<PAGE>

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

                                  FORM 10-KSB/A

(Mark One)

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

         For the fiscal year ended December 31, 2002

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

         For the transition period from ___to___



                         Commission file number 0-22809

                                  AZUREL, LTD.
                 (Name of small business issuer in its charter)


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

   23 F COMMERCE ROAD, FAIRFIELD, NJ                     07004
   ----------------------------------                    -----
(Address of principal executive offices)               (Zip Code)


Issuer's telephone number (973) 575-9500


Securities registered under Section 12(b) of the Exchange Act: none.


Title of each class: None                  Name of exchange on which registered



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

Title of each class:   COMMON STOCK, $0.001 PAR VALUE

                       REDEEMABLE COMMON STOCK PURCHASE WARRANTS

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


<PAGE>

         Check if no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B is contained in this form,  and no disclosure  will be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statement  incorporated  by  reference  in Part III of this  Form  10-KSB or any
amendment to this Form 10-KSB. [ ]

         The issuer's net sales for the most recent fiscal year were $236,535.

         The aggregate  market value of the voting stock held by  non-affiliates
of the  registrant,  based on the closing price of its shares of common stock on
September 17, 2003, is approximately $3,649,272.


     (ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Check  whether the issuer has filed all  documents  and  reports  required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court. Yes : No 9


As  of  September  18,  2003  there  were  30,472,343  shares  of  common  stock
outstanding.


                       DOCUMENTS INCORPORATED BY REFERENCE

Definitive  Proxy  Statement  filed on  Schedule  14A with  the  Securities  and
Exchange Commission on September 26, 2002.


Transitional Small Business Disclosure Format (Check one):  Yes [ ] ; No [X]


<PAGE>

EXPLANATORY  NOTE:  Azurel,  Ltd. filed its annual report on Form 10-KSB for its
fiscal year ended  December 31, 2002 on May 21, 2003.  The financial  statements
included  in such  Form  10-KSB,  however,  had not  been  audited  by  Azurel's
independent  auditor or any other entity.  Accordingly,  Azurel,  Ltd. is filing
this  amendment on Form  10-KSB/A,  the financial  statements of which have been
audited by Marcum & Kleigman, LLP, Azurel's independent auditors.

Azurel has restated the  consolidated  financial  statements  for the year ended
December 31, 2002.  The  restatement  reflects an increase in total assets and a
decrease in  shareholders'  deficit of approximately  $803,000.  The restatement
also  resulted  in an  increase  in  the  loss  before  extraordinary  items  of
approximately  $533,000.  An  increase  of  approximately  $830,000 of the total
assets  and the  reduction  of  shareholders'  deficit  is  attributable  to the
modification of management's estimate of the allocation of the purchase price of
Romantic Moments,  Inc. and the remaining  decrease of approximately  $27,000 is
attributable to various other changes to management's  assertions.  The increase
in  the  loss  before  extraordinary  items  reflected  a  modification  of  the
accounting  treatment of 1,767,500  shares and 883,750 warrants issued by Azurel
to four  investors in  connection  with the issuance of $353,500 of  convertible
promissory notes (see Note 13 to the  Consolidated  Financial  Statements).  The
effect of the modification  resulted in an increase in loss before extraordinary
items from  $680,136  ($0.05 per  share) to  $1,172,809  ($0.08 per share) as of
December 31, 2002. This modification had no effect on the shareholders' deficit.
Corresponding  changes were made to the text of the Report as  originally  filed
and to the consolidated  financial  statements  contained therein (see Note 1 to
the Consolidated Financial Statements). In addition, Management's Discussion and
Analysis of the Results of Operations" has been updated to reflect this change.



                           FORWARD-LOOKING STATEMENTS

Certain  statements  within  this  Form  10-KSB/A  constitute   "forward-looking
statements" within the meaning of the Private  Securities  Litigation Reform Act
of 1995.  Such  forward-looking  statements  involve  known and  unknown  risks,
uncertainties  and other factors that may cause the actual results,  performance
or  achievements  of Azurel,  Ltd. to be  materially  different  from any future
results, performance or achievement expressed or implied by such forward-looking
statements.   These   forward-looking   statements  are  based  on  our  current
expectations and are subject to a number of risks, uncertainties and assumptions
relating to our  operations,  financial  condition  and  results of  operations,
including,  among others, rapid technological and other changes in the market we
serve,  our numerous  competitors  and the few  barriers to entry for  potential
competitors,  the  seasonality  and  quarterly  variations  we experience in our
revenue,  our  uncertain  revenue  growth,  our  ability to  attract  and retain
qualified  personnel,  our ability to expand our  infrastructure  and manage our
growth, and our ability to identify,  finance and integrate acquisitions,  among
others.  If any of these risks or uncertainties  materializes,  or if any of the
underlying assumptions prove incorrect,  actual results may differ significantly
from results expressed or implied in any forward-looking  statements made by us.
These and other risks are detailed in this Annual Report on Form 10-KSB/A and in
other documents filed by us with the Securities and Exchange Commission. Azurel,
Ltd. undertakes no obligation to update publicly any forward-looking  statements
for any reasons, even if new information becomes available or other events occur
in the future.

When used in this Form 10-KSB/A and in future  filings by Azurel,  Ltd. with the
Securities  and Exchange  Commission,  the words or phrases "will likely result"
and "expects," "will  continue," "is  anticipated,"  "estimated,"  "project," or
"outlook"  or similar  expressions  are  intended to  identify  "forward-looking
statements."




                                       1
<PAGE>

                                     PART I
ITEM 1. BUSINESS

Business Development:

         Azurel,  Ltd.  (including  its  subsidiaries,  "Azurel")  is  primarily
engaged in the  manufacturing  and  distribution  of cosmetics,  fragrances  and
women's loungewear. Azurel was incorporated in Delaware on June 26, 1995.

         On February 2, 2001,  Azurel filed a voluntary  petition for protection
from creditors  under Chapter 11 in the United States  Bankruptcy  Court for the
District of New Jersey,  Newark (the  "Court"),  under case number  01-31034NLW.
Azurel  operated under the protection of the Court until February 27, 2002, when
the Order of Confirmation of the First Modified Plan of Reorganization issued by
the Court became effective (the "Plan").

         In accordance with the confirmed Plan of Reorganization of February 13,
2002, Azurel agreed to settle its claims with its various creditors as follows:

         Priority  tax  claims  for  income,   payroll  and  withholding   taxes
aggregating   approximately   $433,000   payable  in  twenty   equal   quarterly
installments  of  approximately  $21,650,  commencing  February 27, 2002 through
February  27,  2007 and  include  interest  at 8% per annum.  Other  payroll and
withholding  taxes of $8,500 are payable in twelve equal quarterly  installments
of $708,  commencing  February  23, 2002  through  February  23, 2005  including
interest at 8% per annum. No payments have been made in 2002 or 2003 relative to
this priority tax claim.

         Azurel has not been able to meet all of the financial  requirements  as
defined  in the  Plan.  If  Azurel's  default  under the Plan  remains  uncured,
priority claim holders and/or creditors may be successful in having the Order of
Confirmation  issued by the Court set aside.  Accordingly,  the  obligations  of
Azurel that were  discharged by the Court under the Plan could be  reestablished
on Azurel's books.

         The  Plan  provided  two  (2)  options  to the  seven  (7)  classes  of
creditors:

         Option One is a  settlement  consisting  of one share of stock for each
dollar of  liability  plus a 20% cash payout over 2 years from the date of court
approval. The total liability under option one was approximately  $1,188,936. In
addition,  certain inside creditors agreed to accept a stock settlement  instead
of stock and cash as described above. Azurel issued  approximately  6,890,337 of
the  approximately  7,376,721  shares  of its  common  stock  to be  issued.  In
addition,  Azurel  committed  to pay  approximately  $237,787  in  three  annual
installments of $118,893, $59,447 and $59,447 commencing in May 2004 through May
2006.

         Option Two refers to  creditors  with  liabilities  of  $1,781,000  who
agreed  to  accept  a  cash  settlement   equal  to  45%  of  their   liability,
approximately  $801,000,  over  a 5  year  period  with  the  first  payment  of
approximately  $185,000  paid at the  date  of  approval  with  the  balance  of
approximately  $616,000 to be paid out over the next 4 years. As of December 31,
2002  Azurel  recognized  a total of  $985,308 in  creditors'  payments  and has
payments  of  approximately  $300,000  due to  creditors  in the year  2003.  In
addition,  the Plan  provided  that all  outstanding  shares of $0.001 par value
Preferred Stock be converted to 1,500 shares of Azurel's $0.001 par value common
stock.  During  2002,  Azurel  issued  all  required  shares  under the Plan and
recognized a one time extraordinary gain on the reorganization of $4,728,310.

         Azurel is currently unable to meet its financial  obligations under the
Plan for the year  2003.  To meet  this  obligation  Azurel  will  depend on its
ability to attract  new  capital and to improve  operating  cash flow.  Azurel's
ability to attract additional capital and improve operating cash flow is subject
to numerous factors, some of which are beyond Azurel's control.  There can be no
assurance that Azurel will be successful in its attempt to raise capital.  These
matters raise  substantial  doubt about Azurel's  ability to continue as a going
concern.



                                       2
<PAGE>

         On July 1, 2002, Azurel, Flo Weinberg,  Inc., newly formed wholly owned
subsidiary of Azurel ("Flo Weinberg"), RM Enterprises International, Ltd. ("RM")
and Romantic Moments,  Inc. a wholly owned subsidiary of RM ("Romantic") entered
into an Agreement and Plan of Merger pursuant to which Romantic was to be merged
with and into Flo Weinberg  (including the amendment  thereto dated September 5,
2002,  the "Merger  Agreement").  On October 17,  2002,  stockholders  of Azurel
approved the Merger Agreement and the requisite  increase of 9,500,000 shares of
$.001 par value  common stock and certain  other  matters  (see  "Submission  of
matters to a vote of security holders"). On November 1, 2002, the parties to the
Merger  Agreement  completed  the merger,  resulting  in the  discontinuance  of
Romantic as a separate  corporate entity and the issuance by Azurel to RM of the
9,500,000  shares of Azurel's common stock,  constituting an aggregate  purchase
price of approximately  $950,000.  On November 14, 2002,  Azurel filed a Current
Report on Form 8-K in connection with the closing of the merger,  which Form 8-K
is incorporated herein by reference and made an integral part hereof.

         The merger was accounted for as a purchase and accordingly,  assets and
liabilities  were valued at fair market  value at the date of the merger and the
results of operations are included in the consolidated  financial  statements of
Azurel,  commencing November 1, 2002 (see "Management's Discussion and Analysis"
and Note 5 to the Consolidated Financial Statements).

Business of Azurel

         Azurel is engaged in two industry  segments:  (1) the manufacturing and
distribution of fragrance products and (2) the manufacturing and distribution of
women's  loungewear and robes. (see  "Management's  Discussion and Analysis" and
Note 17 to the Financial Statements).

         Operating as "Azurel Sales and Distribution,"  Azurel  manufactures and
distributes  its fragrance  products in the United States under  seventeen brand
names.  Operating as "Flo Weinberg," Azurel manufactures and distributes women's
loungewear  and  robes  throughout  the  United  States.   Azurel's   management
("Management")  expects to start licensing the manufacturing and distribution of
one of Azurel's  fragrance brands and to outsource the  manufacturing of some of
its apparel lines during the third quarter of 2003.

         TRADEMARKS

         Azurel currently has sixteen United States registered  trademarks;  Flo
Weinberg (R),  Scent  Overnight  (R),  Scent 123(R),  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  these  trademarks  and trade  names is  material  to  Azurel's
business,  and any  claim  against  the use of these  trademarks  would  have an
adverse material effect on its business and financial condition.

         In October 1997,  Azurel 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
license  agreement  covers the period from  January 1, 1999 until  December  31,
2003. In January 2001, the license  agreement was cancelled by mutual agreement.
Currently,  there are no trademark claims  outstanding  against Azurel,  nor are
there any pending trademark applications for new products

         SEASONALITY AND BACKLOG

         Fragrance  sales are  subject  to  seasonal  fluctuations  in  consumer
purchasing patterns.  Apparel sales are not subject to seasonal fluctuations and
sales tend to be consistent  throughout the year. Azurel has large quantities of
raw materials  on-hand so that when orders are received,  such  materials can be
manufactured  and  shipped  immediately.  This is not  unusual  for the  fashion
industry.



                                       3
<PAGE>

         Azurel  distributes its fragrance lines to chain drug stores,  discount
stores, mass merchandisers and over the Internet. Azurel distributes its apparel
(loungewear  and robes)  through a number of high-end  stores and 162  specialty
stores. Azurel's sales are not, in Management's opinion, significantly dependent
on a single customer or a group of customers.

         Azurel did not have a backlog of orders for  fragrances  as of December
31, 2002; however, there was a backlog of apparel orders in the aggregate amount
of  approximately  $100,000,  which sum was invoiced and  collected in the first
quarter of 2003.

         DEPENDENCE ON OTHERS

         A major raw component of Azurel's  fragrance product is purchased under
an  agreement  with a large  independent  fragrance  manufacturer,  which is the
industry  norm.   Management  of  Azurel  does  not  believe  that  locating  an
alternative  supplier  for  this  product,  in the  event  that  were to  become
necessary,  would materially affect Azurel's  business.  All other raw materials
for fragrance and apparel are readily available.

         COMPETITION

         The fragrance and apparel (fashion)  industries are highly  competitive
and Azurel  competes  against a number of different  companies  for sales in the
same markets.  Azurel believes that it needs to increase market awareness of its
fragrance  brands to gain  market  share  from the  larger  and more  aggressive
fragrance  companies  and that  licensing  the brands would enable the fragrance
brands to gain  market  share.  Management  believes  that the fact that  Azurel
manufactures  its loungewear  and robes  entirely in the United States,  coupled
with Azurel's  sales to high-end  retailers,  contributes  to Azurel's  positive
reputation,  which Management  anticipates will generate increased  awareness of
Azurel's product line among current and potential customers.

         EMPLOYEES

         As of December  31, 2002 Azurel  employed 8 full-time  individuals  and
utilizes 3 part-time  employees and independent  contractors in order to perform
its warehousing, administrative, marketing and selling functions.

ITEM 2. PROPERTIES

         On December  31,  2000,  Azurel  leased  2,400  square feet of space on
Madison Avenue, New York, NY, 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, Azurel closed this office. At December 31,
2000,  Azurel leased a 55,000  square foot  building in  Fairfield,  NJ, used as
manufacturing  and  packaging  plant and as executive  office.  The lease was to
expire in July 2004 and provided for annual rent of approximately  $336,000.  In
January 2001, Azurel defaulted on its rental payments and made arrangements with
the landlord, which enabled it to remain until the middle of March 2001.

