SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-K/A

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED MARCH 31, 2000

                                       OR

[.]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ TO
         _____________

                           Commission file no. 1-10340

                        ALLOU HEALTH & BEAUTY CARE, INC.
             (Exact Name of Registrant as Specified in its Charter)

             DELAWARE                                           11-2953972
--------------------------------------------------------------------------------
(State or other jurisdiction of                              (I.R.S. Employer
  incorporation or organization)                             Identification No.)

50 EMJAY BOULEVARD, BRENTWOOD, NEW YORK                            11717
--------------------------------------------------------------------------------
(Address of principal executive offices)                         (Zip Code)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (516) 273-4000

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

                              Name of Each Exchange
                     Title of Each Class On Which Registered
                     ---------------------------------------

     Class A Common Stock, par value $.001 per share American Stock Exchange

        Securities registered pursuant to Section 12(g) of the Act: None

         Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_. No ___.

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of the  Registrant's  knowledge,  in definitive proxy or information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. /__/

         The aggregate  market value of the Common Stock of the Registrant  held
by  non-affiliates  of the  Registrant  on June 28, 2000 was  $33,675,417.  Such
aggregate  market value is computed by  reference to the closing  sales price of
the Class A common  stock on such date.  For purposes of this  calculation,  the
Registrant  has excluded the Class B common  stock,  which is held  primarily by
affiliates and is not publicly-traded.

         The number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest  practicable  date:  5,602,403  shares of Class A
common  stock and  1,200,000  shares of Class B common  stock as of the close of
business on July 14, 2000.

                     NO DOCUMENTS INCORPORATED BY REFERENCE


<PAGE>

                                    PART III

ITEM 10.          DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Our directors and executive officers are as set forth in the table below:
<TABLE>
<CAPTION>
NAME                                                    AGE     POSITION
----                                                    ---     --------

<S>                                                     <C>
Victor Jacobs......................................     68      Chairman of the Board of Directors
Herman Jacobs......................................     40      Chief Executive Officer and  Director
David Shamilzadeh..................................     54      President, Chief Financial Officer and Director
Jack Jacobs........................................     37      Executive Vice President and Director
Jeffrey Rabinovich.................................     35      Vice President, Chief Systems Analyst and
                                                                Secretary
Sol Naimark........................................     40      Director
Jeffrey Berg.......................................     57      Director
Stuart Glasser.....................................     53      Director
</TABLE>

         Victor Jacobs has served as Chairman of the Board of Directors of Allou
since December 1985.  From December 1985 to April 1990, and from October 1994 to
July 2000, Mr. Jacobs served as Chief Executive Officer of Allou.

         Herman Jacobs has been Chief Executive Officer of Allou since July 2000
and a Director of Allou since July 1985. From December 1985 to July 2000, Mr.
Jacobs served as President of Allou. Mr. Jacobs has been Chief Operating Officer
since February 1994.

         David  Shamilzadeh  has been President of Allou since July 2000,  Chief
Financial  Officer of Allou  since April 1990 and a Director of Allou since July
1989.  From  February  1994 to July 2000 Mr.  Shamilzadeh  served as Senior Vice
President of Finance.

         Jack Jacobs has been  Executive Vice President of Allou since July 2000
and a Director  of Allou  since  1985.  From June 1986 to July 2000 he served as
Vice  President  of  Purchasing  and from January 1989 to June 2000 he served as
Secretary.

         Jeffrey Rabinovich has been Vice President and Secretary of Allou since
July 2000. From January 1999 to July 2000, Mr. Rabinovich served as the
Executive Assistant to the President. From 1993 to January 1999, Mr. Rabinovich
served as Assistant Treasurer at Republic National Bank.

         Sol Naimark  has been a Director  of Allou  since  1991.  He has been a
partner at the law firm of Naimark and Tennenbaum for over five years.

         Jeffrey Berg has been a Director of Allou since 1994. Dr. Berg has
served as President of Health Care Insights, a financial and technology
consulting firm, since March 1991. Dr. Berg has worked in research and
development for Johnson & Johnson Products, Inc. and General Foods Corporation.

<PAGE>

Dr. Berg currently serves on the Board of Directors of Bio-Imaging Technologies,
Inc., Biologix International Ltd., IMX Pharmaceuticals, and Dexterity Surgical.

