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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0001104659-01-501192.txt : 20010809
<SEC-HEADER>0001104659-01-501192.hdr.sgml : 20010809
ACCESSION NUMBER:		0001104659-01-501192
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20010630
FILED AS OF DATE:		20010808

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			VYREX CORP
		CENTRAL INDEX KEY:			0000933972
		STANDARD INDUSTRIAL CLASSIFICATION:	PHARMACEUTICAL PREPARATIONS [2834]
		IRS NUMBER:				880271109
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10QSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-27866
		FILM NUMBER:		1700606

	BUSINESS ADDRESS:	
		STREET 1:		2159 AVENIDA DE LA PLAYA
		CITY:			LA JOLLA
		STATE:			CA
		ZIP:			92037
		BUSINESS PHONE:		6194544462

	MAIL ADDRESS:	
		STREET 1:		2159 AVENIDA DE LA PLAYA
		CITY:			LA JOLLA
		STATE:			CA
		ZIP:			92037
</SEC-HEADER>
<DOCUMENT>
<TYPE>10QSB
<SEQUENCE>1
<FILENAME>j1308_10qsb.htm
<DESCRIPTION>10QSB
<TEXT>
<html>

<head>
<title>Prepared by MerrillDirect</title>
</head>

<body link=blue vlink=purple>

<div>

<div align=right><b><font size=2>

<hr size=2 width="100%" noshade color=black align=right>

</font></b></div>


<div align=right><b><font size=2>

<hr size=1 width="100%" noshade color=black align=right>

</font></b></div>


<p align=center><b><font size=5>United
States<br>
Securities and Exchange Commission<br>
</font></b><b><font size=2>Washington D.C. 20549</font></b></p>





<hr size=1 width="25%" noshade color=black align=center>



<p align=center><b><font size=5>Form 10-QSB</font></b></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td width=24 valign=top><font size=2 face=Wingdings>&#253;</font></td>
  <td width=470 valign=top><b><font size=3>Quarterly Report
  Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934</font></b></td>
 </tr>
</table>

<p align=center><font size=2>For
the Quarterly Period ended <b>June 30, 2001</b></font></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td width=24 valign=top><font size=2 face=Wingdings>o</font></td>
  <td width=469 valign=top><b><font size=3>Transition report
  pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934</font></b></td>
 </tr>
</table>

<p align=center><b><font size=2>Commission file number : 000-27866</font></b></p>

<div align=center>


<table border=0 cellspacing=0 cellpadding=0 width="99%">
 <tr>
  <td  align=center width=720 valign=top><b><font size=5>VYREX CORPORATION</font></b></td>
 </tr>
 <tr>
  <td  align=center width=720 valign=top><font   size=2>(Name
  of small business issuer as specified in its charter)</font></td>
 </tr>
</table>


</div>

<p align=center><font size=3 face=Times>&nbsp;</font></p>

<div align=center>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td  align=center width=348 valign=top><b><font size=2>Nevada</font></b></td>
  <td  align=center width=373 valign=top><b><font size=2>88-0271109</font></b></td>
 </tr>
 <tr>
  <td  align=center width=348 valign=top><font   size=2>(State
  or other jurisdiction of incorporation or organization)</font></td>
  <td  align=center width=373 valign=top><font   size=2>(IRS
  Employer Identification No.)</font></td>
 </tr>
 <tr>
  <td  align=center width=348 valign=top>&nbsp;</td>
  <td  align=center width=373 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width=348 valign=top>&nbsp;</td>
  <td  align=center width=373 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width=721 colspan=2><b><font size=2>2159
  Avenida de la Playa, La Jolla, California, 92037</font></b></td>
 </tr>
 <tr>
  <td  align=center width=721 colspan=2 valign=top><font size=2>(Address of principal
  executive offices)</font></td>
 </tr>
 <tr>
  <td  align=center width=721 colspan=2 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width=721 colspan=2 valign=top><b><font size=2>(858) 454-4446</font></b></td>
 </tr>
 <tr>
  <td  align=center width=721 colspan=2 valign=top><font size=2>(Issuer&#146;s telephone
  number including area code)</font></td>
 </tr>
</table>

</div>


<p align=center><font size=2>&nbsp;</font></p>


<p><font size=2>Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act&nbsp; during the
past 12 months (or for shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days.</font></p>

<p><font size=2>Yes&nbsp;&nbsp; <u>X</u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; No
_____</font></p>

<p align=center><font size=2>Applicable
Only to Issuers Involved in Bankruptcy<br>
Proceedings During the Preceding Five Years</font></p>

<p><font size=2>Check
whether the registrant filed all documents and reports required to be filed by
Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities
under a plan by a court.</font></p>

<p><font size=2>Yes
_____&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; No _____</font></p>

<p align=center><font size=2>Applicable
Only to Corporate Issuers</font></p>

<p><font size=2>State
the number of shares outstanding of each of the issuers classes of common
equity, as of latest practicable date:</font></p>

<p><font size=2>As of June 30, 2001, there are 8,342,867
shares of common stock outstanding and warrants to purchase 150,000 shares of
common stock outstanding.</font></p>

<p><font size=2>Transitional
Small Business Disclosure Format</font></p>

<p><font size=2>Yes&nbsp; _____&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; No&nbsp; <u>X</u></font></p>





