SECURITIES AND EXCHANGE COMMISSION
                                   FORM 20-F
                                   (Mark one)



        [ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR (G) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                                       OR
                [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                     For the fiscal year ended June 30, 2002
                                       OR
              [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                         Commission file number 0-49923

                           VIROTEC INTERNATIONAL LTD
             (Exact name of Registrant as specified in its charter)

                                   AUSTRALIA
                (Jurisdiction of incorporation or organization)

                          Building 50B Pinewood Drive
                         Sanctuary Cove Queensland 4212
                                   Australia
                    (Address of principal executive offices)

   Securities registered or to be registered pursuant to Section 12(b) of the
                                      Act:

                                      None

   Securities registered or to be registered pursuant to Section 12(g) of the
                                      Act:

                               Ordinary Shares[*]
                                (Title of Class)

    Securities for which there is a reporting obligation pursuant to Section
                               15(d) of the Act:

                                      None

  Indicate the number of outstanding shares of each of the issuer's classes of
         capital or common stock as of the date of this annual report.

                          168,193,841 Ordinary Shares

    Indicate by check mark whether the registrant (1) has filed all reports
  required to be filed by Section 13 or 15(d) for the Securities Exchange Act
  of 1934 during the preceding 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 ()

    Indicate by check mark which financial statement item the registrant has
                               elected to follow.
                             (_) Item17 (X) Item 18


________________________

* Represented by American Depositary Shares.  Each American Depositary Share
  represents fifty (50) Ordinary Shares.




TABLE OF CONTENTS


PRESENTATION OF FINANCIAL INFORMATION.......................................3


FORWARD-LOOKING STATEMENTS..................................................3


ENFORCEMENT OF LIABILITIES AND SERVICE OF PROCESS...........................3


ITEM 1.    IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS............4


ITEM 2.    OFFER STATISTICS AND EXPECTED TIMETABLE..........................4


ITEM 3.    KEY INFORMATION..................................................5


ITEM 4.    INFORMATION ON VIROTEC..........................................13


ITEM 5.    OPERATING AND FINANCIAL REVIEW AND PROSPECTS....................31


ITEM 6.    DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES......................43


ITEM 7.    MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS...............50


ITEM 8.    FINANCIAL INFORMATION...........................................52


ITEM 9.    THE OFFER AND LISTING...........................................53


ITEM 10.   ADDITIONAL INFORMATION..........................................56


ITEM 11.   QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.......66


ITEM 12.   DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES..........67


ITEM 13.   DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.................68


ITEM 14.   MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND
           THE USE OF PROCEEDS.............................................68


ITEM 15.   CONTROLS AND PROCEDURES.........................................68


ITEM 16.   RESERVED........................................................68


ITEM 17.   FINANCIAL STATEMENTS............................................69


ITEM 18.   FINANCIAL STATEMENTS............................................69


ITEM 19.   EXHIBITS........................................................69


                                        2

PRESENTATION OF FINANCIAL INFORMATION

     Unless otherwise stated, any financial information, including the financial
statements   included  in  Item  18  of  this  annual  report  (the   "Financial
Statements"), has been prepared in accordance with Australian Generally Accepted
Accounting Principles ("GAAP"), which differ in certain respects from U.S. GAAP.
You should read Note 26 to the  Financial  Statements  for a discussion of these
differences as they relate to Virotec.

FORWARD-LOOKING STATEMENTS

     Certain  statements in this annual report may  constitute  "forward-looking
statements".  Such  forward-looking  statements  are based on the beliefs of our
management as well as  assumptions  based on  information  available to us. When
used in this annual report, the words  "anticipate",  "believe",  "estimate" and
"expect" and similar  expressions,  as they relate to us or our management,  are
intended to identify forward-looking statements. Such forward-looking statements
reflect  our  current  views with  respect to future  events and are  subject to
certain  risks,  uncertainties  and  assumptions.  Many factors  could cause our
actual results,  performance or achievements to be materially different from any
future results,  performance or achievements that may be expressed or implied by
such forward-looking statements. These include, but are not limited to, risks or
uncertainties associated with the development of our technology,  our ability to
protect our  proprietary  technology,  the market for our  products,  government
regulation,  changes in tax and other laws, changes in competition,  the loss of
key personnel and other factors  identified under Item 3D of this annual report.
Should  one or more of  these  risks or  uncertainties  materialize,  or  should
underlying assumptions prove incorrect,  actual results may vary materially from
those  described in this annual report as  anticipated,  believed,  estimated or
expected.  We do not  intend,  and do not assume any  obligation,  to update the
forward-looking statements.


ENFORCEMENT OF LIABILITIES AND SERVICE OF PROCESS

     Virotec is incorporated  under the laws of Australia.  All of our directors
and senior management and the experts named in this annual report reside outside
the United States.  Substantially  all of our assets,  our directors' and senior
management's  assets and such  experts'  assets are  located  outside the United
States.  As a result,  it may not be possible for investors to effect service of
process within the United States upon us or our directors,  senior management or
such  experts,  or to enforce  against  them or us,  judgments  obtained in U.S.
courts based upon the civil liability  provisions of the federal securities laws
of the United  States.  In  addition,  we have been  advised  by our  Australian
counsel,  McCullough Robertson, that there is doubt that the courts of Australia
will enforce against us, our directors, senior management and experts, judgments
obtained in the United States based upon the civil  liability  provisions of the
federal securities laws of the United States or will enter judgments in original
actions brought in Australian  courts based upon the federal  securities laws of
the United States.
                                       3


PART I


ITEM 1.     IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not Applicable

ITEM 2.     OFFER STATISTICS AND EXPECTED TIMETABLE

Not Applicable



                                       4



ITEM 3.     KEY INFORMATION

A.     Selected Financial Data

     The following  table  presents our selected  financial  information  at the
dates and for each of the  periods  indicated.  You  should  read the  following
information  together with the  information  contained in Item 5 "Operating  and
Financial  Review and  Prospects",  as well as our financial  statements and the
notes thereto and other financial information appearing elsewhere in this annual
report.

<TABLE>
<CAPTION>

                                                                       At or for the year ended June 30,
                                                                 1998           1999           2000           2001           2002
  AMOUNTS IN ACCORDANCE WITH AUSTRALIAN GAAP                     (A$)           (A$)           (A$)           (A$)           (A$)
<S>                                                                <C>            <C>            <C>            <C>            <C>

  Statement of Financial Performance Data

  Revenue:
  Sale of goods                                                     -              -              -        254,356         97,819

  Rendering of services                                             -              -              -        511,644        800,047
  Other revenues from operating
  activities                                                   21,478         29,377         67,030        232,686        640,708

  Revenue from outside operating
  activities                                                  898,106              -        151,461              -              -
  Total revenue                                               919,584         29,377        218,491        998,686      1,538,574

  Operating Expenses:
  Depreciation and amortization                              (43,989)       (86,717)       (80,172)      (205,447)      (275,418)
  Research and development                                          -              -      (647,462)      (921,126)    (1,804,866)
  Exploration and evaluation expenditure
  written off                                               (110,044)    (6,377,508)       (58,699)      (339,414)      (489,839)
  Employee costs and directors
  remuneration                                              (470,456)      (426,563)      (557,615)    (3,168,756)    (1,291,421)

  Other expenses from operating
  activities                                                (788,357)      (981,959)    (1,067,849)    (1,802,258)    (2,793,437)

  Total expenses                                          (1,412,846)    (7,872,747)    (2,411,797)    (6,437,001)    (6,654,981)

  Loss from ordinary activities before
  income tax                                                (493,262)    (7,843,370)    (2,193,306)    (5,438,315)    (5,116,407)
  Income tax related to operating loss                              -              -              -              -              -
  Net loss after income tax                                 (493,262)    (7,843,370)    (2,193,306)    (5,438,315)    (5,116,407)

  Basic loss per share (cents)                              (15.0)(1)         (29.8)          (3.0)          (5.3)          (3.4)
  Basic loss per ADS (cents) (2)                              (748.9)      (1,490.8)        (150.9)        (266.2)        (170.1)
  Weighted average number of shares
  outstanding(3)                                            9,289,329     26,305,924     72,649,703    102,158,210    150,430,225
  Weighted average number of ADSs
  outstanding (2) (3)                                         185,786        526,118      1,452,994      2,043,164      3,008,604

  Statement of Financial Position Data
  Current assets                                              877,121      1,476,014      3,544,563      1,353,058     12,199,306
  Non-current assets                                        6,240,769        787,723        384,848      2,583,060      2,672,130
  Total assets                                              7,117,890      2,263,737      3,929,411      3,936,118     14,871,436
  Current liabilities                                       2,743,785        392,793        245,880        556,114        890,179
  Non-current liabilities                                     729,000        910,000        510,000        610,000        790,000
  Total liabilities                                         3,472,785      1,302,793        755,880      1,166,114      1,680,179

  Net assets                                                3,645,105        960,944      3,173,531      2,770,004     13,191,258
  Contributed equity                                       34,290,733     40,699,942     45,105,835     48,140,623     63,678,284

  AMOUNTS IN ACCORDANCE WITH U.S. GAAP
  Net loss                                                        n/a            n/a    (2,168,196)    (5,593,614)    (5,257,527)
  Basic and diluted loss per share (cents)                        n/a            n/a          (3.0)          (5.5)          (3.5)
  Basic and diluted loss per ADS (cents) (2)                      n/a            n/a        (149.2)        (273.8)        (174.7)
  Total assets                                                    n/a            n/a      3,929,411      4,113,066     15,029,264
  Total liabilities                                               n/a            n/a        755,880      1,166,114      1,680,179
  Shareholders' equity                                            n/a            n/a      3,173,531      2,946,952     13,349,086

</TABLE>


(1)  For the purposes of Australian GAAP, an extraordinary item of A$898,106 has
     been  excluded  from the  calculation  of basic loss per share for the year
     ended June 30, 1998.

(2)  Assumes one ADS represents 50 shares.


                                       5

(3)  On May 1, 1998 the number of shares on issue was consolidated on a basis of
     one share for each two shares held.

Exchange Rates

     We publish our  consolidated  financial  statements in  Australian  dollars
("A$").  Unless otherwise  indicated,  or the context  otherwise  requires,  all
dollar amounts in this annual report are expressed in Australian dollars.

     The  following  table sets  forth,  for the  periods  and dates  indicated,
information  concerning the rates of exchange of A$1.00 into U.S.  dollars based
on the  noon  buying  rate in New York  City  for  cable  transfers  in  foreign
currencies as certified for customs  purposes by the Federal Reserve Bank of New
York.  The  average  noon buying  rates  included  in the  following  table were
computed  based on the  noon  buying  rate on the last day of each  month in the
relevant period.

<TABLE>
<CAPTION>

           Period                                    At Period End   Average    High     Low
Fiscal Year Ended June 30,
<C>                                                       <C>        <C>      <C>      <C>
1998                                                      0.6208     0.6805   0.7537   0.5867
1999                                                      0.6611     0.6245   0.6712   0.5500
2000                                                      0.5971     0.6238   0.6703   0.5685
2001                                                      0.5100     0.5320   0.5996   0.4828
2002                                                      0.5628     0.5240   0.5748   0.4841

June 2002                                                                     0.5748   0.5583
July 2002                                                                     0.5688   0.5445
August 2002                                                                   0.5396   0.5280
September 2002                                                                0.5518   0.5419
October 2002                                                                  0.5585   0.5422
November 2002                                                                 0.5660   0.5563

</TABLE>


     The Australian  dollar is convertible  into U.S. dollars at freely floating
rates and there are no applicable exchange control restrictions in Australia. On
December 16, 2002, the noon buying rate was US$0.0.5660 per A$1.00.

     Fluctuations  in the exchange  rate between the  Australian  dollar and the
U.S.  dollar will affect the U.S.  dollar  equivalent of the  Australian  dollar
amount of Virotec's profits or losses (as applicable),  assets and shareholders'
equity.  In addition,  fluctuations  in the exchange rate between the Australian
dollar  and the U.S.  dollar  will  affect  the U.S.  dollar  equivalent  of the
Australian dollar price of Virotec's shares on the Australian Stock Exchange and
are likely to affect the U.S.  dollar  price of  Virotec's  American  Depositary
Shares,  or ADSs.  If in the future we pay any  dividends  on our shares,  these
fluctuations would also affect the U.S. dollar proceeds that holders of American
Depositary  Receipts,  or ADRs, which evidence  ownership of ADSs, would receive
from the conversion  value of cash  dividends paid in Australian  dollars on our
shares.

B.     Capitalization and Indebtedness

Not Applicable

C.     Reasons for Offer and Use of Proceeds

Not Applicable


                                       6

D.     Risk Factors

We have previously been under receivership and administration, we have a history
of operating losses and are uncertain that we will achieve  profitability in the
future.

     Virotec  was  incorporated  in 1969  and has not  made a  profit  from  its
operations  since 1987, when it was principally  involved in mining.  In January
1997, due to the fact we were  experiencing  financial  difficulties,  a secured
creditor  appointed  a receiver  and  manager to  Virotec.  In March  1997,  our
directors  appointed an administrator to Virotec. In July 1997, the receiver and
manager retired  following the  establishment of a deed of company  arrangement.
Following  finalization of the deed of company  arrangement in October 1998, the
Administrator retired. In late 1999, faced with decreased revenue projections as
a result of a decline  in the value of our  mineral  resources  and a  potential
increase in the cost of remediation  bonds required by environmental  regulatory
bodies,  we  resolved  to change  the  nature  of our  business  from  mining to
environmental  management  and  remediation.  Since that time,  our losses  have
resulted  principally  from research and development  costs  associated with the
BauxsolTM  technology,  BaseconTM technology and other related technologies (the
"Technologies"),  and general and  administrative  costs.  To date,  we have not
received any material  revenue from the commercial  sale of any  applications of
the Technologies. We will incur high levels of expense to implement our business
plan. As a result,  we expect our losses to continue through to at least the end
of fiscal 2003.  Our  profitability  is dependent on our ability,  alone or with
others,  to commercialize  the  Technologies.  No assurance can be given that we
will achieve  profitability  in the future.  For fiscal  2002,  our net loss was
approximately A$5.1 million and as of June 30, 2002 our accumulated losses since
inception were approximately A$50.5 million.

We have a  limited  experience  operating  as an  environmental  management  and
remediation company and the BauxsolTM technology is the first technology we have
attempted to commercialize.

     We have only been  operating our  environmental  consulting  business since
October 2000. After becoming  involved with the BauxsolTM  technology in October
1999,  we  focussed  on  researching,   developing  and  testing  the  BauxsolTM
technology and related  technologies and are currently  working to commercialize
the Technologies.  We have not previously been involved in the commercialization
of any other technology.

We are  continuing  to develop the  Technologies  and have not yet entered  into
significant  commercial  arrangements  in  relation to any  applications  of the
Technologies.

     The Technologies will require further  investment,  research,  development,
testing and  possibly  regulatory  approval.  We cannot be sure of the extent to
which the Technologies will be able to gain market acceptance. We cannot predict
when or if the Technologies  will be taken up commercially or when or if we will
generate any material revenue from commercialization.

We may have substantial  additional financing  requirements and are uncertain if
funds will be available.

     We  may  require   additional   funds  in  order  to  further  develop  and
commercialize the Technologies and to expand our operations in the United States
and Europe,  including  the planned  construction  of a BauxsolTM  manufacturing
plant in Italy in fiscal  2004.  In  addition,  we may  require  funds to pursue
regulatory  clearances,  prosecute and defend our intellectual  property rights,
develop marketing, sales and other capabilities, and fund operating expenses. We
intend to seek any such  additional  funding through public or private equity or
debt  financings  and/or  through   collaboration  or  other  arrangements  with
corporate partners, including licensing agreements. We cannot be certain that we
will be able to raise any required  funding,  on  favorable  terms or at all, or
that we will be able to establish corporate  collaborations on acceptable terms,
if at all. Additional equity financings could result in significant  dilution to
our shareholders.  If we are unable to obtain  additional  funding or enter into
corporate  collaborations,  we  may  be  required  to  curtail  our  operations,
including our research and development  activities,  which could have a material
adverse effect on our business, financial condition and results of operations

                                       7


We are substantially dependent on licensed patents for the Technologies.

     We have been granted  exclusive  marketing and  distribution  rights to the
BauxsolTM  technology and BaseconTM  technology and any other related technology
invented  under an agreement  with Nauveau  Technology  Investments  Limited,  a
company that is 10% controlled by Brian Sheeran, our Executive Chairman, and 40%
controlled by Professor David McConchie,  a director of Virotec.  As a result of
their  interests in Nauveau  Technology  Investments,  Mr. Sheeran and Professor
McConchie  may have  conflicts  of  interest  in  connection  with  the  license
agreement.  See Item 7A and Item 10C. The loss of our  exclusive  license to use
the  Technologies  could result in us having to cease selling  products that use
the licensed  intellectual  property.  Nauveau  Technology  Investments may only
terminate our exclusive  license if we fail to make required  royalty  payments.
However,  we could also lose our rights under this exclusive license for reasons
beyond our  control.  For example,  Nauveau  Technology  Investments  could lose
patent  protection  for the  Technologies  for a number  of  reasons,  including
invalidity  of the  licensed  patents.  The  loss  of  our  license  to use  the
Technologies  would have a material  adverse  effect on our business,  financial
condition  and  results of  operations  and could lead to the  cessation  of our
business.

We may be unable to protect the  intellectual  property rights needed to operate
our business and our efforts to protect our  intellectual  property may cause us
to become involved in costly and lengthy litigation,  which could seriously harm
our business.

     Although  we are not the  owners  of the  Technologies,  we hold  exclusive
rights to them and are responsible for their protection. Our success will depend
largely on our ability to obtain patents,  maintain trade secret  protection and
operate without infringing on the proprietary  rights of third parties,  or have
third parties  circumvent our rights.  We principally  rely upon patents,  trade
secret,  copyright and contract law to protect the proprietary technology needed
to operate our business.

     There are six pending  patent  applications  for the  Technologies  that we
filed on behalf of Nauveau  Technology  Investments and we will continue to seek
patent  protection  for  the  Technologies  on  behalf  of  Nauveau   Technology
Investments. However, there can be no assurance:

     * that patents will be issued from any pending applications;

     * that the claims allowed under any patents will be sufficiently broad to
       protect the technology;

     * that any patents issued to Nauveau Technologies Investments will not be
       challenged, invalidated or circumvented; or

     * as to the degree or adequacy of protection any patents or patent
       applications may or will afford.

     The  publication of discoveries  in scientific or patent  literature  often
lags behind  actual  discoveries.  As such,  we cannot be certain  that  Nauveau
Technologies   Investments   as  the  inventor,   were  the  first  creators  of
intellectual property covered by the pending patent applications.  Nor can we be
certain  that  Nauveau  Technologies   Investments  was  first  to  file  patent
applications for such inventions.

     In addition,  many of the laws of foreign countries treat the protection of
proprietary  rights differently from, and may not protect our proprietary rights
to the same extent as do, laws in Australia,  the United States and other Patent
Co-operation Treaty countries.

                                       8


     Litigation may be necessary to enforce  patents issued or licensed to us or
to determine the scope and validity of a third party's  proprietary  rights.  We
could incur  substantial  costs if we are involved in such  litigation and there
can be no  assurance  that funds would be  available  for us in the event of any
such litigation.  Additionally,  there can be no assurance that we would prevail
in any such  litigation.  An adverse outcome in litigation or an interference to
determine priority or other proceeding in a court or patent office could subject
us to significant liabilities, require disputed rights to be licensed from other
parties or require us to cease using the  infringing  technologies  or products,
any of which could have a material  adverse  effect on our  business,  financial
condition and results of operations.

     We also rely on trade  secrets  and  proprietary  know-how,  especially  in
circumstances  in which we  believe  patent  protection  is not  appropriate  or
obtainable.  For example,  the Australian  provisional  patent for the BauxsolTM
technology  does not cover the  BauxsolTM  technology as a whole and some of the
BauxsolTM  technology  has  been  published  and is  available  for use by third
parties. We attempt to protect the proprietary  technology needed to operate our
business in part by confidentiality agreements with our employees,  advisers and
consultants.  There can be no assurance,  however,  that these  agreements  will
provide  meaningful  protection  or adequate  remedies  for any breach,  or that
unpatented proprietary intellectual property needed to operate our business will
not otherwise become known or independently  discovered by our competitors,  any
of which  could  have a  material  adverse  effect  on our  business,  financial
condition and results of operations.

We may be subject to patent infringement claims.

     Our  commercial  success  depends  significantly  on our ability to operate
without infringing the patents and proprietary rights of third parties. Although
we are not aware of any action or threatened action alleging patent infringement
or improper use of proprietary  information by us, if we have to defend any such
claims we could incur  substantial  costs and our management  resources could be
diverted.  This could have a material adverse effect on our business,  financial
condition and results of operations.

     If we were found to be  infringing  any third  party  patents,  we could be
required to pay damages,  alter our products or  processes,  obtain  licenses or
cease the activities  that infringe on patents.  We cannot be certain that if we
required  licenses  for patents  held by third  parties  that they would be made
available on terms  acceptable  to us, if at all. To the extent that we required
such licenses for the  development  of  technology  for our business and we were
unable to obtain them, we could be foreclosed from the development,  manufacture
or  commercialization  of technology or products  requiring  such  licenses,  or
encounter delays in product introductions while attempting to design around such
patents.  This could have a material  adverse effect on our business,  financial
condition and results of operations.

Our success  depends on retaining our key  personnel and advisers,  particularly
Professor  D.  McConchie,  our chief  scientific  adviser,  and  attracting  and
retaining additional qualified personnel.

     We are dependent on retaining  key  personnel  and  advisers,  particularly
Professor D. McConchie. Professor D. McConchie was primarily responsible for the
initial   development  of  the  Technologies  and  is  crucial  to  the  further
development of the Technologies. If we were to lose his services it could have a
material  adverse  effect on our  business,  financial  condition and results of
operations.  We do not maintain any "key man" life insurance policies. There are
a  small  number  of  qualified  geochemical  and  environmental  engineers  and
retaining and attracting such qualified  individuals is critical to our success.
We cannot be certain  that we will be able to attract and retain such  qualified
individuals on acceptable  terms, if at all, and the failure to do so could have
a material  adverse effect on our business,  financial  condition and results of
operations.

                                       9


There are potential adverse effects from technological change and new
competition.

     We know of no existing technology,  other than BauxsolTM  technology,  that
can   extract  up  to  99.99   percent   of  heavy   metals,   neutralize   acid
cost-effectively and leave no environmental threat after treatment. Accordingly,
we  believe  we  have  a  competitive  advantage  in  the  global  environmental
remediation market.

     We know of no other  technology,  other than BaseconTM  technology  that is
able to  cost-effectively  neutralize  caustic  bauxite  refinery  residues  and
produce an entirely  benign  residue  which can be safely  stored or used as raw
material for BauxsolTM products.

     Although  we  are  unaware  of  any  new  technologies  under  development,
competitors may develop and implement new technologies  that allow them to offer
lower-priced or superior quality environmental  remediation products that render
the BauxsolTM or BaseconTM technologies obsolete or non-competitive.  This would
have a material adverse effect on our business.

We may be exposed  to  lawsuits  and other  claims if the  Technologies  fail to
perform as warranted, which could increase our expenses and harm our reputation.

     Potential  customers  will rely upon us to  provide  crucial  environmental
management and remediation  services.  If the application of the Technologies is
not  successful in any  particular  instance  there is potential for us to incur
significant liability. We may be held liable for damages beyond the scope of any
insurance  coverage  we may  have.  In  addition,  a  well-publicized  actual or
perceived  problem  could  adversely  affect  the  market's  perception  of  the
Technologies,  which  could  have a  material  adverse  effect on our  business,
results of operations and financial condition.

We are planning to expand our operations throughout the world, which will expose
us to the inherent risks of doing business on an international level,  including
fluctuations in foreign currency, unexpected changes in regulatory requirements,
tariffs and other trade  barriers  and  difficulties  in staffing  and  managing
foreign operations.

     Currently,  the  majority  of our  assets  and  operations  are  located in
Australia. We are continuing to grow our operations outside Australia, including
the opening of an office in Italy in February  2002, the opening of a laboratory
in  Europe  in  August  2001,  and  the  planned  construction  of  a  BauxsolTM
manufacturing  plant  in  Italy  in  fiscal  2004,  and  we  plan  to  sell  the
Technologies  throughout  the world.  There are certain risks  inherent in doing
business on an international level, including:

     * fluctuations in foreign currency;

     * unexpected changes in regulatory requirements;

     * tariffs and other trade barriers;

     * difficulties in staffing and managing foreign operations;

     * longer payment cycles;

     * problems in collecting accounts receivables;

     * political instability; and

     * potentially adverse tax consequences of operating in multiple
       jurisdictions.

     In some countries,  we may need to enter a joint venture or other strategic
relationship   with  one  or  more  third  parties  in  order  to   successfully
commercialize  the  Technologies  and/or  conduct  our  operations,  and  may be
required by law to hold only a minority interest in any operating entity. To the
extent  we are a  party  to  joint  ventures,  we  may be  subject  to  loss  of
proprietary information,  risky business practices and other strategic decisions
contrary to our business judgment.

                                       10


     We  account  for  transactions  in  Australian  dollars  and our  financial
statements are kept in Australian  dollars.  We expect that an increasing amount
of our  expenses  and revenue  will be  denominated  in U.S.  dollars and Euros.
Accordingly,  fluctuations in rate of exchange of the Australian  dollar and the
U.S. dollar and the Australian dollar and the Euro could have a material adverse
effect on our financial  position,  results of operations and cash flows.  We do
not currently hedge currency exchange rate fluctuation.

Our  agreement  with  Eurallumina  does not provide for a  guaranteed  supply of
bauxite refinery  residue,  the main raw material used to manufacture  BauxsolTM
products, and we would be unable to recover from Eurallumina any increase in our
costs  resulting  from  purchasing  bauxite  refinery  residue  from a different
supplier.

     We plan to  build a  BauxsolTM  manufacturing  plant  in  Sardinia,  Italy,
located near Eurallumina,  S.p.A.'s alumina production plant, in fiscal 2004. We
have entered into an agreement with Eurallumina  pursuant to which it has agreed
to  supply  us  exclusively  with  bauxite  refinery  residue  from its  alumina
production  plant.  However,  the  agreement  does  not  provide  for a  minimum
guaranteed  supply.  Therefore,  if  Eurallumina  were  unable to supply us with
bauxite refinery residue, we would need to purchase the bauxite refinery residue
from a  different  company.  We would be unable to recover  any  increase in our
costs  resulting  from  purchasing  bauxite  refinery  residue  from a different
supplier.

There may be volatility in our stock price.

     In recent years, the stock market in general,  and technology  companies in
particular, have experienced significant price fluctuations, sometimes unrelated
to the operating performance of particular companies.  These market fluctuations
may result in a material decline in the market price of our shares and our ADSs.
There are a number of factors that may have a  significant  impact on the market
price of our shares and our ADSs including:

     * variations in our actual, anticipated or estimated earnings;

     * announcements by competitors;

     * changes in securities analysts' recommendations or earnings estimates;

     * market reaction to any acquisition, joint venture or strategic
       investments announced by us or our competitors;

     * future sales of significant amounts of our shares or our ADSs; and

     * general economic or stock market conditions unrelated to our operating
       performance.

     In the past,  securities class action  litigation has often been instituted
against  companies  following  periods of volatility in their stock price.  This
type of litigation could result in substantial costs and divert our management's
attention and resources.

We cannot assure you that holders of ADRs will receive voting  materials in time
to instruct the  depositary  to vote,  and it is possible that you will not have
the opportunity to exercise a right to vote.

     Holders of ADRs may  instruct  the  depositary  how to exercise  the voting
rights for the ordinary shares  represented by the ADSs if we ask the depositary
to solicit voting instructions. If we so request, the depositary will notify ADR
holders of any shareholder meeting or solicitation of consents or proxies.  This
notice will describe how you may instruct the  depositary to exercise the voting
rights for the ordinary shares represented by your ADSs. For the instructions to
be valid, the depositary must receive them on or before the date specified.  The
depositary will try, as far as is practical,  to vote or to have its agents vote
the ordinary  shares  represented  by your ADSs as you instruct.  The depositary
will only vote or  attempt  to vote as you  instruct.  The  depositary  will not
itself exercise any voting discretion.  Furthermore,  neither the depositary nor
its agents are responsible for any failure to carry out any voting instructions,
the manner in which any vote is cast or the effect of any vote.

                                       11


     We are not obliged to ask the depositary to solicit voting instructions. We
can not assure you that you will  receive  voting  materials in time to instruct
the  depositary to vote,  and it is possible that you, or persons who hold their
ADSs  through  brokers,  dealers  or  other  third  parties,  will  not have the
opportunity to exercise a right to vote.
                                       12



ITEM 4.     INFORMATION ON VIROTEC

History and Development of Virotec

     Our legal  name is Virotec  International  Ltd and we are  incorporated  in
Australia  as  a  public   company   limited  by  shares  under  the  Australian
Corporations  Act 2001.  Our principal  place of business is located at Building
50B Pinewood Drive, Sanctuary Cove, Queensland,  4212, Australia.  Our telephone
number is 011-61-7-5530-8014. Our web site address is www.virotec.com.

     The liability of our shareholders is limited by shares. We were admitted to
the Official List of the Australian Stock Exchange in February 1970.

     In July  2001,  our shares  were  admitted  to  trading on the  Alternative
Investment  Market of the London  Stock  Exchange,  or AIM,  and we received net
proceeds of  approximately  A$9.0 million from the public offering of our shares
in the United Kingdom in connection with the AIM listing.

     Since the beginning of our last three  financial  years to the date of this
annual  report,  we have not made any material  capital  expenditures  except in
September 2000 we purchased the environmental  consulting,  laboratory  analysis
and fieldwork  services business of Global  Environmental  Corporation and other
items of plant and equipment from the  unitholders of the Consil Unit Trust,  in
consideration  for which for we issued  2,700,000  Virotec  shares at A$0.60 per
share, paid A$400,000 and issued 2,700,000 options to acquire a Virotec share at
A$1.00 per share on or before August 31, 2003. The  consideration  was valued at
A$2,020,000  under Australian GAAP and A$2,211,295 under U.S. GAAP. In addition,
pursuant to a separate  consulting  agreement,  the three  principals  of Global
Environment  Corporation  provided  us with  A$150,000  worth  of  environmental
consulting,  laboratory analysis and fieldwork services for free between October
2000 and September 2001, after which the agreement was terminated.

     We have no material  capital  expenditures  or  divestitures  in  progress.
However, we plan to build a BauxsolTM manufacturing plant in Sardinia, Italy. We
have not  finalized our plans for the plant,  including  its planned  production
capacity,  and as such we cannot  estimate the cost of the  construction  of the
plant at this stage. We expect to finalize these plans and to commence  building
the plant in fiscal 2004.

B.     Business Overview

Overview

     Since   early   2000,   the  focus  of  our   business   has  been  on  the
commercialization  of  environmental  technologies.  At  present,  the two major
technologies  that  we are  focused  on are  the  BauxsolTM  technology  and the
BaseconTM technology.

     BauxsolTM is the trademarked  name for a material  prepared by the chemical
and physical  modification of the caustic  bauxite  refinery  residue  generated
during alumina production.  We are exclusively licensed to market and distribute
BauxsolTM technology worldwide and we own the BauxsolTM trademark.

     BauxsolTM technology can cost-effectively neutralize acid and extract heavy
metals together with some other inorganic  species from water and soil. There is
a  significant  worldwide  market  for  BauxsolTM  technology  in  a  number  of
industries,  including the mining,  sewage,  industrial wastewater treatment and
soil treatment  industries.  However, to date, we have not received any material
revenue from sales of the BauxsolTM technology

                                       13



     BaseconTM  is the  trademarked  name  for a  process  of  treating  bauxite
refinery  residues  generated  during  alumina  production.  We are  exclusively
licensed to market and distribute  BaseconTM technology worldwide and we own the
BaseconTM trademark.

     The  BaseconTM   technology   provides  for  a  process  that  is  able  to
cost-effectively  neutralize  caustic refinery  residues and produce an entirely
benign  residue  which  can be  safely  stored  or  used as a raw  material  for
BauxsolTM  products.  As the refinery  residue is  environmentally  benign after
treatment,  there is no longer any environmental  liability  attaching to it. It
can be applied to virtually any alumina refinery and does not interfere with the
existing  refining  processes  employed,  and as a result  there is a  worldwide
market for  BaseconTM  technology.  To date,  we have not  received any material
revenue from sales of the BaseconTM  technology.  Our target market for sales of
the BaseconTM technology is the alumina industry.

     Our goal is to commercialize the Technologies and to become a world-leading
provider  of   environmental   remediation   technologies.   Revenue   from  the
exploitation  of the  Technologies  will be  derived  from the sale of  licences
related to specific applications and/or geographical areas,  consulting fees for
the  application of the  technologies  in specific  areas,  the sale of reagents
derived from the technologies or by a combination of all of the above.

     Since October 2000,  we have provided a range of  environmental  management
services for clients in Australia,  including  scientific  analysis and testing,
pollution  abatement  services,  environmental  management  training  and advice
regarding  compliance  with  environmental  laws. Our  environmental  consulting
employees also respond to inquiries  received in relation to the Technologies in
Australia.  Sales of the  Technologies,  if any,  will be  accounted  for in our
Environmental Consulting segment.

     To date,  we have  operated  principally  in  Australia.  We are  currently
expanding our operations into Europe,  Asia and North America. In August 2001 we
opened a laboratory in The Netherlands and subsequently  moved the laboratory to
Sardinia,  Italy  in  September  2002  to be  closer  to  Eurallumina's  alumina
refinery. In February 2002 we opened an office in Italy.

     We operate primarily in three industry segments - environmental consulting,
mining interests and research and development of environmental technologies. The
segments are determined based on several factors including nature of activities,
customers and products/services provided.

     Currently,  our main  source of revenue is derived  from the  provision  of
environmental consulting,  laboratory analysis and fieldwork services related to
the business  acquired in October  2000. In addition,  we have received  revenue
from sales of cleaned tin  concentrates.  The table below sets forth our revenue
by segment for fiscal 2000, 2001 and 2002.

                                       14



                               Revenue by Segment


<TABLE>
<CAPTION>


               Segment                                    Fiscal 2000       Fiscal 2001    Fiscal 2002
                                                                 ($A)              ($A)           ($A)

<S>                                                             <C>               <C>            <C>
Environmental Consulting(1)                                         -           511,644        800,047
Mining Interests(2)                                           153,823           263,982         97,819
Research and Development of Environmental Technologies              -                 -              -
Unallocated(3)                                                 64,668           223,150        640,708

                                                              218,491           998,686      1,538,574
</TABLE>

_________________

(1)     Includes laboratory analysis and fieldwork services, which were both
        previously accounted for as a separate segment.
(2)     Previously called Mining and Exploration.
(3)     This includes interest income and sundry income from non-core
        activities.


     During the periods  reflected  in the above table,  all revenue  except for
sales  of  cleaned  tin  concentrates  (accounted  for in the  Mining  Interests
segment) has been  generated  from sales to Australian  companies.  All sales of
cleaned tin concentrates have been made to Malaysian companies.

Environmental Consulting

     Environmental Consulting encompasses the following areas:


(i)  Laboratory  analysis - operations of a laboratory  in Melbourne,  Australia
     providing  chemical  analysis.   Our  laboratory  specializes  in  emission
     sampling and analysis, odor abatement and contaminated site assessment.  We
     earn  revenue  based on a schedule  of fees for  routine  testing  and on a
     quoted fee for non-routine or specialized analyses.

(ii) Fieldwork services - provision of on-site environmental management
     systems. Our revenue is derived on a fee for service basis.

(iii)Consulting services - provision of specialist advice on cleaner production,
     waste management and reversing processes that generate waste.  Revenue from
     sales of the Technologies  will be recognized in this segment.  Our revenue
     to date is derived on a fee for service basis,  but if the Technologies are
     commercialized,  revenue is expected to be derived  from sales of licenses,
     royalties  from  the  licensees,  the  sale of  reagents  derived  from the
     Technologies or by a combination of all of the above.


