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

                                   FORM 10-KSB

     (Mark One)

     [ X ] Annual report under Section 13 or 15(d) of the Securities Exchange
Act of 1934

     For the fiscal year ended December 31, 2003

     [    ] Transition report under Section 13 or 15(d) of the Securities
Exchange Act of 1934

     For the transition period from _________ to _________

     Commission File No. 0-30728


                                  PROTEO, INC.
                 (Name of Small Business Issuer in Its Charter)

          NEVADA                                      88-0292249
(State or Other Jurisdiction of                     (IRS Employer
Incorporation or Organization)                 Identification Number)

                         3206 WEST WIMBLEDON DRIVE
                            AUGUSTA, GA 30909
              (Address of Principal Executive Offices) (Zip Code)

                              (706) 737-6600
                       (Issuer's Telephone Number)
           SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
                                   (None)

           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                        Common Stock, par value $0.001
                            (Title of Class)

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

     Yes  [ X ]   No  [  ]

     Check  if  there is no disclosure of delinquent filers pursuant to Item 405
of  Regulation  S-B  is  not  contained  in this form, and no disclosure will be
contained,  to  the  best  of  registrant's  knowledge,  in  definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or  any  amendment  to  this  Form  10-KSB.  [  X  ]

     State  issuer's  revenues  for  its  most  recent  fiscal  year.     $  -0-

     State  the  aggregate  market  value of voting and non-voting common equity
held  by  non-affiliates  computed by reference to the price at which the common
equity  was  sold, or the average bid and asked prices of such common equity, as
of  a  specified  date within the past 60 days.  (See definition of affiliate in
rule  12b-2  of  the  Exchange  Act.)   As  of December 31, 2003, the Issuer had
8,557,101  shares  of common  stock held by non-affiliates valued at $21,442,753
based on the closing market price for the common stock on April 12, 2004.

     State  the  number of shares outstanding of each of the issuer's classes of
common equity,  as  of  the  latest  practicable  date.  21,667,101 at December,
31, 2003.

                       DOCUMENTS INCORPORATED BY REFERENCE

     If  the following documents are incorporated by reference, briefly describe
them  and  identify  the  part of the form 10-KSB (e.g., Part I, Part II, etc. )
into  which  the  document  is  incorporated:  (1) any annual report to security
holders;  (2)  any  proxy or information statement; and (3) any prospectus filed
pursuant to rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act").
The  listed  documents  should  be clearly described for identification purposes
(e.g.,  annual  report  to  security  holders for fiscal year ended December 24,
1990).

None.

     Transitional  Small  Business  Disclosure  Format  (check  one):

Yes No  [ X ]

<PAGE>

                                TABLE OF CONTENTS

                                     PART I
Item  1          Description  of  Business.

Item  2          Description  of  Property

Item  3          Legal  Proceedings

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

                                     PART  II

Item 5          Market for Common Equity, Related Stockholder Matters, and Small
Business  Issuers  Purchases  of  Equity  Securities.

Item  6          Management's  Discussion  and  Analysis  or Plan or Operations.

Item  7          Financial  Statements.

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

Item  8a         Controls  and  Procedures


                                    PART  III

Item  9          Directors  and  Executive  Officers  of  the  Registrant.

Item  10        Executive  Compensation.

Item  11        Security  Ownership  of Certain Beneficial Owners and Management
and  Related  Stockholder  Matters.

Item  12        Certain  Relationships  and  Related  Transactions.

Item  13        Exhibits  and  Reports  on  Form  8-K.

Item  14.       Principal  Accountant  Fees  and  Services

<PAGE>


                                     PART  I

This Annual Report includes forward-looking statements within the meaning of the
Securities Exchange Act of 1934 (the "Exchange Act"). These statements are based
on  management's beliefs and assumptions, and on information currently available
to  management.  Forward-looking  statements  include the information concerning
possible  or assumed future results of operations of the Company set forth under
the  heading  "Financial  Information-Management's  Discussion  and  Analysis of
Financial  Condition and Results of Operations." Forward-looking statements also
include  statements  in  which words such as "expect,"  "anticipate,"  "intend,"
"plan,"  "believe,"  "estimate,"  "consider"  or  similar  expressions are used.

Forward-looking  statements  are  not  guarantees  of  future  performance. They
involve  risks, uncertainties and assumptions.  The Company's future results and
shareholder  values  may  differ  materially  from  those  expressed  in  these
forward-looking  statements.  Readers are cautioned not to put undue reliance on
any  forward-looking  statements.

ITEM  1  -  DESCRIPTION  OF  BUSINESS

COMPANY  OVERVIEW

Proteo,  Inc.  (the  "Company")  is  a Nevada corporation formed on December 18,
1992.  The  Company  has  two  wholly owned subsidiaries, Proteo Marketing, Inc.
("PMI")  and  Proteo  Biotech  AG  ("PBAG"),  a German Corporation (collectively
hereinafter  referred  to  as the "Company"). The Company currently  trades  its
common  stock  on  the  Over-The-Counter  Bulletin  Board  ("OTCBB")  under  the
symbol  "PTEO".

PMI  was  incorporated  in the State of Nevada and began operations on  November
22,  2000.  In  December  2000,  PMI  entered  into  a reorganization  and stock
exchange  agreement  with  PBAG,  and  as  a result, PBAG became a wholly  owned
subsidiary  of  PMI.

The  Company  entered  into  a  Shell  Acquisition  Agreement  (the "Acquisition
Agreement")  with  PMI.  In  accordance  with  the  Acquisition  Agreement,  PMI
originally  acquired  176,660,280  shares  (1,313,922  post  split, as described
below)  of  the  Company's  common  stock  representing  90%  of  the issued and
outstanding  common  stock  of  the  Company. Upon completion of the Acquisition
Agreement,  the  Company  completed  a  one  for one-hundred-fifty reverse stock
split.  In  conjunction  with  the Acquisition Agreement, PMI paid approximately
$500,000  to  SiteStar  Corporation,  the  former  parent  of  the  Company.

<PAGE>

Effective  April 25, 2002, the shareholders of PMI exchanged their shares of PMI
for  an  aggregate  of  20,286,512  shares  of  the  Company to effect a reverse
acquisition  (the "Merger") between the PMI and Proteo, Inc. As all the existing
officers  and  directors  of  the  Company  resigned  and management of PMI were
elected  and  appointed  to  such  positions,  thereby  effectuating a change of
control.  By  virtue  of  the  Merger,  the  stockholders  of  the  PMI acquired
20,286,512 shares of Proteo, Inc. The total issued and outstanding shares of the
combined entities subsequent to the Merger were 21,600,434 shares. The number of
shares  issued  to  the PMI shareholders reflected additional investments in the
combined  entities.

DESCRIPTION  OF  BUSINESS

     The Company and the Subsidiary intend to develop, manufacture, promote, and
market  pharmaceuticals  and other biotech products.  However, we do not believe
that  any  of  our planned products will produce sufficient revenues in the next
six  years  to  support  us financially.  We currently expect to only sell small
quantities  of  these  products  in  the first few business years.  We intend to
identify  and  develop  other  potential  products.  To  achieve  profitable
operations,  the  Company,  independently  or in collaboration with others, must
successfully  identify,  develop,  manufacture, and market proprietary products.
The  products  and  technologies  we  intend to develop will require significant
commitments  of  personnel  and  financial  resources.

     Our  business  strategy  is  focused  on the development of pharmaceuticals
based on human protein.  Specifically, we intend to initially focus our research
on  the development of drugs based on the human protein Elafin.  We believe that
Elafin  may  be  useful in the treatment of cardiac infarction, serious injuries
caused  by accidents, post-surgery damage to tissue, and complications resulting
from  organ  transplantation.

     Elafin  is  a  human protein that naturally occurs in human skin, lungs and
the  mammary gland.  Elafin is an elastase inhibitor which inhibits the activity
of  two  enzymes  called  elastase  and proteinase 3.  Both of these enzymes are
known  to  be  involved  in  the  breakdown  of  tissue  in various inflammatory
diseases.  Elafin is believed to protect cells containing it against destruction
by  these  enzymes.  We  intend  to utilize Elafin as a drug in the treatment of
various  diseases  and  injuries.

<PAGE>

     We  believe that Elafin may be useful as a drug in the treatment of cardiac
infarction.  Cardiac infarction appears as a result of deficiencies in the blood
supply of heart muscles caused by damage to the supplying coronary vessels.   As
an  immediate  result,  the  heart  weakens and the heart muscles are destroyed.
Damage  to  tissue caused by cardiac infarction will slowly form scars.  Current
methods  of  treatment  are  aimed  at  restoring the blood supply to the heart,
either  by  replacement with new blood vessels (bypass surgery) or by removal of
blood-clots in the coronary vessels (lyse therapy).  Utilizing this methods, the
mortality  of  patients  suffering  from  cardiac  infarction  is  reduced  from
approximately  12%  to  8%  during clinical treatment.  The remaining deaths are
mainly  a  result  of  inflammation  of  the  heart  muscle  after  the  cardiac
infarction,  which causes the destruction of the affected muscle tissue.  Animal
experiments  have  shown  that  Elafin  may be effective in protecting the heart
muscles  against  destruction  after  blood  supply  was  interrupted.

     Elafin  may  also  be  useful  in  the  treatment of the seriously injured.
Similar to damage of heart muscles as described above, much of the damage caused
by  serious  injuries  appear  after  the  injury  causing  event (e.g.: traffic
accidents).  In emergency treatment following accidents, the blood supply, nerve
fibers  and  the stability of bones and joints are given priority.  Due to blood
supply  deficiencies,  inflammation will occur in injured muscles and in injured
vessels.  Because  muscles  may be destroyed by the inflammation, limbs may have
to  be  amputated  despite  successful  surgeries.  Elafin  may  protect muscles
against  damage caused by inflammation.  In animal experiments, rat legs treated
with Elafin remained almost unaffected, although the blood supply of the leg was
cut  off  for  six  hours.

     Elafin  may  also  be  used  in  the  course  of heart transplantation.  To
transplant  hearts  successfully,  simultaneous treatment with anti-inflammatory
drugs  is  necessary.  Inflammations  of  transplanted  organs are mainly caused
either  by  rejection  of  the  organ  by  the  immune system or by blood supply
deficiencies  during the transplantation.  Although various drugs are used today
to  avoid  the  rejection of the organ, such rejections still occur quite often.
Therefore,  additional anti-inflammatory drugs are needed, which may potentially
prevent  damages  caused  by blood supply deficiencies.  Animal experiments have
shown  that  treatment  solely  with  Elafin may avoid rejection of transplanted
hearts.

<PAGE>

     Other  preliminary data indicate that Elafin may be useful in a broad range
of other applications whether pharmaceutical or not.  Therefore, we will attempt
to encourage other scientists, research centers as well as other companies to do
research  and development on Elafin for other applications than described above.
For  example,  Elafin  may  also be effective in the treatment of dermatological
diseases  and  defects,  or  as  ingredient  in  cosmetics.

     Proteo  owns  licenses to exclusively develop products based on patents and
filings  relating  to  Elafin, including nine patents already issued and another
four  patent  applications  already in the process of patent office reviews.  Of
the  issued  patents,  two  patents  were  issued  in  the  U.S.

     Further,  Proteo intends to engage in the research and development of other
drugs  and biotechnical products based on human protein.  We may also be able to
implement  unique  technologies  and biotechnological production procedures that
may  enable  the  Company  to  offer  related  services  to  other  companies.

     In  2001  we  received  a  grant  in  the  amount  of  790,000  Euro
(approximately  $992,000  at  the  December  31,  2003 exchange rate)  from  the
government  of  the  German  state  Schleswig-Holstein  for  the  research  and
pre-clinical  development  of the our pharmaceuticals based on the human protein
Elafin.  Such  grant, as amended, requires that the Company prove its economical
ability  to  cover  at  least 52% of the project costs on its own as well as the
achievement  of  milestones.

     After  developing  a  production  procedure  for  Elafin,  Proteo  is  now
concentrating  on  the  preparation and initiation of clinical trials to achieve
governmental  approval  for  the  use  of  Elafin  as  a  drug  in  Europe.

     Our goals for German (CE Mark) approval on our initial product designed for
patients  suffering  from  serious  injuries is targeted for 2009 and U.S. (FDA)
approval  one  or  two years later.  It  should  be  noted that this specialized
application,  if
successfully developed, would have a market potential substantially smaller than
the  overall  market  of Elafin for more widespread applications such as for the
treatment  of  cardiac  infarction.

THE  SUBSIDIARY

In December 2000, PMI entered into a reorganization and stock exchange agreement
with  the  shareholders  of  PBAG  and  acquired  all  of  the  issued  and
outstanding  capital  stock  of  PBAG,  a  German  corporation,  with  its
principal  place  of  business located in Kiel, Germany. As PMI was subsequently
acquired in a reverse merger  by  the  Company,  PBAG  is  the  only significant
subsidiary  of  Proteo.

<PAGE>

PBAG  was formed in Kiel, Germany, on April 6, 2000. PBAG  is in the business of
developing a pharmaceutical based on the human protein called  Elafin and
possible by-products thereof as well as related technologies.  The President and
CEO of PBAG is currently Ulrich Glaeser.  The directors of PBAG are Prof. Oliver
Wiedow, MD., Birge Bargmann and Barbara Kahlke, MD.

To  date,  the  Company  has  not had any profitable operations. Furthermore, we
do  not  anticipate  that we will have profitable operations in the near future.

