UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q


                                   (Mark One)

[x]      Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Period Ended June 30, 1997


                                       or

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the Transition Period from __________ to __________


                         Commission File Number 0-19278


                                 OSTEOTECH, INC.
             (Exact name of registrant as specified in its charter)

           Delaware                                        13-3357370
 (State or other jurisdiction of                      (I.R.S. Employer
  incorporation or organization)                       Identification No.)

  51 James Way, Eatontown, New Jersey                           07724
    (Address of principal executive offices)                  (Zip Code)

                                 (908) 542-2800
              (Registrant's telephone number, including area code)

                                 Not Applicable
     (Former name, former address and former fiscal year, if changed since
                                  last report)

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

                      Applicable Only to Corporate Issuers

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practical date.

Common Stock, $.01 par value - 8,162,758 shares as of July 31, 1997


<PAGE>



PART I.       FINANCIAL INFORMATION

ITEM 1.       FINANCIAL STATEMENTS

                        OSTEOTECH, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (unaudited)
                             (dollars in thousands)
<TABLE>
<CAPTION>

                                                                                June 30,            December 31,
                                                                                 1997                  1996
----------------------------------------------------------------------------------------------------------------
ASSETS
----------------------------------------------------------------------------------------------------------------
Current assets:
<S>                                                                               <C>                   <C>    
     Cash and cash equivalents                                                    $ 7,953               $ 7,290
     Short-term investments                                                         3,445                 1,987
     Accounts receivable, net                                                       6,078                 6,280
     Prepaid expenses and other current assets                                      3,997                 4,374
                                                                      ------------------------------------------
        Total current assets                                                       21,473                19,931

Equipment and leasehold improvements, net                                           8,557                 8,170
Excess of cost over net assets of business acquired,
     less accumulated amortization of $1,323 in 1997
     and $1,197 in 1996                                                             2,375                 2,501
Other assets                                                                          922                   881
================================================================================================================
Total assets                                                                      $33,327               $31,483
================================================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY
----------------------------------------------------------------------------------------------------------------
Current liabilities:
     Accounts payable and accrued liabilities                                     $ 5,977               $ 6,247
     Notes payable                                                                    218                   655
     Current maturities of long-term debt and
          obligations under capital leases                                            679                   756
                                                                      ------------------------------------------
        Total current liabilities                                                   6,874                 7,658

Long-term debt and obligations under capital leases                                   517                   840
Other liabilities                                                                     261                   268
----------------------------------------------------------------------------------------------------------------
Total liabilities                                                                   7,652                 8,766
----------------------------------------------------------------------------------------------------------------

Commitments and contingencies

Stockholders' equity:
     Preferred stock, $.01 par value; 5,676,595 shares
         authorized; no shares issued or outstanding
     Common stock, $.01 par value; 20,000,000 shares
         authorized; issued and outstanding 7,970,243
         shares in 1997 and 7,826,779 shares in 1996                                   80                    78
     Additional paid-in capital                                                    30,961                30,288
     Currency translation adjustments                                                (65)                 (113)
     Accumulated deficit                                                          (5,301)               (7,536)
----------------------------------------------------------------------------------------------------------------
Total stockholders' equity                                                         25,675                22,717
                                                                      ------------------------------------------
======================================================================
Total liabilities and stockholders' equity                                        $33,327               $31,483
================================================================================================================
</TABLE>


     See accompanying notes to condensed consolidated financial statements.

                                       -2-


<PAGE>
                        OSTEOTECH, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)
                  (dollars in thousands, except per share data)


<TABLE>
<CAPTION>

                                                         Three Months                        Six Months
                                                        Ended June 30,                     Ended June 30,
                                                --------------------------------   --------------------------------
                                                     1997             1996              1997             1996
-------------------------------------------------------------------------------------------------------------------
Net Revenues:
<S>                                                    <C>               <C>              <C>              <C>    
     Service                                           $ 9,887           $7,578           $19,365          $15,101
     Product                                               559              641             1,165            1,365
     License fee                                           257                                257
     Grant                                                                  156                                318
                                                ---------------  ---------------   ---------------  ---------------
                                                       $10,703            8,375            20,787           16,784
Costs and expenses:
     Cost of services                                    3,526            3,063             6,946            6,127
     Cost of products                                      410              552               862            1,085
     Marketing, general and administrative               3,831            2,984             7,629            6,140
     Research and development                              890            1,122             1,826            2,183
                                                ---------------  ---------------   ---------------  ---------------
                                                         8,657            7,721            17,263           15,535


