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, 2000

                                       or

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

Commission File Number 0-19278

                                 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)

                                  (732)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 - 13,951,827 shares as of July 31, 2000.


                                      -1-
<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,
                                                                          2000                   1999
                                                                       --------------------------------
<S>                                                                    <C>                     <C>
ASSETS
-------------------------------------------------------------------------------------------------------
Current assets:
     Cash and cash equivalents                                         $ 11,806                $ 16,770
     Short-term investments                                               1,942                   3,946
     Accounts receivable, net                                            12,613                  15,095
     Inventories                                                          4,301                   3,405
     Prepaid expenses and other current assets                            8,800                  11,097
                                                                       --------------------------------
        Total current assets                                             39,462                  50,313

Property, plant and equipment, net                                       47,083                  33,995
Excess of cost over net assets of business
     acquired, less accumulated amortization
     of $2,282 in 2000 and $2,089 in 1999                                 3,489                   3,682
Other assets                                                              1,819                   1,740
-------------------------------------------------------------------------------------------------------
Total assets                                                           $ 91,853                $ 89,730
=======================================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------------------------------------------------------------------------
Current liabilities:
     Accounts payable and accrued liabilities                          $ 11,220                $ 13,231
                                                                       --------------------------------
        Total current liabilities                                        11,220                  13,231

Long-term debt                                                            8,741                   6,359
Other liabilities                                                           748                     734
-------------------------------------------------------------------------------------------------------
Total liabilities                                                        20,709                  20,324
-------------------------------------------------------------------------------------------------------

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; 70,000,000 shares
         authorized; issued and outstanding 13,942,077
         shares in 2000 and 14,194,126 shares in 1999                       138                     140
     Additional paid-in capital                                          46,210                  48,837
     Accumulated other comprehensive loss                                  (502)                   (376)
     Retained earnings                                                   25,298                  20,805
-------------------------------------------------------------------------------------------------------
Total stockholders' equity                                               71,144                  69,406
-------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity                             $ 91,853                $ 89,730
=======================================================================================================
</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,
                                                                   -----------------------------       -----------------------------
                                                                        2000               1999              2000             1999
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>               <C>               <C>               <C>
Net revenues:
   Service                                                         $    19,788       $    18,969       $    37,531       $    36,826
   Product                                                                 831               633             1,734             1,464
   License fee                                                                               118                                 118
                                                                   -----------       -----------       -----------       -----------
                                                                        20,619            19,720            39,265            38,408

Cost of services                                                         6,173             5,672            11,802            11,126
Cost of products                                                           569               443             1,151               846
                                                                   -----------       -----------       -----------       -----------
                                                                         6,742             6,115            12,953            11,972
                                                                   -----------       -----------       -----------       -----------

Gross Profit                                                            13,877            13,605            26,312            26,436

Marketing, general and administrative                                    8,600             6,689            16,732            13,063
Research and development                                                 1,687             1,486             3,047             2,938
                                                                   -----------       -----------       -----------       -----------
                                                                        10,287             8,175            19,779            16,001
                                                                   -----------       -----------       -----------       -----------

Income from litigation settlement                                          250                                 500
                                                                   -----------       -----------       -----------       -----------

Operating income                                                         3,840             5,430             7,033            10,435

Interest and other income, net                                             279               178               585               428
                                                                   -----------       -----------       -----------       -----------

Income before income taxes                                               4,119             5,608             7,618            10,863

Income tax provision                                                     1,595             2,264             3,125             4,361

------------------------------------------------------------------------------------------------------------------------------------
Net income                                                         $     2,524       $     3,344       $     4,493       $     6,502
====================================================================================================================================
Net income per share:
     Basic                                                         $       .18       $       .24       $       .32       $       .47
     Diluted                                                       $       .18       $       .23       $       .31       $       .44
------------------------------------------------------------------------------------------------------------------------------------
Shares used in computing net income per share:
     Basic                                                          14,089,366        14,013,539        14,148,189        13,867,413
     Diluted                                                        14,327,732        14,727,581        14,477,928        14,637,907
</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,                                                                              2000                   1999
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                 <C>                    <C>
Cash Flow From Operating Activities
   Net income                                                                                       $  4,493               $  6,502
   Adjustments to reconcile net income to net cash
      provided by (used in) operating activities:
         Depreciation and amortization                                                                 1,902                  1,473
         Loss on disposal of fixed assets                                                                  9
         Provision for doubtful accounts                                                                   3
         Changes in assets and liabilities:
               Accounts receivable                                                                     2,482                 (2,295)
               Inventories                                                                              (926)                (1,389)
               Prepaid expenses and other current assets                                               2,239                 (1,522)
               Accounts payable and other liabilities                                                 (1,895)                (3,522)
------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities                                                    8,307                   (753)

Cash Flow From Investing Activities
   Capital expenditures                                                                              (14,790)                (9,208)
   Purchases of investments                                                                           (1,942)                (7,688)
   Proceeds from sale of investments                                                                   3,946                  6,850
   Acquisition of business                                                                                                   (1,467)
   Increase in other assets                                                                             (182)                  (824)
------------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities                                                                (12,968)               (12,337)

Cash Flow From Financing Activities
   Proceeds from issuance of common stock                                                                460                  4,710
   Income tax benefit related to stock options                                                            32                  6,389
   Repurchase of common stock                                                                         (3,121)
   Proceeds from issuance of notes payable                                                                                      116
   Principal payments on notes payable                                                                                         (572)
   Proceeds from issuance of long-term debt                                                            2,382
   Principal payments on long-term debt
      and obligations under capital leases                                                                                     (758)
   (Decrease) increase in other liabilities                                                             (100)                   171
------------------------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities                                                     (347)                10,056

