SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-KSB

               Annual Report Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934

[ X ] Annual report pursuant to section 13 or 15(d) of the Securities
      Exchange Act of 1934 For the fiscal year ended December 31, 2002

[   ] Transition report under section 13 or 15(d) of the Securities
      Exchange Act of 1934
      For the transition period from _____________ to _______________.

                        Commission File Number 000-26875

                              VIRAL GENETICS, INC.
                 (Name of small business issuer in its charter)


                Delaware                               33-0814123
    (State or other jurisdiction of         (IRS Employer Identification No.)
     incorporation or organization)

                  905 Mission Street, So. Pasadena, CA 91030
                   (Address of principal executive offices)

                                 (323) 682-2171
                           (Issuer's telephone number)

Securities registered pursuant to Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

                         Common Stock, par value $0.0001
                                (Title of class)

Check  whether the Issuer (1) filed all reports  required to be filed by section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such report(s), and (2) has been
subject to such filing requirements for the past 90 days. Yes [ X ] No [ ]

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B is contained in this form,  and no disclosure  will be contained,
to the best of the  registrant's  knowledge,  in definitive proxy or information
statements  incorporated  by  reference  in Part III of this form  10-KSB or any
amendment to this Form 10-KSB. [ X ]

The issuer's revenue for its most recent fiscal year was: $0

The  aggregate  market value of the  issuer's  voting stock held as of April 22,
2003, by non-affiliates of the issuers was $3,572,044.

As of March 31,  2003,  the issuer  had  40,723,137  shares of its common  stock
outstanding.

Transitional Small Business Format:   Yes [  ]   No [ X ]

Documents incorporated by reference:  None



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                                TABLE OF CONTENTS

ITEM NUMBER AND CAPTION                                                    Page

Part I

1.    Description of Business                                                3
2.    Description of Properties                                              8
3.    Legal Proceedings                                                      8
4.    Submission of Matters to a Vote of Security Holders                    8

Part II

5.    Market for Common Equity and Related Stockholder Matters               9
6.    Management's Discussion and Analysis or Plan of Operation              9
7.    Financial Statements                                                  12
8.    Changes in and Disagreements with Accountants                         12
      on Accounting and Financial Disclosure

Part III

9.    Directors, Executive Officers, Promoters and Control 12 Persons;
      Compliance with Section 16(a) of the Exchange Act
10.   Executive Compensation                                                13
11.   Security Ownership of Certain Beneficial Owners and Management        13
12.   Certain Relationships and Related Transactions                        14
13.   Exhibits and Reports on Form 8-K                                      15
14.   Controls and Procedures                                               15



                           FORWARD LOOKING STATEMENTS

     This Annual Report on Form 10-KSB contains forward-looking  statements that
are subject to certain risks,  uncertainties  or assumptions and may be affected
by certain  other  factors,  including  but not limited to the specific  factors
discussed in Part I, Item 1 under "Description of business," and Part II, Item 6
under  "Management's  Discussion  and  Analysis or Plan of  Operation."  In some
cases, you can identify forward-looking statements by terminology such as "may,"
"should," "could," "expects," "plans," "projected,"  "anticipates,"  "believes,"
"estimates,"  "predicts,"  "potential," or "continues," or the negative of these
terms or  other  comparable  terminology.  Should  one or more of  these  risks,
uncertainties or other factors  materialize,  or should  underlying  assumptions
prove incorrect,  actual results,  performance or achievements of Viral Genetics
may vary  materially  from  any  future  results,  performance  or  achievements
expressed or implied by such forward-looking statements.

     Forward-looking  statements  are based on beliefs and  assumptions of Viral
Genetics' management and on information  currently available to such management.
Forward-looking  statements  speak only as of the date they are made,  and Viral
Genetics undertakes no obligation to update publicly any of them in light of new
information  or  future  events.  Undue  reliance  should  not be placed on such
forward-looking   statements,   which   are  based  on   current   expectations.
Forward-looking statements are not guarantees of performance.

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<PAGE>


                                     PART I
                        Item 1. Description of Business.

General

     Viral  Genetics,  Inc., was  incorporated on June 8, 1998 under the laws of
the state of  Delaware.  In April 2001,  we entered into an agreement to acquire
Viral Genetics,  Inc., a California  corporation ("VGI"), which was revised by a
new agreement in September 2001.  Under the new agreement we acquired in October
2001 all of the  outstanding  capital stock of VGI for 29,750,580  shares of our
common stock, or  approximately  78.7 percent of our then issued and outstanding
shares.  There was no  affiliation  between Viral Genetics and VGI or any of its
officers, directors, and controlling stockholders prior to the acquisition.

     VGI was  founded in 1995 to  discover,  develop,  and  commercialize  novel
therapeutic and diagnostic  systems for the treatment of viral  diseases.  Viral
Genetics' core technology  revolves around a biologically active linear protein,
Thymus Nuclear  Protein (TNP).  To date, our main focus has been the development
of a  treatment  to stop the  progression  of the Human  Immunodeficiency  Virus
(HIV),  which is the causative agent in AIDS. Based on Thymus Nuclear  Protein's
proposed  mechanism of action and the results of human clinical  testing,  Viral
Genetics  believes TNP may be useful as a treatment  for HIV and possibly  other
viral infections.

     Viral  Genetics was  originally  formed  under the name Hitech  Investments
Inc.,  for the purpose of pursuing  certain high  technology  opportunities  and
alliances  and to assist in the  establishment  and  development  of an Internet
electronic  search engine venture.  We had no active business  operations  until
April 1999,  when we changed our name to 5 Starliving  Online,  Inc.,  and began
pursing a business  plan to implement an  e-commerce  luxury item auction  site,
which was abandoned at the beginning of 2001.

Product Technology

     The Human  Immunodeficiency  Virus  ("HIV") and the  clinical  condition it
causes known as Acquired  Immunodeficiency Syndrome ("AIDS") was first described
in 1981, and currently approximately 40 million people are HIV positive. AIDS is
the leading cause of death in Africa and the fourth leading cause globally.

     There are  approximately  15  anti-retro  viral  agents  available  for the
treatment  of  HIV-AIDS.  There  are two  main  categories  of  agents,  reverse
transcriptse  inhibitors ("RTI"),  and protease  inhibitors ("PI").  Combination
therapy with two or more of these  drugs,  which has become the standard of care
for HIV, slows multiplication of the virus and delays onset of AIDS. Combination
anti-retro  viral  therapies,  however,  do not cure HIV infection or cure AIDS.
These drug regimens are complex,  requiring ten or more pills a day,  expensive,
costing  upwards of $15,000  per patient in the United  States,  and have gastro
intestinal,  neurological,  and hematological side effects that adversely impact
the  quality of life.  Furthermore,  HIV  patients  who use the drugs for a long
period of time develop  resistance  to the drugs,  so that the drugs become less
effective in delaying the onset of AIDS.

     Because of what can be described as a worldwide  epidemic of HIV infection,
and the lack of an  effective  treatment  for the disease,  management  believes
there are substantial  opportunities  for new  biotechnologies  that prove to be
effective  treatments.  Viral Genetics has pursued the  development of TNP as an
anti-viral  agent for treatment of AIDS and other  diseases  based on its belief
that this product can be helpful in the fight against AIDS.

     Viruses  must  invade a host  cell in order  to  reproduce.  In the case of
HIV-1,  the host cell is  usually a type of white  blood cell known as a T cell,
which is  responsible  for defending the human body against the various types of
infection.  It is believed that the process by which HIV binds with and enters T
cells  involves  two  proteins on the surface of the HIV-1 virus (known as GP120
and GP41) and two  receptors  on the  surface  of the T cell (CD4 and  chemokine
receptors).  Once inside the T cell,  the HIV virus uses the T cell's  metabolic
machinery to produce millions of new viruses.  The T cell eventually bursts open
and the new HIV  particles  go on to  infect  and kill  more T cells.  HIV is so
detrimental  to the human  host  because T cells play an  important  role in the
body's response to infection.  As more and more T cells are destroyed over time,
the immune system weakens and the body is left  defenseless  against  secondary,
opportunistic infections.

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     Based on its research  and  preliminary  clinical  trials,  Viral  Genetics
believes  that the TNP product  works  against HIV by binding  itself to the HIV
GP41 surface protein,  which prevents the virus from invading T cells, and flags
the virus for recognition by  immuno-competent  T cells resulting in an increase
in HIV-1 antibodies that can combat the infection in the body.

     In three  preliminary  clinical  trials,  TNP was  studied  in 48  HIV-AIDS
patients. TNP was administered as an intra-muscular injection,  twice weekly for
eight  weeks.  The first trial  involved  18 HIV-1  infected  patients  who were
followed up for 18 months.  The second trial involved 20 HIV-1 infected patients
who were followed up for nine months. The third trial involved 10 HIV-1 patients
who were resistant to existing combination anti-retroviral therapy treatment and
who were followed up for six months. In all of the clinical studies, TNP did not
show any  significant  adverse effects by physical exam,  subjective  complaints
from patients, or routine blood work performed on patients. Based on blood tests
of the principal indicators of HIV infection,  Viral Genetics believes there was
a dramatic  decrease in HIV viral load in the patients  tested,  which continued
through the follow-up  evaluations  periods,  patients  experienced  weight loss
stabilization  or weight  gain,  and more than half the patients  experienced  a
steady improvement in T cell count.

Product Development and Distribution

     Drug  development  is time  consuming,  expensive,  and  unpredictable.  On
average,  only one out of many  thousands of chemical  compounds  discovered  by
researchers  proves to be both medically  effective and safe enough to become an
approved  medicine.  The process from discovery to regulatory  approval can take
more than ten  years.  Drug  candidates  can fail at any  stage of the  process.
Candidates  may not  receive  regulatory  approval  even  after  many  years  of
research, and products that have been approved and marketed can be ordered to be
withdrawn from the market by regulatory authorities.

     Viral  Genetics  spent  approximately  $617,855  on  development  of TNP in
calendar year 2002,  compared to approximately  $498,749 spent on development in
2001.  We estimate  we will spend an  additional  $650,000  in 2003,  on product
testing and development.  As a result of this development work and completion of
the clinical trials described above,  Viral Genetics applied for registration of
TNP in Mexico for use on late-stage  AIDS patients in the beginning of 2002. The
issuance of a license under this application would permit Viral Genetics to sell
its  product for use on  late-stage  AIDS  patients in Mexico.  We also filed in
Mexico an  application  for an  expanded  human  clinical  trial on  patients in
earlier  stages of  HIV-AIDS.  The  purpose  of this trial is to  determine  the
efficacy of TNP on patients in the early stages of the disease.  The application
was presented in Mexico through Soluciones Avanzadas Para La Salud, S.A. De C.V.
("SAVSA"), and Labortorios Senosiain, S.A. de C.V. ("LSSA"). Our application for
expanded  clinical  trials  on early  stage  patients  and our  application  for
registration of TNP in Mexico are pending.

     In July 1999,  Viral Genetics  entered into a  distribution  agreement with
SAVSA to distribute TNP in Mexico and Central and South  America,  including the
Caribbean.  The agreement is for a term of seven years and automatically renewed
for an  additional  seven-year  term,  subject  to the right of either  party to
terminate the agreement at the end of the initial term. We are obligated to ship
product within 45 days following acceptance of an order placed by SAVSA. Product
will be offered and sold at prices Viral establishes from time to time, which we
currently  estimate  will be between  $3,000 and $4,000 per  16-dose  treatment.
SAVSA will receive a  distribution  fee equal to 30 percent of the product sales
price after deducting import taxes and duties. Under a related agreement between
Viral  Genetics,  SAVSA,  and  LSSA,  LSSA  participated  in  submission  of the
application in Mexico and will render  additional  services on  distribution  in
Mexico for a fee equal to five percent of the product sales price, which will be
paid and deducted  from the sales price before the  allocation of the 30 percent
distribution fee to SAVSA.

