<PAGE>
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                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-K

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

     For the fiscal year ended April 30, 2001 Commission File No. 000-23250

                              MARKET AMERICA, INC.

             (Exact Name of Registrant as Specified in its Charter)

         North Carolina                                        56-1784094
-------------------------------                           ------------------
(State or Other Jurisdiction of                            (I.R.S. Employer
 Incorporation or Organization)                           Identification No.)

1302 Pleasant Ridge Road,  Greensboro, NC                         27409
 ----------------------------------------                       ----------
 (Address of Principal Executive Offices)                       (Zip Code)

                                 (336) 605-0040
         --------------------------------------------------------------
              (Registrant's Telephone Number, Including Area Code)

         Securities Registered under Section 12(b) of the Exchange Act:
                                      None
         --------------------------------------------------------------
                                (Title of Class)

         Securities Registered under Section 12(g) of the Exchange Act:
                    Common Stock, par value $.00001 per share
         --------------------------------------------------------------
                                (Title of Class)

Check if the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months
(or for such shorter period as the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes |X| No |_|

Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-K is not contained herein and no such disclosure will be contained, to the
best of the registrant's 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 shares of Common Stock of the registrant held by
non-affiliates (based on the July 24, 2001 closing sale price of $4.03) was
$13,481,761 million. The Common Stock is traded over-the-counter and quoted
through the OTC Bulletin Board. As of July 24, 2001, 19,420,000 shares of the
Common Stock were outstanding.

                      Documents Incorporated by Reference:

Certain information from the Notice and Information Statement for the
registrant's annual meeting of stockholders, scheduled to be held October 1,
2001, is incorporated by reference in Part III, Items 10,11, 12 and 13 of this
report.

<PAGE>

                                     PART I



Item 1.  Business

Introduction

Market America is a nine-year-old marketing and distribution company. The
Company has taken attributes of traditional franchising and network distribution
systems and combined them into a unique marketing plan, referred to as The
UnFranchise(R). The UnFranchise(R) combines the one-to-one marketing concepts of
direct selling with the systemization concepts of franchising.

Market America, Inc. sells an assortment of consumer-oriented products and
services, including customized apparel, automotive lubricants, enzyme-activated
cleaning and soil conditioning products, biologically activated hydrocarbon
remediation products, water filters, household cleaning products, gourmet
coffee, flower arrangements, dietary and nutritional supplements, vitamins,
photographic services, personal protection devices, jewelry, a full line of
custom-blended cosmetics, a separate line of cosmetics developed especially for
teenagers, personal care products including skin and hair care products and bath
products, personal development products and various marketing support materials.
The Company operates through a network of approximately 80,000 independent
distributors.

The Company has positioned itself as a leader in a relatively new distribution
trend, the mass customization of products and services. Mass customization
refers to utilizing information and technology to produce high volumes of
customized or differentiated products at an affordable cost to the end consumer.
The Company has thus far introduced its customized Motives(TM) cosmetics line
and a customized gourmet food line.

The Company's principal executive offices and national distribution center are
located at 1302 Pleasant Ridge Road, Greensboro, North Carolina 27409. The
telephone number at that address is (336) 605-0040.


Products and Manufacturing

Market America offers a wide variety of market-driven products and services.
These products and services are presented in a unique marketing environment
known as the Market America "Mall without Walls(TM)." The Company presents its
products within this virtual mall atmosphere in a broad assortment of "stores".
These stores do not constitute market segments but, rather, represent a
positioning of the products for marketing purposes.

In the last three fiscal years, the only product or class of similar products or
services whose sales exceeded 10% of the Company's gross revenue was OPC-3, or
Oligomeric Proanthocyanidins, which represented 32.2% of gross revenue during
the fiscal year ended April 30, 2001. During the years ended April 30, 2000 and
1999, OPC-3 constituted 31.2% and 30.6%, respectively, of gross revenue.

As a product brokerage company, the Company does not engage in manufacturing
activities. All products sold by the Company are purchased from unrelated
suppliers. Virtually all of the Company's products are sold under trade names
that are exclusive to the Company under contracts that protect the trade names
and prevent them from being used by other direct sales companies. This strategy
provides flexibility in introducing new products and withdrawing products from
the market, and minimizes capital investment and product liability exposure. One
supplier, Purity Technologies Inc. (formerly Isotonix Corporation), a
manufacturer of vitamin and nutritional products, supplies the Company with
vitamin compounds and nutritional supplements, including OPC-3, that accounted
for 49.8% of the Company's gross sales in fiscal year 2001, 46.0% in fiscal year
2000 and 44.0% in fiscal year 1999, under a contract dating from 1993. In order
to reduce the risk of reliance on a single manufacturer, the Company is
continually in the process of identifying alternative sources for its products.


                                                                               2
<PAGE>


Marketing

Sales of the Company's products are primarily dependent upon the efforts of the
Company's independent distributors and preferred customers. Distributor growth
is important to continued success in the direct selling industry. The Company
had 80,270, 73,214 and 66,394 active distributors during the years ended April
30, 2001, 2000 and 1999, respectively. In order to qualify as an "active"
distributor, individuals must meet certain sales, reporting and management
requirements. Management expects the number of active distributors to continue
to grow as the Company's product lines expand and as distributor recruitment
increases.

The Company believes its distributor compensation plan is one of the most
financially rewarding in the direct selling industry. Distributor commissions
are calculated and paid weekly based on "business volume", which is a cumulative
measure of distributor or wholesale cost of goods purchased and sold by
distributors. Commissions are the Company's most significant expense and
represented approximately 42.81%, 44.56% and 45.03% of net sales volume for the
years ended April 30, 2001, 2000 and 1999, respectively. The decrease in
commission expense as a percentage of sales during fiscal 2001 may be attributed
to a change in the product mix of commissionable product purchased by
distributors. However, the commission payout as a percentage of business volume
earned through commissionable product sales has remained constant from fiscal
2000 to fiscal 2001.

The Company's product return policy allows retail customers to return a product
to a distributor and receive a full cash refund within three business days. The
Company reimburses any distributor who then provides proper documentation and
the returned product within thirty days.

The Company will refund the costs of returned marketable and unused products by
a distributor within one year of purchase, less a 10% restocking fee.

The Company, upon receipt of proper documentation from the distributor, will
replace product that was damaged during shipment. Returns of marketable and
unused products have not been significant in any of the past three fiscal years.


New Product Status

Market America continually searches for new, innovative, market-driven products
and services. The Product Development Department carefully follows market
trends, as well as new published research available through select trade
journals. Market America also obtains valuable product information from its
substantial network of contacts around the world, including manufacturers,
scientific authorities, field representatives, and the Direct Selling
Association. Using a systemized approach, the management team reviews
information and selects new products and services over a pre-determined period
of time to meet sensitive timelines. Standards for product selection include
guidelines for optimal levels of inventory for maximum results from a new
product launch.

Market America expects to continue to develop its health and nutrition product
line, adding products to enhance lifestyle and longevity. During fiscal 2001,
the Company began development of a secretagogue human growth hormone (HGH)
enhancer. The enhancer uses a special blend of nutritional ingredients that
naturally increase the production and release of HGH by the pituitary gland.
When specific amino acids and nutrients are combined in a precise peptide
formulation with other biologically active nutrients and taken as directed, they
effectively raise HGH levels in the body. Due to delays in product introduction
to the marketplace, the Company did not ship any HGH until early May 2001. Upon
shipment, the Company recognized approximately $1 million of revenue from the
first time orders of this product.

During fiscal 2000, Market America formed an Internet Advisory Board (IAB),
comprised of seven experts in the Internet field, for the purpose of advising
and developing an Internet site which would enhance distributors' business
opportunities. In August 2000, Phase II, of a three-phase program, was
completed. Phase II provided distributors with the option to have e-commerce


                                                                               3
<PAGE>

available on a custom web site allowing them to receive and process transactions
through the Internet. Phase III was completed during February 2001. The
completion of Phase III included the introduction of Market America WebCenters.
The WebCenters provide distributors with the ability to market web sites with
e-commerce capabilities to small business owners.


Backlog

The Company typically ships products within 24 hours after the receipt of the
order. As of April 30, 2001, the Company had no significant backlog.


Employees

At April 30, 2001 the Company employed 249 persons at its Greensboro, North
Carolina corporate headquarters and distribution center and 19 persons at its
Miami, Florida location. Unions do not represent any of the Company's employees.
The Company believes that its employee relations are satisfactory.


Seasonality

The Company's revenues and business operations have not experienced significant
seasonal fluctuations, and management does not expect this to be a concern in
the future.


Trademarks, Patents and Proprietary Information

"Market America, Inc." and "Market America Mall without Walls" are registered as
the Company's service marks. The Company has also obtained registered trademarks
for "The Unfranchise," a name it uses to designate its marketing system. The
Company also has various registered product trademarks, including its "Motives"
customized cosmetics, "Thermochrome 5000" nutritional supplement, "Royal Spa"
personal care products, "Ultimate Aloe" nutritional supplements and personal
care products, "Mineral Blast" nutritional supplement, "Glucosatrin" nutritional
supplement and "Clear Shield" and "Vitashield" skin care products. The Company
holds no patents.

The Company regards its marketing plan as proprietary and has implemented
protective measures of both a legal and a practical nature to ensure that it
retains that status. The Company derives such protection by contract with
distributors and by keeping its software program confidential. Access to the
Company's proprietary marketing plan software is limited to those with a need to
know. The Company seeks to protect its official literature by means of copyright
protection. The Company aggressively pursues anyone who violates its proprietary
rights and distributor non-competition and non-solicitation contractual
provisions. Litigating risks always exist in the protection of such rights. The
Company also believes that such factors as innovation, expertise and market
responsiveness are of equal importance with the legal protections described
above.


Competition

The direct selling industry is highly competitive and sensitive to consumer
demand and distributor retention. The Company must compete with both retail
outlets and other direct selling companies for many of its sales and
distributors. Many of the Company's products compete with national brand-name
items that have much more consumer recognition. There are many competitors for
both sales and distributors with substantially greater financial resources than
the Company.