COLLABORATION  WITH  OTHER  COMPANIES

     In  an  effort  to  provide  the  Company  with  some revenue which will be
utilized  in  the  implementation  of  our  business  plan, our Subsidiary plans
periodically to provide research and development and manufacturing services as a
sub-contractor  and/or consultant to unaffiliated companies which do not compete
with  the Company.  We plan to explore such opportunities if deemed advantageous
to  the  Company.

COMPETITION

     The market for our planned products and technologies is highly competitive,
and  we  expect competition to increase.  We will compete with many other health
care research product suppliers, most of which will be larger than Proteo.  Some
of  our  anticipated  competitors  offer  a  broad range of equipment, supplies,
products  and  technology,  including  many  of  the  products  and technologies
contemplated  to be offered by us.  To the extent that customers exhibit loyalty
to  the  supplier  that  first  supplies  them  with  a  particular  product  or
technology,  our  competitors  may  have  an  advantage  over us with respect to
such products and technologies.  Additionally, many of our competitors have, and
will  continue  to  have, greater research and development, marketing, financial
and  other  resources  than  us  and,  therefore, represent and will continue to
represent  significant  competition  in our anticipated markets.  As a result of
their size and the breadth of their product offering, certain of these companies
have  been  and  will  be able to establish managed accounts by which, through a
combination  of  direct computer links and volume discounts, they seek to gain a
disproportionate  share of orders for health care products and technologies from
prospective  customers.  Such  managed  accounts present significant competitive
barriers  for  us.  It  is  anticipated  that  we  will  benefit  from  their
participation  in  selected  markets,  which,  as  they  expand, may attract the
attention  of  our  competitors.  The  business  of  research and development of
pharmaceuticals  for  the  treatment  of  cardiac  infarction  is  intensely
competitive.  Major  companies with immense financial and personal resources are
also  engaged  in  this  field.

<PAGE>

     Currently,  we  are not aware of any substance available in the market with
similar  effectiveness to Elafin.  Elastase inhibitors such as Elafin, which may
be  applied  to  humans,  have  been  under  research  and  development  in  the
pharmaceutical  industry  for  more  than ten years.  Currently, there have been
more  than  200  related patents granted.  Most of these substances are produced
synthetically,  and  are not applicable in the treatment of cardiac infarctions.
Three  other  elastase  inhibitors,  secretory  leukoprotease  inhibitor (SLPI),
alpha-1-antitrypsin  and  recombinant  monocyte/neutrophil  elastase  inhibitor
(rM/NEI),  are  similar  to  Elafin in that they are of human descent and may be
applied  like  Elafin  principally.  Three  other  substances,
ZD8321,  ZD0892  and ONO-5046 are artificial elastase inhibitors, which may have
comparable  effectiveness  to  that  of  Elafin.

Secretory  Leukoprotease  Inhibitor  (SLPI)

     Amgen,  Inc.  is  the  owner  of the patent for SLPI.  Amgen purchased this
patent  by  acquiring  Synergen,  Inc.  SLPI  is  quite  similar  to  Elafin.
Nevertheless,  SLPI  has  some  disadvantages in its intended application in the
treatment  of  cardiac infarctions and in the treatment of serious injuries.  It
is  only  effective  against  one  (leukocyte-elastase)  of  the  two
(leukocyte-elastase  and proteinase 3) major enzymes which destroy tissue, while
Elafin  has  shown  effectiveness against both. Therefore, Elafin is probably of
higher  effectiveness.  Furthermore, SLPI is not as stable as Elafin, which is a
disadvantage  in  its  distribution as a drug.  SLPI was discovered much earlier
than  Elafin,  therefore,  the  remaining  term of the covering patent should be
shorter  than that related to Elafin.  Amgen does not mention the development of
SLPI  as  a  drug  in  its  annual  report  of  1998.

Alpha-1-antitrypsin

Human  blood contains relatively large amounts of alpha-1-antitrypsin naturally.
Research  into  the  use  of  alpha-1-antitrypsin  for  the treatment of cardiac
infarctions,  shock  and of other serious inflammations has been ongoing for the
last  twenty  years.  Compared  to  Elafin,  however, there are some substantial
problems related to alpha-1-antitrypsin. For example, alpha-1-antitrypsin is not
as  stable  as  Elafin,  and  therefore, from the scientific point of view it is
probably  not  as effective as Elafin. Additionally, alpha-1-antitrypsin is very
difficult  to  produce.  The  existing  biotechnological  procedure  to  produce

<PAGE>

alpha-1-antitrypsin  is  to  use  genetically  manipulated  sheep, which produce
alpha-1-Antitrypsin  in  their  milk.  Existing  flocks  of sheep do not produce
sufficient  amounts  of  alpha-1-antitrypsin. As a result, experiments involving
cloning of sheep (such as "Dolly") have been performed to produce a better flock
of  sheep  compatible  with  the  production  of  alpha-1-antitrypsin.
Alpha-1-antitrypsin  has  received  approval  for  the  use as a drug in genetic
deficiency  of  alpha-1-antitrypsin  and is currently produced from pooled human
sera.

Recombinant  monocyte/neutrophil  elastase  inhibitor  (rM/NEI)

     This  compound  of human descent is currently under development for the use
in cystic fibrosis and to be applied by inhalation devices. IVAX Corporation has
entered into a license option agreement with the Center for Blood Research, Inc.
(CBR),  an  affiliate  of the Harvard Medical School, which holds the rights for
this  compound.

ZD8321  and  ZD0892

     Both  ZD8321  and  ZD0892  have  been  developed  by  AstraZeneca  with the
intention  of  treating  lung  diseases.  However,  AstraZeneca  has  suspended
both  inhibitors  from  their  research  and  development  pipeline.

ONO-5046  (Sivelestat)

     Ono  Pharmaceutical  Co.  Ltd.,  Japan  has  developed  the  synthetic
elastase  inhibitor  ONO-5046  (Sivelestat). ONO has got the approval in 2002 to
use  Sivelestat as a drug for the indication "Amelioration of acute lung disease
accompanying  generalised  inflammatory  syndrome  in  Japan.

GOVERNMENT  REGULATION

The  Company  is,  and  will  continue  to  be,  subject  to
governmental  regulation  under  the  Occupational  Safety  and  Health Act, the
Environmental  Protection  Act,  the  Toxic  Substances  Control  Act, and other
similar  laws  of  general application, as to all of which we believe we are  in
material  compliance.  Any  future  of,  and  the cost of compliance with, these
laws  and  regulations  could  have  a  material adverse effect on the business,
financial  condition,  and  results  of  operation  of  the  Company.

<PAGE>

Because  of  the  nature  of  our  operations, the use of hazardous  substances,
and  our ongoing research and development and manufacturing  activities,  we are
subject  to  stringent federal,  state  and  local  laws, rules, regulations and
policies  governing  the  use, generation, manufacturing, storage, air emission,
effluent  discharge,  handling  and  disposal  of  certain materials and wastes.
Although  we  believe  that  we  are  in material compliance with all applicable
governmental  and environmental laws, rules, regulations and policies, there can
be  no  assurance  that  the  business,  financial  conditions,  and  results of
operations  of  the  Company  will  not  be  materially  adversely  affected  by
current  or  future  environmental  laws,  rules,  regulations and policies,  or
by  liability occurring because of any past or future releases or discharges  of
materials  that  could  be  hazardous.

     Additionally,  the  clinical  testing, manufacture, promotion and sale of a
significant  majority  of  the  products  and  technologies  of  the Company, if
those  products  and  technologies  are  to  be  offered  and  sold  in  the
United  States,  are  subject  to  extensive regulation by numerous governmental
authorities  in  the United States, principally the FDA, and corresponding state
regulatory agencies. Additionally, to the extent those products and technologies
are to be offered and sold in markets other than the United States, the clinical
testing, manufacture, promotion and sale of those products and technologies will
be  subject  to similar regulation by corresponding foreign regulatory agencies.
In general, the regulatory framework for biological health care products is more
rigorous  than  for  non-biological  health care products. Generally, biological
health care products must be shown to be safe, pure, potent and effective. There
are numerous state and federal statutes and regulations that govern or influence
the  testing,  manufacture,  safety,  effectiveness,  labeling,  storage, record
keeping,  approval, advertising, distribution and promotion of biological health
care  products. Non-compliance with applicable requirements can result in, among
other  things,  fines,  injunctions,  seizures  of  products,  total  or partial
suspension  of  product marketing, failure of the government to grant pre-market
approval,  withdrawal  of  marketing  approvals,  product  recall  and  criminal
prosecution.

PATENTS,  LICENSES  &  ROYALTIES

     The  Company  owns  licenses  to  exclusively  develop  products  based  on
patents  and  filings including nine (9) patents already issued and another four
(4) patent applications already in the process of patent office reviews.  Of the
issued  patents  are  two  (2)  patents  which  have  been  issued  in  the
United States of America.  The Company does not have title to any patents; title
to  the  patents  rests  with  Dr.  Wiedow,  a  director  of  the  Company.

<PAGE>

Dr.  Wiedow  will  receive  three  percent  (3%)  of  the
gross  revenues  of  the  Company  from  products  based  on  patents  of
which  he  was  the principal inventor. Further, Dr. Wiedow will receive license
fees  in  the  amount of 110,000 Euros per year and a refund for all expenses to
maintain  the  patents (patent fees, lawyers fees, etc.) Such license fees shall
be  reduced  by  any  other royalties paid to Dr. Wiedow. As of the date of this
annual  report,  no  fees  have  been  paid  to Dr. Wiedow although $414,000 has
been  accrued.

     AstraZeneca  Inc. (formerly Zeneca Inc., formerly ICI Pharmaceuticals Inc.)
had  held  the  patents  for  elafin  for  several  years  and has significantly
contributed  to  the current knowledge. Therefore, AstraZeneca Inc. will receive
two  percent  (2%) of  the  gross revenues of the Company from products based on
patents in which Dr. Wiedow was the principal inventor.

Proteo  holds  an  exclusive  license  for  the  following  patents:

USA          US     5464822
USA          US     6245739
EU           EP     0402068
Japan        JP     2989853
Australia    AU     636148
Canada       CA     2018592
Finland      FI     902880
Ireland      IE     070520
Israel       IL     094602
New Zealand  NZ     233974
Norway       NO     177716
Portugal     PT     094326
South Africa ZA     9004461

EMPLOYEES

     Currently,  PMI  has  one  full  time  employee,  and  PBAG  has
six  employees.

<PAGE>

ITEM  2  -  DESCRIPTION  OF  PROPERTY

In  October  2001,  the  Company  entered  into  several  leases  for office and
laboratory  facilities  in  Germany beginning January 2002 and expiring at dates
through  December 2011. Certain leases have a rental adjustment in 2007 based on
the  consumer  price  index.

ITEM  3  -  LEGAL  PROCEEDINGS

The  Company  may  from  time  to  time be involved in various claims, lawsuits,
disputes with third parties, actions involving allegations of discrimination, or
breach  of  contract  actions  incidental to the operation of its business.  The
Company is not currently involved in any such litigation which it believes could
have  a  materially  adverse  effect  on  its  financial condition or results of
operations.


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

None

<PAGE>
                                     PART  II

ITEM  5  -  MARKET  FOR  COMMON  EQUITY,  RELATED  STOCKHOLDER  MATTERS,  AND
SMAL  BUSINESSISSUERS  PURCHASES  OF  EQUITY  SECURITIES

The  following  table  sets  forth  the closing prices for shares of the Company
Common  Stock for the periods noted, as reported by the National Daily Quotation
Service,  the Over-the-Counter Bulletin Board maintained by Nasdaq, and the Pink
Sheets.  Quotations  reflect  inter-dealer  prices,  without  retail  mark-up,
mark-down or commission and may not represent actual transactions. The Company's
Common Stock was originally listed on the NASDAQ Over-the-Counter Bulletin Board
on  April  2, 1998 under the trading symbol AFLK. On May 21, 1999, the Company's
symbol  was  changed  to  PAHI.  On  October  12, 2001, the Company's symbol was
changed  to TVGE. In conjunction with the Company's name change to Proteo, Inc.,
the  Company's  symbol  was  changed  to  PTEO  on  January  28,  2002.

                         COMMON  STOCK  PRICES
     YEAR     PERIOD                      HIGH         LOW
                                         -------      -------
     2001      First  Quarter              N/A          N/A
               Second  Quarter             N/A          N/A
               Third  Quarter              N/A          N/A
               Fourth  Quarter            34.50        3.00

<PAGE>

     2002      First  Quarter             10.501        0.15
               Second  Quarter            10.25         0.14
               Third  Quarter             15.00         2.95
               Fourth  Quarter            15.00         1.50

     2003      First  Quarter              1.50         0.85
               Second  Quarter             5.00         1.05
               Third  Quarter              6.00         1.01
               Fourth  Quarter             2.50         0.55

__________________
N/A  -  Not  available.

NUMBER  OF  SHAREHOLDERS

The number of beneficial holders of record of the Common Stock of the company as
of  the close of business on December 31, 2003 was 1,825.  Many of the shares of
the  Company's  Common  Stock  are  held  in  "street name" and consequently may
reflect  numerous  additional  beneficial  owners.

DIVIDEND  POLICY

To  date,  the  Company  has declared no cash dividends on its Common Stock, and
does  not expect to pay cash dividends in the near term.  The Company intends to
retain  future earnings, if any, to provide funds for operation of its business.

