Form 10-KSB

               [As last amended in Release No. 33-7505, effective
                        January 1, 1999, 63 F.R. 9632.]
                     U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                  Form 10-KSB

(Mark One)

[X]     ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT OF 1934

        For the fiscal year ended            May 31, 2001

[ ]     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT OF 1934

        For the transition period from                        to

        Commission file number                   0-28385

                                 Protalex, Inc.
                 (Name of small business issuer in its charter)

        New Mexico                                      91-2003490
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
Incorporation or organization)

           P.O. Box 30952                                  Albuquerque, NM 87190
(Address of principal executive offices)                        (Zip Code)

Issuer's telephone number                    (505) 260-1726

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

Title of each class                    Name of each exchange on which registered

      None                                              None

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

                                  Common Stock
                                (Title of Class)


                                (Title of Class)

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

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

State issuer's  revenues for its most recent fiscal year.               $12,228

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates  computed by reference to the price at which the common equity
was sold,  or the average bid and asked  price of such  common  equity,  as of a
specified  date within the past 60 days.  (See  definition  of affiliate in Rule
12b-2 of the Exchange Act.)

Note:  If  determining  whether  a  person  is  an  affiliate  will  involve  an
unreasonable  effort and expense,  the issuer may calculate the aggregate market
value of the common  equity held by  non-affiliates  on the basis of  reasonable
assumptions, if the assumptions are stated.

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date 10,608,635.

        Transitional Small Business Disclosure Format (check one):

  Yes  [ ]          No  [X]


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ITEM I - DESCRIPTION OF BUSINESS


Overview

Protalex,  Inc. (the  "Company") is a development  stage company  engaged in the
development and marketing of a new class of organic chemical  molecules,  called
"bioregulators,"  for the  treatment of  rheumatoid  arthritis  ("RA") and other
autoimmune  diseases.  The  Company's  business  is an  extension  of over three
decades of research by Dr. Paul Mann, an officer,  director and  shareholder  of
the Company.

The use of bioregulatory compounds for the treatment of human disease represents
a  completely  new  approach to therapy.  Unlike  many  existing  pharmaceutical
agents,  which  act  upon  the  end  products  of  complex  metabolic  pathways,
bioregulators  influence cellular activities at a more basic level. This results
in  restoration  of tissue  integrity and function,  in many  instances not only
alleviating,  but  potentially  reversing the  pathologic  process.  The Company
intends to bring this unique  biotechnology to commercial  realization,  thereby
establishing an entirely new category of pharmaceutical treatment of disease.

The  Company has since its  inception  focused  primarily  on the  treatment  of
rheumatoid arthritis and pre-clinical animal studies of RA are now complete. The
Company  is now  starting  the  process  of filing an  investigational  new drug
application  with  the food and drug  administration  (FDA)  and has also  begun
planning full clinical trials.

About Bioregulation

The  Company's  discoveries  and its  proprietary  products  represent the first
application of  bioregulator  technology to the treatment of disease.  Since the
1960's,  however,  certain  natural and synthetic  molecules  have been known to
influence cell  proliferation  and  differentiation  in laboratory  experiments.
(Proliferation   consists   simply  of  an  increase  in  cell   number,   while
differentiation  implies the ability to accomplish  some function  especially to
respond to or initiate some change in the cell's environment.)

Both  proliferation and  differentiation  can be influenced by external stimuli,
most  of  which  are  in  the  form  of  chemical   "messages."   Under   normal
circumstances, equilibrium is maintained within and among cells by the continual
exchange of such messages. Cells may begin to function or proliferate abnormally
under three  circumstances:  when they  receive an  erroneous  signal from their
environment,  when  their  reception  or  processing  of  external  messages  is
impaired, or when they receive abnormal genetic signals from within.  Widespread
abnormalities of cellular  differentiation  cause diseases of many kinds,  while
uncontrolled cellular  proliferation causes cancer. The Company's  bioregulators
are  compounds  with the  ability  to act upon  cells  at a  primitive  level of
function,  "resetting"  their internal  mechanisms to allow resumption of normal
behavior.

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Some naturally occurring bioregulators have the property of stimulating cellular
proliferation   at   certain    concentrations,    while   promoting    cellular
differentiation  at other  concentrations.  In the latter  role,  they can bring
about increased production of antibodies in one cell line, or slow the growth of
a tumor in another,  apparently by helping  restore normal function within cells
and  promoting  cell-to-cell  signaling.  Bioregulators  seem to act upon a wide
variety of tissue types, suggesting that they affect simple activities common to
all cells.

Bioregulators  represent a completely  new approach to the treatment of disease.
For example,  rheumatoid arthritis is one of the "autoimmune" diseases, in which
cells of the immune system erroneously identify other body tissues as "foreign".
These immune cells then produce substances that attack other body tissues,  such
as the lining of the joints.  Current therapy for rheumatoid  arthritis is aimed
at either  suppressing the symptoms caused by this attack,  or inactivating  the
substances   produced  by  the  immune   cells.   In  contrast,   the  Company's
bioregulators  act upon the immune cells  themselves,  restoring normal cellular
function. In this way, bioregulator  treatment not only relieves symptoms of the
disease,  but also may promote  reversal of the tissue  damage that  already has
taken place.

The Company's research has defined the concept of bioregulators and has produced
proprietary compounds particularly suitable for therapeutic administration.  The
most active of these show intense cellular activity in miniscule doses. Clinical
effectiveness in such a low dosage range is expected to yield exceptional safety
and freedom from side effects.

Experiments and Studies

The best  demonstration of the ability of bioregulators to  re-equilibrate  cell
differentiation lie in the field of immunology.  Here, both humoral and cellular
immune  responses  can  be  modified  by  the  appropriate  concentration  of  a
bioregulating  agent. Cell proliferation also can be normalized by bioregulators
in experiments  dealing with natural  senescence  and tumor growth.  Examples of
each of these processes are outlined below.

In Vitro Experiments

IGG  Production in HPBL.  Bioregulators  induce immune  responsiveness  in human
peripheral blood lymphocytes in response to a number of antigenic  stimuli.  The
number of antibody-producing cells can be amplified as much as 100 to 1000 times
above untreated values.  This technique can be used to produce highly monoclonal
antibodies.

Cell  Senescence  Studies.  The life span of cells in culture can be extended by
nearly 100% through the action of  bioregulators.  When senescence  finally does
take place, it affects all of the cells simultaneously,  thus "rectangularizing"
the usually gradual fall of the survival curve.

In Vivo Experiments

Nude  Mice.   A  mouse   strain   lacking  in  cellular   immunity,   nude  mice
characteristically show almost no production of T cells, which makes them highly
susceptible  to  infection  and early  death.  This  situation  mimics a genetic
disease in humans called DiGeorge syndrome.  Administration of bioregulators can
partially  reverse  this  deficit,  restoring  about  70% of the  mice's  T cell
complement  and almost  doubling their life  expectancy.  The same effect can be
obtained in mice whose thymus has been surgically removed in early life.

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Nude  Rats  With  Heterologous   Tumors.   Another  rodent  strain  with  immune
deficiency, the nude rat, often is used in experiments involving transplantation
of tumors  from  another  animals,  but persist in the nude rat because of their
inability to mount a rejection  response.  Administration  of  bioregulators  in
tumor-bearing  rats results in regression of the neoplasm in about two-thirds of
the animals.

Dogs With Implanted  Homologous  Tumors.  As part of study of  bioregulators  as
potential "contrast agents" for nuclear magnetic resonance imaging, glial tumors
were  transplanted  into  the  brains  of  dogs.  This  type of  tumor  normally
progresses rapidly with irreversible  neurological signs appearing between 2 and
3 weeks after  transplantation.  A bioregulator  compound was injected 3 times a
week for 3 weeks following  transplantation.  Complete tumor regression was seen
in 100% of the treated animals.

Inflammatory   Arthritis   Model.   The  Company's   bioregulator   altered  the
inflammatory  process  in mice  induced  with  arthritis.  This  alteration  was
substantially different from a mere delaying of the onset of the disease.

Naturally Occurring Disease

Dogs and Cats With Spontaneous  Tumors. Data continues to be collated on several
dozen  domestic  dogs and cats that have been given the  bioregulator  treatment
outline above for  spontaneously  occurring  tumors of various types.  Anecdotal
reports have been received from  veterinarians all over the country,  indicating
success with  bioregulator  treatment,  but a controlled study with a consistent
protocol is needed to validate this mode of therapy.

Genetic  Autoimmune  Model.  In this  mouse  model the  Company's  bioregulators
positively affected several disease processes.

Markets

Human  autoimmune  diseases  provide  the  first  and most  obvious  target  for
bioregulator  therapy. In these disorders,  the immune system  misidentifies the
body's own tissues as "foreign," prompting an inappropriate and prolonged immune
response that can damage tissues and organs  throughout  the body.  Bioregulator
treatment can be expected to restore normal immune homeostasis,  with the result
that the disease is not merely ameliorated, but permanently cured.

RA will be the first  autoimmune  disease  targeted  and will be the primary and
immediate focus of the Company.  RA is a serious autoimmune disorder that causes
the body's immune system to mistakenly produce antibodies that attack the lining
of the  joints,  resulting  in  inflammation  and  pain.  RA can  lead to  joint
deformity  or  destruction,   organ  damage,  disability  and  premature  death.
According to a leading  scientific  journal,  the prevalence of RA in the United
States is  approximately 1% (or about 2.5 million  people),  with  approximately
200,000 new cases diagnosed yearly.