Other income (expense):
     Interest income                                       138              105               269              209
     Interest expense                                     (31)             (61)              (79)            (129)
     Other                                                  35                5                44               25
                                                ---------------  ---------------   ---------------  ---------------
                                                           142               49               234              105
                                                ---------------  ---------------   ---------------  ---------------

Income before income taxes                               2,188              703             3,758            1,354

Income tax provision                                       785              501             1,523              981

===================================================================================================================
Net income                                             $ 1,403           $  202           $ 2,235          $   373
===================================================================================================================
Net income per share:
     Primary                                              $.16             $.02              $.26             $.04
     Assuming full dilution                               $.16             $.02              $.25             $.04
Shares used in computing net income per share:
     Primary                                            8,681,882        8,319,023         8,622,475        8,354,163
     Assuming full dilution                             8,852,476        8,349,699         8,847,644        8,354,163
======================================================================================================================
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       -3-

<PAGE>

                        OSTEOTECH, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)
                             (dollars in thousands)

<TABLE>
<CAPTION>


Six Months Ended June 30,                                                           1997              1996
-----------------------------------------------------------------------------------------------------------------
Cash Flow From Operating Activities
<S>                                                                                    <C>               <C>    
   Net income                                                                          $ 2,235           $   373
   Adjustments to reconcile net income to net cash
      provided by (used in) operating activities:
         Depreciation and amortization                                                   1,218             1,168
         Deferred income taxes                                                            (50)               434
         Other items, net                                                                                      6
         Changes in assets and liabilities:
               Accounts receivable                                                         161             (875)
               Prepaid expenses and other current assets                                   272               505
               Accounts payable and other liabilities                                       55               716
-----------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities                                                3,891             2,327

Cash Flow From Investing Activities
   Capital expenditures                                                                (1,585)           (1,200)
   Purchases of investments                                                            (4,431)           (2,974)
   Proceeds from sale of investments                                                     2,973             6,907
   Increase in other assets                                                               (50)             (213)
-----------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities                                    (3,093)             2,520

Cash Flow From Financing Activities
   Proceeds from issuance of common stock                                                  670               324
   Proceeds from issuance of notes payable                                                  93                94
   Principal payments on notes payable                                                   (530)             (427)
   Principal payments on long-term debt
     and obligations under capital leases                                                (397)             (393)
-----------------------------------------------------------------------------------------------------------------
Net cash used in financing activities                                                    (164)             (402)

Effect of exchange rate changes on cash                                                     29                76
-----------------------------------------------------------------------------------------------------------------

Net increase in cash and cash equivalents                                                  663             4,521
Cash and cash equivalents at beginning of period                                         7,290             2,788
=============================================================================--==================================
Cash and cash equivalents at end of period                                              $7,953           $ 7,309
=============================================================================  ==================================
                                                                             
Supplementary cash flow data:
   Cash paid during the period for taxes                                                $1,071           $   519
   Cash paid during the period for interest                                                 87               133


</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                       -4-

<PAGE>
                        OSTEOTECH, INC. AND SUBSIDIARIES

              Notes To Condensed Consolidated Financial Statements
                                   (unaudited)


1.       Basis of Presentation
         The accompanying  unaudited condensed consolidated financial statements
         reflect all adjustments  (consisting only of normal recurring accruals)
         considered  necessary by  management  to present  fairly the  Company's
         consolidated  financial  position as of June 30, 1997 and  December 31,
         1996, and the  consolidated  results of operations for the  three-month
         and  six-month   periods  ended  June  30,  1997  and  1996,   and  the
         consolidated  cash flows for the  six-month  periods  then  ended.  The
         results  of  operations  for the  respective  interim  periods  are not
         necessarily indicative of the results to be expected for the full year.
         The  condensed  consolidated  financial  statements  should  be read in
         conjunction  with the audited  financial  statements for the year ended
         December 31, 1996 which were included as part of the  Company's  Report
         on Form 10-K.

