SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

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

For Fiscal Year ended July 31, 2001         Commission File Number  0-25659

                           VIRILITEC INDUSTRIES, INC.
             (Exact Name of Registrant as Specified in its Charter)

         Delaware                                        11-3447894
(State or other jurisdiction of incorporation          (I.R.S. Employer
or organization)                                        Identification No.)

236 Broadway Ave., Suite 201, Brooklyn, NY                  11211
(Address of Principal Executive Offices)                  (Zip Code)

Registrant's telephone number, including Area Code: (800) 775-0712 ext. 4144

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

                                      None

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

                                 Title of Class

                         Common Stock, par value $.0001

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve (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 ninety (90) days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
registrant's  best  knowledge,  in definitive  proxy or  information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [  ]

The  aggregate  market  value of  voting  stock  held by  non-affiliates  of the
Registrant as of September 30, 2001: $86,648

The number of shares  outstanding of  Registrant's  Common Stock as of September
30, 2001: 8,169,130

<PAGE>

ITEM 1.  BUSINESS

(a) Business Development

         Virilitec Industries, Inc. ("Virilitec",  or the "Company"), a Delaware
corporation, was organized on August 11, 1998. The Company has not been involved
with any bankruptcy,  receivership or similar  proceedings.  The Company has not
had any material reclassification, merger, consolidation, or purchase or sale of
a significant amount of assets not in the ordinary course of business.

(b) Business of Issuer

         The  Company  was  formed  to  license   and   distribute   a  line  of
bioengineered virility nutritional  supplements,  designed to enhance human male
sperm count and potency (the "Product"). The Product is a nutritional supplement
derived from natural  materials  and  compounds.  While the Company  believes it
contains  properties that could stimulate human male sperm production and sexual
virility,  it does not make any claims  whatsoever that the Product does in fact
induce the desired results.  The Company has not clinically  tested the Product,
nor has it  been  clinically  tested  in a  previous  formulation.  There  is no
statistical data to support any claims of effectiveness and the Company makes no
such clinical claims. In this manner, the Product could be compared to a vitamin
or herb, in that it is a nutritional supplement taken by individuals who believe
that such  supplements will have an effect upon a certain  condition  whether or
not such result has been determined  clinically to be a product of utilizing the
supplement.  There are other nutritional  supplements that claim to have similar
effectiveness as the Company's  Product.  However,  to the Company's  knowledge,
none of them have demonstrated recognized clinical effectiveness.

     Management  believed that the success and widespread  coverage generated by
Pfizer's Viagra(R) has positioned the market to be receptive to the introduction
of a naturally derived nutritional  supplement that is cheaper and may produce a
positive  effect  upon  male  potency.  As such,  the  Company  entered  into an
agreement   with   Vitahealth   Scientific,   Inc.,   a  New  York   corporation
("Vitahealth"),  regarding the distribution of its nutritional supplement geared
toward enhancing male potency and sperm count. Management believed that it could
be  successful  in  capitalizing  on the market  awareness of concerns over male
potency by introducing the Product into worldwide markets.

         Due to the nature of the Product,  and the high cost of qualifying  for
US FDA approval,  management  determined that the best way to market the Product
initially was to pursue sales internationally.  The Company has not received any
professional  or   governmental   opinion  that  it  would  not  be  subject  to
governmental  regulation in those countries in which the Company intends to sell
the Product. However, in the Company's research of the market (via the internet,
contacts  with  other   providers  of  nutritional   supplements   and  informal
discussions  with counsel),  the Company has found  overseas  markets to be much
more  liberal in  regulation  than the United  States.  In fact a  principal  of
Vitahealth  (the Company's  supplier) has sold a similar product to the overseas
market without  governmental  regulatory  involvement.  As such, the Company has
identified independent sales agents in England and Israel where it could, in the
opinion of  management,  successfully  introduce  the Product  with little or no
regulatory  approval needed.  Due to the delays involved with commencing Product
production,  the Company was  uncertain as to the start of the sales process and
could not, in good faith, make commitments to potential  distributors.  As such,
management has delayed interviewing

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<PAGE>

potential  distributors in other countries.  As soon as sales via the Israel and
England  distributors  are  established,  the Company will resume its efforts to
identify and engage additional international distributors.

         Vitahealth has sold a nutritional  supplement  designed to enhance male
potency  and sperm  count in the past.  However,  Vitahealth  spent  most of the
fiscal year reformulating its product to produce a Product with greater efficacy
in producing the desired results.  In conjunction with the  reformulation of the
Product,  Vitahealth also revamped its production  line, with all new commercial
grade production and encapsulation equipment intended to allow it to produce the
Product at a high volume.  The  facility is expected to have full  certification
from the  Israel  Department  of  Health.  The  certification  from  the  Israel
Department  of  Health  is not a drug  review or  certification  of the  product
itself.  The  facility  is being  built  with "off the shelf"  equipment,  under
standard health  procedures.  One of the principals of Vitahealth has previously
manufactured a similar  product in Israel,  and is well versed in the applicable
regulations.  The  production  facility was designed and  constructed  under his
direct  supervision.  The certification from the Israeli Department of Health is
akin to  certification  from any local health  department.  They verify that the
premises are clean and  sanitary  for the usage  intended.  As  construction  is
supervised by an individual who is experienced with the health requirements, the
Company  expects  that  there  should  be no  problem  in  the  issuance  of its
certification.

         There are currently  many  purveyors of  nutritional  supplements.  The
Company  intends  to  compete by  placing a focused  advertising  campaign  with
testimonial information (when available),  and by referral.  Management believes
the Product will produce the desired effect upon its users, and that the success
of those users will prompt others to add the Company's nutritional supplement to
their diet.

         The industry is extremely fragmented.  There are many small operators -
companies or individuals  that sell nutritional  supplements,  and as such it is
difficult  to  accurately  determine  what market  share a specific  vendor has.
Additionally,  while a principal of the  Company's  supplier has sold an earlier
version of the Product, the Company is still deemed a newcomer selling its first
product, and as such has no established position in the industry.

Licensing and Distribution Agreement

         On August 25, 1998,  the Company  entered into a 50 year  Licensing and
Distribution  Agreement  with  Vitahealth,   whereby  the  Company  was  granted
exclusive  rights to distribute the Product.  Under terms of the agreement,  the
Company's  independent sales agents place sales orders directly with Vitahealth,
which fills such orders.  The sales agents pay Vitahealth upon order  placement,
and  Vitahealth,  acting as  collections  agent for the  Company,  forwards  the
Company's portion of the sales proceeds to the Company. Vitahealth has agreed to
periodic  reviews of its order  receipts  in order to ensure that the Company is
receiving its appropriate revenue.