Currently,  no uniformly effective  treatment for RA exists.  Current treatments
are costly,  and in most cases must be continued for decades.  In contract,  the
Company believes that bioregulator  therapy will be much more cost effective and
can be administered by weekly injections over the course of a few months.

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The  Company's  decision to  concentrate  its efforts on RA, as opposed to other
autoimmune diseases or cancers, is based upon two main considerations:

*    Evidence from Dr.  Mann's work that  bioregulators  strongly  influence the
     immune system in ways that should  produce  beneficial  effects in patients
     with RA;

*    At this stage in the Company's development, the Company believes it is most
     appropriate  to  concentrate  its efforts and  resources  on  developing  a
     treatment  for a  single,  well  defined,  and  serious  disease  for which
     adequate therapy currently is not available.

The  Company  anticipates  that its  products  will  initially  be used to treat
patients with severe cases of RA, and  particularly  those  individuals for whom
other  treatments  have  failed.  Additionally,  the Company  believes  that its
experience with this class of patients will prove the Company  believes that its
experience with this class of patients will prove the efficacy and safety of its
products,  and will encourage the use of its products in less severely  affected
individuals in earlier stages of the disease.

Competition

In strictest terms, the Company has no direct competition in its field, since no
other  firms  have  brought  to  market  any   therapeutic   agents  based  upon
biomodulator or bioregulator  technology.  However,  the Company's products will
compete  with  other  pharmaceutical  agents  intended  to treat RA. A number of
pharmaceutical agents are currently being used, with varying degrees of success,
to control the symptoms of RA and slow its progress. Available treatment options
include:

*    Analgesic/anti-inflammatory  preparations,  ranging from simple  aspirin to
     the recently introduced COX-2 inhibitors;

*    Immunosuppressive/antineoplastic    drugs,   including   azathioprine   and
     methotrexate ;

*    TNF (Tumor Necrosis Factor)  inhibitors,  currently  represented by Immunex
     Corporation's Enbrel-Registered Trademark;

*    "Immunoadsorption  Therapy,:  now in  limited  use in Europe and the United
     States,  entailing  weekly  sessions  during  which a  patient's  blood  is
     separated and passed through a molecular filter; and

*    Colloidal gold given by injection,  a  time-honored  treatment but one with
     extreme variability of effect and an unknown mechanism of action.

In all, at least a dozen large and small pharmaceutical  companies are active in
this market,  with Immunex Corporation and Pfizer, Inc. dominating the market as
a  result  of  their  respective  products,   Enbrel-Registered   Trademark  and
Celebrex-Registered  Trademark.  Despite  intense  media  attention and enormous
sales, the long-term efficacy of these compounds remains to be evaluated.

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Operations

The  Company  is  currently   engaged  in  developing  the  corporate  base  for
commercialization of its bioregulator  products,  as well as planning production
and marketing  strategies.  The Company's  business  operations are housed in an
office in Albuquerque. The Company currently has no manufacturing facilities and
may have to rely on others to  manufacture  compounds  for the  Company's use in
research and development, pre-clinical trials, and clinical trials.

The  Company  continues  ongoing  research  aimed  at  clarifying  the  biologic
functions of bioregulators,  establishing  their safety and efficacy in treating
induced arthritis in animals,  and determining  appropriate dosage and treatment
protocols.

Reverse Merger

In  September  1999,  Protalex,  Inc.,  a New Mexico  corporation  ("Protalex"),
acquired a majority  of the issued  and  outstanding  shares of common  stock of
Enerdyne  from  Don  Hanosh,  pursuant  to a Stock  Purchase  Agreement  between
Protalex,  Enerdyne  and Mr.  Hanosh.  Under the Stock  Purchase  Agreement,  in
consideration  for Mr.  Hanosh's  shares of common  stock,  Protalex  executed a
Promissory Note in the amount of $368,546.00 in favor of Mr. Hanosh.

In November 1999,  Protalex  merged with and into Enerdyne  pursuant to a Merger
Agreement  and Plan of  Reorganization  (the "Merger  Agreement"),  and Enerdyne
changed its name to Protalex,  Inc.,  thereby  creating  the Company.  Under the
Merger Agreement,  each share of Protalex common stock  outstanding  immediately
prior to the effective  date of the merger was converted  into 822 shares of the
Company's common stock.  After the merger,  Protalex's former  shareholders held
approximately  92.28%  of  the  shares  of  common  stock  of the  Company,  and
Enerdyne's former  shareholders held approximately 7.72% of the shares of common
stock of the Company.

Business and Marketing Strategy

The  Company  has  initiated  private  placements  of stock to raise  funds  for
completion of animal research, initiation of Phase I and Phase II human studies,
and production and marketing of the Company's products on a commercial scale and
has recently begun applying for patent coverage. Currently the Company estimates
that it has enough cash to fund  development  activities  and operations for the
next 12 months.

The  Company  expects  if it is  granted  all  regulatory  approvals,  that  its
bioregulator  products  will  be  competitive   throughout  the  global  market.
Therefore,  the Company intends to enter into  collaborative  arrangements  with
larger  strategic  partners  to market and sell the  Company's  products  in the
United States and in foreign  markets.  The Company  expects that these partners
will be responsible  for funding or reimbursing all or a portion of the costs of
pre-clinical  and clinical trials  required to obtain  regulatory  approval.  In
return for such  payments,  the Company will grant these  partners  exclusive or
semi-exclusive   rights  to  market   certain  of  its  products  in  particular
geographical regions.

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Government Regulation

The  Company's  ongoing  research  and  development  activities,  and its future
manufacturing and marketing  activities,  are subject to extensive regulation by
numerous  governmental  authorities,  both in the  United  States  and in  other
countries. In the United States, the FDA regulates the approval of the Company's
products under the authority of the Federal Food, Drug and Cosmetics Act.

In  order  to  obtain  FDA  approval  of  the  Company's  new  drugs,  extensive
pre-clinical  and  clinical  tests must be  conducted  and a rigorous  clearance
process  must be  completed.  Satisfaction  of the  FDA's  safety  and  efficacy
requirements  may take several years and require the  expenditure of substantial
resources.

The FDA approval  process  entails  several steps.  Initially,  the Company must
conduct  pre-clinical  trials.  During  pre-clinical  trials,  the Company  must
evaluate the safety and  efficacy of its  products  through in vitro and in vivo
laboratory animal testing. Subsequently the FDA will require, at a minimum, that
the Company (i) prepare a  pharmacological  profile of the drug;  (ii) determine
the toxicity of the drug in at least two species of animals;  and (iii)  conduct
short-term toxicity studies ranging from two weeks to three months, depending on
the proposed clinical trials.

Upon successful  completion of pre-clinical  trials,  the Company must submit an
Investigational  New Drug  Application  ("IND")  to the FDA  before it can begin
human  clinical  trials.  The  purpose  of the  IND is to  confirm  pre-clinical
research data.

Clinical studies are typically  conducted in three sequential  phases,  although
these phases may overlap.  In Phase I trials, a drug is tested for safety in one
or more doses in a small number of patients or  volunteers.  In Phase II trials,
efficacy  and safety are tested in up to  several  hundred  patients.  Phase III
trials involve  additional  safety,  dosage and efficacy  testing in an expanded
patient population at multiple test sites.

The results of the  pre-clinical and clinical trials are submitted to the FDA in
the form of a new Drug  Application  ("NDA").  The  approval  of an NDA may take
substantial  time and effort.  In addition,  upon approval of an NDA the FDA may
require post marketing  testing and  surveillance  of the approved  product,  or
place other conditions on their approvals.

In 1997,  the FDA's  Modernization  Act (the "Act) was passed.  The Act expanded
earlier  laws  passed  to  shorten  the  drug  approval  process  and  developed
guidelines  regarding the testing and approval process for products  intended to
treat serious or life-threatening illnesses. More specifically,  the Act created
a fast-track  process which  facilitates and expedites the review and testing of
new drugs that are intended to treat serious or life threatening diseases, while
preserving appropriate  guarantees for safety and effectiveness.  The passage of
the Act reflects the  recognition  that both patients and physicians are willing
to accept  greater  risks and side  effects  from  products  that treat  serious
diseases.  The fast-track  procedures apply to products  intended to treat AIDS,
some  cancers and other life  threatening  illnesses.  In most cases,  a drug is
usually  given a  fast-track  designation  at a  relatively  early  stage in its
development.

Sales of new drugs outside the United  States are subject to foreign  regulatory
requirements that differ from country to country. Foreign regulatory approval of
a product  must  generally  be obtained  before that  product may be marketed in
those countries.

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However, the FDA approval process is among the most restrictive in the world and
typically  takes a longer time to complete  than  foreign  regulatory  approval.
Research and development  efforts and pre-clinical trial for the Company's first
product for the treatment of RA are  complete.  The Company has started to apply
to the FDA to secure its approval for limited  safety  testing of the  Company's
product in humans.  Following the  successful  completion of limited  safety and
efficacy trials, the Company expects to conduct full-scale studies of safety and
efficacy  (NDA) in patients with advanced and  intractable  RA. This  full-scale
study will be supervised by Dr. Arthur Bankhurst,  a renowned  rheumatologist at
the  University  of New Mexico,  and should be  completed in  approximately  two
years.  Dr.  Bankhurst is a director and  shareholder  of the Company.  Once the
trials are finished,  an application for FDA authorization to produce and market
the product will be filed,  with final approval  estimated to take an additional
six months.