         In March 2001,  Azurel moved to a smaller facility in Fairfield,  NJ of
approximately  4,500 square feet, with rental payments of approximately  $18,000
annually.  In March, 2002, Azurel relocated its offices and warehouse to another
facility in Fairfield,  NJ. The new facility is approximately  8,000 sq ft. on a
month to month  lease at an annual  rent of $6,000  and will  afford  Azurel the
opportunity to expand its operations to accommodate sales growth.

         Azurel's  wholly  owned   subsidiary  Flo  Weinberg   currently  leases
approximately  4,000 square feet of office and  manufacturing  space located in,
Brooklyn,  NY,  pursuant to a lease beginning in 1999. The lease expires on June
30,  2004.  Annual  rent is  approximately  $48,000.  Azurel  believes  that its
facilities are adequate for its current and future operations.




                                       4
<PAGE>

ITEM 3.  LEGAL PROCEEDINGS

         On February 2, 2001,  Azurel filed a voluntary  petition for protection
from creditors  under Chapter 11 in the United States  Bankruptcy  Court for the
District of New Jersey,  Newark under case number  01-31034NLW.  Azurel operated
under the protection of the Court until February 27, 2002, when the Court issued
an order of confirmation of the Plan. The Plan provided two options to creditors
and seven  classes of  creditors.  Option One consists of one share of stock for
each  dollar of  liability  plus 20% cash payout over two years from the date of
Court approval.  In addition,  certain inside creditors agreed to accept a stock
settlement  instead of stock and cash.  Option Two consists of a cash settlement
equal to 45% of their liability,  over a five year period with the first payment
paid at the date of the approval. Each unsecured creditor that filed a claim was
permitted to select  either of these two options (see  "Management's  Discussion
and Analysis" and the Notes to the "Consolidated Financial Statements").


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

On October 17, 2002,  Azurel held its annual  meeting of  stockholders  at which
those  stockholders:  (i)  approved  the  Merger  Agreement;  (ii)  approved  an
amendment to Azurel's certificate of incorporation  increasing the number of its
authorized  shares of common stock,  par value $0.001 per share,  to 50,000,000;
(iii) elected the nominees to Azurel's  board of directors for the ensuing year,
and (iv)  ratified  the  appointment  of Grassi & Co.  CPAs,  P.C. , as Azurel's
independent auditors for the ensuing year. Stockholders holding 9,813,735 shares
of common stock of an aggregate of 16,598,534 such shares issued and outstanding
and entitled to vote on the foregoing  matters were  represented in person or by
proxy at the annual meeting.

         (i) The proposed Merger Agreement received the following votes:


For:                                                    9,797,450
-----------------------------------------------------------------
Against:                                                   15,990
-----------------------------------------------------------------
Withheld:                                                     295
-----------------------------------------------------------------

         (ii) The proposed  amendment to Azurel's  certificate of  incorporation
received the following votes:


For:                                                    9,767,974
-----------------------------------------------------------------
Against:                                                    7,745
-----------------------------------------------------------------
Withheld:                                                  38,016
-----------------------------------------------------------------

         (iii) The proposed slate of directors received the following votes:

For:                                                    9,505,519
-----------------------------------------------------------------
Against:                                                  307,966
-----------------------------------------------------------------
Withheld:                                                     250
-----------------------------------------------------------------

         (iv) The proposed  appointment  of Grassi & Co received  the  following
votes:


For:                                                    9,811,285
-----------------------------------------------------------------
Against:                                                      450
-----------------------------------------------------------------
Withheld:                                                    2000
-----------------------------------------------------------------



                                       5
<PAGE>


         No other matter was brought to a vote. The definitive  proxy  statement
on Schedule 14A relating to the annual  meeting was filed on September  26, 2002
with  the  Securities  and  Exchange   Commission  (the   "Commission")  and  is
incorporated   herein  by  reference.   Electronic  reports  filed  through  the
Electronic Data Gathering,  Analysis and Retrieval System are publicly available
through the Commission's Web site (HTTP://WWW.SEC.GOV).



                                       6
<PAGE>


                                     PART II

ITEM 5. MARKET FOR AZUREL'S COMMON STOCK

         Azurel's common stock is traded on the Over-the-Counter  Bulletin Board
("OTC BB") under the symbol `AZUR."

         On July 26, 2002,  Azurel  extended the  expiration  date on its public
warrants from July 29, 2002 to July 29, 2005.

SALES OF UNREGISTERED SECURITIES

During the fiscal year 2002,  Azurel sold  unregistered  securities as described
below. There were no underwriters involved in the transactions and there were no
underwriting  discounts or commissions paid in connection  therewith,  except as
disclosed  below.  The  purchasers  of  the  securities  in  such   transactions
represented  their  intention to acquire the securities for investment  purposes
only and not with a view to or for  sales in  connection  with any  distribution
thereof  and  appropriate  legends  were  affixed  to the  certificates  for the
securities issued in such transactions.  The purchasers of the securities in the
transactions  below  were  each   sophisticated   investors  who  were  provided
information  about  us and were  able to bear  the risk of loss of their  entire
investment.

During 2002,  Azurel issued an aggregate of 6,890,337 shares of its common stock
to pre-petition creditors pursuant to the Plan.

On May 22, 2002,  Azurel  issued an  aggregate  of 225,000  shares of its common
stock in a private placement for an aggregate purchase price of $45,000.

On June 5,  2002,  Azurel  granted  to RM  150,000  shares of its  common  stock
representing   non-cash  compensation  for  RM's  performance  pursuant  to  the
management  services  agreement  entered into by and between  Azurel and RM. The
management  services agreement is incorporated herein by reference from the DEFM
14A by Azurel on September 26, 2002 and made an integral part hereof.

On November 1, 2002,  Azurel issued 200,000 shares of its common stock to Edward
Adamcik, its Vice Chief Of Operations, in consideration for services rendered.

On November 6, 2002, Azurel issued 9,500,000 shares of its common stock to RM in
connection  with the acquisition of Romantic  pursuant to the Merger  Agreement.
Prior to the merger, Romantic was wholly owned by RM.

On November 22, 2002,  Azurel sold units  consisting  of  convertible  notes and
warrants a private  placement for an aggregate  purchase price of $327,600.  The
notes were convertible into five (5) shares of common stock for every one dollar
($1.00) of the face amount of the note.  The investors  were issued  warrants to
purchase 2.5 shares of common stock at $0.40 per share for every $1.00 invested.
On November 26,  2002,  Azurel  issued an  aggregate of 1,767,500  shares of its
common stock pursuant to the conversion of the afore-mentioned notes.

Azurel  believes  all of the  above  issuances  were  exempt  from  registration
pursuant to the exemption  provided by Section 4(2) of the Securities Act or, in
the case of  issuances  pursuant  to the  Plan,  under  Section  3(a)(7)  of the
Securities Act.

On  September  18,  2003,  there  were  approximately  167  holders of record of
Azurel's 30,472,343 outstanding shares of common stock.



                                       7
<PAGE>

On October 17, 2002  Azurel's  stockholders  voted in favor of a  resolution  to
amend its  certificate of  incorporation,  thereby  increasing the number of its
authorized  shares of common stock to 50,000,000.  See Exhibit B to the Schedule
14A filed by Azurel on September 26, 2002,  which  Schedule 14A is  incorporated
herein by reference.

The following  table sets forth the high and low bid prices for the common stock
as reported by the OTC BB.


<TABLE>
<CAPTION>
                                                       2002                                  2001
                                             High               Low                High                Low
                                             ----               ---                ----                ---
<S>                                        <C>                <C>                <C>                 <C>
First Quarter                              $ 0.40             $ 0.25             $ 0.16              $ 0.09
Second Quarter                               0.51               0.30               0.21                0.08
Third Quarter                                0.52               0.21               0.35                0.16
Fourth Quarter                               0.40               0.15               0.39                0.17
</TABLE>

On September  17,  2003,  the last sale price of the common stock as reported on
the OTC Bulletin Board was $0.17.

DIVIDEND POLICY

Azurel 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 Azurel's board
of directors and will depend upon Azurel's earnings,  its capital  requirements,
financial  condition and other relevant  factors.  Azurel  presently  intends to
retain future earnings for use in its business.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY PLANS


<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
                                   Number of securities to be      Weighted-average exercise
                                     issued upon exercise of         price of outstanding      Number of securities remaining
                                  outstanding options, warrants      options, warrants and      available for future issuance
                                           and rights                       rights             under equity compensation plans
------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>                             <C>                        <C>       <C>
Equity compensation plans                    15,000                          $1.00                      1,735,000 (1)
approved by security holders
------------------------------------------------------------------------------------------------------------------------------
Equity compensation plans not
approved by security holders
------------------------------------------------------------------------------------------------------------------------------
           Total
------------------------------------------------------------------------------------------------------------------------------
</TABLE>


(1) The options to purchase the 15,000  shares of common stock were issued under
Azurel's 1997 Stock Option Plan (the "Option Plan") during 1999 and 2000.

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

         The  following  discussion  may  contain  forward-looking   statements.
Azurel's  actual results could differ  materially  from those  discussed is such
forward-looking  statements.  Factors  that could  cause or  contribute  to such
difference  include those discussed below and elsewhere in this Annual Report on
Form  10-KSB/A.  The  following  discussion  and  analysis  should  be  read  in
conjunction  with the  Consolidated  Financial  statements and the Notes thereto
which appear elsewhere in this Annual Report on Form 10-KSB/A.

Liquidity and Capital Resources



                                       8
<PAGE>

         On February 2, 2001,  Azurel filed a voluntary  petition for protection
from creditors  under Chapter 11 in the United States  Bankruptcy  Court for the
District of New Jersey,  Newark under case number  01-31034NLW.  Azurel operated
under the  protection  of the Court until  February 27, 2002,  when the Order of
Confirmation  of the First Modified Plan of  Reorganization  issued by the Court
became effective (the "Plan"). The Plan provided two options to the creditors:

         Option One is a  settlement  consisting  of one share of stock for each
dollar of  liability  plus a 20% cash payout over 2 years from the date of court
approval, the total liability under option one was approximately  $1,188,936, in
addition certain inside creditors agreed to accept a stock settlement instead of
stock and cash, as described above. Azurel issued approximately 6,890,337 shares
of common  stock of the  approximate  7,376,721  such  shares to be  issued.  In
addition,  Azurel  committed  to pay  approximately  $237,787  in  three  annual
installments of $118,893, $59,447 and $59,447 commencing in May 2004 through May
2006.

         Option Two refers to creditors with liabilities of $1,781,000 agreed to
accept  a  cash  settlement  equal  to  45% of  their  liability,  approximately
$801,000,  over a 5 year period with the first payment of approximately $185,000
paid at the date of approval  with the balance of  approximately  $616,000 to be
paid out over the next 4 years.  As of December  31, 2002  Azurel  recognized  a
total of $985,308  in  creditors'  payments  and has  payments of  approximately
$300,000 due to creditors in the year 2003. In addition,  the Plan provided that
all  outstanding  shares of $0.001 par value  preferred  stock be converted into
1,500 shares of common stock.  During 2002,  Azurel  issued all required  shares
under the Plan and recognized a on-time extraordinary gain on the reorganization
of $4,728,310.

         In addition,  the Plan called for the payment  schedule of priority tax
claims for  income,  payroll and  withholding  taxes  aggregating  approximately
$433,000 that is payable in twenty equal quarterly installments of approximately
$21,650,  commencing  February  27, 2002  through  February 27, 2007 and include
interest at 8% per annum.  Other payroll and withholding  taxes of approximately
$8,500 are payable in twelve equal quarterly  installments  of $708,  commencing
February 23, 2002 through February 23, 2005 including  interest at 8% per annum.
No payments have been made in 2002 relative to this priority tax claim.

         Azurel has not been able to meet all of the financial  requirements  as
defined  in the  Plan.  If  Azurel's  default  under the Plan  remains  uncured,
priority claim holders and/or creditors may be successful in having the Order of
Confirmation  issued by the Court set aside.  Accordingly,  the  obligations  of
Azurel that were  discharged by the Court under the Plan could be  reestablished
on Azurel's books.

         During  2002 Azurel sold  3,225,000  shares of common  stock to outside
investors for an aggregate purchase price of approximately $345,000.

         Azurel has not  generated  positive cash flow from  operations  for the
year ended December 31, 2002. It is Management's belief that Azurel can generate
a positive cash flow from operations by increasing  sales through  licensing and
reducing overhead by outsourcing some production;  successful  accomplishment of
these actions should increase cash flow for Azurel. Nonetheless,  this condition
raises substantial doubts about Azurel's ability to continue as a going concern.

         In  February  2003,  Azurel  received  $80,000,  to be used as  working
capital, from the Breckenridge group in exchange for a secured note that was due
August 20, 2003 bearing  interest at an amount not to exceed the maximum  amount
of interest allowed by applicable law. Azurel is in default of the secured note.
Management anticipates fully repaying the note as soon as practicable.  The note
is  collateralized  by the  inventory  of  Azurel  and is  guaranteed  by one of
Azurel's shareholders.  Azurel also pledged 1,027,000 shares of its common stock
as security for performance of its obligation  under the secured note agreement.
Azurel has not been contacted by Breckenridge with respect to the default on the
secured note.

RESULTS OF OPERATIONS



                                       9
<PAGE>

         For the year  ended  December  31,  2002  compared  to the  year  ended
December 31, 2001.

         Consolidated  net sales  include the sale of our fragrance and apparel,
net of discounts  coupons and returns.  Net  consolidated  sales from continuing
operations  for the year ended  December 31, 2002 was  $236,535  compared to net
sales of $463,173 for the year ended December 31, 2001.

         Apparel  sales were $152,953 or 65% of  consolidated  net sales for the
year ended December 31, 2002.  Apparel sales  commenced with the  acquisition of
Romantic,  which occurred on November 6, 2002.  (See Note 5 to the  Consolidated
Financial Statements.)

         Fragrance  sales for the year ended  December  31, 2002 were $83,582 as
compared to $ 463,173 for the year ended  December 31, 2001. The decrease of 82%
was mainly due to Azurel being  unable to generate  sales due to the decrease in
personnel  related  to  Azurel's  plan  of  reorganization.  (See  Note 2 to the
Consolidated Financial Statements.)

         For the year ended  December  31,  2002,  cost of goods sold related to
apparel was $ 54,532 or 35.6% of apparel sales; this is consistent with previous
years (See Note 3 to the Financial Statements).

         Cost of goods sold related to  fragrances  for the year ended  December
31,  2002 was $ 107,498 or 128.6% of  fragrance  sales  compared to $ 192,435 or
41.6% of fragrance  sales for the year ended  December 31, 2001. The decrease in
the gross profit percentage for the year ended December 31, 2002 is attributable
to larger than normal  closeout  sales for holiday sets that did not sell during
the 2001  holiday  season in addition  to a  write-down  of obsolete  inventory.
Management is now  exploring the option of  outsourcing  the  manufacturing  and
distribution of its fragrances through licensing agreements.