<hr size=1 width="100%" noshade color=black align=right>






<hr size=2 width="100%" noshade color=black align=right>


</div>

<page>


<div>

<p align=center><b><font size=2>Vyrex
Corporation<br>
Index to Form 10-QSB</font></b></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td width="41%" colspan=3 valign=bottom><b><font size=2><a
  href="#PartIFinancialInformation"   title="Click to goto PART I  Financial Information&#13;">Part I Financial
  Information</a></font></b></td>
  <td width="58%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="41%" colspan=3 valign=bottom>&nbsp;</td>
  <td width="58%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="5%" valign=top>&nbsp;</td>
  <td width="94%" colspan=3 valign=top><font size=2><a
  href="#Item1_FinancialStatements"   title="Click to goto Item 1.&#9;Financial Statements&#13;">Item 1 - Financial
  Statements</a></font></td>
 </tr>
 <tr>
  <td width="14%" colspan=2 valign=top>&nbsp;</td>
  <td width="85%" colspan=2 valign=top><font size=2><a   href="#CondensedBalanceSheets" title="Click to goto Condensed Balance Sheets&#13;">Condensed
  Balance Sheets</a></font></td>
 </tr>
 <tr>
  <td width="14%" colspan=2 valign=top>&nbsp;</td>
  <td width="85%" colspan=2 valign=top><font size=2><a
  href="#CondensedStatementsOfOperations"   title="Click to goto Condensed Statements of Operations&#11;">Condensed
  Statements of Operations</a></font></td>
 </tr>
 <tr>
  <td width="14%" colspan=2 valign=top>&nbsp;</td>
  <td width="85%" colspan=2 valign=top><font size=2><a
  href="#CondensedStatementsOfCashFlows"   title="Click to goto Condensed Statements of Cash Flows&#11;">Condensed
  Statements of Cash Flows</a></font></td>
 </tr>
 <tr>
  <td width="14%" colspan=2 valign=top>&nbsp;</td>
  <td width="85%" colspan=2 valign=top><font size=2><a
  href="#NotesToCondensedFinancialStatements"   title="Click to goto Notes To Condensed Financial Statements&#11;">Notes to
  Condensed Financial Statements</a></font></td>
 </tr>
 <tr>
  <td width="14%" colspan=2 valign=top>&nbsp;</td>
  <td width="85%" colspan=2 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="5%" valign=top>&nbsp;</td>
  <td width="94%" colspan=3 valign=top><font size=2><a
  href="#Item2_ManagementsDiscussionAndAnalysisOf"   title="Click to goto Item 2.&#9;Management's Discussion and Analysis of Financial Condition and Results of Operations&#13;">Item
  2 - Management's Discussion and Analysis of Financial Conditionand Results of
  Operations</a></font></td>
 </tr>
 <tr>
  <td width="14%" colspan=2 valign=top>&nbsp;</td>
  <td width="85%" colspan=2 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="100%" colspan=4 valign=top><b><font size=2><a
  href="#PartIiOtherInformation"   title="Click to goto PART II  Other Information&#13;">Part II Other
  Information</a></font></b></td>
 </tr>
 <tr>
  <td width="100%" colspan=4 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="5%" valign=top>&nbsp;</td>
  <td width="94%" colspan=3 valign=top><font size=2><a
  href="#Item1_LegalProceedings"   title="Click to goto Item 1.&#13;&#7;Legal Proceedings&#13;&#7;">Item 1 -
  Legal Proceedings</a></font></td>
 </tr>
 <tr>
  <td width="5%" valign=top>&nbsp;</td>
  <td width="94%" colspan=3 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="5%" valign=top>&nbsp;</td>
  <td width="94%" colspan=3 valign=top><font size=2><a
  href="#Item2_ChangesInSecurities"   title="Click to goto Item 2.&#13;&#7;Changes in Securities&#13;&#7;">Item 2 -
  Changes in Securities</a></font></td>
 </tr>
 <tr>
  <td width="5%" valign=top>&nbsp;</td>
  <td width="94%" colspan=3 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="5%" valign=top>&nbsp;</td>
  <td width="94%" colspan=3 valign=top><font size=2><a
  href="#Item3_DefaultsUponSeniorSecurities"   title="Click to goto Item 3.&#13;&#7;Defaults upon Senior Securities&#13;&#7;">Item
  3 - Defaults upon Senior Securities</a></font></td>
 </tr>
 <tr>
  <td width="5%" valign=top>&nbsp;</td>
  <td width="94%" colspan=3 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="5%" valign=top>&nbsp;</td>
  <td width="94%" colspan=3 valign=top><font size=2><a
  href="#Item4_SubmissionOfMattersToAVoteOfSecuri"   title="Click to goto Item 4.&#13;&#7;Submission of Matters to a Vote of Security Holders&#13;&#7;">Item
  4 - Submission of Matters to a Vote of Security Holders</a></font></td>
 </tr>
 <tr>
  <td width="5%" valign=top>&nbsp;</td>
  <td width="94%" colspan=3 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="5%" valign=top>&nbsp;</td>
  <td width="94%" colspan=3 valign=top><font size=2><a
  href="#Item5_OtherInformation"   title="Click to goto Item 5.&#13;&#7;Other Information&#13;&#7;">Item 5 -
  Other Information</a></font></td>
 </tr>
 <tr>
  <td width="5%" valign=top>&nbsp;</td>
  <td width="94%" colspan=3 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="5%" valign=top>&nbsp;</td>
  <td width="94%" colspan=3 valign=top><font size=2><a
  href="#Item6_ExhibitsAndReportsOnForm8k"   title="Click to goto Item 6.&#13;&#7;Exhibits and Reports on Form 8-K&#13;&#7;">Item
  6 - Exhibits and Reports on Form 8-K</a></font></td>
 </tr>
 <tr>
  <td width="5%" valign=top>&nbsp;</td>
  <td width="94%" colspan=3 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="100%" colspan=4 valign=top><font size=2><a   href="#Signatures" title="Click to goto SIGNATURES&#13;">Signatures</a></font></td>
 </tr>

<!-- DO NOT remove the following table row. It is needed for  .               the proper rendering of tables containing misaligned cells.-->
 <tr height=0>
  <td width=40></td>
  <td width=65></td>
  <td width=192></td>
  <td width=424></td>
 </tr>
</table>