Effect of exchange rate changes on cash                                                                   44                    (76)
------------------------------------------------------------------------------------------------------------------------------------

Net (decrease) increase in cash and cash equivalents                                                  (4,964)                (3,110)
Cash and cash equivalents at beginning of period                                                      16,770                 15,119
------------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period                                                          $ 11,806               $ 12,009
====================================================================================================================================

Supplementary cash flow data:
   Cash paid during the period for interest                                                         $    305               $     27
   Cash paid during the period for taxes                                                                 678                  2,061
   Acquisition of business:
      Fair value of assets acquired                                                                                           2,563
      Liabilities assumed                                                                                                     2,669
</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, 2000 and December 31, 1999,
     and  the  consolidated  results  of  operations  for  the  three-month  and
     six-month  periods ended June 30, 2000 and 1999, 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,  1999  which were
     included as part of the Company's Report on Form 10-K.

2.   Inventories

     Inventories consist of the following:
                                                         June 30,   December 31,
     (dollars in thousands)                                2000         1999
     ---------------------------------------------------------------------------

     Raw Materials                                        $  890      $  912
     Finished Goods                                        3,411       2,493
     ---------------------------------------------------------------------------

                                                          $4,301      $3,405
     ---------------------------------------------------------------------------

3.   Comprehensive Income

     Comprehensive  income for the three-month and six-month  periods ended June
     30, 2000 and 1999:

<TABLE>
<CAPTION>
                                                       Three months ended                 Six months ended
                                                            June 30,                          June 30,
                                                  -------------------------------------------------------------

     (dollars in thousands)                         2000              1999              2000              1999
     ----------------------------------------------------------------------------------------------------------
<S>                                               <C>               <C>               <C>               <C>
     Net income                                   $ 2,524           $ 3,344           $ 4,493           $ 6,502

     Currency translation adjustments                 (75)             (131)             (126)             (282)
     ----------------------------------------------------------------------------------------------------------

     Comprehensive Income                         $ 2,449           $ 3,213           $ 4,367           $ 6,220
     ==========================================================================================================
</TABLE>

4.   Stock Repurchase Program

     In May,  2000,  the  Board  of  Directors  of the  Company  authorized  the
     repurchase and retirement of up to 1,000,000 shares of the Company's common
     stock through open market  purchases,  or block  purchases.  As of June 30,
     2000,  the Company had  repurchased  and retired  330,500  shares of common
     stock at a cost of approximately $3,121,000.


                                      -5-
<PAGE>

                        OSTEOTECH, INC. AND SUBSIDIARIES
              Notes To Condensed Consolidated Financial Statements
                                   (unaudited)

5.   Commitments and Contingencies

     Service Contracts

     In June, 2000, the Company entered into an exclusive  five-year  processing
     agreement with Bone Bank  Allografts  ("BBA") of San Antonio,  Texas.  BBA,
     which is a tissue bank  accredited  by the American  Association  of Tissue
     Banks,  coordinates  the  procurement  and  distribution  of allograft bone
     tissue  nationally,  with a focus  in the  Southern  region  of the  United
     States.

     Litigation

     GenSci Regeneration Laboratories,  Inc. v. Osteotech, Inc.; Osteotech, Inc.
     v. GenSci Regeneration Sciences, Inc.

     In January,  1998, the Company filed a patent  infringement  action against
     GenSci   Regeneration   Laboratories,   Inc.  ("GenSci  Labs")  and  GenSci
     Regeneration  Sciences,  Inc. ("GenSci  Sciences") alleging that the GenSci
     parties  violated  claims of one of the  patents  involving  the  Company's
     Grafton(R) Demineralized Bone Matrix (DBM) process. Approximately two weeks
     after the  Company's  filing,  GenSci Labs filed a suit against the Company
     alleging infringement of two patents assigned to GenSci Labs in addition to
     tortious  interference with a business expectancy,  negligent  interference
     with a prospective  economic  advantage and inducing breach of contract and
     seeking a declaratory  judgment of the invalidity of the Company's  patents
     U.S.  Patent Nos.  5,284,655  and  5,290,558  covering  Grafton(R)  DBM. In
     February,  1998, GenSci Labs amended its complaint alleging essentially the
     same  causes of action,  but  adding a third  patent to the  allegation  of
     patent  infringement.  In August,  1998, the actions were consolidated into
     one case before the United States  District Court for the Central  District
     of California.

     In  September,  1998,  GenSci  Labs  served  an  amended  complaint,  which
     asserted,  in addition to the previously  asserted claims,  claims of false
     advertising  under Federal law. In September,  1998, the Company served its
     answer to this amended  complaint,  asserted  counterclaims  against GenSci
     Labs and served a third-party complaint against GenSci Sciences,  and DePuy
     AcroMed,  Inc.("DePuy").   The  Company's  counterclaims  and  third  party
     complaint accused the GenSci parties of infringing a second Company patent,
     in  addition to the patent  referred  to above,  and accused the GenSci and
     DePuy  parties of acting  jointly and severally in infringing on the claims
     of both patents.

     In May, 1999,  GenSci Labs amended its complaint to allege that in addition
     to the Company's  Grafton(R) DBM Flex product, the Company's Grafton(R) DBM
     Gel and Putty  products  infringe on GenSci Lab's patents at issue.  GenSci
     Labs also  amended its  complaint  to modify its false  advertising  claim,
     alleging  that  in  addition  to the  Company,  individuals  acting  on the
     Company's behalf engaged in false advertising. The Company filed and served
     its answer and counterclaims to the amended complaint in May, 1999.


