 per option. These
        results may not be representative of those to be expected
        in future years.



<PAGE>                                                               35


                                MED GEN, INC.
                                -------------

                        NOTES TO FINANCIAL STATEMENTS
                        -----------------------------

                         SEPTEMBER 30, 2001 AND 2000
                         ---------------------------

NOTE 7. STOCKHOLDERS' (DEFICIT) (CONTINUED)
        -----------------------------------

        Stock-based Compensation (Continued)
        ------------------------------------

        Under the provisions of SFAS 123, the Company's net income
        (loss) and earnings (loss) per share would have been
        reduced (increased) to the proforma amounts indicated
        below:

        Net (loss)
            As reported					$(1,459,868)
            Proforma                                    $(1,619,868)
        Basic and diluted (loss) per share
            As reported                                 $  (.26)
            Proforma                                    $  (.29)

        A summary of stock option activity is as follows:


                                                Weighted-
                                    Number       average       Weighted-
                                      of        exercise        average
                                    shares       price        fair value
                                  ---------     --------      ----------
	Balance at
          September 30, 2000          -            -               -
        Granted                   6,782,850     $  .20          $  .31
        Exercised                 2,285,000        .09          $  .45
        Forfeited                       -           -               -
                                  ---------
     	Balance at
          September 30, 2001      4,497,850
                                  =========


        The following table summarizes information about fixed-
        price stock options at September 30, 2001:

<TABLE>
<CAPTION>
                                Outstanding                              Exercisable
                                Weighted-     Weighted-                  Weighted -
                                Average       Average                    Average
        Exercise    Number      Contractual   Exercise    Number         Exercise
        Prices    Outstanding   Life          Price       Exercisable    Price
        --------  -----------   -----------   --------    -----------    ----------
<S>     <C>       <C>           <C>           <C>         <C>            <C>

        $ 0.13    2,000,000      5.0 years    $ 0.13      2,000,000        $ 0.13
        $ 0.20      750,000      2.3 years    $ 0.20        750,000        $ 0.20
        $ 0.25      430,000      2.3 years    $ 0.25        430,000        $ 0.25
        $ 0.30    1,000,000      5.0 years    $ 0.30      1,000,000        $ 0.30
        $ 0.44      125,000      2.3 years    $ 0.44        125,000        $ 0.44
        $ 1.00       85,000      2.8 years    $ 1.00         85,000        $ 1.00
        $ 1.25       53,925      2.8 years    $ 1.25         53,925        $ 1.25
        $ 2.50       53,925      2.8 years    $ 2.50         53,925        $ 2.50
                  ---------                               ---------
                  4,497,850                               4,497,850
                  =========                               =========

</TABLE>


<PAGE>                                                               36

                               MED GEN, INC.
                               -------------

                        NOTES TO FINANCIAL STATEMENTS
                        -----------------------------

                        SEPTEMBER 30, 2001 AND 2000
                        ---------------------------


NOTE 8. RELATED PARTY TRANSACTIONS
        --------------------------

        Due From Related Parties
        ------------------------

        During the year ended September 30, 2001, the Company wrote
        off advances and accounts receivable aggregating $165,660
        current as bad debts from related entities by virtue of
        common control.

        Sales
        -----

        During the year ended September 30, 2000, the Company had
        sales of $71,242 to an entity related by virtue of common
        control.

        Officer Advances
        ----------------

        During the year ended September 30, 2001, the Company made
        non-interest bearing advances to certain officers. These
        advances are expected to be repaid within the next twelve
        months.

        Office Facilities
        -----------------

        The Company leased office space under a month to month
        arrangement to an entity owned by certain officers of the
        Company. Rent paid by this entity was $6,500 and $16,440
        for the years ended September 30, 2001 and 2000,
        respectively. This arrangement ended in December 2000.

NOTE 9. COMMITMENTS AND CONTINGENCIES
        -----------------------------

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

        The Company leases its office and two warehouse facilities
        under operating leases for gross monthly rent, including
        common area maintenance, of $18,879. The office lease
        provides for no annual cost of living adjustments in the
        base rent and the warehouse leases provide for fixed annual
        increases in the base rent.



<PAGE>                                                               37


                                MED GEN, INC.
                                -------------

                         NOTES TO FINANCIAL STATEMENTS
                         -----------------------------

                          SEPTEMBER 30, 2001 AND 2000
                          ---------------------------


NOTE 9. COMMITMENTS AND CONTINGENCIES (CONTINUED)
        -----------------------------------------

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

        The Company has paid security deposits of $78,829 towards
        these leases.

        The Company also leases various motor vehicles and office
        equipment under noncancellable leases expiring through the
        year 2004. Monthly payments under these leases aggregate
        $8,977. Security deposits under these leases total $6,300.

        Future minimum lease payments under all noncancellable
        operating leases for years ending subsequent to September
        30, 2001 are as follows:

                        2002             $  303,704
                        2003                240,346
                        2004                197,516
                        2005                 38,335
                                         ----------
                                         $  779,901
                                         ==========

        Rent expense for the years ended September 30, 2001 and
        2000 was $262,006 and $192,108, respectively.

        Litigation
        ----------

        The Company is involved in various legal actions arising in
        the normal course of business. In the opinion of
        management, such matters will not have a material effect
        upon the financial position of the Company.


NOTE 10 CONCENTRATIONS
        --------------

        During years ended September 30, 2001 and 2000, the Company
        derived substantially all of its revenue from the sale of
        one product, SNORENZ. Credit is granted to their customers
        in the normal course of business.

        The Company derived 40% and 37% of its total sales from
        three major customers during the years ended September 30,
        2001 and 2000, respectively. At September 30, 2001 and
        2000, outstanding accounts receivable from these three
        customers accounted for 65% and 13% of total accounts
        receivable, respectively.



<PAGE>                                                               38


                                MED GEN, INC.
                                -------------

                        NOTES TO FINANCIAL STATEMENTS
                        -----------------------------

                         SEPTEMBER 30, 2001 AND 2000
                         ---------------------------


NOTE 10 CONCENTRATIONS (CONTINUED)
        --------------------------

        The Company has an exclusive contract with a manufacturing
        company to produce SNORENZ.

NOTE 11 SUBSEQUENT EVENTS
        -----------------

        On October 1, 2001, the Company formalized a letter of
        intent relating to a stock purchase agreement dated August
        14, 2001 to purchase 100% of the outstanding common stock
        of a distribution Company in exchange for 1,000,000 shares
        of its common stock. The agreement provides for a 60 day
        due diligence period which was extended to March 15, 2002.
        Furthermore, in accordance with the agreement the Company
        has made $52,814 of advances to this entity for working
        capital purposes.

        On October 23, 2001, the Company refinanced one of its
        loans payable for $50,000 and its line of credit of $47,100
        (see notes 4 and 5) into a $350,000 note payable due
        January 23, 2002 with interest at 7.5% per annum. The
        Company issued 1,500,000 shares of its common stock to this
        entity for making the loan. The fair market value of the
        common stock issued will be charged to interest expense
        over the life of the loan.

        During October 2001, a consultant of the Company exercised
        stock options aggregating 735,000 shares of the Company's
        common stock for consideration of $147,000.

        On November 1, 2001, the Company received a commitment
        letter for a credit facility of up to $1,000,000. The terms
        of the commitment provide for interest at 2% above prime
        and secured by all accounts receivable of the Company. At
        the sole discretion of the Company after giving notice to
        the lender, any advances under the credit facility can be
        converted to equity.



<PAGE>                                                               39