     BauxsolTM Technology

     Description of the BauxsolTM technology

     BauxsolTM   technology  is  an   environmentally   friendly  treatment  for
intractable  environmental  problems such as acidic and metal contaminated water
and soils. We believe it is innovative,  efficient,  cost-effective and does not
suffer from the problems that affect  alternative  procedures such as the use of
lime. The BauxsolTM technology has taken almost a decade to develop.

     The application process of the BauxsolTM  technology appears simple but the
geochemical  processes are complex.  It involves a cocktail of minerals prepared
by chemically and physically  modifying bauxite refinery residues.  Although the
products from the BauxsolTM technology range themselves are almost neutral, they
have the  ability to  neutralize  acid and to remove  metals  and some  chemical
substances from solution.  These products are  non-corrosive  and safe to use in
sensitive natural environments.

                                       15


     When the BauxsolTM  products are added to contaminated  water or soil, they
react  with the metal  contaminants  in several  ways that  result in the metals
being removed from solution as insoluble minerals. BauxsolTM products can reduce
the  concentrations  of the trace metals to  exceptionally  low levels that meet
both the  requirements  for drinking water and the more stringent  standards for
the protection of aquatic ecosystems.  At the same time, any acid in the soil or
water is neutralized.  The BauxsolTM  products  quickly drop out of any solution
and settle  within 48 hours to form a thin layer of sediment.  Long term testing
shows that the sediment  continues  to extract  trace metals from water for many
months after the  treatment  has been  completed.  Trace metals are very tightly
bound with the BauxsolTM  products and will not be released even if the products
are  exposed to a new  inflow of acid  water.  The  longer  the spent  BauxsolTM
products are left in place after water or soil  treatment is completed  the more
tightly the metals are bound.  After use, the products remain stable.  BauxsolTM
products pose no environmental  hazard,  and actually support plant growth which
means that the product  may be left where it was used or it can be removed  from
the application site and used as a soil additive to aid in revegetation work.

     The BauxsolTM technology involves the chemical and physical modification of
caustic bauxite refinery residues,  a waste by-product  generated during alumina
production. Bauxite refinery residue creates environmental management issues for
alumina  producers  and there are costs  associated  with  managing the residue.
There is  currently  no  market  price  for  bauxite  refinery  residue  and the
BauxsolTM  technology  is one of the few uses that has been  found  for it.  The
production of alumina  throughout the world is a significant  industry and, as a
result, a substantial  amount of bauxite refinery residue is produced  annually.
We  anticipate  being able to source  sufficient  amounts  of  bauxite  refinery
residue  for our needs  and have  entered  into an  agreement  with  Eurallumina
S.p.A.,  an Italian  corporation,  pursuant to which  Eurallumina  has agreed to
exclusively  supply us with bauxite  refinery  residue from its alumina plant in
Sardinia,  Italy.  Although  Eurallumina  has  agreed to supply us with  bauxite
refinery  residue,  the  agreement  does not provide for a minimum  amount to be
supplied nor is supply guaranteed.

     Products  within the BauxsolTM  technology  range can be prepared as blends
that are designed to treat contaminated waters with particular compositions.

     Potential applications for the BauxsolTM technology

     Applications  of the BauxsolTM  technology  are primarily  based around its
capacity to neutralize  acid, trap heavy metals and other inorganic  species and
control odor.  Our initial  target market for sales of the BauxsolTM  technology
has been the mining  industry,  however  several other target  markets have been
identified and are now being marketed to as follows:


   * Mining Industry -BauxsolTM technology can be used in the in the treatment
     of acid mine drainage, which has been reported as one of the most serious
     environmental problems of the mining industry throughout the world, and the
     treatment of toxic metal contaminants in tailings dams. Neutra BTM, Acid
     BTM, Acid BExtraTM, Alka BTM and Cya BTM are reagents developed from
     BauxsolTM technology for use in treatment of large volumes of tailings dam
     water and acid mine drainage to stringent environmental standards. Once the
     contaminated water has been treated it no longer needs to be contained and
     can be safely released into the environment. We have also developed Terra
     BTM to prevent the formation of acid mine drainage by stabilizing exposed
     waste rock, mining overburden and tailings. Virotec markets its products
     for the mining industry under the name ViroMineTM.

   * Sewage Industry -BauxsolTM technology can be used in the sewage industry
     for the treatment of odor elimination, phosphorous removal and heavy metal
     immobilization and production of more useful biosolids. Virotec markets its
     products for the sewage industry under the name ViroSewageTM.

                                       16


   * Industrial Waste and Wastewater Treatment Industry - BauxsolTM technology
     can be used to treat industrial waste and wastewater. Industries targeted
     include: electro plating with the development of a reagent (ElectrobindTM)
     that replaces conventional alkaline treatments, tanneries with the
     development of a reagent (ViroChromeTM) that removes chromium and reduces
     solid wastes, and removal of phosphates from wastewater in a variety of
     industries (ViroPhosTM). Virotec markets its products for the treatment of
     industrial waste and wastewater under the name ViroFlowTM.

   * Soil Treatment Industry - BauxsolTM technology can be used for treating
     acid sulphate soils, primarily for the neutralization of acid. Virotec's
     ViroBindTM, which has been developed from BauxsolTM technology, is a
     durable, insoluble, long-lasting solution for acid sulphate soils that
     enhances nutrient retention capacity and promotes plant growth. Industries
     targeted include acquaculture, agriculture and property development.
     Virotec markets its products for soil treatment under the name ViroSoilsTM.

     Trials of the BauxsolTM technology

     We have  successfully  trialed the BauxsolTM  technology to treat water and
solids  contaminated with acid, heavy metals and some other inorganic species on
numerous occasions.

     The first  large-scale  trial of the Bauxsol TM technology was completed at
our 1.5 billion  liter Mount  Carrington  tailings  dam in August  2000.  To our
knowledge, this is the largest body of contaminated water ever treated by direct
addition  methods.  The acid mine drainage water in the 35 acre Mount Carrington
tailings dam was  successfully  cleaned to the  stringent  requirements  for the
protection of aquatic ecosystems; the levels of metal contamination were reduced
such that they were up to 100 times  cleaner than that  required for  Australian
and  New  Zealand   Environment   and   Conservation   Council   drinking  water
requirements.

     Significant  commercial trials of the BauxsolTM technology since the end of
fiscal 2001 include the following.

     In October 2001, we announced  the  successful  completion of trials at the
Baia Mare  tailings dam in Romania for the  treatment of acid mine  drainage and
mine process water. These trials showcased the BauxsolTM technology, in the form
of ViroMineTM  technology,  to European regulatory  authorities.  We cleaned the
water with  BauxsolTM  technology  to the  appropriate  environmental  discharge
standards, before safely releasing it into the environment.

     In July  2002,  we entered  into an  agreement  with  EXMIN (the  principal
company  responsible for rehabilitating mine sites in Portugal) to treat a small
body of acid mine  drainage  water.  The contract is valued at A$100,000 but its
greater  significance  is that it will  provide an  additional  showcase  of the
ViroMineTM  technology in a region with  numerous  tailings  dams.  Work on this
project commenced in September 2002 and we expect to complete it by March 2003.

     In September  2002,  the U.S.  Environmental  Protection  Agency (Region 8)
released its initial report on its trials on the use of the BauxsolTM technology
to treat  acid mine  drainage  and acid  sulfate  soils at the Gilt Edge Mine in
Colorado.  The EPA's report investigated the performance of the technology,  and
the EPA is seeking to proceed to larger scale trials of the  technology.  We are
currently working with the EPA to plan the next stage of the trials at the mine,
which are expected to commence in early 2003.

                                       17



     In October  2002,  we  successfully  completed  a  commercial  trial of the
ViroFlowTM  technology at an electroplating  plant in Victoria,  Australia.  The
technology  was  successful  in reducing  the heavy metal  content such that the
effluent was in compliance with environmental regulations for discharge and also
enabled  some of the  effluent  to be  recycled  back  into  the  electroplating
process.

     In December  2002,  we  successfully  completed a  commercial  trial of the
ViroSewageTM  technology at a sewage  treatment plant in Queensland,  Australia.
Results showed that the technology reduced the levels of odour,  phosphorous and
suspended solids in the effluent and also improved the capacity of the plant and
the clarity of the effluent.  We expect to conduct further commercial trials and
commence marketing to the sewage industry in 2003.

     We have begun commercial  trials on the treatment of acid sulphate soils at
a large prawn farm in Queensland,  Australia.  Preliminary  results suggest that
the  ViroSoilTM  technology  has the  ability to lower pond pH and reduce  heavy
metals in pond sand,  both major  causes of reduced  prawn life and  growth.  We
expect to have the final results of the trial in April 2003.

     We have been  contracted to conduct a one-month  co-funded trial on the use
of ViroChromeTM  technology to treat  wastewater from a medium-sized  tannery in
Queensland, Australia. The trial is expected to start in early 2003.


     BaseconTM Technology

     BaseconTM  is the  trademarked  name  for a  process  of  treating  bauxite
refinery residue  generated  during alumina  production using the Bayer process.
BaseconTM  technology  economically  converts basicity (mainly sodium hydroxide)
and  soluble  alkalinity  (mainly  sodium  carbonate)  into  alkalinity  that is
retained as low solubility  hydroxide,  carbonate or hydroxycarbonate  minerals.
Application  of the  BaseconTM  technology  is specific to the alumina  refinery
industry.  BaseconTM technology can be applied at virtually any alumina refinery
in the world.

     In the Bayer process, which is used by the alumina industry worldwide,  the
bauxite is crushed  and ground,  then mixed with a solution of caustic  soda and
pumped into large  autoclaves.  There,  under  pressure and at a temperature  of
110oC to 270oC,  the alumina  contained  in the ore is  dissolved to form sodium
aluminate.  The silica in the bauxite reacts and  precipitates  from solution as
sodium-aluminium-silicate.  The remaining residue settles out of solution and is
separated from the sodium  aluminate  solution and washed to recover the caustic
soda.  However,  as washing does not ensure the complete recovery of the caustic
aluminate,  which is the cause of the  alkalinity  of the  residue (a pH that is
usually  greater than 13.0 and often about 13.5),  most alumina  refineries pump
the  residue  into  lagoons  or dams.  Naturally,  there are  concerns  with the
potential for groundwater  contamination with large alkaline residue,  even with
clay liners,  as some  leakage may occur.  To date,  any area  dedicated to be a
disposal area has limited future land use.

     For  decades,  the  alumina  industry  has been  investigating  options for
treating,  disposing,  and using  bauxite  residue.  In  addition,  the  alumina
industry  faces  challenges  related to the  storage of bauxite  residue.  These
issues include product  liability,  potentially  high life-cycle costs of future
disposal  and  monitoring,  uncertainty  about total costs of residue  disposal,
large  volumes  of  long-term,   non-usable  wastes,  highly  caustic  material,
potential for  reclassification as a hazardous waste at some future time (in the
United  States,   bauxite  refinery  residue  has  been  designated  by  law  as
non-hazardous   if  it  is   stored  in  a  lagoon   or  dam),   potential   for
leaching/rainwater  penetration,   perception  of  wastes  as  hazards,  tighter
environmental  regulations in the future,  potential groundwater  contamination,
future  requirements  precluding  abandonment,  and unlikeliness of a "walkaway"
situation.

                                       18


     When applied as part of the Bayer process,  BaseconTM technology treats the
residue produced making it a benign product,  thus eliminating the need to store
a caustic bauxite residue.  BaseconTM  technology can also be applied to caustic
residue that is stored in containment ponds,  enabling immediate,  effective and
complete environmental remediation of these areas. The commercial benefit to the
alumina industry is the elimination of a potential  environmental  liability and
the ongoing costs associated with managing these liabilities.

     Because of the variability in ores,  alumina plants are usually tailored to
suit particular bauxite.  BaseconTM  technology provides a geochemical  computer
model that allows  rapid  calculation  of  neutralization  requirements  for any
initial red mud  alkalinity,  any solids load in the residue and the composition
of a  wide  range  of  cost-effective,  readily  available  neutralizing  agents
(including,  but not limited to, seawater,  saline or hard  groundwater  brines,
salt lake brines and industrial waste brines). The computer model can be applied
to any alumina refinery in the world.

     We believe the  potential  costs and  liabilities  associated  with bauxite
refinery  residue can best be reduced by not having to store a caustic  residue.
The neutralized bauxite refinery residue produced using BaseconTM  technology is
environmentally benign and relatively easy to rehabilitate and, as a result, the
long-term management costs are substantially  reduced. In addition,  Virotec can
use the  neutralized  residue  to  produce  its  range of  BauxsolTM  technology
products.

Mining Interests

     This segment consists of our mining tenements and other mining assets.  The
tenements are not being actively  explored.  Revenue  relates to the sale of tin
that has been acquired from third parties and processed  using our mining plant.
Details of our mining tenements are set forth in Item 4D.

Research and Development of Environmental Technologies

     This segment is involved in research and  development of the  Technologies.
It currently has no sales.

Marketing and Sales

     BauxsolTM Technology

     To date, we have had no significant sales of the BauxsolTM technology.  Our
plan is to initially sell BauxsolTM products together with the technical support
required for use of these products.

     In October 2001, we hired one full time employee and one consultant to work
in the  United  States to  promote  and  explain  the  BauxsolTM  technology  to
government  regulators,  potential clients and potential alliance  partners.  In
addition to marketing the  BauxsolTM  technology  ourselves,  our strategy is to
identify and enter into  agreements  with  strategic  partners to facilitate the
sales and marketing of the BauxsolTM  technology  into specific  regions  and/or
industries  where these  partners have an established  infrastructure.  Once the
BauxsolTM technology has been accepted, the longer term aim is to sell exclusive
licences to the most appropriate strategic partners.

     To date we have entered  into various  exclusive  and  non-exclusive  sales
agency  and  consultancy  agreements  in  Europe,   Australia  and  Asia.  These
agreements  generally provide that our sales agents and consultants will receive
a percentage  of the gross  revenue  received by us from sales or  introductions
arranged by them.

                                       19


     We believe the benefits of these agreements are that:

     * each local agent or consultant's network of political and regional
       connections will facilitate the acceptance of the technology in that
       region; and

     * each local agent or consultant's knowledge of its particular country or
       region should increase the likelihood of successfully targeting customers
       in that country or region.

     In March 2001,  we entered  into a  consultancy  agreement  with Peter Noel
Duncan,  Timothy  Charles Scott,  and Paul Lyndsay Warren,  together  trading as
Indoz Business Consultancy,  pursuant to which the consultants are authorized to
obtain  orders for the use of BauxsolTM  technology  in  Indonesia  and adjacent
countries.  The  agreement  is for three  years  followed  by three  consecutive
re-appointments of two years each.

     In March 2001,  we entered into a  consultancy  agreement  with  Australian
Innovations  and Inventions Pty Ltd pursuant to which it is authorized to obtain
orders for the use of BauxsolTM  technology in  Australia.  The agreement is for
six years with an option to renew the contract for a further three years.

     In November  2001, we signed a memorandum of  understanding  with TerraPlus
Engenharia Do Ambiente E Fiscalizacao  LDA, a company  incorporated in Portugal.
Both  companies  will work  together in order to identify  and develop  mutually
beneficial business  opportunities for BauxsolTM  technology and the geochemical
and  related  services   offered  by  Virotec.   TerraPlus  has  an  established
engineering  consultancy  business in Portugal and Spain.  It has a particularly
strong presence in the fields of civil engineering,  minerals extraction,  water
management and sanitation  services.  TerraPlus has already identified potential
opportunities  in the  Portuguese  and  Spanish  mining  industries  to use  the
BauxsolTM technology.

     In October 2001, we signed a memorandum of  understanding  with  Montgomery
Watson Harza sa/nv, a company  incorporated in Belgium.  Montgomery Watson is an
international  civil  and  environmental  engineering  consultancy,  which has a
particular  focus on mining,  water  management,  and sanitation  services.  The
memorandum of  understanding  provides that Virotec and  Montgomery  Watson will
jointly  identify  and  develop  business  opportunities  in Eastern and Western
Europe that require Virotec's geochemical and related industrial services.  Both
companies  will  co-operate  initially  on a  non-exclusive  basis,  focusing on
France, Belgium,  Bulgaria and Romania and a possible exclusive arrangement will
be reviewed  during 2003.  BauxsolTM  technology  will be marketed by Montgomery
Watson through its existing client base where appropriate.  If a client seeks to
implement our technology, Montgomery Watson will manage the implementation, with
Virotec supplying BauxsolTM technology and technical support.

     In January 2002, we signed a memorandum of understanding with International
Environment  Technology  Solutions  Pty  Ltd,  a  company  that  specializes  in
environmental remediation,  particularly in the cleaning up of lakes, rivers and
waterways in China.  International  Environment Technology Solutions has entered
into a separate  memorandum of understanding with Chinese government agencies to
provide  management  and  technologies  for the  remediation of Dianchi Lake, in
Kunming Yunnan,  China.  The Dianchi Lake in China is  approximately  300 square
kilometers in size and is suffering  from the effects of pollution from sewerage
and industrial effluents and intensive horticulture.

     In March 2002, we signed a non-exclusive  marketing and licensing agreement
with Jiangsu Yihuan Group  Corporation  based in Jiangsu,  People's  Republic of
China. The Jiangsu Yihuan Group is a wastewater and environmental  equipment and
solutions specialist and employs more than 1,000 staff. The agreement authorizes
the  Jiangsu  Yihuan  Group  Corporation  to market  and sell our  products  and
services under license  throughout the People's  Republic of China.  The initial
term of the  agreement is for 12 months.  The  agreement  automatically  extends
beyond the  initial  term in 12-month  increments  unless  terminated  by either
party.

     In March 2002, we signed  non-exclusive  marketing and licensing agreements
with each of Alpac (Malaysia) Sdn Bhd, a water treatment and wastewater  company
based in Kuala Lumpur,  Malaysia,  and Alpac  Technologies  (Madras) Pvt Ltd, an
environmental  engineering  company based in Chennai,  India. Both companies are
subsidiaries  of  Waterworks   Technologies,   Inc.,  a  Calgary-based  Canadian
environmental  engineering  company.  The  agreements  authorize each company to
market and sell our products and services under license throughout  Malaysia and
India,  respectively.  Both agreements have an initial term of nine months. Both
agreements  automatically  extend  beyond  their  initial  terms  in  nine-month
increments unless terminated by either party.

                                       20


     In March 2002, we signed a strategic  alliance  agreement  with  Kyungchang
Geotechnical  Consultant Co Ltd, a geotechnical  environmental  company based in
Taegu, South Korea. The Agreement authorizes  Kyungchang  Geotechnical to act as
an agent to market and sell our products and services throughout South Korea and
was entered into with the express  purpose of securing  contracts to treat water
in South Korea's  abandoned mine sites and  uncontrolled  waste  landfills.  The
initial term of the  agreement  is for 12 months.  The  agreement  automatically
extends  beyond the initial term in 12-month  increments  unless  terminated  by
either party.

     In March 2002, we signed a non-exclusive  marketing and licensing agreement
with PT. Portal  Bisnis  Pasific  Barat,  a business  development  and marketing
company based in Jakarta,  Indonesia.  PT.  Portal  Bisnis  Pasific Barat is the
local trading company of West Pacific Global Trading Portal, which is authorized
to secure local and national government contracts.  The agreement authorizes PT.
Portal Bisnis  Pasific Barat to market and sell our products and services  under
license  throughout  Indonesia.  The  initial  term of the  agreement  is for 12
months. The agreement  automatically extends beyond the initial term in 12-month
increments unless terminated by either party.

     In March 2002, we signed a non-exclusive  marketing and licensing agreement
with AWM Consulting, an environmental consulting firm based in Hyderabad, India.
The  agreement  authorizes  AWM  Consulting  to market and sell our products and
services under license  throughout  India.  The initial term of the agreement is
for 12 months.  The agreement  automatically  extends beyond the initial term in
12-month increments unless terminated by either party.

     In April 2002, we signed a non-exclusive  marketing and licensing agreement
with PT. Niromukti Adhisemesta, a wastewater treatment company based in Jakarta,
Indonesia. The agreement authorizes PT. Niromukti Adhisemesta to market and sell
our products and services under license throughout  Indonesia.  The initial term
of the agreement is for 12 months.  The agreement  automatically  extends beyond
the initial term in 12-month increments unless terminated by either party.

     In April 2002, we signed a memorandum of  understanding  with the CSA Group
based  in  Dublin,  Ireland.  CSA  is an  established  international  civil  and
environmental engineering consultancy, active in the British Isles and overseas,
which has a particular focus on mining, water management, and related industrial
services.  The  memorandum of  understanding  provides that Virotec and CSA will
jointly  identify and develop  business  opportunities in the United Kingdom for
application of the BauxsolTM technology.

     In  April  2002,  we  entered  into a  Strategic  Alliance  Agreement  with
Geonenvirotec  Co Ltd, an environmental  geochemistry  and remediation  company,
based in Taegu,  South  Korea,  which is working  with the Korean  Institute  of
Construction Technology to assess the applicability of Virotec's technologies in
acid mine drainage and waste rock dump remediation, and the treatment of tannery
effluent.

                                       21


     In September  2002, we signed a memorandum of  understanding  with Marubeni
Corporation  a  company  based  in  Tokyo,  Japan.  Marubeni  is an  established
international   company  with  significant  interests  in  a  diverse  range  of
industries including,  energy, metal and mineral resources,  chemicals, iron and
steel. The memorandum of  understanding  provides that Virotec and Marubeni will
jointly  identify  and  develop  business  opportunities  in Japan  and Asia for
application of the BauxsolTM technology and BaseconTM technology.

     BaseconTM Technology

     To date, we have had no significant sales of the BaseconTM technology.  Our
plan is to initially  sell  BaseconTM  technology by way of license  directly to
alumina  refineries  worldwide.  We thus intend to concentrate our marketing and
commercialization  efforts on this market. We presented a paper on the BaseconTM
technology at the World Alumina Conference held in September 2002.

     In December 2002, we signed a Business Development  Agreement with Mahendra
International to introduce the BaseconTM technology to the alumina refineries of
India.  Mahendra  International is a business development and consulting company
based in New  Delhi  with  more  than 40 years  experience  in  mining,  alumina
refinery processes,  and other aspects of waste water and soil treatment.  There
are four primary alumina refineries in India, and Mahendra International has the
rights to initiate  pilot  projects and site trials of BaseconTM  technology  at
these  refineries.  This agreement  follows from the Memorandum of Understanding
signed between the parties in February 2002.

     Environmental Consulting

     We will continue to provide services to our existing network of clients and
pursue  new  relationships  when  the  opportunities  arise.  Some of the  staff
employed  in  the  environmental  consulting  area  are  now  focussing  on  the
commercialization  of the  Technologies,  which has reduced the marketing of our
other services in this area. However,  the decrease in our marketing efforts has
not adversely  affected our revenue from this segment and we do not expect it to
do so in the future.

Current Competition

     BauxsolTM technology

     We believe  that  BauxsolTM  technology  is the first  viable  solution  to
economically  clean  water of heavy  metals  and  neutralize  acid to  stringent
environmental release standards.  We know of no existing technology,  other than
BauxsolTM  technology,  that can  extract up to 99.99  percent of heavy  metals,
neutralize  acid  cost-effectively  and  leave  no  environmental  threat  after
treatment.  Accordingly,  we believe  we have a  competitive  advantage  in this
global market.

     Current management strategies for industry rely on applications of lime, or
lime  derivatives,  to control  the acidity of soil and  wastewater,  and in the
mining industry tailings dams are designed as huge settling ponds to accommodate
heavy metals. However, these metals can be re-released if the wastewater becomes
even  slightly  acidic,  so  ongoing  remediation  is  required.  This  involves
perpetually  maintaining  holding  ponds at such a high level of  toxicity  that
aquatic life cannot  survive in it. These dams and settling  ponds pose a lethal
threat to surrounding  environments.  Although the drawbacks and deficiencies of
lime-based  systems are well known, the absence of  cost-effective  alternatives
has ensured  that it remains the  treatment  of choice at the  majority of sites
facing these issues.

                                       22


     The advantages of using  BauxsolTM  technology  compared with  conventional
lime treatments include:

     * BauxsolTM technology achieves much lower metal concentrations in metal
       contaminated waters than lime, ensuring that treated water can meet
       standards that will protect sensitive ecosystems.

     * BauxsolTM technology, unlike lime, does not produce large volumes of
       unstable contaminated sludge that has to be managed and disposed of
      safely.

     * BauxsolTM technology, unlike lime, will not release the bound metals
       unless treated with very strong reagents and the longer it is left to age
       after use, the more tightly the metals are bound.

     * BauxsolTM material, unlike lime, cannot be leached from the soil by
       rainwater or groundwater before acid that needs to be neutralized has
       formed.

     * Bicarbonate ions that form when some of the lime dissolves may accelerate
       the decomposition of sulfides.

     * When acid sulfate soils or sulfidic mine tailings are treated with
       BauxsolTM technology, they can be revegetated without the need for the
       addition of other materials.

     * The mechanisms involved in removal of iron and aluminum from the water do
       not result in a reduction in acid neutralization capacity.

     Other  than  the  non-toxic  red  sediment  that is  created  by use of the
BauxsolTM  technology,  we  believe  that  there are no  disadvantages  in using
BauxsolTM technology compared with conventional lime treatments.

     Other methods that may be employed in the treatment of acid and heavy metal
contamination such as chemical  treatment plants,  sulfate reducing bacteria and
reverse osmosis are not generally used due to the high capital costs  associated
with treating large volumes of water.

     BaseconTM technology

     Within  the  alumina  industry,   individual  refineries  use  a  range  of
strategies to manage their red mud  residues.  At most  refineries  the strategy
involves  storing the caustic red mud in large  impoundments,  but this strategy
carries  costly  long  term  management   requirements  and  there  are  serious
environmental  and human health risks associated with storing such large volumes
of caustic residue.

     The only  completely safe solution is to neutralize,  or partly  neutralize
the residues.  Some refineries have neutralized the red mud using acid, but this
approach  is costly  and the red mud still  has to be stored  because  it is not
suitable for presently known large scale reuse  applications.  Other  refineries
have successfully used seawater to neutralize the red mud.  Seawater-neutralized
red mud is suitable for reuse in a wide range of large scale  applications (such
as the BauxsolTM technology),  but there are logistical problems with moving the
relatively  large quantity of seawater  required to and from the red mud storage
facility.  Until  recently,  seawater  neutralization  provided  the best way to
manage red mud residues and to allow the storage facilities to be rehabilitated.

     BaseconTM technology works in a similar way to seawater neutralization, but
three to five times less  seawater  is  required  to achieve  target  standards.
Hence,  we  believe  that  the  new  BaseconTM   technology  provides  the  most
cost-effective way to manage the red mud residues from alumina refineries.

     Environmental Consulting

     We compete with other  environmental  consultancies and fieldwork  services
companies  in  Australia  on a price and service  basis,  although we believe we
offer superior service and knowledge in some areas.  Many of the tests performed
by our commercial  laboratory are either not performed by other  laboratories or
only by a relatively small number of testing facilities in Australia. We compete
on a price, turnaround time and service basis with these other laboratories.

                                       23



Intellectual Property

     We hold the worldwide  exclusive  marketing and distribution rights for the
Technologies.  The majority of this intellectual  property is know-how and trade
secrets relating to the development and application of the BauxsolTM  technology
for land and water remediation and the BaseconTM technology for the treatment of
alumina  industry  residues.  We are  substantially  dependent on our license to
market and  distribute the  Technologies  and the loss of our license to use the
Technologies or our inability to protect the  intellectual  property  related to
the Technologies would have a material adverse effect on our business, financial
condition  and  results of  operations  and could lead to the  cessation  of our
business.

     On behalf of Nauveau  Technology  Investments,  we have filed the following
provisional patent applications:


       * A patent application, no. PR1054, filed in Australia in October 2000
         titled "Processes and compositions for water treatment" and relates to
         the BauxsolTM technology. An international patent application was filed
         in October 2001, nominating application in many countries including the
         United States.

       * A patent application, no. 1018084, was filed in The Netherlands in May
         2001 titled "Preparation of granular material or bricks with
         metal-binding properties" and relates to the pelletization of the
         BauxsolTM product.

       * A patent application, no. PS 3381, was filed in Australia in July 2002
         titled "Processes for the treatment of a waste material having a high
         pH and/or alkalinity" and relates to the BaseconTM technology.

       * A patent application, no. 2002951011, was filed in Australia in August
         2002 titled "Water treatment process" and relates to the application
         of the BauxsolTM technology in the sewage industry and the removal of
         phosphorous.

       * A patent application, no. 2002951437, was filed in Australia in
         September 2002 titled "Processes for separation, deodorization and use
         of biosolids" and relates to the application BauxsolTM technology in
         the sewage industry.

       * A patent application, no. 2002952712 was filed in Australia in November
         2002 titled "Fertiliser" and relates to the use of the BauxsolTM
         technology in the production of fertilizer.

       * A patent application, no. 2002951438, was filed in Australia in
         September 2002 titled "Methods and Compositions for Treatment of Excess
         Stomach Acid in Mammals" and relates to the use of the BauxsolTM
         technology in the treatment of stomach acid in mammals.

     Work is also  continuing in respect of patent  applications  for the use of
the  BauxsolTM  technology  in the treatment of acid sulfate soils and for other
applications.  All patents issued for the Technologies  will be owned by Nauveau
Technology  Investments  and will be licensed to us exclusively  pursuant to the
terms of the licence agreement.

     Based on legal advice we have received and literature  searches on existing
patents,  we are confident that the above  applications for patents will achieve
registration.

                                       24


     We believe that the know-how and trade secrets protected by confidentiality
arrangements  rather  than by  patent  protection  are  also  important  for the
commercial application of the Technologies.

     Trademarks for BauxsolTM technology and BaseconTM technology are registered
in Australia and  applications  have been lodged in the United  States,  Canada,
European Union, Japan and many other countries  throughout the world. We own the
trademark rights for the BauxsolTM technology and BaseconTM technology.

Technical Analysis Support

     Since  the  commencement  of  our  involvement  in the  development  of the
Technologies in 2000, our technical  analysis support team has been based at the
Southern Cross  University in Lismore  Australia.  This continues to be our main
base and is supported in Australia by our Melbourne-based staff.

     In August 2001, we  established a laboratory in The  Netherlands to service
European-based  operations.  This  laboratory  was moved to  Sardinia,  Italy in
September 2002 to be closer to Eurallumina's alumina refinery. Dr. Hans Zijlstra
manages  the  laboratory,  which  provides  technical  support  to our  European
operations  as well as  research  and  development  on new  applications  of the
Technologies.

     We have  arrangements  in place  to use  independent  laboratories  in West
Virginia and Sudbury, Canada for our testing needs in North America.

Product Development

     We intend to continue to trial and develop the  Technologies.  To this end,
we have entered into  research  agreements  with  Southern  Cross  University in
Lismore,  NSW, Australia pursuant to which we fund further research by Professor
David McConchie,  Dr. Malcolm Clark, Fiona  Davies-McConchie  and Dr. Chuxia Lin
and their respective  assistants.  Any further  developments  resulting from the
research will belong to Nauveau Technology Investments but will be automatically
licensed to us under the terms of the  license  agreement  for the  Technologies
between us and Nauveau  Technology  Investments.  At this stage, some of the new
applications include reducing arsenic levels in drinking water and the treatment
of sulfidic tailings.

Raw Materials

     The  principal  raw  material  that  we use is  bauxite  refinery  residue,
sometimes  referred  to as red mud,  which is  generated  as a waste  by-product
during the production of alumina. Bauxite refinery residue creates environmental
management issues for alumina producers.  There is currently no market price for
bauxite refinery  residue and the BauxsolTM  technology is one of the few viable
reuse that has been found for it. The worldwide  production  of alumina  ensures
that bauxite  refinery  residue is relatively  easily obtained from a variety of
sources and is generally available.  The application of the BaseconTM technology
to a  refinery  produces  bauxite  refinery  residue  that is ideal  for  making
BauxsolTM products.

     Eurallumina S.p.A., which operates an alumina plant in Sardinia, Italy, has
agreed to supply  bauxite  refinery  residue to us for the purpose of making the
products within the BauxsolTM  technology range. This agreement was entered into
in  November  2001  and  is  subject  to  us  satisfying   necessary  regulatory
requirements  for the  production  of the  products  at a plant to be built near
Eurallumina's  alumina plant in Sardinia.  Eurallumina  has agreed to supply the
bauxite  refinery residue in an amount that it produces at its alumina plant but
there is no  minimum  guaranteed  supply  and  Eurallumina  may refuse to supply
bauxite refinery residue where the supply of such would be incompatible  with or
detrimental  to  Eurallumina's  production  of  alumina  or would  infringe  any
applicable  environmental  law or regulation.  Eurallumina  may not sell bauxite
refinery residue to a competitor of Virotec unless Virotec first obtains bauxite
refinery residue from another supplier for use in Europe.  The agreement expires
five years after the date that all  necessary  approvals  have been obtained and
Virotec's processing plant has been built but will be automatically  renewed for
successive one-year periods unless terminated by either party by notice at least
four  months  prior  to the  automatic  renewal  date.  The  agreement  is  also
terminable  by the  non-defaulting  party on a material  breach of the agreement
that remains uncured 30 days after the notice thereof.

                                       25


     Similar  arrangements are currently being sought with alumina  producers in
North and South America, Asia and Australia.

     The other raw materials that are mixed with the bauxite refinery residue to
produce the products within the BauxsolTM  technology  range are relatively easy
to obtain from a variety of sources and are generally available.

Manufacturing

     We currently  manufacture products within the BauxsolTM technology range at
Eurallumina's refinery in Sardinia, Italy through a batching process which has a
capacity of 25 tonnes per day. This is sufficient for our immediate needs but is
insufficient  for  commercial  purposesAs  contemplated  in our  agreement  with
Eurallumina,  we plan to build a commercial scale BauxsolTM  manufacturing plant
in Sardinia, Italy. We have not finalized our plans for the plant, including its
planned  production  capacity,  and as such we cannot  estimate  the cost of the
construction  of the plant at this stage.  We expect to finalize these plans and
to commence  building the plant in fiscal 2004.  In February  2002, we opened an
office in Rome,  Italy.  The office is being used to secure permits and licenses
required for transport and  application of the BauxsolTM  technology  throughout
the European Union and will be used to oversee the engineering and  construction
of the planned plant.

Seasonality

     Our business is not subject to seasonal fluctuations.


C.   Organizational Structure


Not Applicable


D.   Property, Plant and Equipment


Office and Laboratory Space

     We lease approximately 300 square meters of office space in Sanctuary Cove,
Queensland, Australia. The annual gross rental payments are approximately
A$30,600 and A$20,600 for two separate spaces. These leases expire on April
30, 2004 and July 31, 2004, respectively.

     In Melbourne, Australia, we lease approximately 550 square meters for use a
laboratory and office space. The annual gross rental payments are  approximately
A$36,000 per annum. The lease expires on September 30, 2003, with two options to
extend the lease for a further three years each.

     In Utrecht,  The Netherlands,  we lease approximately 250 square meters for
use a  laboratory.  The annual gross  rental  payments are Euro 33,937 per annum
(approximately  A$57,000).  The lease  expires  on August 1,  2006.  As the main
operation of the laboratory in now conducted in Sardinia, the premises are being
sub-leased to another  tenant and it is planned to assign the lease to the other
tenant as soon as possible.

                                       26


Planned Construction of BauxsolTM Plant in Italy

     As  contemplated  in our  agreement  with  Eurallumina,  we plan to build a
BauxsolTM manufacturing plant in Sardinia, Italy. We are still in the process of
assessing the  production  capacity  required,  and  finalizing  the design of a
production facility. Until such plans are finalized, we cannot estimate the cost
of the construction of the plant. We expect to finalize these plans and commence
building the plant in fiscal 2004.

