<PAGE>



================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                 AMENDMENT NO. 1
                                       TO
                                  FORM 10-KSB/A
         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                            FOR THE FISCAL YEAR ENDED
                                DECEMBER 31, 2001

                             COMMISSION FILE NUMBER
                                    811-3584

                           LEVCOR INTERNATIONAL, INC.
           (Exact name of the registrant as specified in its charter)

              DELAWARE                                        06-0842701
   (State or other jurisdiction of                          (I.R.S. Employer
   Incorporation or organization)                           Identification No.)

                  462 SEVENTH AVENUE, NEW YORK, NEW YORK 10018
                    (Address of principal executive offices)

                                 (212) 354-8500
                         (Registrant's telephone number)

      SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE EXCHANGE ACT:

                                      NONE

      SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE EXCHANGE ACT:

                     COMMON STOCK, PAR VALUE $0.56 PER SHARE

         Indicate by check mark whether the issuer: (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-B is not contained herein, and will not 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. X
                               -

         Issuer's revenues for the fiscal year ended December 31, 2001:
$20,107,692.

         As at March 14, 2002, approximately 2,326,047 shares of common stock,
par value $0.56 per share, of the issuer were outstanding and the aggregate
market value of the voting common stock held by non-affiliates was approximately
$4,652,094.

         Transitional Small Business Disclosure Format:   Yes         No  X
                                                             -----      -----

         Documents incorporated by reference: None



<PAGE>



                                Table of Contents
<TABLE>
<CAPTION>

                                                                                                                Page
<S>                                                                                                             <C>
  PART I..........................................................................................................2

   Item 1.     DESCRIPTION OF BUSINESS............................................................................2

   Item 2.     DESCRIPTION OF PROPERTY............................................................................4

   Item 3.     LEGAL PROCEEDINGS..................................................................................5

   Item 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................................................6

  PART II.........................................................................................................7

   Item 5.     MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS...........................................7

   Item 6.     MANAGEMENT DISCUSSION AND ANALYSIS OF PLAN OF
                 OPERATION .......................................................................................7

   Item 7.     FINANCIAL STATEMENTS..............................................................................12

   Item 8.     CHANGES IN, AND DISAGREEMENTS WITH, ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE............37

  PART III.......................................................................................................37

   Item 9.     DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
               CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a)
               OF THE EXCHANGE ACT...............................................................................37

   Item 10.    EXECUTIVE COMPENSATION............................................................................38

   Item 11.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT....................................40

   Item 12.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS....................................................41

   Item 13.    PROCEDURES AND CONTROLS...........................................................................42

   Item 14.    EXHIBITS, LISTS AND REPORTS ON FORM 8-K...........................................................42

</TABLE>



<PAGE>



FORWARD-LOOKING STATEMENTS

         Some of the statements contained in this Amendment No. 1to Annual
Report on Form 10-KSB/A discuss future expectations, contain projections of
results of operations or financial condition or state other "forward-looking
statements" within the meaning of 21E of the Securities Exchange Act of 1934, as
amended. Those statements include statements regarding the intent, belief or
current expectations of Levcor and its management team. Any such forward-looking
statements are not guarantees of future performance and involve risks and
uncertainties. Actual results may differ materially from those projected in the
forward-looking statements. These risks and uncertainties include, but are not
limited to, those risks and uncertainties set forth under the heading "Factors
That Could Affect Our Future Results" in Part I of this Report. In light of the
significant risks and uncertainties inherent in the forward-looking statements
included in this Report, the inclusion of such statements should not be regarded
as a representation by us or any other person that our objectives and plans will
be achieved.


                                    PART I.

ITEM 1.       DESCRIPTION OF BUSINESS.

         Levcor International, Inc. ("Levcor") was incorporated in 1964 as
Pantepec International, Inc. under the laws of the Islands of Bermuda and was
reorganized in 1967 under the laws of the State of Delaware. In 1995, Pantepec
International, Inc. changed its name to Levcor International, Inc.

         In 1995, Levcor acquired a woven fabric converting business that
converts cotton, synthetics, and blend fabrics for sale to domestic apparel
manufacturers. This acquisition formed the basis of Levcor's current business.
On July 1, 1999, Levcor purchased from Andrex Industries Corp. ("Andrex") its
knit fabric and processing business that produces knit fabrics used in the
production of apparel. During the fourth quarter of 2000, Levcor started a new
woven division selling to the dress market. As a result of the current soft
retailing climate for dresses, the woven division has not produced management's
anticipated results and therefore has been scaled back significantly during the
first quarter of 2002.

         Levcor is engaged in converting woven textile fabrics and processing
knit textile fabrics which are sold for production principally to domestic
manufacturers of women's apparel. The textile fabric converting process consists
of (i) designing fabrics, (ii) purchasing yarns both dyed and undyed and
commissioning knitting mills to knit the yarns into greige fabric (unfinished
fabric) according to Levcor's specifications, and (iii) commissioning fabric
finishers to finish the fabrics through a process of washing, bleaching, dyeing
and applying certain chemical finishes to greige fabric according to Levcor's
specifications. Finished apparel fabric is ready to be cut and sewn into
garments. Levcor contracts with commercial transporters to deliver greige fabric
from textile mills to the fabric finishers. Levcor receives orders for the sale
of finished fabrics through its sales personnel and independent commissioned
agents.

         The principal raw materials used by Levcor to fabricate textiles are
typically a combination or blend of two or more fibers, such as rayon, acetate,
polyester, cotton and acrylic. The principal suppliers of raw materials, greige
goods and yarn used by Levcor during 2001



                                      -2-
<PAGE>



were JPS Converter and Industrial Corp. and National Spinning, Inc. The primary
knitters used in the conversion process were Fairfield Textiles Corp. and
Ramseur Interlock Knitting. The primary finishers in the conversion process were
United Piece Dye Works, Inc. and Oxford Textiles, Inc. During the year 2001, JPS
Converter and Industrial Corp. filed for bankruptcy. Levcor had anticipated the
filing and had provided alternative sourcing to insure continuity of the supply
of raw materials required for its business.

         In 2001, Alfred Dunner, Inc. and Nygard International, Ltd.,
manufacturers of women's apparel, accounted for approximately 47% and 11% of
Levcor's revenues, respectively. Levcor currently employs 16 persons, all of
whom are employed full time, and none of its employees are represented by a
collective bargaining agreement. Levcor does not have any long-term agreements
with Alfred Dunner, Nygard International or any of its other customers.

FACTORS THAT COULD AFFECT OUR FUTURE RESULTS

LEVCOR HAS A STOCKHOLDERS' DEFICIENCY AND MAY BE DEPENDENT UPON ITS PRINCIPAL
STOCKHOLDER TO FUND ITS FUTURE OPERATIONS.

         Levcor has sustained losses in prior years that have adversely affected
Levcor's liquidity. At December 31, 2001 current liabilities exceeded current
assets by approximately $188,000, and at December 31, 2001, Levcor had a
stockholders' deficiency of approximately $2,107,000. Robert A. Levinson has
agreed to continue to personally support its cash requirements to enable Levcor
to meet its current obligations through January 2, 2004. Levcor has successfully
implemented several actions to reduce losses and improve cash flow. There can be
no assurance that Mr. Levinson will continue to personally support Levcor's cash
requirements, or that these measures will otherwise continue to be successful.

THE TEXTILE CONVERSION BUSINESS IS EXTREMELY COMPETITIVE.

         In the event we are unable to continue to be competitive in our product
offerings and services, our business, results of operations and financial
condition may suffer. Within the domestic textile converting business,
competition is based on price, uniqueness in styling of fabrics and the ability
to quickly respond to customers' orders. However, we cannot assure you that our
domestic or foreign competitors will not be able to offer services that are more
attractive to our customers or potential customers than what we are able to
provide. A large number of domestic and foreign manufacturers supply apparel
into the United States market, many of which have a much more significant market
presence than does Levcor. Some of Levcor's competitors also have substantially
greater financial, marketing, personnel and other resources than does Levcor.
This may enable Levcor's competitors to compete more aggressively than can
Levcor in pricing, marketing and other respects, to react more quickly to market
trends and to better weather market downturns. Increased competition by existing
and future competitors could result in reductions in sales or reductions in
prices of Levcor's products. There is no assurance that Levcor will be able to
compete successfully against present or future competitors or that competitive
pressures faced by Levcor will not have a material adverse effect.


                                      -3-
<PAGE>


LEVCOR DEPENDS ON THIRD PARTIES FOR CRUCIAL RAW MATERIALS AND SERVICES.

         Levcor's principal raw materials are cotton, rayon and polyester.
Cotton is available from a large number of suppliers. The quantity of plantings,
crop and weather conditions, agricultural policies, domestic uses, exports and
market conditions can significantly affect the cost and availability of cotton.
The price of polyester varies and is determined by supply and demand as well as
the price of petroleum used to produce polyester. Levcor depends on third party
knitters, finishers and transporters in the production and delivery of the
finished fabrics it sells and markets to apparel manufacturers. If any of its
third party knitters, finishers and transporters fail to timely produce quality
products and in sufficient qualities or fail to timely deliver finished
products, Levcor's results would suffer.

LEVCOR'S BUSINESS IS SUBJECT TO THE SEASONAL NATURE OF THE FASHION INDUSTRY.

          The business of Levcor is seasonal and we typically realize higher
revenues and operating income in the second and fourth calendar quarters. Such
seasonality takes into account the standard lead-time required by the fashion
industry to manufacture apparel, which corresponds to the respective retail
selling seasons. Standard lead-time is the period of time commencing with when
Levcor receives an order from a customer and ending with when Levcor ships the
order to the customer. In response to this seasonality, Levcor generally
increases its inventory levels, and thereby has higher working capital needs,
during the third and fourth quarters of its fiscal year to meet customer demands
for the peak first and fourth fiscal quarter seasons. Levcor and the U.S.
apparel industry are sensitive to the business cycle of the national economy.
Moreover, the popularity, supply and demand for particular apparel products can
change significantly from year to year based on prevailing fashion trends and
other factors. Reflecting the cyclical nature of the apparel industry, many
apparel producers tend to increase capacity during years in which sales are
strong. These increases in capacity tend to accelerate a general economic
downturn in the apparel markets when demand weakens. These factors have
contributed historically to fluctuations in Levcor's results of operations and
these fluctuations are expected to occur in the future. Levcor may be unable to
compete successfully in any industry downturn.

         Levcor's seasonality, along with other factors that are beyond Levcor's
control, including general economic conditions, changes in consumer behavior,
weather conditions, availability of import quotas and currency exchange rate
fluctuations, could adversely affect Levcor and cause its results of operations
to fluctuate. Results of operations in any period should not be considered
indicative of the results to be expected for any future period. The sale of
Levcor's products is subject to substantial cyclical fluctuation. Sales tend to
decline in periods of recession or uncertainty regarding future economic
prospects that affect consumer spending, particularly on discretionary items.
This cyclicality and any related fluctuation in consumer demand could have a
material adverse effect on Levcor's results of operations and financial
condition.