</div>

<page>


<div>

<p align=center><a name=PartIFinancialInformation><b><font size=2>PART I&nbsp; Financial
Information</font></b></a></p>



<p><a name="Item1_FinancialStatements"><b><font size=2>Item 1.</font></b></a><font size=2> <b>Financial Statements</b></font></p>



<p align=center><b><font size=2>Vyrex
Corporation<br>
</font></b><font size=2>(a development stage enterprise)<br>
<a name=CondensedBalanceSheets><b>Condensed Balance Sheets</b></a></font></p>



<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td width="64%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="0%" valign=bottom>&nbsp;</td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="0%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="64%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="16%" colspan=2 valign=bottom><b><font size=2>Jun 30, 2001</font></b></td>
  <td width="0%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="16%" colspan=2 valign=bottom><b><font size=2>Dec 31, 2000</font></b></td>
  <td width="0%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
 </tr>
 <tr>
  <td width="64%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="34%" colspan=5 valign=bottom><div align=right><b><font size=2><hr size=1 width="100%" noshade color=black align=right></font></b></div></td>
  <td width="0%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="64%" colspan=2 valign=bottom bgcolor="#cceeff"><b><font size=2>Assets</font></b></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Unaudited</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>(Note 1</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="64%" colspan=2 valign=bottom><font size=2>Current
  asset - cash and cash equivalents</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="16%" valign=bottom><font size=2>127,448</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="16%" valign=bottom><font size=2>238,817</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="64%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="64%" colspan=2 valign=bottom><font size=2>Furniture
  and equipment, net of accumulated depreciation of&nbsp; $94,514 in 2001 and $146,679 in 2000</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>5,056</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>14,030</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="64%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="34%" colspan=5 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="64%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Total
  assets</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="16%" valign=bottom bgcolor="#cceeff"><font size=2>132,504</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="16%" valign=bottom bgcolor="#cceeff"><font size=2>252,847</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="64%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="34%" colspan=5 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="64%" colspan=2 valign=bottom><b><font size=2>Liabilities
  and stockholders&#146; deficiency</font></b></td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="64%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Current
  liabilities:</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="62%" valign=bottom><font size=2>Accounts
  payable and accrued liabilities</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="16%" valign=bottom><font size=2>220,155</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="16%" valign=bottom><font size=2>264,036</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="62%" valign=bottom bgcolor="#cceeff"><font size=2>Deferred
  revenue</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>1,322</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>2,171</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="62%" valign=bottom><font size=2>Notes
  payable to related parties</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>5,000</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>10,000</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="62%" valign=bottom>&nbsp;</td>
  <td  align=right width="34%" colspan=5 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="64%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Total
  current liabilities</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>226,477</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>276,207</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="64%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="64%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Notes
  payable</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>160,000</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>160,000</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="64%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="34%" colspan=5 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="64%" colspan=2 valign=bottom><font size=2>Total
  liabilities</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>386,477</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>436,207</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="64%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="34%" colspan=5 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="64%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="64%" colspan=2 valign=bottom><font size=2>Commitments
  and contingencies</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="64%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="64%" colspan=2 valign=bottom><font size=2>Stockholders&#146;
  deficiency:</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="62%" valign=bottom bgcolor="#cceeff"><font size=2>Preferred
  stock, $.001 par value; 10,000,000 shares authorized; none issued</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="62%" valign=bottom><font size=2>Common
  stock, $.001 par value; 50,000,000 shares authorized; 8,342,867 issued and
  outstanding</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>8,343</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>8,343</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="62%" valign=bottom bgcolor="#cceeff"><font size=2>Additional
  paid-in capital</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>12,845,397</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>12,845,397</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="62%" valign=bottom><font size=2>Deficit
  accumulated during the development stage</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>(13,107,713</font></td>
  <td width="0%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>(13,037,100</font></td>
  <td width="0%" valign=bottom><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="62%" valign=bottom>&nbsp;</td>
  <td  align=right width="34%" colspan=5 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="64%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Total
  stockholders&#146; deficiency</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>(253,973</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>(183,360</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="64%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="34%" colspan=5 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="64%" colspan=2 valign=bottom><font size=2>Total
  liabilities and stockholders&#146; deficiency</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="16%" valign=bottom><font size=2>132,504</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="16%" valign=bottom><font size=2>252,847</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="64%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="34%" colspan=5 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="0%" valign=bottom>&nbsp;</td>
 </tr>
</table>

<p><i><font size=2>See accompanying notes.</font></i></p>

</div>

<page>


<div>

<p align=center><b><font size=2>Vyrex
Corporation<br>
</font></b><font size=2>(a development stage enterprise)</font></p>