Patents, Trademarks, and Proprietary Technology

The  Company's  success will depend on its ability to maintain its trade secrets
and proprietary  technology in the United States and in other countries,  and on
the Company to obtain patents for the bioregulatory  technology.  The Company is
currently  seeking  patents  for  proteins  for  use as  medications  for  human
autoimmune disease. Patent protection will also be sought for the derivatives of
proteins which can also be found in other bioregulators.  The Company expects to
submit its initial  patent for  proteins in the fall of 2001 and the  additional
patents  shortly  thereafter.  In  addition  to patent  protection,  the Company
intends to seek trademark  protection for the term  "bioregulator."  The Company
believes that this will assist in differentiating this new field of science from
current biomodulator theory.

Risks Related To The Company's Business

This Registration Statement Contains Forward-Looking Statements Which May Differ
From The Company's Actual Future Results.  This registration  statement contains
forward-looking  statements that involve  substantial  risks and  uncertainties.
These statements are identified by forward-looking  words such as "may," "will,"
"expect," "anticipate,"  "believe," "estimate," and "continue" or similar words.
Statements  that  contain  these words  should be read  carefully  because  they
discuss the Company's future expectations,  contain projections of the Company's
future results of operations or of the Company's financial condition,  and state
other  "forward-looking"  information.  The Company  believes it is important to
communicate its  expectations.  However,  there may be events in the future that
the Company is not able to  accurately  predict or over which the Company has no
control.

The  risk  factors  listed  in this  section,  as well as any  other  cautionary
language  appearing in this registration  statement,  provide examples of risks,
uncertainties  and events that may cause the Company's  actual results to differ
materially  from the  expectations  described in the  Company's  forward-looking
statements.  The  occurrence  of the events  described in these risk factors and
elsewhere in this  registration  statement  could have an adverse  effect on the
Company's business, results of operations and financial condition.

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The  Company  May Not Be Able To  Continue  As A Going  Concern  If It Does  Not
Attract  Investment  Capital Or  Generate  Operating  Revenue.  The Company is a
development  stage enterprise and does not have operating  revenue,  nor does it
anticipate  generating  operating revenue in the foreseeable future. The ability
of the Company to  continue as a going  concern is  dependent  initially  on its
ability to raise sufficient  investment capital to fund all necessary operations
and product development activities.  Thereafter,  in order to generate operating
revenue the Company  must develop  products  that gain  regulatory  approval and
market  acceptance.  There can be no assurance  that the Company will be able to
raise  sufficient  investment  capital or  successfully  develop  and market its
products.

The Company Has A History Of Losses  Since Its Merger  With  Enerdyne,  And Will
Continue To Incur Losses Until Its Sales  Generate  Sufficient  Revenues.  Since
Enerdyne  Corporation's  acquisition  of  Protalex,  Inc.  (which is more  fully
described in "Corporate History"),  the Company has incurred significant losses.
The  Company  expects  to  continue  to  incur  net  losses  until  sales of its
biomodulator  products  generate  sufficient  revenues  to fund  its  continuing
operations.

The Company Is  Uncertain  Whether Its  Bioregulator  Products  Can Be Developed
Successfully,  And It May Have To Incur  Additional  Expenses If It  Experiences
Problems In Development. The Company does not know whether bioregulator products
can be  successfully  developed for  administration  as human  medications.  The
Company's  failure to demonstrate the safety and/or efficacy of its bioregulator
product, at the human trial stage, would necessitate  potentially  expensive and
time-consuming additional research.

The Company's  Bioregulator Product Is Limited To A Single Disease,  Which Means
The  Company's  Prospects  May Be Limited If Its Product  Does Not  Successfully
Treat The  Disease.  The  Company is focused on the  treatment  of one  disease,
rheumatoid  arthritis.  If the results from the Company's  animal studies and/or
the human  clinical  trials  related to that  disease are  inconclusive  or show
results no better than a substance with no medical effect, the Company would not
have a  commercially  viable  product.  In this case, a great deal of additional
research would be required, and it is unlikely that the Company would be able to
attract further capital.

The  Company's  Bioregulator  Products  May  Not  Be  Accepted  By  The  Medical
Community,  Which Would Result In Poor Product Sales. The Company's bioregulator
product  may be safe  and  effective  for its  intended  use,  but may not  show
sufficient   superiority  to  other  treatments  currently  in  use  to  gain  a
significant  share of the  market.  Additionally,  the  novelty  of this form of
treatment  or its mode of  administration  may make  bioregulator  therapy  less
appealing  than  existing  treatments  to  prescribing  physicians  or to  their
patients.  Inadequate  medical acceptance would result in poor product sales and
decreased  profitability,  and could impair the Company's ability to continue to
operate.

The Company Is  Uncertain  Whether Its  Existing  Bioregulator  Products  Can Be
Extended To Treat Diseases Other Than  Rheumatoid  Arthritis.  While the Company
will  initially  focus on the treatment of rheumatoid  arthritis,  its long-term
plans call for the  extension  of  bioregulator  therapy to other types of human
disease,  such as cancer.  The  development  of new  bioregulator  products  (or
expanding  the  indications  for  existing  products  to  the  treatment  of new
diseases)  will be subject to many of the same  hazards and risks  discussed  in
this "Risk Factors" section.

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The Company Is Exposed To Significant  Costs And Risks Related To The Regulatory
Approval Of Bioregulator Products,  And Is At A Competitive  Disadvantage Due To
Its Need To Complete The Regulatory  Process.  Before the Company's products can
be  manufactured,  marketed and sold to the public,  the requirements of the FDA
and similar governmental agencies in foreign countries must be met. The approval
process typically entails considerable time and expense, and may delay marketing
of the Company's products for a considerable  period. The Company cannot predict
when  regulatory  applications  might be  submitted,  nor when final  regulatory
approval will be obtained.  Also, the FDA could approve only certain uses of the
Company's products or subject its products to additional testing or surveillance
programs.  Failure to obtain  timely FDA  approval  will  require the Company to
spend more resources on additional applications,  and would delay the generation
of income from sales of the Company's  products.  In addition,  the FDA approval
process  presents a competitive  advantage to some of the Company's  competitors
who have already received FDA approval for their products.

The Company  Depends On  Reimbursement  From Third Parties,  Who May Decrease Or
Eliminate The Amount Of  Reimbursement  Paid To The Company.  In today's medical
economy,  reimbursement  for all types of medical care depends  substantially on
third  party  payors,  including  government  authorities  (e.g.,  the  Medicare
program),  private  health  insurers  and  other  organizations,  such as health
maintenance  organizations  ("HMOs").  Managed  healthcare  is increasing in the
United  States,  the number of HMOs is growing,  and  legislative  proposals are
being introduced to reform  healthcare or reduce  government  medical  insurance
programs.  As a part of their cost-control  efforts, such entities may establish
fiscal policies  decreasing or eliminating the amount of  reimbursement  for the
Company's products,  making it difficult for the Company to sell its products at
a sufficient profit to remain in business.

The  Company  May  Not Be Able  To  Manufacture  Its  Bioregulator  Products  In
Commercial  Quantities  And May  Have To  Incur  Significant  Costs  To Meet Its
Manufacturing  Requirements.   Currently,  the  Company  does  not  possess  the
facilities  or equipment to  manufacture  its products.  The Company  intends to
contract  with a  third  party  or  parties  to  manufacture  its  products  for
commercial  distribution.  However, the Company does not know whether such third
party or parties will be able to successfully  manufacture sufficient quantities
of the Company's products for these purposes. Therefore, the Company may have to
invest substantial sums to construct facilities sufficient to meet its long-term
manufacturing requirements. See "Operations."

The Company May Not Be Able To Protect Or Maintain  The  Security Of Its Patents
Or Other Proprietary  Information.  The Company intends to apply for,  prosecute
and  maintain  patents  for this  technology.  Conceivably,  the  Company may be
unsuccessful  in  obtaining  patents  and in avoiding  infringements  of patents
granted  to  others.   Even  if  patents  are  granted  to  the   Company,   the
enforceability  of patents issued to biotechnology and  pharmaceutical  firms is
often highly uncertain, and existing law may not protect the Company's patents.

Without patent  protection,  it is unlikely that the Company could  successfully
market its bioregulator products.  Lacking a proprietary advantage,  the Company
would be  unable to  prevent  marketing  of its  biomodulator  products  by more
well-established  competitors  who  would be able to  dominate  the  market.  In
addition,  the Company  could incur  substantial  costs in defending  any patent
litigation  brought  against  it or in  asserting  its  patent  rights in a suit
against another party. See "Patents, Trademarks and Proprietary Technology."

                                       11
<PAGE>

The Company  relies on trade  secrets,  know-how  and  continuing  technological
advancement  to develop  and  maintain  its  competitive  position.  The Company
requires that each of its employees enter into a confidentiality  agreement that
contains  provisions  prohibiting the disclosure of confidential  information to
anyone outside the Company. However, these confidentiality agreements may not be
honored and the  Company  may be unable to protect its rights to its  unpatented
trade secrets.  Dissemination of this proprietary information might allow others
to develop  bioregulator  products that would compete with those of the Company,
diminishing the Company's sales and market share.

The  Company's  Business  Could Be Harmed By New  Research  Efforts  and Product
Development By The Company's  Competitors,  Most of Whom Have Greater  Resources
Than  The  Company.   The  Company  is  engaged  in  a  sector  of  the  economy
characterized by extensive research efforts and rapid technological development.
New drug discoveries are to be expected, including those directed at the disease
the  Company  has  targeted.   A  number  of  the  Company's   competitors  have
substantially more capital, research and development, regulatory, manufacturing,
marketing,  human and other  resources  and  experience  than the Company.  Such
competitors may develop products that are more effective or less costly than any
of the  Company's  current or future  products  and also may  produce and market
their  products  more  successfully  than the  Company.  Large-scale  successful
competition would reduce the Company's market share and profitability, and might
jeopardize the Company's ability to stay in business. See "Competition."

