UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    _________

                                   FORM 10-KSB


(Mark One)

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

For the fiscal year ended ________________________________.

                                       OR

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

For the transition period from July 31,2003 to December 31, 2003.

                         Commission file number 0-25659

                           VIRILITEC INDUSTRIES, INC.
                 ----------------------------------------------
                 (Name of Small Business Issuer in Its Charter)

              Delaware                                        11-3447894
 ---------------------------------                        -------------------
   (State or Other Jurisdiction                            (I.R.S. Employer
 of Incorporation or Organization)                        Identification No.)

           62 White Street, Third Floor, New York, NY          10013
        ------------------------------------------------------------------
            (Address of Principal Executive Offices)         (Zip Code)

                                 (646) 320-4394
                ------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)


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

                                                       Name of Each Exchange
       Title of each Class                              on Which Registered
       -------------------                             ---------------------
         Not Applicable                                         None


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


                         Common Stock, $0.0001 Par Value
                         -------------------------------
                                (Title of Class)


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 _X_   No ___

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

The issuer's revenues for its most recent fiscal year were $145,252.

The aggregate market value of the voting stock held by non-affiliates based upon
the last sale price on February 10, 2004 was approximately $8,543,604.

As of February 10, 2004 there were 157,669,130 shares of Common Stock, par value
$0.0001 per share, outstanding.


<PAGE>


                                TABLE OF CONTENTS


ITEM                                                                        PAGE


PART I


1        Description of Business                                              1
2        Description of Property                                              5
3        Legal Proceedings                                                    5
4        Submission of Matters to a Vote of Security Holders                  5


PART II


5        Market for Common Equity and Related Stockholder Matters             5
6        Management's Discussion and Analysis or Plan of Operation            7
7        Financial Statements                                                 15
8        Changes In and Disagreements with Accountants on Accounting and
         Financial Disclosure                                                 25
8A       Controls and Procedures                                              25


PART III


9        Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16 of the Exchange Act                       25
10       Executive Compensation                                               26
11       Security Ownership of Certain Beneficial Owners and Management
         And Related Stockholder Matters                                      28
12       Certain Relationships and Related Transactions                       29
13       Exhibits, Lists And Reports On Form 8-K                              29
14       Principal Accountant Fees and Services                               29


SIGNATURES                                                                    30


<PAGE>


PART I

ITEM 1.  DESCRIPTION OF BUSINESS

BACKGROUND

Virilitec Industries, Inc., a Delaware corporation ("Virilitec"), was organized
on August 11, 1998. We were formed to license and distribute a line of
bioengineered virility nutritional supplements designed to enhance human male
sperm count and potency. We were not successful in implementing our business
plan, and after looking at other possible products to expand our product line,
our management determined that it was in the best interests of our shareholders
to attempt to acquire an operating company. As a result, we terminated all of
our existing contracts and were inactive until the merger with ROO Media
Corporation, a Delaware corporation ("ROO Media").

ACQUISITION OF ROO MEDIA CORPORATION

On December 2, 2003, Virilitec, VRLT Acquisition Corp., a Delaware corporation
and wholly-owned subsidiary of Virilitec ("Merger Sub"), ROO Media, and Jacob
Roth and Bella Roth, each an individual (collectively, the "Virilitec Principal
Stockholders"), entered into an Agreement and Plan of Merger (the "Merger
Agreement"). Upon the terms and subject to the conditions set forth in the
Merger Agreement, Merger Sub was merged with and into ROO Media (the "Merger").
As a result of the Merger, Virilitec, through Merger Sub, acquired 100% of the
capital stock of ROO Media, all issued and outstanding shares of capital stock
of ROO Media held by the stockholders of ROO Media were cancelled and converted
into the right to receive an aggregate of 148,000,000 shares of common stock of
Virilitec ("Virilitec Common Stock"), the separate corporate existence of Merger
Sub ceased, and ROO Media continued as the surviving corporation in the Merger
as a wholly-owned subsidiary of Virilitec.

In connection with the Merger, we agreed to cause the resignation of all of the
members of our Board of Directors and appoint new Directors as designated by the
Chairman of the Board of Directors of ROO Media. As additional consideration for
the Virilitec Common Stock, ROO Media paid to Virilitec $37,500 prior to the
execution of the Merger Agreement, an aggregate of $100,000 of Virilitec's total
$162,500 of liabilities as reflected on Virilitec's balance sheet on the closing
date of the Merger, and Virilitec's $62,500 debt to Jacob Roth, Virilitec's
former Chief Executive Officer. In connection with the $62,500 payment to Mr.
Roth, ROO Media entered into an agreement to pay such debt within 90 days after
the effective date of the Merger, which was December 3, 2003. The obligation to
pay such debt is secured by the pledge of the 72,000,000 shares of the Virilitec
Common Stock issued to Robert Petty, the Chief Executive Officer of ROO Media,
after the Merger.

The Business

OVERVIEW

We, through our operating subsidiary ROO Media, are a digital media company in
the business of providing products and solutions to a global base of clients
that enable the broadcast of topical video content from their Internet websites.
We specialize in providing the technology and content required for video to be
played on computers via the Internet as well as emerging broadcasting platforms
such as set top boxes and wireless devices (i.e., mobile phones and PDAs). Our
core activities include the aggregation of video content, media management,
online advertising, hosting, and content delivery. We also operate a global
network of individual destination portals under the brand ROO TV, enabling end
users in different regions around the world to view video content over the
Internet that is topical, informative, up to date, and specific to the region in
which they live. In conjunction with our subsidiaries, we currently service
websites based in Europe, Australia, the United States and South Africa.

HISTORY OF THE DEVELOPMENT OF THE COMPANY'S BUSINESS

ROO Media Corporation ("ROO Media"), our wholly-owned subsidiary, was
incorporated on March 30, 2001 in the State of Delaware. ROO Media's
subsidiaries are ROO Media (Aust) Pty Ltd, ROO Media Europe Ltd, ROO
Broadcasting Ltd and ROO TV Pty Ltd. ROO Media's business is the provisioning of
topical video content, including news, business, entertainment, fashion, video
games, movies, music and travel video, and associated services for broadcasting
video over the Internet to a global base of clients. ROO Media's delivery
platform supports worldwide syndication and television-style advertisement
insertion programming. During 2001 and 2002, ROO Media focused on the
development and refinement of its products and solutions, and only commenced the
commercial selling of its solutions in late 2003. As a result of ROO Media's
focus on the development and rollout of product and services, turnkey
infrastructure, technology, and distribution model, ROO Media established a
technology platform specifically designed to provide a cost effective, robust,
and scaleable solution to manage and syndicate video content over the Internet.

Our media operational management and updating functions are based in Australia,
where we are able to benefit from not only the substantial savings associated
with the lower currency cost, but operational benefits associated with the time
differences between the eastern and western hemispheres, allowing daily media
content to be processed during the evening in the United States and the United
Kingdom and during the daytime in Australia. As a result, we believe we have a
strategic cost benefit over our competitors.

Our business plan is to develop a worldwide network of websites that utilize our
technology and content to broadcast video from individual websites. The network
of websites includes third party websites that license our technology and
content as well as our own network of websites, which are branded as ROO TV. The
network is designed to be similar to a traditional satellite of cable networks
that distributes content throughout the world, with the difference being it is
broadcasted over the Internet rather than via television. We have already


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<PAGE>

developed the technology platform and content to enable over 4,000 videos to be
viewed on a daily basis by a computer user connected to the Internet who visits
a website utilizing our technology and video content. The video content
available for viewing includes topical content such as news, business,
entertainment, fashion, music, movies and travel. We update the video content
and distribute the content to websites receiving our services on a daily bases.
The video content is supplied by content providers such as The Associated Press
and Reuters Media Inc, with whom we have established relationships. We generate
revenue from fees paid by the websites for our content and technology services
and, like traditional media companies, from advertising across our network of
websites.

As part of our worldwide strategy to develop a network of websites, we have also
developed and launched our own network of websites under the brand name ROO TV
(www.rootv.com). ROO TV operates television-style destination websites in
various regions around the world, including Australia, Singapore, South Africa,
the United States, and the United Kingdom. Since commencing operations in
January 2003, ROO TV has provided on-demand news, business, entertainment,
fashion, travel, health, music and movie videos. The ROO TV sites offer users a
wide range of video content to view free of charge, via either a narrowband or
broadband Internet connection. Until recently, the business of ROO TV has been
operated as part of our technology and video distribution platform based in the
United States, and utilized various technologies, including video files hosted
and delivered worldwide via AT&T's network. ROO TV now operates as a stand-alone
business. The principal objectives of ROO TV are to open additional
country-based websites in conjunction with expanding and developing the initial
advertising base already secured by us. This principal objective involves the
procurement and registration of suitable websites, securing increased visits to
the websites, promoting the existing and new websites to worldwide and local
advertisers, and securing content, which encourages return and regular visits to
the websites.

We have a number of established license agreements in place with content owners
around the world, including The Associated Press, Reuters Media Inc, and The
Australian Broadcasting Corporation (ABC). Specifically, we have signed two-year
contracts with Reuters and the Associated Press for news, business and
entertainment content. These relationships have enabled us to build a content
database that hosts over 4,000 video clips on a range of topics, including news
(world and regional), business, entertainment, fashion, health, music, movies
and travel. The content database is updated on a daily basis. Contracts with the
individual content providers are typically twelve to twenty-four months in
length. The fees we pay for the content we receive can range from a flat fee per
month, to a fee every time a video is viewed, to a fee whenever a video is
viewed with an associated instream television-style video advertisement.

Operational Strategy
--------------------

Our operational strategy for 2004 is broken into the following core areas:

o    Expanding content database and developing new products based on our
     existing pool of quality video content for emerging markets such as
     wireless and set top boxes;

o    Increasing market penetration and growing market share and distribution in
     the United States, Europe, Asia and Australia;

o    Expanding the network of websites in which we provide content and
     technology by expanding the ROO TV network of websites to more countries,
     and activating new customers to our content solutions using our direct
     sales force and resellers of our products and services in markets in the
     United States, Australia, United Kingdom and Asia;

o    Acquiring commercially viable companies or businesses that have the
     potential for accelerating or enhancing our business model;

o    Investing in research and development of products, platform and technology
     to offer a wider range of video content and improved user experience for
     users viewing videos from our platform; and

o    Developing awareness and relationships with advertising agencies and
     advertisers of the benefits of advertising on our network of websites.

The implementation of our operational strategies will be dependent on raising
additional capital throughout 2004 and we cannot assure you that such
operational strategies will be achieved.

Sales and Marketing
-------------------

Our products and services are sold by our direct sales force and appointed
resellers. Our syndication and video solutions products are sold by our direct
sales force based in the United States and Australia, our online advertising is
sold by our direct sales force and through appointed interactive online
advertising agencies, and ROO TV is promoted through major search engines and
interactive web sites. Our direct sales force target the following market
segments for our content syndication products: (1) media and newspaper chains;
(2) Internet service providers; and (3) dedicated vertical websites such as
entertainment websites that are potential purchasers of entertainment video
content. Through our direct sales force and third party advertising agencies, we
target potential advertisers to advertise on our network of websites. We manage
our sales database through a customer relationship management system, which
allows for access and tracking from any ROO Media sales staff connected to the
Internet. Marketing of our products and services is done through traditional
public relations and web-based marketing.

Technology
----------

Our technology platform and infrastructure is largely based in the United States
and is designed to be accessed and maintained from satellite offices anywhere in
the world via a Virtual Private Network (VPN) over the Internet. The technology
platform has been specifically designed to provide a cost effective, robust,
scaleable solution to manage and syndicate video content over the Internet. The



                                       2
<PAGE>


platform architecture allows for the flexible usage of a wide range of third
party software, hardware and internally developed operational processes. The key
components forming the platform are housed with AT&T in New York, VideoDome
Networks, Inc. in California, and smaller hosting arrangements located in Texas
and Atlanta, Georgia. The key features of our technology platform include:

     o    Full screen video viewing;

     o    Viewing of all content via either a narrowband (Dial up) or broadband
          connection;

     o    Platform supporting Real Networks and Microsoft Windows Media formats;

     o    Global delivery and hosting allowing for video viewing throughout the
          world by anyone connected to the Internet;

     o    Ability to program TV commercials to be played before selected videos
          on selected web sites;

     o    Secure storage and protection of media files;

     o    Full reporting on videos viewed by type, date, country, web site,
          etc.;

     o    The ability to present the videos in players and templates which match
          the branding of the multiple web sites on which the content is
          syndicated; and

     o    Central technology platform allowing videos to be automatically
          updated across the multiple web sites in which they are displayed.

Intellectual Property
---------------------

         We do not have any registered copyrights on any software and have not
completed the filing of our trademark and patent applications. A large majority
of our software was acquired from third parties. For example, we acquired the
intellectual property relating to Internet satellite sports from Robert Petty,
our Chief Executive Officer, who in turn acquired it from Midnight Bay Pty Ltd,
in exchange for the issuance of 25 ordinary shares in ROO Media to Mr. Petty or
his nominees prior to the merger with Virilitec Industries Inc. We rely upon
confidentiality agreements signed by our employees, consultants and third
parties to protect our intellectual property.

         We depend on technology licensed to us by third parties. We license
technology from third parties, including software that is integrated with
internally developed software and used in our products to perform key functions.
We anticipate that we will continue to license technology from third parties in
the future. Although we do not believe that we are substantially dependent on
any licensed technology, some of the software that we license from third parties
could be difficult for us to replace. The effective implementation of our
products depends upon the successful operation of third-party licensed products
in conjunction with our products, and therefore any undetected errors in these
licensed products could prevent the implementation of our products, impair the
functionality of our products, delay new product introductions, and/or damage
our reputation. See "Risk Factors".