         Selling,  general  and  administrative  expenses  for  the  year  ended
December  31, 2002 were $ 754,641 as compared to  $1,281,375  for the year ended
December 31, 2001. The decrease in selling,  general and administrative  expense
is due to Azurel significantly  downsizing its operations in February, 2001 upon
filing for  protection  under Chapter 11. Thus, the year ended December 31, 2001
contained one month of significantly higher payroll costs.  Furthermore,  Azurel
moved into a lower cost  facility  toward the end of the first  quarter of 2002,
resulting in substantial rent savings for the year ended December 31, 2002.

         Interest  expense was  $511,612  for the year ended  December 31, 2002,
compared to $42,837 for the year ended  December 31, 2001.  Subsequent to filing
Chapter 11 in February 2001,  Azurel was not required to record interest expense
on its notes  payable.  The expense for the fiscal year ended 2002 is related to
the issuance of convertible notes in November, 2002.

         For the years ended  December  31, 2002 and 2001,  Azurel  realized net
extraordinary   gains  of  $  4,728,310   and  $  190,000,   respectively.   The
extraordinary  gain  realized  during the year ended  December 31, 2002 is for a
gain on extinguishment of liabilities  subject to compromise.  The extraordinary
gain realized  during the year ended December 31, 2001  represents a gain on the
early  extinguishment of debt. These gains are due to the  implementation of the
Plan.  (See Note 2 to the  Consolidated  Financial  Statements  and  Managements
Discussion and Analysis.)

         Net Income for the year ended  December  31,  2002 was $  3,555,501  as
compared to a net loss of ($ 991,920) for the year ended  December 31, 2001. The
increase of  approximately $ 4,547,421 is due to the gain on  extinguishment  of
liabilities subject to compromise, described above.

New Accounting Pronouncements

         SFAS No. 141, "Business  Combinations," and SFAS No. 142, "Goodwill and
Other Intangible Assets" became effective for Azurel during 2002. The provisions
of  this  statement  that  are  applicable  to  Azurel  were



                                       10
<PAGE>

implemented on a prospective  basis as of January 1, 2002, which had no material
effect on Azurel's consolidated financial statements.

         SFAS  No.  145,  "Rescission  of  FASB  Statements  No.  4,  44 and 64,
Amendment of FASB Statement No. 13, and Technical  Corrections" is effective for
transactions  occurring  after  May  15,  2002.  SFAS  No.  145  eliminates  the
requirement that gains and losses from the  extinguishment of debt be aggregated
and, if material, classified as an extraordinary item, net of the related income
tax  effect  and  eliminates  an   inconsistency   between  the  accounting  for
sale-leaseback  transactions and certain lease  modifications that have economic
effects  that are  similar to  sale-leaseback  transactions.  Azurel has not yet
determined  the  effect  SFAS No.  145 will have on its  consolidated  financial
position or results of operations in future periods.

         SFAS No. 146,  "Accounting  for Costs  Associated with Exit or Disposal
Activities"  provides guidance on the recognition and measurement of liabilities
for costs  associated with exit or disposal  activities.  The provisions of this
statement are effective for exit or disposal activities that are initiated after
December 31, 2002.  Azurel does not expect the adoption of SFAS No.146 to have a
material effect on its consolidated financial statements.

         In November  2002, the FASB issued  Interpretation  No. 45, ("FIN 45"),
"Guarantor's  Accounting and Disclosure  Requirements for Guarantees,  Including
Indirect  Guarantees of Indebtedness  of Others." FIN 45 requires a company,  at
the time it issues a guarantee,  to recognize an initial  liability for the fair
value of  obligations  assumed under the  guarantee  and  elaborates on existing
disclosure  requirements  related to  guarantees  and  warranties.  The  initial
recognition  requirements  of FIN 45 are  effective  for  guarantees  issued  or
modified after December 31, 2002 and adoption of the disclosure requirements are
effective  for Azurel as of December 31,  2002.  Azurel does not expect that the
adoption of the  recognition  requirements of FIN 45 will have a material effect
on its consolidated financial statements.

         In  December  2002,  the FASB  issued  SFAS No.  148,  "Accounting  for
Stock-Based   Compensation-Transition   and  Disclosure-an   amendment  of  FASB
Statement No. 123" which is effective for financial statements issued for fiscal
years ending after December 15, 2002.  This Statement  amends FASB Statement No.
123,  Accounting for Stock-Based  Compensation to provide alternative methods of
transition  for a voluntary  change to the fair value based method of accounting
for stock-based employee  compensation.  In addition,  this Statement amends the
disclosure  requirements  of Statement 123 to require  prominent  disclosures in
both annual and interim financial  statements about the method of accounting for
stock-based  compensation and the effect of the method used on reported results.
Azurel   continues  to  follow  the  pro-forma   disclosures   for  stock  based
compensation as permitted in SFAS 123. Such pro-forma  disclosures have not been
provided  as  their  effect  is  not  material  to  the  accompanying  financial
statements.

         In January  2003,  the FASB  issued  Interpretation  No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities,  an Interpretation of ARB No. 51."
FIN 46 requires  certain  variable  interest  entities to be consolidated by the
primary  beneficiary of the entity if the equity  investors in the entity do not
have the  characteristics  of a  controlling  financial  interest or do not have
sufficient  equity at risk for the  entity to  finance  its  activities  without
additional financial support from other parties. FIN 46 is effective for all new
variable  interest  entities  created or acquired  after  January 31, 2003.  For
variable  interest  entities  created or acquired prior to February 1, 2003, the
provisions  of FIN 46 must be applied  for the first  interim  or annual  period
beginning after June 15, 2003.  Azurel does not expect the adoption of FIN 46 to
have a material effect on its consolidated financial statements.

         In April 2003,  the FASB issued SFAS No. 149,  "Amendment  of Statement
133 on  Derivative  Instruments  and  Hedging  Activities."  SFAS 149 amends and
clarifies  financial  accounting  and  reporting  for  derivative   instruments,
including  certain  derivative  instruments  embedded in other contracts and for
hedging activities under SFAS No. 133, Accounting for Derivative Instruments and
Hedging  Activities  (SFAS No. 133).  Except for the  provisions of SFAS No. 149
that relate to SFAS No. 133  implementation  issues that have been effective for
fiscal quarters that began prior to June 15, 2003 and for hedging  relationships
designated  after June 30, 2003. The adoption of SFAS No. 149 is not expected to
have a material effect on Azurel's consolidated financial statements.



                                       11
<PAGE>

         In May 2003,  the FASB  issued  SFAS No. 150  "Accounting  for  Certain
Financial Instruments with Characteristics of both Liabilities and Equity." SFAS
No.  150  establishes  standards  for  classification  and  measurement  in  the
statement  of  financial   position  of  certain   financial   instruments  with
characteristics of both liabilities and equity. It requires  classification of a
financial  instrument  that is within its scope as a  liability  (or an asset in
some circumstances). SFAS No. 150 is effective for financial instruments entered
into or modified after May 31, 2003, and otherwise is effective at the beginning
of the first interim period  beginning  after June 15, 2003.  Azurel has not yet
determined the impact of adoption of SFAS No. 150 on its consolidated  financial
statements.

Item 7. Financial Statements.

         The consolidated  financial  statements for Azurel are included in this
Annual Report on form 10-KSB/A at pages F1-F29.

Item  8.  Changes  in and  disagreements  with  accountants  on  accounting  and
financial disclosure.

         On May 15,  2003,  Azurel  filed  a Form  8-K to  report  a  change  of
independent  auditors.  Due  strictly to a personnel  change  within the firm of
Grassi  & Co.,  Azurel  engaged  Marcum  and  Kliegman  LLP  as its  independent
auditors, effective April 24, 2003.



                                       12
<PAGE>


                                    PART III

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

The Director and Executive Officers of Azurel are as follows:


NAME                      AGE            POSITION
----                      ---            --------

Norman Grief              71             Director
Brian Bookmeier           44             Director
Steven Moskowitz          39             Director and Chief Executive Officer
Frank Lazauskas (1)       42             Director
Jerome Schlanger          46             Director
Robert O'Grady            55             President
Michael Metter (2)        51             Chief Operating Officer
Edward Adamcik            60             Vice-President of Operations
Martin Pelman             57             Acting Chief Financial Officer

(1)      Mr.  Lazauskas  submitted his resignation as a director on September 5,
         2003.

(2)      Mr. Metter submitted his resignation on June 28, 2003.

         Directors  are elected to serve until the next meeting of  stockholders
and  until  their  successors  are  duly  elected  and  qualified.  Meetings  of
stockholders of Azurel 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.  At  December  31, in each of 2002 and 2001  there  were no
options issued or outstanding to any directors or officers with the exception of
the options to purchase 15,000 shares of common stock granted to Mr. Adamcik.

         NORMAN  GRIEF was on Azurel's  Board of  Directors  since  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 held 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  director of Azurel in March 2000.  Since  August
1997, Mr.  Bookmeier 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, until its merger into TekInsight.com.  Mr. Bookmeier has
been a director of the American Diabetes Association since June 1995.

         STEVEN MOSKOWITZ, was appointed director and Chief Executive Officer in
October 2002,  he has been a successful  leader in business and has helped major
corporations in the development of sales and marketing operations. Over the last
five  years,  Mr.  Moskowitz  has  served as Vice  President  of  Marketing  and
Licensing for



                                       13
<PAGE>

H.W.  Carters & Sons,  N.Y.C.  Mr.  Moskowitz  currently  serves on the board of
directors of Spongetech Delivery Systems, Inc and RM. Mr. Moskowitz obtained his
degree in 1986 from Toro College.

         FRANK  LAZAUSKAS  was  appointed  director in October  2002.  With over
twenty years  experience as a Domino's  franchisee,  Mr.  Lazauskas has won many
national  awards and has been an advisor to the founder of  Domino's,  Mr. Frank
Monahan.  Currently,  Mr.  Lazauskas owns and operates  eleven stores in the New
Jersey/Pennsylvania/Connecticut  markets.  Mr. Lazauskas currently serves on the
board of directors of Spongetech  Delivery  Systems,  Inc. Mr. Lazauskas holds a
degree in math and psychology from Central  Connecticut State University,  which
he obtained in 1982. Mr.  Lazauskas  submitted his  resignation as a director on
September 5, 2003.

         JEROME  SCHLANGER has been  employed by Romantic  Moments since 1999 as
its  Vice  President  of  Operations,  where  his  focus  has  been on  domestic
manufacturing,  handling and costing, production and on time delivery. From 1995
to 1999,  Mr.  Schlanger  was Vice  President  of Business  Development  at NEMA
Consulting  where  he was  responsible  for  ascertaining  the  requirements  of
business  operations  and ensuring  that the proper  systems were  adopted.  Mr.
Schlanger  currently  serves on the board of  directors of  Spongetech  Delivery
Systems, Inc and RM Mr. Schlanger graduated from Villanova University in 1976.

         ROBERT O'GRADY was appointed  President of Azurel in February 2003. Mr.
O'Grady has over thirty years of experience in consumer  products  manufacturing
and  the  health  and  beauty  aid  markets.   In  addition  to  positions  with
International  Paper Company and Nabisco Brands,  Mr. O'Grady served as the Vice
President of Finance and Chief  Operating  Officer for Cosrich  Group Inc.  from
1998 to 2003.  Mr.  O'Grady is a 1969  graduate of St.  Vincent  College  with a
degree in Accounting and Finance.

         MICHAEL  METTER was  appointed  President of Azurel in October  2002, a
position he held until the  appointment  of Mr.  O'Grady in February  2003.  Mr.
Metter was the Chief Operating  Officer for Azurel until his resignation on June
28, 2003.  From 2001 to 2002,  Mr. Metter served as President for RM Enterprises
International,  Ltd. Mr. Metter served as President and Chief Executive  Officer
at Business Talk Radio from 2000 to 2001.  From 1998 to 2001,  Mr. Metter was an
Investment  Banker at  Security  Capital  Trading  Corp.  Mr.  Metter  served as
President of Madison Capital from 1997 to 1998. Mr. Metter  currently  serves on
the board of directors of Spongetech Delivery Systems, Inc and RM.

         EDWARD ADAMCIK  joined Azurel 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.

         MARTIN PELMAN was named Azurel's acting Chief Financial Officer on July
15,  2003.  From July 2003 to the present,  Mr.  Pelman has served as the CFO of
Spongetech Delivery Systems, Inc. From March 2003 through July 2003, he held the
position  of VP of Mergers and  Acquisitions  at Eagle Rock  Capital,  a limited
partnership. From July 2000 through September 2002, Mr. Pelman served as the CFO
of  Quadlogic  Controls  Corporation.  Mr.  Pelman  served  as the CFO of Tenney
Engineering,  Inc. from August, 1993, through December,  1999. Mr. Pelman earned
his B.S.  from Long Island  University in 1968 and has been a CPA since 1973. He
is a member of the American Institute of Certified Public Accountants.


ITEM 10. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

         The following  table sets  information for the years ended December 31,
2002, 2001 and 2000 concerning the  compensation of the Chief Executive  Officer
of Azurel and the four other most highly  compensated  officers of



                                       14
<PAGE>

Azurel  whose total annual  salary and bonus  exceeded  $100,000.  There was one
person whose compensation in 2002 exceeded $100,000 per annum.


<TABLE>
<CAPTION>
                                                                              Other       Annual
Name and Principal Position        Year     Salary           Bonus            Compensation        Restricted Stock
---------------------------------- -------- ---------------- ---------------- ------------------- -------------------
<S>                                <C>      <C>              <C>              <C>                 <C>     <C>
Edward Adamcik                     2002     $104,000         $--              $--                 $64,000 (1)
Vice-President of Operations       2001     104,000           --               --                  --
                                   2000     104,000           --               --                  --
---------------------------------------------------------------------------------------------------------------------
Steve Moskowitz
Chief Executive Officer            2002     --               --               --                  --
---------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Represents  200,000 shares issued on November 1, 2002, valued at the closing
market price of $0.32.

OPTIONS TO NAMED EXECUTIVE OFFICER

         None of the persons  named above was granted  options for common  stock
during the year ended December 31, 2002,  except that Mr. Adamcik was granted an
option to purchase  10,000 shares of Azurel's common stock in 1999 and an option
to purchase an  additional  5,000  shares in 2000,  in each case for an exercise
price of $1.00 per share.

EMPLOYMENT AGREEMENTS

         As of December 31, 2002, there were no employment  agreements,  nor has
any been entered into since.

