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. [X]

The  aggregate  market  value of  voting  stock  held by  non-affiliates  of the
Registrant as of September 30, 2001: $1,671,195

The number of shares  outstanding of  Registrant's  Common Stock as of September
30, 2001: 4,739,130

<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  believes that the current  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  believes that it can
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

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<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.

Acquisitions

         The Company has no specific  acquisition  plans at this time.  However,
the Company is looking to expand its product line by  acquiring  rights to other
natural products.

Employees

         Mrs.  Bella Roth, the Company's  President,  is the Company's only full
time  employee.  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.

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<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

         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>    <C>    <C>    <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  4,739,130  shares of common stock  outstanding,  3,747,030  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, 2001,  there were 168 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, 2001, the Company sold a total of
23,000 shares of Common Stock at a price of $1.00 per share. The sales were made
pursuant to Rule 506 and all of the purchasers were accredited investors.

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                From 8/11/98
                                    Ended                     (inception) to
                                    7/31/01                       7/31/01
                                    ------------               --------------
Net Revenues                         $45,320                     $ 55,520
Cost and Expenses                    (27,228)                    (240,303)
General and Administrative
         Expenses                    (24,768)                     (32,523)
Interest Income                          -0-                           24
Income Taxes                             -0-                           -0-
Net Loss                             (6,676)                     (217,281)
Loss Per Share                      $ (.001)                     $    (??)

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Balance Sheet Data

                       July 31, 2001
                       -------------
Working Capital        $ 32,253
Total Assets             43,053
Total Liabilities         4,000
Stockholders' Equity   $ 39,503

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 it is
likely 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 for at least
three months following initial production and sale of the Product.

         The  Company  expects to fund $4,000 of initial  advertising  in health
journals and media so distributors will have such publications in hand for sales
purposes.  The Company also intends to use the Internet for  advertising as that
currently  allows the greatest  visibility  for very small costs.  In fact,  the
Company  believes that it may be able to obtain free access on certain  websites
looking for products such as the Company's. Subsequently, the company intends to
reserve 20% of revenues for ongoing  advertising and marketing up to $10,000 (in
advertising  expenditures - or $50,000 total revenues) monthly per country,  and
10% of all additional revenues.

         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 at this time intends 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.

         The  Company  does not  expect to  conduct  any  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 for its President only if warranted by its sales volume on
an as needed basis.

Results of Operations

Twelve months ended July 31, 2001 and 2000

         During the twelve  month  period  ending  July 31,  2001,  the  Company
incurred  a loss of $6,676  compared  to a loss of $38,251  for the same  period
ended July 31, 2000.  The main  component  contributing  to the decrease in loss
from year to year was the revenue generated by the Company during fiscal 2001.

Revenues

         During the twelve month  period  ending July 31,  2001,  the  Company's
revenues  were  $45,320  compared to $10,200 for the same period  ended July 31,
2000. Revenues are principally  commissions received on the sale of Product. The
increase  of revenue  from year to year is due to  increased  volume of capsules
sold from year to year.

Operating Expenses

         During the twelve  months  ended July 31,  2001,  the Company  incurred
$51,996 in  operating  expenses  as  compared  to $48,451 for the same period in
2000.   This  increase  was  primarily   driven  in  the  area  of  general  and
administrative expenses offset by a decrease in travel and professional fees.

Material changes in financial condition, liquidity and capital resources

         At July 31, 2001, the Company had $22,220 in cash and cash  equivalents
compared to $20,117 for the same period in 2000. The Company had working capital
of  approximately  $32,253 at July 31,  2001  compared  to $13,579  for the same
period in 2000.  Net cash used in  operating  activities  for the twelve  months
ended July 31, 2001 was $20,896  compared to $29,214 for the same period in 2000
and $58,640 since inception.  Cash used was mainly attributable to the operating
expenses  related to operations  as well as changes in net operating  assets and
liabilities.

         No cash was used in investing  activities  for the twelve  months ended
July 31, 2001 or for the twelve  months  ended July 31,  2001.  Net cash used in
investing  activities since inception was $12,100. The net cash used was for the
purchase of equipment and distributor rights.