     Viral Genetics  entered into an agreement on March 25, 2002,  with New York
International  Commerce Group, Inc. ("NYCG"),  to pursue  distribution of TNP in
China.  As part of the agreement,  NYCG will assist Viral Genetics in securing a
State Drug Administration certification from the Chinese government, after which
NYCG will distribute  product in China. Viral Genetics filed the application for
this  license  in China in 2002,  which is now being held in  abeyance  until we
perform further testing. If the license is not granted within one year following
submission of the application, Viral Genetics may terminate the agreement at its
option;  provided, that NYCG's rights will continue under the agreement if Viral
Genetics conducts further testing or takes other steps after the initial year to
obtain the license from China. We are now pursuing additional clinical trials in

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<PAGE>

China,  which may extend the term of our agreement with NYCG.  NYCG also has the
exclusive  right to pursue  applications  in other  countries,  which are Japan,
Korea, Taiwan, Hong Kong, Malaysia,  Indonesia,  Singapore, and Thailand. Once a
license is  granted,  NYCG is  required to use its  reasonable  best  efforts to
arrange for  manufacture  of product in China,  provided that all  manufacturing
costs will be borne by Viral  Genetics.  NYCG has the  exclusive  right  after a
license  is  granted  to market  the  product  under  the terms of a  definitive
distribution  agreement  to be entered  into by the  parties.  The terms of this
definitive agreement will include the following.

o    The distribution rights will be for a term of 10 years,  subject to renewal
     for an additional  ten-year period based on achieving minimum sales targets
     of 37,500 treatments within 12 months and 62,500 within 24 months following
     the grant of a license.

o    Shipment  of product by Viral  Genetics  in bulk to a  processing  facility
     located in or near the territory covered by the license.

o    Distribution of product by NYCG in the territory at its cost.

o    Payment of a  distribution  fee to NYCG equal to 37 percent of gross profit
     from sale of the product,  which is the greater of the sales price  charged
     by Viral  Genetics  to NYCG and the sales  price  charged  by NYGC to third
     parties,  reduced  by  the  base  cost  of the  product  as  determined  in
     accordance with generally accepted accounting principles.

     Viral  Genetics is now working  through a draft of an  Investigational  New
Drug application ("IND") to the FDA. We need to complete certain laboratory work
on TNP before filing the IND. We cannot predict when we will be able to file the
FDA application,  because the filing depends on our ability to obtain sufficient
capital to complete required laboratory work.

     Unless and until we are  successful in our domestic  applications  with the
FDA,  our  operations  will  be  limited  to  those  we  can  conduct  overseas.
International  business  operations are subject, in varying degrees, to a number
of risks  inherent in carrying on business in other  countries.  These  include,
currency fluctuations,  capital and exchange control regulations,  expropriation
and nationalization, and other restrictive government actions. Our international
business may also subject us to government-imposed  constraints,  including laws
on pricing or reimbursement for use of products.

     Depending on the direction of change relative to the U.S.  dollar,  foreign
currency  values can either  improve or reduce the reported  dollar value of our
net assets and results of operations.  We cannot  predict with certainty  future
changes  in  foreign  exchange  rates  or  the  effect  they  will  have  on us.
Consequently,  we may attempt to mitigate their impact through operational means
and by  using  various  financial  instruments,  including  currency  derivative
instruments.

     Viral Genetics,  Inc., a California corporation and our subsidiary ("VGI"),
is a party to an  Assignment  of Patent  agreement  dated August 1, 1995,  under
which Therapeutic Genetics, Inc., a California corporation,  assigned all of its
rights  in the  patent  pertaining  to TNP,  a protein  used or  useful  for the
treatment of infectious  deceases,  to VGI for a note in the principal amount of
$6,250,000  and a  continuing  royalty  equal to five  percent of gross sales of
products using the patented technology. The stockholders of Therapeutic Genetics
are all of the same  persons  who were former  stockholders  of VGI prior to its
acquisition  by Viral  Genetics in October  2001.  At  December  31,  2002,  the
principal and accrued interest on the note was $6,890,625.

Product Manufacture

     Viral  Genetics  has  equipment  capable  of  producing  TNP in  commercial
quantities,  but we lack a facility  larger enough for laboratory and production
lines necessary for larger scale commercial production of TNP. At such time as a
license is issued in Mexico or any other  country for the sale and  distribution
of the product, we will either establish a laboratory and manufacturing facility
for the product if we have  sufficient  capital,  or  contract  with third party
manufacturers to produce TNP. In the past we have used third party manufacturers
to produce TNP used in our clinical trials. We may use such manufacturers in the
future for commercial  production,  but we have no agreement or understanding to

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<PAGE>

do  so  at  the  present  time.   Our  inability  to  establish   facilities  or
manufacturing   arrangements   in  the   future  to   commercialize   TNP  would
substantially impair our ability to implement our business.

Proprietary Rights

     In the aggregate,  our patent and related rights are of material importance
to our proposed  business in the United States and other countries.  Considering
the vigorous  competition among drug  manufacturers and the competition we might
expect should our product  prove to be accepted as a treatment  option for AIDS,
the patent rights we consider significant in relation to our business as a whole
are covered by U.S.  patent  application  number  08/641,936,  Compositions  and
Methods for  Detecting  and  Treating  Immunodeficiency  Syndrome,  which is now
pending.  We  are  evaluating  whether  additional  patent  applications  may be
appropriate to protect extensions and variations of our product.

     Under  international  agreements  in recent  years,  global  protection  of
intellectual property rights is improving.  The General Agreement on Tariffs and
Trade requires participant  countries to amend their intellectual  property laws
to  provide  patent  protection  for  pharmaceutical  products  by the  end of a
ten-year  transition  period.  A number  of  countries  are doing  this.  Patent
protection in other countries where we have registered patents,  including,  the
European  Patent  Office,  The  Eurasian  Patent   Organization,   New  Zealand,
Australia, and Israel extend for varying periods according to the date of patent
filing or grant and the legal  term of patents in the  various  countries  where
patent protection is obtained. The actual protection afforded by a patent, which
can vary from country to country,  depends upon the type of patent, the scope of
its coverage and the availability of legal remedies in the country.

     The expiration of a product patent or loss of patent  protection  resulting
from a legal  challenge  would be expected to result in significant  competition
from generic products against the covered product and, particularly in the U.S.,
can result in a significant  reduction in sales of the pioneering product. If we
were to loose patent protection, we may be able to continue to obtain commercial
benefits  from  product  manufacturing  trade  secrets,  patents  on  use of our
product,   and  patents  on  processes  and  intermediates  for  the  economical
manufacture of the active  ingredients.  The effect of product patent expiration
or loss also  depends  upon the  nature of the market  and the  position  of the
product in it, the growth of the  market,  the  complexities  and  economics  of
manufacture of the product, and the requirements of generic drug laws.

Competition

     Competition  is intense in the  pharmaceutical  business and includes  many
large and  small  competitors.  Technological  innovations  affecting  efficacy,
safety,  patient ease of use,  and cost  effectiveness  by other  pharmaceutical
companies with greater  financial and research  resources working on competitive
AIDS and viral  treatment  products could result in products that offer the same
or similar benefits as TNP or render our product obsolete.  We intend to compete
with existing AIDS and viral treatment  products on the basis of product quality
and  efficacy,  product  safety,  price,  and  promotion  directly  and  through
distributor relationships we are now forming.

Government Regulation

     Pharmaceutical  companies  are subject to extensive  regulation by numerous
national,  state and local agencies.  Of particular importance is the FDA in the
United  States.  It has  jurisdiction  over  virtually all of our businesses and
administers requirements covering the testing, safety, effectiveness,  approval,
manufacturing,  labeling, marketing, advertising and post-marketing surveillance
of our pharmaceutical  products.  FDA requirements and/or reviews have increased
the amount of time and money necessary to develop new products and bring them to
market.

     Since 1998,  the approval of new drugs across the EU is possible only using
the European Medicines  Evaluation Agency's (EMEA) mutual recognition or central
approval processes.  The use of either of these procedures provides a more rapid
and consistent  approval  within the 15 member states than was the case when the
approval  processes  were  operating  independently  within each  member  state.
Further,  on January 1, 2000, Norway and Iceland became full participants in the
EU central approval processes.  In addition, the agreement between the EU and 12
other  European  states to base their  approvals on the  centralized EU approval
will  significantly  speed the regulatory  process in those countries.  The EMEA

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does not have jurisdiction  over patient  reimbursement or pricing matters in EU
member countries, however. We will be required to deal with individual countries
on such issues.

     In  recent  years in the  U.S.,  various  legislative  proposals  have been
offered at the federal and state levels that would bring about major  changes in
the affected health care systems. Some states have passed such legislation,  and
further federal and state proposals are possible. Such proposals and legislation
include,  and future  proposals  could include,  price or patient  reimbursement
constraints  on  medicines,  increases  in  required  rebates or  discounts  and
restrictions on access to certain products. Similar issues exist in many foreign
countries  where we may do  business.  We cannot  predict  the  outcome  of such
initiatives,  but we will work to maintain patient access to our products and to
oppose price constraints.

     In the U.S.,  federal proposals have called for substantial  changes in the
Medicare  program,  and federal and state  proposals have called for substantial
changes in the Medicaid program.  If such changes are enacted,  they may require
significant  reductions from currently  projected  government  expenditures  for
these programs.  Driven by budget  concerns,  Medicaid managed care systems have
been implemented in many states. If the Medicare and Medicaid programs implement
changes that restrict the access of a significant  population of patients to our
innovative  medicines,  our business could be materially affected.  On the other
hand,  relatively little pharmaceutical use is currently covered by Medicare. If
changes to these  programs  shift  patients to managed care  organizations  that
cover  pharmaceuticals,  or if an outpatient  drug benefit is added to Medicare,
usage of pharmaceuticals could increase. Pricing pressures likely would ensue in
either case given the  enhancement of the  purchasing  power of the managed care
organizations or the federal government.

     U.S. law requires us to give rebates to state  Medicaid  agencies  based on
each  state's  reimbursement  of  pharmaceutical  products  under  the  Medicaid
program.  Some states are seeking  rebates in excess of the amounts  required by
federal   law.  We  also  must  give   discounts  or  rebates  on  purchases  or
reimbursements  of  pharmaceutical  products by certain  other federal and state
agencies and programs.  Rebates  potentially  could be viewed as price discounts
without appreciable increases in volume as an offset.

     We  encounter  similar  regulatory  and  legislative  issues in most  other
countries.  In Europe  and some  other  international  markets,  the  government
provides   health  care  at  low  direct  cost  to   consumers   and   regulates
pharmaceutical  prices or patient  reimbursement levels to control costs for the
government-sponsored  health care system. This international  patchwork of price
regulation  has led to  inconsistent  prices and could lead to some  third-party
trade in our  products  from markets with lower  prices.  Such trade  exploiting
price  differences  between  countries could undermine our sales in markets with
higher prices.

Risks Associated With Our Business

     Notwithstanding  our efforts to foresee and mitigate the effects of changes
in our business and  industry,  we cannot  predict with  certainty all potential
changes that might affect our business. Consequently, our business is subject to
a number of risks, some of which are as follows.

o    We have been engaged in research and  development of our TNP product in the
     past, and have not commenced commercial  distribution of our product. There
     is no assurance  that our product will gain  acceptance  as a treatment for
     AIDS  or  any  other  viral  infection.  If we  are  unable  to  gain  such
     acceptance,  it is  unlikely  we will be able  to  achieve  any  meaningful
     revenue or successfully implement our business.

o    Our  proposed  international  business  could be  affected  by  changes  in
     intellectual property legal protections and remedies, trade regulations and
     procedures   and   actions   affecting   approval,   production,   pricing,
     reimbursement and marketing of products, as well as by unstable governments
     and legal systems, intergovernmental disputes and possible nationalization.

o    Cost-containment  measures  employed by governments that have the effect of
     limiting  patient access to medicines and related issues described above in
     "Government  Regulation"  could affect the growth and  profitability of our
     operations in some countries.

