SECURITIES AND EXCHANGE COMMISSION
                       WASHINGTON, D.C.  20549

                     Admendment to  FORM 10-KSB

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

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

     For the fiscal year ended June 30, 2000 or

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

     For the transition period from ___________  to __________

                    Commission file number 0-11232
                                          ----------

                      VEREX LABORATORIES, INC.
-----------------------------------------------------------------------
        (Exact name of Registrant as specified in its charter)

           Colorado                                     84-0850695
         -------------                              ----------------
(State or other jurisdiction                       (I.R.S. Employer
of incorporation or organization)                 Identification No.)


Building D, Suite 100,
14 Inverness Dr. East, Englewood, CO                    80112
---------------------------------------------------------------------------
(Address of principal executive offices)              (Zip Code)

Registrant's telephone number, including area code:   (303) 799-4499



                             1<PAGE>
      Securities registered pursuant to Section 12(b) of the Act:

      Title of each class                   Name of each exchange on
                                                which registered

            None                                     None
      -------------------                    ---------------------



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

                 Common Stock - No Par Value
                 -----------------------------
                       (Title of class)


Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports)
and (2) has been subject to such filing requirements for the past 90
days.   Yes _______   No ___X___

     The aggregate market value of the voting stock held by
non-affiliates of the Registrant at June 30, 2000 was approximately
$392,737.

     The number of shares outstanding of the Registrant's no par
value common stock as of June 30, 2000, was 2,327,359 shares.














                              2<PAGE>


                              PART I

ITEM 1.  BUSINESS
         --------
Background
----------

The Company was organized under the laws of the State of
Colorado on September 29, 1980.  The objective of the Company
is to acquire, develop and market pharmaceutical and health care
products.  The Company obtains formulas and patents when
available, selectstrademarks, designs product packages and
promotes and markets, through licensing agreements,
pharmaceutical and health care products.  During fiscal 1998 the
Company had one subsidiary, Bear Laboratories, Inc., incorporated
in April 1991 for the purpose of exploiting VERIN, a drug
formulation developed by the Company. Bear Laboratories, Inc.,
was disbanded on or about December 1999.

     On or about March 31, 2000, PR Pharmaceuticals, Inc.
("PRP"), a privately held pharmaceuticals company in drug
delivery systems, acquired 52.95% of the outstanding common
stock of the Company from certain of the shareholders and
directors of the Company.  The selling shareholders received one
share of PRP common stock for each 15 shares of Verex common
stock.   In the purchase agreement, PRP agreed to make a tender
offer to purchase the remaining shares of outstanding Verex
common stock on a similar exchange basis or, at PRP's option, for
a cash purchase price.  This agreement was based on the condition
that audited financials of the Company would be issued on or
before November 30, 2000, which condition was not met.  The
Company has received no notice of PRP's intentions with respect
to the tender offer."

Credit Facility
---------------

On March 20, 2000 the Company obtained a $1 million credit
facility with PRP, Inc. Without the line, the Company may have
been unable to continue to operate for any significant period. The
credit facility was also negotiated to provide payment of accrued
management compensation. At June 30, 2000 approximately

                              3<PAGE>


$280,000 had been drawn on the credit facility to pay for
operations and the accrued management compensation. The
unpaid amount of such accrued compensation approximated
$629,000 at June 30, 2000. Therefore, approximately $91,000 is
available for uses other than accrued management compensation,
subject to conditions of the loan agreement. Considering other
commitments such as rent, aged payables, etc., there is no
assurance that funds will be available to support on-going
operations or research and development. See Managements
Discussion - Liquidity & Capital Resources, below.

Assignment of Certain Future Revenues - Birklea, Ltd.
-----------------------------------------------------
    Effective November 30, 1993, the Company entered into a
Credit Agreement with Birklea, Ltd., a major shareholder of the
Company, whereby Birklea, Ltd. agreed to use its best efforts to
provide up to $10,000,000 in financing to the Company.  The note
was secured by the Company's right, title and interest in patent
applications, patents, tradenames, know-how and trade secrets
relating to existing and future drug formulations relating to the
drug commonly known as AZT.  In March 1997, the balance
(principal and interest) on this note was $2,185,984, when the
Company and Birklea agreed that the debt was forgiven in
consideration for the assignment of 25% of all future sources of
revenue from the Company's AZTEC formulation, and 5% of all
future revenues from other specified Company drug formulations
up to  $4,650,000 and $2,325,000 respectively.  In addition, the
Company agreed to assign to Birklea, Ltd. the AZTEC formulation
in the event it has not licensed it prior to December 31, 1998. This
assignment was not effectuated and on or about, January 27, 2000,
the Company amended this royalty agreement with Birklea, Ltd.,
to change the AZTEC royalty to equal 7.5% of license royalty or
on gross profit received by the Company on sales or licensing from
the Aztec product only and to change all other future royalties to
equal 3% of license royalty or on gross profit received by the
Company on other specified drug formulations.  The Company
further modified the aggregate royalty payment to equal
$2,325,000 for all products including AZTEC formulations.

Assignment of Certain Future Revenues - Dr. James M. Dunn
---------------------------------------------------------

                              4<PAGE>


    In March, 1997 the Company's president forfeited his right to
receive $2,605,204 in accrued salary and other benefits in
consideration for the Company's assignment to him of 25% of all
future sources of revenue from its AZTEC formulation and 5% of
the income derived from other specified Company drug
formulations up to $2,605,204. The Company amended this royalty
agreement with Dr. Dunn and changed the AZTEC royalty to equal
7.5% of license royalty or on gross profit received by the Company
on sales or licensing from the Aztec product only and to change all
other future royalties to equal 3% of license royalty or on gross
profit received by the Company on other specified drug
formulations.  The Company further modified the aggregate
royalty payment to equal $2,517,339 for all products including
AZTEC formulations.

Licensing Activities
-------------------------

     The Company has licensing agreements with several
foreign-based pharmaceutical companies covering the Company's
patented constant-release rate formulation of AZTEC,
VEREXAMIL, as well as its proprietary once daily delivery system
for diltiazem, drugs used in the treatment of heart disease and
hypertension.  These agreements provide the licensee the exclusive
right to market the formulations in a certain geographical area for
a specified period of time subject to the licensee maintaining high
quality of material and workmanship for the product and require
an initial licensing fee payable to the Company and a royalty to the
Company based on product sales or other arrangements. There is
no assurance that these agreements will produce any significant
revenue in the future.


The Company has not licensed its technology relating to other
sustained release prescription drugs.  Most licenses generally
provide for the Licensee to obtain registration for the products.

The following table summarizes licensing agreements in existence
at June 30, 2000:




                              5<PAGE>


Licensee and
Year of License                 Territory                Drug
---------------                -----------              -------

Sanofi GmbH                      W. Germany            Verapamil
(Formerly Labaz GmbH)
(1985)

Laevosan                          Austria              Verapamil
(1987 & 1988)
Approved 8/93

Trimel Life Sciences              Canada               Verapamil
(Formerly Galen
 Pharma, Inc.)
(1988)

Trima Pharmaceutical              Israel               Verapamil,
(1993)                                                 Diltiazem

Trimel Life Sciences            Canada and             Nifedipine,
(Formerly Galen                United States           Naproxen,
 Pharma, Inc.)                                         Indomethacin
(1988)

Trimel Pharmaceutical             Israel               Verapamil,
(1992)                                                 Diltiazem

Productos BiotyLDA               Portugal              Verapamil
(1988)

ECR Pharmaceuticals                USA
Conquer (2000) (This license was subsequently terminated in
December 2000.