2.      Earnings Per Share
         In February  1997,  the  Financial  Accounting  Standards  Board issued
         Statement of Financial  Accounting  Standards  No. 128,  "Earnings  Per
         Share" ("SFAS 128").  SFAS 128 establishes  standards for computing and
         presenting  earnings per share ("EPS") and  supersedes  APB Opinion No.
         15,  "Earnings  Per  Share"  ("Opinion  15").  SFAS  128  replaces  the
         presentation  of  primary  EPS with a  presentation  of basic EPS which
         excludes  dilution  and is  computed by dividing  income  available  to
         common  stockholders  by the  weighted-average  number of common shares
         outstanding  during the  period.  This  statement  also  requires  dual
         presentation  of basic EPS and  diluted  EPS on the face of the  income
         statement for all periods presented.  Diluted EPS is computed similarly
         to fully  diluted EPS pursuant to Opinion 15, with some  modifications.
         SFAS 128 is  effective  for  financial  statements  issued for  periods
         ending after  December  15,  1997,  including  interim  periods.  Early
         adoption is not permitted and the statement requires restatement of all
         prior-period EPS data presented after the effective date.

         The Company will adopt SFAS 128 effective with its financial statements
         for the year ending  December 31, 1997. If SFAS 128 had been adopted at
         June 30, 1997,  there would have been no material  change in the EPS as
         reflected  in the  accompanying  financial  statements  for the periods
         ended June 30, 1997 and 1996.

3.      Financing Arrangements
         Effective  as of May 1997,  the Company  amended its loan and  security
         agreement  with  a US  bank  which  provides  for  borrowings  under  a
         revolving line of credit and an equipment line of credit. The amendment
         extends  the term of the  agreement  through  May 1998 and  reduces the
         annual rate of interest on  equipment  advances  from the bank's  prime
         rate plus a margin of .25% to the bank's prime rate.


                                       -5-
<PAGE>
4.      Commitments and Contingencies

         Service Agreements

         Effective  April 1,  1997,  the  Company  entered  into a new five year
         exclusive  agreement  with  one  of  its  major  allograft   processing
         customers,  the Musculoskeletal  Transplant Foundation ("MTF").  During
         the first six months of 1997 and 1996,  MTF  accounted for 59% and 64%,
         respectively, of revenues.

         License and Option Agreement

         In June 1997, the Company entered into an exclusive,  worldwide license
         agreement  for  its  proprietary   PolyActive(TM)  polymer  biomaterial
         technology and patents with Matrix Medical BV, The  Netherlands.  Terms
         of the  agreement  call for the Company to receive an up front  license
         payment of 500,000 Dutch Guilders ("dfl" or  approximately  $257,000 at
         the June 30, 1997 exchange rate) and two additional license payments of
         250,000 dfl (approximately $125,000 at the June 30, 1997 exchange rate)
         each on the first and second  anniversary  of the effective date of the
         agreement. Additionally, Matrix Medical BV has an option to acquire the
         technology for 4 million dfl  (approximately $2 million at the June 30,
         1997 exchange  rate)  commencing in the third year of the agreement and
         extending through the sixth year of the agreement.

         Throughout the term of the agreement,  which is the longer of ten years
         from the first  commercial  sale of product or the life of the patents,
         Osteotech will receive a royalty of 5% of net sales, declining to 2% of
         net sales if the  option  to  purchase  the  technology  is  exercised.
         Further the agreement  requires  Matrix  Medical BV to achieve  certain
         milestones during the first three years of the agreement. Failure to do
         so will  result  in its loss of  exclusive  rights to the  patents  and
         technology.

         During June 1997 the Company the received the up front license  payment
         which was recognized as license fee revenue.

         Litigation

          The Company  has been named as a defendant  in a number of lawsuits in
          which  patients  claim  that  they  have  suffered  damages  from  the
          implantation of allegedly  defective spinal fixation devices allegedly
          distributed by the Company.  See Part II, Item 1, "Legal Proceedings".
          Management  believes  that the suits and claims are without  merit and
          intends  to  defend   such   actions   vigorously.   Pursuant  to  its
          distribution  agreement  with the  Company,  the  manufacturer  of the
          spinal fixation devices,  Heinrich C. Ulrich, KG ("Ulrich") has agreed
          to  indemnify  the Company  for all costs and damages  incurred by the
          Company in connection with its  distribution of products  manufactured
          by  Ulrich,  except  such  costs and  damages  which are caused by the
          Company's  gross  negligence  or willful  misconduct  or  unauthorized
          claims made by the Company in marketing  the  products.  Additionally,
          the Company maintains  products  liability  insurance  coverage in the
          amount of $20 million per  occurrence  and per year in the  aggregate.
          The Company's  insurance  carrier has denied  coverage with respect to
          certain  of  these  cases  and  there  can be no  assurance  that  the
          remaining  claims will be covered by the Company's  insurance  policy.
          Litigation is subject to many