Environmental Consulting Plant and Equipment

     We own  assets  used in our  environmental  consulting  businesses  and for
research and development with a financial  statement  carrying amount as of June
30, 2002 of A$943,277.  These assets include primarily specialist equipment used
in our commercial laboratory, various other equipment used in scientific testing
and office and computer equipment. In September 2001, we purchased an additional
Liquid  Chromatograph - Mass  Spectrometer  for use in the laboratory to analyze
liquid samples at a cost of A$240,000.

Mining Tenements

     We have been granted and have  applications for renewal pending on a number
of mineral  exploration and mining licenses  subject to conditions in Australia.
These  areas are  located in North  Queensland  and  Northern  New South  Wales,
Australia.  We have  written  down the  carrying  amount of all of these  mining
tenements to zero in our financial statements.

     We do not intend to actively explore or mine these mining tenements, as the
activities  no longer  fit with our core  business.  As such,  we are  currently
looking to (1) enter into joint venture partnerships pursuant to which the joint
venture partners would develop and operate mines on all or some of the tenements
and we would retain a passive interest and/or (2) sell all or some of the mining
tenements and retain an interest in such tenements by way of royalty income.  To
this end we have lodged  applications  for  surrender of mining  leases in North
Queensland  where it is  considered  unlikely that a return would be received on
sale, and have entered into an option  agreement with Kanowna Lights Limited for
the sale of the Mount Carrington  leases.  The agreement provides Kanowna Lights
with the right but not the  obligation to purchase the Mount  Carrington  leases
and is highly conditional  including  conditions regarding the completion of due
diligence procedures by Kanowna Lights, Kanowna Lights raising funds to complete
due  diligence,  and  Kanowna  determining  that there are  sufficient  mineable
reserves  to make  mining  of the site a viable  operation.  If  Kanowna  Lights
purchases the Mount Carrington leases, Virotec will be issued with the number of
ordinary shares in Kanowna Lights  equivalent to 19.9% of Kanowna Lights' shares
and  options  on  issue  at the  time  of the  purchase.  Kanowna  Lights  is an
Australian Stock Exchange listed company.  The option agreement expires on March
15, 2004.

     The directors  believe it is unlikely that we will receive any  significant
amount on the sale of these tenements.  Our business is not dependent on and our
plan of  operations  is not based on  realizing  any  amount of money from these
mining  tenements.  During  fiscal 2002,  we incurred  costs of A$489,839 on our
mining tenements.

     The table  below sets forth  information  on our  mineral  exploration  and
mining leases.

                                       27


<TABLE>
<CAPTION>

                             Area                                                                               Rent
     Tenure               (Hectares)        Name                 Expiry Date        Status(1)                   (A$)

  <S>                        <C>             <C>                    <C>                <C>                     <C>
  Queensland
  PJM 20043 - Mareeba - Leichhardt Creek
  ML 20264                   82.54        Leichhardt           October 31, 2011     Granted(2)              3,344.90

  PJM 10077 - Charters Towers
  ML 1357                    77.78       Adventure 2          September 30, 2010    Granted(2)              1,918.80
  ML 1372                    16.19       Adventure 1          November 30, 2002     Granted(2)                685.10
  ML 1443                   136.80      Gowrie Creek 1         January 31, 2006     Granted(2)              2,671.50
  ML 1444                    16.00      Gowrie Creek 2         January 31, 2006     Granted(2)                312.00

  PJM 20043 - Mareeba - Tate
  ML 20259                  183.34       Soda Springs       Awaiting Notification   Application dated       Awaiting
                                                                                    February 27, 1996(2)   Notification

  PJM 20148 - Mareeba - Mount Garnet
  ML 3945                     2.43          Paddy              January 31, 2011     Granted(2)                120.90
  ML 4032                    46.12         Surprise           February 28, 2012     Granted                 1,894.10
  ML 4057                   149.61       Battle Creek         February 28, 2012     Granted                 6,045.00
  ML 4062                     4.05     Foley's Gully 2        February 28, 2004     Granted(2)                 75.00
  ML 4063                     2.63     Foley's Gully 1        February 28, 2004     Granted(2)                 45.00
  ML 4064                     8.24       Battle Creek         February 28, 2005     Granted(2)                162.00
  ML 4066                    34.22   Battle Creek East 1      February 28, 2005     Granted(2)                630.00
  ML 4067                    23.02   Battle Creek East 2      February 28, 2005     Granted(2)                432.00
  ML 4069                    21.22       Nettle Creek           March 31, 2006      Granted                   429.00
  ML 4071                   125.76          Males             February 28, 2007     Granted                 2,457.00
  ML 4073                   144.57         Basalt 1             July 31, 2007       Granted                 2,827.50
  ML 4074                    98.18         Basalt 2             July 31, 2007       Granted                 1,950.00
  ML 4082                   110.07         Ambrose             August 31, 2011      Granted                 4,473.30
  ML 4083                   137.24         Nymbool            November 30, 2010     Granted                 3,394.80
  ML 4084                    62.73         Corella             August 31, 2011      Granted                 2,536.90
  ML 4085                    69.81    Battle Creek South        March 31, 2011      Granted(2)              1,722.00
  ML 4134                    42.73         Nanyeta            September 30, 2015    Granted(2)              1,732.90
  ML 4193                    12.96        Moon Probe            June 30, 2020       Granted(2)                523.90
  ML 4196                    20.35       Big Dam Site           June 30, 2020       Granted(2)                846.30
  ML 4201                     2.33   Simmonds Connection      September 30, 2020    Granted(2)                120.90
  ML 4202                     3.47    Foley's Connection        April 30, 2020      Granted(2)                161.21
  ML 4203                     6.32        Moon Shot           November 30, 2019     Granted(2)                282.10
  ML 4231                     8.00    Screenplate Flats        January 31, 2010     Granted(2)                196.80
  ML 4254                    25.15        Neds Folly          December 31, 2007     Granted(2)                507.00
  ML 4304                   124.50        Phill D 4             April 30, 2006      Granted(2)              2,437.50
  ML 4349                    83.06       Summer Hills           March 31, 2006      Granted(2)             16,380.00
  ML 4388                    79.73  Battle Creek Plan Site    February 28, 2011     Granted(2)              1,968.00
  ML 4466                    17.58         Brownie              April 30, 2011      Granted(2)                442.80
  ML 20034                    1.00           Owen              October 31, 2002     Granted                    40.30
  ML 20035                    9.00         Renewal              April 30, 2002      Renewal Pending           362.70
  ML 20170                   20.81     Eight Mile Mine         August 31, 2004      Granted(2)                820.05
  MDL 38                    399.00         Gillian            November 30, 2003     Granted                 7,620.90

                                       28


  New South Wales (Mount Carrington) (3)
  SL 409                     47.45      Silver King 1       September 8, 1987       Renewal Pending                -
  SL 471                     56.66       White Rock 3           July 16, 1989       Renewal Pending                -
  SL 492                      2.14         Adeline             October 10, 1989     Renewal Pending                -
  ML 6242                     6.19        Red Rock 1          September 9, 1990     Renewal Pending                -
  ML 6295                    23.88        Red Rock 2             May 24, 1991       Renewal Pending                -
  ML 6291                    25.90         Mascotte              May 25, 1991       Renewal Pending                -
  ML 1200                     8.75       Lady Jersey            March 22, 1992      Renewal Pending                -
  ML 6335                    19.51        Red Rock 3            April 20, 1992      Renewal Pending                -
  ML 6004                    16.16       White Rock 1           July 11, 1995       Renewal Pending                -
  ML 5883                    11.33      Silver King 2            June 3, 1994       Renewal Pending                -
  ML 6006                     8.09       White Rock 2           July 11, 1995       Renewal Pending                -
  ML 1148                     3.15       Lady Hampden         November 26, 1995     Renewal Pending                -
  ML 1149                    51.19      Silver King 3         November 26, 1995     Renewal Pending                -
  ML 1150                    30.00      Silver King 4         November 26, 1995     Renewal Pending                -
  ML 5444                     2.68    Mount Carrington 1       January 7, 1996      Renewal Pending                -
  GL 5477                     2.47    Mount Carrington 2      December 14, 1997     Renewal Pending                -
  GL 5478                     0.40    Mount Carrington 3      December 14, 1997     Renewal Pending                -
  ML 1147                   356.40          Drake             December 14, 1997     Renewal Pending                -
  MPL 1345                    0.81        Red Rock 4           October 25, 1998     Renewal Pending                -
  MPL 24                     51.19      Silver King 5           April 1, 1997       Renewal Pending                -
  MPL 256                    54.73    Mount Carrington 4      December 14, 1997     Renewal Pending                -
  MPL 259                   151.40     Humphries Creek        December 14, 1997     Renewal Pending                -
_________________

</TABLE>



(1)  Tenements noted as "Renewal  Pending" in Queensland are awaiting renewal by
     the  Department  of Natural  Resources in  Queensland.  Tenements  noted as
     "Renewal  Pending" in New South Wales are awaiting renewal by the New South
     Wales  Department  of  Mineral  Resources,  during  which  time  no rent is
     payable.  Virotec  believes it has satisfied the requirements to permit the
     renewals in each case.  Virotec's  rights over the tenements are maintained
     while the renewals are pending.

(2)  An  application  for surrender of the mining lease has been lodged with the
     Department on Natural Resources in Queensland.

(3)  These leases are the subject of an option  agreement  with  Kanowna  Lights
     Limited.


Mining Plant and Equipment

     We own various plant and equipment  located on the mining  tenements with a
financial  statement carrying amount as of June 30, 2002 of A$135,990.  Included
in this amount is some heavy  machinery,  motor  vehicles,  office and  computer
equipment.

                                       29


Environmental Regulations

     As with all mining  tenements in Australia,  our tenements are subject to a
number  of  environmental  regulations.  We must  meet the  requirements  of the
licensing system under the Protection of the Environment Operations Act 1997 for
our Drake tenements in Northern New South Wales.  The New South Wales Department
of Mineral Resources  requires security bonds to be in place for  rehabilitating
our mine sites.  This is currently set for the Drake tenements at  approximately
A$178,000.

     The Mines  Department in Queensland  also requires  security bonds to be in
place for  rehabilitating  mine sites.  We currently hold a large number of mine
sites  in  Northern   Queensland   and  we  have  in  place  security  bonds  of
approximately A$382,000.

     We believe that adequate  provision exists in the financial  statements for
future rehabilitation costs of these mine sites.

     In December  2001,  we were found to have  breached the  Protection  of the
Environment Operations Act 1997 by allowing polluted water to be discharged from
one of the dams at our Mount  Carrington  mine site in  November  1999 (when our
business was mining).  In July 2002,  we were fined  A$30,000 for this breach of
the Act. Apart from this breach, we are not aware of any significant breaches of
any environmental regulation by us.

                                       30



ITEM 5.     OPERATING AND FINANCIAL REVIEW AND PROSPECTS

     The  following  discussion  and  analysis  of our  financial  position  and
financial   performance   should  be  read  in  conjunction  with  Item  3  "Key
Information"  and our  financial  statements  and the notes to those  statements
included in this annual  report.  In addition  to  historical  information,  the
following   discussion   and  other   parts  of  this  annual   report   contain
forward-looking  statements  that  reflect  our  plans,  estimates,  intentions,
expectations and beliefs.  Our actual results could differ materially from those
discussed  in the  forward-looking  statements.  See Item 3D "Risk  Factors" and
other forward-looking statements in this annual report for a discussion of some,
but not all, factors that could cause or contribute to such differences.

     Our fiscal year ends on June 30 of each year and is identified according to
the calendar year in which it ends. For example,  the fiscal year ended June 30,
2002 is referred to as "fiscal 2002."


A.     Operating Results


General

     Virotec   International   Ltd   is   focused   on   the   development   and
commercialization of the Technologies, for which we hold the exclusive worldwide
marketing and distribution  license. In addition, we provide other environmental
consulting  services  and  currently  our main  sources of revenue  are from the
provision of those services.

     In October  2000,  we acquired  the  environmental  consulting,  laboratory
analysis and fieldwork  services business of Global  Environment  Corporation to
assist us in marketing the Technologies more efficiently.

     On July 18, 2001,  our shares were  admitted to trading on the  Alternative
Investment  Market of the London Stock  Exchange,  or AIM,  and we  concurrently
received net proceeds of  approximately  A$9.0 million from a public offering of
our shares in the United Kingdom.

     During fiscal 2000, 2001 and 2002, the only material  revenues we generated
were from sales of cleaned tin  concentrates  and the provision of environmental
consulting services.  In addition,  we received interest on cash on deposit with
banks.

     As of June 30, 2002,  our  accumulated  losses since  inception were A$50.5
million. Over the past three fiscal years we have incurred  approximately A$12.7
million in losses.  Over the past three fiscal years our principal expenses have
been costs associated with (1) research and development of the Technologies, (2)
expenditure  in  relation  to our mining  tenements  that was  expensed  and (3)
general and administrative expenses.

     With the planned  expansion  of our  business,  we intend to  increase  our
operating  expenses.  We expect to incur further  losses through fiscal 2003 and
cannot predict when we will become profitable, if ever.

Industry Segments

     We operate in three industry  segments:  environmental  consulting;  mining
interests; and research and development of environmental technologies.

     Environmental Consulting

     This  industry  segment  consists of the  provision  of  chemical  analysis
services by our laboratory in Melbourne,  Australia,  our on-site  environmental
management   systems,   and  our  provision  of  specialist  advice  on  cleaner
production, waste management and reversing processes that generate waste. Sales,
if any, of the Technologies will be accounted for in this segment.

                                       31


     Mining Interests

     This industry segment consists of our mining tenements and other mining
assets.

     Research and Development of Environmental technologies

     This  industry  segment  consists of the  research and  development  of the
Technologies.  In the short-term,  revenue in this segment, if any, will be from
government  research grants Although we do not currently  undertake research and
development  projects  for  third  parties,  if the  Technologies  gains  market
acceptance,  we plan to offer our services to companies in the alumina  industry
to assist them in conducting research into the management of red mud residue and
other environmental issues. Revenue, if any, from undertaking research for third
parties and from government research grants is not expected to be significant in
the next few years.

Critical Accounting Policies

     Virotec's significant  accounting policies are more fully described in Note
1 to the Financial  Statements,  in respect of Australian GAAP, with differences
in  accounting  policies  for U.S.  GAAP more fully  described in Note 26 to the
Financial  Statements.   Some  of  Virotec's  accounting  policies  require  the
application of significant  judgment by management in selecting the  appropriate
assumptions  for  calculating  financial  estimates.   By  their  nature,  these
judgments are subject to an inherent degree of uncertainty.  Management believes
the following critical accounting policies affect its more significant judgments
and estimates used in the preparation of the Financial Statements.

     Assessment of the ultimate amount of rehabilitation costs

     In connection  with the  preparation of our financial  statements,  we must
make estimates of potential  future  rehabilitation  costs necessary to meet the
requirements of the mining leases as notified by the relevant  authorities.  The
estimated  amount of these  costs has been  determined  on the basis of  current
costs, legal requirements and technology.  Significant uncertainties exist as to
the  ultimate  amount  of  costs  that  we  will  incur  with  respect  to  such
rehabilitation  costs.  As additional  information  becomes  available,  we will
assess the potential liability related to our pending rehabilitation obligations
and revise our  estimates.  Such  revisions in our  estimates  of the  potential
liability  could  materially  impact our  results  of  operation  and  financial
position.

                                       32


Operating Results

<TABLE>
<CAPTION>

                          Net Profit/(Loss) by Segment




         Segment                                                 Fiscal 2000     Fiscal 2001     Fiscal 2002
                                                                        ($A)            ($A)            ($A)
<S>                                                                     <C>            <C>             <C>
Environmental Consulting(1)                                                -          80,656        (26,084)
Mining Interests(2)                                                (334,249)       (360,265)       (521,885)
Research and Development of Environmental Technologies             (661,025)       (921,126)     (1,804,866)
Unallocated(3)                                                   (1,198,032)     (4,237,580)     (2,763,545)
                                                                 (2,193,306)     (5,438,315)     (5,116,407)
</TABLE>


(1) Includes laboratory analysis and fieldwork services, which were both
    previously accounted for as a separate segment.
(2) Previously called Mining and Exploration.
(3) This includes general administration and corporate costs not directly
    attributable to one of the three above listed industry segments.

Fiscal 2002 Compared with Fiscal 2001

Revenue

     Revenue increased  A$539,888,  from A$998,686 in fiscal 2001 to A$1,538,574
in the fiscal  2002.  This  increase  was mainly due to a A$288,403  increase in
revenue  from the  rendering  of services  (mainly due to an increase in revenue
from the Environmental  Consulting Services segment) and a A$408,022 increase in
revenue from the Unallocated  segment (mainly interest income) compared with the
corresponding  period,  partly offset by a decrease of A$156,537 in revenue from
the sale of goods (mainly due to a decrease in revenue from the Mining Interests
segment) compared with the corresponding period.

     Sale of goods.  The sale of goods relates  entirely to the Mining Interests
segment.  During fiscal 2002, we recognized revenue of A$97,819 from the sale of
cleaned tin  concentrates,  which was a decrease of A$156,537  compared with the
corresponding  period.  This decrease was due to a decrease in the volume of tin
concentrate sold and average sales price of our tin concentrates,  which was due
to the decrease in world tin prices.  We are currently  looking to retain only a
passive interest in our mining assets and if we are able to do this it is likely
that no further  significant revenue will be generated from sales of cleaned tin
concentrates.

     Rendering of services.  The rendering of services  relates  entirely to the
Environmental  Consulting segment. We recognized A$800,047 from the rendering of
laboratory  analysis,  fieldwork services and consulting  services during fiscal
2002, which was an increase of A$288,403 compared with the corresponding period.
The majority of this  increase  was due to the fact that revenue was  recognized
for the full period for the first time, as we only acquired these  businesses on
October  1, 2000.  We do not expect  revenues  from  these  established  service
businesses to materially increase in fiscal 2003 compared with fiscal 2002.

     Other  revenue from  operating  activities.  Revenue  from other  operating
activities  increased  A$408,022,  from A$232,686 in fiscal 2001 to A$640,708 in
fiscal 2002. This increase related primarily to an increase in interest received
from  other  parties,  due to the  increase  in cash on hand as a result  of the
capital raised through our listing on the Alternative  Investment  Market of the
London Stock Exchange ("AIM") in July 2001. This is reflected in the Unallocated
segment revenue.

                                       33



Expenses

     The level of expenses increased marginally, from A$6,437,001 in fiscal 2001
to A$6,654,981 in fiscal 2002.

     Depreciation  and  amortization  expenses.  Depreciation  and  amortization
expenses  increased  A$69,971,  from  A$205,447  in fiscal 2001 to  A$275,418 in
fiscal 2002. This increase  related  primarily to the  amortization for the full
twelve-month  period of the plant and equipment acquired and goodwill that arose
from our acquisition of the environmental  consulting,  laboratory  analysis and
fieldwork  services  business of Global  Environment  Corporation  on October 1,
2000.

     Research  and  development   expense.   Research  and  development  expense
increased  A$883,740,  from  A$921,126 in fiscal 2001 to  A$1,804,866  in fiscal
2002.  This increase was primarily  related to the continued  development of the
Technologies,  and the funding of research and  development  programs into other
potential  applications  for the BauxsolTM  technology.  We expect  research and
development  costs to  increase  in fiscal  2003 and to  continue  to grow as we
commercialize  the  Technologies  and expand the potential  applications for the
BauxsolTM technology.

     Mining Interests expense.  Mining interests expense increased by A$150,425,
from A$339,414 in fiscal 2001 to A$489,839 in fiscal 2002. This increase related
to a A$80,000  increase in our  provision for the  rehabilitation  of our mining
tenements and a A$70,425  increase mining interests costs written off, which was
primarily due to rehabilitation work conducted on the mining leases. Work on our
mining  tenements has been,  and is planned to remain,  the minimum  required to
protect our interest in the mining leases and  exploration  permits we hold over
these areas. As these mining tenements no longer fit with our core business,  we
have lodged applications to surrender some of our mining tenements in Queensland
and are  currently  looking  to retain a passive  interest  in the other  mining
tenements  by  entering  into  joint  venture  partnerships  to  assist  in  the
exploitation of the mining  tenements  and/or or by selling the mining tenements
and retaining an interest in them by way of royalty income.  If we achieve this,
then the future expense in this area would be insignificant.

     Employee  costs and directors  remuneration.  Employee  costs and directors
remuneration costs decreased by A$1,877,335,  from A$3,168,756 in fiscal 2001 to
A$1,291,421 in fiscal 2002.  This decrease was due primarily to the fact that we
recognized a A$2,000,000  expense for options granted to two directors in fiscal
2001 and no similar  expense  was  recognized  in fiscal  2002.  These  options,
exercisable  at  A$0.20  each,  were  issued to our  directors  as part of their
remuneration  package,  which was  negotiated  and  approved  by an  independent
director in February  2000,  when shares in Virotec  were  trading at A$0.11 per
share.  Under the ASX  listing  rules,  the options  could only be issued  after
shareholder  approval was received.  This approval was received in November 2000
and the options  were issued in December  2000,  when our shares were trading at
approximately  A$0.60 per share. Under Australian GAAP, the value of the options
has been  expensed  at the  economic  cost to us of A$0.40  each at the date the
options were issued.  The rise in the share price in the period between the date
of agreement and the date of the  shareholders  meeting  resulted in a charge of
A$2,000,000,  being the value  attributed to the options,  which was included in
the directors remuneration for the period. This decrease was partly offset by an
increase in costs associated with a small increase in staffing.

     Other  expenses from  operating  activities.  Other expenses from operating
activities   increased  by  A$991,179,   from  A$1,802,258  in  fiscal  2001  to
A$2,793,437 in fiscal 2002. This increase was due to our increasing size in both
terms of operations and locations,  and travel  associated  with the increase in
corporate size and the listing of our shares on AIM and the proposed  listing of
our ADSs on the Nasdaq SmallCap Market.

                                       34


Net Loss After Income Tax

     Net  loss  after  income  tax  decreased  by  A$321,908,  from  a  loss  of
A$5,438,315 in fiscal 2001 to a loss of A$5,116,407 in fiscal 2002, as result of
the factors discussed above.

     The Environmental  Consulting segment had a loss of A$26,084 in fiscal 2002
as compared with a profit of A$80,656 in the corresponding  period.  This mainly
reflected an increased  focus on marketing of the  Technologies  throughout  the
world.  This  marketing is expected to continue  throughout  fiscal 2003 and the
resulting financial benefits may not be derived until future periods.

     The Mining  Interests  segment loss increased by A$161,620,  from a loss of
A$360,265  in  fiscal  2001 to a loss of  A$521,885  in fiscal  2002,  primarily
resulting  from an increase in the  provision for  rehabilitation  of our mining
tenements of A$80,000, A$21,901 loss from reduced  sales of tin  concentrates
and a net increase in the costs associated  with  maintaining  the mining and
exploration  tenements of A$59,719 compared with the corresponding period.

     The Research and  Development of  Environmental  Technologies  segment loss
increased  by  A$883,740,  from a loss of  A$921,126 in fiscal 2001 to a loss of
A$1,804,866  in fiscal  2002,  as a result of an  increase in the  research  and
development expenses on the BauxsolTM technology and other technologies.

     The unallocated  loss decreased by A$1,474,035,  from a loss of A$4,237,580
in fiscal 2001 to a loss of A$2,763,545 in fiscal 2002, primarily as a result of
the  A$2,000,000  cost  attributed  to the options  granted to our  directors in
fiscal 2001,  while no such expense was incurred in fiscal 2002. This was offset
by an increase in costs  associated  with the global  expansion of our corporate
presence.

Fiscal 2001 Compared with Fiscal 2000

Revenue

     Revenue increased A$780,195,  from A$218,491 in fiscal 2000 to A$998,686 in
fiscal  2001.  This  increase  related to  revenue  generated  by  environmental
consulting  services  business  acquired in October  2001,  sales of cleaned tin
concentrates  and an increase of A$111,743 in interest  received  resulting from
higher  cash  levels  throughout  the year as a result  of share  options  being
exercised.  Of the revenue in fiscal  2000,  A$151,461  related to an  insurance
recovery  on  damage to plant  and  equipment  that is  considered  outside  our
operating activities.

     Sale of goods.  The sale of goods related  entirely to the Mining Interests
segment. During fiscal 2001, we recognized revenue of A$254,356 from the sale of
cleaned tin  concentrates.  We did not recognize any revenue from this source in
fiscal 2000.

     Rendering of services.  The rendering of services  related  entirely to the
Environmental  Consulting segment. We recognized A$511,644 from the rendering of
environmental  consulting  services  during  fiscal  2001.  In fiscal  2001,  we
acquired the environmental  consulting  services business of Global  Environment
Corporation and these revenues were generated  predominantly from this business.
We did not  recognize  any revenue  from  environmental  consulting  services in
fiscal 2000.

     Other  revenue from  operating  activities.  Revenue  from other  operating
activities  increased  A$149,955,  from  A$67,030 in fiscal 2000 to A$216,985 in
fiscal 2001. This increase related primarily to an increase in interest received
from other parties, which is reflected in the Unallocated segment revenue.

                                       35


     Revenue from outside operating  activities.  We did not receive any revenue
from outside operating  activities in fiscal 2001. In fiscal 2000, we received a
A$151,461  lump sum  insurance  payment  for  damage  to our  mining  plant  and
equipment. This payment is reflected in the Mining Interests segment revenue.

Operating Expenses

     The level of operating expenses increased A$4,025,204,  from A$2,411,797 in
fiscal 2000 to A$6,437,001 in fiscal 2001.  This increase  related  primarily to
the cost of the issuance of options to our executive  directors in December 2000
and to the employee and other operating costs associated with the  environmental
consulting,  laboratory  analysis and fieldwork services business we acquired in
October 2000.

     Depreciation  and  amortization  expense.   Depreciation  and  amortization
expenses  increased  A$125,275,  from  A$80,172 in fiscal 2000 to  A$205,447  in
fiscal 2001. This increase related primarily to the amortization of the goodwill
that arose from our  acquisition  of the  environmental  consulting,  laboratory
analysis and fieldwork  services  business in October 2000 and the  depreciation
expense related to the laboratory  equipment acquired as part of the acquisition
of this business.

     Research  and  development  expense.   Research  and  development  expenses
increased A$273,664,  from A$647,462 in fiscal 2000 to A$921,126 in fiscal 2001.
This  increase  was  primarily  related  to  the  continued  development  of the
Technologies  and the funding of research and  development  programs  into other
potential applications for the Technologies.

     Mining Interests  expense.  Mining interests expense  increased  A$280,715,
from A$58,699 in fiscal 2000 to A$339,414 in fiscal 2001. This increase  related
to an increase in our provision for the  rehabilitation  of our mining tenements
and an increase in evaluation work undertaken on our mining tenements.

     Employee   costs  and   director   remuneration.   Employee   and  director
remuneration  costs  increased  A$2,611,141,  from  A$557,615  in fiscal 2000 to
A$3,168,756  in fiscal 2001.  This  increase was due primarily to an issuance of
options to our executive  directors in December  2000 and to increased  employee
costs  associated with the  environmental  consulting,  laboratory  analysis and
fieldwork services business we acquired in October 2000.

     Other  expenses from  operating  activities.  Other expenses from operating
activities increased  A$734,409,  from A$1,067,849 in fiscal 2000 to A$1,802,258
in fiscal 2001. This increase was primarily related to an increase in legal fees
of  A$334,988  associated  with  litigation  that we are involved  with,  and an
increase of A$275,207 in cost of goods sold.  This increase  related to the cost
of tin concentrates acquired.

Net Loss After Income Tax

     Net  loss  after  income  tax  increased  by  A$3,245,009,  from a loss  of
A$2,193,306 in fiscal 2000 to a loss of A$5,438,315 in fiscal 2001, as result of
the factors discussed above.

     The Environmental  Consulting  segment  contributed a $80,656 profit to the
consolidated  loss in fiscal 2001.  This segment was in its first fiscal year of
operation.

     The Mining  Interests  segment  loss  increased by A$26,016 in fiscal 2001,
from a loss of  A$334,249  in fiscal 2000 to a loss of A$360,265 in fiscal 2001,
primarily  resulting  from an increase in exploration  and  evaluation  expenses
offset by an increase in revenue from the sale of cleaned tin concentrates.

                                       36


     The Research and  Development of  Environmental  Technologies  segment loss
increased  by  A$260,101,  from a loss of  A$661,025 in fiscal 2000 to a loss of
A$921,126  in  fiscal  2001,  as a result of an  increase  in the  research  and
development expenses on the BauxsolTM technology.

     The unallocated  loss increased by A$3,039,548,  from a loss of A$1,198,032
in fiscal 2000 to a loss of A$4,237,580 in fiscal 2001, primarily as a result of
the cost attributed to the options granted to our directors in fiscal 2001.

B.   Liquidity and Capital Resources

     During the past three fiscal years we have funded our operations  primarily
through capital raisings and the exercise of options, which have resulted in net
proceeds  of   approximately   A$20.52   million,   including  net  proceeds  of
approximately A$9.0 million from the public offering of our shares in the United
Kingdom in July 2001,  and funds  received on the  exercise of options  totaling
A$6.6 million during fiscal 2002. As of September 30, 2002, we had approximately
A$10.5 million in cash, which is held in Australian dollars.


Fiscal 2002 Compared with Fiscal 2001


     Net  cash  used  in  operating  activities  increased  by  A$465,478,  from
A$1,663,076  in fiscal 2001 to  A$2,128,554  in fiscal 2002.  This  increase was
primarily  due to an increase of  A$1,011,979  in cash  payments in the ordinary
course of business,  resulting from the expansion of our business. This increase
was offset by  increases in interest  received of A$265,024  and receipts in the
course of business of A$281,477,  mainly reflecting an increase in cash received
from the provision of services, reflecting a full twelve months of operations of
our  environmental  consulting,   laboratory  analysis  and  fieldwork  services
business we acquired in October 2000 compared with nine months of operations for
fiscal 2001.

     Net  cash  used  in  investing  activities  increased  by  A$493,072,  from
A$2,051,549  in fiscal 2001 to  A$2,544,621  in fiscal 2002.  This  increase was
primarily  due to both an increase of  A$883,740  in  research  and  development
expenditure  and an increase of A$399,152  in payments  for  property  plant and
equipment, which includes the purchase in September 2001 of an additional Liquid
Chromatograph  - Mass  Spectrometer  for use in the laboratory to analyze liquid
samples at cost of  A$240,000,  partly  offset by the fact we paid  A$250,000 as
part  payment  for the  acquisition  of our  environmental  consulting  services
business in fiscal 2001 and made no such payment in fiscal 2002.

     Net cash provided by financing activities  increased by A$15,157,027,  from
A$834,812 in fiscal 2001 to  A$15,991,839  in fiscal 2002. This increase was due
to an increase in the net proceeds  from the issuance of our shares,  reflecting
net  proceeds  of  A$8,970,041  from the  issuance of our shares in July 2001 in
connection  with the  admission of our shares to trading on AIM and  A$6,186,986
from the issuance of our shares on the exercise of options in December  2001 and
March 2002.


Fiscal 2001 Compared with Fiscal 2000


     Net  cash  used  in  operating  activities  increased  by  A$580,948,  from
A$1,082,128  in fiscal 2000 to  A$1,663,076  in fiscal 2001.  This  increase was
primarily  due  to the  acquisition  of the  environmental  consulting  services
business of Global Environment Corporation in October 2000, which used A$135,634
in operating  activities,  the increase in legal costs incurred of A$334,988 and
an increase in directors remuneration of A$139,500.

     Net cash  used in  investing  activities  increased  by  A$1,474,272,  from
A$577,277  in fiscal 2000 to  A$2,051,549  in fiscal  2001.  This  increase  was
primarily  due to the part  payment  for the  acquisition  of our  environmental
consulting  services business,  and payment of security deposits relating to the
rehabilitation  of our mine sites.  Also  contributing  to this  increase was an
increase in our payments for  exploration,  evaluation  and  development  of our
mining tenements and an increase in the payments for research and development of
the Technologies.

                                       37


     Net cash  provided by financing  activities  decreased by  A$2,855,703,  or
77.4%,  from  A$3,690,515  in fiscal  2000 to  A$834,812  in fiscal  2001.  This
decrease was  primarily  due to a decrease in the proceeds  from the issuance of
our shares of  A$2,401,526  and costs  incurred of  A$454,177 in relation to the
issuance of our shares in July 2001.

Debt and Financial Instruments


     As of June 30, 2002,  we had no  long-term  debt or  uncommitted  borrowing
facilities.  To date,  we have not utilized  financial  instruments  for hedging
purposes.  See Item 11  "Quantitative  and Qualitative  Disclosure  about Market
Risk".


Anticipated Capital Expenditures


     We do not expect to have any material  capital  expenditure in fiscal 2003.
We intend to start building a BauxsolTM  manufacturing plant in Sardinia,  Italy
near to  Eurallumina's  alumina  production  plant in fiscal  2004.  We have not
finalized our plans for the plant,  including its planned  production  capacity,
and as such we cannot estimate the cost of the construction of the plant at this
stage. We expect to finalize our plans in fiscal 2004.

Contractual Commitments for Other Expenditures


     As of June 30, 2002, we have the following non-cancelable operative
lease commitments:


     Within 1 year         A$111,380
     Within 1-2 years        106,117
     Within 2-3 years         61,650
     Within 3-4 years         60,000
     Within 4-5 years          5,000
     Later than 5 years            -
                           A$344,147


     We  have  commitments   under  research   agreements  with  Southern  Cross
University amounting to A$279,365 in 2003 and A$129,275 in 2004.

     While we remain listed on the Alternative  Investment  Market of the London
Stock Exchange we have an annual commitment for fees of approximately A$100,000.


Future Cash Needs

     Based upon our  results  for the year ended June 30,  2002 and our  current
business  plan,   including  the  beginning  of   construction  of  a  BauxsolTM
manufacturing  plant in Italy in fiscal 2004, we believe that our cash reserves,
interest   income  on  our  cash  reserves  and  revenue   generated   from  our
environmental  consulting,  laboratory  analysis and fieldwork services business
will be sufficient  for our  anticipated  needs until at least the end of fiscal
2004. In addition,  although we are not relying on it, we may receive additional
cash  from the  exercise  of  options.  As we have not  estimated  the  costs of
building the BauxsolTM  manufacturing  plant,  we cannot be certain that we will
not need additional  funding after the end of fiscal 2004. We intend to seek any
such  additional  funding  through public or private  equity or debt  financings
and/or through  collaboration  or other  arrangements  with corporate  partners,
including  licensing  agreements.  We cannot be certain  that we will be able to
raise any required  funding,  on  favorable  terms or at all, or that we will be
able to establish  corporate  collaborations  on  acceptable  terms,  if at all.
Additional  equity  financings  could  result  in  significant  dilution  to our
shareholders.

                                       38


C.   Research and Development, Patents and Licenses, etc.

     We undertake  research and  development  activities in connection  with the
development  and  commercialization  of  the  Technologies.   Our  research  and
development  activities  include the  research we fund via our  agreements  with
Southern Cross  University,  pursuant to which we fund further research into the
BauxsolTM technology by Professor David McConchie,  Fiona Davies-McConchie,  Dr.
Malcolm Clark and Dr. Chuxia Lin and their respective  assistants.  In addition,
our  laboratory in Sardinia,  Italy  conducts  research and  development  on the
Technologies.

     We spent  A$647,462,  A$921,126 and A$1,804,866 on research and development
in fiscal 2000, 2001 and 2002, respectively.

D.   Trend Information

     Due to the fact we changed the nature of our business in late 1999,  and we
have a short history of operations in the environmental remediation industry and
have yet to commercialize  the  Technologies,  we believe our results for fiscal
1999,  2000 and 2001 will not be  indicative  of our  operating  results  in the
future.  The results for the year ended June 30, 2002 include for the first time
the entire period of operations  for our  environmental  consulting,  laboratory
analysis and fieldwork  services business we acquired in October 2000. We expect
that there will not be any material changes in the results for our environmental
consulting,  laboratory analysis and fieldwork services business in fiscal 2003.
Other trend information is discussed above in Item 5A.