PENNY  STOCK

Until  the  Company's  shares  qualify  for  inclusion in the Nasdaq system, the
public  trading,  if  any,  of  the  Company's  common  stock  will  be  on  the
OTCBB.  As  a  result,  an  investor  may  find  it  more  difficult  to dispose
of,  or  to  obtain  accurate  quotations  as  to the price of, the common stock
offered.  The  Company's  common stock is subject to provisions of Section 15(g)
and Rule 15g-9 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"),  commonly referred to as the "penny stock rule." Section 15(g) sets forth
certain  requirements  for  transactions  in  penny  stocks,  and  Rule 15g-9(d)
incorporates the definition of "penny stock" that is found in Rule 3a51-1 of the
Exchange  Act. The SEC generally defines "penny stock" to be any equity security
that  has  a  market  price  less  than  $5.00  per  share,  subject  to certain
exceptions. If the Company's common stock is deemed to be a penny stock, trading
in  the  shares  will  be  subject  to additional sales practice requirements on
broker-dealers who sell penny stocks to persons other than established customers
and  accredited  investors.  "Accredited  investors"  are persons with assets in
excess  of  $1,000,000  or annual income exceeding $200,000 or $300,000 together

<PAGE>

with  their spouse. For transactions covered by these rules, broker-dealers must
make  a  special suitability determination for the purchase of such security and
must  have  the  purchaser's  written  consent  to  the transaction prior to the
purchase.  Additionally,  for  any  transaction  involving a penny stock, unless
exempt,  the  rules  require  the delivery, prior to the first transaction, of a
risk  disclosure  document,  prepared  by  the  SEC, relating to the penny stock
market.  A  broker-dealer also must disclose the commissions payable to both the
broker-dealer  and the registered representative, and current quotations for the
securities.  Finally,  monthly  statements  must be sent disclosing recent price
information  for  the  penny  stocks  held  in an account and information on the
limited  market  in  penny  stocks.  Consequently,  these rules may restrict the
ability  of  a  broker-dealer to trade and/or maintain a market in the Company's
common  stock  and  may affect the ability of the Company's shareholders to sell
their  shares.

RECENT  SALES  OF  UNREGISTERED  SECURITIES

The  Company  has  entered  into a common stock purchase agreement to sell up to
1,000,000 shares of the Company's restricted common stock.  Under the agreement,
the Company will sell its  common stock at a price per share equal to 40% of the
average ask price for the 20  trading days previous to the date of subscription,
as quoted on a public market.  However, the price per share will be no less than
$0.40.  The agreement shall expire upon the earlier of the purchase of 1,000,000
or December 31, 2004.   The  Company  issued 66,667 shares at $0.60 per share or
$40,000 in cash during the year ended December 31, 2003.

EQUITY  COMPENSATION  PLAN  INFORMATION

The  Company  has  no  equity  compensation  plans.

ITEM  6.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR  PLAN  OF  OPERATIONS

CAUTIONARY  STATEMENTS:

This  Annual  Report  on Form 10-KSB contains certain forward-looking statements
within  the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of  the  Securities  Exchange  Act  of  1934.  The  Company  intends  that  such
forward-looking  statements  be  subject  to  the  safe  harbours  created  by
such

<PAGE>

statutes.  The  forward-looking  statements included herein are based on current
expectations  that  involve a number of risks and uncertainties. Accordingly, to
the  extent  that  this  Annual  Report  contains  forward-looking  statements
regarding  the financial condition, operating results, business prospects or any
other  aspect  of  the  Company,  please  be  advised  that the Company's actual
financial  condition,  operating  results  and  business  performance may differ
materially  from  that  projected or estimated by the Company in forward-looking
statements. The differences may be caused by a variety of factors, including but
not  limited  to  adverse  economic  conditions,  intense competition, including
intensification  of price competition and entry of new competitors and products,
adverse  federal,  state  and  local  government regulation, inadequate capital,
unexpected  costs  and  operating  deficits,  and  increases  in  general  and
administrative  costs,  and  other specific risks that may be alluded to in this
Annual  Report  or  in  other  reports  issued  by the Company. In addition, the
business  and  operations  of  the Company are subject to substantial risks that
increase  the  uncertainty  inherent  in  the  forward-looking  statements.  The
inclusion  of  forward  looking  statements  in this Annual Report should not be
regarded  as  a  representation  by  the  Company  or  any other person that the
objectives  or  plans  of  the  Company  will  be  achieved.

The  Company  does  not  currently  generate  any  significant  revenue from its
operations  and  does  not  expect  to  report any significant revenue until the
successful  development  and marketing of  its  planned pharmaceutical and other
biotech  products.  Additionally,  after  the  launch  of the Company's service,
there  can be no assurance that the Company will generate positive cash flow and
there can be no assurances as to the level of  revenues,  if  any,  the  Company
may  actually  achieve  from  its  planned  operations.


Plan  of  Operations

The  Company intends to specialize in the research, development and marketing of
drugs  for inflammatory diseases with Elafin as its first project. The Company's
management  deems  Elafin  to  be  one of the most prospective substances in the
treatment  of  serious  tissue and muscle damage. Independently conducted animal
experiments  have  indicated  that  Elafin may have benefits in the treatment of
tissue  and muscle damage caused by insufficient oxygen supply and therefore may
be  useful in the treatment of heart attacks, serious injuries and in the course
of  organ  transplants.  Other  applications  have  yet  to  be  determined.

The  Company  intends  to implement Elafin as a drug in the treatment of serious
tissue  and  muscle damage, e.g. due to traffic accidents and intends to achieve
governmental  approval  in  Europe first.  Currently, management assumes that it
will take at least five years to achieve first governmental approval for the use
of  Elafin  as  a drug in the treatment of serious tissue and muscle damage.  In
order  to  conduct  clinical  trials,  the  Company  must  first
complete  the  research  and  development  of an efficient production process in
accordance  with  GMP  (Good  Manufacturing  Practices)  standards.

<PAGE>

The  Company's  success  will  depend  on  its  ability  to  implement efficient
production  process  in  accordance with GMP standards, to examine toxicology in
animal experiments, and to prove that Elafin is well tolerated by humans and its
efficiency  in  the  indicated  treatment.  There  can  be no assurance that the
Company  will  be  able  to develop feasible production procedures in accordance
with  GMP  standards,  or that Elafin will receive any governmental approval for
the  use  as  drug  in  any  of  the  intended  applications.

In  collaboration  with  a  non-affiliated  third party company, the Company has
identified  the yeast to be utilized in the production of Elafin and has ordered
the  third  party  to  develop  efficient  clones  of such yeasts.  Further, the
Company  has  optimized  the  yeast  expression  systems  to  increase
efficient  production  of  such  yeasts.  The  Company's  management  intends to
finish  animal  experiments  on  the  toxicology of Elafin as  needed  to  enter
governmental  approval  procedures  in  the  first  quarter  of  2004.

LIQUIDITY  AND  CAPITAL  RESOURCES

Since Inception, the Company has raised a total of approximately $3,666,000 from
the  sale  of 17,853,179 shares of common stock, of which, 5,085,487 shares have
been  sold at $0.40 per share under a stock subscription agreement in the amount
of  approximately $2,035,000 . As of December 31, 2003, the Company has received
approximately  $800,000  related  to  the  stock  subscription  agreement.

Additionally,  PBAG  received  a  grant  from  the  German  State
Schleswig-Holstein  in  the amount of approximately  790,000 Euros.  Such grant,
as amended, covers the period from February 1, 2001 to March 31, 2004 and covers
47.95%  of  costs  and  expenses  related to the research and development of the
Company's  Elafin  project.  The grant depends on the Company's ability to cover
52.05%  of  such  costs  and  expenses,  and  from  the  achievement  of certain
milestones.  During the twelve month period ended December 31, 2003, the Company
has received approximately 289,000 Euros ($328,000) of the grant, which has been
netted against the related research and development expenses.  PBAG is currently
in  the  process  of  applying to the German state of Schleswig-Holstein and the
European Union for additional grants to further develop its product (see further
discussion below).  There can be no assurance, however, that such grants will be
approved  and  funds  will  be  available  for  future  research and development
activities.

The  Company  has  cash approximating  $490,000 as of December 31, 2003. This is
consistent  with  the  December 31, 2002 cash balance of approximately $449,000.

<PAGE>

The  Management  of  the Company believes that the Company will not generate any
significant  revenues  in  the  next few years, nor will it have sufficient cash
to
fund  operations.  As a result, the Company's success will largely depend on its
ability to secure additional funding through the sale of its Common Stock and/or
the  sale of other debt securities. There can be no assurance, however, that the
Company  will be able to consummate debt or equity financing in a timely manner,
or  on  a  basis  favourable  to  the  Company,  at  all.

CAPITAL  EXPENDITURES

None  significant.

GOING  CONCERN

The  Company's  independent  certified  public  accountants have stated in their
Auditor's  Report  included  in  this  Form  10-KSB  that  the  Company  will
require  a  significant  amount  of  additional capital to advance the Company's
products  to  the  point  where they become commercially viable and has incurred
significant  losses  since  inception.  These  conditions, among  others,  raise
substantial  doubt  about  the Company's ability to continue as a going concern.

The  Company  intends  to  fund  operations  through  grant  proceeds  and
increased  equity
financing arrangements which management believes may be insufficient to fund its
capital expenditures, working capital and other cash requirements for the fiscal
year  ending  December 31, 2004. Therefore, the Company will be required to seek
additional  funds  to  fund  its long-term operations. The successful outcome of
future
activities  cannot  be determined at this time and there is no assurance that if
achieved,  the  Company  will  have  sufficient  funds  to  execute its intended
business  plan  or  generate  positive  operating  results.

Inflation

Management  believes  that  inflation  has  not  had  a  material  effect on the
Company's  results  of  operations.

Off  Balance  Sheet  Arrangements

The  Company  does  not  currently  have  any  off  balances sheet arrangements.

<PAGE>

ACCOUNTING  MATTERS

Critical  Accounting  Policies

In  December  2001,  the  SEC requested that all registrants list their three to
five  most  "critical  accounting  policies" in the MD&A. The SEC indicated that
a
"critical  accounting policy" is one which is both important to the portrayal of
the  Company's  financial  condition and results, and requires management's most
difficult,  subjective  or  complex judgements, often as a result of the need to
make  estimates  about  the  effect of matters that are inherently uncertain. We
believe  that  our  following  accounting  policies  fit  this  definition:

Grants

The  Company  receives  grants from the German government which are used to fund
research  and  development  activities and the acquisition of equipment. Revenue
from  grants  for  the  reimbursement  of  research and development expenses are
offset  against  research  and  development  expenses  in  the  accompanying
consolidated  statements  of  operations when the related expenses are incurred.
Grants  related  to  the  acquisition  of  tangible  property  are recorded as a
reduction  of  the  property's  historical  cost.

Funds  are  available  at the earliest from January 1 of each budget year with a
fund  request submitted on or before December 5 of each year. Funds reserved for
each  budget  year  may not be assigned and funds not requested by December 5 of
each  budget  year  will  expire.

Foreign  Currency  Translation

Assets  and  liabilities  of the Company's German operations are translated into
U.S.  dollars  at  period-end  exchange  rates.  Income  and  expense  are
translated  at  weighted  average  exchange rates for the period.  Net  exchange
gains  or  losses
resulting  from such translation are excluded from net earnings but are included
in  comprehensive  loss and accumulated in a separate component of stockholders'
equity.  Such  amount  approximated  $260,000  at  December  31,  2003.

The  Company  records  payables  related  to  a  certain  licensing agreement in
accordance  with  SFAS  No.  52,  "Foreign  Currency  Translation."  Quarterly
commitments under such agreement are denominated in Euros.  At each quarter-end,
the  Company  translates the quarterly amount to US Dollars at the exchange rate
effective  on that date.  If the exchange rate changes between the time incurred
and  the  time  actual payment is made, a foreign exchange gain or loss results.
The Company has made no payments under this licensing agreement, and, therefore,
the  Company  has  not  realized  any  exchanges  losses  during the years ended
December  31,  2003  and  2002.

<PAGE>

Additionally,  the  Company  computes  a  foreign  exchange gain or loss at each
balance  sheet  date  on  all  recorded  foreign transactions that have not been
settled.  The  difference between the exchange rate that could have been used to
settle  the  transaction  at  the date it occurred, and the exchange rate at the
balance  sheet  date,  is  the unrealized gain or loss recognized in current net
income.  The  Company  recorded  an  unrealized  exchange  loss of approximately
$79,000  for  the  year  ended  December  31,  2003.  There  were no significant
unrealized  exchange  gains  or  losses during the year ended December 31, 2002.

Risks  and  Uncertainties

The  Company  maintains  its cash in foreign accounts and not in bank depository
accounts  insured  by  the  Federal  Deposit  Insurance  Corporation (FDIC). The
Company  has  not  experienced  any  losses  in  these  accounts.

The  Company's  research  and  development activities and most of its assets are
located  in Germany.  The Company's operations are subject to various political,
economic, and other risks and uncertainties inherent in Germany and the European
Union  ("EU").

Comprehensive  Income  (Loss)

The  Company adopted SFAS No. 130 "Reporting Comprehensive Income." SFAS No. 130
establishes  standards  for reporting and display of comprehensive income (loss)
and  its components in a full set of general-purpose financial statements. Total
comprehensive  income  (loss)  represents the net change in stockholders' equity
during  a  period  from sources other than transactions with stockholders and as
such,  includes  net  earnings.  For  the  Company,  the  components  of  other
comprehensive  income  (loss) are the changes in the cumulative foreign currency
translation  adjustments and are recorded as components of stockholders' equity.

