U.S. Securities and Exchange Commission
                                 Washington, D.C. 20549

                                      FORM 10-KSB

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


                   For the Fiscal Year Ended December 31, 1999

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

                   For the Transition Period from    N/A    to    N/A

                             Commission File No. 33-97156


                                 WHITEWING LABS, INC.
                    (Name of small business issuer in its charter)

          Delaware                                            95-4437350
    (State or other jurisdiction of                        (I.R.S. Employer
    incorporation or organization)                       Identification Number)

    15455 San Fernando Mission Blvd., #105, Mission Hills, California   91345
       (Address of principal executive offices)                       (Zip Code)

    Issuer's Telephone Number:  (818) 898-2167

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

                                          None

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

                            Common Stock, $.001 par value
                                    (Title of Class)

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

    Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and disclosure 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]

    The issuer's revenue for the year ended December 31, 1999 was $853,185.

    The aggregate market value of the voting stock held by non-affiliates as of
February 23, 2001, computed by reference to the price at which the stock was
sold, or the average closing bid and asked quotations of such stock, was
$253,535.10.

DOCUMENTS INCORPORATED BY REFERENCE:  None


<PAGE>


                                   PART I

Item 1.  Description of Business.

General
    Whitewing Labs, Inc. (the "Company" or "Whitewing") develops, seeks to
acquire through license, markets and sells nutritional supplements for sale to
the over age forty market primarily in the United States.  This market is the
fastest growing segment of the population and a segment for whom quality of
life has become one of the most important issues associated with aging.  Direct
mail, magazine advertisements and electronic direct marketing of product
advertising are the primary vehicles used by the Company to reach this
expanding population segment.  Utilizing formulations that include only herbs
and other natural ingredients, the Company's products are intended to offer
alternatives to conventional treatments for symptoms associated with the aging
process.  Customers confronted with concerns such as a lack of convenient
transportation, unsafe shopping areas, and the loss of personal mobility, also
enjoy the added benefit of ordering and receiving the Company's products in the
comfort and security of their own homes.

Market

    Census data indicates that the U.S . population includes more than 55
million men between the ages of 45 and 85.  That number is projected to
increase to 64 million by the year 2002.  Women between the ages of 55 and 85
now number approximately 70 million, and are expected to number more than 80
million by the year 2002.

    Most adults approaching their 80's and 90's experience health disorders.
The U.S. Food and Drug Administration estimates that 80% of all men will
eventually experience urination difficulty, increased frequency or urgency of
urination or other prostate symptoms.  Moreover, according to health experts,
more than half of the men between the ages of 40 and 70 experience some degree
of sexual impotence.  All women experience menopause, although each woman
experiences the transition to middle age individually with different degrees of
the symptoms, which include dizziness, hot flashes and fatigue, experienced
over varying time periods and at different ages.

    Management believes that the growth of the nutritional supplement industry
is due primarily to heightened public awareness of the positive effects of
vitamins and other nutritional supplements.  Many individuals are now using
nutritional supplements as a means of preventive health care.  Retail sales of
nutritional supplements reached a high of $13.86 billion in 1998 as reported in
the Nutritional Business Journal.  The factors driving the growth so far remain
unchanged.  Demographics of an aging population, the emergence of alternative
medicine, the movement to self-directed health maintenance, a gradual
accumulation of scientific evidence, a relatively permissive regulatory
environment, the enhanced recognition, distribution and quality of supplements
and natural products among consumers.


                                       2

<PAGE>

Marketing Strategy

    The Company's strategic marketing plan utilizes a two-pronged approach.
The first approach (or "front-end" component) entails efforts to capture new
customers from the target population through electronic in-home delivery of
product advertising, direct mail and print advertising.  Selection of airings
for electronic media placements and mailing lists for direct mail, is based
upon response rates to date.  The Company determines which of the electronic
media placements or mailing lists tested have the most potential for generating
meaningful sales, and thus should be used on a more extensive basis.  In
addition, the Company has placed display advertisements in a variety of local
and national magazines.  Electronic in-home delivery of product advertising
includes use of television and the internet.  Direct mail advertising includes
postcard inserts, tear sheets, holiday special mailers and the Journal of
Natural Health "TM".  During 2000, the Company reacted to declining response
rates in certain segments of its mail order operations by reducing advertising
and selling costs from $1,543,041 in 1999 to $581,206 in 2000.  The strategy
for 2001 involves a more rigorous selection process in identifying and
implementing advertising programs designed to attract and retain new customers.

    The second part of the Company's approach, and the potentially more
profitable element of its marketing strategy, involves generating repeat orders
from existing customers, since the selling and advertising costs incurred in
these orders are expected to continue to be considerably lower.  Four mailings
per year to its customer base are planned for the Company's in-house Journal of
Natural Health "TM", which promotes products available from the Company.  In
addition, the Company offers two or three holiday sales per year.  The
Company's products are sold with an unconditional, money back guarantee which
alleviates the basis for customer complaints.  Product returns through December
31, 2000, have been less than 3% of sales.

Products

    The Company's two main products, which accounted for 46.6% and 23%
respectively of the Company's total revenue for the year ended December 31,
2000, are:

    PROSTSAFE "R" and PROSTSAFE"R" PLUS:  Formulated to alleviate the symptoms
associated with prostatitis and benign prostate hyperplasia ("BPH"). Helps to
reduce troublesome symptoms such as urination difficulties, increased frequency
and urgency of urination, and low back pain.  A blend of natural herbs,
vitamins, minerals and amino acids.

    SEXHILARATE "R": Assists in increasing male virility and decreasing sexual
dysfunction by working to improve blood flow, increase hormone production,
stimulate the libido and restore physical stamina.  A unique combination of
herbs, vitamins and minerals.

    Other products currently available from the Company include the following:

    ARTHRIVIVE "R":  Addresses the internal problems that cause joint pain and
discomfort.  Arthrivive( contains natural anti-inflammatories that help to
relieve arthritic pain, reduce stiffness and inflammation, and improve
flexibility.  Contains herbs, vitamins and minerals.

    ARTHRIVIVE "R" CREAM:  Applied topically, this cream penetrates the skin
quickly to relieve minor arthritic aches and pains in muscles and joints.
Contains natural pain-relieving agents.

    DE-STRESS "TM":  Helps to ease tension and to meet the increased
nutritional demands that result from environmental, physical and emotional
stress.  A combination of vitamins, minerals and herbs.

    CHOLEST-LESS "TM":  Includes plant extracts and vitamins to support control
and lowering of cholesterol levels when added to a low fat, low cholesterol
diet and an exercise program.

    CIRC ELATION "TM": Formulated to help increase circulation to extremities -
especially relevant to baby boomers and for diabetics.

    COLON PURE "TM":  Formulated to promote proper balance of intestinal flora,
relieve constipation and diarrhea, and guard against hemorrhoids.

                                      3

<PAGE>


    DIMI-OXIDE "TM":  Formulated to protect the body against free-radical
damage and associated tissue and cell destruction.  A combination of
antioxidant vitamins, minerals and herbs.

    ENERG-EYES "TM":  A nutritional supplement formulated to help protect
vision and reduce free radical production.  It includes minerals, plant
extracts, amino acids and vitamins are designed to help protect the strength of
the vascular and capillary walls that supply the eyes.

    EVENING GLOW "TM":  Contains botanicals and nutrients formulated to boost
the level of hormones that aid in sexual arousal with the intention of
increasing the circulating levels of estrogen and testosterone.

    IMMUNE DEFENSE "TM":  Combines important nutrients formulated to help the
body's immune system combat viruses, bacteria, foreign proteins, yeasts and
fungi.  Immune Defense( can increase immune system activity as well as
strengthen the fundamental organs and glands involved in the body's immune
response.

    JOINT AIDE "TM":  Formulated to support bone health and aid in reducing
swellings and inflammation of joints.

    JOINT AIDE "TM" CREAM :  This cream is formulated to compliment Joint Aide
to relieve discomfort in joints.

    NZ GESTION "TM":  Formulated to aid with the better utilization of foods
eaten.

    OSTEO SAFE "R":  Contains bone-supporting minerals, herbs and vitamins to
help ensure healthy bones.  Contains calcium, flaxseed, magnesium and other
ingredients which help preserve bone mass.

    POWER MIND "TM":  Helps improve concentration and cognition, enhance
memory, sharpen the thinking process, and prevent deterioration of brain cells.
Includes vitamins, minerals, herbs, and amino acids that work to restore
healthy neurotransmitter levels and optimize brain function.

    PRESSURE CONTROL "TM":  Formulated from high quality herbal extracts,
minerals and vitamins to promote the prevention of hypertension when used in
conjunction with proper exercise and diet.

    PROPAUSE "R":  Formulated to ease menopausal symptoms.  Propause "R" works
gently and naturally to help regulate hormonal imbalances, reduce hot flashes,
improve mood, and increase energy level.  A combination of selected vitamins
and herbs.

    PROTRANS CREAM "TM":  This is a natural Progesterone cream to be applied
topically to help increase bone density.

    RESTPIRATION "TM":  Formulated to alleviate the symptoms of asthma, hay
fever, allergies, sinusitis and bronchitis by helping the body expel foreign
organisms that cause irritation, inflammation and mucous production.  Also
provides support to the immune system, soothes inflamed sinus tissues and
assists the adrenal glands.

    SKIN ELATION "TM" CREAM :  This is a cream formulated to compliment Circ
Elation "TM"  to promote skin condition and improve circulation.

    SLEEPSAFE "TM":  Uses natural ingredients to help reduce the delay in sleep
onset to help promote a natural, non-addictive restful sleep.