Impact of Recently Issued Australian Accounting Standards

     The  Australian  Accounting  Standards  Board ("AASB") has issued AASB 1044
Provisions,  Contingent  Liabilities and Contingent Assets,  which will apply to
annual and half-year  reporting periods  beginning on or after July 1,2002.


     The  standard  introduces  rules  for  the  recognition,   measurement  and
disclosure of provisions.  It also includes detailed disclosure requirements for
contingent  assets  and  liabilities.  The major  changes  to  current  practice
include:

                                       39


     * More stringent requirements for restructuring provisions, differentiating
       between restructurings on acquisition and other restructurings.

     * Discounting of provisions, using specific liability related risk rates,
       applied to pre-tax cash flows.

     * Provisions for dividends will only be recognized at reporting date if
       they have been declared, determined or recommended before reporting date.
       The full amount of the dividend must be recognized as a provision, not
       just the amount payable in cash.

     * Separate recognition criteria for any recoveries related to provisions.


     Because of the  extensiveness  of the efforts  needed to comply,  it is not
practicable to reasonably  estimate the impact that the adoption of AASB 1044 is
expected to have on our financial report.

     The AASB has issues a revision of AASB 1020 Income Taxes,  which will apply
to annual  and  half-year  financial  reporting  periods  beginning  on or after
January 1, 2005. The main features of the revised Standard are:


     * The revised standard adopts the "balance sheet" liability method of tax
       effect accounting rather than the "income statement" liability approach.
       The "balance sheet" liability method focuses on the tax effects of
       transactions and other events that affect amounts recorded in the
       statement of financial position and temporary differences. Temporary
       differences are the differences between the carrying amounts of assets
       and liabilities and their tax bases.

     * The measurement of a deferred tax asset or liability depends on
       management's intended use of the asset or liability.

     * Deferred tax assets should be recognized when it is probable that the
       taxable income will be available against which the deferred tax asset can
       be utilized.

     * Discounting of deferred tax assets and liabilities is not permitted,
       unless required by another standard.

     * Goodwill amortization is not deductible under Australian tax law. This
       would give rise to a deferred tax liability. The Standard, however, does
       not permit the temporary difference to be recognized, as this would have
       the effect of increasing the amount of the goodwill on an iterative
       basis.


     Because of the  extensiveness  of the efforts  needed to comply,  it is not
practicable to reasonably  estimate the impact that the adoption of AASB 1020 is
expected to have on our financial report.

     The AASB has issued a revision of AASB 1028  Employee  Benefits  which will
apply to annual reporting  periods  beginning on or after 1 July 2002. The major
changes to the standard are:


     * Specific rather than general recognition criteria for wages and salaries
       (including non-monetary benefits), compensated absences, profit sharing
       and bonus plans, termination benefits (including those arising through
       acquisition) and post-employment benefits - the termination benefit
       criteria are now black letter requirements and in an acquisition, the
       acquiree must recognize the liability in some circumstances.

     * Recognition of employee benefits to be measured at nominal amounts
       (including wages and salaries, annual leave and sick leave) using
       "expected" remuneration rates that will be paid when the obligation is
       settled, not rates at reporting date.

     * Significantly more detailed disclosures in relation to items such as
       equity-based compensation benefits.

     * Terminology changes to more closely harmonize with IAS 19

     * Employee benefit assets and liabilities arising from agreements equally
       proportionately unperformed need not be recognized unless required by
       this or another standard.

                                       40


     The  Company  does not expect the  adoption of AASB 1028 to have a material
effect on the consolidated financial statements.

Reconciliation of Australian GAAP to U.S. GAAP

     The  financial  statements  found  elsewhere  in this  annual  report  were
prepared in accordance with Australian  GAAP,  which differs in certain material
respects  from  U.S.  GAAP.  Note 26 to our  consolidated  financial  statements
contains additional  disclosures required under U.S. GAAP. In addition,  note 26
provides a  reconciliation  and  description  of the major  differences  between
Australian  GAAP and U.S.  GAAP for the items  that  affect  the net loss  after
income tax and shareholders' equity of Virotec.

New U.S. Accounting Pronouncements

     In June 2001, the FASB issued Statement No. 141, Business Combinations, and
Statement No. 142, Goodwill and Intangible  Assets.  Statement 141 requires that
the  purchase  method  of  accounting  be  used  for all  business  combinations
completed  after  June 30,  2001  and  also  specifies  the  types  of  acquired
intangible  assets that are required to be  recognized  and reported  separately
from  goodwill  and those  acquired  intangible  assets that are  required to be
included in goodwill.  Statement  142 will  require  that  goodwill no longer be
amortized,  but instead tested for impairment at least  annually.  Statement 142
will also  require  recognized  intangible  assets to be  amortized  over  their
respective estimated useful lives and reviewed for impairment in accordance with
Statement  No. 144,  Accounting  for the  Impairment  or Disposal of  Long-Lived
Assets. Any recognized  intangible asset determined to have an indefinite useful
life will not be amortized, but instead tested for impairment in accordance with
Statement 142 until its life is determined to no longer be indefinite.

     The provisions of Statement 141 are applicable to all business combinations
accounted for by the purchase method for which the date of acquisition is 1 July
2001,  or later.  We are required to adopt the  provisions of Statement 142 on 1
July 2002.  Retroactive  application of Statements 141 and 142 is not permitted.
However,  any goodwill and any intangible asset determined to have an indefinite
useful life that is acquired in a business combination  completed after June 30,
2001 will not be amortized.  Goodwill and intangible assets acquired in business
combinations  completed  before July 1, 2001 will continue to be amortized until
June 30, 2002.

     We do not expect the adoption of SFAS No. 141 to have a material  impact on
its consolidated financial statements under US GAAP. We implemented SFAS No. 142
on July 1, 2002. In  accordance  with SFAS No. 142, the Company will be required
to  complete  the first step of the  transitional  goodwill  impairment  test by
December 31, 2002.  We have not yet  determined  the impact that the adoption of
SFAS No.  142 will have on its  consolidated  financial  statements.  Under this
statement,  goodwill  will no longer be amortized in the  statement of financial
performance.  The amount of amortization of goodwill during the years ended June
30, 2002, 2001 and 2000 in accordance with US GAAP were A$122,050,  A$91,582 and
nil respectively.

     In June 2001,  the FASB  issued  Statement  No. 143,  Accounting  for Asset
Retirement  Obligations.   Statement  143  addresses  financial  accounting  and
reporting for obligations  associated with the retirement of tangible long-lived
assets  and  the  associated  asset  retirement  costs,  and  applies  to  legal
obligations  associated  with the  retirement  of  long-lived  assets and/or the
normal operation of a long-lived asset. Under Statement 143, the fair value of a
liability  for an asset  retirement  obligation  is  recognized in the period in
which it is incurred  if a  reasonable  estimate of fair value can be made.  The
associated asset retirement costs are capitalized as part of the carrying amount
of the long-lived  asset.  The liability is discounted and accretion  expense is
recognized using the credit-adjusted  risk-free interest rate in effect when the
liability was initially  recognized.  Statement 143 is effective for the Company
as of July 1, 2002.  We do not expect the  adoption of  Statement  143 to have a
material impact on the consolidated financial statements.

                                       41


     In August 2001 the FASB issued SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived  Assets.'' SFAS No. 144 addresses financial accounting
and  reporting for the  impairment  of long lived assets and will  supersede (a)
SFAS No. 121 with respect to the  accounting  for the  impairment or disposal of
long lived assets and (b)  Accounting  Principles  Board Opinion No. 30 (Opinion
30) for the  disposal  of a segment  of a  business.  SFAS No. 144  retains  the
requirements of SFAS No. 121 to (a) recognize an impairment loss if the carrying
amount of a long lived asset is not recoverable from its undiscounted cash flows
and (b) measure an impairment loss as the difference between the carrying amount
and fair value of the asset.

     SFAS No.  144  also  requires  that a long  lived  asset  to be  abandoned,
exchanged for a similar productive asset, or distributed to owners in a spin off
be  considered  held and used  until  the asset is  disposed  of,  exchanged  or
distributed.

     SFAS  No.  144  retains  the  basic   provisions  of  Opinion  30  for  the
presentation  of  discontinued  operations in the income  statement but broadens
that  presentation to include a component of an entity (rather than a segment of
a business).  A component of an entity comprises  operations and cash flows that
can  be  clearly  distinguished,   operationally  and  for  Financial  reporting
purposes,  from  the  rest of the  entity.  A  component  of an  entity  that is
classified  as held  for sale or that has been  disposed  of is  presented  as a
discontinued  operations if the  operations and cash flows of the component will
be (or have been)  eliminated from the ongoing  operations of the entity and the
entity will not have any significant continuing involvement in the operations of
the component. In addition,  discontinued operations are no longer measured on a
net realizable value basis, and future operating losses are no longer recognized
before they occur.

     We implemented  SFAS No. 144 on July 1, 2002. This statement did not have a
material impact on the Company's  consolidated  results or financial position on
the date of adoption.

     In  April  2002,  the  FASB  issued  SFAS  No.  145,  ""Rescission  of FASB
Statements  No. 4, 44 and 64,  Amendment of FASB Statement No. 13, and Technical
Corrections.''  As a  result  of the  rescission  of  SFAS  No.  4,  a  loss  on
extinguishment of debt will no longer be presented as an extraordinary item upon
the  adoption of SFAS No. 145,  which is  effective  for the Group in the Fiscal
year beginning July 1, 2002.

     In July  2002,  the  FASB  issued  SFAS  No.  146,  "Accounting  for  Costs
Associated  with Exit or  Disposal  Activities.''  SFAS No.  146 is based on the
general  principle  that a  liability  for a cost  associated  with  an  exit or
disposal activity should be recorded when it is incurred and initially  measured
at fair  value.  SFAS  No.  146  applies  to costs  associated  with (1) an exit
activity  that  does  not  involve  an  entity  newly  acquired  in  a  business
combination,  or (2) a disposal activity within the scope of SFAS No. 144. These
costs include certain termination  benefits,  costs to terminate a contract that
is not a capital lease, and other associated costs to consolidate  facilities or
relocate  employees.  Because the provisions of this statement are to be applied
prospectively to exit or disposal activities  initiated after December 31, 2002,
the effect of adopting this statement cannot be determined.

                                       42



ITEM 6.     DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

     The following people comprise our board of directors and senior management:



  Name                                  Age    Position

  Brian James Sheeran                   54     Executive Chairman and Chief
                                               Executive Officer
  Bruno Joseph Bamonte                  44     Chief Financial Officer
  Professor David Murray                53     Director
  McConchie
  Dr. Michael Ian Nissen                75     Director
  John Anthony Glynn                    52     Director
  Angus John Craig                      31     Company Secretary
  Dr. Lee Fergusson                     48     Chief Operating Officer

Directors

Brian James Sheeran - Executive Chairman and Chief Executive Officer

     Mr.  Sheeran  has been a  director  of  Virotec  since  1997 and became our
Executive  Chairman in July 1999. In December  2002, he was given the additional
title of Chief  Executive  Officer to better  reflect his role in  Virotec.  Mr.
Sheeran is primarily  responsible for our strategic direction.  Prior to joining
Virotec,  he  established  and  operated LKL Sheeran Pty Ltd, one of the largest
private bus companies in Australia. Mr. Sheeran was also the founder of Sunlover
Cruises,  a private  business that operated  high-speed  catamarans to the Great
Barrier  Reef. He has been a director of various  companies  involved in mining,
timber, farming ventures,  earthmoving and haulage. Mr. Sheeran is currently the
director of the private  Australian  companies Supamere Pty Ltd, Sheeran Pacific
Pty Ltd,  Sheeran  Nominees Pty Ltd,  Palmer  River Mining Pty Limited,  Sheeran
Transport Pty Ltd, C & B Investments  Pty Ltd, New  Technology  Investments  Pty
Limited,  Queensland Wine Company Ltd, Sheeran Haulage Pty Limited, Starvest Pty
Limited and Australasian Resources Pty Ltd.

Bruno Joseph Bamonte -Chief Financal Officer

     Mr. Bamonte has been an executive  director of Virotec since December 1997.
Originally given the title of Finance Director,  Mr. Bamonte's title was changed
in December 2002 to Chief Financial Officer. Since joining Virotec, he has acted
as our  principal  financial  officer,  administrative  officer  and  commercial
officer. Mr. Bamonte is responsible for our overall financial and administrative
management and our legal  compliance  functions.  Mr. Bamonte is a member of our
audit committee and of our intellectual property and technical review committee.
Mr. Bamonte is a qualified  Australian  Chartered Accountant and a member of the
Australian  Institute of Company  Directors.  Prior to joining us he worked as a
consultant  to a number  of  public  companies  advising  on a range  of  issues
including the preparation of  prospectuses,  assistance in gaining  admission to
the  official  list of the  Australian  Stock  Exchange,  assistance  in seeking
re-quotation of shares for suspended companies,  corporate governance, and other
financial areas.

Professor David Murray McConchie - Non Executive Director

     Professor  David  McConchie  was appointed to the Board in July 2000. He is
our chief scientific adviser and is responsible for our research and development
program.  Professor  McConchie  is a member  of our  intellectual  property  and
technical review committee.  Professor McConchie is Professor of Engineering and
Environmental  Geochemistry at Southern Cross  University  where, in addition to
teaching and  consultancy  work,  he is leader of the Applied  Geochemistry  and
Sedimentology  Research  Group. He is a co-founder of the Centre for Research on
Acid Sulphate  Soils.  He gained his MSc in Geology (with  distinction)  in 1978
from the University of  Canterbury,  New Zealand and was awarded a Ph.D. in 1985
by the  University  of  Western  Australia.  Professor  McConchie  has  received
numerous  research grants,  published over 60 research papers and 5 books,  made
over 50 conference presentations,  and prepared over 250 consultancy reports. In
recognition  of the quality of his  research  and  consultancy  work,  Professor
McConchie  was a  finalist  in the  Australian  Eureka  Prize for  environmental
research  in 1996.  Over the last 20 years  his  research  has  focussed  on the
geochemistry of trace metals in sediment, water and biota, and on the assessment
and management of acid mine drainage.

                                       43


John Anthony Glynn - Non Executive Director

     Mr. Glynn has been a director of Virotec  since March 2000.  He is a member
of our audit  committee.  Mr. Glynn is a practicing  lawyer with his own firm in
New South Wales, Australia. He is admitted as a solicitor in New South Wales and
Queensland.  He has  experience  in the Land  and  Environment  Court  and has a
particular  interest in  environmental,  company and aviation  law. Mr. Glynn is
currently a director of the private Australian companies  Aeromedical  Australia
Pty Ltd,  Foceli Pty  Limited,  Lismore  Serviced  Offices Pty Ltd,  and Odd Lot
Nominees Pty Ltd, which is currently a major shareholder of Virotec.

Dr. Michael Ian Nissen - Non Executive Director

     Dr.  Nissen has been a director of Virotec  since March 2000. He chairs our
audit  committee.  Dr.  Nissen is a member of the Royal  College  of  Physicians
(U.K.) Prior to joining  Virotec,  Dr. Nissen acted as chief  executive at Cedar
Court  private  hospital in  Camberwell,  Melbourne,  Australia,  where he was a
forerunner  in the  development  of  rehabilitation  in  private  hospitals  and
achieved  the  inaugural  award  for  excellence  in a private  hospital  by the
Australian  Private  Hospitals  Association.  He  is  currently  a  director  of
Banque-Tec  Limited,  a company listed on the Australian  Stock Exchange.  He is
also  Director  of  the  Australian   private  companies   Andwendrod   Services
Proprietary  Limited,  Wengale Pty  Limited,  Caput Pty  Limited,  Wenrodan  Pty
Limited,  Protanto Pty Ltd,  Kwamina Pty Ltd and Swinbar Pty Ltd. He is Chairman
of the Victorian  Rehabilitation Research Institute situated at Cedar Court, and
is Chairman of Metro 5 Gallery  Pty Ltd,  an art  gallery  located in  Armadale,
Melbourne.

Senior Management

Dr. Lee Fergusson - Chief Operating Officer

     Dr. Fergusson was appointed as our Chief Operating  Officer,  Australia and
Asia in  February  2002 and in  December  2002 his  title was  changed  to Chief
Operating Officer to better reflect his role in Virotec.  As the Chief Operating
Officer,  Dr.  Fergusson is responsible for competitive and market  intelligence
throughout  the  world,  developing  and  articulating  our  strategy,  building
alliances and  partnerships  with  companies,  and executing our business  plan.
Prior to joining  Virotec,  Dr.  Fergusson  was  President  and Chief  Operating
Officer of Global Online India,  Inc., an e-commerce  and  e-business  solutions
company focussed on Indian  consumers,  where he was responsible for all aspects
of designing  and  implementing  that  company's  business  strategy,  including
technology   development,   financing  strategies  and  partnerships,   investor
relations, NASD and SEC compliance,  and sales and marketing. From 1996 to 2001,
Dr.  Fergusson held a variety of positions with USA Global Link,  Inc., a global
telecommunications  provider  based in the United  States,  including  acting as
President  and  Chief  Operating  Officer,  from  1999  to  2001,  when  he  was
responsible for all aspects of business  operations,  including  finance,  human
resources,  legal affairs and sales and  marketing.  Prior to joining USA Global
Link,  Dr.  Fergusson was a management  consultant  involved in  object-oriented
analysis and design and business process re-engineering for the Object Discovery
Corporation.  Dr. Fergusson is also on the Industry  Advisory Board of INOMY, an
Indian Internet economy  association  based in New Delhi.  From 1998 to 1999, he
served  as a  Director  and  Chair of the  Internet  and Data  Committee  of the
European Competitive Telecommunications Association based in London.

                                       44


Angus John Craig - Company Secretary

     Mr. Craig joined us as Company  Secretary in March 2001. He is  responsible
for our financial and  administrative  management as well as all secretarial and
compliance functions. Mr. Craig commenced his career at Price Waterhouse in 1992
before holding the position of Senior Listings  Officer at the Australian  Stock
Exchange  from April  1994 to July  2000.  His  particular  expertise  is in the
Australian Stock Exchange Listing Rules and he has been a guest lecturer for the
Securities  Institute  of  Australia  and the  Chartered  Institute  of  Company
Secretaries.


B.   Compensation


     In the year ended June 30, 2002,  the  aggregate  remuneration  we paid and
that accrued to our directors and senior  management was  A$879,133.  During the
year  ended  June  30,  2002,  in  accordance  with  Australian   superannuation
legislation,  we contributed A$20,083 to employee superannuation funds for their
retirement benefits, which is included in the amount above.

     The  remuneration  and  benefits  paid  to our  directors  and  our  senior
management in the year ended June 30, 2002, on an individual  basis, are set out
in the  table  below.  During  that  period,  only  two  members  of our  senior
management were not directors.  Dr.  Fergusson  commenced  employment with us in
February 2002.


<TABLE>
<CAPTION>
                                                 Consulting   Board
Name                                            Fees/Salary    Fees      Benefits(1)     Total       Options
                                                    (A$)       (A$)           (A$)        (A$)
<S>                                                 <C>       <C>              <C>     <C>               <C>
Directors
Brian James Sheeran                                 324,080   24,000           1,920   350,000             -
Bruno Joseph Bamonte                                224,080   24,000           1,920   250,000             -
Professor David Murray McConchie                     36,000   24,000           4,800    64,800             -
Dr. Michael Ian Nissen                                    -   24,000               -    24,000             -
John Anthony Glynn                                        -   24,000           1,920    25,920             -
Senior Management
Angus John Craig                                     92,390        -           4,523    96,913    100,000(2)
Lee Fergusson(3)                                     62,500        -           5,000    67,500             -

</TABLE>

_________________________________

(1)     This includes statutory superannuation contributions as required
        under Australian law.
(2)     Represents 100,000 options to purchase shares in Virotec at an
        exercise price of A$0.47 on or before February 28, 2004.
(3)     Lee Fergusson joined Virotec in February 2002.


C.   Board Practices

     Under our  constitution  our board of  directors is required to comprise at
least three directors.  Our Board currently  comprises five directors.  Of these
five  directors,  Mr.  Glynn and Dr.  Nissen are  considered  to be  independent
directors.

     Pursuant  to our  constitution,  one-third  of  directors  other  than  the
director who is the managing  director,  which is currently  Mr.  Sheeran,  must
retire from office at every annual general  meeting.  If the number of directors
is not a  multiple  of  three  then the  number  nearest  to but not  less  than
one-third  must retire from office.  The directors who retire in this manner are
required  to be the  directors  or director  longest in office  since last being
elected. A director,  other than the director who is a managing  director,  must
retire from office at the conclusion of the third annual  general  meeting after
which the director was elected.

     There are no requirements in our  constitution  regarding the retirement of
directors at any  particular  age. The  Australian  Corporations  Act,  however,
requires that  directors  retire at the  conclusion of the first annual  general
meeting after a director  reaches age 72. A person who has reached age 72 may by
special  resolution  of our  shareholders  be  appointed  or  re-appointed  as a
director,  provided  the notice of meeting and the  resolution  appointing  such
director  states such  director's  age. Dr.  Nissen is over the age of 72 and as
such must seek re-election at each annual general meeting.

                                       45



     Dr.  McConchie and Dr. Nissen were reelected at our annual general  meeting
in November  2002. If the Board remains  unchanged,  Dr. Nissen and Mr.  Bamonte
will have to stand for reelection at our next annual general meeting.

     We have not entered into any service  contracts  with any of our  directors
that provide for benefits upon termination of employment.

     Specific directors' employment arrangements are summarized below.

Brian Sheeran

     Mr.  Sheeran was  appointed  as  Executive  Chairman on July 23,  1997.  In
December 2002, he was also given the title of Chief Executive  Officer to better
reflect his role in Virotec.  Under a retainer  agreement,  dated June 19, 2001,
among Virotec,  Sheeran  Nominees Pty Ltd and Mr. Sheeran,  Sheeran Nominees Pty
Ltd provides the  consultancy  services of Mr. Sheeran with effect from April 1,
2001. The services  provided by Mr. Sheeran,  through Sheeran  Nominees Pty Ltd,
are equivalent to the services  provided by a full-time chief executive  officer
and a director.  Mr.  Sheeran's  services are provided on a full-time basis, and
his minimum  engagement  period is until March 31, 2004.  We may  terminate  the
agreement  on one month's  notice if we cannot  usefully  utilize Mr.  Sheeran's
services or if he has committed a substantive breach of the agreement.  Pursuant
to the agreement,  we pay Mr. Sheeran A$29,166 per calendar month,  inclusive of
any directors fees and superannuation.

Bruno Bamonte

     Mr.  Bamonte was  appointed as an executive  director on December 24, 1997.
Under a retainer  agreement,  dated June 19, 2001, among Virotec,  BSB Trust and
Mr.  Bamonte,  BSB Trust provides the  consultancy  services of Mr. Bamonte with
effect from April 1, 2001.  The services  provided by Mr.  Bamonte,  through BSB
Trust,  are equivalent to the services  provided by a full-time  chief financial
officer and a director.  His services are provided on a full-time basis, and his
minimum  engagement  period  is until  March  31,  2004.  We may  terminate  the
agreement  on one month's  notice if we cannot  usefully  utilize Mr.  Bamonte's
services or if he has  substantively  breached  the  agreement.  Pursuant to the
agreement,  we pay Mr.  Bamonte  A$20,750 per calendar  month,  inclusive of any
directors fees and superannuation.

Professor David McConchie

     Professor  McConchie was appointed as a non-executive  director on July 10,
2000.  By a  letter  of  engagement  dated  May 17,  2001,  Professor  McConchie
undertakes to act as a director,  with effect from April 1, 2001,  terminable by
three  months'  written  notice.  Pursuant to the  agreement,  we pay  Professor
McConchie up to A$110,000  per year (plus  superannuation)  for the provision of
his services as a director of Virotec. Under a research agreement, dated June 7,
2001, among Virotec,  Southern Cross University,  Nauveau Technology Investments
and Professor  McConchie,  Professor McConchie provides ongoing technical advice
to Virotec and conducts further  research on the  Technologies  through Southern
Cross University. See Item 10C "Material Contracts".

John Glynn

     Mr. Glynn was appointed as a  non-executive  director on March 17, 2000. By
letter of  engagement  dated May 17,  2001,  Mr.  Glynn  undertakes  to act as a
director,  with effect from April 1, 2001,  terminable by three months'  written
notice.  Pursuant to the  agreement,  we pay Mr.  Glynn  A$24,000 per year (plus
superannuation) for the provision of his services as a director of Virotec.

                                       46


Dr. Michael Nissen

     Dr. Nissen was appointed as a non-executive  director on March 17, 2000. By
letter of  engagement  dated May 17, 2001,  Dr.  Nissen  undertakes  to act as a
director,  with  effect  from  April 1, 2001,  for a minimum  period of one year
terminable  thereafter  by  three  months'  written  notice.  We pay Dr.  Nissen
A$24,000 per year for the provision of services as a director of Virotec.

Corporate Governance

     The board of directors has established two committees: the Audit
Committee; and the Intellectual Property and Technical Review Committee. The
board of directors has not established a remuneration committee.

Audit Committee

     The board of directors has  established  an audit  committee  consisting of
three directors,  two of whom are independent.  The current members of our Audit
Committee  are Mr.  Bamonte,  Mr.  Glynn and Dr.  Nissen.  The  Audit  Committee
provides a forum for the effective  communication between the board of directors
and external auditors.

     Responsibilities of the audit committee include:

     * reviewing the financial report and other financial information
       distributed externally;
     * reviewing any new accounting policies to ensure compliance with
       Australian Accounting Standards and generally accepted accounting
       principles;
     * reviewing audit reports to ensure that where major deficiencies or
       breakdowns in controls or procedures have been identified appropriate and
       prompt remedial action is taken by management;
     * reviewing the nomination and performance of the external auditor;
     * considering whether non-audit services provided by the external auditor
       are consistent with maintaining the external auditor's independence;
     * liaising with the external auditors and ensuring that the annual audit
       and half-year review are conducted in an effective manner;
     * monitoring the establishment of an appropriate internal control framework
       and considering enhancements;
     * monitoring the procedures in place to ensure compliance with the
       Corporations Act 2001 and Stock Exchange Listing Rules and all other
       regulatory requirements; and
     * addressing any matters outstanding with auditors, Australian Taxation
       Office, Australian Securities and Investments Commission, Australian
       Stock Exchange and financial institutions.


Intellectual Property and Technical Review Committee

     The  board of  directors  has  established  an  Intellectual  Property  and
Technical  Review  Committee  consisting  of four  members,  being Mr.  Bamonte,
Professor McConchie,  both of whom are directors,  Mr. Daniel Drew and Mr. David
Rowsell, both of whom are technical specialists that provide consulting services
to us. The committee's  role is to help to ensure our technology is protected to
the best extent possible.

                                       47


     The committee  focuses on issues relating to our intellectual  property and
its role is to help to ensure that:

     * all of our intellectual property is protected by way of patent or trade
       secret (as considered most appropriate);
     * the dissemination of all technical documents is controlled;
     * appropriate systems are in place to ensure that correct testing protocols
       for ongoing research and development programs are used; and
     * all new technologies offered to us are reviewed and assessed to determine
       their value to us.

D.   Employees


     As of June  30,  2000,  2001  and  2002,  we had a total  of 12,  34 and 41
full-time employees and consultants  providing services to us, respectively.  In
addition, as of June 30, 2002, we funded research by two post doctorate fellows,
one Ph.D. student and one associate professor at Southern Cross University,  New
South Wales,  Australia.  The table below  provides a breakdown of our employees
and consultants providing services to us as of June 30, 2000, 2001 and 2002.

<TABLE>
<CAPTION>

                                                     Employees                    Consultants
                                               2002    2001    2000           2002    2001    2000
Australia
<S>     <C>                                      <C>     <C>     <C>            <C>     <C>     <C>
        Corporate                                 6       3       2              2       4       3
        Operations                               17      16       4              3       3       -
        Research and Development                  1       -       -              4       3       3

Europe
        Operations                                1       -       -              2       3       -
        Research and Development                  -       -       -              2       2       -

North America
        Operations                                1       -       -              1       -       -

</TABLE>


E.   Share Ownership

     The  following  table sets forth (1) the  number of shares  owned,  (2) the
percentage of outstanding  shares owned and (3) the number of options underlying
shares owned by each of our directors  and senior  management as of November 30,
2002:

<TABLE>
<CAPTION>

                                         Number of          Percentage of         Number of
Name                               Shares Owned(1)     Outstanding Shares   Options Owned(1)

<S>                                      <C>                         <C>          <C>
Brian Sheeran(2)                         2,765,542                   1.6%         600,000(3)
Bruno Bamonte                            1,255,000                      *                   -
Dr. Michael Nissen(4)                    7,450,000                   4.4%         200,000(5)
John Glynn(6)                             6,300(7)                      *         200,000(8)
Professor David McConchie                  280,000                      *         500,000(9)
Angus Craig                                      -                      -        100,000(10)
Lee Ferguson                                     -                      -                   -

</TABLE>


_________________________________

*     Represents less than 1% of the outstanding shares.


(1)   As of November 30, 2002, the number of outstanding shares was
      168,193,841 and the number of outstanding options was 16,400,000.

(2)   The 2,765,542 shares are held by Sheeran Nominees Pty Limited, a company
      wholly owned by Mr. Brian Sheeran.

(3)   Represents 600,000 beneficially owned options to purchase ordinary
      shares of Virotec that are exercisable on or before November 30, 2003 at
      an exercise price of A$0.56 per share held in the name of Ms. Christine
      Boland.

(4)   Made up of 7,300,000 shares held by Andwendrod Services Pty Limited,
      100,000 shares held by Wengale Pty Limited, companies which are controlled
      by Dr. Michael Nissen, and 50,000 shares held jointly by Mrs. Pearl Nissen
      (Dr. Nissen's wife) and Darren Levy as trustees for the Pearl Nissen
      superannuation account.

                                       48


(5)   Represents 200,000 options to purchase ordinary shares of Virotec that
      are exercisable on or before November 30, 2003 at an exercise price of
      A$1.00 per share.

(6)   Mr. Glynn is the sole nominee director of Odd Lot Nominess Pty Ltd, a
      major shareholder in the company holding 11,589,577 shares and 10,000,000
      options to purchase ordinary shares of Virotec on or before February 28,
      2003 at an exercise price of A$0.20 per share, but does not beneficially
      own any shares of Odd Lot Nominees. Odd Lot Nominees is a wholly owned
      subsidiary of Artisan Capital Limited, which is wholly owned by Nigel
      Kirwan. Mr. Glynn does not have control or voting discretion with respect
      to the shares held by Odd Lot Nominees because he has agreed to act in
      accordance with the instructions of Artisan Capital Limited. Accordingly,
      Mr. Glynn disclaims beneficial ownership of the shares held by Odd Lot
      Nominees.

(7)   Represents 6,300 shares held by Gaunt Mill Pty Limited, a company wholly
      owned by Mr. John GlynnRepresents 200,000 options to purchase ordinary
      shares of Virotec that are exercisable on or before November 30, 2003 at
      an exercise price of A$1.00 per share.

(8)   Represents 500,000 options to purchase ordinary shares of Virotec that
      are exercisable on or before November 30, 2003 at an exercise price of
      A$1.00 per share.

(9)   Represents 100,000 options to purchase ordinary shares of Virotec that
      are exercisable on or before February 28, 2004 at an exercise price of
      A$0.47 per share.

     We can grant  options to purchase our shares to our directors and employees
under our Constitution and under our employee option incentive scheme.

     As a  requirement  of the  admission  of our shares for  trading on AIM , a
director may not deal in any of our securities  during (a) the period two months
immediately preceding the preliminary  announcement of our annual results or, if
shorter, the period from the relevant financial year end up to and including the
time of the announcement,  and (b) the period two months  immediately  preceding
the announcement of our half-yearly results or, if shorter,  the period from the
relevant financial period end up to and including the time of the announcement.

Employee Share Option Plan

     Our shareholders approved an employee option incentive plan on November 29,
2000.  This  entitles  the Board to invite  eligible  employees to apply for any
number of options to acquire our shares on terms and conditions as determined by
the Board.  The Board must not issue  options under the plan if the total number
of shares relating to unexercised and unexpired options under the plan, existing
or which would be issued if all invitations were accepted,  exceeds five percent
of the total number of shares issued in Virotec. Written consent of the Board is
required if employees  wish to exercise  their  options  within one month of our
half-yearly or annual financial  results.  The options can be transferred at any
time prior to expiry and are not quoted on the Australian Stock Exchange.  As of
November 30,  2002,  a total of 1,050,000  options have been issued to employees
under the plan. Of these, 100,000 options were issued to senior management.


                                       49


ITEM 7.     MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.   Major Shareholders

     The  following  table  summarizes  information  about the  ownership of our
outstanding  ordinary  shares as of September 30, 2000 and 2001 and November 30,
2002 for each  person or group that we know to be the  beneficial  owner of more
than 5% of our ordinary shares.

     We  determine  beneficial  ownership  of  shares  under  the  rules  of the
Securities and Exchange  Commission and include any ordinary shares over which a
person exercises sole or shared voting or investment power, or of which a person
has the right to acquire  ownership at any time within 60 days of September  30,
2000 and 2001 and  November  30, 2002.  Applicable  percentage  ownership in the
following  table is based on the number of  ordinary  shares  outstanding  as of
September 30, 2000 and 2001 and November 30, 2002. We had  168,193,841  ordinary
shares on issue as of November 30, 2002.


<TABLE>
<CAPTION>


                               Ordinary Shares                      Ordinary Shares                      Ordinary Shares
                          Beneficially Owned as of             Beneficially Owned as of             Beneficially Owned as of
                             September 30, 2000                   September 30, 2001                   November 30, 2002

                                    Percentage of                        Percentage of                             Percentage of
  Name of         Number of shares   outstanding        Number of shares  outstanding            Number of shares   outstanding
  shareholder           owned          shares                owned           shares                    owned           shares
  <S>                   <C>               <C>                 <C>              <C>                     <C>               <C>
  Odd Lot Nominees
  Pty Ltd(1)         7,844,892(2)        8.1%             26,900,000(3)       19.5%                21,589,577(4)        12.8%

  SFE Investments
  Pty Ltd(5)         12,756,16(6)        13.2%            12,111,085(7)       8.8%                     12,111,085       7.2%

</TABLE>


(1)   Odd Lot Nominees is a wholly owned subsidiary of Artisan Capital
      Limited, which is wholly owned by Nigel Kirwan.
(2)   This represents 5,351,423 shares and 2,493,469 options to purchase
      shares.
(3)   This represents 14,406,531 shares and 12,493,469 options to purchase
      shares.
(4)   This holding represents 11,589,577 ordinary shares and 10,000,000
      options to purchase shares.
(5)   SFE Investments is a company controlled by Stephen Daley and John
      Robinson.
(6)   This represents 1,525,076 shares and 11,231,085 options to purchase
      shares.
(7)   This represents 880,000 shares and 11,231,085 options to purchase
      shares.

     Our major  shareholders do not have different voting rights with respect to
our ordinary shares.

     As of November 30, 2002,  there were 6,049 holders of ordinary  shares,  of
which  eight  were U.S.  shareholders  holding  approximately  0.07% of our then
outstanding ordinary shares.

     To the best of our  knowledge,  we are not owned or controlled by any other
corporation,  by any foreign government or by any other natural or legal person.
We are not aware of any arrangement,  the operation of which may at a subsequent
date result in a change in control of Virotec.

B.   Related Party Transactions

Employment Agreements

     We have employment  and/or  consultancy  agreements with all directors (see
Item 6C) and senior  management  named in Item 6A. We believe that each of these
agreements  was entered  into on terms at least as  favorable  to us as we would
expect to negotiate with unaffiliated third parties.

                                       50


Other Transactions

     We believe  that all related  party  transactions  described  below were on
terms at least as favorable to us as would have been negotiated with independent
third parties.