Expiration  of  the  old  grant

The  ongoing  grant from the German state of Schleswig-Holstein expires on March
31,  2004.  PBAG  has  fulfilled  all milestones and requirements of this grant.

Aspiring  new  grants

PBAG,  along  with  a consortium of other EU-companies, has filed an application
with  the  EU-Commission in order to achieve a swift market launch for Elafin in
special applications. If approved, we expect to receive about 1.5 million Euros.
Also, PBAG is seeking a second grant from the German state of Schleswig-Holstein
for  the  continuation of the running Elafin development project for 3 years. If
approved,  we  expect  to  receive  about 760,000 Euros. The decisions regarding
approval  from  both  granting  authorities  are  expected  in  April/May  2004.

<PAGE>

ITEM  7  -  FINANCIAL  STATEMENTS

The  consolidated  financial  statements  and  corresponding  notes  to  the
consolidated  financial
statements  called  for by this item appear under the caption Index to Financial
Statements  (Page  F-1  hereof).

ITEM  8  -  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL  DISCLOSURE

None.

ITEM  8A  -  CONTROLS  AND  PROCEDURES

As  of  the  end of the period covered by this report, Management carried out an
evaluation  of  the  effectiveness  of the design and operation of the Company's
disclosure controls and procedures, pursuant to Exchange Act Rules 13a-15(c) and
15d-15(c) which includes inquiries made to certain other of our employees. Based
on  the  foregoing,  the  Principal  Executive  Officer  and Principal Financial
Officer  concluded  that  the  Company's  disclosure controls and procedures are
effective  to  timely  alert  them  to  any material information relating to the
Company,  including its consolidating subsidiaries, that must be included in the
Company's  periodic  SEC  filings.  In  addition, there have been no significant
changes  in  the  Company's  internal  controls  or  in other factors that could
significantly affect internal controls subsequent to the date of the most recent
evaluation.

<PAGE>

                                    PART  III

ITEMS  9  -  DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  REGISTRANT

     The  following  table  sets  forth  the  names  and ages of the current and
incoming  directors and executive officers of the Company, the principal offices
and  positions  with  the  Company  held by each person and the date such person
became  a  director or executive officer of the Company.  The executive officers
of  the  Company  are elected annually by the Board of Directors.  The directors
serve one year terms until their successors are elected.  The executive officers
serve  terms  of  one  year  or until their death, resignation or removal by the
Board  of  Directors.  Unless described below, there are no family relationships
among  any  of  the  directors  and  officers.

     Name                         Age     Positions

     Joerg Alte                   43     President  and  Director

     Professor Oliver Wiedow, MD. 46     Director  and  Principal  Executive
                                         Officer

     Birge Bargmann               43     Director

     Holger Pusch                 47     Director

     Ulrich Glaeser               46     Secretary,  Director  and  Principal
                                         Financial  Officer

     Hartmut Weigelt, Ph.D.       58     Director

Biographical  Information:

     Joerg  Alte,  currently  serves  as  the  President  and  Director  of  the
Company.  Mr.  Alte  is  a  German  lawyer  by  training  and  practice.  After
studying  law  and  passing  his  second
state  examination,  he  worked for more than three years at a German law office
predominantly  engaged  in  economic  and  corporate  laws  with both public and
private  company  clients  engaged  in international business. Subsequently, Mr.
Alte  worked  as a legal advisor with a German diagnostic company, where he also
practiced  German  and  U.S. Securities laws.  From November 1998 to April 2000,
Mr.  Alte  served as President and CEO for Sangui BioTech International, Inc., a
publicly  traded  company.

     Prof.  Oliver  Wiedow,  M.D.,  currently serves as a Director and Principal
Executive  Officer  of  the Company. Since  1985  Professor  Wiedow  has  served
as  physician  and  scientist  at  the
University  of  Kiel,  Germany.  Currently,  Prof.  Wiedow  is  a  Professor  of
dermatology,  venerology  and  allergology  at  the  university's dermatological
clinic.  Mr.  Wiedow  discovered  Elafin  in  human  skin and has researched its
biological  effects.  He  has  knowledge in biochemistry which is needed for the
production  of  Elafin.

<PAGE>

     Birge Bargmann, currently serves as a Director of the Company.  Since 1989,
Ms.  Bargmann  has worked as a medical technique assistant engaged in the Elafin
project  at  the  dermatological  clinic  of  the  University  of  Kiel.  She
co-developed  and  carried  out  procedures  to  detect  and to clean up Elafin.

     Holger  Pusch,  currently serves as a Director of the Company. Mr. Pusch is
presently  employed by Agfa-Gaevert. For the last 15 years, Mr. Pusch has worked
in  different  marketing  and  sales functions for major German companies, among
others  as  Director  of  Marketing  and  Division  Leader.

Ulrich  Glaeser,  currently  serves  as  Secretary,  Director  and  Principal
Executive  Officer of the Company. Before  joining  Proteo  Biotech  AG as Chief
Executive  Officer  in  May  2001,  Mr.
Glaeser  was  sales  and  marketing  manager at Draeger ProTech GmbH in Luebeck,
Germany.  In  addition  to  his  degrees  in economics and engineering, he has a
Master  of  Business  Marketing (MBM) degree from the Free University of Berlin.

     Hartmut  Weigelt,  Ph.D.,  currently  serves  as a Director of the Company.
Since  1996,  Mr. Weigelt has served as the managing director of Eco Impact GmbH
which  he  co-founded.  Between  1995  and 1996, Mr. Weigelt was the Director of
Environmental  Agency  for the city of Dortmund, Germany.  From 1992 to 1994 Mr.
Weigelt  served  as the managing directgor of Environmental Resources Management
GmbH.  From  1989  to  1992 Mr. Weigelt worked as the Director for Environmental
Risk-Analysis and Business Coordination for Gerling AG (a large German insurance
company).  From  1987  to  1989  Mr.  Weigelt  worked  as  the  Director  for
Drug-Development-Coordination  of Schering AG (a German pharmaceutical company).
Between  1972  to  1985,  Mr.  Weigelt  worked  for  Max-Planck-Institute  for
Systems-Physiology.  Mr.  Weigelt  was  also  a  co-founder  of the first German
private  university, Witten/Herdecke.  Mr. Weigelt studied chemistry and biology
and  graduated  with  a  M.Sc.,  Ph.D.,  and  D.Sc.  in  biology.

Audit  Committee  and  Financial  Expert:

While  no  formal  audit  committee  has  been  established, the entire Board of
Directors  acts in such capacity.  Additionally, none of our directors qualifies
as  an  audit  committee  financial  expert.  To  date, we have not been able to
secure  an  audit  committee  financial  expert  to  serve  as  a
director.  We  believe  this  is  a result of the lack of directors and officers
insurance,  and  we are seeking to acquire such insurance at the most affordable
rate.

FAMILY  RELATIONSHIPS

There  are  no  family  relationships  between or among the directors, executive
officers  or  persons nominated or charged by the Company to become directors or
executive  officers.

<PAGE>

INVOLVEMENT  IN  LEGAL  PROCEEDINGS

To  the best of the Company's knowledge, during the past five years, none of the
following  occurred  with  respect  to a present or former director or executive
officer  of  the  Company:  (1)  any bankruptcy petition filed by or against any
business  of which such person was a general partner or executive officer at the
time  of  the  bankruptcy  or  within  two  years  prior  to  that time; (2) any
conviction  in  a  criminal  proceeding  or  being subject to a pending criminal
proceeding  (excluding  traffic  violations and other minor offences); (3) being
subject  to  any order, judgment or decree, not subsequently reversed, suspended
or  vacated,  of  any  court  of  any  competent  jurisdiction,  permanently  or
temporarily  enjoining, barring, suspending or otherwise limited his involvement
in  any  type of business, securities or banking activities; and (4) being found
by  a  court  of  competent  jurisdiction  (in  a  civil action), the SEC or the
Commodities  Futures  Trading  Commission  to  have  violated a federal or state
securities or commodities law, and the judgment has not been reversed, suspended
or  vacated.

COMPLIANCE  WITH  SECTION  16(A)  OF  THE  SECURITIES  EXCHANGE  ACT  OF  1934.

     Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors  and executive officers and persons who own more than ten percent of a
registered class of the Company's equity securities to file with the SEC initial
reports  of  ownership  and  reports of changes in ownership of Common Stock and
other  equity  securities  of the Company.  Officers, directors and greater than
ten  percent shareholders are required by SEC regulations to furnish the Company
with  copies  of  all Section 16(a) forms they file. To the Company's knowledge,
based  solely  on  the review of copies of such reports furnished to the Company
and written representations that no other reports were required, the Company has
been  informed  that  all  Section  16(a)  filing requirements applicable to the
Company's  officers,  directors  and  greater than ten percent shareholders were
complied  with.

CODE  OF  ETHICS

We  have not adopted a code of ethics as of the date of filing this report.  Our
Board  of  Directors has not had time to complete the code of ethics and intends
to  do  so  within  the  next  120  days.

<PAGE>

ITEM  10  -  EXECUTIVE  COMPENSATION

The  following Summary Compensation Table shows certain compensation information
for  services rendered in all capacities for the fiscal years ended December 31.
Other  than  as  set  forth  herein,  no  executive  officer's
salary and bonus exceeded $100,000 in any of the applicable years. The following
information includes the dollar value of base salaries, bonus awards, the number
of stock options granted and certain other compensation, if any, whether paid or
deferred.

Summary  Compensation  Table
-  ----------------------------
The  Summary  Compensation  Table  shows  certain  compensation  information for
services rendered in all capacities for the fiscal years ended December 31, 2003
and  2002.  Other  than  as  set forth herein, no executive officer's salary and
bonus  exceeded  $100,000  in  any  of  the  applicable  years.  The  following
information includes the dollar value of base salaries, bonus awards, the number
of stock options granted and certain other compensation, if any, whether paid or
deferred.

<TABLE>
<CAPTION>
                                                             SUMMARY COMPENSATION TABLE

                                          ANNUAL  COMPENSATION                          LONG  TERM  COMPENSATION
                                         ----------------------                         AWARDS           PAYOUTS
                                                                                    -------------------------------
                                                                OTHER        RESTRICTED  SECURITIES                 ALL
NAME AND                                                        ANNUAL         STOCK     UNDERLYING    LTIP        OTHER
PRINCIPAL                          SALARY        BONUS       COMPENSATION      AWARDS     OPTIONS     PAYOUTS   COMPESATION
POSITION               YEAR         ($)           ($)            ($)            ($)       SARS (#)      ($)         ($)
---------------------------------------------------------------------------------------------------------------------------
<S>                   <C>       <C>             <C>          <C>               <C>       <C>          <C>       <C>

Joerg Alte            2002      $   96,000        -0-             -0-           -0-           -0-       -0-         -0-
(Chief Executive Officer,
Chief Financial Officer
and Director

                      2003      $   75,000        -0-             -0-           -0-           -0-       -0-         -0-

</TABLE>


<TABLE>
<CAPTION>


                                   OPTION/SAR GRANTS IN LAST FISCAL YEAR
                                            (INDIVIDUAL GRANTS)


                  NUMBER OF SECURITIES      PERCENT OF TOTAL
                       UNDERLYING         OPTIONS/SAR'S GRANTED
                 OPTIONS/SAR'S GRANTED   TO EMPLOYEES IN FISCAL    EXERCISE OF BASE PRICE
NAME                      (#)                     YEAR                     ($/SH)           EXPIRATION DATE
                 ----------------------  -----------------------  ------------------------  ---------------
<S>                         <C>                     <C>                      <C>                       <C>
Joerg Alte                    0                    n/a                      n/a

</TABLE>

<TABLE>
<CAPTION>



                                   AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
                                               AND FY-END OPTION/SAR VALUES


                                                                   NUMBER OF UNEXERCISED      VALUE OF UNEXERCISED IN
                                                                   SECURITIES UNDERLYING       THE-MONEY OPTION/SARS
                   SHARES ACQUIRED ON             VALUE            OPTIONS/SARS AT FY-END (#)        AT FY-END ($)
NAME                  EXERCISE (#)             REALIZED ($)        EXERCISABLE/UNEXERCISABLE   EXERCISABLE/UNEXERCISABLE
                 ----------------------  ------------------------  --------------------------  --------------------------
<S>                        <C>                     <C>                       <C>                         <C>

Joerg Alte                 -0-                    -0-                         -0-                       -0-

</TABLE>

Compensation  of  Directors

     The  Directors  have  not  received  any  compensation  for serving in such
capacity,  and  the  Company  does  not  currently  contemplate compensating its
Directors  in  the  future  for  serving  in  such  capacity.


<PAGE>

ITEM  11  SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED  STOCKHOLDER  MATTERS

The  following  table  sets  forth, as of December 30, 2003, certain information
with  respect to the Company's equity securities owned of record or beneficially
by  (i)  each  Officer  and  Director  of the Company; (ii) each person who owns
beneficially  more  than  5%  of  each class of the Company's outstanding equity
securities;  and  (iii)  all  Directors  and  Executive Officers as a group. The
address  for  all of the following entities and individuals is c/o Proteo, Inc.,
3206  W.  Wimbledon  Drive,  Augusta,  GA  30909.

