UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, D.C 20549

                                   FORM 10-KSB

(Mark One)

[X] Annual Report to Section 13 or 15(d) of the Securities Exchange Act of 1934

                  For the Fiscal Year ended December 31, 2001

Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934

           For the transition period of ____________ to ____________

                          Commission File No. 0-22809

                                   AZUREL LTD.
             (Exact name of registrant as specified in its charter)

DELAWARE                                                      13-3842844
--------                                                      ----------
(State or other jurisdiction of                               (I.R.S Employer
incorporation or organization)                               Identification No.)

                                23F Commerce Road
                              Fairfield N.J. 07004
                    (Address of principal executive offices) (Zip Code)


Registrant's telephone number, including area code: (973) 575-9500

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

Title of Each Class                                     Name of Each Exchange on
                                                        Which Registered None.

Not Applicable

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



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<PAGE>



                          Common Stock, $.001 Par Value
                                (Title of Class)
                    Redeemable Common Stock Purchase Warrants
                                (Title of Class)



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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of 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.
Yes               No X

The issuer's net sales for the most recent fiscal year were $463,173.


The aggregate market value of the voting stock held by non-affiliates based upon
the last sale price on April 11, 2002 was approximately $1,871,558.

Indicate  by check mark  whether  the  registrant  has filed all  documents  and
reports  required  to be  filed by  Section  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.     Yes  X            No

As of April 11, 2002 there were 6,931,697 shares of Common Stock, per value
$.001 per share outstanding.

Other than historical information, statements in this report may be deemed to be
forward-looking statements within the meaning of the federal securities laws.
Actual results and the timing of certain events could differ materially from
those projected in the forward-looking statements due to a number of factors,
including those set forth in this report. See "Forward-Looking Statements" in
Part II of this report.







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                                     PART I
ITEM 1. BUSINESS

General
         The Company, through its wholly-owned subsidiary manufactures,
distributes,  and assembles  perfumes and color kit products under the Company's
own brand names. In order to take advantage of the Company's product development
expertise,  the Company  develops color cosmetic and fragrance  lines,  which it
markets  under brand names  created  internally.  These  products are  sometimes
referred to as "Branded Products".  To date, the Company has developed two lines
of Branded Products internally.

         In March 2000, The Company met with the NASDAQ Listing Qualifications
Panel to respond to concerns raised by NASDAQ. On April 28, 2000, the Panel
delisted the Company's securities for public interest concerns. The Company
subsequently applied for and has been listed on the bulletin board.

         In May 2000, the Company sold its Private Label Group, which consisted
of subsidiaries acquired in August 1996 from Michael J. Assante.

Products and Services
          In the United States, the Company sells its Branded Products directly
to two distributors, which purchase the Company's products for resale. One of
the distributors sells the Company's products through the internet, and the
other distributor sells to retail stores within its territory. The Company
established a sales and distribution facility in France in the first quarter of
1999. In November 2000, the Company decided not to sell in the international
market and closed its facility in France. The Company is currently seeking a
relationship that will allow for the Company's products to be sold
internationally.

         In October 1997, the Company acquired all of the outstanding capital
stock of Cambridge Business Services, Inc. (CBS). CBS provided outsourcing and
distribution services such as: accounting, sales, marketing, warehousing,
distribution, and other administrative and back offices services to cosmetic,
fragrance, and accessory companies. These functions were absorbed by Azurel
Sales and distribution in the third quarter of 2000.    The Company dissolved
the Corporation (CBS) during the fourth quarter 2000 and subsequently
discontinued the aforementioned service operations in February 2001.

         In October 1997, the Company began developing cosmetics, fragrances,
and related products for sale under the HANG TEN trade name pursuant to a
license agreement with the owner of the HANG TEN trade name (the "Licensor").
The HANG TEN trade name is a brand name used on men's outerwear, active wear,
and a wide variety of other merchandise which has been marketed in print media
in both the United States and internationally.

         The license agreement covered the period from January 1, 1999 until
December 31, 2003. In January 2001, the licensor cancelled the license agreement
due to the fact that the Company could not meet the minimum payments required in
the agreement.

         In July 1998, the Company purchased all of the assets of Ben Rickert
Inc. from Summit Bank. Ben Rickert Inc. was founded in 1970 by Ben Rickert and
throughout the years became a leading manufacturer, distributor, and assembler
of luxury bath and body products. With the purchase of Ben Rickert Inc. assets,
the Company created a wholly-owned subsidiary and named it Ben Rickert Corp.
(which was subsequently changed to Azurel Sales and Distribution), which
manufactured, distributed, and assembled bath and body products and perfumes,
sold mostly in gift sets. Azurel Sales and Distribution sells its products under
its own brand names including Benandre and Privilege, and intends to reintroduce


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<PAGE>

luxury bath and body products, which would be sold primarily to department
stores and mass merchandisers such as, J.C Penny, Federated Department Stores,
Marshall Field's, and AAFES (Military). The purchasers of Azurel Sales and
Distribution products are primarily women between the ages of 12 and 65 years of
age.

         Azurel Sales and Distribution believes that its products are
differentiated from its competitors' products by three distinct factors: (i)
aesthetics; (ii) price (value); and (iii) fragrance. Azurel Sales and
Distribution's products compete effectively with its competition by creating
handsomely designed quality products at reasonable prices, and its products have
established the concept of "high gift value" as its core selling strategy.

         On March 27, 2002, the Company signed a letter of intent to merge with
Romantic Moments Inc. ("Romantic"), a distributor of high-end evening garments.
The merger is expected to be consummated by the end of the second quarter. The
merger is expected to broaden the distribution base of our existing products
(see discussion on letter of intent which follows ).

         The Company also sells cosmetic kits, which are varieties of color
cosmetic items packaged in containers and manufactured in Asia, which are custom
made for retailers such as Marshall Field's and Bloomingdales as well as
cosmetic companies. This sector of the overall cosmetic market is growing
rapidly and should continue to expand in the future.

Competition
         All aspects of the cosmetic and fragrance industry are subject to
intense competition throughout the world. In all aspects of its business the
Company will compete with numerous companies, many of which are better known in
the industry and have established channels of distribution and substantially all
of which have greater financial and other resource than the Company. These
competitors include Estee Lauder, Revelon, Avon, Maybelline, Coty, and Dial.

         In selling the Branded Products and cosmetic kits and accessories the
Company competes against numerous companies. Many of these competitors are
better known in the industry, and established channels of distribution and
greater financial and other resources than the Company.

         The Company believes that the primary elements of competition in the
sale of Branded Products are product awareness and consumer acceptance of the
competing brands. Achieving market acceptance may require substantial marketing
efforts and expenditure of significant funds. The Company markets its Branded
Products to niche markets such as chain drug stores, discount stores, and mass
merchandisers and develops Branded Products, which it believes will appeal to
the customers of these retailers.

Government Regulation
         Various laws and regulations relating to safe working conditions, and
other employment matters, including the Occupational Safety and Health Act, are
also applicable to the Company. The Company believes it is in substantial
compliance with all material federal, state and local laws and regulations
regarding safe working conditions, and other employment matters.

Trademarks
         The Company has fifteen United States registered trademarks, Scent
Overnight (R), Scent 123(R) and Sports Extreme (R), U.S. - Privilege (R),
Benandre(R), Bene(R), PP Parfums Privilege & Design (R), American Country
Garden(R), Ben Rickert(R), Extreme Berry(R), Extreme Girl(R), Extreme
Vanilla(R), Private Part(R), France - Privilege(R) and Japan - Ben Rickert(R).

         The right to use trademarks and trade names in connection with the sale
of the Branded Products is material to the Company's business. In cases where
the Company is the licensee of the trademark or trade name, the ownership of the

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<PAGE>

trademark or trade name will be retained by the licensor. In such cases, the
Company may be subject to material claims of infringement by third-parties and
may or may not be indemnified by the licensor.

         The Company will be the owner of brand names developed by it and will
seek to establish protection of names. There can be no assurance, however, that
trademark rights would sufficiently protect the Company's right to use such
names or that, if and when the Company files trademark applications for such
names, such applications would be approved. Notwithstanding such ownership,
third-parties may claim that such names infringe such third party's rights. Such
claims may seek to require the Company to cease use of the names as well as pay
monetary damages. At the time any such claim is brought, the Company may not
have the financial resources to defend against such claim. The cessation of the
use of any brand name used by the Company might have a material adverse effect
on it.

Insurance
         In view of the activities conducted by the Company, there are inherent
risks of exposure to certain liabilities including product liability and
negligence claims resulting from the use of the Company's products. The Company
currently carries a general liability insurance policy (including products
liability) and property damage insurance, which provides for coverage of
$1,000,000 per occurrence and $2,000,000 in the aggregate. Although the Company
believes such insurance is sufficient, no assurance can be given that the amount
of the Company's present coverage will prove to be adequate.