EMPLOYEE PENSION PLAN

         Azurel does not currently have an employee pension plan.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Under Section 16(a) of the Securities  Exchange Act of 1934, as amended
(the "Exchange Act"), directors and officers of Azurel, and persons who own more
than ten percent of the common  stock,  are required to file reports  concerning
their  beneficial  ownership  of  securities  of  Azurel  with  the  Commission.
Directors,  officers and greater than ten percent  stockholders  are required by
regulations of the Commission to furnish Azurel with copies of all Section 16(a)
reports they file.

         Azurel  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  stockholders  (including  any  "group",  as  that  term is used in
Section  13(d)(3)  of the  Exchange  Act)  who,  to  the  knowledge  of  Azurel,
beneficially  owned more than five  percent of the common  stock as of September
18, 2003,  and their  respective  shareholdings  as of such date  (according  to
information  furnished by them to Azurel), are set forth in the following table.
The  table  does  not  include  options  that  have  not yet  vested  or are not
exercisable within 60 days of the date hereof.  Unless otherwise indicated,  the
address  of each such  person or entity is 23F  Commerce  Road,  Fairfield,  New
Jersey 07004.

                                       15
<PAGE>

<TABLE>
<CAPTION>
NAME                              NUMBER OF SHARES BENEFICIALLY OWNED (1)     PERCENTAGE OF SHARES BENEFICIALLY OWNED
---------------------------------------------------------------------------------------------------------------------
<S>                               <C>                                         <C>
Norman Grief                                                          --                                        --
---------------------------------------------------------------------------------------------------------------------
Brian Bookmeier                                                       --                                        --
---------------------------------------------------------------------------------------------------------------------
Steven Moskowitz (2)                                           1,392,000                                       4.6%
---------------------------------------------------------------------------------------------------------------------
Robert O'Grady                                                   180,360                                          *
---------------------------------------------------------------------------------------------------------------------
Edward Adamcik                                                   215,000                                          *
---------------------------------------------------------------------------------------------------------------------
Martin Pelman
---------------------------------------------------------------------------------------------------------------------
Jerome Schlanger                                                 702,000                                       2.3%
---------------------------------------------------------------------------------------------------------------------
Damon Testaverde                                               3,171,667                                      10.4%
---------------------------------------------------------------------------------------------------------------------
International Smart
 Sourcing                                                      1,682,844                                       5.5%
---------------------------------------------------------------------------------------------------------------------
H.T. Ardinger & Sons, Inc. (3)                                 3,903,750                                      12.6%
---------------------------------------------------------------------------------------------------------------------
RM Enterprises International                                     150,000                                          *
---------------------------------------------------------------------------------------------------------------------
All Officers and Directors
as a Group (7 persons)                                         2,489,360                                       8.2%
---------------------------------------------------------------------------------------------------------------------
</TABLE>

* Less than one percent.

(1)      Beneficial ownership is determined in accordance with the Rule 13d-3(a)
         of the Exchange Act, and generally  includes voting or investment power
         with respect to  securities.  Pursuant to the rules and  regulations of
         the 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.  Except as subject to
         community  property laws, where applicable,  the person named above has
         sole voting and investment power with respect to all shares of Azurel's
         common stock shown as beneficially owned by him.

(2)      All  shares of common  stock  issued  to RM by Azurel  pursuant  to the
         Merger Agreement were  subsequently  distributed to the stockholders of
         RM. Azurel  granted to RM  Enterprises,  Ltd.  150,000 shares of common
         stock  representing  non-cash  compensation  referenced in a management
         agreement that provided for management  services in 2002. Mr. Moskowitz
         disclaims beneficial ownership of these 150,000 shares of common stock.

         1,134,000 shares of common stock are held by a trust the  beneficiaries
         of which are the children of Mr. Moskowitz.  The trustees are his wife,
         Mindy Moskowitz and Susan Weissman.  Mr. Moskowitz disclaims beneficial
         ownership as to all such shares of common stock.

         Includes  108,000  shares of common  stock held by Eagle Rock  Capital,
         LLC.  Mr.  Moskowitz  is a  co-principal  and 50%  owner of Eagle  Rock
         Capital.

(3)      Includes  558,750  shares of common  stock upon  exercise  of  warrants
         issued in  connection  with  Azurel's  private  placement  completed on
         November 22, 2002 (see "Market for Azurel's Common Stock" above).

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



                                       16
<PAGE>

         As of December 31, 2002, Azurel owed Mr. Moskowitz, its chief executive
officer,  an  aggregate  of  $110,513.  This loan was made by Mr.  Moskowitz  to
Romantic prior to the closing of the Merger Agreement.  Azurel assumed this debt
in connection with its acquisition of Romantic in the merger.

         In  addition,  Azurel has  issued a note to A&N  Enterprises,  Inc.,  a
private  corporation  with which Mr.  Moskowitz is affiliated,  in the principal
aggregate  face amount of $35,000,  which note bears interest at the rate of 15%
per annum and is  payable  on demand.  This note had an  outstanding  balance of
$44,227 at December 31, 2002. Mr. Moskowitz,  Azurel's chief executive  officer,
is a stockholder and the vice president of this related party.

         Management believes that the above transactions  between Azurel and its
officers, directors or 5% stockholders,  and their affiliates were made on terms
no less favorable to Azurel than those available from unaffiliated  parties. All
future   transactions   between  Azurel  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

(a)      EXHIBITS.

         See Index to Exhibits hereafter.

(b) REPORTS ON FORM 8-K.

         Azurel  filed a Form  8-K on  November  14,  2002  pursuant  to Item 2.
Acquisition or Disposition of Assets  relating to the  acquisition by its wholly
owned and operated  subsidiary  Flo  Weinberg,  Inc. of Romantic  Moments,  Inc.
pursuant  to the terms of the  Merger  Agreement.  Azurel  included  the  Merger
Agreement,  the amendment thereto and the related press release in its Form 8-K,
the entirety of which is incorporated by reference herein.

ITEM 14: CONTROLS AND PROCEDURES

Immediately  following  the signature  page of this report is the  Certification
that is required  under  Section  302 of the  Sarbanes-Oxley  Act of 2002.  This
section of the report contains  information  concerning the controls  evaluation
referred to in the  Section 302  Certifications  and the  information  contained
herein should be read in conjunction with the Certification.

Internal  controls are designed  with the  objective of ensuring that assets are
safeguarded,  transactions are authorized, and financial reports are prepared on
a timely basis in accordance with generally  accepted  accounting  principles in
the United  States.  The  disclosure  procedures are designed to comply with the
regulations established by the Commission.

Internal  controls,  no matter how designed,  have  limitations.  It is Azurel's
intent that the  internal  controls be conceived  to provide  adequate,  but not
absolute,  assurance that the objectives of the controls are met on a consistent
basis.  Management  plans to  continue  its  review  of  internal  controls  and
disclosure procedures on an ongoing basis.

Azurel's  principal  executive officer and principal  financial  officer,  after
supervising and  participating in an evaluation of the effectiveness of Azurel's
internal and  disclosure  controls and procedures as of a date within 90 days of
the filing date of this report (the "Evaluation  Date"), have concluded that, as
of the Evaluation Date, Azurel's internal and disclosure controls and procedures
were effective.

There were no significant  changes in Azurel's internal and disclosure  controls
or in other factors that could significantly affect such internal and disclosure
controls subsequent to the date of their evaluation



                                       17
<PAGE>

                                   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/A  to be  signed  on  its  behalf  by  the  undersigned,  thereunto  duly
authorized.

                                        AZUREL Ltd.


Steven Moskowitz                        BY:  /s/ Steven Moskowitz
                                             ----------------------------------
                                             Chief Executive Officer


         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/ Steven Moskowitz             Director and                 September 18, 2003
--------------------             Chief Executive Officer
Steven Moskowitz


/S/ Norman Grief                 Director                     September 18, 2003
----------------
Norman Grief


/s/ Jerome Schlanger             Director                     September 18, 2003
--------------------
Jerome Schlanger


/s/ Brian Bookmeier              Director                     September 18, 2003
-------------------
Brian Bookmeier




                                       18
<PAGE>


                          AZUREL, LTD. AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

            For the Years Ended December 31, 2002 (restated) and 2001






<PAGE>



                                                   AZUREL, LTD. AND SUBSIDIARIES


                                                                        CONTENTS
--------------------------------------------------------------------------------



                                                                         PAGE


INDEPENDENT AUDITORS' REPORT - Marcum & Kliegman LLP                        1


INDEPENDENT AUDITORS' REPORT - Feldman Sherb & Co., P.C.                    2


FINANCIAL STATEMENTS

  Consolidated Balance Sheet                                              3-4
  Consolidated Statements of Operations                                     5
  Consolidated Statement of Shareholders' Deficit                           6
  Consolidated Statements of Cash Flows                                   7-8


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                               9-29





<PAGE>


                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors of
Azurel, Ltd. and Subsidiaries

We have audited the accompanying  consolidated balance sheet of Azurel, Ltd. and
Subsidiaries as of December 31, 2002, and the related consolidated  statement of
operations, shareholders' deficit, and cash flows for the year then ended. These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the consolidated  financial position of Azurel, Ltd. and
Subsidiaries  as of December  31, 2002 and,  the  consolidated  results of their
operations  and  their  consolidated  cash  flows for the year  then  ended,  in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 3 to the
consolidated  financial  statements,  the Company has incurred  recurring losses
from  operations and had an  accumulated  deficit of $14,562,216 at December 31,
2002. These conditions raise  substantial  doubt about the Company's  ability to
continue  as a going  concern.  The  consolidated  financial  statements  do not
include any adjustments that might result from the outcome of this uncertainty.



July 17, 2003
New York, NY



                                      F-1
<PAGE>

                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------



To the Board of Directors
Azurel, Ltd. and Subsidiary


We have audited the accompanying  consolidated statement of operations,  changes
in stockholders'  deficit and cash flows of Azurel,  Ltd. and Subsidiary for the
year ended December 31, 2001. These financial  statements are the responsibility
of the  Company's  management.  Our  responsibility  is to express an opinion on
these consolidated financial statements based on our audit.

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

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

The accompanying  consolidated  financial statements have been prepared assuming
the Company will continue as a going  concern.  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.  The  consolidated  financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.




Feldman Sherb & Co., P.C.
April 10, 2002
New, York, New York




                                      F-2
<PAGE>

                                                   AZUREL, LTD. AND SUBSIDIARIES

                                                      CONSOLIDATED BALANCE SHEET

                                                    December 31, 2002 (Restated)
--------------------------------------------------------------------------------


                                     ASSETS


CURRENT ASSETS
  Cash                                            $     15,521
  Accounts receivable, net                              46,992
  Inventories, net                                     490,059
  Prepaid expenses and other current assets             28,397
                                                  ------------


         Total Current Assets                                       $   580,969


PROPERTY AND EQUIPMENT, net                                              48,587
----------------------


OTHER ASSETS
  Intangibles                                          823,000
  Goodwill                                             429,633
  Due from related party                                89,657
  Deposits                                              18,922
                                                  ------------


         Total Other Assets                                           1,361,212
                                                                     ----------


         TOTAL ASSETS                                                $1,990,768
                                                                     ==========



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



                                      F-3
<PAGE>

                                                   AZUREL, LTD. AND SUBSIDIARIES

                                                      CONSOLIDATED BALANCE SHEET

                                                    December 31, 2002 (Restated)
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                      LIABILITIES AND SHAREHOLDERS' DEFICIT


CURRENT LIABILITIES
<S>                                                                             <C>
  Accounts payable and accrued expenses                                         $       454,535
  Reorganization costs payable, current portion                                         300,019
  Taxes payable, current portion                                                        302,529
  Officer advances                                                                      110,513
  Capital leases, current portion                                                        14,512
  Revolving line of credit                                                               84,965
  Note Payable, related party                                                            44,227
                                                                               ----------------

         Total Current Liabilities                                                                  $    1,311,300

OTHER LIABILITIES
  Reorganization costs payable, long-term                                               685,289
  Taxes payable, long-term                                                              257,448
  Capital leases, long-term                                                              13,840
                                                                               ----------------

         Total Other Liabilities                                                                           956,577
                                                                                                    --------------

         TOTAL LIABILITIES                                                                               2,267,877

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' DEFICIT
  Preferred stock, $.001 par value; 4,000,000 shares authorized;
   none issued and outstanding                                                                                  --
  Common stock, $.001 par value; 50,000,000 shares authorized;
   28,666,034 shares issued and outstanding                                                                 28,666
  Additional paid-in capital                                                                            14,256,441
  Accumulated deficit                                                                                  (14,562,216)
                                                                                                      ------------

TOTAL SHAREHOLDERS' DEFICIT                                                                               (277,109)
                                                                                                    --------------

TOTAL LIABILITIES AND SHAREHOLDERS'
 DEFICIT                                                                                             $   1,990,768
                                                                                                     =============
</TABLE>


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


                                      F-4
<PAGE>



                                                   AZUREL, LTD. AND SUBSIDIARIES

                                           CONSOLIDATED STATEMENTS OF OPERATIONS

                       For the Years Ended December 31, 2002 (Restated) and 2001
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                                         2002
                                                                                      (Restated)           2001
                                                                                     ----------------------------
<S>                                                                                  <C>              <C>
NET SALES                                                                            $   236,535      $   463,173
---------

COST OF GOODS SOLD                                                                       162,030          192,435
------------------                                                                    ----------      -----------

         GROSS PROFIT                                                                     74,505          270,738

OPERATING EXPENSES
  Selling, general and administrative expenses                                           754,641        1,281,375
                                                                                      ----------      -----------

         LOSS FROM OPERATIONS                                                           (680,136)      (1,010,637)

OTHER INCOME (EXPENSE)
  Interest                                                                              (511,612)         (42,837)
  Gain on sale of fixed assets                                                                --            8,256
  Reorganization costs                                                                   (12,315)         (95,500)
  Other income (expense)                                                                  31,254          (41,202)
                                                                                      ----------      -----------

         LOSS BEFORE EXTRAORDINARY ITEMS                                              (1,172,809)      (1,181,920)

EXTRAORDINARY ITEMS
  Gain on early extinguishment of debt                                                        --          190,000
  Gain on extinguishment of liabilities subject to compromise                          4,728,310               --
                                                                                      ----------      -----------

         NET INCOME (LOSS)                                                            $3,555,501      $  (991,920)
                                                                                      ==========      ===========

EARNINGS PER SHARE OF COMMON STOCK:
----------------------------------
  Basic and Diluted:
    Loss before extraordinary items per share                                         $    (0.08)     $     (0.17)
    Income from extraordinary items per share                                               0.34             0.03
                                                                                      ----------      -----------

         Net income (loss) per share                                                  $     0.26      $     (0.14)
                                                                                      ==========      ===========

  Weighted average number of shares of common stock and
    common stock equivalents outstanding                                              13,767,733        6,911,796
                                                                                      ==========      ===========
</TABLE>