<TABLE>
<CAPTION>

                              Name and Address of     Amount and Nature of       Percent
Title of Class                Beneficial Owner        Beneficial Ownership (1)   of Class
----------------------------  ----------------------  ------------------------   --------
<S>                           <C>                     <C>                        <C>
Common                        Oliver Wiedow
Stock                                                      10,680,000            49.29%

Common                        Birge Bargmann
Stock                                                       2,000,000             9.24%

Common                        Holger Pusch
Stock                                                          20,000             0.09%

Common                        Ulrich Glaeser
Stock                                                         100,000             0.46%

Common                        Hartmut Weigelt
Stock                                                         150,000             0.69%

Common                        Joerg Alte
Stock                                                         140,000             0.65%

Common                        All officers and directors
Stock                          as a group (6 persons)      13,090,000            60.42%

</TABLE>

(1)     Based  on  21,667,101  shares  outstanding.

ITEM  12  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

     The  Company  has  agreed  to  pay  Dr.  Wiedow, a director of the Company,
three  percent  (3%)  of  the  gross  revenues of Company from products based on
patents  where  he  was  the  principal  inventor.  Furthermore, the Company has
agreed  to  pay  licensing  fees  in  the  amount of 110,000 Euro (approximately
$138,000  at  December  31,  2003)  per  year  through  December 31, 2006, and a
refund  for  all  expenses  needed  to maintain such patents (e.g., patent fees,
lawyers  fees,  etc).

<PAGE>

ITEM  13  -  EXHIBITS  AND  REPORTS  ON  FORM  8-K

(A)  EXHIBITS

EXHIBIT
NO.     DESCRIPTION

2.1**   Agreement  and  Plan  of  Share  Exchange

3.1*    Articles  of  Incorporation,  dated  December  18,  1992

3.2*    Amendment  to  Articles  of  Incorporation,  dated  October  31,  1996

3.3*    Amendment  to  Articles  of  Incorporation,  dated  February  12,  1998

3.4*    Amendment  to  Articles  of  Incorporation,  dated  May  18,  1999

<PAGE>

3.5**   Amendment  to  Articles  of  Incorporation,  dated  July  18,  2001

3.6***  Amendment  to  Articles  of  Incorporation,  dated  January  11,  2002

3.7**   Articles  of  Share  Exchange,  dated  April  25,  2002

3.8*    By-Laws,  dated  December  18,  1992

31.1    Rule  13a-14(e)  Certification  of  Chief  Executive  Officer

31.2    Rule  13a-14(e)  Certification  of  Chief  Financial  Officer

32.1    Section  1350  Certification  of  Chief  Executive  Officer

32.2    Section  1350  Certification  of  Chief  Financial  Officer

________________________
*  Incorporated  by  reference from the Company's Registration Statement on Form
10-SB  filed  with  the  SEC  on  March  2,  1999.

** Incorporated by reference from the Company's Current Report on Form 8-K filed
  on  May  6,  2002

***  Incorporated  by  reference from the Company's Annual Report on Form 10-KSB
filed  with  the  SEC  on  May  10,  2002.

(B)  REPORTS  ON  FORM  8-K

There  were  no  filings on Form 8-K during the fourth quarter of the year ended
December  31,  2003.

ITEM  14.  PRINCIPAL  ACCOUNTANT  FEES  AND  SERVICES

Audit  Fees:

We  were billed $57,600 and $84,900 for the fiscal years ended December 31,
2003 and 2002, respectively, for professional services rendered by the principal
accountant for the audit of the our annual consolidated financial statements and
the  review  of  our  quarterly  consolidated  financial  statements.

Audit  Related  Fees:

None

Tax  Fees:

We  were  billed  $7,300 and $0 for the fiscal years ended December 31, 2003 and
2002,  respectively,  for  professional  services  rendered  by  the  principal
accountant  for  tax  compliance  and  tax  advice.

All  Other  Fees:

There  were  no  other  professional  services  rendered  by  our  principal
accountant  during the last two fiscal years that were not included in the three
categories  above.

All  of  the  services provided by our principal accountant were approved by our
Board  of Directors. No more than 50% of the hours expended on our audit for the
last  fiscal  year  were  attributed  to  work  performed  by persons other than
full-time employees of our principal accountant.

<PAGE>
                                   SIGNATURES

Pursuant  to  the requirements of Section 13 or 15(d) 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.


Dated:  April 14, 2004

                                     PROTEO,  INC
                                     (Registrant)

                                     By:  /s/  Prof.  Oliver  Wiedow,  M.D.
                                     --------------------------
                                     Prof.  Oliver  Wiedow,  M.D.
                                     Acting  President  and  CEO

Pursuant to requirements of the Securities Exchange Act of 1934, this report has
been  signed  below  by the following persons on behalf of the registrant and in
the  capacities  and  on  the  dates  indicated:

     Signature                         Capacity            Date
     ---------------------------------------------------------------

     Professor Oliver Wiedow, MD.      Director          April  14,  2004

     Birge  Bargmann                   Director          April  14,  2004

     Holger  Pusch                     Director          April  14,  2004

     Ulrich  Glaeser                   Director          April  14,  2004

     Hartmut  Weigelt,  Ph.D.          Director          April  14,  2004


<PAGE>



                                  PROTEO,  INC.
                                AND  SUBSIDIARIES
                         (A  Development  Stage  Company)

                        CONSOLIDATED  FINANCIAL  STATEMENTS

                                December  31,  2003



<PAGE>




                          INDEX  TO  FINANCIAL  STATEMENTS



Independent  Auditors'  Report                                     F-1

Consolidated  Balance  Sheet                                       F-3

Consolidated Statements of Operations and Comprehensive Loss       F-4

Consolidated  Statements  of  Stockholders'  Equity                F-5

Consolidated  Statements  of  Cash  Flows                          F-8

Notes  to  Consolidated  Financial  Statements                    F-10

<PAGE>



                          INDEPENDENT AUDITORS' REPORT



To  the  Board  of  Directors  and  Stockholders
Proteo,  Inc.  and  Subsidiaries

We  have audited the accompanying consolidated balance sheet of Proteo, Inc. and
Subsidiaries  (collectively  the  "Company"), a Development Stage Company, as of
December  31,  2003,  and  the related consolidated statements of operations and
comprehensive  loss,  stockholders'  equity  and  cash flows for the years ended
December  31,  2003  and  2002,  and  for  the  period  from  November  22, 2000
(Inception)  to  December 31, 2003.  These consolidated financial statements are
the  responsibility  of  the  Company's  management.  Our  responsibility  is to
express  an  opinion  on  these  consolidated  financial statements based on our
audits.

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

In  our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Proteo,
Inc.  and  Subsidiaries as of December 31, 2003, and the consolidated results of
their  operations and their cash flows for the years ended December 31, 2003 and
2002,  and  for  the  period  from November 22, 2000 (Inception) to December 31,
2003,  in conformity with accounting principles generally accepted in the United
States  of  America.


<PAGE>



The  accompanying  consolidated financial statements have been prepared assuming
that the Company will continue as a going concern.  As shown in the accompanying
consolidated  financial  statements,  the Company is a development stage company
which  has  experienced significant losses since inception with no revenues.  As
discussed  in  Note  1  to  the consolidated financial statements, a significant
amount of additional capital will be necessary to advance the development of the
Company's  products  to  the point at which they may become commercially viable.
These  conditions,  among  others,  raise  substantial doubt about the Company's
ability  to  continue  as  a  going concern.  Management's plans regarding these
matters  are  also described in Note 1.  The accompanying consolidated financial
statements  do not include any adjustments that might result from the outcome of
this  uncertainty.


/s/ Squar, Milner, Raehl & Williamson, LLP

March  8,  2004
Newport  Beach,  California
<PAGE>

                          PROTEO, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                           CONSOLIDATED BALANCE SHEET
                                December 31, 2003

                                     ASSETS
<TABLE>
<CAPTION>
<S>                                                  <C>
Current Assets
Cash . . . . . . . . . . . . . . . . . . . . .  $   491,282
Inventory. . . . . . . . . . . . . . . . . . .       48,041
Prepaid expenses and other current assets. . .       34,508
                                                ------------
                                                    573,831

Property and Equipment, net. . . . . . . . . .      439,636
                                                ------------

                                                $ 1,013,467
                                                ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Accounts payable and accrued liabilities . . .  $    64,305
Accrued licensing fees . . . . . . . . . . . .      414,000
                                                ------------
                                                    478,305

Commitments and Contingencies

Stockholders' Equity
Preferred stock, par value $0.001 per share;
20,000,000 shares authorized; no shares issued
and outstanding. . . . . . . . . . . . . . . .            -
Common stock, par value $0.001 per share;
300,000,000 shares authorized; 21,667,101
shares issued and outstanding. . . . . . . . .       21,668
Additional paid-in capital . . . . . . . . . .    3,653,446
Stock subscriptions receivable . . . . . . . .   (1,239,955)
Accumulated other comprehensive income . . . .      259,963
Deficit accumulated during development stage .   (2,159,960)
                                                ------------
                                                    535,162
                                                ------------

                                                $ 1,013,467
                                                ============
</TABLE>

F-3     The  accompanying  notes  are  an  integral  part of  these consolidated
financial  statements.

<PAGE>

                          PROTEO, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                             AND COMPREHENSIVE LOSS
       For the Years Ended December 31, 2003 and 2002, and For the Period
          From November 22, 2000 (Inception) Through December 31, 2003

<TABLE>
<CAPTION>
<S>                                               <C>             <C>         <C>
                                                                         November
                                                                         22, 2000
                                                                         (Inception)
                                                                         Through
                                                                         December
                                                   2003          2002    31, 2003
                                              ----------    -----------  ------------

REVENUES. . . . . . . . . . . . .             $        -    $        -   $         -

EXPENSES
General and Administrative                       439,356       989,687     1,787,977
Research and Development, net of
grants                                           152,336       138,615       372,833
                                              ----------    -----------  ------------
                                                 591,692     1,128,302     2,160,810

OTHER INCOME (EXPENSE)
Interest income                                    5,775        12,400        24,630
Miscellaneous income, net                         44,713        10,507        55,220
Unrealized foreign currency
transaction loss                                 (79,000)            -       (79,000)
                                              ----------    -----------  ------------
                                                 (28,512)       22,907           850
                                              ----------    -----------  ------------

NET LOSS AVAILABLE TO
 COMMON SHAREHOLDERS                            (620,204)   (1,105,395)   (2,159,960)

FOREIGN CURRENCY
TRANSLATION ADJUSTMENTS                          164,399       116,057       259,963
                                              ----------    -----------  ------------

COMPREHENSIVE LOSS                           $  (455,805)  $  (989,338)  $(1,899,997)
                                              ===========   ===========  ============

BASIC AND DILUTED LOSS
AVAILABLE TO COMMON
SHAREHOLDERS PER COMMON
SHARE                                        $     (0.03)  $     (0.05)
                                              ==========    ===========

WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING                                   21,634,000    21,186,000
                                              ==========    ===========
</TABLE>

F-3     The  accompanying  notes  are  an  integral  part of  these consolidated
financial  statements.

<PAGE>

                          PROTEO, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENTS OF STOCKHOLDERS'EQUITY
       For the Years Ended December 31, 2003 and 2002, and For the Period
          From November 22, 2000 (Inception) Through December 31, 2003

<TABLE>
<CAPTION>
<S>                                      <C>             <C>        <C>            <C>             <C>           <C>        <C>
                                                                                                            Deficit
                                                                                             Accumulated    Accumulated
                                                                Additional      Stock        Other          During
                                              Common Stock      Paid-in       Subscriptions  Comprehensive  Development
                                         Shares        Amount   Capital         Receivable   Income (Loss)  Stage            Total
                                         -----------  -------   -----------    ------------   ------------  ----------   ---------
BALANCE - November 22, 2000 (Inception)  $         -   $    -    $        -     $        -     $       -    $    -               -
Common stock
subscribed at $0.001 per
share . . . . . . . . . . . . . . . . .    4,800,000    4,800             -         (4,800)            -         -               -
Common stock issued
for cash at $3.00 per
share . . . . . . . . . . . . . . . . .       50,000       50       149,950              -             -                   150,000
Reorganization with
Proteo Biotech AG . . . . . . . . . . .    2,500,000    2,500         6,009              -             -                     8,509

Net loss. . . . . . . . . . . . . . . .            -        -             -              -             -   (60,250)        (60,250)
                                         -----------  -------   -----------    ------------   ------------  ----------   ---------
BALANCE -
 December 31, 2000. . . . . . . . . . .    7,350,000    7,350       155,959         (4,800)            -   (60,250)         98,259
Common stock issued
for cash at $3.00 per
share . . . . . . . . . . . . . . . . .      450,000      450     1,349,550              -             -         -       1,350,000
Cash received for
common stock
subscribed at $0.001 per
share . . . . . . . . . . . . . . . . .            -        -             -          4,800             -         -           4,800

</TABLE>


(continued)

F-5    The  accompanying  notes  are  an  integral  part of  these consolidated
financial  statements.