    VIM! "TM":  Provides nutrients needed to create and sustain a high energy
level.  Consists of selected vitamins, minerals and herbs needed to maintain a
feeling of well-being and physical stamina.

    VITAMIN AND MINERAL SYSTEM(:  A nutrient mix that supports circulatory,
immune, bone, joint and eye health, as well as men's and women's reproductive
health.

    VITAMIN C:  This combination of ascorbic acid and citrus bioflavonoids aids
our body in fighting infection, coping with stress, healing wounds and works as
a powerful anti-oxidant.

                                      4

<PAGE>


    FRUIT MIGHT "TM" , VEGGIE MIGHT "TM" , and GREEN MIGHT "TM":  Developed to
provide phytochemicals and carotenoids as supplements to a healthy diet which
includes fruits and vegetables.  Includes wheat grass, chlorella and other
natural extracts.

    The following new products were developed during 2000:

    ANTI-GLOOM "TM":  Formulated to aid in mood elevation.

    VITAMIN B COMPLEX:  This combination of vitamin Bs is formulated to aid
nerve function and stamina.

    VITAMIN E:  Formulated to reduce heart disease.

    All products are formulated with natural ingredients, and with no
preservatives, synthetics, artificial colors, lactose, starch or sugar. The
average price for a one month supply of any one of the current products is
between $19.95 and $34.95.

    The Company markets a video entitled WHEN SOMEONE YOU LOVE IS AT RISK FOR
PROSTATE DISEASE, developed to raise awareness about the prostate and prostate
diseases, symptoms, diagnosis and prevention.  The tape is sold for $19.95.
The Company also has available two audio tapes, both thirty minutes in length.
The first is for men:  THE NATURAL PATH OF MEN'S HEALTH:  PROSTATE CARE.  The
second is for women:  PASSAGE TO YOUR SECOND LIFE:  FLOURISHING AFTER
MENOPAUSE.  Each of these tapes is sold for $14.95.

Product Planning and Development

    The Company anticipates continuing to expand its product line.  Product
development begins with researching medical conditions that can be affected by
herbal remedies utilizing completed current studies from recognized doctors,
pharmacologists, scientists, and experts.  When sufficient information is
accumulated on a specific health problem, the Company summarizes the
information and presents it to a number of experts in the nutritional field.
These experts have formulated a number of nutritional products sold nationally
by other companies.  These experts work with the Company to develop formulas
and compile substantiation for new products to be offered.  In addition to its
product development efforts, the Company intends to expand its product
offerings by obtaining the right to market licensed products that complement
the overall product line and are not currently offered via direct mail.  For
example, the Company is currently considering various cosmetic, hair care, and
educational products with established brand names that could be marketed to its
existing customer base.

Production, Order Procurement and Fulfillment

    The Company's nutritional products currently are produced by Vitaminerals,
Inc., which also bottles and labels the products.  Vitaminerals then ships them
to an outside distribution center where order fulfillment is handled for the
Company by an independent contractor.  Although there is no long-term contract
between the Company and Vitaminerals, with all purchases made pursuant to
simple purchase orders, the Company does provide Vitaminerals with an advance
quarterly forecast of the Company's product requirements that is used by
Vitaminerals to procure sufficient quantities of herbs that have a limited
growing season.  Vitaminerals has manufactured drugs, as well as vitamins, for
over 75 years, and its operations are subject to regulations of, and monitoring
by, the U.S. Food and Drug Administration ("FDA").  Since the FDA does not
monitor the operations of manufacturers who produce only vitamins, management
believes that the Company's use of Vitaminerals for production, packaging and
labeling significantly enhances controls on the quality of the Company's
products.  Vitaminerals is also regulated by, and holds a variety of licenses
for drug and processed food manufacture issued by, various state and local
regulatory authorities, including the State of California Department of
Consumer Affairs and the County of Los Angeles.

Although the Company does not engage in the manufacture of any of the products
it markets and sells, the Company could be exposed to product liability claims.
The Company has not had any such claims to date.  Although the Company
maintains a limited amount of products liability insurance, additional
insurance covering products sold by the Company is also provided by
Vitaminerals.  There can, however, be no assurance that the Company will not be
subject to claims in the future or that available insurance coverage will be
adequate.

    Independent contractors and outside service agencies are used to perform a
number of tasks under the supervision of management, including advertising
placement, in-bound order taking, and order fulfillment.  The Company also has

                                      5

<PAGE>

entered into an agreement with Professional Marketing Associates, Inc. to
provide warehousing and distribution of the Company's products which
automatically renews for successive six-month periods unless terminated by
either party.

    Outsourcing of production, order taking and order fulfillment to an outside
company and three independent contractors, potentially subjects the Company to
concentration of supplier risk.  In addition, substantially all printing is
handled by an outside company and substantially all advertising placement
including purchase of mailing lists for direct mail programs is handled by an
outside service agency.  Although these services are currently concentrated
with a few key suppliers, management believes that other suppliers could
provide similar services on comparable terms.  A change in suppliers, however,
could cause delay in manufacturing, shipping, advertising placements and
implementation of direct mail programs and a possible loss of sales, which
could affect operating results adversely.

Regulation

    The FDA and the Federal Trade Commission ("FTC") are the primary agencies
that monitor the health care and direct marketing industries in the United
States.  Because nutritional supplements are classified as foods, they do not
require FDA approval.  However, product labeling and advertising copy must be
within FDA established guidelines.  FTC regulations also address advertising
copy, fraud, and specific guidelines for shipping and refunds.  The Company's
promotional literature presents the effectiveness of ingredients contained in
the formula, based on documented studies conducted by reputable independent
health care professionals, along with testimonials from satisfied users of the
products.  In addition, the Company maintains a library of articles and studies
cited in promotional materials as well as original letters from customers'
testimonials.

    The FDA food labeling regulations went into effect during March 1999.  All
food products, including nutritional supplements had to conform to the new
formats.  The Company is in compliance with the new label law.  All existing
and new products utilize the new label formats.

    The FDA's health claims regulations include no claim may be made on a
dietary supplement label or in printed sales literature, "that expressly or by
implication characterizes the relationship of any substance to a disease or
health-related condition."  The Company cannot determine what effect currently
proposed FDA regulations, when and if promulgated, will have on its business in
the future.  Such regulations could, among other things, require expanded or
different labeling, the recall or discontinuance of certain products,
additional record keeping and expanded documentation of the properties of
certain products and scientific substantiation.  In addition, the Company
cannot predict whether new legislation regulating its activities will be
enacted, which new legislation could have a material effect on the Company.

    The Company has an ongoing compliance program with assistance from outside
consultants regarding the nature and scope of food and drug legal matters
affecting the Company's business and products.  The Company is unaware of any
legal actions currently pending or threatened by the FDA or any other
governmental authority against the Company.

Competition

    The market for nutritional supplements is characterized by extensive
competition, frequent new product introductions, short product life cycles,
rapid price declines and eroding profit margins, and changing customer
preferences.  The Company expects to continue to face substantial competition
in its efforts to successfully capture a significant share of the over age
forty market.  There are a number of companies that currently offer competing
products, and it can be expected that additional competing products will be
introduced by other companies in the future.  In addition, there are a variety
of channels of distribution for nutritional supplements other than through
direct response marketing, including multi-level distributors, specialty retail
health and nutrition stores, drug stores, supermarkets and the Internet.  Many
of the Company's existing and potential competitors have greater financial,
marketing, distribution, and research capabilities than the Company.  The
performance of the Company will depend on its ability to develop and market new
products that can gain customer acceptance and loyalty, as well as its ability
to adapt its product offerings to meet changing pricing considerations and
other market factors.  The Company attempts to differentiate itself from
competitors by focusing on products formulated to meet the specific needs of a
given population group and which contain only natural ingredients, and
marketing these products directly to the Company's target age group.

                                      6

<PAGE>

Proprietary Rights

    The Company has received federal trademark registration for PROSTSAFE "R",
SEXHILARATE "R", PROPAUSE "R", ARTHRIVIVE "R", ARTHRIVIVE "R" CREAM, and OSTEO
SAFE "R", and intends to continue to seek trademark protection for a number of
the brand names under which the Company's products are marketed.  There can be
no assurance that such protection will be obtained.  The Company will be
required to rely upon common law concepts of confidentiality and trade secret
laws to protect its product formulations. There can be no assurance that the
foregoing will protect the formulations or provide adequate remedies for the
Company in the event of unauthorized use or disclosure of such formulations, or
that others will not be able to independently develop such formulations.  In
addition, each quarterly edition of the Journal of Natural Health "TM", which
promotes products available from the Company, is copyrighted.  International
trademarks are being obtained as Whitewing enters foreign markets.  European
trademarks have already been filed and other country trademark applications are
in progress.


Employees

    In addition to its President, the Company has a total of five employees,
three of whom are involved in general administration and two of whom are
involved in customer service and order processing and reporting.  The Company's
success depends to a significant extent upon the continued service of its
President, Cynthia Kolke.  The loss of Ms. Kolke, who may terminate her
services to the Company at any time, could have a material adverse effect on
the Company.  The Company maintains a $500,000 key-person insurance policy on
the life of Ms. Kolke.  The Company's success also depends on its ability to
retain its key personnel, and on its ability to attract, retain, train and
motivate additional highly skilled and dedicated employees. The Company is not
a party to any collective bargaining agreement.  The Company has never
experienced a work stoppage and believes that its relations with its employees
are excellent.  From time to time, the Company may retain independent third
parties to provide services on a contract, "as needed" basis.

Item 2.  Description of Property.

    The Company leases a 1,754 square foot office in Mission Hills, California.
This lease expires in September 2001, and management does not intend to seek
renewal.  The company is considering various alternatives believes ample space
will be available.