Products
--------

Our products and services, including those of our subsidiaries, are broken into
the following core areas:

         ROO Solutions. We utilize our expertise in video broadcasting over the
Internet to build customized video solutions for specific customers or industry
segments. Our platform has been designed to be flexible in accommodating various
opportunities for activating video for broadcast over the Internet and
accommodating emerging technologies such as wireless devices (i.e., mobile
phones and PDAs) and set top boxes. The same platform, or components thereof,
used by us to run our network of websites can be adapted to suit the individual
needs of clients with specific objectives in mind. As our profile within the
market segment increases, organizations have increasingly approached us to aid
them in addressing a variety of individual Internet broadcasting requirements.
An example is B & T Weekly, a Reed Business Information publication targeted to
the advertising and marketing industry; we utilize our platform and solutions to
provide a wide range of television commercials for the advertising industry,
which can be viewed from the B & T Website located at www.bandt.com.au.

         ROO Syndication of Licensed Video Content. We provide a turnkey
solution for customers located throughout the world to activate licensed topical
video content on their web sites. ROO Media supplies our wholesale clients with
a cost effective turnkey solution whereby the client receives the licensed video
content it selects, such as news, business, fashion, entertainment, travel,
etc., the technology to integrate the video into its website, daily management
and updating of the content, and regular reporting on which content is being
viewed. We generally receive a base fee per month from the client and a share of
the advertising revenue generated on the client's website. Samples of current
customers for this service include www.internetvideomag.com based in the United
States, Neighborhood Cable, a broadband and cable TV provider based in Australia
(www.nctv.com.au), Undercover, a music interview and information web site, and
CEO Online, a web site for CEOs to access information and resources.

         ROO TV, Our Own Network of Web Sites. ROO TV (www.rootv.com) web sites
are country-based web sites that provide over 4,000 videos available for viewing
and allow users to view a range of videos across multiple categories, such as
news, business, entertainment, music, movie, fashion, computer games and travel,
from their computer. Each individual ROO TV country site contains content
specific to that country. For example, on the Australian ROO TV sites,
Australian news is featured. Videos are updated six times a week with the latest
video content available. The first ROO TV site was officially launched in the
first quarter of 2003. To date, sites have been launched in Australia, the
United States, the United Kingdom, Singapore and South Africa.

         ROO Media Online Advertising Network. Through ROO TV and our
syndication clients, we have developed a network of web sites across which we
can sell advertising inventory. Specifically, we have developed and implemented
an advertising platform specifically designed to simultaneously provide
advertisers with a targeted demographic and calculated success, and ROO Media,
our content providers and our wholesale clients with a substantial and
additional incremental revenue stream. The advertising includes traditional
banner ads and television-style 15 second and 30 second commercials, which can
be programmed to play before and after topical video clips that are most likely
to be viewed by the advertisers' chosen demographic. The platform has also been
designed to allow for 2 to 3 minute advertorials to


                                       3
<PAGE>


be included on a wholesale client's website, or as a standalone clip within
certain content categories of our content bank. Advertising inventory across our
network of web sites is sold by our direct sales force and through appointed
interactive online advertising agents. Revenue is generated for us every time a
clip is viewed. Our syndication clients receive a percentage of the advertising
revenue generated on their websites by our online advertising.

         Our platform provides the ability to:

          o    Program an advertisement to run only on selected web sites in
               selected countries;

          o    Program a commercial to run a specific amount of times or between
               a selected range of dates;

          o    Program a commercial to run within a selected content category;
               and

          o    Provide reports on how many times the advertisement was viewed.

Initial advertisers featuring our instream advertising have included brands such
as Telstra, Saab, Sony Music, Nescafe, American Express and ING.

         ROO Broadcasting Ltd. In July 2003, we purchased the intellectual
property relating to Australian horse racing. In August 2003, we established ROO
Broadcasting Ltd. ("RBL") as a separate company to focus on the development of
solutions for the horse racing market place. RBL plans to focus on the supply of
video solutions to the horse racing industry, which include the broadcasting of
live horse races over the Internet. Target markets include thoroughbred racing,
harness racing and greyhound racing. RBL currently focuses on the Australian
market place, which is known to have one of largest racing industries in the
world, and plans to explore other worldwide markets.

INDUSTRY

         We focus on providing technology and content solutions to the emerging
and growing segment of broadcasting video over the Internet and emerging
broadcasting platforms such as wireless and set top boxes. Through technology
advancements and the expansion of broadband services worldwide, the Internet now
enables the viewing of video from a computer connected to the Internet. This
creates a fundamental change in the way people can view media and transforms the
Internet into a broadcasting platform similar to television and radio platforms.
According to industry statistics, Internet access and audio and video usage over
the Internet have grown substantially over the past twelve months. A recent
study by Arbitron/Edison Media Research called Internet and Multimedia 11: New
Media Enters the Mainstream reported that Internet usage in the United States
has grown five percent (5%) in the period from January 2003 to July 2003,and
that currently eighty percent (80%) of Americans have access to the Internet
compared to forty eight percent (48%) in July 1999. The weekly Internet
broadcast audience has grown from approximately 16 million Americans in July
2000 to 30 million in July 2003. Furthermore, in July 2003 more than one in five
consumers (approximately 50 million Americans) have accessed audio or video over
the Internet. In addition, a study by AccuStream iMedia Research showed a 52%
increase in the number of video streams being served in 2001 to 3.9 billion in
2002.

COMPETITION

         The provisioning and streaming of digital media content over the
Internet is rapidly becoming a competitive industry. While there are only a few
industry participants similar to us that provide a full suite of associated
products and services, there are a number of more traditional content
syndicators who have entered the industry by providing their own content for
streaming over their own portals. For example, Disney, Time Warner and CNN all
provide access to their own content in digital format over their own destination
Internet portals. There are also a number of smaller operations which provide
wholesale syndication services such as The FeedRoom (www.feedroom.com), which
provides a destination service similar to that of ROO TV. Other competitors on
select products of ROO Media include: Real Networks, Inc., a global provider of
network-delivered digital media service and the technology that enables digital
media creation, distribution and consumption; 24/7 Real Media, Inc., a provider
of solutions for interactive marketing, including enabling Internet marketers to
target, convert and retain their best online customers and manage and protect
customer relationships; and Loudeye Corporation, a service provider facilitating
the use of digital media for live and on-demand applications for enterprise
communication, marketing and entertainment. ROO Media has sales, marketing
and/or technology relationships with Real Networks, Inc. and 24/7 Real Media,
Inc. We believe that as the market segment continues to grow, new competitors
will enter the market and compete directly with us.

GOVERNMENT REGULATION

         We are subject to risks associated with governmental regulation and
legal uncertainties. Few existing laws or regulations specifically apply to the
Internet, other than laws and regulations generally applicable to businesses.
Many laws and regulations, however, are pending and may be adopted in the United
States, individual states and local jurisdictions and other countries with
respect to the Internet. These laws may relate to many areas that impact our
business, including content issues (such as obscenity, indecency and
defamation), caching of content by server products, sweepstakes, promotions, and
the convergence of traditional communication services with Internet
communications, including the future availability of broadband transmission
capability and wireless networks. These types of regulations are likely to
differ between countries and other political and geographic divisions. Other
countries and political organizations are likely to impose or favor more and
different regulation than that which has been proposed in the United States,
thus furthering the complexity of regulation. In addition, state and local
governments may impose regulations in addition to, inconsistent with, or
stricter than federal regulations. The adoption of such laws or regulations, and
uncertainties associated with their validity, interpretation, applicability and
enforcement, may affect the available distribution channels for and costs
associated with our products and services, and may affect the growth of the
Internet. Such laws or regulations may harm our business. Our products and
services may also become subject to investigation and regulation of foreign data
protection authorities, including those in the European Union. Such activities
could result in additional product and distribution costs for us in order to
comply with such regulation.



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<PAGE>


         There is uncertainty regarding how existing laws governing issues such
as illegal or obscene content and retransmission of media apply to the Internet.
The vast majority of such laws were adopted before the advent of the Internet
and related technologies and do not address the unique issues associated with
the Internet and related technologies. Most of the laws that relate to the
Internet have not yet been interpreted. In addition to potential legislation
from local, state and federal governments, labor guild agreements and other laws
and regulations that impose fees, royalties or unanticipated payments regarding
the distribution of media over the Internet may directly or indirectly affect
our business. While we and our customers may be directly affected by such
agreements, we are not a party to such agreements and have little ability to
influence the degree such agreements favor or disfavor Internet distribution or
our business models.

         The Child Online Protection Act and the Child Online Privacy Protection
Act impose civil and criminal penalties on persons distributing material harmful
to minors (e.g., obscene material) over the Internet to persons under the age of
17, or collecting personal information from children under the age of 13. We do
not knowingly distribute harmful materials to minors or collect personal
information from children under the age of 13. The manner in which these Acts
may be interpreted and enforced cannot be fully determined, and future
legislation similar to these Acts could subject us to potential liability if we
were deemed to be non-compliant with such rules and regulations, which in turn
could harm our business. See "Risk Factors."

         RESEARCH AND DEVELOPMENT

         We continue to pursue opportunities to improve and expand our products
and services and have dedicated resources which continue to review and enhance
our technology platform and the products and solutions we offer. Currently,
research and development is conducted internally as well as through outsourcing
agreements. We plan to consider opportunities to expand our current content
categories to offer specific lifestyle, children's content, sport, science and
educational content. We also plan to explore opportunities to further enhance
our distribution and technological infrastructures to maintain our competitive
position. Furthermore, we are planning to launch a new ROO TV platform offering
improved user features and to improve operational process and costs for
maintaining and uploading our database on a daily basis. We cannot assure you,
however, that we will achieve our research and development goals. Research and
development expenses were $142,845 for the year ended December 31, 2003, and
$138,380 for the year ended December 31, 2002.

INSURANCE

         Other than workers' compensation insurance, which we are required to
acquire under the laws of Australia, we maintain no other insurance.

EMPLOYEES

         We currently have seven (7) employees and consultants, 6 full-time and
1 part-time, based in Australia and the United States. The current employees and
consultant's functions are divided into three-core areas: development and media
management, sales and marketing, and management and administration. With the
exception of our CEO Robert Petty, we have no long-term employment contracts
with any of our staff or consultants. We do, however, enter into confidentiality
agreements with all our employees and consultants, which clearly outline the
individual's job function and the treatment of confidential information.

ITEM 2.           DESCRIPTION OF PROPERTY

         Our operations are based in a rented premises located at 212 Balaclava
Road, North Caulfield, Victoria, Australia. Our principal executive offices are
a rented premises located at 62 White Street, 3rd Floor, New York , New York
10013. Both rental agreements are month-to-month agreements

ITEM 3.           LEGAL PROCEEDINGS

         On August 21, 2003, we, through our former President Bella Roth,
entered into a cease and desist agreement with the SEC resolving the previously
disclosed matter. We are not currently involved in any material legal
proceedings.

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

         There were no matters submitted to a vote of security holders, through
solicitation of proxies or otherwise, during the last quarter of the year ended
December 31, 2003.


PART II


ITEM 5.           MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES

MARKET INFORMATION

On February 6, 2001, the Company's Common Stock began being quoted on the NASDAQ
Over-The-Counter Bulletin Board (OTC:BB) under the symbol VRLT.



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<PAGE>


The following table sets forth, for the periods indicated, the high and low
closing price of the Common Stock for each fiscal quarter during the last two
fiscal years and for the subsequent period to December 31, 2003, as reported by
the Over-the-Counter Bulletin Board. These quotations reflect the inter-dealer
prices, without retail markup, markdown or commission and may not necessarily
represent actual transactions.

      Fiscal Quarter Ended          High               Low
      --------------------          -----              ---
             7/31/01                $2.50             $ .90
            10/31/01                $2.50             $1.30
             1/31/02                $3.10             $ .70
             4/30/02                $1.20             $ .28
             7/31/02                $ .30             $ .08
            10/31/02                $ .12             $ .04
             1/31/03                $ .07             $ .04
             4/30/03                $ .07             $ .02
             7/31/03                $ .055            $ .03
            10/31/03                $ .09             $ .03
            12/31/03                 $.15              $ .04

     Of the 157,669,130 shares of common stock outstanding, approximately
148,669,130 are currently subject to the resale restrictions and limitations of
Rule 144. In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions, a person, including an affiliate, or
persons whose shares are aggregated with affiliates, who has owned restricted
shares of common stock beneficially for at least one year is entitled to sell,
within any three-month period, a number of shares that does not exceed 1% of the
total number of outstanding shares of the same class. In the event the shares
are sold on an exchange or are reported on the automated quotation system of a
registered securities association, you could sell during any three-month period
the greater of such 1% amount or the average weekly trading volume as reported
for the four calendar weeks preceding the date on which notice of your sale is
filed with the SEC. Sales under Rule 144 are also subject to certain manner of
sale provisions, notice requirements and the availability of current public
information about us. A person who has not been an affiliate for at least the
three months immediately preceding the sale and who has beneficially owned
shares of common stock for at least two years is entitled to sell such shares
under Rule 144 without regard to any of the limitations described above.

HOLDERS

On February 10, 2004, there were approximately 190 holders of our common stock.

DIVIDENDS

We have not declared any dividends to date. We have no present intention of
paying any cash dividends on our Common Stock in the foreseeable future, as we
intend to use earnings, if any, to generate growth. The payment by us of
dividends, if any, in the future, rests within the discretion of our Board of
Directors and will depend, among other things, upon the our earnings, our
capital requirements and our financial condition, as well as other relevant
factors.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMENSATION PLANS

None.