         The  Company  has  paid  an  initial  non-refundable  one  time  $8,500
licensing fee to Vitahealth.  The Company will also pay Vitahealth an annual fee
of $10,000,  beginning 90 days after the Product is  manufactured  and ready for
delivery to the Company's agents and then annually thereafter on the anniversary
of the first  payment's  due date,  as long as the  Licensing  and  Distribution
Agreement has not been terminated for any reason before the date such payment is
due. Due to the longer than expected  delays,  the Company and  Vitahealth  have
agreed to waive the $10,000  annual fee for this year.  The agreement also calls
for  Vitahealth  to be paid  $1.45 per  capsule  of the  product - to be sold in
thirty day supplies (the Product's  expected  minimum usage period before a user
would  potentially  achieve positive  results).  The Company expects to continue

                                       3

<PAGE>

distributing  the  Product to its sales  agents for $1.85 per  capsule  (thereby
making  $0.40 per  capsule),  and the  Company's  independent  sales  agents are
projected to continue sell them for approximately $2.15 to $2.25 per capsule.

         As of July 31, 1999  Vitahealth had not yet completed  construction  of
its manufacturing  facility,  so the Company allowed  Vitahealth a 95 day period
from the signing of the  Licensing  Agreement  before the Product would be ready
for  production  and sale.  Should the  Product  not be ready at such time,  the
Company had the right to either  terminate the agreement within the following 30
days or extend the  production  deadline.  As the  production  facility  was not
timely  completed,  the  Company  and  Vitahealth  agreed to  extend  the 95 day
production deadline until September 30, 1999, when it believed the Product would
be available.

         Vitahealth  and the  Company  have agreed upon  certain  minimal  sales
quotas to be maintained  for the License  Agreement to remain in effect.  Should
the sales levels fall below the sales  quotas,  the Company shall have the right
to terminate the Licensing and Distribution  Agreement.  The sales quotas follow
the  following  schedule;  a) within the 2nd month of  production  and sales - a
minimum of 22,500 capsules,  b) within the 3rd month of production and sales - a
minimum of 55,000 capsules,  c) within the 6th month of production and sales - a
minimum of 150,000  capsules,  d) a minimum of 200,000  capsules for every month
following the end of the 6th month of production and sales of the product. There
is also a 10%  increase  in the sales  quota  effective  annually  on January 1,
beginning   January  1,  2000.   The  Company  and   Vitahealth   are  currently
renegotiating the terms for the quotas.

Marketing and Growth

         With  the  broad  based   recognition  of  products  such  as  Pfizer's
Viagra(R),  Management  believes  the  market is ready for the  introduction  of
nutritional  supplements  designed to enhance human male potency and sperm count
on a long term  basis.  Should the  Company  begin  distribution  of the Product
domestically,  it will be  subject  to  regulation  by the  U.S.  Food  and Drug
Administration  ("FDA") and most likely  also by the  Federal  Trade  Commission
("FTC") but possibly under similar  circumstances as standards  applied to other
mainstream  food  company  product  lines.   However,   certain  more  stringent
regulations can be applied by the FDA and FTC to companies  making health and/or
nutritional  claims  beyond those  approved by existing  regulations.  While the
Company does not believe the more stringent regulations will apply, it cannot be
certain.   Therefore,   the   Company   intends  to   distribute   the   Product
internationally, at least initially.

         The  Product   will  be  subject  to   regulation   by  the   presiding
jurisdictional drug and/or food regulatory commissions of the countries in which
the Company  intends to  distribute  the  Product.  While the  Company  does not
believe  that any  regulations  will apply to the  distribution  of the  Product
within the various  countries in which it intends to initiate  distribution,  it
cannot be certain. At this time the Company has selected the countries of Israel
and England as its initial  markets.  Management  believes  that the  regulatory
requirements  of those  countries  to be such that the  Company  will be able to
launch sales in those  countries  without  concern of violating food and/or drug
regulations. The Company intends to increase its distribution to such additional
countries  as allow for the sale of the  Product  without  expensive  regulatory
approval.

         The Company has selected the initial sales force in Israel and now that
the Product will be available in  commercial  quantities,  the Company  plans to
begin the  process of  selecting  additional  qualified  sales  agents to be its
direct representatives in the countries the Company will market the Product. The
Company  intends to support  its sales  agents  with  focused  media  (internet,
magazine, newspaper) advertisements introducing the Product designed to heighten
awareness of the  availability  of  alternative  products to enhance  human male

                                       4

<PAGE>

sperm count and potency such as the Product.  The Company will also  endeavor to
provide its sales  agents with  promotional  materials  containing  testimonials
(when available) from users of the Company's products.

     To date,  sales of the  Product  have been only  minimal and the Company is
considering  other products to replace the Product as its lead item.  Management
may  determine to cease  efforts to sell the Product  during the ccoming  fiscal
year.

     On August 9, 2001,  the Company  entered  into an agreement  with  Meditech
International KFT/LTD, a corporation formed and based in Hungary, to finance the
development  and  manufacture  of a cream and spray for use by people  suffering
from  psoriasis  and  another  neutracudical  product.  Under  the  terms of the
Agreement,  the Company will invest $250,000 by September 15, 2002 in return for
profits from these products  ranging from 67% to 74%.  Neither of these products
are regulated as drugs and no claims of medicinal value are claimed.  As of July
31,  2002,  due to limited  funds  available,  the Company has only paid $8,000.
Meditech has agreed to extend the due dates for payment.

On February 25, 2002,  the Comany  entered  into an agreement  with  PowerMedics
Inc., a New York corporation  developing a machine for use by persons  suffering
from psoriasis. In exchange for investing $200,000 to support the development of
a second  generation  of the  machine,  the Comany  acquired a 49%  interest  in
PowerMedics.  As of July 31, 2002, no funds have been paid and PowerMedics has
agreed to extend the Closing date.

In May  and  June  2002,  the  Company  entered  into a five  year  distribution
agreement with Meditech and PowerMedics,  respectively.  The Meditech  agreement
gives the Company  exclusive  distribution  rights in the USA and  non-exclusive
rights in  England,  Europe  and Canada for a fee of  $25,000.  The  PowerMedics
agreement gives the Company exclusive worldwide distribution rights for a fee of
$15,000.  As of July 31, 2002, no funds have been paid and both  companies  have
agreed to extend the deadline for payment

Employees

     Mr.  Jacob Roth,  the  Company's  CEO and Mrs.  Bella Roth,  the  Company's
President,  are the Company's only full time  employees.  The Company intends to
retain marketing and public relations consultants as necessary.