Item 3.  Legal Proceedings.

    None

Item 4.  Submission of Matters to a Vote of Security Holders.

    None

                                      7

<PAGE>

PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters.

Recent Market Prices

    Since April 9, 1999, the Company's Common Stock and Warrants have traded
separately on the Over-the-Counter Bulletin Board ("OTCBB").  Prior to April 9,
1999, the Company's Common Stock and Warrants traded on the Nasdaq SmallCap
Market under the symbols "WWLI" and "WWLI-W", respectively, since February 14,
1996.  No assurance can be given that an active trading market for the Common
Stock and Warrants will be sustained in the future.  The market for the
Company's Common Stock has experienced extreme price and volume fluctuations
during certain periods.  These broad market fluctuations and other factors,
such as new product developments and trends in the Company's industry and the
investment markets generally, as well as economic conditions and quarterly
variations in the Company's results of operations, have in the past, and may
continue to adversely affect the market price of the Company's Common Stock.
The Company's securities are subject to rules adopted by the Commission
regulating broker-dealer practices in connection with transactions in "penny
stocks."  Penny stock generally are equity securities with a price of less than
$5.00 (other than securities registered on certain national securities
exchanges or quoted on Nasdaq, provided that current price and volume
information with respect to transactions in such securities is provided by the
exchange or the Nasdaq system).  Any broker engaging in a transaction in the
Company's securities is required to provide any customer with a risk disclosure
document, disclosure of market conditions, if any, disclosure of the
compensation of the broker-dealer and its salesperson in the transaction, and
monthly accounts showing the market values of the Company's securities held in
the customer's account.  The bid and offer quotation and compensation
information needs to be provided prior to effecting the transaction and needs
to be contained on the customer's confirmation.

    The following table sets forth the high and low closing bid quotations for
a share of the Company's Common Stock as well as the high and low closing bid
quotations for a Warrant, during the periods presented, as reported by Nasdaq
and the OTCBB.  Bid quotations represent high and low prices quoted between
dealers, do not include commissions, mark-ups, or mark-downs, and may not
represent actual transactions.
<TABLE>
<CAPTION>

Common Stock                                 1999                   2000
                                         High      Low         High       Low
     <S>                               <C>         <C>         <C>        <C>
     First Quarter ended March 31,     $7/8        $1/2        $9/16      $5/32
     Second Quarter ended June 30,     $13/16      $1/4        $9/64      $7/32
     Third Quarter ended September 30, $17/32      $3/16       $9/32      $3/16
     Fourth Quarter ended December 31, $1/32       $1/64       $19/32     $1/8

     Warrants

     First Quarter ended March 31,     $1/8        $1/32       $1/8       $1/64
     Second Quarter ended June 30,     $3/32       $1/32       $1/32      $1/32
     Third Quarter ended September 30, $1/16       $1/32       $1/32      $1/64
     Fourth Quarter ended December 31, $1/32       $1/32       $1/64      $1/64
</TABLE>

    On February 23, 2001, the closing bid and asked quotations for the Common
Stock, as reported on the OTCBB, were $.15 and $.15, respectively, per share.
On that date, the closing bid and asked quotations for the Warrants, as
reported on OTCBB, were $.001 per Warrant.

                                      8

<PAGE>

Description of Securities

    The Company is authorized to issue up to 10,000,000 shares of Common Stock,
$.001 par value, and 500,000 shares of preferred stock, $.001 par value.  As of
February 1, 2001, there were 326 holders of record of shares of the Company's
Common Stock and 326 holders of record of Warrants, including shares and
Warrants held in "street" or "nominee" names for an undetermined number of
beneficial holders.  Prior to the Company's public offering, shares of
preferred stock were sold to raise equity capital.  See Item 6, "Management's
Discussion and Analysis, Liquidity and Capital Resources".  In connection with
the public offering, all of these shares were converted into Common Stock.  No
shares of preferred stock were outstanding as of February 1, 2001.

    Holders of the Company's Common Stock are entitled to one vote per share on
all matters to be voted upon by the stockholders, and there is no cumulative
voting for the election of directors to the Company's classified Board of
Directors.  Holders of the Company's Common Stock are entitled to receive
ratably such dividends, if any, as may be declared by the Board of Directors
out of funds legally available therefore.  Upon the liquidation, dissolution,
or winding up of the Company, the holders of the Company's Common Stock will be
entitled to share ratably in all assets of the Company which are legally
available for distribution, after payment of all debts and other liabilities.
Holders of the Company's Common Stock have no preemptive, subscription,
redemption or conversion rights.

    Shares of the Company's Preferred Stock may be issued from time to time in
one or more series as may be determined by the Board of Directors.  The voting
powers and preferences, the relative rights of each series, and the
qualifications, limitations and restrictions thereof may be established by the
Board of Directors without any further vote or action by the Company's
stockholders, except that no holder of Preferred Stock will have preemptive
rights.  Issuance of shares of the Company's Preferred Stock may have the
effect of delaying, deferring or preventing a change in control of the Company.
The Company has no present plan to issue any shares of its Preferred Stock in
the foreseeable future.

    Since November 4, 1997 when the exercise price of the Warrants was reduced,
the holder of two Warrants was entitled to purchase one share of the Company's
Common Stock at a price of $3.00 (previously $7.00) per share during a three-
year period ended on February 9, 1999.  These warrants have been extended to
expire on February 9, 2002.  The Company may at any time and from time to time
extend the term of the Warrants or reduce the exercise price of the Warrants.
Unless exercised during the exercise period, the Warrants will expire
automatically.  The holders of Warrants as such, are not entitled to vote, to
receive dividends or to exercise any of the rights of stockholders for any
purpose.  Since February 9, 1997, the Company has been entitled, at its
discretion, to call all of the Warrants for redemption on 45 days prior written
notice at a redemption price of $.05 per Warrant.  However the Warrants cannot
be called for redemption unless and until:  (i) the closing bid price of the
Company's Common Stock exceeds the exercise price of the Warrants by at least
50% during a period of at least 20 of the 30 trading days immediately preceding
the notice of redemption; (ii) the Company has in effect a current registration
statement covering the Common Stock issuable upon exercise of the Warrants; and
(iii) the expiration of the 45 day notice period is within the term of the
Warrants.  If the Company elects to exercise its redemption right, holders of
Warrants may either exercise their Warrants, sell such Warrants in the market
or tender their Warrants to the Company for redemption.  Within five business
days after the end of the 45 day period, the Company will mail a redemption
check to each holder of a Warrant who holds unexercised Warrants as of the end
of the 45 day period, whether or not such holder has surrendered the Warrant
certificates for redemption.  The Warrants may not be exercised after the end
of such 45 day period.

    U.S. Stock Transfer Corporation, 1745 Gardena Avenue, Glendale, California
91204-2991, is the appointed Transfer Agent and Registrar for the Common Stock
and the Warrants, and the Warrant Agent under the Company's Warrant Agreement.

Shares Eligible for Future Sale

    All of the issued and outstanding shares of the Company's Common Stock have
been registered under Securities Act of 1933, as amended (the "Securities
Act").  However, 789,709 of these shares are held of record by Acacia, an
"affiliate" of the Company, and therefore are considered "restricted
securities", as those terms are defined under the Securities Act and the rules
and regulations thereunder.  Shares of the Company's Common Stock owned by
"affiliates" (including Acacia) may be publicly sold only by complying with
Rule 144 under the Securities Act (exclusive of the two-year holding period)
unless registered under the Securities Act, or some other exemption from
further registration thereunder is available.  Sales of substantial amounts of
these shares, or even the potential for such sales, could have an adverse

                                      9

<PAGE>
effect on any market price for shares of the Company's Common Stock that could
develop, and could impair the Company's ability to raise capital through the
sale of its equity securities.

Rights to Acquire Shares

    As of February 25, 2001, a total of 428,685 shares of Common Stock have
been reserved for issuance upon exercise of outstanding options granted under
the Company's Stock Option Plan.  All of these shares, together with the
additional 571,315 shares available for the future grant of options under the
Stock Option Plan, have been registered under the Securities Act.  The exercise
price of the outstanding options ranges between $0.089 and $5.00, with a
weighted average exercise price of $.863 per share.  In connection with the
Company's initial public offering, the Representatives of the Underwriters
acquired options to purchase up to 90,000 shares of Common Stock at $6.00 a
share and 90,000 Warrants at $.24 a warrant in connection therewith (the
"Representative's Securities").  The Representative's Securities expired
unexercised on February 9, 2001.  During the terms of the outstanding options
the holders thereof will have the opportunity to profit from an increase in the
market price of the Company's Common Stock with resulting dilution in the
interest of holders of Common Stock.  The existence of such stock options may
adversely affect the terms on which the Company can obtain additional
financing, and the holders of such options can be expected to exercise or
convert such options at a time when the Company, in all likelihood, would be
able to obtain additional capital by offering shares of its Common Stock on
terms more favorable to the Company than those provided by the exercise or
conversion of such options.

Dividend Policy

    The Company has never paid any cash dividends on its Common Stock and does
not anticipate that it will pay dividends in the foreseeable future.  Instead,
the Company intends to apply any earnings to the development and expansion of
its business.

Item 6.  Management's Discussion and Analysis of Financial Condition and
Results of Operations.

