TABLE OF CONTENTS




|                                        |                                                                                               |  |  |  |  |  |  | 
|--------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                 
|                                        | Item 1. Business                                                                             
|                                        | Item 2. Properties                                                                           
|                                        | Item 3. Legal Proceedings and Other Matters                                                  
|                                        | Item 4. Submission of Matters to a Vote of Security Holders                                  
|PART II                                
|                                        | Item 5. Market for the Registrants Common Equity and Related Shareholder Matters            
|                                        | Item 6. Selected Financial Data                                                              
|                                        | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                        | Item 8. Financial Statements and Supplementary Data                                          
|                                        | Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure 
|PART III                               
|                                        | Item 10. Executive Officers and Directors of the Registrant                                  
|                                        | Item 11. Executive Compensation                                                              
|                                        | Item 12. Security Ownership of Certain Beneficial Owners and Management                      
|                                        | Item 13. Certain Relationships and Related Transactions                                      
|PART IV                                
|                                        | Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K                    
|                                        | Item 15. Signatures                                                                          
|2001 STOCK INCENTIVE PLAN              
|EMPLOYMENT AGREEMENT NO 1              
|EMPLOYMENT AGREEMENT NO 2              
|EMPLOYMENT AGREEMENT DATE JUNE 14, 2001
|CONSULTING AGREEMENT DATED JULY 9, 2001
|CONSENT OF MAHONEY SABOL & COMPANY LLP 



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##### Table of Contents



BIO-PLEXUS, INC.

INDEX TO ANNUAL REPORT


ON FORM 10-K


YEAR ENDED DECEMBER 31, 2001


|           |  |                                                                                         |  |   
|---------- |  | --------------------------------------------------------------------------------------- |  | --
|Document   |  | 1                                                                                      
|Base       |  | 1                                                                                      
|Cover Page |  | 1                                                                                      
|PART I    
|Item 1.    |  | Business                                                                                |  | 3 
|Item 2.    |  | Properties                                                                              |  | 22
|Item 3.    |  | Legal Proceedings and Other Matters                                                     |  | 23
|Item 4.    |  | Submission of Matters to a Vote of Security
	Holders                                    |  | 23
|PART II   
|Item 5.    |  | Market for the Registrants Common Equity
	and Related Shareholder Matters              |  | 23
|Item 6.    |  | Selected Financial Data                                                                 |  | 24
|Item 7.    |  | Managements Discussion and Analysis of
	Financial Condition and Results
	of Operations |  | 24
|Item 8.    |  | Financial Statements and Supplementary Data                                             |  | 28
|Item 9.    |  | Changes in and Disagreements with Accountants on
	Accounting and Financial Disclosure   |  | 28
|PART III  
|Item 10.   |  | Executive Officers and Directors of the Registrant                                      |  | 28
|Item 11.   |  | Executive Compensation                                                                  |  | 30
|Item 12.   |  | Security Ownership of Certain Beneficial Owners
	and Management                         |  | 35
|Item 13.   |  | Certain Relationships and Related Transactions                                          |  | 35
|PART IV   
|Item 14.   |  | Exhibits, Financial Statement Schedules, and
	Reports on Form 8-K                       |  | 36
|Item 15.   |  | Signatures                                                                              |  | 38



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##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549




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FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO

SECTIONS 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF
1934


(MARK ONE)

|  |                                                     
|- | ----------------------------------------------------
|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended December 31,
2001

Or



|  |                                                         
|- | --------------------------------------------------------
|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934


For the transition period
from                to

Commission file number 0-24128

BIO-PLEXUS, INC.


(Exact name of Registrant as specified in its
Charter)


|                                                                |  |                                     
|--------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                        |  | 06-1211921                          
|(State or other jurisdiction of
	incorporation or organization) |  | (I.R.S. Employer Identification No.)

129 Reservoir Road, Vernon, Connecticut
06066

(Address of principal executive offices,
including zip code)


(860) 870-6112

(Registrants telephone number, including
area code)


Securities Registered Pursuant to
Section 12(B) of the Act: None

Securities Registered Pursuant to
Section 12(G) of the Act:

Title of class:

Common Stock, $0.001 par value


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

Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not 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-K or any amendment to this Form 10-K.

The aggregate market value of voting stock held
by non-affiliates of the Registrant (computed by reference to
the last reported sale price of such stock on March 12,
2002) was $633,300.

On March 12, 2002, there were 11,569,191
outstanding shares of the Registrants common stock.







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##### Table of Contents



FORWARD LOOKING STATEMENTS

The discussions set forth below and elsewhere
herein contain certain statements which are not historical facts
and are considered forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended
and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements are identified by the use of
such terminology as believes, expects,
may, should, anticipates,
plans, estimates, and
intends, or derivations or negatives thereof or
comparable terminology. Accordingly, such statements involve
risks (known and unknown) and uncertainties. These risks and
uncertainties include the ability of Bio-Plexus (the
Company) to obtain the additional financing it needs
to fund its operations commencing in the latter part of 2002;
the effect on suppliers, customers, employees, and others
because of the Companys receipt of a going concern opinion
from its auditors; the extent of acceptance of the
Companys products by healthcare professionals; the
Companys ability to protect its proprietary technology;
availability of qualified personnel; changes in, or failure to
comply with government regulations; general economic and
business conditions; reliance on certain critical suppliers; and
certain other risks detailed in the Risk Factors in this report,
described from time to time in the Companys other
Securities and Exchange Commission filings, or discussed in the
Companys press releases. All forward-looking statements
included in this document are based on information available to
the Company on the date hereof, and the Company assumes no
obligation to update any such forward-looking statements.

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##### Table of Contents






PART I






|        |         
|------- | --------
|Item 1. | Business



| |        
| | -------
| | General

The Company is a designer, developer,
manufacturer, seller and licensor of medical products designed
to prevent the infection of healthcare workers through
accidental needlesticks. The Companys products, unique
among its competition, are based on a patented technology that
internally blunts a needle prior to its removal from a patient,
a major competitive advantage in managements view. These
products are the only safety products on the market that render
the needle safe prior to removal from the patient. The Company
has developed and sells its own lines of safety products, and
also licenses its technology to other companies in specific
market niches that do not compete with the Companys own
branded products.

The Company currently utilizes its technology to
make blood collection needles (primarily for use by
phlebotomists in the lab) and Winged Sets (used by phlebotomists
and other medical personnel in hospitals and doctors
offices). In addition to product sales, the Company licenses its
technology to Johnson & Johnson Medical
(JJM) and to TFX Medical (TFX), a
division of Teleflex Incorporated, to apply the patented
technology to various types of catheters. TFX manufactures the
product under an exclusive sublicense to CR Bard. The
Company is also developing a fistula needle for Fresenius
Medical Care Holdings (Fresenius), under an
exclusive licensing agreement. The Company, in support of its
product manufacturing, also develops and builds sophisticated,
proprietary, production equipment to assemble its products. The
Company holds patents on elements of these production processes.

The Company is a reorganized debtor company as a
result of filing a voluntary petition for relief under
Chapter 11 of the United States Code with the United States
Bankruptcy Court for the District of Connecticut (the
Bankruptcy Court) on April 4, 2001. On
June 12, 2001, a confirmation order was entered by the
Bankruptcy Court that confirmed the Plan of Reorganization
pursuant to Bankruptcy Code section 1129, and the Company
emerged from its debtor-in-possession status. The conditions
precedent to the effectiveness of the Plan of Reorganization
were met on July 18, 2001 with the reincorporation of the
Company in the State of Delaware, payment in full of all trade
vendors, the conversion of the Appaloosa Entities debt
into Company common stock and the consummation of the Appaloosa
Private Placement. See Company Financing and
Reorganization below for a more detailed description.
Other than in that section, all references to the Company
before, during, and after the reorganization, and after the
reincorporation in Delaware, will be as the Company.
In addition, all numbers or quantities in this report, except
for stock price, EPS, and share information, are rounded to the
nearest thousand.



| |                        
| | -----------------------
| | The Needlestick Problem

As long as healthcare workers have used needles,
accidental needlesticks have been a common
occurrence. According to a report by the National Institute for
Occupational Safety and Health (NIOSH), there are an estimated
600 to 800 thousand needlestick and other percutaneous
injuries annually among healthcare workers [NIOSH Alert;
November 1999]. This report states that about half these
injuries go unreported. Furthermore, the report states that data
from the EPINet system (a University of Virginia based
surveillance system that tracks needlestick injuries in a sample
group of U.S. hospitals) suggest that at an average hospital,
workers incur approximately 30 needlestick injuries per
100 beds per year. Some of these injuries, especially those
resulting from an accidental needlestick with a blood filled
hollow bore needle, expose the healthcare worker to deadly blood
borne pathogens that can cause infection. Of particular concern
are exposure to hepatitis B, hepatitis C and HIV.
Infections with each of these pathogens are potentially life
threatening and, according to NIOSH, preventable.

According to the above NIOSH report, the
emotional impact of a needle stick injury can be severe and long
lasting even when a serious infection is not transmitted. This
impact is particularly severe when the injury involves exposure
to HIV. These risks to workers expose hospitals and other
healthcare organizations and groups to extensive cost in
testing, counseling of exposed workers, treatment costs, time
off from work and even litigation.

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Hollow-bore needles, therefore, are becoming the
focus of safety-feature development efforts by a large number of
companies. There are essentially three safety technology
platforms for use with hollow-bore needles. One is the older
outer sheath technology, with several variations.
The newer technologies are the retractable needle
and the internal needle blunting. Whereas the
retractable technology is used by a number of
companies, the internal needle blunting technology is offered
only by Bio-Plexus.

Outer sheath technology uses a plastic chamber or
sheath that is added to a needle. This method uses an outer
sheath that is stored behind the needle during use and is
advanced over the needle after use. The retractable approach
uses a chamber behind the needle and a spring that
retracts the needle into the chamber after use. The
Company believes that research and market experience point to
fundamental problems with both these technologies in that the
needle must be withdrawn from the patient prior to the
activation of the safety feature or the needle is withdrawn
concomitant with the activation. This means that the healthcare
worker is exposed potentially to a sharp, contaminated needle
during the procedure and/or following removal of the needle from
the patient.

A collaborative study during 1993-1995 by the CDC
(Centers for Disease Control and Prevention) and six hospitals
showed that 61% of accidental needlesticks among the three
safety needles tested involved an injury before activation of
the safety feature was appropriate or possible (i.e., within
seconds after the device was removed from the vein) [CDC
Morbidity and Mortality Weekly Report; January 17, 1997].
In the case of outer sheathing technology, the safety device
cannot be activated until removal. With regard to retractable
technology, the safety feature is activated upon completion of
the procedure. However, just as in the case of the outer
sheathing technology, the healthcare worker is potentially at
risk of an accidental stick with a contaminated needle, if the
needle becomes accidentally dislodged from the patient during
the procedure. The Company believes that this risk can be
significantly reduced or eliminated if the worker could activate
the safety feature during the sample blood collection from the
patients vein.

The Company believes its internal needle blunting
technology  which is patented by and proprietary to
Bio-Plexus  addresses these problems in a unique way.
The Companys basic invention is a blunt hollow bore needle
positioned within a conventional sharp needle. The user is able
to manually activate the safety device which causes the
internal, blunt needle to advance just beyond the sharp tip of
the outer needle, thus significantly reducing the possibility of
an accidental needle stick. The safety feature can be activated
in the patients vein immediately upon achieving clear
access, either at the beginning of the procedure or at the end
immediately prior to withdrawing the needle from the
patients arm or other access site. Efficacy of the
technology has been clearly demonstrated in the CDC study (the
Companys safety Punctur-Guard® needle resulted in the
greatest needlestick reductions), independent study and
laboratory testing by ECRI (formerly known as Emergency Care
Research Institute  a nonprofit health services
research agency established in 1955) and from testimonials and
studies conducted by the Companys customers.

The Company believes that the branded products it
manufactures and distributes as well as the products marketed by
its licensees, which incorporate its safety technology, are
superior or competitive in design, efficacy, quality and
convenience to all other safety needle devices on the market
today.

Growth in the blood collection needle market is
being driven by state and federal OSHA (Occupational and Safety
Health Administration) regulations and legislation. In 1999,
California, which accounts for an estimated 11% of the blood
collection market, was the first state to pass legislation
mandating the use of safety needles. By the end of 2001,
21 states had passed needle safety legislation. In
November 2000, Congress passed and the President signed,
the Needlestick Safety and Prevention Act of 2000, which
requires OSHA to implement new standards for needlestick
prevention. These new regulations are increasingly resulting in
requirements for the use of proven needle safety technologies.



| |                         
| | ------------------------
| | The Companys Technology

The blood collection safety needle assembly
consists of a mechanically activated, hollow, internal cannula
with a blunt end, called a blunting member, placed within a
blood collection needle. The blunting member advances through
the needle by applied mechanical pressure. When the needle is
inserted into the patient, the blunting member is in its
retracted position. Prior to removing the needle from the
patient (or during the

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procedure), the healthcare worker activates the
safety feature, allowing the blunting member to advance forward
and lock into place beyond the needles tip, ensuring a
blunt end upon removal. The blunting member does not cause any
additional patient discomfort, and because it is hollow, fluids
flow through the needle in the same manner as through standard
blood collection needles. This basic process is patented
worldwide, and can be used in a host of existing industry
applications where needle safety is required.




| |                               
| | ------------------------------
| | The Companys Branded Products

The Company designs, develops, manufactures and
sells its own line of safety medical products and accessories
marketed under the Punctur-Guard® and Drop-It® brand
names. The Companys Punctur-Guard® safety blood
collection needle (BCN) and Punctur-Guard®
Winged Set product line (Winged Set) are patented
safety needles, which reduce the risk of accidental needle
sticks through a self-blunting mechanism. The
Punctur-Guard® product lines are the only safety needles on
the market that are activated prior to their removal from the
patient, eliminating exposure to a contaminated sharp needle.



| |    
| | ---
| | BCN

The Companys first Punctur-Guard®
product was a safety blood collection needle used by
phlebotomists to draw blood. The Company manufactures and sells
three varieties of these safety BCNs, three types of needle
holders and a needle disposal container. The BCN is similar in
appearance, size, performance and general operation to standard
blood collection needles. This is important for the marketing of
and training for the use of the Companys products, which
have a familiar look and usage to the products healthcare
workers currently use. Hospitals, doctors and other healthcare
professionals use blood collection needles to obtain blood
samples for a variety of diagnostic procedures.

Winged
Set

The Companys second Punctur-Guard®
product line, introduced in July 2001, is a safety Winged
Set blood collection needle. A Winged Set is a small needle with
a pair of plastic wings that give the healthcare worker the
ability to control the needle for precise insertion into the
patients vein. Its primary purpose is to draw blood from
patients whose veins are more difficult to access, such as
geriatric and pediatric patients. The Companys product
offers a unique third wing for easy insertion and safety
blunting activation. It also features a conventional design and
appearance for easy handling, storage and disposal. The blunting
member is activated with movement of the third wing to the
right, rendering the needle safe prior to removal from the
patient. The Company currently manufactures and sells two sizes
of these needles. The Winged Set needle is similar in
appearance, size, performance and general operation to standard
blood collection needles. The Company filed patent applications
and received its 510(k) approval with the Food and Drug
Administration in January 2001. The patent applications for this
product are in addition to the basic patent. The Company began
shipping Winged Sets in the third quarter of 2001.

Accessory
Products

In addition to its blood collection needles, the
Company manufactures needle holders and needle disposal
containers. The Drop-It® product line consists of the
Drop-It® Quick Release Needle Holder and Drop-It®
Needle Disposal Container. These products are designed to work
in conjunction with the BCN and Winged Set safety needles to
increase the ease-of-use and overall safety for the healthcare
professional. The needle holder features simple, one-handed
disposal of a needle, with a push button for quick release. The
needle can also be automatically released when used with the
Drop-It® Needle Disposal Container. In addition, the
Company developed a needle holder, the Punctur-Guard
Revolution Quick Release Holder, which allows for greater
ease-of-use with its safety blood collection needle devices with
a simple quarter turn of the holder for activation of the
internal blunting member.

The Drop-It® Needle Disposal Container is a
one-quart, tray-mountable container. The container offers fast,
one handed needle disposal with push button or automatic release
when used with a Drop-It® Quick Release Needle Holder or
Punctur-Guard Revolution Needle Holder. It offers
temporary and permanent-

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locking tabs, is injection molded for uniform
thickness, and meets OSHA Standards for needle disposal
containers.


The Company also manufactures a standard needle
holder, which can be used with both Punctur-Guard® BCN and
Winged Set safety needles.

Licenses

The Company also licenses its technology, which
has become an increasing component of revenue. The Company
currently has licenses, and receives royalties, from JJM and TFX
(TFX sublicensed the product to CR Bard). The licensing
agreements with JJM and TFX grant them the exclusive worldwide
rights to manufacture and sell specific applications of the
Companys patents in the Intravenous Catheter and
Peripherally Inserted Central Catheter (PICC)
introducer markets, respectively. In addition to up front cash
payments, these license agreements provide for continuing
royalty payments based upon the net sales of the licensed
products. The Company also has received a temporary paid up
license fee from Fresenius, for which the Company is currently
developing a product in the dialysis market.

The Company continues to seek the licensing of
its technology to other large medical companies for which the
blunting technology would be complementary to their existing
product lines.

The
Companys Proprietary Manufacturing Processes

The Company assembles the proprietary components
of its Punctur-Guard® blood collection needles on automated
assembly machines. In 1996, the Company purchased additional
assembly and packaging equipment, allowing for increased
capacity and efficiencies in its manufacturing processes. During
1999-2001, the Company purchased additional assembly and
packaging equipment for its new Winged Set product line, which
became operational in July 2001. The Company was granted a
process patent for its manufacturing methods in 2000.

The Company owns a 37,500 square foot
manufacturing, R&D, and headquarters facility, located in
Vernon, Connecticut. The facility houses two clean rooms, one
for the BCN product line, the other for the Winged Set product
line, along with sophisticated fully automated production
equipment. The facility also has a research and development
laboratory, equipped with test and assembly equipment for
product development purposes.

Sales
and Marketing

The Companys primary customers for its
branded products are hospitals, laboratories and other
organizations that collect blood samples for testing. The
Companys value proposition to its customers is in
providing the safest technology for attaining zero accidental
needle sticks in all procedures using hollow bore needles.

The Companys sales representatives and the
sales representatives of the Companys specialty dealer
network directly present the Companys products to
healthcare professionals, purchasing professionals and
administrators in these healthcare organizations. The
Companys independent, medical-surgical distributor network
stocks and resells the Companys products to these
customers once a decision is made to use the products.

The Company relies on traditional print
advertising, product sampling, representation at medical trade
shows and other print and electronic communication to influence
potential customers and help retain existing customers.

The Company also maintains a sales and marketing
focus in obtaining group purchasing agreements. These are
product supply agreements with specific, negotiated pricing for
healthcare organizations that belong to a particular Group
Purchasing Organization (GPO). Hospitals and other
healthcare organizations often belong to one or more GPOs, which
negotiate product supply agreements on behalf of members in
order to obtain lower prices.

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The Company has been successful in negotiating a
number of GPO supply agreements that represent the majority of
hospitals in the U.S. Having these agreements in place is an
added incentive for a member healthcare organization to purchase
the Companys products. In 2001 the Company entered into
multiple year agreements with three of the leading
GPOs  Amerinet, Broadlane and Consorta 
and the Department of Veteran Affairs for supplying the
Companys products to V.A. hospitals. The Company also has
an evaluation agreement with Premier, which is one of the
largest GPOs in the country. This agreement, entered into in the
fourth quarter of 2000, is for 18 months. The Company is
currently in the process of negotiating a new multi-year
agreement, which it expects to successfully conclude in 2002.

Independent
Domestic Distributors & Specialty Dealers

The Company distributes its products in the
United States through 10 general line distributors and 13
specialty dealers. Distributors purchase and stock the
Companys products for resale to healthcare providers
nationwide. The independent distributors accounted for 85% of
the Companys 2001 product revenue and 74% of the
Companys 2001 total revenue. The largest distributors of
the Companys products are Allegiance Healthcare, Fisher
Scientific, Owens and Minor, and McKessonHBOC.

Specialty dealers do not stock the Companys
products, but instead act as independent sales representatives.
During 2001, the Company shifted its sales strategy from a
direct sales model to a specialty dealer sales representative
strategy and signed contracts with 13 specialty dealers around
the country. These specialty dealers have approximately 70
independent representatives who are currently selling the
Companys products. The largest of these regional specialty
dealers are Medical Marketing in Maryland, Westcon in
California, New England Medical in Connecticut, Infection
Control Products in Missouri, and Capitol Medical in
Pennsylvania. As part of the new strategy, the Company reduced
its direct sales force by ten people on September 30, 2001.
At the same time, the remaining five direct salespeople became
regional area managers, with the responsibility of supporting
the nationwide specialty dealer network.

General
Development of Business

Background

The Company was incorporated under the laws of
the State of Connecticut in September 1987 and subsequently
re-incorporated as a Delaware company on July 18, 2001
(pursuant to a merger agreement entered into pursuant to the
Plan of Reorganization, described below). Its executive offices
and manufacturing facility are located at 129 Reservoir
Road, Vernon, Connecticut 06066, and its telephone number is
(860) 870-6112.