Special Note Regarding Forward-Looking Statements

     Some of the statements under "Business" are forward-looking statements that
involve risks and uncertainties. These forward-looking statements include
statements about our plans, objectives, expectations, intentions and assumptions
and other statements contained herein are not statements of historical fact. You
can  identify  these  statements  by  words  such as  "may,"  "will,"  "should,"
"estimates," "plans," "expects,"  "believes," "intends" and similar expressions.
We  cannot  guarantee  future  results,  levels  of  activity,   performance  or
achievements.  Our actual  results  and the timing of certain  events may differ
significantly  from the results  discussed  in the  forward-looking  statements,
based  specifically upon the ability of our manufacturer to produce the Product,
which we do not control.  You are cautioned  not to place undue  reliance on any
forward-looking statements.

ITEM 2. PROPERTIES

     The Company maintains its corporate  offices at 236 Broadway Avenue,  Suite
201, Brooklyn, NY 11211 on a month-to-month basis at a rate of $300 per month.

ITEM 3. LEGAL PROCEEDINGS

     The Company is not currently involved in any material legal proceedings.

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

     Not applicable.

                                       5

<PAGE>

                                     PART II

ITEM 5.  MARKET PRICE OF REGISTRANT'S COMMON EQUITY AND RELATED
         STOCKHOLDER MATTERS

         (a) 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. The
following  chart  shows the high and low closing  price of the Common  Stock for
each fiscal quarter since public trading started:

               Fiscal
            Quarter Ended              High                    Low
            -------------              ----                    ---
              4/30/01                  $4.00                   $ .10
              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                  $2.48                   $ .08

         The  Company   currently  has  42,100  class  A  warrants   issued  and
outstanding.  Each  Warrant  entitles  the  holder  to  purchase  one  Share  of
restricted  Common Stock at an exercise price of $10.00,  subject to adjustment,
through the first  anniversary  of the date the  Company's  Shares are initially
approved for trading in any public market.

         Under the terms of the Company's licensing  agreement,  the Company has
agreed to grant  Vitahealth  stock options to purchase up to 300,000  additional
restricted  shares of the Common  Stock of the  Company  for a period of 5 years
beginning June 30, 1999 according to the following schedule:

<TABLE>
<S>                                <C>                                 <C>

Date Option to be Effective         Amount of Options                  Exercise Price (per Share)
----------------------------      --------------------                 ---------------------------
         6/30/1999                  100,000                                    $10.00
        11/30/1999                  100,000                                    $10.00
         6/30/2000                  100,000                                    $10.00

</TABLE>

         The Company has also granted stock options to the following officers to
purchase  additional  shares of common  stock of the  Company  according  to the
following schedule:

<TABLE>
<S>                                 <C>                                 <C>

Name of Option Holder               Amount of Options                  Exercise Price (per Share)
----------------------------      --------------------                 ---------------------------
Bella Roth                               175,000                                $2.50
Bella Roth                               150,000                                $4.00
Arnold Lipton, M.D.                       25,000                                $2.00
Arnold Lipton, M.D.                       50,000                                $3.00
Moshe Laufer                              25,000                                $2.50
Moshe Laufer                              50,000                                $4.00

</TABLE>

         The shares underlying the options issued to Vitahealth and the officers
have no registration rights.

         Of the  8,169,130  shares of common stock  outstanding,  7,177,030  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

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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.

(b) Holders

         On September 30, 2002  there were 170 holders of the Company's  common
stock, and 9 holders of the Company's Class A Warrants.

(c) Dividends

         The Company has not declared any dividends to date.  The payment by the
Company of dividends,  if any, in the future, rests within the discretion of its
Board of  Directors  and will depend,  among other  things,  upon the  Company's
earnings, its capital requirements and its financial condition, as well as other
relevant  factors.  The  Company  has not  declared  any  cash  dividends  since
inception,  and has no present  intention  of paying any cash  dividends  on its
Common Stock in the foreseeable  future, as it intends to use earnings,  if any,
to generate growth.

(d) Recent Sales of Unregistered Securities

     During the fiscal year ended July 31,  2002,  the  Company  sold a total of
100,000 shares of Common Stock at a price of $0.25 per share to five purchasers,
three of whom were existing shareholders.

     The Company issued  230,000 shares of common stock for consulting  services
during the current fiscal year. These services were valued at $39,500.

     The  Company  issued  600,000  shares of common  stock to its CEO  (related
party) as part of an employment agreement entered into during the current fiscal
year. The transaction was vaued at $6,000.

     The  Company  issued  2,500,000  shares  of common  stock to its  president
(related party) at a value of $100,000.  A promissory note was received from the
president  in the amount of $99,750  and has been  reflected  as a  subscription
receivable in the equity section of the financial statements.


ITEM 6.  PLAN OF OPERATIONS

Selected Financial Data

     The following  selected  financial  data for the fiscal year ended July 31,
2001 and for the period  August 11, 1998  (inception)  through  July 31, 2001 is
derived from the  Company's  audited  financial  statements  included  elsewhere
herein.  The  following  data should be read in  conjunction  with the financial
statements of the Company and Predecessor.

           Statement of Operations Data

                                    Fiscal Year                Fiscal Year
                                    Ended                      Ended
                                    7/31/02                    7/31/01
                                    ------------               --------------
Net Revenues                         $16,190                     $ 45,320
Cost and Expenses                   (143,412)                     (27,228)
General and Administrative
         Expenses                    (91,858)                     (24,768)
Interest Income                          258                          -0-
Income Taxes                             -0-                          -0-
Net Loss                            (142,102)                      (6,676)
Loss Per Share                      $  (0.03)                    $  (.001)

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<PAGE>

Balance Sheet Data

                       July 31, 2002
                       -------------
Working Capital        $(38,249)
Total Assets            (12,479)
Total Liabilities        44,778
Stockholders' Equity   ($32,299)

Plan of Operation

The  following  discussion  should  be read in  conjunction  with the  financial
statements  and  related  notes which are  included  elsewhere  in this  report.
Statements  made  below  which  are not  historical  facts  are  forward-looking
statements.   Forward-looking   statements   involve   a  number  of  risks  and
uncertainties  including,  but not  limited  to,  general  economic  conditions,
competition, availability of the Product and our ability to market our product.

     As noted in Item 1 above, until the production  facilities of its supplier,
Vitahealth Scientific, Inc. became operational, the Company was unable to market
the  Product  as it had no  expectation  to be able to  deliver  goods  within a
reasonable  amount of time.  Vitahealth began delivery of the Product during the
fourth quarter of fiscal 2000.