Employees
         As of December 31, the Company employed 1 person in the United States.
The Company utilizes temporary help and independent contractors in order to
perform its warehousing and administrative functions. The Company plans to hire
a sales rep force after the confirmation of its plan of reorganization. This
will increase the distribution of its Branded Products.

Seasonality and Backlog
         The cosmetic and fragrance business in general is subject to seasonal
fluctuations, with net sales in the second half of the year substantially higher
than those in the first half as a result of increased demand by retailers in the
United States in anticipation of and during the back-to-school, Thanksgiving,
and Holiday seasons. The Company anticipates that the sales of Branded and
Azurel Sales and Distribution Products will follow the general industry trend.

Chapter 11 Filing
         On February 2, 2001, the Company filed a voluntary petition of
bankruptcy under Chapter 11 in the United States Bankruptcy Court for the
District of New Jersey, Newark. All creditors have been notified and all legal
proceedings, including those indicated in ITEM 3, have been terminated; however,
these claims will be settled as part of the First Modified Plan which was
approved by the bankruptcy court in Newark, New Jersey, effective February 27,
2002.
         On February 13, 2002, subsequent to the ratification of the First
Modified Plan, the Order of Confirmation was issued by the Bankruptcy Court, and
became effective February 27, 2002. The Plan provided two options to the
unsecured creditors: One is a combination of one share of stock for each dollar
of liability plus a 20% cash payout over 2 years. The other is a 45% payout over
5 years. Each unsecured creditor that filed a claim was permitted to select
either of the two options.


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<PAGE>

Letter of Intent
         On March 27, 2002, the Company signed a letter of intent to merge with
Romantic Moments, Inc. (`romantic"), a manufacturer and distributor of high-end
evening apparel. The consideration of the merger of Azurel and Romantic shall be
the  issuance of an  aggregate  of  1,300,000  of Common  Stock of Azurel to the
owners of  Romantic  and 1,350  shares of  convertible  preferred  stock,  which
convert to 6,700,000  shares of common stock. In addition,  Azurel's  investment
banker  will  seek to raise  approximately  $300,000  by  selling  approximately
1,000,000  shares of common  stock.  The  funds are  anticipated  to be used for
working  capital.  The merger is  expected to be  consummated  by the end of the
second quarter of 2002. Two of Romantics  executive  officers are expected to be
named to be named Chief  Executive  Officer and President of the merged company.
The merger is subject to shareholder approval of the Company, due diligence, and
customary  regulatory  approval.  The  Company  expects  the merger to result in
expansion into new retail markets.

ITEM 2. PROPERTIES

         At December 31, 2000, the Company leased 2,400 square feet of space at
509 Madison Avenue, New York, New York, which was used as its executive office.
The lease, which was to expire in April, 2001, provided for an annual base rent
of $75,000, including utilities. In January 2001, the Company closed this office
as part of an overall consolidation plan.

         At December 31, 2000, the Company leased a 55,000 square foot building
in Fairfield, New Jersey, which was used as a packaging plant and as Azurel
Sales and Distribution's executive office. Approximately 10,000 square feet was
used for office space and 45,000 square feet housed its assembling, warehousing,
and shipping operations.

         The lease was to expire in July 2004 and provided for annual rent of
approximately $336,000. In January 2001, the Company defaulted on its rental
payments and made arrangements with the landlord, which enabled it to remain
until the middle of March 2001. At that time it moved to another facility in
Fairfield New Jersey of approximately 4,500 square feet, with annual rental
payments of approximately $18,000 annually.

         In March, 2002, after the confirmation of the Company's plan of
reorganization, the Company relocated its offices and warehouse to another
facility in Fairfield, New Jersey. The new facility is 10,000 sq ft. and will
afford the Company the opportunity to expand its operations to accommodate sales
growth.

ITEM 3.  LEGAL PROCEEDINGS

Chapter 11 Proceedings. Reference to such matters discussed below is made in
"Item 1 - Business" for information regarding the Company's Chapter 11
proceedings.

Dowel Associates v. Azurel, Ltd. On March 21,2000, plaintiff landlord of
defendant's business premises brought an action in Essex County Superior Court
in New Jersey seeking unpaid rent of $87,937.37, plus attorney's fees and
additional future rent to accrue, and also seeking a judgment for possession of
the premises. This matter has been settled by an agreement awarding plaintiff a
judgment of possession that will be permanently stayed provided Azurel makes
timely monthly payments in compliance with an agreed upon schedule. In January
2001, the Company defaulted and relocated in March 2001.


                                       6
<PAGE>

Twincraft v. Ben Rickert Corp. and Azurel,  Ltd. This is an action in the United
States  District Court for the District of Vermont in which  plaintiff is in the
process of obtaining a default judgment in excess of $339,000.

W.E. Calligaro. In December 1999, Azurel Ltd. and Ben Rickert Corp. entered into
an agreement with this former executive (modifying a prior severance agreement)
requiring various payments to be made in exchange for a release of any further
claims. The Company defaulted on its payment obligations after making the first
payment under the agreement, and $25,262.50 remains unpaid and is subject to
acceleration together with the reasonable attorney's fees and costs of
collecting the unpaid balance. In April 2000, plaintiff commenced an action in
Superior Court of Morris County, New Jersey seeking $27,262.50. The Court
permitted the plaintiff to attach a lien against the defendant and collected
$22,844.66, leaving a balance of $4,417.84 as of December 31, 2000.

Pactrans  Air & Sea.  In  December  1999,  Ben  Rickert,  Inc.  entered  into an
agreement  with  Pactrans  Air & Sea  requiring  various  payments to be made in
exchange for the  forbearance of any legal action and the provision of a general
release  upon full  payment.  Ben  Rickert,  Inc.  has  defaulted on its payment
obligations and cure period has expired,  which will permit  acceleration of the
entire amount due of $63,108.54 plus 15% attorney's fees and costs.

Ensignia Group v. Ben Rickert, Corp. In this suit, presently pending in the
Passaic County Superior Court in New Jersey, plaintiff originally sued for
$51,935.23. After several interim payments were made pursuant to an informal
settlement agreement, plaintiff obtained an arbitration award in the amount of
$7,305.93, plus interest and costs, which amount represented the balance due as
previously agreed by the defendant although the defendant has since sought to
reconsider its agreement on the grounds that the previously agreed balance was
not calculated correctly. Ben Rickert has requested a trial de novo, in effect
nullifying the arbitration award, and it is expected that a trial or a summary
judgment motion will be forthcoming shortly.

Tricor Braun v. Ben Rickert Corp. This action in Superior Court of Essex County,
New Jersey was served in April 2000 and seeks compensatory damages of $45,178.06
plus allegedly agreed upon attorney's fees totaling an additional 20% for a
total of $59,273.61 plus interest and costs.


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

         There were no matters submitted to a vote of security holders during
2001.


                                     PART II

ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK

         As of the date hereof, the Company has outstanding 6,931,697 shares of
its Common Stock $.001 par value ("Common Stock"). The Company's Common Stock is
traded on the Nasdaq Bulletin Board ("OTCBB") under the symbol "AZUR". The
following table sets forth the high and low bid prices for the Common Stock as

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<PAGE>

reported by on the OTCBB. The high and low bid prices reflect inter-dealer
prices, without retail mark-up, mark-down, or commission, and may not present
actual transitions.

                                                COMMON STOCK

FISCAL 2000                           HIGH                      LOW

First Quarter                      $  1.53                     $  0.25
Second Quarter                        0.25                        0.15
Third Quarter                         0.15                        0.07
Fourth   Quarter                      0.14                        0.08


FISCAL 2001

First Quarter                    $   0.15                      $  0.09
Second Quarter                       0.21                         0.11
Third Quarter                        0.29                         0.16
Fourth   Quarter                     0.39                         0.18

         On March 31, 2002, there were approximately 59 holders of record of the
Company's 6,931,697 outstanding shares of Common Stock.

         On April 11, 2002, the last sale price of the Common Stock as reported
on the Nasdaq Bulletin Board was $0.27.


                                 DIVIDEND POLICY

         The Company has never paid or declared dividends on its Common Stock.
The payment of cash dividends, if any, in the future is within the discretion of
the Board of Directors and will depend upon the Company's earnings, its capital
requirements, financial condition, and other relevant factors. The Company
intends, for the foreseeable future, to retain future earnings for use in the
Company's business.


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

AZUREL LTD. AND SUBSIDIARIES
FORWARD-LOOKING STATEMENTS

         When used in this Form 10-KSB and in future filings by the Company with
the Securities and Exchange commission, the words or phrases "will likely
result" and "the company expects," "will continue," "is anticipated,"
"estimated," "project," or "outlook" or similar expressions are intended to
identify "forward-looking statements." The Company wishes to caution readers not
to place undue reliance on any such forward-looking statements, each of which


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speak only as of the date made. Such statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical earnings and those presently anticipated or projected.