         Net cash provided by financing  activities was a net of $23,000 for the
twelve  months ended July 31, 2001 and $40,030 for the same period in 2000.  Net
cash  provided  since  inception  was  $92,960.   These  amounts  are  primarily
attributable from sale of shares through private placements for both periods.

         On July 10, 2000, the Board of Directors  approved a resolution whereas
the  Company  may  commence a private  placement  offering  to sell up to 75,000
shares of common stock at a price of $1.00 per share.  For the nine months ended
April 30,  2001,  23,000  shares of common  stock had been sold.  Since July 10,

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<PAGE>

2000, common shares totaling 28,600 have been sold from the private placement.

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

Name                               Age              Position
--------                           ----             ---------
Bella Roth                          51              President & Chairman of
                                                    the Board
Arnold A. Lipton, M.D.              71              VP - Scientific Advisor &
                                                    Director
Moshe Laufer                        42              Secretary/Treasurer &
                                                    Director

Directors serve for five year terms.

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.

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 year.
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 (1)
------------------         ----     --------       -----    ------------   -------------------------
Bella Roth                 2000          0           0           0                      0
President &                1999          0           0           0                      0
Chairman                   1998    $31,282(3)        0     $50,000(2)              325,000 options worth $0

Arnold Lipton, M.D.        2000          0           0           0                      0
V.P.-Scientific            1999          0           0           0                      0
Advisor &                  1998          0           0      $2,500(2)               75,000 options worth $0
Director

Moshe Laufer               2000          0           0           0                      0
Secretary,                 1999          0           0           0                      0
Treasurer &                1998          0           0           0                  75,000 options worth $0
Director

</TABLE>

                                       11
<PAGE>

(1) Based on the  Company's  Offering  Memorandum  dated  September 25, 1998, in
which the Shares of the Company's  stock was sold for an arbitrarily  determined
price of $1.00 per  share for  unrestricted  shares of the  Company's  of common
stock,  the  relatively  high  exercise  price and the  limited  time before the
Options expire, the options are essentially valueless.
(2) Consists of shares purchased at par value which for accounting  purposes are
being valued at $.10.

(3) Reflects amounts recorded on Company's financial statements as compensation.
This is purely an accounting entry as no compensation was actually paid.

(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.  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, no  transactions  occurred  which  required the
filing of any forms under Section 16(a).

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

         The following table sets forth,  as of September 30, 2001,  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               Bella Roth                   3,825,000(1)                           75.5%
                           543 Bedford Ave.
                           Brooklyn, NY

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            4,100,000(3)                           79.0%
                           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.
(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 $19,000 to
a corporation  owned by Mrs.  Roth's  husband.  Payment was for the provision of
management,  administrative and consulting  services and use of office space and
equipment.

                                     PART IV

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

(a)

1.  Financial Statements
         The financial statements are listed in the Index to Financial
         Statements on page F-1 and are filed as part of this annual report.
2.  Not Applicable.
3.  None.

(b) Reports on Form 8-K
None.

                                       13
<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. (a
company in the  development  stage) as of July 31, 2001 and 2000 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  generally   accepted  auditing
standards.  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, 2001 and 2000, and the results of its operations and its cash flows for
the  years  then  ended,  in  conformity  with  generally  accepted   accounting
principles.


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

Hollywood, Florida
October 08, 2001

<PAGE>

                           VIRILITEC INDUSTRIES, INC.
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                                 BALANCE SHEET
                           AT JULY 31, 2001 AND 2000

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


                                     Assets

                                                                                   July 31, 2001           July 31, 2000
                                                                                   -------------           -------------
Current Assets
     Cash and cash equivalents                                                       $ 22,220                $ 20,117
     Receivables - net                                                                 12,297                       -
     Other current assets (principally related party)                                   1,735                     537

       Total current assets                                                            36,253                  20,654
Property and equipment, net                                                                 -                   1,200
Other Assets                                                                            6,800                   7,650
                                                                                   -------------           -------------
       Total assets                                                                    43,053                  29,504
                                                                                   =============           =============
                      Liabilities and Shareholder's Equity

Current Liabilities
     Accounts payable                                                                       -                   3,075
     Other current liabilities                                                          4,000                   4,000

       Total current liabilities                                                        4,000                   7,075

