SECURITIES AND EXCHANGE COMMISSION
                       WASHINGTON, D.C.  20549

                             FORM 10-KSB/A

                           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, 2001 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
                                                     ----------------
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___

                           Page 1
<PAGE>
     The aggregate market value of the voting stock held by
non-affiliates of the Registrant at October 4, 2001 was
approximately $417,000.

     The number of shares outstanding of the Registrant's no par
value common stock as of June 30, 2001, was  2,387,907 shares.

This Amendment Provides Certain Information Previously
Omitted in the 10KSB/A Executed 1/24/02

     This amendment is being filed to provide additional
information previously omitted pursuant to the Statement
Concerning Rule 12b-21 as stated in the 1/24/02 10KSB/A




                              PART I

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

Background
-------------

The Company was organized under the laws of the State of
Colorado on September 29, 1980.  The Company's objective is to
acquire, develop and market pharmaceutical and health care
products.

     On or about March 31, 2000, PR Pharmaceuticals, Inc. ("PRP"),
a privately held pharmaceuticals company focused on developing
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. 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,
provided that audited financials of the Company were issued on or
before November 30, 2000.  That condition was not met, and PRP
has taken the position that it is under no obligation to make any
tender or exchange offer to Verex's shareholders.

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

On March 20, 2000 the Company obtained a $1 million credit
facility with PRP.  Without the credit facility, the Company would
have been unable to continue to operate for any significant period.
The credit facility was also negotiated to provide payment of the
accrued management compensation. On March 22, 2001 this credit
facility became due and payable.  PRP did not extend this credit
facility and the Company is currently in default.  At June 30, 2001,
the Company owed $615,000 in principal and $56,000 in interest

                           Page 2
<PAGE>
on this credit facility.  In order to enable the Company to pay
accrued management compensation, the Company has negotiated a
series of 90-day notes with PRP.  At June 30, 2001, the Company
had borrowed $45,000 under two notes.  In addition, PRP has
advanced $49,192 on account to enable the Company to pay
operating expenses such as rent and utilities.  The agreement under
which PRP acquired its shares in Verex provides that PRP is
obligated to make certain advances to Verex to fund accrued
salaries.  That obligation is disputed by PRP.  See Item 3 - Legal
Proceedings.   PRP has made no other commitments to continue to
provide funds to Verex and there is no assurance that funds will be
available to support operations or research and development.  See
Management's 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, trade names, 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 be limited to
$2,325,000 for all products including AZTEC formulations.

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

     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

                            Page 3
<PAGE>
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.

The Company has not licensed its technology relating to other
sustained release prescription drugs.

The following table summarizes licensing agreements in existence
at June 30, 2001:

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)

Productos BiotyLDA            Portugal                      Verapamil
(1988)

Metabolic Innovations, LLC    Worldwide                     Verin, CR
                                                            Glucosamine

PR Pharmaceuticals
Agreement regarding patent
prosecution, research and                                   Nanosphere
development)                  Not Applicable                Technology


     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. The Company received no revenues from
licensing fees and royalties under any of the foregoing license
agreements during the fiscal years ending June 30, 2001 and 2000.
The Company does not foresee receiving any material revenue
under any of those licensing agreements in the future.  The
Company does not have the resources to continue to pursue
licensing arrangements.

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

                                Page 4
<PAGE>
     The Company has developed a controlled release rate
formulation of zidovudine (AZT), which is 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 GlaxoSmithKline plc, which do not expire in the
U.S. until 2005. During the fiscal years ended June 30, 1995
through 1998, clinical trials of AZTEC were conducted at 15 sites
in the United States.  However, clinical work and product
registration activities were halted by the Company because of lack
of financial resources. In the mean time the AIDS treatment
market is evolving rapidly, with many new drugs and combination
treatments introduced in recent years.  The Company currently has
no resources to pursue this project, and it is unclear whether the
Company's formulation would be commercially viable even if it
is successfully developed, in view of the new therapies that have
become available.

Future Drug Delivery System
---------------------------

      The Company has conducted early stage development work
with respect to of a sustained drug delivery system that has shown
potential for oral administration of drugs of macromolecule size,
particularly proteins, polypeptides and polysaccharides, which
have low or no bioavailability when given orally.  After the
previous management abandoned a patent application with respect
to this approach, a new provisional patent application was filed
with the assistance of PRP with respect to this approach in
November 2000. PRP and the Company have agreed that PRP 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. However the
Company has been unsuccessful in reproducing earlier work with
this approach. Any further development of this technology would
require that the Company successfully reproduce the results
apparently obtained in earlier experiments.  The Company
currently has no resources to pursue additional experiments in this
area.  There can be no assurance that any patent will be issued and
if it does, whether the claims will be commercially significant.

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.  However, no controlled clinical field trials have
been carried out. A trademark has been received.

Psorex
------

     The Company has discovered a treatment which it believes may
be useful in alleviating the symptoms of psoriasis. 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.  The Company currently lacks the
resources to conduct any further development work on this
treatment.

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

                            Page 5
<PAGE>
     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.

     Historically, the Company has sought licensing arrangements
for its formulations rather than engage in significant marketing
efforts of its own.  The Company currently has no resources to
pursue licensing arrangements for any of its products under
development.

Employees
---------

     The Company had no full-time employees at June 30, 2001.


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 $4,594 per
month pursuant to a lease through March 31, 2002. The Company
sublets a portion of the premises at $2,700 per month to another
unaffiliated company.


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

     On October 23, 2001, PR Pharmaceuticals, Inc., the
majority shareholder of the Company, filed a complaint in the
District Court for Larimer County, Colorado against Mr. James
Petre and Dr. James Dunn, two of the Directors of the Company.
The complaint alleges that Dr. Dunn and Mr. Petre fraudulently
misrepresented material facts in order to induce PR
Pharmaceuticals to purchase the shares of Verex Laboratories, Inc.
from its then majority shareholders.  Mr. Petre and Dr. Dunn were
terminated as employees of PR Pharmaceuticals, Inc. on October
25, 2001.  As of the date of this report, both Mr. Petre and Dr.
Dunn continue as members of the board of directors of Verex
Laboratories, Inc. As of the date of this filing in February 2002,
Mr. James Petre and Dr. James Dunn filed a request for dismissal
of the above complaint, and a counterclaim with the District Court
for Arapahoe County, Colorado alleging misrepresentations by PR
Pharmaceuticals, Inc.

      On October 28, 2001, the State of Colorado, Central Collection
Service, as agent for the  University of Colorado Midical School, filed
a lawsuit against the Company in the District Court for the City and County
of Denver, Colorado, seeking payment for clinical drug study services
allegedly provided at the reauest of the Company.  Services mentioned in
the complaint were performed before the acquisition of any of the Company's
stock by PR Pharmaceuticals, Inc.  The complaint seeks money damages of
$146,761.85, including accrued interest of $29,543.91.  The Compnay has
filed an answer to the complaint denying any liability to the State of
Colorado.

                             Page 6
<PAGE>
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
         ---------------------------------------------------

    There were no matters 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
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, 2001)             $.50               $.38
Third Qtr.  (Ended March 31, 2001)            $.43               $.43
Second Qtr. (Ended December 31,2000)          $.43               $.43
First Qtr.  (Ended September 30,2000)         $.43               $.43
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

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, 2001, the Company had approximately 1,236
holders of record of its common stock and the closing bid price on
its common stock on Thursday, October 4, 2001 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
                        6/30/01       6/30/00        6/30/99       6/30/98
                                   (as restated)  (as restated)
                      -----------    -----------   -----------   -----------

  Working Capital
  (Deficit)         $(1,605,042)    $ (781,385)    $ (783,256)   $ (254,923)

  Total
  Assets                 53,294        100,237         81,281       170,514

  Total
  Liabilities         1,635,706      1,349,269      2,008,727     1,201,564

  Long
  Term Debt                   0        489,325      1,167,141       933,970

  Shareholders'
  (Deficit)          (1,582,412)    (1,249,032)    (1,927,446)   (1,031,050)

  Revenues                    0         31,546        104,200       301,093

                                 Page 7
<PAGE>
  Net(Loss)            (359,415)      (638,742)      (955,765)     (748,957)

  Net(Loss)
  Per Share                (.14)          (.25)          (.41)         (.32)


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

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

  2001 Compared to 2000, as restated
  -----------------------------------
  Revenues for 2001 were $ -0- compared to $31,546 in 2000.  Revenue 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. The Company has
  no expectation of future contract projects in pharmaceutical
  development, but will analyze the value of such projects if new
  opportunities are presented.  The net loss for 2001 was $359,415 or
  $279,327 less than the restated net loss reported for fiscal 2000.  This
  is principally attributed to the decrease in general and administrative
  expenses of $397,531 that was the result of decreased employment related
  expenses.  This was offset by an increase in interest expense of $96,949
  which was the result of an increase in borrowing activity and the
  accrual of interest on an agreement to settle the Company's accrued
  salaries liability.