         The Company has no obligation to publicly release the result of any
revisions, which may be made to any forward-looking statements to reflect
anticipated or unanticipated events or circumstances occurring after the date of
such statements.

General
         Azurel, through its wholly-owned subsidiary, manufactures, markets and
sells private label cosmetics, fragrances and skincare products and also
provides warehousing and other administrative services.

         In August 1996, Azurel acquired the stock of the Private Label Group,
and in October 1996, Azurel acquired the assets of Scent Overnight. In October
1997, Azurel acquired the stock of Cambridge Business Services. In July 1998,
Azurel's wholly-owned subsidiary, Azurel Sales and Distribution, acquired the
assets of Ben Rickert Inc., a 28 year old cosmetic company, for $1.5 million.

         During the second quarter of 2000, the Company sold the stock of the
Private Label Group and, in the fourth quarter of 2000, dissolved Cambridge
Business Services.

         On February 2, 2001, the Company filed for protection under the Federal
Bankruptcy laws under Chapter 11. The Company proposed a Plan of Reorganization
to the creditors, which was subsequently accepted. In February 2002, the Plan of
Reorganization was ratified. Management's plans with respect to this matter
includes raising additional capital through the issuance of stock and ultimately
developing a viable business under new leadership.

         The following discussion and analysis should be read together with the
financial statements and notes for Azurel included herein.

Results of Operations
The following table sets forth, for the periods indicated, the percentage of net
sales represented by certain items included in the statements of operation.
<TABLE>
<CAPTION>
                                                                                Year Ended December 31,
                                                         -----------------------------------------------------------------------
                                                                       2001                                 2000
                                                         ---------------------------------    ----------------------------------
                                                              Amount               %               Amount                %
                                                         ------------------   ------------    ------------------    ------------

<S>                                                   <C>                        <C>       <C>                         <C>
Sales                                                 $        463,173           100.0     $      2,318,944            100.0
Cost of goods sold                                             192,435            41.5            3,467,533            149.5
                                                         ------------------   ------------    ------------------    ------------
Gross profit                                                   270,738            58.5           (1,148,589)           (49.5)
Selling, general and  administrative expenses                1,281,375           277.7            4,331,895            186.8
                                                         ------------------   ------------    ------------------    ------------
Loss from continuing operations                             (1,010,637)         (218.2)          (5,480,484)          (236.4)
Interest expense                                               (42,837)           (9.3)            (567,815)           (24.5)
Gain on sale of fixed assets                                     8,256             1.8                -                  -
Reorganization costs                                           (95,500)          (20.6)               -                  -
Other income                                                   (41,202)           (8.9)             391,658             16.9
                                                         ------------------   ------------    ------------------    ------------
Net loss before extraordinary item                          (1,181,920)         (255.2)          (5,656,641)          (243.9)
Extraordinary item                                             190,000            41.0                -                  -
                                                         ------------------   ------------    ------------------    ------------
Net loss from continuing operations                           (991,920)         (214.2)          (5,656,641)          (243.9)
Income from discontinued operations                              -                 -                 92,913              4.0
                                                         ------------------   ------------    ------------------    ------------
Net loss                                              $       (991,920)         (214.2)    $     (5,563,728)          (239.9)
                                                         ==================   ============    ==================    ============
</TABLE>


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Year Ended December 31, 2001 (The "2001 Period") and Year Ended
December 31, 2000 (The "2000 Period").

     Net sales were $ 463,173 for the year ended  December 31, 2001 and declined
$ 1,855,771 or 80.0% when compared to the 2000 Period. The sales decrease in the
2001 Period was primarily due to the downsizing of the Company subsequent to the
Company's filing for protection under the Chapter 11 Federal bankruptcy laws.

     Cost of goods sold for the 2001 Period was  $192,435 or 41.5% of net sales,
as  compared  to  $3,467,533  or 149.5% of net  sales for the 2000  Period.  The
increase in gross profit  percentage in the 2001 Period was primarily due to the
lack of sales of closeout merchandise and obsolete inventory in the year 2001.

     Selling,  general  and  administrative  expenses  for the 2001  Period were
$1,281,375  or 277.7 % of sales as compared to $4,331,895 or 186.8% of sales for
the  2000  Period.  The  decrease  in SG&A  expenses  was due  primarily  to the
downsizing  of the Company  subsequent  to its filing of Chapter 11 in February,
2001.

     Interest  expense  was  $42,837  or 9.3% of net sales for the 2001  Period,
compared to $391,658 or 16.9% of net sales for the 2000  Period.  Subsequent  to
filing  Chapter 11, the Company was not required to record  interest  expense on
its notes payable during 2001.

     Income from  discontinued  operations  in the 2000 Period was $ 92,913,  as
favorable results in our PLC and Cambridge subsidiaries were partially offset by
losses in our French  operations.  All of these subsidiaries were either sold or
discontinued prior to the 2002 Period and, thus, there were no operating results
to report in this Period.


Liquidity And Capital Resources

     From  inception  to  date,  Azurel's  operations  have  been  funded  by  a
combination  of debt and equity  financings.  The  Company  sustained  losses of
approximately  $992,000  for the year ended  December 31, 2001 and had a working
capital deficiency of approximately $6,659,000 as of that date.

Chapter 11 Filing

     On February 2, 2001,  the Company filed a voluntary  petition of bankruptcy
under Chapter 11 in the United States Bankruptcy Court,  District of New Jersey,
located in Newark. The Company had been experiencing  liquidity problems and had
been  unable to finance  its  working  capital  and other  business  needs.  The
Auditor's report on its financial  statements included elsewhere herein contains
an  explanatory  paragraph  about the  Company's  ability to continue as a going
concern.

     On February 13, 2002,  subsequent to the ratification of the First Modified
Plan, the Order of Confirmation  was issued by the Bankruptcy  Court, and became
effective  February 27,  2002.  The Plan  provided two options to the  unsecured
creditors:  One is a  combination  of one  share of stock  for  each  dollar  of
liability plus a 20% cash payout over 2 years.  The other is a 45% payout over 5
years. Each unsecured creditor that filed a claim was permitted to select either
of the two options.  The Company seeks to accomplish  payments under the Plan by
infusion of up to $300,000 of new money,  of which  approximately  $266,000  has
been infused, from a secured creditor.


                                       10
<PAGE>

Letter of Intent

     On March 27,  2002,  the  Company  signed a letter of intent to merge  with
Romantic Moments, Inc. (`romantic"),  a manufacturer and distributor of high-end
evening apparel. The consideration of the merger of Azurel and Romantic shall be
the  issuance of an  aggregate  of  1,300,000  of Common  Stock of Azurel to the
owners of  Romantic  and 1,350  shares of  convertible  preferred  stock,  which
convert to 6,700,000  shares of common stock. In addition,  Azurel's  investment
banker  will  seek to raise  approximately  $300,000  by  selling  approximately
1,000,000  shares of common  stock.  The  funds are  anticipated  to be used for
working  capital.  The merger is  expected to be  consummated  by the end of the
second quarter of 2002. Two of Romantics  executive  officers are expected to be
named to be named Chief  Executive  Officer and President of the merged company.
The merger is subject to shareholder approval of the Company, due diligence, and
customary  regulatory  approval.  The  Company  expects  the merger to result in
expansion into new retail markets.

         The Company will seek to raise additional capital through the issuance
of stock and ultimately developing a viable business under new leadership.


ITEM 7. FINANCIAL STATEMENTS
         See pages F-1 to F-16.


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

         None.


                                    PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSON

Name                                Age               Position

Norman Grief                        70                Director

Brian Bookmeier                     43                Director

Other Significant Employees

Name                                Age               Position

Edward Adamcik                      59                Vice-President, Operations




                                       11
<PAGE>

     Directors are elected to serve until the next meeting of  stockholders  and
until their successors are duly elected and qualified.  Meetings of stockholders
of the  Company  will be held on an  annual  basis.  However,  if at any time an
annual  meeting is not held for the  election  of  directors,  then the  current
directors  will  continue  to serve  until  their  successors  are  elected  and
qualified. Vacancies and newly created directorships resulting from any increase
in the number of directors may be filled by a majority vote of Directors then in
office.  Officers are appointed by, and serve at the discretion of, the Board of
Directors. Non-employee directors are eligible to receive options under the 1997
Stock Option Plan.

     The  following  is a brief  summary  of the  background  of each  director,
executive officer, and significant employee of the Company:

Norman  Grief was elected to the  Company's  Board of  Directors on February 23,
1998. Mr. Grief is presently the Chief  Executive  Officer of The Jarrott Group,
Inc., a full service  marketing  agency with a specialty in developing  cosmetic
brands,  a position which he has served as since January 3, 1995.  From March 1,
1981 to December 1, 1994 Mr. Grief was the President of Givandan.  From March 9,
1970 to December 15, 1986 Mr. Grief served as the Vice President of Research and
Development at Revlon.