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



                                      F-5
<PAGE>


                                                   AZUREL, LTD. AND SUBSIDIARIES

                                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT

                       For the Years Ended December 31, 2002 (Restated) and 2001
--------------------------------------------------------------------------------




<TABLE>
<CAPTION>

                                           PREFERRED STOCK               COMMON STOCK            Additional
                                    ---------------------------   --------------------------      Paid-In     Accumulated
                                       Shares         Amount          Shares       Amount         Capital       Deficit
                                    ------------   ------------   ------------  ------------   ------------  ------------
BALANCE -
<S>                                    <C>         <C>               <C>        <C>            <C>            <C>
 January 1, 2001                       1,001,500   $  2,237,587      6,911,796  $      6,912   $  8,998,983   $(17,125,083)

 Net Loss                                     --             --             --            --             --       (991,920)
Change in translation adjustment              --             --             --            --             --           (714)
                                    ------------   ------------   ------------  ------------   ------------  ------------
BALANCE - December 31, 2001            1,001,500      2,237,587      6,911,796         6,912      8,998,983    (18,117,717)

Adjust prior year shares                      --             --         19,901            20            (20)            --
Common stock issued
 for cash                                     --             --      3,225,000         3,225        341,715             --
Common stock issued to creditors
under plan of reorganization                  --             --      6,890,337         6,890        777,795             --
Common stock issued for services .            --             --        350,000           350        131,150             --
Common stock issued for Romantic
Moments acquisition                           --             --      9,500,000         9,500        940,500             --
Beneficial conversion feature                 --             --             --            --        327,000             --
Warrants issued in connection with
 promissory notes                             --             --             --            --        150,000             --
Conversion of promissory notes to
common stock                                  --             --      1,767,500         1,768        351,732             --
Conversion of preferred stock to
common stock per plan of
reorganization                        (1,001,500)    (2,237,587)         1,500             1      2,237,586             --
Net income
                                              --             --             --            --             --      3,555,501
                                    ------------   ------------   ------------  ------------   ------------  ------------
BALANCE - December 31, 2002         $         --   $         --   $ 28,666,034  $     28,666   $ 14,256,441  $(14,562,216)
                                    ============   ============   ============  ============   ============   ============


<CAPTION>
                                       Accumulated
                                          Other
                                      Comprehensive
                                          Loss         Total
                                     ------------  ------------
BALANCE -
<S>                                  <C>           <C>
 January 1, 2001                     $       (714) $ (5,882,315)

 Net Loss                                      --      (991,920)
Change in translation adjustment              714            --
                                     ------------  ------------
BALANCE - December 31, 2001                    --    (6,874,235)

Adjust prior year shares                       --            --
Common stock issued
 for cash                                      --       344,940
Common stock issued to creditors
under plan of reorganization                   --       784,685
Common stock issued for services .             --       131,500
Common stock issued for Romantic
Moments acquisition                            --       950,000
Beneficial conversion feature                  --       327,000
Warrants issued in connection with
 promissory notes                              --       150,000
Conversion of promissory notes to
common stock                                   --       353,500
Conversion of preferred stock to
common stock per plan of
reorganization                                 --            --
Net income
                                               --     3,555,501
                                     ------------  ------------
BALANCE - December 31, 2002          $         --  $   (277,109)
                                     ============  ============
</TABLE>


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



                                      F-6
<PAGE>

                                                   AZUREL, LTD. AND SUBSIDIARIES

                                           CONSOLIDATED STATEMENTS OF CASH FLOWS

                       For the Years Ended December 31, 2002 (Restated) and 2001
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                      2002
                                                                   (Restated)              2001
                                                                  -----------          -----------
CASH FLOWS FROM OPERATING ACTIVITIES
------------------------------------
<S>                                                               <C>                  <C>
  Net income (loss)                                               $ 3,555,501          $  (991,920)
                                                                  -----------          -----------
   Adjustments to reconcile net income (loss) to net cash
    (used in) provided by operating activities:
     Depreciation                                                       3,453               22,054
     Amortization                                                          --              118,439
     Provision for doubtful accounts                                    2,952                   --
     Interest expense - beneficial conversion                         327,000                   --
     Interest expense - deferred financing costs                      175,900                   --
     Gain on sale of fixed assets                                          --               (8,256)
     Write-down of impaired assets                                         --              125,583
     Extraordinary gain on early distinguishment of debt                   --             (190,000)
     Common stock issued for services                                 131,500
     Reductions of accrued expenses                                    45,479               21,500
     Reduction of non-cash interest expense                                --               (7,000)
     Extraordinary gain on extinguishment of liabilities
      subject to compromise                                        (4,728,310)                  --
     Decrease in minority interest                                         --                 (357)
   Changes in operating assets and liabilities:
     Accounts receivable                                               39,266              504,714
     Inventories                                                      (17,319)             490,801
     Prepaid expenses and other current assets                        (13,098)              (3,002)
     Due from related parties                                              --              150,000
     Deposits                                                          (8,196)                  --
     Other assets                                                       8,704               (8,703)
     Accounts payable and accrued expenses                            (15,288)            (196,042)
     Taxes payable                                                     40,471                   --
     Liabilities not subject to compromise                            (95,500)
     Net assets of discontinued operations                                 --               (8,533)
                                                                  -----------          -----------

         Net Cash (used in) PROVIDED BY Operating
          Activities                                                 (547,485)              19,278
                                                                  -----------          -----------

CASH FLOWS FROM INVESTING ACTIVITIES
------------------------------------
  Net cash acquired in the acquisition of Romantic                      5,329                   --
  Disposal of property and equipment                                       --               37,896
                                                                  -----------          -----------

NET CASH PROVIDED BY INVESTING
------------------------------
 ACTIVITIES                                                       $     5,329          $    37,896
                                                                  -----------          -----------
</TABLE>

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


                                      F-7
<PAGE>

                                                   AZUREL, LTD. AND SUBSIDIARIES

                                CONSOLIDATED STATEMENTS OF CASH FLOWS, Continued

                       For the Years Ended December 31, 2002 (Restated) and 2001
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                        2002
                                                                     (Restated)              2001
                                                                    -----------          -----------
CASH FLOWS FROM FINANCING ACTIVITIES
------------------------------------
<S>                                                                 <C>                  <C>
  Net proceeds from sale of common stock                            $   344,940          $        --
  Net proceeds from convertible promissory notes                        327,600                   --
  Repayment of long-term debt                                          (270,913)                  --
  Advances from bank, net                                                84,965                   --
                                                                    -----------          -----------

         Net Cash Provided by Financing
          Activities                                                    486,592                   --
                                                                    -----------          -----------

         NET (DECREASE) INCREASE IN CASH                                (55,564)              57,174

CASH - Beginning                                                         71,085               13,911
----------------                                                    -----------          -----------

CASH - Ending                                                       $    15,521          $    71,085
-------------                                                       ===========          ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
-------------------------------------------------
  Cash paid for interest                                            $     8,712          $        --
  Cash paid for income taxes                                        $        --          $        --

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND
-------------------------------------------------
 FINANCING ACTIVITIES:
 ---------------------
  Net assets acquired in Romantic acquisition:
   Prepaid expenses and other current assets                        $     5,817          $        --
   Inventories                                                          278,022                   --
   Property and equipment, net                                           53,946                   --
   Deposits                                                              10,726                   --
   Goodwill                                                             429,633                   --
   Intangibles, net                                                     823,000                   --
   Accounts payable and accrued expenses                               (214,237)                  --
   Taxes payable                                                        (77,887)                  --
   Current and long-term debt                                          (364,349)                  --
   Common stock issued in acquisition                                  (950,000)                  --
                                                                    -----------          -----------

         Increase in cash                                           $     5,329          $        --
                                                                    ===========          ===========

   Conversion of accounts payable to common stock                   $   784,685          $        --
                                                                    ===========          ===========
   Conversion of preferred stock to common stock                    $ 2,237,587          $        --
                                                                    ===========          ===========
   Conversion of promissory notes to common stock                   $   353,500          $        --
                                                                    ===========          ===========
   Reduction in capital lease obligation                            $        --          $   200,000
                                                                    ===========          ===========
</TABLE>

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



                                      F-8
<PAGE>




                                                    AZUREL LTD. AND SUBSIDIARIES

                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)
--------------------------------------------------------------------------------


NOTE 1 - NATURE OF BUSINESS

         Azurel,  Ltd. and Subsidiaries  (the "Company") is primarily engaged in
         the manufacturing and distribution of cosmetics and fragrances.  During
         2002, the Company  entered into a merger  agreement with RM Enterprises
         International,   Ltd.  and  Romantic  Moments  Inc.   ("Romantic"),   a
         distributor of high-end evening  garments.  Under the Merger Agreement,
         Flo Weinberg,  Inc. and a newly formed  wholly owned  subsidiary of the
         Company  acquired all of the outstanding  common stock of Romantic (see
         Note 5).

         Azurel, Ltd. ("Azurel") was incorporated in Delaware on June 26, 1995.

         RESTATEMENT  The  Company  has  restated  the  consolidated   financial
         statements  for the year  ended  December  31,  2002.  The  restatement
         reflects an increase  in total  assets and a decrease in  shareholders'
         deficit of approximately  $803,000. The restatement also resulted in an
         increase  in the  loss  before  extraordinary  items  of  approximately
         $533,000. An increase of approximately $830,000 of the total assets and
         the  reduction  of   shareholders'   deficit  is  attributable  to  the
         modification of management's estimate of the allocation of the purchase
         price of Romantic Moments, Inc. (see Note 5) and the remaining decrease
         of  approximately  $27,000 is  attributable to various other changes to
         management's assertions.  The increase in the loss before extraordinary
         items reflects a modification of the accounting  treatment of 1,767,500
         shares and 883,750  warrants issued by the Company to four investors in
         connection  with the  issuance of $353,500  of  convertible  promissory
         notes (see Note 13).  The  effect of the  modification  resulted  in an
         increase in loss before  extraordinary  items from $680,136  ($0.05 per
         share) to  $1,172,809  ($0.08 per share) as of December 31, 2002.  This
         modification had no effect on the shareholders'  deficit as of December
         31, 2002.


NOTE 2 - REORGANIZATION

         On  February  2, 2001,  the  Company  filed a  voluntary  petition  for
         protection  from  creditors  under  Chapter  11 in  the  United  States
         Bankruptcy  Court for the District of New Jersey,  Newark (the "Court")
         under  case  number   01-31034NLW.   The  Company  operated  under  the
         protection of the Court until February 27, 2002,  when the Court issued
         Order of  Confirmation  of the First  Modified Plan ("The Plan") became
         effective. The Plan provided two options to the creditors and seven (7)
         classes of creditors:

         Option One is a settlement  consisting of one share of common stock for
         each dollar of  liability  plus a 20% cash payout over 2 years from the
         date of court approval,  the total liability  included under option one
         was  approximately  $1,188,936,  in addition  certain inside  creditors
         agreed to accept an all  stock  settlement  instead  of stock and cash.
         During 2002, the Company issued  approximately  6,890,337 shares of its
         common stock out of the  approximate  7,376,721  shares to be issued in
         settlement of the entire plan.



                                      F-9
<PAGE>

                                                    AZUREL LTD. AND SUBSIDIARIES

                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)
--------------------------------------------------------------------------------

NOTE 2 - REORGANIZATION, continued

         Option Two relates to creditors  with  liabilities  of  $1,781,000  who
         agreed to accept  45% of their  liability,  approximately  $801,000  in
         cash,  over a 5 year  period  with the first  payment of  approximately
         $185,000 paid at the date of approval with the balance of approximately
         $616,000 to be paid out over the next 4 years.

         As of  December  31,  2002  the  Company  had a total  of  $985,308  in
         creditors' payments recorded as a liability with approximately $300,000
         due to creditors  in 2003.  In addition  the Plan  instructed  that all
         outstanding shares of $.001 par value Preferred Stock be converted into
         1,500  shares of the  Company's  $.001 par value Common  Stock.  During
         2002,  the  Company  issued all  required  shares  under the Plan.  The
         Company  did not adopt fresh start  accounting  because  holders of the
         existing voting shares immediately prior to the filing and confirmation
         of the Plan received more than 50% of the voting shares of the emerging
         entity.  Accordingly,  the Company  recognized an extraordinary gain on
         the reorganization in the amount of $4,728,310.

         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   $433,000  are  payable  in  twenty  equal
         quarterly  installments of approximately  $21,650,  commencing February
         27, 2002  through  February  27,  2007 and  include  interest at 8% per
         annum. Other payroll and withholding taxes of approximately  $8,500 are
         payable in twelve equal quarterly  installments of approximately  $708,
         commencing  February  27, 2002  through  February  27,  2005  including
         interest at 8% per annum.  No payments  have been made in 2002 relative
         to this priority tax claim.

         At any time the Internal  Revenue  Service could declare the Company in
         default of their fiduciary  responsibility and could file a tax lien on
         the Company's  assets or take other action  against the Company and its
         responsible officers, which would have a material adverse effect on the
         Company's business.

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

         CLASS 1
         A secured amount owed to an entity was $560,948. The Company issued the
         entity  three  shares  of its  common  stock  for each  dollar  owed as
         settlement of this liability, which amounted to 1,682,844 shares.


                                      F-10
<PAGE>

                                                    AZUREL LTD. AND SUBSIDIARIES

                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)
--------------------------------------------------------------------------------


NOTE 2 - REORGANIZATION, continued

         CLASS 2
         Class two consists of secured amounts owed to an individual investor of
         $1,010,000.  This  individual  received  three shares of the  Company's
         common stock for each dollar owed, amounting to 3,030,000 shares, which
         were issued in March and June 2002.

         CLASS 2A
         Class two (a) consists of two  creditors  with  amounts  owed  totaling
         $587,533. These individuals received two shares of the Company's common
         stock for each dollar owed, amounting to 1,175,000 shares.

         CLASS 3
         Class three is a note payable including  interest,  to an entity in the
         amount of $1,823,833. Principal and interest were due in June 2002. The
         Company has settled such amount with a note  receivable  of  $1,650,000
         relating to the sale of its PLC subsidiary,  which has been assigned to
         the  entity.  The  Company  recorded  a net amount due to the entity of
         $173,833 as of December 31, 2001.  This balance was paid in full during
         the year ended December 31, 2002.

         CLASS 4
         These are unsecured claims with trade creditors totaling  approximately
         $2,969,900.  Each  creditor  has the  option to  receive  shares of the
         Company's common 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  $1,188,936.  Accordingly,  during  2002,  the
         Company  issued  approximately  702,000  shares of its common  stock to
         these creditors and the balance of 486,936 shares are to be issued.  In
         addition,  remaining  cash  payments at December  31, 2002  totaled led
         $237,787  which are payable in three annual  installments  of $118,893,
         $59,447 and $59,447 commencing in May 2004 through May 2006.