  2000 Compared to 1999, as restated
 --------------------------
  Revenues for 2000 were $31,546 compared to $104,200 in 1999.  The
  principle difference in revenue between reporting periods is a
  license fee of $85,000 that the Company received in
  1999.  The Company's licensing and sales revenue is based on the
  Company's ability to develop, protect, and market the Company's
  intellectual property.  It is difficult to predict the Company's future
  recognition of licensing and sales revenue.

  The net loss for 2000 was $638,742 or $317,023 less than the net loss
  reported for fiscal 1999.  This is principally attributed to the
  decrease in general and administrative expenses of $ 249,010 during the
  year ended June 30, 2000. The principal item contributing to reduced
  expenses was the reduction of executive compensation of approximately
  $210,000 as the result of the resignation of the Company's president
  during the year.  In addition, expenditures were reduced as a result of
  the limitation financial resources that occurred throughout the year.


                         Page 8
<PAGE>
Liquidity and Capital Resources
----------------------------------

     At June 30, 2001 the Company had a working capital
deficiency exceeding $1.6 million compared to negative working
capital of $781,385 at June 30, 2000. The principal items
contributing to the deficiency are working capital expenditures
supporting operations for fiscal 2001, and the change in
classification of liabilities for accrued salaries from long-term
liabilities to current liabilities.

     The Company has no capital commitments other than the
payment of deferred salaries to its former employees, aged
accounts payable and the payment of rent on its facilities lease.
The Company currently has no source of funds to meet those
commitments, or to fund ongoing operations.

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

     On or about March 22, 2000, the Company arranged a credit
facility with PRP to borrow up to $1,000,000, which matured
March 21, 2001.  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 was able to 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.

     On March 22, 2001 this credit facility became due and
payable.  PRP did not extend this credit facility and the Company
is currently in default.  At June 30, 2001 the Company owed
$615,000 in principal and $56,000 in interest on this line of credit.
In order for the Company to maintain its commitment to provide
payment of the accrued management compensation the Company
has negotiated a series of 90 day notes with PRP.  At June 30,
2001 the Company had borrowed $45,000 under two notes.  In
addition, PRP has advanced $49,192 on account to enable the
Company to pay operating expenses such as rent and utilities. The
agreement under which PRP acquired its shares in Verex provides
that PRP is obligated to make certain advances to Verex to fund
accrued salaries.  That obligation is disputed by PRP.  See Item 3 -
Legal Proceedings.  PRP has made no other commitments to
continue to provide funds and there is no assurance that funds will
be available to support operations or research and development.
There remains $521,513 of accrued management compensation
and aged payables of approximately $267,000. The Company does
not have adequate resources to fund any operations, including
research or development projects.

Recently issued or Proposed Accounting Standards and Pronouncements
-------------------------------------------------------------------

In July 2001, the Financial Accounting Standards Board issued
SFAS No. 141, Business Combinations, and SFAS No 142,
Goodwill and Other intangible Assets and approved for issuance
SFAS No. 143 Accounting for Asset Retirement Allocations.
SFAS No. 141 requires that the purchase method business
combination must meet to be recognized and reported apart from
goodwill. The adoption of SFAS No. 141 will have no impact on
our fiscal 2001 financial statements.

     SFAS No. 142 requires that goodwill no longer be
amortized, but instead tested for impairment at least annual in

                           Page 9
<PAGE>
accordance with the provisions of SFAS No. 142. Any goodwill
and any intangible asset determined to have an indefinite useful
life that are acquired in a purchase business combination
completed after June 30, 2001 will not be amortized, but will be
evaluated for impairment in accordance with the appropriate
existing accounting literature. The adoption will have no impact
on our fiscal 2001 financial statements.

     SFAS No. 143 requires entities to record the fair value of a
liability for an asset retirement obligation in the period in which it
is incurred and a corresponding increase in the carrying amount of
the related long-lived asset and is effective for fiscal years
beginning after June 15, 2002. Management is currently assessing
the impact SFAS No. 143 will have on our financial condition and
results of operations.

Subsequent Events
------------------

Subsequent to June 30, 2001 the Company received a notice of
claim from the State of Colorado Health Science Center relating to
an alleged debt of approximately $117,219 plus $5,780 of interest
through August 23, 2001 allegedly owed by the Company from
1995.  The Company maintained no record of this alleged liability
and the alleged liability was not recorded as of June 30, 2001.
Further, the Company is subject to many claims in the normal
course of its business operations.  The outcome of the claim and
those in the normal course of its business cannot be accurately
predicted.

Subsequent to June 30, 2001, Edward C. Gruben, Treasurer,
tendered his resignation and was accepted by the Company's
Chairman.

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, Indomethicin and AZT.

Future Business Strategy and Subsequent Events
----------------------------------------------
The Company currently does not have the financial resources to
meet existing commitments or to fund ongoing business
operations.

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

                            Page 10
<PAGE>
       Attached hereto are financial statements responsive to this Item.


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

      On October 9, 2001, Registrant replaced Balukoff Lindstrom &
Co., P.A. ("BL&Co.") as Registrant's principal accountant and
engaged the services of KPMG LLP.  BL&Co. was Registrant's
auditor for the year ended June 30, 2000.

     The decision to replace BL&Co. was approved by unanimous
consent of the Board of Directors of the Registrant on September
18, 2001.

     There have been no disagreements between BL&Co. and the
Registrant on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure.
The term "disagreement" is utilized in accordance with Item 304
of Regulation S-K.

     Registrant provided BL&Co. with a copy of this Current Report
on Form 8-K prior to its filing with the SEC and requested that
BL&Co. furnish it with a letter, addressed to the Securities and
Exchange Commission, indicating that it agrees with the
statements contained in the Current Report on Form 8-K and, if it
does not agree, indicating the statements with which it does not
agree.  BL&Co. provided such letter dated October 9, 2001, stating
that they agreed with the statements made in the disclosure set out
in Item 4 of Form 8-K.


                               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
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.           64          President of the Company (1980 -
                                         March 2000); Director of the
                                         Company (1980 - Present);
                                         Treasurer of the Company (1980 -
                                         March 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                48         Director of the Company

                         Page 11
<PAGE>
                                         (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 <FN1>              49         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.; BA in
                                         Business Administration - University
                                         of Wyoming.


Patrick Bols, Ph.D.          51          Director (March 2000 -
<FN1>                                    Present); President (March 2000
                                         - Present); President and Director PR
                                         Pharmaceuticals Inc.; Director of
                                         Worldwide Business Development -
                                         Johnson & Johnson; Ph.D in
                                         Agricultural Sciences -
                                         University of Gent, Belgium.


Edward C. Gruben             55          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. Subsequent to June 30, 2001,
                                         Mr. Gruben resigned as an officer
                                         and employee of the company.


<FN1> Messrs. 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, 2000 to
June 30, 2001, the Board of Directors met two times, and all
directors attended the meetings, either in person or by telephone.

                               Page 12
<PAGE>
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.