Forward-Looking Statements

    Statements contained herein that are not purely historical are forward-
looking statements within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934, including but not
limited to statements regarding the Company's expectations, hopes, beliefs,
intentions or strategies regarding the future.  Actual results could differ
materially from those projected in any forward-looking statements as a result
of a number of factors, including those detailed in this Management's
Discussion and Analysis of Results of Operations and Financial Condition, as
well as those set forth elsewhere herein.  The forward-looking statements are
made as of the date of the financial statements of the Company set forth
elsewhere herein and the Company assumes no obligation to update the forward-
ooking statements, or to update the reasons why actual results could differ
materially from those projected in the forward-looking statements.

General

    The Company formulated its business plans and strategies based on certain
assumptions of the Company's management regarding the size of the market for
nutritional supplements, the products which the Company will be able to offer
to the over age forty market, the Company's anticipated share of the market,
and the estimated prices for and acceptance of the Company's products.
Although these plans and assumptions were based on the best estimates of
management, there can be no assurance that these assessments will prove to be
correct.  No independent marketing studies have been conducted on behalf of or
otherwise obtained by the Company, nor are any such studies planned.  Any
future success that the Company might enjoy will depend upon many factors,
including factors which may be beyond the control of the Company or which
cannot be predicted at this time.  These factors may include product
obsolescence, increased levels of competition, including the entry of
additional competitors and increased success by existing competitors, changes
in general economic conditions, increases in operating costs including costs of
supplies, personnel and equipment, reduced margins caused by competitive
pressures and other factors, and changes in governmental regulation imposed
under federal, state or local laws.

    The Company continued its plan of expanding its customer database during
2000 by exploring other direct response media such as electronic in-home
delivery of product advertising.  Utilizing a large portion of the net proceeds

                                      10

<PAGE>

from its February 1996 initial public offering, the Company invested
approximately $581,206 in selling and advertising expense in furtherance of
this strategy during the year ended December 31, 2000.  These expenditures have
not started to produce comparable increases in revenue.  As a result, the
Company reported a loss for the year.  It is anticipated that the Company will
continue to stress growth of the customer database over short-term profits; the
Company's management believes potential net earnings will be driven by
continued growth of the customer database.

    The costs of deferred print advertising placements and direct mailings are
amortized, based upon management's estimates, over the periods in which the
related direct responses are received.  The Company evaluates the realizability
of its direct-response advertising by comparing the carrying amount of prepaid
and deferred advertising at each balance sheet date on a cost-pool-by-cost-pool
basis to the probable remaining future net revenues expected to result from
such advertising.  An excess carrying amount over probable remaining future
revenues is reported as advertising expense in the current period.

    Newspaper and weekly publications are expensed in the month of issue.

    Sales of the Company's PROSTSAFE "R" product accounted for approximately
51% and 46.6% of net sales for the years ended December 31, 1999 and 2000,
respectively.  During 2000, SEXHILARATE "R" accounted for 22.7% of net sales.
The Company anticipates that sales of PROSTSAFE "R" will continue to contribute
a substantial portion of total revenues in subsequent periods.  A decline in
the demand for this product, whether as a result of competition or other
factors, could have a material adverse effect on the Company's results of
operations and financial condition, particularly if not offset by growth in
sales of SEXHILARATE "R" or other products.  The markets for the Company's
products are characterized by changing customer demand, short product life
cycles, and frequent new product introductions.  The performance of the Company
will depend on the ability of the Company to develop and market new products
that will gain customer acceptance and loyalty, as well as its ability to adapt
its product offerings to meet changing pricing considerations and other market
factors.  The Company's operating performance would be adversely affected if
the Company were to incur delays in developing new products or if such products
did not gain market acceptance.  Therefore, there can be no assurance that the
Company's existing or future products will be sufficiently successful to enable
the Company to effectively compete in its prospective market or, should the
Company's product offerings meet with significant customer acceptance, that one
or more current or future competitors will not introduce products which render
the Company's products noncompetitive.

    Like other distributors of consumer products, the Company encounters the
risk of product returns from its customers.  The Company's products are sold
with an unconditional, money-back guarantee.  Any customer who is not satisfied
with a Company product for any reason may return it or any unused portion for a
full refund of the purchase price.  Although product returns to date have been
approximately 3% of sales, which is substantially less than the national
average of 6%, there can be no assurance that actual levels of returns will not
significantly exceed amounts anticipated by the Company.

    The Company's operating results have in the past and may continue to vary
significantly due to a variety of factors including changing customer profiles,
the availability and cost of raw materials, the introduction of new products by
the Company or its competitors, the timing of the Company's advertising and
promotional campaigns, pricing pressures, general economic and industry
conditions that affect customer demand, and other factors.  It can be expected
that future operating results will continue to be subject to many of the
problems, expenses, delays and risks inherent in the establishment of a new
business enterprise, many of which the Company cannot control.  There can be no
assurance, therefore, that the Company will even be able to achieve or sustain
profitability.

Selected Financial Data

    The following table sets forth for the periods indicated selected financial
data for the Company.  The selected statement of operations and balance sheet
items which follow have been derived from the Company's audited financial
statements and notes thereto included elsewhere herein.  This information
should be read in conjunction with the audited financial statements and related
notes and the other financial information included elsewhere in this Form 10-
KSB.

                                      11

<PAGE>

<TABLE>


Statements of Operations Data:
<CAPTION>

                                                     Year ended December 31,
                                                   1999                 2000
<S>                                           <C>                  <C>
Net sales                                     $ 1,665,129          $  853,185
Gross profit                                    1,379,214             696,893
Operating expenses:
   Selling and advertising expenses             1,543,041             581,206
   General and administrative expenses            598,314             572,089
   Total operating expenses                     2,141,355           1,153,295
Loss from operations                             (762,141)           (456,402)
Other income, net                                  73,245              63,580
Loss before provision
   for income taxes                              (688,896)           (392,822)
Income tax provision                              (25,350)            (25,000)
Net loss                                      $  (714,246)           (417,822)

Net loss attributable
   to common shareholders                     $  (714,246)        $  (417,822)

Basic and diluted loss per common share       $     (0.24)        $     (0.14)

Weighted average number of
   common shares outstanding                    2,925,440           2,925,443


                                                     Year ended December 31,
Balance Sheet Data:                                1999                 2000

Working capital                               $ 1,113,599           $ 709,772
Total assets                                    1,223,276             799,736
Total liabilities                                  20,671              14,953
Shareholders' equity                            1,202,605             784,783
____________________________
</TABLE>


Results of Operations

    The following table sets forth, for the periods indicated, the percentages
of net sales represented by certain items in the Company's statements of
operations.

Percentage of Net Sales
<TABLE>
<CAPTION>

                                                   Year ended December 31,
                                               1999                        2000
<S>                                          <C>                        <C>
Net sales                                    100%                       100%
Gross profit                                  82.8%                      81.7%
Selling and advertising expenses              92.7%                      68.1%
General and administrative expenses           35.9%                      67.1%
Loss before income taxes                     (41.4%)                    (46.0%)
Income Tax Provision                          (1.5%)                     (2.9%)
Net loss                                     (42.9%)                    (49.0%)

</TABLE>

                                      12

<PAGE>

    Net Sales.  Net sales decreased in 2000 by 48.8% to $853,185 compared to
$1,665,129 in 1999.  The Company varied its efforts to attract new customers in
2000 and experienced growth from its existing customer base.  The customer base
grew to approximately 208,000 customers at December 31, 2000 from approximately
185,000 customers at December 31, 1999.  The decrease in sales is attributed to
increased competitive offers.  The customer base grew but many were single,
one-time buyers.

    Reorders from existing customers accounted for approximately 89% and 95% of
net sales in 1999 and 2000, respectively.

    Gross Profit.  Cost of goods sold for the Company's products represents
only a small percentage of net sales.  During the years ended December 31, 1999
and 2000, the Company generated gross profit of $1,379,214 and $696,893,
respectively, or 82.8% and 81.7% of net sales, respectively.  Although sales of
Prostsafe "R" and Sexhilarate "R" represented approximately 46.6% and 22.7% of
total sales, respectively, in 2000, sales of the Sexual Energy package
(including Prostsafe "R" and Sexhilarate "R") which yield a significantly lower
margin, also increased.

    Selling and Advertising Expense.  During the year ended December 31, 2000,
selling and advertising expense decreased by 62.3% to $581,206, representing
68.1% of net sales, compared to $1,543,041, or 92.7% of net sales, in 1999.
This expense decrease resulted primarily from a shift away from print
advertising towards other media such as electronic in-home delivery of product
advertising as the Company sought more favorable response rates for the
marketing dollar.  In 2000 and 1999, advertising expense was $145,464 and
$627,671 , respectively, or 17.1% and 37.6% of net sales, respectively.

    Prepaid advertising at December 31, 2000, includes approximately $40,822 of
costs related to the development of electronic in-home delivery of product
advertising.  The Company is expensing costs related to the development of
electronic in-home delivery of product advertising over a period not to exceed
the lesser of the revenue earning stream directly related to advertising or one
year, whichever comes first.

    General and Administrative Expense.  General and administrative expenses
decreased 3.2% to $572,089 or 67.1% of net sales for the year ended December
31, 2000 compared to $598,314 or 35.9% of net sales in 1999.

Year 2000

    Management has reviewed its internal software and hardware components and
believes that the Company's systems are Year 2000 compliant.  Management has
also made inquiries of its primary vendors as to the capabilities of their
systems with respect to the Year 2000.  At this time, it has been conclusively
determined that the systems of these vendors are Year 2000 compliant.  Based on
recent discussions with the vendors, management believes the vendors will be
capable of meeting the needs of the Company beyond the year 2000.  The Company
did not experience any problems with the calendar change of the Year 2000.

Liquidity and Capital Resources

    During the years ended December 31, 2000 and 1999, the Company's operations
required cash of $338,295 and $455,843, respectively.  As of December 31, 2000,
the Company had cash and short-term investments on hand of $564,443.  The
Company has no commitments for placements of electronic in-home delivery of
product advertising and magazine advertisements as of December 31, 2000.