         Stuart  Glasser has been a Director of Allou since  February  2000. Mr.
Glasser has served as President and Chief  Executive  officer of Casual Male Big
and Tall and Senior Executive Vice President and director of J. Baker, Inc., its
parent  company,  a leading  specialty  retailer of apparel and  footwear  since
August 1997.  From 1991 to 1997, Mr. Glasser served as Executive Vice President,
General  Merchandise  Manager,  for  the  Mens  Boys  and  Cosmetics  areas  for
Bloomingdale's.  Prior to that,  he was  employed  by  Elder-Beerman  Stores  as
President for the Department Store Division.

         Herman Jacobs and Jack Jacobs are brothers and sons of Victor Jacobs.

         Directors who are not employed by Allou  receive  $1,000 for each Board
meeting  attended and an additional  $250 for each committee  meeting  attended.
Furthermore,  each non-employee  director is granted an option to purchase 5,000
shares of Class A Common Stock upon each election as a director of Allou.

             SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16(a) of the  Securities  Exchange Act of 1934, as amended (the
"Exchange Act"),  requires the Company's directors and executive  officers,  and
persons who own more than 10% of the Company's  Common  Stock,  to file with the
Securities and Exchange  Commission (the "SEC") initial reports of ownership and
reports of changes in ownership of Common Stock and other equity  securities  of
the Company. Officers,  directors and greater than 10% shareholders are required
by SEC  regulation  to furnish  the Company  with  copies of all  Section  16(a)
reports they file.  To the  Company's  knowledge,  based solely on review of the
copies of such reports furnished to the Company during the one-year period ended
March  31,  2000,  all  Section  16(a)  filing  requirements  applicable  to its
officers, directors and greater than 10% beneficial owners were complied with.

ITEM 11.          EXECUTIVE COMPENSATION

         The following  table sets forth  information  concerning the annual and
long term  compensation of the Company's chief executive  officer and other four
most highly  compensated  executive  officers of the Company for services in all
capacities to the Company and its  subsidiaries  during the Company's 2000, 1999
and 1998 fiscal years.

                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>

                                                                                              LONG TERM
                                                          ANNUAL COMPENSATION            COMPENSATION AWARDS
                                                     ------------------------------  ----------------------------

           NAME AND PRINCIPAL              FISCAL                                             SECURITIES
              POSITION                      YEAR     SALARY($)(1)      BONUS($)         UNDERLYING OPTIONS(#)
              --------                      ----     ------------      --------         ---------------------
<S>                                         <C>         <C>             <C>
  Victor Jacobs........................     2000        300,000         178,666                   --
    Chairman of Board and Chief             1999        300,000           --                      --
    Executive Officer                       1998        300,000           --                      --

  Herman Jacobs........................     2000        300,000         178,666                   --
    Chief Operating Officer                 1999        300,000           --                      --
                                            1998        300,000           --                      --
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

<S>                                         <C>         <C>             <C>
  Jack Jacobs..........................     2000        300,000         178,666                   --
    Vice President of Purchasing and        1999        300,000           --                      --
    Secretary                               1998        300,000           --                      --

  David Shamilzadeh                         2000        300,000         120,000                   --
    Chief Financial Officer                 1999        290,000         75,000                    --
                                            1998        249,231         75,000                    --
</TABLE>
   -----------------------------------

(1)  The Company  pays  annual  insurance  premiums  for Victor  Jacobs,  Herman
     Jacobs,  Jack  Jacobs and David  Shamilzadeh  in the  amounts  of  $37,234,
     $8,434, $7,474 and $5,217,  respectively.  The Company has agreed that each
     of Messrs.  V. Jacobs, H. Jacobs, J. Jacobs and Shamilzadeh are entitled to
     receive the entire cash surrender value under their insurance policies.