ITEM 2.       DESCRIPTION OF PROPERTY.

         Levcor's offices are located at 462 Seventh Avenue, 20th Floor, New
York, New York 10018. Levcor has entered into a seven-year lease of this
property, which expires on January 21, 2007, at an annual rent of $162,500.
Levcor believes that this office is suitable to service its current level of
sales and satisfy its foreseeable needs.


                                      -4-
<PAGE>



ITEM 3.       LEGAL PROCEEDINGS.

         The 0.67% carried interest in the Kotaneelee gas field sold by Levcor
in August 1991, as well as Magellan Petroleum Corporation's 2.67% carried
interest in such field, is held in trust by Canada Southern Petroleum Ltd.
("Canada Southern"), which has a 30% carried interest in such field. In late
1987, Canada Southern commenced an action against Allied-Signal, Inc. in Florida
alleging its failure to fulfill certain contractual obligations to develop the
field (the "Florida Action"). In September 1988, Allied-Signal, Inc. commenced
an action (the "Allied-Signal Action") in Calgary, Canada against Dome Petroleum
Limited, Amoco Production Company and Amoco Canada Petroleum Company, Ltd.
("Amoco Canada" and, collectively, the "Amoco-Dome Group") seeking a declaration
that the defendants were responsible for the development of the field, and also
seeking reimbursement of its legal costs incurred in the Florida Action. The
Florida Action has since been dismissed.

         In March 1989, Allied-Signal, Inc. amended its complaint in the
Allied-Signal Action to add Levcor, Canada Southern and Magellan Petroleum
Corporation ("Magellan") as additional defendants. Certain of the other
defendants in the Allied-Signal Action have filed counterclaims against Levcor
and other defendants seeking indemnification for unspecified costs and expenses
incurred by them in defending the Allied-Signal Action. In January 1996, Levcor,
Allied-Signal, Inc., Canada Southern and Magellan Petroleum Corporation entered
into a settlement whereby each party agreed not to sue any of the other parties
and, subsequently, the Allied-Signal Action was discontinued.

         Shortly after the Allied-Signal Action commenced, the Amoco-Dome Group
filed a counterclaim against Levcor, Canada Southern and Magellan seeking
certain declaratory relief with respect to their alleged failure to fulfill
certain contractual obligations to develop and market gas from the Kotaneelee
gas field. The trial on the counterclaim action commenced on September 3, 1996,
and is ongoing.

         On October 27, 1989, in the Court of Queen's Bench of Alberta, Judicial
District of Calgary, Canada (the "Canada Court"), Canada Southern filed a
statement of claim against the Amoco-Dome Group, Columbia Gas Development of
Canada Ltd. ("Columbia"), Mobil Oil Canada Ltd. ("Mobil") and Esso Resources of
Canada Ltd. ("Esso") seeking a declaratory judgment (the "Declaratory Action")
regarding two issues relating to the Kotaneelee gas field. The Declaratory
Actions seeks a judgment on: (1) whether interest accrued on the carried
interest account (Canada Southern maintains it does not), and (2) whether
expenditures for gathering lines and dehydration equipment are expenditures
chargeable to the carried interest account (Canada Southern maintains they are).
Mobil, Esso and Columbia have filed answers essentially agreeing to the granting
of the relief requested by Canada Southern. The Amoco-Dome Group has now
admitted to the claim that interest does not accrue on the carried interest
account.

         In 1991, Anderson Exploration Ltd. acquired all of the shares in
Columbia, and changed its name to Anderson Oil & Gas Inc. ("Anderson"). Anderson
is now the sole operator of the Kotaneelee gas field, and is a direct defendant
in the Declaratory Action. Columbia's previous parent, The Columbia Gas System,
Inc., was reorganized in a bankruptcy proceeding in the United States, and is
contractually liable to Anderson in the Declaratory Action.


                                      -5-
<PAGE>



         On March 7, 1990, Canada Southern filed a statement of claim in the
Canada Court against the Amoco-Dome Group, Columbia, Mobil and Esso seeking
forfeiture of the Kotaneelee gas field, damages and other relief for breach of
fiduciary duty (the "Forfeiture Action"). Levcor was added as a party plaintiff
to this action in November 1993. If such claim is upheld, Levcor could recover a
2 percent interest in the Kotaneelee gas field and damages. The defendants have
contested the claim and Canada Southern is pursuing discovery and trial.
Columbia filed a counterclaim seeking, if Canada Southern is successful in its
claims, repayment from Canada Southern, Levcor and Magellan Petroleum
Corporation of all sums expended by Columbia on the Kotaneelee gas fields before
Canada Southern, Levcor and Magellan Petroleum Corporation are entitled to their
interests. The trial commenced in September 1996, and is ongoing. Based on
recently discovered evidence, Canada Southern petitioned the Canada Court for
leave to amend its complaint to add a claim that the defendants in the action
failed to develop the field in a timely manner.

         The field operator has entered into a contract for the sale of the
Kotaneelee gas field. Levcor believes that it is too early to determine the
impact, if any, that this contract may have on the status of these cases.

         On August 6, 1991, Levcor sold to an independent third party (the
"Buyer") its carried interest in a lease in property, including the Kotaneelee
gas field. The agreement for the transfer of Levcor's interest provides that
Levcor shall continue to prosecute the Declaratory Action and the Forfeiture
Action. Levcor and the Buyer have agreed to share equally all costs and expenses
of the Declaratory Action and the Forfeiture Action and to share equally any
payments or other benefit resulting from the resolution of such actions. The
agreement further provides that Levcor shall indemnify the Buyer against all
actions, proceedings, claims, demands, damages and expenses brought against or
suffered by the Buyer which arise out of, or are attributable to, the
Allied-Signal Action.

         Levcor has been advised that under Canadian law certain costs (known as
"Taxable Costs") of a litigation may be assessed against a nonprevailing party.
Taxable costs consist primarily of attorneys and expert witness fees incurred
during a trial. Effective September 1, 1998, the Alberta Rules of Court were
amended to provide for a material increase in the costs which may be awarded to
the prevailing party in matters before the Court. In addition, a judge in
complex and lengthy trials has the discretion to increase an award of Taxable
Costs.

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

         None.



                                      -6-
<PAGE>



                                    PART II.

ITEM 5.       MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         Levcor common stock, par value $0.56 per share, is traded on the Over
The Counter Bulletin Board under the symbol "LEVC.OB." The common stock is
traded sporadically, and no established liquid trading market currently exists
therefor.

         The following table sets forth the range of high and low bids of Levcor
common stock for the calendar quarters indicated. The quotes listed below
reflect inter-dealer prices or transactions solely between market-makers,
without retail mark-up, mark-down or commission and may not represent actual
transactions.

 2000                             High                      Low
 First Quarter                   $1.375                   $0.625
 Second Quarter                   1.125                    0.625
 Third Quarter                    1.000                    0.625
 Fourth Quarter                   2.031                    0.750

 2001
 First Quarter                    2.438                    1.188
 Second Quarter                   4.400                    1.250
 Third Quarter                    5.000                    2.150
 Fourth Quarter                   3.000                    1.800


HOLDERS OF RECORD

         As of March 14, 2002, there were approximately 6,300 holders of record
of Common Stock.

DIVIDEND POLICY

         Levcor has not paid any cash dividends on shares of its common stock
and has no present intention to declare or pay cash dividends on such shares in
the foreseeable future.

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

GENERAL

         This management's discussion and analysis of Levcor's financial
condition and results of operations and other portions of this report contain
forward-looking information that involve risks and uncertainties. Levcor's
actual results could differ materially from those anticipated by this
forward-looking information. Factors that may cause such differences include,
but are not limited to, those discussed under the heading "risk factors" and
elsewhere in this report. This management's discussion and analysis of financial
condition and results of operations should be



                                      -7-
<PAGE>



read in conjunction with Levcor's financial statements and the related notes
included elsewhere in this report.

CRITICAL ACCOUNTING POLICIES

         The following is a brief discussion of the critical accounting policies
used in the preparation of Levcor's financial statements, including those
accounting policies and methods used by Levcor which require subjective
judgments and are considered very important to the understanding of Levcor's
financial condition.

     Receivables

         Under our factoring agreement, the factor purchases substantially all
of the trade accounts receivable without recourse and assumes substantially all
credit risks with respect to such accounts. The agreement allows Levcor to
obtain advances, computed on a borrowing base formula, from the factor that bear
interest at 1/2% above the bank's prime rate (4.75% at September 30, 2002). The
amounts due to Levcor from the factor earn no interest. Levcor has pledged its
accounts receivable and property and equipment as collateral under the factor
loan.

     Inventory

         Inventories are stated at the lower of cost (principally average cost)
or market. Inventories consist of yarn and greige goods (collectively considered
raw materials), work in process and finished goods.

         Levcor estimates the markdowns required for inventories based upon
future marketability as well as general economic conditions. Levcor believes
that it has recorded adequate markdowns and therefore the inventory valuation
does not require any additional valuation adjustments.

     Revenue Recognition

         Revenue is recognized when goods are shipped to customers. Usual sales
terms are FOB shipping point, at which time Levcor has completed all performance
obligations to consummate the sale. On occasion, Alfred Dunner has approached
Levcor to bill and hold merchandise. Levcor recognizes revenue on these
transactions only when all of the following occurs: the risks of ownership have
passed to the buyer, the customer has made a fixed commitment to purchase the
goods, the customer has requested that the transaction be on a bill and hold
basis even though the goods are ready for shipment, there is a fixed date of
delivery, Levcor has performed all performance obligations to consummate the
sale and the goods are segregated from the remainder of Levcor's goods in the
warehouse. At December 31, 2002 and 2001, Levcor did not recognize any revenues
from bill and hold transactions.

     Debt and Debt Covenants

     During the period ended December 31, 2002, Levcor was in compliance with
all debt covenants.



                                      -8-
<PAGE>



RESULTS OF OPERATIONS

Calendar Year 2001 Compared to Calendar Year 2000

         Sales for 2001 were approximately $20,108,000, an increase of
approximately $2,850,000, or 16.5%, from approximately $17,258,000 for 2000, due
to new business from Levcor's woven division. The cost of sales in 2001 was
approximately $16,252,000, an increase of approximately $1,903,000, or 13.3%,
which is caused by the increase in sales, from approximately $14,349,000 in
2000. The gross profit for 2001 was approximately $3,856,000, an increase of
approximately $946,000, or 32.5%, from a gross profit of approximately
$2,910,000 for 2000. The gross profit percentage was 19.2% in 2001 as compared
to 16.9% in 2000. The gross profit increase resulted from Levcor's concentrating
its business in products with higher overall profit margins.

         Levcor's total selling, general and administrative expenses for 2001
were approximately $3,236,000, an increase of approximately $230,000, or 7.7%,
from approximately $3,006,000 in 2000. Such increase was due to the increased
costs associated with the woven business that was in operation for the entire
2001 year.

         Other income was approximately $20,000 in 2001, a decrease of
approximately $119,000, or 85.6%, from approximately $139,000 in 2000. The
decrease in other income resulted from the inclusion of $100,000 of income from
the Andrex lease buy-out agreement in 2000. Interest expense increased 2.2%, or
approximately $9,000, to approximately $427,000 from approximately $418,000.