                                      -6-
<PAGE>

                        OSTEOTECH, INC. AND SUBSIDIARIES
              Notes To Condensed Consolidated Financial Statements
                                   (unaudited)

5.   Commitments and Contingencies (continued)

     In  November,  1999,  the  Company  settled  all claims  which it had filed
     against DePuy. As part of the settlement,  DePuy has agreed to stop selling
     the GenSci products accused of infringing the Company's  patents,  no later
     than  February  4,  2001 and to pay the  Company  $3,000,000.  Payments  of
     $2,000,000  were received in the fourth quarter of 1999 and $250,000 in the
     first and second  quarters of 2000.  Payments of $250,000 each will be made
     at the end of each  quarter in 2000 unless DePuy  discontinues  selling the
     GenSci products during the year, at which time DePuy would not be obligated
     for  payments  beyond the  quarter in which it stopped  selling  the GenSci
     products.

     In April,  2000, the Company,  GenSci Labs, and GenSci Sciences  reached an
     agreement to dismiss with  prejudice  all of GenSci's  patent  infringement
     claims  against the Company's  proprietary  Grafton(R)  DBM products and to
     stay any action in GenSci's anti-trust suit, which it had filed against the
     Company  on  March  6,  2000,  until  the  completion  of the  trial of the
     Company's patent infringement claims against GenSci.  GenSci also agreed to
     dismiss all of the tort  claims that it had brought  against the Company in
     its patent  lawsuit  without  prejudice  and to transfer  the claims to the
     anti-trust  action. As a result of these dismissals,  GenSci will no longer
     have  any  claims  against  the  Company  in the  patent  action.  The only
     remaining  claims in the patent action  involve the  Company's  allegations
     that GenSci has infringed certain of the Company's patents through the sale
     of the Dynagraft(TM) Gel and Dynagraft(TM)  Putty products.  This agreement
     was subject to court approval, which approval has been received.

     In July,  2000, the Company filed a motion seeking summary  judgment in its
     favor on GenSci Labs' and GenSci Sciences'  reverse doctrine of equivalents
     defense on the bases that the GenSci  parties failed to assert that defense
     in a timely manner and that the defense is otherwise meritless. The Company
     also  filed a motion  seeking  judgment  that the  portion of the case that
     GenSci  dismissed with  prejudice be ruled as  exceptional  based on GenSci
     Labs having  asserted and maintained  baseless  allegations  that Osteotech
     infringed GenSci Labs' patents, thus warranting an award of attorneys' fees
     and costs to Osteotech.

     Also,  in July,  2000,  GenSci filed various  motions for summary  judgment
     seeking orders that GenSci does not infringe on Osteotech's  patents and/or
     that such patents are invalid.

     The  Company  will  continue  to  vigorously  prosecute  the  claims it has
     asserted in this action to protect its products and  intellectual  property
     to the fullest extent possible under the law.


                                      -7-
<PAGE>

                        OSTEOTECH, INC. AND SUBSIDIARIES
              Notes To Condensed Consolidated Financial Statements
                                   (unaudited)

5.   Commitments and Contingencies (continued)

     GenSci Orthobiologics, Inc. v. Osteotech, Inc.

     On March 6, 2000, GenSci Orthobiologics,  Inc. ("GenSci") filed a complaint
     in the United States District Court for the Central  District of California
     against  the  Company,  alleging  that  the  Company  engaged  in  unlawful
     monopolization,  attempted to monopolize the market for demineralized  bone
     matrix and entered into  agreements in restraint of trade,  in violation of
     sections 1 and 2 of the Sherman  Antitrust Act and Section 3 of the Clayton
     Act; and that the Company engaged in unlawful and unfair business practices
     in violation of section 17200 of the  California  Unfair  Competition  Law.
     GenSci has alleged  that the Company has  monopoly  power in the market for
     demineralized bone matrix products in the United States, and has engaged in
     anticompetitive  conduct by improperly asserting its patents through patent
     infringement  actions,  seeking  to have the  Food and Drug  Administration
     remove   certain  of  GenSci's   products  from  the  market,   restricting
     competitors'   access  to  raw   materials,   interfering   with   GenSci's
     arrangements to manufacture demineralized bone matrix implants, interfering
     with GenSci's  marketing and  distribution  arrangements,  and  disparaging
     GenSci's products.  GenSci seeks compensatory,  incidental,  consequential,
     and punitive  damages in an unspecified  amount,  and injunctive  relief to
     stop the Company from  restricting  the tissue banks for which it processes
     tissue  from  (a)  supplying   processed   demineralized   bone  matrix  to
     Osteotech's  competitors and (b) distributing the demineralized bone matrix
     implant products of Osteotech's  competitors.  Certain of these allegations
     had  previously  been  asserted  by GenSci in its  patent  litigation  with
     Osteotech in the Central District of California federal court.

     In April,  2000, the Company  reached an agreement with GenSci whereby tort
     claims that were dismissed from the patent  litigation would be transferred
     to this action and this action was stayed until the completion of the trial
     of the Company's patent infringement claims against GenSci.

     The Company  believes the claims made in this lawsuit are without merit and
     intends to vigorously defend against these claims.

     University of Florida Tissue Bank, Inc. v. Osteotech, Inc.