RECENT SALES OF UNREGISTERED SECURITIES; USES OF PROCEEDS FROM REGISTERED
SECURITIES

On December 1, 2003 ROO Media, prior to the merger with Virilitec Industries,
Inc., completed a private placement of 115 shares of its common stock for an
aggregate amount of US$524,589. We offered the shares directly without the
utilization of a placement agent. The securities were only sold to accredited
investors pursuant to an exemption from the registration requirements of the
Securities Act of 1933, as amended, provided by Section 4(2) thereof and Rule
506 of Regulation D promulgated thereunder. ROO Media used the proceeds from the
private placement for working capital.

On December 2, 2003, Virilitec, VRLT Acquisition Corp., a Delaware corporation
and wholly-owned subsidiary of Virilitec ("Merger Sub"), ROO Media, and Jacob
Roth and Bella Roth, each an individual (collectively, the "Virilitec Principal
Stockholders"), entered into an Agreement and Plan of Merger (the "Merger
Agreement"). Upon the terms and subject to the conditions set forth in the
Merger Agreement, Merger Sub was merged with and into ROO Media (the "Merger").
As a result of the Merger, Virilitec, through Merger Sub, acquired 100% of the
capital stock of ROO Media, all issued and outstanding shares of capital stock
of ROO Media held by the stockholders of ROO Media were cancelled and converted
into the right to receive an aggregate of 148,000,000 shares of common stock of
Virilitec ("Virilitec Common Stock"), the separate corporate existence of Merger
Sub ceased, and ROO Media continued as the surviving corporation in the Merger
as a wholly-owned subsidiary of Virilitec.



                                       6
<PAGE>


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

Set forth below is a discussion of the financial condition and results of
operations for the years ended December 31, 2003 and 2002. The following
discussion should be read in conjunction with the information set forth in the
consolidated financial statements and the related notes thereto appearing
elsewhere in this annual report.

Certain statements contained herein may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Because such statements include risks and uncertainties, actual results may
differ materially from those expressed or implied by such forward-looking
statements as a result of certain factors, such as those set forth under "Risk
Factors" and elsewhere in this report. Factors that could cause actual results
to differ materially include, but are not limited to, risks associated with the
integration of businesses following an acquisition, competitors with broader
product lines and greater resources, emergence into new markets, the termination
of any of our significant contracts, our inability to maintain working capital
requirements to fund future operations, or our inability to attract and retain
highly qualified management, technical and sales personnel.

OVERVIEW

Virilitec Industries, Inc. ("Virilitec"), through its operating subsidiary ROO
Media Corporation ("ROO Media"), is a digital media company in the business of
providing products and solutions to a global base of clients that enable the
broadcast of topical video content from the clients' Internet websites. We
specialize in providing the technology and content required for video to be
played on computers via the Internet as well as emerging broadcasting platforms
such as set top boxes and wireless devices (i.e., mobile phones and PDAs). Our
core activities include the aggregation of video content, media management,
online advertising, hosting, and content delivery. We also operate a global
network of individual destination portals under the brand ROO TV, enabling end
users in different regions around the world to view video content over the
Internet that is topical, informative, up to date, and specific to the region in
which they live. In conjunction with our subsidiaries, we currently service
customers based in Europe, Australia, the United States and South Africa.

We acquired ROO Media by entering into an Agreement and Plan of Merger (the
"Merger Agreement") between Virilitec, VRLT Acquisition Corp., a Delaware
corporation and wholly-owned subsidiary of Virilitec ("Merger Sub"), ROO Media,
and Jacob Roth and Bella Roth, each an individual (collectively, the "Virilitec
Principal Stockholders"), on December 2, 2003. Upon the terms and subject to the
conditions set forth in the Merger Agreement, Merger Sub was merged with and
into ROO Media (the "Merger"). As a result of the Merger, Virilitec, through
Merger Sub, acquired 100% of the capital stock of ROO Media, all issued and
outstanding shares of capital stock of ROO Media held by the stockholders of ROO
Media were cancelled and converted into the right to receive an aggregate of
148,000,000 shares of common stock of Virilitec ("Virilitec Common Stock"), the
separate corporate existence of Merger Sub ceased, and ROO Media continued as
the surviving corporation in the Merger as a wholly-owned subsidiary of
Virilitec.

ROO Media was incorporated on March 30, 2001 in the State of Delaware. ROO
Media's subsidiaries are ROO Media (Aust) Pty Ltd, ROO Media Europe Ltd, ROO
Broadcasting Ltd and ROO TV Pty Ltd. ROO Media's business is the provisioning of
topical video content, including news, business, entertainment, fashion, video
games, movies, music and travel video, and associated services for broadcasting
video over the Internet to a global base of clients. ROO Media's delivery
platform supports worldwide syndication and television-style advertisement
insertion programming. During 2001 and 2002, ROO Media focused on the
development and refinement of its products and solutions, and only commenced the
commercial selling of its solutions in late 2003. As a result of ROO Media's
focus on the development and rollout of product and services, turnkey
infrastructure, technology, and distribution model, ROO Media established a
technology platform specifically designed to provide a cost effective, robust,
and scaleable solution to manage and syndicate video content over the Internet.

RESULTS OF OPERATIONS

MATTERS AFFECTING COMPARABILITY

On December 3, 2003, we obtained all of the outstanding shares of common stock
of ROO Media Corporation ("ROO Media"), a provider of topical video content and
associated services for broadcasting video over the Internet, in exchange for
the issuance of an aggregate of 148,000,000 of our common shares, valued at
$0.05 per common share. The acquisition was accounted for as a purchase. Prior
to the acquisition of ROO Media, we had no tangible assets and had no operations
since around July 2003, when we terminated all of our existing contracts and
started exploring offers from various private operating companies seeking to
merge into a public company.

For accounting purposes the Merger is being recorded as a recapitalization of
ROO Media with ROO Media as the acquirer. The transaction is being treated as an
issuance of shares for cash by ROO Media. Shares issued in the Merger are shown
as outstanding for all periods presented in these financial statements in the
same manner as for a stock split. Pro forma information on this transaction is
not presented as at the date of this transaction, Virilitec is considered a
public shell and accordingly, the transaction will not be considered a business
combination. The financial statements prior to December 2, 2003 reflect the
operations of ROO Media only.


                                       7
<PAGE>


YEAR ENDED DECEMBER 31, 2003 COMPARED TO YEAR ENDED DECEMBER 31, 2002

    NET REVENUES

Total net revenues increased by $140,725, from $4,527 for the year ended
December 31, 2002 to $145,252 for the year ended December 31, 2003. The increase
reflects the commercial release of our products and solutions in late 2003.

    OPERATING EXPENSES

Research and Development. Research and development expenses consist primarily of
salaries and related personnel costs, consulting fees associated with product
development, and costs of technology acquired from third parties to incorporate
into products currently under development. Research and development expenses
were $142,845 for the year ended December 31, 2003, an increase of 3.2% from
$138,380 for the year ended December 31, 2002. The increase in expenses was due
primarily to the increase in activities to bring our products to market.

SALES AND MARKETING. Sales and marketing expenses consist primarily of expenses
for advertising sales and marketing consultants, expenditures for advertising,
and promotional activities and expenses to bring the product to market,
including content cost and hosting costs. These expenses increased by $151,161,
from $48,716 for the year ended December 31, 2002 to $199,877 for the year ended
December 31, 2003, an increase of 310.3%. This increase was due primarily to
higher costs associated with increased activity in the commercialization of our
products.

We believe that additional sales and marketing personnel and programs are
required to remain competitive. Therefore, we expect that our sales and
marketing expenses will continue to increase in absolute dollars for the
foreseeable future.

GENERAL AND ADMINISTRATIVE. General and administrative expenses consist
primarily of expenses for management, finance and administrative personnel,
legal, accounting, and consulting fees, and facilities costs. These expenses
increased by $149,077, from $169,873 for the year ended December 31, 2002 to
$318,950 for the year ended December 31, 2003, an increase of 87.8%. This
increase was due primarily to increased activity in preparing for the merger
with ROO Media and included the external costs associated with the merger, as
well as providing administrative support to the increased activity of
operations.

We expect our general and administrative expenses to increase in absolute
dollars for the foreseeable future as we continue to hire personnel and incur
expenses to build our infrastructure to support the growth of our business and
our operations.

Interest Income. Interest income totaled $29 in the year ended December 31,
2003.

INTEREST EXPENSE, RELATED PARTY

Interest expense, related party, includes interest charges on our indebtedness
to Robert Petty, our Chief Executive Officer, and his affiliate, Petty
Consulting Inc. This expense increased by $25,244, from $37,178 for the year
ended December 31, 2002 to $62,422 for the year ended December 31, 2003, an
increase of 60.3%. This increase was due primarily to an increased level of
indebtedness to Robert Petty and Petty Consulting Inc. as a result of funding
our working capital requirements.

NET LOSS FROM OPERATIONS

Net Loss increased $189,193 or 48.6% for the year ended December 31, 2003
compared to the year ended December 31, 2002. The increase in net loss is due to
the increase in activities to develop products for future revenue generation
together with the costs associated with the merger with ROO Media in 2003.

DIVIDENDS

We did not declare dividends on our shares of common stock in the years ended
December 31, 2003 and 2002.

CRITICAL ACCOUNTING POLICIES

The policies discussed below are considered by our management to be critical to
an understanding of our financial statements because their application places
the most significant demands on our management's judgment, with financial
reporting results relying on estimation about the effect of matters that are
inherently uncertain. Specific risks for these critical accounting policies are
described below. For these policies, our management cautions that future events
rarely develop as forecast, and that best estimates may routinely require
adjustment.

Fees generated from advertising recognized as advertising is delivered over the
terms of the contracts. We may guarantee a minimum number of advertising
impressions, click-throughs or other criteria on our websites or products for a
specified period. To the extent these guarantees are not met, we defer
recognition of the corresponding revenue until guaranteed delivery levels are
achieved.

RECENTLY ISSUED ACCOUNTING STANDARDS

In November 2002, the FASB, issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" ("FIN 45"). FIN 45 requires a guarantor to
recognize a liability, at the inception of the guarantee, for the fair value of
obligations it has undertaken in issuing the guarantee and also include more
detailed disclosures with respect to guarantees. FIN 45 is effective on a
prospective basis for guarantees issued or modified starting January 1, 2003 and
requires the additional disclosures in interim and annual financial statements
effective for the period ended December 31, 2002. The Company's adoption of the
initial recognition and measurement provisions of FIN 45 effective January 1,
2003, did not have a material impact on the Company's results of operations or
financial position.


                                       8
<PAGE>


In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities" ("FIN"). FIN 46 requires a variable interest entity
to be consolidated by a company if that company is subject to a majority of the
risk of loss from the variable interest entity's activities or entitled to
receive a majority of the entity's residual returns or both. Historically,
entities generally were not consolidated unless the entity was controlled
through voting interests. FIN 46 also requires disclosures about variable
interest entities that a company is not required to consolidate but in which it
has a significant variable interest. The consolidation requirement so of FIN 46
apply immediately to variable interest entities created after January 31, 2003
and to variable interest entities in which an enterprise obtains an interest
after that date.

On October 8, 2003, the FASB deferred the implementation date for FIN 46 as it
relates to variable interest entities that existed prior to February 1, 2003 and
in December 2003 the FASB issued a revised FIN 46. The revised effective date
for the Company is the end of the first reporting period ending after March 15,
2004 (April 30, 2004 for the Company). However, the Company must apply either
the revised or the original FIN 46 to so called special-purpose entities as of
the end of the first reporting period ending after December 15, 2003 (January
31, 2004 for the Company). Certain disclosure requirements apply to all
financial statements issued after January 31, 2003, regardless of when the
variable interest entity was established. The adoption of this standard is not
expected to have a material impact on the Company's consolidated financial
statements.

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities" ("SFAS 149"), which amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities under SFAS 133. SFAS 149 is effective for contracts entered
into or modified after June 30, 2003 and for hedging relationships designated
after June 30, 2003. The adoption of SFAS 149, effective July 1, 2003, did not
have a material impact on the Company's results of operations or financial
position.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Instruments
with Characteristics of both Liabilities and Equity" ("SFAS 150"), which
established standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. SFAS
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's adoption of the initial
recognition and initial measurement provisions of SFAS 150, effective June 1,
2003, did not have a material impact on the Company's results of operations or
financial position.

LIQUIDITY AND CAPITAL RESOURCES

From ROO Media's inception through December 31, 2003, we have financed our
activities through funding from a loan facility from Robert Petty, our Chief
Executive Officer, and through private placements.

Net cash used in operating activities was $365,708 for the year ended December
31, 2003 and $372,764 for the year ended December 31, 2002. Net cash used in
operating activities resulted primarily from our net operating losses.

Net cash used in investing was $12,814 for the year ended December 31, 2003 and
$7,891 for the year ended December 31, 2002. Net cash used in investing
activities resulted primarily from increased costs related to purchased computer
equipment.

Net cash provided by financing activities was $405,422 for the year ended
December 31, 2003 and $393,046 for the year ended December 31, 2002. Net cash
provided by financing activities consisted of proceeds from net increases in
loans from Robert Petty, our Chief Executive Officer, and private placements.

As of December 31, 2003, we had a working capital deficiency of approximately
$772,648. Our cash balance as of December 31, 2003 of $26,371 is, in
management's opinion, not sufficient to ensure our continued operation and the
payment of debts until our business is profitable and generating sufficient cash
flow to meet our liquidity requirements, of which there can be no assurance. We
do not expect additions to property and equipment to be material in the near
future.