The Company is engaged principally in the design,
development, manufacture, sale and license of safety medical
products used by healthcare professionals. The Companys
initial products have been safety blood collection needles and
related accessory products that are marketed under the
Punctur-Guard® and Drop-It® trade names. The safety
blood collection needles utilize a patented technology that
greatly reduces the risk of accidental needlesticks by
internally blunting the needle prior to removal from the
patient. The Company has also focused its efforts on developing
strategic partnerships with larger healthcare organizations in
order to cost effectively bring new products to market featuring
its patented internal blunting technology.

In June 1993, the Company completed its
clinical tests of the Punctur-Guard® blood collection
needle (BCN) and began selling the BCN product line to
hospitals, medical centers and other large volume users on a
limited basis. In June 1994, the Company completed an
initial public offering of 163,875 shares of common stock at
$100 per share. Net proceeds to the Company were $14,191,000.
From June 1994 through December 1996, the Company
concentrated on improving and expanding its overall
manufacturing, sales and marketing operations. This included the
acquisition of a production facility, improvements to and the
expansion of its production tooling, and the installation of a
new needle assembly and packaging system.

On March 16, 1995, the Company entered into
a domestic distribution and marketing agreement with Allegiance
Healthcare Corporation (Allegiance, formerly Baxter
Healthcare Corporation), a worldwide leader in sales,
distribution and manufacturing of medical products. Pursuant to
the agreement, the Company

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retains primary responsibility for marketing its
products. Allegiance supports the Companys marketing
efforts with marketing promotions for the Companys
products and stocks the Companys products in Allegiance
warehouse locations throughout the United States. Allegiance is
compensated based on a percentage of sales.


In September 1995, the Company completed a
secondary public offering of securities involving the sale of
172,500 shares of common stock at $112.50 per share. The net
proceeds totaled $17,575,000, of which the Company utilized
$4,000,000 to repay outstanding debt obligations. The balance
was used for working capital to sustain ongoing operations, to
purchase additional machinery and equipment, and to continue to
improve and expand its manufacturing and marketing operations,
as well as to support research and development.

From the latter part of 1996 through 1998, the
Company focused its efforts on establishing joint venture
agreements on one or more of its major product lines, and on
January 28, 1997, the Company entered into a Development
and License Agreement and a Supply Agreement with Johnson &
Johnson Medical (JJM) of Arlington, Texas. Under the
terms of the original agreements, the Company would develop and
manufacture safety needle assemblies for JJM utilizing its
self-blunting technology, which would be used by JJM under an
exclusive worldwide license granted by the Company to
manufacture and sell a new safety intravenous catheter
(I.V. catheter). The Company received licensing fees
and funding to complete the development of the safety needle
assemblies and for the development of manufacturing equipment
and tooling. JJM agreed to acquire initial production equipment,
purchase certain minimum quantities of safety needle assemblies
annually, and to pay certain minimum annual royalties.

On April 9, 1998, the Company amended the
original development and license agreement and canceled its
supply agreement with JJM. The amended terms included certain
changes in the licensing and royalty agreements as well as the
transfer of manufacturing of the safety needle assemblies to
JJM, in exchange for an initial milestone payment of $3,500,000
with an additional $500,000 payable upon completion of certain
additional milestones. The revised agreement also provided for
an additional $300,000 payable to the Company for initial
capital equipment purchases during 1998.

In December of 1998, the Company completed the
construction of an automated assembly machine for JJM under the
terms of the amended agreement, and the equipment was
transferred to JJMs facility. During the first quarter of
1999, the Company continued to perform services for JJM under
the terms of the agreement. By the end of the first quarter of
1999, the Company had met substantially all of the contractual
obligations, but during the remainder of 1999, the Company
continued to provide consulting and engineering work for JJM for
the I.V. catheter project; however, revenue recorded was outside
of the original agreements with JJM.

In October 1998, the Company entered into a
distribution agreement with Fisher HealthCare of Houston, Texas,
the second largest operating unit of Fisher Scientific. Fisher
Scientific is one of the world leaders in serving science,
providing more than 245,000 products and services to research,
healthcare, industrial, and educational and government customers
in 145 countries. The distribution agreement allows Fisher
HealthCare to purchase and distribute all of the Bio-Plexus
blood collection products.

On October 23, 1998, the Company entered
into an exclusive License Agreement and Design, Development and
Asset Transfer Agreement for a safety Peripherally Inserted
Central Catheter (PICC) introducer with TFX Medical
(TFX), a division of Teleflex Incorporated, the
industrys dominant supplier of PICC introducers. The
License Agreement includes certain minimum annual volume
requirements and ongoing royalties on the sale of PICC
introducer catheters featuring Punctur-Guard® technology.
Under the Design, Development and Asset Transfer Agreement, the
Company would design and develop safety needle assemblies to be
used with the TFX catheter, and would modify existing
manufacturing equipment to be transferred to TFX pursuant to the
terms and conditions of the agreement. On July 26, 1999, an
agreement was entered into with TFX to modify the License
Agreement dated October 23, 1998. The amended agreement
included additional licensing fees and changes in royalty
revenue in exchange for TFXs right to exclusively market
to one of its customers. In the first quarter of 2000, the
Company completed its obligations under the Design, Development
and Asset Transfer Agreement.

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In June of 1998, the Company received
ISO 9002 and EN 46002 certifications from the National
Standards Authority of Ireland (NSAI). ISO 9002
is a general international standard for quality assurance in
production, installation and servicing. EN 46002 provides
particular quality system requirements for suppliers of medical
devices that are more specific than the general requirements
specified in ISO 9002. The Company also began labeling its
products with the CE Mark during 1998, which indicates that
the Company is following Medical Device Directives in Europe
that include the standards set forth under ISO 9002 and
EN 46002. In February of 2000, the Company received
ISO 9001 and EN 46001 registrations from the NSAI.
This certification is an upgrade from the previous ISO 9002
and EN 46002 status. The change indicates that the
Companys product design process also meets the
international quality system standards. The Company will
continue to label product with the CE Marking, which indicates
that the Company is following the European Community Medical
Device Directives. The Company believes that these registrations
will better enable the Company to sell its products
internationally if and when the Company decides to actively
pursue the international market.

In January 2000, the Company entered into a
distribution agreement with Owens & Minor, a major
distributor of medical products to hospitals throughout the
United States. Owens & Minor, a Fortune 500 company
headquartered in Richmond, Virginia, is one of the nations
largest distributors of national brand medical and surgical
supplies. Their distribution centers serve hospitals, integrated
healthcare systems and group purchasing organizations
nationwide. The distribution agreement allows Owens & Minor
to purchase and distribute all of the Bio-Plexus blood
collection products.

On February 21, 2000, the Company entered
into a distribution agreement with McKessonHBOC Medical Group of
Richmond, Virginia. McKessonHBOCs Supply Management
Business is a leading distributor of medical-surgical supplies
to more than 5,000 hospitals nationwide. The agreement allows
McKessonHBOC to purchase and distribute the Companys
products on a non-exclusive basis without territorial
limitations or restrictions. The agreement is in effect for a
period of five years and shall continue automatically in effect
for successive terms of five years each until terminated by
either party.

On December 19, 2000, the Company entered
into a Development and Manufacturing and Distribution Agreement
with Fresenius. Pursuant to this agreement, during the first
phase, the Company and Fresenius will develop Extracorporeal
Therapy Needles, and the Company will deliver 5,000 finished
needle assemblies for evaluation by Fresenius. The Company
anticipates that it will complete these obligations under the
contract in the second quarter of 2002. Fresenius then has a
four-month option period to decide whether or not to proceed
with the second phase. If it elects to exercise the option for
phase two, Fresenius will manufacture, market, and distribute
the needles. In connection with this agreement, the Company also
granted to Fresenius, contingent on its exercise of the phase
two option, an exclusive worldwide license to manufacture, have
manufactured, use, sell, have sold or offer for sale such
needles utilized in dialysis applications covered by the
Punctur-Guard® technology. The Fresenius agreement provides
for the payment of royalties to the Company within twelve months
after the election by Fresenius to proceed with phase two.

In May 2001, the Company began clinical-use
evaluations of its Punctur-Guard® Winged Set blood
collection product line in key hospitals and laboratories in
anticipation of full commercial launch. As noted above, the
Winged Set product line was commercially launched in the third
quarter of 2001.

The Company anticipates that it will experience
continuing product sales growth in 2002 due, in part, to federal
and state legislation directing the use of safety products such
as the Company sells.

Company Financing and Reorganization

The following section details the Companys
financing and reorganization activities covering the period from
1999 to the effective reorganization date of July 18, 2001.
During this timeframe, the Company completed a series of
financings with the Appaloosa Entities. In accordance with the
Company reorganization on July 18, 2001, all Appaloosa
Entities debt was subsequently converted to Company common
stock and Appaloosa Entities common stock warrants and
stock options were canceled and deemed extinguished as part of
the Plan of Reorganization.

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When used in this section, the registrant prior
to its reorganization on April 4, 2001 (the Petition Date)
is referred to as the pre-petition Company; the
registrant prior to its approved reorganization pursuant to the
Plan of Reorganization is referred to as the Debtor
Company; the registrant after its reorganization under the
Plan of Reorganization is referred to as the Reorganized
Company; and the registrant after its reincorporation in
the State of Delaware is referred to as the Company.

Convertible
Note Financing

On September 21, 1999, the pre-petition
Company received a commitment from Appaloosa Management L.P. for
a total financing package of $17.5 million, comprised of
(i) $16.75 million of zero-coupon, secured convertible
notes due 2005 (the Convertible Notes),
(ii) 25,000 shares of common stock issued at a purchase
price of $30 per share (the Permanent Financing
Shares) and (iii) nine-year warrants to purchase
150,000 shares of common stock at an initial exercise price of
$70 per share (the $70 Warrants, and collectively
with the Convertible Notes and the Permanent Financing Shares,
the Permanent Financing). The Permanent Financing
was consummated on April 28, 2000 after receipt of
stockholder approval of the terms of the Permanent Financing and
certain related matters. All Convertible Notes were converted
into Company common stock on July 18, 2001 as part of the
consummation of the Plan of Reorganization explained below.

Bridge
Transactions

Pending consummation of the Permanent Financing,
on October 21, 1999, the pre-petition Company issued to
certain funds for which Appaloosa Management L.P. acts as
investment adviser (collectively, the Appaloosa
Entities) a 7.5% non-convertible secured note in the
aggregate principal amount of $3 million (the First Bridge
Note). In January 2000, the interest rate on the
First Bridge Note was increased to 12% per annum. In connection
with the issuance of the First Bridge Note, the pre-petition
Company also issued to the Appaloosa Entities (i) a
five-year warrant to purchase up to 100,000 shares of common
stock, at an initial exercise price of $30 per share (the
$30 Warrants) and (ii) a nine-year warrant
to purchase up to 150,000 shares of common stock at an initial
exercise price of $50 per share (the
$50 Warrants) (the $30 Warrants and
$50 Warrants are collectively referred to herein as the
First Bridge Warrants). At the election of the
Appaloosa Entities and upon the closing of the Permanent
Financing, the exercise price of the $30 Warrants increased
to $40 per share of common stock. The exercise price of the
$50 Warrants increased to $70 per share of common stock
upon the closing of the Permanent Financing. The
$50 Warrants contained a net-exercise provision. The fair
value of the warrants at the date of issuance was recorded as a
discount on the debt and was amortized over the term of the
First Bridge Note.

On January 5, 2000, the pre-petition Company
issued to the Appaloosa Entities a 15% non-convertible secured
note in the aggregate principal amount of $1.65 million (the
Second Bridge Note). In connection with the issuance
of the Second Bridge Note the Company also agreed to issue and
sell on the earlier of (i) April 30, 2000 and
(ii) the closing of the Permanent Financing, five-year
warrants to acquire up to 20,000 shares of common stock at an
initial exercise price of $30 per share (the Second Bridge
Warrants). The Second Bridge Warrants contained a
net-exercise provision.

On April 3, 2000, the pre-petition Company
issued to the Appaloosa Entities a 15% non-convertible secured
note in the aggregate principal amount of $2.2 million (the
Third Bridge Note). No warrants or convertible
securities were issued in connection with the Third Bridge Note.
The First Bridge Note, the Second Bridge Note and the Third
Bridge Note are collectively referred to as the Bridge
Notes. The Bridge Notes were not convertible into shares
of common stock and were paid-in-full at the closing of the
Permanent Financing on April 28, 2000.

Permanent
Financing

In order to consummate the Permanent Financing,
the pre-petition Company was required by the rules of the NASDAQ
Stock Market to obtain the approval of a majority of the
pre-petition Companys stockholders of the terms and
conditions of the Permanent Financing. In addition, the
Connecticut Business Corporation

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Act required that the pre-petition Company obtain
stockholder approval of (i) an amendment to the
pre-petition Companys certificate of incorporation (the
Charter Amendment) and (ii) an amendment to the
pre-petition Companys 1991 Long-Term Incentive Plan (the
Incentive Plan Amendment). The Charter Amendment and
the Incentive Plan Amendment were required by the terms of the
Permanent Financing. The approval of the pre-petition
Companys stockholders of the terms of the Permanent
Financing, the Charter Amendment and the Incentive Plan
Amendment is collectively referred to as Stockholder
Approval. Coinciding with Stockholder Approval obtained on
April 28, 2000, the pre-petition Company issued to the
Appaloosa Entities the Convertible Notes, the Permanent
Financing Shares and the $70 Warrants. The Convertible Notes
were convertible into shares of common stock at an initial
conversion price of $30. The $70 Warrants contained a
net-exercise provision. The fair value of the warrants at the
date of issuance was recorded as a discount on the debt, which
was to be amortized over the term of the debt.


The Permanent Financing generated aggregate
proceeds to the pre-petition Company of $17.5 million. After
repayment of the Bridge Notes and costs and expenses associated
with the financing, the pre-petition Company realized net
proceeds of approximately $9.6 million, which was available
along with existing resources for general working capital
purposes, subject to the terms and conditions of the Permanent
Financing transaction agreements.

The Convertible Notes contained certain
restrictive covenants including but not limited to, minimum
(maximum) operating profit (loss), minimum product sales
revenues, and maximum permitted capital expenditures, all as
defined. Prior to the effectiveness of the Plan of
Reorganization, the Company was in violation of the operating
profit (loss) and minimum product sales revenues covenants.
Under the terms of the agreement, the Appaloosa Entities were
entitled to call the Convertible Notes if the pre-petition
Company was in violation of any restrictive covenant. The
covenant violations were not waived by the Appaloosa Entities;
however, such notes were converted under the provisions of the
Plan of Reorganization (see below). Accordingly, the full amount
of the convertible debt was classified as a current liability as
of March 31, 2001 and up until July 18, 2001, when the
debt was converted to equity.

All Convertible Notes were converted into Company
common stock on July 18, 2001, as part of the consummation
of the Plan of Reorganization explained below.

Convertible
Debentures

On April 27, 1999, the pre-petition Company
sold an aggregate principal amount of $2,500,000 of its 6%
Convertible Debentures due June 30, 2004 (the
6% Debentures) to several purchasers (the
Debenture Holders) (the Convertible Debenture
Financing). The 6% Debentures were convertible at any
time at the option of the Debenture Holders into shares of the
pre-petition Companys common stock at the lesser of a
fixed conversion price of $30.60 per share (as may have been
adjusted from time to time) or a floating conversion price at
the time of the conversion if the floating conversion price was
less than $30.60 per share (as may have been adjusted from time
to time). The 6% Debentures could have been wholly or partially
redeemed at the option of the pre-petition Company for an amount
not to exceed 130% of the face value thereof plus accrued and
unpaid interest at any time after the date of issuance. As of
September 30, 2000, the Debenture Holders had converted all
of the $2,500,000 outstanding principal balance of the
6% Debentures into 88,073 shares of common stock. The
pre-petition Company and the Debenture Holders had limited put
and call options, respectively, for additional 6% Debentures. In
connection with the subsequent financing by the Appaloosa
Entities, the pre-petition Company agreed not to exercise its
put right under the 6% Debentures. As of July 26, 2000, the
Debenture Holders call options expired and were not
exercised. In connection with the Convertible Debenture
Financing, the pre-petition Company issued a warrant to purchase
up to 50,000 shares of the pre-petition Companys common
stock at an exercise price of $33.80 per share. Such warrant was
canceled and deemed extinguished as part of the Plan of
Reorganization explained below.

Reorganization
and Emergence from Chapter 11

On April 4, 2001 (the Petition
Date) the pre-petition Company filed a voluntary petition
for relief under Chapter 11 of the United States Code (the
Bankruptcy Code) with the United States Bankruptcy

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Court for the District of Connecticut (the
Bankruptcy Court). As of the Petition Date, the
pre-petition Company commenced operating its business and
managed its properties as a debtor-in-possession. On
April 4, 2001, the pre-petition Company filed a Disclosure
Statement (the Disclosure Statement) and a Plan of
Reorganization (the Plan of Reorganization) with the
Bankruptcy Court. The Disclosure Statement set forth certain
information regarding, among other things, significant events
that had occurred during the pre-petition Companys
Chapter 11 case and the anticipated organization, operation
and financing of the reorganized Company (Reorganized
Company). The Debtor Company subsequently filed certain
amendments to the Plan of Reorganization to add and clarify
certain terms of the Plan of Reorganization and to establish
conditions to confirmation and effectiveness of the Plan of
Reorganization. Among other things, the Plan of Reorganization
(1) divided the pre-petition Companys creditors into
eight classes; (2) provided that certain classes of
creditors would be paid in full, and would be otherwise rendered
unimpaired; (3) provided that, in exchange for their
secured claim, the Appaloosa Entities would receive shares of
common stock of the Reorganized Company representing 85% of the
Reorganized Companys outstanding common stock; and
(4) provided that holders of common stock issued prior to
the confirmation of the Plan of Reorganization would receive, in
exchange for their existing shares, new shares of common stock
of the Reorganized Company, which would constitute 15% of the
Reorganized Companys outstanding common stock. In
addition, all outstanding common stock warrants and options
(including those issued under the 1991 Long-Term Incentive Plan
and the 1995 Non-Employee Directors Stock Option Plan) were
canceled and deemed extinguished.


In general, the Plan of Reorganization provided
that holders of administrative claims, allowed tax claims,
allowed priority claims and allowed unsecured claims would be
paid in full, and would be otherwise rendered unimpaired.
Allowed secured claims other than the allowed secured claim of
the Appaloosa Entities would be reinstated and paid in
accordance with their terms.

The Plan of Reorganization also set forth certain
information, means for implementation of the Plan of
Reorganization, the effect of rejection of the Plan of
Reorganization by one or more classes of claims or interests,
provisions for how distributions would be made to the Debtor
Companys creditors, the treatment of executory contracts
and leases and conditions precedent to confirmation of the Plan
of Reorganization and the occurrence of the Effective Date of
the Plan of Reorganization.

The Debtor Company filed with the Bankruptcy
Court the First Amended Plan of Reorganization on April 19,
2001, and the Modified First Amended Plan of Reorganization on
June 12, 2001, to add and clarify certain terms of the Plan
of Reorganization and to establish conditions to confirmation
and effectiveness of the Plan of Reorganization.

On April 19, 2001, an order was approved by
the Bankruptcy Court (i) approving the Disclosure
Statement, (ii) establishing solicitation, voting, and
tabulation procedures and deadlines, and (iii) scheduling a
hearing to consider confirmation of the Plan of Reorganization,
establishing deadlines and procedures for filing objections to
confirmation of the Plan of Reorganization.

On June 12, 2001, a confirmation order was
entered by the Bankruptcy Court that confirmed the Plan of
Reorganization pursuant to Bankruptcy Code section 1129,
and the Debtor Company emerged from its debtor-in-possession
status as the Reorganized Company. The conditions precedent to
the effectiveness of the Plan of Reorganization included, among
other things, reincorporation of the Reorganized Company in the
State of Delaware, there being no material adverse change in the
development and launch of the Companys Winged Set product,
and the consummation of the Appaloosa Private Placement (as
described below).

The conditions precedent to the effectiveness of
the Plan of Reorganization were met on July 18, 2001 with
the reincorporation of the Reorganized Company in the State of
Delaware, payment in full of all trade vendors, the conversion
of the Appaloosa Entities debt into Company common stock,
and the consummation of the Appaloosa Private Placement.

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Reverse
Split and Reincorporation

Effective July 18, 2001, the Reorganized
Company reincorporated in the State of Delaware. The
reincorporation was effected pursuant to a merger agreement
entered into pursuant to the Plan of Reorganization (the
Merger Agreement). Immediately prior to the
reincorporation, the Reorganized Company effected a reverse
stock split pursuant to the Plan of Reorganization. As a result
of the reverse stock split, each ten shares of the Reorganized
Companys common stock was converted into one share of
Reorganized Company common stock. Thereafter, the
reincorporation was effected in accordance with the Merger
Agreement by merging the Reorganized Company with and into the
Company. As a result of that merger, the separate corporate
existence of the Reorganized Company ceased, the certificate of
incorporation and bylaws of the Company became and continue in
effect as the registrants certificate of incorporation and
bylaws, and each ten shares of common stock of the Reorganized
Company was immediately converted into one share of common stock
of the Company. All share and per share information has been
restated to reflect the effect of the reverse split.