                                                                               4
<PAGE>

The Company believes that its leading competition, based on total sales, is
Amway Corporation and its affiliates, and that Avon Products, Inc. is the
leading direct seller of beauty and related products worldwide. Leading
competitors in the nutritional products and nutritional direct selling markets
include Nature's Sunshine Products, Inc., Nu Skin International Inc., Herbalife
International Inc., Shaklee Corporation and Usana Inc. The Company believes
there are other manufacturers of competing product lines that may or intend to
launch direct selling enterprises, which will compete with the Company in
certain of its product lines and for distributors. There can be no assurance
that the Company will be able to successfully meet the challenges posed by such
increased competition.


Government Regulation and Compliance with Environmental Laws

As a distributor without any manufacturing processes, the Company has avoided
material capital expenditures to comply with Federal, state, or local
environmental laws. The Company does not expect this to change in the
foreseeable future.

As a product broker and distributor of consumer nondurable goods, the Company
and its products are subject to extensive government regulations. The Food and
Drug Administration, Federal Trade Commission, Environmental Protection Agency,
and Consumer Product Safety Commission are a few of the governmental agencies
responsible for regulating and monitoring the Company's products. Product
labeling, distribution, packaging, advertising, and content are all subject to
intense laws and regulations. The Company believes it is in substantial
compliance with all laws and regulations, but there is no assurance that
legislation or regulations adopted in the future will not adversely affect the
Company's operations.

Other laws and regulations affecting the Company have been enacted to prevent
the use of deceptive or fraudulent practices that have sometimes been
inappropriately associated with legitimate direct selling and network marketing
activities. These include anti-pyramiding, securities, lottery, referral
selling, anti-fraud and business opportunity statutes, regulations and court
cases. Illegal schemes typically referred to as "pyramid," "chain distribution,"
or "endless chain" schemes, compensate participants into the scheme. Often such
schemes are characterized by large up-front entry or sign-up fees, over-priced
products of low value, little or no emphasis on the sale or use of products,
high pressure recruiting tactics and claims of huge and quick financial rewards
with little or no effort. Generally the laws directed at such schemes attempt to
ensure that product sales ultimately are made to consumers and that advancement
within such sales organizations is based on sales of the enterprise's products,
rather than investments in the organizations themselves or other non-retail
sales related criteria. Where required by law, the Company obtains regulatory
approval of its network marketing system.

The Company remains subject to the risk that, in one or more of its present or
future markets, its marketing system or the conduct of certain of its
distributors could be found not to be in compliance with applicable laws and
regulations. Failure by the Company or its distributors to comply with these
laws could have an adverse effect on the Company in a particular market or in
general. The Company monitors the activities of its distributors through its
national meeting, training and seminar system, in accordance with the management
and supervisory responsibilities of its higher level distributors, certified
trainers and advisory council members. Through such efforts the Company seeks to
minimize the possibility of unauthorized conduct by any distributor.

The Company cannot predict the nature of any future law, regulation,
interpretation or application, nor can it predict what effect additional
governmental legislation or regulations, judicial decisions, or administrative
orders, when and if promulgated, would have on its business in the future. It is
possible that such future developments may require revisions to the Company's
marketing program. Any or all of such requirements could have a material adverse
effect on the Company's business, results of operations and financial condition.


                                                                               5
<PAGE>

Markets

The Company's primary markets have been in the United States, Canada, and most
U.S. possessions. Approximately 7.8%, 5.7% and 3.7% of the Company's sales in
fiscal 2001, 2000 and 1999, respectively, were outside the United States.

If business factors continue to be favorable, management intends on expanding
operations to Australia during the fourth quarter of fiscal 2002.


Risk Factors

Important factors that may cause results of the Company's operations to differ
from expectations include the following:

Increased Government Regulation and Changes in Government Regulations. Any of
the government agencies that regulate aspects of the Company's operations and
products could enact new rules that prohibit the sale or distribution of Company
products or require changes in operating practices which could have a material
adverse effect on the sales and results of operations of the Company. The
Company is not aware of any pending legislation or any other regulatory changes
that would have a material effect on the Company.

Product Liability. By acting as a product broker and distributor of consumer
durable goods, the Company is subject to the risk of product liability claims.
To protect itself from these possible claims, the Company maintains product
liability insurance at a level consistent with responsible industry practices.
To date, the Company has paid no product liability claims and its insurers have
paid only two immaterial claims submitted by the Company. Management believes
that the Company's stringent supplier selection process and substantial
insurance coverage shields the Company from exposure to a materially adverse
product liability judgment.

Risk of Loss of Key Management Personnel. James H. Ridinger, Chief Executive
Officer and Chairman of the Board, is vital to the success and growth of the
Company. His recognition and marketing appeal contributes significantly to the
Company's success. The Company's dependence on Mr. Ridinger means that his loss
could have a material adverse effect on the Company's financial position and
results of operations.

Risk of Distributor Defections. Large-scale distributor defections have long
been common in the direct sales industry. The recruitment and retention of
independent distributors is vital to the long-term success of the Company.
Management devotes considerable time and effort to the marketing of the
Company's marketing plan and products. The Company's annual convention,
leadership school, moving up seminars, and various sales tapes and videos are
marketing tools utilized by the Company. None of these things, however, can
provide full assurance that current distributors will not leave the business.

Reliance on Key Manufacturers. Due to the unique nature of several of the
Company's products, the Company relies upon exclusive manufacturing
arrangements. There will always be a risk of unexpected contingencies affecting
these manufacturers which could adversely affect the Company. The Company
continues to pursue arrangements to minimize these risks.


Forward-Looking Information

Statements in this report concerning the Company's business outlook for future
economic performance, anticipated profitability, revenues, expenses or other
financial items, together with other statements that are not historical facts,


                                                                               6
<PAGE>

are "forward-looking statements" as that term is defined under federal
securities laws. "Forward-looking statements" are subject to risks,
uncertainties and other factors, which could cause actual results to differ
materially from those stated in such statements. Such risks, uncertainties and
factors include, but are not limited to, decreases in sales volume or number of
distributors, unfavorable regulatory action, loss of key personnel, loss of key
suppliers and general economic conditions.


Item 2.  Properties

During the year ended April 30, 2001, the Company leased a 40,000 square foot
building, in Greensboro, North Carolina. The lease covering this property was
terminated without penalty on July 10, 2000 when the Company moved into a new
corporate office and distribution center it had been constructing since the
summer of 1999. The new 102,000 square foot building in Greensboro, North
Carolina serves as the Company's headquarters and primary distribution center.
Management believes that this facility will meet the Company's needs for office
and distribution space for the foreseeable future. The Company has a five-year
$2.1 million mortgage with a fixed interest rate of 7.625%. The loan requires
monthly payments, including interest, of approximately $20,000 for fifty-nine
months with all remaining principal and interest due sixty months from loan
inception. The land on which the building resides is leased under a 33-year net
ground lease with a related company owned by Mr. and Mrs. James H. Ridinger,
officers/stockholders of the Company.

In addition, the Company leases a 6,000 square foot warehouse in Brampton,
Ontario for distribution of products to Canadian distributors. The lease
agreement requires a $3,200 monthly payment in US dollars and expires on
November 25, 2001.

The Company also leases office and meeting space in Miami, Florida for use in
direct sales training and education as well as other corporate functions. The
lease agreement is for twenty years and requires a $60,000 monthly payment. The
lease is renewable for an additional twenty-year period. Management has
committed to expand the meeting and training facilities in Miami, Florida during
fiscal 2002 in order to provide additional space for distributor events and
corporate meetings. In March 2001, the Company paid $1.1 million in earnest
money for the purchase of a facility in Miami, Florida. This transaction closed
in June 2001 with an additional cash payment of $2.46 million. The Company will
lease the land on which the facility resides from a related company owned by Mr.
and Mrs. James H. Ridinger, officers/stockholders of the Company, at an amount
and period yet to be determined.


Item 3.  Legal Proceedings

On April 27, 1999, judgment was entered in the case of Market America vs. Rossi,
et al, by the United States District Court for the Middle District of North
Carolina. This case involved termination of a group of Distributors for
violation of the Company's former Independent Distributor Agreement. During the
litigation of that case, the Company revised its Independent Distributor
Agreement. The revised Independent Distributor Agreement has been upheld in the
North Carolina courts since that revision and the North Carolina Court of
Appeals has specifically endorsed the company's ability to enter into covenants
not to compete with its distributors. As a result, the Rossi case has no
continuing impact on the Company or its Distributors all of whom are subject to
the revised Independent Distributors Agreement. It is however important to note
that many of the Defendants in the Rossi case were earning substantial
commissions from the Company at the time of their terminations. The Courts held
that the Defendants were only entitled to receive commissions through the
Company's annual renewal date of all Distributor Agreements which amounted to a
total of less than $170,000 for all Defendants. Moreover, the Defendants'
actions which led to their terminations ultimately resulted in their loss of
commissions far in excess of the total award in the cases which amounted to
$787,487, including interest. The Company has satisfied all monetary awards.


                                                                               7
<PAGE>

The Company is periodically involved in routine litigation incidental to its
business, including litigation involving distributor terminations. Management
believes that any such pending litigation will not have a material effect on the
Company's financial position or results of operations.


Item 4.  Submission Of Matters To A Vote Of Security Holders

No matters were submitted to a vote of the Company's security holders during the
fourth quarter of the fiscal year covered by this report.


                                                                               8
<PAGE>


PART II


Item 5.  Market For Registrant's Common Equity And Related Stockholder Matters

The Company's common stock is traded in the over-the-counter market under the
symbol MARK.OB. Quotations are published through the OTC Bulletin Board. The
following information reflects the actual reported range of high and low bid
quotations for the Company's common stock for each quarter within the fiscal
years ended April 30, 2001 and 2000 and as of a recent date. These quotations
reflect inter-dealer prices, without retail mark-up, mark-down or commission and
may not represent actual transactions.

                              Year Ending             Year Ending
                             April 30, 2001          April 30, 2000
                             --------------          --------------

                              High      Low          High        Low
                              ----      ---          ----        ---


First Quarter                $5-1/8    $3-7/8        $10        $3-7/8
Second Quarter                5         3-5/8         6-7/8      4-5/16
Third Quarter                 4-1/16    2-7/8         5-9/16     4-1/2
Fourth Quarter                4-1/20    3-1/4         5          3-3/4


The closing sale price for the Company's common stock on July 24, 2001 was
$4.03. As of that date, there were 467 shareholders of record of the Company's
common stock. The Company has never declared or paid any dividends on its Common
Stock since its inception. Management has no plans to declare any dividends in
the near future but may re-evaluate the Company's dividend policy as various
factors change.