         CREDITORS WHO ELECT TO RECEIVE CASH
         For  creditors,  who elect to receive cash, the Company will pay 45% of
         the total dollar amount owed to them. The total outstanding  balance to
         creditors in this  category,  as of March 11, 2002,  was  approximately
         $1,781,000.   Therefore,   the   Company   will  pay   such   creditors
         approximately $801,450, which is payable in four annual installments of
         approximately $184,700, $184,700, $184,700 and $247,350 commencing with
         an initial payment in April 2002 and subsequent  annual payments in May
         2004 through May 2006.  Certain  trademarks of the Company secure these
         claims.



                                      F-11
<PAGE>

                                                    AZUREL LTD. AND SUBSIDIARIES

                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)
--------------------------------------------------------------------------------

NOTE 2 - REORGANIZATION, continued

         CLASS 5, 6 AND 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 issued  preferred  stock. In August
         2002, the Company converted all of its issued and outstanding shares of
         preferred  stock to 1,500 shares its common stock.  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  originally
         expired on July 3, 2003,  but were  extended by the Company until July,
         3, 2005.

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

         The Plan was  funded  by a certain  secured  creditor  who  contributed
         $299,000 for the payment of  administrative  claims.  This contribution
         will 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.  In return,  for this  contribution the creditor received
         approximately  299,000  shares of the Company's  $.001 par value Common
         Stock.

         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:

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

       The  Company  has  recorded  liabilities  in  excess of such  amounts  at
       December 31, 2001. Included were 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 was recorded upon the
       finalization  of  the  bankruptcy  proceedings  and  is  reflected  as an
       extraordinary gain on extinguishment of liabilities subject to compromise
       at December 31, 2002.

       The Company has not been able to meet all of the  financial  requirements
       defined in the court-approved  plan of  reorganization.  If the Company's
       default under this plan remains,  uncured  priority  claim holders and or
       creditors  may  be  successful  in  having  the  court  issued  order  of
       confirmation  set aside.  Accordingly,  the  obligations  of the  Company
       discharged by the bankruptcy court under the plan of reorganization could
       be reestablished on the Company's books.


                                      F-12
<PAGE>

                                                    AZUREL LTD. AND SUBSIDIARIES

                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)
--------------------------------------------------------------------------------

NOTE 3 - GOING CONCERN

       As shown  in the  accompanying  consolidated  financial  statements,  the
       Company incurred a loss before  extraordinary items of $1,172,809 for the
       year ended December 31, 2002, and as of that date, the Company's  current
       liabilities  exceeded its current  assets by $730,331.  Management of the
       Company  is   developing  a  plan  to  license  the   manufacturing   and
       distribution  of  some  of its  fragrance  brands  and to  outsource  the
       manufacturing  of some of its apparel  lines during the third  quarter of
       2003. In addition, the Company is seeking to raise equity capital to fund
       and  expand  its  operations.  As  discussed  in Note 2, the  Company  is
       currently  in default of its Plan of  Reorganization  and the  Company is
       unable  to meet its  financial  obligations  under  the Plan for the year
       ending December 31, 2003.

       Management  believes that by licensing the manufacturing and distribution
       of some of its  fragrance  brands and to outsource the  manufacturing  of
       some of its apparel  lines,  they will be able to increase  revenues  and
       reduce their  manufacturing costs and if they are successful in obtaining
       additional  capital the cash flows would be sufficient to fund operations
       through  December 31, 2003.  However,  there can be no assurance that the
       Company  will be  successful  in its attempts to generate  positive  cash
       flows or raise  sufficient  capital  essential  to its  survival.  To the
       extent  that the  Company is unable to  generate  or raise the  necessary
       operating  capital,  it will  become  necessary  to  curtail  operations.
       Additionally, even if the Company does raise operating capital, there can
       be no assurance  that the net proceeds will be sufficient to enable it to
       develop  its  business  to a level  where it will  generate  profits  and
       positive cash flows.

       These matters  raise  substantial  doubt about the  Company's  ability to
       continue  as  a  going  concern.   However,  the  accompanying  financial
       statements   have  been  prepared  on  a  going  concern   basis,   which
       contemplates the realization of assets and satisfaction of liabilities in
       the normal course of business.  The  financial  statements do not include
       any  adjustments  relating to the recovery of the recorded  assets or the
       classification  of the  liabilities  that might be  necessary  should the
       Company be unable to continue as a going concern.


NOTE 4 - SIGNIFICANT ACCOUNTING POLICIES

       PRINCIPLES OF CONSOLIDATION
       The  consolidated  financial  statements  include the accounts of Azurel,
       Ltd. and its subsidiaries.  All significant intercompany transactions and
       balances have been eliminated in consolidation.

       REVENUE RECOGNITION
       The Company  recognizes  revenue from product sales, net of any discounts
       and coupons,  when the products are  completed  and shipped to customers.
       Substantially  all of the  Company's  goods are shipped  F.O.B.  shipping
       point.  Shipping and handling costs are included in cost of goods sold in
       the consolidated statements of operations.



                                      F-13
<PAGE>

                                                    AZUREL LTD. AND SUBSIDIARIES

                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)
--------------------------------------------------------------------------------


NOTE 4 - SIGNIFICANT ACCOUNTING POLICIES, continued

       The Company  follows the  provisions of EITF No. 00-14,  "Accounting  for
       Sales  Incentives",  and reflects its sales  incentives as a reduction of
       sales.

       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.

       ACCOUNTS RECEIVABLE
       Accounts  receivable is shown net of allowance  for doubtful  accounts of
       $7,952 at December 31, 2002.  The Company  estimates  the  allowance  for
       doubtful  accounts  based upon a review of  outstanding  receivables  and
       historical   collection   information  by  customer.   Normally  accounts
       receivable  are  due  within  30 days  after  the  date  of the  invoice.
       Receivables  more  than 90 days old are  considered  past  due.  Accounts
       receivable are written off when they are determined to be uncollectible.

       FACTORING
       The Company has a factoring agreement with Westgate Financial Corporation
       whereby all accounts  receivable are sold to the factor on a pre-approved
       non-recourse basis, except for chargebacks and customer claims. Factoring
       commissions  are charged at 1.25% of factored sales with a minimum charge
       to the Company of $15,000 per annum.

       INVENTORIES
       Inventories  consists of  finished  products,  work in  process,  and raw
       materials.  Inventories are carried at the lower of cost or market.  Cost
       is determined using the first in first out method,  and market represents
       the lower of replacement cost or estimated net realizable value.

       PROPERTY AND EQUIPMENT
       Property  and  equipment  are  stated at cost and  depreciated  using the
       straight-line  method  over the  estimated  useful  lives of the  related
       assets.  Leasehold  improvements  are amortized  using the  straight-line
       method over the lesser of the term of the respective  lease or the useful
       lives  of the  improvements.  Repairs  and  maintenance  are  charged  to
       expenses when incurred and renewals and betterments are capitalized.

       Capitalized  leased  assets are  amortized  over the shorter of the lease
       term or the service life of the related assets.


                                      F-14
<PAGE>

                                                    AZUREL LTD. AND SUBSIDIARIES

                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)
--------------------------------------------------------------------------------

NOTE 4 - SIGNIFICANT ACCOUNTING POLICIES, continued

       INTANGIBLES
       The intangible assets consist of patterns,  trademarks and customer list,
       which are all amortized on a  straight-line  basis over their  respective
       useful lives.

       INCOME TAXES
       The Company  accounts for income taxes using the  liability  method.  The
       liability  method requires the  determination  of deferred tax assets and
       liabilities based on the differences  between the financial statement and
       income  tax bases of assets and  liabilities,  using  enacted  tax rates.
       Additionally,  net  deferred  tax  assets  are  adjusted  by a  valuation
       allowance  if,  based on the  weight of  available  evidence,  it is more
       likely than not that some  portion or all of the net  deferred tax assets
       will not be realized.

       EARNINGS PER SHARE
       Basic  earnings  per share are  computed  by  dividing  net income by the
       weighted average number of shares of common stock outstanding  during the
       period. Diluted earnings per share reflects the amount of earning for the
       period  available  to each share of common stock  outstanding  during the
       reporting  period,  giving effect to all  potentially  dilutive shares of
       common stock from the potential exercise of stock options and warrants.

       The  dilutive  effect  of  outstanding  options  and  warrants  and their
       equivalents  are  reflected  in  dilutive   earnings  per  share  by  the
       application of the treasury stock method.  Options and warrants will have
       a dilutive  effect only when the average market price of the common stock
       during the period  exceeds the exercise price of the options or warrants.
       The Company had 4,934,418 and 4,050,668  potentially dilutive options and
       warrants  outstanding  during the years ended December 31, 2002 and 2001,
       respectively, that have not been considered in the computation of diluted
       earnings  per  share  since  the  effect  of  their  inclusion  would  be
       anti-dilutive.

       USE OF ESTIMATES
       In  preparing   consolidated  financial  statements  in  conformity  with
       accounting principles generally accepted in the United States of America,
       management  makes  estimates  and  assumptions  that affect the  reported
       amounts of assets and liabilities  and  disclosures of contingent  assets
       and liabilities at the date of the consolidated financial statements,  as
       well as the reported amounts of revenue and expenses during the reporting
       period. Disclosures that are particularly sensitive to estimation include
       management's  plans,  as disclosed in Note 3. Actual results could differ
       from those estimates.

       COMMITMENTS AND CONTINGENCIES
       Liabilities  for loss  contingencies  arising from  claims,  assessments,
       litigation, fines and penalties and other sources are recorded when it is
       probable  that a  liability  has  been  incurred  and the  amount  of the
       assessment can be reasonably estimated.



                                      F-15
<PAGE>

                                                    AZUREL LTD. AND SUBSIDIARIES

                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)
--------------------------------------------------------------------------------

NOTE 4 - SIGNIFICANT ACCOUNTING POLICIES, continued

       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  were  impaired at December 31,  2001,  as
       disclosed below in Note 8.

       NEW ACCOUNTING PRONOUNCEMENTS
       SFAS No. 141,  "Business  Combinations,"  and SFAS No. 142, "Goodwill and
       Other  Intangible  Assets" became  effective for the Company during 2002.
       The  provisions of these  statements  that are  applicable to the Company
       were implemented on a prospective  basis as of January 1, 2002, which had
       no material effect on the Company's consolidated financial statements.

       SFAS No. 145,  "Rescission of FASB Statements No. 4, 44 and 64, Amendment
       of FASB  Statement  No. 13, and Technical  Corrections"  is effective for
       transactions  occurring  after May 15, 2002.  SFAS No. 145 eliminates the
       requirement  that gains and  losses  from the  extinguishment  of debt be
       aggregated and, if material,  classified as an extraordinary item, net of
       the related income tax effect and eliminates an inconsistency between the
       accounting   for   sale-leaseback    transactions   and   certain   lease
       modifications   that  have   economic   effects   that  are   similar  to
       sale-leaseback  transactions.  The  Company  has not yet  determined  the
       effect SFAS No. 145 will have on its consolidated  financial  position or
       results of operations in future periods.

       SFAS No.  146,  "Accounting  for Costs  Associated  with Exit or Disposal
       Activities"  provides  guidance on the  recognition  and  measurement  of
       liabilities for costs  associated with exit or disposal  activities.  The
       provisions  of  this   statement  are  effective  for  exit  or  disposal
       activities  that are initiated  after December 31, 2002. The Company does
       not expect the  adoption of SFAS No.146 to have a material  effect on its
       consolidated financial statements.

       In November  2002,  the FASB issued  Interpretation  No. 45,  ("FIN 45"),
       "Guarantor's  Accounting  and  Disclosure  Requirements  for  Guarantees,
       Including Indirect Guarantees of Indebtedness of Others." FIN 45 requires
       a company,  at the time it issues a  guarantee,  to  recognize an initial
       liability for the fair value of  obligations  assumed under the guarantee
       and elaborates on existing disclosure  requirements related to guarantees
       and  warranties.  The  initial  recognition  requirements  of  FIN 45 are
       effective for  guarantees  issued or modified after December 31, 2002 and
       adoption of the disclosure  requirements are effective for the Company as
       of December  31,  2002.  The Company does not expect that the adoption of
       the recognition requirements of FIN 45 will have a material effect on its
       consolidated financial statements.



                                      F-16
<PAGE>

                                                    AZUREL LTD. AND SUBSIDIARIES

                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)
--------------------------------------------------------------------------------

NOTE 4 - SIGNIFICANT ACCOUNTING POLICIES, continued

       NEW ACCOUNTING PRONOUNCEMENTS, continued
       In  December  2002,  the  FASB  issued  SFAS  No.  148,  "Accounting  for
       Stock-Based  Compensation-Transition  and Disclosure-an amendment of FASB
       Statement No. 123" which is effective for financial statements issued for
       fiscal years ending after December 15, 2002.  This Statement  amends FASB
       Statement No. 123, "Accounting for Stock-Based Compensation",  to provide
       alternative  methods of  transition  for a  voluntary  change to the fair
       value based method of accounting for stock-based  employee  compensation.
       In  addition,  this  Statement  amends  the  disclosure  requirements  of
       Statement 123 to require prominent disclosures in both annual and interim
       financial  statements  about the  method of  accounting  for  stock-based
       compensation and the effect of the method used on reported  results.  The
       Company  continues to follow the pro-forma  disclosures  for  stock-based
       compensation  as permitted in SFAS 123. Such pro-forma  disclosures  have
       not been  provided as their  effect is not  material to the  accompanying
       consolidated financial statements.

       In  January  2003,  the FASB  issued  Interpretation  No. 46 ("FIN  46"),
       "Consolidation  of Variable Interest  Entities,  an Interpretation of ARB
       No.  51."  FIN 46  requires  certain  variable  interest  entities  to be
       consolidated  by the  primary  beneficiary  of the  entity if the  equity
       investors in the entity do not have the  characteristics of a controlling
       financial  interest  or do not  have  sufficient  equity  at risk for the
       entity to finance its activities  without  additional  financial  support
       from other  parties.  FIN 46 is effective  for all new variable  interest
       entities  created or  acquired  after  January  31,  2003.  For  variable
       interest  entities  created or acquired  prior to  February 1, 2003,  the
       provisions  of FIN 46 must be  applied  for the first  interim  or annual
       period  beginning  after June 15,  2003.  The Company does not expect the
       adoption  of  FIN 46 to  have  a  material  effect  on  its  consolidated
       financial statements.

       In April 2003, the FASB issued SFAS No. 149,  "Amendment of Statement 133
       on Derivative  Instruments and Hedging  Activities."  SFAS 149 amends and
       clarifies financial accounting and reporting for derivative  instruments,
       including certain derivative  instruments embedded in other contracts and
       for hedging  activities  under SFAS No. 133,  "Accounting  for Derivative
       Instruments  and  Hedging  Activities"  (SFAS No.  133).  Except  for the
       provisions  of SFAS No. 149 that  relate to SFAS No.  133  implementation
       issues that have been  effective for fiscal  quarters that began prior to
       June 15, 2003 and for  hedging  relationships  designated  after June 30,
       2003.  The  adoption  of SFAS No. 149 is not  expected to have a material
       effect on the Company's consolidated financial statements.