After giving effect to the reverse stock split
and the Companys reincorporation in the State of Delaware,
the registrants common stock began trading on the National
Association of Securities Dealers OTC Bulletin Board under
the symbol BPXS effective July 27, 2001.

Conversion
of Convertible Notes

Effective July 18, 2001, and in accordance
with the terms of the Plan of Reorganization, the Purchasers
(defined below) converted $19,408,000 of debt (made up of the
Convertible Notes) in the Reorganized Company, into 8,501,224
shares of common stock in the Company (the Debt
Conversion), at an effective conversion price of $2.283
per share, giving the Purchasers 85% of the ownership of the
Company. In conjunction with the Debt Conversion, all warrants
associated with the Permanent Financing, the Bridge Financing,
and the Convertible Debentures (all described above) were
canceled.

The
Appaloosa Private Placement

On July 18, 2001 (the Effective
Date), the Company completed a private placement of
1,314,060 shares of its common stock to certain funds for which
Appaloosa Management L.P. acts as investment adviser
(collectively referred to herein as the Purchasers).
The purchase price paid for the stock was $3 million, which
was reduced in an amount equal to the Purchasers costs
incurred in connection with the transaction and the amount of
the Companys outstanding indebtedness for borrowings
pursuant to the financing provided by the Purchasers during the
Chapter 11 case. The private placement was made pursuant to
a Stock Purchase Agreement, which contained customary
provisions, including representations and warranties. As part of
the private placement, on the Effective Date, the Company also
issued to the Purchasers warrants to purchase 1,314,060 shares
of its common stock (the Warrants). The Warrants
have an exercise price of $2.283 per share. The Warrants contain
customary provisions, including anti-dilution protection. Upon
the Company achieving certain performance targets, (a) the
Company shall have the right to redeem these Warrants at a price
of $.01 per share at any time 45 days after the Purchasers
receive notice of the achievement of the performance target by
the Company and (b) the Warrants shall be exercisable by
the Purchasers for 30 days after the Purchasers receive
notice of the achievement of the performance target by the
Company. The exercise of these Warrants, assuming they are
exercised in full, would yield proceeds of approximately
$3.0 million to the Company. Additionally, in consideration
for the equity investment made by the Purchasers, the Company
and the Purchasers have entered into a Registration Rights
Agreement, dated as of the Effective Date (the
Registration Rights Agreement). The Registration
Rights Agreement contains customary provisions, including
adjustments for stock splits, stock dividends and reverse stock
splits. Pursuant to the Registration Rights Agreement, the
Purchasers have demand registrations which, if
exercised, would obligate the Company, subject to certain
exceptions, to file and have declared effective, a registration
statement relating to resales of common stock owned by the
Purchasers or received from the Company in respect of the
foregoing by reason of stock dividends or similar matters. These
demand registration rights may be exercised no more than six
times. Pursuant to the Registration Rights Agreement, the
Purchasers also have piggyback registration rights
in connection with other public offerings by the Company. The
summary set

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forth herein of certain provisions of the Plan of
Reorganization, the Companys certificate of incorporation
and bylaws, the Stock Purchase Agreement, the Warrant Agreement,
and the Registration Rights Agreement does not purport to be a
complete description of the documents and is qualified in its
entirety by reference to the full provisions of each document as
previously filed.


Description
of Reorganization Accounting

In connection with the reorganization, the
Company reviewed the recommended accounting principles for
entities emerging from Chapter 11 (fresh start
reporting) set forth in the American Institute of
Certified Public Accountants Statement of Position 90-7
Financial Reporting by Entities in Reorganization under
the Bankruptcy Code. SOP 90-7 provides guidance with
regard to disclosures while an entity is in reorganization, and
requires that fresh start reporting (purchase accounting) be
adopted when the reorganization value of the assets of the
emerging entity (immediately before the date of confirmation) is
less than the total of all post-petition liabilities and allowed
claims, and the holders of existing voting shares immediately
before confirmation receive less than fifty percent (50%) of the
voting shares of the emerging entity. If fresh start reporting
were applicable, it would require, among other things, an
allocation of the reorganization value to the assets of the
Company, creating a new set of financial statements for the
reorganized entity. These statements would not be comparable
with those prepared before the reorganization plan because they
would be those of a new entity.

In connection with the Plan of Reorganization,
the holders of the existing shares received only 15% of the
voting shares of the Company; however, the reorganization value
of the Company was not deemed to be less than the total of all
post-petition liabilities and allowed claims. Accordingly, the
adoption of the fresh start requirements was not applicable, and
therefore the transaction was accounted for at historical values
within the third quarter of 2001 financial statements, which
allows comparison of the Companys financial statements to
those of prior periods.

In determining the reorganization value, the
Company utilized prior independent appraisals, discounted cash
flow analysis, and comparable industry standards. The Company,
subsequent to its reorganization on July 18, 2001, has paid
all allowed unsecured claims and pre-petition value. All other
allowed secured and priority claims were not subject to
compromise, and with the exception of the Convertible Notes,
were carried forward at historical values. Accordingly, there
was no discounting or forgiveness of debt associated with the
reorganization. Costs of the reorganization are separately
identified within the statements of operations.

Reorganization
Costs

As part of the Plan of Reorganization, certain
costs were incurred and certain asset carrying values were
impaired, causing a write-off of such assets. The total
reorganization charge in the accompanying 2001 statements of
operations was $3,377,000. Of that amount, $2,741,000 represents
write-offs of unamortized debt financing costs and unamortized
debt discounts. Both of these assets had originally been
established with the placement of the Convertible Notes, and
because of the conversion to common stock of this debt, the
associated unamortized debt financing and debt discount carrying
values were written off. The remaining $636,000 represents
professional fees paid during the reorganization period.

NASDAQ
Delisting

The Nasdaq SmallCap Stock Market notified the
Company that its common stock was delisted from The Nasdaq Stock
Market effective with the opening of business on March 6,
2001. The delisting was as a result of the Companys
failure to meet Nasdaqs requirements for continued
listing. The Company did not appeal the delisting on the Nasdaq
National Market and is not currently eligible for listing on The
New York Stock Exchange or the American Stock Exchange.

Trading in the Companys common stock was
conducted on the National Association of Securities
Dealers Pink Sheets until July 27, 2001. On that
date, after giving effect to the reverse stock split and the
reincorporation, the Companys common stock began trading
on the National Association of Securities Dealers OTC
Bulletin Board under the symbol BPXS.

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The Companys common stock may become
subject to regulation as a penny stock. The
Securities and Exchange Commission has adopted regulations,
which generally define penny stock to be any equity
security that has a market price or exercise price less than
$5.00 per share, subject to certain exceptions, including
listing on the Nasdaq National Market. If the Companys
common stock is not listed on the Nasdaq National Market and no
other exception applies, the Companys common stock may be
subject to the SECs Penny Stock Rules, Rules 15g-1
through Rule 15g-9 under the Exchange Act. For transactions
covered by these rules, the broker-dealer must make a special
suitability determination for the purchase of such securities
and have received 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 transaction, of a risk
disclosure document mandated by the SEC relating to the penny
stock market. The broker-dealer must also disclose the
commission payable to both the broker-dealer and the registered
representative, current quotations for the securities and, if
the broker-dealer is the sole market maker, the broker-dealer
must disclose this fact and the broker-dealers presumed
control over the market. Finally, monthly statements must be
sent disclosing recent price information for the penny stock
held in the account and information on the limited market in
penny stocks. Consequently, the penny stock rules may restrict
the ability of broker-dealers to sell the Companys
securities and may affect the ability of holders to sell the
Companys securities in the secondary market and the price
at which such holders can sell any such securities.
Rule 15g-9 under the Exchange Act imposes additional sales
practice requirements on broker-dealers who sell such securities
except in transactions exempted from such rule. Such exempt
transactions include those meeting the requirements of
Rule 505 or 506 of Regulation D promulgated under the
Securities Act and transactions in which the purchaser is an
institutional accredited investor or an established customer of
the broker-dealer.

Risk Factors

We Need to Obtain Additional
Financing

We are in the process of attempting to raise
additional capital to fund operations. We have recently
substantially reduced our monthly net usage of cash through a
combination of reduction of expenses in the latter half of 2001
and an increase in both product sales and royalty revenues (see
Liquidity and Capital Resources for more detailed description).
We believe that we have sufficient funds to support operations
into the third quarter of 2002. If we are unable to raise
additional funds as required, we may have to reduce the scope
of, or cease, our operations.

We Have Experienced A History of Losses And
Any Future Profitability Is Uncertain

We were formed in 1987, and we have not yet made
a profit. We cannot guarantee that we will ever be profitable.
Furthermore, we may incur additional losses. As of
December 31, 2001, we had an accumulated deficit of
approximately $88,890,000 and we cannot assure investors that we
will ever achieve profitability or positive operating cash flow.
Our relatively limited history of operations, the nature of our
business, and our limited marketing and manufacturing experience
make the prediction of future operating results difficult and
highly unreliable. Our future prospects, therefore, must be
evaluated in light of the substantial risks, expenses, delays
and difficulties normally encountered by companies in the
medical device industry, which is characterized by an increasing
number of participants, intense competition and a high rate of
failure. We cannot assure investors that we will be able to
market our products at prices and in quantities that will
generate a profit. We cannot assure investors that we can avoid
potential delays and expenses in developing new products,
problems with production and marketing or other unexpected
difficulties. See Managements Discussion and
Analysis of Financial Condition and Results of Operations.

We Have Received A Going Concern
Opinion From Our Accountants

We currently require additional capital to fund
operations during the latter part of 2002. Due to recurring
losses from operations, and the uncertainty surrounding our
ability to attract additional financing to support current and
anticipated levels of operations, our independent public
accountants audit opinion states that these matters raise
doubt about our ability to continue as a going concern. See
Managements Discussion and Analysis of Financial
Condition and Results of Operations.

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Our Success Depends On Greater Commercial
Acceptance; We Are Not Able To Predict Future Commercial
Acceptance

Our future depends on the success of our current
safety medical products which depends primarily on healthcare
professionals accepting our products as reliable, accurate and
cost-effective replacement for traditional medical products. We
cannot predict the extent that the market will continue to
accept our safety blood collection needles and related accessory
products that are marketed under the Punctur-Guard® and
Drop-It® trademarks. Although we continue to focus on
developing additional safety medical products featuring our
patented internal blunting technology to respond to the needs of
healthcare professionals, we cannot guarantee that we will be
able to develop additional safety medical products or in a way
that is cost-effective.

Our Manufacturing Is Subject To Certain
Risks

We may face unexpected technical problems in
trying to transfer product ideas from the development stage to
the manufacturing stage. These technical problems could delay
our plans for new product releases. In addition, our
manufacturing processes involve proprietary molds, machinery and
systems to manufacture our safety needles and related products
which our manufacturing personnel must continuously monitor and
update, especially as we develop more products. Although we have
extensive experience in manufacturing our first product line,
the BCN, we have limited experience in producing our new product
line, the Winged Set. Manufacturing companies sometimes have
problems in ramping up production levels for new products, such
as quality control, compliance with FDA regulations, and
production yields. Problems in scaling up production of the
Winged Set product line could have a material adverse effect on
the Company. In addition, if we cannot increase production
rates, a backlog could develop which could cause us to lose new
customers, which could then have a material adverse effect on
the prospects of the Company. In order to be profitable, we must
manufacture greater quantities of products than we have to date
and we must do this more efficiently than we have.

Reliance On Certain Suppliers

Only a few third-party vendors make some of our
components. We may not be able to meet the demand for our
products if one or more of these vendors could not supply us
with the needed components. We purchase other important
components from single suppliers, so that problems with such
suppliers could seriously impact our production schedules.
Shortages could also occur from some suppliers, which could
create delays in product shipments and have a material impact on
operations. We own the molds that are used by our suppliers to
manufacture the components of our products.

Reliance on Single Manufacturing
Facility

Our Vernon, Connecticut facility is our only
manufacturing facility. If this facility were damaged or closed
due to fire or other causes, it would present serious
consequences adversely impacting the viability of our business.

We May Not Be Successful in Defending Our
Proprietary Rights

Our commercial success depends partly upon our
trade secrets, know-how, trademarks, patents and other
proprietary rights. We have obtained patent protection for our
proprietary technology in the United States and internationally,
but we cannot assure investors that third parties will not
challenge our patents or that they will not be invalidated or
designed around or that they will provide a commercially
significant level of protection. Furthermore, once issued, a
patent is not always valid or enforceable, and a patent holder
may still infringe the patent rights of others. If our key
patents are invalidated or expire, this could lead to increased
competition and would adversely affect our business. Litigation
may be necessary to enforce our patents, trade secrets or
know-how, or to determine the enforceability, scope and validity
of the proprietary rights of others. It would be a substantial
expense to our business and a diversion of our personnels
time and effort to defend and prosecute intellectual property
suits and related legal and administrative proceedings.
Furthermore, we cannot assure

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investors that we will be able to maintain the
confidentiality of our trade secrets or know-how or that others
may not develop or acquire trade secrets or know-how that are
similar to ours.


We Compete Against Larger Entities That Sell
Safety Medical Products

Our success depends on our ability to establish
and maintain a competitive position in the safety medical
product market, particularly with respect to our
Punctur-Guard® safety needles and related products. We
expect that manufacturers of conventional medical products will
compete intensely to maintain their markets and revenues. Some
of these manufacturers currently offer products, which may be
perceived as less expensive to operate, and which include a
broader range of applications than the products we offer and
expect to offer. We cannot assure investors that competitive
pressures will not result in price reductions of our products,
which could adversely affect our profitability. In addition,
healthcare professionals may choose to maintain their current
method of blood collection, which may not rely on self-blunting
needle technology. We also face competition from manufacturers
of alternative safety medical products intended for similar use.
Many of our competitors have substantially greater capital
resources, research and development staffs and facilities than
ours. Our products may become obsolete or non-competitive if
rapid technological changes or developments occur. We may need
to make substantial investments in and commit significant
resources to product improvement and development in order to
stay competitive and successfully introduce new products. We
cannot assure investors that we will have the resources
necessary to make such investments. If we do have the required
resources, we cannot assure investors that we will be able to
respond adequately to technological or market changes.

We Depend On Key Members Of Our Staff And Must
Retain And Recruit Qualified Individuals If We Are To Be
Competitive

Our success depends on our ability to retain
certain scientific, technical, regulatory and managerial
personnel. If we lose key personnel, it could have a materially
adverse effect on our business. Competition for qualified
personnel is intense and we cannot assure investors that we will
be successful in recruiting or retaining such personnel in the
future.

Our Products Are Regulated by the United
States Food and Drug Administration (FDA)

The FDA regulates our products in the United
States as medical devices. The process of obtaining United
States regulatory approvals and clearances may be lengthy,
expensive and uncertain. Commercial distribution of our products
in foreign countries may be subject to varying governmental
regulation that may delay or restrict the marketing of our
products in those countries. In addition, other regulatory
authorities may impose limitations on the use of our products.
FDA enforcement policy strictly prohibits the marketing of
FDA-cleared or approved medical devices for unapproved uses. Our
manufacturing operations are subject to compliance with Good
Manufacturing Practices (GMP) regulations of the FDA
and similar foreign regulations. These regulations include
controls over design, testing, production, labeling,
documentation and storage of medical devices. Enforcement of GMP
regulations has increased significantly in the last several
years and the FDA has stated publicly that compliance will be
more strictly monitored in the future. Our facilities and
manufacturing processes, as well as those of current and future
third party suppliers, will be subject to periodic inspection by
the FDA and other regulatory authorities. Failure to comply with
these and other regulatory requirements could result in, among
other measures, warning letters, fines, injunctions, civil
penalties, recall or seizure of products, total or partial
suspension of production, refusal of the government to grant
clearance or approval for devices, withdrawal of clearances or
approvals, or criminal prosecution, which would have an adverse
effect on our business.

Significant Stockholders Exercise Influence
Over the Company

The Appaloosa Entities own approximately 87% of
the Companys outstanding common stock. As a result, the
Appaloosa Entities can control the outcome of stockholder votes.
Examples of stockholder votes include those for the election of
directors, changes in our Certificate of Incorporation and
Bylaws and

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approving certain mergers or other similar
transactions, such as a sale of all or substantially all of our
assets. See Security Ownership of Certain Beneficial
Owners and Management.


The Companys Stock Price Is Volatile And
Investing In Our Common Stock Involves A High Degree Of
Risk

The market price of our common stock has
fluctuated significantly and as a result, it can be
volatile. Future announcements concerning our
competitors, including operating results, technological
innovations or new commercial products, government regulations,
developments concerning proprietary rights, or litigation could
have a significant impact on the market price of our common
stock. In addition, the Appaloosa Entities have the right to
request under the Securities Act of 1933, as amended, that we
register the shares of common stock it beneficially owns for
public sale. If we registered these shares, they would, subject
to certain volume limitations, become freely tradable.
Furthermore, the stock market has from time to time experienced
extreme price and volume fluctuations, which may adversely
affect the market price of our common stock. Some of these
fluctuations have particularly affected companies in the medical
device industry and they have often been unrelated to the
operating performance of such companies. In addition, general
economic, political and market conditions may also adversely
affect the market price of our common stock. We cannot assure
investors that the trading price of our common stock will remain
at or near its current level.

Financial Information About Industry
Segments

Operating segments are components of an
enterprise about which separate financial information is
available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in
assessing performance. In fiscal 1998, with the onset of the
development contract with JJM, the Company began internally
reporting two distinct segments: Safety Medical Products and
Accessories and Joint Venture Design and Development. Distinct
reporting by such segments was deemed necessary by management
based on the significance of reported revenues and expenses and
the Companys intention to focus operating resources in
both of these areas.

The Safety Medical Products and Accessories
segment includes operations associated with the manufacture of
blood collection needles, needle holders and needle disposal
containers. Starting in 2000, this segment also began to include
royalty revenues. The Joint Venture Design & Development
segment includes operations associated with product design and
development, and the design, development and construction of
machinery and tooling in connection with joint venture partners.

Information with respect to each of the
Companys business segments is as follows:

Segment
Revenue

|                                        |  |      |           |      |  |      |           |  |  |   |           | 
|--------------------------------------- |  | ---- | --------- | ---- |  | ---- | --------- |  |  | - | --------- | 
|                                        |  | 2001 |           | 2000 |  | 1999
|                                        |  |      |           |      |  |     
|Safety Medical Products and Accessories |  | $    | 6,049,000 |      |  | $    | 4,761,000 |  |  | $ | 5,498,000 | 
|Joint Venture Design & Development      |  |      | 322,000   |      |  |      | 234,000   |  |  |   | 1,526,000 | 
|                                        |  |      |           |      |  |      |           |  |  |   |           | 
|Total Revenue                           |  | $    | 6,371,000 |      |  | $    | 4,995,000 |  |  | $ | 7,024,000 | 
|                                        |  |      |           |      |  |      |           |  |  |   |           | 

Major
Customers

There were two customers, domestic distributors
of the Companys products, Allegiance and Fisher
HealthCare, that exceeded 10% of the Companys Safety
Medical Products and Accessories segment revenue for the periods
presented. These distributors sell the Companys products
to hospitals and other users. If the Company lost one of these
distributors, the hospitals and other users could still purchase
the Companys products from other distributors; however,
the loss of business of any of the foregoing distributors could
disrupt the Companys business and possibly have a material
adverse effect on the business and prospects of the Company. In
the Joint Venture Design & Development segment, JJM and
Fresenius contributed to more than

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10% of the revenues associated with this segment
for the periods presented. The following table represents the
revenue associated with these major customers by segment:


|                                                            |  |      |           |      |  |      |           |  |  |   |           | 
|----------------------------------------------------------- |  | ---- | --------- | ---- |  | ---- | --------- |  |  | - | --------- | 
|                                                            |  | 2001 |           | 2000 |  | 1999
|                                                            |  |      |           |      |  |     
|Total Revenue Major Customers:                              |  |      |           |      |  |      |           |  |  |   |           | 
|Safety Medical Products and Accessories to Major
	Customers |  | $    | 3,769,000 |      |  | $    | 3,766,000 |  |  | $ | 4,510,000 | 
|Other Safety Medical domestic sales                         |  |      | 1,745,000 |      |  |      | 927,000   |  |  |   | 440,000   | 
|Export sales                                                |  |      | 51,000    |      |  |      |          |  |  |   | 548,000   | 
|Royalties                                                   |  |      | 484,000   |      |  |      | 68,000    |  |  |   |          | 
|                                                            |  |      |           |      |  |      |           |  |  |   |           | 
|Total Safety Medical Product Revenues                       |  |      | 6,049,000 |      |  |      | 4,761,000 |  |  |   | 5,498,000 | 
|Joint Venture Design & Development                          |  |      | 322,000   |      |  |      | 234,000   |  |  |   | 1,526,000 | 
|                                                            |  |      |           |      |  |      |           |  |  |   |           | 
|Total Revenue                                               |  | $    | 6,371,000 |      |  | $    | 4,995,000 |  |  | $ | 7,024,000 | 
|                                                            |  |      |           |      |  |      |           |  |  |   |           | 

For the periods presented, there were no
intersegment revenues.