                                       -6-

<PAGE>
4.      Commitments and Contingencies

         Litigation (continued)

         uncertainties  and  management  is unable to predict the outcome of the
         pending suits and claims. It is possible that the results of operations
         or liquidity  and capital  resources of the Company  could be adversely
         affected  by the  ultimate  outcome of the pending  litigation  or as a
         result  of the  costs  of  contesting  such  lawsuits  if the  ultimate
         liability  materially exceeds the amount that the Company recovers from
         Ulrich and/or its insurance coverage. The Company is unable to estimate
         the  potential  liability,  if any,  that may result  from the  pending
         litigation and, accordingly, no provision for any liability (except for
         accrued  legal  costs)  has  been  made in the  consolidated  financial
         statements.

5.      Reclassifications

          Certain of the 1996 amounts  have been  reclassified  for  comparative
          purposes.


                                       -7-

<PAGE>

Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
           AND RESULTS OF OPERATIONS


FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED JUNE 30, 1997 AND 1996



Results of Operations

Net Income

Net income in the second  quarter of 1997  increased to  $1,403,000  or $.16 per
share compared to net income of $202,000 or $.02 per share in the second quarter
of 1996.  Net income in the first six months of 1997 was  $2,235,000 or $.26 per
share ($.25 assuming full  dilution)  compared to net income of $373,000 or $.04
per share in the first six months of 1996.

Following is a discussion of factors which  affected  results of operations  for
the three-month and six-month periods ended June 30, 1997 and 1996.


Revenues

Consolidated revenues in the second quarter of 1997 increased 28% to $10,703,000
from $8,375,000 in the second quarter of 1996.  Revenues in the first six months
of 1997 increased 24% to $20,787,000 from $16,784,000 in the first six months of
1996.  Domestic  revenues  increased 30% to $9,725,000 in the second  quarter of
1997  from  $7,506,000  in the  second  quarter  of 1996  and  increased  28% to
$19,129,000  in the first six months of 1997 from  $14,988,000  in the first six
months of 1996.  Foreign revenues increased 13% in the second quarter of 1997 to
$978,000 from $869,000 in the second quarter of 1996 and decreased 8% in the six
months ended June 30, 1997 to $1,658,000 from $1,796,000 in the six months ended
June 30, 1996.

The increase in domestic revenues resulted principally from increased demand for
the Company's proprietary  Grafton(R)  Demineralized Bone Matrix (DBM) allograft
processing services which increased 75% in the second quarter of 1997 and 65% in
the first six months of 1997 as compared to the same periods in 1996.

Foreign  revenues in the second  quarter  and first six months of 1997  included
$257,000 from licensing the Company's proprietary PolyActive polymer technology.
Foreign revenues in 1996 included grant revenues of $156,000 and $318,000 in the
second  quarter and first six months,  respectively,  which did not  continue in
1997 as a result  of the  discontinuance  of the  Company's  PolyActive  polymer
research and  development  program in the fourth quarter of 1996.  Additionally,
foreign revenues in the second quarter and first six months of 1997 were reduced
by  approximately  12% as a result of the strength of the US dollar  compared to
the Dutch guilder.

During the second  quarter  and first six months of 1997,  two of the  Company's
major  customers  accounted  for 56% and 33% and 59% and 31%,  respectively,  of
revenues.


                                       -8-

<PAGE>
Results of Operations (continued)
Cost of Services and Products

Cost of  services  as a  percentage  of service  revenues  was 36% in the second
quarter and first six months of 1997 compared to 40% and 41%,  respectively,  in
the same  periods last year.  The decline in costs as a  percentage  of revenues
results  primarily  from (i) a shift in revenue mix toward  services with higher
gross margins; (ii) operating  efficiencies resulting from increased volume; and
(iii) an  increase  in fees  charged  to the  Company's  customers  for  certain
allograft processing services.