Item 6.     Selected Financial Data


Income Statement Data:

<TABLE>
<CAPTION>
                             ---------------------------Year Ended April-----------------------------
                                                                30,
                                 2001           2000           1999           1998           1997
                             ------------------------------------------------------------------------
<S>                          <C>            <C>            <C>            <C>            <C>
Operating Revenues           $138,513,706   $135,965,263   $110,347,824   $ 87,531,005   $ 66,281,671

Income from Operations         24,928,785     25,894,708     21,076,766     17,339,402     13,276,101

Income before Income Taxes     29,326,141     28,846,046     23,585,650     18,783,209     14,275,790

Net Income                     20,212,394     17,790,922     14,191,025     10,840,540      8,471,221

Net Income Per Common
  Share                              1.04           0.89           0.71           0.54           0.43
</TABLE>


                                                                               9
<PAGE>


Balance Sheet Data:

<TABLE>
<CAPTION>
                           -------------------------Years Ended April 30,-------------------------
                              2001           2000           1999           1998           1997
                           -----------------------------------------------------------------------
<S>                        <C>            <C>            <C>            <C>            <C>
Working Capital            $59,501,154    $43,858,428    $38,560,369    $24,496,643    $14,172,686

Inventories                  3,296,701      2,430,734      1,852,487      1,468,321      1,244,586

Total Assets                92,433,090     69,765,464     48,998,497     33,584,430     21,691,428

Current Ratio                      5.2            4.4            5.1            4.1            3.1

Quick Ratio                        4.9            4.2            4.8            3.9            2.9

Long-Term Debt               1,955,346        755,214         10,000        164,315        281,707

Shareholders' Equity        76,100,087     56,279,152     39,672,535     25,481,510     14,640,970

Return on
Shareholders' Equity (1)          30.5%          37.1%          43.6%          54.0%          81.4%
</TABLE>


(1) Net income divided by average shareholders' equity.


                                                                              10
<PAGE>


Item 7.   Management's Discussion And Analysis Of Financial Condition And
Results Of Operations

Results of Operations

The following table summarizes the Company's operating results for the three
most recent fiscal years. All amounts are in millions of dollars, except for the
earnings per share data.

<TABLE>
<CAPTION>
Fiscal Year Ended               April 30,       2001          April 30,       2000            April 30,      1999
                              ------------------------      -------------------------       ------------------------
<S>                              <C>           <C>             <C>            <C>              <C>           <C>
Sales Revenue                     $138.5       100.0%           $136.0        100.0%            $110.3       100.0%

Cost of Sales                       36.4        26.3%             34.0         25.0%              28.0        25.4%
                              ------------------------      -------------------------       ------------------------
     Gross Profit                  102.1        73.7%            102.0         75.0%              82.3        74.6%

Selling Expenses:

Commissions                         59.3        42.8%             60.6         44.6%              49.7        45.0%

General and Administrative
     Expenses:

Salaries                             8.5         6.2%              6.9          5.1%               5.1         4.6%
Professional fees                    0.9         0.6%              1.2          0.9%               1.3         1.2%
Rent expense                         1.2         0.9%              1.4          1.0%               1.0         0.9%
Insurance                            0.8         0.6%              0.8          0.6%               0.6         0.5%
Other taxes and licenses             0.8         0.6%              0.6          0.4%               0.5         0.4%
Utilities                            0.3         0.2%              0.4          0.3%               0.3         0.3%
Consulting                           0.6         0.4%              0.8          0.6%               0.3         0.3%
Depreciation and
   amortization                      0.9         0.6%              0.4          0.3%               0.2         0.2%
Repairs and maintenance              0.8         0.6%              0.6          0.4%               0.1         0.1%
Other operating expenses             3.1         2.2%              2.4          1.9%               2.1         1.9%
                              ------------------------      -------------------------       ------------------------

Total General and
   Administrative Expenses          17.9        12.9%             15.5         11.5%              11.5        10.4%
                              ------------------------      -------------------------       ------------------------

Income From Operations              24.9        18.0%             25.9         19.0%              21.1        19.1%

Other Income (Expense)               4.4         3.2%              2.9          2.2%               2.5         2.3%
                              ------------------------      -------------------------       ------------------------

Income before Income Taxes          29.3        21.2%             28.8         21.2%              23.6        21.4%
Income Taxes                         9.1         6.6%               11          8.1%               9.4         8.5%
                              ------------------------      -------------------------       ------------------------

Net Income                         $20.2        14.6%            $17.8         13.1%             $14.2        12.9%
                              ------------------------      -------------------------       ------------------------

Earnings per common share          $1.04                         $0.89                           $0.71
                              -----------                   -----------                     -----------
</TABLE>


                                                                              11
<PAGE>


Sales revenue increased for the eighth consecutive year. For the years ended
April 30, 2001, 2000 and 1999, sales were $138.5, $136.0 and $110.3 million,
respectively. This represents a $25.7 million (23.3%) sales growth from 1999 to
2000 and a $2.5 million (1.9%) sales growth from 2000 to 2001.

In management's judgment, fiscal 2001 sales have not maintained historical
growth rates due primarily to the following:

o    Corporate sales and marketing personnel and field sales and distribution
     managers focused their efforts on the development, retooling,
     implementation and training on our new Internet programs/products and the
     revised Preferred Customer Program.

o    Operational challenges associated with the move into the new facility in
     Greensboro, North Carolina.

o    Communication, training and implementation of procedural revisions to the
     placement/submittal of distributor orders for commissionable products.

o    General economic conditions resulted in a slowdown of growth for the direct
     sales industry as a whole. According to the Direct Sales Association,
     multilevel direct sales companies with over $100 million in retail sales
     experienced average sales growth during calendar 2000 of just 2.6%. This
     same group experienced average sales declines of -3.3% during the first
     calendar quarter of 2001, which largely overlaps with the Company's fourth
     quarter.

With the above factors behind the Company, management was satisfied with the
1.9% sales growth for the fiscal year. Management believes that historical sales
trends will return with an improvement in the general economy.

Management attributes the growth in sales during fiscal 2000 to growth in the
number of average orders per month and the average dollar amount per order.

The Company's focus on recruitment in fiscal 2000 resulted in a 10.3% growth of
distributors, which was largely responsible for a 10.4% increase in the number
of average orders per month during that year or approximately $11.2 million of
additional sales revenue.

In addition, the Company's emphasis during fiscal 2000 on "One-to-One
marketing", which allows distributors to emphasize product sales to their
customers based on the customer's wants and needs, has created better
relationships between distributors and their customers resulting in an increased
average dollar amount per order during this time period. The average dollar
amount per sales order increased by 11.0%, which contributed approximately $13.2
million of additional sales revenue.

Cost of goods sold as a percentage of revenue was 26.3%, 25.0% and 25.4% for
fiscal years ending April 30, 2001, 2000 and 1999, respectively. The increase in
cost of goods sold as a percentage of sales from fiscal 2000 to 2001 was
primarily due to larger shipping and labor costs as a result of backorder
problems with a few vendors. The Company has replaced these vendors as of the
end of fiscal 2001 without any detriment to the quality of products being sold.

Commissions as a percentage of sales were 42.8%, 44.6% and 45.0% for the years
ended April 30, 2001, 2000 and 1999, respectively. The decrease in commission
expense as a percentage of sales during fiscal 2001 may be attributed to a
change in the product mix of commissionable product purchased by distributors.
However, the commission payout as a percentage of business volume earned through
commissionable product sales has remained constant from fiscal 2000 to fiscal
2001.

Salary expense was $8.5 million in fiscal 2001, a 23.2% increase from $6.9
million in fiscal 2000. In fiscal 2000, salaries increased by 35.3% from $5.1
million in fiscal 1999. As a percentage of sales, salary expense was 6.2%, 5.1%
and 4.6% for fiscal years 2001, 2000 and 1999, respectively. The increase over
the past two fiscal years has been a result of a commitment by management to
improve human resources within the Company to better serve the needs of the
Company's distributors. The primary areas of improvement have been in the
Company's Management Information Systems and Internet departments. The Company


                                                                              12
<PAGE>

also paid approximately $1.9 and $1.7 million in bonuses for fiscal 2001 and
2000, respectively, above historical levels.

Professional fees incurred during the years ended April 30, 2001, 2000 and 1999
were $864,509, $1,241,117 and $1,305,221 respectively. The decrease in
professional fees over the past two fiscal years was primarily due to higher
legal fees incurred in 1999 and 2000 in connection with court and regulatory
proceedings that concluded in early fiscal 2000. Management expects the costs of
professional fees to remain consistent with fiscal 2001 during fiscal 2002.

The Company incurred rent expense of $1,193,551 $1,380,351 and $995,994 during
the years ended April 30, 2001, 2000 and 1999, respectively. Rent expense
decreased during fiscal 2001 due to the termination of a yacht lease in the
fourth quarter of fiscal 2000. Rent expense increased in fiscal 2000 due to the
expansion of office and training facilities in Miami, Florida. The Company
expects rent expense to increase in fiscal 2002 compared to fiscal 2001 due to a
commitment to further expand the meeting and training facilities in Miami,
Florida.

Insurance expense was $755,513 in 2001, $844,534 in 2000 and $626,108 in 1999.
The decrease in fiscal 2001 was a result of lower health care costs incurred
under the Company's self-insured health insurance plan. The amount of expense
incurred under the plan can vary from year to year depending upon the health of
the Company's employees. The Company's health plan does have a $30,000 stop loss
limit per employee and an aggregate stop loss limit of approximately $652,029.
The increase in fiscal 2000 from the previous year was due to higher general
liability and property insurance resulting from the expanded corporate
facilities in Miami, Florida. Management expects insurance expense to increase
in fiscal 2002 as a result of the planned expansion of the corporate facilities
in Miami, Florida.