Segment Profit
(Loss)

|                                             |  |      |             |      |  |      |             |   |  |   |            |  
|-------------------------------------------- |  | ---- | ----------- | ---- |  | ---- | ----------- | - |  | - | ---------- | -
|                                             |  | 2001 |             | 2000 |  | 1999
|                                             |  |      |             |      |  |     
|Safety Medical Products and Accessories      |  | $    | 2,409,000   |      |  | $    | 2,311,000   |   |  | $ | 1,744,000  |  
|Joint Venture Design & Development           |  |      | 159,000     |      |  |      | 199,000     |   |  |   | 1,439,000  |  
|                                             |  |      |             |      |  |      |             |   |  |   |            |  
|Total Gross Margin                           |  |      | 2,568,000   |      |  |      | 2,510,000   |   |  |   | 3,183,000  |  
|                                             |  |      |             |      |  |      |             |   |  |   |            |  
|Pre-production manufacturing costs           |  |      | 540,000     |      |  |      |            |   |  |   |           |  
|Research and development                     |  |      | 1,538,000   |      |  |      | 1,453,000   |   |  |   | 1,379,000  |  
|Selling, general and administrative expenses |  |      | 6,323,000   |      |  |      | 7,404,000   |   |  |   | 4,670,000  |  
|Financing expenses                           |  |      | 851,000     |      |  |      | 4,379,000   |   |  |   | 2,367,000  |  
|Reorganization costs                         |  |      | 3,377,000   |      |  |      |            |   |  |   |           |  
|                                             |  |      |             |      |  |      |             |   |  |   |            |  
|Net Loss                                     |  | $    | (10,061,000 | )    |  | $    | (10,726,000 | ) |  | $ | (5,233,000 | )
|                                             |  |      |             |      |  |      |             |   |  |   |            |  

Segment Capital
Expenditures

|                                        |  |      |         |      |  |      |           |  |  |   |         | 
|--------------------------------------- |  | ---- | ------- | ---- |  | ---- | --------- |  |  | - | ------- | 
|                                        |  | 2001 |         | 2000 |  | 1999
|                                        |  |      |         |      |  |     
|Safety Medical Products and Accessories |  | $    | 868,000 |      |  | $    | 4,040,000 |  |  | $ | 536,000 | 
|Joint Venture Design & Development      |  |      |        |      |  |      |          |  |  |   |        | 
|                                        |  |      |         |      |  |      |           |  |  |   |         | 
|Total Capital Expenditures              |  | $    | 868,000 |      |  | $    | 4,040,000 |  |  | $ | 536,000 | 
|                                        |  |      |         |      |  |      |           |  |  |   |         | 

Net identifiable assets related to Safety Medical
Products and Accessories were $5,700,000, $5,561,000, and
$2,198,000 at December 31, 2001, 2000, and 1999,
respectively. Depreciation expense related to these assets was
$729,000, $391,000, and $269,000, for the periods ended
December 31, 2001, 2000, and 1999, respectively. Due to the
service nature of the Joint Venture Design and
Development segment, identifiable assets were not material for
the periods presented.

Products, Marketing, Technology and Other
Company Information

Revenues
and Distribution

The Companys products are marketed and sold
in the United States both through independent distribution
channels and directly to end-users. The Companys products
are marketed and sold outside of the United States through
independent distributors. Order backlog is not material to the
Companys business, as orders for the Companys
products are received and filled on a current basis (see
Backlog). Product sales revenue is recognized when
products are shipped to distributors or direct to end-user
customers.

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The Companys strategic partnerships with
JJM, TFX and Fresenius have resulted in the recognition of
development contract or service revenue during the
last several years. Product and process development services
were progress billed as performed, and revenue was recognized
when billed, or, in the case of Fresenius, pro-rated over the
service period.

The Companys royalty revenue related to its
licensing agreements with JJM and TFX increased substantially,
to $484,000 in 2001, compared to $68,000 in 2000. The $416,000
increase was primarily due to the first year JJM royalties
recorded in 2001.

Products under
Development

In 2000 and 2001, substantial resources were
expended to complete the development and the purchase of
equipment and molds to begin the production of the
Punctur-Guard® Winged Set product line. A Winged Set is a
small needle with a pair of plastic wings that gives the
healthcare worker the ability to control the needle for precise
insertion into the patients vein. Its primary purpose is
to draw blood from patients whose veins are more difficult to
access, such as geriatric and pediatric patients. The
Companys product offers a unique third wing for easy
insertion and safety blunting activation. It also features a
conventional design and appearance for easy handling, storage
and disposal. The blunting member is activated with movement of
the third wing to the right, rendering the needle safe prior to
removal from the patient. This product line was commercially
launched in the third quarter of 2001.

The PICC introducer was introduced to the market
during 2000. The Company began to receive royalties on this
product in the third quarter of 2000. Pursuant to the
October 1998 agreements with TFX, the Company has received
payments for design, development, licensing fees and royalties
based on product sales. PICC introducers are used to place a
catheter in a patients vein. The PICC introducer is
comprised of a catheter mounted over a hollow bore needle that
is attached to a plastic housing. The catheter and needle is
inserted into the patients vein. The needle is then
withdrawn from the patient leaving the catheter in the vein. The
motion of withdrawing the needle automatically deploys our
internal blunting safety technology.

The Company has also developed initial prototype
designs for a number of other applications of its self-blunting
technology and intends to explore opportunities during 2002 to
establish additional joint ventures on one or more of these new
products. The Company will also continue its efforts to improve
production processes and reduce manufacturing costs of its
safety medical products.

The Company incurred $1,538,000 in research and
development expenses during the fiscal year ended
December 31, 2001, and $1,453,000 and $1,379,000,
respectively, during the two immediately preceding fiscal years.
In addition, the Company incurred $540,000 of pre-production
manufacturing costs during the fiscal year ended
December 31, 2001 related to the new Winged Set product
launched during the third quarter of 2001. Due to the completion
of certain R&D projects during 2001, as well as a recent
reduction in R&D expenses, the Company expects total
research and development expenses for 2002 to decrease from the
level experienced during recent years.

Raw Materials

The Companys Punctur-Guard® BCNs,
Winged Sets and accessory products are manufactured from
components purchased from third-party vendors. These components
are manufactured according to drawings and/or specifications
provided by the Company. The materials used in the manufacture
of these components are readily available.

The Company owns or otherwise controls all
production molds and tooling used in the manufacture of those
components deemed critical. Tooling for components purchased on
an OEM basis are owned by the manufacturer. No long-term
contracts exist for the purchase of raw materials. Most of the
Companys component suppliers are the Companys sole
source for that component. Several of these suppliers are
located outside the United States.

The Company maintains inventory of all required
components at its principal place of business. The amount of
inventory for a given component varies according to its purchase
pattern and sales outlook.

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Competition

The blood collection needle market is highly
competitive. One of the Companys primary challenges is
gaining market share against well-funded and strongly entrenched
competitors as they promote their own brands of safety needles.
Today a large segment of the blood collection needle market
continues to use non-safety devices, with one major medical
device manufacturer, Becton Dickinson and Company, holding the
largest share of the market. Other significant competitors are
SIMS Portex, a unit of Smiths Industries, Kendall Healthcare, a
unit of Tyco International, and Terumo Medical Corporation of
Japan.

The Company also competes with developers of
safety needles for license agreements, predominantly Med-Design
and Retractable Technologies.

The Company believes that the branded products it
manufactures and distributes as well as the products marketed by
its licensees, which incorporate its safety needle technology,
are superior or competitive in design, efficacy, quality and
convenience to all other safety needle devices on the market
today. In a 1997 Center for Disease Control and Prevention (CDC)
study, the Companys safety blood collection needle was
shown to reduce needlestick injuries by 76%, by far the highest
reduction of the three companies products tested.

Patents, Proprietary Rights and
Trademarks

The Company holds a United States utility patent
for a self-blunting needle using an internal cannula design,
which expires in May 2006. The Company believes the patent is
broad enough to include a number of product applications
including blood collection needles, Winged Sets, and I.V.
catheters. Similar patents have been granted in a number of
foreign countries as well, which expire on various dates ranging
from September 2003 to September 2008. In addition to
its original utility patent for its self-blunting needle design,
the Company was granted a patent for its self-blunting needle
design for use with a catheter in April 1991, which expires
in April 2008.

In September 1999, the Company was granted a
patent for the method by which needles with self-blunting
technology can be assembled (the process patent), which expires
in 2016. The Company believes that this process patent
effectively extends the life of the Companys basic
internal blunting patents to 2016, since the process by which
these safety needles are produced is now protected.

There are also patent applications pending in
both the United States and in several foreign countries that the
Company believes will strengthen its product protection once
such patents are granted. There can be no assurance, however,
that patents will be issued for any pending patent application.

In May 1997, the Company was granted patent
protection on its Drop-It® holder through 2015 and, in
2001, received a patent on its needle disposal container, which
expires in 2016.

The Company considers the design of its needle
assembly machines and certain other features of its
manufacturing systems to be proprietary information. The Company
protects such information through employee confidentiality
agreements and limited access to its facilities.

Punctur-Guard®,
Drop-It®, Revolution,
Bio-Plexus®, Safeguarding The Future of
Healthcare Workers® and the Company logo are all
trademarks registered with the United States Patent and
Trademark Office. The Company considers these trademarks, its
patents, and other proprietary information to be valuable assets
to its business.

Seasonality of Business

Sales of the Companys products are not
subject to material seasonal variations.

Regulation

The Companys medical products and
operations are subjected to regulations by the U.S. Food and
Drug Administration (the FDA) and various other
federal and state agencies, as well as by a number of foreign
governmental agencies. Among other things, the FDA requires the
Company to adhere to certain Good

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Manufacturing Practices (GMP)
regulations that include validation testing, quality assurance,
quality control and documentation procedures. The Companys
facilities are also subject to periodic inspections. In
addition, performance standards may be adopted by regulatory
organizations for the blood collection needle product, which the
Company believes it would then be required to meet.


In June 1998, the Company received
ISO 9002 and EN 46002 certifications from the NSAI.
ISO 9002 is a general international standard for quality
assurance in production, installation and servicing.
EN 46002 provides particular quality system requirements
for suppliers of medical devices that are more specific than the
general requirements specified in ISO 9002. The Company
also began labeling its products with the CE Mark during
1998, which indicates that the Company is following Medical
Device Directives in Europe that include the standards set forth
under ISO 9002 and EN 46002. In February of 2000, the
Company received ISO 9001 and EN 46001 registrations. This
certification is an upgrade from the previous ISO 9002 and
EN 46002 status. The change indicates that the
Companys product design process also meets the
international quality system standards. The Company will
continue to label product with the CE Marking, which indicates
that the Company is following the European Community Medical
Device Directives. The Company believes that these registrations
will better enable the Company to sell its products
internationally if and when the Company decides to actively
pursue the international market.

The Company believes it is in compliance in all
material respects with the regulations promulgated by these
regulatory organizations, and that such compliance has not had,
and is not expected to have, a material adverse effect on its
business.

The Company also believes that its operations
comply in all material respects with applicable environmental
laws and regulations. Such compliance has not had, and is not
expected to have, a material adverse effect on the
Companys business.

Recent Legislation

Recently there has been regulatory action on the
state and federal level which could have a significant favorable
impact on the Companys business. This legislation was for
the purpose of reducing the rate of accidental needlesticks and
promoting the use of safety needles. During 1999, California
began requiring the use of safety needles, which was followed by
similar action in a number of other states (21 in all as of the
end of 2001). In November 2000, Congress passed and the
President signed the Needlestick Safety and Prevention Act,
requiring employers to implement safer needle products. These
regulatory actions will increase public awareness of the issue
and should result in a continued increase in demand for the type
of products the Company makes.

Employees

As of December 31, 2001, Bio-Plexus employed
53 people including 10 research and development
employees, 14 production employees and 29 sales,
marketing and administrative employees. The Companys
employees are not represented by a labor union, and the Company
believes its employee relations are satisfactory.

Backlog

The Companys backlog as of March 12,
2002 was approximately $100,000. Normally the Company has no
backlog, since products are shipped within a day of the receipt
of an order. However, a backlog has developed based on the
recent increased demand from the Companys domestic
distributors for purposes of building their inventory reserves
related to the Winged Set product line.




Item 2.  Properties

In October of 1994, the Company acquired a
37,500 square foot facility on 5.6 acres in Vernon,
Connecticut, which houses all of the Companys
manufacturing, research and development, warehouse and

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general and administrative personnel. The Company
believes that its facility in Vernon, Connecticut is of good
construction and in good physical condition, and is suitable and
adequate for the operations conducted there.





Item 3.  Legal Proceedings
and Other Matters

The Company is not party to any litigation or
legal proceedings.




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

On July 19, 2001, the Appaloosa Entities, as
the holders of a majority of the Companys common stock and
in accordance with Section 228 of the General Corporation
Law of the State of Delaware, adopted resolutions in lieu of a
meeting of and vote by the Companys shareholders. The
resolutions approved an amendment to the Companys 2001
Stock Incentive Plan increasing from 1,111,271 to 2,000,000 the
number of shares of the Companys common stock that can be
subject to grants and awards issued under the 2001 Stock
Incentive Plan. The Companys shareholders were notified of
the action taken in lieu of a meeting in accordance with the
requirements of applicable Delaware law.




PART II




Item 5.     Market
for the Registrants Common Equity and Related Shareholder
Matters

Until March 6, 2001, the Companys
common stock was traded on The Nasdaq Stock Market® under
the symbol BPLX. From March 6, 2001 until July 27,
2001, trading in the Companys common stock was conducted
on the National Association of Securities Dealers Pink Sheets.
Effective July 27, 2001, trading on the Companys
common stock was conducted on the National Association of
Securities Dealers OTC Bulletin Board under the symbol
BPXS. The following table shows the quarterly high and low
closing price on NASDAQ (prior to March 6, 2001) and on the
OTC Bulletin Board and Pink Sheets (on and after March 6,
2001) for a share of the Companys common stock for each
quarter in the years ended December 31, 2001 and 2000 (all
per share amounts below reflect the Companys one-for-ten
reverse stock split discussed above):

|                        |  |      |       |      |  |      |      |     |  |   |       |  |  |   |       | 
|----------------------- |  | ---- | ----- | ---- |  | ---- | ---- | --- |  | - | ----- |  |  | - | ----- | 
|                        |  |      |       |     
|                        |  | 2001 |       | 2000
|                        |  |      |       |     
|Year Ended December 31, |  | High |       | Low  |  | High |      | Low
|                        |  |      |       |      |  |      |      |    
|First Quarter           |  | $    | 20.00 |      |  | $    | 2.60 |     |  | $ | 50.00 |  |  | $ | 35.00 | 
|Second Quarter          |  | $    | 6.25  |      |  | $    | .10  |     |  | $ | 35.00 |  |  | $ | 21.80 | 
|Third Quarter           |  | $    | 8.00  |      |  | $    | .50  |     |  | $ | 29.10 |  |  | $ | 16.90 | 
|Fourth Quarter          |  | $    | 1.70  |      |  | $    | .52  |     |  | $ | 24.40 |  |  | $ | 7.50  | 

As of March 12, 2002 there were
approximately 512 holders of record of the Companys common
stock and the reported last sale price on the National
Association of Securities Dealers OTC Bulletin Board was
$0.43 per share.

The Company has not paid any dividends on its
common stock since its inception and does not intend to pay any
dividends in the foreseeable future.

23



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##### Table of Contents






Item 6.     Selected
Financial Data

The following selected financial data should be
read in conjunction with the Financial Statements and related
Notes appearing elsewhere in this Form 10-K:

|                                              |  |                                 |           |      |  |      |           |      |  |      |           |   |  |   |           |   |  |   |         |  
|--------------------------------------------- |  | ------------------------------- | --------- | ---- |  | ---- | --------- | ---- |  | ---- | --------- | - |  | - | --------- | - |  | - | ------- | -
|                                              |  |                                
|                                              |  | For the Year Ended December 31,
|                                              |  |                                
|                                              |  | 2001                            |           | 2000 |  | 1999 |           | 1998 |  | 1997
|                                              |  |                                 |           |      |  |      |           |      |  |     
|                                              |  |                                
|                                              |  | (dollars in thousands)         
|Statement of Operations Data:                 |  |                                 |           |      |  |      |           |      |  |      |           |   |  |   |           |   |  |   |         |  
|Total revenue                                 |  | $                               | 6,371     |      |  | $    | 4,995     |      |  | $    | 7,024     |   |  | $ | 9,307     |   |  | $ | 5,042   |  
|                                              |  |                                 |           |      |  |      |           |      |  |      |           |   |  |   |           |   |  |   |         |  
|Total operating costs and expenses            |  |                                 | 12,204    |      |  |      | 11,342    |      |  |      | 9,890     |   |  |   | 11,678    |   |  |   | 13,568  |  
|Financing expenses, net                       |  |                                 | 851       |      |  |      | 4,379     |      |  |      | 2,367     |   |  |   | 589       |   |  |   | 3,786   |  
|                                              |  |                                 |           |      |  |      |           |      |  |      |           |   |  |   |           |   |  |   |         |  
|Loss before reorganization costs              |  |                                 | (6,684    | )    |  |      | (10,726   | )    |  |      | (5,233    | ) |  |   | (2,960    | ) |  |   | (12,312 | )
|Reorganization costs                          |  |                                 | (3,377    | )    |  |      |          |      |  |      |          |   |  |   |          |   |  |   |        |  
|Less: Imputed dividend on preferred stock     |  |                                 |          |      |  |      |          |      |  |      |          |   |  |   |          |   |  |   | (500    | )
|                                              |  |                                 |           |      |  |      |           |      |  |      |           |   |  |   |           |   |  |   |         |  
|Net loss applicable to common stock           |  | $                               | (10,061   | )    |  | $    | (10,726   | )    |  |      | (5,233    | ) |  | $ | (2,960    | ) |  | $ | (12,812 | )
|                                              |  |                                 |           |      |  |      |           |      |  |      |           |   |  |   |           |   |  |   |         |  
|Net loss (basic and diluted) per common share |  | $                               | (1.65     | )    |  | $    | (7.30     | )    |  | $    | (3.86     | ) |  | $ | (2.41     | ) |  | $ | (13.74  | )
|                                              |  |                                 |           |      |  |      |           |      |  |      |           |   |  |   |           |   |  |   |         |  
|Weighted average common shares outstanding    |  |                                 | 6,081,913 |      |  |      | 1,469,551 |      |  |      | 1,354,092 |   |  |   | 1,226,387 |   |  |   | 932,080 |  
|                                              |  |                                 |           |      |  |      |           |      |  |      |           |   |  |   |           |   |  |   |         |  

|                                     |  |              |        |      |  |      |        |      |  |      |       |  |  |   |       |   |  |   |        |  
|------------------------------------ |  | ------------ | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ----- |  |  | - | ----- | - |  | - | ------ | -
|                                     |  |             
|                                     |  | December 31,
|                                     |  |             
|                                     |  | 2001         |        | 2000 |  | 1999 |        | 1998 |  | 1997
|                                     |  |              |        |      |  |      |        |      |  |     
|Balance Sheet Data:                  |  |              |        |      |  |      |        |      |  |      |       |  |  |   |       |   |  |   |        |  
|Working capital (deficiency)         |  | $            | 2,863  |      |  | $    | 6,110  |      |  | $    | 702   |  |  | $ | (754  | ) |  | $ | (33    | )
|Total assets                         |  |              | 11,653 |      |  |      | 16,972 |      |  |      | 9,647 |  |  |   | 9,152 |   |  |   | 11,688 |  
|Long-term debt                       |  |              | 1,199  |      |  |      | 17,806 |      |  |      | 2,262 |  |  |   | 2,403 |   |  |   | 3,204  |  
|Total shareholders equity (deficit) |  |              | 9,935  |      |  |      | (2,419 | )    |  |      | 3,728 |  |  |   | 2,477 |   |  |   | 4,158  |  






|        |                                                                                       
|------- | --------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis
	of Financial Condition and Results of Operations

The discussions set forth in this
Managements Discussion and Analysis of the Results of
Operations and Financial Condition and elsewhere herein contain
certain statements which are not historical facts and are
considered forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended and
Section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements are identified by the use of
such terminology as believes, expects,
may, should, anticipates,
plans, estimates, and
intends or derivations or negatives thereof or
comparable terminology. Accordingly, such statements involve
risks (known and unknown) and uncertainties. These risks and
uncertainties include the ability of the Company to obtain the
additional financing it needs to fund its operations commencing
in the latter part of 2002; the effect on suppliers, customers,
employees, and others because of the Companys receipt of a
going concern opinion from its auditors; the extent of
acceptance of the Companys products by health care
professionals; the Companys ability to protect its
proprietary technology; availability of qualified personnel;
changes in, or failure to comply with government regulations;
general economic and business conditions; reliance on certain
critical suppliers; and certain other risks detailed in the Risk
Factors in this report, described from time to time in the
Companys other Securities and Exchange Commission filings,
or discussed in the Companys press releases. All
forward-looking statements included in this document are based
on information available to the Company on the date hereof, and
the Company assumes no obligation to update any such
forward-looking statements.