     Royalties on the foregoing licensing agreements range from 5%
to 7.5% of invoice sales and there are no minimum sales
requirements pursuant to the agreements.  The Company is not
entitled to any royalties under the agreement with Sanofi. The
company has been notified that Laevosan does not intend to sell
Verapamil in Austria, and the Company intends to determine if
other distributors may be interested in selling this product. The

                              6<PAGE>


Company received $ 0 and $ 0 revenues from licensing fees and
royalties during the fiscal years ending June 30, 1999 and 2000,
respectively. The Company does not foresee receiving any
significant income from those licensing agreements.

     The Company intends to continue to pursue licensing
arrangements through the services of PR Pharmaceuticals with
respect to marketing and/or developing certain selected drug
formulations and compounds.


AZT Formulation
---------------

     The Company has developed a unique controlled release rate
formulation of zidovudine (AZT), the primary drug used in the
treatment of persons diagnosed as having Acquired
Immunodeficiency Syndrome (AIDS) or being HIV positive. The
trademark name AZTEC has been registered with the United
States Patent and Trademark Offices and a patent covering this
formulation of AZT was issued in the United States on Oct. 28,
1997. However, the use of the compound AZT for the treatment of
HIV is protected by patents held by Glaxo Wellcome plc, which do
not expire in the U.S. until 2005. The Company's formulation has
been the subject of a clinical study at the University of Colorado
Health Science Center which concluded that the AZTEC
formulation had fewer adverse side effects, produces longer
duration blood level curves, and higher intercellular
phosphorylated AZT levels than the currently used AZT drug
(Retrovir).  Further, AZTEC is administered twice daily.  During
the fiscal years ended June 30, 1995, 1996, 1997 and 1998 clinical
trials of AZTEC were conducted at 15 sites in the United States at
a cost of approximately $2,400,000. Clinical work and product
registration activities were halted by the Company because of lack
of resources. Management is currently assessing possible options
with respect to continuing with this technology.


Future drug delivery system
---------------------------

      The Company has been in early stage development of a

                               7<PAGE>


sustained drug delivery system that has the potential for oral
administration of drugs of macromolecule size, particularly
proteins, polypeptides and polysaccharides, which have low or no
bioavailability when given orally. Subsequent to the filing date of
this document, a patent application has been filed with respect to
this technology. PR Pharmaceuticals, Inc. and Verex have agreed
that PR Pharmaceuticals, Inc. will pay for certain intellectual
property and research costs of this technology, and that the two
companies will share equitably in any proceeds from the
development of this technology.


Veraderm
--------

This is a wound dressing, made from a proprietary formulation of
polymers that, when applied superficially to an open wound, can
enhance healing while diminishing the chances of infection.  Early
testing has shown that it might be beneficial in the treatment of
decubitus ulcers.  A trademark has been received. Licensing
opportunities are currently being explored, along with the
associated regulatory requirements and costs.


Psorex
------

     The Company has discovered a treatment for alleviating the
symptoms of psoriasis, which it believes is safe and effective with
no side effects.  Psoriasis is a chronic inflammatory skin disease,
characterized by skin scaling and ulcerations, which affects about
2% of the population.  The formulation is a tablet, Psorex, which
contains safe ingredients. Further development and/or licensing
opportunities are currently being explored, along with the
associated regulatory requirements and costs.

Government Regulation
---------------------

     Non-prescription drug products are regulated by various
federal, state, municipal and foreign regulatory agencies with


                              8<PAGE>

respect to safety, effectiveness, advertising and labeling.  The
principal regulatory agency in the United States is the Food and
Drug Administration ("FDA") which requires evidence of safety
and efficacy of a drug formulation before it can be marketed.

     Non-prescription or over-the-counter ("OTC") drugs are
generally recognized by the FDA as safe and effective if they meet
certain conditions set forth in FDA regulations.  These regulations
relate to such items as ingredient quantity and quality,
manufacturing practices, side effects, labeling, container
components, dosage instructions and warnings for misuse.
Independent advisory panels of qualified experts are appointed
under FDA regulations to review the safety and efficacy of certain
OTC drugs.


Patents and Trademarks
----------------------

     The Company has developed proprietary technologies which
relate to the development of its drug formulations and business.
These technologies relate primarily to the constant release
characteristics of such formulations.  The Company holds several
patents.

     The Company has obtained several U.S. Trademarks, including
one for its name and others for capsules and formulations which
have been utilized in products and formulations relating to
constant release rate delivery systems.

Competition and Markets
-----------------------

     The Company's drug formulations face severe competition from
many companies which have far greater financial and technical
resources as well as an established reputation.

     The Company has sought licensing arrangement for its
formulations rather than engage in significant marketing efforts of
its own.

Employees
---------
                               9<PAGE>


     The Company has one full-time employee, who is also a
director of the Company.


ITEM 2.  PROPERTIES
         ----------

     The Company leases office and research facilities at 14
Inverness Drive East, Building D, Suite 100, Englewood,
Colorado, consisting of 6,486 square feet of space at $4,459 per
month pursuant to a lease through March 31, 2002. The Company
sublets a portion of the premises at $2,106 per month to another
unaffiliated company.


ITEM 3.  LEGAL PROCEEDINGS
         -----------------

     No legal proceedings are pending.



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


    There were no following matters were submitted to the
Company's shareholders for a vote during the Company's fiscal
fourth quarter:




                                     PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON
         STOCK AND RELATED SECURITY HOLDER MATTERS
         -----------------------------------------

     The Company's common stock is traded over-the-counter and


                              10<PAGE>

its quotations are carried in the Electronic Bulletin Board of the
National Association of Securities Dealers, Inc.

     The following table sets forth the range of high and low bid
quotations for the Company's common stock for the periods
indicated from sources the Company deems reliable, however, no
review of the daily Pink Sheets for the periods indicated has been
undertaken by the Company.
----------------------------------------------------------------------
                                            High               Low
Fourth Qtr.
(Ended June 30, 2000)                       $.56               $.35
Third Qtr.
(Ended March 31, 2000)                      $.56               $.42
Second Qtr.
(Ended December 31,1999)                    $.66               $.35
First Qtr.
(Ended September 30,1999)                   $.44               $.35
Fourth Qtr.
(Ended June 30, 1999)                       $.50               $.35
Third Qtr.
(Ended March 31, 1999)                      $.63               $.19
Second Qtr.
(Ended December 31, 1998)                  $1.38               $.41
First Qtr.
(Ended September 30, 1998)                 $1.31               $.72
Fourth Qtr.
(Ended June 30, 1998)                      $1.43               $.68
Third Qtr.
(Ended March 31, 1998)                     $1.00               $.70
Second Qtr.
(Ended December 31, 1997)                  $2.00               $.75
First Qtr.
(Ended September 30, 1997)                 $1.17               $.77
Fourth Qtr.
(Ended June 30, 1997)                      $1.25              $0.75
Third Qtr.
(Ended March 31, 1997)                     $2.00              $0.87
Second Qtr.
(Ended December 31, 1996)                  $2.37              $1.44
First Qtr.
(Ended September 30, 1996)                 $2.50              $2.25
-----------------------------------------------------------------------

                              11<PAGE>

     The foregoing quotations reflect inter-dealer prices without
retail mark-up, mark-down or commissions and may not
necessarily represent actual transactions.