We conduct our operations in primary functional currencies: the United States
dollar, the British pound, the Euro and the Australian dollar. Historically,
neither fluctuations in foreign exchange rates nor changes in foreign economic
conditions have had a significant impact on our financial condition or results
of operations. We currently do not hedge any of our foreign currency exposures
and are therefore subject to the risk of exchange rate fluctuations. We invoice
our international customers primarily in U.S. dollars, except in Europe, the
United Kingdom and Australia, where we invoice our customers primarily in euros,
pounds and Australian dollars, respectively. We are exposed to foreign exchange
rate fluctuations as the financial results of foreign subsidiaries are
translated into U.S. dollars in consolidation and as our foreign currency
consumer receipts are converted into U.S. dollars. Our exposure to foreign
exchange rate fluctuations also arises from payables and receivables to and from
our foreign subsidiaries, vendors and customers. Foreign exchange rate
fluctuations did not have a material impact on our financial results in the
fiscal years ended December 31, 2003 and 2002.

We anticipate that our liquidity needs over the next 12 months will require
additional financings. If cash generated from operations is insufficient to
satisfy our liquidity requirements, we may seek to sell additional equity or
debt securities or obtain a credit facility. The sale of additional equity or
convertible debt securities could result in additional dilution to our
stockholders. The incurrence of indebtedness would result in increased fixed
obligations and could result in operating covenants that would restrict our
operations. We cannot assure you that financing will be available in amounts or
on terms acceptable to us, if at all.


                                       9
<PAGE>


GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming
that we will continue as a going concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business. We
have incurred net losses of approximately $578,813 and $389,620 for the years
ended December 31, 2003 and 2002, respectively. Additionally, we had a net
working capital deficiency of approximately $772,648 and accumulated deficit of
approximately $1,152,652 at December 31, 2003, and negative cash flows from
operating activities of approximately $365,708 and $372,764 for the years ended
December 31, 2003 and 2002, respectively. We have incurred losses since ROO
Media's inception, have an accumulated deficit, and have experienced negative
cash flows from operations since ROO Media's inception. The expansion and
development of our business may require additional capital. This condition
raises substantial doubt about our ability to continue as a going concern. Our
management expects cash flows from operating activities to improve in 2004,
primarily as a result of an increase in sales, and plans to raise capital
through various methods to achieve their business plans, although there can be
no assurance thereof. The accompanying consolidated financial statements do not
include any adjustments that might be necessary should we be unable to continue
as a going concern. If we fail to generate positive cash flows or obtain
additional capital when required, we could continue to modify, delay or abandon
some or all of our business and expansion plans.

OFF-BALANCE SHEET ARRANGEMENTS

None.

FACTORS THAT MAY AFFECT FUTURE RESULTS AND FINANCIAL CONDITION

Risks Related to our Business.

OUR OPERATING SUBSIDIARY, ROO MEDIA CORPORATION ("ROO MEDIA") HAS A LIMITED
OPERATING HISTORY AND THEREFORE WE CANNOT ENSURE THE LONG-TERM SUCCESSFUL
OPERATION OF OUR BUSINESS OR THE EXECUTION OF OUR BUSINESS PLAN. Our prospects
must be considered in light of the risks, expenses and difficulties frequently
encountered by growing companies in new and rapidly evolving markets, such as
the markets digital media software in which we operate. To address the risks and
uncertainties faced by our business, we must meet many challenges including:

     o   Establishing  and maintaining  broad market  acceptance of our products
         and services and converting  that  acceptance  into direct and indirect
         sources of revenue;

     o   Establishing  and  maintaining  adoption  of our  technology  on a wide
         variety of platforms and devices;

     o   Establishing and maintaining our brand name;

     o   Timely and successfully  developing new products,  product features and
         services  and  increasing  the  functionality  and features of existing
         products and services;

     o   Developing  services  and  products  that  result  in high  degrees  of
         customer satisfaction and high levels of customer usage;

     o   Successfully  responding to  competition,  including  competition  from
         emerging technologies and solutions; and

     o   Developing  and  maintaining  strategic  relationships  to enhance  the
         distribution,  features,  content  and  utility  of  our  products  and
         services.

Our business strategy may be unsuccessful and we may be unable to address the
risks we face in a cost-effective manner, if at all. If we are unable to
successfully address these risks our business will be harmed.

WE HAVE NOT BEEN PROFITABLE AND IF WE DO NOT ACHIEVE PROFITABILITY, OUR BUSINESS
MAY FAIL. We are a development stage company and to date have not been
profitable. As of December 31, 2003, we had a stockholders' deficit of $756,472.
We had net losses for the years ended December 31, 2003 and 2002, and we may not
generate sufficient revenue to be profitable on a quarterly or annual basis in
the future. Accordingly, our failure to increase our revenues significantly or
improve our gross margins will harm our business. Even if we do achieve
profitability, we may not be able to sustain or increase profitability on a
quarterly or annual basis in the future. If our revenues grow more slowly than
we anticipate, our gross margins fail to improve, or our operating expenses
exceed our expectations, our operating results will suffer. The prices we charge
for our products and services may decrease, which would reduce our revenues and
harm our business. If we are unable to sell our products or services at
acceptable prices relative to our costs, or if we fail to develop and introduce
on a timely basis new products and services from which we can derive additional
revenues, our financial results will suffer. We devote significant resources to
developing, enhancing, selling, marketing and obtaining content for our products
and services. As a result, we will need to generate significant revenue to be
profitable in the future.

WE NEED ADDITIONAL FINANCING TO ACHIEVE OUR GROWTH STRATEGY. Because there can
be no assurance that future financing will be available to us, we cannot ensure
that we will be able to obtain the capital necessary to implement our plan of
operations. We secured additional financing in the fourth quarter of 2003 to
continue to pursue our growth strategy. We have limited resources and it is
possible that we may need additional financing depending on the performance
against our business plan, or we may be required to modify, delay or abandon
some or all of our expansion plans, which may have a material adverse effect on
our business. We cannot guarantee that we will be able to obtain any additional
financing or that such additional financing, if available, will be on terms and
conditions acceptable to us. In addition, we may not be able to continue as a
going concern.

If additional funds are raised through the issuance of equity or convertible
debt securities, the percentage ownership of our current stockholders will be
reduced and these securities may have rights and preferences superior to those
of our current stockholders. If we raise



                                       10
<PAGE>


capital through debt financing, we may be forced to accept restrictions
affecting our liquidity, including restrictions on our ability to incur
additional indebtedness or pay dividends.

OUR BUSINESS MAY SUFFER IF WE ARE UNABLE TO SUCCESSFULLY IMPLEMENT OUR
ADVERTISING BUSINESS MODEL. A significant part of our business model is to
generate revenue by providing interactive marketing solutions to advertisers, ad
agencies and Web publishers. The profit potential for this business model is
unproven. To be successful, both Internet advertising and our solutions will
need to achieve broad market acceptance by advertisers, ad agencies and Web
publishers. Our ability to generate significant revenue from advertisers will
depend, in part, on our ability to contract with Web publishers that have Web
sites with adequate available ad space inventory. Further, these Web sites must
generate sufficient user traffic with demographic characteristics attractive to
our advertisers. The intense competition among Internet advertising sellers has
led to the creation of a number of pricing alternatives for Internet
advertising. These alternatives make it difficult for us to project future
levels of advertising revenue and applicable gross margin that can be sustained
by us or the Internet advertising industry in general.

Intensive marketing and sales efforts may be necessary to educate prospective
advertisers regarding the uses and benefits of, and to generate demand for, our
products and services. Enterprises may be reluctant or slow to adopt a new
approach that may replace, limit or compete with their existing direct marketing
systems. Acceptance of our new solutions will depend on the continued emergence
of Internet commerce, communication and advertising, and demand for its
solutions. We cannot assure you that demand for our new solutions will emerge or
become sustainable.

OUR RESOURCES MAY NOT BE SUFFICIENT TO MANAGE OUR EXPECTED GROWTH; FAILURE TO
PROPERLY MANAGE OUR POTENTIAL GROWTH WOULD BE DETRIMENTAL TO OUR BUSINESS. We
may fail to adequately manage our anticipated future growth. Any growth in our
operations will place a significant strain on our administrative, financial and
operational resources, and increase demands on our management and on our
operational and administrative systems, controls and other resources. We cannot
assure you that our existing personnel, systems, procedures or controls will be
adequate to support our operations in the future or that we will be able to
successfully implement appropriate measures consistent with our growth strategy.
As part of this growth, we may have to implement new operational and financial
systems, procedures and controls to expand, train and manage our employee base,
and maintain close coordination among our technical, accounting, finance,
marketing, sales and editorial staffs. We cannot guarantee that we will be able
to do so, or that if we are able to do so, we will be able to effectively
integrate them into our existing staff and systems. To the extent we acquire
other businesses, we will also need to integrate and assimilate new operations,
technologies and personnel. If we are unable to manage growth effectively, such
as if our sales and marketing efforts exceed our capacity to install, maintain
and service our products or if new employees are unable to achieve performance
levels, our business, operating results and financial condition could be
materially adversely affected.

WE MAY NOT SUCCESSFULLY DEVELOP NEW PRODUCTS AND SERVICES. Our business and
operating results would be harmed if we fail to develop products and services
that achieve widespread market acceptance or that fail to generate significant
revenue or gross profits to offset our development and operating costs. We may
not timely and successfully identify, develop and market new product and service
opportunities. If we introduce new products and services, they may not attain
broad market acceptance or contribute meaningfully to our revenue or
profitability. Competitive or technological developments may require us to make
substantial, unanticipated investments in new products and technologies, and we
may not have sufficient resources to make these investments. If we are unable to
be a technological leader in our market, our business is likely to be harmed.

Because the markets for our products and services are changing rapidly, we must
develop new offerings quickly. Delays and cost overruns could affect our ability
to respond to technological changes, evolving industry standards, competitive
developments or customer requirements. Our products also may contain undetected
errors that could cause increased development costs, loss of revenue, adverse
publicity, reduced market acceptance of our products or services or lawsuits by
customers.

WE COULD LOSE STRATEGIC RELATIONSHIPS THAT ARE ESSENTIAL TO OUR BUSINESS. The
loss of certain current strategic relationships or key licensing arrangements,
the inability to find other strategic partners or the failure of our existing
relationships to achieve meaningful positive results for us could harm our
business. We may not be successful in forming or managing strategic
relationships and, in particular, we may meet resistance in forging such
relationships if our potential strategic partners desire to minimize their
dependency on any one technology provider.

THE GROWTH OF OUR BUSINESS DEPENDS ON THE INCREASED USE OF THE INTERNET FOR
COMMUNICATIONS, ELECTRONIC COMMERCE AND ADVERTISING AND THE GROWTH OF THE
WIRELESS DATA MARKET. The growth of our business depends on the continued growth
of the Internet as a medium for media consumption, communications, electronic
commerce and advertising, and also on the growth of the wireless data market,
including the growth of devices with multimedia capability. Our business will be
harmed if Internet usage does not continue to grow, particularly as a source of
media information and entertainment and as a vehicle for commerce in goods and
services, or if widespread adoption of technology to access data and multimedia
content on wireless devices does not occur. Our success also depends on the
efforts of third parties to develop the infrastructure and complementary
products and services necessary to maintain and expand the Internet as a viable
media medium. We believe that other Internet-related issues, such as security,
privacy, reliability, cost, speed, ease of use and access, quality of service
and necessary increases in bandwidth availability, remain largely unresolved and
may affect the amount and type of business that is conducted over the Internet,
and may impact our ability to sell our products and services and ultimately
impact our business results and prospects.

If Internet usage grows, the Internet infrastructure may not be able to support
the demands placed on it by such growth, specifically the demands of delivering
high-quality media content. As a result, its performance and reliability may
decline. In addition, Web sites have experienced interruptions in service as a
result of outages, system attacks and other delays occurring throughout the
Internet network infrastructure. If these outages, attacks or delays occur
frequently or on a broad scale in the future, Internet usage, as well as the
usage of our products, services and Web sites, could grow more slowly or
decline.



                                       11
<PAGE>


RATE OF ADOPTION OF BROADBAND TECHNOLOGIES POSES RISKS TO OUR BUSINESS. We
believe that increased Internet use and especially the increased use of media
over the Internet may depend on the availability of greater bandwidth or data
transmission speeds through the growth of broadband transmission. If broadband
technologies do not become widely available or widely adopted, our products and
services, particularly our subscription services, may not achieve broad market
acceptance and our business and prospects could be harmed.

RECENTLY ENACTED AND PROPOSED CHANGES IN SECURITIES LAWS AND REGULATIONS ARE
LIKELY TO INCREASE OUR COSTS. In July 2002, President Bush signed into law the
Sarbanes-Oxley Act of 2002 (the "SOX"). The purpose of the SOX is to, among
other things, protect investors by improving the accuracy and reliability of
corporate disclosures made pursuant to the securities laws. We expect these
developments to increase the legal and financial compliance costs, and to make
some activities more difficult. For example, we expect these developments to
make it more difficult and more expensive for public companies to obtain
director and officer liability insurance. These developments could make it more
difficult for us to attract and retain qualified members of our board of
directors, particularly to serve on our audit committee, and qualified executive
officers. We are presently evaluating and monitoring regulatory developments and
cannot estimate the timing or magnitude of additional costs we may incur as a
result. Furthermore, proposed changes in the accounting rules, including
legislative and other proposals to account for employee stock options as
compensation expense, could increase the expenses that we report under GAAP and
adversely affect our operating results. While we will endeavor to establish the
requisite procedures and structure our corporate governance in accordance with
the SOX and the rules and regulations issued by the SEC thereunder, we cannot
assure you that we will be successful in this regard or that the costs we incur
in doing so will not prove exorbitant.