       In May  2003,  the FASB  issued  SFAS No.  150  "Accounting  for  Certain
       Financial  Instruments  with  Characteristics  of  both  Liabilities  and
       Equity."  SFAS No.  150  establishes  standards  for  classification  and
       measurement in the statement of financial  position of certain  financial
       instruments  with  characteristics  of both  liabilities  and equity.  It
       requires  classification  of a  financial  instrument  that is within its
       scope as a liability (or an asset in some circumstances). SFAS No. 150 is
       effective for financial  instruments  entered into or modified  after May
       31,  2003,  and  otherwise  is  effective  at the  beginning of the first
       interim  period  beginning  after June 15, 2003.  The Company has not yet
       determined the impact of the adoption of SFAS No. 150 on its consolidated
       financial statements.




                                      F-17
<PAGE>

                                                    AZUREL LTD. AND SUBSIDIARIES

                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)
--------------------------------------------------------------------------------

NOTE 5 - ACQUISITION

       ROMANTIC MOMENTS, INC.
       On November 1, 2002, the Company, RM Enterprises International,  Ltd. and
       Romantic Moments, Inc. ("Romantic") completed a merger under an Agreement
       and Plan of Merger ("Merger Agreement").  Under the Merger Agreement, Flo
       Weinberg,  Inc., a newly formed  wholly owned  subsidiary  of the Company
       acquired all of the  outstanding  common stock of Romantic.  The purchase
       price of Romantic  approximated  $950,000,  which  consisted of 9,500,000
       shares of the Company's common stock.

       The acquisition was accounted for as a purchase and  accordingly,  assets
       and  liabilities  were valued at their fair  market  value at the date of
       acquisition   and  the  results  of   operations   are  included  in  the
       consolidated financial statements of the Company,  commencing November 1,
       2002. The consolidated  financial  statements  reflect the Company's best
       estimate of the fair value of the acquired  assets and liabilities at the
       date of the  acquisition.  Such  estimate may be subject to adjustment in
       the new term. An allocation of the fair value of the assets  acquired and
       liabilities assumed is as follows:

       Purchase price:
         Azurel, Ltd. common stock issued                          $   950,000
                                                                   ===========

       Allocation of purchase price:
         Current assets                                            $   289,168
         Property and equipment                                         53,946
         Goodwill                                                      429,633
         Intangibles                                                   823,000
         Other assets                                                   10,726
                                                                   -----------

                  Total assets acquired                              1,606,473
                                                                   -----------

         Current liabilities                                           635,989
         Non-current liabilities                                        20,484
                                                                   -----------

                  Total liabilities assumed                            656,473
                                                                   -----------

                  Net assets acquired                              $   950,000
                                                                   ===========

       Of the $823,000 of acquired  intangible assets,  $650,000 was assigned to
       the  customer  list  which  has a useful  life of 10 years,  $93,000  was
       assigned to patterns which have a useful life of 25 years and $80,000 was
       assigned to registered trademarks which have a useful life of 17 years.



                                      F-18
<PAGE>
                                                    AZUREL LTD. AND SUBSIDIARIES

                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)
--------------------------------------------------------------------------------

NOTE 5 - ACQUISITION, continued

       ROMANTIC MOMENTS, INC., continued
       The following unaudited pro forma financial information has been prepared
       as if the acquisition of Romantic were consummated as of the beginning of
       each of the years presented. The pro forma information is not necessarily
       indicative  of the  combined  results  that would have  occurred  had the
       acquisition  taken  place  at  the  beginning  of  the  year,  nor  is it
       necessarily indicative of the results that may occur in the future.

<TABLE>
<CAPTION>
                                                                    For the Year Ended
                                                                       December 31,
                                                            ----------------------------------
                                                                2002
                                                             (restated)               2001
                                                            ------------          ------------
<S>                                                         <C>                   <C>
Net Sales                                                   $    707,627          $  1,160,291
Expense                                                        1,873,328             2,510,732
                                                            ------------          ------------

                                                              (1,165,701)           (1,350,441)

Other expense, net                                              (505,796)             (223,902)
                                                            ------------          ------------

Loss before extraordinary item                                (1,671,497)           (1,574,343)

Extraordinary items                                            4,728,310               190,000
                                                            ------------          ------------

           Net income (loss)                                $  3,056,813          $ (1,384,343)
                                                            ============          ============

Basic and diluted earnings (loss) per share:
Loss before extraordinary items                             $      (0.08)         $      (0.10)
Income from extraordinary items                                     0.22                  0.01
                                                            ------------          ------------

Net income (loss)                                           $       0.14          $      (0.09)
                                                            ============          ============

Weighted average shares of common stock outstanding           21,869,800            16,366,832
                                                            ============          ============
</TABLE>

NOTE 6 - DUE FROM FACTOR

       The Company has an agreement  with a factor,  whereby  substantially  all
       accounts receivable are sold to the factor on a pre-approved non-recourse
       basis, except for chargebacks and customer claims.  Factoring commissions
       are  charged  at 1.25% of  factored  sales  with a minimum  charge to the
       Company of $15,000 per year. The Company's borrowings,  not to exceed 80%
       of accounts receivable or $750,000,  whichever is less, bears interest at
       prime  plus 2% per annum.  Related  interest  expense  for the year ended
       December  31, 2002  aggregated  approximately  $6,685.  The  agreement is
       guaranteed by one of the Company's shareholders.  The Company's factoring
       charges for the year ended December 31, 2002 totaled $4,000.



                                      F-19
<PAGE>

                                                    AZUREL LTD. AND SUBSIDIARIES

                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)
--------------------------------------------------------------------------------

NOTE 7 - INVENTORIES

       Inventories consist of the following at December 31, 2002:

       Raw materials                                                 $ 340,966
       Work-in-process                                                  24,132
       Finished goods                                                  243,921
       Obsolescence reserve                                           (118,960)
                                                                     ---------
                                                                     $ 490,059


NOTE 8 - PROPERTY AND EQUIPMENT

       Property and equipment consists of the following at December 31, 2002:

<TABLE>
<CAPTION>
                                                                  Amount           Useful Lives
                                                               ---------------- -------------------
<S>                                                                 <C>                        <C>
       Machinery and equipment                                      $  5,168                   5-7
       Office equipment                                               32,678                   5-7
       Furniture and fixtures                                         12,743                   5-7
       Leasehold improvements                                          1,451         Life of lease
                                                                    --------

                                                                      52,040
       Less: accumulated deprecation and amortization                 (3,453)
                                                                    --------

         Property and Equipment, net                                 $48,587
                                                                     =======
</TABLE>

       Depreciation and  amortization  expense related to property and equipment
       for the years ended  December 31, 2002 and 2001 was $3,453,  and $22,054,
       respectively.

       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 gain  on sale  of  fixed  assets  of  $8,256  in the
       accompanying consolidated financial statements.

       In  addition,  during  2001,  the Company  recognized  an  impairment  on
       long-lived  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. 144,  "Accounting For The
       Impairment or Disposal of Long Lived Assets".  Further, the Company under
       the  bankruptcy  plan of  reorganization  elected  to reject  this  lease
       obligation  which had a balance  due of  $200,000.  The  Company  and the
       creditor then reached an agreement  whereby the Company paid the creditor
       $10,000 in exchange for the  forgiveness of the remaining  balance due on
       the lease obligation (See Note 18).


                                      F-20
<PAGE>

                                                    AZUREL LTD. AND SUBSIDIARIES

                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)
--------------------------------------------------------------------------------

NOTE 9 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

       Accounts  payable  and  accrued  expenses  consist  of the  following  at
December 31, 2002:

       Trade accounts payable                                        $301,001
       Advances from customers                                         13,500
       Cash overdraft                                                  24,543
       Accrued legal                                                   16,528
       Accrued payroll                                                  9,317
       Accrued interest                                                11,845
       Other accrued expenses                                          77,801
                                                                     --------
                                                                     $454,535
                                                                     ========


NOTE 10 - REVOLVING LINE OF CREDIT

       The Company has a line of credit which was assumed in connection with the
       Romantic  acquisition  (See Note 5). This line has an expiration  date of
       May 24, 2004 and bears an interest  rate of prime  (4.25% at December 31,
       2002).  The line is personally  guaranteed  by a  shareholder  and has an
       outstanding balance of $84,965 at December 31, 2002.


NOTE 11 - OFFICER ADVANCES

       Officer  advances  consist  of  interest  bearing  (10%  per  annum)  and
       non-interest bearing loans and advances, payable upon demand. Included in
       officer  advances at December 31, 2002 is a $110,513  loan  consisting of
       credit card cash advances of $120,323  netted  against a receivable  from
       the officer of $9,810. These advances were assumed in connection with the
       Romantic  acquisition  (See Note 5). For the year ended December 31, 2002
       interest  expense paid to credit card companies for the related  advances
       was approximately $400.


NOTE 12 - CAPITAL LEASE OBLIGATIONS

       The Company has equipment  under three capital  lease  obligations  which
       were assumed in connection  with the Romantic  acquisition  (See Note 5).
       These capital lease obligations expire at various times through 2004. The
       assets and  liabilities  under capital  leases are stated at the lower of
       the present  values of the minimum  lease  payments or the fair values of
       the assets.  The assets are  included in property and  equipment  and are
       amortized on a straight-line method over the shorter of the lease term or
       the service life of the related assets.



                                      F-21
<PAGE>
                                                    AZUREL LTD. AND SUBSIDIARIES

                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)
--------------------------------------------------------------------------------

NOTE 12 - CAPITAL LEASE OBLIGATIONS, continued

       As of December 31, 2002 minimum future lease payments under these capital
leases are:

                  For the Year Ending
                     December 31,                              Amount
       ----------------------------------------------- -------------------
                         2003                                   $16,761
                         2004                                    14,556
                                                                -------

             Total minimum lease payments                        31,317
             Less: amounts representing interest                  2,965
                                                                -------

              Net minimum lease payments                        $28,352
                                                                =======

       The interest  rates  pertaining to these capital  leases range from 7% to
       12%,  and the net  book  value of the  related  assets  is  approximately
       $32,678 at December  31,  2002.  Interest  expense  incurred for the year
       ended December 31, 2002 was $1,375.

       Subsequent  to December 31,  2002,  the Company has not made all required
       payments under these capital lease obligations.  As a result, the Company
       is in default of these  agreements and is subject to the  repossession of
       the  underlying  assets and  potential  litigation  for the  recovery  of
       amounts due.


NOTE 13 - SHAREHOLDERS' EQUITY

       PREFERRED STOCK
       In August 2002,  the Company  converted  all of its Series A  Convertible
       Preferred  Stock into 1,500 shares of common stock as part of its Plan of
       Reorganization.

       During the year ended  December  31,  2001,  the Company did not issue or
       convert any shares of its Series A Convertible Preferred Stock.

       COMMON STOCK
       During the year ended December 31, 2002,  the Company  issued  21,754,238
       shares of its common stock as detailed below:

       o      Sold  3,000,000  shares  of its  common  stock  for  approximately
              $300,000 to various  investors as part of an agreement to fund the
              Company's Plan of Reorganization, valued at $784,685.

       o      Issued an aggregate of 6,890,337  shares of its common  stock,  to
              its  prepetition  creditors  as  part  of the  Company's  Plan  of
              Reorganization, valued at $784,685.


                                      F-22
<PAGE>

                                                    AZUREL LTD. AND SUBSIDIARIES

                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)
--------------------------------------------------------------------------------

NOTE 13 - SHAREHOLDERS' EQUITY, continued

       COMMON STOCK, continued

       o      Converted all of its Series A Convertible Preferred Stock to 1,500
              shares  of its  common  stock  as  part of the  Company's  Plan of
              Reorganization.

       o      Issued  150,000  shares  of its  common  stock to an  entity  that
              provided   management   services  through  July  2002,  valued  at
              approximately $68,000.

       o      Issued  200,000  shares of its common stock to a key employee as a
              bonus, valued at approximately  $64,000.  The sale of these shares
              is restricted for one year expiring October 31, 2003.

       o      Sold  225,000  shares  to an  individual  at $.20 per share for an
              aggregate of $45,000.

       o      Issued  9,500,000  shares  of  its  common  stock  to  the  former
              shareholders of Romantic as part of a Merger Agreement,  valued at
              $950,000 (see Note 5).

       o      Adjusted its outstanding  common stock by 19,901 to reflect shares
              issued in October  2000 that were not  previously  recorded in the
              Company's consolidated financial statements.

       CONVERTED PROMISSORY NOTES
       During November 2002, the Company conducted a private placement  offering
       of 390 units at a price of $10,000 per unit.  Each unit  consists of a 7%
       convertible two-year promissory note and warrant to purchase 2,500 shares
       of Common Stock. During this period,  353.5 units ($353,500) were sold to
       4 investors. The Company paid fees in the amount of $25,900 in connection
       with the private placement. A portion of the net proceeds raised from the
       placement has been used to fund the Company's working capital and capital
       expenditure requirements.

       The Promissory Notes including accrued interest are convertible into five
       (5) shares of Common Stock for each dollar of debt,  at the option of the
       holder, subject to certain adjustments and conditions.

       In accordance  with the Private  Placement  Offering,  the Company issued
       warrants to purchase  883,750 shares of Common Stock at an exercise price
       of $0.40 per share. These warrants, expire in November 2005.

       The fair  value of the  warrants  (calculated  using  the  Black  Scholes
       Option-Pricing model) and the notes were recorded based on their relative
       fair values in accordance  with Emerging  Issues Task Force Nos. 98-5 and
       00-27 as follows:



                                      F-23
<PAGE>

                                                    AZUREL LTD. AND SUBSIDIARIES

                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)
--------------------------------------------------------------------------------

NOTE 13 - SHAREHOLDERS' EQUITY, continued

         CONVERTED PROMISSORY NOTES, continued

         Face value of Promissory Notes                             $  353,500
         Less: Relative fair value of warrants                        (150,000)
                                                                    ----------
                  Relative fair value of Promissory Notes           $  203,500
                                                                    ==========

         Accordingly,  the Company recorded a beneficial  conversion  feature on
         the  promissory  notes of  $327,000.  The  relative  fair  value of the
         warrants  was  recorded as a deferred  debt  discount.  The  beneficial
         conversion  feature  and  deferred  debt  discount  accrete to interest
         expense over the life of the Promissory Notes.