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o    Competition from manufacturers of generic drugs is a major challenge in the
     U.S. and is growing  internationally.  Loss of patent protection  typically
     leads to significant loss of sales in the U.S. market. The patents covering
     our product could be challenged by generic drug manufacturers and others.

o    Risks and uncertainties  particularly apply with respect to product-related
     forward-looking  statements.  There can be no assurance as to if or when we
     will  receive  regulatory  approval for our  products.  There are also many
     considerations that can affect marketing of pharmaceutical  products around
     the world.  Regulatory  delays,  the  inability  to  successfully  complete
     clinical  trials,  claims  and  concerns  about  safety and  efficacy,  new
     discoveries,  patent  disputes and claims about  adverse side effects are a
     few  of  the  factors  that  could  adversely  affect  the  realization  of
     product-related forward-looking statements.

o    Difficulties or delays in product  manufacturing  or marketing,  including,
     but  not  limited  to,  the  inability  to  build  up  production  capacity
     commensurate  with demand,  or the failure to predict market demand for, or
     to gain market  acceptance  of,  approved  products,  could  affect  future
     results.

o    We cannot predict with accuracy the timing or impact of the introduction of
     competitive products or their possible future effect on our sales. Products
     that  potentially  could compete with our products are in various stages of
     development, and could be introduced and become accepted forms of treatment
     before approval of our products.

o    Our future results could be affected by changes in business,  political and
     economic conditions,  including the cost and availability of insurance, due
     to the  September  11, 2001  terrorist  attacks in the U.S.,  the threat of
     future  terrorist  activity  in the U.S.  and other  parts of the world and
     related U.S. military action overseas.

o    We  may  become  involved  in  patent,  product  liability,   and  consumer
     litigations  and  additional  matters  that  arise from time to time in the
     ordinary course of our business.  These include  challenges to the coverage
     and/or  validity of patents on products or  processes  and  allegations  of
     injuries   caused  by  our  drug   products.   Litigation   is   inherently
     unpredictable,  and  excessive  verdicts  that  are  not  justified  by the
     evidence can occur.  Litigation  in the future may have a material  adverse
     impact on our financial condition and results of operations.

Employees

     We  presently  have  one  full-time   executive  officer,   one  management
consultant, one full time office person, and one full time researcher.

                        Item 2. Description of Property.

     Our corporate  office in located at 905 Mission  Street in South  Pasadena,
California  provided by Haig  Keledjian,  our president,  director and principal
stockholder at no cost to Viral Genetics.  The costs  associated with the use of
this  space are deemed by us to be  immaterial,  as Mr.  Keledjian  uses the for
other business  purposes.  Mr. Keledjian is under no legal obligation to provide
rent-free office space to Viral Genetics.  We lease  approximately  2,000 square
feet of space in South Pasadena, California as a laboratory and storage facility
at $1,850 per month.

                           Item 3. Legal Proceedings.

     No legal  proceedings  are  pending  against  Viral  Genetics or any of its
officers or directors.

        Item 4. Submission of Matters to a Vote of Securities Holders.

     No  matter  was  submitted  to a vote of  security  holders  in the  fourth
calendar quarter of 2002.

                                       8

<PAGE>


                                     PART II
        Item 5. Market for Common Equity and Related Stockholder Matters.

     Viral  Genetics'  common  stock is listed on the Over the Counter  Bulletin
Board  ("OTCBB"),  under  the  symbol  "VRAL".  As of  March  31,  2003,  we had
approximately 122 shareholders of record.

     The following  quotations,  as provided by the OTC Bulletin  Board,  Nasdaq
Trading & Market  Services,  represent prices between dealers and do not include
retail markup,  markdown or  commission.  In addition,  these  quotations do not
represent actual transactions.

Calendar Quarter Ended             High Bid ($)               Low Bid ($)

March 31, 2001                         3.16                      0.88
June 30, 2001                          3.35                      0.81
September 30, 2001                     3.45                      0.38
December 31, 2001                      1.94                      0.81

March 31, 2002                         1.45                      0.89
June 30, 2002                          1.35                      0.35
September 30, 2002                     0.92                      0.27
December 31, 2002                      0.37                      0.08

     Since its inception,  no dividends  have been paid on the common stock.  We
intend to retain any earnings for use in our business  activities,  so it is not
expected that any dividends on the common stock will be declared and paid in the
foreseeable future.

     In  December  2002  Viral  Genetics  entered  into a business  and  finance
consulting  agreement with Voluto  Ventures,  LLC. As compensation  for services
under the  agreement,  the Company  sold to Voluto  Ventures  in  December  2002
1,000,000  shares of common  stock at a price of $0.01 per share,  or a total of
$10,000.  Viral Genetics  recognized  $140,000 of expense on the stock issuance.
Over the two-year term of the agreement,  Viral Genetics is obligated to sell to
Voluto Ventures at the end of each calendar quarter an additional 250,000 shares
of common  stock at a price of $0.01 per  share,  or a total of  $2,500,  unless
terminated in accordance with the terms and conditions of the agreement.

     In December  2002 Viral  Genetics also issued 67,837 shares of common stock
to Biocomm  Communication,  Inc., a  consultant,  as  compensation  for services
valued at $15,000.

     The  foregoing  securities  were issued in reliance on the  exemption  from
registration  set  forth in  Section  4(2) of the  Securities  Act of  1933.  No
commission was paid to any person in connection with the transactions.

      Item 6. Management's Discussion and Analysis or Plan of Operation.

Plan of Operation

     In April 2001,  Viral  Genetics  entered into an agreement to acquire Viral
Genetics,  Inc., a California  corporation  ("VGI"),  which was revised by a new
agreement in September 2001. Under the new agreement we acquired in October 2001
all of the outstanding  capital stock of VGI for 29,750,580 shares of our common
stock, or approximately 78.7 percent of our then issued and outstanding  shares.
There was no affiliation  between Viral Genetics and VGI or any of its officers,
directors, and controlling stockholders prior to the acquisition.

     VGI was  founded in 1995 to  discover,  develop,  and  commercialize  novel
therapeutic and diagnostic  systems for the treatment of viral  diseases.  Viral
Genetics' core technology  revolves around a biologically active linear protein,
Thymus Nuclear  Protein (TNP).  To date, our main focus has been the development
of a  treatment  to stop the  progression  of the Human  Immunodeficiency  Virus
(HIV),  which is the causative agent in AIDS. Based on Thymus Nuclear  Protein's
proposed  mechanism of action and the results of human clinical  testing,  Viral
Genetics  believes TNP may be useful as a treatment  for HIV and possibly  other
viral infections.

                                       9

<PAGE>

     VGI is a party to an Assignment of Patent  agreement  dated August 1, 1995,
under which Therapeutic Genetics,  Inc., a California corporation,  assigned all
of its rights in the patent pertaining to TNP to VGI for a note in the principal
amount of  $6,250,000  and a continuing  royalty  equal to five percent of gross
sales of products using the patented technology. The stockholders of Therapeutic
Genetics are all of the same persons who were former  stockholders  of VGI prior
to its  acquisition by Viral Genetics in October 2001. At December 31, 2002, the
principal and accrued  interest on the note was $6,890,625.  Viral Genetics does
not  expect  to be able to pay this  obligation  unless  it  obtains  additional
outside  financing or is able to generate  substantial  revenue from sale of its
products in the future, of which there is no assurance.

     Drug  development  is time  consuming,  expensive,  and  unpredictable.  On
average,  only one out of many  thousands of chemical  compounds  discovered  by
researchers  proves to be both medically  effective and safe enough to become an
approved  medicine.  The process from discovery to regulatory  approval can take
more than ten  years.  Drug  candidates  can fail at any  stage of the  process.
Candidates  may not  receive  regulatory  approval  even  after  many  years  of
research, and products that have been approved and marketed can be ordered to be
withdrawn from the market by regulatory authorities.

     Viral  Genetics  applied  for  registration  of TNP in  Mexico  for  use on
late-stage  AIDS  patients in the  beginning of 2002.  The issuance of a license
under this  application  would permit Viral Genetics to sell its product for use
on late-stage  AIDS patients in Mexico.  We also filed in Mexico an  application
for an expanded  human clinical trial on patients in earlier stages of HIV-AIDS.
The purpose of this trial is to determine the efficacy of TNP on patients in the
early stages of the disease. Both of these applications are pending.

     The application was presented in Mexico through  Soluciones  Avanzadas Para
La Salud,  S.A.  De C.V.  ("SAVSA"),  and  Labortorios  Senosiain,  S.A. de C.V.
("LSSA").  In July 1999,  Viral Genetics  entered into a distribution  agreement
with SAVSA to distribute TNP in Mexico and Central and South America,  including
the  Caribbean.  Dr.  Alberto  Osio  and  Horacia  Altamirano,   both  principal
stockholders of Viral Genetics,  are principal owners of SVASA. The agreement is
for a term of seven years and automatically renewed for an additional seven-year
term, subject to the right of either party to terminate the agreement at the end
of the initial term. We are obligated to ship product  within 45 days  following
acceptance  of an order  placed by SAVSA.  Product  will be offered  and sold at
prices Viral establishes from time to time, which we currently  estimate will be
between  $3,000  and  $4,000  per  16-dose  treatment.   SAVSA  will  receive  a
distribution  fee equal to 30 percent of the product sales price after deducting
import  taxes and duties.  Under a related  agreement  between  Viral  Genetics,
SAVSA,  and LSSA,  LSSA  participated in submission of the application in Mexico
and will render additional services on distribution in Mexico for a fee equal to
five percent of the product  sales price,  which will be paid and deducted  from
the sales price  before the  allocation  of the 30 percent  distribution  fee to
SAVSA.

     Viral Genetics  entered into an agreement on March 25, 2002,  with New York
International  Commerce Group, Inc. ("NYCG"),  to pursue  distribution of TNP in
China.  As part of the agreement,  NYCG will assist Viral Genetics in securing a
state drug administration certification from the Chinese government, after which
NYCG will distribute  product in China. Viral Genetics filed the application for
this  license  in China in 2002,  which is now being held in  abeyance  until we
perform further testing. If the license is not granted within one year following
submission of the application, Viral Genetics may terminate the agreement at its
option;  provided, that NYCG's rights will continue under the agreement if Viral
Genetics conducts further testing or takes other steps after the initial year to
obtain the license from China. We are now pursuing additional clinical trials in
China,  which may extend the term of our agreement with NYCG.  NYCG also has the
exclusive right to pursue  applications  in other  countries,  including  Japan,
Korea, Taiwan, Hong Kong, Malaysia,  Indonesia,  Singapore, and Thailand. Once a
license is  granted,  NYCG is  required to use its  reasonable  best  efforts to
arrange for manufacture of product China,  provided that all manufacturing  cost
will be borne by Viral Genetics. NYCG has the exclusive right after a license is
granted  to market  the  product  under the terms of a  definitive  distribution
agreement  to be  entered  into by the  parties.  The  terms of this  definitive
agreement will include the following.

o    The distribution rights will be for a term of 10 years,  subject to renewal
     for an additional  ten-year period based on achieving minimum sales targets
     of 37,500 treatments within 12 months and 62,500 within 24 months following
     the grant of a license.

                                       10

<PAGE>

o    Shipment  of product by Viral  Genetics  in bulk to a  processing  facility
     located in or near the territory covered by the license.

o    Distribution of product by NYCG in the territory at its cost.

o    Payment of a  distribution  fee to NYCG equal to 37 percent of gross profit
     from sale of the product,  which is the greater of the sales price  charged
     by Viral  Genetics  to NYCG and the sales  price  charged  by NYGC to third
     parties,  reduced  by  the  base  cost  of the  product  as  determined  in
     accordance with generally accepted accounting principles.