Other taxes and licenses incurred by the Company during the years ended April
30, 2001, 2000 and 1999 were $763,772, $624,634 and $458,155, respectively. The
primary cause of the increase over the past two fiscal years is a result of the
Company incurring larger payroll tax burdens due to 34% growth in the number of
employees over the same time period. The Company has also incurred larger
property taxes due to the expansion of corporate facilities in both Greensboro,
North Carolina and Miami, Florida over the past two fiscal years. In fiscal
2001, the Company received refunds of prior years' state franchise taxes of
approximately $64,000 that helped offset the larger property tax burdens.
Management expects other taxes and licenses to increase in fiscal 2002 as a
result of the planned expansion of the meeting and training facilities in Miami,
Florida.

Consulting expenses were $640,713, $819,128 and $266,154 for the years ended
April 30, 2001, 2000 and 1999 respectively. In fiscal 2001 and 2000, the Company
incurred consulting fees relating to renovations of the leased corporate
facility in Miami, Florida of approximately $472,000 and $424,000, respectively.
In fiscal 2000, the Company also incurred consulting fees due to the expansion
of its Internet site of approximately $214,000. Management expects consulting
expenses to decrease in fiscal 2002 due to the completion of renovations to the
leased corporate facility in Miami, Florida.

The Company has incurred total expenditures of approximately $14 million on
property and equipment during the past two fiscal years. As a result,
depreciation and amortization expense has increased from approximately $209,000
in fiscal 1999 to approximately $937,000 in fiscal 2001. The primary purchases
during the past two years have been the $4.6 million headquarters and
distribution center in Greensboro, North Carolina and a $3.6 million yacht. The
building in Greensboro is being depreciated over 33 years (ground lease term)
and the yacht over a 10-year period.

Repairs and maintenance expense has increased over the past two fiscal years due
to annual repairs made to the corporate yacht. Prior to June 1999, the Company
leased a much smaller yacht for distributor training events than the yacht
currently owned. Repairs and maintenance expense has also risen due to the
expansion of office, meeting and training space of the Miami, Florida
facilities.


                                                                              13
<PAGE>

Other operating expenses were $3,055,062, $2,410,943 and $2,084,741, for the
years ended April 30, 2001, 2000 and 1999, respectively. Other operating
expenses consist primarily of bad debts, office supplies, postage, charitable
donations, advertising, travel and other necessary business expenses.

The increase in other operating expenses during fiscal 2001 is partially due to
an additional $387,487 for the settlement of a previously reported lawsuit
brought against the Company by various former distributors. The Company had
previously accrued $400,000 towards the resolution of this matter. Without this
additional cost, other operating expenses would have been approximately the same
percentage of sales as the prior year.

Due to the Company's increased emphasis on distributor recruitment in fiscal
2000, management presence at corporate events and meetings increased, as well as
at distributor functions. This resulted in approximately $450,000 of increased
travel costs. Without these increased costs, other operating expenses would have
been slightly lower as a percentage of sales than the prior year.

The Company's effective tax rate was 31.1% in fiscal 2001 compared to 38.3% in
fiscal 2000 and 39.8% in fiscal 1999. During the year ended April 30, 2001, the
Company amended prior years' state income tax returns due to a change in its
multi-state income allocation methodology claiming state tax refunds of
$3,477,237. Management expects the Company's effective income tax rate to be
approximately 37% in fiscal 2002. Earnings per share in fiscal 2001 were
increased by approximately $0.12 due to state income tax refunds.


Liquidity and Capital Resources

The Company had unrestricted and restricted cash on deposit with various
financial institutions and available-for-sale debt securities totaling $69.75
million as of April 31, 2001 compared to $55.81 million as of April 30, 2000.
The $69.75 million as of April 30, 2001 was comprised of $60.51 million of
unrestricted cash, $2.94 million of restricted cash and $6.30 million of
available-for-sale securities.

The restricted cash consisted primarily of certificates of deposit, which were
restricted for use as collateral under a guarantee of a $5.3 million loan
extended by a financial institution during fiscal 2000 to a related company
controlled by Mr. and Mrs. James H. Ridinger, officers/stockholders of the
Company. The related company used the loan proceeds to purchase real estate in
Miami, Florida. The outstanding balance of the guaranteed loan was $5,248,075 at
April 30, 2001. The Company is leasing this real estate under a twenty-year
agreement that requires monthly payments of $60,000. The real estate is used for
direct sales training and education as well as other corporate functions (see
Related Party Transactions in the Notes to Financial Statements included
herein). Subsequent to April 30, 2001, the Company purchased a building in
Miami, Florida, from an unrelated party for $3,560,000. The Company had made an
earnest money deposit of $1,100,000 on this building prior to April 30, 2001 and
paid the remaining $2,460,000 in cash in June 2001. The Company will lease the
land on which the building resides from a company owned by Mr. and Mrs. James H.
Ridinger, officers/stockholders of the Company, at an amount and period yet to
be determined.

The available-for-sale debt securities consist of obligations of governmental
agencies and commercial paper. These securities were purchased in order to
increase the Company's yield on assets pending use in the Company's business and
can be converted into cash if the need arises.

The Company's primary source of funds is the cash generated from operating
activities. For the year ended April 30, 2001, cash provided by operating
activities was $18.5 million compared to $20.8 million and $15.2 million in 2000
and 1999, respectively. The primary reduction in cash flow from operations from
fiscal 2000 to fiscal 2001 is due to the additional labor and shipping costs
incurred as a result of increased product backorders. The growth from fiscal
1999 to fiscal 2000 can primarily be attributed to the 23.2% sales growth for
the year.


                                                                              14
<PAGE>

Cash flow from investing activities improved by approximately $19 million for
the year ended April 30, 2001 compared to the year ended April 30, 2000. The
primary reason for the improvement was the timing of purchases and sales of
available-for-sale securities ($12.8 million). Secondly, the Company spent
approximately $3.7 million more on property and equipment during fiscal 2000
than fiscal 2001. This $3.7 million can be attributed to the purchase of the
corporate yacht in June 1999. During fiscal 2000, the Company also restricted
approximately $2.3 million more of cash as collateral under various agreements
compared to fiscal 2001.

Working capital at April 30, 2001 was $59.5 million compared to $43.9 million
and $38.6 million at April 30, 2000 and 1999, respectively. These increases were
due primarily to the net increase in cash and available-for-sale securities as a
result of continued growth over the past two fiscal years.

On June 28, 1999, the Company became guarantor of a $1.6 million loan extended
by a financial institution during fiscal 2000 to a related company controlled by
Mr. and Mrs. James H. Ridinger, officers/stockholders of the Company. The
related company used the loan proceeds to purchase the land on which the
Company's new headquarters and distribution facility is located in Greensboro,
North Carolina. The guaranteed loan is repayable over a five-year period that
began August 2000. The outstanding balance of the guaranteed loan at April 30,
2001 was $1,551,167.

The Company invested $5,111,803 in 2001 for property and equipment purchases
compared to $8,804,088 and $346,315 in 2000 and 1999 respectively. Foremost, the
Company began construction of a $4.6 million, 102,000 square foot office and
distribution center in Greensboro, North Carolina during the summer of 1999. The
facility was completed in early July 2000. The Company financed the building
with approximately $2.5 million of cash on hand and borrowed the remaining $2.1
million on a five-year loan, bearing interest at 7.625% annually. The total
investment in the building during fiscal 2000 and 2001 was approximately $3.1
and $1.5 million, respectively. The Company also spent approximately $2.4
million for equipment and furnishings for the Greensboro, North Carolina and
Miami, Florida facilities and $900,000 for leasehold improvements to the leased
facility in Miami, Florida.

The Company believes that its current level of cash and cash equivalents and its
cash provided by operating activities will provide sufficient resources for
operations in the foreseeable future. In the event that the Company's operating
environment becomes adverse, there can be no assurance that additional financing
would not be required.


Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Not applicable


Item 8.  Financial Statements And Supplementary Data

Included immediately after Exhibit Index.


Item 9.  Changes In And Disagreements With Accountants On Accounting And
         Financial Disclosure

None


                                                                              15
<PAGE>


PART III


Item 10.  Directors And Executive Officers Of The Registrant

Information relating to Item 10 is incorporated herein by reference to the
Company's Notice and Information Statement scheduled to be filed on or about
August 25, 2001.


Item 11.  Executive Compensation

Information relating to Item 11 is incorporated herein by reference to the
Company's Notice and Information Statement scheduled to be filed on or about
August 25, 2001.


Item 12.  Security Ownership of Certain Beneficial Owners and Management

Information relating to Item 12 is incorporated herein by reference to the
Company's Notice and Information Statement scheduled to be filed on or about
August 25, 2001.


Item 13.  Certain Relationships and Related Transactions

Information relating to Item 13 is incorporated herein by reference to the
Company's Notice and Information Statement scheduled to be filed on or about
August 25, 2001.


                                                                              16
<PAGE>


PART IV


Item 14.  Exhibits, Financial Statement Schedules And Reports On Form 8-K

     (a)(1) Financial Statements

         The following financial statements are included in this report.

                  Balance Sheets as of April 30, 2001 and 2000

                  Statements of Income for the Years Ended April 30, 2001, 2000,
                  and 1999

                  Statements of Changes in Stockholders' Equity for the Years
                  Ended April 30, 2001, 2000, and 1999

                  Statements of Cash Flows for the Years ended April 30, 2001,
                  2000, and 1999

                  Notes to Financial Statements

     (a)(2) Financial Statement Schedules

                  Not applicable.

     (a)(3) Exhibits

                  The exhibits to this report are identified in the Exhibit
                  Index, which appears immediately after the signature page and
                  is incorporated in this Item 14 by reference.

(b)      Reports on Form 8-K

                  No reports on Form 8-K were filed by the Company during the
                  last quarter of the fiscal year covered by this report.


                                                                              17
<PAGE>


                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Greensboro, State of North Carolina, on July 26, 2001.

               MARKET AMERICA, INC.


               BY:  /s/ James H. Ridinger
               -----------------------------------
               James H. Ridinger
               President & Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.


/s/ James H. Ridinger               July 26, 2001
--------------------------------
James H. Ridinger
President, Chief Executive Officer & Director


/s/ Loren A. Ridinger               July 26, 2001
--------------------------------
Loren A. Ridinger
Senior Executive Vice President & Director


/s/ Martin Weissman                 July 26, 2001
--------------------------------
Martin Weissman
Executive Vice President & Director


/s/ Patrick G. Landry III           July 26,2001
--------------------------------
Patrick G. Landry III
Controller


                                                                              18
<PAGE>


                              MARKET AMERICA, INC.