24



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##### Table of Contents



Overview

The Company is principally engaged in the design,
development, manufacturing, selling, and licensing of its safety
blood collection needle technology and accessory products, and
the design and development of the molds, needle assembly
machines and production processes needed for manufacturing these
products, as well as the design and development of new products.
The Company has also focused its efforts on developing strategic
partnerships with larger healthcare organizations in order to
bring new products to market featuring its patented internal
blunting technology.

With the addition of high volume, fully automated
blood collection needle (BCN) assembly and packaging system in
1996, and similar high volume fully automated Winged Set
assembly system in 2001, the Company believes it will have
sufficient capacity to meet its production needs for blood
collection needles through early 2004. For the Company to
achieve profitability, reductions in unit manufacturing costs
through increased volumes and increases in product sales of its
blood collection needles are necessary.

In January 1997, amended in 1998, the
Company entered into a Development and Licensing Agreement and a
Supply Agreement with Johnson & Johnson Medical
(JJM). Pursuant to the original agreements, the
Company would develop and manufacture safety needle assemblies
for JJM, to become part of a new safety I.V. catheter to be
manufactured and sold by JJM, utilizing the Companys
patented self-blunting needle design. This agreement stipulates
the payment of royalties based on unit volume sales of the
licensed product. There are minimum royalties stipulated in this
agreement. The royalties under this agreement began in the
calendar year 2001. The minimum royalties required to be paid by
JJM in 2001 were $184,000. However, because the actual unit
sales by JJM exceeded the minimum levels stated in the
agreement, the actual royalties earned in 2001 were $393,000.

On October 23, 1998, the Company entered
into an exclusive License Agreement and Design, Development and
Asset Transfer Agreement for a PICC Introducer Catheter with TFX
Medical (TFX), a division of Teleflex Incorporated,
the industrys dominant supplier of PICC Introducers. The
License Agreement includes certain minimum annual volume
requirements and ongoing royalties on the sale of PICC
Introducer Catheters featuring the Companys
Punctur-Guard® technology. The Company earned $91,000 in
royalties from TFX in the year 2001, compared to $68,000 in 2000.

Years Ended December 31, 2001 and
2000

The Company had total product sales of $5,565,000
for the year ended December 31, 2001, compared with product
sales of $4,693,000 for the prior year. The $872,000 (19%)
increase was primarily attributable to steady sales increases in
the last half of the year in the BCN product line, along with
the introduction of the new Winged Set intravenous product line
in the third quarter of 2001. Total 2001 Winged Set sales were
approximately $429,000.

The Company had revenues from services totaling
$322,000 for the year ended December 31, 2001, compared to
$234,000 for the prior year. The 2001 service revenues were
primarily derived from a product development project with
Fresenius to develop extracorporeal therapy needles for the
dialysis market.

The Companys royalty revenue increased
substantially, to $484,000 for the year ended December 31,
2001, compared to $68,000 for the prior year. The $416,000
increase was primarily due to the first year JJM royalties
recorded during 2001.

Product costs were $3,640,000 or 65% of product
sales for the year ended December 31, 2001, compared to
$2,450,000 or 52% of product sales for the prior year. The
increased percentage in product costs resulted primarily from
the introduction of the new Winged Set product line with its
expected high, initial manufacturing costs and resulting smaller
gross profit margin, and because of substantial sales discounts
offered to certain customers in the second quarter of 2002 while
the Company was in reorganization.

Service costs were $163,000 for the year ended
December 31, 2001, compared to $35,000 for the prior year.
These costs represent engineering costs for various product
development projects.

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##### Table of Contents



Pre-production manufacturing costs were $540,000
for the year ended December 31, 2001 and consisted of the
pre-production and early production inventory write-offs
associated with the new Winged Set product line launched during
the third quarter of 2001.

Research and development expenses were $1,538,000
for the year ended December 31, 2001, compared to
$1,453,000 for the prior year. The $85,000 (6%) increase in
these costs resulted primarily from fixed asset molds write-offs
of approximately $368,000 partially offset by reductions in
department costs in both the Revolution product line and
business development and technology areas.

Selling, general and administrative expenses were
$6,323,000 for the year ended December 31, 2001, compared
with $7,404,000 for the prior year. This $1,081,000 (15%)
decrease resulted from reductions in legal expenses of $495,000,
and the remaining decreases were in selling expenses, primarily
salaries, travel, and advertising expense. During the latter
half of 2001, as part of a change in selling strategy, the
Company moved from a reliance on a direct sales force to a mix
of independent distributor and specialty dealer representatives
and limited direct sales personnel.

Financing expenses for the year ended
December 31, 2001 were $851,000 compared to $4,379,000 for
the prior year. The significant $3,528,000 decrease resulted
primarily from conversion of approximately 95% of the
Companys debt into equity on July 18, 2001, pursuant
to the Companys reorganization.

Reorganization costs were $3,377,000 for the year
ended December 31, 2001 and consisted of $2,741,000
representing asset write-offs of unamortized debt financing
costs and unamortized debt discounts. Both of these assets had
originally been established with the placement of the
Convertible Notes, and because of the conversion of the
Convertible Notes to common stock of the Company, the associated
unamortized debt financing and debt discount carrying values
were written off. The remaining $636,000 of reorganization costs
represented predominately professional fees.

Years Ended December 31, 2000 and
1999

The Company had total product sales of $4,693,000
for the year ended December 31, 2000, compared with product
sales of $5,498,000 for the prior year. The decrease was
attributable to decreased sales of medical devices of $819,000
due to a decrease in foreign sales of $548,000. In addition, the
Companys major distributors made large purchases of the
Companys products in the last quarter of 1999, in
preparation for potential Y2K supply problems, which contributed
to the decline in year 2000 domestic product sales.

The Company had revenues from services totaling
$234,000 for the year ended December 31, 2000, compared to
$1,526,000 for the prior year. The decrease was primarily
attributable to the completion of the JJM project during 1999.

Product costs were $2,450,000 for the year ended
December 31, 2000, compared to $3,754,000 for the prior
year. The decrease in these costs resulted primarily from lower
manufacturing costs of $1,304,000 associated with the sales of
the blood collection needle product line. The lower costs were
due to both higher levels of production in 2000, which lowered
per unit production costs, and to lower sales volumes in 2000.

Service costs were $35,000 for the year ended
December 31, 2000, compared to $87,000 for the prior year.
These costs represent engineering time billed for various
development projects. The decrease in these costs is the result
of the completion of the I.V. catheter development project
during the first quarter of 1999, and completion of the PICC
project with TFX in the first quarter of 2000.

Research and development expenses were $1,453,000
for the year ended December 31, 2000, compared to
$1,379,000 for the prior year. The increase in these costs
resulted primarily from increased expenses related to the Winged
Set project in 2000 as compared to 1999.

Selling, general and administrative expenses were
$7,404,000 for the year ended December 31, 2000, compared
with $4,670,000 for the prior year. This was due to increases of
approximately $1,026,000 and $1,409,000 associated with general
management and sales and marketing expenses, respectively. The
$1,026,000 general management increase was due primarily to a
$335,000 increase in administration and

26



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##### Table of Contents



general management personnel and salaries, a
$334,000 increase in legal fees and increased investor relations
costs of $171,000. The $1,409,000 sales and marketing increase
was due primarily to additional manpower related costs in
anticipation of increased sales. Sales and marketing salaries
were up $576,000, travel and mileage was up $262,000, consulting
was up $105,000 and recruiting was up $94,000.


Financing expenses for the year ended
December 31, 2000 were $4,379,000 compared to $2,367,000
for the prior year. The increase resulted from an increase of
$618,000 of debt discount associated with warrants issued in
connection with the Permanent Financing in April 2000. The
Company also recorded an additional $66,000 of deferred
financing expenses primarily associated with the Permanent
Financing. In addition, interest expense increased by $1,695,000
due to the increased borrowings associated with the Permanent
Financing transactions in April 2000.

Liquidity and Capital Resources

As of December 31, 2001, the Company had
cash on hand of $953,000, as compared to $4,003,000 at
December 31, 2000. The reduction was primarily attributable
to additional operating losses of the Company and its continued
investment in 2001 in the development and introduction of its
new Winged Set product line. For the foreseeable future, the
Company will continue to generate operating losses. Therefore,
management is in the process of attempting to raise additional
capital to fund operations. The Company has substantially
reduced its monthly net usage of cash (burn rate) through a
combination of reductions in operating expenses in the latter
half of 2001 and an increase in both product sales and royalty
revenues during the same period. The monthly burn rate was
reduced from approximately $500,000 per month (excluding legal
fees for the first quarter and reorganization costs) for the
period January through September 2001, to approximately
$100,000 per month in the last quarter of 2001. The continuation
of this reduced burn rate is dependent on future product sales
staying consistent with the fourth quarter of 2001, and the
ability of the Company to operate its business at the reduced
level of costs and expenditures of the fourth quarter of 2001.
Management believes that it has sufficient funds to support
operations into the third quarter of 2002. If the Company is
unable to raise additional funds as required, it may have to
reduce the scope of, or cease, its operations.

Net cash used in operating activities for the
year ended December 31, 2001 totaled $5,937,000 and was
primarily due to a loss before reorganization costs for the
period of $6,684,000. Also contributing were decreases in
accounts payable and accrued expenses of $1,123,000 and
reorganization cost payments totaling $636,000. Partially
offsetting these uses of cash, were depreciation and
amortization expenses of $1,176,000, and decreases in inventory
of $1,336,000.

Net cash used by investing activities amounted to
$917,000 due to investments in fixed assets of $868,000 and
patent costs of $49,000.

Net cash provided by financing activities
amounted to $3,804,000 for the year ended December 31,
2001. The increase in cash is attributable to proceeds from the
sale of stock of $2,895,000, accretion of interest payable of
$937,000, and proceeds from notes payable of $27,000, partially
offset by the repayment of debt totaling $55,000.

The Companys primary cash requirement for
2002 will be for working capital to increase its manufacturing
production rates.



| |                                      
| | -------------------------------------
| | Financing During the Chapter 11
	Case

On May 17, 2001, the Bankruptcy Court
entered an order authorizing the Company to borrow from the
Appaloosa Entities term loans in an amount not to exceed the
aggregate principal amount of $300,000 pursuant to the terms of
a Credit Agreement (the DIP Credit Agreement)
between the Company and the Appaloosa Entities. The term loans
were used for the purposes of funding general working capital
needs in the ordinary course of the Companys business in
excess of the net income generated by the Companys
business. As security for the prompt payment of the term loans
and performance of any and all obligations, liabilities and
indebtedness of the Company to the Appaloosa Entities under the
Credit Agreement or otherwise, the Appaloosa Entities were
granted valid and perfected first priority security interests
and liens, superior to all

27



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##### Table of Contents



other creditors of the estate of the Company
(subject to certain exceptions), in and upon all existing and
thereafter acquired property of the Company which constituted
collateral under the DIP Credit Agreement, wherever located, of
any kind or nature, and the proceeds (including insurance
proceeds) and products thereof. The term loans were repaid from
the proceeds of the Appaloosa Private Placement described above.


As more fully described above, the Appaloosa
Entities invested an additional $3 million in the Company
on July 18, 2001 (the Appaloosa Private
Placement). The Company believes that the net proceeds of
the Appaloosa Private Placement, its existing cash, cash
generated from operations, and funds available through trade
credit financing will be sufficient to satisfy its cash
requirements into the third quarter of 2002.






|        |                                             
|------- | --------------------------------------------
|Item 8. | Financial Statements and Supplementary
	Data

See Item 14 for an index to Financial
Statements and Financial Statement Schedules. Such Financial
Statements and Financial Statement Schedules are incorporated
herein by reference.






|        |                                                                                      
|------- | -------------------------------------------------------------------------------------
|Item 9. | Changes In and Disagreements with
	Accountants on Accounting and Financial Disclosure

There were no changes in or disagreements with
Accountants during the reporting period.




PART III






|         |                                                    
|-------- | ---------------------------------------------------
|Item 10. | Executive Officers and Directors of the
	Registrant

The executive officers and directors of the
Company are as follows:

|                     |  |     |    |          |  |                                                              
|-------------------- |  | --- | -- | -------- |  | -------------------------------------------------------------
|Name                 |  | Age |    | Position
|                     |  |     |    |         
|John S. Metz         |  |     | 58 |          |  | President, Chief Executive Officer and Director              
|James Bolin(1)(2)    |  |     | 43 |          |  | Non-Executive Chairman of the Board and Director             
|Kenneth Maiman(1)(2) |  |     | 38 |          |  | Director                                                     
|Scott M. Tepper(2)   |  |     | 41 |          |  | Vice Chairman of the Board and Director                      
|Brian J. Herrman     |  |     | 47 |          |  | Senior Vice President, Chief Financial Officer
	and Treasurer
|Christopher C. Zorn  |  |     | 47 |          |  | Executive Vice President of Sales                            




|    |                                  
|--- | ---------------------------------
|(1) | Member of Compensation Committee.
|   
|(2) | Member of Audit Committee.       

The Companys board of directors now
consists of four directors: James Bolin, who is the
non-executive Chairman of the Companys Board of Directors;
Scott M. Tepper, the Vice Chairman of the Companys
Board of Directors and the brother of David A. Tepper, the
sole stockholder and President of Appaloosa Partners Inc.;
Kenneth Maiman, and John S. Metz, who is the president and
chief executive officer of the Company.

Mr. Metzis a
Director of the Company and, since April 28, 2000, has
served as the Companys President and Chief Executive
Officer. Mr. Metz became President and CEO when he joined
the Company from Kimberly-Clark Corporation where he served from
June 1997 until April 2000 as President, Professional
HealthCare Strategic Acquisitions. For fifteen (15) years
prior to this position Mr. Metz held positions of
increasing responsibility with Kimberly-Clark Corporation. Prior
to joining Kimberly-Clark, Mr. Metz held marketing manager
positions with Becton-Dickinson & Company (1976-1982),
McKesson Corporation (1974-1976) and The Coca-Cola Company
(1970-1974). Mr. Metz was a First Lieutenant in the U.S.
Army and holds both Bachelors and Masters degrees
from the University of Mississippi and an MBA from Stanford
University.

Mr. Herrmanis
the Companys Senior Vice President, Chief Financial
Officer and Treasurer and has served in such capacity since
July 1, 2001. For the two years immediately prior to
joining the Company,

28



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##### Table of Contents



Mr. Herrman served in a similar capacity at
Paradigm4, a 250-employee software development and wireless data
company where he was instrumental in engineering a turnaround
and quintupling revenues over the same period. From 1991 through
1998, Mr. Herrman was also CFO, then COO, of Silikal Resin
Systems, a high tech coatings manufacturer which he managed
through three phases: turnaround, financing/ growth and eventual
sale to a large, multinational company. Mr. Herrman began
his career at Ernst & Young in 1977, providing audit
and tax services to a variety of businesses. He became a Partner
at Ernst & Young in 1989, leading their Entrepreneurial
Services Group and specializing in emerging growth and mid-sized
companies in the medical device, high tech, software development
and manufacturing industries. Mr. Herrman is a CPA with a
BBA in Business and Accounting from George Washington University.


Mr. Zornis the
Companys Executive Vice President of Sales and has served
in such capacity since December 13, 2000. Prior to joining
the Company, Mr. Zorn was employed with Johnson &
Johnson from 1988 to 2000. His last position at
Johnson & Johnson was as Director of Sales of the
Codman Johnson & Johnson Professional, Inc. division.
Prior to Johnson & Johnson, Mr. Zorn served in
various sales and field service positions with Eastman Kodak.
Mr. Zorn holds a Bachelors of Science Degree from Marist
College and an MBA from the University of Connecticut.

Mr. Tepperis
the Vice Chairman of the Board and a Director of the Company and
has served in such capacity since July 2001.
Mr. Tepper was elected to the Board of Directors on
June 28, 2000. Mr. Tepper has served as a consultant
to the Company since September 1999. Mr. Tepper is the
founder and, since 1994, principal of KST Consulting, a
healthcare and healthcare technology consulting firm. From
1997-2000, Mr. Teppers projects included several
consumer goods companies and a major northeast grocery chain.
From 1994-1997, Mr. Tepper was Acting Chief Operating
Officer for FoxMeyer Canada. Mr. Tepper was instrumental in
the formation of this company from four employees to become the
largest healthcare technology company in Canada. The company
currently trades under the name Medisolution on the TSE. From
1986-1994, Mr. Tepper held senior marketing positions with
FoxMeyer Health Corp., Harris Wholesale, Phar-Mor, Inc. and
Giant Eagle Supermarkets.

Mr. Metz, Mr. Herrman, Mr. Zorn,
and Mr. Tepper will hereinafter be referred to as the
Officers.

Mr. Bolinis
the non-executive Chairman of the Board and a Director of the
Company and has served in such capacity since July 18,
2001. Since 1995, Mr. Bolin has been Vice President and
Secretary of Appaloosa Management L.P. Mr. Bolin serves as
a director of Inamed Corporation, a global surgical and medical
device company, and Kindred Healthcare, Inc., a provider of
long-term healthcare services primarily through the operation of
nursing centers and hospitals.

Mr. Maimanis a
Director of the Company and has served in such capacity since
July 18, 2001. He is a Principal of Appaloosa Management
L.P., where he has served as General Counsel since 1998. From
1995 to 1997, Mr. Maiman was associated with
Andrews & Kurth LLP.

There are no family relationships between any of
the executive officers or directors of the Company.

Executive officers of the Company are elected by
the Board of Directors on an annual basis and serve at the
discretion of the Board. Members of the Board of Directors are
elected annually at the annual meeting of shareholders.

The Board of Directors has a Compensation
Committee and an Audit Committee. The Compensation Committee
administers the Companys 2001 Stock Incentive Plan. The
Audit Committee reviews the results and scope of the annual
audit and other services provided by the Companys
independent auditors.

Section 16(a) Beneficial Ownership
Reporting Compliance

Section 16 of the Securities Exchange Act of
1934 (the Exchange Act) requires directors and
executive officers and persons, if any, owning more than ten
percent (10%) of a class of the Companys equity securities
(10% Shareholders) to file with the Securities and
Exchange Commission (the SEC) initial reports of
ownership and reports of changes in ownership of the
Companys equity and equity derivative

29



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##### Table of Contents



securities. As of March 12, 2002, based on
review of copies of reports or representations from reporting
persons, the directors of the Company have filed reports of
ownership. The Officers did not file these ownership reports in
2001 and were delinquent in filing Form 5, which was due
February 15, 2002. All Officers have since filed such
reports and are in compliance with all reporting requirements.







|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation

Included below are tables that set forth certain
information concerning compensation paid by the Company to its
chief executive officer and all other executive officers with
annual compensation in excess of $100,000 for the year ended
December 31, 2001 . The tables include columns related to
stock options and stock appreciation rights (SARS)
(contractual rights to compensation measured by increases in the
value of the common stock payable in stock and/or cash). No SARS
have been issued by the Company.