WE ARE SUBJECT TO RISKS ASSOCIATED WITH GOVERNMENTAL REGULATION AND LEGAL
UNCERTAINTIES. Few existing laws or regulations specifically apply to the
Internet, other than laws and regulations generally applicable to businesses.
Many laws and regulations, however, are pending and may be adopted in the United
States, individual states and local jurisdictions and other countries with
respect to the Internet. These laws may relate to many areas that impact our
business, including content issues (such as obscenity, indecency and
defamation), caching of content by server products, sweepstakes, promotions, and
the convergence of traditional communication services with Internet
communications, including the future availability of broadband transmission
capability and wireless networks. These types of regulations are likely to
differ between countries and other political and geographic divisions. Other
countries and political organizations are likely to impose or favor more and
different regulation than that which has been proposed in the United States,
thus furthering the complexity of regulation. In addition, state and local
governments may impose regulations in addition to, inconsistent with, or
stricter than federal regulations. The adoption of such laws or regulations, and
uncertainties associated with their validity, interpretation, applicability and
enforcement, may affect the available distribution channels for and costs
associated with our products and services, and may affect the growth of the
Internet. Such laws or regulations may harm our business. Our products and
services may also become subject to investigation and regulation of foreign data
protection authorities, including those in the European Union. Such activities
could result in additional product and distribution costs for us in order to
comply with such regulation.

There is uncertainty regarding how existing laws governing issues such as
illegal or obscene content and retransmission of media apply to the Internet.
The vast majority of such laws were adopted before the advent of the Internet
and related technologies and do not address the unique issues associated with
the Internet and related technologies. Most of the laws that relate to the
Internet have not yet been interpreted. In addition to potential legislation
from local, state and federal governments, labor guild agreements and other laws
and regulations that impose fees, royalties or unanticipated payments regarding
the distribution of media over the Internet may directly or indirectly affect
our business. While we and our customers may be directly affected by such
agreements, we are not a party to such agreements and have little ability to
influence the degree such agreements favor or disfavor Internet distribution or
our business models. Changes to or the interpretation of these laws and the
entry into such industry agreements could:

     o    limit the growth of the Internet;

     o    create uncertainty in the marketplace that could reduce demand for our
          products and services;

     o    increase our cost of doing business;

     o    expose us to increased litigation risk, substantial defense costs and
          significant liabilities associated with content available on our Web
          sites or distributed or accessed through our products or services,
          with our provision of products and services, and with the features or
          performance of our products and Web sites;

     o    lead to increased product development costs or otherwise harm our
          business; or

     o    decrease the rate of growth of our user base and limit our ability to
          effectively communicate with and market to our user base.

The Child Online Protection Act and the Child Online Privacy Protection Act
impose civil and criminal penalties on persons distributing material harmful to
minors (e.g., obscene material) over the Internet to persons under the age of
17, or collecting personal information from children under the age of 13. We do
not knowingly distribute harmful materials to minors or collect personal
information from children under the age of 13. The manner in which these Acts
may be interpreted and enforced cannot be fully determined, and future
legislation similar to these Acts could subject us to potential liability if we
were deemed to be non-compliant with such rules and regulations, which in turn
could harm our business.

WE MAY BE SUBJECT TO LEGAL LIABILITY FOR THE PROVISION OF THIRD-PARTY PRODUCTS,
SERVICES OR CONTENT. We have arrangements to offer third-party products,
services, content or advertising via distribution on our Web sites. We may be
subject to claims concerning these products, services, content or advertising by
virtue of our involvement in marketing, branding, broadcasting or providing
access to them, even if we do not ourselves host, operate, provide, or provide
access to these products, services, content or advertising. While our



                                       12
<PAGE>


agreements with these parties often provide that we will be indemnified against
such liabilities, such indemnification may not be adequate. It is also possible
that, if any information provided directly by us contains errors or is otherwise
negligently provided to users, third parties could make claims against us.
Investigating and defending any of these types of claims is expensive, even if
the claims do not result in liability. If any of these claims do result in
liability, we could be required to pay damages or other penalties, which could
harm our business and our operating results.

WE MAY BE UNABLE TO SUCCESSFULLY COMPETE WITH OTHER COMPANIES IN THE MEDIA
DELIVERY MARKET. The market for software and services for media delivery over
the Internet is relatively new and constantly changing. We expect that
competition will continue to intensify. Increased competition may result in
price reductions, reduced margins, loss of customers, and a change in our
business and marketing strategies, any of which could harm our business.

Many of our current and potential competitors have longer operating histories,
greater name recognition, more employees and significantly greater financial,
technical, marketing, public relations and distribution resources than we do. In
addition, new competitors with potentially unique or more desirable products or
services may enter the market at any time. The competitive environment may
require us to make changes in our products, pricing, licensing, services or
marketing to maintain and extend our current brand and technology franchise.
Price concessions or the emergence of other pricing, licensing and distribution
strategies or technology solutions of competitors may reduce our revenue,
margins or market share, any of which will harm our business. Other changes we
have to make in response to competition could cause us to expend significant
financial and other resources, disrupt our operations, strain relationships with
partners, or release products and enhancements before they are thoroughly
tested, any of which could harm our operating results and stock price.

Our web sites and network compete for user traffic and Internet advertising
revenue with a wide variety of web sites, Internet portals and ISPs. We cannot
be certain that advertisers will place advertising with us or that revenue
derived from such advertising will be meaningful. We cannot predict if our
advertising revenues can be sustained or will increase in future periods.

ANY FAILURE OF OUR NETWORK COULD LEAD TO SIGNIFICANT DISRUPTIONS IN OUR SERVICES
BUSINESS, WHICH COULD DAMAGE OUR REPUTATION, REDUCE OUR REVENUES OR OTHERWISE
HARM OUR BUSINESS. Our business is dependent upon providing our customers with
fast, efficient and reliable services. A reduction in the performance,
reliability or availability of our web sites and network infrastructure may harm
our ability to distribute our products and services to our clients, as well as
our reputation and ability to attract and retain clients, customers, advertisers
and content providers. Our systems and operations are susceptible to, and could
be damaged or interrupted by, outages caused by fire, flood, power loss,
telecommunications failure, Internet breakdown, earthquake and similar events.
Our systems are also subject to human error, security breaches, power losses,
computer viruses, break-ins, "denial of service" attacks, sabotage, intentional
acts of vandalism and tampering designed to disrupt our computer systems, Web
sites and network communications, and our systems could be subject to greater
vulnerability in periods of high employee turnover. A sudden and significant
increase in traffic on our Web sites could strain the capacity of the software,
hardware and telecommunications systems that we deploy or use. This could lead
to slower response times or system failures. To meet our customers'
requirements, we must protect our network against damage from, among other
things, human error, physical or electronic security breaches, computer virus,
fire, earthquake, flood and other natural disasters, power loss,
telecommunications failure, and sabotage and vandalism. Our failure to protect
our network against damage from any of these events will harm our business.

Our operations also depend on receipt of timely feeds from our content
providers, and any failure or delay in the transmission or receipt of such feeds
could disrupt our operations. We also depend on Web browsers, ISPs and online
service providers to provide Internet users access to our Web sites. Many of
these providers have experienced significant outages in the past, and could
experience outages, delays and other difficulties due to system failures
unrelated to our systems.

WE DEPEND ON AN OUTSIDE THIRD PARTY TO MAINTAIN OUR COMMUNICATIONS HARDWARE AND
PERFORM MOST OF OUR COMPUTER HARDWARE OPERATIONS. Substantially all of our
communications hardware and most of our computer hardware operations are located
at an AT&T facility in New York. If AT&T's hardware and operations fail, our
reputation and business will suffer. We do not have complete backup systems for
these operations. We have a limited disaster recovery plan in the event of
damage from fire, floods, typhoons, earthquakes, power loss, telecommunications
failures, break-ins and similar events. Our operations are dependent on our
ability to protect our computer systems against these unexpected adverse events.
If any of the foregoing occurs, we may experience a complete system shutdown.
Any business interruption insurance that we carry is unlikely to be sufficient
to compensate us for loss of business in the event of a significant catastrophe.
A problem with, or failure of, our communications hardware or operations could
result in interruptions or increases in response times on the Internet sites of
our customers. If we cannot maintain our system in the event of unexpected
occurrences, make necessary modifications and/or improvements to the technology,
such deficiencies could have a material adverse effect upon our business,
financial condition and results of operations. To improve the performance and to
prevent disruption of our services, we may have to make substantial investments
to deploy additional servers or one or more copies of our Web sites. Although we
believe we carry property insurance with adequate coverage limits, our coverage
may not be adequate to compensate us for all losses, particularly with respect
to loss of business and reputation, that may occur.

WE DEPEND ON TECHNOLOGY LICENSED TO US BY THIRD PARTIES. The loss of, or our
inability to maintain, these licenses could result in increased costs or delay
sales of our products. We license technology from third parties, including
software that is integrated with internally developed software and used in our
products to perform key functions. We anticipate that we will continue to
license technology from third parties in the future. This software may not
continue to be available on commercially reasonable terms, if at all. Although
we do not believe that we are substantially dependent on any licensed
technology, some of the software that we license from third parties could be
difficult for us to replace. The loss of any of these technology licenses could
result in delays in the license of our products until equivalent technology, if
available, is developed or identified, licensed and integrated. The use of
additional third-party software would require us to negotiate license agreements
with other parties, which could result in higher royalty payments and a loss of
product differentiation. In addition, the effective implementation of our
products depends upon the successful operation of third-party licensed products
in conjunction with our products, and therefore any undetected errors in these
licensed products could prevent the implementation of our products, impair the
functionality of our



                                       13
<PAGE>


products, delay new product introductions, and/or damage our reputation.

We rely on content provided by third parties to increase market acceptance of
our products and services. If third parties do not develop or offer compelling
content to be delivered over the Internet, or grant necessary licenses to us or
our customers to distribute or perform such content, our business will be harmed
and our products and services may not achieve or sustain broad market
acceptance. We rely on third-party content providers to develop and offer
content in our formats that can be delivered using our server products. We also
rely entirely on third-party content for the programming and content offerings.
In some cases, we pay substantial fees to obtain content for these services. We
cannot guarantee that third-party content providers will continue to rely on our
technology or offer compelling content in our formats, nor can we guarantee that
we will be able to secure licenses to their content or that such licenses will
be available at commercially reasonable rates, to encourage and sustain broad
market acceptance of our products and services. The failure to do so would harm
our business and our business prospects.

OUR BUSINESS MAY BE HARMED BECAUSE WE HAVE NOT COMPLETED THE FILING OF OUR
TRADEMARK AND PATENT APPLICATIONS AND WE DO NOT HAVE ANY REGISTERED COPYRIGHTS.
A large majority of our software was acquired from third parties. We have not
registered copyrights on any software. We rely upon confidentiality agreements
signed by our employees, consultants and third parties to protect our
intellectual property. We can not assure you that we can adequately protect our
intellectual property or successfully prosecute potential infringement of our
intellectual property rights.

WE ARE DEPENDENT ON OUR MANAGEMENT AND KEY EMPLOYEES. If we are unable to retain
our key personnel, our business may be harmed. We rely on our management to make
all of our business decisions. Our business is dependent upon the experience of
our executive officers and key personnel who are familiar with both the specific
issues facing the Internet media industry and our future plans and goals. We do
not have employment agreements with most of our senior management team. If one
or more individuals from our senior management team were to resign, the loss
could result in loss of sales, delays in new product development and diversion
of management resources, and we could face high costs and substantial difficulty
in hiring qualified successors and could experience a loss in productivity while
any such successor obtains the necessary training and experience. We do not
maintain "key person" life insurance policies.

OUR FAILURE TO ATTRACT, TRAIN OR RETAIN HIGHLY QUALIFIED PERSONNEL COULD HARM
OUR BUSINESS. Our ability to establish and maintain a competitive position will
depend, in part, on our ability to attract and retain qualified personnel in all
areas, especially those with management and product development skills. In
particular, we must hire and retain experienced management personnel to help us
continue to grow and manage our business, and skilled software engineers to
further our research and development efforts. Competition for qualified
personnel is intense. If we do not succeed in attracting new personnel or in
retaining and motivating our current personnel, our business could be harmed.

OUR DIRECTORS AND EXECUTIVE OFFICERS BENEFICIALLY OWN APPROXIMATELY 46.93% OF
OUR STOCK; THEIR INTERESTS COULD CONFLICT WITH THE STOCKHOLDERS, WHO MAY BE
UNABLE TO EXERCISE CONTROL. As of February 10, 2004, our executive officers,
directors and affiliated persons beneficially owned approximately 46.93% of our
common stock. Robert Petty, our Chief Executive Officer and Chairman of the
Board, beneficially owns approximately 45.67% of our common stock. As a result,
our executive officers, directors and affiliated persons will have significant
influence to:


     o    elect or defeat the election of our directors;

     o    amend or prevent amendment of our articles of incorporation or bylaws;

     o    effect or prevent a merger, sale of assets or other corporate
          transaction; and

     o    control the outcome of any other matter submitted to the shareholders
          for vote.





                                       14
<PAGE>


ITEM 7.        FINANCIAL STATEMENTS

INDEX TO FINANCIAL STATEMENTS
VIRILITEC INDUSTRIES, INC. AND SUBSIDIARIES

     o    Consolidated Balance Sheet as of December 31, 2003

     o    Consolidated Statements of Operations and Comprehensive Income (Loss)
          for the years ended December 31, 2003 and 2002 and the cumulative
          period from March 30, 2001 (date of inception) to December 31, 2003

     o    Consolidated Statements of Stockholders' Equity (deficit)

     o    Consolidated Statements of Cash Flows for the years ended December 31,
          2003 and 2002 and for the cumulative period from March 30, 2001 (date
          of inception) to December 31, 2003

     o    Notes to Consolidated Financial Statements







                                       15
<PAGE>


                          INDEPENDENT AUDITOR'S REPORT


To the Board of Directors and Stockholders of Virilitec Industries, Inc. and
Subsidiaries

We have audited the accompanying consolidated balance sheet of Virilitec
Industries, Inc. and Subsidiaries (a development stage company) as of December
31, 2003, and the related consolidated statements of operations, and
comprehensive income (loss), stockholders' equity (deficit) and cash flows for
each of the two years then ended and for the period from March 30, 2001
(inception), to December 31, 2003. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Virilitec Industries, Inc. and
Subsidiaries as of December 31, 2003, and the results of their operations and
their cash flows for each of the two years then ended and from March 30, 2001
(inception), to December 31, 2003, in conformity with accounting principles
generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements,
the Company has incurred net losses since its inception and has experienced
severe liquidity problems. Those conditions raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to those matters are also described in Note 6. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.