         A loss on impairment of assets held for sale of $20,000 was recognized
in 2001 compared with a loss on impairment of assets held for sale of $50,000 in
2000. As a result of the above, net income was approximately $192,000 in 2001 as
compared to a loss of approximately $432,000 in 2000.

LIQUIDITY AND CAPITAL RESOURCES

         Under Levcor's factoring agreement with CIT Group, the factor purchases
Levcor's trade accounts receivable and assumes substantially all credit risks
with respect to such accounts. The amounts due to Levcor from the factor earn no
interest. The agreement allows Levcor to obtain advances from the factor that
bear interest at 1/2% above the bank's prime rate. Levcor has pledged its
accounts receivable and property and equipment as collateral under the
agreement. The amount available for advances under the factoring agreement is
the difference between eligible receivables less funds in use and outstanding
letters of credit.

         On December 15, 2000, Levcor refinanced $1,500,000 of the factor loan
into a term note with the CIT Group. Levcor and Robert A. Levinson have provided
substantially the same collateral that is provided under the factor loan as
collateral for the term note. The term note is payable in 35 equal consecutive
monthly installments of $8,696 beginning on February 1, 2001, with a final
installment of $1,195,652 due on January 1, 2004. In addition, the term note
contains covenants that include a limitation on the amount of capital
expenditures and certain procedural covenants.



                                      -9-
<PAGE>



         Under the factoring agreement, the factor purchases the trade accounts
receivable without recourse and assumes substantially all credit risks with
respect to such accounts. The agreement allows Levcor to obtain advances from
the factor that bear interest at 1/2% above the bank's prime rate (4.75% at
December 31, 2001). The amounts due to Levcor from the factor earn no interest.
Levcor has pledged its accounts receivable and property and equipment as
collateral under the advances. In addition, Robert A. Levinson a stockholder,
officer and director of Levcor has provided certain side collateral against
advances provided under the agreement.

         There is no set limit on borrowings. The amount available for borrowing
is based on a formula consisting of 90 percent of eligible accounts receivable
increased by side collateral and reduced by both the current loan balance and
outstanding letters of credit.

         On May 2, 2002 Levcor borrowed $3,000,000 from JPMorgan Chase Bank
pursuant to a promissory note due May 3, 2004. The note bears interest at a
fixed rate per annum equal to the Adjusted LIBO Rate applicable to such note
plus .75% (a "Eurodollar Loan"). The interest on the note at May 3, 2002 was
2.90625%. In addition, Robert A. Levinson a stockholder, officer and director of
Levcor has provided certain additional collateral guaranteeing the note. The
proceeds of the note were used to payoff the outstanding balance of $1,375,557
of its term note with the CIT Group and pay down Levcor's advance position of
$1,160,000 with the CIT Group. The remainder was used for working capital
requirements.

         If necessary, Mr. Levinson has agreed to personally support Levcor's
cash requirements to enable it to fulfill its obligations through January 2,
2004. On September 27, 2002 Mr. Levinson delivered to Levcor his written
commitment that he will continue to support Levcor's cash requirements until
January 2, 2004, to the extent necessary, up to a maximum amount of $3 million.
Levcor believes its reliance on such commitment is reasonable and that Mr.
Levinson has sufficient liquidity and net worth to honor such commitment. Levcor
believes that Mr. Levinson's written commitment provides Levcor with the legal
right to request and receive such advances. In the event that Mr. Levinson did
not honor such commitment, Levcor would have the right to sue Mr. Levinson for
breach of his agreement.

         The amount owed by Levcor to Mr. Levinson as of June 30, 2002 under
loans he has made to Levcor is $500,000 and is a demand obligation that Mr.
Levinson has promised not to demand until at least January 2, 2004. On June 5,
2002 the Levcor board of directors determined that in light of the fact that the
financing arrangement with CIT was paid off in May of 2002, Levcor currently has
sufficient funds available, and Levcor's other sources of financing are at lower
interest rates, it was in Levcor's best interest to prepay a portion of the
outstanding principal amount owed to Mr. Levinson in order to save interest
expenses. On June 5, 2002, Levcor prepaid $220,000 of the outstanding principal
amount owed to Mr. Levinson. Also, the accrued interest on this obligation of
$269,671 has been classified as a long-term obligation because Mr. Levinson has
promised not to demand payment until at least January 2, 2004.

         Levcor's obligation to repay the sums owed to Mr. Levinson is not a
demand obligation until after January 2, 2004. On February 28, 2002 Mr. Levinson
delivered to Levcor his written undertaking that he will not require the
repayment of the loan together with accrued and unpaid interest, prior to
January 2, 2004. Levcor believes its reliance on such undertaking is reasonable.
In the event that Mr. Levinson did demand repayment prior to January 2, 2004,
Levcor believes that such demand would be unenforceable and that Levcor would
have the right to sue Mr.



                                      -10-
<PAGE>



Levinson for breach of his agreement. Mr. Levinson reaffirmed this undertaking
in writing on September 27, 2002.

         Levcor believes that cash generated from Levcor's sale of fabrics, the
advances under the CIT Group factoring agreement, the proceeds from its term
note with JPMorgan Chase and loans from Mr. Levinson (if needed) will be
sufficient to fund Levcor's operations through 2004. Levcor's unrestricted cash
at September 30, 2002 was approximately $2,000 and was approximately, $3,000 at
December 31, 2001.

         Levcor's future minimum lease payments under noncancelable operating
leases at December 31, 2001 are approximately $900,000 for the years 2002
through 2006. The majority of these payments are for Levcor's headquarters in
New Jersey.

         SEASONALITY

         The business of Levcor is seasonal and typically higher revenues and
operating income are realized in the second and fourth calendar quarters. Such
seasonality takes into account the standard lead-time required by the fashion
industry to manufacture apparel, which corresponds to the respective retail
selling seasons. Standard lead-time is the period of time commencing with when
Levcor receives an order from a customer and ending with when Levcor ships the
order to the customer.

         IMPACT OF INFLATION

         Levcor's results are affected by the impact of inflation on operating
costs. Historically, Levcor has used selling price adjustments, cost containment
programs and improved operating efficiencies to offset the otherwise negative
impact of inflation on its operations.

CURRENT ACCOUNTING ISSUES

SFAS No. 142

         In July 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards Number 142, "Goodwill and Other Intangible
Assets" ("SFAS 142"). Under SFAS 142, goodwill will no longer be subject to
amortization over its estimated useful life. Rather, goodwill will be subject to
an annual assessment for impairment by applying a fair-value based test. The
standard became effective beginning January 1, 2002. Levcor has yet to determine
the impact of the statement on its financial position and results of operations.

SFAS No. 144

         In August 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards Number 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("SFAS 144"). SFAS 144 addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets and discontinued operations. The standard became effective beginning
January 1, 2002. Levcor has determined that the impact of initial adoption will
not have a material impact on Levcor's financial position or results of
operations.




                                      -11-
<PAGE>



ITEM 7.       FINANCIAL STATEMENTS






















                                      -12-
<PAGE>



                           LEVCOR INTERNATIONAL, INC.

                          INDEX TO FINANCIAL STATEMENTS


                                                                           Page
                                                                           ----
AUDITED FINANCIAL STATEMENTS


Reports of Independent Certified Public Accountants.........................14


Balance Sheet for the Year Ended December 31, 2001..........................16


Statement of Operations for the Years Ended December 31, 2001 and 2000......17


Statement of Stockholders' Deficiency for the Years Ended
  December 31, 2001 and 2000................................................18


Statement of Cash Flows for the Years Ended
  December 31, 2001 and 2000................................................19


Notes to Financial Statements...............................................20








                                      -13-
<PAGE>



               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
  LEVCOR INTERNATIONAL, INC.


         We have audited the accompanying balance sheet of LEVCOR INTERNATIONAL,
INC. as of December 31, 2001, and the related statements of operations,
stockholders' deficiency and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

         We conducted our 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 that 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 LEVCOR
INTERNATIONAL, INC. as of December 31, 2001, and the results of its operations
and its cash flows for the year then ended in conformity with accounting
principles generally accepted in the United States of America.




                                      Friedman Alpren & Green LLP


New York, New York
March 1, 2002


                                      -14-
<PAGE>



               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


To The Board of Directors and Stockholders of
   Levcor International, Inc.

         We have audited the accompanying statements of operations,
stockholders' deficiency and cash flows of Levcor International, Inc. (the
"Company") for the year ended December 31, 2000. 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
statements of operations, stockholders' deficiency and cash flows are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statements of operations,
stockholders' deficiency and cash flows. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the results of operations. We believe
that our audit of the statements of operations, stockholders' deficiency and
cash flows provides a reasonable basis for our opinion.

         In our opinion, the statements of operations, stockholders' deficiency
and cash flows referred to above present fairly, in all material respects, the
results of operations of Levcor International, Inc. for the year ended December
31, 2000, in conformity with accounting principles generally accepted in the
United States of America.



Grant Thornton LLP

New York, New York
April 16, 2001


                                      -15-
<PAGE>


<TABLE>
<CAPTION>

                                        LEVCOR INTERNATIONAL, INC.

                                              BALANCE SHEET
                                            DECEMBER 31, 2001

                                                 ASSETS
                                                 ------
<S>                                                                             <C>
Current assets
  Cash                                                                          $        2,685
  Accounts receivable, less allowances of $17,525                                       43,297
  Inventories                                                                        2,211,503
  Prepaid expenses and other current assets                                             49,150
                                                                                --------------
           Total current assets                                                      2,306,635

Property and equipment, less accumulated
  depreciation and amortization of $69,043                                              87,426
Assets held for sale                                                                   234,400
Security deposits                                                                       34,650
                                                                                --------------
                                                                                $    2,663,111
                                                                                ==============


                                      LIABILITIES AND STOCKHOLDERS' DEFICIENCY
                                      ----------------------------------------

Current liabilities
  Accounts payable and accrued expenses                                         $    1,518,637
  Due to factor                                                                        788,329
  Deferred income                                                                       33,267
  Current maturities of long-term debt                                                 154,348
                                                                                --------------
           Total current liabilities                                                 2,494,581
                                                                                --------------
Long-term debt, less current maturities                                              1,306,651
                                                                                --------------
Loans payable - officer/stockholder                                                    969,080
                                                                                --------------
Commitment and contingencies                                                             -

Stockholders' deficiency
   Common stock - par value $.56 per share; authorized 15,000,000 shares,
     issued 2,383,647 shares and outstanding 2,326,047 shares                        1,334,842
   Capital in excess of par value                                                    5,267,561
   Accumulated deficit                                                          (    8,632,417)
                                                                                --------------
                                                                                (    2,030,014)
   Less - Treasury stock - at cost, 57,600 shares                               (       77,187)
                                                                                --------------
                                                                                (    2,107,201)
                                                                                --------------
                                                                                $    2,663,111
                                                                                ==============
</TABLE>