 Shareholder's Equity
     Common Stock, $.0001 par value; authorized 20,000,000 shares;                        474                     472
          issued and outstanding - 4,739,130 in 2000 4,716,130 in 2000
     Paid in Capital                                                                  255,860                 232,562
     Deficit accumulated during the development stage                                (217,281)               (210,605)
                                                                                   -------------           -------------
       Total Shareholder's Equity                                                      39,053                  22,429
                                                                                   =============           =============
        Total liabilities and shareholder's equity                                   $ 43,053                $ 29,504

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

</TABLE>

<PAGE>

                           VIRILITEC INDUSTRIES, INC.
                            STATEMENT OF OPERATIONS
                   FOR THE YEARS ENDED JULY 31, 2001 AND 2000
               FROM INCEPTION (AUGUST 11, 1998) TO JULY 31, 2001

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

                                                                                                              Inception
                                                                                                          (August 11, 1998)
                                                                                 Years Ended                   through
                                                                   July 31, 2001        July 31, 2000       July 31, 2001
                                                               -------------------------------------------------------------
Sales Arranged                                                   $ 243,595             $54,825               $ 298,420
                                                               ==============       ==============       ===================

Revenue                                                           $ 45,320             $10,200               $  55,520

Operating expenses:
       Salaries and payroll related                                      -                   -                  38,460
       Other compensation expense                                        -                   -                  52,500
       Management fees                                                   -                   -                  38,500
       Travel                                                        4,500              14,183                  24,463
       Rent                                                          3,300               1,800                   6,900
       Depreciation                                                  1,200               1,200                   3,600
       Amortization                                                    850                 850                   1,700
       Professional fees                                            17,378              26,738                  74,180
       Selling, general and administrative expenses                 24,768               3,681                  32,523
                                                               --------------       --------------       -------------------
          Total operating expenses                                  51,996              48,451                 272,826

          Loss before other income (expense)                        (6,676)            (38,251)               (217,305)

Other income (expense):
       Interest income                                                   -                   -                      24
                                                               --------------       --------------       -------------------
          Total other income (expense)                                   -                   -                      24

                                                               --------------       --------------       -------------------
Net Loss                                                            (6,676)            (38,251)               (217,281)
                                                               ==============       ==============       ===================

Basic weighted average common shares outstanding                 4,728,391           4,704,135
                                                               ==============       ==============

Basic Loss per common share                                       $ (0.001)           $ (0.008)
                                                               ==============       ==============

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

</TABLE>

<PAGE>

                           VIRILITEC INDUSTRIES, INC.
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                       STATEMENT OF SHAREHOLDERS' EQUITY
             FROM INCEPTION (AUGUST 11, 1998) THROUGH JULY 31, 2001

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


                                                                                                          Accumulated
                                                                      Common Stock                        Deficit during     Total
                                                  ----------------------------------------   Paid in      Development  Shareholder's
                                                    Shares       Par Value      Amount       Capital         Stage          Equity
                                                  ------------  ------------  ------------ -------------  -------------  -----------

Balance, beginning:  August 11, 1998                        -           $ -           $ -           $ -        $ -           $ -

August 11, 1998 - Issuance of shares                3,100,000        0.0001           310          (310)                       -

Proceeds from the sale of Common Stock                933,000        0.0001            93        41,417                     41,510

September 18, 1998 - Issuance of shares for            50,000        0.0001             5        10,091                     10,096
professional fees

December 31, 1998 - Issuance of shares as             525,000        0.0001            53        52,447                     52,500
compensation to officers

Proceeds from the sale of common stock                  4,100        0.0001             0         4,400                      4,400

March 30, 1999 Issuance of shares for mgmt fee         55,000        0.0001             6        38,494                     38,500

July 31, 1999 - Officer's salary from August 1998                                                38,410                     38,410
to July 31, 1999 applied against paid in capital

July 31, 1999 - Office rent from August 1998                                                      1,800                      1,800
to July 31, 1999 applied against paid in capital

July 31, 1999 - Amortization of Issuance of shares for                                           19,968                     19,968
professional fees

July 31, 1999 - Stock issuance costs applied                                                    (24,980)                   (24,980)
against paid in capital