     As of June 30, 2000, the Company had approximately 1,236
holders of record of its common stock and the closing bid price on
its common stock was $.40 per share.

     The Company has not paid any dividends since its inception
and presently anticipates that all earnings will be retained for
development of the Company's business.



ITEM 6.  SELECTED FINANCIAL DATA
         -----------------------

     Following is a summary of selected financial data.  See the
financial statements included herein for more complete
information.


                Year Ended     Year Ended     Year Ended    Year Ended
                  6/30/00        6/30/99        6/30/98       6/30/97
                -----------    -----------    -----------   -----------

Working
Capital
(Deficit)       $ (774,685)    $ (781,385)   $  (254,923)   $ (348,112)

Total
Assets             197,162        199,772        170,514       206,464

Total
Liabilities      1,260,635      2,077,868      1,201,564       488,558

Long
Term
Debt               407,391      1,238,153        933,970       117,406

Share-
holders'
(Deficit)       (1,063,473)    (1,878,096)    (1,031,050)     (282,034)

                                12<PAGE>


Revenues            31,550        104,205        301,093        14,710

Net(Loss)         (215,003)      (906,415)      (748,957)   (1,276,778)

Net(Loss)
Per Share             (.09)          (.39)         (. 32)         (.55)



ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
                ---------------------------------------------


Results of Operations
---------------------

     2000 Compared to 1999
     ---------------------

Revenues for 2000 were $31,550 compared to $104,205 in 1999.
The principal difference in revenue between reporting periods is a
non-recurring one time license fee of $85,000 that the Company
received in 1999. The net loss for 2000 was $215,003 or $691,412
less than the net loss reported for fiscal 1999.  This is principally
attributed to the decrease in general and administrative expenses
of $ 803,637 during the period ended June 30, 2000.  The principal
item contributing to reduced expenses was the reduction of
executive compensation of approximately $570,000.

     1999 Compared to 1998
     ---------------------

Revenues for 1999 were $104,205 compared to $301,093 as the
Company was able to generate $124,048 from the sale of products,
primarily of its controlled release alpha lipoic acid formulation.  In
addition, the Company had advance royalties from a licensing
agreement on AZTEC and other royalties totaling $168,000.  No
revenues from such sources were obtained during fiscal 1999.
Losses for 1999 were $906,415 or $157,518 more than the losses
for fiscal 1998.  This is principally attributed to the decrease
revenues of $196,948.

                            13<PAGE>
     1998 Compared to 1997
     ---------------------

Revenues for 1998 were $301,093 compared to $14,710 as the
Company was able to generate $124,048 from the sale of products,
primarily of its controlled release alpha lipoic acid formulation.  In
addition, the Company had advance royalties from a licensing
agreement on AZTEC  and other royalties totaling $168,000.  No
revenues from such sources were obtained during fiscal 1997.
Losses for 1998 were $748,957 or $527,880 less than the losses for
fiscal 1997.  This is accounted for by increased revenues of
$286,383 and reduced costs and expenses of $241,497.  The
principal items contributing to reduced expenses were the lack of
write down of patented drug products which was $189,000 in
fiscal 1997 and the lack of interest expense which was $139,617
for that year.  Cost of sales was $53,427 for 1998 compared to $0
for 1997 when the Company had no sales.  Research and
development expenses have fallen by nearly 50% to $43,870 as the
Company focused more on sales.

Liquidity and Capital Resources
-------------------------------

     At June 30, 2000 the Company had a working capital
deficiency of $774,685 compared to negative working capital of
$781,385 at June 30, 1999.  The principal items contributing to the
deficiency is the loss of $906,415 for fiscal 1999.

     The Company has no capital commitments other than the salary
of its employee, the payment of deferred salaries to its employee
and a former employee, aged accounts payable and the payment of
rent on its facilities lease.  Such commitments can not be satisfied
from current or projected revenues. Further, the Company has very
limited cash resources to operate the Company at its current level
of expense without experiencing liquidity problems.

On March 31, 2000, PR Pharmaceuticals, Inc. (PRP) purchased
approximately 53% of the outstanding stock from the majority
stockholders. As part of the purchase agreement the employment
agreement, royalty agreement and option agreement between the
Company and its president and other company employees were
either amended or terminated.


                            14<PAGE>
     On or about March 22, 2000, the Company arranged a credit
facility with PRP, Inc. to borrow up to $1,000,000.  All advances
under this arrangement are secured by all of the Company's assets,
including its technology, patents, trademarks and proprietary
information and all updates, modifications, continuations and
improvements thereto.  The Company may request advances under
this line of credit from time to time as long as it is in compliance
with the "Conditions of Lending" under the Master Loan
Agreement.  Generally, PRP, Inc. will make advances pursuant to
the "Conditions of Lending" as long as the Company is complying
with the material terms of the Master Loan Agreement and there
are no material adverse changes in its financial condition.  As of
June 30, 2000 the Company had drawn $280,000 under this line of
credit.  Management believes that unused line of credit of
$720,000 may not be sufficient to meet minimum liquidity needs
for the foreseeable future. Since there remains $629,000 of
accrued management compensation and aged payables of
approximately $200,000 to pay from this line, the availability from
line of credit is not adequate to allow the Company to fund any
research or development projects.


Industry Trends
---------------

     There is substantial competition with respect to delayed release
drug delivery products from major, highly recognized,
manufacturers with large advertising budgets.  In addition, major
drug manufacturers currently market recognized prescription
formulations for Verapamil, Naproxen, Indomethacin and AZT.


Future Business Strategy and Subsequent Events
------------------------------------------------
Management is reviewing the current business liquidity problem
and is developing a plan to address these issues.


Forward-Looking Statements
----------------------------

     Included under this Item 7 are "forward-looking statements"
within the meaning of Section 27 of the Securities Act of 1933 and

                            15<PAGE>
Section 21E of the Securities Exchange Act of 1934.  Although the
Company believes that the expectations reflected in such
forward-looking statements are reasonable, it an give no assurance
that such expectations will prove to be correct since he Company
is not able to accurately predict if it will obtain adequate funding
to continue in business or license or market its products.
Important factors affecting its ability to do so include the extreme
competitiveness of the industry, the cost involved to market new
drug products, the very limited resources of the Company and the
regulatory environment in which the Company operates.







ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
         -------------------------------------------


     Attached hereto are financial statements responsive to this
Item.