     As the Company only recently began to sell the Product, it is difficult for
management to evaluate the growth curve of Product  sales.  Additionally,  it is
expected that the delays involved with  initiating  production has tarnished the
earlier  market  'excitement'  for human sexual  virility  and potency  products
created by Viagra(R).  When considering those factors,  Management believes that
the initial  sales  quotas will not be met and it will have a right to terminate
the  Vitahealth  Agreement  pursuant to the sales quota  clauses  present in the
agreement.  Having  considered  the various  factors  involved with its right to
terminate the agreement  based on sales quota  requirements,  management  has no
plans to do so at this time. It is management's  opinion, that there is a market
for a human sexual  potency  nutritional  supplement  and is fully  committed to
providing  Vitahealth  with the  opportunity  to be the sole  supplier of such a
product to the Company. While the Company will review the sales numbers as sales
are  commenced,  and retains the right to reevaluate  its position on an ongoing
basis,  there are no plans or  intentions at this time to exercise the Company's
right to terminate the Vitahealth agreement due to sales quotas.

     While the Company is  committed to retaining  Vitahealth  as its  supplier,
there is no guarantee  that  Vitahealth's  production  delays or lack of product
salability as evidenced by underpreforming the sales quotas will not necessitate
the eventual  termination of the Vitahealth  agreement.  Should the agreement be
terminated for any reason, the Company may attempt to locate another provider of
human  sexual  potency  and  virility  nutritional  supplements  to  become  its
supplier.  There is no  guarantee  that the  Company  will be able to locate and
retain  such a provider  and the Company has not even begun to attempt to locate
one. The Company continually evaluates the business market to attempt to place

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<PAGE>

itself at the most profitable  position.  While the Company currently intends to
continue to operate as discussed,  there can be no guarantee that uncontrollable
variables  will not force a  substantive  change in the  Company's  operation or
plans of operation.

     As described in greater  detail above,  the Company is attempting to expand
its  product  list by adding  itmes for people  with  psoriasis.  The Company is
seeking sources of financing in order to fund these other projects. Without such
financing,  the Company  will be unable to proceed  with its plans for these new
products.

     The  Company  does not expect to conduct  any other  product  research  and
development or to purchase or sell a plant or significant equipment. The Company
intends to retain marketing and public relations  consultants as necessary,  and
to hire  support  staff only if  warranted  by its sales  volume on an as needed
basis.

Results of Operations

Twelve months ended July 31, 2002 and 2001

     During the twelve month period ending July 31, 2002, the Company incurred a
loss of $142,102 compared to a loss of $6,676 for the same period ended July 31,
2001. The main component  contributing to the increase in loss from year to year
was the additional  professional  and consulting fees paid by the Company during
fiscal 2002.

Revenues

     During the twelve month period ending July 31, 2002, the Company's revenues
were  $16,960  compared  to $45,320  for the same  period  ended July 31,  2000.
Revenues  are  principally  commissions  received  on the sale of  Product.  The
decrease  of revenue  from year to year is due to  decreased  volume of capsules
sold from year to year.

Operating Expenses

     During the twelve months ended July 31, 2002, the Company incurred $150,470
in operating  expenses as compared to $51,146 for the same period in 2001.  This
increase was primarily driven in the area of consulting and professional fees.

Material changes in financial condition, liquidity and capital resources

     At July 31,  2001,  the  Company  had  $350 in cash  and  cash  equivalents
compared  to $22,220  for the same  period in 2000.  The  Company  had  negative
working capital of approximately  ($38,249) at July 31, 2002 compared to $32,253
for the same period in 2001.

     The Company hopes to raise  additonal  capital to fund its  activities  and
intends to commence a private placement during the last quarrter of 2002. If the
financing is unsuccessful the Company may have to cease  operations  and/or look
for a merger candidate.

ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The financial  statements are included  herein  commencing on page F-1. The
Company is not required to provide supplementary financial information.

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

     Disclosure  regarding a change in  accountants  in October 2000 was made in
the Annual Report on Form 10-KSB for the fiscal year ended July 31, 2000.

                                    PART III

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
<S>                                <C>             <C>
Name                               Age              Position
--------                           ----             ---------
Jacob Roth                          55              Chief Executive Officer

Bella Roth                          52              President & Chairman of
                                                    the Board
Arnold A. Lipton, M.D.              72              VP - Scientific Advisor &
                                                    Director
Moshe Laufer    *                   43              Secretary/Treasurer &
                                                    Director
</TABLE>

Directors serve for five year terms.

Jacob  Roth - Chief  Executive  Officer - Mr.  Roth,  husband  of the  Company's
President,  was appointed CEO on July 1, 2002.  Prior thereto,  Mr. Roth was the
President of JR Consulting,  a public  corporation,  from 1982- 1995. Since that
time, Mr. Roth has been a financial consultant to corporations.

Bella Roth - President & Chairman of the Board of Directors - Mrs. Roth founded
the Company in August 1998, and has been its President and Chairman of the Board
since  inception.  From 1988 to 1995 Mrs.  Roth was  Treasurer,  Secretary and a
Director of  Providential  Secureties  Inc.  (OTC:BB  PRVH),  a publicly  traded
holding company.  From 1996 to 1998, Mrs. Roth was involved in various community
projects as she searched for a business  opportunity.  From 1983 to 1987 she was
an officer and Director of Innovative  Medical  Technologies,  a public  company
involved with the development and marketing of electronic medical devices.  Mrs.
Roth is the wife of Jacob Roth, the CEO.

Arnold A. Lipton,  M.D. - Vice President & Director - has been a Vice President,
the scientific  advisor and a Director of the Company since August 17, 1998. Dr.
Lipton is a physician  in private  practice in Brooklyn,  NY since 1970,  with a
specialty in Obstetrics and  Gynecology.  Dr. Lipton holds an M.D. from Lausanne
Medical School, a Masters in Science from the  Philadelphia  College of Science,
and a Bachelors of Science from the Brooklyn College of Pharmacy.  Dr. Lipton is
a member of the New York State  Medical  Society  and the Kings  County  Medical
Society.

Moshe  Laufer  -  Secretary/Treasurer  &  Director  - Mr.  Laufer  has  been the
Secretary/Treasurer and a director of the Company since its inception. From 1995
to 1998 he has been primarily  occupied with managing his  investment  portfolio
and pursuing various personal and professional interests.  From 1986 to 1995 Mr.
Laufer was a licensed distributer of NY Bottling,  Inc. a company engaged in the
bottling and distribution of soft drinks in the Northeastern  United States. Mr.
Laufer is the brother-in-law of Mrs. Roth.