The Company Is Exposed To Significant Liability Associated With Its Bioregulator
Products,  And May Not Be Able To  Secure  Insurance  To  Cover  These  Risks On
Acceptable  Terms, If At All. While the Company  believes that its  bioregulator
product  will be safe  compared  to other  drugs,  the  Company  still may incur
significant  product  liability  exposure.  When the Company  develops a product
suitable  for  human  administration,  it  intends  to secure  adequate  product
liability  coverage.  However,  insurers  may  not  offer  the  Company  product
liability  insurance,  may raise the  price of such  insurance  or may limit the
coverage of such insurance. In addition, the Company may not be able to maintain
such  insurance in the future on  acceptable  terms and such  insurance  may not
provide the Company with adequate coverage against potential  liabilities either
for clinical trials or commercial sales.  Successful product liability claims in
excess of the Company's insurance would affect the Company's ability to continue
to operate as a going concern.

The  Company  Is  Exposed  To  Significant   Environmental   Risks  Because  Its
Bioregulator   Research  And  Development   Activities   Involve  Hazardous  And
Radioactive Materials. The Company's research and development activities involve
the controlled use of hazardous materials,  chemicals and radioactive compounds.
The  Company  is  subject  to  federal,  state  and local  laws and  regulations
governing the use, manufacture, storage, handling and disposal of such materials
and certain waste products.

Although  the  Company  believes  that its  planned  safety  procedures  for the
handling and disposal of such materials comply with the standards  prescribed by
such  laws  and  regulations,   it  cannot  eliminate  the  risk  of  accidental
contamination or injury from these materials.  In the event of such an accident,
the  Company  could be held  liable  for any  damages  that  result and any such
liability could exceed the Company's  resources.  The Company may be required to
incur significant costs to comply with environmental laws and regulations in the
future.  Current or future  environmental  laws or  regulations  may  materially
adversely affect the Company's operations, business or assets.

                                       12
<PAGE>

Dependence  upon  Key  Personnel;  Management  of  Growth.  The  success  of the
Company's  operations during the foreseeable future will depend largely upon the
continued services of the following individuals: Mr. John Doherty, the Company's
President, Dr. Paul Mann, the Company's Treasurer and Secretary. The loss of the
services of Mr. Doherty or Dr. Mann could have a material  adverse impact on the
Company.  Mr.  Doherty or Dr. Mann have not entered into  employment  agreements
with the Company.

The Company's success will also depend in part on its ability to manage, attract
and retain qualified technical, management and sales personnel.  Competition for
such  personnel is intense.  There can be no assurance  that the Company will be
successful in attracting  and retaining the personnel it required to conduct its
operations successfully.  The Company's results of operations could be adversely
affected  if the  Company  were  unable to  attract,  manage  and  retain  these
personnel or if its revenues fail to increase at a rate sufficient to absorb the
resulting increase in expenses. See "Employees."

Control By Principal  Shareholders.  As of May 31, 2001, each of Mr. Doherty and
Dr. Mann beneficially  owned  approximately 28% of the outstanding shares of the
Company's common stock. Mr. Doherty and Dr. Mann  collectively  have the ability
to  control  the  election  of all of the  members  of the  Company's  Board  of
Directors and the outcome of corporate  actions requiring  majority  shareholder
approval.  Even as to  corporate  actions  in which  super-majority  shareholder
approval may be required such as fundamental corporate transactions, Mr. Doherty
and Dr. Mann will collectively control the outcome of such actions.

Absence of Prior Trading Market; Potential Volatility of Stock Price. The market
price of the shares of the Company's  common stock is highly  volatile.  Factors
such as fluctuation the Company's  operating  results,  the  introduction of new
products  or  services by the  Company or its  competitors,  and general  market
conditions  may have a  significant  effect on the market price of the Company's
common stock.

Need for Additional Funding.  The Company believes that its available short-term
assets and investment income will be sufficient to meets its operating  expenses
and capital  expenditures for 12 months. The Company does not know if additional
financing  will be available when needed,  or if it is available,  if it will be
available on acceptable terms.  Insufficient  funds may prevent the Company from
implementing  its business  strategy or may require the Company to delay,  scale
back or eliminate certain components of its business plan.

Employees

The Company currently has two full-time employees and three part-time employees.
The Company's  employees are non-union and none are  represented by an organized
labor union. The Company  believes its  relationship  with its employees is very
good and it has never experienced an employee-related work stoppage. The Company
will need to hire and retain highly-qualified experienced technical,  management
and sales  personnel  in order to execute its business  plan,  carry out product
development  and secure  advantages over its  competitors.  No assurances can be
given that the  Company  will  continue  to be able to pay the  higher  salaries
necessary to retain such skilled employees.

                                       13
<PAGE>

Additional Information

The Company intends to provide an annual report to its security holders,  and to
make quarterly  reports  available for inspection by its security  holders.  The
annual report will include audited financial statements.


ITEM 2 - DESCRIPTION OF PROPERTY

The  Company's  office and  laboratory  is  located at 717 Encino NE,  Suite 17,
Albuquerque,  New Mexico 87106.  The Company leases this property  pursuant to a
three-year lease agreement.


ITEM 3 - LEGAL PROCEEDINGS

The Company is not a party to any pending legal proceedings.


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

No matter was submitted to a vote of security  holders during the fourth quarter
of the fiscal year ended May 31, 2001.


ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
                 MATTERS

The Company's  common stock is traded on the OTC Bulletin Board under the symbol
"PRTX".  The common stock of Enerdyne  prior to the reverse merger was traded on
the OTC Bulletin Board under the symbol "ENDY".

                                       14
<PAGE>

The following table sets forth, for the fiscal periods  indicated,  the high and
low closing bid prices for the common  stock of Enerdyne  through  November  15,
1999 and for Protolex,  Inc. after that date. The Company's  fiscal  year-end is
May 31. The quotations are taken from internet quotation sources. The quotations
may reflect inter-dealer prices, without retail mark-up,  markdown or commission
and may not necessarily represent actual transactions.

                                                High    Low
                                                ----    ---
        Fiscal Year 1997
                First Quarter                   0.125   0.125
                Second Quarter                  0.125   0.125
                Third Quarter (1)                N/A     N/A
                Fourth Quarter                  0.125   0.125

        Fiscal Year 1998
                First Quarter (1)                N/A     N/A
                Second Quarter                  0.125   0.125
                Third Quarter                    N/A     N/A
                Fourth Quarter                  0.125   0.125

        Fiscal Year 1999
                First Quarter                   0.125   0.125
                Second Quarter (1)               N/A     N/A
                Third Quarter (1)               0.625   0.125
                Fourth Quarter                  1.5625  0.625

        Fiscal Year 2000
                First Quarter                   3.23    1.875
                Second Quarter                  3.937   2.062
                Third Quarter                   2.812   2.125
                Fourth Quarter                  3.187   1.950

(1) No trading  activity  occurred for the common  stock of Enerdyne  during the
third  quarter of fiscal year 1997,  the first and third quarter and quarters of
fiscal year 1998, and the second and third quarters of fiscal year 1999.

At May 31, 2001 the Company had  10,608,635  share of common stock  outstanding,
which  were held by  holders of record.  The  transfer  agent for the  Company's
common stock is Standard Registrar & Transfer Agency, PO Box 1411,  Albuquerque,
NM 87191. The Company has nine market makers currently.

Dividend Policy. No dividends have been declared or paid to date by the Company.
The Company  currently  anticipates  that it will retain all future earnings for
use in the  operation  and  expansion of its  business  and does not  anticipate
paying any cash dividends in the foreseeable future.

Recent Sales of Unregistered Securities.  In November 1999, the Company issued a
total of 8,289,048  shares of its common  stock to Protalex,  Inc., a New Mexico
corporation (Protalex),  in connection with its acquisition of Protalex pursuant
to a Merger  Agreement  and Plan of  Reorganization.  The Company  issued  these
shares in reliance upon the exemption from  registration  in Section 4(2) of the
Securities Act of 1933, as amended.

                                       15
<PAGE>

Subsequent to November  1999, at various dates from November 18 through  January
12, 2000, the Company issued 459,444 shares of stock to various  individuals all
at $0.36 per  share.  From May 1, 2000 to May 27,  The  Company  issued  641,644
shares of stock to various  individuals all at $1.00 per share. The Company also
issued 100,000  shares of restricted  stock in exchange for legal  services.  In
December of 2000 the Company issued 425,000 shares of restricted stock at $1 per
share.  The  Company  issued  these  shares in  reliance  on the  "sophisticated
investor"  exemption and obtained signed  subscription  agreements  attesting to
financial net worth and investment experience of the stock purchasers.


ITEM 6 - PROTALEX INC. - MANAGEMENT'S DISCUSSIONS AND ANALYSIS INCLUDING PLAN OF
OPERATION

Protalex,  Inc. ended its fiscal year by continuing  with its animal studies and
its general  laboratory  work.  Early results of the Company's  acute  arthritis
model study were encouraging. The Company intends to extend the treatment period
of the animals beyond the usual two-week  treatment period to verify whether the
Company's drug  continues to work well over longer periods of time.  Work in the
laboratory continued on schedule,  further validating the Company's  therapeutic
approach.  Based on  laboratory  results  to date,  the  Company  will  continue
research and begin the process of pursuing a physician sponsored investigational
new drug application.  Successful completion of this application would result in
the Company making the important transition to treatment of humans.