Cost of  products as a  percentage  of product  revenues  was 73% and 74% in the
second quarter and first six months of 1997,  respectively,  compared to 86% and
79% in the same  periods  last year.  The  decline in costs as a  percentage  of
revenues  results  primarily  from a shift in product mix toward  products  with
higher gross margins.


Marketing, General and Administrative

Marketing,  general and administrative expenses increased $847,000 or 28% in the
second quarter and  $1,489,000 or 24% in the first six months of 1997,  compared
to the same periods last year.  The increases  were  primarily  attributable  to
expanded  marketing  activities  associated with the continued  expansion of the
business and increased  administrative  costs,  principally outside professional
services.


Research and Development

Research and development  expenses decreased  $232,000 and $357,000,  or 21% and
16%, in the second quarter and first six months of 1997, respectively,  compared
to the same  periods  last  year.  The  decreases  result  principally  from the
discontinuance  of the Company's  PolyActive  polymer  research and  development
program in the fourth quarter of 1996.


Other Income, net

Interest  income  increased  $33,000 and $60,000 in the second quarter and first
six months of 1997, respectively, compared to the same periods in the prior year
due to a higher  level of  invested  funds and a higher  average  return on such
funds.

Interest expense  decreased  $30,000 and $50,000 in the second quarter and first
six months of 1997, respectively,  compared to the same period in the prior year
as a result of lower outstanding debt and obligations under capital leases.


                                       -9-

<PAGE>

Provision for Income Taxes

The  Company's  effective  income tax rate declined to 36% and 41% in the second
quarter and first six months of 1997, respectively, from 71% and 72% in the same
periods last year.  The high effective  income tax rate in 1996 was  principally
due to foreign  losses for which no current tax  benefits  were  available.  The
Company's  effective  income tax rate is expected  to remain near the  six-month
rate of 41% for the remainder of 1997.


Liquidity and Capital Resources

At June 30,  1997,  the Company  had cash and cash  equivalents  and  short-term
investments of $11,398,000  compared to $9,277,000 at December 31, 1996. Working
capital  increased  by  $2,326,000  from  $12,273,000  at  December  31, 1996 to
$14,599,000 at June 30, 1997.

Cash flow from  operating  activities  increased to  $3,891,000 in the first six
months of 1997 from  $2,327,000 in the first six months of 1996  principally due
to the  increase in net income and  decreases  in prepaid  expenses and accounts
receivable. Capital expenditures increased to $1,585,000 in the first six months
of 1997 from  $1,200,000 in the same period in 1996 as the Company  continues to
invest in  facilities  and  equipment  needed for  current  and future  business
requirements, principally allograft tissue processing capacity.

The Company has a loan and security  agreement with a US bank which provides for
borrowings of up to $3,000,000  under a revolving  line of credit and $4,000,000
under an equipment line of credit. At June 30, 1997,  $1,024,000 was outstanding
under the  equipment  line of credit  and there were no  borrowings  outstanding
under the revolving line of credit.

The  Company  also has a line of credit  with a Dutch  bank which  provides  for
borrowings  of  up  to  5,000,000  Dutch  Guilders  ("dfl"),   or  approximately
$2,546,000 at the June 30, 1997 exchange  rate.  Analysis of the Company's  cash
position and  anticipated  cash flow  indicated that it most likely would not be
necessary to utilize a significant portion of the line of credit and, therefore,
the Company has agreed to temporarily  limit its borrowings,  if any, to no more
than  3,000,000 dfl, or  approximately  $1,527,000 at the June 30, 1997 exchange
rate. Additionally, in connection with the Leiden facility lease, the Company is
required  to  maintain a  declining  bank  guarantee  which  reduced  the amount
available for  borrowings to 2,605,000 dfl, or  approximately  $1,326,000 at the
June 30, 1997 exchange rate.  There were no borrowings under this credit line as
of June 30, 1997.

The Company believes that its cash,  short-term  investments and available lines
of  credit,  together  with  anticipated  cash  flow  from  operations,  will be
sufficient to meet its near-term requirements. From time to time the Company may
seek additional funds through equity or debt financing. However, there can be no
assurances  that such additional  funds will be available to the Company,  or if
available, that such funds will be available on terms favorable to the Company.