     In February,  1999, a complaint was filed against the Company in the United
     States  District Court for the Northern  District of Florida.  This action,
     which has been brought by  plaintiffs,  University of Florida  Tissue Bank,
     Inc.,  Regeneration  Technologies,  Inc.,  Sofamor Danek Group,  Inc.,  and
     Sofamor Danek L.P.  alleges that the Company's  bio-d(TM)Threaded  Cortical
     Bone  Dowel  and  Endodowel  infringe  on the  claims  of U.S.  Patent  No.
     5,814,084,   entitled   "Diaphysical   Cortical  Dowel."  In  April,  1999,
     plaintiffs   filed  an  amended   complaint   adding  a  claim  for  patent
     infringement against the Company with respect to U.S. Patent No. 5,814,084,
     entitled "Bone Grafting Units",  which is owned by plaintiff  University of
     Florida  Tissue Bank,  Inc. In May,  1999, the Company filed its answer and
     counterclaim  seeking declaratory  judgment that the patents in question in
     this  action are  invalid  and  otherwise  not  infringed  by the  Company.
     Although  the  plaintiffs  seek  monetary  damages,  an amount has not been
     specified.  In May,  1999,  plaintiffs  filed their reply to the  Company's
     counterclaims.


                                      -8-
<PAGE>

                        OSTEOTECH, INC. AND SUBSIDIARIES
              Notes To Condensed Consolidated Financial Statements
                                   (unaudited)

5.   Commitments and Contingencies (continued)

     Discovery on all of the claims asserted in this litigation is ongoing.  The
     Company believes that the claims made against it in this action are without
     merit and will continue to vigorously defend against such claims.

     Medtronic  Sofamor Danek,  Inc.,  Sofamor Danek L.P. and Sofamor  Holdings,
     Inc. v. Osteotech, Inc.

     In July, 1999, Medtronic Sofamor Danek Inc., Sofamor Danek L.P. and Sofamor
     Danek Holdings, Inc. ("Danek") sued Osteotech in the United States District
     Court for the Western  District of  Tennessee  alleging  that  instruments,
     instrument sets and cortical bone dowel products, manufactured, sold and/or
     otherwise  distributed  by the Company  infringe on certain  claims of U.S.
     Patent Nos. 5,741,253, entitled "Method for Inserting Spinal Implants", and
     5,484,437,  entitled  "Apparatus and Method of Inserting Spinal  Implants",
     which are owned by Danek. In September,  1999, the Company filed its answer
     and  counterclaims  seeking a  declaratory  judgement  that the  patents in
     question  in this action are invalid and  otherwise  not  infringed  by the
     Company.  Plaintiffs  filed  their reply to the  counterclaims  in October,
     1999.

     Discovery on all of the claims asserted in this litigation is ongoing.  The
     Company believes that the claims made against it in this action are without
     merit and will continue to vigorously defend against such claims.

     Condos v. Musculoskeletal Transplant Foundation

     In June,  2000, the Company was served with an action brought in the United
     States  District  Court for the  District  of Utah  against the Company and
     Musculoskeletal  Transplant  Foundation ("MTF"). The suit alleges causes of
     action for strict  liability,  breach of implied  warranty  and  negligence
     arising from allegedly  defective  allograft bone tissue  processed  and/or
     provided  by the  Company and MTF which was  allegedly  implanted  into the
     plaintiff,  Chris Condos,  during two spinal surgeries.  Plaintiffs,  which
     include  Mr.  Condos's  family  members,  demand  monetary  damages  in  an
     unspecified  amount.  On July 25, 2000, the Company answered the complaint,
     denying any and all liability.

     The Company maintains a general liability insurance policy and has notified
     the insurance  company of this action and the insurance  company has agreed
     to defend the action.

     Regner v. Inland Eye & Tissue Bank of Redlands

     In May,  2000,  Regner brought suit against the Company and fifteen or more
     other  defendants in the Superior  Court for the State of  California,  San
     Bernardino  County.  The suit seeks class action status and alleges a cause
     of action based on a violation of the California  Business and Professional
     Code,  as well as a number  of  common  law  causes  of  action,  including
     negligence,  deceit, and intentional and negligent  infliction of emotional
     distress. With respect to the Company, plaintiff claims that the Company is
     violating  California  law by engaging in the activity of buying or selling
     organs or tissue for valuable  consideration or profit. It appears that the
     plaintiff is seeking only injunctive  relief with respect to its California
     Business and Professional Code claim. To the extent any of the other causes
     of action exist against Osteotech,


                                      -9-
<PAGE>

                        OSTEOTECH, INC. AND SUBSIDIARIES
              Notes To Condensed Consolidated Financial Statements
                                   (unaudited)

5.   Commitments and Contingencies (continued)

     the plaintiffs are seeking damages in an unspecified  amount in addition to
     class certification.

     In June,  2000,  Regner filed a motion for a preliminary  injunction  and a
     hearing was held on June 28, 2000. The Court denied the motion. The Company
     has filed a demurrer to the  complaint  requesting  that the  complaint  be
     dismissed.  That  motion  is  scheduled  to be heard  on  August  9,  2000.
     Otherwise, the Company denies that it is engaged in the activity complained
     of and  asserts  that it is  licensed  by the  State  of  California  to do
     precisely  what it is doing,  and that its  activities  are fully in accord
     with all state and federal laws. Therefore,  the Company believes this suit
     to be without merit and will vigorously defend against the claims.

     Orthopaedic Bone Screw Products Liability Litigation

     The Company  remained a defendant in one  previously  reported  state court
     products  liability  action involving  orthopaedic  bone screws:  Ponder v.
     Synthes. This action has been discontinued.

     "O" Company, Inc. v. Osteotech, Inc.