ITEM 9.  DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
         ----------------------------------------------------

     None




PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS
          --------------------------------

     The By-laws of the Company provide that the affairs of the
Company shall be managed by its Board of Directors consisting of
at least three persons. The controlling shareholders of the

                          16<PAGE>

Company elected a new slate of Directors and Executive Officers
as indicated below.  On April 1, 2000, Carolyn Dunn and Mark
Banister resigned from the Board of Directors. These vacancies
were filled by Dr. Patrick Bols and Steve Howe. During the
reporting period the following Directors and Executive Officers
were in office.

Name                                    Age             Occupation

James M. Dunn M.D.                      63

President of the Company (1980 - March 2000); Director of the
Company (1980 - Present); Treasurer of the Company (1980 -
March of 2000; Chairman of the Board of Directors and Chief
Executive Officer of the Company (1982 - March of 2000;
Assistant Professor, School of Medicine, Louisiana State
University (1979-1980); Vice President-Medical Affairs, Boots
Pharmaceutical, Inc.  (1979-1980); Director of Clinical
Pharmacology and Research, Wallace Laboratories (1976-1979)

James B. Petre                           47

Director of the Company (January 1993 - Present); Independent
business consultant and advisor (1989 - Present);
Senior Vice President and Director of Previews, Inc., Denver
Colorado; a worldwide real estate brokerage firm (1984-1989);
Member of the Drug Information Association. BS in Business
Administration, University of Denver.

Steve Howe (1)                           48

Chairman of the Board of Directors (March 2000 - Present); Chief
Executive Officer (March 2000 - Present); Secretary (March 2000
- Present) Chairman of the Board of Directors and Chief Executive
Officer, PR Pharmaceuticals Inc.; 43.82% Shareholder PR
Pharmaceuticals Inc.; BA in Business Administration - University
of Wyoming.

Patrick Bols, Ph.D. (1)                  50

Director (March 2000 - Present); President (March 2000 - Present;
Director PR Pharmaceuticals Inc.; President PR Pharmaceuticals


                             17<PAGE>
Inc.; 17.50% Shareholder PR Pharmaceuticals Inc.; Director of
Worldwide Business Development - Johnson & Johnson; Ph.D. in
Agricultural Sciences - University of Gent, Belgium.

Edward C. Gruben                   54

Treasurer (March 2000 - Present); Managing Partner - Cambridge
Consulting Group LLP; Managing Partner - Cambridge
Management Associates LLP; Member of the American Institute
of Certified Public Accountants and the Colorado Society of
CPA's; BSBA in Physical Sciences and Accounting - University of
Colorado.


--------------------------

(1) Messers Howe and Bols are major shareholders in PR
Pharmaceuticals Inc. which owns 52.95% of the Company's issued
and outstanding common stock.

     The Board of Directors does not have Audit, Compensation or
Nominating Committees.  During the period from July 1, 1999 to
June 30, 2000, the Board of Directors met two times, and all
directors attended the meetings, either in person or by telephone.

ITEM 11.  EXECUTIVE COMPENSATION
          ----------------------

     The following tabular information includes all plan and
non-plan compensation paid to the Company's President and
to all other executive officers whose total annual salary and
bonus is $100,000 or more.












                                 18<PAGE>

                             Summary Compensation
               Annual Compensation                Long-TermCompensation
         ----------------------------------  ----------------------------------
                                            Awards             Payouts
                                         ----------------   ------------
                                  Other
                                  Annual   Restricted
Name and                          Compen-    Stock     LTIP
Principal       Salary   Bonus    sation   Award(s)   Options/  Payouts
Position  Year    ($)     ($)      ($)       ($)      SARs(#)     ($)
--------- ----  ------  -------  -------   -------    ------    -------
James M.  2000  125,000   -0-      -0-       -0-       -0-        -0-
Dunn,     1999  125,000   -0-     9,063      -0-       -0-        -0-
M.D.
(Former   1998  125,000   -0-    12,621      -0-       -0-        -0-
President
and
Chairman
of
the Board)
                                                                     All
                                                                    Other
                                                                   Compen-
                                                                   sation
                                                                     ($)
                                                                -----------
                                                                     -0-

                                                                     -0-

                                                                     -0-

--------------------------

(1)  Dr. Dunn was actually paid $31,250, $0, and $0 as salary for
the years ended June 30, 2000, 1999 and 1998, respectively.  The
annual salaries set forth above are pursuant to Dr. Dunn's
employment contract discussed below.

     (2)  Dr. Dunn actually received $0 in fiscal 2000, $9,063 in
fiscal 1999 and $12,621 in fiscal 1998, in other forms of
compensation comprised of premiums paid on life insurance and
automobile lease and maintenance expense. He earned $ 5,506,

                             19<PAGE>

$5,506 and $5,506 in vacation allowance for fiscal 2000, 1999 and
1998, respectively and $0, $0 and $0 respectively in product
minimum royalties for each fiscal year: 2000, 1999 and 1998, all
of which was deferred along with accumulated amounts through
January 1, 2000.  At June 30, 1998, the Company owed Dr. Dunn
$789,000 in salary and vacation pay. Accumulated vacation
allowance is included in the deferred accumulated salary amount
set forth in Note (1) above.

     (3)  Excludes amounts accrued and forgiven by Dr. Dunn on
March 31, 1997. See Note 5 to the financial statements.


Employment Contract - James M. Dunn, M.D.
-----------------------------------------

     On November 30, 1993, the Company entered into an
employment agreement with its President, James M. Dunn, M.D.
whereby Dr. Dunn agreed to serve as President of the Company
until he reaches the age of 65 (2003) and agreed to assign to the
Company all his right, title and interest in his inventions,
discoveries, innovations, concepts and know-how during the
period of the Agreement.  Dr. Dunn is entitled to receive an annual
salary of $338,000, subject to annual adjustments, a $3,000,000
life insurance policy, disability insurance equal to 80% of his gross
income, and health insurance.  In addition, he is entitled to a 2%
royalty on the first $5,000,000 in net sale price of any Verex
patented product, a 1% royalty on net sales in excess of $5,000,000
and a 2% royalty on Verex licensed technology.  At March, 1997, a
total of $2,605,204 was accrued in compensation pursuant to the
agreement, and Dr. Dunn waived his claims thereunder in
exchange for 25% in future revenues from AZTEC and 5% in
future revenues from certain other Company drug formulations up
to $2,605,204 and certain assignment rights to AZTEC in the event
the Company has not licensed AZTEC prior to December 31,
1998. On March 31, 2000, Dr. Dunn resigned from the company as
an employee, its President and Chairman. He is currently an
employee of PRP. On March 31, 2000, Mr. Petre executed an
employment agreement with the Company.

Employment and Royalty Agreements
---------------------------------


                           20<PAGE>
On March 31, 2000 the Company and its prior President
terminated all prior employment agreements and amended the
royalty agreement.  The prior President had a balance of accrued
salaries of $395,833 owed for past services.  The Company agreed
to pay $9,461 for 24 months with a balloon payment of $176,321
plus any accrued interest on February 1, 2002.  If during the
twenty-four months the Company is able to commercialize any of
its products, 30.49% of the net profit will be used to accelerate the
payment of the accrued salary.  The acceleration payments will be
made to the balloon balance first, and then applied to the
remaining monthly installments.