    Management currently anticipates that the Company will generate sufficient
cash flow, supplemented by the remaining balance of the net proceeds to the
Company from its initial public offering, to finance the Company's operations
at currently anticipated levels at least through the end of 2001.  However,
there can be no assurance that the Company will not encounter unforeseen
difficulties that may deplete its capital resources.  In addition, management
believes that the Company's growth may be restarted by the use of the net
proceeds of the offering to finance various marketing, advertising and
promotional activities.

    The Company's ability to continue operations beyond the year 2000 will
depend upon its ability to generate a significant cash flow from its
operations.  If sufficient cash flow is not being generated at the end of this
year, the Company would be required to seek additional funds through equity,
debt or other external financing.  There can be no assurance that any
additional capital resources which the Company may need will be available if
and when required, or on terms that will be acceptable to the Company.  If

                                      13

<PAGE>

additional financing is not pursued, the Company may be required to forego a
substantial interest in its future revenues or dilute the equity interests of
existing shareholders, and a change in the control of the Company could result.

    The Company's shares and warrants were delisted on April 9, 1999 from
trading on the Nasdaq SmallCap and are now traded electronically on the Over-
the-Counter Bulletin Board.  This delisting has made it more difficult to
effect trades and the Company's frequency of trades and trading volume have
decreased significally since the delisting.  The delisting has reduced the
Company's visibility and will likely adversely effect the Company's ability to
attract and obtain financing in the future because of the decreased liquidity
of the Company's shares.  See "Item 5.  Market for Registrant's Common Equity
and Related Stockholder Matters."

    The Company initiated an open market stock repurchase program in July 1996
in which up to 200,000 shares or 7% of outstanding shares of the Company's
common stock may be acquired in the open market.  To date, the Company has
repurchased and retired 41,450 shares.  Future repurchases will depend on the
Company's cash flow and on such other factors the Company deems relevant.

Item 7.  Financial Statements.

    The financial statements and supplemental data required by this Item are
filed as exhibits hereto, as listed in the Index to Financial Statements
included under Item 13(c) of Part IV below, and are incorporated herein by this
reference.

Item 8.  Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure.

    None

                                      14

<PAGE>

PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act.

    The directors and executive officers of the Company are as follows:

<PAGE>
<TABLE>
<CAPTION>

    Name                Age       Positions
<S>                     <C>       <C>
Cynthia Kolke           53        President, Assistant Secretary and Director

R. Bruce Stewart        63        Chairman of the Board, Secretary and
                                  Treasurer

Paul R. Ryan            55        Director

William D. Fox          63        Director

</TABLE>

    Cynthia Kolke has 26 years experience in sales and marketing.  From 1965
through 1986 she was employed in a number of capacities, including Director of
Marketing by The Service Bureau Corporation, a division of IBM which was sold
to Control Data in 1973.  Between 1986 and 1989, Ms. Kolke served as the Vice
President of Sales for Light Signatures, and operated as an independent
marketing consultant thereafter until she joined G.B. Data Systems, Inc., a
direct mail, nutritional supplement marketing company, in April 1990 as its
Operations Manager.  In July 1993, she left G.B. Data Systems, Inc. to co-found
Whitewing Labs as its President, Assistant Secretary and as a director.  She
holds a Bachelor's degree in Marketing and Data Processing from the Detroit
College of Business.

    R. Bruce Stewart, who served as Chairman, President and Chief Executive
Officer of Acacia, the Company's largest shareholder and a publicly-held
corporation, from 1993 to January 1997, devoted much of his time to the
formation of Whitewing Labs and the development of its plan of operations.  Mr.
Stewart is currently Acacia's Chairman and Chief Financial Officer.  From
August 1977 to March 1991, Mr. Stewart served as President of Annandale
Corporation, a financial consulting firm.

    Paul R. Ryan became a director of the Company in October 1996.  He was Vice
President of Capital Management and a director of Acacia since June 1995.  He
was elected President and Chief Executive Officer of Acacia in January 1997.
He received a B.S. degree from Cornell University and attended New York
University Graduate School of Business.  Mr. Ryan was a general partner of the
American Health Care Fund, L.P. until 1993.

    William D. Fox has owned Classic Tire, an automotive repair and tire
retailer since 1992.  For the previous seven years, he conducted an independent
management consulting business.  He joined the Company's Board of Directors in
February 1996, upon consummation of the Company's initial public offering. From
1963 through 1984, Mr. Fox held numerous positions with IBM and Control Data,
including Branch Manager and Marketing Program Administrator.  He graduated
from Middlebury College with a B.A. degree in Political Science.

    The Company's Board of Directors has established an audit committee
comprised of Mr. Stewart, Mr. Ryan and Mr. Fox, which meets periodically to
consult with the Company's independent auditors concerning their engagement and
audit plan, and concerning the auditor's report and management letter and, with
the assistance of the independent auditors, monitors the adequacy of the
Company's internal accounting controls.  The Company's Board of Directors has
established a compensation committee comprised of Mr. Stewart and Mr. Fox.  The
compensation committee, a committee of board members, met in July 1999 to
review and determine the compensation of the Company's executive officers,
adopt compensation policies and practices, and review and pass upon all
transactions with affiliates and other persons having a material financial
interest in the Company.  The Board has not established a separate nominating
committee.  Rather, all members of the Company's Board of Directors meet to
nominate the individuals to be proposed by the Board of Directors for election
as directors of the Company.

    Subject to the terms of applicable employment agreements, of which there
currently are none, officers are appointed by and serve at the discretion of
the Board of Directors.  The Company's Certificate of Incorporation currently
provide for a Board of Directors divided into two classes of directors serving
staggered terms, with one-half of the total number of authorized directors

                                      15

<PAGE>

(currently four) to be elected at each annual meeting of the Company's
stockholders to serve a 2-year term.  No family relationships exist between any
of the officers or directors of the Company.  Terms for William D. Fox and Paul
R. Ryan expire in 2001. Terms for Cynthia Kolke and R. Bruce Stewart expire in
2002.


Compliance with Section 16(a) of the Securities Exchange Act of 1934

    Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of the
Company's Common Stock to file reports of ownership and changes in ownership
with the Securities and Exchange Commission ("SEC").  Officers, directors and
greater than ten percent shareholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.
Management believes all such individuals were in compliance with Section 16(a)
as of the filing date of this Annual Report on Form 10-KSB, and that none were
delinquent.

Item 10.  Executive Compensation.

    The following table summarizes the annual compensation paid by the Company
during fiscal years ended December 31, 1999 and 2000 to the President of the
Company.  No other executive officer of the Company received an annual salary
and bonus exceeding $100,000 during the year ended December 31, 2000.


<TABLE>
    Summary Compensation Table
<CAPTION>
                                             Annual Compensation
Name and                                    Salary   Bonus  Other
Principal Position                    Year     $       $      $
<S>                                           <C>     <C>    <C>
Cynthia Kolke,                        1999    88,500  -      -
President, Assistant                  2000    88,500  -      24,700*
Secretary and Director

</TABLE>

*Includes payments of $24,700 of accrued vacation.

The Company leases and pays the insurance on an automobile on Ms. Kolke's
behalf at a cost of $4,298 in 2000.

    Each director of the Company who is not otherwise employed full-time by the
Company or Acacia is paid $100 for each Board meeting attended.  Directors are
also reimbursed for their travel expenses incurred in attending Board or
committee meetings.  Directors have previously not been compensated for their
attendance at Board meetings, except for reimbursement of travel expenses.

Stock Options

    The Company's 1993 Stock Option Plan, as amended (the "Stock Option Plan"),
authorizes the granting of options to employees that are intended to qualify as
"incentive stock options" under the Internal Revenue Code of 1986 ("Incentive
Stock Options"), as well as stock options that are not intended to so qualify
("Nonstatutory Options") which may be granted to officers, directors,
employees, consultants, and others expected to provide significant services to
the Company or its subsidiaries.  The Stock Option Plan, which is administered
by the Board of Directors, currently covers an aggregate of 518,685 shares.
The maximum term of a stock option granted under the Stock Option Plan is ten
years, but if the optionee at the time of grant has voting power over more than
10% of the Company's Stock, the maximum term is five years.  If an option
granted expires or terminates, the shares subject to the unexercised portion of
that option will become available for the grant of future options under the
Stock Option Plan.  If an optionee terminates his or her service to the
Company, the optionee may exercise only those option shares vested as of the
date of termination and must effect such exercise within three months, although

                                      16

<PAGE>

the Board of Directors may set a longer period for exercise of stock options.
The Stock Option Plan may be amended at any time by the Board of Directors,
although certain amendments would require stockholder approval.  The Stock
Option Plan will terminate in 2003 unless earlier terminated by the Board.

    The exercise price of Incentive Stock Options granted under the Stock
Option Plan must be at least equal to the fair market value of the stock
subject to the option on the date of grant, except that the exercise price of
an Incentive Stock Option granted to an optionee who owns stock possessing more
than 10% of the voting power of the Company's outstanding capital stock must
equal at least 110% of the fair market value of the stock subject to the option
on the date of grant.  The exercise price of Nonstatutory Stock Options granted
under the Stock Option Plan must be at least equal to 85% of the fair market
value of the stock subject to the option on the date of the grant.  Payment of
the exercise price may be made in cash, promissory notes or other consideration
as determined by the Board of Directors.