<PAGE>
                          PROTEO, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
       For the Years Ended December 31, 2003 and 2002, and For the Period
          From November 22, 2000 (Inception) Through December 31, 2003

<TABLE>
<CAPTION>
<S>                                      <C>             <C>        <C>            <C>             <C>           <C>        <C>
                                                                                                            Deficit
                                                                                             Accumulated    Accumulated
                                                                Additional      Stock        Other          During
                                              Common Stock      Paid-in       Subscriptions  Comprehensive  Development
                                         Shares        Amount   Capital         Receivable   Income (Loss)  Stage            Total
                                         -----------  -------   -----------    ------------   ------------  ----------   ---------
Common stock
issued for cash at $.040
per share . . . . . . . . . . . . . . .      201,025      201        80,209              -             -         -          80,410
Common stock subscribed
at $0.40 per share. . . . . . . . . . .    5,085,487    5,086     2,029,109     (2,034,195)            -         -               -
Common stock issued for
cash to related parties
at $0.001 per share . . . . . . . .        7,200,000    7,200             -              -             -         -           7,200
Other comprehensive loss. . . . . . . .            -        -             -              -       (20,493)        -         (20,493)
Net loss . . . . . . . .. . . . . . . .            -        -             -              -             -  (374,111)       (374,111)
                                         -----------  -------   -----------    ------------   ------------  ----------   ---------
BALANCE -
 December 31, 2001. . . . . . . . . . .   20,286,512   20,287     3,614,827     (2,034,195)      (20,493) (434,361)      1,146,065
Common stock issued
in connection with
reverse merger. . . . . . . . . . . . .    1,313,922    1,314        (1,314)             -             -         -               -
Cash received for
common stock
subscribed at $0.40 per
share . . . . . . . . . . . . . . . . .            -        -             -        406,440             -         -         406,440

</TABLE>

(continued)

F-6    The  accompanying  notes  are  an  integral  part of  these consolidated
financial  statements.

<PAGE>

                          PROTEO, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
       For the Years Ended December 31, 2003 and 2002, and For the Period
          From November 22, 2000 (Inception) Through December 31, 2003

<TABLE>
<CAPTION>
<S>                                      <C>             <C>        <C>            <C>             <C>           <C>        <C>
                                                                                                             Deficit
                                                                                             Accumulated     Accumulated
                                                                Additional      Stock        Other           During
                                              Common Stock      Paid-in       Subscriptions  Comprehensive   Development
                                         Shares        Amount   Capital         Receivable   Income (Loss)   Stage           Total
                                         -----------  -------   -----------    ------------   ------------   ----------  ---------
Other comprehensive
income    . . . . . . . . . . . . . . .            -        -             -              -       116,057         -        116,057
Net loss . . . . . . . .. . . . . . . .            -        -             -              -             - (1,105,395)   (1,105,395)
                                         -----------  -------   -----------    ------------   ------------  ----------   ---------
BALANCE -
 December 31, 2002. . . . . . . . . . .   21,600,434   21,601     3,613,513     (1,627,755)       95,564 (1,539,756)       563,167
Common stock issued for
cash at $0.60 per share . . . . . .           66,667       67        39,933              -             -          -         40,000
Cash received for common
stock subscribed at $0.40 per share                -        -             -        387,800             -          -        387,800
Other comprehensive income. . . . . . .            -        -             -              -       164,399          -        164,399
Net loss . . . . . . . .. . . . . . . .            -        -             -              -             -   (620,204)      (620,204)
                                         -----------  -------   -----------    ------------   ------------  ----------   ---------
BALANCE -
 December 31, 2003. . . . . . . . . . .   21,667,101   21,668     3,653,446     (1,239,955)      259,963 (2,159,960)       535,162
                                         ===========  =======   ===========    ============   ============  ==========   =========

</TABLE>


F-7    The  accompanying  notes  are  an  integral  part of  these consolidated
financial  statements.

<PAGE>

                          PROTEO, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
       For the Years Ended December 31, 2003 and 2002, and For the Period
          From November 22, 2000 (Inception) Through December 31, 2003

<TABLE>
<CAPTION>
<S>                                             <C>         <C>           <C>
                                                                        November
                                                                        22,  2000
                                                                        (Inception)
                                                                        Through
                                                                        December
                                                2003          2002      31, 2003
                                           ----------  ------------  ------------

CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss. . . . . . . . . . . . . . . . .  $(620,204)  $(1,105,395)  $(2,159,960)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation. . . . . . . . . . . . . . .     46,525        20,150        66,675
Unrealized foreign currency
transaction loss. . . . . . . . . . . . .     79,000             -        79,000
Changes in operating assets and
liabilities:
Inventory . . . . . . . . . . . . . . . .    (15,430)      (32,611)      (48,041)
Prepaid expenses and other current
assets. . . . . . . . . . . . . . . . . .     49,868        (9,172)      (30,846)
Accounts payable and accrued
Liabilities . . . . . . . . . . . . . . .   (116,483)       65,606        39,996
Accrued licensing fees. . . . . . . . . .    125,000       110,000       335,000
                                           ----------  ------------  ------------
Net cash used in operating activities . .   (451,724)     (951,422)   (1,718,176)

CASH FLOWS FROM INVESTING
ACTIVITIES
Acquisition of property and equipment . .    (98,061)     (282,839)     (504,793)
Cash of reorganized entity. . . . . . . .          -             -        27,638
                                           ----------  ------------  ------------
Net cash used in investing activities . .    (98,061)     (282,839)     (477,155)

CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from issuance of common stock. .     40,000             -     1,627,610
Proceeds for subscribed stock . . . . . .    387,800       406,440       799,040
                                           ----------  ------------  ------------
Net cash provided by financing activities    427,800       406,440     2,426,650

FOREIGN CURRENCY
TRANSLATION ADJUSTMENT. . . . . . . . . .    164,399       116,057       259,963
                                           ----------  ------------  ------------

NET INCREASE (DECREASE) IN CASH . . . . .     42,414      (711,764)      491,282

CASH - beginning of period. . . . . . . .    448,868     1,160,632             -
                                           ----------  ------------  ------------

CASH - end of period. . . . . . . . . . .  $ 491,282   $   448,868   $   491,282
                                           ==========  ============  ============
</TABLE>

                                   (continued)

F-8    The  accompanying  notes  are  an  integral  part of  these consolidated
financial  statements.

<PAGE>

                          PROTEO, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
       For the Years Ended December 31, 2003 and 2002, and For the Period
          From November 22, 2000 (Inception) Through December 31, 2003

<TABLE>
<CAPTION>
<S>                                             <C>         <C>           <C>
                                                                        November
                                                                        22,  2000
                                                                        (Inception)
                                                                        Through
                                                                        December
                                                2003          2002      31, 2003
                                           ----------  ------------  ------------


<PAGE>
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION

Common stock issued for subscriptions
receivable                                 $        -   $        -   $  1,627,755

Net assets of reorganized entity in
exchange for equity securities             $        -   $        -   $      8,509

</TABLE>

See  the  accompanying  notes  to  consolidated  financial  statements  for more
information  on  non-cash  investing  and  financing activities during the years
ended  December  31,  2003  and  2002, and for the period from November 22, 2000
(Inception)  through  December  31,  2003.

F-9     The  accompanying  notes  are  an  integral  part  of these consolidated
financial  statements.

<PAGE>

                          PROTEO, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
       For the Years Ended December 31, 2003 and 2002, and For the Period
          From November 22, 2000 (Inception) Through December 31, 2003

1.  ORGANIZATION  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

Nature  of  Business

Proteo,  Inc.  (formerly  TriVantage  Group,  Inc.)  and  Proteo Marketing, Inc.
("PMI"),  a  Nevada corporation which began operations in November 2000, entered
into  a reorganization and stock exchange agreement in December 2000 with Proteo
Biotech  AG,  ("PBAG"),  a  German  corporation,  incorporated in Kiel, Germany.
Pursuant  to  the  terms  of  the  agreement,  all  of  the shareholders of PBAG
exchanged  their  common  stock  for  2,500,000 shares of PMI common stock. As a
result,  PBAG  is  a  wholly  owned  subsidiary  of PMI.  On April 25, 2002, PMI
completed  a  reverse  merger  with  TriVantage  Group,  Inc., a publicly traded
"shell"  company  (see  Note  2).  Proteo,  Inc.,  PMI, and PBAG are hereinafter
collectively  referred  to  as the "Company".  The Company is publicly traded on
the  Over-the-counter  Bulletin  Board  under  the  symbol  "PTEO".

The  Company intends to develop, manufacture, promote and market pharmaceuticals
and  other  biotech  products.  The  Company  is  focused  on the development of
pharmaceuticals  based  on  the  human protein Elafin. Elafin is a human protein
that  naturally  occurs  in  human  skin, lungs, and mammary glands. The Company
believes  Elafin  may  be useful in the treatment of cardiac infarction, serious
injuries  caused  by  accidents, post surgery damage to tissue and complications
resulting  from  organ  transplantations.

Since  its inception, the Company has primarily been engaged in the research and
development of its proprietary product Elafin. Once the research and development
phase  is complete, the Company will begin to manufacture and obtain the various
governmental  regulatory  approvals for the marketing of Elafin.  The Company is
in  the development stage and has not generated revenues from any product sales.
The  Company  believes that none of its planned products will produce sufficient
revenues  in  the  near  future.  As a result, the Company plans to identify and
develop  other  potential  products.  There are no assurances, however, that the
Company will be able to produce such products, or if produced, that they will be
accepted  in  the  marketplace.

Development  Stage  and  Going  Concern

The  Company  has  been  in  the  development stage since it began operations on
November  22, 2000, and has not generated any revenues from operations and there
is  no  assurance  of  any  future  revenues.

The  Company will require substantial additional funding for continuing research
and  development, obtaining regulatory approval and for the commercialization of
its  product.  There can be no assurance that the Company will be able to obtain
sufficient  additional funds when needed, or that such funds, if available, will
be  obtainable  on  terms  satisfactory  to  the  Company.

F-10

<PAGE>

1.  ORGANIZATION  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING POLICIES (continued)

Development  Stage  and  Going  Concern  (continued)

Management  has  taken  action  to  address  these  matters.  They  include:

-     Retention  of  experienced  management personnel with particular skills in
the  commercialization  of  such  products.
-     Attainment  of  technology  to  develop  additional  biotech  products.
-     Raising  additional  funds through the sale of debt and equity securities.

The Company's products, to the extent they may be deemed drugs or biologics, are
governed  by  the  Federal  Food,  Drug and Cosmetics Act and the regulations of
State  and  various  foreign  government  agencies.  The  Company's  proposed
pharmaceutical  products to be used with humans are subject to certain clearance
procedures  administered  by  the  above  regulatory  agencies.  There can be no
assurance  that  the  Company  will receive the regulatory approvals required to
market  its  proposed products elsewhere or that the regulatory authorities will
review  the  product  within  the  average  period  of  time.

Management  plans  to  obtain  revenues  from  product  sales,  but  there is no
commitment  by  any persons for purchase of any of the proposed products. In the
absence  of  significant  sales  and  profits,  the  Company  may  seek to raise
additional funds to meet its working capital requirements through the additional
sales of debt and equity securities. There is no assurance that the Company will
be  able  to obtain sufficient additional funds when needed, or that such funds,
if  available,  will  be  obtainable  on  terms  satisfactory  to  the  Company.

These  circumstances,  among others, raise substantial doubt about the Company's
ability  to continue as a going concern. The accompanying consolidated financial
statements  do not include any adjustments that might result from the outcome of
this  uncertainty.

Risks  and  Uncertainties

The  Company's  line  of  future  pharmaceutical products being developed by its
German subsidiary are deemed as drugs or biologics, and as such, are governed by
the  Federal  Food  and  Drug  and Cosmetics Act and by the regulations of state
agencies and various foreign government agencies. There can be no assurance that
the  Company  will  maintain  the  regulatory  approvals  required to market its
products.  The  pharmaceutical  products,  under development in Germany, will be
subject  to  more  stringent  regulatory  requirements  because they are in vivo
products  for  humans.  The  Company  has  no experience in obtaining regulatory
clearance  on these types of products. Therefore, the Company will be subject to
the  risks  of delays in obtaining or failing to obtain regulatory clearance and
F-11

<PAGE>

1.  ORGANIZATION  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING POLICIES (continued)

Risks  and  Uncertainties  (continued)

other uncertainties, including financial, operational, technological, regulatory
and  other  risks  associated with an emerging business, including the potential
risk  of  business  failure.

Principles  of  Consolidation

The  consolidated  financial  statements  have  been prepared in accordance with
accounting  principles  generally  accepted  in the United States of America and
include  the  accounts  of  Proteo,  Inc and its wholly owned subsidiaries.  The
operations  of  PBAG,  acquired  on  December  30,  2000,  are  included  in the
accompanying  statements  of  operations  and comprehensive loss from such date.
All  significant  intercompany accounts and transactions have been eliminated in
consolidation.

Startup  Activities

Statement  of  Position  No.  98-5, ("SOP 98-5") "Reporting the Costs of Startup
Activities."  SOP  98-5  requires that all non-governmental entities expense the
costs  of  startup  activities as incurred, including organizational costs. This
standard has not materially impacted the Company's financial position or results
of  operations.

Grants

The  Company  receives  grants from the German government which are used to fund
research  and  development activities and the acquisition of equipment (See Note
6).  Revenue  from  grants  for  the  reimbursement  of research and development
expenses  are  offset  against  research  and  development  expenses  in  the
accompanying consolidated statements of operations when the related expenses are
incurred. Grants related to the acquisition of tangible property are recorded as
a  reduction  of  such  property's  historical  cost.

Funds  are  available  at the earliest from January 1 of each budget year with a
fund  request submitted on or before December 5 of each year. Funds reserved for
each  budget  year  may not be assigned and funds not requested by December 5 of
each  budget  year  will  expire.