Brian  Bookmeier was appointed as a director of the Company in Mach 2000.  Since
August 1997, Mr. Boomeier has been the Vice President of Seven Sons, Inc., d/b/a
Las Vegas Golf & Tennis,  a company in the business of  franchised  retailing of
golf and tennis equipment. From July 1995 to February 2000, Mr. Bookmeier served
as the  President,  Chief  Executive  Officer and a director of  TekInsight.com,
Inc., a  publicly-traded  company.  From 1989 Mr.  Bookmeier served as Executive
Vice President and a director of Patient Care Services, a home medical equipment
supply company that specialized in diabetes management,  and the sale of related
equipment and supplies, units its merger into TekInsight.com.  Mr. Bookmeier has
been a director of the American Diabetes Association since June 1995.

Edward  Adamcik  joined the Company in September  1998.  Mr.  Adamcik  worked as
Vice-President  for various  companies from 1992 to 1998. From 1987 to 1992, Mr.
Adamcik was Chief Financial Officer and  Vice-President of Operations for Parlux
Fragrances  Inc. Mr.  Adamcik served as Controller of Onyx Chemical from 1976 to
1986 and for ten years prior, Mr. Adamcik was Controller of Faberge Inc.

Meeting of the Board of Directors

The Company's  Board of Directors met in July 2000. At this meeting,  a majority
of the Board of Directors  passed a resolution  to relieve Mr.  Gerard Semhon of
his duties as Chairman and Chief  Executive  Officer of the  Company.  The Board
appointed  Mr.  Norman  Grief as  Chairman  of the Board  and  agreed to run the
Company by committee going forward.  The position of Chief Executive Officer has
remained unfilled since that time.


ITEM 10. EXECUTIVE COMPENSATION

                           SUMMARY COMPENSATION TABLE

                                       12
<PAGE>

The following table sets forth all cash compensation for services rendered in
all capacities to the Company, for the year ended December 31, 2001. There was
one person whose compensation in 2001 exceeded $100,000 per annum.
<TABLE>
<CAPTION>

Name and                                               Restricted
Principal                                                Stock     Options         All Other
Position                Year      Salary       Bonus     Awards     SARS           Compensation
--------                ----      ------       -----     ------     ----           ------------

<S>                     <C>     <C>
Edward Adamcik          2001    $104,000           -          -        -                      -
Vice-President,
Operations


</TABLE>


Options to Named Executive Officer

There were no options granted to any of the executive officers named in the
Summary Compensation Table above.

Employee Agreements

As of December 31, 2001, there were no employment agreements.

Stock Option Plan

         In March 1997 the Board of Directors adopted, and the stockholders
subsequently approved the Company's 1997 Stock Option Plan (the "1997 Plan"). In
December 1998, the 1997 Plan was amended whereby the number of options to
acquire common stock, which may be granted was increased from 750,000 to
1,750,000. The 1997 Plan provides for grants to officers and other employees of
the Company, non-employee directors, consultants and advisors and other persons
who may perform significant services on behalf of the Company and will be
administers by the Board of Directors, or a committee (the "Committee") of two
or more directors, each of whom is a "Non-Employee Director: within the meaning
of Rule 16b-3 under the Exchange Act. Pursuant to the 1997 Plan, options to
acquire an aggregate of 1,750,000 shares of Common Stock may be granted subject
toadjustments as provided in the 1997 Plan.

         The 1997 Plan authorizes the issuance of incentive stock options
("ISOs"), as defined in Section 422A of the Internal Revenue Code of 1986 (the
"Code"), as amended, as well as non-qualified stock options ("NQSOs"). Only
"employees" (within the meaning of Section 3401(C) of the Code) of the Company
shall be eligible for the grant of Incentive Stock Options. The exercise price
of each ISO may not be less than 100% of the fair market value of the Common
Stock at the time of grant, except that in the case of a grant to an employee
who owns 10% or more of the then outstanding stock of the Company or a
subsidiary or parent of the Company (a "10% Stockholder"), the exercise price
shall be at least 110% of the fair market value of the Common Stock on the date
of grant. The exercise price of each NQSO is determined by the Committee, but
shall not be less than 85% of the fair market value of the Common Stock on the
date of grant. Notwithstanding the foregoing, the exercise price of any option


                                       13
<PAGE>

granted on or after the effective date of the registration of any class of
equity security of the Company pursuant to Section 12 of the Exchange Act, and
prior to size months after the termination of such registration, may be no less
than 100% of the fair option agreement, when the term of the option subject to
such agreement expires and the date when it becomes exercisable, but in no event
will an option granted under the 1997 Plan be exercisable after the expiration
of ten years from the date it is granted. Options may not be transferred during
the lifetime of an option holder and are only exercisable during the optionee's
lifetime only be the optionee of by his or her guardian or legal representative.
The 1997 Plan shall terminate automatically as of the close of business on the
day preceding the 10th anniversary date of its adoption, subject to earlier
termination.

         To the extent Fair Market Value, as defined in the Code, the Common
Stock with respect to which Incentive Stock Options granted hereunder are
exercisable for the first time by an optionee in any calendar year exceeds
$100,000, such options granted shall be treated as NQSO's to the extent required
by Section 422 of the Code.

         If the outstanding shares of Common Stock are changed by reason of an
adjustment to the capitalization of the Company or as a result of a merger or
consolidation, an appropriate adjustment shall be made by the Board of Committee
in the number, kind and price of shares, as to which options may be granted and
exercised.

         Subject to the provisions of the 1997 Plan, the Board of Directors or
the Committee has the authority to determine the individuals to whom stock
options are to be granted, the number of shares to be covered by each option,
the exercise price, the type of option, the option period, the restrictions, if
any, on the exercise of the option, the terms for payment of the option price
and all other terms and provisions of such options (which need not be
identical). Payments by holders of options, upon exercise of an option, may be
made (as determined by the Board or the Committee) in cash or such other form of
payment as may be permitted under the 1997 Plan, including without limitation,
by promissory note or by delivery of shares of Common Stock.

Employee Pension Plan

The Company does not currently have an employee pension plan.

Section 16(a) Reporting

         Under the securities laws of the United States, the Company's
directors, its executive (and certain other) officers, and any persons holding
ten percent or more of the Company's Common Stock must report on their ownership
of the Company's Common Stock and any changes in that ownership to the
Securities and Exchange Commission and to the National Association of Securities
Dealers, Inc.'s Automated Quotation System. Specific due dates for these reports
have been established. During the year ended December 31, 2001, the Company does
not believe that all reports required to be filed by Section 16(a) were filed on
a timely basis, if at all.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following tables set forth certain information as of December 31,
2001 with respect to each beneficial owner of five percent (5%) or more of the
outstanding shares of Common Stock of the Company, each officer and director of
the Company and all officers and directors as a group. The table does not
include options that have not yet vested or are not exercisable within 60 days
of the date hereof.


                                       14
<PAGE>

Unless  otherwise  indicated,  the  address of each such person or entity is 23F
Commerce Road; Fairfield, New Jersey 07004.

Name and Address              Number of Shares                   Percentage of
Of Beneficial Owner           Beneficially Owned (1)             Common Stock
-------------------           ----------------------             ------------

Norman Grief                        -0-                            0.0%

Brian Bookmeier                     -0-                            0.0%

All officers and Directors          -0-                            0.0%
A group (2 persons)

(1)       Pursuant to the rules and  regulations  of the Securities and Exchange
          Commission,  shares of Common Stock that an  individual or group has a
          right to acquire within 60 days pursuant to the exercise of options or
          warrants  are deemed to be  outstanding  for the purposes of computing
          the  percentage  ownership of such  individual  or group,  but are not
          deemed to be outstanding  for the purposes of computing the percentage
          ownership of any other person shown in the table.

     ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         In May 2000, the Company sold its interest in the Private Label Group,
     Inc., a majority-owned subsidiary, to Michael J. Assante for an aggregate
     purchase price of $3,085,821, plus forgiveness of $600,000 of indebtedness
     owned to Mr. Assante in connection with the Company's purchase of the
     Private Label Group from Mr. Assante in August 1996.

         Except as disclosed above and pursuant to certain loan transactions
     with officers, all previous transactions between the Company and its
     officers, directors or 5% stockholders, and their affiliates were made on
     terms no less favorable to the Company than those available from
     unaffiliated parties. All future transactions between the Company and its
     officers, directors of 5% stockholders, and their affiliates, will be on
     terms no less favorable than could be obtained from unaffiliated third
     parties.

ITEM 13. EXHIBITS, LISTS AND REPORTS ON FORM 8-K

Exhibit      Description of Document
Number

2.1          First Amended Chapter 11 Plan of Reorganization of Azurel, Ltd.
             ("Azurel"), filed with the United States Bankruptcy Court, District
             of New Jersey.

2.2          First Modified Plan of Reorganizaton


2.3          Order of Confirmation

                                       15
<PAGE>

                  Reports on Form 8-K for the quarter ended December 31, 2001
                  None.