The prior President continues to act as a Director of the Company.
On March 31, 2000 the prior President and PRP agreed to an
employment agreement for five years.  The prior President is paid
$125,000 for the first year and increases in subsequent years based
on contributions to PRP.

On March 31, 2000 the Company and one of its
Employee/Director agreed to an employment contract. The
employee is paid a base salary of $80,000 per year.  This employee
had a balance of accrued salaries of $253,333.  The Company
agreed to pay $5,854 for 24 months with a balloon payment of
$112,845 plus any accrued interest on February 1, 2002. If during
the twenty-four months the Company is able to commercialize any
of its products, 19.51% of the net profit will be used to accelerate
the payment of the accrued salary.  The acceleration payments will
be made to the balloon balance first, and then applied to the
remaining monthly installments.

The Company amended the royalty agreement to pay its prior
President 7.5% of license royalty or on gross profit received by the
Company on sales or licensing from the Aztec product only.  The
amount to be paid to the prior President is not to exceed an
accumulative total of approximately $2.5 million.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
          AND MANAGEMENT
          -----------------------------------------------

     Based on certain reports filed with the Securities and Exchange


                    21<PAGE>
Commission, the table on the following page reflects certain
information as of September 30, 2000 as to beneficial holders of
more than 5% of the outstanding shares of Common Stock of the
Company and as to Common Stock beneficially owned by all
executive officers and directors of the Company as a group:

                             Amount and Nature             Percent of Shares
     Name of                   of Beneficial                of Common Stock
Beneficial Owner               Ownership (1)                  Outstanding
-----------------            -----------------             -----------------

PR Pharmaceuticals,
Inc.                               1,345,517                     52.95%

Steve R. Howe (2)

Patrick Bols (2)

James M. Dunn, M.D.                  -0-                             0%

James B. Petre                       -0-                             0%

Officers and Directors
as a Group (4 persons)             1,345,517                      48.8%
-----------------------

(1)  This table is based on 2,327,359 shares outstanding and does
not include presently exercisable options to purchase shares of the
Company's Common Stock held by each of the foregoing.  See
"Certain Relationships and Related Transactions" below for
details.  Beneficial ownership by any person includes direct or
indirect voting power and investment power with respect to such
shares of common stock of the Company.

     (2)  Includes shares held by PR Pharmaceuticals, Inc.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
          ----------------------------------------------

     The Company leases facilities through March 31, 2002 at a
current monthly rate of $4,459 plus a pro rata share of

                             22<PAGE>
maintenance costs.  A portion of the space is subleased to Jerry R.
Dunn, a former officer of the Company at $2,106 per month.
Management believes the terms of the facilities sharing with Jerry
R. Dunn are as fair to the Company as could be arranged with an
independent party.


Business Service Agreement
-----------------------------

On April 12, 2000 the Company signed a business services
agreement with PRP.  PRP is to provide administrative functions
necessary in the management of the Company.   Fees to be paid to
PRP are not to exceed $5,000 per month, without the prior written
consent of the Board of Directors of Verex.  The business service
agreement can be cancelled by either party with 60 days prior
written notice.


PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
          AND REPORTS ON FORM 8-K
          ----------------------------------------

(a)   (1)   The following consolidated financial statements are
included in Part II, Item 8 of this Report:

            Report of Independent Certified Public Accountants

            Balance Sheets at June 30, 2000 and 1999

            For the years ended June 30, 2000, 1999 and 1998:

              Statements of Operations
              Statements of Shareholders' Equity
              Statements of Cash Flows

            Notes to Financial Statements

      (2)   All schedules are omitted because they are not required,



                               23<PAGE>
            are inapplicable, or the information is otherwise shown in
            the financial statements or notes thereto.

      (3)   The following Exhibits were included as Exhibits to the
            Form S-18, SEC File No. 2-82403-D filed March 11, 1983
            and are incorporated herein by reference:

        3.1 - Restated Articles of Incorporation
        3.2 - Restated By-laws
      10.34 - Credit Facility Agreement - PR Pharmaceuticals
      10.35 - Agreement - James M. Dunn, M.D. and registrant
              regarding accrued salary at registrant
      10.36 - Agreement James B. Petre regarding employment at
              Registrant and payment of accrued salary at Registrant.
      10.37 - Royalty Agreement - James M. Dunn, M.D. amended
              March 2000
      10.38 - Business Service Agreement - PR Pharmaceuticals

(b)   The following Form 8-K's were filed by the Company during
the quarter ended June 30, 2000.
























                              24<PAGE>




               VEREX LABORATORIES, INC. AND SUBSIDIARY




                        Table of Contents

 Independant Auditors' Report                                     F - 2

Financial Statements

     Consolidated Balance Sheets - June 30, 2000
     and 1999                                                     F - 3,4

     Consolidated Statements of Operations
     For the Years Ended June 30, 2000, 1999 and 1998
     and Cumulative from September 29, 1980 (inception)
     to June 30, 2000                                             F - 5

     Consolidated Statements of Stockholders' Deficit
     For the Years Ended June 30, 2000, 1999 and 1998
     and Cumulative from September 29, 1980 (inception)
     to June 30, 2000                                             F - 6

     Consolidated Statements of Cash Flows
     For the Years Ended June 30, 2000, 1999 and 1998
     and Cumulative from September 29, 1980 (inception)
     to June 30, 2000                                             F - 7,8

     Notes to Consolidated Financial Statements                   F - 9












                                     F-1<PAGE>


INDEPENDENT AUDITORS' REPORT



To the Shareholders and Board of Directors
Verex Laboratories, Inc. and Subsidiary

We have audited the accompanying consolidated balance sheets of
Verex Laboratories, Inc. and Subsidiary as of June 30, 2000 and
1999, and the related consolidated statements of operations,
shareholders' deficit and cash flows for the years then ended.
These consolidated financial statements are the responsibility of
the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our
audits.

We conducted our audits in accordance with generally accepted
auditing standards.  Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material
misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
consolidated 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 consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of Verex Laboratories, Inc. and Subsidiary as of June 30, 2000 and
1999, and the results of their operations and their cash flows for
the years then ended in conformity with generally accepted
accounting principles.