                              EXHIBITS TO FORM 10-K

                                  EXHIBIT INDEX

         Exhibit
         Number                     Identification
         ------                     --------------


         2.1      Agreement and Plan of Merger dated as of October 1, 1993
                  between Atlantic Ventures, Inc. and Market America, Inc. and
                  Addendum (to same) dated October 1, 1993 (incorporated by
                  reference to Exhibits 2.1 and 2.2, respectively, to the
                  Company's Current Report on Form 8-K filed October 6, 1993,
                  Commission File No. 000-23250)

         3.1      Articles of Incorporation of the Company (incorporated by
                  reference to Exhibit 3.1 to the Company's Current Report on
                  Form 8-K filed with the Commission on November 3, 1993,
                  Commission File No. 000-23250)

         3.2      Articles of Amendment of the Company (incorporated by
                  reference to Exhibit 3.3 to the Company's Annual Report on
                  Form 10-K filed with the Commission on July 30, 1996,
                  Commission File No.
                  000-23250)

         3.3      By-Laws of the Company (incorporated by reference to Exhibit
                  3.4 to the Company's annual report on Form 10-K filed with the
                  Commission on July 30, 1996, Commission File No. 000-23250)

         4.1      Article 2 of the Articles of Incorporation of the Company
                  (incorporated by reference to Exhibit 3(i) to the Company's
                  Current Report on Form 8-K filed with the Commission on
                  November 3, 1993, Commission File No. 000-23250)

         4.2      Articles of Merger of Atlantis Ventures, Inc. and Market
                  America, Inc. (incorporated by reference to Exhibit 2.3 to the
                  Company's Current Report on Form 8-K filed with the Commission
                  on November 3, 1993, Commission File No. 000-23250)

         10.1     Lease between Miracle Marine, Inc. and Market America, Inc.
                  dated May 1, 1998 (incorporated by reference to Exhibit 10.1
                  to the Company's Current Report on Form 10-K with the
                  Commission on July 29, 1999, Commission File No. 000-23250)

         10.2     Vendor Agreement between Market America, Inc. and Purity
                  Technology Inc. (formerly Isotonix(r) Corporation) dated
                  October 25, 1993 (incorporated by reference to Exhibit 10.2 to
                  the Company's Annual Report on Form 10-K filed with the
                  Commission on August 13, 1998, Commission File No. 000-23250)

         10.3     Lease between Miracle Properties LLC and Market America, Inc.
                  dated May 1, 1998 (incorporated by reference to Exhibit 10.3
                  to the Company's Current Report on Form 10-K filed with the
                  Commission on July 29, 1999, Commission File No. 000-23250)


                                                                              19
<PAGE>


         10.4     Lease between Miracle Holdings LLC and Market America, Inc.
                  dated November 1, 1998 (incorporated by reference to Exhibit
                  10.4 to the Company's Current Report on Form 10-K filed with
                  the Commission on July 29, 1999, Commission File No.
                  000-23250)

         10.5     Right of First Refusal agreement between Market America, Inc.
                  and Miracle Holdings, LLC dated May 20, 1999 (incorporated by
                  reference to the Exhibit 10.5 to the Company's Current Report
                  on Form 10-K filed with the Commission on July 29, 1999,
                  Commission File No. 000-23250)

         10.6     Lease between Miracle Properties LLC and Market America, Inc.
                  dated February 1, 2000 (incorporated by reference to Exhibit
                  10.6 to the Company's Current Report on Form 10-K filed with
                  the Commission on July 27, 2000, Commission File No.
                  000-23250)


                                                                              20
<PAGE>



                              MARKET AMERICA, INC.


                              FINANCIAL STATEMENTS


                    Years Ended April 30, 2001, 2000 and 1999




                                                                              21
<PAGE>



MARKET AMERICA, INC.
--------------------------------------------------------------------------------


TABLE OF CONTENTS


                                                                        Page No.
                                                                        --------

INDEPENDENT AUDITORS' REPORT................................................   1

FINANCIAL STATEMENTS

    Balance Sheets..........................................................   2

    Statements of Income....................................................   3

    Statements of Changes in Stockholders' Equity...........................   4

    Statements of Cash Flows................................................   5

    Notes to Financial Statements...........................................   7


                                                                              22
<PAGE>


                          INDEPENDENT AUDITORS' REPORT



To the Board of Directors
Market America, Inc.
Greensboro, North Carolina


We have audited the accompanying balance sheets of Market America, Inc. as of
April 30, 2001 and 2000 and the related statements of income, changes in
stockholders' equity and cash flows for each of the years in the three-year
period ended April 30, 2001. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits 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 Market America, Inc. as of
April 30, 2001 and 2000, and the results of its operations and its cash flows
for each of the years in the three-year period ended April 30, 2001 in
conformity with accounting principles generally accepted in the United States of
America.


/s/ Dixon Odom PLLC




Greensboro, North Carolina
June 13, 2001





                                     ------
                                     Page 1
<PAGE>


MARKET AMERICA, INC.
BALANCE SHEETS
April 30, 2001 and 2000
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
ASSETS                                                                                2001          2000
                                                                                  -----------   -----------
<S>                                                                               <C>           <C>
CURRENT ASSETS
   Cash and cash equivalents (Note 1)                                             $60,511,367   $43,870,755
   Investment in available-for-sale securities (Notes 1 and 2)                      6,301,797     9,299,820
   Income tax refunds receivable (Note 8)                                           2,366,440            --
   Interest receivable                                                                550,827       106,723
   Advances to related parties (Note 6)                                                16,222         6,978
   Advances to officers, directors and employees (Note 6)                             236,467       425,958
   Inventories (Note 1)                                                             3,296,701     2,430,734
   Deferred tax assets (Note 8)                                                       372,500       404,000
   Other current assets                                                               134,190        44,558
                                                                                  -----------   -----------

                                                          TOTAL CURRENT ASSETS     73,786,511    56,589,526
                                                                                  -----------   -----------

PROPERTY AND EQUIPMENT (Notes 1 and 6)
   Yacht                                                                            3,610,000     3,610,000
   Furniture and equipment                                                          5,346,209     3,007,076
   Building                                                                         4,593,133     3,076,870
   Software                                                                           397,000       306,975
   Leasehold improvements                                                           1,253,536       348,410
                                                                                  -----------   -----------
                                                                                   15,199,878    10,349,331
   Less accumulated depreciation                                                    1,913,505     1,093,028
                                                                                  -----------   -----------
                                                                                   13,286,373     9,256,303
                                                                                  -----------   -----------

OTHER ASSETS
   Restricted cash (Notes 6 and 16)                                                 2,933,477     2,637,635
   Deposit on building (Note 14)                                                    1,100,000            --
   Other (Note 6)                                                                   1,326,729     1,282,000
                                                                                  -----------   -----------
                                                                                    5,360,206     3,919,635
                                                                                  -----------   -----------

                                                                                  $92,433,090   $69,765,464
                                                                                  ===========   ===========

<CAPTION>

LIABILITIES AND STOCKHOLDERS' EQUITY                                                  2001          2000
                                                                                  -----------   -----------
<S>                                                                               <C>           <C>
CURRENT LIABILITIES
   Current portion of long-term debt (Note 3)                                     $    80,478   $    73,949
   Accounts payable - trade                                                         1,861,504     2,095,449
   Commissions payable                                                              2,676,825     2,542,125
   Sales tax payable (Note 11)                                                      1,039,156       845,454
   Income taxes payable                                                             3,811,363     3,642,394
   Other accrued liabilities (Note 11)                                                526,462       837,481
   Unearned revenue (Note 4)                                                        4,289,569     2,694,246
                                                                                  -----------   -----------

                                                      TOTAL CURRENT LIABILITIES    14,285,357    12,731,098
                                                                                  -----------   -----------

LONG-TERM DEBT (Note 3)                                                             1,955,346       755,214
                                                                                  -----------   -----------

DEFERRED TAX LIABILITIES (Note 8)                                                      92,300            --
                                                                                  -----------   -----------

COMMITMENTS AND CONTINGENCIES (Notes 6, 7, 11 and 14)

STOCKHOLDERS' EQUITY
   Common stock, $.00001 par value; 800,000,000 shares
    authorized; 19,420,000 and 19,550,000 shares issued and
    outstanding at April 30, 2001 and 2000, respectively                                  194           195
   Additional paid-in capital                                                          39,801        39,801
   Retained earnings                                                               76,030,856    56,187,461
   Accumulated other comprehensive income
     Unrealized gains on available-for-sale
      securities, net of deferred tax                                                  29,236        51,695
                                                                                  -----------   -----------
                                                                                   76,100,087    56,279,152
                                                                                  -----------   -----------


                                                                                  $92,433,090   $69,765,464
                                                                                  ===========   ===========
</TABLE>


--------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.  Page 2
<PAGE>


MARKET AMERICA, INC.
STATEMENTS OF INCOME
Years Ended April 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                   2001             2000             1999
                                                              -------------    -------------    -------------
<S>                                                           <C>              <C>              <C>
Sales (Note 1)                                                $ 138,513,706    $ 135,965,263    $ 110,347,824
Cost of Sales                                                    36,405,439       33,913,335       28,071,236
                                                              -------------    -------------    -------------

                                               GROSS PROFIT     102,108,267      102,051,928       82,276,588
                                                              -------------    -------------    -------------
Selling Expenses
   Commissions                                                   59,300,200       60,580,701       49,692,793
                                                              -------------    -------------    -------------

General and Administrative Expenses
   Salaries                                                       8,522,042        6,910,803        5,085,053
   Consulting                                                       640,713          819,128          266,154
   Rents (Note 6 and 7)                                           1,193,551        1,380,351          995,994
   Depreciation and amortization                                    937,208          439,095          208,868
   Other expenses (Notes 5 and 9)                                 6,585,768        6,027,142        4,950,960
                                                              -------------    -------------    -------------
                                                                 17,879,282       15,576,519       11,507,029
                                                              -------------    -------------    -------------