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


                                      -16-
<PAGE>



                           LEVCOR INTERNATIONAL, INC.
                             STATEMENT OF OPERATIONS
                     YEARS ENDED DECEMBER 31, 2001 AND 2000

<TABLE>
<CAPTION>

                                                                       2001             2000
                                                                   -----------       -----------
<S>                                                              <C>                 <C>
Net sales                                                          $20,107,692       $17,258,354

Cost of goods sold                                                  16,252,165        14,348,638
                                                                   -----------       ----------
           Gross profit                                              3,855,527         2,909,716
                                                                   -----------       -----------
Selling, general and administrative expenses                         3,236,402         3,005,684
Loss on impairment of assets held for sale                              20,000            50,000
                                                                   -----------       -----------
                                                                     3,256,402         3,055,684
                                                                   -----------       -----------
           Income (loss) from operations                               599,125        (  145,968)
                                                                   -----------       -----------
Other income (expense)
   Interest expense                                                 (  426,555)       (  418,018)
   Other income                                                         19,580           139,027
                                                                   -----------       -----------
                                                                    (  406,975)       (  278,991)
                                                                   -----------       -----------
           Income (loss) from continuing operations                    192,150        (  424,959)
Loss from discontinued operations                                         -           (    7,487)
                                                                   -----------       -----------
           Net income (loss)                                       $   192,150       $(  432,446)
                                                                   ===========       ===========

Earnings per share:

   Basic
     Income (loss) from continuing operations                      $      0.08       $     (0.19)
     Loss from discontinued operations                                    -                 -
                                                                   -----------       -----------
     Basic net income (loss) per common share                      $      0.08       $     (0.19)
                                                                   ===========       ===========
   Diluted
     Income (loss) from continuing operations                      $      0.08       $     (0.19)
     Loss from discontinued operations                                    -                 -
                                                                   -----------       -----------
     Diluted net income (loss) per common share                    $      0.08       $     (0.19)
                                                                   ===========       ===========

Weighted average number of shares
   outstanding - basic                                               2,321,337         2,316,727
Potential common stock                                                  73,857              -
                                                                   -----------       -----------
Weighted average number of shares
   outstanding - diluted                                             2,395,194         2,316,727
                                                                   ===========       ===========

</TABLE>

*The amount of loss per share is less than $0.01.

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


                                      -17-


<PAGE>



                           LEVCOR INTERNATIONAL, INC.
                      STATEMENT OF STOCKHOLDERS' DEFICIENCY
                     YEARS ENDED DECEMBER 31, 2001 AND 2000


<TABLE>
<CAPTION>


                                                           Common Stock                 Capital
                                                  -------------------------------      in Excess       Accumulated
                                                     Shares            Amount        of Par Value        Deficit
                                                  -----------       -------------  ---------------   ----------------
<S>                                               <C>               <C>            <C>                  <C>
Balance, January 1, 2000                            2,354,299       $   1,318,407    $   5,246,177        $(8,392,121)

Shares issued for services rendered                    17,000               9,520            8,480               -
Stock options exercised                                 5,000               2,800              325               -
Net loss                                                 -                   -               -               (432,446)
                                                  -----------       -------------    -------------    ---------------

Balance, December 31, 2000                          2,376,299           1,330,727        5,254,982         (8,824,567)

Shares issued for services rendered                     7,348               4,115           12,579               -
Net income                                               -                   -               -                192,150
                                                  -----------       -------------    -------------       ------------

Balance, December 31, 2001                          2,383,647       $   1,334,842    $   5,267,561        $(8,632,417)
                                                  ===========       =============    =============        ===========


                                                         Treasury Stock
                                                  -----------------------------         Total
                                                                                    Stockholders'
                                                   Shares            Amount           Deficiency
                                                  ----------      -------------    -------------
Balance, January 1, 2000                             54,000       $  (  74,062)    $ (1,901,599)

Shares issued for services rendered                    -                   -             18,000
Stock options exercised                               3,600          (   3,125)            -
Net loss                                               -                   -         (  432,446)
                                                  ---------       -------------    -------------

Balance, December 31, 2000                           57,600          (  77,187)      (2,316,045)

Shares issued for services rendered                    -                   -             16,694
Net income                                             -                   -            192,150
                                                  ---------       -------------    -------------

Balance, December 31, 2001                           57,600       $  (  77,187)    $ (2,107,201)
                                                  =========       =============    =============

</TABLE>


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


                                      -18-
<PAGE>


                           LEVCOR INTERNATIONAL, INC.
                             STATEMENT OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 2001 AND 2000
<TABLE>
<CAPTION>

                                                                                    2001                2000
                                                                                 ------------      --------------
<S>                                                                              <C>                 <C>
Cash flows from operating activities of continuing operations
   Net income (loss) from continuing operations                                  $   192,150       $(   424,959)
   Adjustments to reconcile net income (loss) to
     net cash provided by (used in) operating activities
       Depreciation and amortization                                                  30,860             21,494
       Provision for doubtful accounts                                                10,825               -
       Services paid in common stock                                                  16,694             18,000
       Disposal of assets from discontinued operations
         charged to continuing operations as compensation                               -                33,138
       Loss on sale of assets held for sale                                             -                37,600
       Loss on impairment of assets held for sale                                     20,000             50,000
       Loss on disposal of property and equipment                                       -                   522
       Changes in operating assets and liabilities
         Accounts receivable                                                          88,248        (    87,131)
         Inventories                                                               1,476,081        ( 1,364,596)
         Prepaid expenses and other current assets                                    53,502        (    69,664)
         Security deposits                                                              -           (     5,400)
         Accrued interest on loan payable - officer/stockholder                       43,200             43,318
         Accounts payable and accrued expenses                                    (2,311,788)         2,892,635

         Deferred income                                                              33,267               -
                                                                                 -----------       ------------

           Net cash provided by (used in) operating activities
             of continuing operations                                               (346,961)         1,144,957
                                                                                 -----------       ------------

Cash used in operating activities of discontinued operations                            -           (    33,523)
                                                                                 -----------       ------------

Cash flows from investing activities
   Proceeds from sale of assets held for sale                                         20,650             49,550
   Purchases of property and equipment                                                (8,815)           (98,046)
                                                                                 -----------       ------------
           Net cash provided by (used in) investing activities                        11,835        (    48,496)
                                                                                 -----------       ------------

Cash flows from financing activities
   Payment of long-term debt                                                      (  689,001)       (   827,500)
   Proceeds from (payments to) factor                                            _ 1,019,406       _(   231,077)
                                                                                 -----------       ------------


           Net cash provided by (used in) financing activities                       330,405       (  1,058,577)

           Net increase (decrease) in cash                                        (    4,721)             4,361

Cash, beginning of year                                                                7,406              3,045
                                                                                 -----------       ------------
Cash, end of year                                                                $     2,685       $      7,406
                                                                                 ===========       ============
Supplemental disclosure of cash flow information
  Cash paid during the year for interest                                         $   383,355       $    395,686
                                                                                 ===========       ============
</TABLE>

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

                                      -19-
<PAGE>



                           LEVCOR INTERNATIONAL, INC.

                          NOTES TO FINANCIAL STATEMENTS


1 - SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Liquidity

         Levcor International, Inc. (the "Company") was engaged in two industry
segments through June 2000: the ownership of fractional interests in oil and gas
wells and leases with respect thereto (see Note 15 for discontinued operations);
and the operation of a fabric-converting business that produces fabrics used in
the production of apparel. The Company sells its products to customers in the
United States and Canada.

         The Company sustained substantial losses in prior years that have
adversely affected the Company's liquidity. At December 31, 2001, current
liabilities exceeded current assets by approximately $188,000 and the Company
had a stockholders' deficiency of approximately $2,107,000. Robert A. Levinson,
an officer, director and stockholder of the Company has agreed to continue to
personally support the Company's cash requirements to enable the Company to meet
its current obligations through January 2, 2004 and to fund future operations.

         The Company has successfully implemented several actions to reduce
losses and improve cash flow. These actions, which include beginning a new
product line in October 2000 and the reduction of certain operating costs, have
produced a profit from continuing operations during the year ended December 31,
2001. Although there can be no assurance that these measures will continue to be
successful, the Company believes that future operations and support from Robert
A. Levinson will provide sufficient liquidity to fund current operations.

Inventories

         Inventories are stated at the lower of cost (principally average cost)
or market. Inventories consist of yarn and greige goods (collectively considered
raw materials), work in process and finished goods.

         The Company estimates the markdowns required for inventories based upon
future marketability as well as general economic conditions. Consequently, an
adverse change in those factors could affect the Company's estimate of the
markdowns.



                                      -20-
<PAGE>



                           LEVCOR INTERNATIONAL, INC.

                          NOTES TO FINANCIAL STATEMENTS


1 - SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Cost of Sales

         The significant items included in the Company's cost of sales include
purchases of yarn, purchases of greige goods, dyeing and finishing costs and
freight in.

Property and Equipment

         Property and equipment are stated at cost less accumulated depreciation
and amortization. Depreciation and amortization are provided for, on a
straight-line basis, in amounts sufficient to relate the cost of depreciable
assets to operations over their estimated service lives, which range from three
to seven years. Leasehold improvements are amortized over the lesser of the
lease term or the service lives of the improvements.

Impairment and Disposal of Long-Lived Assets

         On an ongoing basis, the Company reviews the valuation of long-term
assets. As part of the review, the Company estimates the undiscounted future
cash flow expected to be generated by the related assets to determine whether an
impairment has occurred. If such future cash flows are insufficient to recover
the carrying amount of the assets, impairment is recognized and the carrying
value of any impaired assets would be reduced to fair value.

         The Company initiated a process to sell certain operating machinery and
equipment. This machinery and equipment was acquired in a business combination
in September 1999. The machinery and equipment has never been used and,
accordingly, no depreciation has ever been taken. In 2001, the Company sold part
of the equipment for book value. The Company expects to complete the sale of the
remaining machinery and equipment in 2002.

Earnings (Loss) Per Share

         The computation of basic net income (loss) per share of common stock is
based upon the weighted average number of common shares outstanding during the
period. Diluted net income (loss) per share is calculated similarly to basic net
income (loss) per share except that the weighted average of shares outstanding
is increased to reflect additional shares from the assumed exercise of stock
options (see Note 10), if dilutive. For the year ended December 31, 2000, stock
options have been excluded from the calculation of diluted income (loss) per
share, as their effect would have been antidilutive.



                                      -21-
<PAGE>



                           LEVCOR INTERNATIONAL, INC.

                          NOTES TO FINANCIAL STATEMENTS


1 - SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Taxes

         The Company accounts for income taxes using the asset and liability
method. Under this method, deferred income taxes are recognized for the
estimated future tax effects of the temporary differences between the financial
reporting basis and the tax basis of assets and liabilities. Deferred income
taxes are recognized for the estimated future tax effects of the temporary
differences between the financial reporting basis and the tax basis of assets
and liabilities.