                                Summary Compensation
                Annual Compensation                 Long-Term
Compensation
         ----------------------------------  ---------------------------------
                                                 Awards            Payouts
                                            ----------------   --------------
                                     Other                              All
                                     Annual    Restricted               Other
Name and                             Compen-   Stock            LTIP   Compen-
Principal          Salary     Bonus  sation   Award(s) Options/ Payouts sation
Position      Year   ($)       ($)     ($)        ($)    SARs(#)  ($)    ($)
---------     ----  ------    -----   -------   -------- ----- ------- -------
James M.      2001     -0-     -0-      -0-       -0-     -0-     -0-    -0-
Dunn, M.D.    2000  125,000    -0-      -0-       -0-     -0-     -0-    -0-
 (Former      1999  125,000    -0-    9,063       -0-     -0-     -0-    -0-
President and
Chairman of
the Board)

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

  (1)  Dr. Dunn was actually paid -0-, $31,250, and $0 as salary for
the years ended June 30, 2001, 2000 and 1999, 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 2001 and 2000, in
other forms of compensation comprised of premiums paid on life
insurance and automobile lease and maintenance expense. He
earned $ -0-, $5,506 and $5,506 in vacation allowance for fiscal
2001, 2000 and 1999, respectively and $0, $0 and $0 respectively
in product minimum royalties for each fiscal year: 2001, 2000 and
1999, all of which was deferred along with accumulated amounts
through January 1, 2000.

  (3)  Excludes amounts accrued and forgiven by Dr. Dunn on
March 31, 1997.

Employment Contract - James M. Dunn, M.D.
-------------------------------------------
     On November 30, 1993, the Company entered into an
employment agreement with its now former 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 was 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

                        Page 13
<PAGE>
prior to December 31, 1998. On March 31, 2000, Dr. Dunn
resigned from the Company as an employee, its President and
Chairman.

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 $9,146 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/Directors agreed to an employment contract. The
employee was to be  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. In April of
2001, this employee resigned his position with the Company and
agreed to an employment agreement with PRP on similar terms as
he had with the Company.

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
Commission, the table on the following page reflects certain
information as of September 30, 2001 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 <FN1>         Outstanding
------------------         -----------------      -----------------

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

Steve R. Howe <FN2>

Patrick Bols <FN2>

                            Page 14
<PAGE>

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

James B. Petre                  -0-                      0%

Officers and Directors
as a Group (2 persons)       1,345,517               52.95%
------------------------

<FN1>  This table is based on 2,540,987 shares outstanding and
contingently issuable, 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.

<FN2>  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 $4,594 plus a pro rata share of
maintenance costs.  A portion of the space is subleased to Jerry R.
Dunn, a former officer of the Company at $2,700 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.  As of June 30, 2001 the Company owed $30,000 in
fees under this agreement which is accruing finance charges for
late payment at 10% per annum.  The Company has accrued $660
in finance charges to June 30, 2001.

Agreement Regarding Patent Prosecution, Research and Development

On November 16, 2000, the Company signed an agreement
concerning the development of the Company's sustained release
approach for oral delivery of macromolecules with PRP.  This
agreement provides that PRP will make certain payments for the
research, development and intellectual property expenses incurred
in connection with this approach. Pursuant to this agreement, a
provisional patent application was filed, and additional studies
have been conducted. To date, the Company had not been able to
replicate earlier favorable data.  Any further development of this
technology would require that the Company successfully
reproduce the results apparently obtained in earlier experiments.
The Company currently has no resources to pursue additional
experiments in this area.  There can be no assurance that any
patent will be issued and if it does, whether the claims will be
commercially significant.

                             Page 15
<PAGE>
                           PART IV

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


(a)   (1)   The following financial statements are included in
Part II, Item 8 of this Report:  The financial statements have been
restated for the year ended June 30, 2000 to reflect information
discovered in the current year audit.  These adjustments have some
effect on the all 10-Q's filed for the years ended June 30, 2001 and
2000.  These 10-Q's have not been amended to reflect these
adjustments, as of the date of this filing.  The amendment of these
quarterly reports would require a considerable additional expense
and may be unwarranted in light of the current financial position
of the Company. The financial statements should be read with this
in mind.

Report of Independent Certified Public Accountants

            Balance Sheets at June 30, 2001 and 2000

For the years ended June 30, 2001 and 2000,:

              Statements of Operations
              Statements of Shareholders' Deficit
              Statements of Cash Flows

            Notes to Financial Statements

      (2)   All schedules are omitted because they are not required,
            are inapplicable, or the information is otherwise shown in
            the financial statements or notes thereto.



                              Page 16
<PAGE>
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)                             4/26/02
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)                             4/26/02
By:(Signature)                     /s/ Patrick Bols
(Name and Title)                   Patrick Bols, President and Director




(Date)                             4/26/02
By:(Signature)                     /s/ Steve R. Howe
(Name and Title)                   Steve R. Howe, Chairman of the
                                   Board, Secretary and Director








                                Page 17
<PAGE>
                     INDEX TO FINANCIAL STATEMENTS
                     -----------------------------

                                                                Page
                                                                ----
Independent Auditors' Report - 2001                              F-1
Independent Auditors' Report - 2000                              F-2

 Balance Sheets for June 30,2001 and 2000                        F-3
 Statements of Operations for June 30, 2001 and 2000             F-4
 Statements of Shareholder's Deficit June 30, 2001 and 2000      F-5
 Statements of Cash Flows June 30, 2001 and 2000                 F-6
 Notes to Financail Statements  June 30, 2001 and 2000        F-7 - F-16

Balance Sheets for Sept, 30, 1999 and Dec. 31, 1999              F-17
Statements of Operation Sept, 30, 1999 and Dec. 31, 1999         F-18

Balance Sheets March 31, 2000 and June 30, 2000                  F-19
Statements of Operations March 31, 2000 and June 30, 2000        F-20

Balance Sheets for Sept 30, 2000 and Dec. 31, 2000               F-21
Statements of Operations Sept. 30, 2000 and Dec. 31, 2000        F-22

Balance Sheets Reported and Restated for March 31, 2001          F-23
Statements of Operations Reported and Restated for
   March 31, 2001                                                F-24












<PAGE>
Independent Auditors' Report


The Board of Directors
Verex Laboratories, Inc.:

We have audited the accompanying balance sheet of Verex
Laboratories, Inc. (the Company) as of June 30, 2001, and the
related statement of operations, shareholders' deficit, and cash
flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
audit.

We conducted our audit in accordance with auditing standards
generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides 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 Verex
Laboratories, Inc. as of June 30, 2001, and the results of its
operations and its cash flows for the year then ended in conformity
with accounting principles generally accepted in the United States
of America.

The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As
discussed in note I to the financial statements, the Company has
suffered recurring losses from operations and has a net capital
deficiency that raise substantial doubt about its ability to continue
as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.




KPMG LLP


Denver, Colorado
October 15, 2001




                             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.
                             BALANCE SHEETS
                         June 30, 2001 and 2000
<TABLE>
<CAPTION>
                 Assets                      2001           2000
                                            ------         ------
<S>                                    <C>            <C>
  Current assets:

       Cash                                   $209         $33,967
       Note receivable                      25,300          25,300
       Other Receivable                        555               -
       Prepaid expenses and deposits         4,600          19,292
                                        ----------     -----------
            Total current assets            30,664          78,559

  Property and equipment:

       Furniture and equipment             496,874         496,874
       Leasehold improvements                1,317           1,317

       Accumulated depreciation and
         amortization                     (495,108)       (493,561)
                                        -----------     -----------
       Net property and equipment            3,083           4,630

  Intangible assets -
       Patents, net of accumulated
         amortization of $4,698 and
         $2,651, respectively, as
           restated                         19,547          17,048
                                        ----------     -----------
            Total assets                   $53,294        $100,237
                                        ==========     ===========
Liabilities and Shareholders' Deficit

  Current liabilities:

       Accounts payable, as restated      $266,815        $313,020
       Accrued expenses, as restated       113,960          18,621
       Current portion of salary
          and benefits payable             521,513         180,000
        Accrued royalties                   32,500          32,500
       Notes payable, in default
         related party, as restated        700,918         315,803
                                        ----------     -----------
           Total current liabilities     1,635,706         859,944

  Salary and benefits payable,
   net of current portion, as restated           -         489,325
                                        ----------     -----------
            Total liabilities            1,635,706       1,349,269