     In July,  1998,  a  complaint  was filed  against the Company in the Second
     Judicial  District  Court,  Bernallilo  County,  New Mexico,  which alleges
     negligence,    strict    liability,    breach   of   warranty,    negligent
     misrepresentation,  fraud,  and  violation  of the New Mexico  Unfair Trade
     Practices Act arising from allegedly  defective  dental implant coating and
     coating services provided to plaintiffs by a subsidiary of the Company, Cam
     Implants BV.  Plaintiffs have demanded  unspecified  monetary  damages.  In
     August, 1998, the Company removed this action to the United States District
     Court for the  District  of New Mexico  and filed and  served  its  answer,
     denying any and all liability in this action,  and moved to dismiss five of
     the seven claims alleged  against it. In March,  1999, the court  dismissed
     with  prejudice the  plaintiff's  negligence and strict  liability  claims.
     Remaining are claims for breach of warranty,  negligent  misrepresentation,
     fraud,  and violation of the New Mexico Unfair Trade  Practices  Act. As to
     those claims,  the Company has moved for summary judgment on the basis that
     all of the  remaining  claims are barred by their  applicable  statutes  of
     limitations.  At plaintiff's request, the court permitted limited discovery
     on the  matters  related to the  statute  of  limitations  issue,  which is
     ongoing.

     The Company  believes  that the claims  made  against it in this action are
     without merit and will continue to vigorously defend against such claims.

     Litigation  is subject to many  uncertainties  and  management is unable to
     predict the outcome of the pending  suits and claims.  It is possible  that
     our results of  operations  or  liquidity  and capital  resources  could be
     adversely  affected by the ultimate outcome of the pending litigation or as
     a result  of the  costs of  contesting  such  lawsuits.  We are  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.


                                      -10-
<PAGE>

                        OSTEOTECH, INC. AND SUBSIDIARIES
              Notes To Condensed Consolidated Financial Statements
                                   (unaudited)

6.   Earnings Per Share

     The  following  table  sets  forth the  computation  of basic  and  diluted
     earnings per share for the three-month and six-month periods ended June 30,
     2000 and 1999:

<TABLE>
<CAPTION>
                                                                   Three Months Ended                  Nine Months Ended
                                                                        June 30,                            June 30,
                                                            ------------------------------------------------------------------
     (dollars in thousands
      except per share data)                                    2000               1999              2000              1999
     -------------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>                <C>               <C>                <C>
     Net income available to common                             $2,524             $3,344            $4,493             $6,502
         Shareholders
     -------------------------------------------------------------------------------------------------------------------------

     Denominator for basic earnings per share:
         Weighted average common
         shares                                             14,089,366         14,013,539        14,148,189         13,867,413

     Effect of dilutive securities:
         Stock options                                         238,272            713,631           329,521            770,086
         Warrants                                                   94                411               218                408
                                                            ------------------------------------------------------------------
     Denominator for diluted earnings per
     share                                                  14,327,732         14,727,581        14,477,928         14,637,907
     -------------------------------------------------------------------------------------------------------------------------

         Basic earnings per share                                 $.18               $.24              $.32               $.47
     -------------------------------------------------------------------------------------------------------------------------

         Diluted earnings per share                               $.18               $.23              $.31               $.44
     -------------------------------------------------------------------------------------------------------------------------
</TABLE>

7.   Operating Segments

     Summarized  in the table below is financial  information  for the Company's
     reportable  segments for the three-month  and six-month  periods ended June
     30, 2000 and 1999:

<TABLE>
<CAPTION>
     (dollars in thousands)                                 2000         1999         2000         1999
     ---------------------------------------------------------------------------------------------------
<S>                                                      <C>          <C>          <C>          <C>
     Revenues:
       Grafton(R)DBM Segment                             $ 12,190     $ 10,866     $ 22,294     $ 22,441
       Base Tissue Segment                                  7,288        7,715       14,599       13,518
       Other                                                1,141        1,139        2,372        2,449
     ---------------------------------------------------------------------------------------------------
       Consolidated                                      $ 20,619     $ 19,720     $ 39,265     $ 38,408
     ---------------------------------------------------------------------------------------------------
     Operating income (loss):
       Grafton(R)DBM Segment                             $  3,324     $  3,642     $  5,952     $  8,080
       Base Tissue Segment                                  1,563        2,651        2,962        4,085
       Other                                               (1,047)        (863)      (1,881)      (1,730)
     ---------------------------------------------------------------------------------------------------
       Consolidated                                      $  3,840     $  5,430     $  7,033     $ 10,435
     ---------------------------------------------------------------------------------------------------
</TABLE>


                                      -11-
<PAGE>

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

Information contained herein contains "forward-looking  statements" which can be
identified  by the  use  of  forward-looking  terminology  such  as  "believes",
"expects",  "may", "will", "should", or "anticipates" or the negative thereof or
variations thereon or comparable terminology,  or by discussions of strategy. No
assurance can be given that the future  results  covered by the  forward-looking
statements will be achieved. Some of the matters set forth in the "Risk Factors"
section of the Company's  Annual Report on Form 10-K for the year ended December
31, 1999, constitute  cautionary statements  identifying factors with respect to
such forward-looking statements, including certain risks and uncertainties, that
could cause actual results to vary materially from the future results  indicated
in such  forward-looking  statements.  Other  factors  could also  cause  actual
results  to  vary  materially   from  the  future  results   indicated  in  such
forward-looking statements.

FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED JUNE 30, 2000 AND 1999

Results of Operations

Net Income

Consolidated net income in the second quarter of 2000 decreased to $2,524,000 or
$.18  diluted net income per share as compared  to net income of  $3,344,000  or
$.23  diluted net income per share in the second  quarter of 1999.  Consolidated
net income in the six months ended June 30, 2000 decreased to $4,493,000 or $.31
diluted  net income per share as compared  to net income of  $6,502,000  or $.44
diluted net income per share in the six months ended June 30, 1999.

The following is a discussion of factors affecting results of operations for the
three-month and six-month periods ended June 30, 2000 and 1999.