Financial Instruments

         The Company's financial instruments include long-term debt and loans
payable - officer/stockholder. The fair value of the CIT promissory note, the
largest portion of the long-term debt, approximates its carrying value because
that note had a market-based interest rate. It was not practicable to estimate
the fair value of the loans payable - officer/stockholder because no market
exists for that type of instrument.

New Accounting Pronouncements

         In the third quarter of 2001, the Financial Accounting Standards Board
issued Statements of Financial Accounting Standards (SFAS) No. 141, "Business
Combinations", and No. 142, "Goodwill and Other Intangible Assets". SFAS No. 141
eliminates the pooling-of-interests method for business combinations and
requires use of the purchase method. SFAS No. 142 changes the accounting for
goodwill and indefinite life intangibles by requiring periodic tests for
impairment of the asset instead of amortizing those assets over time. Upon
adoption on January 1, 2002, SFAS No. 142 requires discontinuance of
amortization of goodwill and indefinite life intangibles which had been recorded
in connection with previous business combinations. At this time, the Company
does not expect these statements to have a material impact on its financial
position, results of operations and cash flows.

         In the third quarter of 2001, the FASB also issued SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets". This Statement
addresses the conditions under which an impairment charge should be recorded
related to long-lived assets to be held and used, except for goodwill, and those
to be disposed of by sale or otherwise. The provisions of this Statement are
effective on January 1, 2002. At this time, the Company is evaluating the
potential impact of this Statement on its financial position, results of
operations and cash flows.



                                      -22-
<PAGE>




                           LEVCOR INTERNATIONAL, INC.

                          NOTES TO FINANCIAL STATEMENTS


1 - SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenue Recognition

         Revenue is recognized when goods are shipped to customers. Usual sales
terms are FOB shipping point, and at this time the Company has performed all
performance obligations to consummate the sale. On occasion, the Company
recognizes revenue on bill and hold sales for its most significant customer (see
Note 13). The Company recognizes revenue on these transactions only when all of
the following occurs: the risks of ownership have passed to the buyer, the
customer has made a fixed commitment to purchase the goods, the customer has
requested that the transaction be on a bill and hold basis even though the goods
are ready for shipment, there is a fixed date of delivery, the Company has
performed all performance obligations to consummate the sale and the goods are
segregated from the remainder of the Company's goods in the warehouse. During
the year ended December 31, 2001, the Company did not recognize any revenues
from bill and hold transactions. During the year ended December 31, 2000, the
Company recognized $519,518 of revenue from bill and hold sales.

         The significant costs included in selling, general and administrative
expenses are salaries, sales commissions, benefits and related payroll taxes,
rent and utilities, professional fees, factor fees, product development costs,
shipping and warehousing, travel and entertainment and telecommunication
expenses.

Shipping and Handling

         For each of the years December 31, 2001 and 2000, the Company billed
approximately $10,000 of shipping and handling fees to customers in each year.
During the same periods, the Company incurred shipping and handling costs of
$110,000 and $100,000 respectively. Because the amount billed was not material,
these fees were netted against the costs, which were included in selling,
general and administrative expenses.

Stock-Based Compensation Plans

         The Company maintains a stock option plan, as more fully described in
Note 10 to the financial statements, accounted for using the "intrinsic value"
method pursuant to the provisions of Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees." The fair value of options granted
and the pro forma effects on the Company's net income (loss) and net income
(loss) per share are disclosed pursuant to Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation."



                                      -23-
<PAGE>




                           LEVCOR INTERNATIONAL, INC.

                          NOTES TO FINANCIAL STATEMENTS


1 - SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Use of Estimates in Financial Statements

         In preparing financial statements in conformity with accounting
principles generally accepted in the United States of America, management makes
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements, as well as the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

Reclassifications

         Certain reclassifications have been made to the prior year financial
statements to conform to the current year presentation.

2 - AMENDMENT TO ASSET PURCHASE AGREEMENT

         On September 2, 1999, the Company purchased from Andrex Industries
Corp. ("Andrex") inventory; machinery and equipment; furniture, fixtures and
supplies; sales orders; and Andrex's trade name, "Andrex Knits." The purchase
price consisted of: $660,000 in cash; a promissory note ("Promissory Note 1")
totaling $282,450; and a second promissory note ("Promissory Note 2") totaling
$1,214,750. The promissory notes originally bore interest at 6% per annum.

         The Company funded the $660,000 cash payment with a promissory note due
to CIT Group bearing interest at 8.5% per annum, which was repaid on December
31, 2000. Promissory Note 1 was to be repaid with the proceeds from the sale of
the machinery and equipment after the promissory note due to the CIT Group was
paid. Promissory Note 2 was to be paid down with proceeds from the sale of the
inventory purchased by the Company and by an additional $120,704 on April 1,
2000 in a final settlement of the purchase price of the Andrex inventory.



                                      -24-
<PAGE>



                           LEVCOR INTERNATIONAL, INC.

                          NOTES TO FINANCIAL STATEMENTS


2 - AMENDMENT TO ASSET PURCHASE AGREEMENT (Continued)

         An agreement between the Company and Andrex dated July 15, 2000 deemed
Promissory Note 1 as satisfied in full and Promissory Note 2 as canceled. In
return, the Company agreed to pay Andrex $900,000, payable in 18 equal monthly
installments beginning August 1, 2000, together with accrued interest at the
rate of 6-1/2% per annum from April 1, 2000 payable on each principal payment
date.

         At December 31, 2001, the balance due to Andrex under the amended asset
purchase agreement was $50,000, which was subsequently paid in January 2002.


3 - ACCOUNTS RECEIVABLE FACTORED

         Under a factoring agreement, the factor purchases the trade accounts
receivable without recourse and assumes substantially all credit risks with
respect to such accounts. The agreement allows the Company to obtain advances,
computed on a borrowing base formula, from the factor that bear interest at 1/2%
above the bank's prime rate (4.75% at December 31, 2001). The amounts due to the
Company from the factor earn no interest. The Company has pledged its accounts
receivable and property and equipment as collateral under the factor loan. In
addition, Robert A. Levinson has provided certain side collateral against
advances provided under the agreement.

         On December 15, 2000, the Company refinanced $1,500,000 of the factor
loan into a term note with the CIT Group (see Note 6), the Company's factor. The
Company and Robert A. Levinson have provided substantially the same collateral
that is provided under the factor loan as collateral for the term note.



                                      -25-
<PAGE>


<TABLE>
<CAPTION>
<S>       <C>                                                                      <C>
4 - INVENTORIES

          Inventories consist of the following:

                 Raw materials                                                       $      975,602
                 Work in process                                                            535,852
                 Finished goods                                                             700,049
                                                                                     --------------

                                                                                     $    2,211,503
                                                                                     ==============
5 - PROPERTY AND EQUIPMENT

          Property and equipment consist of the following:

               Computer equipment                                                    $      102,108
               Furniture and fixtures                                                        26,244
               Leasehold improvements                                                        18,132
               Machinery and equipment                                                        9,985
                                                                                     --------------
                                                                                            156,469

               Less - Accumulated depreciation
                  and amortization                                                           69,043
                                                                                     --------------

                                                                                     $       87,426
                                                                                     ==============
6 - LONG-TERM DEBT

          Long-term debt at December 31, 2001 is as follows:

               Amended  note payable to Andrex (see Note 2),  bearing  interest
                  at a rate of 6.5% per annum                                        $      50,000
               Term  promissory note payable to CIT Group (see Note 3), bearing
                  interest at Chase's  prime rate (4.75% at December  31, 2001)
                  plus 1/2%                                                              1,410,999
                                                                                     -------------

                                                                                         1,460,999

               Less - Current maturities                                                   154,348
                                                                                     -------------

                                                                                     $   1,306,651
                                                                                     =============
</TABLE>



                                      -26-
<PAGE>



                           LEVCOR INTERNATIONAL, INC.

                          NOTES TO FINANCIAL STATEMENTS


6 - LONG-TERM DEBT (Continued)

         On December 15, 2000, the Company refinanced $1,500,000 of the factor
loan into a term note with the CIT Group, the Company's factor. The Company and
Robert A. Levinson have provided substantially the same collateral that is
provided under the factor loan as collateral for the term note. The term note is
payable in 23 equal consecutive monthly installments of $8,696 beginning on
February 1, 2001, with a final installment of $1,300,000 due on January 1, 2003.
In addition, the term note contains covenants that include a limitation on the
amount of capital expenditures and certain procedural covenants. The Company was
in violation of the covenant regarding limitations on capital expenditures and
requiring audited financial statements within 90 days of the December 31, 2000
year-end. In May 2001, the term note was amended to revise those covenants. The
Company is now in compliance with the loan's covenants. In December 2001, the
term note was amended to extend its due date to January 1, 2004 with a final
installment of $1,195,652 due at that date and the factoring agreement was
amended to provide a reduction of its factoring fees and a termination date that
coincides with the January 1, 2004 due date of the term note. All other terms of
the term note and factoring agreement remain in force.

7 - RELATED PARTY TRANSACTIONS

         Robert Levinson has provided $720,000 of loans to the Company. The
loans bear interest at 6% per annum. Mr. Levinson has agreed to defer the
payment of interest during 2001 and 2000. In addition, Mr. Levinson has agreed
not to require payment of these loans and $249,080 of the related accrued
interest at December 31, 2001, prior to January 2, 2004.

         In addition to being a director of Levcor, Edward H. Cohen serves as
counsel to Katten Muchin Zavis Rosenman, legal counsel to Levcor. During the
twelve months ended December 31, 2001, fees for those services provided to
Levcor by Katten Muchin Zavis Rosenman totaled $41,540, of which $12,343 was
settled through the issuance to Katten Muchin Zavis Rosenman of 4,448 shares of
Levcor common stock with a fair market value of $2.76 per share on the date of
such issuance.



                                      -27-
<PAGE>




                           LEVCOR INTERNATIONAL, INC.

                          NOTES TO FINANCIAL STATEMENTS

8 - INCOME TAXES

         The following summarizes the Company's deferred tax assets at December
31, 2001:

           Net operating loss carryforwards                  $    2,251,000
           Provision for losses on accounts receivable                7,000
           Loss on impairment of assets held for sale                 8,000
           Deferred rent                                             13,000
                                                             --------------

                                                                  2,279,000
           Less - Valuation allowance                             2,279,000
                                                             --------------

                                                             $       -0-
                                                             ==============


                                      -28-
<PAGE>



                           LEVCOR INTERNATIONAL, INC.

                          NOTES TO FINANCIAL STATEMENTS



8 - INCOME TAXES (Continued)

         At December 31, 2001, the Company had a net tax operating loss
carryforward of approximately $5,627,000 available to reduce taxable income in
future years, expiration of which occurs between 2002 and 2020. No assurance can
be given as to the Company's ability to realize the net operating loss
carryforward. Additionally, the net operating loss carryforward is subject to
Internal Revenue Code Section 382, which limits the use of the net operating
loss, if there is a change in ownership.