  Shareholders' deficit

     Common stock, no par value,
       100,000,000 shares authorized
       2,387,907 and 2,327,359 shares
       issued and outstanding at
       June 30, 2001 and 2000,
       respectively, as restated        14,038,977      14,012,942
       Accumulated deficit, as
         restated                      (15,621,389)    (15,261,974)
                                       ------------    ------------
     Total shareholders' deficit        (1,582,412)     (1,249,032)
                                       ------------    ------------
  Commitments and contingencies
   Total liabilities
     and shareholders' deficit             $53,294        $100,237
                                       ===========     ===========
</TABLE>
  See accompanying notes to financial statements



                                  F-3
<PAGE>
                       VEREX LABORATORIES, INC.
                       STATEMENTS OF OPERATIONS
                 Years Ended June 30, 2001 and 2000
<TABLE>
<CAPTION>
                                                  2001            2000
                                                 ------          ------
<S>                                          <C>              <C>
  Revenues

       Sales                                  $       -                $70
        Special projects                              -             31,476
                                              ---------        -----------
            Total operating revenues                  -             31,546

  Expenses
       Selling, general and
         administrative expenses, as restated   265,578            663,109
       Research and development                  11,039             17,042
                                              ---------         ----------
            Total operating expenses            276,617            680,151
                                              ----------        -----------
            Loss from operations               (276,617)          (648,605)
                                              ----------        -----------
  Other income(expense)
       Other income                              43,743             39,451
       Interest income                                -                  4
       Interest expense, as restated           (126,541)           (29,592)
                                              ----------        -----------
            Total other income
               (expense), net                   (82,798)             9,863
                                              ----------        -----------

  Loss before income taxes                     (359,415)          (638,742)

  Income taxes                                        -                  -
                                              ----------         ----------
                   Net loss                   $(359,415)         $(638,742)
                                              ==========         ==========
  Net loss per common share
    basic and diluted                            $(0.14)            $(0.25)

  Weighted average shares
    outstanding basic and diluted,
    as restated                               2,540,987          2,513,118


</TABLE>
  See accompanying financial statements

                                     F-4
<PAGE>
                          VEREX LABORATORIES, INC.
                   STATEMENTS OF SHAREHOLDERS' DEFICIT
                   Years Ended June 30, 2001 and 2000
<TABLE>
<CAPTION>

                                                                    Total
                                   Common        Accumulated     shareholders'
                                   stock           deficit          deficit
                                  -------        -----------     ------------
<S>                            <C>             <C>              <C>
  Balances at June 30, 1999,
    as restated                 $12,695,786     $(14,623,232)    $(1,927,446)

       Net loss                           -         (638,742)       (638,742)
       Accrued compensation
         converted to equity      1,317,156                -       1,317,156
                                -----------     ------------     -----------
  Balances at June 30, 2000,
    as restated                  14,012,942      (15,261,974)     (1,249,032)
       Net loss                           -         (359,415)       (359,415)


       Issuance of common stock      26,035                -          26,035
                                -----------     -------------    ------------
  Balances at June 30, 2001     $14,038,977     $(15,621,389)    $(1,582,412)
                                ===========     =============    ============
</TABLE>
  See accompanying financial statements










                                 F-5
<PAGE>
                       VEREX LABORATORIES, INC.
                       STATEMENTS OF CASH FLOWS
                Years Ended June 30, 2001 and 2000
<TABLE>
<CAPTION>
                                                    2001           2000
                                                   ------         ------
<S>                                            <C>           <C>
  Cash flows from operating activities:

    Net loss                                      $(359,415)    $(638,742)
    Adjustments to reconcile net loss to
      net cash used by operating activities:
      Depreciation and amortization                   3,594         6,648
  Changes in operating assets and liabilities:
       Note receivable                                    -        (6,000)
       Other receivable                                (555)            -
       Prepaid expenses                              14,692       (11,633)
       Accounts payable                             (20,170)       62,278
       Accrued expenses                              95,339         3,528
       Note payable, in default, related party        5,115         5,051
       Salary and benefits payable                 (147,812)      306,841
                                                  ----------   -----------
   Net cash used by operating activities           (409,212)     (272,029)

  Cash flows used by investing activities:
    Acquisition of property and equipment                 -        (2,325)
    Investment in intangibles                        (4,546)       (3,050)
                                                  ----------   -----------
    Net cash used by investing activities            (4,546)       (5,375)

  Cash flows from financing activities -
    Proceeds from issuance of notes payable          380,000      280,000
                                                  ----------   ----------
           Net cash provided by
              financing activities                   380,000      280,000

              Net increase (decrease) in cash        (33,758)       2,596
  Cash at beginning of year                           33,967       31,371
                                                   ----------  ----------
                 Cash at end of year                    $209      $33,967
                                                   ==========  ==========
  SUPPLEMENTAL CASH FLOW DISCLOSURES:

       Cash paid for interest                        $32,877   $   21,828

       Non-cash financing activity -
         Deferred compensation converted
          to paid in capital                        $      -   $1,317,156
         Exchange of payable to common stock        $ 26,035   $        -




</TABLE>
  See accompanying financial statements

                                    F-6
<PAGE>

                         VEREX LABORATORIES, INC.
                     Notes to Financial Statements
                         June 30, 2001 and 2000


  (1) Summary of Significant Accounting Policies
  ----------------------------------------------
  (a)  Company Operations and Basis of Presentation
  -------------------------------------------------
  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 of developing and marketing
  non-prescription and prescription drug products 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 disbanded
  and is no longer in existence.  There was no activity for Bear
  Laboratories in 1999 and consequently no information for Bear
  Laboratories, Inc. is consolidated in the Company's financial statements
  for the fiscal years ended June 30, 2000 and 2001. On March 31, 2000 PR
  Pharmaceuticals, Inc. (PRP) purchased approximately 53% of the
  outstanding common 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.

  The accompanying financial statements have been prepared assuming the
  Company will continue as a going concern.  As shown in the accompanying
  financial statements, the Company has a working capital deficit of
  $1,605,042 as of June 30, 2001, and has a shareholders' deficit of
  $1,582,412, which factors raise substantial doubt about the Company's
  ability to continue as a going concern.  The accompanying financial
  statements do not include any adjustments relating to the outcome of
  this uncertainty.

  (b)  Property and Equipment
  ---------------------------
  Property and equipment are recorded at cost.  Depreciation, which
  totaled $1,547 and $4,830 for the years ended June 30, 2001 and 2000
  respectively, is calculated using the straight-line method over the
  estimated useful lives of the assets, which range from five to ten
  years.  Leasehold improvements are amortized on a straight-line basis
  over the term of the related lease.

  (c)  Intangible assets
  ----------------------
  Intangible assets consist of patent costs associated with the
  development of patent rights in developed and purchased technology.
  Intangibles are amortized using the straight-line method over the
  estimated useful life of ten years.

  (d) Long-Lived Assets
  ---------------------
  The Company reviews long-lived assets (including intangible assets) for
  impairment whenever events or changes in circumstances indicate that the

                               F-7
<PAGE>
  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.

  (e) 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.  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) Research and Development Costs
  ----------------------------------
  The Company expenses research and product development costs as incurred.

  (g)  Income Taxes
  -----------------
  Income taxes are accounted for under the asset and liability method.
  Deferred tax assets and liabilities are recognized for the future tax
  consequences attributable to differences between the financial statement
  carrying amounts of existing assets and liabilities and their respective
  tax bases and operating loss and tax credit carryforwards.  Deferred tax
  assets and liabilities are measured using enacted tax rates expected to
  apply to taxable income in the years in which those temporary
  differences are expected to be recovered or settled.  The effect on
  deferred tax assets and liabilities of a change in tax rates is
  recognized in income in the period that includes the enactment date.  A
  valuation allowance is established to reduce deferred income tax assets
  to the amounts expected to be realized.