     In consideration  for assisting Viral Genetics in negotiating its agreement
with NYCG, Viral Genetics agreed to compensate L&M Global Ventures,  Inc., under
a Services  Agreement  dated March 25, 2002,  through a royalty payment equal to
five percent of its gross profit realized under the distribution  agreement with
NYGC.  Under the  Services  Agreement we also granted to L&M Global the right to
purchase a total of 1,000,000 common shares in increments of 250,000 shares at a
price of $62,500 for the first 250,000 shares, $125,000 for the second and third
tranches of 250,000 shares,  and $437,500 for the last 250,000 shares. The right
to  purchase  each  tranche of  250,000  shares is  exercisable  only after each
tranche of product sales under the NYCG distribution agreement of $50,000,000.

     Viral  Genetics is now working  through a draft of an  investigational  new
drug application to the FDA. We need to complete certain  laboratory work on TNP
before filing the  application.  We cannot  predict when we will be able to file
the FDA  application,  because  the  filing  depends  on our  ability  to obtain
sufficient capital to complete required laboratory work.

     Unless and until we are  successful in our domestic  applications  with the
FDA,  our  operations  will  be  limited  to  those  we  can  conduct  overseas.
International  business  operations are subject, in varying degrees, to a number
of risks  inherent in carrying on business in other  countries.  These  include,
currency fluctuations,  capital and exchange control regulations,  expropriation
and nationalization, and other restrictive government actions. Our international
business may also subject us to government-imposed  constraints,  including laws
on pricing or reimbursement for use of products.

     Depending on the direction of change relative to the U.S.  dollar,  foreign
currency  values can either  improve or reduce the reported  dollar value of our
net assets and results of operations.  We cannot  predict with certainty  future
changes  in  foreign  exchange  rates  or  the  effect  they  will  have  on us.
Consequently,  we may attempt to mitigate their impact through operational means
and by  using  various  financial  instruments,  including  currency  derivative
instruments.

     Viral  Genetics  has  equipment  capable  of  producing  TNP in  commercial
quantities,  but we lack a facility  larger enough for laboratory and production
lines necessary for larger scale commercial production of TNP. At such time as a
license is issued in Mexico or any other  country for the sale and  distribution
of the product, we will either establish a laboratory and manufacturing facility
for the product if we have  sufficient  capital,  or  contract  with third party
manufacturers to produce TNP. In the past we have used third party manufacturers
to produce  TNP used in our  clinical  trials.  We may use the  services of such
manufacturers in the future for commercial production,  but we have no agreement
or  understanding  to do so at the present  time.  Our  inability  to  establish
facilities or  manufacturing  arrangements  in the future to  commercialize  TNP
would substantially impair our ability to implement our business.

     Until  Viral  Genetics  receives  outside  financing  to fund  its  capital
commitments,  its  operations  will be  limited  to those  that can be  effected
through its officers, directors and consultants.  Haig Keledjian, our president,
has served without  compensation  and without any agreement or  arrangement  for
compensation.  Viral  Genetics  expects  that it will  negotiate a  compensation
package for Mr.  Keledjian  covering  past and future  service at such time that
Viral Genetics has sufficient working capital to do so.

     On July 24, 2002,  Viral Genetics  completed the conversion of certain debt
obligations  to  equity.  Viral  Genetics  issued  1,654,027  units  to Top  Hat
Investments Inc., of Toronto,  Ontario,  Canada, in exchange for cancellation of
$1,323,222  of  debt  obligations  payable  to  Top  Hat  Investments.  Top  Hat

                                       11

<PAGE>

Investments is a private  investment firm owned by one or more private  Canadian
investors,  the names of whom have not been disclosed to Viral Genetics, and its
president is Phillip W. Knight.  Each unit consists of one share of common stock
and a warrant to purchase  one-half share of common stock.  Consequently,  Viral
Genetics  issued to Top Hat  Investments  1,654,027  shares of common  stock and
warrants  to purchase  827,013  shares of common  stock at an exercise  price of
$1.00 per share that expire June 6, 2003. If the warrant is not exercised within
45 days following the date on which the Mexican  government or authorized agency
thereof issues a license, permit, or other authorization for the sale of our TNP
product in Mexico, then the exercise price automatically  increases to $1.25 per
share.  Viral Genetics was  subsequently  advised by Top hat Investments that it
assigned  the  warrants to purchase  827,013 to one or more  unidentified  third
parties.  Viral Genetics has not received the assigned  warrants for transfer to
the new  holders  as of the  date of this  report.  Since  April  2001,  Top Hat
Investments advanced funds to or for Viral Genetics to support operations in the
total amount of $1,042,947, which includes $499,000 of direct cash advances. Top
Hat Investments also acquired  outstanding Viral Genetics notes in the amount of
$280,275. All of these obligations were cancelled in the exchange.

     From 1995 through 2002, certain directors of Viral Genetics have made loans
and other  advances to fund  operations.  At  December  31,  2002,  we owed Haig
Keledjian, an officer and director,  $881,317 of principal and accrued interest,
Hampar Karageozian,  a director,  $783,648 of principal and interest, the Estate
of Dr. Harry  Zhabilov,  a former  director,  $509,648 of principal  and accrued
interest,  and Arthur  Keledjian,  a director  $2,671 of  principal  and accrued
interest.  All of these  loans bear  interest  at the rate of five  percent  per
annum.  Viral  Genetics  does  not  expect  to be able  to  repay  any of  these
obligations  unless  it  obtains  additional  outside  financing  or is  able to
generate  substantial  revenue from sale of its products in the future, of which
there is no assurance.

     At December 31, 2002, we had $410 of current assets, current liabilities of
$6,909,975,  and long-term  liabilities of $2,643,416.  We estimate that we will
need   approximately   $1,000,000  of   additional   capital  in  2003  to  fund
approximately  $650,000 of research  and  development  costs,  $50,000 of patent
work, and $300,000 of administrative  expenses and product  manufacturing costs.
We have  no  meaningful  agreements  or  arrangements  in  place  to  raise  the
additional capital. These factors, together with our existing liabilities, raise
substantial doubt about our ability to continue as a going concern.

                          Item 7. Financial Statements.

     The financial statements of Viral Genetics appear at the end of this report
beginning with the Index to Financial Statements on page 19.

   Item 8. Changes In and Disagreements with Accountants on Accounting and
                              Financial Disclosure.

     None.

                                    PART III

      Item 9. Directors, Executive Officers, Promoters and Control Persons;
                     With Section 16(a) of the Exchange Act

Directors and Officers

     The following  table sets forth the names,  ages, and positions for each of
the directors and officers of Viral Genetics.

Name                      Age   Positions                         Since

Haig Keledjian            41    President, Secretary, and         October 2001
                                Director

Hampar Karageozian        62    Director                          October 2001

Arthur Keledjian          36    Director                          October 2001

                                       12

<PAGE>

     The following is  information  on the business  experience of each officer,
director and director appointee.

     Haig  Keledjian  is an attorney  in private  practice  since 1993,  with an
emphasis in federal and state taxes.

     Hampar  Karageozian  has a Bachelor of Science and Masters of Science  from
the  American  University  of Beirut,  a Masters of Science  from  Massachusetts
Institute of Technology, and a MBA from the University of California, Irvine. He
has been with ISTA  Pharmaceuticals,  Inc. as Senior Vice President of Discovery
Research since 1994.

     Arthur   Keledjian  has  a  degree  of  Bachelor  of  Science  in  Business
Administration  from California  State  University in Los Angeles,  and has been
employed  by Farmers  Insurance  Group  since 1988,  and is  presently  District
Manager. He is the brother of Haig Keledjian.

Key Consultant

     In November 2002, Viral Genetics retained the services of Michael Capizzano
as a management  consultant to assist with  business and corporate  development,
the advancement of our  applications  in Mexico and China,  and to provide other
corporate  consulting  services.  From September 1999 to September  2002, he was
self-employed as a business  consultant.  From September 1999 to the present Mr.
Capizzano  has been a principal  owner of  Everbloom  Mushrooms  Inc., a private
corporation  engaged  in the  business  of  agricultural  technology  related to
specialty food  manufacturing  and  distribution.  Prior to September  1999, Mr.
Capizzano  was employed as a credit  analyst with  Newcourt  Financial  Ltd., of
Toronto, Ontario.

Section 16(a) Beneficial Ownership ReportingCompliance

     Section 16(a) of the Securities  Exchange Act of 1934 requires officers and
Directors  of Viral  Genetics  and  persons  who own more than ten  percent of a
registered  class  of Viral  Genetics'  equity  securities  to file  reports  of
ownership  and  changes in their  ownership  with the  Securities  and  Exchange
Commission,  and forward copies of such filings to Viral Genetics.  Based on the
copies of filings  received by Viral  Genetics,  during the most  recent  fiscal
year, the directors, officers, and beneficial owners of more than ten percent of
the equity securities of Viral Genetics registered pursuant to Section 12 of the
Exchange Act, have filed on a timely basis,  all required  Forms 3, 4, and 5 and
any amendments thereto.

                         Item 10. Executive Compensation

Annual Compensation

     No executive officer of Viral Genetics received any compensation during the
year ended December 31, 2002. Haig Keledjian,  our president, has served without
compensation  and without any agreement or arrangement for  compensation.  Viral
Genetics expects that it will negotiate a compensation package for Mr. Keledjian
covering past and future service at such time that Viral Genetics has sufficient
working capital to do so.

Stock Options

     There  are no stock  options  issued  or  outstanding  for any of the Named
Executive  Officers of Viral Genetics.  Viral Genetics has not adopted any stock
option or other compensation plans for its executive officers.

   Item 11. Security Ownership of Certain Beneficial Owners and Management

     The  following  table  sets  forth as of  April 1,  2003,  the  number  and
percentage of the 40,723,137 outstanding shares of common stock which, according
to the information  supplied to Viral Genetics,  were beneficially  owned by (i)
each person who is currently a director,  (ii) each executive officer, (iii) all
current  directors and executive  officers of Viral Genetics as a group and (iv)
each person who, to our knowledge,  is the  beneficial  owner of more than 5% of
the outstanding common stock. Except as otherwise  indicated,  the persons named
in the table have sole voting and  dispositive  power with respect to all shares
beneficially owned, subject to community property laws where applicable.

                                       13

<PAGE>

                                             Common              Percent
Name and Address                             Shares              of Class

Haig Keledjian (1)(2)                      16,585,950              40.7
905 Mission Street
South Pasadena, CA 91030

Hampar Karageozian (1)                     5,941,509               14.6
31021 Marbella Vista
San Juan Capistrano, CA 92675

Arthur Keledjian (1)                          -0-                  -0-
905 Mission Street
South Pasadena, CA 91030

Dr. Alberto Osio                           2,380,046               5.8
Gobemador Ignacio
Esteva 71 Mexico 11850 D.F.

Caribou Investments, Inc. (3)              2,073,000               5.1
Gubemador Ignacio
Esteva 70, Mexico 11850 D.F.

All officers and directors (3 persons)    22,531,459              55.3


(1)  Officer or Director of Viral Genetics.

(2)  Haig Keledjian holds 1,109,697 shares personally. He holds 5,932,761 shares
     as Trustee for an irrevocable voting trust for the benefit of his children,
     5,932,761 shares as Trustee for an irrevocable voting trust for the benefit
     of the children of Dr. Harry Zhabilov,  2,188,403  shares as Trustee for an
     irrevocable  trust  established  for a  group  of  private  investors,  and
     1,422,328  shares as Trustee for an  irrevocable  trust  established  for a
     group of Mr. Keledjian's family members.  Mr. Keledjian has sole voting and
     investment control over the shares he holds as Trustee.