     In March 2001, we entered into an intellectual  property license  agreement
with  Nauveau  Technology  Investments  pursuant to which we hold the world wide
exclusive license to distribute and market the Technologies,  which are owned by
Nauveau Technology Investments. Sheeran Nominees Pty Limited (a company in which
Mr. Sheeran,  our Executive Chairman,  holds shares) holds a 10 percent interest
in Nauveau Technology  Investments.  Professor McConchie, a director of Virotec,
and his wife, F.  Davies-McConchie,  each hold a 20 percent  interest in Nauveau
Technology  Investments.  Under the license  agreement,  we are  required to pay
Nauveau  Technology  Investments a royalty of two percent of the gross  proceeds
received  from  the  exploitation  of  the  intellectual  property  and  we  are
responsible for all costs associated with development of the technology.  We are
able to terminate this agreement on providing 12 months notice of termination in
writing.  From July 1, 2006,  minimum royalties of A$100,000 are payable for the
first year  increasing  by 10 percent  per annum to a minimum of  A$250,000  per
annum.  These  minimum  payments are not in addition to the two percent  royalty
payments and if the two percent royalty exceeds the minimum payment amount,  the
two percent  royalty is payable.  The total amount  payable under this agreement
for fiscal 2002 was A$454.

     We paid A$23,575 for transport  services in fiscal 2002 to Sheeran Nominees
Pty Ltd, a company in which Mr. Sheeran is a shareholder. The transport services
were provided pursuant to an oral agreement and charged on a commercial rate per
kilometer.  The transport services were provided on an as required basis and the
agreement has no fixed term.

     Under a research agreement,  dated June 7, 2001, between Virotec,  Southern
Cross  University,  Nauveau  Technology  Investments  and  Professor  McConchie,
Professor  McConchie  provides  ongoing  technical  advice  to  Virotec  through
Southern  Cross  University.  Total  payments  for fiscal  2002 were  A$111,661.
Further details of this agreement are set out at Item 6C and Item 10C.

     Christine  Boland,  an  associate  of  Mr.  Sheeran,  provided  consultancy
services to Virotec in relation to marketing and communication and received fees
of A$56,596 in fiscal 2002.

     Fiona Davies-McConchie, the wife of Professor McConchie, provided technical
advice and other  services  to Virotec and  received  fees of A$43,664 in fiscal
2002.


C.   Interest of Experts and Counsel

Not Applicable

                                       51



ITEM 8.     FINANCIAL INFORMATION

A.   Financial Statements and Other Financial Information

     See pages F-1 - F-43 of this annual report.


Other Financial Information


Export Sales

Not Applicable

Material Litigation

     We are currently involved in the following litigation. We do not have legal
indemnity insurance in relation to any of the litigation:


(i)  We have  commenced  proceedings  against  Nationwide  News Pty  Limited  in
     relation to alleged  defamatory remarks published by the defendant in March
     2000. The action was taken after alleged  defamatory  allegations were made
     in  articles  written  in The  Australian  newspaper  that  questioned  the
     credibility  of the BauxsolTM  technology.  The  allegations  have all been
     shown as false as a consequence of the successful  testing of the BauxsolTM
     at the Mount  Carrington  mine  site.  We  believe,  based on legal  advice
     received,  that our  prospects  of  receiving a favorable  verdict are very
     good.

(ii) We have  commenced  proceedings  against  Jenny  Prahbu and Gerard  Stanley
     (trading as Ozequities) in relation to alleged defamatory remarks published
     by the  defendants  in March  2000.  The action was taken after the alleged
     defamatory  allegations  were made in articles  written in "The Ozequities"
     newsletter that  questioned the credibility of the BauxsolTM  technology at
     the Mount Carrington mine site. We believe, based on legal advice received,
     that our  prospects of receiving a favorable  verdict are very good.

     It is estimated  that  costs of  preparing  the cases  referred  to above
will be approximately A$100,000 and costs of the hearings approximately
A$250,000.

     In December  2001,  we were found to have  breached the  Protection  of the
Environment Operations Act 1997 by allowing polluted water to be discharged from
one of the dams at our Mount  Carrington  mine site in  November  1999 (when our
business was mining).  In July 2002,  we were fined  A$30,000 for this breach of
the Act.

Dividends

     Until we make a profit our directors will not be able to recommend that any
dividends be paid to our  shareholders.  Our directors will not resolve a formal
dividend  policy  for us until  we  generate  profits.  Our  directors'  current
intention is to reinvest our income in the continued  development  and operation
of our business.

B.   Significant Changes

     Since June 30, 2002, no matter of circumstance has arisen,  other than that
referred to elsewhere in this annual report,  the financial  statements or notes
thereto,  which has  significantly  affected,  or may  significantly  affect our
operations,  results of those operations,  or the state of our affairs in future
years.

                                       52


ITEM 9.     THE OFFER AND LISTING

A.   Offer and Listing Details

     Our  ordinary  shares  were  listed on the  Australian  Stock  Exchange  on
February 5, 1970.  Our ordinary  shares trade on the  Australian  Stock Exchange
under the symbol "VTI". The following tables sets forth:

     (1)  the reported low and high market  prices for our ordinary  shares as
          quoted on the Australian Stock Exchange:

          (a)  on annual basis for the five most recent fiscal years;
          (b)  on a quarterly basis for the each full financial quarter during
               fiscal 2001 and fiscal 2002 and the first quarter of fiscal
               2003; and
          (c)  on a monthly basis from June 2002 to November 2002.

     (2)  the average daily trading volume of our ordinary shares on the
          Australian Stock Exchange:

          (a)  on a quarterly basis for the each full financial quarter during
               fiscal 2001 and fiscal 2002 and the first quarter of fiscal
               2003; and
          (b)  on a monthly basis from June 2002 to November 2002.

<TABLE>
<CAPTION>

                                                     Price Per
                                                  Ordinary Share
                                             Annual High     Annual Low
              Fiscal Year Ended
                                                 (A$)            (A$)

     <S>                                         <C>               <C>
      June 30, 2002                             0.53              0.22
      June 30, 2001                             0.99              0.33
      June 30, 2000                             1.60              0.028
      June 30, 1999(1)                          0.22              0.06
      June 30, 1998(1)                          n/a               n/a

</TABLE>


(1)  Our shares were  suspended  from trading on the  Australian  Stock Exchange
     from  January  1997 to May  1999.  Due to  Virotec  experiencing  financial
     difficulty,  a secured creditor appointed a receiver and manager to Virotec
     in January 1997. Virotec's shares were then suspended from quotation on the
     Australian Stock Exchange because the receiver and manager, appointed under
     the Australian  Corporations  Act, took control of the company.  To protect
     our shareholders'  interests,  our directors  appointed an administrator to
     Virotec  in March  1997.  In July 1997,  the  secured  creditors  agreed to
     convert  their debt to equity and the receiver  and manager was retired.  A
     deed of  company  arrangement  was also  executed  in July 1997  (which was
     subsequently  amended in October  1997).  In October 1998,  pursuant to the
     deed of company  arrangement,  the secured  creditors were issued equity in
     Virotec and unsecured  creditors accepted a cash payment in satisfaction of
     the debts  owed by  Virotec.  Following  completion  of the deed of company
     arrangement the administrator  retired.  Following a public offering of our
     ordinary  shares  in March  1999,  trading  in our  ordinary  shares on the
     Australian Stock Exchange recommenced in May 1999.

                                       53


<TABLE>
<CAPTION>

                                                  Price Per
                                               Ordinary Share
                                                                          Average Daily
Fiscal Quarter                                High          Low          Trading Volume
                                              (A$)         (A$)         (number of shares)
<S>                                          <C>          <C>                <C>
June 30, 2003
First Quarter                                0.415        0.255              404,386

June 30, 2002
First Quarter                                 0.53         0.25              222,733
Second Quarter                               0.495        0.365              213,184
Third Quarter                                 0.38         0.33              227,935
Fourth Quarter                               0.355         0.22              227,483

June 30, 2001
First Quarter                                 0.99         0.53              306,591
Second Quarter                                0.77         0.33              658,562
Third Quarter                                 0.67        0.465              408,738
Fourth Quarter                                0.58         0.36              304,045

</TABLE>


<TABLE>
<CAPTION>


                                                      Price Per
                                                   Ordinary Share
                                                                               Average Daily
Month                                           High              Low          Trading Volume
                                                (A$)             (A$)        (number of shares)
<S>                                             <C>              <C>               <C>
June 2002                                       0.33             0.23              183,168
July 2002                                       0.32             0.32              224,833
August 2002                                    0.345             0.27              315,537
September 2002                                 0.415            0.255              697,264
October 2002                                    0.38            0.245              492,295
November 2002                                   0.33            0.255              385,052

</TABLE>
_________________

B.     Plan of Distribution

Not Applicable

                                       54


C.   Markets

     Our ordinary shares are currently  listed on the Australian  Stock Exchange
under the symbol "VTI." Our shares are also traded on the  Regulated  Unofficial
Market of the Frankfurt and Berlin Stock Exchanges,  and also on the Alternative
Investment  Market of the  London  Stock  Exchange.  Our ADSs are  eligible  for
trading on the  "over-the-counter"  market in the United States.  However, as of
November 30, 2002,  trading in our ADSs had not  commenced.  In fiscal 2002,  we
made an initial application to have our ordinary shares admitted to the official
list for  trading on the  Nasdaq  SmallCap  Market in the form of ADSs.  At this
time, we have decided to delay  seeking  approval to list our ADSs on the Nasdaq
SmallCap Market until we expand sales of the Technologies into North America. If
approved, we expect that our ADSs will trade under the symbol "VTIL".

D.   Selling Shareholders

Not Applicable


E.   Dilution


Not Applicable

F.   Expenses of the Issue

Not Applicable

                                       55



ITEM 10.     ADDITIONAL INFORMATION

A.   Share Capital

Not applicable

B.   Our Constitution

     We are a  public  company  registered  by  the  Australian  Securities  and
Investments  Commission.  We  were  registered  on  December  4,  1969,  and our
Australian  Company Number is 004 801 398. Our Australian  Business Number is 81
004  801  398.  The  rights  that  attach  to our  shares  are  detailed  in our
constitution and they are subject to the Australian Stock Exchange Listing Rules
and the Corporations Act of Australia.  Our current  constitution was adopted on
November 30, 1999. For a summary of the terms of our constitution,  see Item 10B
"Our  Constitution"  in  Virotec's  Form  20-F  dated  July 16,  2002,  which is
incorporated herein by reference.


C.   Material Contracts

     The following contracts are material to our business.

     Nauveau Technology Investments License Agreement

     A license  agreement,  dated March 14,  2001,  between  Nauveau  Technology
Investments  and Virotec.  The agreement  grants us the exclusive  rights to the
Technologies  for  exploitation  throughout  the world.  We are  required to pay
Nauveau  Technology  Investments a royalty of two percent of the gross  proceeds
received from  exploitation  of the  intellectual  property.  From July 1, 2006,
minimum  royalties  of  A$100,000  for the first year  increasing  by 10 percent
yearly to a minimum of A$250,000 per annum are payable.  These minimum  payments
are not in addition to the two percent  royalty  payments and if the two percent
royalty exceeds the minimum payment amount,  the two percent royalty is payable.
The agreement continues while any of Nauveau Technology  Investments' patents or
patent  applications remain in force or until the trade secrets no longer remain
confidential,  whichever is the later.  In addition,  Virotec may  terminate the
agreement by giving one year's notice of such termination.

     Agreement for purchase of Global Environment Corporation's environmental
consulting, laboratory analysis and fieldwork services business

     A business  sale  agreement,  dated  September  30,  2000,  between  Global
Environment  Corporation Pty Ltd, Virotec and Daniel Maxwell Drew, Alfred Norman
Ducksbury and David George Rowsell under which Virotec acquired the business and
trade  secrets  connected  with the business of the Consil Unit Trust trading as
Global  Environment  Corporation.  The purchase  price was  2,700,000  shares in
Virotec, a payment of A$400,000 and 2,700,000 options to subscribe for shares in
Virotec  exercisable  from the date of  completion  to September 30, 2003, at an
exercise  price of  A$1.00  per  share.  In  addition,  as part of the  purchase
consideration  and  pursuant  to a  separate  consulting  agreement,  the  three
principals of Global Environment Corporation provided us with A$150,000 worth of
environmental  consulting,  laboratory  analysis and fieldwork  services between
October 2000 and September 2001, after which the agreement was terminated.

     Agreement for Supply of Bauxite Refinery Residue with Eurallumina

     An agreement,  dated  November 30, 2001,  between  Virotec and  Eurallumina
S.p.A.  for the supply of bauxite refinery residue to Virotec for the purpose of
making the BauxsolTM  products.  This  agreement is subject to us satisfying all
necessary regulatory requirements for the production of the BauxsolTM at a plant
to be built near  Eurallumina's  alumina  production  plant in Sardinia,  Italy.
Eurallumina has agreed to supply the bauxite  refinery residue in an amount that
it produces at its alumina  production plant. The agreement does not provide for
a minimum  guaranteed  supply  and  Eurallumina  may  refuse  to supply  bauxite
refinery  residue  where  the  supply  of such  would  be  incompatible  with or
detrimental  to  Eurallumina's  production  of  alumina  or would  infringe  any
applicable  environmental  law or regulation.  Eurallumina  may not sell bauxite
refinery residue to a competitor of Virotec unless Virotec first obtains bauxite
refinery residue from another supplier for use in Europe.  The agreement expires
five  years  after  the date all  necessary  approvals  have been  obtained  and
Virotec's  processing  plant has been built. The agreement will be automatically
renewed for successive  one-year  periods  unless  terminated by either party by
written  notice at least four months prior to the renewal date. The agreement is
also  terminable  by  the  non-defaulting  party  on a  material  breach  of the
agreement that remains uncured 30 days after the notice thereof.

                                       56


     Research Agreement - Professor McConchie

     A research agreement,  dated June 7, 2001, among Southern Cross University,
Nauveau Technology  Investments,  Professor David McConchie and Virotec provides
for Professor David  McConchie,  through Southern Cross  University,  to conduct
research  relating  to  new  applications  for  the  BauxsolTM  technology.  The
agreement provides that the intellectual property resulting from the research is
owned by Nauveau  Technology  Investments  and is made available to us under the
license  agreement  with Nauveau  Technology  Investments.  The agreement is for
three years from  January 1, 2001 and  provides  for the funding of an associate
professor  at  Southern  Cross  University.  We  agreed  to pay  Southern  Cross
University  A$111,800  in year one (which  includes  set up costs of  A$13,590),
A$101,510  in year  two  and  A$104,815  in year  three.  The  agreement  may be
terminated in writing by all parties subject to payment of outstanding  fees and
costs to Southern Cross University.



     Advisory Agreement - Global Markets Capital Corporation

     Pursuant to an amended and restated  agreement  between  Virotec and Global
Capital Markets Corporation (formerly GTH Capital,  Inc.), dated April 30, 2002,
we  have  retained   Global  Markets   Capital   Corporation  to  serve  as  our
non-exclusive U.S. strategic and corporate advisor and it agreed to advise us on
accessing  potential sources of investment in the U.S. market and to guide us in
connection with the listing of our ADSs on Nasdaq.

     In April 2001, Global Capital Markets Corporation was issued 250,000 of our
ordinary shares at no cost following the execution of the original agreement. In
addition, in October 2001, Global Capital Markets Corporation was issued 400,000
options  at an  exercise  price of A$0.61  per share  that were  exercisable  on
issuance and expire in October 2004. Global Markets Capital Corporation receives
a monthly retainer of US$1,500.

     Upon the issuance of a research report prepared by an Australian investment
bank or research group,  Global Markets Capital  Corporation will be entitled to
be issued  with a further  200,000  options at an  exercise  price of A$0.61 per
share that will be  exercisable on issuance and will expire three years from the
date of issuance. If we list our ADSs on the Nasdaq SmallCap Market prior to the
expiration date of the agreement, which is April 1, 2003, Global Markets Capital
Corporation  will be entitled to be issued with a further  600,000  options that
will be  exercisable  on issuance  and will expire  three years from the date of
issuance.  The  exercise  price per share will be A$0.35,  which was the closing
price of our ordinary shares on the ASX on the date our  registration  statement
on Form 20-F went effective.

     In addition to the above  compensation,  if prior to the  expiration of the
agreement,  Global  Markets  Capital  Corporation  assists  us  in  identifying,
analyzing,  structuring or negotiating a joint venture,  merger,  consolidation,
stock or asset sale,  assumption of liabilities  or tender offer  arrangement or
any similar  transaction or any combination of the above,  which  transaction is
valued at  US$2,000,000 or more, it will be entitled to be issued with 1,000,000
options. The options will be exercisable on the date of issuance and will expire
three  years  after the date of  issuance.  The  options  will be issued with an
exercise  price per  share  equal to the  average  of the  closing  price of our
ordinary  shares on the ASX for the five trading days prior the  announcement of
the transaction.

                                       57

     The agreement also provides that we will reimburse  Global Markets  Capital
Corporation  for its  reasonable  out-of-pocket  expenses  related to performing
services on behalf of Virotec.

D.   Exchange Controls

     The Australian  dollar is convertible  into U.S. dollars at freely floating
rates, and there are currently no restrictions on the flow of Australian dollars
between  Australia and the United  States.  Unless the Reserve Bank of Australia
has given specific  approval under the Banking (Foreign  Exchange)  Regulations,
payments or transfers to or for the order of  prescribed  governments  and their
statutory authorities, agencies and entities and, in certain cases, nationals of
prescribed countries are subject to certain limited exceptions,  restrictions or
prohibitions.  The prescribed  governments and countries  currently  include the
governments  and countries of Iraq,  Libya,  the Federal  Republic of Yugoslavia
(Serbia  and  Montenegro),  Afghanistan  and  Angola.  No such  restrictions  or
prohibitions apply to the United States.

E.   Taxation

     The following is a summary of material U.S. federal income tax consequences
for U.S. holders, as defined below, and non-U.S. holders and material Australian
tax consequence to  non-Australian  resident  shareholders  of the  acquisition,
ownership and disposition of ADSs or shares and is based on the laws in force as
of the date of this annual  report.  Holders  are  advised to consult  their tax
advisers  concerning the overall tax consequences of the acquisition,  ownership
and  disposition of ADSs or ordinary shares in their  particular  circumstances.
This  discussion  relies in part on  representations  by the  depositary  in the
deposit  agreement and related documents and the assumption that each obligation
in the deposit  agreement and related  documents will be performed in accordance
with their terms.

U.S. Federal Income Tax Considerations

     This  section  describes  the material  United  States  federal  income tax
consequences of owning  Virotec's ADSs or shares.  It applies to you only if you
hold your ADSs or shares as capital  assets for tax purposes.  This section does
not apply to you if you are a member of a special  class of  holders  subject to
special rules, including:

     * a dealer in securities,

     * a trader in securities that elects to use a mark-to-market method of
       accounting for your securities holdings,

     * a tax-exempt organization,

     * a life insurance company,

     * a person liable for alternative minimum tax,

     * a person that actually or constructively owns 10% or more of the voting
       stock of Virotec,

     * a person that holds shares as part of a straddle or a hedging or
       conversion transaction, or

     * a person whose functional currency is not the U.S. dollar.

     This section is based on the Internal Revenue Code of 1986, as amended, its
legislative history,  existing and proposed  regulations,  published rulings and
court decisions,  as in effect as of the date hereof.  These laws are subject to
change, possibly on a retroactive basis.

                                       58


     You are a U.S. holder if you are a beneficial owner of ADSs or shares and
you are:

     * a citizen or resident of the United States,

     * a U.S. domestic corporation, or other entity treated as domestic
       corporation for U.S. federal income tax purposes,

     * an estate whose income is subject to United States federal income tax
       regardless of its source, or

     * a trust if a United States court can exercise primary supervision over
       the trust's administration and one or more United States persons are
       authorized to control all substantial decisions of the trust.


     A "non-U.S.  holder" is a beneficial  owner of ADSs or shares that is not a
United States person for United States federal income tax purposes.

     You should  consult your tax advisor with respect to the U.S.  federal,  as
well as state,  local and non-U.S.,  tax consequences to you of an investment in
ADSs or ordinary shares.

Ownership of ADSs in General

     A beneficial owner of ADSs will be treated as the beneficial owner of the
ordinary shares represented by such ADSs for U.S. federal income tax purposes.

Taxation of Dividends

     U.S. Holders.  Under the United States federal income tax laws, and subject
to the PFIC rules discussed below, if you are a U.S. holder, you must include in
your gross income the gross  amount of any  dividend  paid by Virotec out of its
current or  accumulated  earnings and profits (as  determined  for United States
federal income tax purposes).  You must include any Australian tax withheld from
the dividend payment in this gross amount even though you do not in fact receive
it. The  dividend  is ordinary  income that you must  include in income when you
receive the  dividend,  actually or  constructively.  The  dividend  will not be
eligible for the dividends-received deduction generally allowed to United States
corporations  in  respect  of  dividends   received  from  other  United  States
corporations.  The amount of the dividend  distribution that you must include in
your income as a U.S.  holder will be the U.S.  dollar  value of the  Australian
dollar payments made, determined at the spot Australian dollar/U.S.  dollar rate
on the date the dividend  distribution is includible in your income,  regardless
of whether the payment is in fact converted into U.S.  dollars.  Generally,  any
gain or loss resulting  from currency  exchange  fluctuations  during the period
from the date you include the dividend payment in income to the date you convert
the payment into US dollars will be treated as ordinary income or loss. The gain
or loss  generally  will be income or loss from sources within the United States
for foreign tax credit limitation  purposes.  Distributions in excess of current
and  accumulated  earnings and profits,  as determined for United States federal
income tax purposes,  will be treated as a non-taxable  return of capital to the
extent of your basis in the ADSs or shares and thereafter as capital gain.

     Subject to certain  limitations,  the Australian tax withheld in accordance
with the  Convention  between the Government of the United States of America and
the  Government  of  Australia  for the  Avoidance  of Double  Taxation  and the
Prevention of Fiscal  Evasion with Respect to Taxes on Income (the "Treaty") and
paid over to Australia  will be creditable  against your United  States  federal
income tax liability. To the extent a refund of the tax withheld is available to
you under Australian law or under the Treaty, the amount of tax withheld that is
refundable  will not be eligible for credit  against your United States  federal
income tax liability.

                                       59


     Dividends  will be income  from  sources  outside  the United  States,  but
generally  will be "passive  income" or  "financial  services  income"  which is
treated  separately  from other types of income for  purposes of  computing  the
foreign tax credit allowable to you.

     Non-U.S.  Holders. If you are a non-U.S.  holder,  dividends paid to you in
respect of ADSs or shares will not be subject to United  States  federal  income
tax unless the  dividends  are  "effectively  connected"  with your conduct of a
trade or business within the United States,  and the dividends are  attributable
to a permanent  establishment  that you maintain in the United States if that is
required by an applicable income tax treaty as a condition for subjecting you to
United States  taxation on a net income basis.  In such cases you generally will
be taxed in the same manner as a U.S.  holder.  If you are a corporate  non-U.S.
holder,  "effectively connected" dividends may, under certain circumstances,  be
subject to an additional  "branch  profits tax" at a 30% rate or at a lower rate
if you are eligible for the benefits of an income tax treaty that provides for a
lower rate.

Taxation of Capital Gains

     U.S. Holders.  Subject to the PFIC rules discussed below, if you are a U.S.
holder  and you sell or  otherwise  dispose  of your  ADSs or  shares,  you will
recognize  capital gain or loss for United  States  federal  income tax purposes
equal to the  difference  between the U.S.  dollar  value of the amount that you
realize and your tax basis,  determined in U.S. dollars, in your ADSs or shares.
Capital gain of a noncorporate  U.S. holder is generally taxed at a maximum rate
of 20% where the property is held more than one year, and 18% where the property
is held for more than five years.  The gain or loss will  generally be income or
loss from  sources  within the United  States for foreign tax credit  limitation
purposes.

     Non-U.S.  Holders. If you are a non-U.S. holder, you will not be subject to
United  States  federal  income  tax on gain  recognized  on the  sale or  other
disposition of your ADSs or shares unless:

     * the gain is "effectively connected" with your conduct of a trade or
       business in the United States, and the gain is attributable to a
       permanent establishment that you maintain in the United States if that is
       required by an applicable income tax treaty as a condition for subjecting
       you to United States taxation on a net income basis, or

     * you are an individual, you are present in the United States for 183 or
       more days in the taxable year of the sale and certain other conditions
       exist.

     If you are a corporate non-U.S. holder,  "effectively connected" gains that
you recognize may also, under certain circumstances, be subject to an additional
"branch  profits  tax" at a 30% rate or at a lower rate if you are  eligible for
the benefits of an income tax treaty that provides for a lower rate.

PFIC Rules

     We believe we will not be treated as a passive foreign investment  company,
or PFIC, for United States  federal income tax purposes for our current  taxable
year or for the foreseeable future. However, we may have been a PFIC in 2000 and
in prior years. The determination of whether or not Virotec is a PFIC for United
States  federal  income tax  purposes  is a factual  determination  that is made
annually  based on the types of income  Virotec earns and the value of Virotec's
assets,  both of  which  are  subject  to  change.  Therefore,  there  can be no
assurance that Virotec may not become a PFIC in any future taxable year.

     In general,  if you are a U.S. holder,  Virotec will be a PFIC with respect
to you if for any taxable year in which you held ADSs or shares:

     * at least 75% of Virotec's gross income for the taxable year is passive
       income or
     * at least 50% of the value, determined on the basis of a quarterly
       average, of Virotec's assets is attributable to assets that produce or
       are held for the production of passive income.

                                       60


     Passive income generally includes  dividends,  interest (including interest
on cash or cash  equivalents),  royalties,  rents (other than certain  rents and
royalties  derived in the active conduct of a trade or business),  the excess of
gains over losses from certain types of transactions  in commodities,  annuities
and gains from assets that produce passive income. If a foreign corporation owns
at  least  25% by  value  of the  stock  of  another  corporation,  the  foreign
corporation   is  treated  for   purposes  of  the  PFIC  tests  as  owning  its
proportionate  share of the assets of the other  corporation,  and as  receiving
directly its proportionate share of the other corporation's income.

     If Virotec is treated  as a PFIC,  and you are a U.S.  holder  that did not
make a  mark-to-market  election,  as  described  below,  you will be subject to
special rules with respect to:

     * any gain you realize on the sale or other disposition of your shares and
     * any excess distribution that Virotec makes to you (generally, any
       distributions to you during a single taxable year that are greater than
       125% of the average annual distributions received by you in respect of
       the shares during the three preceding taxable years or, if shorter, your
       holding period for the shares).

     Under these rules:

     * the gain or excess distribution will be allocated rateably over your
       holding period for the shares,
     * the amount allocated to the taxable year in which you realized the gain
       or excess distribution will be taxed as ordinary income,
     * the amount allocated to each prior year, with certain exceptions, will be
       taxed at the highest tax rate in effect for that year, and
     * the interest charge generally applicable to underpayments of tax will be
       imposed in respect of the tax attributable to each such year.

     Special  rules apply for  calculating  the amount of the foreign tax credit
with respect to excess distributions by a PFIC.

     If you own shares in a PFIC that are treated as marketable  stock,  you may
make a mark-to-market  election.  As long as shares are traded on the Australian
Stock Exchange or ADSs are traded on the Nasdaq SmallCap Market,  ADSs or shares
should  be  treated  as  marketable  stock  for this  purpose.  If you make this
election, you will not be subject to the PFIC rules described above. Instead, in
general,  you will include as ordinary  income each year the excess,  if any, of
the fair market value of your ADSs or shares at the end of the taxable year over
your adjusted basis in your ADSs or shares.  You will also be allowed to take an
ordinary  loss in respect of the excess,  if any, of the adjusted  basis of your
ADSs or shares over their fair market  value at the end of the taxable year (but
only to the extent of the net amount of previously  included  income as a result
of the  mark-to-market  election).  Your basis in the shares will be adjusted to
reflect any such income or loss amounts.

     Virotec does not intend to furnish you with the information  that you would
need in order to make a "qualified electing fund" election to include your share
of Virotec's income on a current basis.

     If you own ADSs or shares during any year that Virotec is a PFIC,  you must
file  Internal  Revenue  Service  Form 8621  that  describes  the  distributions
received on the ADSs or shares and the gain realized on the  disposition  of the
ADSs or shares.

                                       61


Backup Withholding and Information Reporting

     If you are a non-corporate U.S. holder, information reporting requirements,
on Internal Revenue Service Form 1099, generally will apply to:

     * dividend payments or other taxable distributions made to you within the
       United States, and
     * the payment of proceeds to you from the sale of shares effected at a
       United States office of a broker.

     Additionally,  backup  withholding  may apply to such payments if you are a
non-corporate U.S. holder that:

     * fails to provide an accurate taxpayer identification number,
     * is notified by the Internal Revenue Service that you have failed to
       report all interest and dividends required to be shown on your federal
       income tax returns, or
     * in certain circumstances, fails to comply with applicable certification
       requirements.

     If you  are a  non-U.S.  holder,  you  are  generally  exempt  from  backup
withholding and information reporting requirements with respect to:

     * dividend payments made to you outside the United States by Virotec or
       another non-United States payor; and
     * other dividend payments and the payment of the proceeds from the sale of
       shares effected at a United States office of a broker, as long as the
       income associated with such payments is otherwise exempt from United
       States federal income tax, and:
     * the payor or broker does not have actual knowledge or reason to know that
       you are a United States person and you have furnished the payor or
       broker:
     * an Internal Revenue Service Form W-8BEN or an acceptable substitute form
       upon which you certify, under penalties of perjury, that you are a non-
       United States person, or
     * other documentation upon which it may rely to treat the payments as made
       to a non-United States person in accordance with U.S. Treasury
       regulations, or
     * you otherwise establish an exemption.


     Payment  of the  proceeds  from the sale of ADSs or  shares  effected  at a
foreign  office  of a  broker  generally  will  not be  subject  to  information
reporting  or backup  withholding.  However,  a sale of ADSs or  shares  that is
effected  at a  foreign  office  of a  broker  will be  subject  to  information
reporting and backup withholding if:

     * the proceeds are transferred to an account maintained by you in the
       United States,
     * the payment of proceeds or the confirmation of the sale is mailed to you
       at a United States address, or
     * the sale has some other specified connection with the United States as
       provided in U.S. Treasury regulations,

unless the broker does not have actual knowledge or reason to know that you
are a United States person and the documentation requirements described above
are met or you otherwise establish an exemption.

                                       62

     In addition, a sale of ADSs or shares effected at a foreign office of a
broker will be subject to information reporting if the broker is:

     * a United States person,
     * a controlled foreign corporation for United States tax purposes,
     * a foreign person 50% or more of whose gross income is effectively
       connected with the conduct of a United States trade or business for a
       specified three-year period, or
     * a foreign partnership, if at any time during its tax year:
     * one or more of its partners are "U.S. persons", as defined in U.S.
       Treasury regulations, who in the aggregate hold more than 50% of the
       income or capital interest in the partnership, or
     * such foreign partnership is engaged in the conduct of a United States
       trade or business,

unless the broker does not have actual knowledge or reason to know that you
are a United States person and the documentation requirements described above
are met or you otherwise establish an exemption. Backup withholding will
apply if the sale is subject to information reporting and the broker has
actual knowledge that you are a United States person.

     You generally may obtain a refund of any amounts  withheld under the backup
withholding rules that exceed your income tax liability by filing a refund claim
with the United States Internal Revenue Service.

Australian Tax Considerations

     In this section we discuss the material Australian tax consequences related
to the acquisition,  ownership and disposal by the absolute beneficial owners of
ADSs, which are evidenced by ADRs, or ordinary shares.  This discussion is based
upon existing Australian tax law as of the date of this annual report,  which is
subject to change,  possibly  retrospectively.  This discussion does not address
all aspects of  Australian  income tax law which may be important to  particular
investors in light of their individual investment circumstances, such as ADSs or
shares held by investors  subject to special tax rules (for  example,  financial
institutions,  insurance  companies or tax exempt  organizations).  In addition,
this  summary  does not  discuss  any  non-Australian  or  Australian  state tax
considerations,  other  than  stamp  duty.  Prospective  investors  are urged to
consult their tax advisers  regarding the Australian and  non-Australian  income
and other tax  considerations of the purchase,  ownership and disposition of the
ADSs or shares. This summary is based upon the premise that the holder is not an
Australian  tax  resident.  U.S.  residents  are not required to file a separate
Australian tax return to recover  withholding tax,  however,  there may U.S. tax
requirements.

Nature of ADSs for Australian Taxation Purposes

     Ordinary  shares  underlying ADSs held by a U.S. holder will be treated for
Australian  taxation  purposes  as held under a 'bare  trust'  for such  holder.
Consequently,  the underlying  ordinary  shares will be regarded as owned by the
ADS holder for Australian  income tax and capital gains tax purposes.  Dividends
paid on the underlying ordinary shares will also be treated as dividends paid to
the  ADS  holder,  as the  person  beneficially  entitled  to  those  dividends.
Therefore,  in the  following  analysis  we  discuss  the  tax  consequences  to
non-Australian  resident  holders  of  ordinary  shares  which,  for  Australian
taxation purposes, will be the same as to U.S. holders of ADSs.

Taxation of Dividends

     Australia  operates a dividend  imputation system under which dividends may
be declared to be 'franked' to the extent of tax paid on company profits.  Fully
franked dividends are not subject to dividend withholding tax. Dividends payable
by the  company  to  non-Australian  resident  shareholders  will be  subject to
dividend  withholding  tax, to the extent the dividends are unfranked.  Dividend
withholding  tax will be imposed at 30%, unless a shareholder is a resident of a
country  with  which  Australia  has a  double  taxation  agreement.  Under  the
provisions of the current Double Taxation  Convention  between Australia and the
United States, the Australian tax withheld on unfranked  dividends paid by us to
which a resident  of the United  States is  beneficially  entitled is limited to
15%, unless the shares are effectively connected to a permanent establishment or
fixed base in Australia  through  which the  shareholder  carries on business or
provides independent personal services, respectively.

                                       63


Tax on Sales or other Dispositions of Shares - Capital gains tax

     Non-Australian  resident  shareholders  will not be subject  to  Australian
capital  gains tax on the gain made on a sale or other  disposal  of our shares,
unless they, together with associates, hold 10% or more of our issued capital at
any time during the five years before the disposal of the shares.

     If a  non-Australian  resident  shareholder did own a 10% or more interest,
that  shareholder  would be subject to Australian  capital gains tax to the same
extent as Australian  resident  shareholders.  The  Australian  Taxation  Office
maintains  the view that  Australian  capital  gains tax is not  limited  by the
Double Taxation  Convention between the United States and Australia.  Australian
capital gains tax applies to net capital gains at a taxpayer's marginal tax rate
but for certain  shareholders  a discount  of the capital  gain may apply if the
shares have been held for 12 months or more. For  individuals,  this discount is
50%. Net capital gains are calculated after reduction for capital losses,  which
may only be offset against capital gains.

Tax on Sales or other Dispositions of Shares - Shareholders Holding Shares on
Revenue Account

     Some non-Australian resident shareholders may hold shares on revenue rather
than on capital account, for example, share traders. These shareholders may have
the gains made on the sale or other  disposal  of the shares  included  in their
assessable income under the ordinary income provisions of the income tax law, if
the gains are sourced in Australia.

     Non-Australian resident shareholders assessable under these ordinary income
provisions  in respect of gains made on shares held on revenue  account would be
assessed  for  such  gains  at  the  Australian  tax  rates  for  non-Australian
residents,  which  start  at a  marginal  rate  of 29%.  Some  relief  from  the
Australian  income  tax  may  be  available  to  such  non-Australian   resident
shareholders under the Double Taxation  Convention between the United States and
Australia,  for  example,  because  the  shareholder  does not have a  permanent
establishment in Australia.

     To the extent an amount  would be  included  in a  non-Australian  resident
shareholder's  assessable income under both the capital gains tax provisions and
the ordinary  income  provisions,  the capital  gain amount  would  generally be
reduced,  so that the shareholder would not be subject to double tax on any part
of the income gain or capital gain.

Dual Residency

     If a  shareholder  were a resident of both  Australia and the United States
under those countries'  domestic  taxation laws, that shareholder may be subject
to tax as an Australian resident.  If, however, the shareholder is determined to
be a U.S.  resident for the purposes of the Double Taxation  Convention  between
the  United  States  and  Australia,  the  Australian  tax would be  subject  to
limitation  by  the  Double  Taxation  Convention.  Shareholders  should  obtain
specialist taxation advice in these circumstances.