  (h) Stock Based Compensation
  ----------------------------
  The Company accounts for its stock plans in accordance with the
  provisions of Accounting Principles Board (APB) Opinion No. 25,
  Accounting for Stock Issued to Employees, and related interpretations.
  As such, compensation expense is recorded on the date of grant only if
  the current market price of the underlying stock exceeds the exercise
  price.  The Company has adopted Statement of Financial Accounting
  Standards   No.  123  (SFAS No. 123), Accounting   for   Stock-Based

                              F-8

  Compensation, which permits entities to recognize as expense over the
  vesting period the fair value of all stock-based awards on the date of
  grant.  Alternatively, SFAS No. 123 also allows entities to continue to
  apply the provisions of APB Opinion No. 25 and provide pro forma net
  income (loss) disclosures for employee stock option grants made in 1995
  and thereafter as if the fair-value-based method defined in SFAS No. 123
  had been applied.  The Company has elected to continue to apply the
  provisions of APB Opinion No. 25 and provide the pro forma disclosures
  required by SFAS No. 123.

  (i)  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 disclosure of contingent assets
  and liabilities at the date of the financial statements and the reported
  amounts of revenue and expense during the reporting period.  The Company
  used significant estimates in the accompanying financial statements
  related to estimated life of the patents.  Actual results could differ
  significantly from those estimates.

  (j)  Fair Value of Financial Instruments
  ----------------------------------------
  The carrying amounts of financial instruments including cash, accounts
  payable, notes payable and accrued expenses approximated fair value as
  of June 30, 2001 and 2000 because of the relatively short maturity of
  these instrument.

  (k) Reclassifications
  ---------------------
  Certain prior year amounts have been reclassified to conform with the
  current year presentation.

  (2) Intangible Assets
  ---------------------
  Intangible assets consist of the following as of June 30:

                                                    2001             2000
                                                   ------           ------
  Patent costs for developing patent rights    $   24,245           19,699

  Less accumulated amortization                    (4,698)          (2,651)
                                               -----------       ----------

                 Total                         $   19,547           17,048
                                               ===========       ==========

  (3) Notes, Salary and Benefits Payable
  --------------------------------------
  Notes, salary and benefits payable as of June 30, consist of the
  following:
                                                      2001        2000
                                                   ----------  ----------
  Salaries and vacation owed to the prior
  President and Officer/Director for past
  services with an interest rate of 7%,

                                 F-9
<PAGE>
  Principal payments in monthly installments
  of $15,000 for twenty-four months with
  the remaining balance and interest due on
  February 1, 2002.                                 $ 521,513   $669,325

  Notes payable to PRP currently in default           615,000    280,000

  Unsecured notes payable to PRP with an
  interest rate of 15.40%, interest paid
  at maturity with principal balances of
  $30,000 due August 3, 2001 and $15,000
  due August 29, 2001.                                 45,000         -

  A series of 90 day notes payable to the
  former president of the Company currently
  in default; non interest bearing and
  maturing from July 1997 to June 2001 with
  a default rate of interest of 18%; the
  notes are not collateralized and
  include interest accrued at default rate            40,918      35,803
                                                  -----------   ---------
                                                   1,222,431     985,128
               Less current portion               (1,222,431)   (495,803)
                                                  -----------   ---------
                                                  $        -    $489,325
                                                  ===========   =========

  On March 22, 2000, the Company arranged a credit facility with PRP to
  borrow up to $1,000,000 to help fund approximately $704,000 of the
  Company's deferred employee compensation, and other working capital.
  All advances under this arrangement are secured by all of the Company's
  assets.  The Company could request advances under this line of credit
  from time to time as long as it was in compliance with the "Conditions
  of Lending" under the Master Loan Agreement.  Generally, PRP would make
  advances pursuant to the "Conditions Of Lending" as long as the Company
  was complying with the material terms of the Master Loan Agreement and
  there were no material adverse changes in its financial condition.
  Interest was accrued quarterly at an interest rate of 15.78% with all
  outstanding principal and accrued interest due on March 22, 2001.   As
  of June 30, 2001 the Company has borrowed $615,000 on the line of credit
  and is in default.  Accrued interest for the period from January 1, 2001
  to March 22, 2001 has not been paid and interest is now accruing at the
  default rate of 19.78%.  As of June 30, 2001 the Company has accrued a
  total of $56,017 in interest that remains unpaid.

  As of September 30, 2001 the Company has borrowed an additional $45,000
  with a Series of 90 day unsecured notes payable to PRP with an interest
  rate of 15.40% and interest due at maturity.  In addition $45,000 of
  unsecured notes payable to PRP outstanding at June 30, 2001 are in
  default as of this date.

  In addition to these formal notes, PRP has advanced to the company
  $65,870 on open account as of September 30, 2001 to assist the Company
  in funding normal operations.

  (4)  Stockholder contributions
  ------------------------------
  On March 31, 2000 the Company's former President and Officer/Director
  forgave the Company a total of $1,317,156 of deferred compensation.  The

                             F-10
  amount forgiven is reflected in common stock as additional paid-in-
  capital during the year ended June 30, 2000.

  (5) Common Stock
  ----------------
  Net Loss Per Common Share
  -------------------------
  Basic earnings (loss) per share is computed by dividing income (loss)
  by the weighted average number of common shares and contractually
  obiligated shares outstanding.  Diluted earnings per share is computed
  by dividing income (loss) available to common stockholders by the
  weighted average number of common shares and contingently obligated
  shares outstanding increased for potentially dilutive common shares
  outstanding during the period unless the impact is anti-dilutive.  Basic
  and diluted earning (loss) per share for June 30, 2001 and 2000 are as
  follows:

                                                        2001          2000
                                                     -----------   ---------
  Net income (loss)                                  $ (359,415)   (638,742)

  Common and common equivalent shares outstanding:
    Historical common shares outstanding at
    beginning of year                                 2,327,359   2,327,359

  Weighted average contractually obligated shares *     175,640     185,759

  Weighted average common equivalent shares
    issued during year                                   37,988      - 0 -

   Weighted average common shares - basic             2,540,987   2,513,118

   Weighted average common equivalent shares issued
          during the year                              - 0 -         - 0 -

   Weighted average common shares - diluted          2,540,987    2,513,118
                                                    -----------   ----------
   Net loss per basic share                         $     (.14)        (.25)

   Net loss per diluted share                             (.14)        (.25)

  * includes 22,560 of weighted average of 60,548 shares contingently
    available at June 30, 2000 which were issued in November 2000.












                                  F-11
<PAGE>
  Stock Options
  -------------
  The following is a summary of options at June 30, 2001 and 2000:

                                                                  Weighted
                                                                   average
                                              Exercise            exercise
                                              price per           price per
                            Options             share               share
                            -------           ---------           ---------

Balance at June 30, 1999    980,000        $   .75 - 2.50         $    .85
      Granted                - 0 -                    .00              .00
      Cancelled            (980,000)       $   .75 - 2.50              .85
                           ---------       --------------        ---------
Balance at June 30, 2000     - 0 -                    .00              .00
      Granted                - 0 -                    .00              .00
                           ---------       --------------        ---------
Balance at June 30, 2001     - 0 -                    .00              .00

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
















                                F-12
<PAGE>
  (6) Income Taxes
  ----------------
  Income tax expense differed from the amounts computed by applying the
  U.S. federal income tax rate of 34% to pretax loss as a result of the
  following:

                                                         June 30,
                                                   2001           2000
                                                ---------       --------
Computed expected tax expense (benefit):      $( 122,201)      (217,172)
   Reduction (increase) in income taxes
     resulting from:
   State and local taxes, net of federal
     benefit                                     (11,268)       (20,025)
    Benefit reduction caused by
     NOL expiration                              285,367        740,298
    Non-Deductible Expenses                          655             22
    Other, net                                    12,388         25,375
Change in valuation allowance                   (164,941)      (528,498)
                                              -----------      ---------
Income tax (expense) benefit                  $        -       $      -
                                              ===========      =========


  At June 30, 2001, the Company has a net operating loss carryforward for
  income tax purposes of approximately  $8,450,000  expiring during the
  period from  2002 to  2021.  Research and  experimental  tax  credit
  carryforwards approximate   $24,000.   The future utilization of the
  operating loss carryforwards or the time period in which the
  carryforwards may be utilized could be limited.