<p align=center><a name=CondensedStatementsOfOperations><b><font size=2>Condensed Statements of Operations<br>
</font></b></a><font size=2>(Unaudited)</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td  align=center width="30%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=center width="24%" colspan=5 valign=bottom><b><font size=2>Three
  Months Ended<br>
  June 30,</font></b></td>
  <td  align=center width="1%" valign=bottom>&nbsp;</td>
  <td  align=center width="24%" colspan=5 valign=bottom><b><font size=2>Six
  Months Ended<br>
  June 30,</font></b></td>
  <td  align=center width="1%" valign=bottom>&nbsp;</td>
  <td  align=center width="17%" colspan=2 valign=bottom><b><font size=2>Cumulative
  </font></b><b><font size=2>From</font></b></td>
  <td  align=center width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width="30%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=center width="11%" colspan=2 valign=bottom><b><font size=2>2001</font></b></td>
  <td  align=center width="1%" valign=bottom>&nbsp;</td>
  <td  align=center width="11%" colspan=2 valign=bottom><b><font size=2>2000</font></b></td>
  <td  align=center width="1%" valign=bottom>&nbsp;</td>
  <td  align=center width="11%" colspan=2 valign=bottom><b><font size=2>2001</font></b></td>
  <td  align=center width="1%" valign=bottom>&nbsp;</td>
  <td  align=center width="11%" colspan=2 valign=bottom><b><font size=2>2000</font></b></td>
  <td  align=center width="1%" valign=bottom>&nbsp;</td>
  <td  align=center width="17%" colspan=2 valign=bottom><b><font size=2>Inception</font></b></td>
  <td  align=center width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td  align=center width="30%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=center width="67%" colspan=14 valign=bottom><div align=right><b><font size=2><hr size=1 width="100%" noshade color=black align=right></font></b></div></td>
  <td  align=center width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="30%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Licensing and royalty
  revenue</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>125</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>9,256</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>849</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>19,238</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="16%" valign=bottom bgcolor="#cceeff"><font   size=2>441,878</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="30%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="67%" colspan=14 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="30%" colspan=2 valign=bottom><font size=2>Operating expenses:</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom><font   size=2>1,921</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom><font   size=2>5,250</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom><font   size=2>(37,201</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom><font   size=2>13,170</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" colspan=2 valign=bottom><font   size=2>6,395,547</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="29%" valign=bottom bgcolor="#cceeff"><font size=2>Research and
  development</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="17%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="29%" valign=bottom><font size=2>Marketing and selling</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom><font   size=2>516</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom><font   size=2>-</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom><font   size=2>1,338</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom><font   size=2>-</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" colspan=2 valign=bottom><font   size=2>434,440</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="29%" valign=bottom bgcolor="#cceeff"><font size=2>General and
  administrative</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>45,663</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>53,903</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>103,047</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>255,496</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>5,751,427</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="29%" valign=bottom>&nbsp;</td>
  <td  align=right width="67%" colspan=14 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="30%" colspan=2 valign=bottom><font size=2>Total operating
  expenses</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom><font   size=2>48,100</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom><font   size=2>59,153</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom><font   size=2>67,184</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom><font   size=2>268,666</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" colspan=2 valign=bottom><font   size=2>12,581,414</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="30%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="67%" colspan=14 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="30%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="11%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="30%" colspan=2 valign=bottom><font size=2>Loss from operations</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom><font   size=2>(47,975</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom><font   size=2>(49,897</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom><font   size=2>(66,335</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom><font   size=2>(249,428</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="17%" colspan=2 valign=bottom><font   size=2>(12,139,536</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="30%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="67%" colspan=14 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="30%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Other income
  (expense):</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="29%" valign=bottom><font size=2>Interest income</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom><font   size=2>1,326</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom><font   size=2>1,608</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom><font   size=2>3,160</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom><font   size=2>2,003</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" colspan=2 valign=bottom><font   size=2>473,612</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="29%" valign=bottom bgcolor="#cceeff"><font size=2>Loss on disposal of
  fixed assets</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>-</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>-</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>-</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>(6,376</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
  <td  align=right width="17%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>(12,605</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="29%" valign=bottom><font size=2>Interest expense</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom><font   size=2>(4,035</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom><font   size=2>(4,453</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom><font   size=2>(7,438</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom><font   size=2>(8,935</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="17%" colspan=2 valign=bottom><font   size=2>(79,284</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="29%" valign=bottom bgcolor="#cceeff"><font size=2>Charge from issuance
  of stock options for arranging bridge financing costs</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>-</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>-</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>-</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>-</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>(1,349,900</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="29%" valign=bottom>&nbsp;</td>
  <td  align=right width="67%" colspan=14 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="30%" colspan=2 valign=bottom><font size=2>Total other income
  (expense)</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom><font   size=2>(2,709</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom><font   size=2>(2,845</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom><font   size=2>(4,278</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom><font   size=2>(13,308</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="17%" colspan=2 valign=bottom><font   size=2>(968,177</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="30%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="67%" colspan=14 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="30%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Net loss</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>(50,684</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>(52,742</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>(70,613</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="10%" valign=bottom bgcolor="#cceeff"><font   size=2>(262,736</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="16%" valign=bottom bgcolor="#cceeff"><font   size=2>(13,107,713</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="30%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="67%" colspan=14 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="30%" colspan=2 valign=bottom><font size=2>Net loss per share -
  basic and diluted</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="10%" valign=bottom><font   size=2>(0.01</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="10%" valign=bottom><font   size=2>(0.01</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="10%" valign=bottom><font   size=2>(0.01</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="10%" valign=bottom><font   size=2>(0.03</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
  <td width="0%" valign=bottom><font size=2>$</font></td>
  <td  align=right width="16%" valign=bottom><font   size=2>(1.94</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="30%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="67%" colspan=14 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="30%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Shares used in per
  share computations</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>8,342,867</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>8,125,220</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>8,342,867</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="11%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>7,754,955</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="17%" colspan=2 valign=bottom bgcolor="#cceeff"><font   size=2>6,744,635</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="30%" colspan=2 valign=bottom>&nbsp;</td>
  <td  align=right width="67%" colspan=14 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="1%" valign=bottom>&nbsp;</td>
 </tr>
</table>

<p><i><font size=2>See accompanying notes.</font></i></p>

</div>

<page>


<div>

<p align=center><b><font size=2>Vyrex Corporation<br>
</font></b><font size=2>(a development stage enterprise)</font></p>