                                   SIGNATURES

         In accordance with Section 13 or 15 (d) of the Securities Exchange Act
of 1934, the Registrant has duly caused this Annual Report on Form 10-KSB to be
signed on its behalf by the undersigned, thereunto duly authorized.

                                                      AZUREL LTD.


Edward Adamcik                                        By:/s/ Edward Adamcik
                                                      Vice President, Operations

         In accordance with the Exchange Act, this report has been signed below
by the following persons and in the capacities and on the date indicated.

SIGNATURE                    TITLE                               DATE


/S/ Edward Adamcik           Vice President, Operations          April 25, 2002
------------------
Edward Adamcik



/S/ Norman Grief             Director
Norman Grief



/S/ Brian Bookmeier          Director
Brian Bookmeier





                                       16
<PAGE>




                           AZUREL LTD. AND SUBSIDIARY

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



Independent Auditors' Report..........................................F-1

Consolidated Balance Sheet............................................F-2

Consolidated Statements of Operations.................................F-3

Consolidated Statement of Stockholders' Deficit.......................F-4

Consolidated Statements of Cash Flows.................................F-5

Notes to Consolidated Financial Statements............................F-7 - F-16

<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors
Azurel Ltd. and Subsidiary


     We have audited the accompanying  consolidated balance sheet of Azurel Ltd.
and Subsidiary as of December 31, 2001, and the related consolidated  statements
of  operations,  changes in  stockholders'  deficit and cash flows for the years
ended  December  31,  2001  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  auditing  standards  generally
accepted in the United States of America.  Those standards  require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material  misstatement.  An audit includes examining on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly, in all material respects, the consolidated financial position of
Azurel Ltd. and Subsidiary as of December 31, 2001, and the consolidated results
of their  operations  and their cash flows for the years ended December 31, 2001
and 2000, in conformity with  accounting  principles  generally  accepted in the
United States of America.

     The  accompanying  financial  statements  have been  prepared  assuming the
Company  will  continue as a going  concern.  As  discussed  in Note 2(a) to the
financial  statements,  the Company suffered recurring losses and on February 2,
2001,  voluntarily  filed for  relief  under  Chapter  11 of the  United  States
Bankruptcy Code, which raises  substantial  doubt about the Company's ability to
continue as a going concern.  Management's  plans in regard to these matters are
described  further in Note 2(a). The  consolidated  financial  statements do not
include any adjustments that might result from the outcome of this uncertainty.


                                                /s/ Feldman Sherb & Co., P.C.
                                                    Feldman Sherb & Co., P.C
                                                    Certified Public Accountants

April 10, 2002
New York, New York



                                       F-1


<PAGE>

                          AZUREL LTD. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)

                           CONSOLIDATED BALANCE SHEET

                                DECEMBER 31, 2001


                                     ASSETS

             CURRENT ASSETS:
                 Cash                                         $          71,085
                 Accounts receivable, net of allowance for
                    doubtful accounts of $5,000                          93,784
                 Inventories                                            194,718
                 Due from related parties                                18,098
                 Prepaid expenses and other current assets                3,002
                                                                 ---------------
                    TOTAL CURRENT ASSETS                                380,687

             OTHER ASSETS                                                 8,704
                                                                 ---------------


                                                              $         389,391
                                                                 ===============



                      LIABILITIES AND STOCKHOLDERS' DEFICIT

             LIABILITIES SUBJECT TO COMPROMISE:
                 Accounts payable                             $       2,917,797
                 Notes payable                                        3,082,294
                 Interest payable                                       726,417
                 Taxes payable                                          441,618
                                                                 ---------------
                    TOTAL CURRENT LIABILITIES                         7,168,126
                                                                 ---------------

             LIABILITIES NOT SUBJECT TO COMPROMISE                       95,500
                                                                 ---------------

             STOCKHOLDERS'  DEFICIT:
                 Preferred stock, $.001 par value, authorized
                   4,000,000 shares;
                    issued and outstanding 1,001,500 shares           2,237,587
                 Common stock, $.001 par value, authorized
                   24,000,000 shares,
                    issued and outstanding 6,911,796 shares               6,912
                 Additional paid-in-capital                           8,998,983
                 Accumulated deficit                                (18,117,717)
                                                                 ---------------
                    TOTAL STOCKHOLDERS'  DEFICIT                     (6,874,235)
                                                                 ---------------

                                                              $         389,391
                                                                 ===============

                 See notes to consolidated financial statements.

                                      F - 2
<PAGE>


<TABLE>
<CAPTION>



                          AZUREL LTD. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)

                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                 YEARS ENDED DECEMBER 3!,
                                                              -------------------------------
                                                                  2001             2000
                                                              --------------   --------------

<S>                                                         <C>              <C>
    NET SALES                                               $       463,173  $     2,318,944

    COST OF GOODS SOLD                                              192,435        3,467,533
                                                              --------------   --------------

    GROSS PROFIT (LOSS)                                             270,738       (1,148,589)

    SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                  1,281,375        4,331,895
                                                              --------------   --------------

    LOSS FROM OPERATIONS                                         (1,010,637)      (5,480,484)

    INTEREST EXPENSE                                                (42,837)        (567,815)

    GAIN ON SALE OF FIXED ASSETS                                      8,256                -

    OTHER INCOME (EXPENSE)                                          (41,202)         391,658

    REORGANIZATION COSTS                                            (95,500)               -
                                                              --------------   --------------

    NET LOSS BEFORE EXTRAORDINARY ITEM                           (1,181,920)      (5,656,641)

    EXTRAORDINARY ITEM:
       Gain on early extinguishment of debt                         190,000                -
                                                              --------------   --------------
    NET LOSS FROM CONTINUING OPERATIONS                            (991,920)      (5,656,641)

    INCOME FROM DISCONTINUED OPERATIONS                                   -           92,913

                                                              --------------   --------------
    NET LOSS                                                $      (991,920) $    (5,563,728)
                                                              ==============   ==============

    BASIC (LOSS) EARNINGS PER COMMON SHARE:
       LOSS BEFORE EXTRAORDINARY ITEM                       $         (0.17) $         (0.85)
       EXTRAORDINARY ITEM                                              0.03                -
                                                              --------------   --------------
       CONTINUING OPERATIONS                                          (0.14)           (0.85)
       DISCONTINUED OPERATIONS                                            -             0.01
                                                              --------------   --------------
    BASIC LOSS PER COMMON SHARE                             $         (0.14) $         (0.84)
                                                              ==============   ==============

    WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                    6,911,796        6,620,130
                                                              ==============   ==============


</TABLE>
                 See notes to consolidated financial statements.


                                       F - 3
<PAGE>



<PAGE>

                          AZUREL LTD. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
          FOR THE PERIODS ENDED DECEMBER 31, 2001 AND DECEMBER 31, 2000

<TABLE>
<CAPTION>


                                             Preferred Stock           Common Stock        Additional
                                           ---------------------   ----------------------   Paid-in
                                            Shares      Amount      Shares      Amount      Capital
                                           ---------   ---------   ----------  ----------  ----------


<S>                    <C>                 <C>                     <C>       <C>         <C>
    Balance at January 1, 2000             1,001,500$  2,237,587   6,211,796 $     6,212 $ 8,649,683

       Sale of common stock                        -           -     700,000         700     349,300
       Net loss                                    -           -           -           -           -
       Change in translation adjustment            -           -           -           -           -
                                           ---------   ---------   ----------  ----------  ----------
    Balance at December 31, 2000           1,001,500$  2,237,587   6,911,796 $     6,912 $ 8,998,983




       Net loss                                    -           -           -           -           -
       Change in translation adjustment            -           -           -           -           -
                                           ---------   ---------   ----------  ----------  ----------
    Balance at December 31, 2001           1,001,500$  2,237,587   6,911,796 $     6,912 $ 8,998,983
                                           =========   =========   ==========  ==========  ==========

</TABLE>
<TABLE>
<CAPTION>
                                                                Other
                                              Accumulated    Comprehensive                Comprehensive
                                                Deficit          Loss         Total           Loss
                                              ------------   -------------  -----------   -------------
<S>                    <C>                 <C>            <C>             <C>
    Balance at January 1, 2000             $  (11,561,356)$        (9,916)$   (677,790)

       Sale of common stock                                             -      350,000
       Net loss                                (5,563,727)                  (5,563,727)$    (5,656,641)
       Change in translation adjustment                 -           9,202        9,202           9,202
                                              ------------   -------------  -----------   -------------
    Balance at December 31, 2000           $  (17,125,083)$          (714)$ (5,882,315)$    (5,647,439)
                                                                                          =============



       Net loss                                  (991,920)                    (991,920)$      (991,920)
       Change in translation adjustment              (714)            714            -             714
                                              ------------   -------------  -----------   -------------
    Balance at December 31, 2001           $  (18,117,717)$             - $ (6,874,235) $     (991,206)
                                              ============   =============  ===========   =============

</TABLE>
                 See notes to consolidated financial statements.