  As of June 30, 2001, the Company had a gross deferred tax asset of
  appoximately $3,050,000 relating primarily to the Company's net
  operating loss carryforward.  A valuation allowance for asset has been
  recorded due to management's determination that it is not more likely
  than not that the tax assets will be utilized.

  (7) 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 $9,146 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 Company and one of its Officer/Director agreed to
  a new employment contract for five years.  The employee was paid a base
  salary of $80,000 per year.  On March 19, 2001, the Company transferred
  its future rights to the employment of this employee, consistent with
  his employment contract with the Company, to PRP.  PRP assumed none of

                                F-13
<PAGE>
  the prior obligation of the Company for the employee other than those
  stated in the purchase agreement date March 31, 2000 described
  herein. 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 would be used to accelerate the payment of the
  accrued salary.  The accelerated 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 approximately
  $2.5 million. The Company has paid $0 on this royalty agreement for the
  years ended June 30, 2001 and 2000.

  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 a 60 days prior written notice. As of June 30, 2001
  the Company owes $30,000 in fees under this business services agreement
  and is accruing finance charges for late payment at 10% per annum.   The
  Company has accrued $660 in finance charges to date under this
  agreement.  As of  September 30, 2001 the Company has incurred an
  additional $15,000 in fees which along with the balance of June 30, 2001
  has not been paid.

  Agreement Regarding Patent Prosecution, Research and Development
  ----------------------------------------------------------------
  On November 16, 2000, the Company signed an agreement concerning the
  development of the Company's sustained release approach for oral
  delivery of macromolecules with PR Pharmaceuticals. This agreement
  provides that PRP will make certain payments for the research,
  development and intellectual property expenses incurred in connection
  with this approach. Pursuant to this agreement, a provisional patent
  application was filed, and additional studies have been conducted. To
  date, the Company had not been able to replicate earlier favorable data.
  The Company and PRP are evaluating experiments with respect to this
  approach.

  Officer and Employee Lending
  ----------------------------
  In prior fiscal years, the Company entered into a series of lending
  transactions with its then President/Director and with an
  Officer/Director of the Company.   The lending activity was in the form
  of periodic advances made to and from the Company with related parties.
  Notes made to the Company were non-interest bearing 90-day notes with a
  default rate of 18%.  No action was taken by the Board of Directors of
  the Company relative to these lending activities.   A liability to the
  past President/Director in the amount of $40,918, which includes accrued
  interest, remains outstanding at June 30, 2001.  A receivable from the
  Officer/Director in the amount of $25,300, also remains outstanding at
  June 30, 2001.

                                 F-14
<PAGE>
  (8)  Commitments and Contingencies
  ----------------------------------
  Office
  ------
  Currently, the Company occupies space under a lease agreement requiring
  monthly payments of $4,594.  The lease commitment expires March 31,
  2002.   The Company subleased a portion of the leased space from April
  1, 2000 through March 31, 2001 for $2,500 per month and from June 1
  through June 30 2001 for $2,700 per month.

  Rent expense (which includes a pro rata share of certain maintenance
  costs), net of sublease income was $43,551 and $45,269 for the years
  ended June 30, 2001 and 2000, respectively.

  Vehicle
  -------
  The future minimum annual lease payments through expiration of the
  office lease are as follows:

            July 1 to December 31, 2001       $    27,564
            January 1 to March 31, 2002            13,782
                                              -----------
                                              $    41,346


  The Company has commitments to issue approximately 153,000 shares of
  common stock in exchange for cash previously given and forgiveness of
  accounts payable of approximately $42,000.

  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.  The Company has incurred and
  paid nothing  on this royalty agreement for the years ended June 30, 2001
  and 2000, respectively.

(9)  Restatement
     -----------
The Company has restated its June 30, 2000 and June 30, 1999 financial
statements to properly reflect certain information discovered in the current
financial audit.  Below is a summary of the transactions that caused
restatement followed by a table of quarterly balance sheet and statements of
operations comparing the financial information as originally reported in the
10-Q and as restated.

  - Net intangible assets were reduced by $96,925 as of June 30, 2000 as a
result of a re-evaluation of the support for their carrying value.  The
adjustment was carried back to the fiscal year ended June 30, 1999.  Net
loss was reduced by $22,301 for the period ended June 30, 2000 as a
result of the adjustment of amortization expense recognized for the year.
Intangible assets consist of the accumulation of capitalized legal costs
associated with certain filings for patent rights on the Company's
intellectual property.  The Company could not detail.

                              F-15
<PAGE>
  -  A transaction recorded in March of 2000 involving the settlement of
accrued salaries was re-evaluated resulting in recording $81,934 of
additional liability for vacation accruals that were inappropriately
written down in the transaction.  In addition $360,000 of salaries which had
been accrued during that fiscal year and $71,012 of current salaries paid
were inappropriately reversed out in the settlement transaction resulting
in an under reporting of expense and under reporting of the contribution to
capital.  The financial statements have been restated to reflect the more
appropriate recording of this accrued salary settlement transaction.  The
effect is to increase the Company's net loss at June 30, 2000 by $440,476,
and to increase the contribution to capital recognized on this transaction
to $1,317,156.

  -  Current liabilities and net loss were restated to reflect the adjustment
of several transactions involving the accrual of interest, property, and the
settlement of certain payables with the agreement to issue stock. Interest
on a judgment recognized against the Company was accrued and the value of the
stock issued was recalculated using the closing price of the Company's stock
on the date the transaction occurred rather than the average price on that
day.  The net result was a decrease in expense and decrease in liabilities
of $223 for the year ended June 30, 2000.

Below is a table showing the balance sheets and statement of
operations for the previous quarters showing a comparison of the
balances as originally filed against the balances as restated.  In
addition to adjustments for the transactions explained above there
were also some reclassifications of accounts to provide a more
consistent presentation.

















                                   F-16
<PAGE>
                       VEREX LABORATORIES, INC.
                             BALANCE SHEETS
<TABLE>
<CAPTION>
                    As Reported    As Restated     As Reported    As Restated
                  Period Ending   Period Ending   Period Ending  Period Ending
                  Sept. 30, 1999  Sept. 30, 1999  Dec. 31, 1999  Dec. 31, 1999
                  --------------  --------------  -------------  -------------
<S>              <C>             <C>             <C>            <C>
Assets
 Current assets:
  Cash and cash
    equivalents            3,080           3,080         13,332        13,332
  Note receivable         19,800          19,800         22,300        22,300
  Other receivables            -               -              -             -
  Prepaid expenses         7,659           7,659          7,367         7,367
                   -------------- -------------- -------------- --------------
                          30,539          30,539         42,999        42,999
<CAPTION>
 Property and equipment, at cost
<S>               <C>             <C>            <C>            <C>
   Furniture and
     equipment           494,548         494,548        496,874       496,874
   Leasehold
     improvements          1,317           1,317          1,317         1,317
                  --------------  --------------  -------------  ------------
                         495,866         495,866        498,191       498,191

  Less accumulated
    depreciation        (489,938)       (489,938)     (491,146)      (491,146)
    and amortization
                    -------------- -------------- -------------- --------------
     Property and
       equipment
       - net               5,928           5,928          7,045         7,045
 Other assets:
   Patents and
    trademarks,
    net of
    accumulated
    amortization
    of                   127,926          15,399        138,734        14,982

                    -------------- -------------- -------------- --------------
           Total         164,393          51,865        188,778        65,026
                    ============== ============== ============== ==============
<CAPTION>
Liabilities and Stockholders' Equity
<S>                     <C>             <C>          <C>         <C>
Current Liabilities
   Accounts Payable           291,090      272,055      312,082       295,118
   Accrued Expenses                         16,885                     10,010
   Accrued salary and
     benifits payable         764,970      764,970      773,434       773,434
   Accrued royalties           32,500       32,500       32,500        32,500
   Notes payable                    -            -       30,000        30,000
   Notes payable -
     related parties           24,938       32,011       24,938        33,271
                         ------------   ----------    ---------     ---------
Total current liabilities   1,113,498    1,118,420    1,172,955     1,174,333

 Long-term debt
  Accrued salary and
    benefits payable,
    net of current
    portion                 1,098,362     1,098,362    1,273,822    1,274,822
                         ------------   -----------   ----------    ---------
     Total Liabilities      2,211,860     2,216,782    2,446,777    2,449,155