9 - LITIGATION

         The 0.67% carried interest in the Kotaneelee gas field sold by the
Company in August 1991, as well as Magellan Petroleum Corporation's 2.67%
carried interest in such field, is held in trust by Canada Southern Petroleum
Ltd. ("Canada Southern"), which has a 30% carried interest in such field. In
late 1987, Canada Southern commenced an action against Allied-Signal, Inc. in
Florida alleging its failure to fulfill certain contractual obligations to
develop the field (the "Florida Action"). In September 1988, Allied-Signal, Inc.
commenced an action (the "Allied-Signal Action") in Calgary, Canada against Dome
Petroleum Limited, Amoco Production Company and Amoco Canada Petroleum Company,
Ltd. ("Amoco Canada" and, collectively, the "Amoco-Dome Group") seeking a
declaration that the defendants were responsible for the development of the
field, and also seeking reimbursement of its legal costs incurred in the Florida
Action. The Florida Action has since been dismissed.

         In March 1989, Allied-Signal, Inc. amended its complaint in the
Allied-Signal Action to add the Company, Canada Southern and Magellan Petroleum
Corporation ("Magellan") as additional defendants. Certain of the other
defendants in the Allied-Signal Action have filed counterclaims against the
Company and other defendants seeking indemnification for unspecified costs and
expenses incurred by them in defending the Allied-Signal Action. In January
1996, the Company, Allied-Signal, Inc., Canada Southern and Magellan Petroleum
Corporation entered into a settlement whereby each party agreed not to sue any
of the other parties and, subsequently, the Allied-Signal Action was
discontinued.

         Shortly after the Allied-Signal Action commenced, the Amoco-Dome Group
filed a counterclaim against the Company, Canada Southern and Magellan seeking
certain declaratory relief with respect to their alleged failure to fulfill
certain contractual obligations to develop and market gas from the Kotaneelee
gas field. The trial on the counterclaim action commenced on September 3, 1996,
and is ongoing.



                                      -29-
<PAGE>



                           LEVCOR INTERNATIONAL, INC.

                          NOTES TO FINANCIAL STATEMENTS


9 - LITIGATION (Continued)

         On October 27, 1989, in the Court of Queen's Bench of Alberta, Judicial
District of Calgary, Canada (the "Canada Court"), Canada Southern filed a
statement of claim against the Amoco-Dome Group, Columbia Gas Development of
Canada Ltd. ("Columbia"), Mobil Oil Canada Ltd. ("Mobil") and Esso Resources of
Canada Ltd. ("Esso") seeking a declaratory judgment (the "Declaratory Action")
regarding two issues relating to the Kotaneelee gas field. The Declaratory
Actions seeks a judgment on: (1) whether interest accrued on the carried
interest account (Canada Southern maintains it does not), and (2) whether
expenditures for gathering lines and dehydration equipment are expenditures
chargeable to the carried interest account (Canada Southern maintains they are).
Mobil, Esso and Columbia have filed answers essentially agreeing to the granting
of the relief requested by Canada Southern. The Amoco-Dome Group has now
admitted to the claim that interest does not accrue on the carried interest
account.

         In 1991, Anderson Exploration Ltd. acquired all of the shares in
Columbia, and changed its name to Anderson Oil & Gas Inc. ("Anderson"). Anderson
is now the sole operator of the Kotaneelee gas field, and is a direct defendant
in the Declaratory Action. Columbia's previous parent, The Columbia Gas System,
Inc., was reorganized in a bankruptcy proceeding in the United States, and is
contractually liable to Anderson in the Declaratory Action.

         On March 7, 1990, Canada Southern filed a statement of claim in the
Canada Court against the Amoco-Dome Group, Columbia, Mobil and Esso seeking
forfeiture of the Kotaneelee gas field, damages and other relief for breach of
fiduciary duty (the "Forfeiture Action"). The Company was added as a party
plaintiff to this action in November 1993. If such claim is upheld, the Company
could recover a 2 percent interest in the Kotaneelee gas field and damages. The
defendants have contested the claim and Canada Southern is pursuing discovery
and trial. Columbia filed a counterclaim seeking, if Canada Southern is
successful in its claims, repayment from Canada Southern, the Company and
Magellan Petroleum Corporation of all sums expended by Columbia on the
Kotaneelee gas fields before Canada Southern, the Company and Magellan Petroleum
Corporation are entitled to their interests. The trial commenced in September
1996, and is ongoing. Based on recently discovered evidence, Canada Southern
petitioned the Canada Court for leave to amend its complaint to add a claim that
the defendants in the action failed to develop the field in a timely manner.



                                      -30-
<PAGE>



                           LEVCOR INTERNATIONAL, INC.

                          NOTES TO FINANCIAL STATEMENTS


9 - LITIGATION (Continued)

         The field operator has entered into a contract for the sale of the
Kotaneelee gas field. The Company believes that it is too early to determine the
impact, if any, that this contract may have on the status of these cases.

         On August 6, 1991, the Company sold to an independent third party (the
"Buyer") its carried interest in a lease in property, including the Kotaneelee
gas field. The agreement for the transfer of the Company's interest provides
that the Company shall continue to prosecute the Declaratory Action and the
Forfeiture Action. The Company and the Buyer have agreed to share equally all
costs and expenses of the Declaratory Action and the Forfeiture Action and to
share equally any payments or other benefit resulting from the resolution of
such actions. The agreement further provides that the Company shall indemnify
the Buyer against all actions, proceedings, claims, demands, damages and
expenses brought against or suffered by the Buyer which arise out of, or are
attributable to, the Allied-Signal Action.

         The Company has been advised that under Canadian law certain costs
(known as "Taxable Costs") of a litigation may be assessed against a
nonprevailing party. Taxable costs consist primarily of attorneys and expert
witness fees incurred during a trial. Effective September 1, 1998, the Alberta
Rules of Court were amended to provide for a material increase in the costs
which may be awarded to the prevailing party in matters before the Court. In
addition, a judge in complex and lengthy trials has the discretion to increase
an award of Taxable Costs.

         The Company's ultimate legal and financial liability in respect to all
claims, lawsuits and proceedings referred to above cannot be estimated with any
degree of certainty. Accordingly, the Company has not recognized any loss
related to these contingencies.

10 - STOCK OPTION PLAN

         On December 8, 1992, the Board of Directors of the Company adopted a
Stock Option Plan (the "Plan"). The Plan, as amended, authorizes the Company to
grant options to purchase an aggregate of 500,000 shares of Common Stock to
induce employees and directors to remain in the employ or service of the Company
and its subsidiaries and to attract new employees. Options granted under the
Plan are intended to qualify as incentive stock options ("ISOs") within the
meaning of Section 422A(b) of the Internal Revenue Code of 1986 (the "Code"), as
amended, or as nonincentive stock options ("NISOs"). The Plan is administered by
the Board of Directors. During January 2001, the Company granted the remaining
61,700 options available under the Plan. The Plan terminates in December 2002.



                                      -31-
<PAGE>



                           LEVCOR INTERNATIONAL, INC.

                          NOTES TO FINANCIAL STATEMENTS


10 - STOCK OPTION PLAN (Continued)

         The Plan provides for discretionary grants of ISOs and NISOs to
employees (including directors or officers who are also employees) of the
Company and an automatic annual grant to each nonemployee director of options to
purchase the number of shares derived by dividing $1,500 by the fair market
value of a share of Common Stock on the date of grant. The initial per share
option exercise price for the options granted to the non-employee directors is
the fair market value of the common stock on the date of the grant thereof.

         As described in Note 1, the Company has adopted the disclosure-only
provisions of SFAS No. 123 and, accordingly, no compensation cost has been
recognized for grants made under its stock option plan. Had compensation cost
been determined based on the fair value at the grant date for stock option
awards in 2001 and 2000 in accordance with the provisions of SFAS No. 123, the
Company's net income (loss) and net income (loss) per common share would have
been reduced to the pro forma amounts indicated below:


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

       Net income (loss)
         As reported                           $  192,150       $ (432,446)
         Pro forma                                 99,150         (444,446)
       Basic earnings (loss) per share
         As reported                           $      .08       $     (.19)
         Pro forma                                    .04             (.19)
       Diluted earnings (loss) per share
         As reported                           $      .08       $     (.19)
         Pro forma                                    .04             (.19)












                                      -32-
<PAGE>



                           LEVCOR INTERNATIONAL, INC.

                          NOTES TO FINANCIAL STATEMENTS


10 - STOCK OPTION PLAN (Continued)

         The weighted-average fair value at date of grant for options granted
during 2001 and 2000 was $1.05 and $.82 per option, respectively. The fair value
of each option at date of grant was estimated using the Black-Scholes option
pricing model with the following weighted-average assumptions for grants in:


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

         Risk-free interest rates           4.69% - 6.58%         5.45%
         Expected life
            Employees                          9 years          10 years
            Officers/directors                 9 years          10 years
         Expected volatility                     99%               250%
         Expected dividends                     $-0-               $-0-


         The following table summarizes option activity for the years ended
December 31, 2001 and 2000:

                                                       Incentive Options
                                                 -----------------------------
                                                                    Weighted -
                                                   Number             Average
                                                    of               Exercise
                                                  Options              Price
                                                  -------           ----------

               Balance, January 1, 2000            77,300           $   .581

                  Granted                         152,700               .818
                  Exercised                        (5,000)              .625
                                                  -------

               Balance, December 31, 2000         225,000               .741

                  Granted                          61,700              1.05
                                                  -------           --------

                Balance, December 31, 2001        286,700           $   .819
                                                  =======           ========


         During October 2000, an option holder utilized shares previously owned
in excess of six months to pay for the exercise price of the options. The amount
was recorded as a treasury stock transaction at the cost to the Company of
acquiring 3,600 shares at the date of exercise, or $3,125.


                                      -33-
<PAGE>



                           LEVCOR INTERNATIONAL, INC.

                          NOTES TO FINANCIAL STATEMENTS



10 - STOCK OPTION PLAN (Continued)

         The following table summarizes information about stock options as of
December 31, 2001:

<TABLE>
<CAPTION>

                                           Options Outstanding                        Options Exercisable
                             --------------------------------------------         ----------------------------
                                                Weighted -
                                                  Average          Weighted -                        Weighted -
          Range of                               Remaining           Average                           Average
          Exercise             Number           Contractual         Exercise         Number           Exercise
           Prices           Outstanding            Life               Price        Exercisable          Price
       -----------          -----------      ---------------       ----------      -----------      ---------
       <S>                  <C>              <C>                   <C>             <C>              <C>
       $.25 to $.50              20,800           3.2               $  .36            20,800          $  .36
       $.63 to $.81             200,000           8.2               $  .77           100,000          $  .72
       $1.10 to $2.00            65,900           9.8               $ 1.13             1,900          $ 1.58
                            -----------                                            ------------

                                286,700                                              122,700
                            ===========                                            ============
</TABLE>


11 - EMPLOYEE BENEFIT PLAN

         The Company's eligible employees may participate in a Company-sponsored
401(k) benefit plan (the "Plan"). The Plan covers substantially all employees
and permits employees to defer up to 15% of their salary up to statutory
maximums. The Plan also provides for the Company to make contributions solely at
the Company's discretion. There were no Company contributions to the Plan for
the years ended December 31, 2001 and 2000.