                                      F-4
<PAGE>

                           AZUREL LTD. AND SUBSIDIARY
                             (DEBTOR-IN-POSSESSION)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>


                                                                                           YEARS ENDED DECEMBER 31,
                                                                                      ---------------------------------
                                                                                           2001              2000
                                                                                      ---------------   ---------------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                <C>               <C>
    Net loss                                                                       $        (991,920)$      (5,656,640)
                                                                                      ---------------   ---------------
    Adjustments to reconcile net loss to net cash provided by (used in)
    operating activities:
       Depreciation                                                                           22,054            51,880
       Amortization                                                                          118,439             7,957
       (Gain) loss on disposal of fixed assets                                                (8,256)            3,305
       Write-down of impaired asset                                                          125,583                 -
       Gain on early extinguishment of debt                                                 (190,000)                -
       Reduction of accrued expenses                                                          21,500                 -
       Reduction of non-cash interest expense                                                 (7,000)                -
       Provision for discontinued operations                                                       -           132,000
       Decrease in minority interest                                                            (357)                -
       Income from discontinued operations                                                         -           (92,913)

    Changes in assets and liabilities:
       Accounts receivable                                                                   504,714         1,170,474
       Inventories                                                                           490,801         2,019,097
       Prepaid expenses and other current assets                                              (3,002)          114,004
       Due from related parties                                                              150,000            13,186
       Other assets                                                                           (8,703)          109,068
       Accounts payable other liabilities                                                   (196,042)        1,023,963
       Net assets of discontinued operations                                                  (8,533)          232,355
                                                                                      ---------------   ---------------
       NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                                    19,278          (872,264)
                                                                                      ---------------   ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:

       Purchase of property and equipment                                                          -           (15,117)
       Disposal of property and equipment                                                     37,896                 -
                                                                                      ---------------   ---------------
       NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                                    37,896           (15,117)
                                                                                      ---------------   ---------------

CASH FLOW FROM FINANCING ACTIVITIES:

       Decrease in revolving line of credit                                                        -        (1,144,482)
       Proceeds from borrowings on notes                                                           -           847,533
       Payment of long term debt                                                                   -           (27,538)
       Proceeds from sale of Private Label Group                                                   -         1,212,797
                                                                                      ---------------   ---------------
       NET CASH PROVIDED BY FINANCING ACTIVITIES                                                   -           888,310
                                                                                      ---------------   ---------------
       Effect of exchange rate on cash                                                             -             9,202

NET INCREASE IN CASH                                                                          57,174            10,131

CASH, beginning of year                                                                       13,911             3,780
                                                                                      ---------------   ---------------
CASH, end of year                                                                  $          71,085 $          13,911
                                                                                      ===============   ===============
</TABLE>


                 See notes to consolidated financial statements.
                                      F - 5


<PAGE>

                           AZUREL LTD. AND SUBSIDIARY
                             (DEBTOR-IN-POSSESSION)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                          YEARS ENDED DECEMBER 31,
                                                                                      ---------------------------------
                                                                                           2001              2000
                                                                                      ---------------   ---------------

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:

<S>                                                                                <C>                <C>
          Cash paid for interest                                                   $               -  $              -
                                                                                      ===============   ===============

          Cash paid for income taxes                                               $               -  $          11,657
                                                                                      ===============   ===============
          Notes received in connection with sale of subsidiary                     $               -  $       2,024,403
                                                                                      ===============   ===============
          Conversion of notes to common stock                                      $               -  $         350,000
                                                                                      ===============   ===============
SUPPLEMENTAL DISCLOSURE OF NON-CASH
FINANCING ACTIVITIES:

          Reduction in capital lease obligations                                   $         200,000 $               -
                                                                                      ===============   ===============
</TABLE>

                 See notes to consolidated financial statements.

                                      F - 6

<PAGE>

                           AZUREL, LTD. AND SUBSIDIARY
                             (DEBTOR-IN-POSSESSION)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2001 AND 2000


1.        ORGANIZATION AND SIGNIFICANT EVENTS

          Azurel Ltd. ( "Azurel") was incorporated in Delaware on June 26, 1995.
          In July 1996,  the Company  formed a  subsidiary,  Scent 123, Inc. and
          subsequently  acquired  the  assets  of  Scent  Overnight,   Inc.,  an
          overnight  delivery  service of men's cologne and women's  fragrances.
          There have been no significant operations as of December 31, 2001.

          In August 1996,  Azurel purchased all of the outstanding  common stock
          of Private Label Cosmetics, Inc. and affiliates ("Private Label Group"
          or "PLC") for cash, notes and common stock aggregating $2,782,500 plus
          acquisition  costs of $285,000.  The Private Label Group is located in
          New  Jersey  and  manufactures  cosmetics  for sale to major  cosmetic
          companies.  In May 2000,  the Company  sold its  remaining  two-thirds
          ownership  interest in PLC. The Company had  transferred  one third of
          the stock in PLC in December 1999 pursuant to a notice of default of a
          loan  to the  former  shareholder  of  PLC.  Under  the  terms  of the
          agreement,  The Company returned all of PLC's outstanding common stock
          to PLC and in exchange,  received  $3,085,821,  which consisted of (i)
          cash received  aggregating  $1,285,821  and (ii) a promissory  note of
          $1,800,000  with  interest  accruing at 7.5% per annum,  principal and
          interest due May 2002. The note receivable was  subsequently  assigned
          to  another  entity to  secure an  outstanding  note  payable  to such
          entity.

          In October  1997,  Azurel  acquired all of the  outstanding  shares of
          Cambridge Business Services  Corporation for $212,000.  In 1998 Azurel
          opened a sales and distribution facility in France. Such entities were
          discontinued during the year ended December 31, 2001.

          On July  31,  1998,  Azurel  acquired  from a bank the  assets  of Ben
          Rickert, Inc. a manufacturer and distributor of cosmetics,  fragrances
          and gift items,  for $1.5  million.  The  acquisition  was financed by
          $150,000 in cash and a $1,350,000 note.

          On February 2, 2001, the Company filed a voluntary  petition and order
          for relief  under  Chapter  11 of the US  bankruptcy  code.  The court
          confirmed the Company's  First  Modified Plan of  Reorganization  (the
          "Plan") on February 13, 2002.  Accordingly,  the Effective Date of the
          Plan was February 27, 2002.

          Hereinafter all of the above entities are collectively referred to as
          the "Company".

                                      F-7
<PAGE>


2.       SIGNIFICANT ACCOUNTING POLICIES

         a.    Going Concern - The accompanying  financial  statements have been
               prepared  assuming  that the  Company  will  continue  as a going
               concern.  The Company incurred losses of  approximately  $992,000
               and $5,564,000 for the years ended December 31, 2001 and 2000. On
               February 2, 2001,  the Company  filed a  voluntary  petition  and
               order for relief under Chapter 11 of the US bankruptcy  code. The
               Company  emerged from Chapter 11  bankruptcy on February 27, 2002
               and to  date  has  received  $266,000  from  one  of its  secured
               creditors to fund the bankruptcy  plan.  Such creditor has agreed
               to fund up to $300,000.  On March 27, 2002,  the Company signed a
               letter of intent to merge with an entity  that  manufactures  and
               distributes   luxury  evening  apparel,   although  there  is  no
               assurance that such a merger will be consummated.  The Company is
               also  considering  raising  additional  funds through the sale of
               additional   shares  of  its  common  stock.   The   accompanying
               consolidated  financial statements do not include any adjustments
               that might be necessary  should the Company be unable to continue
               as a going concern.

         b.    Basis of  Consolidation - The consolidated  financial  statements
               include  the  accounts  of  the  Company  and  its  wholly  owned
               subsidiaries.   All  intercompany  profits,   transactions,   and
               balances have been eliminated.

         c.    Financial  Reporting For  Bankruptcy  Proceedings - In connection
               with the  bankruptcy  proceedings,  the  Company is  required  to
               report in accordance  with  Statement of Position 90-7  Financial
               Reporting by Entities in Reorganization under the Bankruptcy Code
               ("SOP 90-7").  SOP 90-7  requires,  among other things,  (i) that
               pre-petition  liabilities  that  are  subject  to  compromise  be
               segregated  in  the  Company's   consolidated  balance  sheet  as
               liabilities  subject to compromise and (ii) the identification of
               all  transactions  and  events  that  are  directly  associated
               with  the  reorganization  of the  Company  in  the  Consolidated
               Statement of Operations.

         d.    Cash  Equivalents  - The  Company  considers  all  highly  liquid
               temporary cash  investments,  with an original  maturity of three
               months or less when purchased, to be cash equivalents.

         e.    Accounts  Receivable - Accounts  receivable  is presented  net of
               allowance for doubtful accounts.

         f.    Inventories  -  Inventories  are recorded at the lower of cost or
               market. Cost was determined using the FIFO method.

         g.    Property  and  Equipment - Property and  equipment  are stated at
               cost. Depreciation is calculated on the straight-line method over
               the estimated useful lives of the assets.