<p align=center><a name=CondensedStatementsOfCashFlows><b><font size=2>Condensed Statements of Cash Flows<br>
</font></b></a><font size=2>(Unaudited)</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="99%">
 <tr>
  <td  align=center width="46%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=center width="34%" colspan=5 valign=bottom><b><font size=2>Six Months ended</font></b></td>
  <td  align=center width="1%" valign=bottom>&nbsp;</td>
  <td  align=center width="16%" colspan=2 valign=bottom><b><font size=2>Cumulative</font></b></td>
  <td  align=center width="0%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=center width="16%" colspan=2 valign=bottom><b><font size=2>Jun 30, 2001</font></b></td>
  <td width="1%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
  <td  align=center width="16%" colspan=2 valign=bottom><b><font size=2>Jun 30, 2000</font></b></td>
  <td width="1%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
  <td  align=center width="16%" colspan=2 valign=bottom><b><font size=2>From<br>&nbsp;Inception</font></b></td>
  <td width="0%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=center width="52%" colspan=8 valign=bottom><div align=right><b><font size=2><hr size=1 width="100%" noshade color=black align=right></font></b></div></td>
  <td width="0%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom><b><font size=2>Operating
  activities</font></b></td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="0%" valign=bottom><b><font size=2>&nbsp;</font></b></td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom bgcolor="#cceeff"><font size=2>Net
  loss</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font size=2>(70,613</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font size=2>(262,736</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font size=2>(13,107,713</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom><font size=2>Adjustments
  to reconcile net loss to net cash used in operating activities:</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="45%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Depreciation,
  amortization and impairment charges</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>8,975</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>11,400</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>332,333</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="45%" colspan=2 valign=bottom><font size=2>Interest
  receivable</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>3,506</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="45%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Loss
  on sale of fixed assets</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>6,376</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>12,605</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td width="45%" colspan=2 valign=bottom><font size=2>Issuance
  of compensatory notes, stock, stock options and warrants</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>148,000</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>2,229,712</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="45%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>Changes
  in operating assets and liabilities:</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="3%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="43%" valign=bottom><font size=2>Other
  assets</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>100,000</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="3%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="43%" valign=bottom bgcolor="#cceeff"><font size=2>Accounts
  payable and accrued liabilities</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>(43,882</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>5,666</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>642,717</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="3%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="43%" valign=bottom><font size=2>Deferred
  revenue</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>(849</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>(19,238</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>(98,678</font></td>
  <td width="0%" valign=bottom><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="3%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="43%" valign=bottom bgcolor="#cceeff"><font size=2>Accrued
  interest on convertible debentures</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>9,041</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="3%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="43%" valign=bottom>&nbsp;</td>
  <td  align=right width="52%" colspan=8 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom><font size=2>Net
  cash used in operating activities</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>(106,369</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>(110,532</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>(9,876,477</font></td>
  <td width="0%" valign=bottom><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=right width="52%" colspan=8 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom bgcolor="#cceeff"><b><font size=2>Investing
  activities</font></b></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom><font size=2>Purchase
  of short-term investments</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>(8,440,442</font></td>
  <td width="0%" valign=bottom><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom bgcolor="#cceeff"><font size=2>Sale
  of short-term investments</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>8,467,931</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom><font size=2>Purchases
  of furniture and equipment</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>(209,595</font></td>
  <td width="0%" valign=bottom><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom bgcolor="#cceeff"><font size=2>Proceeds
  on sale of fixed assets</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>10,000</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom><font size=2>Patent,
  trademark and copyright costs</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>(133,519</font></td>
  <td width="0%" valign=bottom><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom bgcolor="#cceeff"><font size=2>Other
  assets, including notes receivable from related parties</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>(4,202</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=right width="52%" colspan=8 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom><font size=2>Net
  cash used in investing activities</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom>&nbsp;</td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>(309,827</font></td>
  <td width="0%" valign=bottom><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=right width="52%" colspan=8 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom bgcolor="#cceeff"><b><font size=2>Financing
  activities</font></b></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom><font size=2>Net
  proceeds from issuance of common stock</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>270,000</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>7,889,808</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom bgcolor="#cceeff"><font size=2>Exercise
  of stock options and sale of options</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>25,000</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>975,100</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom><font size=2>Exercise
  of warrants</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>5,000</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>10,000</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom bgcolor="#cceeff"><font size=2>Proceeds
  from short-term loan</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>867,730</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom><font size=2>Proceeds
  from note payable</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>15,000</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>591,114</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom bgcolor="#cceeff"><font size=2>Repayment
  of note payable</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>(5,000</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>(15,000</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>(20,000</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom><font size=2>Advances
  from potential investors</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>100,000</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom bgcolor="#cceeff"><font size=2>Repayment
  of advances</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff"><font size=2>(100,000</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>)</font></td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=right width="52%" colspan=8 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom><font size=2>Net
  cash provided by (used in) financing activities</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>(5,000</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>300,000</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>10,313,752</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=right width="52%" colspan=8 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom><font size=2>Net
  increase (decrease) in cash and cash equivalents</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>(111,369</font></td>
  <td width="1%" valign=bottom><font size=2>)</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>189,468</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>127,448</font></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom bgcolor="#cceeff">&nbsp;</td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom><font size=2>Cash
  and cash equivalents, beginning of period</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>238,817</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom><font size=2>3,184</font></td>
  <td width="1%" valign=bottom><font size=2>&nbsp;</font></td>
  <td  align=right width="16%" colspan=2 valign=bottom>&nbsp;</td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=right width="52%" colspan=8 valign=bottom>
<hr size=1 width="100%" noshade color=black align=left></td>
  <td width="0%" valign=bottom>&nbsp;</td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom bgcolor="#cceeff"><font size=2>Cash
  and cash equivalents, end of period</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font size=2>127,448</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font size=2>192,652</font></td>
  <td width="1%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>$</font></td>
  <td  align=right width="15%" valign=bottom bgcolor="#cceeff"><font size=2>127,448</font></td>
  <td width="0%" valign=bottom bgcolor="#cceeff"><font size=2>&nbsp;</font></td>
 </tr>
 <tr>
  <td width="46%" colspan=3 valign=bottom>&nbsp;</td>
  <td  align=right width="52%" colspan=8 valign=bottom>
<hr size=2 width="100%" noshade color=black align=right></td>
  <td width="0%" valign=bottom><font size=2>&nbsp;</font></td>
 </tr>