12 - LEASE COMMITMENT

         In February 2000, the Company entered into an operating lease for
office space that expires on January 21, 2007. Approximate annual future minimum
rents are as follows:

                            Year Ending
                            December 31,
                            ------------
                                2002                 $    169,000
                                2003                      169,000
                                2004                      169,000
                                2005                      175,000
                                2006                      175,000
                                2007                       15,000
                                                     ------------

                                                     $    872,000
                                                     ============


                                      -34-
<PAGE>


                           LEVCOR INTERNATIONAL, INC.

                          NOTES TO FINANCIAL STATEMENTS


12 - LEASE COMMITMENT (Continued)

         In addition to minimum lease commitments, the operating lease requires
payments of real estate taxes, utilities and other occupancy costs. Rent expense
charged to operations under this lease was $174,000 and $153,100 for the years
ended December 31, 2001 and 2000, respectively.

13 - MAJOR CUSTOMERS

         During the years ended December 31, 2001 and 2000, one customer
accounted for 47% of sales. In addition, during the years ended December 31,
2001 and 2000, another customer located in Canada accounted for 11% and 16% of
sales, respectively.

14 - MAJOR SUPPLIER

         During the years ended December 31, 2001 and 2000, one supplier
accounted for 64% and 73% of greige goods purchases. In addition, during the
fourth quarter of 2000, the Company recorded an adjustment of approximately
$146,000 to reduce the amount payable to the vendor due to quality problems with
a style of greige goods purchased during 2000.

15 - DISCONTINUED OPERATIONS

         Since 1995, the Company's primary operating segment has been its
textile converting business. Due to the potentially significant insurance cost
increases relating to the oil and gas segment, coupled with the retirement of
the Treasurer of the Company, management decided to transfer its interest in the
remaining oil well to the Treasurer as a noncash retirement arrangement. The
transfer resulted in a charge to operations during 2000 of $33,138. The
retirement settlement charge in 2000 is included in selling, general and
administrative expenses. Accordingly, the operating results have been segregated
from continuing operations and are reported as discontinued operations in the
accompanying statements of operations and cash flows.



                                      -35-
<PAGE>



                           LEVCOR INTERNATIONAL, INC.

                          NOTES TO FINANCIAL STATEMENTS


15 - DISCONTINUED OPERATIONS (Continued)

         Summary financial information of the discontinued operations as of and
for the year ended December 31, 2000 is as follows:


             Sales                                 $   15,664
             Cost of sales                             19,716
             Gross profit (loss on sales)              (4,052)
             Net loss                                  (7,487)


16 - QUARTERLY FINANCIAL DATA (UNAUDITED)

         Selected quarterly financial data for the year ended December 31, 2001
is as follows:

<TABLE>
<CAPTION>

                                          First           Second           Third           Fourth
                                         Quarter          Quarter         Quarter          Quarter          Total
                                     -------------    -------------   -------------    -------------   ---------------
<S>                                  <C>              <C>             <C>              <C>             <C>
  Total revenue                      $   7,763,092    $   5,102,196   $   4,014,204    $   3,228,200   $    20,107,692
  Net income (loss)                        306,432           51,027          14,777         (180,086)          192,150
  Earnings (loss) per share
     Basic                                     .13              .02             .01             (.08)              .08
     Diluted                                   .13              .02             .01             (.08)              .08
</TABLE>


17 - OTHER INCOME

         Other income consists principally of reimbursement of expenses in the
year 2001, and a lease buyout for $100,000 and an insurance recovery of $40,000
for the year 2000.




                                      -36-
<PAGE>



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

         On November 28, 2001, Levcor filed a Form 8-K with the Securities and
Exchange Commission disclosing that Levcor was dismissing Grant Thornton LLP as
its principal independent accountant and has engaged Friedman Alpren & Green LLP
as its new principal independent accountant. The audit reports of Grant Thornton
LLP on Levcor's financial statements for the years ended December 31, 2000 and
1999 did not contain an adverse opinion or disclaimer of opinion, and were not
qualified or modified as to uncertainty, audit scope, or accounting principles.

                                   PART III.

ITEM 9.      DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
             COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

         The following table sets forth information concerning each of the
directors and executive officers of Levcor:

NAME                       AGE        TITLE
----                       ---        -----

Robert A. Levinson         76         Chairman of the Board of Directors,
                                      President, Secretary and Principal
                                      Financial Officer

Edward H. Cohen            63         Director

John McConnaughy           72         Director


         Robert A. Levinson has been Chairman of the board of directors,
President, Secretary and Principal Financial Officer of Levcor since June 1989.
Since May 1998, Mr. Levinson has been Chairman of the board of directors,
President and Chief Executive Officer of Carlyle Industries, Inc. From 1979
until May 1, 1995, Mr. Levinson was Chairman of the board of directors of Andrex
Industries Corp., a company engaged in textile manufacturing and processing. Mr.
Levinson is a member of the Advisory Board of The National Dance Institute and
The Harlem School of the Arts, and is Vice Chairman of the board of directors of
The Academy of Design and Museum.

         John McConnaughy has been a director of Levcor since June 1989. Mr.
McConnaughy is chairman and chief executive officer of JEMC Corporation, a
company engaged in exploring investment opportunities. From 1981 until his
retirement in 1992, Mr. McConnaughy was chairman of the board and chief
executive officer of GEO International Corporation, a company engaged in
screen-printing and oil services. Mr. McConnaughy also served as President of
GEO International Corporation from 1985 until his retirement in 1992. Mr.
McConnaughy is



                                      -37-
<PAGE>


Chairman of the Board of the Excellence Group, LLC, which filed a petition for
bankruptcy under Chapter 11 of the Bankruptcy Code on January 13, 1999. The
Excellence Group's subsidiaries produced labels for a variety of customers. Mr.
McConnaughy serves as a director of Varsity Sports, Inc., Adrien Arpel, Inc.,
Mego Corporation, Transact International, Inc., Wave Systems Corp. and
DeVlieg-Bullard, Inc.

         Edward H. Cohen has been a director of Levcor since June 1998. Mr.
Cohen is currently Counsel to the law firm of Katten Muchin Zavis Rosenman, and
for more than the past five years, until January 31, 2002, Mr. Cohen was a
Senior Partner at its predecessor law firm, Rosenman & Colin LLP. Mr. Cohen also
serves as a director of Franklin Electronic Publishers, Inc., a designer and
developer of electronic products, and its 82%-owned subsidiary, Voice Powered
Technology, Inc., Phillips-Van Heusen Corporation, a manufacturer and retailer
of apparel and footwear, and Merrimac Industries, Inc., a designer and producer
of microwave and radio frequency components.

         There are no arrangements or understandings pursuant to which any
person has been elected as a director or executive officer of Levcor. Directors
are elected annually by the stockholders and hold office until the next annual
meeting of stockholders or until their respective successors are elected and
qualified. Levcor has not held a stockholder meeting since 1995. Executive
officers are elected by the Board of Directors and hold office until their
respective successors are elected and qualified. There is no family relationship
among any directors or executive officers of Levcor.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16(a) of the Securities Exchange Act of 1934 requires Levcor's
executive officers, directors and persons who beneficially own greater than 10%
of a registered class of Levcor's equity securities to file certain reports
("Section 16 Reports") with the Securities and Exchange Commission with respect
to ownership and changes in ownership of the Common Stock and other equity
securities of Levcor. Based solely on Levcor's review of the Section 16 Reports
furnished to Levcor, all Section 16(a) requirements applicable to its officers,
directors and greater than 10% beneficial owners were complied with during the
fiscal year ended December 31, 2001.


ITEM 10. EXECUTIVE COMPENSATION.

DIRECTOR COMPENSATION

         Directors do not receive any annual fee for their services, but do
receive an annual grant (in January) of options to purchase the number of shares
of Levcor common stock derived by dividing $1,500 by the fair market value of a
share of Levcor common stock on the date of grant. In 2001, 2,400 shares of
Levcor common stock were granted to non-employee directors.



                                      -38-
<PAGE>



EXECUTIVE COMPENSATION

         The following table and discussion summarizes all compensation awarded
to, earned by, or paid to the President of Levcor for services rendered in all
capacities to Levcor during the three fiscal years ended December 31, 2001. Mr.
Levinson is the only executive officer of Levcor.


                            ANNUAL COMPENSATION TABLE

<TABLE>
<CAPTION>

                                           ANNUAL COMPENSATION                      LONG-TERM COMPENSATION AWARDS
                                ---------------------------------------      -----------------------------------------
                                                                 OTHER       RESTRICTED
                                                                 ANNUAL         STOCK          STOCK
NAME AND                                SALARY      BONUS     COMPENSATION      AWARDS        OPTIONS      ALL OTHER
PRINCIPAL POSITION              YEAR      ($)       ($)           ($)            ($)           (#)       COMPENSATION
---------------------------    -----    --------   --------  -------------- -------------   ----------  --------------
<S>                            <C>      <C>        <C>       <C>            <C>             <C>         <C>
Robert A. Levinson,
Chairman, President,            2001     $37,500     -0-          -0-            -0-            -0-          -0-
Secretary and Principal
Financial Officer

                                2000     $37,500     -0-          -0-            -0-            -0-          -0-

                                1999     $25,000     -0-          -0-            -0-            -0-          -0-
</TABLE>


                       FISCAL YEAR-END OPTION VALUE TABLE

                         Number of
                         Securities                  Value of
                         Underlying                 Unexercised
                        Unexercised                In-the-Money
                          Options                     Options
                         at Fiscal                   at Fiscal
                        Year-End (#)               Year-End ($)
                     ------------------    -------------------------------
                       Exercisable /               Exercisable /
Name                  Un-exercisable              Un-exercisable
-----                ------------------    -------------------------------
Robert A. Levinson    50,000 / 100,000              $100,000 / $200,000


Mr. Levinson did not exercise any options to purchase shares of Levcor common
stock during the fiscal year 2001.

STOCK OPTION PLANS

         On December 8, 1992, the board of directors of Levcor adopted a Stock
Option Plan. The plan, as amended, authorizes Levcor to grant options to
purchase an aggregate of 500,000 shares of common stock to induce employees and
directors to remain in the employ or service of Levcor and to attract new
employees.

         The plan terminates in December 2002 and options to purchase all of the
shares available under the plan have heretofore been granted.



                                      -39-
<PAGE>


                      EQUITY COMPENSATION PLAN INFORMATION

<TABLE>
<CAPTION>

<S>                             <C>                          <C>                          <C>
                                (a)                          (b)                          (c)
Plan category                   Number of securities to be   Weighted- average exercise   Number of securities
                                issued upon exercise of      price of outstanding         remaining available for
                                outstanding options          options                      future issuance under
                                                                                          equity compensation plans
                                                                                          (excluding securities
                                                                                          reflected in column (a)
Equity compensation plans                 262,400                       $.81                           0
approved by security holders
Equity compensation plans not               N/A                          N/A                          N/A
approved by security holders
Total                                     262,400                       $.81                           0

</TABLE>


             BOARD OF DIRECTORS INTERLOCKS AND INSIDER PARTICIPATION

         During the fiscal year 2001, except for Mr. Levinson, who also serves
as the Chairman of the board of directors, President and Chief Executive Officer
of Carlyle Industries, Inc., no executive officer of Levcor served as a director
of or a member of a compensation committee of any entity for which any of the
persons serving on the board of directors of Levcor is an executive officer.