(3)  Caribou  Investments,  Inc.,  is a  private  investment  company  owned and
     controlled by Horacia Altamirano of Mexico City, Mexico.

           Item 12. Certain Relationships and Related Transactions

     Viral Genetics,  Inc., a California corporation and our subsidiary ("VGI"),
is a party to an  Assignment  of Patent  agreement  dated August 1, 1995,  under
which Therapeutic Genetics, Inc., a California corporation,  assigned all of its
rights  in the  patent  pertaining  to TNP,  a protein  used or  useful  for the
treatment of infectious  deceases,  to VGI for a note in the principal amount of
$6,250,000  and a  continuing  royalty  equal to five  percent of gross sales of
products using the patented technology.  At December 31, 2002, the principal and
accrued  interest on the note was  $6,890,625.  The  stockholders of Therapeutic
Genetics are all of the same persons who were former  stockholders  of VGI prior
to its acquisition by Viral Genetics in October 2001. Consequently, all payments
made to Therapeutic  Genetics under this agreement will accrue indirectly to the
benefit of the former  stockholders  of VGI,  including Haig  Keledjian,  Hampar
Karageozian,  Dr.  Alberto  Osio,  and  Caribou  Investments,  Inc.,  who became
principal stockholders of Viral Genetics as a result of the acquisition of VGI.

     From 1995 through 2002, certain directors of Viral Genetics have made loans
and other  advances to fund  operations.  At  December  31,  2002,  we owed Haig
Keledjian, an officer and director,  $881,317 of principal and accrued interest,
Hampar Karageozian,  a director,  $783,648 of principal and interest, the Estate
of Dr. Harry  Zhabilov,  a former  director,  $509,648 of principal  and accrued
interest,  and Arthur  Keledjian,  a director,  $2,671 of principal  and accrued
interest.  All of these  loans bear  interest  at the rate of five  percent  per
annum.  Viral  Genetics  does  not  expect  to be able  to  repay  any of  these

                                       14

<PAGE>

obligations  unless  it  obtains  additional  outside  financing  or is  able to
generate  substantial  revenue from sale of its products in the future, of which
there is no assurance.

                  Item 13. Exhibits and Reports on Form 8-K

Reports on Form 8-K

      No reports on Form 8-K were filed in the fourth calendar quarter of 2002.

Exhibits

     Copies of the  following  documents are included as exhibits to this report
pursuant to Item 601 of Regulation S-B.

Exhibit No.  Title of Document                                Location*

2.1          Agreement and Plan of Exchange dated September   Form 8-K/ Oct. 01
             6, 2001 (1)
3.1          Certificate of Incorporation (2)                 Form 10-SB
3.2          Certificate of Amendment (3)                     Form 10-KSB 2001
3.3          Bylaws (2)                                       Form 10-SB
10.1         Assignment of Patent dated August 5, 1995 (3)    Form 10-KSB 2001
10.2         Agreement between Viral Genetics, Soluciones     Form 10-KSB 2001
              Avanzadas Para La Salud, S.A. de C.V. (formerly
              Esigar Quirurgica, S.A. de C.V.)
              Dated July 14, 1999 (English Translation) (3)
10.3         Agreement between Viral Genetics, Soluciones     Form 10-KSB 2001
              Avanzadas Para La Salud, S.A. De C.V., and
              Labortorios Senosiain, S.A. de C.V.,
              Dated July 11, 2001 (English Translation) (3)
10.4         Mutual Cooperation and Joint Venture Agreement   Form 10-KSB 2001
              between Viral Genetics and New York
              International Commerce Group, Inc., dated
              March 25, 2002 (3)
10.5         Services Agreement between Viral Genetics and    Form 10-KSB 2001
              L&M Global Ventures, Inc., dated March 25,
              2002 (3)
10.6         Letter from Top Hat Investments dated June 28,   Form 8-K/ Aug. 02
              2002 (4)
10.7         Subscription Agreement with Top Hat Investments  Form 8-K/ Aug. 02
              (4)
10.8         Warrant Agreement issued to Top Hat Investments  Form 8-K/ Aug. 02
              (4)
10.9         Consulting Agreement with Voluto Ventures, LLC,  Page E-1
              dated December __, 2002
21.1         List of Subsidiaries (3)                         Form 10-KSB 2001
99.1         Certification Under Section 906 of the           Page E-11
              Sarbanes-Oxley Act of 2002

(1) This exhibit is incorporated  herein by this reference to the Current Report
on Form 8-K dated  October  2,  2001,  filed with the  Securities  and  Exchange
Commission on October 17, 2001.

(2) These exhibits are incorporated  herein by this reference to Viral Genetics'
Registration  Statement  on Form 10-SB filed with the  Securities  and  Exchange
Commission on July 29, 1999.

(3) These exhibits are incorporated  herein by this reference to Viral Genetics'
Annual  Report on Form 10-KSB for the year ended  December 31, 2001,  filed with
the Securities and Exchange Commission on April 24, 2002.

(4) These exhibits are incorporated  herein by this reference to Viral Genetics'
Current Report on Form 8-K dated August 23, 2002,  filed with the Securities and
Exchange Commission on that date.

                        Item 14. Controls And Procedures

     With the participation of management, the chief executive officer and chief
financial  officer of viral  Genetics  evaluated  its  disclosure  controls  and

                                       15

<PAGE>

procedures  as of a date  within  90 days  prior to the date of  filing  of this
annual report on Form 10-KSB with the Securities and Exchange Commission.  Based
on this evaluation,  the chief executive officer and the chief financial officer
concluded  that  the  disclosure   controls  and  procedures  are  effective  in
connection with Viral  Genetics'  filing of its annual report on Form 10-KSB for
the year ended December 31, 2002.

     Subsequent to the date as of which the evaluation was made through the date
of this filing of Form 10-KSB for the year ended  December 31, 2002,  there have
been no significant  changes in Viral  Genetics'  internal  controls or in other
factors  that  could   significantly   affect  these  controls,   including  any
significant  deficiencies or material weaknesses of internal controls that would
require corrective action.


                                       16

<PAGE>


                                   SIGNATURES

      In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                          VIRAL GENETICS, INC.


Date:  April 30, 2003                     By: /s/ Haig Keledjian
                                              Haig Keledjian, President
                                              Chief Executive and Chief
Financial Officer

      In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.



Date:  April 30, 2003                     /s/ Haig Keledjian
                                          Haig Keledjian, Director


Date:  April 30, 2003                     /s/ Hampar Karageozian
                                          Hampar Karageozian, Director


Date:  April 30, 2003                     /s/ Arthur Keledjian
                                          Arthur Keledjian, Director


                                       17

<PAGE>


       CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT

I, Haig Keledjian, certify that:

1. I have reviewed this annual report on Form 10-KSB of Viral Genetics, Inc.;

2.  Based on my  knowledge,  this  annual  report  does not  contain  any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during the period in which this annual report
          is being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

     c)   presented   in  this   annual   report  our   conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's   board  of  directors  (or  persons   performing   the  equivalent
functions):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6. The  registrant's  other  certifying  officers  and I have  indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.



Date:  April 30, 2003                         By: /s/ Haig Keledjian
                                                  Haig Keledjian
                                                  Chief Executive and Chief
                                                  Financial Officer



                                       18

<PAGE>




                              VIRAL GENETICS, INC.

                                TABLE OF CONTENTS

                                December 31, 2002



WILLIAMS & WEBSTER'S AUDIT REPORT                                       20

FINANCIAL STATEMENTS

      Balance Sheets                                                    21

      Statements of Operations                                          22

      Statement of Stockholders' Deficit                                23

      Statements of Cash Flows                                          25

NOTES TO THE FINANCIAL STATEMENTS                                       26


                                       19

<PAGE>




Board of Directors
Viral Genetics, Inc.
South Pasadena, California

                          INDEPENDENT AUDITOR'S REPORT

We have  audited the  accompanying  balance  sheets of Viral  Genetics,  Inc. (a
development  stage  company) as of December  31, 2002 and 2001,  and the related
statements  of  operations,  stockholders'  deficit and cash flows for the years
then ended,  and for the period from July 11, 1995 to December 31,  2002.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Viral  Genetics,  Inc. as of
December  31, 2002 and 2001,  and the results of its  operations,  stockholders'
deficit  and its cash flows for the years then  ended,  and for the period  from
July 11, 1995 to December  31, 2002 in  conformity  with  accounting  principles
generally accepted in the United States of America.

The Company's  continued  viability is dependent upon its ability to meet future
financing requirements and the success of future operations.  The Company has no
cash,  negative  working  capital,  substantial  debt and a history of recurrent
losses.  These factors raise  substantial  doubt about the Company's  ability to
continue as a going  concern.  Management's  plans  regarding  those matters are
described in Note 2. The  financial  statements  do not include any  adjustments
that might result from the outcome of this uncertainty.



Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington
April 15, 2003

                                       20

<PAGE>



                              VIRAL GENETICS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                                 BALANCE SHEETS

                                                       December 31, December 31,
                                                          2002         2001
                                                       ------------ ------------
ASSETS
   CURRENT ASSETS
      Cash                                             $         -  $         -
      Deposits                                                 410            -
                                                       ------------ ------------
        TOTAL CURRENT ASSETS                                   410            -
                                                       ------------ ------------

   PROPERTY AND EQUIPMENT (NET)                            103,516      146,625
                                                       ------------ ------------
   OTHER ASSETS
      Goodwill and patents                               5,206,051    5,206,051
                                                       ------------ ------------

      TOTAL ASSETS                                     $ 5,309,977  $ 5,352,676
                                                       ============ ============

LIABILITIES AND STOCKHOLDERS' DEFICIT
   CURRENT LIABILITIES
      Accounts payable                                 $   266,871  $   167,123
      Bank overdrafts payable                                5,291        1,370
      Accrued interest                                   1,023,572    1,995,513
      Payroll taxes payable                                      -       26,116
      Notes payable - related parties                    5,514,241            -
      Other current liability                              100,000            -
                                                       ------------ ------------
        TOTAL CURRENT LIABILITIES                        6,909,975    2,190,122
                                                       ------------ ------------
   LONG-TERM LIABILITIES
      Notes payable - related parties                    2,603,416    7,267,339
      Other notes payable                                   40,000            -
                                                       ------------ ------------
        TOTAL LONG-TERM LIABILITIES                      2,643,416    7,267,339
                                                       ------------ ------------

      TOTAL LIABILITIES                                  9,553,391    9,457,461
                                                       ------------ ------------

   COMMITMENTS AND CONTINGENCIES                                 -            -
                                                       ------------ ------------

   STOCKHOLDERS' DEFICIT
      Preferred stock, 20,000,000 shares authorized,
        $0.0001 par value; no shares issued and
        outstanding                                              -            -
      Common stock, 80,000,000 shares authorized,
        $0.0001 par value; 40,723,137 and
        37,786,273 issued and outstanding,
        respectively                                         4,072        3,779
      Additional paid-in capital                         5,811,984    4,273,297
      Common stock warrants                                 99,242            -
      Deficit accumulated during development stage     (10,158,712)  (8,381,861)
                                                       ------------ ------------
        TOTAL STOCKHOLDERS' DEFICIT                     (4,243,414)  (4,104,785)
                                                       ------------ ------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT            $ 5,309,977  $ 5,352,676
                                                       ============ ============

  The accompanying notes are an integral part of these financial statements.