Summary Compensation Table

|                            |                                                    |      |      |                     |  |            |         |                 |  |              |        |        |  |  |         |  |  |  |  |  | 
|--------------------------- | -------------------------------------------------- | ---- | ---- | ------------------- |  | ---------- | ------- | --------------- |  | ------------ | ------ | ------ |  |  | ------- |  |  |  |  |  | 
|                            |                                                    |      |      |                     |  |            |         | Long-Term       |  |             
|                            |                                                    |      |      |                     |  |            |         | Compensation    |  |             
|                            |                                                    |      |      |                     |  |            |         |                
|                            |                                                    |      |      | Annual Compensation |  | Securities |         |                
|                            |                                                    |      |      |                     |  | Underlying |         | Other          
|Name and Principal Position |                                                    | Year |      | Salary($)           |  | Bonus($)   |         | Options/SARs(4) |  | Compensation
|                            |                                                    |      |      |                     |  |            |         |                 |  |             
|John S. Metz(1)             |                                                    |      | 2001 |                     |  |            | 250,000 |                 |  |              | 75,000 |        |  |  | 150,000 |  |  |  |  | 
|                            | President and Chief Executive Officer              |      |      | 2000                |  |            |         | 250,000         |  |              |        | 75,000 |  |  |         |  |  |  |  |  | 
|Brian J. Herrman(2)         |                                                    |      | 2001 |                     |  |            | 83,000  |                 |  |              |        |        |  |  | 100,000 |  |  |  |  | 
|                            | Senior Vice President, and Chief Financial Officer |      |      |                     |  |            |         |                 |  |              |        |        |  |  |         |  |  |  |  |  | 
|Christopher C. Zorn(3)      |                                                    |      | 2001 |                     |  |            | 142,000 |                 |  |              | 23,000 |        |  |  | 75,000  |  |  |  |  | 
|                            | Executive Vice President of Sales                  |      |      | 2000                |  |            |         | 135,000         |  |              |        | 32,000 |  |  |         |  |  |  |  |  | 




|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Mr. Metz was elected to the position of
	President and Chief Executive Officer on April 28, 2000. He
	is also a Director of the Company. In addition to the stock
	options indicated above, Mr. Metz was also granted 50,000
	restricted stock shares on July 19, 2001. These restricted
	shares vest in three equal installments on July 19, 2002,
	July 19, 2003 and July 19, 2004. The exercise strike
	price for the stock options as well as the fair market value of
	the restricted stock issuances was $2.283 per option/share.
|   
|(2) | Mr. Herrman was elected to the position of
	Senior Vice President and Chief Financial Officer on
	June 14, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|(3) | Mr. Zorn joined the Company on
	December 13, 2000 as Executive Vice President of Sales. In
	addition to the stock options indicated above, Mr. Zorn was
	also granted 25,000 restricted stock shares on July 19,
	2001. These restricted shares vest in three equal installments
	on July 19, 2002, July 19, 2003 and July 19,
	2004. The exercise strike price for the stock options as well as
	the fair market value of the restricted stock issuances was
	$2.283 per option/share.                                                
|   
|(4) | On July 19, 2001, the Company adopted a new
	employee stock option plan and a restricted stock plan
	(collectively, the 2001 Stock Incentive Plan as
	described below). All options issued under the previous
	incentive plan were canceled.                                                                                                                                                                                                                                                                                         

30



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##### Table of Contents



Option Grants in Last Fiscal Year

|                 |  |            |         |               |  |          |    |            |  |                   |       |     |  |  |            |  |  |         |  |        
|---------------- |  | ---------- | ------- | ------------- |  | -------- | -- | ---------- |  | ----------------- | ----- | --- |  |  | ---------- |  |  | ------- |  | -------
|                 |  |            |         |               |  |          |    |            |  |                  
|                 |  |            |         |               |  |          |    |            |  | Potential        
|                 |  |            |         |               |  |          |    |            |  | Realizable Value 
|                 |  |            |         |               |  |          |    |            |  | at Assumed       
|                 |  |            |         |               |  |          |    |            |  | Annual Rates     
|                 |  | Number of  |         |               |  |          |    |            |  | of Stock Value   
|                 |  | Securities |         | Percent of    |  | Exercise |    |            |  | Appreciation for 
|                 |  | Underlying |         | Total Options |  | or Base  |    |            |  | Option Term($)(1)
|                 |  | Options    |         | Granted       |  | Price    |    | Expiration |  |                  
|Name             |  | Granted(#) |         | in 2001       |  | ($/SH)   |    | Date       |  | 5%                |       | 10%
|                 |  |            |         |               |  |          |    |            |  |                   |       |    
|John S. Metz     |  |            | 150,000 | (2)           |  |          | 17 | %          |  |                   | 2.283 |     |  |  | 07/19/2011 |  |  | 558,000 |  | 888,000
|Brian J. Herrman |  |            | 100,000 | (2)           |  |          | 11 | %          |  |                   | 2.283 |     |  |  | 07/19/2011 |  |  | 372,000 |  | 592,000
|Chris C. Zorn    |  |            | 75,000  | (2)           |  |          | 9  | %          |  |                   | 2.283 |     |  |  | 07/19/2011 |  |  | 279,000 |  | 444,000
|Scott M. Tepper  |  |            | 100,000 | (3)           |  |          | 11 | %          |  |                   | 2.283 |     |  |  | 07/19/2011 |  |  | 372,000 |  | 592,000




|    |                                                                                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents the potential realizable value of each
	grant assuming the market price of the underlying security
	appreciates in value from the date of grant to the end of the
	option term at five percent (5%) and ten percent (10%) annually.
|   
|(2) | Exercisable in three (3) equal annual
	installments on July 19, 2002, July 19, 2003, and
	July 19, 2004.                                                                                                                                      
|   
|(3) | Exercisable in two (2) equal annual
	installments on July 19, 2002 and July 19, 2003.                                                                                                                                                         
|   
|(4) | Restricted stock vests (will be issued) in equal
	installments on July 19, 2002, July 19, 2003, and
	July 19, 2004.                                                                                                                           

Restricted Stock Grants in Last Fiscal
Year(4)

|                |  |                |        |                  |  |                   |    |   |  |   |       | 
|--------------- |  | -------------- | ------ | ---------------- |  | ----------------- | -- | - |  | - | ----- | 
|                |  |                |        | Percent of Total |  |                  
|                |  | Number of      |        | Restricted Stock |  | Fair Market Value
|Name            |  | Shares Granted |        | Granted in 2001  |  | At Date of Grant 
|                |  |                |        |                  |  |                  
|John S. Metz    |  |                | 50,000 |                  |  |                   | 19 | % |  | $ | 2.283 | 
|Chris C. Zorn   |  |                | 25,000 |                  |  |                   | 10 | % |  | $ | 2.283 | 
|Scott M. Tepper |  |                | 50,000 |                  |  |                   | 19 | % |  | $ | 2.283 | 

On July 19, 2001, the Company adopted a new
employee stock option plan and a restricted stock plan
(collectively, the 2001 Stock Incentive Plan). A
copy of the 2001 Stock Incentive Plan is filed as an Exhibit
hereto and is incorporated herein by reference. The total number
of stock options and restricted shares reserved under the 2001
Stock Incentive Plan is 2,000,000, of which a total of 1,135,500
were issued and outstanding as of December 31, 2001. The
total outstanding at December 31, 2001 consisted of 873,100
stock options and 262,400 restricted stock shares. All grants
were made on July 19, 2001, and the vesting period for both
stock options (except for 100,000 options issued to Scott Tepper
of which 50% vest on July 19, 2002 and 50% on July 19,
2003) and restricted stock shares is three years with one third
vesting on each grant date anniversary. The exercise strike
price for the stock options as well as the fair market value (as
determined by the Board of Directors on the date of grant of the
restricted stock issuances) was $2.283 per option/share.

Employment Agreements



| |             
| | ------------
| | John S. Metz

Effective July 19, 2001, the Company entered
into a two (2) year employment agreement (the
Employment Agreement) with Mr. Metz (which
superseded his prior agreement dated April 28, 2000)
pursuant to which the Company is obligated to pay Mr. Metz
an annual salary of $250,000 or such greater amount as the
Companys Board of Directors may approve from time to time
(Base Salary). The Company is also required to pay
Mr. Metz annual cash bonuses for each fiscal year, up to
100% of his Base Salary based on the Companys and
Mr. Metzs performance relative to certain performance
goals. In addition to the 150,000 incentive stock options
(Initial Options) granted to Mr. Metz, he also
received 50,000 restricted shares. A copy of this employment
agreement is filed as an Exhibit hereto and is incorporated
herein by reference.

31



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##### Table of Contents



In the event of a Change in Control transaction
(as defined in the Employment Agreement) which results in the
sale of substantially all of the Company and proceeds to the
holders of common stock in excess of $30 million,
Mr. Metz shall be entitled to a lump sum payment equal to
twice his Base Salary. In the event that the proceeds received
in such transaction exceed $37.5 million, Mr. Metz
will be entitled to such payment at the rate of three
(3) times his Base Salary. In addition, the Initial Options
and any performance options previously granted will become
immediately fully vested upon a Change of Control, regardless of
the transaction value. The Employment Agreement contains a
non-competition provision limiting Mr. Metzs ability
to compete with the Company upon the termination of his
employment and Mr. Metz has executed the Companys
standard form of confidentiality and inventions assignment
agreement.



| |                    
| | -------------------
| | Christopher C. Zorn

Effective July 19, 2001, the Company entered
into an eighteen month employment agreement (the
Employment Agreement) with Mr. Zorn pursuant to
which the Company is obligated to pay Mr. Zorn an annual
salary of $150,000 or such greater amount as the Companys
Board of Directors may approve from time to time (Base
Salary). The Company is also required to pay Mr. Zorn
annual cash bonuses for each fiscal year, up to 100% of his Base
Salary based on the Companys and Mr. Zorns
performance relative to certain performance goals. In addition
to the 75,000 incentive stock options (Initial
Options), Mr. Zorn also received 25,000 restricted
shares. A copy of this employment agreement is filed as an
Exhibit hereto and is incorporated herein by reference.

The Employment Agreement contains a
non-competition provision limiting Mr. Zorns ability
to compete with the Company upon the termination of his
employment and Mr. Zorn has executed the Companys
standard form of confidentiality and inventions assignment
agreement.



| |                
| | ---------------
| | Scott M. Tepper

Effective July 19, 2001, the Company entered
into a two (2) year consulting agreement (the
Consulting Agreement) with Mr. Tepper. A copy
of this consulting agreement is filed as an Exhibit hereto and
is incorporated herein by reference. As provided for in the
Consulting Agreement, the Company issued Mr. Tepper 100,000
incentive stock options, 50,000 of which vest upon the first
anniversary of this agreement and 50,000 upon the second
anniversary. Pursuant to the Consulting Agreement, the Company
is obligated to pay Mr. Tepper a monthly fee of $15,000 for
the first five (5) months and $12,000 thereafter.
Mr. Tepper is acting as an independent contractor of the
Company and the Consulting Agreement may be terminated upon
written consent of both parties. Mr. Tepper may also be
immediately terminated at the option of the Company prior to the
end of the initial or any renewal consulting period, by notice
to Mr. Tepper, for cause (as defined in the Consulting
Agreement). The Company has agreed to reimburse Mr. Tepper
for approved travel expenses incurred in connection with the
performance of his services on behalf of the Company.



| |                 
| | ----------------
| | Brian J. Herrman

Effective July 19, 2001, the Company entered
into a two (2) year employment agreement (the
Employment Agreement) with Mr. Herrman pursuant
to which the Company is obligated to pay Mr. Herrman an
annual salary of $180,000 or such greater amount as the
Companys Board of Directors may approve from time to time
(Base Salary). The Company is also required to pay
Mr. Herrman annual cash bonuses for each fiscal year, up to
50% of his Base Salary based on the Companys and
Mr. Herrmans performance relative to certain
performance goals. Pursuant to the Employment Agreement,
Mr. Herrman received 100,000 incentive stock options
(Initial Options). A copy of this employment
agreement is filed as an Exhibit hereto and is incorporated
herein by reference.

All employees have executed confidentiality
agreements with the Company.

Legal Proceedings

The following individuals were officers and/or
directors of Bio-Plexus at the time it filed a voluntary
petition for bankruptcy on April 4, 2001: Mr. Metz, Mr.
Zorn, and Mr. Tepper. In addition, one of Mr. Herrmans
prior employers, Paradigm4, filed a voluntary petition for
bankruptcy on March 23, 2001. In connection with the
aforementioned bankruptcies, there were no claims filed against
any of the officers.

32



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##### Table of Contents



2001 Stock Incentive Plan

On July 19, 2001, the Company adopted a new
employee stock option plan and a restricted stock plan
(collectively, the 2001 Stock Incentive Plan). The
total number of stock options and restricted shares reserved
under the 2001 Stock Incentive Plan is 2,000,000, of which a
total of 1,135,500 were issued and outstanding as of
December 31, 2001. The total outstanding at
December 31, 2001 consisted of 873,100 stock options and
262,400 restricted stock shares. All grants were made on
July 19, 2001 and the vesting period for both stock options
(except for 100,000 options issued to Scott Tepper 
as described above) and restricted stock shares is three years
with one third vesting on each grant date anniversary. The
exercise strike price for the stock options as well as the fair
market value of the restricted stock issuances was $2.283 per
option/share. With regard to the restricted stock issuances,
compensation expense, determined at the date of grant, is being
recognized ratably in accordance with the vesting schedule.
Compensation expense recognized was $92,000 for the six months
ended December 31, 2001. At December 31, 2001,
$508,000 of future compensation expense associated with the
restricted stock shares has been deferred and is included in
deferred compensation in the accompanying condensed balance
sheets.

Compensation Committee Interlocks and Insider
Participation

The Companys board of directors now
consists of four directors: James Bolin who is the non-executive
Chairman of the Companys Board of Directors; Scott M.
Tepper, the Vice Chairman of the Companys Board of
Directors and the brother of David A. Tepper; Kenneth Maiman,
and John S. Metz, who is the president and chief executive
officer of the Company.

Messrs. Bolin and Maiman are the members of
the Compensation Committee. Each is an Outside Director of the
Company. No executive officers of the Company serve on the
Compensation Committee (or in a like capacity) for any other
entity.

Compensation Committee Report on Executive
Compensation

Introduction

The Compensation Committee of the Board of
Directors establishes the general compensation policies of the
Company, administers the Companys 2001 Stock Incentive
Plan, and sets specific compensation levels for executive
officers of the Company. The goal of the Compensation Committee
is to provide such levels and forms of compensation as will
allow the Company to attract, retain, and motivate persons
important to the growth and success of the Company. Outside
Directors serve as members of the Compensation Committee.

Compensation
Programs

Base Salary.The
Committee establishes base salaries for each of the executive
officers based upon their respective positions with the Company,
their experience level and their individual performance. Base
salaries are subject to adjustment by the Compensation
Committee, from time to time, in its discretion.

Bonuses.Each
executive officer is eligible to receive a cash bonus at the
election of the Compensation Committee. The bonus may be awarded
at any time during the year and may be based on a specific goal
or achievement or overall performance.

Incentive Plan.Executive officers, directors and employees are eligible to
participate in the Companys 2001 Stock Incentive Plan.
Grants under the 2001 Stock Incentive Plan may be made in a
variety of forms including nonqualified stock options, incentive
stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended, (the
Code) and restricted stock.

Compensation
of Chief Executive Officer

Mr. Metzs employment is governed by an
employment agreement dated as of July 19, 2001 (which
superceded his previous agreement dated April 28, 2000).
His compensation in 2001 consisted of a base salary of $250,000
and a bonus of $75,000. For a more complete description of
Mr. Metzs compensation for 2001, please see the
description provided under the heading Employment
Agreements elsewhere in this report.

33



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##### Table of Contents



Code
Section 162(m)

In 1993, the Code was amended to add
Section 162 (m). Section 162 (m) places a
limit of $1,000,000 on the amount of compensation that may be
deducted by a public company in any year with respect to certain
of the Companys higher paid executives. Certain
performance-based compensation that has been approved by
shareholders is not subject to the deduction limitation. The
2001 cash compensation of the Companys executive officers
was well below the level where this limitation would apply. The
Company believes that options granted under the 2001 Stock
Incentive Plan are excluded from the Section 162 (m)
limitation as performance-based compensation.



| |                        
| | -----------------------
| | Compensation Committee,
|
| | James Bolin            
| | Kenneth Maiman         




Item 12.     Security
Ownership of Certain Beneficial Owners and
Management

The following table sets forth certain
information with respect to the beneficial ownership of the
common stock as of March 12, 2002 (unless otherwise
specified) for: ( i) each person who is known by the
Company to beneficially own more than five percent (5%) of the
common stock; (ii) each of the Companys directors;
(iii) each of the Companys executive officers; and
(iv) all of the directors and executive officers as a group.

|                                                             |                                   |               |           |              |  |  |      |   | 
|------------------------------------------------------------ | --------------------------------- | ------------- | --------- | ------------ |  |  | ---- | - | 
|                                                             |                                   | Amount And    |           | Percent of  
|                                                             |                                   | Nature        |           | Class       
|Name and Address                                             |                                   | of Beneficial |           | Beneficially
|of Beneficial Owner(1)                                       |                                   | Ownership(2)  |           | Owned       
|                                                             |                                   |               |           |             
|Appaloosa Management L.P. and David A. Tepper                |                                   |               | 9,840,284 |              |  |  | 87.0 | %
|                                                             | 26 Main Street, Chatham, NJ 07928 |               |           |              |  |  |      |   | 
|John S. Metz                                                 |                                   |               |           |              |  |  | *    |  
|James Bolin                                                  |                                   |               |           |              |  |  | *    |  
|Kenneth Maiman                                               |                                   |               |           |              |  |  | *    |  
|Scott M. Tepper                                              |                                   |               |           |              |  |  | *    |  
|Brian J. Herrman                                             |                                   |               |           |              |  |  | *    |  
|Christopher C. Zorn                                          |                                   |               |           |              |  |  | *    |  
|All directors and executive officers as a group
	(6 persons) |                                   |               |           |              |  |  | *    |  




|  |                           
|- | --------------------------
|* | Less than 1% of the class.



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Unless otherwise indicated, the address of each
	named holder is c/ o Bio-Plexus, Inc., 129 Reservoir Road,
	Vernon, Connecticut 06066.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|(2) | Beneficial ownership is determined in accordance
	with the rules of the Securities and Exchange Commission and
	generally includes voting or investment power with respect to
	securities. Shares of common stock subject to options, warrants
	and convertible notes currently exercisable or convertible, or
	exercisable or convertible within sixty (60) days, are
	deemed outstanding for computing the percentage of the person
	holding such options but are not deemed outstanding for
	computing the percentage of any other person. Except as
	indicated by footnote, and subject to community property laws
	where applicable, the persons named in the table have sole
	voting and investment power with respect to all shares of common
	stock shown as beneficially owned by them.




Item 13.     Certain
Relationships and Related Transactions

In July 2001, the Company entered into a two
(2) year consulting agreement (the Consulting
Agreement) with Mr. Scott M. Tepper, who is the
brother of David A. Tepper, the sole stockholder and

35



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##### Table of Contents



President of Appaloosa Partners Inc., the general
partner of Appaloosa, which is the major shareholder of the
Company. For a description of this agreement, see
Employment Agreements elsewhere in this report.


For a description of the transactions between the
Company and the Appaloosa Entities, see the Business:
Company Financing and Reorganization section; Risk
Factors: Significant Stockholders Can Exercise Influence Over
the Company and Liquidity and Capital Resources:
Financing During the Chapter 11 Case.




PART IV




Item 14.     Exhibits,
Financial Statement Schedules, and Reports on
Form 8-K

(a) The following documents are filed as
part of this report:

(1) FINANCIAL STATEMENTS

Listed on page F-1 of the Financial Statements.

(b) Reports on Form 8-K

The Registrant filed no reports on Form 8-K
during the fourth quarter ended December 31, 2001.

(c) Exhibits to 10-K for the year ended
December 31, 2001.

|        |       |             |  |                                                                                                                           |  |                                                                                                                                                       
|------- | ----- | ----------- |  | ------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |             |  |                                                                                                                          
|No.     |       | Description |  | Method of Filing                                                                                                         
|        |       |             |  |                                                                                                                          
|        | 3.1   |             |  | Certificate of Incorporation of the Reorganized
	Delaware Bio-Plexus                                                      |  | Incorporated by reference to Exhibit 3.1 of
	the Companys Form 8-K filed July 31, 2001.                                                              
|        | 3.2   |             |  | Bylaws of the Reorganized Delaware
	Bio-Plexus                                                                            |  | Incorporated by reference to Exhibit 3.2 to
	the Companys Form 8-K filed July 31, 2001.                                                              
|        | 4.5   |             |  | Promissory Note, dated October 28, 1994,
	between the Company and Victor and Margaret DeMattia                            |  | Incorporated by reference to Exhibit 4.5 to
	the Registrants Annual Report on Form 10-K filed on
	March 30, 1995 (File No. 0-24128).                 
|        | 10.6  |             |  | Marketing and Distribution Agreement dated
	March 16, 1995, between the Company and Allegiance                            |  | Incorporated by reference to Exhibit 10.6 to
	the Registrants Amendment No. 2 to Annual Report on
	Form 10-K on June 30, 1995 (File No. 0-24128).    
|        | 10.18 |             |  | Development and License Agreement dated
	January 28, 1997 by and between the Company and
	Johnson & Johnson Medical, Inc. |  | Incorporated by reference to 10.18 to the
	Registrants Quarterly Report on Form 10-Q for the
	quarter ended on September 30, 1998 (File No. 0-24128).
|        | 10.19 | (a)         |  | Amendment Agreement dated April 15, 1998
	between the Company and Johnson & Johnson Medical,
	Division of Ethicon, Inc.** |  | Incorporated by reference to Exhibit 10.19
	to the Registrants Annual Report on Form 10-K/A filed
	on October 25, 2000 (File No. 0-24128).           