F-12

<PAGE>

1.  ORGANIZATION  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING POLICIES (continued)

Use  of  Estimates

The  Company  prepares  its consolidated financial statements in conformity with
accounting  principles  generally accepted in the United Sates of America, which
requires  management  to make estimates and assumptions that affect the reported
amounts  of  assets  and  liabilities,  disclosure  of  contingent  assets  and
liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting period. Significant estimates made by
management  include,  among  others,  realizability  of  long-lived  assets  and
estimates  for  deferred  income  tax valuation allowances. Actual results could
materially  differ  from  such  estimates.

Financial  Instruments

Statement  of Financial Accounting Standards ("SFAS") No. 107 "Disclosures About
Fair  Value  of  Financial  Instruments"  requires  disclosure  of  fair  value
information  about financial instruments when it is practicable to estimate that
value.  Management believes that the carrying amounts of the Company's financial
instruments,  consisting  primarily  of  cash  and  accounts payable and accrued
expenses,  approximate  their  fair  value  at  December  31, 2003, due to their
short-term  nature.

Foreign  Currency  Translation

Assets  and  liabilities  of the Company's German operations are translated into
U.S.  dollars at period-end exchange rates. Income and expense are translated at
weighted  average  exchange  rates for the period.  Net exchange gains or losses
resulting  from such translation are excluded from net earnings but are included
in  comprehensive  loss and accumulated in a separate component of stockholders'
equity.  Such  amount  was  $259,963  at  December  31,  2003.

Foreign  Currency  Transactions

The  Company records payables related to a certain licensing agreement (see Note
6),  in  accordance with SFAS No. 52, "Foreign Currency Translation."  Quarterly
commitments under such agreement are denominated in Euros.  At each quarter-end,
the  Company  translates the quarterly amount to US Dollars at the exchange rate
effective  on that date.  If the exchange rate changes between the time incurred
and  the  time  actual payment is made, a foreign exchange gain or loss results.
The Company has made no payments under this licensing agreement, and, therefore,
the  Company  has  not  realized  any  exchanges  losses  during the years ended
December  31,  2003  and  2002.


F-13

<PAGE>

1.  ORGANIZATION  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING POLICIES (continued)

Foreign  Currency  Transactions  (continued)

Additionally,  the  Company  computes  a  foreign  exchange gain or loss at each
balance  sheet  date  on  all  recorded  foreign transactions that have not been
settled.  The  difference between the exchange rate that could have been used to
settle  the  transaction  at  the date it occurred, and the exchange rate at the
balance  sheet  date,  is  the unrealized gain or loss recognized in current net
income.  The  Company  recorded  an  unrealized  exchange  loss of approximately
$79,000  for  the  year  ended  December  31,  2003.  There  were no significant
unrealized  exchange  gains  or  losses during the year ended December 31, 2002.

Concentrations

The  Company maintains substantially all of its cash in bank accounts in Germany
and not in United States bank depository accounts insured by the Federal Deposit
Insurance  Corporation.  The  Company  has  not  experienced any losses in these
accounts.

The  Company's  research  and  development activities and most of its assets are
located  in Germany.  The Company's operations are subject to various political,
economic, and other risks and uncertainties inherent in Germany and the European
Union.

Inventory

Inventories  are  stated  at  the lower of cost (first-in, first-out) or market.
Inventories  are  entirely  comprised of research supplies and materials and are
expensed  as  consumed.

Property  and  Equipment

Property  and  equipment  are  recorded  at  cost  and are depreciated using the
straight-line  method over their expected useful lives, which range from 3 to 14
years.  Expenditures  for  normal maintenance and repairs are charged to income,
and  significant  improvements are capitalized. The cost and related accumulated
depreciation  of  assets  are removed from the accounts upon retirement or other
disposition;  any  resulting  gain  or  loss  is  reflected  in the consolidated
statements  of  operations.


F-14

<PAGE>

1.  ORGANIZATION  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING POLICIES (continued)

Long-Lived  Assets

In July 2001, the Financial Accounting Statements Board ("FASB") issued SFAS No.
144,  "Accounting  for  the  Impairment  of Long-Lived Assets and for Long-Lived
Assets  to  be  Disposed  Of."  SFAS  No. 144 addresses financial accounting and
reporting  for the impairment or disposal of certain long-lived assets. SFAS No.
144  requires that certain long-lived assets be reviewed for impairment whenever
events  or changes in circumstances indicate that their carrying amounts may not
be  recoverable.  If  the  cost  basis of a long-lived asset is greater than the
projected  future  undiscounted  net  cash  flows  from  such  asset  (excluding
interest), an impairment loss is recognized. Impairment losses are calculated as
the  difference between the cost basis of an asset and its estimated fair value.
SFAS  No.  144  also  requires  companies  to  separately  report  discontinued
operations  and  extends  that reporting to a component of an entity that either
has  been  disposed  of  (by  sale,  abandonment,  or  in  a  distribution  to
shareholders)  or  is  classified  as  held  for sale. Assets to be disposed are
reported  at  the lower of the carrying amount or fair value less costs to sell.
The  Company  adopted  SFAS  No.  144 on January 1, 2002. The provisions of this
statement  for  assets held for sale or other disposal are generally required to
be  applied  prospectively  after  the  adoption  date  to  any  newly initiated
commitment to a plan to sell such assets by management. As a result, the Company
cannot  determine  the potential effects that adoption of SFAS No. 144 will have
on  the  financial statements with respect to future disposal decisions, if any.
As  of  December  31,  2003,  management  has determined that no such impairment
exists  and  therefore,  no adjustments have been made to the carrying values of
long-lived  assets.  There  can be no assurance, however, that market conditions
will  not  change or demand for the Company's products or services will continue
which  could  result  in  impairment  of  long-lived  assets  in  the  future.

Revenue  Recognition

It  is  the  Company's intent to recognize revenues from future product sales at
time  of  delivery.

In  December  1999,  the  Securities  and  Exchange  Commission  released  Staff
Accounting  Bulletin  ("SAB")  No.  101,  "Revenue  Recognition in the Financial
Statements,"  which  provides  guidance  on  the  recognition,  presentation and
disclosure  of  revenue  in  the  financial  statements  and which was effective
October  1,  2000.  The  Company  believes  that  once  significant revenues are
generated,  the  Company's  revenue  recognition  will  conform  to SAB No. 101.

F-15

<PAGE>

1.  ORGANIZATION  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING POLICIES (continued)

Research  and  Development

Research  and  development costs are charged to operations as they are incurred.
Grant funds received are netted against research and development costs (see Note
6).

Patents  and  Licenses

The Company does not hold title to any patents or patents pending related to the
Elafin  technology  and instead operates under a technological license agreement
with  a  related  party  (see  Note  6).

Income  Taxes

The  Company  accounts for income taxes using the liability method in accordance
with  SFAS  No.  109,  "Accounting  for  Income  Taxes." Deferred tax assets and
liabilities  are  recognized  for  future  tax  consequences  attributable  to
differences  between the financial statement carrying amounts of existing assets
and  liabilities  and  their  respective  tax  bases.  A  valuation allowance is
provided  for  significant  deferred  tax assets when it is more likely than not
that  such  assets  will  not  be  recovered.

Accounting  for  Stock-Based  Compensation

From  inception  to  December  31,  2003,  the Company has not granted any stock
options,  stock  warrants, or adopted any stock option plan. The Company intends
to account for any future stock options granted to employees using the intrinsic
value method as prescribed by Accounting Principles Board Opinion ("APB") No. 25
"Accounting for Stock Issued to Employees" and the disclosure-only provisions of
SFAS  No.  123 "Accounting for Stock-Based Compensation", as amended by SFAS No.
148,  "Accounting  for  Stock-Based Compensation - Transition and Disclosure, an
amendment  of FASB Statement No. 123" and interpreted by FASB Interpretation No.
44,  "Accounting  for  Certain  Transactions  Involving  Stock  Compensation, an
Interpretation  of  APB  25."

Basic  and  Diluted  Loss  Per  Common  Share

The  Company computes net loss per common share using SFAS No. 128 "Earnings Per
Share."  Basic  loss  per common share is computed based on the weighted average
number  of shares outstanding for the period. Diluted loss per share is computed
by  dividing  net  loss  by the weighted average shares outstanding assuming all
dilutive  potential  common shares were issued. There were no dilutive potential
common  shares  at  December  31,  2003 and 2002.  Additionally, for purposes of
calculating  diluted loss per share, there were no adjustments to net loss.  See
Note  7  for  more  information.

F-16

<PAGE>

1.  ORGANIZATION  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING POLICIES (continued)

Comprehensive  Income  (Loss)

SFAS  No.  130,  "Reporting  Comprehensive  Income",  established  standards for
reporting  and  display  of  comprehensive income (loss) and its components in a
full  set  of  general-purpose  financial statements. Total comprehensive income
(loss)  represents  the  net change in stockholders' equity during a period from
sources  other  than  transactions  with  stockholders and as such, includes net
earnings.  For  the Company, the components of other comprehensive income (loss)
are  the  changes in the cumulative foreign currency translation adjustments and
are  recorded  as  components  of  stockholders'  equity.

Segments  of  an  Enterprise  and  Related  Information

SFAS  No.  131,  "Disclosures  about  Segments  of  an  Enterprise  and  Related
Information",  established  standards  for  the  way  public  companies  report
information  about  segments  of  their  business  in  their  annual  financial
statements  and  requires  them  to report selected segment information in their
quarterly  reports  issued  to  shareholders.  It  also  requires  entity-wide
disclosures  about  the  products  and services an entity provides, the material
countries in which it holds assets and reports revenues and its major customers.
The  Company  considers itself to operate in one segment and has had no revenues
from  inception.  See  Note  3  for  information on long-lived assets located in
Germany.

Significant  Recent  Accounting  Pronouncements

SFAS  No.  146,  "Accounting  for  Costs  Associated  with  Exit  and  Disposal
Activities,"  was  issued  in  June  2002 and is effective for exit and disposal
activities  initiated  after  December  31, 2002.  The Company is complying with
SFAS  No.  146.

SFAS  No.  147  relates  exclusively to certain financial institutions, and thus
does  not  apply  to  the  Company.

In  November  2002, the Financial Accounting Standards Board (the "FASB") issued
FASB  Interpretation  ("FIN")  No.  45,  "Guarantor's  Accounting and Disclosure
Requirements  for  Guarantees,  Including Indirect Guarantees of Indebtedness of
Others."  FIN No. 45 clarifies that a guarantor is required to recognize, at the
inception  of  a  guarantee,  a  liability  for the fair value of the obligation
undertaken  in  issuing  the guarantee.  The initial recognition and measurement
provisions  of  FIN  No.  45 are applicable on a prospective basis to guarantees
issued  or  modified  after December 31, 2002, while the disclosure requirements
became  applicable  in  2002.  The  Company  is  complying  with  the disclosure
requirements  of  FIN  No. 45.  The other requirements of this pronouncement did
not  materially  affect  the  Company's  consolidated  financial  statements.

F-17

<PAGE>

1.  ORGANIZATION  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING POLICIES (continued)

Significant  Recent  Accounting  Pronouncements  (continued)

In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest
Entities,  an  Interpretation  of ARB 51."  The primary objectives of FIN No. 46
are  to  provide guidance on the identification of entities for which control is
achieved through means other than voting rights ("variable interest entities" or
"VIEs")  and  how  to  determine  when  and  which  business  enterprise  should
consolidate  the VIE.  This new model for consolidation applies to an entity for
which  either:  (1)  the  equity  investors  (if  any) do not have a controlling
financial  interest;  or  (2)  the  equity investment at risk is insufficient to
finance  that  entity's  activities  without  receiving  additional subordinated
financial  support  from  other  parties.  In addition, FIN No. 46 requires that
both  the  primary  beneficiary  and  all  other  enterprises with a significant
variable  interest in a VIE make additional disclosures.  As amended in December
2003,  the  effective  dates  of  FIN  No. 46 for public entities that are small
business  issuers,  as  defined  ("SBIs"),  are as follows: (a) For interests in
special-purpose entities: periods ended after December 15, 2003; and (b) For all
other VIEs: periods ending after December 31, 2004.  The December 2003 amendment
of  FIN  No. 46 also includes transition provisions that govern how an SBI which
previously  adopted the pronouncement (as it was originally issued) must account
for  consolidated  VIEs.  The  Company  does not believe FIN No. 46 (as amended)
will  have  any  significant  effect  on  its consolidated financial statements.

In  April  2003,  the  FASB issued SFAS No. 149, "Amendments of Statement 133 on
Derivative  Instruments  and  Hedging  Activities,"  which  amends and clarifies
financial accounting and reporting for derivative instruments, including certain
derivative  instruments  embedded  in other contracts and for hedging activities
under  SFAS No. 133.  This pronouncement is effective for contracts entered into
or  modified  after  June  30,  2003  (with certain exceptions), and for hedging
relationships  designated after June 30, 2003.  The adoption of SFAS No. 149 did
not  have  a material impact on the Company's consolidated financial statements.