Balukoff Lindstrom & Co.
Boise, Idaho
July 28, 2000


                              F-2<PAGE>

                 VEREX LABORATORIES, INC. AND SUBSIDIARY

                      CONSOLIDATED BALANCE SHEETS

                         June 30, 2000 and 1999
<TABLE>
<CAPTION>
                                                       June 30,
                                                   2000        1999
                                                ----------    -------
<S>                                         <C>              <C>
Current assets
Cash                                            $33,967        $31,371
Prepaid expenses                                 19,292          7,659
Note receivable                                  25,300         19,300
                                             ----------      ---------
Total current assets                             78,559         58,330
Property and equipment, at cost

Furniture and equipment                         496,873        494,548
          Leasehold improvements                  1,317          1,317

          Less accumulated depre-
           ciation and amortization            (493,560)      (488,730)
                                             -----------     ----------
                                                  4,630          7,135

     Other assets
          Patents, net of accum-
             ulated amortization
              of $284,688 and
               $259,163                         113,973        134,307
                                             ----------      ---------
                                               $197,162       $199,772
                                             ==========      =========
Current liabilities
     Accounts payable                          $321,633       $255,117
     Accrued expenses                            14,173         14,660
     Accrued salary and
         benefits payable                       180,000        512,500
     Accrued royalties                           32,500         32,500
     Notes payable                              280,000              -
     Notes payable - related parties             24,938         24,938
                                             ----------      ---------
                 Total current liabilities      853,244        839,715
</TABLE>
                               F-3<PAGE>

                VEREX LABORATORIES, INC. AND SUBSIDIARY


                     CONSOLIDATED BALANCE SHEETS

                        June 30, 2000 and 1999
                               CONTINUED
<TABLE>
<CAPTION>
                                                            June 30,
                                                     2000          1999
                                                  ----------    --------
<S>                                         <C>              <C>
Long-term debt
     Accrued salary and
        benefits  payable, net of
        current portion                           407,391        1,238,153

Shareholders' deficit
  Common stock, no par value,
  100,000,000 shares authorized
   2,327,359 shares issued and
     outstanding                                2,304,422        2,304,422
     Additional paid-in capital                11,420,990       10,391,364
     Retained earnings (deficit)              (14,788,885)
(14,573,882)
                                               (1,063,473)      (1,878,096)
                                             -------------    -------------
                                                 $197,162         $199,772
                                             =============    =============

</TABLE>















                                  F-3<PAGE>

                 VEREX LABORATORIES, INC. AND SUBSIDIARY

                  CONSOLIDATED STATEMENTS OF OPERATIONS

                    Years Ended June 30, 2000 and 1999

<TABLE>
<CAPTION>
                                                   2000          1999
                                                 --------       -------
<S>                                            <C>           <C>

Revenues
     Sales                                              $70              $-
     Licensing income                                     -               -
     Special projects                                31,476          19,200
     Other income                                         -          85,000
     Interest income                                      4               5
                                                -----------    ------------
               Total Revenues                        31,550         104,205

Expenses
     Cost of Sales                                        -               -
     Selling, general and
      administrative
      expenses                                      206,983       1,010,620
     Research and
        development                                  17,042               -
     Operating                                            -               -
     Marketing                                          700               -
     Interest expense                                21,828               -
                                                -----------    ------------
              Total expenses                        246,553       1,010,620
                                                -----------    ------------
Loss before income taxes                           (215,003)       (906,415)

Income taxes                                              -               -

                      Net loss                    $(215,003)      $(906,415)
                                                  ==========      ==========
Net income (loss) per
   common share                                      $(0.09)         $(0.39)

Weighted average
   shares outstanding                             2,327,359       2,327,359

</TABLE>
                                 F-5<PAGE>

                         VEREX LABORATORIES, INC.
                  CONSOLIDATED STATEMENTS OF CHANGES IN
                     SHAREHOLDERS' EQUITY (DEFICIT)
                Years Ended June 30, 2000, 1999 and 1998

<TABLE>
<CAPTION>
                                       Additional
            Common        Paid-in      Retained
            Stock         Capital      Deficit         Total
          ----------     ----------   ---------       --------
<S>      <C>           <C>          <C>             <C>
Balance
 at  June
30, 1997  $2,304,422    $10,332,114  $(12,918,570)   $(282,034)

Net loss           -              -      (748,897)    (748,897)
          ----------    -----------  -------------   ----------
Balance
at June
30, 1998   2,304,422     10,332,114   (13,667,467)  (1,030,931)

Capital
proceeds           -         59,250             -       59,250

Net loss           -              -      (906,415)    (906,415)
          ----------     ----------   ------------  -----------
Balance
at June
30, 1999   2,304,422     10,391,364   (14,573,882)  (1,878,096)

Net loss           -              -      (215,003)    (215,003)

Deferred
compen-
sation             -      1,029,626             -    1,029,626
          ----------     -----------  -----------   ----------
Balance
at June
30, 2000  $2,304,422    $11,420,990  $(14,788,885) $(1,063,473)
          ==========    ===========  ============= ============


</TABLE>
                               F-6<PAGE>

               VEREX LABORATORIES, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF CASH FLOWS

                  Years Ended June 30, 2000 and 1999
<TABLE>
<CAPTION>
                                      2000           1999
                                       ------       -------
<S>                               <C>           <C>
Cash flows from
  operating activities

  Net loss                           $(215,003)    $(906,415)
     Adjustments to
       reconcile net
       loss to net

 cash used by
    operating activities

          Depreciation                   4,830         9,623
          Amortization                  23,384        23,947
       Changes in assets
             and liabilities
           Prepaid expenses            (11,633)          584
        Accounts payable
            and other accruals          66,516        36,455
               Accrued expenses           (487)       14,660
               Accrued salary
         and benefits payable         (133,636)      806,183
          Accrued royalties                  -             -
                                   ------------   ----------
 Net cash used by
    operating activities              (266,029)      (14,963)

Cash flows from investing
     activities

     Additions to property
         and equipment                  (2,325)         (520)
     Additions to patents
         and trademarks                 (3,050)      (16,649)
                                   ------------    ----------
</TABLE>

                                 F-7<PAGE>
                 VEREX LABORATORIES, INC. AND SUBSIDIARY
                   CONSOLIDATED STATEMENTS OF CASH FLOWS

                  Years Ended June 30, 2000 and 1999
                                  CONTINUED
<TABLE>
<CAPTION>
                                           2000               1999
                                          ------             -------
<S>                                 <C>              <C>
Net cash used by
    investing activities                  (5,375)           (17,169)

Cash flows from
    financing activities

Proceeds from paid-in
     capital                                   -             59,250
     Payment received
      on notes receivable                  1,000              3,000
     Issuance of notes
        receivable                        (7,000)           (11,800)
     Proceeds from notes
         payable                         280,000             11,125
     Payments on notes
         payable                               -             (2,500)
                                      -----------          ---------
 Net cash provided by
   financing activities                  274,000             59,075
  Net increase in cash                     2,596             26,943

Cash at beginning
    of year                               31,371              4,428
                                      ----------         ----------
 Cash at end of year                     $33,967            $31,371
                                      ==========         ==========
<CAPTION>
SUPPLEMENTAL DISCLOSURE FOR CASH FLOW
INFORMATION

Interest paid                            $21,828                $-
Deferred compensation
     converted to paid in
      capital                         $1,029,626                $-

</TABLE>
                                F-8<PAGE>

              VEREX LABORATORIES, INC. AND SUBSIDIARY
                    NOTES TO FINANCIAL STATEMENTS
                      June 30, 2000 and 1999

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Company Operations
------------------
Verex Laboratories, Inc. (the "Company") was incorporated in
Colorado on September 29, 1980 and began developmental
activities in July 1981.  The Company is primarily engaged in the
business ofdeveloping and marketing non-prescription and
prescription drugproducts utilizing constant release rate drug
delivery systems.