    As of February 25, 2001, options to purchase an aggregate of 428,685
(416,685 are vested) shares of Common Stock, at prices ranging from $0.089 to
$5.00 per share, under the Stock Option Plan were outstanding and held by a
total of 4 officers, directors, employees and consultants, including options to
purchase 247,500, 97,500, 15,000, and 15,000 shares granted to Ms. Kolke, Mr.
Stewart, Mr. Ryan and Mr. Fox, respectively.  No options were granted by the
Company during the year ended December 31, 2000.

<TABLE>
Option Values as of December 31, 2000
<CAPTION>

                           Number of Unexercised         Value of Unexercised
                                Options at             In-the-Money Options at
                            Fiscal Year-End 2000      Fiscal Year-End 2000 (1)
Name                    Exercisable / Unexercisable Exercisable / Unexercisable
<S>                       <C>            <C>            <C>            <C>
Cynthia Kolke             247,500   /    0              $0      /      $0
</TABLE>

(1)    Assumes that a share of Common Stock was valued at $.125 per share on
       December 31, 2000, which is less than the option exercise price.

Limitation of Directors' and Officers' Liability and Indemnification

    The Company's Certificate of Incorporation limits the liability of
directors to the maximum extent permitted by Delaware law.  Delaware law
provides that directors of a Delaware corporation will not be personally liable
for monetary damages for breach of the fiduciary duties as directors except for
liability as a result of their duty of loyalty to the company for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, unlawful payments of dividends or stock transactions,
unauthorized distributions of assets, loan of corporate assets to an officer or
director, unauthorized purchase of shares, commencing business before obtaining
minimum capital, or any transaction from which a director derived an improper
benefit.  Such limitations do not affect the availability of equitable remedies
such as injunctive relief or rescission. In addition, the Company's Bylaws
provide that the Company must indemnify its officers and directors, and may
indemnify its employees and other agents, to the fullest extent permitted by
Delaware law.  At present, there is no pending litigation or proceeding
involving any director, officer, employee, or agent of the Company where
indemnification will be required or permitted.  Insofar as indemnification for
liabilities arising under the Securities Act of 1933, as amended, may be
permitted to officers, directors or persons controlling the Company pursuant to
the foregoing provisions, the Company has been informed that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933, as amended, and is therefore
unenforceable.

Item 11.  Security Ownership of Certain Beneficial Owners and Management.

The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of February 25, 2001, by (i) each
director and executive officer of the Company, (ii) each person known to the
Company to be the beneficial owner of more than 5% of the outstanding Common
Stock, and (iii) all directors and executive officers of the Company as a
group.  Except as may be indicated in the footnotes to the table, each of such
persons has sole voting and investment power with respect to the shares owned,
subject to applicable community property laws.  The address of each individual
listed is in care of the Company, 15455 San Fernando Mission Boulevard, Suite
105, Mission Hills, California 91345.

                                      17

<PAGE>

<TABLE>
<CAPTION>

                                                Shares Beneficially Owned*

                                              Number                   Percent
<S>                                          <C>                        <C>
Acacia Research Corporation (1)
12 S. Raymond Ave., Ste. B
Pasadena, CA 91105                           789,709                    27.0%

R. Bruce Stewart (2)(3)                      996,209                    34.1%

Cynthia Kolke (3)                            262,500                     9.0%

Paul R. Ryan (2)(3)                          808,709                    27.6%

William D. Fox (3)                            15,000                      .005%

All directors and executive
officers as a group (4 persons) (2)(3)     1,273,709                    43.5%

</TABLE>

*    In calculating beneficial and percentage ownership, all shares of Common
     Stock which a named stockholder will have the right to acquire from
     February 23, 2001, upon exercise of stock options are deemed to be
     outstanding for the purpose of computing the ownership of such
     stockholder, but are not deemed to be outstanding for the purpose of
     computing the percentage of Common Stock owned by any other stockholder.
     As of February 23, 2001, an aggregate of 2,925,443 shares of Common Stock
     were outstanding.  Except as otherwise indicated in the footnotes to the
     table, this does not take into account currently exercisable stock options
     outstanding as of February 25, 2000 to purchase an aggregate of 428,685
     shares, nor the Warrants outstanding as of February 23, 2001 to purchase
     up to 517,500 additional shares of Common Stock.

(1)   Includes 267,250 shares held of record by Acacia as security for
      repayment of debts owed to Acacia by third parties.

(2)   Includes in the case of each of Messrs. Stewart and Ryan all shares held
      of record by Acacia, of which they are directors, and executive officers.

(3)   Includes shares issuable upon exercise of currently exercisable options,
      including 97,500 shares in the case of Mr. Stewart and 247,500 shares in
      the case of Ms. Kolke.  One hundred percent of the options to purchase
      15,000 shares granted to Mr. Fox became exercisable on February 9, 2001
      and eighty percent of the options to purchase 15,000 shares granted to
      Mr. Ryan became exercisable on October 17, 1999 and are therefore
      included.

Item 12.  Certain Relationships and Related Transactions.

     For a description of the options to purchase shares of the Company's
Common Stock granted to the Company's executive officers and directors, see
Item 10, "Executive Compensation."

                                      18

<PAGE>

Item 13.  Exhibits and Reports on Form 8-K.

    (a)    Exhibits.  The following exhibits are either filed herewith or
           incorporated herein by reference:
<TABLE>
<CAPTION>
            <S>   <C>
            3.1   Certificate of Incorporation*
            3.2   Bylaws*
            3.3   Reincorporation Agreement*
            4.1   Form of Warrant*
            4.2   Agreement Not to Sell*
            10.1  Lease of Company's Executive Offices*
            10.2  Stock Option Plan*
            10.4  Fulfillment Services Agreement with Professional Marketing
                  Associates, Inc.*
            10.5  Consulting Agreement*
            27    Financial Data Schedule*

</TABLE>
*    Incorporated by reference from the Company's Registration Statement on
     Form S-1 (33-97156) which became effective under the Securities Act of
     1933, as amended, on February 9, 1996.

     (b)   Reports on Form 8-K

    None
<TABLE>
    (c)    Index to Financial Statements.
<CAPTION>

                                                                Page
<S>                                                             <C>
Independent Auditors' Report                                    F-1

Balance Sheet as of December 31, 2000                           F-2

Statements of Operations for the years ended
   December 31, 1999 and 2000                                   F-3

Statements of Shareholders' Equity for the years ended
   December 31, 1999 and 2000                                   F-4

Statements of Cash Flows for the years ended
   December 31, 1999 and 2000                                   F-5

Notes to Financial Statements                                   F-6 - F-11

</TABLE>

                                      19

<PAGE>

                                     SIGNATURES



Pursuant to the requirements of 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.

                                   Whitewing Labs, Inc.



                              By:    /s/  Cynthia Kolke
                                   Cynthia Kolke
                                   President, Assistant Secretary and Director
                                   Dated:  March 29, 2001

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

  /s/  R. Bruce Stewart     Chairman of the Board               March 29, 2001
R. Bruce Stewart            of Directors, Secretary
                            and Treasurer



  /s/  Cynthia Kolke        Director, Assistant                 March 29, 2001
Cynthia Kolke               Secretary



  /s/  Paul R. Ryan         Director                            March 29, 2001
Paul R. Ryan



  /s/  William D. Fox       Director                            March 29, 2001
William D. Fox

                                      20

<PAGE>

                           INDEPENDENT AUDITOR'S REPORT




To the Shareholders of Whitewing Labs, Inc.

We have audited the accompanying balance sheet of Whitewing Labs, Inc. as of
December 31, 2000 and the related statements of operations, shareholders'
equity and cash flows for the years ended December 31, 1999 and 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 audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Whitewing Labs, Inc. as of
December 31, 2000, and the results of its operations and its cash flows for the
years ended December 31, 1999 and 2000 in conformity with generally accepted
accounting principles.


                                      /s/  Moss Adams LLP
                                      MOSS ADAMS LLP



Los Angeles, California
February 12, 2001



WHITEWING LABS, INC.




















                                         F-1
<TABLE>



                             WHITEWING LABS, INC.

                               BALANCE SHEETS

                              DECEMBER 31, 2000


<CAPTION>
                                  ASSETS

<S>                                                          <C>
CURRENT ASSETS:
   Cash and cash equivalents                                 $    50,044
   Short-term investments                                        514,399
   Inventories                                                    61,083
   Prepaid expenses
      Advertising                                                 52,508
      Other                                                       35,696
   Other receivables                                              10,995
                                                             ___________
      Total current assets                                       724,725
                                                             ___________

EQUIPMENT:
   Furniture and fixtures                                        167,851
   Accumulated depreciation                                      148,346
                                                             ___________
                                                                  19,505
                                                             ___________

OTHER ASSETS
   Trademarks                                                     51,137
   Other                                                           4,369
                                                             ___________
                                                                  55,506
                                                             ___________

                                                               $ 799,736
                                                             ===========

</TABLE>




The accompanying notes are an integral part of these financial statements




                                        F-2a

<TABLE>

                               WHITEWING LABS, INC.

                                 BALANCE SHEETS

                                DECEMBER 31, 2000

<CAPTION>
                      LIABILITIES AND SHAREHOLDERS' EQUITY


<S>                                                             <C>

   Accounts payable                                             $     14,953


SHAREHOLDERS' EQUITY:
   Preferred stock, $.001 par value:
      10% cumulative, 500,000 shares authorized;
      no shares issued and outstanding                                    -
   Common stock, $.001 par value:
      10,000,000 shares authorized; 2,925,443 shares
      issued and outstanding                                          2,925
   Paid-in capital                                                6,248,752
   Accumulated deficit                                           (5,466,894)
                                                                 __________

	Shareholders' equity                                          784,783
                                                                 __________

                                                                $   799,736
                                                                 ==========

</TABLE>





The accompanying notes are an integral part of these financial statements




                                        F-2b
<TABLE>
                                 WHITEWING LABS, INC.