<!-- DO NOT remove the following table row. It is needed for  .               the proper rendering of tables containing misaligned cells.-->
 <tr height=0>
  <td width=13></td>
  <td width=15></td>
  <td width=310></td>
  <td width=7></td>
  <td width=113></td>
  <td width=9></td>
  <td width=7></td>
  <td width=113></td>
  <td width=9></td>
  <td width=7></td>
  <td width=113></td>
  <td width=6></td>
 </tr>
</table>

<p><i><font size=2>See accompanying notes.</font></i></p>

</div>

<page>


<div>

<p align=center><b><font size=2>Vyrex
Corporation<br>
</font></b><font size=2>(A Development Stage Enterprise)</font></p>

<p align=center><a name=NotesToCondensedFinancialStatements><font size=2>Notes
To Condensed Financial Statements<br>
</font></a><font size=2>(Unaudited)</font></p>

<p><b><i><font size=2>(1) Basis of Presentation</font></i></b></p>

<dir>
<p><font size=2>The accompanying
condensed financial statements have been prepared by the Company in conformity
with accounting principles generally accepted in the United States of America
for interim financial information. Certain information and disclosures normally
included in financial statements prepared in conformity with accounting
principles generally accepted in the United States of America have been
condensed or omitted. In the opinion of the Company's management, the unaudited
financial statements contain all adjustments necessary (consisting of normal
recurring accruals) for a fair presentation of the financial position as of
June 30, 2001, and its results of operations for the three and six months ended
June 30, 2001 and 2000 and cash flows for the six months ended June 30, 2001
and 2000. The results of operations for the three and six months ended June 30,
2001 are not necessarily indicative of the results to be expected for the full
year. For further information, refer to the financial statements and notes
thereto included in Vyrex&#146;s Form 10-KSB for the year ended December 31, 2000.</font></p>
</dir>

<dir>
<p><font size=2>The accompanying
condensed financial statements have been prepared assuming that the Company
will continue as a going concern.&nbsp; This
basis of accounting contemplates the recovery of the Company&#146;s assets and the
satisfaction of its liabilities in the normal course of business.&nbsp; As of June 30, 2001, the Company had an
accumulated deficit of $13,107,713, a net capital deficiency of $253,973 and a
working capital deficiency of $99,029.&nbsp;
Due to the Company&#146;s recurring losses and capital deficiency, there can
be no assurance that the Company will be able to obtain additional operating
capital, which may impact the Company&#146;s ability to continue as a going
concern.&nbsp; The accompanying condensed
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the
amounts and classification of liabilities that may result from the possible
inability of the Company to continue as a going concern.</font></p>
</dir>

<dir>
<p><font size=2>The Company is seeking
collaborative or other arrangements with larger pharmaceutical and
nutraceutical companies, under which such companies would provide additional
capital to the Company in exchange for exclusive or non-exclusive licenses or
other rights to certain of the technologies and products the Company is
developing.&nbsp; Competition for corporate
partnering arrangements with major pharmaceutical and nutraceutical companies
is intense, with a large number of biopharmaceutical companies attempting to arrive
at such arrangements.&nbsp; Accordingly,
there can be no assurance that an agreement will arise in a timely manner, or
at all, or that any agreement that may arise will successfully reduce the
Company&#146;s short-term or long-term funding requirements.</font></p>
</dir>

<dir>
<p><font size=2>The Company&#146;s major
activities through June 30, 2001 have been limited to raising funds for
conducting research and development on its proposed products.&nbsp; These activities have not generated any
significant revenues; accordingly, the Company has been in the development
stage since its inception.&nbsp; Successful
completion of the Company&#146;s development program and its transition, ultimately,
to attaining profitable operations is dependent upon obtaining additional
financing adequate to fulfill its research and development activities, and
achieving a level of revenue adequate to support the Company&#146;s cost
structure.&nbsp; There can be no assurance
that the Company will be successful in these areas.&nbsp; To supplement its existing resources, the Company will require
additional capital through the sale of debt or equity.&nbsp; There can be no assurance that such capital
will be available on favorable terms, or at all, and if additional funds are
raised by issuing equity securities, dilution to existing stockholders is
likely to result.</font></p>
</dir>

</div>

<page>


<div>

<p><b><i><font size=2>(2) Stock option plan</font></i></b></p>

<p><font size=2>The Company&#146;s 1993 Stock Option Plan (the
&#147;Plan&#148;) was adopted by the Board of Directors in February 1994. Pursuant to the
Plan, the Company may grant both incentive stock options and nonqualified stock
options. Incentive stock options may be granted only to the employees, while
consultants, employees, officers and directors are eligible for the grant of
nonqualified options.&nbsp; During the annual
shareholders&#146; meeting held June 11, 2001, the stockholders approved an increase
in the number of shares reserved and available for grant under the plan to
total 3,875,000 shares, an increase of 1,000,000 shares.</font></p>

<p><font size=2>During
the three months ended June 30, 2001, in accordance with the Plan, the Company
issued options at or near fair market value to the Board of Directors and
employees of the Company.&nbsp; The exercise
price was not lower than the closing bid price on the grant date.&nbsp; The incentive options granted are
exercisable for a total of 615,000 shares of common stock, at a weighted
average exercise price of $0.38 per share.&nbsp;
The options were 100% vested at the date of grant and have expiration
dates of five and ten years.</font></p>

<p><a name="Item2_ManagementsDiscussionAndAnalysisOf"><b><font size=2>Item 2.</font></b></a><font size=2> <b>Management's Discussion and Analysis of Financial
Condition and Results of Operations</b></font></p>