Net loss year ended July 31, 1999                                                                             (172,354)   (172,354)
                                                 ------------  ------------  ------------ -------------  -------------  -----------
Balance, ending July 31, 1999:                      4,667,100                         467       181,737       (172,354)      9,850

Proceeds from the sale of common stock                 49,030        0.0001             5        49,025                     49,030

July 31, 2000 - Office rent from August 1999                                                      1,800                      1,800
through July 31, 2000 applied against paid in capital

Net loss year ended July 31, 2000                                                                              (38,251)    (38,251)
                                                  ------------  ------------  ------------ -------------  -------------  ----------
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

Sept 30, 2000 - Office rent from August 2000                                                        300                        300
through Sept 30, 2000 applied against paid in capital

Net loss year ended July 31, 2001                                                                               (6,676)     (6,676)
                                                  ------------  ------------  ------------ -------------  -------------  ----------
                                                    4,739,130      $ 0.0001         $ 474     $ 255,860     $ (217,281)   $ 39,053
                                                  ============  ============  ============ =============  =============  ==========

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

</TABLE>

<PAGE>

                           VIRILITEC INDUSTRIES, INC.
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                            STATEMENT OF CASH FLOWS
                   FOR THE YEARS ENDED JULY 31, 2001 AND 2000
             FROM INCEPTION (AUGUST 11, 1998) THROUGH JULY 31, 2001

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

                                                                                                             Inception
                                                                                                         (August 11, 1998)
                                                                                  Years Ended                  through
                                                                    July 31, 2001       July 31, 2000       July 31, 2001
                                                                 -----------------------------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES:

Net Income (Loss)                                                    $ (6,676)          $ (38,251)            $ (217,282)
Adjustments to reconcile net income (loss) to net cash
 used in operating activities:
            Depreciation and amortization                               2,050               2,050                  5,300
            Issuance of shares for officer compensation                     -                   -                 52,500
            Issuance of shares for professional fees                        -                   -                 30,064
            Issuance of shares for management fee                           -                   -                 38,500
            Officers salary applied to paid in capital                      -                   -                 38,410
            Office rent applied to paid in capital                        300               1,800                  3,900


Changes in Operating assets and liabilities:
            Other current assets                                      (13,495)               (537)               (14,032)
            Accounts Payable and Accrued Liabilities                   (3,075)              5,725                  4,000
                                                                 -------------       -------------       -------------------
Net cash provided by/(used in) operating activities                   (20,896)            (29,214)               (58,640)

CASH FLOWS FROM INVESTING ACTIVITIES:

            Purchase of Property and equipment                              -                   -                 (3,600)
            Payment for license                                             -                   -                 (8,500)
                                                                 -------------       -------------       -------------------
Net cash provided by/(used in) investing activities                         -                   -                (12,100)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from:
              Issuance of common shares                                23,000              49,030                 117,940
              Cost of common share offering                                 -                   -                 (24,980)
                                                                 -------------       -------------       -------------------
Net cash provided by/(used in) financing activities                    23,000              49,030                  92,960
                                                                 -------------       -------------       -------------------
Net increase (decrease) in cash and cash equivalents                    2,103              19,817                  22,220
Cash and cash equivalents, beginning of period                         20,117                 300                       -
                                                                 -------------       -------------       -------------------
Cash and cash equivalents, end of period                             $ 22,220            $ 20,117                $ 22,220
                                                                 =============       =============       ===================

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

</TABLE>

<PAGE>

                           VIRILITEC INDUSTRIES, INC.
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                          NOTES TO FINANCIAL STATEMENTS
                             JULY 31, 2001 AND 2000

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.

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 and cash
equivalents  because of the immediate or short-term  maturity of these financial
instruments.

Property and Equipment:

         Property   and   equipment   are   stated  at  cost  less   accumulated
depreciation.  Depreciation is computed using the straight-line  method over the
estimated useful lives when the property and equipment is placed in service.

                                                         Estimate Useful Life
                                                                (In Years)

         Computer Equipment & Software................................3

The cost of fixed assets retired or sold,  together with the related accumulated
depreciation,  are removed from the appropriate asset and depreciation accounts,
and the  resulting  gain or loss is included in net  earnings.  Maintenance  and
repairs are expensed as incurred.