The Company continues to pursue additional financing.  In the near term the goal
remains the same:  to raise  funds in the  vicinity  of  $5,000,000  in order to
continue all present  operations,  and necessary  research and development.  The
Company's  longer term funding goal also remains at the same level;  $15,000,000
to $20,000,000 to fully implement the Company's Bioregulator technology.

As of August 6th, 2001 Protalex,  Inc. has been engaged in a private  placement.
As of August  24th  approximately  $950,000  has been  escrowed  and the minimum
funding level has been achieved.  The escrow will remain open for  approximately
ten additional days as more funds may be received.  The maximum capital that can
be escrowed under the placement agreement is $1,125,000.  Final funding from the
private  placement  together with current  resources  will fund  operations  and
necessary  research and development  for the next 12 months.  In connection with
this funding and future funding  efforts,  an affiliated  company Alex, LLC, has
decided to transfer all intellectual property rights,  interests and application
of  bioregulator  technology  to the Company so that the Company  directly  owns
them.  This transfer is in process and all  necessary  actions will be completed
shortly. As noted above, the Company's laboratory work continues to support this
intellectual  property  base.  The Company  has  acquired  and will  continue to
acquire laboratory equipment. These acquisitions will help to keep down the high
cost associated with frequent third party contracting,  and speed the process of
learning  more about  various  aspects of the  Company's  core  technology.  The
Company has started the process of patent applications in early July. It expects
to file its first patent in the fall of 2001.

Please refer to the  Company's  10-SB filing  (December 3, 1999) and  amendments
thereto for more information on the Company's technology and risk factors.

                                       16
<PAGE>

ITEM 7 - FINANCIAL STATEMENTS

                              FINANCIAL STATEMENTS
                           AND REPORT OF INDEPENDENT
                          CERTIFIED PUBLIC ACCOUNTANTS

                                 PROTALEX, INC.
                      (A COMPANY IN THE DEVELOPMENT STAGE)

                                  May 31, 2001




<PAGE>



                                C O N T E N T S


                                                                Page

REPORT OF INDEPENDENT CERTIFIED
  PUBLIC ACCOUNTANTS                                             1

FINANCIAL STATEMENTS

        BALANCE SHEET                                            2

        STATEMENT OF OPERATIONS                                  3

        STATEMENT OF STOCKHOLDERS' DEFICIT                       4

        STATEMENT OF CASH FLOWS                                5-6

NOTES TO FINANCIAL STATEMENTS                                 7-13








<PAGE>


        REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



Board of Directors
Protalex, Inc.


We have audited the accompanying  balance sheet of Protalex,  Inc. (a New Mexico
corporation  in the  development  stage)  as of May 31,  2001,  and the  related
statements of  operations,  stockholders'  deficit and cash flows for the period
from  September  17, 1999  (inception)  through May 31,  2001.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in 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 our audit  provides a reasonable
basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial  position of Protalex,  Inc. as of May 31,
2001,  and the results of its  operations and its cash flows for the period from
September 17, 1999 through May 31, 2001 in conformity with accounting principles
generally accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue as a going  concern.  The Company is in the  development
stage and its ability to continue as a going  concern is initially  dependent on
its ability to raise  adequate  capital to fund  necessary  product  development
activities  and  subsequently  on the inflow of operating  revenue  derived from
developed  products which must be regulatory  approved and market accepted.  The
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.


                                                 Atkinson & Co., Ltd.

Albuquerque, New Mexico
August 11, 2001
  (except for note J-3 as to
  which the date is August 24, 2001)


                                       1
<PAGE>
                                 Protalex, Inc.
                      (A Company in the Development Stage)

                                 BALANCE SHEET

                                  May 31, 2001


                                     ASSETS

CURRENT ASSETS
  Cash ............................................   $   212,254
  Prepaid expense .................................        17,141
                                                      -----------
         Total current assets .....................                  $   229,395

EQUIPMENT
  Lab equipment ...................................       174,727
  Office and computer equipment ...................       128,149
  Furniture & fixtures ............................        15,495
  Leasehold improvements ..........................        10,590
                                                      -----------
                                                          328,961
  Less accumulated depreciation ...................        83,916        245,045
                                                      -----------
OTHER ASSETS
   Intellectual technology license, net of
    accumulated amortization of $1,608 ............                       18,692
                                                                     -----------

                                                                     $   493,132
                                                                     ===========


                                  LIABILITIES

CURRENT LIABILITIES
  Professional fees payable .......................   $       192
  Payroll taxes payable ...........................         4,652
  Interest payable ................................         3,004
  Current maturities of long-term liabilities .....       172,886
  Accrued compensation ............................        17,922
                                                      -----------
         Total current liabilities ................                  $   198,656

LONG-TERM LIABILITIES, less current maturities
  Equipment note payable ..........................                       36,687
                                                                     -----------
         Total liabilities ........................                      235,343

STOCKHOLDERS' DEFICIT
  Common stock, no par value, authorized
    40,000,000 shares, 10,847,135 shares
    issued, 10,608,635 shares outstanding .........
    238,500 shares in the treasury at -0- cost ....     1,390,891
  Common stock, contra ............................      (368,547)
  Additional paid in capital ......................        40,000
  Deficit accumulated during the development stage       (804,555)       257,789
                                                      -----------    -----------

                                                                     $   493,132
                                                                     ===========

    The accompanying notes are an integral part of this financial statement.
                                       2
<PAGE>


                                 Protalex, Inc.
                      (A Company in the Development Stage)

                            STATEMENT OF OPERATIONS

            From Inception (September 17, 1999) through May 31, 2001


                                                                       From
                                                                     Inception
                                       Year Ended     Year Ended      Through
                                      May 31, 2001   May 31, 2000   May 31, 2001
                                      ------------   ------------   ------------

Interest income ...................    $  12,228      $  10,669      $  22,897

Expenses
  Research and development ........      452,102        123,491        575,593
  Professional fees ...............       36,859         77,520        114,379
  Administrative ..................       42,223         27,813         70,036
  Interest ........................       23,649         25,991         49,640
  Depreciation and amortization ...       11,261          6,543         17,804
                                       ---------      ---------      ---------

         NET LOSS .................    $(553,866)     $(250,689)     $(804,555)
                                       =========      =========      =========

Loss per common share - Basic .....    $    (.05)     $    (.03)     $    (.08)
                                       =========      =========      =========

Loss per common share - Diluted ...    $    (.05)     $    (.03)     $    (.08)
                                       =========      =========      =========

   The accompanying notes are an integral part of these financial statements.
                                       3
<PAGE>

                                 Protalex, Inc.
                      (A Company in the Development Stage)

                       STATEMENT OF STOCKHOLDERS' DEFICIT

            From Inception (September 17, 1999) through May 31, 2001
<TABLE>
<CAPTION>
                                                                                                Deficit
                                                                                              Accumulated
                                         Common Stock         Additional       Common         In The
                                  -------------------------     Paid in        Stock-       Development
                                     Shares        Amount       Capital        Contra          Stage          Total
                                  -----------   -----------   -----------    -----------    -----------    -----------
<S>                               <C>           <C>           <C>            <C>            <C>            <C>
September 17, 1999 -- initial
  issuance of 10,000 shares
  for intellectual technology
  license at $.03 per share ...        10,000   $       300   $      --      $      --      $      --      $       300

September 30, 1999 -- cost of
  public shell acquisition over
  net assets acquired to be
  accounted for as a
  recapitalization ............          --            --            --         (250,000)          --         (250,000)

October 27, 1999 -- issuance of
  84 shares to individual for
  $25,000 .....................            84        25,000          --             --             --           25,000

November 15, 1999 -- reverse
  merger transaction with
  Enerdyne Corporation, net
  transaction amounts .........     8,972,463       118,547          --         (118,547)          --             --

November 15, 1999 -- treasury
  shares - Enerdyne  $-0- cost        238,500          --            --             --             --             --

November 18, 1999 - February
  7, 2000 -- issuance of
  459,444 shares to various
  investors at $0.36 per share        459,444       165,400          --             --             --          165,400

January 1, 2000 -- issuance of
  100,000 shares in exchange
  for legal services ..........       100,000        15,000          --             --             --           15,000

May 1 - 27, 2000 -- issuance
  of 640,000 shares to various
  investors at $1.00 per share        640,000       640,000          --             --             --          640,000

May 27, 2000 -- issuance of
  1,644 shares to individual
  in exchange for interest due          1,644         1,644          --             --             --            1,644

December 7, 2000 -- issuance
  of 425,000 shares to various
  investors at $1.00 per share        425,000       425,000          --             --             --          425,000

Additional paid in capital ....          --            --          40,000           --             --           40,000

Net loss from prior periods ...          --            --            --             --         (250,689)      (250,689)

Net loss for the year .........          --            --            --             --         (553,866)      (553,866)
                                  -----------   -----------   -----------    -----------    -----------    -----------

                                   10,847,135   $ 1,390,891   $    40,000    $  (368,547)   $  (804,555)   $   257,789
                                  ===========   ===========   ===========    ===========    ===========    ===========
</TABLE>
   The accompanying notes are an integral part of these financial statements.
                                       4
<PAGE>

                                 Protalex, Inc.
                      (A Company in the Development Stage)

                            STATEMENT OF CASH FLOWS

        Periods from Inception (September 17, 1999) through May 31, 2001
<TABLE>
<CAPTION>