36



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##### Table of Contents



|        |       |             |  |                                                                                                                                                                                                |  |                                                                                                                                                         
|------- | ----- | ----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |             |  |                                                                                                                                                                                               
|No.     |       | Description |  | Method of Filing                                                                                                                                                                              
|        |       |             |  |                                                                                                                                                                                               
|        | 10.51 |             |  | Development and Manufacturing and Distribution
	Agreement dated December 19, 2000 between the Company and
	Fresenius Medical Care Holdings, Inc. (d/b/a Fresenius Medical
	Care North America) |  | Incorporated by reference to Exhibit 10.51
	to the Registrants Annual Report on Form 10-K for the
	year ended December 31, 2000 filed on July 17, 2001.
|        | 10.53 |             |  | Debtors Modified First Amended Plan of
	Reorganization dated June 12, 2001                                                                                                                    |  | Incorporated by reference to Exhibit 10.53
	to the Registrants Annual Report on Form 10-K for the
	year ended December 31, 2000 filed on July 17, 2001.
|        | 10.54 |             |  | Stock Purchase Agreement, dated as of
	July 18, 2001, by and among Bio-Plexus, Inc. and each of
	the purchasers listed on Exhibit A thereto                                                    |  | Incorporated by reference to Exhibit 3.1 of
	the Companys Form 8-K filed July 31, 2001.                                                                
|        | 10.55 |             |  | Warrant, dated July 18, 2001, by and among
	Bio-Plexus, Inc. and each of the holders listed on
	Exhibit A thereto                                                                              |  | Incorporated by reference to Exhibit 3.1 of
	the Companys Form 8-K filed July 31, 2001.                                                                
|        | 10.56 |             |  | Registration Rights Agreement, dated as of
	July 18, 2001, by and among Bio-Plexus, Inc. and each of
	the stockholders listed on Exhibit A thereto                                             |  | Incorporated by reference to Exhibit 3.1 of
	the Companys Form 8-K filed July 31, 2001.                                                                
|        | 10.57 |             |  | 2001 Stock Incentive Plan, dated as of
	July 19, 2001                                                                                                                                          |  | Filed with this Report.                                                                                                                                 
|        | 10.58 |             |  | Employment agreement, dated July 19, 2001,
	between the Company and Christopher C. Zorn                                                                                                        |  | Filed with this Report.                                                                                                                                 
|        | 10.59 |             |  | Employment agreement, dated July 19, 2001,
	between the Company and John S. Metz                                                                                                               |  | Filed with this Report.                                                                                                                                 
|        | 10.60 |             |  | Employment agreement, dated June 14, 2001,
	between the Company and Brian J. Herrman                                                                                                           |  | Filed with this Report.                                                                                                                                 
|        | 10.61 |             |  | Consulting agreement, dated July 9, 2001,
	between the Company and Scott M.
	Tepper                                                                                                            |  | Filed with this Report.                                                                                                                                 
|        | 23    |             |  | Consent of Mahoney Sabol & Company, LLP                                                                                                                                                        |  | Filed with this Report.                                                                                                                                 




|   |                                                                                                                                                                                                                                                                                                                                    
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|** | Confidential treatment has been requested for
	portions of this Exhibit pursuant to Rule 24b-2 under the
	Securities Exchange Act of 1934 as amended. The confidential
	portions have been deleted and filed separately with the United
	States Securities and Exchange Commission together with a
	confidential treatment request.

37



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##### Table of Contents






Item 15.     Signatures

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.



| |                              
| | -----------------------------
| | BIO-PLEXUS, INC. (REGISTRANT)



| |     |                 
| | --- | ----------------
| | By: | /s/ JOHN S. METZ

| |                                   
| | ----------------------------------
| |                                   
| | John S. Metz                      
| | President, Chief Executive Officer
| | and Director                      

Dated: March 15, 2002

Pursuant to the requirements of 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                            |  | Title                                            |  | Date          
|                                     |  |                                                  |  |               
|By: /s/ JOHN S. METZJohn S. Metz     |  | President, Chief Executive Officer
	and Director |  | March 15, 2002
|                                    
|By: /s/ JAMES BOLINJames Bolin       |  | Non-Executive Chairman and
	Director             |  | March 15, 2002
|                                    
|By: /s/ KENNETH MAIMANKenneth Maiman |  | Director                                         |  | March 15, 2002
|                                    
|By: /s/ SCOTT TEPPERScott Tepper     |  | Vice-Chairman and Director                       |  | March 15, 2002

38



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##### Table of Contents



BIO-PLEXUS, INC.

INDEX TO FINANCIAL STATEMENTS

|                                                                                                               |  |      |     | 
|-------------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|Financial Statements:                                                                                          |  | Page
|                                                                                                               |  |     
|Report of Independent Accountants                                                                              |  |      | F-2 | 
|Balance Sheets at December 31, 2001 and 2000                                                                   |  |      | F-3 | 
|Statements of Operations for the years ended
	December 31, 2001, 2000 and 1999                                 |  |      | F-4 | 
|Statements of Changes in Shareholders
	Equity (Deficit) for the years ended December 31, 2001,
	2000 and 1999 |  |      | F-5 | 
|Statements of Cash Flows for the years ended
	December 31, 2001, 2000, and 1999                                |  |      | F-6 | 
|Notes to Financial Statements                                                                                  |  |      | F-7 | 

All schedules are omitted because they are not
applicable or the required information is shown in the Financial
Statements or Notes thereto.

F-1



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##### Table of Contents



REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders

of Bio-Plexus, Inc.


We have audited the balance sheets of Bio-Plexus,
Inc. as of December 31, 2001 and 2000 and the related
statements of operations, shareholders equity
(deficit) and cash flows for each of the three years ended
December 31, 2001. These financial statements are the
responsibility of the Companys management. Our
responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, such financial statements present
fairly, in all material respects, the financial position of
Bio-Plexus, Inc. as of December 31, 2001 and 2000, and the
results of its operations, and its cash flows for each of the
three years ended December 31, 2001 in conformity with
accounting principles generally accepted in the United States of
America.

The accompanying financial statements have been
prepared assuming the Company will continue as a going concern.
As discussed in Note 1 to the financial statements, the Company
has suffered recurring losses from operations, and will require
additional capital in 2002 to fund continuing operations. These
items raise substantial doubt about the Companys ability
to continue as a going concern through December 31, 2002.
Managements plans in regards to these matters are also
described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.

MAHONEY SABOL & COMPANY, LLP

Hartford, Connecticut

February 1, 2002


F-2



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##### Table of Contents



BIO-PLEXUS, INC.

BALANCE SHEETS

|                                                       |                                                                                                 |                 |                                      |              |           |           |            |             |           |            |  
|------------------------------------------------------ | ----------------------------------------------------------------------------------------------- | --------------- | ------------------------------------ | ------------ | --------- | --------- | ---------- | ----------- | --------- | ---------- | -
|                                                       |                                                                                                 | December 31,    |                                      | December 31,
|                                                       |                                                                                                 | 2001            |                                      | 2000        
|                                                       |                                                                                                 |                 |                                      |             
|ASSETS                                                 |                                                                                                 |                 |                                      |              |           |           |            |            
|Current assets:                                        |                                                                                                 |                 |                                      |              |           |           |            |            
|                                                       | Cash                                                                                            |                 | $                                    | 953,000      |           |           | $          | 4,003,000   |          
|                                                       | Accounts receivable, net                                                                        |                 |                                      | 352,000      |           |           |            | 516,000     |          
|                                                       | Royalty receivables                                                                             |                 |                                      | 163,000      |           |           |            |            |          
|                                                       | Inventories:                                                                                    |                 |                                      |              |           |           |            |             |          
|                                                       |                                                                                                 | Raw materials   |                                      |              | 1,015,000 |           |            |             | 1,379,000 |           
|                                                       |                                                                                                 | Work-in-process |                                      |              | 360,000   |           |            |             | 36,000    |           
|                                                       |                                                                                                 | Finished goods  |                                      |              | 338,000   |           |            |             | 1,634,000 |           
|                                                       |                                                                                                 |                 |                                      |              |           |           |            |            
|                                                       |                                                                                                 |                 | 1,713,000                            |              |           |           | 3,049,000  |            
|                                                       | Other current assets                                                                            |                 |                                      | 201,000      |           |           |            | 127,000     |          
|                                                       |                                                                                                 |                 |                                      |              |           |           |            |            
|                                                       |                                                                                                 |                 | Total current assets                 |              |           | 3,382,000 |            |             |           | 7,695,000  |  
|                                                       |                                                                                                 |                 |                                      |              |           |           |            |            
|Fixed assets, net (Note 4)                             |                                                                                                 |                 | 7,839,000                            |              |           |           | 7,845,000  |            
|Deferred debt financing expenses, net of
	amortization |                                                                                                 |                 |                                     |              |           |           | 1,017,000  |            
|Patents, net of amortization                           |                                                                                                 |                 | 432,000                              |              |           |           | 415,000    |            
|                                                       |                                                                                                 |                 |                                      |              |           |           |            |            
|                                                       |                                                                                                 | $               | 11,653,000                           |              |           | $         | 16,972,000 |            
|                                                       |                                                                                                 |                 |                                      |              |           |           |            |            
|LIABILITIES AND SHAREHOLDERS EQUITY
	(DEFICIT)        |                                                                                                 |                 |                                      |              |           |           |            |            
|Current liabilities:                                   |                                                                                                 |                 |                                      |              |           |           |            |            
|                                                       | Current portion of long-term debt (Note 5)                                                      |                 | $                                    | 60,000       |           |           | $          | 52,000      |          
|                                                       | Accounts payable and accrued expenses                                                           |                 |                                      | 353,000      |           |           |            | 1,129,000   |          
|                                                       | Deferred revenue                                                                                |                 |                                      | 49,000       |           |           |            |            |          
|                                                       | Accrued vacation                                                                                |                 |                                      | 35,000       |           |           |            | 122,000     |          
|                                                       | Other accrued employee costs                                                                    |                 |                                      | 22,000       |           |           |            | 282,000     |          
|                                                       |                                                                                                 |                 |                                      |              |           |           |            |            
|                                                       |                                                                                                 |                 | Total current liabilities            |              |           | 519,000   |            |             |           | 1,585,000  |  
|                                                       |                                                                                                 |                 |                                      |              |           |           |            |            
|Long-term debt, net (Note 5)                           |                                                                                                 |                 | 1,199,000                            |              |           |           | 17,806,000 |            
|                                                       |                                                                                                 |                 |                                      |              |           |           |            |            
|Shareholders equity (deficit) (Note 7):               |                                                                                                 |                 |                                      |              |           |           |            |            
|                                                       | Common stock, $.001 par value, 25,000,000
	authorized, 11,577,991 shares issued and outstanding |                 |                                      | 12,000       |           |           |            |            |          
|                                                       | Common stock, no par value, 4,000,000 authorized,
	1,488,723 shares issued and outstanding      |                 |                                      |             |           |           |            | 76,412,000  |          
|                                                       | Paid-in-capital                                                                                 |                 |                                      | 99,321,000   |           |           |            |            |          
|                                                       | Deferred compensation, net                                                                      |                 |                                      | (508,000     | )         |           |            |            |          
|                                                       | Accumulated deficit                                                                             |                 |                                      | (88,890,000  | )         |           |            | (78,831,000 | )        
|                                                       |                                                                                                 |                 |                                      |              |           |           |            |            
|                                                       |                                                                                                 |                 | Total shareholders equity (deficit) |              |           | 9,935,000 |            |             |           | (2,419,000 | )
|                                                       |                                                                                                 |                 |                                      |              |           |           |            |            
|                                                       |                                                                                                 | $               | 11,653,000                           |              |           | $         | 16,972,000 |            
|                                                       |                                                                                                 |                 |                                      |              |           |           |            |            

See accompanying summary of significant
accounting policies and notes to financial statements.

F-3



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##### Table of Contents



BIO-PLEXUS, INC.

STATEMENTS OF OPERATIONS

|                                              |                                         |                                    |             |           |            |      |             |           |            |   |            |           |           | 
|--------------------------------------------- | --------------------------------------- | ---------------------------------- | ----------- | --------- | ---------- | ---- | ----------- | --------- | ---------- | - | ---------- | --------- | --------- | 
|                                              |                                         |                                   
|                                              |                                         | For the Year Ended December 31,   
|                                              |                                         |                                   
|                                              |                                         | 2001                               |             | 2000      |            | 1999
|                                              |                                         |                                    |             |           |            |     
|Revenue:                                      |                                         |                                    |             |           |            |      |             |           |            |   |            |          
|                                              | Product                                 |                                    | $           | 5,565,000 |            |      | $           | 4,693,000 |            |   | $          | 5,498,000 |          
|                                              | Services (Note 10)                      |                                    |             | 322,000   |            |      |             | 234,000   |            |   |            | 1,526,000 |          
|                                              | Royalties (Note 10)                     |                                    |             | 484,000   |            |      |             | 68,000    |            |   |            |          |          
|                                              |                                         |                                    |             |           |            |      |             |           |            |   |            |          
|                                              |                                         | Total revenue                      |             |           | 6,371,000  |      |             |           | 4,995,000  |   |            |           | 7,024,000 | 
|                                              |                                         |                                    |             |           |            |      |             |           |            |   |            |          
|Costs and expenses:                           |                                         |                                    |             |           |            |      |             |           |            |   |            |          
|                                              | Product                                 |                                    |             | 3,640,000 |            |      |             | 2,450,000 |            |   |            | 3,754,000 |          
|                                              | Services                                |                                    |             | 163,000   |            |      |             | 35,000    |            |   |            | 87,000    |          
|                                              | Pre-production manufacturing            |                                    |             | 540,000   |            |      |             |          |            |   |            |          |          
|                                              | Research and development                |                                    |             | 1,538,000 |            |      |             | 1,453,000 |            |   |            | 1,379,000 |          
|                                              | Selling, general and administrative     |                                    |             | 6,323,000 |            |      |             | 7,404,000 |            |   |            | 4,670,000 |          
|                                              |                                         |                                    |             |           |            |      |             |           |            |   |            |          
|                                              |                                         | Total operating costs and expenses |             |           | 12,204,000 |      |             |           | 11,342,000 |   |            |           | 9,890,000 | 
|                                              |                                         |                                    |             |           |            |      |             |           |            |   |            |          
|Operating Loss                                |                                         |                                    | (5,833,000  | )         |            |      | (6,347,000  | )         |            |   | (2,866,000 | )        
|                                              |                                         |                                    |             |           |            |      |             |           |            |   |            |          
|Financing Expenses:                           |                                         |                                    |             |           |            |      |             |           |            |   |            |          
|                                              | Amortization of deferred debt financing |                                    |             | 63,000    |            |      |             | 333,000   |            |   |            | 266,000   |          
|                                              | Other financing expense (Note 5)        |                                    |             | 854,000   |            |      |             | 4,347,000 |            |   |            | 2,158,000 |          
|                                              | Other income                            |                                    |             | (66,000   | )          |      |             | (301,000  | )          |   |            | (57,000   | )        
|                                              |                                         |                                    |             |           |            |      |             |           |            |   |            |          
|                                              |                                         | Total financing expenses           |             |           | 851,000    |      |             |           | 4,379,000  |   |            |           | 2,367,000 | 
|                                              |                                         |                                    |             |           |            |      |             |           |            |   |            |          
|Loss before reorganization costs              |                                         |                                    | (6,684,000  | )         |            |      | (10,726,000 | )         |            |   | (5,233,000 | )        
|Reorganization costs                          |                                         |                                    | 3,377,000   |           |            |      |            |           |            |   |           |          
|                                              |                                         |                                    |             |           |            |      |             |           |            |   |            |          
|Net loss                                      |                                         | $                                  | (10,061,000 | )         |            | $    | (10,726,000 | )         |            | $ | (5,233,000 | )        
|                                              |                                         |                                    |             |           |            |      |             |           |            |   |            |          
|Net loss (basic and diluted) per common share |                                         | $                                  | (1.65       | )         |            | $    | (7.30       | )         |            | $ | (3.86      | )        
|                                              |                                         |                                    |             |           |            |      |             |           |            |   |            |          
|Weighted average common shares outstanding    |                                         |                                    | 6,081,913   |           |            |      | 1,469,551   |           |            |   | 1,354,092  |          
|                                              |                                         |                                    |             |           |            |      |             |           |            |   |            |          

See accompanying summary of significant
accounting policies and notes to financial statements.

F-4



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##### Table of Contents



BIO-PLEXUS, INC.

STATEMENTS OF CHANGES IN SHAREHOLDERS
EQUITY (DEFICIT)

|                                                                                                              |  |              |            |          |  |               |             |             |  |         |            |       |  |   |          |   |  |   |             |   |  |   |             |  
|------------------------------------------------------------------------------------------------------------- |  | ------------ | ---------- | -------- |  | ------------- | ----------- | ----------- |  | ------- | ---------- | ----- |  | - | -------- | - |  | - | ----------- | - |  | - | ----------- | -
|                                                                                                              |  |              |            |          |  |               |             |             |  |        
|                                                                                                              |  | Common Stock |            |          |  | Deferred      |             |             |  |        
|                                                                                                              |  |              |            | Paid-in- |  | Compensation, |             | Accumulated |  |        
|                                                                                                              |  | Shares       |            | Amount   |  | Capital       |             | Net         |  | Deficit |            | Total
|                                                                                                              |  |              |            |          |  |               |             |             |  |         |            |      
|Balance  December 31, 1998                                                                                   |  |              | 1,279,316  |          |  | $             | 65,349,000  |             |  | $       |           |       |  | $ |         |   |  | $ | (62,872,000 | ) |  | $ | 2,477,000   |  
|Exercise of stock options                                                                                     |  |              | 3,292      |          |  |               | 89,000      |             |  |         |            |       |  |   |          |   |  |   |             |   |  |   | 89,000      |  
|Cash proceeds from sale                                                                                       |  |              | 54,956     |          |  |               | 1,100,000   |             |  |         |            |       |  |   |          |   |  |   |             |   |  |   | 1,100,000   |  
|Board of Directors fees                                                                                      |  |              | 1,738      |          |  |               | 43,000      |             |  |         |            |       |  |   |          |   |  |   |             |   |  |   | 43,000      |  
|Conversion of notes payable                                                                                   |  |              | 54,475     |          |  |               | 1,467,000   |             |  |         |            |       |  |   |          |   |  |   |             |   |  |   | 1,467,000   |  
|Conversion of warrants                                                                                        |  |              | 14,604     |          |  |               |            |             |  |         |            |       |  |   |          |   |  |   |             |   |  |   |            |  
|Warrants issued with debt                                                                                     |  |              |            |          |  |               | 3,785,000   |             |  |         |            |       |  |   |          |   |  |   |             |   |  |   | 3,785,000   |  
|Net loss                                                                                                      |  |              |            |          |  |               |             |             |  |         |            |       |  |   |          |   |  |   | (5,233,000  | ) |  |   | (5,233,000  | )
|                                                                                                              |  |              |            |          |  |               |             |             |  |         |            |       |  |   |          |   |  |   |             |   |  |   |             |  
|Balance  December 31, 1999                                                                                   |  |              | 1,408,381  |          |  |               | 71,833,000  |             |  |         |           |       |  |   |         |   |  |   | (68,105,000 | ) |  |   | 3,728,000   |  
|Exercise of stock options                                                                                     |  |              | 4,495      |          |  |               | 115,000     |             |  |         |            |       |  |   |          |   |  |   |             |   |  |   | 115,000     |  
|Cash proceeds from sale                                                                                       |  |              | 25,000     |          |  |               | 750,000     |             |  |         |            |       |  |   |          |   |  |   |             |   |  |   | 750,000     |  
|Board of Directors fees                                                                                      |  |              | 1,886      |          |  |               | 40,000      |             |  |         |            |       |  |   |          |   |  |   |             |   |  |   | 40,000      |  
|Conversion of notes payable                                                                                   |  |              | 48,961     |          |  |               | 1,333,000   |             |  |         |            |       |  |   |          |   |  |   |             |   |  |   | 1,333,000   |  
|Warrants issued with debt                                                                                     |  |              |           |          |  |               | 2,192,000   |             |  |         |            |       |  |   |          |   |  |   |             |   |  |   | 2,192,000   |  
|Expiration of Redeemable Common
	Stock Warrants                                                               |  |              |           |          |  |               | 149,000     |             |  |         |            |       |  |   |          |   |  |   |             |   |  |   | 149,000     |  
|Net loss                                                                                                      |  |              |            |          |  |               |             |             |  |         |            |       |  |   |          |   |  |   | (10,726,000 | ) |  |   | (10,726,000 | )
|                                                                                                              |  |              |            |          |  |               |             |             |  |         |            |       |  |   |          |   |  |   |             |   |  |   |             |  
|Balance  December 31, 2000                                                                                   |  |              | 1,488,723  |          |  |               | 76,412,000  |             |  |         |           |       |  |   |         |   |  | $ | (78,831,000 | ) |  | $ | (2,419,000  | )
|Board of Directors fees                                                                                      |  |              | 1,319      |          |  |               | 18,000      |             |  |         |            |       |  |   |          |   |  |   |             |   |  |   | 18,000      |  
|Fresenius common stock purchase                                                                               |  |              | 10,174     |          |  |               | 79,000      |             |  |         |            |       |  |   |          |   |  |   |             |   |  |   | 79,000      |  
|Reclass old common stock balance to
	paid-in-capital                                                          |  |              |            |          |  |               | (76,499,000 | )           |  |         | 76,499,000 |       |  |   |          |   |  |   |             |   |  |   |            |  
|Conversion of notes payable and cash proceeds
	from sale                                                      |  |              | 9,815,284  |          |  |               | 1,000       |             |  |         | 22,223,000 |       |  |   |          |   |  |   |             |   |  |   | 22,224,000  |  
|Net shares issued in connection with restricted
	stock plan including deferred compensation and
	amortization |  |              | 262,400    |          |  |               |             |             |  |         | 599,000    |       |  |   | (508,000 | ) |  |   |             |   |  |   | 91,000      |  
|Net loss                                                                                                      |  |              |            |          |  |               |             |             |  |         |            |       |  |   |          |   |  |   | (10,061,000 | ) |  |   | (10,061,000 | )
|Rounding                                                                                                      |  |              | 91         |          |  |               | 1,000       |             |  |         |            |       |  |   |          |   |  |   | 2,000       |   |  |   | 3,000       |  
|                                                                                                              |  |              |            |          |  |               |             |             |  |         |            |       |  |   |          |   |  |   |             |   |  |   |             |  
|Balance  December 31, 2001                                                                                   |  |              | 11,577,991 |          |  | $             | 12,000      |             |  | $       | 99,321,000 |       |  | $ | (508,000 | ) |  | $ | (88,890,000 | ) |  | $ | 9,935,000   |  
|                                                                                                              |  |              |            |          |  |               |             |             |  |         |            |       |  |   |          |   |  |   |             |   |  |   |             |  

See accompanying summary of significant
accounting policies and notes to financial statements.