(b) Significant Employees

None

                                       10

<PAGE>

Indemnification of Directors and Officers

         Section  145 of the  Delaware  General  Corporation  Law,  as  amended,
authorizes  the  Company 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 the Company if it is determined  that such person acted
in  accordance  with  the  applicable  standard  of  conduct  set  forth in such
statutory  provisions.  The  Company's  Certificate  of  Incorporation  contains
provisions  relating to the  indemnification  of director  and  officers and the
Company's  By-Laws  extends  such  indemnities  to the full extent  permitted by
Delaware law.

The Company 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.

Compensation of Directors

         No  Director  receives  any cash  compensation  for their  service as a
Director.  Each Director of the Company is entitled to receive 5,000  restricted
Shares of the Common Stock of the Company per year, provided they attend no less
than 50% of the Board of Directors meeting in that year.

ITEM 10.  EXECUTIVE COMPENSATION OF EXECUTIVE OFFICERS

(a) General

     Commencing  November  12,  1998,  the Company has agreed to pay Mrs.  Bella
Roth,  its President & Chairman of the Board of  Directors,  an annual salary of
$40,000.  Mrs.  Roth's  compensation  was  disclaimed for this year and last two
years.  Mrs. Roth provides her services on a full-time basis.  While the Company
did not pay Mrs.  Roth  any  salary  during  fiscal  year  1999,  the  Company's
financial  statements for that period reflect the pro-rata  amount under general
and  administrative  expenses with a  corresponding  amount in  paid-in-capital.
Similarly,  $52,500 is reflected as "other compensation expense" and "additional
paid-in-capital" on the Company's financial statements.  No executive officer or
employee  of the  Company  is paid more  than  $100,000  per year in salary  and
benefits.

(b) Summary Compensation Table

<TABLE>
<S>                       <C>        <C>             <C>            <C>


                           SUMMARY COMPENSATION TABLE

Name and                                                    Other          Long-term
Principal Position         Year       Salary       Bonus    Compensation   Compensation: Options
------------------         ----     --------       -----    ------------   ---------------------
Jacob Roth                 2001(1)       0           0          0                       0
Chief Executive
Officer

Bella Roth                 2001          0           0           0                      0
President &                2000          0           0           0                      0
Chairman                   1999          0           0           0                      0


Arnold Lipton, M.D.        2001          0           0           0                      0
V.P.-Scientific            2000          0           0           0                      0
Advisor &                  1999          0           0           0                      0
Director

Moshe Laufer               2001          0           0           0                      0
Secretary,                 2000          0           0           0                      0
Treasurer &                1999          0           0           0                      0
Director

</TABLE>

                                       11
<PAGE>

(1) Assumed office on Juy 1, 2002.

(c) Options/SAR Grants Table

None

(d) Aggregated Option/SAR Exercises and Fiscal Year End Option/SAR Value Table

None

(e) Long Term Incentive Plan ("LTIP") Awards Table

None

(f) Compensation of Directors

     Commencing  January 1, 1999 each Director  shall  receive 5,000  restricted
shares annually. Said compensation is contingent upon attendance at no less than
50% of that year's Board of Director's meetings.  These shares have not yet been
issued over the last 3 years.

(g) Employment Contracts and Termination of Employment, and Change-in-Control
Arrangements

     The Company has no employment contracts with any of its executive officers.
Mr. Jacob Roth serves as CEO for $70,000  annually  and 600,000  shares of stock
pursuant to a 3 year employment  agreement.  Mrs. Bella Roth serves as President
of the Company for $40,000 annually, and will continue to serve under such terms
without the  benefit of an  employment  contract.  There are no  provisions  for
compensation to be paid to any executive officer or director of the Company upon
the  termination  of their services by either party or by the actions of a third
party.

(h) Report on Repricings of Options/SARs

None.

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

     Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers  and  directors,  and  persons  who own  more  than  ten  percent  of a
registered  class  of the  Company's  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 the Company  with copies of all Section  16(a) forms
they file. During fiscal 2001, the CEO did not timely file a Form 3.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

     The  following  table sets forth,  as of September  30,  2002,  information
regarding the beneficial  ownership of the Company's Common Stock based upon the
most recent  information  available  to the Company for (i) each person known by
the Company to own beneficially more than five (5%) percent of its outstanding

                                       12

<PAGE>

Common  Stock,  (ii) each of its  officers and  directors,  and (iii) all of its
officers and directors as a group.

<TABLE>
<S>                        <C>                       <C>                                 <C>


                           Name and Address          Amount and Nature
Title of Class             of Beneficial Owner       of Beneficial Owner                 Percent of Class
--------------             --------------------------------------------------------------------------------------

Common Stock               Jacob Roth                     600,000(1)                          7.3%
                           236 Broadway Ave.,
                           Suite 201
                           Brooklyn, NY 11211

Common Stock               Bella Roth                   6,325,000(1)                         74.5%
                           236 Broadway Ave.,
                           Suite 201
                           Brooklyn, NY 11211

Common Stock               Moshe Laufer                   175,000(2)                          3.6%
                           172 Rodney Street
                           Brooklyn, NY

Common Stock               Arnold Lipton, M.D.            100,000(2)                          2.1%
                           225 West 86 Street
                           New York, NY

Common Stock               Vitahealth Scientific, Inc.    300,000(4)                          6.0%
                           c/o Virilitec Industries, Inc.
                           236 Broadway Ave.,
                           Suite 201
                           Brooklyn, NY 11211

Common Stock               All Directors and            7,200,000(3)                         83.3%
                           Executive Officers
                           as a Group

</TABLE>

(1) Includes  underlying  securities for 325,000 options to purchase  additional
shares of common stock.  Does not include  3,800 shares owned by adult  daughter
residing in home. Mrs. Roth disclaims beneficial ownership of these shares. Mrs.
Roth also disclaims beneficial ownership of shares owned by her husband.
(2) Includes  underlying  securities for 75,000  options to purchase  additional
shares of common stock.
(3)  Includes  underlying  securities  for an  aggregate  of 475,000  options to
purchase additional shares of common stock.
(4) Consists of currently exercisable stock options.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     During the fiscal year ended July 31,  2001,  the Company  paid $3,000 to a
corporation  owned by Mr. Roth.  Payment was for the  provision  of  management,
administrative and consulting services and use of office space and equipment.

                                     PART IV

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

(a)     Exhibit 99 - Sarbanes - Oxley Statements

(b) Reports on Form 8-K
None.