Australian Death Duty

     Australia  does not have  estate  or death  duties.  No  capital  gains tax
liability is realized upon the inheritance of a deceased  person's  shares.  The
disposal of inherited  shares by  beneficiaries,  may,  however,  give rise to a
capital gains tax liability.

                                       64


F.   Dividends and Paying Agents

     Not applicable

G.   Statements by Experts

     Not applicable

H.   Documents on Display

     Those  persons  having a right to inspect  our  records  can  inspect  such
records by  contacting  our  principal  office at Building 50B  Pinewood  Drive,
Sanctuary Cove, Queensland,  Australia,  telephone:  61-7-5530-8014,  facsimile:
61-7-5530-8052.

     We are  subject  to the  information  requirements  of the U.S.  Securities
Exchange Act of 1934,  as amended,  and, in  accordance  therewith  file certain
reports and other information with the U.S. Securities and Exchange  Commission.
These materials,  including this annual report and the exhibits thereto,  may be
inspected and copied at the  Commission's  public  reference room in Washington,
D.C.  As a foreign  private  issuer we are  required  to make  filings  with the
Commission  by  electronic  means.  Any filings we make  electronically  will be
available  to the  public  over the  Internet  at the  Commission's  web site at
http://www.sec.gov.

                                       65



ITEM 11.     QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     We invest excess cash in  interest-bearing  accounts and time deposits with
licensed banks in Australia. We do not utilize derivative currency, financial or
commodity  instruments,  positions  or  transactions  in  any  material  manner.
Accordingly,  we believe that we are not subject to any material  risks  arising
from changes in interest  rates,  foreign  currency  exchange  rates,  commodity
prices,  equity prices or other market changes that affect market risk sensitive
instruments.  Since we do not invest cash in locations outside Australia, we are
not subject to cross-border risks.

     We currently  operate  principally in Australia,  and we will be subject to
certain foreign currency exposure.  Currently,  most of our revenue and expenses
are  denominated  in Australian  dollars.  We also have expenses  denominated in
English pounds, Euros and U.S. dollars. Due the fact that we opened an office in
Italy in February 2002 and a laboratory  in Italy in September  2002 and we plan
to construct  and operate a BauxsolTM  plant in Italy in fiscal 2004,  we expect
that more of our expenses will be  denominated  in Euros.  Currently,  we do not
hedge,  nor do we plan to hedge,  these Euro  denominated  expenses  against the
Australian dollar. If we are successful in commercializing the Technologies,  we
expect more of our revenues will be denominated in Euros and U.S. dollars, as we
plan to sell the  Technologies  in Europe  based on a Euro  price and  elsewhere
outside  Australia  on a U.S.  dollar  price.  When  and if we  enter  into  any
significant sales contracts  denominated in Euros or U.S. dollars we will decide
whether  to hedge  such  sales  against  the  Australian  dollar.  Historically,
currency  translation  gains and losses have been  reflected as  adjustments  to
shareholders'  equity, while transaction gains and losses have been reflected as
components  of income and loss.  Translation  gains and losses could be material
depending upon changes in the exchange rate relationships between the Australian
dollar and other currencies.


                                       66


ITEM 12.     DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not Applicable



                                       67


PART II


ITEM 13.     DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not Applicable


ITEM 14.     MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND THE
             USE OF PROCEEDS

Not Applicable


ITEM 15.     CONTROLS AND PROCEDURES

     Within the 90-day  period  prior to the filing of this annual  report there
have been no  significant  changes in the  Virotec's  internal  controls  or the
occurrence  of events or other  factors  that could  significantly  affect these
controls.



ITEM 16.     RESERVED


                                       68



PART III


ITEM 17.     FINANCIAL STATEMENTS

Not Applicable


ITEM 18.     FINANCIAL STATEMENTS

     See pages F-1 - F-43 of this annual report.


ITEM 19.     EXHIBITS



  Exhibit Number    Description of Exhibit

  1.1*              Constitution of Virotec International Ltd.

  4.1*              License agreement, dated March 14, 2001, between Nauveau
                    Technology Investments Limited and Virotec International
                    Ltd.

  4.2*              Business sale agreement, dated October 1, 2000, among
                    Global Environment Corporation Pty Ltd, Virotec Solutions
                    Pty Ltd and Mr. Daniel Maxwell Drew, Mr. Alfred Norman
                    Ducksbury and Mr. David George Rowsell under which
                    Virotec Solutions Pty Ltd acquired the business and trade
                    secrets connected with the business of the Consil Unit
                    Trust trading as Global Environment Corporation.

  4.3*              Research agreement, dated June 7, 2001, among Virotec
                    International Ltd, Southern Cross University, Nauveau
                    Technology Investments Limited and Professor David
                    McConchie.

  4.4*              Amended and restated Advisory Agreement, dated April 30,
                    2002, between Global Markets Capital Corporation and
                    Virotec International Ltd.

  4.5*              Employee Option Incentive Scheme approved by the
                    shareholders on November 29, 2000.

  4.6*              Agreement dated November 30, 2001, between Virotec
                    International Ltd and Eurallumina S.p.A. for the supply
                    of bauxite refinery residue (portions omitted pursuant to
                    an order granting confidential treatment; non-public
                    information has been filed with the SEC).

  8.1               The list of Virotec's subsidiaries is set forth in Note 9
                    to the Financial Statements included as part of this
                    annual report.

                    *Incorporated by reference to the exhibits filed with
                    Virotec's registration statement on Form 20-F dated July
                    16, 2002

                                       69


                                   SIGNATURES

     The registrant hereby certifies that it meets all of the requirements for
filing on Form 20-F and that it has duly caused and authorized the
undersigned to sign this annual report on its behalf.

                                              VIROTEC INTERNATIONAL LTD



                                              By:     /S/ BRUNO BAMONTE

                                                      Bruno Bamonte
                                                      Chief Financial Officer

                                              Date:     December 23, 2002


                                       70



                                 CERTIFICATION

I, Bruno Bamonte, certify that:


1.   I have reviewed this annual report on Form 20-F of Virotec International
     Ltd;

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

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


                                              Date:     December 23, 2002


                                              By:      /S / BRUNO BAMONTE

                                                       Bruno Bamonte
                                                       Chief Financial Officer





                                 CERTIFICATION

I, Brian Sheeran, certify that:


1.   I have reviewed  this annual  report on form 20-F of Virotec  International
     Ltd;

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

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


                                               Date:     December 23, 2002

                                               By:      /S/ BRIAN SHEERAN

                                                        Brian Sheeran
                                                        Executive Chairman and
                                                        Chief Executive Officer




                         VIROTEC INTERNATIONAL LIMITED
                          AND ITS CONTROLLED ENTITIES


                         INDEX TO FINANCIAL STATEMENTS


Independent Auditors' Report                                         F - 2

Statements of Financial Performance for each of the three years
ended 30 June 2002, 30 June 2001 and 30 June 2000,                   F - 3

Statements of Financial Position as at 30 June 2002 and
30 June 2001                                                         F - 4

Statements of Cash Flows for each of the three years
ended 30 June 2002, 30 June 2001 and 30 June 2000                    F - 5

Notes to and forming part of the Financial Statements                F - 6


The dollar amounts in this report are Australian dollars, unless otherwise
stated.


                                                                             F-1



                          INDEPENDENT AUDITORS' REPORT
                             TO THE SHAREHOLDERS OF
                           VIROTEC INTERNATIONAL LTD


We have audited the accompanying  consolidated  statements of financial position
of Virotec  International Ltd and its controlled entities as of 30 June 2002 and
2001, and the related consolidated  statements of financial performance and cash
flows  for  each of the  three  years in the  period  ended  30 June  2002,  all
expressed  in  Australian   dollars.   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 Australia and the United States of America.  Those standards  require that we
plan and  perform the audit to obtain  reasonable  assurance  about  whether the
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material   respects,   the  consolidated   financial  position  of  Virotec
International Ltd and its controlled  entities at 30 June 2002 and 2001, and the
consolidated results of their operations and cash flows for each of the years in
the  three  year  period  ended 30 June  2002,  in  conformity  with  accounting
principles generally accepted in Australia.

Accounting   principles   generally   accepted  in  Australia  vary  in  certain
significant respects from accounting principles generally accepted in the United
States of America.  The application of generally accepted accounting  principles
in the  United  States of America  would  have  affected  the  determination  of
consolidated  net loss for each of the years in the three year  period  ended 30
June 2002, and the determination of consolidated shareholders' equity at 30 June
2002 and 2001, to the extent summarised in note 26 to the consolidated financial
statements.


                                               KPMG

                                               Date: 30 September 2002
                                               Bundall, Australia

                                                                             F-2



              VIROTEC INTERNATIONAL LTD AND ITS CONTROLLED ENTITIES

      Statements of Financial Performance for each of the three years ended
                   30 June 2002, 30 June 2001 and 30 June 2000

<TABLE>
<CAPTION>

                                                                       Consolidated                             Company

                                 Note                          2002            2001           2000           2002           2001
                                                                A$              A$             A$             A$             A$
<S>                              <C>                           <C>           <C>               <C>          <C>           <C>
  Revenue from sale of goods                                   97,819        254,356              -         97,819        254,356

  Revenue from rendering of                                   800,047        511,644              -         16,069         55,382
  services

  Other revenues from                                         640,708        232,686         67,030        640,500        226,897
  operating activities

  Revenue from outside                                              -              -        151,461              -              -
  operating activities
                                                                                            218,491
                                                       __________________________________________________________________________

  Total Revenue                    2                        1,538,574        998,686                       754,388        536,635
                                                       __________________________________________________________________________

  Depreciation and                 2                        (275,418)      (205,447)       (80,172)       (61,492)       (64,799)
  amortisation expenses

  Research and development         2                      (1,804,866)      (921,126)      (647,462)    (1,104,723)      (921,126)
  expense

  Mining interests expense         2                        (489,839)      (339,414)       (58,699)      (489,839)      (339,414)

  Employee costs and directors     2
  remuneration                                            (1,291,421)    (3,168,756)      (557,615)    (1,139,824)    (3,027,607)

  Other expenses from
  operating activities                                    (2,793,437)    (1,802,258)    (1,067,849)    (3,074,917)    (1,622,909)
                                                       __________________________________________________________________________

  Total Expenses                   2                      (6,654,981)    (6,437,001)    (2,411,797)    (5,870,795)    (5,975,855)
                                                       __________________________________________________________________________
  Loss from ordinary
  activities before income tax                            (5,116,407)    (5,438,315)    (2,193,306)    (5,116,407)    (5,439,220)

  Income tax related to            5                                -              -              -              -              -
  operating loss
                                                       __________________________________________________________________________

  Net loss after income tax                               (5,116,407)    (5,438,315)    (2,193,306)    (5,116,407)    (5,439,220)
                                                       __________________________________________________________________________

  Basic loss per share             4                         ($0.034)       ($0.053)       ($0.030)
                                                        __________________________________________________________________________

</TABLE>


The statements of financial performance are to be read in conjunction with the
notes to the financial statements set out on pages F - 6 to F - 43.

                                                                             F-3



   _________________________________________________________________________

              VIROTEC INTERNATIONAL LTD AND ITS CONTROLLED ENTITIES

        Statements of Financial Position as at 30 June 2002 and June 2001
   _________________________________________________________________________

<TABLE>
<CAPTION>

                                                   Consolidated                    Company
                                 Note           2002           2001          2002          2001
Current Assets                                   A$             A$            A$            A$
<S>                              <C>          <C>             <C>         <C>              <C>
Cash assets                                 11,896,720      578,056     11,864,140       507,696
Receivables                        6           178,435      187,664         15,092        33,260
Inventory                          7            16,884      114,162         16,884       114,162
Other                              8           107,267      473,176        107,138       454,441
                                        ________________________________________________________

Total current assets                        12,199,306    1,353,058     12,003,254     1,109,559
                                        ________________________________________________________
Non-Current Assets

Receivables                        6           555,781      553,404      2,362,198     2,434,381
Other financial assets             9                 -            -         20,484             5
Property, plant and equipment     10         1,266,714    1,077,091        317,905       292,398
Intangibles                       11           849,635      952,565              -             -
                                        ________________________________________________________
Total non-current assets                     2,672,130    2,583,060      2,700,587     2,726,784
                                        ________________________________________________________
Total assets                                14,871,436    3,936,118     14,703,841     3,836,343
                                        ________________________________________________________

Current Liabilities

Payables                         12          780,348        479,542        635,400       388,805
Provisions                       13          109,831         76,572         87,183        67,534
                                        ________________________________________________________
Total current liabilities                    890,179        556,114        722,583       456,339
                                        ________________________________________________________
Non-Current Liabilities

Provisions                       13          790,000        610,000        790,000       610,000
                                        ________________________________________________________
Total non-current liabilities                790,000        610,000        790,000       610,000
                                        ________________________________________________________
Total liabilities                          1,680,179      1,166,114      1,512,583     1,066,339
                                        ________________________________________________________
Net assets                               $13,191,258     $2,770,004    $13,191,258    $2,770,004
                                        ________________________________________________________

Equity

Contributed equity               14       63,678,284     48,140,623     63,678,284    48,140,623
Reserve                          16                -      2,000,000              -     2,000,000
Accumulated losses               17     (50,487,026)   (47,370,619)   (50,487,026)  (47,370,619)
                                        ________________________________________________________

Total equity                             $13,191,258     $2,770,004    $13,191,258    $2,770,004
                                        ________________________________________________________

</TABLE>


The statements of financial position are to be read in conjunction with the
notes to and forming part of the financial statements, as set on pages F - 6 to
F - 43.

                                                                             F-4



   _________________________________________________________________________

              VIROTEC INTERNATIONAL LTD AND ITS CONTROLLED ENTITIES

    Statements of Cash Flows for each of the three years ended 30 June 2002,
                          30 June 2001 and 30 June 2000
   _________________________________________________________________________

<TABLE>
<CAPTION>

                                                                        Consolidated                           Company
                                              Note             2002            2001           2000           2002           2001
  Cash flows from operating activities                          A$              A$             A$             A$             A$
<S>                                           <C>               <C>            <C>              <C>          <C>            <C>
  Cash receipts in the course
  of operations                                               907,088        625,611          2,682        132,056        317,964
  Cash payments in the course
  of operations                                           (3,474,019)    (2,462,040)    (1,062,656)    (2,791,430)    (2,018,759)
  Interest received                                           438,377       173,353          60,326        438,374        173,353
  Interest paid                                                     -              -       (82,480)              -              -
                                                        _________________________________________________________________________

  Net cash used in operating                  21(b)       (2,128,554)    (1,663,076)    (1,082,128)    (2,221,000)    (1,527,442)
  activities
                                                        _________________________________________________________________________

  Cash flows from investing activities
  Payments for property, plant and equipment                  (456,189)       (57,037)     (76,658)      (162,515)       (49,132)
  Net proceeds from insurance settlement                              -              -      151,461              -              -
  Proceeds from sale of property, plant and
  equipment                                                      28,650              -       54,081         26,650              -
  Payment for exploration, evaluation &
  development                                                 (309,839)      (339,414)     (58,699)      (309,839)      (339,414)
  Payments for research & development                       (1,804,866)      (921,126)    (647,462)    (1,104,723)      (921,126)
  Part payment for acquisition of a business                          -      (250,000)            -              -              -
  Loans to controlled entities                                        -              -            -      (841,112)      (463,898)
  Investment in controlled entity                                     -              -            -       (20,479)              -
  Payment for security deposits                                 (2,377)      (483,972)            -        (2,377)      (483,972)
                                                        _________________________________________________________________________

  Net cash used in investing activities                     (2,544,621)    (2,051,549)    (577,277)    (2,414,395)    (2,257,542)
                                                        _________________________________________________________________________

  Cash flows from financing activities
  Proceeds from issues of shares                             17,138,457      1,288,989    3,690,515     17,138,457      1,288,989
  Share issue costs                                         (1,146,618)      (454,177)            -    (1,146,618)      (454,177)
                                                        _________________________________________________________________________

  Net cash provided by financing activities                  15,991,839        834,812    3,690,515     15,991,839        834,812
                                                        _________________________________________________________________________

  Net increase/(decrease) in cash held                       11,318,664    (2,879,813)    2,031,110     11,356,444    (2,950,172)
  Cash at beginning of the financial year                       578,056      3,457,869    1,426,759        507,696      3,457,869
                                                        _________________________________________________________________________

  Cash at the end of the financial year         21(a)        11,896,720        578,056    3,457,869     11,864,140        507,696
                                                        _________________________________________________________________________

</TABLE>


The statements of cash flows are to be read in conjunction with the notes to
and forming part of the financial statements, as set out on pages F - 6 to F
- 43.

                                                                             F-5

   _________________________________________________________________________

             VIROTEC INTERNATIONAL LTD AND ITS CONTROLLED ENTITIES

  Notes to and forming part of the financial statements for each of the three
            years ended 30 June 2002, 30 June 2001 and 30 June 2000

   _________________________________________________________________________

   _________________________________________________________________________

                1A. Statement of Significant Accounting Policies
   _________________________________________________________________________

The significant policies, which have been adopted in the preparation of this
financial report, are:

Basis of preparation

The  financial  report is a  general-purpose  financial  report,  which has been
prepared in accordance with Accounting Standards,  Urgent Issues Group Consensus
Views, other authoritative pronouncements of the Australian Accounting Standards
Board and the Corporations Act 2001.

Certain  disclosures  required  by the United  States  Securities  and  Exchange
Commission  in respect of foreign  registrants  have also been  included in this
report.

It has been  prepared  on the basis of  historical  costs and does not take into
account  changing  money  values or, fair values of  non-current  assets.  These
accounting  policies  have  been  consistently  applied  by each  entity  in the
consolidated  entity and,  except where there is a change in accounting  policy,
are consistent with those of the previous year.

Where  necessary,  comparative  information  has been  reclassified  to  achieve
consistency with current financial year amounts and other disclosures.

Reclassification of financial information

Some line items and sub-totals reported in the previous financial year have been
reclassified  and  repositioned  in the financial  statements as a result of the
first  time  application  on 1 July  2000 of the  revised  standards  AASB  1018
Statement of Financial Performance,  AASB 1034 Financial Report Presentation and
Disclosures and the new AASB 1040 Statement of Financial Position.

Adoption of these  standards has resulted in the transfer of the  reconciliation
of opening to  closing  accumulated  losses  from the face of the  statement  of
financial performance to Note 17.

Principles of consolidation

The  consolidated  financial  statements  of the  economic  entity  include  the
financial statements of the Company, being the parent entity, and its controlled
entities ("the consolidated entity"). Where the entity either began or ceased to
be controlled  during the financial year, the results are included only from the
date control  commenced  or up to the date control  ceased.  The  balances,  and
effects  of  transactions,   between   controlled   entities   included  in  the
consolidated financial statements have been eliminated.

Income tax - Note 5

The consolidated  entity adopts the liability  method of tax effect  accounting.
Income tax expense is  calculated  on operating  profit  adjusted for  permanent
differences  between  taxable and  accounting  income.  The tax effect of timing
differences,  which  arise from  items  being  brought  to account in  different
periods  for  income tax and  accounting  purposes,  is  carried  forward in the
balance sheet as a future income tax benefit or a provision for deferred  income
tax. Future income tax benefits are not brought to account unless realisation of
the asset is  assured  beyond  reasonable  doubt.  Future  income  tax  benefits
relating to tax losses are only  brought to account  when their  realisation  is
virtually certain.

                                                                             F-6


   _________________________________________________________________________

             1A. Statement of Significant Accounting Policies (cont)
   _________________________________________________________________________

Inventory - Note 7

Inventories  are carried at the lower of cost or net realisable  value.  Cost is
allocated  on  an  average  basis  and  includes  direct  material,  labour  and
transportation costs to the point of sale and other fixed and variable overheads
directly  related to the  production of the inventory.  Net realisable  value is
determined  on the basis of the entity's  normal  selling  pattern.  Expenses of
selling and  distribution to customers are estimated to establish net realisable
value.

Investments - Note 9

Investments in other  companies are carried at the lower of cost, or recoverable
amount being a directors'  valuation  based on market  values at the time of the
valuation. Dividends are brought to account as they are received.

Property, plant and equipment - Note 10

Items  of  property,  plant  and  equipment  are  recorded  at cost and with the
exception of freehold land are depreciated  over their  estimated  useful lives.
The depreciation rates used for each class of asset are as follows:

Plant and equipment      10% - 23%     straight line
Motor Vehicles           22.5%         diminishing value
Furniture and fittings   20% - 30%     straight line
Computer equipment       33%           straight line

New assets are  depreciated  from the date of  acquisition  or from the time the
assets are held ready for use.  Profits and losses on  disposal  of  non-current
assets are taken into account in determining the results for the year.

Acquisitions of assets

All assets  acquired  including  property,  plant and equipment and  intangibles
other than goodwill are initially  recorded at their cost of  acquisition at the
date of  acquisition,  being the fair value of the  consideration  provided plus
incidental  costs  directly   attributable  to  the  acquisition.   When  equity
instruments  are  issued as  consideration,  their  market  price at the date of
acquisition  is used as fair value.  Transaction  costs  arising on the issue of
equity  instruments  are recognised  directly in equity subject to the extent of
proceeds received, otherwise expensed.

Where  settlement  of any part of cash  consideration  is deferred,  the amounts
payable are recorded at their present value,  discounted at the rate  applicable
to the  company  if a  similar  borrowing  were  obtained  from  an  independent
financier under comparable terms and conditions.

The costs of assets  constructed  or  internally  generated by the  consolidated
entity,  other than  goodwill,  include the cost of materials and direct labour.
Directly attributable  overheads and other incidental costs are also capitalised
to the asset. Borrowing costs are capitalised to qualifying assets.

Expenditure,  including that on internally  generated assets other than research
and  development  costs, is only recognised as an asset when the entity controls
future economic benefits as a result of the costs incurred,  it is probable that
those future  economic  benefits will  eventuate,  and the costs can be measured
reliably. Costs attributable to feasibility and alternative approach assessments
are expensed as incurred.

Costs incurred on assets subsequent to initial  acquisition are capitalised when
it is  probable  that  future  economic  benefits  in excess  of the  originally
assessed performance of the asset will flow to the consolidated entity in future
years.  Costs that do not meet the criteria for  capitalisation  are expensed as
incurred.

                                                                             F-7


   _________________________________________________________________________

             1A. Statement of Significant Accounting Policies (cont)
   _________________________________________________________________________

Recoverable amount of non-current assets valued on cost basis

The carrying amounts of non-current assets valued on the cost basis are reviewed
to determine whether they are in excess of their  recoverable  amount at balance
date.  If the carrying  amount of a non-current  asset  exceeds its  recoverable
amount,  the  asset is  written  down to the lower  amount.  The  write-down  is
recognised  as an expense in the net profit or loss in the  reporting  period in
which it occurs.

Where a group  of  assets  working  together  supports  the  generation  of cash
inflows, recoverable amount is assessed in relation to that group of assets.

In assessing  recoverable  amounts of non-current assets the relevant cash flows
have not been  discounted  to their  present  value,  except where  specifically
stated.

Accounts payable - Note 12

Liabilities  are  recognised  for amounts to be paid in the future for goods and
services  received,  whether or not  billed to the  consolidated  entity.  Trade
accounts are normally settled within 45 days.

Rehabilitation costs - Note 13

Provision is made  progressively  in the financial  statements for the estimated
future mine site rehabilitation  costs necessary to meet the requirements of the
mining leases as notified by the relevant authorities.

These  costs  have  been  determined  on  the  basis  of  current  costs,  legal
requirements and technology.  Significant uncertainty exists as to the amount of
costs  that will be  incurred  due to the  impact of  changes  in  environmental
legislation.

Employee entitlements - Note 13

The provision for employee  entitlements  to wages,  salaries,  annual leave and
sick leave  represents  the amount which the  consolidated  entity has a present
obligation to pay resulting from employees'  services provided up to the balance
date. The provision has been calculated at nominal amounts based on current wage
and salary  rates and  includes  related  on-costs.  Contributions  to  employee
superannuation  accumulation  funds are charged as expenses as the contributions
are paid or become payable.

Research and development costs

Research and development  expenditure is expensed as incurred.  Where a grant is
received relating to research and development costs the grant will be recognised
as revenue.

Mining interests costs

Costs relating to the company's mining interests are expensed as incurred.

Borrowing costs

Borrowing  costs  includes  interest  and are  expensed as incurred  unless they
relate to qualifying assets.  Qualifying assets are assets, which take more than
12 months to get ready for their intended use or sale.  Where funds are borrowed
specifically  for the  acquisition,  construction  or production of a qualifying
asset,  the amount of borrowing costs  capitalised is those incurred in relation
to that borrowing,  net of any interest earned on those borrowings.  Where funds
are borrowed generally, borrowing costs are capitalised using a weighted average
capitalisation   rate.  No  borrowing   costs  have  been   capitalised  by  the
consolidated entity.

Intangible assets

All costs  associated  with  patents and  trademarks  are expensed in the period
incurred.

                                                                             F-8



   _________________________________________________________________________

             1A. Statement of Significant Accounting Policies (cont)
   _________________________________________________________________________

Goodwill - Note 11

Goodwill,  representing the excess of the purchase consideration plus incidental
costs  over the fair  value  of the  identifiable  net  assets  acquired  on the
acquisition  of a business,  is  amortised  over the period of time during which
benefits are expected to arise.

Goodwill is amortised on a straight  line basis over 10 years.  The  unamortised
balance of  goodwill  is reviewed  at least at each  reporting  date.  Where the
balance exceeds the value of expected future benefits, the difference is charged
to the statement of financial performance.

Goods and services tax

Revenues,  expenses  and  assets are  recognised  net of the amount of goods and
services tax (GST),  except where the amount of GST incurred is not  recoverable
from the Australian  Taxation  Office (ATO). In these  circumstances  the GST is
recognised  as part of the cost of  acquisition  of the assets or as part of the
item of expense.

Receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable  from, or payable to, the ATO is included as a
current asset or liability.

Cash flows are included in the statement of cash flows on a gross basis. The GST
of cash  flows  arising  from  investing  and  financing  activities  which  are
recoverable from, or payable to, the ATO are classified as operating cash flows.

Revenue recognition

Revenues are recognised at fair value of the  consideration  received net of the
amount of goods and services tax (GST).

Sale of goods

Sales  revenue  compromises  revenue  earned  (net  of  returns,  discounts  and
allowances)  from the provision of products to entities outside the consolidated
entity.  Sales  revenue  is  recognised  when  control  of goods  passes  to the
customer, which is normally upon delivery.

Rendering of services

Revenue from rendering services is recognised in the period in which the service
is provided.

Interest income

Interest income is brought to account as it accrues.

Other income

Other  income is brought  to account  when the  consolidated  entity's  right to
receive is established and the amount can be reliably measured.

Foreign currency transactions

Foreign currency transactions are translated to Australian currency at the rates
of exchange  ruling at the dates of the  transactions.  Amounts  receivable  and
payable in foreign  currencies  at balance date are  translated  at the rates of
exchange ruling on that date. Exchange  differences  relating to amounts payable
and receivable in foreign currencies are brought to account as exchange gains or
losses  in the  statement  of  financial  performance  in the year in which  the
exchange rates change.

Translation of controlled foreign operations

The  assets  and  liabilities  of  foreign  operations,   including   controlled
operations,  associates and joint  ventures,  that are integrated are translated
using the temporal  method.  Monetary assets and liabilities are translated into
Australian  dollars  at  rates  of  exchange  current  at  balance  date,  while
non-monetary  items and  revenue and expense  items are  translated  at exchange
rates current when the transaction  occurred.  Exchange  differences  arising on
translation  are brought to account in the  statement of financial  performance.
For integrated operations, the translated amounts for non-monetary assets, other
than inventory,  are compared to recoverable amounts translated at spot rates at
reporting  dates any excess is expensed,  unless a revaluation  reserve  balance
exists for non-current assets carried at fair value.

                                                                             F-9


   _________________________________________________________________________

             1A. Statement of Significant Accounting Policies (cont)
   _________________________________________________________________________

Use of estimates

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

Company information

Disclosures  included in the financial statements in relation to the company are
included for information purposes only.


                                                                            F-10


   _________________________________________________________________________

                        1B. Change in Accounting Policies
   _________________________________________________________________________

Earnings per share

The  consolidated  entity has applied AASB 1027  Earnings Per Share (issued June
2001) for the first time from 1 July 2001.  Basic and diluted earnings per share
("EPS") for the comparative period ended 30 June 2001 have been adjusted so that
the basis of calculation used is consistent with that of the current period.

Basic  EPS  earnings  are now  calculated  as net  profit or loss,  rather  than
excluding extraordinary items.

Diluted EPS earnings are now calculated by only adjusting the basic EPS earnings
for the after tax  effect of  financing  costs and the effect of  conversion  to
ordinary shares associated with dilutive potential ordinary shares,  rather then
including  notional  earnings on the funds that would have been  received by the
entity had the  potential  ordinary  shares been  converted.  The  dilutive  EPS
weighted  average  number of shares now includes  the number of ordinary  shares
assumed to be issued for no consideration in relation to the dilutive  potential
ordinary  shares,  rather than the total number of dilutive  potential  ordinary
shares.  The number of ordinary  shares  assumed to be issued now represents the
difference  between the number that would have been issued at the exercise price
and the number  that would have been  issued at the average  market  price.  The
identification of dilutive  potential ordinary shares is now based on net profit
or loss from  continuing  ordinary  operations,  not net  profit of loss  before
extraordinary  items and is applied on a cumulative  basis,  taking into account
the  incremental  earnings and  incremental  number of shares for each series of
potential ordinary shares.

Segment reporting

The  consolidated  entity has applied the revised  AASB 1005  Segment  Reporting
(issued in August 2000) for the first time from 1 July 2001. Individual business
segments have been identified on the basis of grouping of individual products or
services  subject  to  similar  risks and  returns.  The new  business  segments
reporting  are:  Environmental  Consulting,   Mining  Interests,   Research  and
Development and Unallocated.  Comparative  information has been restated for the
changes in definitions of segments.

                                                                            F-11


   _________________________________________________________________________

                   2. Operating Loss from Ordinary Activities
   _________________________________________________________________________

<TABLE>
<CAPTION>

                                                                        Consolidated                 Company
                                                    Notes      2002       2001         2000      2002      2001
                                                                A$         A$           A$        A$        A$
  REVENUE FROM ORDINARY ACTIVITIES
<S>                                                  <C>       <C>       <C>           <C>       <C>       <C>
  Revenue from operating activities
       Sale of goods from operating activities                97,819    254,356          -     97,819    254,356
       Rendering of services from
       operating activities                                  800,047    511,644          -     16,069     55,382

  Other revenue from operating activities
       Interest received or due and
       receivable from other parties                         438,374    173,353     61,610    438,374    173,353
       Sundry                                                 49,893     43,632      5,420     76,335     37,843

       Net foreign exchange gain                             123,791     15,701          -    123,791     15,701

       Proceeds from sale of                                  28,650          -          -      2,000          -
       non-current assets

  Revenue from outside operating activities
       Insurance recovery on damage to
       plant and equipment                                         -          -    151,461          -          -
                                                    ____________________________________________________________

       Total revenue from ordinary activities              1,538,574    998,686    218,491    754,388    536,635
                                                    ____________________________________________________________


</TABLE>

                                                                            F-12

   _________________________________________________________________________

               2. Operating Loss from Ordinary Activities (cont)
   _________________________________________________________________________

<TABLE>
<CAPTION>

                                                             Consolidated                 Company
                                        Notes       2002       2001       2000        2002        2001
                                                      A$         A$         A$          A$          A$
  <S>                                    <C>        <C>        <C>         <C>         <C>        <C>

  EXPENSES FROM ORDINARY ACTIVITIES
  Interest paid or due and payable to:
         - director related entities                   -          -     72,600            -          -
         - other parties                               -          -      9,879            -          -
         Depreciation of:
         - plant and equipment                   142,782    105,267     72,691       31,786     41,854
         - motor vehicles                          3,015      4,950          -        3,015      4,950
         - computer equipment                     17,995     12,377      1,541       17,995     12,377
         - office furniture and equipment          8,696      5,618      5,940        8,696      5,618
         Amortisation of goodwill                102,930     77,235          -            -          -
         Research & development
         expenditure written off               1,804,866    921,126    647,462    1,104,723    921,126
         Mining interests costs written off      309,839    239,414     58,699      309,839    239,414
         Cost of goods sold                      129,865    275,207          -      129,865    275,207
         Cost of rendering services              556,075    373,594          -        1,341     57,394
         Lease rentals                           116,343     64,854     19,878       92,343     55,854

         Doubtful debts - controlled
         entities                                      -          -          -      915,672    203,823
         Loss on disposal of
         non-current assets                       65,427      7,350    346,563       48,866      7,350
         Amounts set aside to
         provisions for
         - Rehabilitation of mining
         tenements                               180,000    100,000          -      180,000    100,000
         - Employee entitlements                  33,259     17,213      6,337       19,949      8,175
         Employee costs - administration
         and corporate                           556,940    548,444    115,117      416,521    548,444
         Legal Fees                              586,010    447,690    112,907      586,010    447,690
         Marketing expenses                      311,276    233,256      2,975      311,276    230,598
         Accounting and audit services  3        196,307    109,640     25,100      196,307    109,640
         Director remuneration         22        714,720    479,163    442,498      714,720    479,163
         Other administration and
         corporate costs                         818,636    414,603    471,610      781,871    227,178

  INDIVIDUALLY SIGNIFICANT ITEMS INCLUDED
  IN LOSS FROM OPERATING ACTIVITIES
         Options value to Directors    22              -  2,000,000          -            -  2,000,000
                                     _________________________________________________________________
         Total expenses from
         operating activities                  6,654,981  6,437,001  2,411,797    5,870,795  5,975,855
                                     _________________________________________________________________

</TABLE>

                                                                            F-13
   _________________________________________________________________________

                           3. Auditors' Remuneration
   _________________________________________________________________________


<TABLE>
<CAPTION>
                                                                                     Consolidation                Company
                                                                              2002       2001      2002       2001       2002
                                                                               A$         A$        A$         A$         A$
<S>                                                                          <C>        <C>       <C>        <C>        <C>
      Amounts received or due and receivable by the auditors for:
      Audit and review of financial reports                                  31,396     28,000    17,500     31,396     28,000
      Other services:
      - Independent reports for overseas listings                           128,540     50,500         -    128,540     50,500
      - Taxation and other advice                                             8,000     31,140     7,600      8,000     31,140
      - Independent report in relation to economic loss                      28,371          -         -     28,371          -
                                                                        ______________________________________________________

                                                                            196,307    109,640    25,100    196,307    109,640
                                                                        ______________________________________________________
</TABLE>

   _________________________________________________________________________

                          4. Earnings/(loss) per Share
   _________________________________________________________________________

The options outlined in Note 14 are potential ordinary shares, however all
potential ordinary shares at the end of the period were not dilutive and
accordingly diluted earnings/ (loss) per share is not disclosed.