                                STATEMENT OF OPERATIONS

                       YEARS ENDED DECEMBER 31, 1999 AND 2000
<CAPTION>

                                                  1999                2000
<S>                                          <C>                 <C>
NET SALES                                    $ 1,665,129         $  853,185
COST OF GOODS SOLD                               285,915            156,292
                                              __________         __________
   Gross profit                                1,379,214            696,893
                                              __________         __________

OPERATING EXPENSES:
   Advertising                                   627,671            145,464
   Selling                                       915,370            435,742
   General and administrative                    598,314            572,089
                                              __________         __________
                                               2,141,355          1,153,295
                                              __________         __________
   Loss from operations                         (762,141)          (456,402)

OTHER INCOME, net                                 73,245             63,580
                                              __________         __________
   Loss before income taxes                     (688,896)          (392,822)

PROVISION FOR INCOME TAX                         (25,350)           (25,000)
                                              __________         __________
NET LOSS                                     $  (714,246)       $  (417,822)
                                              ==========         ==========

BASIC AND DILUTED LOSS PER COMMON SHARE      $     (0.24)       $     (0.14)
                                              ==========         ==========

WEIGHTED AVERAGE NUMBER OF
   COMMON SHARES OUTSTANDING                   2,925,440          2,925,443
                                              ==========         ==========

The accompanying notes are an integral part of these financial statements
</TABLE>


The accompanying notes are an integral part of these financial statements

                                      F-3

<TABLE>
                             WHITEWING LABS, INC.

                      STATEMENTS OF SHAREHOLDERS' EQUITY

                    YEARS ENDED DECEMBER 31, 1999 AND 2999
<CAPTION>
                                   Common Stock              Treasury Stock
                                Shares       Amount       Shares       Amount
<S>                             <C>        <C>            <C>       <C>

BALANCE, December 31, 1998      2,925,438  $   2,925       -        $      -

  Exercise of stock options             5         -       -                -
  Net loss                              -         -       -                -
                                _________  _________      _______   ________


BALANCE, December 31, 1999      2,925,443  $   2,925            -   $      -

  Net loss                              -          -            -          -
                                _________  _________      _______   ________

BALANCE, December 31, 2000      2,925,443  $   2,925            -   $      -

                               =========  ==========      =======   ========
</TABLE>




The accompanying notes are an integral part of these financial statements
                                      F-4a
<TABLE>
                             WHITEWING LABS, INC.

                      STATEMENTS OF SHAREHOLDERS' EQUITY

                    YEARS ENDED DECEMBER 31, 1999 AND 2000
<CAPTION>
                                  Paid-In        Accumulated
                                  Capital           Deficit           Total
<S>                              <C>            <C>                <C>

BALANCE, December 31, 1998       $6,248,746     $ (4,334,826)      $1,916,845

  Exercise of stock options               6                -                6
  Net loss                                -         (714,246)        (714,246)

                                 __________      ___________       __________

BALANCE, December 31, 1999       $6,248,752     $ (5,049,072)      $1,202,605

  Net loss                                -         (417,822)        (417,822)

                                 __________      ___________       __________

BALANCE, December 31, 2000       $6,248,752     $ (5,466,894)     $   784,783

                                 ==========      ===========       ==========
</TABLE>




The accompanying notes are an integral part of these financial statements
                                      F-4b

<TABLE>

                              WHITEWING LABS, INC.

                            STATEMENTS OF CASH FLOWS

                    YEARS ENDED DECEMBER 31, 1999 AND 2000
<CAPTION>

                                                        1999         2000
<S>                                                 <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                          $(714,246)  $ (417,822)
   Adjustments to reconcile net loss
   to net cash used in operating activities:
      Depreciation and amortization                     31,910       24,542
      Changes in assets and liabilities:
         Inventories                                    (8,331)      26,929
         Prepaid advertising                           214,684      (22,075)
         Other prepaid expenses                         14,776       19,709
         Other receivables                              (4,137)      11,140
         Deposits                                         (666)           -
         Accounts payable                              (14,314)        (718)
         Accrued liabilities                              (519)      (5,000)
         Deferred income taxes                          25,000       25,000
                                                    __________    _________
      Net cash used in operating activities           (455,843)    (338,295)
                                                    __________    _________
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of furniture and fixtures                  (10,461)      (6,472)
   Development of trademarks                            (2,963)      (4,077)
   Redemption of short-term investments, net           454,960      319,668
                                                    __________    _________
      Net cash provided by investing activities        441,536      309,119
                                                    __________    _________
CASH FLOWS FROM FINANCING ACTIVITIES:
   Net proceeds from issuance of common stock
      upon exercise of options                               6            -
                                                    __________    _________

      Net cash provided by financing activities              6            -
                                                    __________    _________
NET DECREASE IN CASH
AND CASH EQUIVALENTS                                   (14,301)     (29,176)
                                                    __________    _________
CASH AND CASH EQUIVALENTS,
   Beginning of year                                    93,521       79,220
                                                    __________    _________
CASH AND CASH EQUIVALENTS,
   End of year                                      $   79,220    $  50,044
                                                    __________    _________
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
   Cash paid for income taxes                      $       350    $     850
   Cash paid for interest                                    -            -
                                                    __________    _________

</TABLE>


The accompanying notes are an integral part of these financial statements

                                      F-5
<PAGE>

                                 WHITEWING LABS, INC.

                            NOTES TO FINANCIAL STATEMENTS

                                 DECEMBER 31, 2000


1.    Summary of Operations and Organization and Business

Whitewing Labs, Inc. (the "Company") develops, seeks to acquire through
license, markets and sells nutritional supplements for sale to the over age
forty market primarily in the United States.  Utilizing formulas that include
only natural ingredients, the Company's products offer alternatives to
conventional treatments for symptoms associated with the aging process.

2.    Summary of Significant Accounting Policies

    a.  Estimates Used by Management

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

    b.  Concentration of Risk

    The Company deposits its cash with a major financial institution.  Deposits
    may, at times, exceed amounts insured by the FDIC.

    Production and order taking are outsourced to independent contractors,
    which potentially subject the Company to a concentration of supplier risk.
    In addition, substantially all printing is handled by an outside company
    and substantially all advertising placement, including airing time for
    electronic in-home delivery of product advertising, is handled by outside
    service agencies.  Although these services are currently concentrated with
    a few key suppliers, management believes that other suppliers could provide
    similar services and comparable terms.  A change in suppliers, however,
    could cause delay in manufacturing, shipping, advertising placements and a
    possible loss of sales which could affect operating results adversely.

    c.  Cash and Cash Equivalents, and Short-Term Investments

    The Company considers cash equivalents to be short-term, highly liquid
    investments that are both readily convertible to known amounts of cash, and
    are so near their maturity that they present insignificant risk of changes
    in value because of changes in interest rates.  Cash equivalents include
    only those investments with original maturities of three months or less.

    Short-term investments consist of certificates of deposit with original
    maturities of greater than three months but less than one year and which
    are readily convertible to cash.  Short-term investments are valued at
    cost, which approximates market value as of December 31, 2000.

    d.  Inventories

    Inventories consist of finished goods and shipping supplies.  Inventories
    are valued at the lower of cost (determined by the first-in, first-out
    method) or market value.

                                      F-6

<PAGE>

    e.  Prepaid Advertising

    Electronic and printed materials comprise the main components of the
    Company's direct-response marketing efforts.  Payments to vendors in
    advance of the run date are included in prepaid advertising.  Respondents
    are logged into a customer database which indicates the source of each
    customer's response to the specific advertisement.  Prepaid and deferred
    print advertising placements and mailings are amortized over the lesser of
    one year or the number of months in which the related direct responses are
    expected to be received.  The Company evaluates the realizability of its
    direct-response advertising by comparing the carrying amount of prepaid and
    deferred advertising at each balance sheet date on a cost-pool-by-cost-pool
    basis to the probable remaining future net revenues expected to result from
    such advertising.  Any excess carrying amount over probable remaining
    future revenues is reported as advertising expense in the current period.
    Newspaper and weekly publications are expensed in the month of issue.
    Magazines which are available prior to the middle of the month preceding
    the issue date are amortized over a three month period.  Magazines which
    are available subsequent to the middle of the month preceding the issue
    date are amortized over a four month period.  Costs to develop, edit, and
    reproduce infomercials and commercials for airing at local television
    stations nationwide are amortized over a period of twelve months or the
    estimated revenue earning stream, whichever is less.  Prepaid advertising
    at December 31, 2000 includes approximately $40,822 of costs related to the
    development of infomercial advertising.  Advertising expense was $627,671
    and $145,464 for the years ended December 31, 1999 and 2000, respectively.

    f.  Furniture and Fixtures

    Furniture and fixtures are recorded at cost.  Major additions and
    improvements are capitalized.  Depreciation is computed using the straight-
    line method over the estimated useful lives which range from 3 to 7 years.
    When assets are sold or otherwise disposed of, the cost and related
    accumulated depreciation are removed from the accounts and any resulting
    gain or loss is included in earnings.

    g.  Trademarks

    Costs incurred to develop proprietary trademarks are capitalized and
    amortized using the straight-line method over a forty-year period.

    h.  Income Taxes

    The Company accounts for income taxes using the asset and liability method.
    Income taxes are further explained in Note 5.

    i.  Revenue Recognition

    Revenue is recorded at the time of shipment.

    j.  Earnings Per Share

    Basic earnings per share are calculated based on weighted average shares
    outstanding for the period without giving effect to outstanding common
    stock equivalents while diluted earnings per share considers the effect of
    common stock equivalents on weighted average shares outstanding.  The
    common stock equivalents had no dilutive effect in 1999 or 2000.

    k.  Recently Issued Accounting Pronouncements

    During 2000, the Financial Accounting Standards Board (FASB) issued
    Statement of Financial Accounting Standard (SFAS) No. 140, "Accounting for
    Transfers and Servicing of Financial Assets and Extinguishments of
    Liabilities-a replacement of FASB Statement No. 125", SFAS No. 139,
    "Recission of FASB Statement No. 53 Financial Reporting by Producers and
    Distributors of Motions Picture Films and amendments to FASB Statements No.