                                       13
<


                                   SIGNATURES

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

                                           VIRILITEC INDUSTRIES, INC.


                                        By:/s/Bella Roth
                                        ----------------
                                              Bella Roth
                                              President

Dated: 13th day of November, 2002

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



/s/ Jacob Roth                                       Date: November 13, 2002
Jacob Roth
Chief Executive Officer


/s/ Bella Roth                                       Date: November 13, 2002
Bella Roth
President and Chairman


                                                     Date: November 13, 2002
Moshe Laufer
Secretary/Treasurer and Director
(Chief Financial/Accounting Officer)



----------------------                               Date: November 13, 2002
Arnold A. Lipton, M.D.
V.P. and Director
<PAGE>
                                Mark Cohen C.P.A.
                           1772 East Trafalgar Circle
                               Hollywood, Fl 33020
                                (954) 922 - 6042
--------------------------------------------------------------------------------


                          INDEPENDENT AUDITORS' REPORT




Board of Directors
Virilitec Industries, Inc.

We have audited the accompanying balance sheets of Virilitec Industries, Inc. as
of  July  31,  2002  and  2001  and  the  related   statements  of   operations,
shareholders' equity (deficiency) and cash flows for the years then ended. These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Virilitec Industries,  Inc. at
July 31, 2002 and 2001, and the results of its operations and its cash flows for
the years  then  ended,  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  discussed  in  Note 5 to the
financial  statements,  the  Company  has  experienced  an  operating  loss  and
management has determined  that it will require  additional  capital to continue
funding  operations and meet its obligations as they come due. These  conditions
raise  substantial  doubt  about the  Company's  ability to  continue as a going
concern.  The  financial  statements do not include any  adjustments  that might
result from the outcome of this uncertainty.





/s/ Mark Cohen
Mark Cohen C.P.A.
A Sole Proprietor Firm


Hollywood, Florida
November 4, 2002
<PAGE>
                           VIRILITEC INDUSTRIES, INC.
                                 BALANCE SHEET
                           AT JULY 31, 2002 AND 2001


                                     Assets
                                    --------
<TABLE>
<S>                                                             <C>                     <C>
                                                                  July 31, 2002           July 31, 2001
Current Assets
     Cash and cash equivalents                                            $ 350                $ 22,220
     Receivables                                                          5,920                  12,297
     Other current assets (principally related party)                       258                   1,735
       Total current assets                                               6,529                  36,253
Other Assets                                                              5,950                   6,800

       Total assets                                                      12,479                  43,053
                                                                 ===============         ==============



                      Liabilities and Shareholder's Equity

Current Liabilities
     Accrued payroll and related benefits                                 6,739                      -
     Accrued professional fees                                           25,126                  4,000
     Other accrued liabilities                                              413                      -

     Note payable - long term                                            12,500                      -

       Total current liabilities                                         44,778                  4,000



 Shareholder's Equity
     Common Stock, $.0001 par value; authorized 20,000,000 shares;          817                    474
          issued and outstanding - 8,169,130 in 2002 4,739,130 in 2001
     Paid in Capital                                                    426,017                255,860
     Subscription receivable (related party)                            (99,750)
     Accumulated deficit                                               (359,383)              (217,281)

       Total Shareholder's Equity                                       (32,299)                39,053

        Total liabilities and shareholder's equity                     $ 12,479               $ 43,053
                                                                  ==============         =============
</TABLE>


Read the accompanying  summary of significant  accounting  policies and notes to
financial  statements,  both of which  are an  integral  part of this  financial
statement.

<PAGE>
                           VIRILITEC INDUSTRIES, INC.
                             STATEMENT OF OPERATIONS
                   FOR THE YEARS ENDED JULY 31, 2002 AND 2001




<TABLE>
<S>                                                             <C>                       <C>
                                                                                Years Ended
                                                                  July 31, 2002             July 31, 2001
                                                                 ---------------           ---------------



Revenue                                                                 $ 16,960                 $ 45,320

Cost of revenue                                                            8,850                      850
                                                                 ---------------           ---------------

Gross profit                                                               8,110                   44,470


Operating expenses:
       Salaries and payroll related                                       12,739                        -
       Travel                                                             16,497                    4,500
       Rent                                                                2,700                    3,300
       Depreciation                                                            -                    1,200
       Professional fees                                                  26,676                   17,378
       Consulting                                                         84,800                   17,000
       Selling, general and administrative expenses                        7,058                    7,768
                                                                 ---------------           ---------------
          Total operating expenses                                       150,470                   51,146

          Loss before other income (expense)                            (142,360)                  (6,676)

Other income (expense):
    A8   Interest income                                                     258                        -
                                                                 ---------------          ----------------
          Total other income (expense)                                       258                        -


                                                                 ---------------          ----------------
Net Loss                                                                (142,102)                  (6,676)
                                                                 ================         ================

Basic weighted average common shares outstanding                       4,992,226                4,728,391
                                                                 ================         ================

Basic Loss per common share                                             $ (0.03)                 $ (0.00)
                                                                 ================         ================
</TABLE>

<PAGE>
                           VIRILITEC INDUSTRIES, INC.
                            STATEMENT OF CASH FLOWS
                   FOR THE YEARS ENDED JULY 31, 2002 AND 2001
<TABLE>
<S>                                                                      <C>                          <C>

                                                                                        Years Ended
                                                                              July 31, 2002      July 31, 2001
                                                                         ---------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES:

Net Income (Loss)                                                             $ (142,102)              $ (6,676)
Adjustments to reconcile net income (loss) to net cash
 used in operating activities:
              Depreciation and amortization                                          850                  2,050
              Issuance of shares for officer compensation                          6,000                      -
              Issuance of shares for consulting services                          39,500                      -
              Office rent applied to paid in capital                                   -                    300


Changes in Operating assets and liabilities:
              Receivables and other current assets                                 7,854                (13,495)
              Accounts Payable and Accrued Liabilities                            28,278                 (3,075)
                                                                         ----------------       ----------------

Net cash provided by/(used in) operating activities                              (59,620)               (20,896)


CASH FLOWS FROM INVESTING ACTIVITIES:


Net cash provided by/(used in) investing activities                                    -                      -


CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from:
                Issuance of common shares                                         25,250                 23,000
                Note payable                                                      12,500                      -
                                                                         ----------------       ----------------

Net cash provided by/(used in) financing activities                               37,750                 23,000
                                                                         ----------------       ----------------