                                      F-8
<PAGE>

         h.    Stock based  compensation  - The Company  follows the  accounting
               treatment prescribed by Accounting Principles Board Opinion No.25
               ("Accounting  for Stock Issues to Employees") when accounting for
               stock-based  compensation granted to employees and directors.  It
               provides the required pro forma  disclosures as if the fair value
               method under Statement of Financial  Accounting Standards No. 123
               ("SFAS No.123"),  "Accounting for Stock Based  Compensation"  was
               adopted. Any stock-based compensation awards to non-employees are
               accounted for using the provisions of SFAS No. 123.

         i.    Net  Income  (Loss)  Per Share - Net  Income  (Loss) Per Share is
               based on the weighted average number of common shares outstanding
               during each period.  Potential  common shares are included in the
               computation  of diluted per share amounts during each period that
               income is reported.  In periods that the Company  reports a loss,
               potential  common shares are not included in the diluted earnings
               per share  calculation since the inclusion of those shares in the
               calculation would be anti-dilutive.

         j.    Income  Taxes - The  Company  accounts  for  income  taxes  under
               Statement of Financial Accounting  Standards No.109,  "Accounting
               for Income  Taxes" (SFAS  No.109).  Pursuant to SFAS No.109,  the
               Company  accounts  for income taxes under the  liability  method.
               Under the liability  method, a deferred tax asset or liability is
               determined  based upon the tax effect of the differences  between
               the financial  statement and tax basis of assets and  liabilities
               as  measured  by the  enacted  rates that will be in effect  when
               these differences reverse.

         k.    Use of Estimates - The  preparation  of financial  statements  in
               conformity with generally accepted accounting principals 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  reporting  period.  Actual  results could differ from
               those estimates.

         l.    Accounting  for  Long-Lived   Assets  -  Long-lived   assets  and
               intangibles  are  reviewed  for  impairment  whenever  events  or
               changes in circumstances  indicate that the carrying amount of an
               asset may not be recoverable. Recoverability of assets to be held
               and used is measured by a comparison  of the  carrying  amount of
               the assets to the future net cash flows  expected to be generated
               by the assets. If such assets are considered to be impaired,  the
               impairment  to be  recognized  is measured by the amount by which
               the carrying  amount of the assets  exceeds the fair value of the
               assets.  Accordingly,  the Company wrote-off long-lived assets it
               believes was impaired at December 31, 2001 as disclosed  below in
               Note 6 to the consolidated financial statements.

                                      F-9
<PAGE>

         m.    Revenue  Recognition  - Income from sales of goods is  recognized
               when the orders are  completed  and  shipped,  provided  that the
               collection  of the resulting  receivable  is reasonably  assured.
               Substantially  all of the  Company's  goods  are  shipped  F.O.B.
               shipping point. Amounts billed to customers are recorded as sales
               while the shipping costs are included in cost of sales.

         n.       New Accounting Pronouncements

                 (i) In July 2001,  the  Financial  Accounting  Standards  Board
                    issued Statement of Financial  Accounting Standards ("SFAS")
                    No. 141 "Business  Combinations"  and SFAS No. 142 "Goodwill
                    and  Intangible  Assets  ("SFAS  No.  142").  SFAS  No.  141
                    requires that all business combinations initiated after June
                    30,  2001 be  accounted  for  using the  purchase  method of
                    accounting and prohibits the use of the pooling-of-interests
                    method for such  transactions.  SFAS No. 142  applies to all
                    goodwill  and  intangible  assets  acquired  in  a  business
                    combination. Under the new standard, all goodwill, including
                    goodwill   acquired   before  initial   application  of  the
                    standard,  should not be amortized  but should be tested for
                    impairment  at least  annually at the  reporting  level,  as
                    defined  in  the  standard.  Intangible  assets  other  than
                    goodwill  should be  amortized  over their  useful lives and
                    reviewed for impairment in accordance with SFAS No. 121. The
                    new standard is effective for fiscal years  beginning  after
                    December 15, 2001.  The Company must adopt this  standard on
                    January 1, 2002.

               (ii)  In August 2001, the Financial  Accounting  Standards  Board
                    ("FASB") issued SFAS No. 144, "Accounting for the Impairment
                    or Disposal of Long Lived  Assets." SFAS No. 144  supercedes
                    SFAS No. 121,  "Accounting  for the Impairment of Long Lived
                    Assets and Assets to be Disposed of" and the  accounting and
                    reporting provisions of Accounting  Principles Board Opinion
                    No. 30 "Reporting  the Results of Operations - Reporting the
                    Effects  of   Disposal  of  a  Segment  of   Business,   and
                    Extraordinary, Unusual and Infrequently Occurring Events and
                    Transactions."  SFAS No. 144 also amends Accounting Research
                    Bulletin No. 51,  "Consolidated  Financial  Statements,"  to
                    eliminate  the exception to  consolidation  for a subsidiary
                    for which  control is likely to be  temporary.  SFAS  No.144
                    will be effective for fiscal years  beginning after December
                    15, 2001. The Company has not yet determined the effect SFAS
                    144  will  have on its  financial  position  or  results  of
                    operations in future periods.


                                      F-10
<PAGE>


3.        PLAN OF REORGANIZATION

          In accordance  with the confirmed Plan of  Reorganization  of February
          27, 2002 (the  "Effective  Date"),  the Company will settle its claims
          with its various creditors as follows:

          Priority  tax  claims  for  income,   payroll  and  withholding  taxes
          aggregating   approximately  $434,000  are  payable  in  twenty  equal
          quarterly installments of approximately  $21,700,  commencing February
          27, 2002 through  February  27, 2007 and  includes  interest at 8% per
          annum. Other payroll and withholding taxes of approximately  $8,500 is
          payable in twelve equal quarterly  installments of approximately $708,
          commencing  February  27, 2002  through  February  27, 2005  including
          interest at 8% per annum.

          For the year ended  December 31, 2001,  the Company repaid payroll and
          withholding taxes in the amount of $16,500.

          Repayment of the  Company's  pre-petition  debts are  segregated  into
          seven different classes of creditors as described below:

          a.   Class 1 - A secured  amount owed to an entity was  $560,948.  The
               Company  will issue this entity  three shares of its common stock
               for each dollar owed, which amounts to 1,682,844 shares.

          b.   Class  2 - Class  two  consists  of  secured  amounts  owed to an
               individual investor for $1,010,000.  This individual will receive
               three shares of the Company's  stock for each dollar owed,  which
               amounts to 3,030,000 shares.

          c.   Class 3 - Class three is a note payable including interest, to an
               entity in the amount of $1,823,833. Principal and interest due in
               June 2002.  The  Company  will settle such amount with the entity
               with a note receivable of $1,650,000  relating to its sale of its
               PLC subsidiary, which was subsequently assigned to the entity and
               is due in May 2002. The Company has recorded a net amount due the
               entity of $173,833 as of December 31, 2001.


          d.   Class  4 -  These  are  unsecured  claims  with  trade  creditors
               totaling  approximately  $2,964,000,  which also  includes  notes
               payable of  approximately  $927,000.  Each creditor will have the
               option to receive  company stock or cash as settlement  for their
               claims.

               Creditors  who elect to receive stock -The Company will issue one
               share of its common stock for each dollar owed to these creditors
               plus a cash payment  equal to 20% of such amount owed.  The total
               outstanding balance to creditors who elected to receive stock was
               approximately $1,315,000.  Accordingly,  the Company will issue a
               total of approximately  1,315,000 shares of common stock to these
               creditors  and  pay  them  $263,000,   payable  in  three  annual
               installments of $131,500, $65,750 and $65,750 commencing May 2004
               through May 2006.

                                      F-11
<PAGE>

               Creditors who elect to receive cash - For creditors, who elect to
               receive cash,  the Company will pay 45% of the dollar amount owed
               to them. The total outstanding balance to creditors,  as of March
               11,  2002,  who have  elected to receive  cash was  approximately
               $1,649,000.  Therefore,  the  Company  will  pay  such  creditors
               approximately   $742,000,   payable  in  four   installments   of
               approximately   $164,900,   $164,900,   $164,900   and   $247,300
               commencing  with in an initial  payment April 2002 and subsequent
               payments in May 2004 through May 2006.

               Certain trademarks of the Company secure the claims.

          e.   Class  5,  6 & 7 -  These  classes  consist  of  equity  interest
               holders. Class 5 holders of common stock will retain their shares
               in accordance  with the Plan  agreement.  Such shares amounted to
               6,911,796  at December  31,  2001.  Class 6 holders of  preferred
               stock will receive one share of common stock in exchange for each
               share of preferred  stock,  which amounted to 2,037,587 shares at
               December 31, 2001.  For class 7 holders of stock  warrants,  such
               warrants will remain  authorized and  outstanding at the exercise
               price of $4.50 per share. Such warrants expire on July 3, 2003.