                                      F-7

<PAGE>

    63, 89, and 121", and SFAS No. 138, "Accounting for Derivative Instruments
    and Hedging activities - an amendment of financial Accounting Standard
    Statement No. 133", which are effective for years after 2000.  Management
    believes these pronouncements will not have a material effect on the
    Company's financial statements or disclosures.

    l.  Stock-Based Compensation

    As permitted by SFAS 123, "Accounting for Stock-Based Compensation", the
    Company continues to apply APB Opinion No. 25 (APB 25) and related
    interpretations in accounting for its stock option plans.  Under SFAS 123,
    a fair value method is used to determine compensation cost for stock
    options or similar equity instruments.  Compensation is measured at the
    grant date and is recognized over the service or vesting period.  Under APB
    25, compensation cost is the excess, if any, of the quoted market price of
    the stock at the measurement date over the amount that must be paid to
    acquire the stock.  The new standard allows the Company to continue to
    account for stock-based compensation under APB 25, with disclosure of the
    effects of the new standards.  Stock options are further disclosed in Note
    6.

3.  Restricted Cash

By agreement with its credit card service organization, the Company is required
to maintain a reserve cash account with a balance equal to an agreed upon
percentage of the prior six months' gross sales volume for credit card
transactions subject to chargeback and return ratios.  As of December 31, 2000,
$20,000 of cash reserved for this purpose is included in cash and cash
equivalents in the accompanying balance sheet.

4.  Commitments and Contingencies

    a.  Lease

    The Company leases its office space under an operating lease agreement,
    expiring September 2001.  The remaining lease commitment for 2001 is
    $32,473.

    Rent expense in 1999 and 2000 was $48,923 and $49,665, respectively.

    b.  Regulation

    The U.S. Food and Drug Administration (FDA) is the primary agency that
    regulates the healthcare industry.

    The Company's products consist of natural ingredients which are considered
    nutritional supplements and are classified as foods, thus they do not
    require FDA approval.  The Company's product labeling and advertising copy,
    however, must be within the FDA's established guidelines.

    The FDA food labeling regulations went into effect during March 1999.  All
    food products, including nutritional supplements had to conform to the new
    formats.  The Company is in compliance with the new label law.  All
    existing and new products utilize the new label formats.

    The FDA's health claims regulations include no claim may be made on a
    dietary supplement label or in printed sales literature, "that expressly or
    by implication characterizes the relationship of any substance to a disease
    or health-related condition."  The Company cannot determine what effect
    currently proposed FDA regulations, when and if promulgated, will have on
    its business in the future.  Such regulations could, among other things,
    require expanded or different labeling, the recall or discontinuance of
    certain products, additional record keeping and expanded documentation of
    the properties of certain products and scientific substantiation.  In
    addition, the Company cannot predict whether new legislation regulating its
    activities will be enacted, which new legislation could have a material
    effect on the Company.

    The Company has an ongoing compliance program with assistance from
    experienced FDA counsel regarding the nature and scope of food and drug
    legal matters affecting the Company's business and products.  The Company

                                      F-8

<PAGE>

    is unaware of any legal actions pending or threatened by the FDA or any
    other governmental authority against the Company.

5.  Income Taxes

The asset and liability method requires the Company to provide income taxes for
the tax effect of temporary differences in recognizing certain income and
expenses for financial statement and income tax purposes.

At December 31, 2000, the Company had net operating loss "NOL" carryforwards of
approximately $5,280,000 for Federal income tax purposes available to reduce
future Federal taxable income through 2020.  Approximately $2,200,000 is
available to reduce future state taxable income in California.  State NOL
carryforwards also expire through 2010.  The Company had approximately
$1,000,000 of NOL carryovers ("pre-change NOLs") for federal tax return
purposes at December 31, 1995.  As a result of an ownership change in 1995, the
Company's ability to utilize pre-change NOL carryovers is limited to
approximately $400,000 per year for Federal tax purposes.

A reconciliation of statutory tax rates to the reported effective income tax
rates for 1999 and 2000 are:
<TABLE>
<CAPTION>

                                               1998           1999
                                               -------       --------
<S>                                            <C>            <C>

Statutory rate
   Federal                                     (34.0)%       (34.0)%
   State, net of Federal benefit                (5.8)         (5.8)

Change in tax asset valuation allowance         42.7          46.6

Other                                            0.8          (0.4)
                                               _____          _____
                                                 3.7%          6.4%
                                               =====          =====
</TABLE>

Temporary differences and carryforwards as of December 31, 2000 which give rise
to the net deferred tax asset are as follows:
<TABLE>
<CAPTION>

<S>                                                            <C>
   Deferred tax assets:
      Federal net operating loss carryforwards                 $1,795,000
      State net operating loss carryforwards-California           128,000
      State net operating loss carryforwards-Arizona               32,000

      Less - Valuation allowance                               (1,935,000)
                                                                _________
          Total deferred tax assets                                20,000
                                                                _________

   Deferred tax liabilities:
      Prepaid advertising                                         (16,000)
      Accumulated depreciation and amortization                    (4,000)
                                                                _________
   Total deferred tax liabilities                                 (20,000)
                                                                _________
   Net deferred tax asset                                     $         0
                                                              ===========
</TABLE>


6.  Stock Option Plan

    a.  Qualified Stock Options

    The Company maintains a qualified stock option plan (the Plan) for
    officers and key employees.  Under the terms of the Plan, incentive stock
    options may be granted with the exercise price established at the
    prevailing market price of the stock at the date of grant.  A number of
    shares not to exceed 20% of the outstanding common shares of the Company

                                      F-9

<PAGE>

    were reserved for issuance under the terms of the Plan.  The options
    generally vest and become exercisable at the date of the grant and expire
    five years from the date of grant, subject to employee termination.  Upon
    termination of employment, individuals have three months from their
    termination date to exercise their options, at which time any unexercised
    options expire.

    b.  Nonqualified Stock Options

    Under the terms of a nonqualified stock option plan, options are granted at
    the prevailing market price of the stock and generally vest and become
    exercisable at the date of the grant.  Options expire ten years from the
    date of grant, subject to the continuation of each person's employment or
    consulting relationship with the Company.  Upon termination of relations
    with the Company, option holders have three months from their termination
    date to exercise their options.

    c.  Options Granted

    The following is a summary of qualified and nonqualified options for the
    years  ended  December 31, 1999 and 2000:

<TABLE>
<CAPTION>
                                                             Number of Options
Qualified Options:                            Exercise       Granted     Vested
<S>                                         <C>             <C>        <C>

Balance, December 31, 1998                  $ 0.089          97,500     97,500
                                                                       =======
   Granted                                        -               -
   Exercised                                      -               -
   Expired                                        -               -
                                            _______         _______

Balance, December 31, 1999                  $ 0.089          97,500     97,500
                                                                       =======
   Granted                                        -               -
   Exercised                                      -               -
   Expired                                        -               -
                                            _______         _______

Balance, December 31, 2000                  $ 0.089          97,500     97,500
                                             =======        ========   =======

Nonqualified Options:

Balance, December 31, 1998                  $0.089 - 5.00   376,185    317,190
                                                                       =======
   Granted                                       -                -
   Exercised                                $1.25                (5)
   Expired                                  $1.00 - 1.25    (44,995)
                                            _______         _______

Balance, December 31, 1999                  $0.089 - 5.00   331,185    307,685
                                                                       =======
   Granted                                   -                    -
   Exercised                                     -                -
   Expired                                       -                -
                                            _______         _______

Balance, December 31, 2000                  $0.089 - 5.00    331,185   319,185
                                             =======        ========   =======
</TABLE>


The Company accounts for the Plan with regard to the Company's employees,
officers and directors under Accounting Principles Board Opinion No. 25 and
related Interpretations.  Accordingly, no compensation cost is recognized for
the issuance of stock options to employees, officers, and directors.  No stock
options were granted in 1999 or 2000.

                                      F-10

<PAGE>


The fair value of each option grant is estimated on the date of grant using an
option pricing model with the following weighted-average assumptions used for
stock grants in 1999 and 2000:  risk-free interest rate of 5.2%, no expected
dividend yield; expected lives of 7 years; expected volatility of approximately
124%.

7.  Warrants and Stock Options

In conjunction with its initial public offering in February 1996, the Company
issued 1,035,000 common stock purchase warrants at $0.20 per share which had to
be purchased together on the basis of one share of common stock and one
warrant, but tradable separately thereafter.  The holder of two warrants is
entitled to purchase one share of the Company's Common stock at $3.00 per share
prior to February 9, 2002.  The warrants may be redeemed by the Company under
certain circumstances.  In connection with the Company's initial public
offering, the representatives of the underwriters acquired 90,000 warrants.  As
of December 31, 2000, no warrants have been exercised.

8.  Operating Segments

The Company's products comprise a single operating segment.  Sales are made to
a large number of customers throughout the United States.  Sales of two of the
Company's products comprised 77% of total sales in 1999 and 2000.