                                     INCOME FROM OPERATIONS      24,928,785       25,894,708       21,076,766

Other Income (Expense)
   Interest income                                                3,366,261        2,277,909        1,763,306
   Interest expense                                                (173,397)        (157,100)         (24,337)
   Dividend income                                                   29,137           71,449             --
   Realized gain on available-for-sale securities                   686,260           50,423             --
   Loss on disposals of property and equipment                      (92,398)            --             (8,537)
   Miscellaneous income                                             581,493          708,657          778,452
                                                              -------------    -------------    -------------
                                                                  4,397,356        2,951,338        2,508,884
                                                              -------------    -------------    -------------

                                        INCOME BEFORE TAXES      29,326,141       28,846,046       23,585,650

Income Taxes (Note 8)                                             9,113,747       11,055,124        9,394,625
                                                              -------------    -------------    -------------

                                                 NET INCOME   $  20,212,394    $  17,790,922    $  14,191,025
                                                              =============    =============    =============

Basic earnings per common share (Note 1)                      $        1.04    $         .89    $         .71
                                                              =============    =============    =============

Weighted average number of common
 shares outstanding                                              19,428,356       19,936,301       19,950,000
                                                              =============    =============    =============
</TABLE>


--------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.  Page 3
<PAGE>


MARKET AMERICA, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years Ended April 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                                       Accumulated
                                                                                                           Other
                                                    Common Stock             Additional                   Compre-
                                             ---------------------------      Paid-In      Retained       hensive
                                                Shares         Amount         Capital      Earnings        Income          Total
                                             ------------   ------------   ------------  ------------   ------------   ------------
<S>                                           <C>          <C>            <C>           <C>            <C>            <C>
BALANCE, April 30, 1998                        19,950,000   $        199   $     39,801  $ 25,441,510   $       --     $ 25,481,510

  COMPREHENSIVE INCOME

     Net income                                      --             --             --      14,191,025           --       14,191,025
                                             ------------   ------------   ------------  ------------   ------------   ------------

        TOTAL COMPREHENSIVE INCOME                                                                                       14,191,025
                                                                                                                       ------------

BALANCE, April 30, 1999                        19,950,000            199         39,801    39,632,535           --       39,672,535

  Purchase and retirement of
   common stock                                  (400,000)            (4)          --      (1,235,996)          --       (1,236,000)

  COMPREHENSIVE INCOME

     Net income                                      --             --             --      17,790,922           --       17,790,922

     Other comprehensive income:
       Unrealized holding gains on
        securities arising during the year,
        net of deferred taxes of $54,000             --             --             --            --           82,118         82,118

       Reclassification adjustment for
        gains realized in net income, net
        of deferred taxes of $(20,000)               --             --             --            --          (30,423)       (30,423)
                                             ------------   ------------   ------------  ------------   ------------   ------------

           TOTAL COMPREHENSIVE INCOME                --                                                                  17,842,617
                                                                                                                       ------------

BALANCE, April 30, 2000                        19,550,000            195         39,801    56,187,461         51,695     56,279,152

  Purchase and retirement of
   common stock                                  (130,000)            (1)          --        (368,999)          --         (369,000)

  COMPREHENSIVE INCOME

    Net income                                       --             --             --      20,212,394           --       20,212,394

     Other comprehensive income:
       Unrealized holding gains on
        securities arising during the year,
        net of deferred taxes of $237,716            --             --             --            --          409,885        409,885

       Reclassification adjustment for gains
        realized in net income, net of
        deferred taxes of $(253,916)                 --             --             --            --         (432,344)      (432,344)
                                             ------------   ------------   ------------  ------------   ------------   ------------

           TOTAL COMPREHENSIVE INCOME                                                                                    20,189,935
                                                                                                                       ------------

BALANCE, April 30, 2001                        19,420,000   $        194   $     39,801  $ 76,030,856   $     29,236   $ 76,100,087
                                             ============   ============   ============  ============   ============   ============
</TABLE>


--------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.  Page 4
<PAGE>


MARKET AMERICA, INC.
STATEMENTS OF CASH FLOWS
Years Ended April 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                       2001           2000           1999
                                                                   ------------   ------------   ------------
<S>                                                                <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                                      $ 20,212,394   $ 17,790,922   $ 14,191,025
   Adjustments to reconcile net income to net cash
    provided by operating activities:
      Depreciation and amortization                                     937,208        439,095        208,868
      Deferred income taxes                                             140,000       (278,000)      (160,000)
      Gain on sale of available-for-sale securities                    (686,260)       (50,423)            --
      Loss on disposals of property and equipment                        92,398             --          8,537
      Increase in income tax refunds receivable                      (2,366,440)            --             --
      Increase in interest receivable                                  (444,104)       (31,723)       (58,345)
      Increase in inventories                                          (865,967)      (578,247)      (384,166)
      (Increase) decrease in other current assets                       (89,632)        36,926        (40,168)
      Decrease in other assets                                           29,957         48,856         51,816
      Increase (decrease) in accounts payable - trade                  (233,945)       987,816         41,359
      Increase (decrease) in commissions payable                        134,700        261,223       (474,874)
      Increase (decrease) in sales tax payable                          193,702         53,016        (10,348)
      Increase in income taxes payable                                  168,969      1,580,183        199,079
      Increase (decrease) in other accrued liabilities                 (311,019)       144,225        490,370
      Increase in unearned revenue                                    1,595,323        434,724      1,164,247
                                                                   ------------   ------------   ------------

                                             NET CASH PROVIDED BY
                                             OPERATING ACTIVITIES    18,507,284     20,838,593     15,227,400
                                                                   ------------   ------------   ------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of available-for-sale securities                        (35,951,121)   (44,350,932)            --
   Proceeds from sale or maturity of available-
    for-sale securities                                              39,596,745     35,187,230             --
   Purchase of property and equipment                                (5,111,803)    (8,804,088)      (346,315)
   Proceeds from sale of property and equipment                          68,000             --         25,092
   Deposit on building                                               (1,100,000)            --             --
   Decrease in short-term investments                                        --             --     12,415,465
   (Increase) decrease in:
      Advances to related parties                                        (9,244)       180,668       (125,201)
      Advances to officers, directors and employees                      98,932       (333,164)       (40,875)
      Restricted cash                                                  (295,842)    (2,637,635)        79,018
      Other assets                                                           --     (1,100,000)            --
                                                                   ------------   ------------   ------------

                                   NET CASH PROVIDED BY (USED IN)
                                             INVESTING ACTIVITIES    (2,704,333)   (21,857,921)    12,007,184
                                                                   ------------   ------------   ------------
</TABLE>


--------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.  Page 5
<PAGE>


MARKET AMERICA, INC.
STATEMENTS OF CASH FLOWS (Continued)
Years Ended April 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                        2001           2000           1999
                                                                   ------------   ------------   ------------
<S>                                                                <C>            <C>            <C>
CASH FLOWS FROM FINANCING ACTIVITIES
   Purchase and retirement of common stock                             (369,000)    (1,236,000)            --
   Payments on notes payable and long-term debt                         (74,176)      (120,000)      (186,791)
   Proceeds from long-term debt                                       1,280,837        819,163             --
                                                                   ------------   ------------   ------------

                                             NET CASH PROVIDED BY
                                   (USED IN) FINANCING ACTIVITIES       837,661       (536,837)      (186,791)
                                                                   ------------   ------------   ------------

                                  NET INCREASE (DECREASE) IN CASH
                                             AND CASH EQUIVALENTS  $ 16,640,612   $ (1,556,165)  $ 27,047,793

CASH AND CASH EQUIVALENTS
 AT BEGINNING OF YEAR                                                43,870,755     45,426,920     18,379,127
                                                                   ------------   ------------   ------------

                                        CASH AND CASH EQUIVALENTS
                                                  AND END OF YEAR  $ 60,511,367   $ 43,870,755   $ 45,426,920
                                                                   ============   ============   ============


SUPPLEMENTAL DISCLOSURE OF CASH FLOW
 INFORMATION
   Cash paid during the year for:

      Interest                                                     $    173,397   $    157,100   $     26,776
                                                                   ============   ============   ============

      Income taxes                                                 $ 11,171,218   $  9,752,941   $  9,355,546
                                                                   ============   ============   ============


SUPPLEMENTAL DISCLOSURES OF NONCASH
 INVESTING AND FINANCING ACTIVITIES

   Net change in unrealized holding gains
     on available-for-sale securities, net of deferred
     income taxes of $(16,200) in 2001 and $34,000
     in 2000                                                       $    (22,459)  $     51,695   $         --
                                                                   ============   ============   ============
</TABLE>


--------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.  Page 6
<PAGE>


MARKET AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS
April 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------

NOTE 1 o ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Market America, Inc. (the Company) is based in Greensboro, North Carolina. It
was incorporated on April 27, 1992. The Company distributes a variety of
consumer home-use products to the public through a network-marketing concept
which utilizes independent contractors to sell these products. The Company
supplies marketing information to these individuals in order to assist them in
their sales efforts. The principal market for the Company's products is
primarily throughout the United States.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents. Included in cash
equivalents as of April 30, 2001 and 2000 are money market accounts and
government agency obligations and commercial paper with maturities ranging from
30 to 90 days. The Company maintains its cash in bank deposit accounts which
generally exceed federally insured limits. The Company has not experienced any
losses in such accounts.

Available-For-Sale Securities

Available-for-sale securities consist primarily of readily marketable debt
securities with remaining maturities of greater than 90 days at time of
purchase. Available-for-sale securities are stated at fair value with unrealized
gains and losses, net of income taxes, included in accumulated other
comprehensive income in stockholders' equity. Realized gains and losses are
included in income and are determined on a specific identification basis.
Unrealized losses are charged against income when a decline in fair value is
determined to be other than temporary.

Inventories

Inventories are stated at the lower of cost (first-in, first-out method) or
market.

Property and Equipment

Property and equipment are recorded at cost and depreciated using the
straight-line method over the estimated useful lives of the assets as follows:

  Yacht                                                                10 years
  Furniture and equipment                                         5 to 10 years
  Software                                                              3 years
  Leasehold improvements                  Shorter of the lease term or 15 years
  Building                         Shorter of the ground lease term or 39 years


--------------------------------------------------------------------------------
                                                                          Page 7
<PAGE>


MARKET AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS
April 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------

NOTE 1 o ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Property and Equipment (Continued)

Maintenance, repairs, and minor renewals are charged to operations as incurred.
Additions, improvements, and major renewals are capitalized. The cost of assets
retired or sold, together with the related accumulated depreciation, is removed
from the accounts and any gain or loss on disposition is credited or charged to
operations. In accordance with the provisions of Statement of Financial
Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," the Company
periodically reviews long-lived assets when indicators of impairment exist, and
if the value of the assets is impaired, an impairment loss would be recognized.