                                       21

<PAGE>



                                VIRAL GENETICS, INC.
                            (A DEVELOPMENT STAGE COMPANY)
                              STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                                             From
                                                                           July 11,
                                                                             1995
                                                      Year Ended          (Inception)
                                                     December 31,              to
                                               -------------------------  December 31,
                                                   2002         2001          2002
                                               ------------ ------------ -------------
<S>                                            <C>          <C>          <C>
REVENUES                                       $         -  $         -  $    347,750
                                               ------------ ------------ -------------

EXPENSES
    Research and development                       617,855      498,749     6,238,575
    Depreciation expense                            43,109       45,948       129,186
    General and administrative                     595,713      398,261     1,623,014
                                               ------------ ------------ -------------
    TOTAL EXPENSES
                                                 1,256,677      942,958     7,990,775
                                               ------------ ------------ -------------

LOSS FROM OPERATIONS                            (1,256,677)    (942,958)   (7,643,025)

OTHER EXPENSE
    Interest                                      (520,174)    (413,159)   (2,515,687)
                                               ------------ ------------ -------------

LOSS BEFORE INCOME TAXES                        (1,776,851)  (1,356,117)  (10,158,712)

INCOME TAXES                                             -            -             -
                                               ------------ ------------ -------------
NET LOSS
                                               $(1,776,851) $(1,356,117) $(10,158,712)
                                               ============ ============ =============
    NET LOSS
      PER COMMON SHARE, BASIC AND DILUTED      $     (0.05) $     (0.04)
                                               ============ ============

    WEIGHTED AVERAGE NUMBER OF
      COMMON SHARES OUTSTANDING,

      BASIC AND DILUTED                         38,715,014   31,759,503
                                               ============ ============
</TABLE>


  The accompanying notes are an integral part of these financial statements.

                                       22

<PAGE>



                                VIRAL GENETICS, INC.
                            (A DEVELOPMENT STAGE COMPANY)
                         STATEMENT OF STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
                                                                                            Deficit
                                                Common                                    Accumulated
                                                Stock               Additional              During         Total
                                              Number of              Paid-in     Stock    Development  Stockholders'
                                                Shares     Amount    Capital    Warrants     Stage        Deficit
                                              ----------  --------  ----------  --------  -----------  ------------
<S>                                           <C>         <C>       <C>         <C>       <C>          <C>
 Issuance of common stock
    for cash at nil per share                 23,800,079  $  2,380  $   (1,380) $      -  $         -  $      1,000

 Net loss for period ended December 31, 1995           -         -           -         -     (707,167)     (707,167)
                                              ----------  --------  ----------  --------  -----------  ------------

 Balance, December 31, 1995                   23,800,079     2,380      (1,380)        -     (707,167)     (706,167)

 Issuance of common stock
    for cash at $0.84 per share                   59,500         6      49,994         -            -        50,000

 Issuance of common stock
    for services at $0.84 per share              357,001        36     299,964         -            -       300,000

 Net loss for year ended December 31, 1996             -         -           -         -     (810,189)     (810,189)
                                              ----------  --------  ----------  --------  -----------  ------------

 Balance, December 31, 1996                   24,216,580     2,422     348,578         -   (1,517,356)   (1,166,356)

 Issuance of common stock
    for cash at $0.84 per share                  339,151        34     284,966         -            -       285,000

 Issuance of common stock
    for services at $0.84 per share              499,802        50     419,950         -            -       420,000

 Net loss for year ended December 31, 1997             -         -           -         -     (577,066)     (577,066)
                                              ----------  --------  ----------  --------  -----------  ------------

 Balance, December 31, 1997                   25,055,533     2,506   1,053,494         -   (2,094,422)   (1,038,422)


 Issuance of common stock
    for cash at $0.84 per share                  345,101        35     289,965         -            -       290,000

 Net loss for year ended December 31, 1998             -         -           -         -     (708,567)     (708,567)
                                              ----------  --------  ----------  --------  -----------  ------------

 Balance, December 31, 1998                   25,400,634     2,541   1,343,459         -   (2,802,989)   (1,456,989)

 Issuance of common stock
    for cash at $0.42 per share                  595,002        59     249,941         -            -       250,000

 Issuance of common stock
    for cash at $0.84 per share                   34,272         3      28,797         -            -        28,800

 Net loss for year ended December 31, 1999             -         -           -         -   (2,037,638)   (2,037,638)
                                              ----------  --------  ----------  --------  -----------  ------------

 Balance, December 31, 1999                   26,029,908  $  2,603  $1,622,197  $      -  $(4,840,627) $ (3,215,827)
                                              ----------  --------  ----------  --------  -----------  ------------
</TABLE>

  The accompanying notes are an integral part of these financial statements.

                                       23

<PAGE>



                                VIRAL GENETICS, INC.
                            (A DEVELOPMENT STAGE COMPANY)
                         STATEMENT OF STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
                                                                                              Deficit
                                                   Common                                   Accumulated
                                                   Stock              Additional   Common     During         Total
                                                  Number of            Paid-in     Stock    Development   Stockholders'
                                                   Shares     Amount   Capital    Warrants     Stage        Deficit
                                                 -----------  ------  ----------  --------  ------------  ------------
<S>                                              <C>          <C>     <C>         <C>       <C>           <C>
Balance, December 31, 1999                       $26,029,908  $2,603  $1,622,197  $      -  $ (4,840,627) $ (3,215,827)

 Issuance of common stock
  for cash at $0.42 per share                        595,002      59     249,941         -             -       250,000

Issuance of common stock
  for cash at $0.84 per share                        842,523      84     707,916         -             -       708,000

Issuance of common stock
  for cash at $1.94 per share                         51,567       6      99,994         -             -       100,000

Issuance of common stock
  for services at $0.84 per share                  2,163,824     216   1,818,117         -             -     1,818,333

Net loss for year ended December 31, 2000                  -       -           -         -    (2,185,117)   (2,185,117)
                                                 -----------  ------  ----------  --------  ------------  ------------

Balance, December 31, 2000                        29,682,824   2,968   4,498,165         -    (7,025,744)   (2,524,611)

 Issuance of common stock
   for cash at $0.84 per share                        29,464       3      24,747         -             -        24,750

 Issuance of common stock
   for services at $0.84 per share                    37,811       4      31,464         -             -        31,468

 Recapitalization through reverse merger and
   acquisition of 5 Starliving Online, Inc.        8,035,693     804    (281,079)        -             -      (280,275)

 Miscellaneous adjustment due to merger                  481       -           -         -             -             -

 Net loss for the year ended December 31, 2001             -       -           -         -    (1,356,117)   (1,356,117)
                                                 -----------  ------  ----------  --------  ------------  ------------

 Balance, December 31, 2001                       37,786,273   3,779   4,273,297         -    (8,381,861)   (4,104,785)

 Issuance of common stock
   for cash at $0.70 per share                       215,000      21     149,979         -             -       150,000

 Issuance of common stock from the exercise
   of options for cash at  $0.01 per share         1,000,000     100     149,900         -             -       150,000

 Issuance of common stock for debt at
   $0.80 per share                                 1,654,027     165   1,223,815    99,242             -     1,323,222

 Issuance of common stock for services
   at $0.22 pershare                                  67,837       7      14,993         -             -        15,000

 Net loss for the year ended December 31, 2002             -       -           -         -    (1,776,851)   (1,776,851)
                                                 -----------  ------  ----------  --------  ------------  ------------

 Balance, December 31, 2002                       40,723,137  $4,072  $5,811,984  $ 99,242  $(10,158,712) $ (4,243,414)
                                                 ===========  ======  ==========  ========  ============  ============
</TABLE>

  The accompanying notes are an integral part of these financial statements.


                                       24

<PAGE>



                              VIRAL GENETICS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                            STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                          July 11
                                                                           1995
                                                    Year Ended          (Inception)
                                                    December 31,            to
                                             -------------------------  December 31,
                                                 2002          2001         2002
                                             -----------  ------------ -------------
<S>                                          <C>          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net loss                                 $(1,776,851) $(1,356,117) $(10,158,712)
    Depreciation                                  43,109       45,948       129,186
    Non-cash operating expenses                  140,000        4,901       144,901
    Increase in deposits                            (410)           -          (410)
    Decrease in inventory                              -      485,010             -
    Issuance of common stock for services         15,000       31,468     2,584,801
    Issuance of common stock for expenses
      paid by third party                        593,947            -       593,947
    Increase in accrued interest                 512,488      413,159     1,023,572
    Increase in accounts payable                  99,748       15,973       266,871
    Proceeds from customer deposit               100,000            -       100,000
                                             -----------  ------------ -------------
Net cash used in operations                     (272,969)    (359,658)   (5,315,844)
                                             -----------  ------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES
    Acquisition of equipment                           -       (3,672)     (232,702)
    Increase in patent                                 -            -    (5,206,051)
                                             -----------  ------------ -------------
Net cash used in investing activities                  -       (3,672)   (5,438,753)
                                             -----------  ------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES
    Proceeds from notes payable                  349,905      338,580     8,843,983
    Payments on notes payable                   (236,936)           -      (236,936)
    Proceeds from sale of common stock           160,000       24,750     2,147,550
                                             -----------  ------------ -------------
Net cash provided by financing activities        272,969      363,330     10,754,59
                                             -----------  ------------ -------------

Change in cash                                         -            -             -

Cash, beginning of period                              -            -             -
                                             -----------  ------------ -------------
Cash, end of period                          $         -  $         -  $          -
                                             ===========  ============ =============
SUPPLEMENTAL CASH FLOW DISCLOSURES:
    Interest expense paid                    $    53,454  $         -  $     53,454
                                             ===========  ============ =============
    Income taxes paid                        $         -  $         -  $          -
                                             ===========  ============ =============
NON-CASH TRANSACTIONS:
    Issuance of common stock for services    $    15,000  $    31,468  $  2,584,801
    Non-cash operating expenses              $   140,000  $     4,901  $    144,901
    Issuance of common stock for debt paid
      by third party                         $   593,947  $         -  $    593,947
    Issuance of common stock for notes
      payable                                $   729,275  $         -  $   $729,275
</TABLE>

  The accompanying notes are an integral part of these financial statements.

                                       25

<PAGE>


                              VIRAL GENETICS, INC.
                          (A Development Stage Company)
                        Notes to the Financial Statements
                                December 31, 2002


NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

Viral Genetics Inc. ("the  Company") was  incorporated in California on July 11,
1995 and is in the development  stage. The Company was organized for the purpose
of  manufacturing  and marketing a  pharmaceutical  product named Thymus Nuclear
Protein  (the  current  formulation  of  which is now  known as and  hereinafter
referred to as "TNP").  This product,  TNP, is used in a drug being developed to
treat AIDS.  Sales of this product  have been  limited,  primarily  for research
purposes.  The  success  of the  Company  will be based upon  obtaining  certain
regulatory  approval for its pharmaceutical  product TNP to commence  commercial
operations. On October 1, 2001, the Company was acquired by 5 Starliving Online,
Inc. See Note 9. The Company's year-end is December 31.

NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This  summary of  significant  accounting  policies  is  presented  to assist in
understanding the financial  statements.  The financial statements and notes are
representations  of the Company's  management,  which is  responsible  for their
integrity  and  objectivity.  These  accounting  policies  conform to accounting
principles  generally  accepted in the United  States of America,  and have been
consistently applied in the preparation of the financial statements.

Accounting Methods
The Company's  financial  statements  are prepared  using the accrual  method of
accounting.

Cash and Cash Equivalents
For purposes of the statements of cash flows,  the Company  considers all highly
liquid  investments with original  maturities of three months or less to be cash
equivalents.

Compensated Absences
The  Company's  policy is to recognize  the cost of  compensated  absences  when
actually  paid to  employees.  If the amount were  estimatable,  it would not be
currently recognized as the amount would be deemed immaterial.