         On November 22, 2003,  upon  conversion of the Promissory  Notes by the
         holders,  as defined above,  the Company issued 1,767,500 shares of its
         common stock.  As a result of the  conversion,  the Company  recorded a
         change to interest for the following:

         Beneficial Conversion Feature                              $327,000
         Deferred Debt Discount                                      150,000
         Deferred Debt Financing                                      25,900
                                                                    --------
                                                                    $502,900
                                                                    ========


NOTE 14 - 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.

       There is no  provision  for income  taxes in each of the two years  ended
       December 31, 2002 and 2001.

       The tax effects of temporary  differences  that give rise to  significant
       portions of the deferred tax assets and  liabilities at December 31, 2002
       are summarized as follows:

       Net operating loss carryforwards                           $5,135,000
       Inventory obsolescence reserve                                 46,000
                                                                  ----------
                                                                   5,181,000
       Less:  Valuation allowance                                  5,181,000
                                                                  ----------

                  Deferred tax asset                              $       --
                                                                  ==========



                                      F-24
<PAGE>

                                                    AZUREL LTD. AND SUBSIDIARIES

                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)
--------------------------------------------------------------------------------

NOTE 14 - INCOME TAXES, continued

       During the year ended December 31, 2002,  approximately $4,728,000 of the
       net operating loss  carryforwards were utilized to reduce taxable income.
       At December 31, 2002,  the Company has net operating  loss carry forwards
       remaining of  approximately  $13,167,000 to reduce future taxable income,
       if  any.  These  losses,  which  expire  through  2022,  are  subject  to
       substantial  limitations  as a result of IRC Section 382 rules  governing
       changes in control.  Management has not determined  what impact,  if any,
       the  IRC  Section  382  rules  will  have  on  the  net  operating   loss
       carryforwards at December 31, 2002.


NOTE 15 - RELATED PARTY TRANSACTIONS

       Note payable,  related  party in the original  amount of $35,000 bears an
       interest rate of 15% per annum and is payable on demand. This note has an
       outstanding  balance of  $44,227 at  December  31,  2002.  The CEO of the
       Company is a shareholder and the Vice President of this related party.


NOTE 16 - 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,  as defined in the Plan.
       Options to acquire up to 1,750,000  shares may be granted under the plan.
       Prior to the Company's  initial public  offering,  980,500  warrants were
       issued  at an  exercise  price of $4.50 per  share.  The  Company  issued
       1,200,000  warrants in connection with the initial public offering of its
       common stock.  Each warrant  entitles its holder to purchase one share of
       Common  Stock at an exercise  price of $4.50 per share.  The warrants are
       exercisable  commencing  July  30,  1998 and  expire  in July  2005.  The
       warrants are  redeemable by the Company at a price of $.10 per share each
       subject to certain conditions  commencing July 30, 1998 and thereafter up
       to their expiration.  The Company  additionally issued 120,000 redeemable
       warrants to the  underwriter  for $18,000.  Such warrants are exercisable
       for four years  commencing  July 30, 1998 at a price equal to 150% of the
       initial  public  offering  price  of  the  Common  Stock  and  Redeemable
       Warrants.  Also, 180,000 warrants were issued pursuant to the exercise of
       the underwriter's  over-allotment option. During 1998, the Company issued
       200,000  warrants  at an  exercise  price of $2 per share.  Each  warrant
       entitles  its holder to purchase one share of Common Stock at an exercise
       price of $2.00 per share.



                                      F-25
<PAGE>

                                                    AZUREL LTD. AND SUBSIDIARIES

                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)
--------------------------------------------------------------------------------

NOTE 16 - STOCK OPTIONS AND WARRANTS, continued

       During 1999, the Company  issued  1,355,168  warrants at exercise  prices
       ranging from $.90 to $3.00 per share. Each warrant entitles its holder to
       purchase one share of Common  Stock.  The Company has reserved  4,035,668
       shares of common stock for issuance upon exercise of the warrants.

       During November 2002, the Company issued 883,750  warrants at an exercise
       price of $0.40 per share, in connection with a private placement offering
       (see Note 13).

<TABLE>
<CAPTION>
                                                   Options                                  Warrants
                                   ----------------------------------------- ----------------------------------------
                                                             Weighted                                 Weighted
                                       Number of         Average Exercise        Number of        Average Exercise
                                         Shares               Price                Shares               Price
                                   ------------------- --------------------- ------------------- --------------------
<S>                                <C>                 <C>                   <C>                 <C>
      Outstanding at
      December 31, 2001                     15,000                  $1.06          4,035,668                  $3.44
      Issued                                    --                     --            883,750                   0.40
      Cancelled                                 --                     --                 --                     --
                                        ----------                -------          ---------                -------
      Outstanding at
       December 31, 2002                    15,000                $  1.06          4,919,418                $  3.44
                                        ==========                =======          =========                =======
</TABLE>

NOTE 17 - SEGMENT REPORTING

       Commencing November 1, 2002, the Company began classifying its operations
       into two business  segments:  (a) the  manufacturing  and distribution of
       fragrance  products and (b) the manufacturing and distribution of women's
       loungewear  and robes.  The Company's  segment  information  for the year
       ended December 31, 2002 is as follows:

<TABLE>
<CAPTION>
                                                              Segment
                                                      (a)                  (b)               Total
                                                -----------------------------------------------------
<S>                                             <C>                  <C>                  <C>
       Net sales                                $    83,582          $   152,953          $   236,535
                                                ===========          ===========          ===========
       Loss from operations                     $  (578,264)         $  (101,872)         $  (680,136)
                                                ===========          ===========          ===========

           Total Identifiable Assets at
            December 31, 2002                   $   271,655          $ 1,719,113          $ 1,990,768
                                                ===========          ===========          ===========
</TABLE>

NOTE 18 - EXTRAORDINARY ITEMS

         For  the  year  ended  December  31,  2002,  the  Company  realized  an
         extraordinary gain of $4,728,310,  with no income tax effect. This gain
         resulted from the  extinguishment of liabilities  subject to compromise
         relating to the plan of reorganization (see Note 2).


                                      F-26
<PAGE>

                                                    AZUREL LTD. AND SUBSIDIARIES

                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)
--------------------------------------------------------------------------------

NOTE 18 - EXTRAORDINARY ITEMS, continued

       During the year ended December 31, 2001, the Company under the bankruptcy
       plan of  reorganization  elected to reject its capital  lease  obligation
       which had a balance due of $200,000. The Company and the creditor reached
       an agreement  whereby the Company  paid 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   realized  an
       extraordinary  gain on  early  extinguishment  of debt in the  amount  of
       $190,000, with no income tax effect.


NOTE 19 - LITIGATION

       The  Company is  involved  in  litigation  through  the normal  course of
       business.  The Company believes that the resolution of these matters will
       not have a  material  adverse  effect on the  financial  position  of the
       Company.


NOTE 20 - MAJOR CUSTOMERS

       During the year ended  December 31, 2001 the Company  sold a  substantial
       portion  of its  products  to two  customers.  Sales to  these  customers
       approximated  35% and 25% of the  Company's  revenue  for the  year  then
       ended.


NOTE 21 - COMMITMENTS AND CONTINGENCIES

       OPERATING LEASES
       In March 2002,  the Company  relocated  its  offices and  warehouse  to a
       facility in Fairfield, New Jersey. The Company leases this premises under
       a month-to-month operating lease.

       The Company  leases a facility in Brooklyn,  New York,  which it acquired
       through the Romantic  acquisition  (see Note 5). The Company  leases this
       facility under a five (5) year noncancelable  operating lease expiring on
       June 30, 2004.  Annual rent under this lease  approximates  $48,000.  The
       Company pays property  taxes,  insurance,  maintenance and other expenses
       related to the leased properties.

       Rental expense for the years ended December 31, 2002 and 2001 was $17,024
       and $84,250, respectively.



                                      F-27
<PAGE>

                                                    AZUREL LTD. AND SUBSIDIARIES

                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)
--------------------------------------------------------------------------------

NOTE 21 - COMMITMENTS AND CONTINGENCIES, continued

       OPERATING LEASES, continued
       Future minimum rental  payments  under the above  operating  leases as of
       December 31, 2002 are as follows:

                          For the
                        Year Ending
                       December 31,                     Amount
               ------------------------------ -----------------------
                           2003                           $39,885
                           2004                            20,318
                                                          -------
                              Total                       $60,203
                                                          =======

       PAYROLL TAXES
       Flo Weinberg,  a wholly owned  subsidiary of the Company is delinquent in
       its payment of payroll  taxes.  As of  December  31,  2002,  the past due
       amounts  have  been  included  in taxes  payable  totaling  approximately
       $129,500 and consist of payroll  taxes owed and  estimated  penalties and
       interest.  At any time the Internal  Revenue  Service  could  declare the
       Company in default of their fiduciary responsibility and could file a tax
       lien on the Company's assets or take other action against the Company and
       its responsible  officers,  which would have a material adverse effect on
       the Company's business.


NOTE 22 - SUBSEQUENT EVENTS

       In February  2003,  the Company  received  $80,000 from the  Breckenridge
       Group in exchange for a secured note that was due August 20, 2003 bearing
       interest  at an  amount  not to exceed  the  maximum  amount of  interest
       allowed by applicable law. The note is collateralized by the inventory of
       the  Company  and  is  guaranteed  by  an  officer  of  the  Company.  As
       consideration  for the loan,  the Company  issued  147,000  shares of its
       Common Stock. In addition, the Company also pledged 880,000 shares of its
       common  stock as security for  performance  of its  obligation  under the
       secured  note  agreement.  The  Company is  currently  in default of this
       agreement and the note is payable on demand.

       In March 2003,  the Company  issued 413,949 shares of its common stock to
       its   prepetition   creditors   as   part  of  the   Company's   plan  of
       reorganization.

       In April 2003,  the Company  issued 365,360 shares of its common stock to
       former  shareholders  of  Romantic  as part of an  agreement  to fund the
       Company's current operations.



                                      F-28
<PAGE>
                                                    AZUREL LTD. AND SUBSIDIARIES

                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)
--------------------------------------------------------------------------------

NOTE 22 - SUBSEQUENT EVENTS, continued

       In May 2003,  the Company  entered into a factor  agreement with Westgate
       Financial Corp.,  whereby  substantially all accounts receivable are sold
       to  the  factor  on  a  pre-approved   non-recourse   basis,  except  for
       chargebacks and customer claims,  as defined.  Factoring  commissions are
       charged at 1.5% of factored sales with a minimum charge to the Company of
       $15,000 per year.  Advances  under the agreement are not to exceed 70% of
       accounts receivable or $250,000,  whichever is less, and bear interest at
       prime plus 3% per annum.  Advances  under the agreement are guaranteed by
       an officer of the Company.


                                      F-29
<PAGE>


                                  CERTIFICATION


I, Steven Moskowitz, certify that:

1.       I have reviewed this annual report on Form 10-KSB/A of Azurel, Ltd.;

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

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

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

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

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

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

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

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

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

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

Date: September 18, 2003
                                                   /s/  Steven Moskowitz
                                                   ---------------------------
                                                   Steven Moskowitz
                                                   Chief Executive Officer



                                       19
<PAGE>

I, Martin Pelman, certify that:

1.       I have reviewed this annual report on Form 10-KSB/A of Azurel, Ltd.;

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

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

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

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

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

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

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

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

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

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

Date: September 18, 2003
                                                 /s/ Martin Pelman
                                                 ------------------------------
                                                 Martin Pelman
                                                 Acting Chief Financial Officer


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<PAGE>


I, Edward Adamcik, certify that:

1.       I have reviewed this annual report on Form 10-KSB/A of Azurel, Ltd.;

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

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

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

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

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

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

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

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

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

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

Date: September 18, 2003
                                                    /s/ Edward Adamcik
                                                    ----------------------------
                                                    Edward Adamcik
                                                    Vice President of Operations

                                       21
<PAGE>

EXHIBIT NO.    DESCRIPTION OF EXHIBITS

2.1            First  Amended  Plan of  Reorganization  of Azurel filed with the
               United States Bankruptcy Court,  District of New Jersey. Filed as
               Exhibit 2.1 to Azurel's Annual Report on Form 10-KSB for 2001 and
               incorporated herein by reference.

2.2            First  Modified Plan of  Reorganization  of Azurel filed with the
               United States Bankruptcy Court,  District of New Jersey. Filed as
               Exhibit 2.2 to Azurel's Annual Report on Form 10-KSB for 2001 and
               incorporated herein by reference.

2.3            Order of Confirmation of First Modified Plan of Reorganization of
               Azurel filed with the United States Bankruptcy Court, District of
               New Jersey.  Filed as Exhibit 2.3 to  Azurel's  Annual  Report on
               Form 10-KSB for 2001 and incorporated herein by reference.

2.4            Merger  Agreement dated July 2, 2002, as amended October 27, 2002
               by and among Azurel, Flo Weinberg, a wholly owned subsidiary,  RM
               Enterprises  International,  Ltd. and Romantic  Moments,  Inc., a
               wholly owned subsidiary of RM Enterprises International. Filed as
               Exhibit A to  Azurel's  Form 8K filed on  November  14,  2002 and
               incorporated herein by reference.

3.1            Certificate of Incorporation  of Azurel.  Filed as exhibit 3.1 to
               Azurel's  Annual  Report  on Form  10-KSB  for 1997  incorporated
               herein by reference.

3.2            Amended  By-Laws of  Azurel.  Filed as  exhibit  3.2 to  Azurel's
               Annual  Report on Form  10-KSB  for 1997  incorporated  herein by
               reference.

3.3            Amended Certificate of Incorporation of Azurel.  Filed as exhibit
               3.2  to   Azurel's   Annual   Report  on  Form  10-KSB  for  1997
               incorporated herein by reference.

3.4            Amended Certificate of Incorporation of Azurel.  Filed as Exhibit
               B to  Azurel's  Schedule  14A  filed on  September  26,  2002 and
               incorporated herein by reference.

4.1            Form of Public Warrant Agreement of Azurel.  Filed as exhibit 4.3
               to Azurel's  Annual  Report on Form 10-KSB for 1997  incorporated
               herein by reference.

10.1           Management   Services   Agreement  between  Azurel,  Ltd  and  RM
               Enterprises  International,  Ltd,  filed as Exhibit G to Azurel's
               Schedule 14A dated September 26, 2002 and incorporated  herein by
               reference.

20.1           Definitive  Proxy  Statement on Schedule 14A filed in  connection
               with Azurel's annual meeting at which the proposal to approve the
               Merger Agreement,  among other matters,  was approved by Azurel's
               stockholders.  The Schedule  14A was filed on September  26, 2002
               and is incorporated herein by reference.

20.2           Current  Report  on  Form  8-K  filed  in  connection   with  the
               consummation  of the  transactions  contemplated  by  the  Merger
               Agreement  on  November  14,  2002  and  incorporated  herein  by
               reference.

21             Subsidiaries of Registrant. Filed herewith.



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