                                                                                      From Inception
                                                          Year Ended     Year Ended      Through
                                                         May 31, 2001   May 31, 2000   May 31, 2001
                                                         -----------    -----------    -----------
<S>                                                      <C>            <C>            <C>
Cash flows from operating activities
  Net loss ...........................................   $  (553,866)   $  (250,689)   $  (804,555)
  Adjustments to reconcile net loss to net
    cash provided by operating activities
      Depreciation and amortization ..................        78,980          6,543         85,523
      Non cash expenses ..............................          --           16,644         16,644
      (Increase) decrease in interest receivable .....        10,669        (10,669)          --
      (Increase) in prepaid expense ..................       (16,641)          (500)       (17,141)
      Increase in payroll taxes payable ..............         3,877            775          4,652
      Increase (decrease) in interest payable ........        (4,758)         7,762          3,004
      Increase (decrease) in professional fees payable        (7,592)         7,782            190
      Increase in compensation payable ...............        12,804          5,120         17,924
      Decrease in installment purchase payable .......       (24,687)          --          (24,687)
      Increase (decrease) in related party advance
       and licenses fee payable ......................       (40,000)        40,000           --
                                                         -----------    -----------    -----------

         Net cash used in operating activities .......      (541,214)      (177,232)      (718,446)
                                                         -----------    -----------    -----------

Cash flows from investing activities
  Acquisition of intellectual technology license
    - fee portion ....................................          --          (20,000)       (20,000)
  Acquisition of equipment ...........................      (164,849)       (72,680)      (237,529)
  Excess of amounts paid for Public Shell
    over assets acquired to be accounted for
    as a recapitalization ............................          --         (250,000)      (250,000)
  Note receivable from individual ....................       118,547       (118,547)          --
  Issuance of note payable to individual .............          --          368,546        368,546
                                                         -----------    -----------    -----------

         Net cash used in investing activities .......       (46,302)       (92,681)      (138,983)
                                                         -----------    -----------    -----------

Cash flows from financing activities
  Proceeds from stock issuance .......................       425,000        830,400      1,255,400
  Additional paid-in-capital .........................        40,000           --           40,000
  Principal payment on note payable individual .......      (225,717)          --         (225,717)
                                                         -----------    -----------    -----------

         Net cash provided by financing activities ...       239,283        830,400      1,069,683
                                                         -----------    -----------    -----------

NET INCREASE IN CASH .................................      (348,233)       560,487        212,254

Cash, beginning of period ............................       560,487           --             --
                                                         -----------    -----------    -----------

Cash, end of period ..................................   $   212,254    $   560,487    $   212,254
                                                         ===========    ===========    ===========
</TABLE>
   The accompanying notes are an integral part of these financial statements.
                                       5
<PAGE>

                                 Protalex, Inc.
                      (A Company in the Development Stage)

                       STATEMENT OF CASH FLOWS -CONTINUED

        Periods from Inception (September 17, 1999) through May 31, 2001

<TABLE>
<CAPTION>
                                                                                    From Inception
                                                 Period Ended      Period Ended        Through
                                                 May 31, 2001      May 31, 2000      May 31, 2001
<S>                                            <C>               <C>               <C>

Interest paid ..............................   $        28,407   $        16,585   $        44,992
                                               ===============   ===============   ===============

Taxes paid .................................   $            50   $          --     $            50
                                               ===============   ===============   ===============


SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
ACTIVITIES


10,000 shares of company stock were
  issued as part of the cost of acquisition
  of the intellectual technology license
  at inception - value at $.03 per share ...   $          --     $           300   $           300
                                               ===============   ===============   ===============

100,000 shares of company stock were
  issued in exchange for legal services
  performed ................................   $          --     $        15,000   $        15,000
                                               ===============   ===============   ===============

1,644 shares of company stock were
  issued in exchange for interest payable ..   $          --     $         1,644   $         1,644
                                               ===============   ===============   ===============

Lab equipment was acquired through
  issuance of installment contract to seller   $          --     $        91,430   $        91,430
                                               ===============   ===============   ===============
</TABLE>
   The accompanying notes are an integral part of these financial statements.
                                       6
<PAGE>

                                 Protalex, Inc.
                      (A Company in the Development Stage)

                         NOTES TO FINANCIAL STATEMENTS

            From Inception (September 17, 1999) through May 31, 2001


NOTE A - DESCRIPTION OF OPERATIONS AND DEVELOPMENT STAGE STATUS

Protalex,  Inc.  (the  Company or Protalex) is a  development  stage  enterprise
incorporated  on September 17, 1999 and based in  Albuquerque,  New Mexico.  The
Company  was formed to take all  necessary  steps to fully  develop and bring to
commercial  realization certain bioregular technology for the treatment of human
diseases. The Company has no operating revenue.


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. Concentration of Credit Risk

Financial  instruments  potentially  subjecting the Company to concentrations of
credit  risk  consist  primarily  of  deposits  in  excess of FDIC  limits.  The
Company's  demand deposits are placed with major financial  institutions and the
Company  does not believe that it is exposed to undue credit risk for any demand
deposits that may, from time to time, exceed the federally insured limits.

2. Equipment, Depreciation and Amortization

Equipment is carried at cost.  Depreciation  has been provided by the Company in
order to amortize the cost of equipment over their estimated  useful lives.  The
Company  uses the  straight-line  method  for all  classes  of  assets  for book
purposes.  The  technology  license  is  amortized  over  a  20-year  life  on a
straight-line basis depreciation and amortization expense is $78,980, $6,543 and
$85,523 for the year ending May 31, 2001, May 31, 2000 and for inception through
May 31, 2001, respectively.  Certain depreciable amounts have been classified as
R & D expense on the financial statements.

3. Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting  principles  requires the Company to make  estimates and  assumptions
affecting the reported amounts of assets, liabilities, revenues and expense, and
the disclosure of contingent  assets and  liabilities.  Estimated  amounts could
differ from actual results.

                                       7
<PAGE>


                                 Protalex, Inc.
                      (A Company in the Development Stage)

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

            From Inception (September 17, 1999) through May 31, 2001


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

4. (Loss) per Common Share

The  Financial  Accounting  Standards  Board  (FASB)  has issued  Statements  of
Financial Accounting Standards No. 128 "Earnings Per Share" (SFAS No. 128) which
is effective for periods ending after  December 15, 1997.  SFAS No. 128 provides
for the calculation of "Basic" and "Diluted"  earnings per share. Basic earnings
per share  includes  no dilution  and is  computed by dividing  (loss) to common
shareholders  by the  weighted  average  number  of  common  shares  outstanding
(9,663,509)  for the  period.  Diluted  loss per share  includes  the effects of
options to purchase  40,000 shares of the Company's  stock at $0.36 per share as
if the options were exercised at the beginning of the period using the "Treasury
Stock" method.

5. Income Taxes

Income taxes are recognized  using enacted tax rates,  and are composed of taxes
on financial  accounting  income that is adjusted for the requirement of current
tax  law  and  deferred  taxes.  Deferred  taxes  are the  expected  future  tax
consequences of temporary  differences  between the financial statement carrying
amounts and tax bases of existing assets and  liabilities.  The Corporation does
not expect to have current income taxes payable or deferred tax balances for the
foreseeable future.


6. Other Comprehensive Income

From  September 17, 1999  (inception)  through May 31, 2001,  the Company had no
changes in equity which constitute components of other comprehensive income.

7.      Research and Development

Research and development costs are expensed as incurred.

8.      Fair Value of Financial Instruments

The fair value of the  Company's  financial  instruments,  principally  cash and
debt, approximates their carrying value.

                                       8
<PAGE>


                                 Protalex, Inc.
                      (A Company in the Development Stage)

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

            From Inception (September 17, 1999) through May 31, 2001


NOTE C - REVERSE MERGER

On November 15, 1999, Enerdyne  Corporation ( Enerdyne or Public Shell) acquired
all of the outstanding common stock of Protalex, Inc. (Protalex) in exchange for
the issuance of additional  shares of Enerdyne stock.  The ratio of exchange was
822 shares of Enerdyne stock issued for each share of Protalex  stock  received.
For accounting  purposes,  the acquisition has been treated as an acquisition of
Enerdyne by Protalex and as a recapitalization of Protalex (Reverse Merger). The
historical financial statement of operations presented herein include only those
of the accounting  acquirer and that the retained earnings (deficit) of only the
accounting  acquirer  carries over consistent  with the  requirements of reverse
merger  accounting.  Concurrently with the share exchange,  Enerdyne changed its
name to Protalex, Inc.