STOCK OPTION PLANS

         In May 1991, the Company  adopted the 1991 Stock Option Plan (the "1991
Plan"),  which was approved by  stockholders  in August 1991; in July 1992,  the
Company adopted the 1992 Stock Option Plan (the "1992 Plan"),  which was adopted
by the  stockholders  in October 1992; in August 1995,  the Company  adopted the
1995 Stock  Option Plan (the "1995  Plan"),  which the  Company  amended in July
1996, and which was approved by  stockholders  in September  1996; in July 1996,
the Company  adopted the 1996 Stock  Option  Plan (the "1996  Plan"),  which was
approved by stockholders in September 1996; and the Company amended and restated
the 1991 Plan, the 1992 Plan, the 1995 Plan and the 1996 Plan (collectively, the
"Plans") as of October  1996.  The  Company  amended the 1996 Plan in July 1999,
which was approved by stockholders in September 1999. The 1991 Plan provides for
the grant of options  to  purchase  an  aggregate  of 650,000  shares of Class A
Common Stock.  To date,  options to purchase  623,475 of the 650,000 shares have
been  granted  under  the 1991  Plan.  The 1992 Plan  provides  for the grant of
options to key employees of the Company to purchase an aggregate  500,000 shares
of the Company's Class B Common Stock.  To date,  options to purchase all of the
500,000 shares have been granted under the 1992 Plan. The 1995 Plan provides for
the grant of non-qualified options to purchase an aggregate of 500,000 shares of
the  Company's  Class B Common  Stock.  To date,  options to purchase all of the
500,000 shares have been granted under the 1995 Plan. The 1996 Plan provides for
the grant of  options  to  purchase  an  aggregate  of  2,000,000  shares of the
Company's  Class A Common Stock. To date,  options to purchase  1,307,595 of the
2,000,000 shares have been granted under the 1996 Plan.

         The  Plans  are each  administered  by a Stock  Option  Committee  (the
"Committee")  approved by the Board of Directors of the Company.  The  Committee
has the  authority  under the Plans to  determine  the terms of options  granted
under such Plan,  including,  among  other  things,  the  individuals  who shall
receive  options,  the times when they shall receive them,  whether an incentive
stock option and/or  non-qualified stock option shall be granted,  the number of
shares to be  subject  to each  option  and the date each  option  shall  become
exercisable.  Options  granted  under the Plans may be  designated as "incentive
stock  options,"  under  Section 422 of the Internal  Revenue  Code of 1986,  as
amended, or non-qualified options, which do not meet such requirements.

         The Committee may set the exercise price for the options, which must be
at least 100% of the fair market  value of the Common Stock on the date of grant
(or, in the case of an incentive  stock  option  granted to an optionee who owns
stock  possessing  more than 10% of the  voting  power of the  Company's  Common
Stock, 110% of the fair market value of the Common Stock on the date of grant).

<PAGE>

         The  Committee  may also set the period during which each option may be
exercised which shall not exceed 10 years from the date of grant (or in the case
of an incentive stock option granted to a stockholder who owns stock  possessing
more than 10% of the voting power of the Common Stock,  five years from the date
of grant).  The Plans also provide that each  employee who is an optionee  shall
agree to remain in the  employ of the  Company  for a term of at least one year.
The 1991 Plan will  terminate on May 29, 2001,  the 1992 Plan will  terminate on
July 9, 2002,  the 1995 Plan will  terminate  on July 31, 2005 and the 1996 Plan
will terminate on July 9, 2006.

NON-EMPLOYEE DIRECTORS' OPTIONS

         Each  non-employee  director  (as defined in the 1996 Plan),  upon each
election as a director of the  Company,  is granted an option to purchase  5,000
shares of Class A Common Stock under the 1996 Plan.  The Committee does not have
any  discretion   with  respect  to  the  selection  of  directors  who  receive
Non-Employee  Director  Options  or the  amount,  the price or the  timing  with
respect thereto; and such Non-Employee Directors may not receive any other award
under the 1996 Plan. The exercise price of such Non-Employee  Director Option is
the fair market  value of the  underlying  shares of Class A Common Stock on the
date of grant, payable in cash. The options have a term of five years and may be
exercised at any time during such term.

OPTION GRANTS IN LAST FISCAL YEAR

         The following  table sets forth options that were granted in the fiscal
year ended March 31, 2000 to any of the executive officers listed on the summary
compensation table.
<TABLE>
<CAPTION>

------------------------------- ------------- ---------------- ---------- ------------ -----------------------------
                                   NUMBER
                                     OF         PERCENT OF                                 POTENTIAL REALIZABLE
                                 SECURITIES    TOTAL OPTIONS   PER                           VALUE AT ASSUMED
                                 UNDERLYING     GRANTED TO     SHARE                      ANNUAL RATES OF STOCK
                                  OPTIONS        EMPLOYEES     EXERCISE   EXPIRATION       PRICE VALUATION FOR
NAME                              GRANTED     IN FISCAL YEAR     PRICE       DATE              OPTION TERM
------------------------------- ------------- ---------------- ---------- ------------ -----------------------------
                                                                                            5%            10%
------------------------------- ------------- ---------------- ---------- ------------ ------------- ---------------
<S>                             <C>                <C>             <C>       <C>   <C>   <C>                <C>
David Shamilzadeh               17,000             .05%            $5.65     11/02/04    $57,129            $97,243
------------------------------- ------------- ---------------- ---------- ------------ ------------- ---------------
</TABLE>


OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUE

         No options  were  exercised  in the fiscal year ended March 31, 2000 by
any of the executive  officers  listed on the summary  compensation  table.  The
following table contains  information  concerning the number and value, at March
31, 2000, held by Messrs.  V. Jacobs,  H. Jacobs,  J. Jacobs and D. Shamilzadeh.
The Company does not use SARs as compensation.

<TABLE>
<CAPTION>

                                      Number of Unexercised Options          Value of Unexercised In-the-Money
                                            at Fiscal Year End                 Options at Fiscal Year End(1)
                                            ------------------                 --------------------------
     Name                             Exercisable         Unexercisable        Exercisable        Unexercisable
--------------                        -----------         -------------        -----------        -------------
<S>                                             <C>                <C>                 <C>                 <C>
Victor Jacobs...................                400,000            110,000             $371,070            $86,450
Herman Jacobs...................                467,500             32,500              376,390             86,450
Jack Jacobs.....................                467,500             32,500              376,390             86,450
David Shamilzadeh...............                257,250             42,750              612,473             97,777
</TABLE>
------------------

<PAGE>

(1)      Fair market value of the  underlying  securities  (the closing price of
         the Company's  Class A Common Stock on the American Stock  Exchange) at
         fiscal year end (March 31, 2000) minus the exercise price.

LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR

         There were no long-term incentive plan awards by the Company during the
fiscal year ended March 31, 2000.

EMPLOYMENT AGREEMENTS

         The Company has entered into employment agreements with each of Victor,
Herman and Jack Jacobs for a three-year  term,  commencing as of August 1, 1998,
each of which  provides for annual  salaries of $300,000 and such  increases and
bonuses as the Board of Directors may determine.  Such  agreements  also provide
for each individual to receive in each year of the agreement a bonus equal to 3%
of any increase in the Company's  earnings before interest and taxes compared to
the prior fiscal year up to the first  $2,000,000  of such  increase,  2% of any
increase greater than $2,000,000 but less than $3,000,000 and 1% of any increase
in excess of $3,000,000.

           COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         The  members  of  the   Compensation   Committee   participate  in  all
deliberations  concerning executive  compensation.  During the fiscal year ended
March  31,  2000,  the  Board of  Directors  participated  in all  deliberations
concerning executive compensation.  As of July, 2000, the Compensation Committee
consisted  of  Victor  Jacobs,  Chairman  of the  Board,  Herman  Jacobs,  Chief
Executive  Officer,  Jack Jacobs,  Executive Vice President,  David Shamilzadeh,
President and Chief Financial Officer, and Jeffrey Berg. No executive officer of
the  Company  serves  as a member  of the  board of  directors  or  compensation
committee of any entity which has one or more  executive  officers  serving as a
member of the Company's Board of Directors.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The following table sets forth as of July 14, 2000 certain  information
regarding the ownership of voting  securities of the Company by each stockholder
known to the  management of the Company to be (i) the  beneficial  owner of more
than 5% of the Company's outstanding Common Stock, (ii) the directors during the
last  fiscal  year and  nominees  for  director  of the  Company  and  (iii) all
executive officers and directors as a group. Unless otherwise noted, the Company
believes that the beneficial  owners of the Common Stock listed below,  based on
information furnished by such owners, have sole investment and voting power with
respect to such shares.  Unless  otherwise noted, the address of each beneficial
owner named below is the Company's corporate address.
<TABLE>
<CAPTION>
  ------------------------------------------ --------------------- --------------------- ----------------- ------------------------
                                                                                                                    PERCENT OF
                        NAME AND                         AMOUNT AND NATURE                                            VOTING
                   PRINCIPAL POSITION                OF BENEFICIAL OWNERSHIP(A)                  PERCENT OF         POWER (k)(l)
  ------------------------------------------ --------------------- --------------------- ------------------------------------------
                                                   CLASS B               CLASS A             CLASS B    CLASS A
  ------------------------------------------ --------------------- --------------------- ------------------------------------------
<S>                                                <C>                   <C>                   <C>         <C>       <C>
  Victor Jacobs
    Chairman of the Board of Directors             925,500(b)            149,600(e)            42%         2.6%      35.9%
  ------------------------------------------ --------------------- --------------------- ------------------------------------------
  Jack Jacobs
    Executive Vice President and Director          624,750(c)            166,500(f)            28.3%       2.9%      24.8%
  ------------------------------------------ --------------------- --------------------- ------------------------------------------
</TABLE>