<p><font size=2>This report on Form 10-QSB contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934.&nbsp; The Company intends that such forward-looking statements be
subject to the safe harbors created thereby.&nbsp;
This report should be read in conjunction with the Company&#146;s report on
Form 10-KSB for the year ended December 31, 2000.</font></p>

<p><b><i><font size=2>Results of Operations</font></i></b></p>

<dir>
<p><b><font size=2>Three months ended June 30, 2001 and June 30, 2000</font></b></p>
</dir>

<dir>
<p><font size=2>The Company earned an
insignificant amount in royalty income from the sale of four nutritional
formulations by the Retired Persons Services Inc. (&#147;RPS&#148;) compared to $9,000
earned in the same period of 2000. The Company is entitled to a royalty of 15%
on the sale of these formulations.&nbsp; The
Company was notified in September 2000 that RPS was relinquishing the product
line.&nbsp; The Company will continue to
receive royalties on sales until the inventory is depleted.&nbsp; Research and development expenses decreased
$3,000 to $2,000 in the three months ended June 30, 2001 compared to $5,000 in
the same period of 2000.&nbsp; General and
administrative expenses decreased $8,000 to $46,000 in the current period,
compared to $54,000 for the same period in 2000. First quarter expenses were
limited to maintenance of patents and general office expenses such as
accounting fees, utility expenses, telephone expenses, rent and postage.&nbsp; Marketing expenses amounted to $500 in the
three months ended June 30, 2001.&nbsp; There
were no marketing expenses for the same period of 2000.</font></p>
</dir>

<dir>
<p><font size=2>Net
loss decreased $2,000 to $51,000, compared to $53,000 for the same period
during 2000.&nbsp; Basic and diluted loss per
share remained the same at $0.01 for the three months period ended June 30,
2001 and 2000.</font></p>
</dir>

<dir>
<p><b><font size=2>Six months ended June 30, 2001 and June 30, 2000</font></b></p>
</dir>

<dir>
<p><font size=2>The
Company earned $1,000 in royalty income from the sale of four nutritional
formulations by the Retired Persons Services Inc. (&#147;RPS&#148;) compared to $19,000
earned in the same period of 2000. The Company is entitled to a royalty of 15%
on the sale of these formulations.&nbsp; The
Company was notified in September 2000 that RPS was relinquishing the product
line.&nbsp; The Company will continue to
receive royalties on sales until the inventory is depleted.&nbsp; Research and development expenses decreased
$50,000 to a credit balance of $37,000 in the six months ended June 30, 2001
compared to $13,000 in the same period of 2000. This decrease was due to
funding constraints and the reversal of previously accrued, but contested
purchased service liability of $40,000.&nbsp;
General and administrative expenses decreased $153,000 to $103,000 in
the current period, compared to $256,000 for the same period in 2000. This
decrease was due to the Company recognizing a large consulting expense in the
first quarter of 2000, relating to services performed for the Company.&nbsp; Expenses were limited to maintenance of
patents and general office expenses such as accounting fees, utility expenses,
telephone expenses, rent and postage.&nbsp;
Marketing expenses amounted to $1,000 in the six months ended June 30,
2001.&nbsp; There were no marketing expenses
for the same period of 2000.</font></p>
</dir>

<page>


<dir>
<p><font size=2>Net
loss decreased $192,000 to $71,000, compared to $263,000 for the same period
during 2000.&nbsp; Basic and diluted loss per
share decreased $0.02 to $0.01 in the six months ended June 30, 2001 compared
to $0.03 in the same period of 2000.&nbsp;
The lower net loss per common share is principally due to the decrease
in the net loss.</font></p>
</dir>

<dir>
<p><font size=2>The
Company has been issued a patent dated July 3, 2001 from the U.S. Patent and
Trademark Office for Water Soluble Pro-Drugs of Propofol.&nbsp; These claims cover treatment of diseases,
states or conditions associated with the nervous system, cardiovascular system
and respiratory system, including but not limited to anesthesia, trauma of the
nervous system, Parkinson&#146;s disease, Alzheimer&#146;s disease and migraine
headache.&nbsp; The Company and its
collaborative partner, Immune Response Corporation, have expanded research
activities to expedite the development of these claims.&nbsp; Although these indications are promising,
there is no assurance the Company and Immune Response Corporation will be
successful in funding further development and commercialization of these
compounds.</font></p>
</dir>

<p><b><i><font size=2>Liquidity and Capital Resources</font></i></b></p>

<dir>
<p><font size=2>The
Company has financed its operations since inception solely through the sales of
debt and equity securities. As of June 30, 2001, the Company had negative
working capital of $99,000.&nbsp; Net cash
used in operating activities during the six months ended June 30, 2001 was
$106,000, compared to $111,000 for the same period during 2000.</font></p>
</dir>

<dir>
<p><font size=2>There can be no assurance
that any further revenues will be realized in 2001 or that they will be
significant and therefore without additional financing the Company may be
unable to continue as a going concern.&nbsp;
The Company is actively pursuing collaborations with potential partners
in both the pharmaceutical and nutraceutical divisions with the objective of
raising financing to enable the Company to continue operations.&nbsp; To date the Company does not have any
commitments for financing.&nbsp; To date the
Company has no prospects for merger or acquisition.&nbsp; The Company does not have any lease or other commitments.&nbsp; The Company does not have an existing bank
line of credit or other form of revolving or renewable credit facility.&nbsp; There can be no assurance the Company will
generate significant revenues during 2001 to continue its operations, or that
funds will be available through the public or private markets.</font></p>
</dir>

<dir>
<p><font size=2>The
Company believes that its current cash reserves and other resources will fund
the business through December 2001. The Company does not anticipate having
significant revenues in the foreseeable future and will likely be required to
raise additional funds to continue operations. There can be no assurance that
additional funds will be available.</font></p>
</dir>