<TABLE>
<CAPTION>
                                                                                          2002           2001           2000
  Earnings reconciliation                                                                  A$             A$             A$
<S>                                                                                       <C>            <C>            <C>
  Net loss                                                                             (5,116,407)    (5,438,315)    (2,193,306)
                                                                                       _________________________________________

  Basic earnings (loss)                                                                (5,116,407)    (5,438,315)    (2,193,306)
                                                                                       _________________________________________

                                                                                          number         number         number

  Weighted average number of ordinary shares used in the calculation of basic loss
  per share                                                                            150,430,225    102,158,210     72,649,703

</TABLE>

                                                                            F-14


   _________________________________________________________________________

                                   5. Taxation
   _________________________________________________________________________



<TABLE>
<CAPTION>
                                                                         Consolidation                           Company
                                                                  2002            2001          2002          2001          2002
                                                                   A$              A$            A$            A$            A$
<S>                                                              <C>            <C>            <C>          <C>          <C>
  (a) INCOME TAX EXPENSE
  Prima facie income tax benefit calculated at 30%
  (2001: 34%, 2000: 36%) on the operating loss                  1,534,922      1,849,026      789,590      1,534,922    1,849,334

  Increase in income tax benefit due to R&D expenditure            54,147         62,637       58,250         54,147       62,637

  Decrease in income tax benefit due to non tax
  deductible items:

  Directors remuneration paid by the issue of options                   -      (680,000)            -              -    (680,000)
  Professional fees (including legal) and commissions           (109,657)      (191,314)     (38,997)      (109,657)    (191,314)
  Provision for doubtful debts of controlled entities                   -              -            -      (274,702)     (69,300)
  Foreign exchange gain on funds raised                            37,137              -            -         37,137            -
  Other expenses                                                  (4,899)            900     (90,457)        (4,899)          900
  Future income tax benefit in respect of income tax
  losses and timing differences not brought to account        (1,511,650)    (1,041,249)    (718,386)    (1,236,948)    (972,257)
                                                             ____________________________________________________________________

  Income tax expense                                                    -              -            -              -            -
                                                             ____________________________________________________________________

  (b) FUTURE INCOME TAX BENEFIT NOT BROUGHT TO ACCOUNT

  The potential future income tax benefit calculated at 30% (2001: 34% 2000:
  30%) arising from the following items has not been recognised as an asset
  because recovery is not virtually certain:

  Tax losses carried forward                                        6,712,960    5,361,542    4,346,454    6,574,740    5,289,300
  Capital losses                                                       80,700      80,700        80,700       80,700       80,700
  Timing differences
  Accrued expenses                                                          -            -        6,000            -            -
  Employee entitlements                                                17,949        7,972          853       11,155        5,260
  Rehabilitation provision                                            252,000      198,000      168,000      252,000      198,000
  Prepaid expenses                                                   (32,180)      (5,700)      (1,043)     (31,141)         (80)
                                                             ____________________________________________________________________
  Net timing differences                                              237,769      200,272      173,810      232,014      203,180
                                                             ____________________________________________________________________
                                                                    7,031,429    5,642,514    4,600,964    6,887,454    5,573,180
                                                             ____________________________________________________________________
</TABLE>


The potential future income tax benefit will only be obtained if:

(i)  The relevant  company derives future  assessable  income of a nature and an
     amount sufficient to enable the benefit to be realised,  or the benefit can
     be utilised by another  company in the  consolidated  entity in  accordance
     with Division 170 of the Income Tax assessment act 1997;

(ii) The  consolidated  entity  continues  to  comply  with the  conditions  for
     deductibility imposed by the law; and

(iii)No changes in tax legislation  adversely affect the consolidated  entity in
     realising the benefit.

None of the tax losses carried forward have expiry dates.


                                                                            F-15


   _________________________________________________________________________

                                 6. Receivables
   _________________________________________________________________________

<TABLE>
<CAPTION>

                                                     Consolidated                Company
                                           Note    2002        2001          2002         2001
CURRENT                                             A$          A$            A$           A$
<S>                                              <C>        <C>             <C>          <C>
Debtors                                          178,435    187,664         15,092       33,260
                                                ________________________________________________
NON-CURRENT
Loan - Controlled entities                23           -          -      2,925,912    2,084,800
Provision for doubtful debts                           -          -    (1,119,495)    (203,823)
                                                ________________________________________________

                                                       -          -      1,806,417    1,880,977

Refundable security deposits and bonds           555,781    553,404        555,781      553,404
                                                ________________________________________________

                                                 555,781    553,404      2,362,198    2,434,381
                                                ________________________________________________


   _________________________________________________________________________

                                 7. Inventory
   _________________________________________________________________________


Finished goods at net realisable value            16,884    114,162         16,884      114,162
                                                 _______________________________________________



   _________________________________________________________________________

                                    8. Other
   _________________________________________________________________________

Costs associated with fundraising                      -    454,176              -      454,176
Other prepayments                                107,267     19,000        107,138          265
                                                ________________________________________________

                                                 107,267    473,176        107,138      454,441
                                                ________________________________________________

</TABLE>


The costs associated with fundraising in 2001 were written off against the
proceeds of issue which were received during the current period.

                                                                            F-16


   _________________________________________________________________________

                           9. Other financial assets
   _________________________________________________________________________

<TABLE>
<CAPTION>

 NON-CURRENT                                                         Consolidated             Company
                                                                   2002        2001      2002        2001
                                                                    A$          A$        A$          A$
<S>                                                                  <C>         <C>       <C>         <C>
 Shares in wholly owned controlled entities - at cost                -          -      20,484           5
                                                                  _______________________________________

                                                                     -          -      20,484           5
                                                                  _______________________________________

</TABLE>


<TABLE>
<CAPTION>


  NAMES OF CONTROLLED ENTITIES                                  Date Acquired           Number of     2002 % held    2001 % held
                                                                                          shares
<S>                                                                   <C>                     <C>              <C>           <C>

  Virotec Global Solutions Pty Ltd (1)                           15 August 1998                   2            100            100
  Virotec Holdings Pty Ltd (1)                                  20 October 2000                   1            100            100
  Virotec Waste Management Pty Ltd (formerly
  Virotec Mining  NSW Pty Ltd) (1)                              20 October 2000                   1            100            100
  Virotec Development Pty Ltd (formerly Virotec Mining Qld
  Pty Ltd) (1)                                                  20 October 2000                   1            100            100
  Virotec USA Inc. (2)                                          23 January 2002                   1            100              -
  Virotec Italia Srl (3)                                           1 March 2002              20,478            100              -

</TABLE>

(1)  these  entities are  incorporated  and carry on business in Australia.  The
     entities  are "small  proprietary  companies"  and are not  required  to be
     audited for statutory purposes.

(2)  this  entity is  incorporated  and  carries on  business in the USA. It was
     acquired for $1.00  representing  the issued  capital of the company at the
     time  of  acquisition.   It  was  a  non-trading  entity  at  the  time  of
     acquisition.

(3)  this  entity is  incorporated  and  carries on  business  in Italy.  It was
     acquired for $20,779  representing the issued capital of the company at the
     time  of  acquisition.   It  was  a  non-trading  entity  at  the  time  of
     acquisition.

                                                                            F-17


   _________________________________________________________________________

                       10. Property, Plant and Equipment
   _________________________________________________________________________

<TABLE>
<CAPTION>


                                                                   Consolidated                 Company
                                                                 2002          2001        2002        2001
                                                                  A$            A$          A$          A$
<S>                                                          <C>           <C>          <C>         <C>
PROPERTY PLANT AND EQUIPMENT
Freehold land and buildings, at cost                         95,000        95,000       95,000      95,000
Less: Amounts written off                                   (95,000)      (95,000)     (95,000)    (95,000)
                                                          _________________________________________________

                                                                   -           -             -           -
                                                          _________________________________________________

Plant and equipment, at cost                               1,439,653    1,305,534      320,376      465,334
Less: Accumulated depreciation                              (354,853)    (304,157)    (184,385)    (240,747)
                                                          _________________________________________________

                                                           1,084,800    1,001,377      135,991      224,587
                                                          _________________________________________________

Motor vehicles, at cost                                       52,457       37,978       52,457       37,978
Less: Accumulated depreciation                               (29,580)     (26,565)     (29,580)     (26,565)
                                                          _________________________________________________

                                                              22,877       11,413       22,877       11,413
                                                          _________________________________________________

Computer equipment, at cost                                   88,384       51,206       88,384       43,303
Less: Accumulated depreciation                               (31,817)     (12,377)     (31,817)     (12,377)
                                                          _________________________________________________

                                                              56,567       38,829       56,567       30,926
                                                          _________________________________________________

Office furniture and equipment, at cost                      124,297       38,601      124,297       38,601
Less: Accumulated depreciation                               (21,825)     (13,129)     (21,825)     (13,129)
                                                          _________________________________________________

                                                             102,472       25,472      102,472       25,472
                                                          _________________________________________________

Total property, plant and equipment, at net book value     1,266,714    1,077,091      317,905      292,398
                                                          _________________________________________________

</TABLE>

                                                                            F-18


   _________________________________________________________________________

                    10. Property, Plant and Equipment (cont)
   _________________________________________________________________________

Reconciliations

Reconciliations of the carrying amounts for each class of property, plant and
equipment are set out below:

<TABLE>
<CAPTION>

                                                    Consolidated                 Company
                                                 2002           2001        2002        2001
Plant & Equipment                               A$             A$          A$          A$
<S>                                          <C>            <C>         <C>         <C>
Carrying amount at beginning of year         1,001,377      273,043     224,587     273,043
Additions                                      312,378      840,200      18,704           -
Disposals                                     (94,076)      (6,599)    (75,514)     (6,599)
Depreciation                                 (142,782)    (105,267)    (31,786)    (41,857)
Reclassification                                 7,903            -           -           -
                                           _________________________________________________

Carrying amount at end of year               1,084,800    1,001,377     135,991     224,587
                                           _________________________________________________
Motor Vehicles
Carrying amount at beginning of year            11,413            -      11,413           -
Additions                                       14,479       16,363      14,479      16,363
Depreciation                                   (3,015)      (4,950)     (3,015)     (4,950)
                                           _________________________________________________

Carrying amount at end of year                  22,877       11,413      22,877      11,413
                                           _________________________________________________
Computer Equipment
Carrying amount at beginning of year            38,829       20,476      30,926      20,476
Additions                                       43,636       30,730      43,636      22,827
Depreciation                                  (17,995)     (12,377)    (17,995)    (12,377)
Reclassification                               (7,903)            -           -           -
                                           _________________________________________________

Carrying amount at end of year                  56,567       38,829      56,567      30,926
                                           _________________________________________________
Office Furniture & Equipment
Carrying amount at beginning of year            25,472       21,898      25,472      21,898
Additions                                       85,696        9,942      85,696       9,942
Disposals                                            -        (751)           -       (751)
Depreciation                                   (8,696)      (5,618)     (8,696)     (5,618)
                                           _________________________________________________

Carrying amount at end of year                 102,472       25,472     102,472      25,472
                                           _________________________________________________

</TABLE>
                                                                            F-19

   _________________________________________________________________________

                                11. Intangibles
   _________________________________________________________________________

<TABLE>
<CAPTION>
                                          Consolidated              Company
                                      2002           2001        2002     2001
                                       A$             A$          A$       A$
<S>                                <C>          <C>              <C>     <C>
   NON CURRENT
   Goodwill                        1,029,800    1,029,800          -       -
   Accumulated Amortisation        (180,165)     (77,235)          -       -
                                  ___________________________________________

                                     849,635      952,565          -       -
                                  ___________________________________________

Goodwill arose from the acquisition by the Company of an environmental
consultancy business. The recoverability of this goodwill is supported by
cashflow projections prepared by the directors and reviewed each year. If the
cashflow projections are not achieved it may be necessary to write off part
or all of the carrying value of goodwill.


   _________________________________________________________________________

                              12. Accounts Payable
   _________________________________________________________________________

   CURRENT
   Trade Creditors and accruals     780,348    479,542    635,400    388,805
                                   _________________________________________


   _________________________________________________________________________

                                 13. Provisions
   _________________________________________________________________________

  CURRENT
  Rehabilitation                    50,000     50,000     50,000     50,000
  Employee Entitlements             59,831     26,572     37,183     17,534
                                   _________________________________________

                                   109,831     76,572     87,183     67,534
                                   _________________________________________
  NON-CURRENT
  Rehabilitation                   790,000    610,000    790,000    610,000
                                   _________________________________________

  Number of employees at year end       31         17         11          8
                                    _________________________________________

</TABLE>

                                                                            F-20

   _________________________________________________________________________

                             14. Contributed Equity
   _________________________________________________________________________

<TABLE>
<CAPTION>

                                                                          Consolidated                           Company
                                                                2002           2001          2000          2002          2001
                                                                 A$             A$            A$            A$            A$
<S>                                                             <C>            <C>            <C>          <C>           <C>
  (a) ISSUED AND PAID UP CAPITAL
  Opening balance 109,950,709 ordinary shares issued
  (2001: 93,056,513 ordinary shares, 2000:63,084,967)        48,140,623     45,105,835     40,699,942   48,140,623    45,105,835

  Add the following share issues:-

  27,514,400 ordinary shares issued at GBP0.14 (A$0.384)
  per share pursuant to a prospectus issued in the United
  Kingdom                                                      10,570,861             -             -    10,570,861             -

  Options exercised at A$0.20 per share resulting in the
  issue of 26,509,919 ordinary shares                           5,301,984             -             -     5,301,984             -

  Options exercised at A$0.30 per share resulting in the
  issue of 4,218,773 ordinary shares                            1,265,632             -             -     1,265,632             -

  Options exercised at A$0.20 per share resulting in the
  issue of 3,938,945 ordinary shares                                    -       787,788             -             -       787,788

  2,700,000 ordinary shares issued on 30 September 2000,
  at A$0.60 per share, as part consideration of the
  acquisition price for a business acquisition                          -     1,620,000             -             -     1,620,000

  Options exercised at A$0.30 per share resulting in the
  issue of 4,000 ordinary shares                                        -         1,200             -             -         1,200

  To consultants in respect of fees:-                                   -                           -             -

  1,250 shares at A$0.64 per share on 25 January 2001                   -           800             -             -           800
  250,000 shares at A$0.50 per share on 17 April 2001                   -       125,000             -             -       125,000
  10,000,000 ordinary shares due to the conversion of
  convertible notes                                                     -       500,000             -             -       500,000

  150,000 ordinary shares on 25 October 1999, at A$0.04
  per share, to pay consulting fees                                     -             -         6,000             -             -

  2,340,000 ordinary shares at A$0.05 per share on 9
  December 1999                                                         -             -       117,000             -             -

  To employees in respect of bonuses: -

  200,000 shares at A$0.05 per share on 9 December 1999                 -             -        10,000             -             -
  12,000 shares at A$0.42 per share on 27 March 2000                    -             -         5,000             -             -

  To consultants in respect of fees: -

  500,000 shares at A$0.05 per share on 3 February 2000                 -             -        25,000             -             -
  5,200 shares at A$0.96 per share on 6 April 2000                      -             -         5,000             -             -
  The payment of outstanding calls on 3,000,000 partly
  paid shares                                                           -             -       432,000             -             -

  10,000,000 ordinary shares due to the conversion of
  convertible notes                                                     -             -       500,000             -             -

</TABLE>

                                                                            F-21
   _________________________________________________________________________

                         14. Contributed Equity (cont)
   _________________________________________________________________________

<TABLE>
<CAPTION>


                                                                              Consolidated                           Company
                                                                   2002           2001          2000           2002          2001
                                                                    A$             A$            A$             A$            A$
  <S>                                                               <C>           <C>        <C>               <C>           <C>
  Options exercised at A$0.20 per share resulting in the
  issue of 16,286,565 ordinary shares                                  -             -     3,257,315              -             -

  Options exercised at A$0.30 per share resulting in the
  issue of 4,000 ordinary shares                                       -             -         1,200              -             -

  473,781 ordinary shares on 9 December 1999, at A$0.10
  per share, to repay secured borrowings                               -             -        47,378              -             -

  Less share issue costs                                     (1,600,816)             -                  (1,600,816)             -
                                                            ______________________________________________________________________
  Closing balance 168,193,841 ordinary shares issued and
  outstanding (2001: 109,950,709 ordinary shares, 2000:
  93,056,513)                                                 63,678,284    48,140,623    45,105,835     63,678,284    48,140,623
                                                            ______________________________________________________________________

</TABLE>



Holders of ordinary shares are entitled to receive dividends as declared from
time to time and are entitled to one vote per share at shareholders'
meetings. In the event of winding up of the Company ordinary shareholders
rank after all other shareholders and creditors and are fully entitled to any
proceeds of liquidation.

(b)     CONVERTIBLE NOTES

On 16 March 1999 shareholders approved the issue of two convertible notes.
Subsequently, these notes were converted into 10 notes, each convertible on
or before 30 June 2001 into 2,000,000 ordinary shares at a price of
$A100,000, with one free attached option for each share issued. Each option
is to acquire a further share in the Compnay at 20 Australian cents each
within two years of the conversion of the convertible note. On 24 February
2000, 5 convertible notes were converted to 10,000,000 ordinary shares and
10,000,000 options. On 28 February 2001, the remaining 5 notes were converted
to 10,000,000 ordinary shares and 10,000,000 options.

No convertible notes remained outstanding at 30 June 2002 and 2001.


                                                                            F-22

   _________________________________________________________________________

                         14. Contributed Equity (cont)
   _________________________________________________________________________

<TABLE>
<CAPTION>


                                                                        2002           2001          2000

  (c) OPTIONS                                                          Number         Number        Number
  <S>                                                                   <C>             <C>           <C>
  The following share options are on issue at 30 June 2002:-
  Exercisable on or before 30 November 2000 at A$020 each                 -              -         700,000
  Exercisable on or before 31 December 2001 at A$0.20 each                -     21,055,089      24,294,084
  Exercisable on or before 31 March 2002 at A$0.20 each                   -     15,000,000      10,000,000
  Exercisable on or before 31 December 2001 at A$0.30 each                -      4,372,456       4,376,406
  Exercisable on or before 31 December 2001 at A$1.00 each                -        500,000               -
  Exercisable on or before 30 June 2002 at A$1.00 each                    -        250,000               -
  Exercisable on or before 30 June 2002 at A$2.00 each                    -        500,000               -
  Exercisable on or before 30 November 2002 at A$0.75 each        1,000,000      1,000,000               -
  Exercisable on or before 31 August 2003 at A$1.00 each          2,700,000      2,700,000               -
  Exercisable on or before 30 November 2003 at A$1.00 each          900,000        900,000               -
  Exercisable on or before 28 February 2003 at A$0.20 each       10,000,000     10,000,000               -
  Exercisable on or before 30 November 2003 at A$0.56 each          850,000        850,000               -
  Exercisable on or before 28 February 2004 at A$0.47 each          200,000              -               -
  Exercisable on or before 30 July 2005 at A$1.00 each            1,100,000              -               -
  Exercisable on or before 30 July 2005 at A$0.47 each              150,000              -               -
  Exercisable on or before 31 October 2005 at A$0.61 each           400,000              -               -
                                                               ___________________________________________

                                                                 17,300,000     57,127,545      39,370,490
                                                               ___________________________________________

</TABLE>


(a)  Stock option transactions with employees during the years ended 30 June
     2002, 2001 and 2000 were as follows:

<TABLE>

                                                          Number of options               Weighted average exercise price
                                                          2002       2001    2000              2002     2001    2000
<S>                                                    <C>            <C>     <C>               <C>       <C>     <C>
  Options outstanding at beginning of year             500,000          -       -             $0.78        -       -
  Granted                                              200,000    500,000       -             $0.47    $0.78       -
  Exercised                                                  -          -       -                 -        -       -
  Expired/forfeited                                  (250,000)          -       -             $2.00        -       -
                                                     _____________________________         ___________________________

  Options outstanding at end of year                   450,000    500,000       -             $0.56    $0.78       -
                                                     _____________________________         ___________________________
</TABLE>

All options outstanding are exercisable and were granted with an exercise
price in excess of market price on the date of grant.

                                                                            F-23

   _________________________________________________________________________

                         14. Contributed Equity (cont)
   _________________________________________________________________________

(b)  Stock option transactions with non-employees during the years ended 30 June
     2002, 2001 and 2000 were as follows:

<TABLE>
<CAPTION>

                                                            Number of options             Weighted average exercise price
                                                   2002           2001            2000          2002     2001     2000
     <S>                                          <C>            <C>             <C>            <C>      <C>      <C>
  Options outstanding at beginning of year   56,627,545     39,370,490      45,642,377         $0.30    $0.21    $0.21
  Granted                                     1,650,000     21,200,000      10,473,781         $0.69    $0.43    $0.20
  Exercised                                (30,728,707)    (3,942,945)    (16,290,565)         $0.22    $0.20    $0.20
  Expired/forfeited                        (10,698,838)              -       (455,103)         $1.47        -    $0.20
                                           ____________________________________________     __________________________

  Options outstanding at end of year         16,850,000     56,627,545      39,370,490         $0.44    $0.30    $0.21
                                           ____________________________________________     __________________________



                                            Weighted average exercise price                   Weighted average fair value
                                                 2002     2001     2000                           2002     2001     2000
  Exercise price in excess of
  market price on the date of grant             $0.90    $1.00    $0.20                          $0.07    $0.07    $0.00
                                           ______________________________                      __________________________
  Exercise price less than
  market price on the date of grant             $0.47    $0.20        -                          $0.15    $0.42        -
                                           ______________________________                      __________________________


</TABLE>


<TABLE>
<CAPTION>

  Range of exercise prices      Number of options       Weighted average
                                                         exercise price
<S>                                    <C>                         <C>
  $0.20 - $0.50                       10,350,000                  $0.21
  $0.51 - $0.75                        2,250,000                  $0.65
  $1.00                                4,700,000                  $1.00
                                     __________________________________

                                      17,300,000                  $0.48
                                     __________________________________

</TABLE>


All options outstanding are exercisable.


                                                                            F-24
   _________________________________________________________________________

                          15. Option Incentive Scheme
   _________________________________________________________________________

Option Incentive Scheme

The  Company has an option  incentive  scheme  which was  approved at the annual
general meeting on 29 November 2000.

The plan provides for eligible employees to receive options over ordinary shares
each year for no  consideration.  The board  may from  time to time  resolve  to
invite eligible  employees to apply for a number of options as determined by the
board. The maximum number of options able to be issued under the scheme is 5% of
the total number of shares on issue.  Each option is convertible to one ordinary
share.  There are no voting  rights  attached to the unissued  ordinary  shares.
Voting rights will be attached to the unissued  ordinary shares when the options
have been exercised. The exercise price of the options, determined in accordance
with the  rules of the  plan,  is based  on the  weighted  average  price of the
Company's  shares traded  during the five  business  days  preceding the date of
granting the option.

All options  expire on the earlier of their  expiry date or  termination  of the
employee's  employment.  The  plan  does  not  represent  remuneration  for past
services.

Unissued ordinary shares of the Company under option are:

<TABLE>
<CAPTION>

        Issue date        Expiry date   Exercise price    Options issued      Total options              Unissued
                                            A$                                exercised and              options
                                                                              shares issued              available
                                                                             2002        2001       2002         2001
      <S>                      <C>          <C>               <C>             <C>        <C>         <C>         <C>
      11 April 2001    30 November 2003    0.56              850,000           -           -       850,000      850,000
      20 July 2001     28 February 2004    0.47              200,000           -           -       200,000            -

</TABLE>


The market value of shares under these options at 30 June 2002 was A$0.24.

No options  issued under the option  incentive  scheme were exercised or expired
during the year ended 30 June 2002.


                                                                            F-25

   _________________________________________________________________________

                                  16. Reserves
   _________________________________________________________________________

<TABLE>
<CAPTION>
                                                                              Consolidated                       Company
                                                                          2002           2001      2000        2002          2001
  OPTION RESERVE                                                           A$             A$        A$          A$            A$
  <S>                                                                    <C>              <C>     <C>           <C>           <C>
  Balance at beginning of year                                         2,000,000            -       -      2,000,000            -

  Add balance resulting from issue of options to the executive
  directors                                                                    -    2,000,000       -              -    2,000,000

  Less transfer to accumulated losses                                (2,000,000)            -       -    (2,000,000)            -
                                                                    _____________________________________________________________

  Total Reserves                                                               -    2,000,000       -              -    2,000,000
                                                                    _____________________________________________________________

</TABLE>


The Option  Reserve  includes the excess of the fair value of the options at the
date the options were issued over the consideration received. These options were
exercised  or  expired  during  the  period  and the  option  reserve  has  been
transferred to accumulated losses.

   _________________________________________________________________________

                             17. Accumulated losses
   _________________________________________________________________________

<TABLE>
<CAPTION>

                                                 2002            2001            2000           2002              2001
                                                 A$              A$              A$              A$                A$
<S>                                          <C>             <C>             <C>             <C>             <C>
  Accumulated losses at beginning of year    (47,370,619)    (41,932,304)    (39,738,998)    (47,370,619)    (41,931,399)
  Net loss after income tax                   (5,116,407)     (5,438,315)     (2,193,306)     (5,116,407)     (5,439,220)
  Transfer from option reserve                  2,000,000               -               -       2,000,000               -
                                            _____________________________________________________________________________

  Accumulated losses at end of year          (50,487,026)    (47,370,619)    (41,932,304)    (50,487,026)    (47,370,619)
                                            _____________________________________________________________________________

</TABLE>

   _________________________________________________________________________

                                  18. Segments
   _________________________________________________________________________

INDUSTRY SEGMENTS

The   consolidated   entity  operates   primarily  in  3  industry   segments  -
environmental  consulting,  mining  interests  and research and  development  of
environmental remediation.  The segments are determined based on several factors
including nature of activities, customers and products/services provided.

Environmental Consulting encompasses the following areas:

   * Laboratory analysis - operations of a laboratory in Melbourne, Australia
     providing chemical analysis.

   * Fieldwork services - provision of on-site environmental management systems.

   * Consulting services - provision of specialist advice on cleaner production,
     waste management and reversing processes that generate waste. Revenue from
     sales of the Bauxsol TM or other technologies are recognised in this
     segment.

Mining  Interests - this segment  consists of the  consolidated  entity's mining
tenements  and  other  mining  assets.  The  tenements  are not  being  actively
explored.  Revenue relates to the sale of tin which has been acquired from third
parties and processed in the consolidated entity's mining plant.

Research and development of environmental remediation - this segment is involved
in research and  development of the Bauxsol TM  technology.  It currently has no
sales.

                                                                            F-26


   _________________________________________________________________________

                              18. Segments (cont)
   _________________________________________________________________________

There are no  intersegment  sales.  Certain  segments may share resources of the
consolidated entity. Where this occurs, costs are allocated on a usage basis.

The  following  table  reflects  the  results  of  operations  of  the  segments
consistent with the consolidated entity's management systems.


<TABLE>
<CAPTION>

                                      Environmental                Mining      Research and           Unallocated    Consolidated
                                        Consulting                Interests   Development of
                                                                              Environmental
                                                                                Remediation
  2002                                       A$                       A$             A$                      A$             A$
<S>                                        <C>                       <C>             <C>                       <C>          <C>
  External customer revenue               800,047                   97,819            -                          -        897,866
  Interest income                               -                        -            -                    438,374        438,374
  Other income                                  -                        -            -                    202,334        202,334
                                        __________________________________________________________________________________________

  Total revenue                           800,047                   97,819            -                    640,708      1,538,574
                                        __________________________________________________________________________________________
  Depreciation and
  amortisation                            213,926                   31,786            -                     29,706        275,418
                                        __________________________________________________________________________________________

  Segment operating results              (26,084)                (521,885)   (1,804,866)               (2,763,545)    (5,116,407)
                                        __________________________________________________________________________________________

  Acquisitions of
  non-current assets                      293,674                   18,704            -                    143,811        456,189
                                        __________________________________________________________________________________________

  Segment assets                        1,961,786                  135,990            -                 12,773,660     14,871,436
                                        __________________________________________________________________________________________

  Segment liabilities                   (155,898)                (840,000)            -                  (684,281)    (1,680,179)
                                        __________________________________________________________________________________________

</TABLE>

<TABLE>
<CAPTION>

                                      Environmental                Mining      Research and           Unallocated    Consolidated
                                        Consulting                Interests   Development of
                                                                              Environmental
                                                                                Remediation
  2001                                       A$                       A$             A$                      A$             A$
<S>                                        <C>                       <C>             <C>                       <C>          <C>
  External customer revenue                511,644                254,356            -                       -          766,000
  Interest income                                -                      -            -                 173,353          173,353
  Other income                                   -                  9,536            -                  49,797           59,333
                                        __________________________________________________________________________________________

  Total revenue                            511,644                263,892            -                 223,150          998,686
                                        __________________________________________________________________________________________

  Depreciation and amortisation            134,304                 41,857            -                  29,286          205,447
                                        __________________________________________________________________________________________

  Segment operating results                 80,656              (360,265)    (921,126)             (4,237,580)      (5,438,315)
                                        __________________________________________________________________________________________

  Acquisitions of non-current assets     1,869,000                      -            -                  48,232        1,918,132
                                        __________________________________________________________________________________________

  Segment assets                         1,650,896                224,587            -               2,059,635        3,936,118
                                        __________________________________________________________________________________________

  Segment liabilities                     (99,775)              (660,000)            -               (406,339)      (1,166,114)
                                        __________________________________________________________________________________________
</TABLE>

                                                                            F-27


   _________________________________________________________________________

                              18. Segments (cont)
   _________________________________________________________________________

<TABLE>
<CAPTION>


                                      Environmental                Mining      Research and           Unallocated    Consolidated
                                        Consulting                Interests   Development of
                                                                              Environmental
                                                                                Remediation
  2000                                       A$                       A$             A$                    A$             A$
<S>                                        <C>                       <C>             <C>                 <C>            <C>
  External customer revenue                      -                   -                -                    -               -
  Interest income                                -                   -                -               61,610          61,610
  Other income                                                 153,823                -                3,058         156,881
                                        __________________________________________________________________________________________

  Total revenue                                  -             153,823                -               64,668         218,491
                                        __________________________________________________________________________________________

  Depreciation and amortisation                  -              72,696                -                7,576          80,272
                                        __________________________________________________________________________________________

  Segment operating results                      -           (334,249)        (661,025)          (1,198,032)     (2,193,306)
                                        __________________________________________________________________________________________

  Acquisition of non current assets              -              35,803                -               43,209          79,012
                                        __________________________________________________________________________________________

  Segment assets                                 -             342,475            3,477            3,583,459       3,929,411
                                        __________________________________________________________________________________________

  Segment liabilities                            -             560,000                -              195,880         775,880
                                        __________________________________________________________________________________________

</TABLE>



The  revenue  allocated  to each  segment  from  external  customers  relates to
services  rendered  and sales from those  segments.  The losses of the  industry
segments  reflect the trading  results as managed and  reported by the  industry
segments.

The unallocated  segment revenues and expenses are attributable to the corporate
overhead activities of Virotec not directly attributable to an industry segment.
Such  revenues  include  primarily  interest  income and such  expenses  include
development of the corporate strategy and development of Virotec's international
activities.

GEOGRAPHIC SEGMENTS

The  consolidated  entity  currently  operates  predominately  in one geographic
segment, namely Australia and its assets are located predominantly in Australia.
The  consolidated  entity  has  established  overseas  controlled  entities  for
contractual arrangements with customers.


  _________________________________________________________________________

                       19. Contingencies and Commitments
  _________________________________________________________________________


(a) MINESITE REHABILITATION

The  consolidated  entity has  security  bonds and bank  guarantees  in place of
A$555,781 for  rehabilitation of mining leases.  The amount equals the estimates
of the  relevant  mining  departments  when the  leases  were first  granted.  A
provision of $840,000 for rehabilitation has been recorded for the expected cost
to rehabilitate all mining leases. However, further liabilities may arise to the
consolidated  entity if the cost of rehabilitating the mining leases exceeds the
current estimate.

                                                                            F-28


  _________________________________________________________________________

                    19. Contingencies and Commitments (cont)
  _________________________________________________________________________


(b) IMPLICATIONS OF NATIVE TITLE

The  decisions of the High Court of Australia in Mabo v The State of  Queensland
(1992) 107 ALR 1 and the Wik  Peoples v The State of  Queensland  (1998) 141 ALR
129 may have an effect on the consolidated  entity's mining tenements.  The Mabo
case  recognised  that native  title to land in  Australia  survived the Crown's
acquisition of  sovereignty.  However,  the  acquisition of sovereignty  exposed
native  title  to  extinguishment  by the  valid  exercise  of  sovereign  power
inconsistent  with  the  continued  right to enjoy  native  title.  The Wik Case
decided that Queensland  pastoral leases do not  necessarily  extinguish  native
title and as a result,  certain  mining  tenements and real  property  interests
granted after 1 January 1994 may be invalid if they affect native title and were
not granted in accordance with the Native Title Act 1993. The Federal Government
has passed  legislation  to address  this issue.  However,  at the date of these
accounts,  it is not possible to accurately  predict the  implications of Native
Title on the consolidated entity's interests in mining tenements.

(c) LITIGATION

The Company has brought  defamation  cases against third parties.  These matters
may result in substantial legal costs being incurred.  The Company is also party
to other litigious matters in the ordinary course of business. It is impractical
to determine the maximum contingent liability in relation to these matters.

In an action  brought by the  Environmental  Protection  Authority  in New South
Wales,  the  Company  has been  found to have  breached  the  Protection  of the
Environment  Operations  Act 1997 by allowing the release of water from the site
in November 1999 when the company was known as Tin Australia N.L. At the hearing
to determine  the quantum of any fine payable for this breach in July 2002,  the
Company was fined $30,000 and ordered to pay costs.  The Company has accrued for
the expected liability to arise from this matter.

The directors  consider that litigation will not have a material  adverse effect
on the operating results or financial position of the company.

(d) NON-CANCELLABLE OPERATING LEASE COMMITMENTS

Future operative lease commitments not provided for in the financial  statements
and payable:


<TABLE>
<CAPTION>


                                   Consolidated                  Company
                        2002            2001     2000       2002         2001
                         $               $         $          $            $
<S>                     <C>            <C>        <C>        <C>          <C>
Within 1 year         111,380         136,900      -       111,380      136,900
Within 1-2 years      106,117         117,200      -       106,117      117,200
Within 2-3 years       61,650         104,767      -        61,650      104,767
Within 3-4 years       60,000          59,550      -        60,000       59,550
Within 4-5 years        5,000          57,000      -         5,000       57,000
Later than 5 years          -           4,750      -             -        4,750
                     __________________________________________________________

                      344,147         480,167      -       344,147      480,167
                     __________________________________________________________
</TABLE>

                                                                            F-29


  _________________________________________________________________________

                            20. Capital Commitments
  _________________________________________________________________________

The consolidated  entity has commitments under research agreements with Southern
Cross University  amounting to A$279,365 in 2003, A$120,275 in 2004 and A$76,867
in 2005.

While the company  remains listed on the  Alternative  Investment  Market of the
London  Stock  Exchange it has an annual  commitment  for fees of  approximately
A$100,000.


  _________________________________________________________________________

                   21. Notes to the Statements of Cash Flows
  _________________________________________________________________________

<TABLE>
<CAPTION>

                                                                           Consolidated                         Company
                                                             2002             2001          2000         2002              2001
  (A) RECONCILIATION OF CASH                                  A$               A$            A$           A$                A$
<S>                                                            <C>              <C>           <C>          <C>               <C>
  For the purposes of the statement of cash flows,
  cash includes cash on hand and at bank. Cash at
  the end of the financial year as shown in the
  statement of cash flows reconciled to the related
  items is in the balance sheet as follows:

  Cash at bank                                             11,896,720        578,056      3,457,869    11,864,140         507,696
                                                          _______________________________________________________________________


  (B) RECONCILIATION OF OPERATING LOSS AFTER
      INCOME TAX TO NET CASH USED IN
      OPERATING ACTIVITIES

  Operating loss after income tax                         (5,116,407)    (5,438,315)    (2,193,306)    (5,116,407)    (5,439,220)
  Add non cash items:
  Depreciation and amortisation                               275,418        205,447         80,173         61,492         64,799
  Loss on disposal of assets                                   65,427          7,350        346,563         48,866          7,350
  Consulting fees - paid by the issue of shares                     -        125,800         51,000              -        125,800
  Directors remuneration - option issue                             -      2,000,000        117,000              -      2,000,000
  Provision for diminution of loans to controlled entities          -              -              -        915,672        203,823
  Add/(less) items classified as investing/financing
  activities
  Net proceeds from insurance settlement                            -              -      (151,461)              -              -
  Net exploration expenditures written off during the year    309,839        339,414         58,699        309,839        339,414
  Net research and development costs written off
  during the year                                           1,804,866        921,126        647,462      1,104,723        921,126
  Share issue costs                                                 -        454,176              -              -        454,176



                                                                            F-30


  _________________________________________________________________________

                21. Notes to the Statements of Cash Flows (cont)
  _________________________________________________________________________

                                                      2002                2001             2000           2002           2001
                                                       A$                  A$               A$             A$             A$
    Changes in assets and liabilities:
    Decrease/(increase) in receivables               9,229              (184,021)        (3,672)         18,168       (29,617)
    Decrease/(increase) in prepayments            (88,269)              (469,699)         44,523      (106,875)      (450,964)
    Decrease/(increase) in inventories              97,278               (34,588)       (79,574)         97,278       (34,588)
    Increase/(decrease) in trade creditors          60,644                292,841        (5,872)        246,595        202,104
    Increase/(decrease) in provisions              453,420                117,393          6,337        199,649        108,355
                                             __________________________________________________________________________________

    Net cash used by operating activities      (2,128,554)            (1,663,076)    (1,082,128)    (2,221,000)    (1,527,442)
                                             __________________________________________________________________________________

</TABLE>

(C) NON CASH FINANCING AND INVESTING ACTIVITIES

During the 2002 year, the company;

    * Issued 200,000 options to employees; and
    * Issued 1,650,000 options to advisors in relation to the company's listing
      on AIM.