                                                   /s/ Moore Stephens, P.C
                                                   --------------------------
New York, New York                                 Moore Stephens, P.C.
February 6, 2004                                   Certified Public Accountants




                                       16
<PAGE>


                   Virilitec Industries, Inc. and Subsidiaries
               Consolidated Balance Sheet as of December 31, 2003


Assets

<TABLE>
<CAPTION>
<S>                                                                                <C>
Current Assets
                  Cash and cash equivalents                                        $    26,371
                  Accounts receivable                                                    4,976
                                                                                   -----------

                                 Total current assets                                   31,347

Equipment net of accumulated depreciation of $7,579                                     16,176
                                                                                   -----------
                                 Total assets                                           47,523
                                                                                   ===========

                                 Liabilities and Stockholders' Equity (Deficit)

Current Liabilities
                  Accounts payable                                                     174,158
                  Notes payable - other                                                 62,500
                  Stockholder loans payable                                            514,164
                  Other current liabilities                                             53,173
                                                                                   -----------
                                 Total current liabilities                             803,995
                                                                                   -----------

Commitments and Contingent Liabilities                                                      --

Stockholders' Equity (Deficit)
                  Common stock, $.0001 par value; authorized 500,000,000 shares;
                    issued and outstanding 157,669,130                                  15,767
                  Paid-in capital                                                      393,341
                  (Deficit) accumulated during development stage                    (1,152,642)
                  Accumulated other comprehensive (loss)                               (12,938)
                                                                                   -----------
                                 Total stockholders' equity (deficit)                 (756,472)
                                                                                   -----------
                                 Total liabilities and stockholders' equity
                                   (deficit)                                       $    47,523
                                                                                   ===========
</TABLE>


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


                                       17
<PAGE>


                   Virilitec Industries Inc. and Subsidiaries
      Consolidated Statements of Operations and Comprehensive Income (Loss)

<TABLE>
<CAPTION>
                                                                                  Cumulative
                                                                                  Period from
                                         Year ended                             March 30 2001,
                                      December 31,2003       Year ended       (date of inception)
                                                         December 31, 2002   to December 31, 2003
                                      ----------------   -----------------   --------------------
<S>                                    <C>                <C>                    <C>
Revenue                                $     145,252      $       4,527          $     149,779
                                       -------------      -------------          -------------
Expenses:
Research and Development                     142,845            138,380                367,725
Sales and Marketing                          199,877             48,716                267,597
General and Administration                   318,950            169,873                563,057
                                       -------------      -------------          -------------
Total Expenses                               661,672            356,969              1,198,379
                                       =============      =============          =============

(Loss) from Operations                      (516,420)          (352,442)            (1,048,600)

Interest Income                                   29                 --                     29
Interest Expense - Related Party             (62,422)           (37,178)              (104,071)
                                       -------------      -------------          -------------
Net (Loss)                             $    (578,813)     $    (389,620)         $  (1,152,642)
                                       =============      =============          =============

 Net (Loss) per  common share          $    (578,813)     $    (389,620)         $  (1,152,642)
                                       =============      =============          =============
 Basic and Diluted                     $          --      $          --          $        (.01)
                                       =============      =============          =============
 Average common shares outstanding     $ 157,669,130      $ 156,169,130          $ 157,669,130
                                       =============      =============          =============

Comprehensive Income:
  Net (Loss)                           $    (578,813)     $    (389,620)         $  (1,152,642)
  Foreign Currency Translation               (11,956)              (982)               (12,938)
                                       -------------      -------------          -------------
Comprehensive Income (Loss)            $    (590,769)     $    (390,602)         $  (1,165,580)
                                       =============      =============          =============
</TABLE>

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



                                       18
<PAGE>


                   Virilitec Industries, Inc and Subsidiaries
            Consolidated Statements of Stockholders' Equity (Deficit)

<TABLE>
<CAPTION>
                                                                                        (Deficit)      Accumulated
                                                                              Other       During          Other         Total
                                                                           Additional   Accumulated   Comprehensive  Stockholders'
                                             Common             Stock        Paid-in    Development      Income         Equity
                                              Stock           Par Value     Capital        Stage          (loss)      (Deficit)
                                              -----           ---------     -------        -----          ------      ---------
<S>                                        <C>                  <C>        <C>       <C>              <C>              <C>
Recapitalization as a result of
merger [1]                                 148,000,000          $14,800    $394,308  $         ---    $      ---       $409,108
Net loss for the period from March
30, 2001 (date of inception) to
December 31, 2001                                   --              ---         ---      (184,209)           ---      (184,209)
                                            -----------        ---------    --------    -----------      --------   ------------
Balance - December 31, 2001                148,000,000           14,800     394,308      (184,209)           ---        224,899
Net Loss for the year ended
December 31, 2002                                  ---              ---         ---      (389,620)           ---      (389,620)
Foreign currency translation
adjustment                                          --              ---         ---            ---         (982)          (982)
                                            -----------        ---------    --------    -----------      --------   ------------
Balance December 31, 2002                  148,000,000           14,800     394,308      (573,829)         (982)      (165,703)
Equity of  shell
In merger transaction                        9,669,130              967       (967)            ---           ---            ---

Net (Loss) for the year
ended December 31, 2003                            ---              ---         ---      (578,813)           ---      (578,813)
Foreign Currency  translation
adjustment                                         ---              ---         ---            ---       (11,956)       (11,956)
                                        ---------------     -----------    --------    ------------    ---------   ------------
Balance December 31, 2003                  157,669,130     $    15,767    $393,341    $  (1,152,642)  $  (12,938) $    (756,472)
                                        ===============     ===========    ========    ============    =========   ============
</TABLE>


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



                                       19
<PAGE>


                   Virilitec Industries, Inc and Subsidiaries
                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>

                                                                                            Cumulative period
                                                                                             March 30, 2001
                                                   Year ended          Year ended               (date of
                                                    December 31,      December 31,            inception) to
Operating activities:                                  2003               2002              December 31, 2003

Net (Loss)                                     $     (578,813)   $         (389,620)    $          (1,152,642)
                                                  -------------     -----------------      --------------------
<S>                                              <C>                <C>                    <C>
Adjustments to reconcile net (loss) to net
cash provided (used) by operating activities:
Depreciation                                             4,863                 2,716                     7,579

Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable                                    (4,976)                    --                   (4,976)
Other assets

Increase (decrease) in:
Accounts payable                                       161,356                12,802                   174,158


Other liabilities                                       51,862                 1,338                    53,173
                                                  -------------     -----------------      --------------------
Total adjustments                                      213,105                16,856                   229,934
                                                  -------------     -----------------      --------------------

                                                  -------------     -----------------      --------------------
Net cash (used) by operating activities              (365,708)             (372,764)                 (922,708)
                                                  -------------     -----------------      --------------------


Investing activities:
Purchase of equipment                                 (12,814)               (7,891)                  (23,755)
                                                  -------------     -----------------      --------------------
Net cash (used) by investing activities               (12,814)               (7,891)                  (23,755)
                                                  -------------     -----------------      --------------------

Financing activities:
Capital contribution                                   409,108                    --                   409,108
Increase in stockholder loan                           405,896               479,679                 1,095,966
(decrease) in stockholder loan                       (472,082)              (86,633)                 (581,802)
Note payable                                            62,500                    --                    62,500
                                                  -------------     -----------------      --------------------
Net each provided by financing activities              405,422               393,046                   985,772
                                                  -------------     -----------------      --------------------
Effect of exchange rate changes on cash               (11,956)                 (982)                  (12,938)
                                                  -------------     -----------------      --------------------

Net increase in cash                                    14,944                11,409                    26,371

Cash end of periods                            $        26,371  $             11,427    $               26,371
                                                  =============     =================      ====================

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the periods for:
  Interest                                     $          --    $               --      $                 --
  Income taxes                                 $          --    $               --      $                 --
</TABLE>


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



                                       20
<PAGE>


                           VIRILITEC INDUSTRIES, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION AND NATURE OF BUSINESS

Virilitec Industries, Inc., a Delaware corporation ("Virilitec"), was organized
on August 11, 1998. We were formed to license and distribute a line of
bioengineered virility nutritional supplements designed to enhance human male
sperm count and potency. We were not successful in implementing our business
plan, and after looking at other possible products to expand our product line,
our management determined that it was in the best interests of our shareholders
to seek to acquire an operating company. As a result, we terminated all of our
existing contracts and was inactive until the merger with ROO Media Corporation,
a Delaware corporation ("ROO Media").

On December 2, 2003, Virilitec, VRLT Acquisition Corp., a Delaware corporation
and wholly-owned subsidiary of Virilitec ("Merger Sub"), ROO Media, and Jacob
Roth and Bella Roth, each an individual (collectively, the "Virilitec Principal
Stockholders"), entered into an Agreement and Plan of Merger (the "Merger
Agreement"). Upon the terms and subject to the conditions set forth in the
Merger Agreement, Merger Sub was merged with and into ROO Media (the "Merger").
As a result of the Merger, Virilitec, through Merger Sub, acquired 100% of the
capital stock of ROO Media, all issued and outstanding shares of capital stock
of ROO Media held by the stockholders of ROO Media were cancelled and converted
into the right to receive an aggregate of 148,000,000 shares of common stock of
Virilitec ("Virilitec Common Stock"), the separate corporate existence of Merger
Sub ceased, and ROO Media continued as the surviving corporation in the Merger
as a wholly-owned subsidiary of Virilitec.

For accounting purposes the Merger is being recorded as a recapitalization of
ROO with ROO as the acquirer. The transaction is being treated as an issuance of
shares for cash by ROO. Shares issued in the Merger are shown as outstanding for
all periods presented in these financial statements in the same manner as for a
stock split. Pro forma information on this transaction is not presented as at
the date of this transaction, Virilitec is considered a public shell and
accordingly, the transaction will not be considered a business combination. The
financial statements prior to December 2, 2003 reflect the operations of ROO
only.

Virilitec prepares its financial statements in accordance with United States
generally accepted accounting principles. During 2001 we focused on the
development refinement of our products and solutions and only commenced the
commercial selling of our solutions in late 2003. We have not yet achieved
substantial revenues. Accordingly, our financial statements are presented as a
developmental stage enterprise, as prescribed by Statement of Financial
Accounting Standards No. 7, "Accounting and Reporting by Development Stage
Enterprises."

We, through our operating subsidiary ROO Media, are a digital media company in
the business of providing products and solutions to a global base of clients
that enable the broadcast of topical video content from their Internet websites.
We specialize in providing the technology and content required for video to be
played on computers via the Internet as well as emerging broadcasting platforms
such as set top boxes and wireless devices (i.e., mobile phones and PDAs). Our
core activities include the aggregation of video content, media management,
online advertising, hosting, and content delivery. We also operate a global
network of individual destination portals under the brand ROO TV, enabling end
users in different regions around the world to view video content over the
Internet that is topical, informative, up to date, and specific to the region in
which they live. In conjunction with our subsidiaries, we currently service
websites based in Europe, Australia, the United States and South Africa.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A) PRINCIPLES OF CONSOLIDATION
-------------------------------

The consolidated financial statements include the accounts of Virilitec
Industries, Inc. and its wholly-owned subsidiary ROO Media Corporation. Included
in the consolidation with ROO Media are ROO Media's wholly-owned subsidiary ROO
Media (Aust) Pty Ltd, its 76%-owned subsidiary ROO Media Europe Pty Ltd, and its
94%-owned subsidiary ROO Broadcasting Limited. All material intercompany
accounts and transactions have been eliminated.

(B) Management estimates

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Certain amounts included in the financial statements are
estimated based on currently available information and management's judgment as
to the outcome of future conditions and circumstances. Changes in the status of
certain facts or circumstances could result in material changes to the estimates
used in the preparation of financial statements and actual results could differ
from the estimates and assumptions. Every effort is made to ensure the integrity
of such estimates.

(C) PROPERTY AND EQUIPMENT
--------------------------

Property and equipment are stated at cost. Depreciation is provided for using
the straight-line method of accounting over the estimated useful life currently
considered to be 3 years.


                                       21
<PAGE>



(D) Fair value of Financial Instruments

     The carrying amounts reported in the balance sheet for cash and cash
equivalents, accounts receivable, accounts payable and accrued liabilities
approximate their fair values because of the immediate or short-term maturity of
these financial instruments.

(E) Impairment of long-lived assets:

     Long-lived assets held and used by Virilitec are reviewed for possible
impairment whenever events or changes in circumstances indicate 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 asset. 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. The fair value of an asset is the amount at which the asset could be
bought or sold in a current transaction between willing parties, that is, other
than in a forced or liquidation sale. Quoted market prices in active markets are
the best evidence of fair value and shall be used as the basis for the
measurement, if available. If quoted market prices are not available, the
estimate of fair value shall be based on the best information available in the
circumstances. The estimate of fair value shall consider prices for similar
assets and the results of valuation techniques to the extent available in the
circumstances. Valuation techniques include the present value of estimated
expected future cash flows using a discount rate commensurate with the risk
involved, option-pricing models, matrix pricing and fundamental analysis.