          Administrative  fees and expenses  incurred  amounted to $95,500 which
          was paid in March 2002.

          The  Plan  will be  funded  by a  certain  secured  creditor  who will
          contribute  $200,000  for the payment of  administrative  claims.  The
          contribution  will  also  be  used  to make  the  initial  payment  to
          unsecured  claimants who elected to receive cash rather than shares of
          stock as settlement of their claims. The creditor will make additional
          contributions  to fund the Plan when  necessary,  up to a  maximum  of
          $300,000.  As of February  27,  2002,  the  creditor  has  contributed
          approximately  $266,000.  In return, the aforementioned  creditor will
          receive ten shares of common stock for each dollar contributed to fund
          the Plan.

          Under the Bankruptcy Code, the Company elected to reject all unexpired
          leases and  executory  contracts.  Amounts due through the filing date
          were reflected as pre-petition debt subject to compromise

          At December 31, 2001,  pre-petition  debt subject to compromise as per
          the  confirmed  plan  related  to the above  classes of  creditors  is
          summarized as follows:

                                                                  Amounts
                                                            --------------------
                   Trade payables                                    $2,037,000
                   Notes payable and interest                         2,671,000
                   Payroll taxes                                        443,000
                                                            --------------------
                                                                     $5,151,000
                                                            ====================

                                      F-12
<PAGE>

          The  Company  has  recorded  liabilities  in excess  of such  amounts.
          Included are approximately  $588,000 of notes payable for which claims
          were not submitted and various other  pre-petition  expenses for which
          ultimately no claims were submitted or for which claims allowed by the
          bankruptcy court were less than the amounts per the Company's records.
          The  reversal of such  liabilities  will be recorded in the year ended
          December 31, 2002, upon the finalization of the bankruptcy proceedings
          and reflected as an extraordinary item from extinguishment of debt.

          Of the  $5,151,000  pre-petition  debt referred to above,  the Company
          will make cash payments of  $1,448,000  and issue shares of its common
          stock  for  an  additional   $1,959,000.   The  remaining  balance  of
          $1,744,000 will be expunged in accordance with the Plan agreement.

3.       DISCONTINUED OPERATIONS

         During the year ended December 31, 2000, the Company ceased operations
         in three subsidiary entities. One such entity, Private Label Group was
         sold in May 2000 as disclosed in Note 1 above. The other two
         subsidiaries were discontinued due to operating losses and inactivity.

         A summary of the combined operating results of discontinued operations
         for the year ended December 31, 2000 are as follows:

               Revenues                                    $          7,595,559
                                                              ==================
               Gross profit                                           2,024,802
               Operating income                                         297,947
               Interest expense                                         (80,606)
               Other expense                                           (124,428)
                                                              ------------------
               Income from discontinued operations         $             92,913
                                                              ==================


4.       INVENTORIES

         Inventories at December 31, 2001 consist of:

                                                                       Amount
                                                                   -------------
                                Raw materials                    $       167,534
                                Work-in-process                           15,871
                                Finished goods                            11,313
                                                                   -------------
                                                                 $       194,718
                                                                   =============

5.       RELATED PARTY TRANSACTIONS

         Amounts due from related parties consist of advances to officers in the
         amount of $18,098.

                                      F-13
<PAGE>

6.        PROPERTY AND EQUIPMENT

          During  2001,  the Company,  in  conjunction  with the  aforementioned
          bankruptcy  proceedings,  sold all of its property and equipment for a
          total amount of $37,896.  For the year ended  December  31, 2001,  the
          Company  recorded  a net  gain on  sale of  assets  of  $8,256  in the
          accompanying financial statements.

          In  addition,  the  Company  recognized  an  impairment  of  assets of
          $125,583.  The asset  write-off  relates  to  computer  equipment  and
          software under a capital lease  obligation  that the Company  believed
          was in excess of its  carrying  value as compared to its fair value as
          determined in accordance with SFAS No. 121. Further, the Company under
          the bankruptcy code elected to reject this lease  obligation which had
          a balance due of $200,000.  Subsequently, the Company and the creditor
          reached an agreement whereby the Company will pay the creditor $10,000
          in exchange for the  forgiveness  of the remaining  balance due on the
          lease  obligation.  For the year ended  December 31, 2001, the Company
          recognized a gain on extinguishment of debt in the amount of $190,000.

          For the year ended  December 31, 2001 and 2000,  the Company  recorded
          depreciation expense of $22,054 and $51,880, respectively.

7.        INCOME TAXES

          The Company  accounts  for income  taxes under  Statement of Financial
          Accounting  Standards No. 109,  Accounting for Income Taxes ("SFAS No.
          109").  SFAS No. 109 requires the  recognition  of deferred tax assets
          and liabilities  for both the expected  impact of differences  between
          the financial statements and tax basis of assets and liabilities,  and
          for the  expected  future tax benefit to be derived  from tax loss and
          tax credit  carry  forwards.  SFAS No. 109  additionally  requires the
          establishment  of a valuation  allowance to reflect the  likelihood of
          realization of deferred tax assets.

          The  provision  for income taxes for year ended  December 31, 2001 and
          2000  differs  from the amount  computed  by  applying  the  statutory
          federal income tax rate to income before income taxes as follows:

                                                            2001          2000
                                                         -----------------------
           Income tax benefit computed at statutory rate $(337,000) $(1,892,000)
           Tax benefit not recognized                      337,000    1,892,000
                                                         -----------------------
           Provision for income taxes                    $       -  $         -

                                                         =======================

          The Company has net operating  loss carry forwards for tax purposes of
          approximately  $16,406,000  at December 31, 2001 expiring in the years
          2010 to 2021.  The  resulting  deferred  tax  asset  of  approximately
          $5,578,000 has been offset by a corresponding valuation allowance.


                                      F-14
<PAGE>

8.        STOCK OPTIONS AND WARRANTS

          In March 1997, the Company  adopted a stock option plan which provides
          for grants to officers and other employees, directors, consultants and
          other persons who perform  significant  services for the Company.  The
          exercise  price of each  option  may not be less than 100% of the fair
          market value of the common stock at the time of the grant.  Options to
          acquire up to 1,750,000 shares may be granted under the plan.


          The  following  table  illustrates  the  Company's  issuance  of stock
          options and  warrants  and  outstanding  option and  warrant  balances
          during the last two years ended December 31, 2001 and 2000:

<TABLE>
<CAPTION>

                                             Options                              Warrants
                                  ------------------------------        -----------------------------
                                                     Weighted                             Weighted
                                    Number           Average              Number          Average
                                       of            Exercise                of           Exercise
                                     Shares           Price               Shares           Price
                                  ------------     -------------        ------------    -------------
<S>                <C> <C>          <C>               <C>                 <C>              <C>
          Outstanding  at
          December 31, 1999         979,176           $1.83               4,035,668        $3.44
          Canceled                 (964,176)
                                  ------------     -------------        ------------    -------------
          Outstanding  at
          December 31, 2000 and
          2001                       15,000           $1.06               4,035,668        $3.44
                                  ============     =============        ============    =============


         The following table summarizes information pertaining to all
         outstanding warrants and which are exercisable as of December 31, 2001:

                                                                  Weighted
                                                                  Average
                  Exercise                                       Remaining               Weighted
                   Price                   Outstanding          Contractual              Average
                   Range                     Warrants               Life              Exercise Price
         ---------------------------    -------------------    ---------------     ---------------------
         $2.00 - $4.50                      2,680,500               1.50                  $4.35
         $0.90 - $3.00                      1,355,168               2.54                  $1.64
         ---------------------------    -------------------    ---------------     ---------------------
                                            4,035,668               1.82                  $3.44
                                        ===================    ===============     =====================
</TABLE>


          The  Company  has  15,000  exercisable   options  outstanding  with  a
          remaining  contractual  life of 2.23  years  at the  weighted  average
          exercise price of $1.06 per share.

9.        MAJOR CUSTOMERS

          The Company has two major customers,  which represented  approximately
          35% and 25% of the Company's revenues for the years ended December 31,
          2001 and 2000, respectively.

                                      F-15
<PAGE>


10.       LEGAL PROCEEDINGS

          During 2000, the Company was engaged in various legal proceedings with
          several of its trade creditors,  which have  subsequently been settled
          in conjunction with the Company's bankruptcy  proceedings described in
          Note 3 above.

11.       SUBSEQUENT EVENTS

          On March 27, 2002, the Company signed a letter of intent to merge with
          an entity that  manufacturers and distributes  luxury evening apparel.
          The  letter  outlines  general  terms of an  agreement  that state the
          companies  intention to enter into definitive  merger  negotiations in
          the near future, at a time not yet specified.