<PAGE>


<TABLE>
<CAPTION>
  ------------------------------------------ --------------------- ---------------------------------- -----------------------------
                                                                                                                      PERCENT OF
                        NAME AND                         AMOUNT AND NATURE                                              VOTING
                   PRINCIPAL POSITION                OF BENEFICIAL OWNERSHIP(A)                PERCENT OF             POWER (k)(l)
  ------------------------------------------ --------------------- ---------------------------------- -----------------------------
                                                   CLASS B               CLASS A        CLASS B           CLASS A
  ------------------------------------------ --------------------- ---------------------------------- -----------------------------
<S>                                                <C>                   <C>              <C>                <C>       <C>
  Herman Jacobs
    Chief Executive Officer and Director           624,750 (d)           166,500(g)       28.3%              2.9%       24.8%
  ------------------------------------------ --------------------- ---------------------------------- -----------------------------
  David Shamilzadeh
    President, Chief Financial
    Officer and Director                               ---               272,250(h)      ---                 4.7%        2.3%
  ------------------------------------------ --------------------- ---------------------------------- -----------------------------
  Sol Naimark
    Director                                           ---                 3,750(i)      ---                 *             *
  ------------------------------------------ --------------------- ---------------------------------- -----------------------------
  Jeffrey Berg
    Director                                           ---                 3,750(i)      ---                 *             *
  ------------------------------------------ --------------------- ---------------------------------- -----------------------------
  Stuart Glasser
    Director                                           ---                   ---         ---                 *             *
  ------------------------------------------ --------------------- ---------------------------------- -----------------------------
  Dimensional Fund Advisors Inc.
  1299 Ocean Avenue, 11th Floor
  Santa Monica, CA 90401                               ---               322,600(j)      ---                 5.8%        2.8%
  ------------------------------------------ --------------------- ---------------------------------- -----------------------------
  All directors and officers as a group          2,174,500               762,350
    (8 persons)                                  (b)(c)(d)         (e)(f)(g)(h)(i)        98.9%             12.1%       67.3%
  ------------------------------------------ --------------------- ---------------------------------- -----------------------------
</TABLE>
*        Less than 1%.
(a)  Pursuant to Rule 13d-3  promulgated under the Exchange Act, includes shares
     of common  stock  that may be  purchased  within 60 days upon  exercise  of
     outstanding  options.
(b)  Includes  168,000  shares of our Class B common  stock that may be acquired
     pursuant to options  granted  under our 1992 Stock  Option Plan and 170,000
     shares  of our  Class B common  stock  which may be  acquired  pursuant  to
     options granted under our 1995 Stock Option Plan.
(c)  Includes  166,000  shares of our Class B common  stock that may be acquired
     pursuant to options  granted under the 1992 Plan and 165,000  shares of our
     Class B common  stock  which may be acquired  pursuant  to options  granted
     under the 1995 Plan.
(d)  Includes  166,000  shares of our Class B common  stock that may be acquired
     pursuant to options  granted under the 1992 Plan and 165,000  shares of our
     Class B common  stock  which may be acquired  pursuant  to options  granted
     under the 1995 Plan.
(e)  Includes  67,000  shares of our Class A common  stock that may be  acquired
     pursuant to options  granted  under the 1991 Plan and 72,500  shares of our
     Class A common stock which may be acquired under the 1996 Plan.
(f)  Includes  69,000  shares of our Class A common  stock that may be  acquired
     pursuant to options  granted  under the 1991 Plan and 72,500  shares of our
     Class A common stock which may be acquired under the 1996 Plan.
(g)  Includes  69,000  shares of our Class A common  stock that may be  acquired
     pursuant to options  granted  under the 1991 Plan and 72,500  shares of our
     Class A Common Stock which may be acquired under the 1996 Plan.
(h)  Includes  120,000  shares of our Class A common  stock that may be acquired
     pursuant to options  granted under the 1991 Plan and 137,250  shares of our
     Class A common stock which may be acquired under the 1996 plan.
(i)  Includes  3,750  shares of our Class A common  stock  that may be  acquired
     pursuant to options granted under the 1996 Plan.
(j)  The  information  contained  herein with  respect to these  shares has been
     obtained from Schedule 13G,  dated February 4, 2000 filed by the beneficial
     owner.
(k)  For the purposes of this calculation,  the Class A common stock and Class B
     common stock are treated as a single class of common stock.
(l)  The Class B common  stock is entitled to five votes per share,  whereas the
     common stock is entitled to one vote per share.