(F) Cash and cash equivalents:

     Virilitec considers all highly liquid investments with original maturities
of ninety days or less to be cash and cash equivalents. Such investments are
valued at quoted market prices.

(G) Receivables:

     Virilitec believes that the carrying amount of receivables approximates the
fair value at such date.

(H) Foreign Currency Translation

      Assets and liabilities of Virilitec's foreign subsidiaries are translated
at current exchange rates and related revenues and expenses are translated at
average exchange rates in affect during the period. Resulting translation
adjustments are recorded as a component of accumulated comprehensive income
(loss) in stockholders' equity.

(I) Revenue Recognition

     Revenues are derived principally from professional services, digital media
management and advertising. Revenue is recognized when service has been
provided.

      In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition," which
provides guidance on the recognition, presentation and disclosure of revenue in
financial statements filed with the SEC. SAB 101 outlines the basic criteria
that must be met to recognize revenue and provide guidance for disclosures
related to revenue recognition policies. Management believes that Virilitec's
revenue recognition practices are in conformity with the guidelines of SAB 101.

(J) Earnings (Loss) per share calculation:

         Net loss per share is based on the weighted average number of shares
outstanding reflecting the shares issued in the merger as outstanding for all
periods presented.

     Earnings (Loss) per common share are calculated under the provisions of
SFAS No. 128, "Earnings per Share," which establishes standards for computing
and presenting earnings per share. SFAS No. 128 requires Virilitec to report
both basic earnings (loss) per share, which is based on the weighted-average
number of common shares outstanding during the period, and diluted earnings
(loss) per share, which is based on the weighted-average number of common shares
outstanding plus all potential dilutive common shares outstanding. Options and
warrants are not considered in calculating diluted earnings (loss) per share
since considering such items would have an anti-diluted effect.

(K) New Authoritative Accounting Pronouncements:

     In November 2002, the FASB, issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" ("FIN 45"). FIN 45 requires a guarantor to
recognize a liability, at the inception of the guarantee, for the fair value of
obligations it has undertaken in issuing the guarantee and also include more
detailed disclosures with respect to guarantees. FIN 45 is effective on a
prospective basis for guarantees issued or modified starting January 1, 2003 and
requires the additional disclosures in interim and annual financial statements
effective for the period ended December 31, 2002. The Company's adoption of the
initial recognition and measurement provisions of FIN 45 effective January 1,
2003, did not have a material impact on the Company's results of operations or
financial position.

     In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities" ("FIN"). FIN 46 requires a


                                       22
<PAGE>


variable interest entity to be consolidated by a company if that company is
subject to a majority of the risk of loss from the variable interest entity's
activities or entitled to receive a majority of the entity's residual returns or
both. Historically, entities generally were not consolidated unless the entity
was controlled through voting interests. FIN 46 also requires disclosures about
variable interest entities that a company is not required to consolidate but in
which it has a significant variable interest. The consolidation requirements of
FIN 46 apply immediately to variable interest entities created after January 31,
2003 and to variable interest entities in which an enterprise obtains an
interest after that date.

     On October 8, 2003, the FASB deferred the implementation date for FIN 46 as
it relates to variable interest entities that existed prior to February 1, 2003
and in December 2003 the FASB issued a revised FIN 46. The revised effective
date for the Company is the end of the first reporting period ending after March
15, 2004 (April 30, 2004 for the Company). However, the Company must apply
either the revised or the original FIN 46 to so called special-purpose entities
as of the end of the first reporting period ending after December 15, 2003
(January 31, 2004 for the Company). Certain disclosure requirements apply to all
financial statements issued after January 31, 2003, regardless of when the
variable interest entity was established. The adoption of this standard is not
expected to have a material impact on the Company's consolidated financial
statement.

     In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities" ("SFAS 149"), which amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities under SFAS 133. SFAS 149 is effective for contracts entered
into or modified after June 30, 2003 and for hedging relationships designated
after June 30, 2003. The adoption of SFAS 149, effective July 1, 2003, did not
have a material impact on the Company's results of operations or financial
position.

         In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Instruments with Characteristics of both Liabilities and Equity" ("SFAS 150"),
which established standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. SFAS
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's adoption of the initial
recognition and initial measurement provisions of SFAS 150, effective June 1,
2003, did not have a material impact on the Company's results of operations or
financial position.

NOTE 3 - COMMITMENTS AND CONTIGENCIES

         On August 21, 2003, we, through our former President Bella Roth,
entered into a cease and desist agreement with the SEC resolving the previously
disclosed matter. We are not currently involved in any material legal
proceedings.

NOTE 4 - PROPERTY AND EQUIPMENT

Property and equipment at December 31 for the years indicated below consists of
the following:

                                     2003           2002
                                   --------      --------
Office and computer equipment        23,755        10,942
                                   --------      --------
Less: accumulated depreciation       (7,579)       (2,716)
                                   --------      --------
                                   $ 16,176      $  8,226
                                   ========      ========

Depreciation expense for the years ended December 31, 2003 and 2002 amounted to
$4,683 and $2,716, respectively.

NOTE 5 - NOTE PAYABLE

On December 2, 2003. Virilitec entered into an agreement with Jacob Roth, the
former CEO of Virilitec, to repay Virilitec's debt of $62,500 to Mr. Roth within
90 days after the effective date of the merger. The merger was effectuated on
December 3, 2003. The debt bears interest at the rate of 8% and its repayment
date is March 3, 2004.

NOTE 6 - GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming
that we will continue as a going concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business. We
have incurred net losses of approximately $578,813 and $389,620 for the years
ended December 31, 2003 and 2002, respectively. Additionally, we had a net
working capital deficiency of approximately $772,648 and accumulated deficit of
approximately $1,152,652 at December 31, 2003, and negative cash flows from
operating activities of approximately $365,708 and $372,764 for the years ended
December 31, 2003 and 2002, respectively. We have incurred losses since ROO
Media's inception, have an accumulated deficit, and have experienced negative
cash flows from operations since ROO Media's inception. The expansion and
development of our business may require additional capital. This condition
raises substantial doubt about our ability to continue as a going concern. Our
management expects cash flows from operating activities to improve in 2004,
primarily as a result of an increase in sales, and plans to raise capital
through various methods to achieve their business plans, although there can be
no assurance thereof. The accompanying consolidated financial statements do not
include any adjustments that might be necessary should we be unable to continue
as a going concern. If we fail to generate positive cash flows or obtain
additional capital when required, we could continue to modify, delay or abandon
some or all of our business and expansion plans.


                                       23
<PAGE>


NOTE 7 - INCOME TAXES

At December 31, 2003, Virilitec, through its wholly-owned subsidiary ROO Media,
had a federal tax net operating loss ("NOL") carryforward of approximately $1
million that expires at various dates through 2018.

Virilitec did not provide any current or deferred United States federal, state
or foreign income tax provision or benefit for the periods presented because it
has experienced operating losses since inception. Virilitec has provided a full
valuation allowance on the deferred tax asset, consisting primarily of NOL
carryforwards, because of uncertainty regarding realizability.

NOTE 8 - SHAREHOLDERS' EQUITY

Common Stock

 Virilitec has 500,000,000 authorized shares of common stock with a par value of
$.0001. Each share entitles the holder to one vote.

NOTE 9 - RELATED PARTY TRANSACTIONS

         ROO Media entered into a consulting agreement with Petty Consulting,
Inc. on August 1, 2001, whereby Petty Consulting, Inc. made Robert Petty
available to ROO Media to serve as its Chairman, President and Chief Executive
Officer. The agreement expires on August 1, 2004. Mr. Petty is the President of
Petty Consulting, Inc. Mr. Petty is paid $10,000 per month for his services to
ROO Media pursuant to the consulting agreement.

         On January 7, 2003, ROO Media entered into a new loan agreement with
Mr. Petty to replace the loan agreement entered into with Mr. Petty dated July
29, 2001. The interest on the loan is 10% per annum and the outstanding balance
as of December 31,2003 was $514,164. Mr. Petty has agreed that no demand for
payment will be made to the company over the following 12 months and any
principle repayment during any month above $20,000 will require board approval.
The loan is secured by all of the assets of ROO Media.

         Pursuant to the terms of An Agreement and Plan of Merger, dated
December 2, 2003, between Virilitec, VRLT Acquisition Corp., a Delaware
corporation and wholly-owned subsidiary of Virilitec ("Merger Sub"), ROO Media,
and Jacob Roth and Bella Roth, each an individual (collectively, the "Virilitec
Principal Stockholders"), ROO Media entered into an agreement to pay within 90
days after December 3, 2003, the effective date of the Merger, Virilitec's
$62,500 debt to Jacob Roth, Virilitec's former Chief Executive Officer. The
obligation to pay such debt is secured by the pledge of the 72,000,000 shares of
the Virilitec Common Stock issued to Robert Petty, the Chief Executive Officer
of ROO Media, after the Merger.

NOTE 10 - SUBSEQUENT EVENTS

ROO Media Corporation acquired beneficial ownership of 686,000 shares or 4.5% of
the outstanding shares of common stock of A. Cohen & CO Plc (Cohen) (CHEN.LSE).
The price that ROO Media paid for the 686,000 shares of common stock of Cohen
ranged from .04p per share to .075p per share. The transaction involved issuing
1,120,176 Virilitec shares in exchange for 686,000 shares of Cohen.

On January 7, 2004, the Board of Directors of Virilitec and a majority of the
stockholders of Virilitec approved the change of Virilitec's name to ROO Group
Inc. On January27, 2004, an information statement on Schedule 14C was sent out
to the record stockholders of Virilitec. Virilitec plans to file an amended to
its Certificate of Incorporation on or around February 17, 2004.

On February 3, 2004 ROO Media Corporation entered into a Window Media Revenue
Program agreement with Microsoft Corporation which relates to Online banner and
instream and television style advertising on the ROO Media network of websites.
The future effects of revenue to ROO Media from this contract can not be clearly
determined at this early stage.



                                       24

<PAGE>


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

On January 30, 2004, we dismissed our independent public accountants, Mark Cohen
C.P.A. ("Cohen"), which dismissal was approved by our Board of Directors. We did
not have any disagreements over accounting policies or practices with Cohen.

On January 30, 2003, upon receipt of approval of our Board of Directors, we
engaged Moore Stephens, P.C. to serve as our independent certified public
accountants. Prior to the engagement of Moore Stephens, P.C., neither we nor
anyone on our behalf consulted with such firm regarding the application of
accounting principles to a specified transaction, either completed or
uncompleted, or type of audit opinion that might be rendered on our consolidated
financial statements.

ITEM 8A. CONTROLS AND PROCEDURES

Based on an evaluation as of the date of the end of the period covered by this
Form 10-KSB, our Chief Executive Office and Chief Financial Officer conducted an
evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures, as required by Exchange Act Rule 13a-15. Based on that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures were effective to ensure that
information required to be disclosed by us in the reports that we file or submit
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified by the Commission's rules and forms.

Changes in Internal Controls

There were no significant changes in the our internal controls over financial
reporting that occurred during the quarter and year ended December 31, 2003 that
have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.

Limitations on the Effectiveness of Controls Our management believes that a
control system, no matter how well designed and operated, cannot provide
absolute assurance that the objectives of the control system are met, and no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within a company have been detected.

PART III.

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

Directors serve for five-year terms. The following are the members of our Board
of Directors and our executive officers.


   NAME               AGE      POSITION
   ----               ---      --------
   Robert Petty       39       Chief Executive Officer, Chairman of the
                                Board of Directors
   Robin Smyth        50       Chief Financial Officer, Director


ROBERT PETTY. Mr. Petty was appointed Chief Executive Officer and Chairman of
the Board of Directors of Virilitec Industries, Inc. on December 3, 2003, the
effective date of the merger with ROO Media Corporation. Mr. Petty has also
served as the President, Chief of Executive Officer and Chairman of the Board of
Directors of ROO Media Corporation since May 2001. From December 2002 to June
30, 2003, Mr. Petty was a Director of A. Cohen & Co Plc. From 1999 to 2002, Mr.
Petty worked in New York in various positions, including Chairman and Chief
Executive Officer of Avenue Group, Inc. (AVNU) (formally. I.T. Technology Inc.)
and President of VideoDome Networks, Inc, a middleware streaming media service
provider. From 1997 to 1999, Mr. Petty was Manager of Electronic Business
Services for e-commerce products for Telstra Corp. Mr. Petty is also on the
Board of Directors of Petty Consulting Inc., ROO Media (Australia) Pty Ltd, ROO
Media Europe Ltd, ROO Broadcasting Ltd, and ROO TV Pty Ltd.

ROBIN SMYTH. Mr. Smyth was appointed Chief Financial Officer and a Director of
Virilitec Industries, Inc. on December 3, 2003. the effective date of the merger
with ROO Media Corporation. Mr. Smyth became involved with ROO Media Corporation
in 2002 and was appointed a Director in 2003. Since 1998 he was a partner at
Infinity International, a consulting and IT recruitment operation. During the
period from 1990 to 1998 Mr. Smyth worked for 3 years as EVP of Computer
Consultants International in the U.S. and for 5 years in London as CEO of
Computer Consultants International's European operations. Mr. Smyth was
Secretary and a Director of the All-States group of companies involved in
merchant banking operations, where he was responsible for corporate banking
activities. Mr. Smyth is also on the Board of Directors of ROO Media (Australia)
Pty Ltd, ROO Media Europe Ltd and Corporate Advice Pty Ltd.