Revenue Recognition

The Company recognizes sales revenues at the time products are shipped. Sales
revenues are collected at or prior to the time of shipment.

Income Taxes

Income taxes have been provided using the liability method in accordance with
SFAS No. 109, "Accounting for Income Taxes."

Earnings Per Share

SFAS No. 128, "Earnings Per Share" specifies the computation, presentation, and
disclosure requirements for earnings per share ("EPS"). Basic EPS excludes all
dilution and has been computed using the weighted average number of common
shares outstanding during the periods. Diluted EPS would reflect the potential
dilution that would occur if securities or other contracts to issue common stock
were exercised or converted into common stock. The Company has no dilutive
potential common shares.

Comprehensive Income

During the year ended April 30, 1999, the Company adopted SFAS No. 130,
"Reporting Comprehensive Income," which requires the Company to display
comprehensive income and its components as part of the Company's full set of
financial statements. Comprehensive income is comprised of net income and other
comprehensive income. Other comprehensive income includes certain changes in
stockholders' equity that are excluded from net income, such as translation
adjustments, unrealized holding gains and losses on available-for-sale
securities, and certain derivative instruments.


--------------------------------------------------------------------------------
                                                                          Page 8
<PAGE>


MARKET AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS
April 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------


NOTE 1 o ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.


Recently Issued Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This Statement establishes accounting and
reporting standards for derivative instruments and hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities on the balance sheet at their fair values. This Statement also
specifies the accounting for changes in fair value depending upon the intended
use of the derivative. The Statement, as amended by SFAS No. 137, is effective
for fiscal years beginning after June 15, 2000. The adoption of SFAS No. 133 on
May 1, 2001 did not have a significant effect on the Company's financial
statements.

Reclassifications

Certain reclassifications have been made to prior year amounts to conform with
the 2001 financial statement presentation. Reclassifications have no effect on
previously reported net income.


NOTE 2 o INVESTMENT IN AVAILABLE-FOR-SALE SECURITIES

Investments in available-for-sale securities consists of the following:

<TABLE>
<CAPTION>
                                                          2001                                        2000
                                        ----------------------------------------    ----------------------------------------
                                                          Gross          Fair                         Gross          Fair
                                                       Unrealized       Market                     Unrealized       Market
                                           Cost           Gains          Value         Cost           Gains          Value
                                        -----------    -----------   -----------    -----------    -----------   -----------
<S>                                     <C>            <C>           <C>            <C>            <C>           <C>
     Governmental agency obligations
      maturing through August 2001      $ 1,881,108    $        --   $ 1,881,108    $ 2,951,344    $        --   $ 2,951,344

     Commercial paper, maturing
      through June 2001                   4,373,653         47,036     4,420,689      6,262,781         85,695     6,348,476
                                        -----------    -----------   -----------    -----------    -----------   -----------

                                        $ 6,254,761    $    47,036   $ 6,301,797    $ 9,214,125    $    85,695   $ 9,299,820
                                        ===========    ===========   ===========    ===========    ===========   ===========
</TABLE>


--------------------------------------------------------------------------------
                                                                          Page 9
<PAGE>


MARKET AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS
April 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------


NOTE 2 o INVESTMENT IN AVAILABLE-FOR-SALE SECURITIES (CONTINUED)

Gross realized gains and losses for the year ended April 30, 2001 were $686,260
and $0, respectively. Gross realized gains and losses for the year ended April
30, 2000 were $2,115,146 and $2,064,723, respectively.


NOTE 3 o LONG-TERM DEBT

<TABLE>
<CAPTION>
                                                                                            2001                2000
                                                                                       --------------     ---------------
<S>                                                                                    <C>                <C>
   Obligation arising in settlement of litigation as approved by the
    U.S. Bankruptcy Court for the District of New Jersey, payable
    in monthly installments of $10,000.                                                $           --     $        10,000

   Note payable in monthly installments of $19,750, including
    interest at 7.625%, with remaining balance due in
   June 2005.  Collateralized by deed of trust.                                             2,035,824             819,163
                                                                                       --------------     ---------------
                                                                                            2,035,824             829,163
   Less current portion due within one year                                                    80,478              73,949
                                                                                       --------------     ---------------

                                                                                       $    1,955,346     $       755,214
                                                                                       ==============     ===============

Future maturities of long-term debt at April 30, 2001 are due as follows:

                2002                                                                   $       80,478
                2003                                                                           89,085
                2004                                                                           95,841
                2005                                                                          103,899
                2006                                                                        1,666,521
                                                                                       --------------

                                                                                       $    2,035,824
                                                                                       ==============
</TABLE>


NOTE 4 o UNEARNED REVENUE

The Company has unearned revenue from two sources. The Company sponsors several
conventions per year for its distributors. A portion of the unearned revenue
represents cash collected from advance ticket sales for these conventions. The
remainder of the unearned revenue represents deposits paid to the Company by
distributors for future purchases of products.


--------------------------------------------------------------------------------
                                                                         Page 10
<PAGE>


MARKET AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS
April 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------

NOTE 5 o EMPLOYEE BENEFITS

During the year ended April 30, 1999, the Company adopted a 401(k) savings plan
to provide retirement benefits for its employees. As allowed under section
401(k) of the Internal Revenue Code, the plan provides tax-deferred salary
deductions for eligible employees. Employees may contribute from 1% to 15% of
their annual compensation to the plan, limited to a maximum annual amount as set
periodically by the Internal Revenue Service. The Company matches employee
contributions up to specified limits. In addition, the plan provides for
discretionary contributions as determined by the Board of Directors. Such
discretionary contributions to the plan are allocated among eligible
participants in the proportion of their salaries to the total salaries of all
participants. Company contributions to the plan totaled $28,208, $30,902 and
$15,524 during the years ended April 30, 2001, 2000 and 1999, respectively. No
discretionary contributions were made in 2001, 2000 or 1999.


NOTE 6 o RELATED PARTY TRANSACTIONS

During the year ended April 30, 1998, the Company entered into agreements with
two companies owned by Mr. and Mrs. James H. Ridinger, officers/stockholders of
the Company, to lease real estate in Miami, Florida and for the lease of a yacht
on a per event basis. Both lease agreements were cancelled in fiscal year 2000.
In December 1999, the Company entered into an agreement with a company owned by
Mr. and Mrs. James H. Ridinger to lease different real estate in Miami, Florida
for direct sales training and education, as well as other corporate functions.
The monthly rental is $60,000 and the lease has a 20-year term and a renewal
option for an additional 20-year term. The Company has paid a $600,000 damage
deposit as part of this lease, which is included in other assets. The amount of
rent expense under these agreements aggregated to $720,000, $683,600 and
$423,600 during the years ended April 30, 2001, 2000, and 1999, respectively.
These related entities owed the Company $16,222 and $6,978 at April 30, 2001 and
2000, respectively.

During the year ended April 30, 1999, the Company entered into an agreement with
a company owned by Mr. and Mrs. James H. Ridinger, officers/stockholders of the
Company, for a 33-year net ground lease for the site on which the Company has
constructed its new headquarters and warehouse facility in Greensboro, North
Carolina at a cost of $4,593,133. Required rental payments are $17,000 per month
since October 2000, and $10,666 per month prior to that date. The amount of rent
expense under this agreement was $172,330, $127,988 and $64,000 for the years
ended April 30, 2001, 2000 and 1999, respectively. In June 1999, the Company
paid $500,000 to the related company for a Right of First Refusal on this site
which provides the Company with the opportunity to purchase the land, should it
be offered for sale, before the land is offered for sale to other parties. The
amount paid is included in other assets and is being amortized on a
straight-line basis over the lease term. The unamortized balance will be applied
to the purchase price of the land in the event the Company buys it. On June 28,
1999, the Company became guarantor of a $1.6 million bank loan to the related
party used for the purchase of the land. This loan and the Company's


--------------------------------------------------------------------------------
                                                                         Page 11
<PAGE>

MARKET AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS
April 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------


NOTE 6 o RELATED PARTY TRANSACTIONS (CONTINUED)

term loan are cross-collateralized by the land being leased from the related
company and by the building improvement constructed thereon by the Company. The
guaranteed loan is repayable over a five-year period following completion of the
building construction and had an outstanding balance of $1,551,167 at April 30,
2001.

In connection with the lease of real estate in Miami, Florida, the Company has
guaranteed a $5.3 million five-year loan to the related company for the purchase
of the real estate being leased. The outstanding balance of the guaranteed loan
was $5,248,075 at April 30, 2001. The Company has restricted cash of $2,703,152
and $2,637,635 at April 30, 2001 and 2000, respectively, as collateral under the
loan guarantee.

Advances to officers, directors and employees include amounts due from officers
and directors of $317,377 and $383,952 at April 30, 2001 and 2000, respectively.
Other assets at April 30, 2001 include $90,559, which is the noncurrent portion
of advances to officers and directors.

Substantially all of the Company's leasehold improvements are to properties
leased from related companies.

NOTE 7 o OPERATING LEASE COMMITMENTS

The Company occupies leased premises in Greensboro, North Carolina and Miami,
Florida. The Miami lease is with a related party (see Note 6) beginning December
1999 and is for twenty years. The Company has a ground lease with a related
party (see Note 6) for a 33-year period, which commenced in November 1998. The
Company also leases automobiles under long-term operating leases.