Net Revenues

Consolidated net revenues increased 5% to $20,619,000 from $19,720,000 in second
quarter of 1999 and  increased 2% to  $39,265,000  from  $38,408,000  in the six
months ended June 30, 1999.  Domestic  revenues,  which consist  principally  of
revenues  from the  Grafton(R)  DBM and Base Tissue  Segments,  increased  3% to
$19,187,000  from  $18,667,000  in second  quarter of 1999 and  increased  2% to
$36,718,000  from  $36,138,000  in the six months ended June 30,  1999.  Foreign
revenues,  increased 36% to $1,432,000 from $1,053,000 in second quarter of 1999
and increased 12% to $2,547,000 from $2,270,000 in the six months ended June 30,
1999.  The  increase in foreign  revenues  resulted  primarily  from the initial
distribution of Grafton(R) DBM in Europe.

Grafton(R) DBM Segment revenues increased 12% to $12,190,000 from $10,866,000 in
the second quarter of 1999 and decreased 1% to $22,294,000  from  $22,441,000 in
the six months  ended June 30,  1999.  The  increase in the second  quarter is a
result of an


                                      -12-
<PAGE>

increase  in unit  volume  and the  distribution  of  Grafton(R)  DBM in Europe.
Grafton(R)  DBM was not  distributed  in Europe during the six months ended June
30,  1999.  Despite a 7% growth at the  hospital/end-user  level,  our  revenues
during the first six months  decreased  as a result of our  clients'  purchasing
less  Grafton(R)  DBM products in the first  quarter of 2000 than they needed to
meet  hospital/end-user  demand because they used $1,500,000 of excess inventory
purchased in December,  1999 ahead of a 4% price increase which became effective
January 1, 2000.  Additionally,  in the first  quarter  1999,  our  clients  had
purchased  approximately $675,000 of inventory in excess of what was required to
meet    hospital/end-user    demand    because   they    anticipated    stronger
hospital/end-user  sales in the  second  quarter  of 1999.  Our  Grafton(R)  DBM
products have faced  increasing  competition  as more  companies  have developed
products with characteristics similar to Grafton(R) DBM. Although we expect that
this  competition  will  continue  in the  future,  we  expect  demand  for  our
Grafton(R) DBM products to grow as we take steps to compete more effectively and
introduce the product line into additional markets in both the U.S. and Europe.

Base Tissue  Segment  revenues  decreased 6% to  $7,288,000  from  $7,715,000 in
second quarter of 1999 and increased 8% to $14,599,000  from  $13,518,000 in the
six months ended June 30, 1999. The decrease in the quarter results  principally
from a 16% decrease in the number of donors processed for our clients, partially
offset  by a 24%  increase  in  bio-implant  revenues  and a  275%  increase  in
OsteoPure(TM)  Femoral Head processing revenues.  The increase in the six months
resulted   primarily  from  increases  in  base  allograft,   bio-implant,   and
OsteoPure(TM)  Femoral Head processing  revenues and price  increases  effective
January 1, 2000.

During the second quarter and six months ended June 30, 2000, two of our clients
in the Grafton(R) DBM and Base Tissue Segment accounted for 50% and 39%, and 50%
and 40% of consolidated revenues.

Gross Profit

Gross profit as a percentage  of revenues was 67% in the second  quarter and six
months ended June 30, 2000, respectively, as compared to 69% in the same periods
of 1999.  The  decreases  in both  periods  result  from costs  associated  with
additional  allograft tissue  processing  capacity which was added in the second
half of 1999 to meet the expected  growth of our allograft  tissue business and,
in the second  quarter of 2000, the  underabsorption  of fixed costs in the Base
Tissue Segment as a result of the decline in donors processed for our clients.

Marketing, General and Administrative

Marketing,  general and  administrative  expenses increased 29% to $8,600,000 in
the second  quarter and 28% to $16,732,000 in the six months ended June 30, 2000
compared to the same periods last year. The increase was primarily  attributable
to: (i) increased  legal fees associated  with patent  infringement  lawsuits in
both  the  Grafton(R)  DBM and the  Base  Tissue  Segments,  and  (ii)  expanded
marketing and promotional  activities associated with the limited launch, in the
second quarter of 2000, of three new bio-implant products.

Research and Development

Research and  development  expenses  increased  14% to  $1,687,000 in the second
quarter and 4% to  $3,047,000  in the six months ended June 30, 2000 compared to
the same periods in 1999. The increase was primarily  attributable  to increased
spending in the Base Tissue Segment associated with the continued development of
several new  processing  technologies  and ongoing  development of new allograft
tissue products.


                                      -13-
<PAGE>

Operating Income

Consolidated  operating income decreased 29% to $3,840,000 in the second quarter
and 33% to  $7,033,000  in the six  months  ended  June  30,  2000  compared  to
$5,430,000  and  $10,435,000 in the same periods last year primarily as a result
of  decreased  operating  income  in both the  Grafton(R)  DBM and  Base  Tissue
Segments.

Grafton(R)  DBM Segment  operating  income,  decreased 9% to  $3,324,000  in the
second  quarter  and 26% to  $5,952,000  in the six months  ended June 30,  2000
compared  to  $3,642,000  and  $8,080,000  in the same  periods in 1999.  Second
quarter and six month  operating  income of 2000 includes  income from the DePuy
patent  litigation  settlement  of  $250,000  and  $500,000,  respectively.  The
decrease  results  primarily  from lower  gross  profit  margin  resulting  from
increased  capacity and increased costs  associated with a patent lawsuit.  Base
Tissue  Segment  operating  income  decreased  41% to  $1,563,000  in the second
quarter and 27% to  $2,962,000 in the six months ended June 30, 2000 compared to
$2,651,000 and  $4,085,000 in the same periods last year. The decrease  resulted
from legal expenses  associated with two patent lawsuits and increased marketing
and  promotional  spending  associated  with the  limited  launch  of three  new
bio-implants.