The details of the reverse merger transaction are as follows:
<TABLE>
<CAPTION>
                                                                            Merged
                                                                           Balance Sheet
                                Protalex,      Enerdyne     Transaction    at November
Account Description               Inc.       Corporation    Adjustments      16, 1999
-------------------           -----------    -----------    -----------    -----------
<S>                           <C>            <C>            <C>            <C>
Cash ......................   $    23,531    $      --      $      --      $    23,531
Note receivable shareholder          --          118,547           --          118,547
License ...................        20,300           --             --           20,300
Investment in Enerdyne ....       368,546           --         (368,546)          --
Other current assets ......         8,212           --             --            8,212
Other current liabilities .       (17,555)          --             --          (17,555)
Accounts payable Alex .....       (40,000)          --             --          (40,000)
Note payable ..............      (368,546)          --             --         (368,546)
Common stock ..............       (25,300)      (833,459)       714,912       (143,847)
Additional paid in capital           --       (1,105,014)     1,105,014           --
Treasury stock ............          --          430,424       (430,424)          --
Accumulated deficit .......        30,812      1,389,502     (1,389,502)        30,812
Common stock - contra .....          --             --          368,546        368,546
                              -----------    -----------    -----------    -----------

                              $      --      $      --      $      --      $      --
                              ===========    ===========    ===========    ===========
</TABLE>
                                       9
<PAGE>


                                 Protalex, Inc.
                      (A Company in the Development Stage)

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

            From Inception (September 17, 1999) through May 31, 2001


NOTE C - REVERSE MERGER - CONTINUED

Additional information in connection with stock amounts and number of shares
issued is as follows:
<TABLE>
<CAPTION>

                              Protalex, Inc.          Enerdyne Corporation
                              --------------          --------------------
                                                             Shares
                                                    ------------------------
Account Description        Shares        Amount     Outstanding    Treasury      Amount
-------------------      ----------    ----------   ----------    ----------   ----------
<S>                      <C>           <C>          <C>           <C>          <C>
Common stock .........       10,084    $   25,300    1,578,907       238,500   $  833,459
822 to 1 stock
  recapitalization ...      (10,084)         --      8,289,048          --           --
Cancellation of shares
  formerly held by
  Protalex in Enerdyne         --            --       (885,408)         --           --
Increase to record net
  assets of Enerdyne .         --         118,547         --            --           --
Cancellation of common
  stock amounts for
  Enerdyne ...........         --            --           --            --       (833,459)
Name change to
  Protalex, Inc. .....         --            --           --            --           --
                         ----------    ----------   ----------    ----------   ----------
                               --      $  143,847    8,982,547       238,500         --
                         ==========    ==========   ==========    ==========   ==========
</TABLE>

NOTE D - INTELLECTUAL TECHNOLOGY LICENSE

At year-end  the Company  has a  technology  license  agreement  with Alex,  LLC
(Alex), a New Mexico Limited Liability Company, for commercial rights to develop
bioregulator type product(s).  The Company issued 10,000 shares of Company stock
as partial payment for the license at the formation of the Company.  The Company
recorded this  nonmonetary  transaction  at a nominal amount (3 cents per share)
based on the business risk of the  development  stage  venture at inception.  In
addition, the Company agreed to pay a $20,000 license fee to Alex.

Effective July 5th and 6th, 2001 Dr. Paul Mann, individually and Alex, LLC, as a
company, assigned all rights and interests in the bioregulator technology to the
Company. See note J-2.

                                       10
<PAGE>



                                 Protalex, Inc.
                      (A Company in the Development Stage)

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

            From Inception (September 17, 1999) through May 31, 2001


NOTE E - INCOME TAXES

The  Company  has no  taxable  income  and no income  tax  liability  during the
reported period of operation.

The net loss reported on the  statement of operations  ($553,866) as well as the
net loss carried from 2000  ($250,689)  is  available to offset  future  taxable
income.  The net  operating  losses  (NOL)  expires  in 15 years  and 14  years,
respectively  if not utilized  during that time.  No deferred tax asset has been
recorded for the NOL as an equivalent  valuation allowance applies against it in
recognition of the Company's uncertainty as a going concern.

The  merger  transaction  of  Enerdyne  and  Protalex  will  be  tax-free  under
applicable provisions of the Internal Revenue Code. Under applicable federal tax
statutes and  regulations  the NOLs available to Enerdyne and carried forward to
the  current  year are lost as more than 50%  beneficial  ownership  of Enerdyne
changed hands on September 30, 1999.

NOTE F - RELATED PARTIES

Forgiveness of Advance and License Fees owing to Alex, LLC

Alex, LLC (Alex) is a New Mexico limited  liability  company and at year-end the
majority owner of the Company's  stock.  Previously Alex advanced $20,000 to the
Company's  securities  lawyers  principally  in  connection  with the  Company's
reverse merger  transaction and owed a $20,000  intellectual  technology license
fee to Alex as discussed in note D.

Effective May 31, 2001, Alex, LLC forgave the $40,000 owed to it by the Company.
The Company has recorded the debt forgiveness  as an increase to additional paid
in capital. No shares of Company stock were issued in the transaction.

                                       11
<PAGE>


                                 Protalex, Inc.
                      (A Company in the Development Stage)

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

            From Inception (September 17, 1999) through May 31, 2001


NOTE G - LONG-TERM DEBT

The Company has the following long-term debt at May 31, 2001:

9% note payable to an individual, due on
  or before September 7, 2001.  Interest
  payments are due in quarterly installments.
  Note is guaranteed by certain directors of
  Protalex, Inc.                                            $       142,830

11.5% installment purchase agreement, due
  in monthly installments of $3,015,
  including interest, through May 2003.
  The note is collateralized by equipment.                           66,743
                                                            ---------------
                                                                    209,573
Less current maturities                                             172,886
                                                            ---------------

Long-term debt, less current maturities                     $       36,687
                                                            ==============

Maturities of long-term debt for each of the years succeeding May 31, 2001 are
as follows:

        Year
        ----

        2002                                                $      172,886
        2003                                                        33,700
        2004                                                         2,986
                                                            --------------

                                                            $      209,572
                                                            ==============

NOTE H - GOING CONCERN UNCERTAINTY

The  accompanying  financial  statements  have been prepared in conformity  with
generally accepted accounting principles,  which contemplate continuation of the
Company as a going concern.  The Company is a development  stage  enterprise and
does not have operating revenue nor anticipate  generating operating revenue for
the  foreseeable  future.  The  ability of the  Company to  continue  as a going
concern is  dependent  initially on its ability to raise  sufficient  investment
capital to fund all necessary  operations  and product  development  activities.
Secondly,  the Company must develop  products that are  regulatory  approved and
market accepted to generate operating revenue.  There is no assurance that these
plans will be  realized in whole or in part.  The  financial  statements  do not
include  any   adjustments   that  might   result  from  the  outcome  of  these
uncertainties.


                                       12
<PAGE>

                                 Protalex, Inc.
                      (A Company in the Development Stage)

                   NOTES TO FINANCIAL STATEMENTS - CONTINUED

            From Inception (September 17, 1999) through May 31, 2001


NOTE I - STOCK OPTIONS

The Company granted stock options to three individuals and a corporate associate
to purchase  10,000 shares each of Company common stock at $0.36 per share.  The
options  are "stand  alone"  options.  There is no  Company  stock  option  plan
currently.

The Company accounted for the options using the "intrinsic" method which records
as compensation  cost the difference  between  exercise price of the options and
the fair market value of Company stock on the measurement  (grant) date. $17,920
of  compensation  expense was  recorded on the Company  books at May 31, 2001 to
reflect an estimated portion of the options awarded for past services of certain
individuals  and  corporate  associate.  An  additional  $7,680 of  compensation
expense will be recorded in future  periods  ending April 28, 2002 to reflect an
estimated  portion of the options awarded for future services of the individuals
and associate.

An alternate  method of  accounting  for stock  options is the fair value method
based on an accepted valuation model.  Compensation cost would not be materially
different if it was calculated using the fair value method.


NOTE J - SUBSEQUENT EVENTS

1.   On July 5 and 6, 2001, Dr. Paul Mann and Alex, LLC,  respectively  assigned
     all  rights  and  interest,   individually  and   organizationally  to  the
     bioregulator   intellectual  technology  to  Protalex,  Inc.  Protalex  now
     directly owns the subject technology.

2.   On July 17, 2001, a shareholder  group  contributed  funds that allowed the
     Company  to pay off its note  payable  to an  individual  in the  amount of
     $142,830  plus  interest  no shares  or notes  payable  were  issued to the
     transaction.  The Company will record additional paid-in capital to reflect
     the contributed funds and debt pay off.

3.   As of  August  6,  2001  Protalex,  Inc.  has  been  engaged  in a  private
     placement. As of August 24, 2001,  approximately $950,000 has been escrowed
     and the minimum  funding  level has been  achieved.  The escrow will remain
     open for  approximately  ten additional days as more funds may be received.
     The maximum  capital that can be escrowed under the placement  agreement is
     $1,125,000.

                                       13



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

The  Company has not had any changes in or  disagreements  with its  accountants
since inception.


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

The following table sets forth-certain information with respect to the Company's
directors and executive officers

             Name                Age                  Position
   ------------------------      ---         ---------------------------------

   John E. Doherty               47          President and Director

   Paul L. Mann, Ph.D.           56          Treasurer, Secretary and Director

   Jon M. Aase, M.D.             65          Vice President and Director

   Arthur D. Bankhurst, M.D.     64          Director

   James K. Strattman            42          Director


JOHN E.  DOHERTY - Mr.  Doherty  has served as  President  and a director of the
Company since November  1999,  and  previously  served as a director of Enerdyne
since August  1999.  From 1976 to 1994,  Mr.  Doherty was a vice  president  and
principal of Doherty & Co., an investment  banking firm. During this time he was
involved in the early and later stage  financing of  companies  such as Thoratec
Laboratories,  SeraCare, Inc. and Excalibur  Technologies.  Mr. Doherty attended
Tufts University in Boston, Massachusetts. From 1994 to the present, Mr. Doherty
has been a private investor, and over the last year and a half was involved with
the early stage development of Protalex.