Net increase (decrease) in cash and cash equivalents                             (21,871)                 2,103
Cash and cash equivalents, beginning of period                                    22,220                 20,117
                                                                         ----------------       ----------------
Cash and cash equivalents, end of period                                           $ 350               $ 22,220
                                                                         ================       ================
</TABLE>
Read the accompanying  summary of significant  accounting  policies and notes to
financial  statement,  both of  which  are an  integral  part of this  financial
statement.
<PAGE>
                           VIRILITEC INDUSTRIES, INC.
                       STATEMENT OF SHAREHOLDER'S EQUITY
<TABLE>
<S>                                              <C>           <C>        <C>      <C>     <C>           <C>          <C>
                                                                                           Share                          Total
                                                            Common Stock          Paid in  Subscription  Accumulated   Shareholder's
                                                 -------------------------------
                                                     Shares   Par Value  Amount   Capital   Receivable      Deficit       Equity
                                                 ------------ ---------  ------  --------- ------------  -----------  --------------


Balance, ending July 31, 2000                      4,716,130   $ 0.0001   $ 472  $ 232,562               $ (210,605)       $ 22,429

Proceeds from the sale of common stock                23,000     0.0001       2     22,998                                   23,000

Office rent applied against paid in capital                                            300                                      300

Net loss year ended July 31, 2001                                                                            (6,676)         (6,676)
                                                 -----------  ---------  ------  --------- ------------  --------------- -----------

Balance, ending July 31, 2001                      4,739,130     0.0001     474    255,860           -     (217,281)         39,053

Proceeds from the sale of common stock               100,000     0.0001      10     24,990                                   25,000

Issuance of common stock for consulting services     230,000     0.0001      23     39,477                                   39,500

Issuance of shares related to employment contract    600,000     0.0001      60      5,940                                    6,000
(related party)

Issuance of shares for share subscription          2,500,000     0.0001     250     99,750     (99,750)                         250
(related party)

Net loss year ended July 31, 2002                                                                            (142,102)     (142,102)
                                                  -----------  --------- ------  --------- ------------  ---------------

Balance, ending July 31, 2002                      8,169,130              $ 817  $ 426,017   $ (99,750)    $ (359,383)    $ (32,299)
                                                 =============           ======  =========  ===========  ===============  ==========
</TABLE>
Read the accompanying  summary of significant  accounting  policies and notes to
financial  statement,  both of  which  are an  integral  part of this  financial
statement.

<PAGE>
                           VIRILITEC INDUSTRIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                  JULY 31, 2002




NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

     Virilitec  Industries,  Inc. (the Company) was incorporated in the State of
Delaware on August 11,  1998.  Through an  exclusive  licensing  agreement,  the
Company  will  distribute  a line of  bioengineered  virility  supplements.  The
Company  intends  to  market  its  product  in  international   markets,   using
independent sales agents.

Virilitec Industries,  Inc. prepares its financial statements in accordance with
generally accepted accounting principles.  This basis of accounting involves the
application  of  accrual  accounting;   consequently,  revenues  and  gains  are
recognized  when earned,  and expenses and losses are recognized  when incurred.
Financial   statement  items  are  recorded  at  historical  cost  and  may  not
necessarily represent current values.

The accompanying  financial statements reflect Virilitec Industries,  Inc. is no
longer  considered to be in the development  stage.  From inception  (August 11,
1998) through July 31, 2001, The Company was considered to be in the development
stage.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of 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  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting  period.  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.

Fair value of Financial Instruments

     The  carrying  amounts  reported  in  the  balance  sheet  for  cash,  cash
equivalents and receivables  approximate  fair value because of the immediate or
short-term maturity of these financial instruments.

Revenue Recognition

     Revenues are derived  principally from commissions  received on the sale of
product. Revenue is recognized when agent orders are filled by the manufacturer.

     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
Industrustries,  Inc.'s revenue recognition practices are in conformity with the
guidelines of SAB 101.
<PAGE>

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):


Earnings (Loss) per share calculation

     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 the Company 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-dilutive effect.

Statement of Cash Flows

     For purposes of the  statement  of cash flows,  the Company  considers  all
highly liquid instruments with original maturities of three months or less to be
cash equivalents.


NOTE 3 - COMMITMENTS AND CONTIGENCIES

Distribution Agreement

     On August 25, 1998,  the Company  entered  into an  exclusive  distribution
agreement with a manufacturer of bioengineered viritlity supplements whereby the
Company  was  granted  exclusive  rights to  distribute  a  certain  nutritional
supplement  designed to enhance human male sperm count and potency.  The term of
the  agreement is 50 years.  The Company's  independent  sales agents will place
orders with payment  directly with the manufacturer who will fill the orders and
forward  the  Company's  portion  of  the  sales  proceeds  to  the  Company.  A
non-refundable one-time fee of $8,500.00 has been paid by the Company. An annual
payment of $10,000 as a license fee is due and payable 90 days after the product
is initially  manufactured  and ready for delivery to the  Company's  agents and
then annually  thereafter on the anniversary of the first payments due date. Due
to the low volume of orders, the manufacturer agreed to waive the annual payment
of $10,000 due from the Company as a license fee for 2002 and 2001.

Development agreement

     On August 9,  2001,  the  Company  entered  into an  agreement  to fund the
development of and market products for the treatment of psoriasis with Meditech,
kft..  As part of the  agreement,  the  Company is  entitled to 67% of the gross
profit  generated.  The  company  committed  to fund a total of  $250,000 in the
following manner:
<TABLE>
<S>     <C>               <C>

         $  5,500 by       August 14, 2001,
         $24,500 by        February 25, 2002,
         $25,000 by        March 31, 2002,
         $25,000 by        May 31, 2002,
         $50,000 by        July 31, 2002,
         $50,000 by        August 31, 2002,
         $20,000 by        September 15, 2002
         $50,000 by        December 31, 2002
</TABLE>

At July 31,  2002,  the Company had funded a total of $8,000 to Meditech  due to
limited  cash flows.  Both parties to this  agreement  have agreed to extend the
payment  dates  into  the  future  to allow  the  continuation  for the  product
development.
<PAGE>

NOTE 3 - COMMITMENTS AND CONTIGENCIES (CONTINUED):

Equity interest and distribution agreement

     On May 8, 2002,  the Company  entered  into an agreement to purchase 49% of
the  outstanding  equity of an  organizations  interest.  The purchase  price is
$200,000.  The seller also agreed to use the  proceeds  for the filing of patent
applications  and  to  finance  research  and  development  of a 2nd  generation
portable  device for the treatment of psoriasis and other  ailments.  On June 5,
2002,  the  Company  also  signed  a   distribution   agreement  with  the  same
organization for five years for exclusive  worldwide  distribution rights of the
2nd generation portable device for a one time payment of $15,000. As of July 31,
2002, no funds have been  forwarded by the Company.  Both parties have agreed to
allow the  agreements  to remain  valid until the Company can generate the funds
necessary to execute the agreements.