</div>

<page>


<div>

<p align=center><a name=PartIiOtherInformation><b><font size=2>PART II&nbsp; Other Information</font></b></a></p>



<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td width="8%" colspan=2 valign=top><a   name="Item1_LegalProceedings"><b><font   size=2>Item 1.</font></b></a></td>

  <td width="91%" valign=top><b><font size=2>Legal Proceedings</font></b></td>

 </tr>
 <tr>
  <td width="8%" colspan=2 valign=top>&nbsp;</td>
  <td width="91%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="5%" valign=top>&nbsp;</td>
  <td width="94%" colspan=2 valign=top><font size=2>Not applicable</font></td>
 </tr>
 <tr>
  <td width="5%" valign=top>&nbsp;</td>
  <td width="94%" colspan=2 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="8%" colspan=2 valign=top><a   name="Item2_ChangesInSecurities"><b><font   size=2>Item 2.</font></b></a></td>

  <td width="91%" valign=top><b><font size=2>Changes in Securities</font></b></td>

 </tr>
 <tr>
  <td width="8%" colspan=2 valign=top>&nbsp;</td>
  <td width="91%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="5%" valign=top>&nbsp;</td>
  <td width="94%" colspan=2 valign=top><font size=2>Not applicable</font></td>
 </tr>
 <tr>
  <td width="5%" valign=top>&nbsp;</td>
  <td width="94%" colspan=2 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="8%" colspan=2 valign=top><a   name="Item3_DefaultsUponSeniorSecurities"><b><font size=2>Item 3.</font></b></a></td>

  <td width="91%" valign=top><b><font size=2>Defaults upon Senior
  Securities</font></b></td>

 </tr>
 <tr>
  <td width="8%" colspan=2 valign=top>&nbsp;</td>
  <td width="91%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="5%" valign=top>&nbsp;</td>
  <td width="94%" colspan=2 valign=top><font size=2>Not applicable</font></td>
 </tr>
 <tr>
  <td width="5%" valign=top>&nbsp;</td>
  <td width="94%" colspan=2 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="8%" colspan=2 valign=top><a   name="Item4_SubmissionOfMattersToAVoteOfSecuri"><b><font size=2>Item 4.</font></b></a></td>

  <td width="91%" valign=top><b><font size=2>Submission
  of Matters to a Vote of Security Holders</font></b></td>

 </tr>
 <tr>
  <td width="8%" colspan=2 valign=top>&nbsp;</td>
  <td width="91%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="5%" valign=top>&nbsp;</td>
  <td width="94%" colspan=2 valign=top><font size=2>Not applicable</font></td>
 </tr>
 <tr>
  <td width="5%" valign=top>&nbsp;</td>
  <td width="94%" colspan=2 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="8%" colspan=2 valign=top><a   name="Item5_OtherInformation"><b><font   size=2>Item 5.</font></b></a></td>

  <td width="91%" valign=top><b><font size=2>Other Information</font></b></td>

 </tr>
 <tr>
  <td width="8%" colspan=2 valign=top>&nbsp;</td>
  <td width="91%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="5%" valign=top>&nbsp;</td>
  <td width="94%" colspan=2 valign=top><font size=2>Not applicable</font></td>
 </tr>
 <tr>
  <td width="5%" valign=top>&nbsp;</td>
  <td width="94%" colspan=2 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="8%" colspan=2 valign=top><a   name="Item6_ExhibitsAndReportsOnForm8k"><b><font   size=2>Item 6.</font></b></a></td>

  <td width="91%" valign=top><b><font size=2>Exhibits and Reports on Form
  8-K</font></b></td>

 </tr>
 <tr>
  <td width="8%" colspan=2 valign=top>&nbsp;</td>
  <td width="91%" valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="5%" valign=top>&nbsp;</td>
  <td width="94%" colspan=2 valign=top><font size=2>The Company did not
  file any reports on Form 8-K during the three months ended June 30, 2001</font></td>
 </tr>

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  <td width=40></td>
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  <td width=657></td>
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</table>

<p align=center><a name=Signatures><b><font size=2>SIGNATURES</font></b></a></p>



<p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; In accordance with Section 13 or
15(d) of the Exchange Act, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.</font></p>

<table border=0 cellspacing=0 cellpadding=0 width="100%">
 <tr>
  <td width="50%" valign=top>&nbsp;</td>
  <td width="50%" colspan=2 valign=top><font size=2>VYREX CORPORATION</font></td>
 </tr>
 <tr>
  <td width="50%" valign=top>&nbsp;</td>
  <td width="50%" colspan=2 valign=top><font size=2>Registrant</font></td>
 </tr>
 <tr>
  <td width="50%" valign=top>&nbsp;</td>
  <td width="50%" colspan=2 valign=top>&nbsp;</td>
 </tr>
 <tr>
  <td width="50%" valign=top>&nbsp;</td>
  <td width="50%" colspan=2 valign=top><font size=2>By:&nbsp; <i>/S/G. Dale Garlow/</i></font></td>
 </tr>
 <tr>
  <td width="50%" valign=top>&nbsp;</td>
  <td width="50%" colspan=2 valign=top>
<hr size=2 width="100%" noshade color=black align=right></td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=top><font size=2>August 8, 2001</font></td>
  <td width="46%" valign=top><font size=2>G. Dale Garlow,</font></td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=top>&nbsp;</td>
  <td width="46%" valign=top><font size=2>Chief Executive
  Officer</font></td>
 </tr>
 <tr>
  <td width="53%" colspan=2 valign=top>&nbsp;</td>
  <td width="46%" valign=top>&nbsp;</td>
 </tr>

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</table>

<p><font size=2>&nbsp;</font></p>

<p><font size=2>&nbsp;</font></p>

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