 Stockholders' deficit
 Common Stock, no par
   value, 100,000,000
   shares authorized
   shares issued and
   outstanding             12,695,786    12,695,786   12,695,786   12,695,786
 Accumulated deficit      (14,743,253)  (14,860,703) (14,953,785) (15,079,914)
                          ------------  ------------ ------------ ------------
                           (2,047,467)   (2,164,917)  (2,257,999)  (2,384,129)
                          ------------  ------------  -----------  -----------
                Total         164,393        51,865      188,778       65,026
                          ============  ============  ===========  ===========


</TABLE>
                                     F-17
<PAGE>
                        VEREX LABORATORIES, INC.
                         STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
                      As Reported    As Restated     As Reported    As Restated
                  Period Ending   Period Ending   Period Ending  Period Ending
                  Sept. 30, 1999  Sept. 30, 1999  Dec. 31, 1999  Dec. 31, 1999
                  --------------  --------------  -------------  -------------
<S>                   <C>          <C>            <C>            <C>
Revenues
   Sales
   Special projects        2,333          2,333        16,898          16,898
                       ----------   ------------   -----------    -----------
Total Operating Income     2,333          2,333        16,898          16,898


 Expenses
   Selling, general
    and administrative
    expenses             171,705        233,227       396,584         469,503
   Research and
    development                           9,651                        18,219
                       ----------   ------------   ------------   -----------
Total operating
  expenses               171,705        242,878       396,584         487,721
                       ----------   ------------   ------------   -----------
Loss from operations    (169,373)      (240,546)     (379,686)      (470,824)
                       ----------   ------------   ------------   ------------

 Other income (expense)                                    71
   Sub-lease and
     other income                         5,010                       18,415
   Interest income                            1                            2
   Interest Expense            -         (1,938)         (287)        (4,163)
                       -----------  ------------   -----------    -----------
Total other income
  (expense), net               -          3,072          (287)        14,254
                       -----------  ------------   ------------   -----------

 Loss before income
  taxes                 (169,372)      (237,473)     (379,902)      (456,570)
                       ----------   ------------   -----------    -----------
 Net Income (loss)      (169,372)      (237,473)     (379,902)      (456,570)
                       ==========   ============   ===========    ===========

 Net income (loss)
   per common share        (0.07)         (0.10)        (0.16)         (0.18)

 Weighted average
   shares outstanding  2,327,359      2,480,439     2,327,359      2,485,821









</TABLE>


                                  F-18
<PAGE>
                      VEREX LABORATORIES, INC.
                           BALANCE SHEETS
<TABLE>
<CAPTION>
                   As Reported    As Restated     As Reported    As Restated
                  Period Ending  Period Ending   Period Ending  Period Ending
                 March 31, 2000  March 31, 2000  June 30, 2000  June 30, 2000
                 --------------  --------------  -------------  -------------
<S>                <C>           <C>             <C>             <C>
Assets
 Current assets:
   Cash and cash
     equivalents       (21,790)       (21,790)         33,967         33,967
   Note receivable      25,300         25,300          25,300         25,300
   Other receivables         -              -               -              -
   Prepaid expenses      7,367          7,367          19,292         19,292
                    -----------   ------------     ----------     ----------
                        10,877         10,877          78,559         78,559

 Property and
  equipment, at cost
   Furniture and
     equipment         496,874        496,874         496,874        496,874
   Leasehold
     improvements        1,317          1,317           1,317          1,317
                    -----------   -----------      ----------     ----------
                       498,191        498,191         498,191        498,191

  Less accumulated
    depreciation      (492,353)      (492,354)       (493,561)      (493,561)
    and amortization
                    -----------   ------------     -----------    -----------
  Property and
   equipment - net       5,838          5,837           4,630          4,630
 Other assets:
  Patents and
   trademarks,
   net of
   accumulated
   amortization of     129,863         14,490         113,973         17,048
                    ----------    -----------       ---------     ----------
 Total                 146,578         31,204         197,163        100,237
                    ==========    ===========       =========     ==========
<CAPTION>
Liabilities and Stockholders' Equity
<S>                <C>          <C>             <C>              <C>
Current Liabilities
   Accounts Payable    375,200        345,219         321,633        313,020
   Accrued Expenses                    24,701          14,173         18,621
   Accrued salary and
     benifits payable  180,000        180,000         180,000        180,000
   Accrued royalties    32,500         32,500          32,500         32,500
   Notes payable        80,280         80,000         280,000        280,000
   Notes payable -
    related parties     24,938         34,531          24,938         35,803
                    ----------    -----------    ------------     ----------
Total current
  liabilities          692,917        696,950         853,244        859,944

 Long-term debt
  Accrued salary
   and benefits
   payable, net of
   current portion     429,593        511,527         407,391        489,325
                    ----------    -----------    ------------     ----------
  Total Liabilities  1,122,510      1,208,477       1,260,635      1,349,269


 Stockholders'
   deficit
 Common Stock,
  no par value,
  100,000,000 shares
  authorized shares
  issued and
  outstanding       13,725,411     14,012,942      13,725,412     14,012,942
 Accumulated
  deficit          (14,701,343)   (15,190,215)    (14,788,885)   (15,261,974)
                   ------------   ------------    ------------   ------------
                      (975,932)    (1,177,273)     (1,063,473)    (1,249,032)
                   ------------   ------------    ------------   ------------
 Total                 146,578         31,204         197,163        100,237
                   ============   ============    ============   ============


</TABLE>
                                   F-19
<PAGE>
                         VEREX LABORATORIES, INC.
                         STATEMENTS OF OPERATIONS
 <TABLE>
<CAPTION>
                   As Reported    As Restated     As Reported    As Restated
                  Period Ending  Period Ending   Period Ending  Period Ending
                 March 31, 2000  March 31, 2000  June 30, 2000  June 30, 2000
                 --------------  --------------  -------------  -------------
<S>                <C>           <C>             <C>             <C>
Revenues
   Sales                                                  70              70
   Special projects     30,990         30,990         31,476          31,476
                    ----------    -----------     ----------      ----------
Total Operating
  Income                30,990         30,990         31,546          31,546

Expenses
 Selling, general
 and administrative
 expenses              152,496        591,545        207,683         663,109
   Research and
    development                        26,296         17,042          17,042
                    ----------    -----------     ----------     -----------
Total operating
 expenses              152,496        617,841        224,725         680,151
                    -----------   ------------    -----------    ------------
Loss from operations  (121,506)      (586,852)      (193,179)       (648,605)
                    -----------   ------------    -----------    ------------

Other income
  (expense)
Sub-lease and other
  income                    73         31,821              -          39,451
   Interest income                          3              4               4
   Interest Expense     (6,028)       (11,842)       (21,828)        (29,592)
                    -----------    -----------    -----------    ------------
Total other income
  (expense), net        (5,995)        19,982        (21,824)          9,863
                    -----------    -----------    -----------    ------------
 Loss before income
   taxes              (127,461)      (566,870)      (215,003)       (638,742)
                    -----------    -----------    -----------    ------------
 Net Income (loss)    (127,461)      (566,870)      (215,003)       (638,742)
                    ===========    ===========    ===========    ============



 Net income (loss)
  per common share       (0.05)         (0.23)        (0.09)           (0.25)

 Weighted average
  shares
  outstanding        2,327,359      2,503,985     2,327,359        2,513,118




</TABLE>




                                   F-20
<PAGE>
                        VEREX LABORATORIES, INC.
                             BALANCE SHEETS
<TABLE>
<CAPTION>
                    As Reported    As Restated    As Reported    As Restated
                   Period Ending  Period Ending  Period Ending  Period Ending
                   Sept. 30, 2000 Sept. 30, 2000 Dec. 31, 2000  Dec. 31, 2000
                   -------------- -------------- -------------  -------------
<S>                <C>             <C>            <C>           <C>
Assets
 Current assets:
  Cash and cash
   equivalents              4,402          4,402         51,985        51,985
  Note receivable          25,300         25,300         25,300        25,300
  Other receivables             -              -                            -
   Prepaid expenses         6,826          6,826          6,826         6,826
                     ------------   ------------   ------------   -----------
                           36,528         36,528         84,111        84,111