Prior to 1999 the Company had a wholly owned subsidiary, Bear
Laboratories, Inc., in December of 1999 Bear Laboratories was
disolved and is no longer in existence.  There was no activity for
Bear Laboratories in 1999 and consequently no information for
BearLaboratories, Inc. is consolidated in the Company's financial
statements for the fiscal years ended June 30, 2000 and 1999.

On March 31, 2000 PR Pharmaceuticals, Inc. (PRP) purchase
approximately 53% of the outstanding stock from the majority
stockholders.  As part of the purchase agreement the employment
agreement, royalty agreement and option agreement between the
Company and its president and other company employees were
either amended or terminated.


Fair Value of Financial Instruments
-----------------------------------
The carrying amounts of financial instruments including cash and
cash equivalents, accounts payable, notes payable and accrued
expenses approximated fair value as of June 30, 2000 and 1999
because of the relatively short maturity of these instruments.

Property and Equipment
----------------------
Property and equipment are recorded at cost and depreciated over



                            F-9<PAGE>
the estimated useful lives (three to seven years) of the asset using
thestraight-line method.  Leasehold improvements are amortized
on astraight-line basis over the remaining term of the office lease.

Patents
-------
Patents are stated at cost and are amortized on a straight-line basis
over the estimated useful life of ten years.  The Company reviews
long-lived assets (including intangible assets) for impairment
whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future
undiscounted net cash flows (without interest costs) expected to be
generated by the asset.  If such assets are considered to be
impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceed the fair
value of the assets.  Assets to be disposed of are reported at the
lower of the carrying amount or fair value less costs to sell.


Revenue Recognition
-------------------
The Company previously recognized nonrefundable technology
access fees and milestone payments as revenue when received and
when the Company fulfilled all contractual obligations relating to
the fees and milestone payments.  Effective in the fourth quarter of
2000, the Company changed its method of accounting for
nonrefundable technology access fees and milestone payments to
recognize such payments over the term of the related agreements
in accordance with the Securities and Exchange Commission's
Staff Accounting Bulletin No. 101 - Revenue Recognition in
Financial Statements.  As of June 30, 2000 the Company had no
further obligations related to the licensing fees agreements signed
in prior years.

The Company recognized $31,476 in 2000 related to a special
project for contract pharmaceutical extraction.  The contract was
of limited scope and was fully completed prior to June 30, 2000.
The Company recognized income once the project had been
completed and accepted by the Company's client.



                             F-10<PAGE>
Research and Development Costs
------------------------------
The Company expenses all research and product development
costs as incurred.

Cash Equivalents
----------------
The Company considers investments that are purchased within
three months of their date of maturity to be cash equivalents.

Income Taxes
------------
Deferred tax liabilities and assets are determined based on the
difference between the financial statements and tax basis of assets
and liabilities using the enacted tax rates in effect for the year in
which the differences are expected to occur.  The measurement of
deferred tax assets is reduced, if necessary, by the amount of any
tax benefits that, based on available evidence, are not expected to
be realized.

Use of Estimates
----------------
The preparation of consolidated financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and
expenses during the reporting period.  The Company used
significant estimates in the accompanying financial statements
related to estimated life of the patents.  Actual results may change
within the next year.

NOTE B - NOTES PAYABLE AND LONG-TERM DEBT

                                                2000            1999
     Notes payable to the former
     president of the Company;
     non interest bearing and maturing
     from July 1997 to June 2000.
     The notes are not collateralized.        $ 24,938       $ 16,313



                               F-11<PAGE>
     Accrued salaries owed to
     the prior President and Officer/
     Director for past services with
     an interest rate of 7%, principle
     payments in monthly installments of
     $15,000 for twenty-four months
     with the remaining balance and interest
     due on February 1, 2002.                   587,391           --

     Note payable to PRP with an interest
     rate of 15.78%, interest paid quarterly
     with the principle balance due March
     21, 2001, secured  by the assets of the
     Company.                                   280,000           --
                                                892,329       16,313
     Less current portion                      (484,938)     (16,313)
                                               ---------     --------
                                               $407,391       $    --
                                               ========       =======
Maturities in future years are:

                         2001                  $    484,938
                         2002                       407,391
                                               ------------
                                               $    892,329

NOTE C - STOCKHOLDER CONTRIBUTIONS

In March 1997, the Company entered into an agreement with the
Company's president and another Stockholder whereby the two
stockholders forgave the Company's indebtedness of $2,605,204
and $2,185,984, respectively.  The total debt forgiven of
$4,791,188 included $1,687,000 of notes payable to a stockholder,
$498,984 of accrued interest on the note and $2,605,204 of
accrued salary and benefits to the president.  As consideration for
the debt forgiveness, the Company agreed to assign each
individual the right to receive 25% of all licensing fees, royalties
and all other sources of income from the Company's Aztec
formulation and 5% of the income derived from other specified
formulations up to the respective indebtedness from the Company
which was forgiven.  In addition, the Company has agreed to
assign the patent for the Aztec formulation to the Stockholder in
the event that the Company is unsuccessful in securing any

                             F-11<PAGE>
licensing or royalty agreements prior to December 1998.  The
Stockholder would then be responsible for marketing the rights
and would distribute all earnings in accordance with the terms of
the original agreement.  The total amount of debt forgiven is
reflected as additional paid-in-capital for the year ended
June 30, 1997 in the accompanying consolidated financial
statements.  During the year ended June 30, 1998, $32,500 was
accrued as royalty expense related to this agreement.

On March 31, 2000 the Company's former President and
Officer/Director forgave the Company a total of $1,029,626 of
deferred compensation and accrued vacation.  The amount
forgiven is reflected as additional paid-in-capital for the current
year.

NOTE D - COMMON STOCK

Net Loss Per Common Share
-------------------------
Net loss per common share for the years ended June 30, l999,
1998, and 1997 has been computed on the basis of the weighted
average number of common shares outstanding of 2,327,359.

Stock Options
-------------
The Corporation has adopted the disclosure-only provisions of
Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" for options granted
to employees.  Accordingly, no compensation cost has been
recognized for the stock option plans.

Had compensation cost for the Company's stock options been
determined based on the fair value at the grant date for awards in
1999 and 1998 consistent with the provisions of SFAS No. 123,
the amount would have been immaterial to the financial
statements.








                               F-12<PAGE>
The following is a summary of options at June 30, 1999 and 1998:

                                                        Weighted
                                                        Average
                                      Exercise          Exercise
                                      Price Per         Price Per
                  Options             Share              Share
                 ----------           ---------        ---------
Balance June
  30, 1997         17,000               2.50              2.50
    Granted        50,000                .75              1.19

Balance June
  30, 1998         67,000            .75 - 2.50           1.19
    Granted       913,500            .82 - 1.15            .82

Balance June
  30, 1999        980,000        $   .75 - 2.50         $  .85


On March 31, 2000 the stock option plan was terminated.  There
were no options granted or exercised prior to the termination.