<PAGE>

(j)  The  information  contained  herein with  respect to these  shares has been
     obtained from Schedule 13G,  dated February 4, 2000 filed by the beneficial
     owner.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         The Company purchases from and, on occasion,  sells to various entities
that are controlled by the family of Victor  Jacobs,  the Chairman of the Board.
During the fiscal year ended March 31,  2000,  the  Company  purchased  products
aggregating  $12.2  million  from these  parties  and sold no  products to these
parties.  The Company believes that these purchases were made on terms that were
at least as favorable to the Company as those that could have been obtained from
unrelated third parties.

         In April  1999 the  Company  sold a  majority  interest  in its  former
subsidiary  The  Fragrance  Counter,  Inc.,  an  internet  retailer  of prestige
fragrances and cosmetics.  In this transaction,  the Company sold  approximately
2.7 million shares of Series A preferred  stock of The Fragrance  Counter for an
aggregate  purchase  price of $12.9  million of which $4.0  million was paid in
cash and $8.9  million is to be paid  under  promissory  notes  that  become due
within one year from closing.  The Fragrance  Counter issued  approximately  5.3
million  additional shares of Series A preferred stock for an aggregate of $25.0
million in cash. As a result of this transaction, the Company's ownership of The
Fragrance Counter was reduced from approximately 83% to approximately 13% of the
shares  of its  capital  stock.  On the  closing  date of this  transaction,  in
addition to the $4.0 million  received as the cash portion of the purchase price
of the  Company's  shares,  the Company  received  $7.3 million in cash from The
Fragrance  Counter as repayment of loans  previously  made. The Company  entered
into a services and supply agreement with The Fragrance  Counter under which the
Company has agreed to supply The Fragrance  Counter with  fragrances,  cosmetics
and upscale health and beauty  products as well as supply The Fragrance  Counter
with services which include warehousing,  order processing,  receiving, etc. for
150 days from the date of closing.  This  agreement  has been  extended  through
October 2000. In consideration for the services provided,  The Fragrance Counter
pays 25% above the Company's  actual cost for providing such  services.  Each of
Victor Jacobs,  Herman Jacobs and Jack Jacobs are  shareholders of The Fragrance
Counter.

         In April 2000,  the Company was  notified  that the makers of the notes
would not honor their  obligation.  As a result,  the  Company  sent a notice of
default  requesting  either  payment  of the  notes  or a  private  sale  of the
collateral  which consists of 1,816,239  shares of  ibeauty.com  common stock, a
privately held internet company, which is the successor to The Fragrance Counter
Inc. The Company has recorded a valuation  allowance of $8,500,000  equal to the
face value of the notes. As a result of the sale, the Company  recognized a gain
of $8,432,401 net of taxes in fiscal 2000, after the provision for the valuation
allowance.

         On December 23, 1999, the Company loaned $138,460 to David Shamilzadeh.
The loan  is  due  on  December 31, 2000 and bears interest at 9% per annum. On
January 4, 2000,  the Company loaned  $535,135.33 to each of Victor, Herman and
Jack Jacobs.  The  loan  is due  on January 4, 2003 and bears interst at 9% per
annum.

         It has been and will continue to be the Company's policy that
transactions between the Company and its directors,  principal  stockholders and
affiliates  be on terms no less  favorable to the Company than could be obtained
from unaffiliated persons.


<PAGE>


                                   SIGNATURES


         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                                                ALLOU HEALTH & BEAUTY CARE, INC.



                                                By: /s/ David Shamilzadeh
                                                  ------------------------------
                                                        David Shamilzadeh
                                                        President and
                                                        Chief Financial Officer
Dated:   July 31, 2000