SIGNIFICANT EMPLOYEES

MICHAEL NEISTAT (age 47). Mr. Neistat joined the Board of Directors of ROO Media
Corporation and Avenue Group, Inc. (AVNU) in April 2002. Mr. Neistat resigned as
a Director of Avenue Group Inc in April 2003 to focus on his role as a Director
of ROO Media Corporation. Mr. Neistat has twenty years of experience in
information technology and related industries. From December 2002 to June 30,
2003, Mr. Neistat also served as a Director of A. Cohen & Co Plc. (LSE CHEN).
From 1999 to 2001, Mr. Neistat was the Chief Operating Officer for Voicenet
(Aust) Ltd. ("Voicenet"), a company listed on the Australian Stock Exchange. Mr.
Neistat joined Voicenet



                                       25
<PAGE>

after selling Skai Computer Systems Pty. Ltd. to Voicenet in 1999. In 1983, Mr.
Neistat founded Skai Computer Systems Pty. Ltd. Mr. Neistat is currently a
director of ROO Media Corporation, Thinworld Pty Limited (Aust), BESD Pty Ltd
(Aust), Gaspard Nominees Pty. Ltd (Aust), Icon Retail Pty Ltd (Aust),
International Commerce Exchange Systems Pty Ltd (Aust), Neistat Superannuation
Pty Ltd (Aust), and Radius Multimedium Group Pty Ltd (Aust).

TRISTAN PLACE (age 29). Mr. Place was appointed as National Sales Manager of ROO
Media on July 1, 2003 and is responsible for sales and marketing of ROO Media
products. Mr. Place has been involved in interactive and online sales, sales
management, business development and product development for IT businesses in
Australia and the United States. He has held the roles of account manager and
business development manager at TMP Worldwide, and sales management roles for
John Fairfax online division F2 and The Age (www.mycareer.com.au).

BOARD COMPOSITION

At each annual meeting of our stockholders, all of our directors are elected to
serve from the time of election and qualification until the next annual meeting
of stockholders following election. The exact number of directors is to be
determined from time to time by resolution of the board of directors.

Each officer is elected by, and serves at the discretion of the board of
directors. Each of our officers and directors devotes his full time to our
affairs.

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

         Section 16(a) of the Securities Exchange Act of 1934 requires our
officers and directors, and persons who own more than ten percent of a
registered class of our equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Officers,
directors and greater-than-ten-percent shareholders are required by SEC
regulation to furnish us with copies of all Section 16(a) forms they file.
During fiscal 2003, one such required filing was inadvertently made a few days
late by Mr. Roth. Except for the foregoing, based solely upon our review of any
such reports furnished to us, we believe that during the year ended December 31,
2003, such persons made all required filings.

CODE OF ETHICS

We have adopted a code of ethics that applies to our principal executive
officer, principal financial officer or person performing similar functions. Our
code of ethics is exhibited to this annual report on Form 10-KSB as Exhibit 14.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

         Section 145 of the Delaware General Corporation Law, as amended,
authorizes us to Indemnify any director or officer under certain prescribed
circumstances and subject to certain limitations against certain costs and
expenses, including attorney's fees actually and reasonably incurred in
connection with any action, suit or proceeding, whether civil, criminal,
administrative or investigative, to which a person is a party by reason of being
a director or officer of Virilitec if it is determined that such person acted in
accordance with the applicable standard of conduct set forth in such statutory
provisions. Our Certificate of Incorporation contains provisions relating to the
indemnification of director and officers and our By-Laws extends such
indemnities to the full extent permitted by Delaware law.

We may also purchase and maintain insurance for the benefit of any director or
officer, which may cover claims for which the Company could not indemnify such
persons.

AUDIT COMMITTEE FINANCIAL EXPERT

We do not have an audit committee financial expert. Since our current management
recently decided to change our fiscal year end from July 31 to December 31, we
were not able to identify a suitable nominee in time for this transition report.
Our management is currently diligently pursuing such a candidate.

ITEM 10. EXECUTIVE COMPENSATION

The following table sets forth, for the fiscal years indicated, certain
information concerning the compensation of our Chief Executive Officer and each
other most highly compensated executive officers of Virilitec whose aggregate
compensation exceeded $100,000 during the years ended December 31, 2003, 2002
and 2001(collectively, the "Named Executive Officers").



                                       26
<PAGE>

<TABLE>
<CAPTION>
                                                          Annual Compensation
                                            --------------------------------------------
           Name and                                                                  Other        Long-Term
       Principal Position                   Year         Salary        Bonus       Compensation  Compensation
----------------------------                -----     ------------  -----------   -------------  -------------
<S>                                         <C>          <C>         <C>          <C>            <C>

Robert Petty (1)                            2003         120,000            0            0            0
     President, Chief Executive Officer
     and Director

Bella Roth (2)
    Former President and Director           2003        $   1.00            0            0            0
    of Virilitec                            2002        $      0            0            0            0
                                            2001        $      0            0            0            0

Jacob Roth (3)
    Former Chief Executive
    Officer                                 2003        $      0     $      0     $15,000 (5)         0
                                            2002 (4)    $      0     $      0            0            0
</TABLE>

-----------
(1) Mr. Petty became President, Chief Executive Officer and a Director of
Virilitec Industries, Inc. on December 3, 2003. The salary stated in the table
above is presented on an annualized basis.

(2) Ms. Roth resigned as President and Director of Virilitec on December 3,
2003. Commencing November 12, 1998, we had agreed to pay Mrs. Bella Roth, our
President & Chairman of the Board of Directors, an annual salary of $40,000.
Mrs. Roth's compensation was disclaimed for the last two years when she provided
her services on a full-time basis. During the fiscal 2003, Mrs. Roth was mostly
inactive and served primarily in an honorary capacity. As a result, her salary
was reduced to a token $1.00.

(3) Mr. Roth, resigned as Chief Executive Officer on December 3, 2003. Mr. Roth
worked full time prior to his resignation; instead of receiving his contractual
salary of $70,000, he was awarded 3 million options at par value.

(4) Mr. Roth assumed office on July 1, 2002.

(5) Consists of 3,000,000 options immediately exercisable at par value.


Options/SAR Grants Table

              Option/SAR Grants in Last Fiscal Year

                   Individual Grants
-----------------------------------------------------------
               Number of
               Securities   % of Total
               Underlying   Options/SARs
               Options/     Granted to
               SARs         Employees in   Exercise or Base  Market  Expiration
     Name      Granted (#)  Fiscal Year      Price ($/Sh)    Price      Date
-------------------------------------------------------------------------------
CEO - J. Roth  3,000,000       100%           $0.0001        $0.005   2/25/05

These options were exercised on February 28, 2003.

Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year End

The following table sets forth, for the year ended December 31, 2003, Common
Shares acquired by the Named Executive Officers upon exercise of options and the
number and value, in US dollars, of unexercised options as at December 31, 2003.

<TABLE>
<CAPTION>
            Common                   Number of Common Shares         Value of Unexercised
            Shares                   Underlying Unexercised Options  "In-the-Money" Options at
            Acquired on    Value     as at December 31, 2003         December 31, 2003
Name        Exercise (#)   Realized  Exercisable/Unexercisable       Exercisable/Unexercisable
----------------------------------------------------------------------------------------------
<S>          <C>           <C>             <C>                                <C>
Jacob Roth   3,000,000     $15,000         -0-                                -0-
</TABLE>


Long Term Incentive Plan ("LTIP") Awards Table

None

Compensation of Directors

No Director receives any cash compensation for their service as a Director. All
directors are reimbursed for their reasonable out-of-pocket expenses incurred in
connection with their duties to us.



                                       27
<PAGE>

Employment Contracts and Termination of Employment, and Change-in-Control
Arrangements

Other than with Robert Petty, we have no employment contracts with any of our
executive officers. ROO Media entered into a consulting agreement with Petty
Consulting, Inc. on August 1, 2001, whereby Petty Consulting, Inc. made Robert
Petty available to ROO Media to serve as its Chairman, President and Chief
Executive Officer. The agreement expires on August 1, 2004. Mr. Petty is the
President of Petty Consulting, Inc. Mr. Petty is paid $10,000 per month for his
services to ROO Media pursuant to the consulting agreement. There are no
provisions for compensation to be paid to any executive officer or director of
Virilitec upon the termination of their services by either party or by the
actions of a third party.

Report on Repricings of Options/SARs

None.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

The following table sets forth certain information with respect to the
beneficial ownership of our Common Stock as of the date of this report for (i)
each person known by us to own beneficially more than 5% of our outstanding
Common Stock, (ii) each of our Named Executive Officers, (iii) each of our
directors and (iv) all directors and officers as a group. Unless otherwise
noted, the address of each of the persons listed below is c/o Virilitec
Industries, Inc., 62 White Street, Third Floor, New York, New York 10013.

                              Number of Shares               Percentage of
Name and Address            Beneficially Owned (1)           Shares Owned
----------------            ---------------------            -------------
Robert Petty                    72,000,000                      45.67%
Avenue Group, Inc.              40,000,000                      25.37%
15303 Ventura Blvd.
9th Floor
Sherman Oaks, CA 91403
Midnight Bay                    25,000,000                      15.86%
11 Torresdale Court
Toorak, Victoria 3142
Australia
Robin Smyth                      2,000,000                       1.27%
                                74,000,000                      46.93%
All directors and
executive officers as a
group (two persons)

(1) Except as otherwise indicated, the stockholders listed in the table have
sole voting and investment power with respect to all shares of Common Stock
beneficially owned by them. 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 the Company's common stock shown as beneficially owned
by him.

Equity Compensation Plan Information

<TABLE>
<CAPTION>

                              Number of securities to be     Weighted-average exercise   Number of securities
                                issued upon exercise of      price of outstanding        remaining available for
                             outstanding options, warrants   options, warrants and       future issuance under
                                      and rights             rights                      equity compensation plans
                            ---------------------------------------------------------------------------------------
<S>                                     <C>                         <C>                           <C>
Equity compensation plans
approved by security                    None                        - - -                         None
holders

Equity compensation plans
not approved by security                None                        - - -                         None
holders

Total                                   None                        - - -                         None
</TABLE>



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<PAGE>


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         ROO Media entered into a consulting agreement with Petty Consulting,
Inc. on August 1, 2001, whereby Petty Consulting, Inc. made Robert Petty
available to ROO Media to serve as its Chairman, President and Chief Executive
Officer. The agreement expires on August 1, 2004. Mr. Petty is the President of
Petty Consulting, Inc. Mr. Petty is paid $10,000 per month for his services to
ROO Media pursuant to the consulting agreement.

         On January 7, 2003, ROO Media entered into a new loan agreement with
Mr. Petty to replace the loan agreement entered into with Mr. Petty dated July
29, 2001. The interest on the loan is 10% per annum and the outstanding balance
as of December 31,2003 was $514,164. Mr. Petty has agreed that no demand for
payment will be made to the company over the following 12 months and any
principle repayment during any month above $20,000 will require board approval.
The loan is secured by all of the assets of ROO Media.

         Pursuant to the terms of An Agreement and Plan of Merger, dated
December 2, 2003, between Virilitec, VRLT Acquisition Corp., a Delaware
corporation and wholly-owned subsidiary of Virilitec ("Merger Sub"), ROO Media,
and Jacob Roth and Bella Roth, each an individual (collectively, the "Virilitec
Principal Stockholders"), ROO Media entered into an agreement to pay within 90
days after December 3, 2003, the effective date of the Merger, Virilitec's
$62,500 debt to Jacob Roth, Virilitec's former Chief Executive Officer. The
obligation to pay such debt is secured by the pledge of the 72,000,000 shares of
the Virilitec Common Stock issued to Robert Petty, the Chief Executive Officer
of ROO Media, after the Merger.

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

(a) Documents Filed as Part of this Form 10-KSB

2.1 An Agreement and Plan of Merger, dated December 2, 2003, between Virilitec,
VRLT Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of
Virilitec ("Merger Sub"), ROO Media, and Jacob Roth and Bella Roth, each an
individual (collectively, the "Virilitec Principal Stockholders")*

 3.1  Certificate of Incorporation**

 3.2  Bylaws**

14.1  Code of Ethics***

21.1  Subsidiaries***

31. 1 Rule 13a-14(a)/15d-14(a) Certification.***

32.1 Certification by the Chief Executive Officer and its Chief Financial
Officer Relating to a Periodic Report Containing Financial Statements.****

----------
*     Incorporated by reference from the Form 8K filed with the Securities and
      Exchange Commission on December 18, 2003.

**    Incorporated by reference from the Form 10-SB filed with the Securities
      and Exchange Commission on March 29, 1999.

***   Filed herewith

****  The Exhibit attached to this Form 10-KSB shall not be deemed "filed" for
purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange
Act") or otherwise subject to liability under that section, nor shall it be
deemed incorporated by reference in any filing under the Securities Act of 1933,
as amended, or the Exchange Act, except as expressly set forth by specific
reference in such filing.

(b) Reports on Form 8-K

A Form 8-K announcing the merger between Virilitec Industries, Inc. and ROO
Media Corporation was filed by us on December 18, 2003.

ITEM 14 PRINCIPAL ACCOUNTANT FEES AND SERVICES

During the fiscal year covered by this report, our auditor was paid $8,000 for
their services as auditor and $400 for tax return preparation. The auditor did
not provide any other services or receive any other compensation from us.


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SIGNATURES

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

                           VIRILITEC INDUSTRIES, INC.

         By:  /s/ Robert Petty
              ----------------
         Robert Petty
         CEO and Chairman of the Board

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

Signature                            Title                          Date
---------                            -----                          ----

/s/ Robert Petty          CEO and chairman of the board       February 17, 2004
---------------------
Robert Petty


/s/ Robin Smyth           CFO and director                    February 17, 2004
---------------------
Robin Smyth





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