                    THE BOARD OF DIRECTORS AND ITS COMMITTEES


 MEETINGS OF THE BOARD OF DIRECTORS

         During the fiscal year 2001, the board held no meetings. Levcor's
directors discharge their responsibilities throughout the year, not only at
board meetings, but also through personal meetings and other communications,
including telephone contacts, with the Chairman and President and others
regarding matters of interest and concern to Levcor.

COMMITTEES OF THE BOARD OF DIRECTORS

         Levcor's board of directors does not have a nominating, compensation or
audit committee. The board, throughout the year, performs the functions of such
committees.


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

         The following table sets forth certain information as of November 22,
2002 with respect to the number of shares of common stock beneficially owned by:
(i) each person known to Levcor to be the beneficial owner of more than five
percent of the common stock; (ii) each of the directors of Levcor; and (iii) all
of the directors and executive officers of Levcor as a group. Except as
otherwise indicated, each such stockholder has sole voting and investment power
with



                                      -40-
<PAGE>


respect to the shares beneficially owned by such stockholder. A person is deemed
to beneficially own a security if he has or shares the power to vote or dispose
of the security or has the right to acquire it within 60 days.


                                            AMOUNT AND NATURE
                                              OF BENEFICIAL          PERCENT OF
NAME AND ADDRESS                                OWNERSHIP              CLASS
----------------                            -----------------        ----------
Robert A. Levinson                              749,175 (1)             31.4%
     462 Seventh Avenue
     New York, NY 10018

John McConnaughy                                 32,825 (2)              1.4%
     1011 High Ridge Road
     Stamford, CT 06905

Edward H. Cohen, Esq.                           111,691 (3)(4)(5)        4.8%
     c/o Katten Muchin Zavis Rosenman
     575 Madison Avenue
     New York, NY 10022

Roger L. and Theresa S. Hueglin                 125,250                 5.35%
     11 Blueberry Hill Road
     Wilton, CT 06897


All directors and executive                     893,691 (6)               37%
     officers as a group (3 persons)

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

(1)  Includes 50,000 shares of common stock subject to currently exercisable
     options.

(2)  Includes 22,850 shares of common stock subject to currently exercisable
     options.

(3)  Includes 2,050 shares of common stock subject to currently exercisable
     options which are held by Mr. Cohen for the benefit of his law firm, Katten
     Muchin Zavis Rosenman.

(4)  Includes 101,741 shares owned by Katten Muchin Zavis Rosenman, of which Mr.
     Cohen is counsel.

(5)  Mr. Cohen disclaims beneficial ownership of all shares of Levcor common
     stock and options to purchase shares of Levcor common stock he holds for
     the benefit of Katten Muchin Zavis Rosenman.

(6)  Includes 74,900 shares of common stock subject to currently exercisable
     options.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         Mr. Levinson has provided $720,000 of loans to Levcor, bearing interest
at 6% per annum. In connection with Levcor's financing arrangement with CIT, Mr.
Levinson had agreed to defer the payment of interest during 2002 and not to
require payment of these loans and $267,000 of the related accrued interest at
December 31, 2001, prior to January 2, 2004. On June 5, 2002, the Levcor board
of directors determined that, in light of the fact that the financing
arrangement with CIT was paid off in May of 2002, Levcor currently has
sufficient funds available, and Levcor's other sources of financing are at lower
interest rates, it was in Levcor's best interest to prepay a portion of the
outstanding principal amount owed to Mr. Levinson in order to save interest
expenses. On June 5, 2002, Levcor prepaid $220,000 of the outstanding




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<PAGE>



principal amount owed to Mr. Levinson. As of November 22, 2002, the aggregate
amount of principal and interest owed to Mr. Levinson by Levcor equaled
$777,000.

         In addition to being a director of Levcor, Edward H. Cohen serves as
counsel to Katten Muchin Zavis Rosenman, legal counsel to Levcor. During the
twelve months ended December 31, 2001, fees for those services provided to
Levcor by Katten Muchin Zavis Rosenman totaled $41,540, of which $12,343 was
settled through the issuance to Katten Muchin Zavis Rosenman of 4,448 shares of
Levcor common stock with a fair market value of $2.76 per share on the date of
such issuance.


ITEM 13.     PROCEDURES AND CONTROLS

         Within the 90 days prior to the date of this report, Levcor carried out
an evaluation, under the supervision and with the participation of Levcor's
management, (including the person performing the functions of Levcor's Chief
Executive Officer and Chief Financial Officer its principal executive officer
and principal financial officer), of the effectiveness of the design and
operation of Levcor's disclosure controls and procedures pursuant to Exchange
Act Rule 13a-14. Based upon that evaluation, the person performing the functions
of Levcor's Chief Executive Officer and Chief Financial Officer concluded that
Levcor's disclosure controls and procedures are effective in timely alerting
them to material information required to be included in our periodic Securities
and Exchange Commission filings. There were no significant changes in Levcor's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation.


ITEM 14.     EXHIBITS, LISTS AND REPORTS ON FORM 8-K.

(a)  (1)  Financial Statements:
          --------------------

         The information required by this item is included in Item 7 of Part II
of this Form 10-KSB.


     (2)  Exhibits:
          --------


         The following exhibits are included in this report:



EXHIBIT
NUMBER                           DESCRIPTION OF DOCUMENT



                                      -42-
<PAGE>


2.1            Agreement and Plan of Merger, dated as of May 24, 2002, by and
               among Levcor International, Inc. ("Levcor") and Carlyle
               Industries, Inc., incorporated herein by reference to Appendix A
               of Levcor's Registration Statement on Form S-4 filed on June 24,
               2002.

2.2            Asset Purchase Agreement, dated as of September 2, 1999, between
               Levcor and Andrex Industries Corp., incorporated herein by
               reference to Levcor's Current Report on Form 8-K filed on
               September 17, 1999.

2.3            Amendment to Asset Purchase Agreement, dated August 3, 2000,
               effective as of April 1, between Levcor and Andrex Industries
               Corp., incorporated herein by reference to Levcor's Form 10-KSB
               filed on April 1, 2002.

3.1.1          Certificate of Incorporation filed August 17, 1967, incorporated
               herein by reference to Levcor's s Registration Statement on Form
               8-B filed on November 27, 1967.

3.1.2          Amendment to Certificate of Incorporation filed August 17, 1972,
               incorporated herein by reference to Levcor's Current Report on
               Form 8-K for the month of August 1972.

3.1.3          Amendment to Certificate of Incorporation filed December 17,
               1984, incorporated herein by reference to Levcor's Form N-2
               Amendment No. 2 filed on April 3, 1987.

3.1.4          Amendment to Certificate of Incorporation filed September 8,
               1995, incorporated herein by reference to Levcor's Current Report
               on Form 8-K filed on September 12, 1995.

4.1.1          By-Laws incorporated herein by reference to Levcor's Form N-2
               Amendment No. 4 filed on May 2, 1989.

4.1.2          Specimen form of Levcor's Common Stock certificate, incorporated
               herein by reference to Levcor's Form 10-KSB filed on March 24,
               1997.

10.1           1992 Stock Option Plan, incorporated herein by reference to
               Levcor's Form 10-K filed on March 30, 1993. +

10.2           Factoring Agreement, dated September 17, 1998, between Levcor and
               the CIT Group/Commercial Services, Inc., incorporated herein by
               reference to Levcor's Form 10-QSB filed on November 16, 1998.

10.3           Term Promissory Note, dated December 15, 2000 issued by Levcor in
               favor of the CIT Group/Commercial Services, Inc., incorporated
               herein by reference to Levcor's Form 10-KSB filed on April 1,
               2002.

10.4           Amendment dated December 31, 2001 to the Factoring Agreement
               dated September 17, 1998 between Levcor and the CIT
               Group/Commercial Services, Inc. and the Term Promissory Note,
               dated December 15, 2000 issued by Levcor in favor of the CIT
               Group/Commercial Services, Inc., incorporated herein by reference
               to Levcor's Form 10-KSB filed on April 1, 2002.



                                      -43-
<PAGE>


10.5           Guaranty dated April 30, 2002, executed by Robert A. Levinson in
               favor of JPMorgan Chase Bank, incorporated herein by reference to
               Levcor's Form 10-QSB filed on May 15, 2002.

10.6           Pledge Agreement dated April 30, 2002, executed by Robert A.
               Levinson in favor of JPMorgan Chase Bank, incorporated herein by
               reference to Levcor's Form 10-QSB filed on May 15, 2002.

10.7           Promissory Note dated May 3, 2002 executed by Levcor in favor of
               JPMorgan Chase Bank, incorporated herein by reference to Levcor's
               Form 10-QSB filed on May 15, 2002.

10.8           Letter dated February 28, 2002 from Mr. Robert A. Levinson,
               incorporated herein by reference to Levcor's Amendment No. 2 to
               Registration Statement on Form S-4 filed on October 4, 2002.

10.9           Letter dated September 27, 2002 from Mr. Robert A. Levinson,
               incorporated herein by reference to Levcor's Amendment No. 2 to
               Registration Statement on Form S-4 filed on October 4, 2002.

99.1           Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
               of 2002.

--------------------
+ Compensatory plan or arrangement required to be filed as an exhibit hereto.



(b)      Reports on Form 8-K:


         On November 28, 2001, the Company filed a Form 8-K with the Securities
and Exchange Commission informing the Commission that the Company was dismissing
Grant Thornton LLP as its principal independent accountant and has engaged
Friedman Alpren & Green LLP as its new principal independent accountant.




                                      -44-
<PAGE>


                                   SIGNATURES
                                   ----------

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




LEVCOR INTERNATIONAL, INC.


By /s/ Robert A. Levinson                              December 18, 2002
   ----------------------
    Robert A. Levinson,
    Chairman of the Board,
    President, Secretary and Principal
    Financial Officer






                                      -45-
<PAGE>



                                  CERTIFICATION
                                  -------------

I, Robert A. Levinson, the principal executive officer and principal financial
officer of Levcor International, Inc., certify that:

1. I have reviewed this Amendment No. 1 to annual report on Form 10-KSB/A of
Levcor International, Inc.;

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

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

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and I have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this amended annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this amended
annual report (the "Evaluation Date"); and

c) presented in this amended annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and


                                      -46-
<PAGE>



6. I have indicated in this amended annual report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.

Date: December 18, 2002.


/s/ Robert A. Levinson
----------------------
 Robert A. Levinson,
 principal executive officer and principal financial officer

















                                      -47-
<PAGE>



                                  EXHIBIT INDEX



      Exhibit Number         Description
      --------------         -----------

      99.1                   Certification  Pursuant  to  Section  906 of
                             the Sarbanes-Oxley Act of 2002























                                      -48-