NOTE E - INCOME TAXES

The Company has long-term deferred tax assets as a result of its
net operating losses and deferred salary (assuming a tax rate of
38%) that is fully impaired due to uncertainty as to their
utilization.  Accordingly, there is no net deferred tax asset
reflected in the accompanying consolidated financial statements.

                                                      June 30,
                                               2000              1999
                                             ---------         --------
Long-term deferred tax assets
        Operating losses                 $   3,978,156    $  3,911,455
          Deferred salary                      223,209         533,573
                                         -------------    ------------
Total long-term deferred assets              4,201,365       4,445,028
     Valuation allowance                    (4,201,365)     (4,445,028)
                                         --------------   -------------
          Net deferred tax               $          --    $         --
                                         ==============   =============
                                F-13<PAGE>

At June 30, 2000, the Company has approximately $10,500,000 of
net operating loss carryforwards for income tax purposes that
expire between June 30, 2000 and June 30, 2015.


NOTE F - RELATED PARTY TRANSACTIONS

Employment and Royalty Agreements

On March 31, 2000 the Company and its prior President
terminated all prior employment agreements and amended the
royalty agreement.  The prior President had a balance of accrued
salaries of $395,833 owed for past services.  The Company agreed
to pay $9,461 for 24 months with a balloon payment of $176,321
plus any accrued interest on February 1, 2002.  If during the
twenty-four months the Company is able to commercialize any of
its products, 30.49% of the net profit will be used to accelerate the
payment of the accrued salary.  The acceleration payments will be
made to the balloon balance first, and then applied to the
remaining monthly installments.

The prior President continues to act as a Director of the Company.
On March 31, 2000 the prior President and PRP agreed to an
employment agreement for five years.  The prior President is paid
$125,000 for the first year and increases in subsequent years based
on contributions to PRP.

On March 31, 2000 the Company and one of its Officer/Director
agreed to a new employment contract for five years.  The
Officer/Director continues as an employee of the Company but is
no longer a Director of the Company.  The employee is paid a base
salary of $80,000 per year.  The prior Officer/Director had a
balance of accrued salaries of $253,333.  The Company agreed to
pay $5,854 for 24 months with a balloon payment of $112,845 plus
any accrued interest on February 1, 2002.  If during the twenty-four
months the Company is able to commercialize any of its products,
19.51% of the net profit will be used to accelerate the payment of
the accrued salary.  The acceleration payments will be made to the
balloon balance first, and then applied to the remaining monthly
installments.


                    F13<PAGE>
The Company amended the royalty agreement to pay its prior
President 7.5% of license royalty or on gross profit received by the
Company on sales or licensing from the Aztec product only.  The
amount to be paid to the prior President is not to exceed an
accumulative total of approximately $2.5 million.

Business Service Agreement
--------------------------
On April 12, 2000 the Company singed a business services
agreement with PRP.  PRP is to provide administrative functions
necessary in the management of the Company.   Fees to be paid to
PRP is not to exceed $5,000 per month, without the prior written
consent of the Board of Directors of Verex.  The business service
agreement can be cancelled by either party with a 60 days prior
written notice.

NOTE G - LEASES

Office
------
Currently, the Company occupies space under a lease agreement
requiring monthly payments of $4,459.  The lease commitment
expires March 31, 2002.   For the first nine months of 2000 and
during 1999 and 1998 the company subleased a portion of the
leased space for $1,783 per month.

Rent expense, net of sublease income was $45,269, $44,294, and
$37,471 for the years ended June 30, 2000, 1999 and 1998,
respectively.

Vehicle
-------
The Company had two operating leases for vehicles. The leases
required monthly lease payments of $530 and $582 and expire
January 1999 and 2000, respectively.  Lease expense was $10,694
and $12,588, for the years ended June 30, 1999 and 1998,
respectively.

The minimum annual lease payments through expiration of the
office lease are as follows:
                      2001                   $    53,913
                      2002                        41,346
                                             -----------
                                             $    95,259
                         F-14<PAGE>
NOTE H - COMMITMENTS

The Company has commitments to issue approximately 130,000
shares of common stock in exchange for cash and forgiveness of
accounts payable of approximately $70,000.

On March 31, 2000 the Company amended its royalty agreement
with Birklea.  In accordance with the terms of the amended
agreement the Company will pay Birklea 7.5% of licensing royalty
or on gross profit received by the Company on sales or licensing
from the Aztec product and 3% of license royalty or on gross profit
received by the Company on sales or licensing of other
technologies.  Royalty payments are not to exceed approximately
$2.3 million dollars.


NOTE G - GOING CONCERN CONTINGENCY

The Company incurred significant operating losses during the
years ended January 31, 1999 and 1998 due primarily to tough
competition in the pharmaceutical industry.  The Company's
ability to continue as a going concern is primarily dependent upon
two factors: increasing licensing revenues from its current patents
and minimizing operating costs, and the Company has access to $1
million security agreement with PRP.  On or about March 22,
2000, the Company arranged a credit facility with PRP, Inc. to
borrow up to $1,000,000 and matures March 21, 2001.  All
advances under this arrangement are secured by all of the
Company's assets, including its technology, patents, and
proprietary information and all updates, modifications,
continuations and improvements thereto.  The Company may
request advances under this line of credit from time
to time as long as it is in compliance with the "Conditions of
Lending" under the Master Loan Agreement.  Generally, PRP, Inc.
will make advances pursuant to the "Conditions of Lending" as
long as the Company is complying with the material terms of the
Master Loan Agreement and there are no material adverse changes
in its financial condition.  As of June 30, 2000 the Company had
drawn $280,000 under this line of credit.  Management believes
that unused line of credit of $720,000 may not be sufficient to
meet minimum liquidity needs for the foreseeable future. Since
there remains $629,000 of accrued management compensation and
aged payables of approximately $200,000 to pay from this line, the

                             F-15<PAGE>
availability from line of credit is not adequate to allow the
Company to fund any research or development projects.










































                                 F-16
                            SIGNATURES

     Pursuant to the requirements of Section 13 of the Securities
Exchange Act of 1934, the Company has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly
authorized.

(Registrant)                       VEREX LABORATORIES, INC.

(Date)                             January 12, 2001
By:(Signature)                     /s/Patrick Bols
(Name and Title)                   Patrick Bols, President and Director


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

(Registrant)                       VEREX LABORATORIES, INC.

(Date)                             January 12, 2001
By:(Signature)                     /s/Patrick Bols
(Name and Title)                   Patrick Bols, President and Director

(Date)                             January 12, 2001
By:(Signature)                     /s/Steve R. Howe
(Name and Title)                   Steve R. Howe, Chairman of the
                                   Board, Secretary and Director

(Date)                             January 12, 2001
By:(Signature)                     /s/Edward C. Gruben
(Name and Title)                   Edward C. Gruben, Treasurer

(Date)                             January 12, 2001
By:(Signature)                     James M. Dunn, M.D.
(Name and Title)                   James M. Dunn, M.D., Vice
                                   President of Medical Affairs and
                                   Director

(Date)                             January 12, 2001
By:(Signature)                     James B. Petre
(Name and title)                   James B. Petre, Director