NOTE 4 - NOTE PAYABLE

     On June 19,  2002 the  Company  signed a  promissory  note in the amount of
$12,500. The note bears interest of 4% and its repayment date is August 19, 2002
including all  outstanding  interest due. The note is also  convertible  at that
time into 400,000 common shares of company stock.


NOTE 5 - GOING CONCERN

     The  accompanying  financial  statements  have been  prepared  assuming the
Company will  continue as a going  concern.  The company  reported a net loss of
$142,102  and $6,676 for the years  ended July 31,  2002 and 2001  respectively.
Management has continued to maintain reporting compliance and seek new expansive
areas in  product  development  and  marketing.  Management  intends to seek new
capital from new equity  security  issuance's  that will provide funds needed to
increase liquidity, fund internal growth, and fully implement its business plan.


NOTE 6 - COMMON STOCK

     The Company sold 100,000  shares of common stock during the current  fiscal
year at a price of $0.25 per share.

     The Company issued  230,000 shares of common stock for consulting  services
during the current fiscal year. These services were valued at $39,500.

     The  Company  issued  600,000  shares of common  stock to its CEO  (related
party) as part of an employment agreement entered into during the current fiscal
year. The transaction was valued at $6,000.

     The  Company  issued  2,500,000  shares  of common  stock to its  president
(related party) at a value of $100,000.  A promissory note was received from the
president  in the amount of $99,750  and has been  reflected  as a  subscription
receivable in the equity section of the financial statements.
<PAGE>

NOTE 7 -  WARRANTS AND OPTIONS

     The Company  currently has 42,100 class A warrants issued and  outstanding.
Each  Warrant  entitles the holder to purchase  one Share of  restricted  Common
Stock at an exercise price of $10.00,  subject to adjustment,  through the first
anniversary of the date the Company's Shares are initially  approved for trading
in any public market

     Under the terms of the Company's distributor agreement,  the Company agreed
to grant stock options to its  manufacturer  to purchase up to 300,000 shares of
restricted  common stock for a period of five years  beginning  October 31, 1999
according to the following:
<TABLE>
<S>     <C>                         <C>                        <C>

         Effective                  Number of                       Exercise
           Date                      Shares                    Price (per share)
         ---------                  ---------                  -----------------
         06/30/99                   100,000                          10.00
         11/30/00                   100,000                          10.00
         06/30/00                   100,000                          10.00
</TABLE>

This option shall become effective only in the event the distribution  agreement
between  the  Company  and the  manufacturer  is still in effect on the date the
options are due to be effective.

     The Company has granted stock options to certain  officers and directors to
purchase additional shares of restricted shares of common stock as follows:
<TABLE>
<S>     <C>                         <C>                       <C>


          Option                    Number of                       Exercise
          Holder                     Options                   Price (per share)
         ---------                  -------------              -----------------
         President                  175,000                            2.50
         President                  150,000                            4.00
         Vice President              25,000                            2.00
         Vice President              50,000                            3.00
         Secretary                   25,000                            2.50
         Secretary                   50,000                            4.00
</TABLE>

In October 1995, the Financial  Accounting  Standards Board issued  Statement of
Financial  Accounting  Standards  ("SFAS") No. 123,  "Accounting for Stock-Based
Compensation".  The Company has determined  that it will continue to account for
employee stock-based  compensation under Accounting  Principles Board No. 25 and
elect the  disclosure-only  alternative  under SFAS No. 123. The fair value of a
share of nonvested stock is measured at the market price of a share on the grant
date.  The proforma  effect to net income and earnings per share is reflected as
follows:
<TABLE>
<S>     <C>                                                           <C>                   <C>
                                                                       Year ended             Year ended
FAS 123 "Accounting for stock based compensation                      July 31, 2001          July 31, 2000
                                                                      -------------          -------------
Paragraph 47 (a)
1.       Beginning of year - outstanding
                i.       number of options                              475,000               475,000
                ii.      weighted average exercise price                   3.16                  3.16
2.       End of year - outstanding
                i.       number of options                              475,000               475,000
                ii.      weighted average exercise price                   3.16                  3.16
3.       End of year - exercisable
                i.       number of options                              475,000               475,000
                ii.      weighted average exercise price                   3.16                  3.16
</TABLE>
<PAGE>
<TABLE>

NOTE 8 -  WARRANTS AND OPTIONS (continued)
<S>     <C>                                                             <C>                   <C>

4.       During the year - Granted
                i.       number of options                                    0                     0
                ii.      weighted average exercise price                      0                     0
5.       During the year - Exercised
                i.       number of options                                    0                     0
                ii.      weighted average exercise price                      0                     0
6.       During the year - Forfeited
                i.       number of options                                    0                     0
                ii.      weighted average exercise price                      0                     0
7.       During the year - Expired
                i.       number of options                                    0                     0
                ii.      weighted average exercise price                      0                     0

         Paragraph 47 (b) Weighted-average grant-date fair value of options
         granted during the year:
1.       Equals market price                                                                        0
2.       Exceeds market price                                                                    2.44
3.       Less than market price                                                                     0

         Paragraph 47(C)Equity instruments other than options               none                 none

         Paragraph 47(d) Description of the method and significant assumptions
         used during the year to estimate the fair value of options:
1.       Weighted average risk-free interest rate                           N/A                  N/A
2.       Weighted average expected life (in months)                         N/A                  N/A
3.       Weighted average expected volatility                               N/A                  N/A
4.       Weighted average expected dividends                                N/A                  N/A

         Paragraph 47(e) Total compensation cost recognized in income for     0                    0
         stock-based employee compensation awards.

         Paragraph 47(f) The terms of significant modifications of none none
         outstanding awards. Paragraph 48 - Options outstanding at the date of
         the latest statement of financial position presented:
1.       (a) Range of exercise prices                                $2.00-$4.00         $2.00-$4.00
         (b) Weighted-average exercise price                                2.44                2.44
2.       Weighted-average remaining contractual life (in months)           12.00               24.00


                                                                      Year ended          Year ended
                                                                   July 31, 2001       July 31, 2001
                                                                   -------------       -------------
         Net Income after proforma effect                              (142,102)             (6,676)
         Earnings per share after proforma effect                  $      (0.03)       $      (0.00)
</TABLE>


NOTE 9 - INCOME TAXES

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