Income Tax Provision

The  effective  income tax rate  decreased  to  approximately  39% in the second
quarter and  increased  to 41% in the six months ended June 30, 2000 from 40% in
the same periods last year.  The net change in the effective  income tax rate in
2000 is caused by non-deductible  foreign losses partly offset by recognition of
tax benefits.

Liquidity and Capital Resources

At June 30, 2000, we had cash and short-term investments of $13,748,000 compared
to   $20,716,000   at  December  31,  1999.   We  invest  excess  cash  in  U.S.
Government-backed securities and investment grade commercial paper of major U.S.
corporations.  Working capital  decreased  $8,840,000 to $28,242,000 at June 30,
2000  compared to  $37,082,000  at December  31,  1999.  The decrease in working
capital  results  principally  from a  decrease  in cash,  accounts  receivable,
prepaid expenses and accounts payable and accrued liabilities.

Net cash  provided by operating  activities  increased to  $8,307,000 in the six
months  ended June 30,  2000,  compared to net cash used of $753,000 in the same
period of 1999.  The  increase  resulted  primarily  from  decreases in accounts
receivable, prepaid expenses and accounts payable and accrued liabilities.

Cash used in investing  activities  increased to  $12,968,000  in the six months
ended June 30, 2000 from  $12,337,000  in the same period of 1999.  The increase
results principally from; (i) an increase in capital expenditures to $14,790,000
from  $9,208,000  resulting  from our continued  investment  in  facilities  and
equipment  needed for current and future  business  requirements.  In the fourth
quarter of 1998,  we  commenced  construction  of a new  processing  facility in
Eatontown,  New Jersey. The estimated aggregate cost for the construction of the
building,   including   furniture,   fixtures  and  equipment  is  approximately
$34,000,000;  $21,500,000  of which we expect will be funded  through a building
mortgage loan and equipment line of credit. The remaining balance will be funded
through  available  cash  reserves  or  anticipated  cash flow from  operations.
Through June 30, 2000,  we have incurred  $21,712,000  in building and equipment
costs,  including  capitalized  interest of $352,000,  of which  $8,741,000  was
funded through bank financing.


                                      -14-
<PAGE>

Net cash used in financing  activities was $347,000 in the six months ended June
30, 2000,  compared to net cash  provided of  $10,056,000  in the same period of
1999,  principally  as a result of cash used to  repurchase  and retire  330,500
shares of common stock at a cost of  $3,121,000  and a decrease in cash proceeds
received from stock option  exercises  and a decrease in the related  income tax
benefits.

We have a credit facility with a U.S. bank, that includes a $5,000,000 revolving
line of credit, a $4,500,000 building mortgage loan, and a $17,000,000 equipment
line of credit. At June 30, 2000, $4,500,000 was outstanding under the revolving
line of credit  and  $4,241,000  was  outstanding  under the  equipment  line of
credit.  We also have a line of credit with a Dutch  bank,  which  provides  for
borrowings  of  up  to  5,000,000  Dutch  Guilders  ("dfl"),   or  approximately
$2,166,000 at the June 30, 2000 exchange rate. Analysis of our cash position and
anticipated  cash flow  indicated  that it most likely would not be necessary to
utilize a significant portion of this line of credit and,  therefore,  we agreed
with the bank to limit  borrowings,  if any,  to no more than dfl  3,000,000  or
approximately  $1,300,000  at the June 30,  2000  exchange  rate.  There were no
borrowings outstanding under this credit line as of June 30, 2000. Additionally,
we have a line of credit with a French bank,  which provides for borrowing of up
to FRF 1,250,000,  or approximately $182,000 at the June 30, 2000 exchange rate.
There were no borrowings outstanding under this credit line as of June 30, 2000.

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

Impact of Inflation and Foreign Currency Exchange Fluctuations

Results of operations for the periods  discussed  above have not been materially
affected by inflation or foreign currency fluctuations.

Litigation

Osteotech,  Inc. is  involved in various  legal  proceedings  involving  product
liability and patent infringement claims. For a discussion of these matters see,
Note 5 of "Notes to Condensed Consolidated Financial Statements", PART II., ITEM
1. LEGAL  PROCEEDINGS and the Company's  Annual Report on Form 10-K for the year
ended  December  31,  1999.  It is possible  that our results of  operations  or
liquidity  and capital  resources  could be  adversely  affected by the ultimate
outcome of the pending litigation or as a result of the costs of contesting such
lawsuits.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable


                                      -15-
<PAGE>

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     Update of Previously Reported Legal Proceedings

     In July,  2000, the Company filed a motion seeking summary  judgment in its
     favor on GenSci Labs' and GenSci Sciences'  reverse doctrine of equivalents
     defense on the bases that the GenSci  parties failed to assert that defense
     in a timely manner and that the defense is otherwise meritless. The Company
     also  filed a motion  seeking  judgment  that the  portion of the case that
     GenSci  dismissed with  prejudice be ruled as  exceptional  based on GenSci
     Labs having  asserted and maintained  baseless  allegations  that Osteotech
     infringed GenSci Labs' patents, thus warranting an award of attorneys' fees
     and costs to Osteotech.

     Also,  in July,  2000,  GenSci filed various  motions for summary  judgment
     seeking orders that GenSci does not infringe on Osteotech's  patents and/or
     that such patents are invalid.