Derivative Instruments
The  Financial   Accounting   Standards  Board  issued  Statement  of  Financial
Accounting  Standards ("SFAS") No. 133,  "Accounting for Derivative  Instruments
and Hedging  Activities," as amended by SFAS No. 137, "Accounting for Derivative
Instruments and Hedging  Activities - Deferral of the Effective Date of SFAS No.
133",  and SFAS No. 138,  "Accounting  for Certain  Derivative  Instruments  and
Certain Hedging Activities", which is effective for the Company as of January 1,
2001.  These  statements   establish  accounting  and  reporting  standards  for
derivative  instruments,  including certain derivative  instruments  embedded in
other  contracts,  and for  hedging  activities.  They  require  that an  entity
recognize all  derivatives  as either assets or liabilities in the balance sheet
and measure those instruments at fair value.

                                       26

<PAGE>


                              VIRAL GENETICS, INC.
                          (A Development Stage Company)
                        Notes to the Financial Statements
                                December 31, 2002


NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Derivative Instruments (continued)
If certain conditions are met, a derivative may be specifically  designated as a
hedge, the objective of which is to match the timing of gain or loss recognition
on the hedging  derivative  with the  recognition of (i) the changes in the fair
value of the hedged asset or liability that are  attributable to the hedged risk
or  (ii)  the  earnings  effect  of the  hedged  forecasted  transaction.  For a
derivative  not  designated  as a  hedging  instrument,  the  gain  or  loss  is
recognized in income in the period of change.

Historically,  the Company has not entered into  derivatives  contracts to hedge
existing risks or for speculative purposes.

At December 31, 2002, the Company has not engaged in any transactions that would
be considered derivative instruments or hedging activities.

Development Stage Activities
The Company has been in the  development  stage since its  formation on July 11,
1995. It is primarily engaged in medical research and development.

Earnings Per Share
On January 1, 1998,  the  Company  adopted  SFAS No.  128,  which  provides  for
calculation  of "Basic" and  "Diluted"  earnings per share.  Basic  earnings per
share  includes no  dilution  and is  computed  by  dividing  net income  (loss)
available  to  common   shareholders  by  the  weighted  average  common  shares
outstanding  for the period.  Diluted  earnings per share  reflect the potential
dilution of securities  that could share in the earnings of an entity similar to
fully diluted earnings per share.  Although there were common stock  equivalents
outstanding at December 31, 2002,  they were not included in the  calculation of
earnings per share because they would have been considered anti-dilutive.

Fair Value of Financial Instruments
The Company's  financial  instruments  as defined by SFAS No. 107,  "Disclosures
about Fair Value of Financial  Instruments,"  include accounts payable,  accrued
expenses and borrowings  from related  parties.  All of the Company's  financial
instruments  are accounted for on a historical  cost basis,  which  approximates
fair value at December 31, 2002.

Going Concern
As shown in the accompanying  financial statements,  the Company has incurred an
accumulated  deficit of  $10,158,712  through  December 31, 2002. The Company is
currently in need of funds to continue its research and development  goals.  The
Company has no cash, has negative  working  capital,  has  substantial  debt and
recurring  losses  from  operations.   These  factors  and  uncertainties  raise
substantial  doubt about the Company's  ability to continue as a going  concern.
The  financial  statements  do  not  include  any  adjustments  relating  to the
recoverability  and  classification  of  recorded  assets,  or the  amounts  and
classification of liabilities  that  might be necessary in the event the Company

                                       27

<PAGE>


                              VIRAL GENETICS, INC.
                          (A Development Stage Company)
                        Notes to the Financial Statements
                                December 31, 2002


NOTE 2 -SUMMARY  OF  SIGNIFICANT ACCOUNTING POLICIES (continued)

Going Concern (continued)
cannot  continue in existence.  Management  has designed  plans for sales of the
Company's  products.  Management  intends to seek  additional  capital  from new
equity  securities   offerings  that  will  provide  funds  needed  to  increase
liquidity,  fund  internal  growth and fully  implement  its business  plan.  An
estimated $1 million is believed  necessary to continue  operations and increase
development through the next fiscal year.

Goodwill and Patents
Goodwill  represents  the excess of the purchase  price and related direct costs
over the fair value of net assets  acquired as of the date of the acquisition of
patents  from  Therapeutic  Genetics,   LLC.  See  Note  4.  In  completing  the
acquisition,  the Company issued to Therapeutic notes, which currently amount to
$6,890,625  including accrued  interest.  The Company  periodically  reviews its
goodwill to assess  recoverability  based on projected  undiscounted  cash flows
from  operations.  Impairments  are  recognized  in  operating  results  when  a
permanent  diminution  in value  occurs.  The Company  intends to  amortize  the
aforementioned patent assets once the Company begins operations.

Impaired Asset Policy
In October 2001, the Financial  Accounting  Standards Board issued  Statement of
Financial  Accounting  Standards  No. 144,  "Accounting  for the  Impairment  or
Disposal of Long-Lived  Assets" ("SFAS No. 144"). SFAS No. 144 replaces SFAS No.
121,  "Accounting  for the  Impairment of Long-Lived  Assets and for  Long-Lived
Assets to Be Disposed Of." This standard  establishes a single  accounting model
for  long-lived  assets  to be  disposed  of  by  sale,  including  discontinued
operations.  SFAS No. 144 requires that these  long-lived  assets be measured at
the lower of carrying amount or fair value less cost to sell,  whether  reported
in continuing operations or discontinued operations. This statement is effective
beginning  for fiscal years after  December 15, 2001,  with earlier  application
encouraged.  The Company  adopted SFAS No. 144. The Company does not believe any
adjustments are needed to the carrying value of its assets at December 31, 2002.

Inventory
Inventories  are  stated at the lower of  average  cost or  market.  The cost of
finished goods includes the cost of raw material, direct and indirect labor, and
other indirect manufacturing costs.

Inventory has a shelf life of approximately twelve months. At December 31, 2001,
management  determined  that all inventory on hand was  completely  impaired and
recorded a charge of $485,211 to research and development.

Reclassification
Certain  amounts  from prior  periods have been  reclassified  to conform to the
current period presentation.  These  reclassifications  have not resulted in any
changes to the Company's accumulated deficit or the net losses presented.

                                       27

<PAGE>


                              VIRAL GENETICS, INC.
                          (A Development Stage Company)
                        Notes to the Financial Statements
                                December 31, 2002



NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Research and Development
Research and development expenses are charged to operations as incurred.

Revenue Recognition
The Company  recognizes revenue from product sales upon shipment to the customer
if collectibility is reasonably assured.

Segment Reporting
The Company does not utilize segment information at this time as defined by SFAS
No. 131 as its only subsidiary has been discontinued. See Note 9.

Use of Estimates
The process of preparing  financial  statements  in conformity  with  accounting
principles  generally  accepted in the United States of America requires the use
of estimates and  assumptions  regarding  certain types of assets,  liabilities,
revenues,   and  expenses.   Such  estimates   primarily   relate  to  unsettled
transactions and events as of the date of the financial statements. Accordingly,
upon settlement, actual results may differ from estimated amounts.

Accounting Pronouncements
In December 2002, the Financial  Accounting  Standards Board issued Statement of
Financial Accounting Standards No. 148, "Accounting for Stock-Based Compensation
- Transition and  Disclosure,"  ("SFAS No. 148").  SFAS 148 amends SFAS No. 123,
"Accounting for Stock-Based  Compensation,"  to provide  alternative  methods of
transition for an entity that voluntarily changes to the fair value based method
of accounting for stock-based employee compensation. In addition, it also amends
the disclosure  provisions of SFAS No. 123 to require prominent disclosure about
the effects on reported results of an entity's  accounting policy decisions with
respect to stock-based  employee  compensation.  The provisions of the statement
are effective for financial  statements  for fiscal years ending after  December
15, 2002. The Company believes that SFAS No. 148 will not  significantly  affect
its financial reporting.

In  November  2002,  the  Financial   Accounting  Standards  Board  issued  FASB
Interpretation No. 45, "Guarantor's  Accounting and Disclosure  Requirements for
Guarantees,  Including  Indirect  Guarantees" ("FIN 45") which elaborates on the
disclosures  to be made by a  guarantor  in its  interim  and  annual  financial
statements about its obligations under certain guarantees that it has issued. It
also clarifies that a guarantor is required to recognize,  at the inception of a
guarantee,  a  liability  for the fair  value of the  obligation  undertaken  in
issuing  the  guarantee.  FIN 45 does not  prescribe  a  specific  approach  for
subsequently measuring the guarantor's recognized liability over the term of the
related guarantee.  It also  incorporates,  without change, the guidance in FASB
Interpretation  No. 34,  "Disclosure of Indirect  Guarantees of  Indebtedness of
Others,"  which is being  superseded.  FIN 45 has had no impact on the Company's
financial  position or results of operations as the Company has not entered into
any of the aforementioned transactions.

                                       29

<PAGE>


                              VIRAL GENETICS, INC.
                          (A Development Stage Company)
                        Notes to the Financial Statements
                                December 31, 2002



NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting Pronouncements (continued)
In June 2002,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards No. 146,  "Accounting for Costs Associated with
Exit  or  Disposal   Activities"  ("SFAS  No.  146").  SFAS  No.  146  addresses
significant  issues  regarding the  recognition,  measurement,  and reporting of
costs  associated  with exit and disposal  activities,  including  restructuring
activities.  SFAS No. 146 also addresses recognition of certain costs related to
terminating  a  contract  that is not a  capital  lease,  costs  to  consolidate
facilities or relocate employees, and termination benefits provided to employees
that  are  involuntarily  terminated  under  the  terms  of a  one-time  benefit
arrangement  that  is  not  an  ongoing  benefit  arrangement  or an  individual
deferred-compensation  contract.  SFAS No.  146 was  issued in June 2002 and its
adoption  has had no impact on the  Company's  financial  position or results of
operations.

In April 2002,  the Financial  Accounting  Standards  Board issued  Statement of
Financial Accounting Standards No. 145, "Rescission of SFAS Statements No. 44, 4
and  64,  Amendment  of  SFAS  Statement  No.  13,  and  Technical  Corrections"
(hereinafter "SFAS No. 145"), which updates,  clarifies and simplifies  existing
accounting pronouncements.  SFAS No. 4, which required all gains and losses from
the  extinguishment of debt to be aggregated and, if material,  classified as an
extraordinary  item, net of related tax effect was rescinded.  As a result, SFAS
No. 64, which amended SFAS No. 4, was rescinded,  as it was no longer necessary.
SFAS No. 44,  "Accounting for intangible Assets of Motor Carriers,"  established
the accounting  requirements  for the effects of transition to the provisions of
the Motor Carrier Act of 1980. Since the transition has been completed, SFAS No.
44 is no longer necessary and has been rescinded.  SFAS No. 145 amended SFAS No.
13  to  eliminate  an   inconsistency   between  the  required   accounting  for
sale-leaseback  transactions  and the  required  accounting  for  certain  lease
modifications  that have  economic  effects  that are similar to  sale-leaseback
transactions.  The Company  adopted  SFAS No. 145 and does not believe  that the
adoption will have a material effect on their financial statements.

In October 2001, the Financial  Accounting  Standards Board issued  Statement of
Financial  Accounting  Standards  No.  143,  "Accounting  for  Asset  Retirement
Obligations"  ("SFAS No. 143"). SFAS No. 143 establishes  guidelines  related to
the retirement of tangible  long-lived  assets of the Company and the associated
retirement costs. This statement requires that the fair value of a liability for
an asset  retirement  obligation  be  recognized  in the  period  in which it is
incurred  if a  reasonable  estimate of fair value can be made.  The  associated
asset  retirement  costs are  capitalized as part of the carrying  amount of the
long-lived assets.  This statement is effective for financial  statements issued
for the fiscal years beginning after June 15, 2002 and with earlier  application
encouraged.  The Company adopted SFAS No. 143 which did not impact the financial
statements of the Company at December 31, 2002.