In  May  2003,  the  FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments  with Characteristics of both Liabilities and Equity."  SFAS No. 150
establishes  standards  for  how  a  company  classifies  and  measures  certain
financial  instruments  with characteristics of both liabilities and equity, and
is  effective  (except  for  certain  mandatorily  redeemable  noncontrolling
interests)  for  financial  instruments  entered  into or modified after May 31,
2003.  Otherwise,  this  pronouncement  is effective for public companies at the
beginning  of  the  first  interim  period  beginning  after June 15, 2003.  The
Company  adopted  SFAS  No.  150  on  the  aforementioned  effective dates.  The
adoption  of  this pronouncement did not have a material impact on the Company's
consolidated  results  of  operations  or  financial  condition.

F-18

<PAGE>

1.  ORGANIZATION  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING POLICIES (continued)

Significant  Recent  Accounting  Pronouncements  (continued)

Other  recent  accounting  pronouncements  issued  by  the  FASB  (including its
Emerging  Issues  Task  Force),  the  American  Institute  of  Certified  Public
Accountants,  and  the  Securities  and  Exchange  Commission did not or are not
believed  by  management  to  have a material impact on the Company's present or
future  consolidated  financial  statements.


2.  REVERSE  MERGER

The  Company  entered  into  a  Shell  Acquisition  Agreement  (the "Acquisition
Agreement")  with  Proteo  Marketing,  Inc.  ("PMI").  In  accordance  with  the
Acquisition  Agreement,  PMI  originally  acquired 176,660,280 shares (1,313,922
post  split,  as described below) of the Company's common stock representing 90%
of  the  issued  and outstanding common stock of the Company. Upon completion of
the  Acquisition  Agreement,  the  Company completed a one for one-hundred-fifty
reverse  stock  split.  In  conjunction with the Acquisition Agreement, PMI paid
approximately  $500,000 to SiteStar Corporation, the former parent of TriVantage
Group, Inc.  Such amount was recorded as acquisition costs during the year ended
December 31, 2002, and is included in general and administrative expenses in the
accompanying  consolidated  statements  of  operations  and  comprehensive loss.

Effective  April 25, 2002, the shareholders of PMI exchanged their shares of PMI
for  an  aggregate  of  20,286,512  shares  of  the  Company to effect a reverse
acquisition  (the  "Merger")  between the PMI and Proteo, Inc.  By virtue of the
Merger,  the stockholders of PMI acquired 20,286,512 shares of Proteo, Inc.  The
total  issued  and outstanding shares of the combined entities subsequent to the
Merger  were  21,600,434  shares.  Since  Proteo, Inc.'s previous and continuing
operations  and balance sheet are insignificant, pro forma financial information
has  not  been  presented.



F-19

<PAGE>

3.  PROPERTY  AND  EQUIPMENT

Property  and equipment, all located in Kiel, Germany, consists of the following
at  December  31,  2003:

Technical and laboratory equipment     $  310,953
Plant                                     185,573
Office equipment                            1,479
Computers                                  17,373
                                       ----------
                                          515,378
Less:  Accumulated depreciation           (75,742)
                                       ----------
                                       $  439,636
                                       ==========

Substantially  all assets were not placed into service until July 2002.  Most of
the  Company's activities prior to July 2002 were conducted in leased facilities
at  the  University  of  Kiel,  Germany.  The  Company  began operations its new
facilities  after  such  date  (see  Note  6).


4.  STOCKHOLDERS'  EQUITY

Common  Stock

The Company is authorized to issue 300,000,000 shares of $0.001 par value common
stock.  The  holders  of the Company's common stock are entitled to one vote for
each  share  held of record on all matters to be voted on by those stockholders.

In  November  2000, the Company sold and issued 4,800,000 shares of common stock
at  $0.001  per  share  for  $4,800  in cash, which was received in fiscal 2001;
therefore  the  issuance was accounted for as a stock subscription receivable at
December  31,  2000.  During  the year ended December 31, 2001, the Company sold
and  issued an additional 7,200,000 shares of common stock to related parties at
$0.001  per  share  for  $7,200  in  cash.

In  November  2000, the Company sold and issued 50,000 shares of common stock at
$3.00  per  share  for  $150,000  in  cash.

In  December  2000,  the  Company  issued  2,500,000  shares  of common stock in
connection  with  the reorganization and stock exchange agreement with PBAG (see
"Nature  of  Business"  in  Note  1).

During  the  year  ended  December 31, 2001, the Company issued and sold 450,000
shares  of  common stock at $3.00 per share to Euro-American GmbH for $1,350,000
in  cash.

F-20

<PAGE>

4.  STOCKHOLDERS'  EQUITY

Common  Stock  (continued)

During  the year ended December 31, 2002, the Company issued 1,313,922 shares of
common  stock  in  conjunction  with  the  reverse merger with PMI (see Note 2).

During the year ended December 31, 2001, the Company entered into a subscription
for  6,000,000  shares  of  the  Company's common stock with Euro-American GmbH,
valued at $2,400,000.  During the year ended December 31, 2001, 5,286,512 shares
of  Company  common  stock  were  issued  under  such  subscription,  of  which
approximately  $388,000,  $406,000  and  $80,000  was  received during the years
ended December 31, 2003, 2002 and 2001, respectively.  In May 2003, FIDEsprit AG
("FIDEsprit") assumed the common stock subscription agreement with Euro-American
GmbH.  Management expects the outstanding balance to be received in installments
through  August  2005.

Additionally,  the  Company  entered into a common stock purchase agreement with
FIDEsprit  to  purchase  up  to  1,000,000 shares of the Company's common stock.
Under the agreement, the Company will sell its common stock at a price per share
equal  to  40%  of the average ask price for the 20 trading days previous to the
date  of  subscription,  as  quoted  on a public market.  However, the price per
share  will  be no less than $0.40.  The agreement shall expire upon the earlier
of  the  purchase  of 1,000,000 or December 31, 2004.  The Company issued 66,667
shares  at $0.60 per share or $40,000 in cash during the year ended December 31,
2004.

Preferred  Stock

The Company is authorized to issue 20,000,000 shares of non-voting, no par value
preferred stock. The Board of Directors has not designated any liquidation value
or  dividend rates.  No preferred stock has been issued as of December 31, 2003.


5.  INCOME  TAX  PROVISION

There  is  no  material income tax expense recorded for the years ended December
31,  2003  and  2002,  due  to  the  Company's  net  losses.

Income  tax expense for the years ended December 31, 2003 and 2002 differed from
the  amounts computed by applying the U.S. federal income tax rate of 34 percent
for  the  following  reasons:

F-21

<PAGE>

5.  INCOME  TAX  PROVISION  (continued)

                                                          2003          2002
                                                          ----          ----

Income tax benefit at U.S. federal statutory rates  $  (211,000)   $(376,000)
State income tax benefit                                (37,000)     (74,000)
Change in valuation allowance                           248,000      450,000
State and local income taxes, net of federal
income tax effect                                          800           800
                                                      ---------    ---------
                                                      $    800     $     800
                                                      =========    =========

The  Company  has a deferred tax asset and like amount of valuation allowance of
approximately  $875,000  at  December  31,  2003,  relating primarily to tax net
operating  loss  carryforwards.

As of December 31, 2003, the Company had tax net operating loss carryforwards of
approximately  $2,200,000,  $1,100,000,  and $600,000 available to offset future
taxable  Federal, state, and foreign income, respectively. The federal and state
carryforward  amounts  expire  in  varying  years  through 2024. The foreign net
operating  loss  relates  to  Germany  and  does  not have an expiration period.

In  the  event  the  Company  were  to  experience  a greater than 50% change in
ownership,  as  defined  in  Section  382  of  the  Internal  Revenue  Code, the
utilization of the Company's tax net operating loss carryforwards ("NOLs") could
be  severely  restricted.  Further,  utilization of the Company's state NOLs for
tax  years 2002 and 2003 have been suspended under provisions of California law.


6.  COMMITMENTS  AND  CONTINGENCIES

Grants

In  2001,  the  German  state  of  Schleswig-Holstein  granted Proteo Biotech AG
approximately  790,000  Euros  for the research and development of the Company's
pharmaceutical  product  Elafin.  The  grant, as amended, covers the period from
February 1, 2001 to March 31, 2004 if certain milestones are reached by November
15  of  each  year,  with  a  possible  extension  as  defined in the agreement.

The  grant, as amended, covers 47.95% of eligible research and development costs
and  is  subject  to  the Company's ability to cover the remaining 52.05% of the
costs.  An  additional  condition  of  the  grant  is  that the product is to be
developed  and  subsequently produced in the German state of Schleswig-Holstein.

F-22

<PAGE>

6.  COMMITMENTS  AND  CONTINGENCIES

Grants

The  Company  qualified for and received grant funds approximating 289,000 Euros
and  322,000  Euros  in  2003  and  2002  ($328,000 and $305,000, respectively),
respectively.  Such  amounts  have  been recorded as a reduction of research and
development  expenses  in  the  respective  year of receipt.  As of December 31,
2003,  management  believes  that  all  milestones  required  by  the grant were
satisfied.

The  Company  is  currently  in  the  process of applying to the German state of
Schleswig-Holstein  and  the  European  Union  for  additional grants to further
develop  its product.  There can be no assurance, however, that such grants will
be  approved  and  funds  will  be available for future research and development
activities.

License  Agreement

On  December  30,  2000,  the  Company entered into a 30-year license agreement,
beginning  January  1, 2001, with Professor Dr. Oliver Wiedow, MD, the owner and
inventor  of  several patents, patent rights and technologies related to Elafin.
In  exchange for an exclusive license worldwide for such patents, patents rights
and  related  technologies, the Company agreed to pay Dr. Wiedow a licensing fee
of  110,000  Euros  per  year, for a term of six years and a total obligation of
660,000  Euros.  Such  licensing fees shall be reduced by payments to Dr. Wiedow
during  such  six  years  for  any  royalties  and  for  50%  of  any  salary.

Royalties  are  to  be paid quarterly, for the 30-year term of the agreement, to
Dr.  Wiedow  in the amount of 3% of gross revenues earned with products based on
the  licensed  technology.  Dr.  Wiedow  has  not  been  paid  any  salary since
execution  of  the  agreement.

At  December  31,  2003,  the  Company  has  accrued $414,000 for licensing fees
payable to Dr. Wiedow.  The Company has not made any installment payments to Dr.
Wiedow  as  required  under the original agreement.  Subsequent to year-end, the
licensing  agreement  was amended to require yearly payments of 30,000 Euros, to
be  paid  on July 15 of each year beginning on July 15, 2004. Such amount can be
increased  up  to 110,000 Euros by June 1 of each year based on an assessment of
the  Company's  financial  ability  to  make  such  payments.  The payments will
continue  yearly  until  the  entire  obligation of 660,000 Euros has been paid.
Expense  related  to  such  license totaling $125,000, $110,000, and $335,000 is
included in general and administrative expense in the accompanying statements of
operations  and  comprehensive  loss  for  the years ended December 31, 2003 and
2002,  and  for  the  period November 22, 2000 (inception) to December 31, 2003,
respectively.  Additionally,  an  unrealized  foreign  currency transaction loss
related  to  accrued licensing fees,  totaling  $79,000, was recorded during the
year-ended  December  31, 2003. No royalty expense has been recognized under the
agreement since the Company has yet to generate any related revenues.

F-23

<PAGE>

6.  COMMITMENTS  AND  CONTINGENCIES  (continued)

License  Agreement  (continued)

On  October  4,  1999, Dr. Wiedow and Zeneca Limited (formerly Imperial Chemical
Industries  PLC)  entered into an agreement to assign all patents and technology
to  Dr. Wiedow in exchange for a royalty of 2% of any future net sales from such
patents  and  technology.  The  Company  under  its  December 30, 2000 licensing
agreement  with  Dr.  Wiedow discussed above assumed such 2% royalty obligation.

Patents

Under  the  Dr. Wiedow license agreement, the Company does not hold title to any
patents  but must pay for all costs related to new patents, patents pending, and
patent  maintenance associated with the Elafin technology.  The Company expenses
such  costs  as  incurred.

Leases

In  October  2001,  the  Company  entered  into  several  leases  for office and
laboratory  facilities  in  Germany beginning January 2002 and expiring at dates
through  December 2011. Certain leases have a rental adjustment in 2007 based on
the  consumer  price  index.

Future minimum rental payments under non-cancelable operating lease commitments,
in  Euros  and  equivalent  Dollars (based on December 31, 2003 exchange rates),
approximate  the  following  for  the  years  ending  December  31:

            Euros              $
            -----           -------

2004        17,000         $21,000
2005        17,000          21,000
2006        17,000          21,000
2007        17,000          21,000
2008        17,000          21,000
Thereafter  48,000          62,700
            -----           -------
           133,000      $  167,700
            ======         ========

The  Company  also  leases  office  space  in  Costa  Mesa,  California  on  a
month-to-month  basis.  Total  rental  expense  for all facilities for the years
ended  December  31,  2003  and  2002,  and  for  the  period  November 22, 2000
(inception)  to  December  31,  2003 approximated $46,000, $45,000 and $126,000,
respectively.

F-24

<PAGE>

7.  LOSS  PER  SHARE

The  following  is  a  reconciliation  of the numerators and denominators of the
basic  and  diluted loss per share computations for the years ended December 31,
2003  and  2002:

                                                  2003          2002
                                                  ====          ====

Numerator for basic and diluted
loss per share:
Net loss charged to common stockholders     $  (620,204)  $  (1,105,395)

Denominator for basic and diluted
loss per share:
Weighted average number of shares            21,634,000      21,187,000
                                           ------------    ------------
Basic and diluted loss per share            $     (0.03)  $      (0.05)
                                           ============    ============

F-25