     New Legal Proceedings

     In June,  2000, the Company was served with an action brought in the United
     States  District  Court for the  District  of Utah  against the Company and
     Musculoskeletal  Transplant  Foundation ("MTF"). The suit alleges causes of
     action for strict  liability,  breach of implied  warranty  and  negligence
     arising from allegedly  defective  allograft bone tissue  processed  and/or
     provided  by the  Company and MTF which was  allegedly  implanted  into the
     plaintiff,  Chris Condos,  during two spinal surgeries.  Plaintiffs,  which
     include  Mr.  Condos's  family  members,  demand  monetary  damages  in  an
     unspecified  amount.  On July 25, 2000, the Company answered the complaint,
     denying any and all liability.

     The Company maintains a general liability insurance policy and has notified
     the insurance  company of this action and the insurance  company has agreed
     to defend the action.

     In May,  2000,  Regner brought suit against the Company and fifteen or more
     other  defendants in the Superior  Court for the State of  California,  San
     Bernardino  County.  The suit seeks class action status and alleges a cause
     of action based on a violation of the California  Business and Professional
     Code,  as well as a number  of  common  law  causes  of  action,  including
     negligence,  deceit, and intentional and negligent  infliction of emotional
     distress. With respect to the Company, plaintiff claims that the Company is
     violating  California  law by engaging in the activity of buying or selling
     organs or tissue for valuable  consideration or profit. It appears that the
     plaintiff is seeking only injunctive  relief with respect to its California
     Business and Professional Code claim. To the extent any of the other causes
     of action exist against Osteotech, the plaintiffs are seeking damages in an
     unspecified amount in addition to class certification.

     In June,  2000,  Regner filed a motion for a preliminary  injunction  and a
     hearing was held on June 28, 2000. The Court denied the motion. The Company
     has filed a demurrer to the  complaint  requesting  that the  complaint  be
     dismissed.  That  motion  is  scheduled  to be heard  on  August  9,  2000.
     Otherwise, the Company denies that it is engaged in the activity complained
     of and  asserts  that it is  licensed  by the  State  of  California  to do
     precisely  what it is doing,  and that its  activities  are fully in accord
     with all state and federal laws. Therefore,


                                      -16-
<PAGE>

     the  Company  believes  this suit to be without  merit and will  vigorously
     defend against the claims.

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

     (a)  An annual meeting of stockholders was held on June 8, 2000.

     (b)  The  directors  elected at the  annual  meeting to serve a term of one
          year or until the next annual meeting of stockholders  were: Arthur A.
          Alfaro, 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 the  election of  Directors  of  Osteotech,  the
               persons named below received the following number of votes:

                             Director                  For          Withheld
                     -------------------------------------------------------
                     Arthur A. Alfaro              11,908,354       920,058
                     Richard W. Bauer              11,910,428       917,984
                     Kenneth P. Fallon, III        11,911,584       916,828
                     Michael J. Jeffries           11,910,099       918,313
                     Donald D. Johnston            11,898,441       929,971
                     John Phillip Kostuik, M.D.    11,912,726       915,686
                     Stephen J. Sogin, Ph.D.       11,910,526       917,886

          ii)  With  respect  to a proposal  to approve  the 2000 Stock Plan the
               stockholders  voted 5,532,840 shares in favor,  3,832,337 against
               and 36,979  abstained.  Broker  non-votes  were  3,426,256.  This
               proposal  received  the vote  required  by the  Delaware  General
               Corporation  Law ("DGCL") and the Company's  by-laws for approval
               (i.e.  affirmative  vote of a  majority  of the  shares of common
               stock  present  at  the  meeting  and  entitled  to  vote  on the
               proposal).  Broker  non-votes were not counted in determining the
               number of shares necessary for the approval of this proposal.

          iii) With  respect  to  a  proposal  to  ratify  the   appointment  of
               PricewaterhouseCoopers  LLP as Osteotech's  independent  auditors
               for the fiscal year ending  December 31, 2000,  the  stockholders
               voted  12,787,731  shares in favor,  22,062  against  and  18,619
               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 shares of
               common  stock  present at the meeting and entitled to vote on the
               proposal).

ITEM 5. OTHER INFORMATION

On May 30, 2000, we announced that Steven  Annunziato  joined the Company in the
new position of Vice  President of  Marketing.  Mr.  Annunziato  was formerly of
Codman,  a  Johnson &  Johnson  Company  where he had  worldwide  marketing  and
distribution sales management responsibilities.


                                      -17-
<PAGE>

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

          27.0           Financial Data Schedule               E-1

     (b)  Reports on Form 8-K

     On May 17, 2000, we filed with the  Commission a current report on Form 8-K
     to announce the  repurchase and retirement of up to 1 million shares of the
     Company's common stock through open market  purchases,  or block purchases,
     which  will be made  from time to time as market  conditions  allow.  As of
     April 30, 2000, there were 14,240,162 shares of common stock outstanding.

     On June 7, 2000, we filed with the  Commission a current report on Form 8-K
     to announce  that we had entered  into an  exclusive  five-year  processing
     agreement with Bone Bank  Allografts  ("BBA") of San Antonio,  Texas.  BBA,
     which is a tissue bank  accredited  by the American  Association  of Tissue
     Banks,  coordinates  the  procurement  and  distribution  of allograft bone
     tissue  nationally,  with a focus  in the  Southern  region  of the  United
     States. BBA was organized in 1991 by Joe and D'Lynn Mims.


                                      -18-
<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 11, 2000                             By: /s/Richard W. Bauer
                                                      --------------------------
                                                      Richard W. Bauer
                                                      Chief Executive Officer


Date: August 11, 2000                             By: /s/Michael J. Jeffries
                                                      --------------------------
                                                      Michael J. Jeffries
                                                      Executive Vice President
                                                      Chief Financial Officer


                                      -19-