--------------------------------------------------------------------------------
                                                                         Page 12
<PAGE>


MARKET AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS
April 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------

NOTE 7 o OPERATING LEASE COMMITMENTS (CONTINUED)

Future minimum rental payments required under operating leases that have an
initial or remaining non-cancelable lease term in excess of one year are as
follows as of April 30, 2001:

<TABLE>
<CAPTION>
                                                           Related           Unrelated
                                                           Parties            Parties             Total
                                                      ---------------     --------------     --------------
<S>                                                   <C>                 <C>                <C>
                2002                                  $       924,000     $       76,445     $    1,000,445
                2003                                          924,000             24,435            948,435
                2004                                          924,000             11,342            935,342
                2005                                          924,000                 --            924,000
                2006                                          924,000                 --            924,000
             Thereafter                                    14,982,000                 --         14,982,000
                                                      ---------------     --------------     --------------

       Total future minimum lease payments            $    19,602,000     $      112,222     $   19,714,222
                                                      ===============     ==============     ==============
</TABLE>


NOTE 8 o INCOME TAXES

Income tax expense is comprised of the following:

<TABLE>
<CAPTION>
                                                            2001               2000               1999
                                                       --------------     --------------     --------------
<S>                                                   <C>                 <C>                <C>
   Current tax provision (benefit)
      Federal                                         $    11,098,241     $    9,568,134     $    7,713,716
      State                                                (2,124,494)         1,764,990          1,840,909
                                                      ---------------     --------------     --------------
                                                            8,973,747         11,333,124          9,554,625
                                                      ---------------     --------------     --------------
   Deferred tax provision (benefit)
      Federal                                                  89,175           (225,875)          (130,000)
      State                                                    50,825            (52,125)           (30,000)
                                                      ---------------     --------------     --------------
                                                              140,000           (278,000)          (160,000)
                                                      ---------------     --------------     --------------

   Total income tax provision                         $     9,113,747     $   11,055,124     $    9,394,625
                                                      ===============     ==============     ==============
</TABLE>


--------------------------------------------------------------------------------
                                                                         Page 13
<PAGE>

MARKET AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS
April 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------

NOTE 8 o INCOME TAXES (CONTINUED)

A reconciliation of the statutory U.S. federal income tax rate and the effective
income tax rate is as follows:

<TABLE>
<CAPTION>
                                               2001               2000               1999
                                            ---------          ---------           --------
<S>                                              <C>                <C>                <C>
     Statutory U.S. federal rate                 35.0%              35.0%              35.0%
     State income taxes and (refunds),
      net of federal (benefit) expense           (4.6)               4.0                5.0
     Effect of non-deductible expenses             .6                 .9                 .2
     Other, net                                    .1               (1.6)               (.4)
                                            ---------          ---------           --------

                                                 31.1%              38.3%              39.8%
                                            =========          =========           ========
</TABLE>


During the year ended April 30, 2001, the Company amended prior years income tax
returns for several states due to a change in its multi-state income allocation
methodology claiming state tax refunds of $3,477,237. Because of the refunds,
the Company's effective income tax rate for the year ended April 30, 2001 was
reduced from 38.8% to 31.1%.

The tax effects of temporary differences that give rise to the deferred tax
assets and liabilities as of April 30, 2001 and 2000 are as follows:

                                                  2001                2000
                                             --------------     ---------------

   Deferred tax assets
      Accrued liabilities                    $      390,300     $       438,000

   Deferred tax liabilities
      Property and equipment                        (92,300)                 --
      Unrealized gains on securities                (17,800)            (34,000)
                                             --------------     ---------------

   Net deferred tax assets                   $      280,200     $       404,000
                                             ==============     ===============


--------------------------------------------------------------------------------
                                                                         Page 14
<PAGE>


MARKET AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS
April 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------

NOTE 9 o OTHER GENERAL AND ADMINISTRATIVE EXPENSES

For the years ended April 30, 2001, 2000 and 1999, Other General and
Administrative Expenses included the following items:

<TABLE>
<CAPTION>
                                           2001               2000               1999
                                     ---------------     --------------     --------------
<S>                                  <C>                 <C>                <C>
   Repairs and maintenance           $       815,362     $      540,411     $      149,698
   Legal and professional fees               864,509          1,241,117          1,305,221
   Insurance                                 755,513            844,534            626,108
   Other taxes and licenses                  763,772            624,634            458,155
   Utilities                                 331,550            365,503            327,037
   Other                                   3,055,062          2,410,943          2,084,741
                                     ---------------     --------------     --------------

                                     $     6,585,768     $    6,027,142     $    4,950,960
                                     ===============     ==============     ==============
</TABLE>


NOTE 10 o SEGMENT INFORMATION

During the year ended April 30, 1999, the Company adopted SFAS No. 131,
"Disclosures About Segments of an Enterprise and Related Information," which
introduced a new model for segment reporting. The Company sells a variety of
consumer home use products that have similar economic characteristics, customers
and distribution methods. The Company, therefore, reports only one segment. The
Company's geographic information is as follows:

<TABLE>
<CAPTION>
                                                          United
                                                          States                 Other
                                                    -----------------     ------------------
<S>                                                 <C>                   <C>
   April 30, 2001
      Product revenue from external customers       $     127,726,468     $       10,787,238
      Property and equipment                               13,286,373                     --

   April 30, 2000
      Product revenue from external customers             128,301,572              7,663,691
      Property and equipment                                9,256,303                     --

   April 30, 1999
      Product revenue from external customers             106,290,160              4,057,664
      Property and equipment                                  891,310                     --
</TABLE>


--------------------------------------------------------------------------------
                                                                         Page 15
<PAGE>


MARKET AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS
April 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------


NOTE 11 o CONTINGENCIES

The Company is engaged in continuing negotiations and litigation with two states
regarding sales tax liabilities for prior years. Sales tax payable at April 30,
2001 and 2000 includes a provision of approximately $700,000 relating to these
matters. Although the outcome of these matters is not presently determinable,
management believes that the outcome will not have a material adverse effect on
the Company's financial position, results of operations or cash flows.

On April 27, 1999, judgment was entered in the case of Market America vs. Rossi,
et al, by the United States District Court for the Middle District of North
Carolina. This case involved termination of a group of distributors for
violation of the Company's former Independent Distributor Agreement. During the
litigation of that case, the Company revised its Independent Distributor
Agreement. The revised Independent Distributor Agreement has been upheld in the
North Carolina courts since that revision and the North Carolina Court of
Appeals has specifically endorsed the Company's ability to enter into covenants
not to compete with its distributors. As a result, the Rossi case has no
continuing impact on the Company or its distributors, all of whom are subject to
the revised Independent Distributors Agreement. It is, however, important to
note that many of the Defendants in the Rossi case were earning substantial
commissions from the Company at the time of their terminations. The Courts held
that the Defendants were only entitled to receive commissions through the
Company's annual renewal date of all Distributor Agreements which amounted to a
total of less than $170,000 for all Defendants. Moreover, the Defendant's
actions, which led to their terminations, ultimately resulted in their loss of
commissions far in excess of the total award in the cases which amounted to
$787,487, including interest. The Company has satisfied all monetary awards.

The Company is involved in litigation arising in the ordinary course of
business. Although litigation is subject to inherent uncertainties, the
Company's legal counsel and management currently believe that the ultimate
outcome of these matters, individually and in the aggregate, will not have a
material adverse effect on the Company's financial position, results of
operations or cash flows.


NOTE 12 o FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts reflected in the balance sheets for cash and cash
equivalents, investment in available-for-sale securities, advances, restricted
cash and long-term debt approximate their respective fair values at April 30,
2001 and 2000. Fair values are based on quoted market prices or current interest
rates available for those or similar instruments.


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                                                                         Page 16
<PAGE>


MARKET AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS
April 30, 2001, 2000 and 1999
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NOTE 13 o MAJOR PRODUCT AND SUPPLIER

The Company's number one selling product is OPC-3, a powerful antioxidant. This
product accounted for 32.2%, 31.2% and 30.6% of the Company's total sales during
the years ended April 30, 2001, 2000 and 1999, respectively.

One of the Company's suppliers, Purity Technologies, Inc., a manufacturer of
vitamin and nutritional products, supplies the Company with vitamin compounds
and nutritional supplements, including OPC-3. Sales of products purchased from
this supplier accounted for 49.8%, 46.0% and 44.0% of the Company's total sales
during the years ended April 30, 2001, 2000 and 1999, respectively. Although
there are other suppliers of these products, a change in suppliers could cause a
delay in shipments to customers, which could ultimately affect operating
results.


NOTE 14 o SUBSEQUENT EVENTS

Subsequent to April 30, 2001, the Company purchased a building in Miami,
Florida, from an unrelated party for $3,560,000. The Company had made an earnest
money deposit of $1,100,000 on this building prior to April 30, 2001 and paid
the remaining $2,460,000 in cash in June 2001. The Company will lease the land
on which the building resides from a company owned by Mr. and Mrs. James H.
Ridinger, officers/stockholders of the Company, at an amount and period yet to
be determined. The building will be depreciated over the shorter of its
estimated useful life or the term of the ground lease.


NOTE 15 o SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

<TABLE>
<CAPTION>
                                           1st                2nd                 3rd                 4th
                                         Quarter            Quarter             Quarter             Quarter
                                           2001               2001                2001                2001
                                    ---------------     ---------------     ---------------    ----------------
<S>                                 <C>                 <C>                 <C>                <C>
Year ended April 30, 2001
   Net sales                        $    33,536,881     $    35,314,883     $    32,564,585    $     37,097,357
   Gross profit                          24,551,082          26,181,022          24,114,108          27,270,237
   Net income                             3,557,189           5,425,082           4,625,334           6,604,789
   Net income per common share      $           .18     $           .28     $           .24    $            .34
</TABLE>


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                                                                         Page 17
<PAGE>

MARKET AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS
April 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------


NOTE 15 o SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (CONTINUED)

<TABLE>
<CAPTION>
                                                     1st                2nd                 3rd                 4th
                                                   Quarter            Quarter             Quarter             Quarter
                                                    2000               2000                2000                2000
                                              ---------------     ---------------     ---------------    ----------------
<S>                                           <C>                 <C>                 <C>                <C>
Year ended April 30, 2000
   Net sales                                  $    30,828,703     $    34,794,209     $    32,392,382    $     37,949,969
   Gross profit                                    22,819,349          26,169,972          24,407,977          28,654,630
   Net income                                       3,555,107           5,539,616           3,598,988           5,097,211
   Net income per common share                $           .18     $          .28      $          .18     $           .26
</TABLE>


During the fourth quarter of 2001, the Company recorded state income tax refunds
due to a change in its multi-state income allocation methodology. These refunds,
net of federal taxes, increased net income in the fourth quarter of 2001 by
$1,538,186 ($.08 per common share).


NOTE 16 o RESTRICTED CASH

In addition to the restricted cash disclosed in Note 6, the Company also has
$230,325 of cash restricted at April 30, 2001 under an agreement with a third
party check processor.


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