                                       30

<PAGE>


                              VIRAL GENETICS, INC.
                          (A Development Stage Company)
                        Notes to the Financial Statements
                                December 31, 2002


NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment are stated at cost.  Depreciation  is provided  using the
straight-line  method over the estimated useful lives of the assets.  The useful
lives of property,  plant and equipment  for purposes of computing  depreciation
are three to five years.

The following is a summary of property, equipment, and accumulated depreciation:

                                             December 31,         December 31,
                                                 2002                 2001
                                           -----------------    ----------------

Equipment                                        $ 232,702            $ 232,702
Less accumulated depreciation                     (129,186)             (86,077)
                                           -----------------    ----------------
                                                 $ 103,516            $ 146,625
                                           =================    ================

Equipment  principally  consists of machines that can be used to manufacture the
drug TNP.  Depreciation  for the year ended  December 31, 2002 was $43,109.  The
Company  evaluates the  recoverability of property and equipment when events and
circumstances   indicate  that  such  assets  might  be  impaired.  The  Company
determines  impairment by comparing the undiscounted future cash flows estimated
to  be  generated  by  these  assets  to  their  respective   carrying  amounts.
Maintenance and repairs are expensed as incurred.  Replacements  and betterments
are  capitalized.  The cost and  related  reserves of assets sold or retired are
removed  from the  accounts,  and any  resulting  gain or loss is  reflected  in
results of operations.

NOTE 4 - PATENTS

The Company has the following patents issued:

              Country           Date Issued      Patent No.
        --------------------  ----------------  -------------

        Europe                    May 9, 2001        0826003
        Australia            October 19, 2000         721463
        Euroasia                 July 4, 2000         001100
        South Africa         February 6, 1997        96/3474
        Israel                January 5, 1996       118103/5
        New Zealand            March 17, 1999         308708


The patents all relate to the  Company's  product,  TNP. The Company  intends to
amortize the  aforementioned  patent assets once the Company begins  production.
The Company also has pending patent applications in Argentina, Brazil, Bulgaria,
Canada,  China, Hong Kong (a divisional  application),  Japan, South America and
United States.

                                       31

<PAGE>


                              VIRAL GENETICS, INC.
                          (A Development Stage Company)
                        Notes to the Financial Statements
                                December 31, 2002


NOTE 4 - PATENTS (continued)

The Company can give no assurance that other companies,  having greater economic
resources, will not be successful in developing products similar to those of the
Company.   There  can  be  no  assurance  that  patents,  if  obtained  for  the
aforementioned  patent  applications,  will be  enforceable.  Patents  that were
acquired  from  Therapeutic  Genetics,  LLC for notes  payable are the  security
underlying the aforementioned notes.

NOTE 5 - COMMITMENTS AND CONTINGENCIES

Product Liability
The Company may be subjected  to future  claims  resulting  from the use of TNP,
although the Company is unaware of any  product-related  litigation or potential
claims since TNP was initially  marketed.  As of December 31, 2002,  the Company
does not have product liability insurance for TNP.

Investment Banking Agreement
In November  2001,  the Company  signed an  agreement  with  Burlington  Capital
Markets,  Inc.  ("Burlington"),   whereby  Burlington  would  provide  strategic
relationships  and assistance in connection with future financing of the Company
in exchange for a combination of cash payments, common stock and stock warrants.
In the year ended December 31, 2002,  management  determined that Burlington has
not complied with the provisions of the agreement.  Accordingly, the Company has
neither paid nor accrued any fees to Burlington.

Consulting Agreements
In December 2002, the Company signed an agreement with Voluto Ventures,  LLC for
various  management  and advisory  services.  Under the  agreement,  the Company
issued 1,000,000 stock options with an exercise price of $0.01 per share,  which
were exercised in December 2002 and the Company potentially will issue to Voluto
Ventures,  LLC up to a total  of  2,000,000  additional  stock  options  with an
exercise  price of $0.01 per share and  potentially  pay  $10,000  per month for
services rendered.

See Note 10 for subsequent consulting agreements.

Joint Venture
On March 25, 2001,  the Company  announced a mutual and joint venture  agreement
with New York International Commerce Group, Inc. ("NYIC") to pursue distribution
of TNP in China.  As part of the  agreement,  NYIC shall  assist the  Company in
securing a State Drug Administration  certification from the Chinese government,
after which NYIC will be given exclusive distribution rights to TNP in China. As
of December  31,  2002,  no funds have been spent and no income or loss has been
incurred relating to this venture.

                                       32

<PAGE>


                              VIRAL GENETICS, INC.
                          (A Development Stage Company)
                        Notes to the Financial Statements
                                December 31, 2002


NOTE 5 - COMMITMENTS AND CONTINGENCIES (continued)

Distribution Agreement
In January 2003, the Company reached a TNP distribution agreement with Don Kelly
Group International,  Inc. regarding the testing,  distribution and marketing of
TNP. See Note 10.

Other Current Liabilities
In April 2002,  the Company  announced it had  submitted a New Drug  Application
with the Mexican Department of Health,  registering TNP for a license permitting
its sale for the  treatment of late-stage  AIDS patients in Mexico.  The Company
also filed a request for an expanded  human  clinical  trial of TNP with Mexican
authorities.  The application is pending at December 31, 2002. In July 2002, the
Company received $100,000 from a hospital in Mexico relating to a potential sale
of TNP. The Company has deferred the recognition of this potential revenue until
such time that the  Mexican  government  grants the  license  and the product is
delivered.   As  of  December  31,  2002,  this  amount  is  classified  in  the
accompanying financial statements under other current liabilities.

NOTE 6 - STOCKHOLDERS' DEFICIT

During years 1996,  1997 and 2000, the Company issued shares of common stock for
$300,000,  $420,000 and $1,818,333,  respectively,  for research and development
services. During the years 1996 through 2000, the Company received $1,962,800 in
cash for common stock.

During the year ended  December 31,  2001,  $24,750 was received for issuance of
common stock for cash and the Company also issued  common stock for research and
development services based on the fair market value of the stock for $31,468.

In April 2002,  the Company  issued  215,000 shares of common stock in a private
placement for $150,000 cash. In July 2002, the Company issued 1,654,027 units of
stock at $0.80 per unit for  $593,947 of debt paid by a third party and $729,275
of notes payable.  The units of stock consist of one share of common stock and a
warrant to  purchase  one-half  share of common  stock.  In December  2002,  the
Company issued 1,000,000 stock options with an exercise price of $0.01 per share
which were exercised in December 2002 for $10,000. The Company recorded $140,000
in  general  and  administrative  expenses  as a result of the  issuance  of the
aforementioned  stock options.  Also in December 2002, the Company issued 67,837
shares of common stock in November 2002 for services valued at $15,000.

The  warrants  issued by the Company  have an exercise  price of $1.00 per share
that will expire on June 6, 2003.  If the warrants are not  exercised  within 45
days  following  the date on which the  Mexican  government  issues a license or
permit  for the sale of TNP in Mexico,  then the  exercise  price  automatically
increases to $1.25 per share.  The market value of the Company's stock was $0.74
a share on the date of their  issuance and the  warrants  were valued at $0.06 a
share.

                                       33

<PAGE>


                              VIRAL GENETICS, INC.
                          (A Development Stage Company)
                        Notes to the Financial Statements
                                December 31, 2002


NOTE 7 - INCOME TAXES

The Company  accounts  for income  taxes under the  provisions  of  Statement of
Financial  Accounting  Standards ("SFAS") No. 109,  Accounting for Income Taxes.
SFAS No. 109 is an asset and liability  approach for computing  deferred  income
taxes.

As of December 31, 2002,  the Company had net operating loss  carryforwards  for
federal income tax reporting purposes amounting to approximately $7,485,000 that
expire in varying  amounts up to 2022.  The components of the deferred tax asset
as of December 31, 2002 were as follows:

                                                            December 31,
                                                               2002
                                                           -------------

Benefit of net operating loss carryforwards                $  2,560,000
Less valuation allowance
                                                             (2,560,000)
                                                           -------------
Net deferred tax asset                                     $          -
                                                           =============

As  of  December  31,  2002,   sufficient   uncertainty   exists  regarding  the
realizability  of  these  operating  loss  carryforwards,   and  accordingly,  a
valuation allowance of $2,560,000 has been established.

The benefit of net  operating  loss  carryforwards  was  calculated  based on an
average of 34% tax rate.

NOTE 8 - NOTES PAYABLE AND RELATED PARTY TRANSACTIONS

At December 31, 2002, the Company has the following obligations:


Notes payable to related parties                           $  8,117,657
Other notes payable                                              40,000
                                                           -------------
Total                                                      $  8,157,657
                                                           =============

The notes are not  collateralized,  have various maturities starting in the year
2003 and ending in the year 2004, and bear interest at 5% annually.

Notes  payable  totaling  $6,250,000  are  to  Therapeutic  Genetics,   LLC,  an
affiliated  company (i.e., a California  Limited  Liability Company owned by the
principal stockholder of Viral Genetics,  Inc.), arose from a patent transfer to
the Company.  The patents that were transferred are the security  underlying the
notes.  Two  directors  and  principal  stockholders  of the  Company  are  also
principal stockholders of the affiliated company.

                                       34

<PAGE>


                              VIRAL GENETICS, INC.
                          (A Development Stage Company)
                        Notes to the Financial Statements
                                December 31, 2002


NOTE 8 - NOTES PAYABLE AND RELATED PARTY TRANSACTIONS (continued)

In June 2002, the Company  issued shares of common stock to Top Hat  Investment,
Inc.  for notes  payable  totaling  $729,275.  Notes  payable  included  in this
aforementioned transaction included those the Company acquired during its merger
with 5-Starliving Online, Inc. in October, 2001. (See Notes 6 and 9.)

NOTE 9 - MERGER AND ACQUISITION

On October 1, 2001, 5 Starliving  Online,  Inc.  acquired all of the outstanding
common stock of Viral Genetics,  Inc. For accounting  purposes,  the acquisition
has been treated as a  recapitalization  of 5 Starliving  Online, Inc with Viral
Genetics,  Inc. as the acquirer (reverse acquisition),  wherein Viral became the
continuing  reporting  entity.  The net book value of  liabilities  assumed  was
$280,275 in the form of notes payable. The historical financial statements prior
to October 1, 2001 are those of Viral  Genetics,  Inc., and are restated for the
exchange of 29,750,580  shares of common stock for the original capital stock of
Viral  Genetics,  Inc.  5  Starliving  Online,  Inc.  changed  its name to Viral
Genetics, Inc. in December, 2001.

NOTE 10 - SUBSEQUENT EVENTS

Consulting Agreements and Issuances of Stock Options
In January 2003, the Company signed an agreement with Mr. Richard  Dellapuca for
various research and development  advisory  services.  Under the agreement,  the
Company will issue to Mr. Dellapuca 100,000 stock options with an exercise price
of $0.01 for every three months of service.

In January 2003,  the Company signed an agreement with Dr. Ian Woods for various
research and development  advisory  services.  Under the agreement,  the Company
will issue to Dr. Woods 100,000  stock  options with an exercise  price of $0.01
for every three months of service.

In January 2003, the Company signed an agreement with Ms. Monica Ord for various
consulting and advisory services. Under the agreement, the Company will issue to
Ms. Ord 100,000  stock  options with an exercise  price of $0.01 for every three
months of service.

Distribution Agreement
In January 2003, the Company reached a TNP distribution agreement with Don Kelly
Group International,  Inc. regarding the testing,  distribution and marketing of
TNP.  Under the  agreement,  the  Company  was to assign its rights to  testing,
distribution  and  marketing  of TNP for all  uses in  Africa,  Europe,  Canada,
Australia and parts of Asia for a ten-year  period in exchange for $2,000,000 to
be  paid  during  2003.  From  January  to  March  2003,  the  Company  received
approximately  $250,000  under the  agreement.  In April 2003, the agreement was
cancelled.

                                       35