                                      -10-

<PAGE>


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

           Not Applicable



PART II.         OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS


1. Orthopaedic Bone Screw Products Liability Litigation

As of August 8, 1997,  the Company  was aware of being  named as a defendant  in
approximately 34 cases based in products  liability in connection with allegedly
defective spinal devices as described in the Company's  Quarterly Report on Form
10-Q for the quarter ended March 31, 1997.  This  represents a decrease from the
79 cases previously  reported in such Quarterly  Report. Of these cases, 32 have
been consolidated with other similar actions for coordinated  proceedings in the
Eastern District of Pennsylvania  under the caption In re: Orthopedic Bone Screw
Products Liability Litigation, MDL Dkt. 1014. The remaining cases are pending in
the state courts of Ohio and Pennsylvania.



2. Kehr et al. v. Musculoskeletal Transplant Foundation and Osteotech, Inc.

The plaintiffs in this action agreed to dismiss this action with  prejudice.  On
May 19,  1997,  the court  approved of and entered a  stipulation  and order for
dismissal.


3. Patent Litigation

The  Company  has  initiated  an  infringement  action  against  LifeNet,   Inc.
("LifeNet")  in the  District  Court of New Jersey  alleging  that  LifeNet  has
infringed US Patent Nos.  5,333,626 and 5,513,662 owned by the Company.  LifeNet
has answered and filed a  counterclaim  that such patents are not  infringed and
are invalid and unenforceable.

LifeNet  Research  Foundation,  an affiliate  of LifeNet,  has brought an action
against the Company in the District Court of Virginia alleging that such patents
are  invalid,  unenforceable  and not  infringed.  The  Company  has denied such
allegations  and is  attempting  to have  the two  actions  consolidated  in New
Jersey. LifeNet is attempting to have the two actions consolidated in Virginia.


                                      -11-

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

          (a)  An annual meeting of stockholders was held on June 5, 1997.

          (b)  The  directors  elected at the annual  meeting to serve a term of
               one year or until the next annual meeting of  stockholders  were:
               Richard W. Bauer,  Kenneth P. Fallon,  III,  Michael J. Jeffries,
               Donald D. Johnston,  John Phillip  Kostuik,  M.D.,  FRCS(C),  and
               Stephen J.  Sogin,  Ph.D.  They  constitute  the entire  board of
               directors of the Company.

          (c)  The matters  voted upon at the annual  meeting and the results of
               the voting are set forth below.

               i)     With  respect to a proposal  to ratify  amendments  to the
                      Company's 1991  Independent  Directors' Stock Option Plan,
                      as amended (the "Plan"),  effective as of July 1, 1997, to
                      (i) decrease the number of options  granted to Independent
                      Directors  (as  defined in the Plan)  upon  their  initial
                      election  to the Board of  Directors  (the  "Board")  from
                      20,000 to 10,000 and upon their  re-election  to the Board
                      from 10,000 to 7,500,  (ii) alter the vesting  schedule of
                      options  granted  under  the Plan from 25% per year over a
                      four (4) year period  commencing on the first  anniversary
                      of  the  date  of  grant  to  100%  vested  on  the  first
                      anniversary  of the date of grant,  (iii)  provide for the
                      options  granted  under  the Plan to be  exercisable  once
                      vested through the tenth  anniversary of the date of grant
                      rather  than the  current  five (5) year  exercise  period
                      commencing on the respective vesting date for each tranche
                      of shares,  (iv) alter the time period when options expire
                      upon an Independent  Director's  departure from the Board,
                      for any reason except removal for cause,  from ninety (90)
                      days to the lesser of five (5) years from the date of such
                      departure or the original  term  remaining for exercise of
                      such  options,  (v) provide for the  cashless  exercise of
                      options  through  the  delivery  of  stock  issuable  upon
                      exercise  of  such  options,  and  (vi)  provide  for  the
                      accelerated vesting of options upon a change of control of
                      the Company,  the  stockholders  voted 5,805,795 shares in
                      favor,  374,131  against  and  22,510  abstained.   Broker
                      non-votes were 686,662.

                    This proposal received the vote required by Delaware General
                    Corporation  Law  ("DGCL")  and the  Company's  by-laws  for
                    approval  (i.e.  affirmative  vote  of  a  majority  of  the
                    outstanding  shares  present at the meeting,  by proxy or in
                    person, and entitled to vote at the annual meeting).