During the 2001 year, the company:

    * Issued 2,700,000 ordinary fully paid shares as part consideration of
      A$1,620,000 for the acquisition of an environmental consultancy and
      laboratory analysis services business;
    * Issued 2,700,000 options as part consideration for the acquisition of an
      environmental consultancy business;
    * Issued 5,000,000 options to executive directors as part of their
      remuneration arrangements,
    * Issued 1,300,000 options to non-executive directors;
    * Issued 850,000 options to employees; and
    * Issued 251,250 ordinary fully paid shares in relation to consulting fees.

During the 2000 year, the company:

    * Converted $547,378 of secured debt to equity by the issue of 10,473,781
      ordinary shares.
    * Issued 3,207,200 ordinary shares in relation to directors' fees and
      consulting fees.

These transactions were not reflected in the statements of cash flows.

                                                                            F-31

  _________________________________________________________________________

                  22. Remuneration of Directors and Executives
  _________________________________________________________________________

<TABLE>
<CAPTION>


                                              2002       2001         2000
  DIRECTORS
<S>                                            <C>        <C>          <C>
  The number of directors whose income from
  the company or any related party falls
  within the following bands:

  A$ 0 - A$ 19,999                              -          -            4
  A$ 20,000 - A$ 29,999                         2          2            -
  A$ 30,000 - A$ 39,999                         -          1            -
  A$ 50,000 - A$ 59,999                         -          -            1
  A$ 60,000 - A$ 69,999                         1          -            -
  A$ 160,000 - A$ 169,000                       -          -            1
  A$ 210,000 - A$ 219,999                       -          -            1
  A$ 250,000 - A$ 259,000                       1          -            -
  A$ 350,000 - A$ 359,000                       1          -            -
  A$1,170,000 - A$1,179,999                     -          1            -
  A$1,210,000 - A$1,219,999                     -          1            -

  Total income paid or payable,
  or otherwise made available
  to all the directors of the
  company from the company or
  any related party. (The
  directors of the controlled
  entity are also directors of
  the consolidated entity)                 $714,720    $2,479,163    $442,498
                                         ___________ _____________ ___________
</TABLE>



There were no retirement benefits paid to directors of the consolidated
entity and/or its controlled entities. Not included in the above
information is a director of a wholly owned overseas subsidiary, who
received no fees for acting in the capacity of director during the year.

The 2001 amount includes options issued to executive directors. These
options, exercisable at A$0.20 each, were issued to the executive Directors
of the Company as part of their remuneration package and was negotiated and
approved by an independent director in February 2000, when shares in the
Company were trading at A$0.11 per share. Under ASX Listing rules, the
options could only be issued after shareholder approval was received. This
approval was received in November 2000 and the options were issued in
December 2000 when shares in the Company were trading at approximately A$0.60
per share. Under Australian accounting requirements the value of the options
were costed at the economic cost to the company of A$0.40 each at the date
the options were issued. The rise in the share price in the period between
the date of agreement and the date of the shareholders meeting gave rise to
this charge of A$2,000,000 being the fair value attributed to the options, to
be included in the directors remuneration for the period.

                                                                            F-32


  _________________________________________________________________________

              22. Remuneration of Directors and Executives (cont)
  _________________________________________________________________________

<TABLE>
<CAPTION>

                                        2002             2001         2000
  EXECUTIVES
<S>                                     <C>              <C>           <C>
  The number of executives
  whose remuneration from the
  consolidated entity or
  related party falls within
  the following bands:

  A$ 100,000 - A$109,999                  1                -            -
  A$ 120,000 - A$129,999                  1                1            -
  A$ 150,000 - A$159,999                  1                -            -
  A$ 160,000 - A$169,999                  -                -            1
  A$ 210,000 - A$219,999                  -                -            1
  A$ 250,000 - A$259,999                  1                -            -
  A$ 350,000 - A$359,999                  1                -            -
  A$1,170,000 - A$1,179,999               -                1            -
  A$1,210,000 - A$1,219,999               -                1            -

  Total remuneration received, or due
  and receivable from the consolidated
  entity or related parties by
  executive officers of the
  consolidated entity whose income is
  A$100,000 or more (The executives of
  the controlled entity are also
  executives of the consolidated      $989,828         $2,503,543   $375,498
  entity)                           ___________      ____________  __________

</TABLE>

  _________________________________________________________________________

                              23. Related Parties
  _________________________________________________________________________


DIRECTORS

The  names  of  each  person   holding  the  position  of  director  of  Virotec
International Ltd during the financial year are B. J. Sheeran, B. J. Bamonte, M.
Nissen, J. Glynn and D. M. McConchie. Details of directors' remuneration are set
out in Note 22. There were no retirement benefits paid to directors, and no loan
advances to directors during the year. Apart from the details  disclosed in this
note,  no director has entered into a material  contract  with the  consolidated
entity since the end of the previous  financial  year and there were no material
contracts involving directors' interests subsisting at year end.

                                                                            F-33


                           23. Related Parties(cont)


DIRECTORS' HOLDINGS OF SHARES AND SHARE OPTIONS

The   interests  of  the  directors  of  the   consolidated   entity  and  their
director-related  entities in shares and options of Virotec International Ltd at
year-end are set out below:

<TABLE>
<CAPTION>
                                                   Number Held
                                         2002          2001          2000

<S>                                       <C>           <C>           <C>
  Fully paid ordinary shares          11,756,842    10,596,842    15,252,268
  Options over ordinary shares         2,200,000     6,861,096    10,961,096
  Partly paid ordinary shares,
  payable to 20 Australian cents
  per share and credited as paid to
  8 Australian cents per share.                 -             -     1,800,000

</TABLE>


During  the 2002  year,  the  directors  in  aggregate  sold nil  shares  (2001:
5,355,426 shares;  2000:  12,794,764 shares) in the company and were issued with
nil options (2001: 6,600,000 options; 2000: 2,340,000 options).  During the year
the directors were issued 1,576,096 shares on exercise of 1,576,096  options and
3,085,000 options lapsed unexercised.

During the 2001 year the  directors  transferred  10,000,000  options to parties
unrelated to the company and exercised  700,000  options into  ordinary  shares.
During the 2000 year,  directors'  fees of  A$117,000  were paid by the issue of
2,340,000 fully paid ordinary shares.

During the 2000 year,  directors  were  issued  20,842,365  ordinary  shares and
20,842,365 options to convert debt to equity.

                                                                            F-34

  _________________________________________________________________________

                           23. Related Parties (cont)
  _________________________________________________________________________


OTHER TRANSACTIONS WITH THE COMPANY OR ITS CONTROLLED ENTITIES

During the 2002 year, Sheeran Nominees Pty Ltd, a company in which B. Sheeran is
a shareholder,  provided transport services to the Company. All payments were in
the ordinary course of business and on normal  commercial  terms and conditions.
Total payments for the period were $23,575 (2001: $176,523, 2000: $114,142).

During the 2002 year, C. Boland, an associate of B. Sheeran,  provided marketing
and  communication  services to the Company.  All payments  were in the ordinary
course of business and on normal commercial terms and conditions. Total payments
for the period were $56,596 (2001: $52,850, 2000: $2,275).

During  the  2002  year,  pursuant  to  an  agreement  with  Nauveau  Technology
Investments  Limited ("NTI"), a company in which B. Sheeran and D. McConchie are
shareholders,  under  which the Company  has a world wide  exclusive  licence to
distribute  and market  technology  owned by NTI,  an amount of A$454  (2001 and
2000: nil) is payable at the end of the period. Under this agreement the Company
is responsible  for all costs  associated with the development of the technology
and will pay a royalty to NTI upon the successful  commercialisation  of related
technologies.  Under the licence agreement, the company pays NTI a royalty of 2%
of the  gross  proceeds  received  from  the  exploitation  of the  intellectual
property.  From 1 July 2006,  minimum  royalties of $100,000 are payable for the
first  year  increasing  by 10% per annum to a maximum  of  $250,000  per annum.
Virotec may terminate the agreement on 1 years notice in writing.  The terms and
conditions of this agreement are no more  favourable  than those  available,  or
which might be reasonably be expected to be available,  on similar  transactions
to non-director related entities on an arm's length basis.

During the 2000 year, Sheeran Pacific Pty Ltd, a company in which B Sheeran is a
shareholder, sold mining, plant and equipment to the Company for A$28,490.

During the 2000 year,  Sheeran Nominees Pty Ltd, a company in which B Sheeran is
a  shareholder,   received  interest  of  A$41,351  on  loans  advanced  to  the
consolidated entity. All payments were in the ordinary course of business and on
normal commercial terms and conditions.  Interest on the loans was calculated at
the rate of 15% per annum and payable monthly in arrears.

During the 2000, year S Daley was a director of the Company, SFE Investments Pty
Ltd, a company in which he is a shareholder, received guarantee fees A$31,250 on
guarantees  provided on behalf of the  consolidated  entity at a rate of 15% per
annum and payable monthly in arrears.

During the 2002 year,  pursuant to an agreement  between the  Company,  Southern
Cross  University  ("SCU"),  NTI and D. McConchie  which enables  D.McConchie to
provide ongoing  technical  advice to the Company through SCU. A total amount of
$111,661 (2001: $126,249, 2000: nil) was paid or is payable at 30 June 2002. All
payments were in the ordinary course of business and on normal  commercial terms
and conditions.

During  the 2002  year,  F.  Davies-McConchie,  an  associate  of D.  McConchie,
provided  technical advice and other services to the Company.  All payments were
in  the  ordinary  course  of  business  and  on  normal  commercial  terms  and
conditions.  Total amounts  payable for the period were $43,664  (2001:  $4,769;
2000: nil).

Under a retainer agreement dated 19 June 2001, Mr B Bamonte provides consultancy
services  to  the  Company,   payments  for  which  are  included  in  directors
remuneration.

Under a retainer agreement dated 19 June 2001, Mr B Sheeran provides consultancy
services  to  the  Company,   payments  for  which  are  included  in  directors
remuneration.

                                                                            F-35

  _________________________________________________________________________

                           23. Related Parties (cont)
  _________________________________________________________________________

<TABLE>
<CAPTION>

                                                              Company
  Details of interests in a wholly-owned controlled      2002         2001
  entities are set out in note 9. Details of              A$           A$
  dealings with these entities are set out below:
<S>                                                       <C>          <C>
  Balance with entities within the wholly owned
  group
  Receivables - non-current loans                     2,925,912    2,084,800

</TABLE>


These loans were unsecured, interest free and have no fixed term of repayment.


  _________________________________________________________________________

                24. Additional Financial Instruments Disclosures
  _________________________________________________________________________

(A) INTEREST RATE RISK

Interest rate risk exposures

The  consolidated  entity's  exposure  to interest  rate risk and the  effective
weighted  average  interest  rate for classes of financial  assets and financial
liabilities is set out below:

<TABLE>
<CAPTION>
                                                                        Fixed Interest Maturing Interest
                                          Weighted
                                        Ave Interest         Floating         1 Year       Non Interest     Total
                                            Rate          interest rate       or less        Bearing
                                                               A$                A$             A$           A$
<S>                                         <C>              <C>              <C>              <C>          <C>
    Financial Assets - 2002
    Cash                                    4.75%            11,896,720          -                -    11,896,720
    Receivables - current                                             -          -          178,435       178,435
    Receivables - non-current               1.50%                     -     56,016          499,765       555,781
                                                          ________________________________________________________

                                                             11,896,720     56,016          678,200    12,630,936
                                                          ________________________________________________________
    Financial Assets - 2001
    Cash                                    5.50%               578,046          -                -       578,046
    Receivables - current                                             -          -          187,644       187,644
    Receivables - non-current               1.50%                     -     56,016          497,388       553,404
                                                          ________________________________________________________

                                                                578,046     56,016          685,032     1,319,094
                                                          ________________________________________________________

                                          Weighted                         Fixed Interest Maturing Interest

                                        Ave Interest
                                            Rate               1 Year       2 Years        Non Interest     Total
                                                              or less       or less          Bearing
                                                                 A$            A$               A$            A$
    Financial Liabilities - 2002
    Accounts Payable                                             -              -           780,348       780,348
                                                          ________________________________________________________

                                                                 -              -           780,348       780,348
                                                          ________________________________________________________
    Financial Liabilities - 2001
    Accounts Payable                                             -              -           479,542       479,452
                                                          ________________________________________________________

                                                                 -              -           479,452       479,452
                                                          ________________________________________________________
</TABLE>

                                                                            F-36

  _________________________________________________________________________

            24. Additional Financial Instruments Disclosures (cont)
  _________________________________________________________________________


(B) CREDIT RISK EXPOSURE

Credit risk  represents  the loss that would be  recognised  if  counter-parties
failed to perform as contracted.

On Balance Sheet Financial Information

The credit risk on financial assets, excluding investments,  of the consolidated
entity, which have been recognised in the balance sheet, is the carrying amount,
net of any provision for doubtful debts.

The consolidated  entity is not materially exposed to any individual customer or
individual overseas country.

Off Balance Sheet Financial Instruments

There are no off balance sheet financial instrument credit risk applicable.

Net fair values of financial assets and liabilities

Valuation Approach - Net fair values of financial assets and liabilities are the
equivalent of their book values.


  _________________________________________________________________________

                             25. Subsequent Events
  _________________________________________________________________________


There has not arisen in the interval  between the end of the financial  year and
the date of this  report any other item,  transaction  or event of a material or
unusual nature likely, in the opinion of the directors of the Company, to effect
significantly  the operations of the consolidated  entity,  the results of those
operations, or the state of affairs of the consolidated entity.


  _________________________________________________________________________

                           26. US GAAP Reconciliation
  _________________________________________________________________________

Virotec is an Australian  incorporated  environmental company with the exclusive
license to market  and  distribute  the  Bauxsol TM  technology  (a green,  cost
effective  technology,  that simultaneously  neutralizes acid and extracts heavy
metals,  together  with some other  inorganic  species  from water and soil) and
other related technologies throughout the world.

The Company and consolidated  entity are substantially  dependent on the licence
to market and distribution the Bauxsol TM technology. The loss of the licence to
use the Bauxsol TM  technology,  or the  inability  to protect the  intellectual
property  related to the Bauxsol TM  technology,  would have a material  adverse
effect on the business,  financial condition and results of operations and could
lead to the cessation of the business.

The consolidated financial statements of the consolidated entity are prepared in
accordance with Generally Accepted Accounting Principles applicable in Australia
(Australian  GAAP),  which  differ  in some  respects  from  Generally  Accepted
Accounting Principles in the United States of America (US GAAP).


                                                                            F-37

  _________________________________________________________________________

                       26. US GAAP Reconciliation (cont)
  _________________________________________________________________________


The following are  reconciliations  between US GAAP and  Australian  GAAP of the
consolidated entity's net loss after income tax,  shareholders' equity and total
assets.

<TABLE>
<CAPTION>

                                                                              Note         2002           2001           2000
                                                                                            A$             A$             A$
<S>                                                                            <C>         <C>            <C>             <C>

  Net loss after income tax reported under Australian GAAP                              (5,116,407)    (5,438,315)   (2,193,306)
  Stock compensation expense                                                  (ii)        (122,000)      (140,952)             -
  Amortisation of goodwill                                                    (iii)        (19,120)       (14,347)             -
  Gain on retirement of debt                                                  (v)                 -              -        25,110
                                                                                       _____________  ____________  ____________

  Net loss under US GAAP                                                                (5,257,527)    (5,593,614)   (2,168,196)
                                                                                       _____________  ____________  ____________

  Basic and dilutive loss per share (Australian cents) according to US GAAP                   (3.5)          (5.5)         (3.0)


  Shareholders' equity reported under Australian GAAP                                    13,191,258      2,770,004
  Goodwill, net of amortisation                                               (iii)         157,828        176,948
                                                                                       _____________  ____________

  Shareholders' equity under US GAAP                                                     13,349,086      2,946,952
                                                                                       _____________  ____________

  Total assets reported under Australian GAAP                                            14,871,436      3,936,118
  Goodwill                                                                    (iii)         157,828        176,948
                                                                                       _____________  ____________

  Total assets under US GAAP                                                             15,029,264      4,113,066
                                                                                       _____________  ____________

</TABLE>


The following table includes a statement of financial performance prepared in
accordance with Australian GAAP but presented in a US GAAP format.


<TABLE>
<CAPTION>
                                                                                             2002           2001           2000
                                                                                              A$             A$             A$
<S>                                                                                          <C>            <C>             <C>
  Sales revenue                                                                            897,866        766,000              -
  Costs and expenses
  Cost of sales                                                                          (129,865)      (275,207)              -
  Depreciation and amortisation                                                          (275,418)      (205,447)       (80,172)
  Research and development expense                                                     (1,804,866)      (921,126)      (647,462)

  Exploration and evaluation expenditure written off                                     (489,839)      (339,414)       (58,699)
  General and administration                                                           (1,291,421)    (3,168,756)      (441,065)
  Operating expenses                                                                   (2,539,781)    (1,511,350)    (1,101,920)
                                                                                       _____________  ____________  ____________

  Total costs and expenses                                                             (6,531,190)    (6,421,300)    (2,329,318)

  Operating loss                                                                       (5,633,324)    (5,655,300)    (2,329,318)

  Other income                                                                              78,543         43,632        156,881
  Interest income                                                                          438,374        173,353         61,610
  Interest expense                                                                               -              -       (82,479)

  Net loss                                                                             (5,116,407)    (5,438,315)    (2,193,306)
                                                                                       _____________  ____________  ____________

</TABLE>

                                                                            F-38


  _________________________________________________________________________

                       26. US GAAP Reconciliation (cont)
  _________________________________________________________________________


(i)     Accounting for share options issued to employees

Under  Australian  GAAP,  options  issued to employees  have been  accounted for
utilising  the  intrinsic  value  method.   Accordingly,  no  expense  has  been
recognised for share options issued to employees.

SFAS No. 123, "Accounting for Stock-Based Compensation (SFAS No. 123)"
requires shares and options issued to employees to be recognised either using
the fair value method or the intrinsic value method, as prescribed by APB
Opinion No. 25 and its related interpretations.

In accordance with APB Opinion No. 25, the Company does not recognise an
expense for options granted to employees with an exercise price greater than
or equal to the market price of the underlying share at the date of grant for
US GAAP. SFAS No. 123 requires a company to determine the fair market value
of all awards of stock-based compensation at the grant date and to disclose
pro-forma net income and earnings per share as if the resulting stock-based
compensation amounts were recorded in the Consolidated Statements of
Financial Performance. The table below presents these pro-forma disclosures.

The fair market value of stock options granted to employees is estimated
using the Black-Scholes option-pricing model with the following assumptions:

<TABLE>
<CAPTION>


                                               2002        2001       2000
<S>                                             <C>        <C>         <C>
    Term (years)                                2.7      1.9 - 3.0      -
    Volatility                                  32%       34%-39%       -
    Risk-free interest rate                    5.5%     5.8 - 6.2%      -
    Dividend yield                             0.0%        0.0%         -
    Weighted average fair value per option    A$0.14      A$0.08        -

</TABLE>



Pro-forma disclosure

<TABLE>
<CAPTION>

                                                     2002                          2001                          2000
                                          As reported     Pro-forma     As reported     Pro-forma     As reported     Pro-forma
<S>                                       <C>            <C>            <C>            <C>            <C>            <C>
  Net loss applicable to common
  stockholders                            (5,257,527)    (5,285,527)    (5,593,614)    (5,796,825)    (2,168,196)    (2,168,196)
  Loss per share
  Basic and diluted
  (Australian cents)                            (3.5)          (3.5)          (5.5)          (5.7)          (3.0)          (3.0)

</TABLE>


(ii)     Accounting for options issued to non-employees - stock compensation
         expense

Under Australian GAAP, options issued to non-employees have been accounted
for utilising the intrinsic value method.

SFAS No. 123 requires options issued to non-employees for the provision of
goods and services to be accounted for under the fair value method.

The Company has issued options to non-employees in the following
circumstances under which SFAS No. 123 requires the options to be valued
using the fair value method:

-     To directors (acting as consultants) and consultants for services
      rendered.
-     To debt providers as partial consideration to settle outstanding
      balances.
-     To a third party to acquire a business operation.


The fair value of stock options granted to non-employees for the provision of
goods and services is calculated using the Black-Scholes option pricing model
with the following assumptions:

<TABLE>
<CAPTION>

                                              2002         2001        2000
<S>                                         <C>             <C>        <C>
  Term (years)                              2.7-3.3     1.3 - 2.6      2.1
  Volatility                                30%-31%     34% - 39%      21%
  Risk free interest rate                     5.5%     6.2% - 5.8%     6.6%
  Dividend yield                              0.0%         0.0%        0.0%
  Weighted average fair value per option     $0.11        $0.32       $0.00

</TABLE>


                                                                            F-39
  _________________________________________________________________________

                       26. US GAAP Reconciliation (cont)
  _________________________________________________________________________


(iii)     Goodwill

The  consolidated   entity  amortises   goodwill  arising  in  relation  to  the
acquisition of a business over 10 years.

As noted in (iv) below,  the  Company  issued  2,700,000  options at an exercise
price of A$1.00 per share, as part  consideration  to acquire a business.  These
options were valued using the intrinsic method for Australian GAAP while US GAAP
requires  the fair value  method.  As a result of using the fair value method to
value  the  options  issued,   additional  goodwill  on  consolidation  for  the
consolidated  entity of  A$191,295  has  arisen for US GAAP  purposes,  which is
amortised over the period of 10 years.  Under US GAAP, an additional  charge for
amortisation of goodwill of $19,120 (2001: A$14,347; 2000:nil) has been recorded
for the year ended 30 June 2002.

(iv)     Acquisitions

On 1 October 2000, the Company  acquired the Consil Unit Trust doing business as
Global   Environment   Corporation  Pty  Ltd.  The  business   acquired  was  an
environmental consultancy, fieldwork and laboratory analysis services business.

The  purchase  price was  determined  by  agreement  between the Company and the
vendors.  Consideration for the purchase was 2,700,000 Virotec shares, 2,700,000
options  to  acquire  Virotec  shares at A$1.00 per share on or before 31 August
2003 and A$400,000 in cash.  The total  consideration  was valued at A$2,020,000
under Australian GAAP and A$2,211,295 under US GAAP.

The  acquisition  was accounted  for under the purchase  method of accounting in
accordance with Accounting  Principles  Board Opinion No 16 and operations since
the  acquisition  date have been  included  in the  consolidated  statements  of
financial  performance.  The excess of the total  acquisition cost over the fair
value of assets  acquired was allocated to goodwill in the amount of A$1,029,800
for Australian  GAAP and  A$1,221,095 for US GAAP, and will be amortised over 10
years subject to tests for impairment.

The purchase price has been allocated to the fair vaue of assets and liabilities
acquired as follows:

<TABLE>
<CAPTION>

                                  AGAAP       US GAAP
                                    $            $
<S>                                <C>          <C>
  Purchase consideration       2,020,000    2,211,295
                             _________________________
  Allocated to:
  Plant and equipment            840,200      840,200
  Prepaid consultants fees       150,000      150,000
  Goodwill                     1,029,800    1,221,095
                             _________________________

                               2,020,000    2,211,295
                             _________________________
</TABLE>

The  unaudited  pro-forma  results of  operations  which follow  assume that the
acquisition  had occurred at the  beginning  of the year ended 30 June 2000.  In
addition to combining the historical  results of operations of the two entities,
the pro-forma  calculations  include adjustments for the estimated effect on the
consolidated   entity's   historical   results  of  operations   for  additional
depreciation and amortisation.  There is no difference  between the proforma and
actual US GAAP for the year ended 30 June 2002.


<TABLE>
<CAPTION>
                                                         Pro-forma
                                                          US GAAP
                                                    2001           2000
                                                     $              $

<S>                                                <C>            <C>
    Sales revenue                                   932,097        668,382
    Net loss                                    (5,636,092)    (2,389,174)
    Basic and diluted loss per share (cents)          (5.5)          (3.3)

</TABLE>

                                                                            F-40

  _________________________________________________________________________

                       26. US GAAP Reconciliation (cont)
  _________________________________________________________________________


(v)     Gain on retirement of debt

On 9 December 1999, the Company retired a debt  obligation  through the issuance
of shares. As of the date of retirement,  the aggregate fair value of the shares
issued was less than the carrying amount of the debt. For Australian  GAAP, this
difference  was recorded  directly to  shareholders'  equity.  For US GAAP,  the
difference  represents  a gain on the  retirement  of the debt which is recorded
through the statement of financial performance.

(vi)     Statements of cash flows

Under  Australian  GAAP, cash outflows for payments for research and development
of  A$1,804,866  and  A$921,126,  and  A$647,462  for the  2002,  2001  and 2000
financial years  respectively,  are disclosed in the statements of cash flows as
cash flows from investing activities.

Under US GAAP, these payments are disclosed as part of cash flows from operating
activities.

(vii)     Future income tax benefit

Under  Australian  GAAP,  future  income tax  benefits  have not been brought to
account as recovery is not considered virtually certain.

Under US GAAP,  future  income tax  benefits  have been brought to account and a
corresponding  valuation  allowance recorded as recovery is not considered to be
more likely than not.

(viii)     Impact of Recently Issued Accounting Standards

Recently Issued Australian Accounting Standards

The  Australian  Accounting  Standards  Board  ("AASB")  has  issued  AASB  1044
Provisions,  Contingent  Liabilities and Contingent Assets,  which will apply to
annual and half-year reporting periods beginning on or after 1 July 2002.

The standard introduces rules for the recognition, measurement and disclosure of
provisions.  It also includes  detailed  disclosure  requirements for contingent
assets and liabilities.

The major changes to current practice include:


-    More stringent requirements for restructuring  provisions,  differentiating
     between restructurings on acquisition and other restructurings.

-    Discounting of provisions,  using  specific  liability  related risk rates,
     applied to pre-tax cash flows.

-    Provisions  for dividends will only be recognised at reporting date if they
     have been declared,  determined or recommended  before  reporting date. The
     full amount of the dividend must be recognised as a provision, not just the
     amount payable in cash.

-    Separate recognition criteria for any recoveries related to provisions.


Because  of the  extensiveness  of  the  efforts  needed  to  comply,  it is not
practicable to reasonably  estimate the impact that the adoption of AASB 1044 is
expected to have on the Company's financial report.

The AASB has issues a revision  of AASB 1020 Income  Taxes,  which will apply to
annual and half-year financial reporting periods beginning on or after 1 January
2005.

The main features of the revised Standard are:

-    The revised  standard  adopts the "balance sheet"  liability  method of tax
     effect accounting rather than the "income  statement"  liability  approach.
     The  "balance  sheet"  liability  method  focuses  on the  tax  effects  of
     transactions and other events that affect amounts recorded in the statement
     of financial position and temporary differences.  Temporary differences are
     the differences  between the carrying amounts of assets and liabilities and
     their tax bases.

-    The   measurement  of  a  deferred  tax  asset  or  liability   depends  on
     management's intended use of the asset or liability.

-    Deferred  tax assets  should be  recognised  when it is  probable  that the
     taxable  income will be available  against which the deferred tax asset can
     be utilised.

                                                                            F-41


  _________________________________________________________________________

                       26. US GAAP Reconciliation (cont)
  _________________________________________________________________________


-    Discounting of deferred tax assets and liabilities is not permitted, unless
     required by another standard.

-    Goodwill  amortisation  is not  deductible  under  Australian tax law. This
     would give rise to a deferred tax liability.  The Standard,  however,  does
     not permit the temporary  difference to be  recognised,  as this would have
     the effect of increasing the amount of the goodwill on an iterative basis.


Because  of the  extensiveness  of  the  efforts  needed  to  comply,  it is not
practicable to reasonably  estimate the impact that the adoption of AASB 1020 is
expected to have on the Company's financial report.

The AASB has issued a revision of AASB 1028 Employee  Benefits  which will apply
to annual reporting periods beginning on or after 1 July 2002.

The major changes to the standard are:

-    Specific  rather than general  recognition  criteria for wages and salaries
     (including non-monetary benefits), compensated absences, profit sharing and
     bonus  plans,   termination   benefits  (including  those  arising  through
     acquisition)  and  post-employment   benefits  -  the  termination  benefit
     criteria  are now black  letter  requirements  and in an  acquisition,  the
     acquiree must recognise the liability in some circumstances.

-    Recognition  of  employee  benefits  to  be  measured  at  nominal  amounts
     (including  wages  and  salaries,   annual  leave  and  sick  leave)  using
     "expected"  remuneration  rates  that will be paid when the  obligation  is
     settled, not rates at reporting date.

-    Significantly  more  detailed  disclosures  in  relation  to items  such as
     equity-based compensation benefits.

-     Terminology changes to more closely harmonise with IAS 19

-    Employee  benefit assets and liabilities  arising from  agreements  equally
     proportionately  unperformed need not be recognised unless required by this
     or another standard.


The Company does not expect the adoption of AASB 1028 to have a material  effect
on the consolidated financial statements.

Recently Issued United States Accounting Standards

In June 2001,  the FASB issued  Statement No. 141,  Business  Combinations,  and
Statement No. 142, Goodwill and Intangible  Assets.  Statement 141 requires that
the  purchase  method  of  accounting  be  used  for all  business  combinations
completed after 30 June 2001 and also specifies the types of acquired intangible
assets that are required to be recognised and reported  separately from goodwill
and those  acquired  intangible  assets  that are  required  to be  included  in
goodwill.  Statement 142 will require that goodwill no longer be amortised,  but
instead tested for impairment at least annually. Statement 142 will also require
recognised  intangible  assets to be amortised over their  respective  estimated
useful lives and reviewed for  impairment in accordance  with Statement No. 144,
Accounting for the Impairment or Disposal of Long-Lived  Assets.  Any recognised
intangible  asset  determined  to have an  indefinite  useful  life  will not be
amortised,  but instead tested for  impairment in accordance  with Statement 142
until its life is determined to no longer be indefinite.

The  provisions  of Statement 141 are  applicable  to all business  combinations
accounted for by the purchase method for which the date of acquisition is 1 July
2001, or later. The Company is required to adopt the provisions of Statement 142
on 1 July  2002.  Retroactive  application  of  Statements  141  and  142 is not
permitted.  However, any goodwill and any intangible asset determined to have an
indefinite  useful  life that is acquired  in a business  combination  completed
after 30 June  2001  will  not be  amortised.  Goodwill  and  intangible  assets
acquired in business combinations  completed before 1 July 2001 will continue to
be amortised until 30 June 2002.

                                                                            F-42



                       26. US GAAP Reconciliation (cont)


The  Company  does not  expect the  adoption  of SFAS No. 141 to have a material
impact on its  consolidated  financial  statements  under US GAAP.  The  Company
implemented  SFAS No. 142 on 1 July 2002. In  accordance  with SFAS No. 142, the
Company will be required to complete the first step of the transitional goodwill
impairment  test by 31 December  2002.  The Company has not yet  determined  the
impact that the adoption of SFAS No. 142 will have on its consolidated financial
statements.  Under this  statement,  goodwill will no longer be amortised in the
statement  of  financial  performance.  The amount of  amortisation  of goodwill
during the years ended 30 June 2002,  2001 and 2000 in  accordance  with US GAAP
were A$122,050, A$91,582 and nil respectively.

In June 2001, the FASB issued Statement No. 143, Accounting for Asset Retirement
Obligations.  Statement 143  addresses  financial  accounting  and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs, and applies to legal  obligations  associated
with the  retirement  of  long-lived  assets  and/or the normal  operation  of a
long-lived  asset.  Under  Statement  143, the fair value of a liability  for an
asset retirement  obligation is recognized in the period in which it is incurred
if a  reasonable  estimate  of fair  value  can be made.  The  associated  asset
retirement  costs  are  capitalised  as  part  of  the  carrying  amount  of the
long-lived   asset.  The  liability  is  discounted  and  accretion  expense  is
recognized using the credit-adjusted  risk-free interest rate in effect when the
liability was initially  recognized.  Statement 143 is effective for the Company
as of 1 July 2002.  The Company does not expect the adoption of Statement 143 to
have a material impact on the consolidated financial statements.

In August 2001 the FASB issued SFAS No. 144,  "Accounting  for the Impairment or
Disposal of Long-Lived Assets.'' SFAS No. 144 addresses financial accounting and
reporting for the  impairment  of long lived assets and will  supersede (a) SFAS
No. 121 with respect to the  accounting  for the  impairment or disposal of long
lived assets and (b) Accounting Principles Board Opinion No. 30 (Opinion 30) for
the disposal of a segment of a business.  SFAS No. 144 retains the  requirements
of SFAS No. 121 to (a) recognize an impairment  loss if the carrying amount of a
long lived asset is not  recoverable  from its  undiscounted  cash flows and (b)
measure an impairment  loss as the  difference  between the carrying  amount and
fair value of the asset.

SFAS No. 144 also requires  that a long lived asset to be  abandoned,  exchanged
for a  similar  productive  asset,  or  distributed  to  owners in a spin off be
considered  held  and  used  until  the  asset  is  disposed  of,  exchanged  or
distributed.

SFAS No. 144 retains the basic  provisions of Opinion 30 for the presentation of
discontinued  operations in the income statement but broadens that  presentation
to include a component of an entity  (rather  than a segment of a  business).  A
component of an entity  comprises  operations and cash flows that can be clearly
distinguished, operationally and for Financial reporting purposes, from the rest
of the entity.  A component of an entity that is  classified as held for sale or
that has been  disposed of is  presented  as a  discontinued  operations  if the
operations  and cash flows of the  component  will be (or have been)  eliminated
from the  ongoing  operations  of the entity  and the  entity  will not have any
significant  continuing  involvement  in the  operations  of the  component.  In
addition,  discontinued  operations  are no longer  measured on a net realizable
value basis, and future operating  losses are no longer  recognized  before they
occur.

The Company implemented SFAS No. 144 on 1 July 2002. This statement did not have
a material impact on the Company's consolidated results or financial position on
the date of adoption.

In April 2002, the FASB issued SFAS No. 145, ""Rescission of FASB Statements No.
4, 44 and 64,  Amendment of FASB Statement No. 13, and Technical  Corrections.''
As a result of the  rescission of SFAS No. 4, a loss on  extinguishment  of debt
will no longer be presented as an  extraordinary  item upon the adoption of SFAS
No. 145,  which is effective for the Group in the Fiscal year  beginning July 1,
2002.

In July 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with  Exit or  Disposal  Activities.''  SFAS No.  146 is  based  on the  general
principle  that a  liability  for a cost  associated  with an  exit or  disposal
activity  should be recorded when it is incurred and initially  measured at fair
value.  SFAS No. 146 applies to costs  associated with (1) an exit activity that
does not involve an entity newly  acquired in a business  combination,  or (2) a
disposal  activity within the scope of SFAS No. 144. These costs include certain
termination benefits, costs to terminate a contract that is not a capital lease,
and other  associated  costs to  consolidate  facilities or relocate  employees.
Because the provisions of this statement are to be applied prospectively to exit
or disposal activities initiated after December 31, 2002, the effect of adopting
this statement cannot be determined.

                                                                            F-43