<PAGE>

                           VIRILITEC INDUSTRIES, INC.
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                         NOTES TO FINANCIAL STATEMENTS
                            JULY 31, 20001 AND 2000

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

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.

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 - DETAILS OF FINANCIAL STATEMENT COMPONENTS

Property and Equipment:                          2001           2000
                                                ------         -----

Computer Equipment.............................$3,600         $3,600
Less: Accumulated depreciation..................3,600          1,200
                                                ------         -----
         Property and equipment, net...........$  -           $2,400
                                                ======         =====

<PAGE>

                           VIRILITEC INDUSTRIES, INC.
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                         NOTES TO FINANCIAL STATEMENTS
                             JULY 31, 2001 AND 2000

NOTE 4 - 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 manufactured agreed to waive the annual payment
of $10,000 due from the Company as a license fee for 2001 and 2000.

Leases

         The Company maintained its corporate offices at an office of one of its
shareholders at 100 Cedarhurst Ave. Suite 201, Cedarhurst, NY 11516 at a cost of
$150 monthly.  No payments have been made to the  shareholder for the rent cost.
The company  included  rent expense of $1,800 for the fiscal year ended July 31,
2000 in the financial statements with a corresponding offset to paid in capital.
The company  included rent expense of $300 for August 2001 and September 2001 in
the financial  statements  with a  corresponding  offset to paid in capital.  In
October 2000,  the company  relocated and maintains its corporate  office at 236
Broadway Ave - Suite 201, Brooklyn, NY 11211 on a month to month basis at a cost
of $300.00 per month.

Private Placement Offering

         On July 10, 2000 the Board of  Directors  approved a Private  Placement
Offering, whereby the Company will sell up to 75,000 shares of common stock at a
price of $1.00 per share.

NOTE 5 - COMMON STOCK

         From August 1999 through July 2000,  the Company sold 49,030  shares of
common stock at a price of $1.00 per share.

         From August 2000 through July 2001,  the Company sold 23,000  shares of
common stock at a price of $1.00 per share.

NOTE 6 - PAID IN CAPITAL

         On July 31,  2000,  the Company  incurred  office rent in the amount of
$1,800.  During the fiscal year ended July 31, 2000 the Company  maintained  its
corporate  offices  at an office of one of its  shareholders.  This  amount  was
applied against paid in capital since it was not paid and deemed  contributed by
the shareholder.

         The company  incurred  office rent for August 2000 and  September  2000
totaling $300 for maintaining  its corporate  offices at an office of one of its
shareholders.  This amount was applied  against paid in capital since it was not
paid and deemed contributed by the shareholder.

<PAGE>

                           VIRILITEC INDUSTRIES, INC.
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                         NOTES TO FINANCIAL STATEMENTS
                             JULY 31, 2001 AND 2000

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:

         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

         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:

          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

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>

                                                                              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>

                           VIRILITEC INDUSTRIES, INC.
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                         NOTES TO FINANCIAL STATEMENTS
                             JULY 31, 2001 AND 2000

NOTE 8 -  WARRANTS AND OPTIONS (continued)

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

</TABLE>

<TABLE>
<S>                                                     <C>            <C>                    <C>
                                                                                                Inception
                                                                                              Aug. 11, 1998
                                                          Year ended    Year ended              Through
                                                        July 31, 2001  July 31, 2000          July 31, 2000
                                                        -------------  -------------          -------------
     Net Income after proforma effect                      (6,676)        (38,251)               (210,605)
     Earnings per share after proforma effect            $ (0.001)       $ (0.008)

</TABLE>

<PAGE>

                           VIRILITEC INDUSTRIES, INC.
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                         NOTES TO FINANCIAL STATEMENTS
                             JULY 31, 2001 AND 2000

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.

<PAGE>


                                   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: 16th day of October, 2001

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


/s/Bella Roth
---------------------                                Date: October 16, 2001
Bella Roth
President and Chairman
(Chief Executive Officer)

/s/Moshe Laufer
---------------------                                Date: October 16, 2001
Moshe Laufer
Secretary/Treasurer and Director
(Chief Financial/Accounting Officer)



----------------------                               Date: October 16, 2001
Arnold A. Lipton, M.D.
V.P. and Director