PAUL L. MANN,  PH.D. - Dr. Mann has served as Treasurer,  Secretary and Director
of Enerdyne  since August  1999.  From  October to November  1999,  Dr. Mann was
Treasurer,  Secretary  and  Director of  Protalex.  Dr. Mann is the  inventor of
bioregulator therapy. His research into the biology and function of bioregulator
compounds  spans a period  of 20  years,  resulting  in more  than  three  dozen
publications  on these  topics.  Dr.  Mann is a  principal  inventor  on nine US
patents.  He received his Ph.D. at the  University of Toronto.  Subsequently  he
served as an Inserm Fellow at the Centre Haeyem/Pasteur  Institute in Paris, the
Fogarty  International  Fellow at the National Institutes of Health in Bethesda,
Maryland  and as an  Oncology  Fellow  at Johns  Hopkins  University  School  of
Medicine in  Baltimore.  In 1981 he joined the faculty at the  University of New
Mexico  School  of  Medicine  in  Albuquerque,  where he now  holds  the rank of
Associate  Professor in the College of Pharmacy and in the  Department of Family
Practice.

                                       17
<PAGE>

JON M. AASE,  M.D. - Dr. Aase has served as Vice President and a director of the
Company since November  1999,  and  previously  served as a director of Enerdyne
since  August  1999.  Dr.  Aase  graduated  from  Pomona  College in  Claremont,
California  and received his medical  degree from Yale  University in New Haven,
Connecticut.  After a pediatric  internship  at the  University of Minnesota and
residency  at the  University  of  Washington,  he spent two years  studying the
native  population  of  Alaska as a fellow of the  National  Institute  of Child
Health  and Human  Development.  He then  returned  to  Seattle  for a  two-year
fellowship  in  dysmorphology  (the study of birth  defects)  with Dr.  David W.
Smith.  In 1974,  Dr. Aase joined the  faculty of the  University  of New Mexico
School of Medicine,  where he served as chief of the dysmorphology  division for
16 years.  His  bibliography  contains  more than 40  published  articles  and a
textbook Diagnostic  Dysmorphology  (Plenum,  New York, 1990). Dr. Aase is now a
Clinical  Professor of Pediatrics at the  University of New Mexico.  Dr. Aase is
the brother-in-law of Mr. Doherty.

ARTHUR D.  BANKHURST,  M.D. - Dr.  Bankhurst  has  served as a  director  of the
Company since November  1999,  and  previously  served as a director of Enerdyne
since August 1999. Dr.  Bankhurst  earned his bachelors  degree in  biochemistry
from the Massachusetts  Institute of Technology,  and his M.D. from Case Western
Reserve  University.  He served as a research  fellow at the Hall  Institute  of
Medical Research in Melbourne,  Australia and as a senior research fellow at the
WHO  Research  Unit  in  Geneva,  Switzerland.  He  joined  the  faculty  of the
University  of New  Mexico  in  1971,  and now  holds a joint  professorship  in
internal medicine and microbiology. Dr. Bankhurst's professional accomplishments
in the fields of  arthritis  and  immunology  are  reflected  in his being named
Senior  Investigator  for the Arthritis  foundation from  1974-1979,  as well as
serving as  associate  editor of several  prestigious  medical  journals.  These
journals include The Journal of Immunology  (1984-1987),  Diagnostic  Immunology
Diagnostic Immunology  (1984-1988),  and Clinical Immunology and Immunopathology
(1988-present). With more than 140 publications to his credit, Dr. Bankhurst has
a national  reputation as an  investigator,  and has participated in a number of
multi-center trials of anti-arthritis drugs.

JAMES K. STRATTMAN - Mr. Strattman has served as a director of the Company since
November  1999,  and  previously  served as a director of Enerdyne  since August
1999. Mr. Strattman is currently employed at Excalibur Technologies Corporation,
a  publicly  traded  software  company.  He has held  several  senior  executive
positions,   including   Director  of  Engineering   and  Director  of  Business
Development.  During the last ten years,  Mr.  Strattman  has  provided  venture
capital investments to several public companies through private placements.


ITEM 10 - EXECUTIVE COMPENSATION

Executive Officer Compensation

The  Company  did not pay any of its  executive  officers,  including  its Chief
Executive Officer, any compensation during the fiscal year ended May 31, 2000.

Employment Agreements

The  Company  does  not have  employment  agreements  with any of its  executive
officers.

Director Compensation

The Company does not compensate its directors.

                                       18
<PAGE>

ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

The  following  table  sets  forth  certain  information   regarding  beneficial
ownership of the Company's  common stock as of May 31, 2001,  (i) by each person
who is known by the  Company  to own  beneficially  more  than 5% of its  common
stock,  (ii)  by  each  of the  Company's  directors,  and  (iii)  by all of the
Company's  officers and  directors as a group.  Except as provided  below,  each
person's address is c/o Protalex, Inc. P.O. Box 30952,  Albuquerque,  New Mexico
87190.


 Name and Address of             Amount and Nature              Percentage of
 Beneficial Owner                of Beneficial Owner              Class (1)
 -------------------             -------------------            -------------

 John E. Doherty                     3,062,660                     28.8695

 Paul L. Mann                        2,937,660                     27.6912

 John M. Aase                          276,192                      2.6035

 Arthur D. Bankhurst                   276,192                      2.6035

 James K. Strattman                    464,878                      4.3525
                                     ---------                     -------

                                     7,017,582                     66.1202
                                     =========                     =======

(1) Based on a total of 10,608,635  outstanding  shares of the Company's  common
stock.


ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

At the end of fiscal  year ending  ("FYE") May 31, 2000 Alex,  LLC, a New Mexico
Limited Liability Company owned  approximately 65% of the Company's  outstanding
common stock.  Alex, LLC distributed all its shares to its two Members,  John E.
Doherty and Paul L. Mann,  during FYE May 31, 2001. John E. Doherty is President
of the Company and Paul L. Mann is the Company's  Treasurer and Secretary.  John
E. Doherty and Paul L. Mann are also  Directors of the Company.  Mr. Doherty and
Mr. Mann own 57% of the Company's common stock at May 31, 2001.

At the end of FYE May 31,  2001 the  bioregulator  technology  which the Company
intends to develop and bring to market was  licensed  by the  Company  form Alex
pursuant  to a  Technology  License  Agreement.  Under  the  Technology  License
Agreement  the  Company  had the  right to use the  bioregulator  technology  to
research,  design,  develop,  market and sell  products  which  incorporate  the
bioregulator  technology  and which are used for the  therapeutic  treatment  of
rheumatoid arthritis and other forms of arthritis.

Following  FYE May 31, 2001 (July 5, 2001) Alex has  assigned  all its rights to
the Company of any  application of  bioregulation  to any human disease  process
and/or treatment which assignment  includes all rights previously licensed under
the  above  referenced  Technology  License  Agreement.  Paul L.  Mann  has also
assigned all his rights on July 6, 2001 to the Company.

                                       19
<PAGE>

ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - CONTINUED

Moreover,  as of May 31,  2001 Alex has  forgiven  all debts  owned  Alex by the
Company including a debt of $40,000.00

Alex is in the process of dissolution.

On July 17, 2001 a shareholder  group contributed funds that allowed the Company
to pay off its note  payable to an  individual  in the amount of  $142,830  plus
interest.  No  shares  or notes  payable  to  shareholders  were  issued  in the
transaction.  The Company will record additional  paid-in capital to reflect the
contributed funds and debt pay-off.


ITEM 13 - INDEX TO EXHIBITS

2.1     Stock Purchase Agreement                Incorporated by reference,
        among Protalex, Inc.,                   to the Company's 10-SB filing
        Don Hanosh and Enerdyne                 December 3, 1999
        Corporation

2.2     Merger Agreement and Plan               Incorporated by reference,
        of Re-organization                      to the Company's 10-SB
        between Protalex, Inc.                  filing December 3, 1999
        and Enerdyne Corporation


3.1     Articles of Incorporation,              Incorporated by reference,
        as amended                              to the Company's 10-SB filing
                                                December 3, 1999

3.2     Bylaws, as amended                      Incorporated by reference,
                                                to the Company's 10-SB filing
                                                December 3, 1999

10.1    Promissory Note in favor                Incorporated by reference,
        of Don Hanosh                           to the Company's 10-SB filing
                                                December 3, 1999

10.2    Continuing and Unconditional            Incorporated by reference,
        Guaranty executed  by                   to the Company's 10-SB filing
        John E. Doherty                         December 3, 1999

10.3    Continuing and Unconditional            Incorporated by reference,
        Guaranty executed  by                   to the Company's 10-SB filing
        James K. Strattman                      December 3, 1999

10.5    Form of Confidential                    Incorporated by reference,
        Disclosure Agreement                    to the Company's 10-SB filing
                                                December 3, 1999

No reports on Form 8-K were filed during the year.


                                       20
<PAGE>


                                   SIGNATURES


In accordance with Section 13 or 15(D) of the Exchange Act the registrant caused
this  registration  statement  to be  signed on its  behalf by the  undersigned,
thereunto duly authorized.

                                PROTALEX, INC.


Date:  August 27, 2000                  By:     John E. Doherty
                                                --------------------------
                                                John E. Doherty, President



       SIGNATURE                        TITLE                        DATE


  John E. Doherty
  ---------------
  John E. Doherty         President and Director                August 27, 2000


Paul L. Mann
-------------------
Paul L. Mann, Ph.D.         Treasurer, Secretary and Director    August 27, 2000


John M. Aase
-----------------
Jon M. Aase, M.D.           Vice President and Director          August 27, 2000


Arthur D. Bankhurst
-----------------------
Arthur D. Bankhurst, M.D.   Director                             August 27, 2000


James K. Strattman
------------------
James K. Strattman          Director                             August 27, 2000


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