                                      -12-


<PAGE>

ITEM 4.(c)  (continued)


               (i)  With  respect to the  election of  Directors of the Company,
                    the persons  named below  received the  following  number of
                    votes:

                Director                          For              Withheld
 ---------------------------------------    ----------------    ---------------
 Richard W. Bauer                              6,808,295            80,803
 Kenneth P. Fallon, III                        6,808,295            80,803
 Michael J. Jeffries                           6,808,195            80,903
 Donald D. Johnston                            6,808,195            80,903
 John Phillip Kostuik, M.D.                    6,808,195            80,903
 Stephen J. Sogin, Ph.D.                       6,808,195            80,903


               (ii)   With  respect to a proposal  to ratify  the  selection  of
                      Coopers  & Lybrand  L.L.P.  as the  Company's  independent
                      auditors for the fiscal year ending December 31, 1997; the
                      stockholders   voted  6,874,349  shares  in  favor,  6,723
                      against and 8,026  abstained.  Broker  non-votes  were not
                      applicable.  This  proposal  received the vote required by
                      DGCL  and  the  Company's   by-laws  for  approval   (i.e.
                      affirmative  vote of a majority of the outstanding  shares
                      present  at  the  meeting,  by  proxy  or in  person,  and
                      entitled to vote at the annual meeting).


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits (numbered in accordance with Item 601 of
                     Regulation S-K)

Exhibit                                                                Page
Number            Description                                         Number
----------------------------------------------------------------------------

10.30             Fourth Amendment to Loan and Security Agreement
                  between the Company and Summit Bank
                  dated July 28, 1997                                   E-1

10.31             Third Restated Equipment Promissory Note
                  between the Company and Summit Bank
                  dated July 28, 1997                                   E-11



                                      -13-

<PAGE>

Item 6. (a)       Exhibits (continued)


  Exhibit                                                                Page
  Number            Description                                         Number
  ------            -----------                                         ------


  10.32             Second Restated Revolving Loan Promissory
                    Note between the Company and Summit Bank
                    dated July 28, 1997                                   E-16

  10.33             License & Option Agreement between HC Implants
                    BV and Matrix Medical Holding BV
                    dated June 6, 1997                                    E-20

  11.1              Computation of Primary Net Income Per Share           E-41

  11.2              Computation of Fully Diluted Net Income
                     Per Share                                            E-42

  27.0              Financial Data Schedule                               E-43



       (b)    Reports on Form 8-K

              On April 11, 1997, the Company filed with the Commission a Current
              Report  on Form 8-K  dated  April 1, 1997  (the  "Form  8-K"),  to
              announce  that it entered into an agreement  with  Musculoskeletal
              Transplant  Foundation  ("MTF") whereby the Company is to serve as
              the  exclusive  processor  of human  bone and  related  connective
              tissue for  transplantation  received  from donors and procured by
              MTF  for a five  year  period,  with an  option  to  renew  for an
              additional five year period.

              Additionally,  in the same Form 8-K, the Company announced that it
              had obtained a consent  injunction in its suit against  Biosystems
              of  New  England,  Inc.  ("Biosystems").   The  Company  had  sued
              Biosystems,  a former  sales  agent for the  Company's  Grafton(R)
              Demineralized Bone Matrix allograft tissue form, for breaching the
              non-compete  and other  provisions  of the Sales Agency  Agreement
              ("Sales  Agreement").  As part of the  injunction,  Biosystems has
              agreed  to fully  comply  with the  terms  and  conditions  of the
              non-compete  clause of the sales  Agreement  and the  Company  has
              agreed to allow  Biosystems to market one form of allograft tissue
              processed  by another  tissue  bank,  in  exchange  for  extending
              Biosystems'  non-compete obligation from July 1997 to December 31,
              1997.

                                      -14-

<PAGE>

                                   SIGNATURES

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

                                                                 Osteotech, Inc.
                                                                    (Registrant)



Date:    August 8, 1997             By:              /s/ RICHARD W. BAUER
                                                     --------------------
                                                         Richard W. Bauer
                                                         President, Chief
                                                         Executive Officer



Date:    August 8, 1997             By:              /s/ MICHAEL J. JEFFRIES
                                                     -----------------------
                                                      Michael J. Jeffries
                                                      Executive Vice President
                                                      Chief Operating Officer
                                                      Chief Financial Officer



                                      -15-