 Property and
  equipment, at cost
   Furniture and
    equipment             496,874        496,874        496,874       496,874
   Leasehold
     improvements           1,317          1,317          1,317         1,317
                     ------------   ------------   ------------   -----------
                          498,191        498,191        498,191       498,191

  Less accumulated
   depreciation         (493,947)      (493,947)       (494,334)     (494,334)
    and amortization
                     ------------   ------------   -------------  ------------
Property and
  equipment - net          4,244          4,244           3,857         3,857
 Other assets:
 Patents and
  trademarks, net of
  accumulated
  amortization of        106,992         16,556         100,011        16,064
                     -----------    -----------    ------------   -----------
 Total                   147,764         57,328         187,979       104,031
                     ===========    ===========    ============   ===========
<CAPTION>
Liabilities and Stockholders' Equity
<S>                 <C>            <C>            <C>            <C>
Current Liabilities
   Accounts Payable        348,939        313,790        279,903      234,573
   Accrued Expenses                        24,200                      43,184
   Accrued salary
    and benifits
    payable                180,000        180,000        180,000      180,000
   Accrued royalties        32,500         32,500         32,500       32,500
   Notes payable           360,000        360,000        558,399      540,000
   Notes payable -
    related parties         24,938         37,082         24,938       38,362
                      ------------   ------------   ------------   ----------
Total current
  liabilities              946,377        947,571      1,072,740    1,068,618

Long-term debt
 Accrued salary
 and benefits
 payable, net of
 current portion           369,778        451,712        332,404      414,338
                      ------------   ------------   ------------   ----------
  Total Liabilities      1,316,155      1,399,283      1,405,144    1,482,956


Stockholders' deficit
 Common Stock, no par
  value, 100,000,000
  shares authorized
  shares issued and
  outstanding           13,725,412     14,012,942     13,755,685   14,038,977
 Accumulated deficit   (14,893,803)   (15,354,897)   (14,972,850) (15,417,902)
                      -------------  -------------  ------------- ------------
                        (1,168,391)    (1,341,956)    (1,217,165)  (1,378,925)
                      -------------  -------------  ------------- ------------
 Total                     147,764         57,328        187,979      104,031
                      =============  =============  ============= ============
</TABLE>
                                  F-22
<PAGE>

                        VEREX LABORATORIES, INC.
                        STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
                      As Reported   As Restated    As Reported    As Restated
                    Period Ending  Period Ending  Period Ending  Period Ending
                   Sept. 30, 2000 Sept. 30, 2000 Dec. 31, 2000  Dec. 31, 2000
                   -------------- -------------- -------------  -------------
<S>                <C>            <C>            <C>            <C>
Revenues
   Sales
   Special
    projects                                  -                             -
                    ------------   ------------   ------------   ------------
Total Operating
  Income                       -              -              -              -

Expenses
 Selling, general
  and admini-
  strative expenses            -         75,382        106,782        133,466
 Research and
  development             90,914          1,540         44,897          3,933
                    ------------   ------------   ------------   ------------
Total operating
  expenses                90,914         76,921        151,840        137,399
                    -------------  -------------  -------------  -------------
Loss from
  operations             (90,914)       (76,921)      (151,840)      (137,399)
                    -------------  -------------  -------------  -------------
 Other income
  (expense)
Sub-lease and other
  income                   7,630          7,630         15,336         33,133
   Interest income                            -                             -
   Interest Expense      (21,634)       (23,635)       (47,663)       (51,665)
                    -------------   ------------   ------------  -------------
Total other income
  (expense), net         (14,004)       (16,005)       (32,127)       (18,532)
                    -------------   ------------   ------------  -------------
 Loss before income
   taxes                (104,918)       (92,926)      (183,967)      (155,931)
                    -------------   ------------   ------------  -------------
 Net Income (loss)      (104,918)       (92,926)      (183,967)      (155,931)
                    =============   ============   ============  =============



Net income (loss)
 per common share          (0.05)         (0.04)         (0.08)         (0.06)

 Weighted average
  shares outstanding   2,327,359      2,540,987      2,387,907      2,540,987












</TABLE>
                                  F-22
<PAGE>
                       VEREX LABORATORIES, INC.
                            BALANCE SHEETS
<TABLE>
<CAPTION>
                                      As Reported    As Restated
                                     Period Ending  Period Ending
                                     March 31, 2001 March 31, 2001
                                     -------------- --------------
<S>                                  <C>            <C>
Assets
 Current assets:
   Cash and cash equivalents                  1,906          1,906
   Note receivable                           25,300         25,300
   Other receivables                              -              -
   Prepaid expenses                           6,826          6,826
                                      -------------- --------------
                                             34,032         34,032

 Property and equipment, at cost
   Furniture and equipment                  496,874        496,874
   Leasehold improvements                     1,317          1,317
                                     -------------- --------------
                                            498,191        498,191

  Less accumulated depreciation            (494,721)      (494,721)
    and amortization
                                     -------------- --------------
     Property and equipment - net             3,470          3,470
 Other assets:
   Patents and trademarks, net of
     accumulated amortization of             93,030         15,572
                                     -------------- --------------
 Total                                      130,532         53,074
                                     ============== ==============

Liabilities and Stockholders' Equity
Current Liabilities
   Accounts Payable                         288,298        256,167
   Accrued Expenses                                         36,144
   Accrued salary and benifits payable      180,000        556,081
   Accrued royalties                         32,500         32,500
   Notes payable                            635,836        615,000
   Notes payable - related parties           24,938         39,642
                                     -------------- --------------
       Total current liabilities          1,161,572      1,535,535

Long-term debt
 Accrued salary and benefits payable,
    net of current portion                  294,147
                                     -------------- --------------
       Total Liabilities                  1,455,719      1,535,535


 Stockholders' deficit
 Common Stock, no par value,
   100,000,000 shares authorized
  shares issued and outstanding           13,755,685     14,038,977
 Accumulated deficit                     (15,080,872)   (15,521,438)
                                       -------------- --------------
                                          (1,325,187)    (1,482,461)
                                       -------------- --------------
 Total                                       130,532         53,074
                                       ============== ==============


</TABLE>

                                  F-24
<PAGE>
                        VEREX LABORATORIES, INC.
                        STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                           As Reported    As Restated
                                          Period Ending  Period Ending
                                         March 31, 2001 March 31, 2001
                                         -------------- --------------
<S>                                      <C>            <C>
Revenues
   Sales
   Special projects                                                  -
                                         -------------- --------------
         Total Operating Income                       -              -


 Expenses
   Selling, general and administrative
      expenses                                  169,157        210,681
   Research and development                      70,951          8,498
                                         -------------- --------------
             Total operating expenses           240,108        219,179
                                         -------------- --------------
      Loss from operations                     (240,108)      (219,179)
                                         -------------- --------------

 Other income (expense)
   Sub-lease and other income                    23,381         40,978
   Interest income                                                   -
   Interest Expense                            (75,263)       (81,266)

                                         -------------- --------------
Total other income (expense), net              (52,882)       (40,288)
                                         -------------- --------------

 Loss before income taxes                     (291,990)      (259,467)
                                         -------------- --------------
 Net Income (loss)                            (291,990)      (259,467)
                                         ============== ==============



 Net income (loss) per common share              (0.12)         (0.10)

 Weighted average shares outstanding          2,387,907      2,540,987


</TABLE>






                                 F-24
<PAGE>
    (10)    Subsequent Events

  Subsequent to June 30, 2001 the Company received a notice of claim from
  the State of Colorado Health Science Center directed to the Company
  relating to a debt of approximately $117,219 plus $5,780 of interest
  through August 23, 2001, allegedly owed by the Company from 1995.  The
  Company maintained no record of this liability and the liability was not
  recorded as of June 30, 2001.  Further, the Company is subject to many
  claims in the normal course of its business operations.  The outcome of
  the $117,219 aforementioned claim and those in the normal course of its
  business cannot be accurately predicted.














                                   F-25