F-5



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##### Table of Contents



BIO-PLEXUS, INC.

STATEMENTS OF CASH FLOWS

|                                                                                                     |                                                           |                                                   |            |            |            |      |             |           |            |   |            |           |            |  
|---------------------------------------------------------------------------------------------------- | --------------------------------------------------------- | ------------------------------------------------- | ---------- | ---------- | ---------- | ---- | ----------- | --------- | ---------- | - | ---------- | --------- | ---------- | -
|                                                                                                     |                                                           |                                                  
|                                                                                                     |                                                           | For the Year Ended December 31,                  
|                                                                                                     |                                                           |                                                  
|                                                                                                     |                                                           | 2001                                              |            | 2000       |            | 1999
|                                                                                                     |                                                           |                                                   |            |            |            |     
|CASH FLOWS FROM OPERATING ACTIVITIES                                                                 |                                                           |                                                   |            |            |            |      |             |           |            |   |            |          
|Loss before reorganization costs                                                                     |                                                           | $                                                 | (6,684,000 | )          |            | $    | (10,726,000 | )         |            | $ | (5,233,000 | )        
|Adjustments to reconcile loss before
	reorganization costs to net cash used in operating activities: |                                                           |                                                   |            |            |            |      |             |           |            |   |            |          
|                                                                                                     | Depreciation and amortization                             |                                                   |            | 907,000    |            |      |             | 546,000   |            |   |            | 552,000   |           
|                                                                                                     | Recognition of stock-based compensation (Note 8)          |                                                   |            | 92,000     |            |      |             |          |            |   |            |          |           
|                                                                                                     | Write-down of equipment to net realizable value
	(Note 4) |                                                   |            |           |            |      |             | 60,000    |            |   |            | 280,000   |           
|                                                                                                     | Amortization of deferred debt financing expenses          |                                                   |            | 63,000     |            |      |             | 333,000   |            |   |            | 266,000   |           
|                                                                                                     | Amortization of debt discount                             |                                                   |            | 114,000    |            |      |             | 2,364,000 |            |   |            | 1,747,000 |           
|                                                                                                     | Reorganization cost payments                              |                                                   |            | (636,000   | )          |      |             |          |            |   |            |          |           
|                                                                                                     | Decrease (increase) in assets:                            |                                                   |            |            |            |      |             |           |            |   |            |           |           
|                                                                                                     |                                                           | Accounts receivable, net and royalty receivables  |            |            | 1,000      |      |             |           | 392,000    |   |            |           | (344,000   | )
|                                                                                                     |                                                           | Inventories                                       |            |            | 1,336,000  |      |             |           | (787,000   | ) |            |           | (238,000   | )
|                                                                                                     |                                                           | Other current assets                              |            |            | (74,000    | )    |             |           | 49,000     |   |            |           |           |  
|                                                                                                     | Increase (decrease) in liabilities:                       |                                                   |            |            |            |      |             |           |            |   |            |           |           
|                                                                                                     |                                                           | Accounts payable and accrued expenses             |            |            | (776,000   | )    |             |           | 288,000    |   |            |           | 275,000    |  
|                                                                                                     |                                                           | Accrued vacation and other accrued employee costs |            |            | (347,000   | )    |             |           | (24,000    | ) |            |           | 19,000     |  
|                                                                                                     |                                                           | Accrued product replacement costs                 |            |            |           |      |             |           |           |   |            |           | (222,000   | )
|                                                                                                     |                                                           | Deferred revenue (Note 10)                        |            |            | 49,000     |      |             |           |            |   |            |           | (875,000   | )
|                                                                                                     | Other, net                                                |                                                   |            | 18,000     |            |      |             | 290,000   |            |   |            | (188,000  | )         
|                                                                                                     |                                                           |                                                   |            |            |            |      |             |           |            |   |            |          
|                                                                                                     |                                                           | Net cash used in operating activities             |            |            | (5,937,000 | )    |             |           | (7,215,000 | ) |            |           | (3,961,000 | )
|                                                                                                     |                                                           |                                                   |            |            |            |      |             |           |            |   |            |          
|CASH FLOWS FROM INVESTING ACTIVITIES                                                                 |                                                           |                                                   |            |            |            |      |             |           |            |   |            |          
|Purchases and construction of fixed assets, net                                                      |                                                           |                                                   | (868,000   | )          |            |      | (4,040,000  | )         |            |   | (536,000   | )        
|Long-term investment                                                                                 |                                                           |                                                   |           |            |            |      |            |           |            |   | 627,000    |          
|Cost of patents                                                                                      |                                                           |                                                   | (49,000    | )          |            |      | (107,000    | )         |            |   | (103,000   | )        
|                                                                                                     |                                                           |                                                   |            |            |            |      |             |           |            |   |            |          
|                                                                                                     |                                                           | Net cash used in investing activities             |            |            | (917,000   | )    |             |           | (4,147,000 | ) |            |           | (12,000    | )
|                                                                                                     |                                                           |                                                   |            |            |            |      |             |           |            |   |            |          
|CASH FLOWS FROM FINANCING ACTIVITIES                                                                 |                                                           |                                                   |            |            |            |      |             |           |            |   |            |          
|Proceeds from sale of common stock (Note 5)                                                          |                                                           |                                                   | 2,895,000  |            |            |      | 750,000     |           |            |   | 1,100,000  |          
|Proceeds from exercise of common stock options                                                       |                                                           |                                                   |           |            |            |      | 115,000     |           |            |   | 91,000     |          
|Accretion of accrued interest                                                                        |                                                           |                                                   | 937,000    |            |            |      | 1,721,000   |           |            |   |           |          
|Proceeds from long-term debt                                                                         |                                                           |                                                   |           |            |            |      | 9,900,000   |           |            |   | 2,060,000  |          
|Payments of deferred financing costs                                                                 |                                                           |                                                   |           |            |            |      | (885,000    | )         |            |   |           |          
|Increase in notes payable                                                                            |                                                           |                                                   | 27,000     |            |            |      | 3,850,000   |           |            |   | 2,750,000  |          
|Proceeds from sale and leaseback                                                                     |                                                           |                                                   |           |            |            |      |            |           |            |   | 137,000    |          
|Repayments of long-term debt                                                                         |                                                           |                                                   | (55,000    | )          |            |      | (953,000    | )         |            |   | (1,833,000 | )        
|                                                                                                     |                                                           |                                                   |            |            |            |      |             |           |            |   |            |          
|                                                                                                     |                                                           | Net cash provided by financing activities         |            |            | 3,804,000  |      |             |           | 14,498,000 |   |            |           | 4,305,000  |  
|                                                                                                     |                                                           |                                                   |            |            |            |      |             |           |            |   |            |          
|                                                                                                     |                                                           | Net increase (decrease) in cash                   |            |            | (3,050,000 | )    |             |           | 3,136,000  |   |            |           | 332,000    |  
|                                                                                                     |                                                           | Cash, beginning of period                         |            |            | 4,003,000  |      |             |           | 867,000    |   |            |           | 535,000    |  
|                                                                                                     |                                                           |                                                   |            |            |            |      |             |           |            |   |            |          
|                                                                                                     |                                                           | Cash, end of period                               |            | $          | 953,000    |      |             | $         | 4,003,000  |   |            | $         | 867,000    |  
|                                                                                                     |                                                           |                                                   |            |            |            |      |             |           |            |   |            |          
|Supplemental cash flow disclosures:                                                                  |                                                           |                                                   |            |            |            |      |             |           |            |   |            |          
|                                                                                                     | Cash payments of interest (net of amounts
	capitalized)   |                                                   | $          | 134,000    |            |      | $           | 382,000   |            |   | $          | 412,000   |           
|                                                                                                     | Cash payments of income taxes                             |                                                   |            | 2,000      |            |      |             | 1,000     |            |   |            | 4,000     |           
|                                                                                                     | Debt discount                                             |                                                   |            |           |            |      |             | 2,192,000 |            |   |            | 1,900,000 |           
|                                                                                                     | Surrender of debt upon conversion to equity               |                                                   |            | 19,408,000 |            |      |             | 1,333,000 |            |   |            | 1,467,000 |           
|                                                                                                     | Non-cash reorganization costs                             |                                                   |            | 2,741,000  |            |      |             |          |            |   |            |          |           

See accompanying summary of significant
accounting policies and notes to financial statements.

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##### Table of Contents



BIO-PLEXUS, INC.

NOTES TO FINANCIAL STATEMENTS

1. Formation and Operations of the
Company

Bio-Plexus, Inc. (the Company) was
incorporated in Connecticut on September 4, 1987 and
subsequently re-incorporated as a Delaware company on
July 18, 2001 (pursuant to a merger agreement entered into
pursuant to the Plan of Reorganization). The Company was formed
for the purpose of the design, development, manufacture, sale
and license of medical products. The Companys operations
consist of two business segments: Safety Medical Products and
Accessories and Joint Venture Design and Development.

The products included in the Companys
Safety Medical Products and Accessories segment include safety
blood collection needles, needle holders, and needle disposal
containers. The Company sells its products to hospitals, medical
centers, and certain distributors both domestically and
internationally. Since its inception, the Company has devoted
substantially all of its efforts to the development and
marketing of a series of safety blood collection needles and
accessories marketed under the Punctur-Guard® trademark,
the development of licensing agreements, and the development and
construction of needle assembly systems used to manufacture the
Punctur-Guard® needles. The Company has funded its
operating losses since inception through loans and the sale of
debt and equity securities.

The Joint Venture Design and Development segment
includes all contract design and development revenue and
associated costs resulting from joint ventures and strategic
partnerships with other healthcare companies. The primary source
of these revenues has been the development contract with Johnson
& Johnson Medical (JJM) for the design and
development of a new safety I.V. catheter, which was introduced
to the market by JJM in late 2000 (See Note 10).

Reorganization
and Emergence from Chapter 11 and Going Concern

On April 4, 2001 (the Petition
Date) the Company filed a voluntary petition for relief
under Chapter 11 of the United States Code (the
Bankruptcy Code) with the United States Bankruptcy
Court for the District of Connecticut (the Bankruptcy
Court). As of the Petition Date, the Company commenced
operating its business and managed its properties as a
debtor-in-possession.

On April 4, 2001, the Company filed a
Disclosure Statement (the Disclosure Statement) and
a Plan of Reorganization (the Plan of
Reorganization) with the Bankruptcy Court. The Disclosure
Statement set forth certain information regarding, among other
things, significant events that had occurred during the
Companys Chapter 11 case and the anticipated
organization, operation and financing of the reorganized Company
(Reorganized Company). On June 12, 2001 a
confirmation order was entered by the Bankruptcy Court that
confirmed the Plan of Reorganization pursuant to Bankruptcy Code
section 1129, and the Company emerged from its
debtor-in-possession status as the Reorganized Company. The
conditions precedent to the effectiveness of the Plan of
Reorganization included, among other things, reincorporation of
the Reorganized Company in the State of Delaware, there being no
material adverse change in the development and launch of the
Companys Winged Set product line, and the consummation of
the Appaloosa Private Placement (as described below).

The conditions precedent to the effectiveness of
the Plan of Reorganization were met on July 18, 2001 with
the reincorporation of the Reorganized Company in the State of
Delaware, payment in full of all trade vendors, the conversion
of the Appaloosa Entities debt into Company common stock,
and the consummation of the Appaloosa Private Placement.
Subsequent to these events, the Appaloosa entities owned 87% of
the Companys stock. All references to the Company before,
during, and after the reorganization, and after the
reincorporation in Delaware, will be as the Company.

The financial statements have been prepared
assuming the Company will continue as a going concern. The
appropriateness of using the going concern basis is dependent
upon, among other things, future profitable operations, and the
ability to generate sufficient cash from operations and
financing arrangements to meet ongoing obligations. The
uncertainty with respect to obtaining additional financing,
coupled with the recurring

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##### Table of Contents



BIO-PLEXUS, INC.


NOTES TO FINANCIAL STATEMENTS 
(Continued)

net losses from operations, raise doubt about the
Companys ability to continue as a going concern. The
Company will need to raise working capital to fund operations in
the latter half of 2002. The Company continues to explore
additional financing alternatives and potential strategic
relationships which may provide additional sources of working
capital. The Company also continues to explore opportunities to
further reduce operating costs and expenses. The financial
statements do not include any adjustments to the carrying value
of assets and liabilities that might be necessary as a
consequence of these uncertainties.

2. Summary of Significant Accounting
Policies

Estimates

The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
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. Actual results could
differ from those estimates.

Cash
and Cash Equivalents

The Company considers all highly liquid
investments purchased with an initial maturity of three months
or less to be cash equivalents. At various times, cash balances
exceeded federally insured limits.

Inventories

All inventories are stated at cost using the
weighted average valuation method. Included in inventory totals
were allowance for obsolescence of approximately $69,000 and
$8,000 at December 31, 2001 and 2000, respectively.

Revenue
Recognition

Product sales and related costs are recorded by
the Company upon shipment of product to the customer or
distributor.

Royalty revenue is recorded as earned, based on
monthly reports of royalties owed from licensees.

Equipment sales as a result of strategic
partnerships are progress billed and revenue is recognized in
the billing period.

The Companys strategic partnerships
resulted in the recognition of development contract or
service revenue. Pursuant to the terms of the
agreements with these strategic partners, product and process
development services are progress billed as performed and
revenue is recognized over the estimated project period.

Fixed
Assets

Fixed assets are stated at cost and are
depreciated using the straight-line method over the estimated
useful lives of the assets, which range from 3-32 years.
Maintenance and repair expenditures are charged to expense as
incurred.

Deferred
Debt Financing Expenses and Debt Discount

Financing expenses and debt discount incurred in
connection with the issuance of long-term debt were amortized
using the interest method over the term of the debt, until the
Plan of Reorganization took place in 2001.

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##### Table of Contents



BIO-PLEXUS, INC.


NOTES TO FINANCIAL STATEMENTS 
(Continued)

Income
Taxes

The Company uses the liability method of
accounting for income taxes, as set forth in Statement of
Financial Accounting Standards No. 109, Accounting
for Income Taxes. Under this method, deferred tax
liabilities and assets are recognized for the expected future
tax consequences of temporary differences between the carrying
amounts and the tax basis of assets and liabilities.

Patents

Patent costs are capitalized as incurred and
amortized on a straight-line basis over the shorter of the legal
term or estimated economic life of the patent. Patent costs are
net of accumulated amortization of $131,000 and $99,000 as of
December 31, 2001 and December 31, 2000, respectively.

Reclassification

Certain reclassifications have been made to the
1999 and 2000 financial statements to conform to the 2001
presentation.

Description
of Reorganization Accounting

In connection with the reorganization, the
Company reviewed the recommended accounting principles for
entities emerging from Chapter 11 (fresh start
reporting) set forth in the American Institute of
Certified Public Accountants Statement of Position 90-7
Financial Reporting by Entities in Reorganization under
the Bankruptcy Code. SOP 90-7 provides guidance with
regard to disclosures while an entity is in reorganization, and
requires that fresh start reporting (purchase accounting) be
adopted when the reorganization value of the assets of the
emerging entity (immediately before the date of confirmation) is
less than the total of all post-petition liabilities and allowed
claims, and the holders of existing voting shares immediately
before confirmation receive less than fifty percent (50%) of the
voting shares of the emerging entity. If fresh start reporting
were applicable, it would require, among other things, an
allocation of the reorganization value to the assets of the
Company, creating a new set of financial statements for the
reorganized entity. These statements would not be comparable
with those prepared before the reorganization plan because they
would be those of a new entity.

In connection with the Plan of Reorganization,
the holders of the existing shares received only 15% of the
voting shares of the Company; however, the reorganization value
of the Company was not deemed to be less than the total of all
post-petition liabilities and allowed claims. Accordingly, the
adoption of the fresh start requirements was not applicable, and
therefore the transaction was accounted for at historical values
within the third quarter of 2001 financial statements, which
allows comparison of the Companys financial statements to
those of prior periods.

In determining the reorganization value, the
Company utilized prior independent appraisals, discounted cash
flow analysis, and comparable industry standards. The Company,
subsequent to its reorganization on July 18, 2001, has paid
all allowed unsecured claims and pre-petition value. All other
allowed secured and priority claims were not subject to
compromise, and with the exception of the Convertible Notes,
were carried forward at historical values. Accordingly, there
was no discounting or forgiveness of debt associated with the
reorganization. Costs of the reorganization are separately
identified within the statements of operations.

Reorganization
Costs

As part of the Plan of Reorganization, certain
costs were incurred and certain asset carrying values were
impaired, causing a write-off of such assets. The total
reorganization charge in the accompanying 2001 statements of
operations was $3,377,000. Of that amount, $2,741,000 represents
write-offs of unamortized debt financing costs and unamortized
debt discounts. Both of these assets had originally been
established with

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##### Table of Contents



BIO-PLEXUS, INC.


NOTES TO FINANCIAL STATEMENTS 
(Continued)

the placement of the Convertible Notes, and
because of the conversion to common stock of this debt, the
associated unamortized debt financing and debt discount carrying
values were written off. The remaining $636,000 represents
professional fees paid during the reorganization period.

3. New Accounting Standards

During 2001, the Financial Accounting Standards
Board (FASB) issued Statement of Financial
Accounting Standard (SFAS) No. 142,
Goodwill and Other Intangible Assets, which requires
that goodwill and certain other intangible assets having
indefinite lives no longer be amortized to earnings, but instead
be subject to periodic testing for impairment, SFAS
No. 143, Accounting for Retirement Obligations,
which provides the accounting requirements for retirement
obligations associated with tangible long-lived assets, and SFAS
No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, which excludes from the definition of
long-lived assets goodwill and other intangibles that are not
amortized in accordance with SFAS 142. SFAS 142 and
144 would be effective for the Companys fiscal year-ended
December 31, 2002 and SFAS 143 would be effective for
the Companys fiscal year ended December 31, 2003. The
Company has quantified the impact of adopting the above SFAS
pronouncements and has determined that the effect on the
Companys financial position and results of operations is
immaterial.

4. Fixed Assets

Fixed assets consist of the following:

|                                 |  |              |            |              |  |   |            |  
|-------------------------------- |  | ------------ | ---------- | ------------ |  | - | ---------- | -
|                                 |  | December 31, |            | December 31,
|                                 |  | 2001         |            | 2000        
|                                 |  |              |            |             
|Land and building                |  | $            | 3,083,000  |              |  | $ | 2,490,000  |  
|Machinery and equipment          |  |              | 6,113,000  |              |  |   | 2,906,000  |  
|Construction-in-progress         |  |              | 52,000     |              |  |   | 3,797,000  |  
|Production molds                 |  |              | 2,825,000  |              |  |   | 2,922,000  |  
|Office furniture and equipment   |  |              | 451,000    |              |  |   | 875,000    |  
|Fixed assets under capital lease |  |              | 103,000    |              |  |   | 76,000     |  
|                                 |  |              |            |              |  |   |            |  
|                                 |  |              | 12,627,000 |              |  |   | 13,066,000 |  
|Less: accumulated depreciation   |  |              | (4,788,000 | )            |  |   | (5,221,000 | )
|                                 |  |              |            |              |  |   |            |  
|                                 |  | $            | 7,839,000  |              |  | $ | 7,845,000  |  
|                                 |  |              |            |              |  |   |            |  

Depreciation expense was $875,000 in 2001,
$519,000 in 2000, and $532,000 in 1999.

Total fixed assets includes $527,000 and $211,000
of capitalized interest as of December 31, 2001 and
December 31, 2000, respectively.

Beginning in 1996 and continuing into 2000,
certain of the Companys fixed assets were written down to
net realizable value and were subsequently written off, as the
manner in which these assets were used by the Company had
changed. These fixed assets consisted of primarily the
Companys first generation production machinery and
equipment used to manufacture its blood collection needle
product line. This machinery and equipment was internally
constructed, lower volume equipment that was phased out over
this time period in favor of higher volume, more automated, more
efficient production machinery and equipment. Total losses
resulting from these write-downs and subsequent write-offs
amounted to $0 in 2001, $60,000 in 2000, $280,000 in 1999, and
$1,359,000 in 1998, and such losses were reported in product
costs on the statements of operations in those years.

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##### Table of Contents



BIO-PLEXUS, INC.


NOTES TO FINANCIAL STATEMENTS 
(Continued)

5. Contractual Obligations and Commercial
Commitments

The Companys contractual obligations and
commercial commitments as of December 31, 2001 and 2000
consisted of the following:

|                                   |  |                        |           |           |  |             |        |       |  |         |         |              |  |   |         |  |  |   |         |  |  |   |            | 
|---------------------------------- |  | ---------------------- | --------- | --------- |  | ----------- | ------ | ----- |  | ------- | ------- | ------------ |  | - | ------- |  |  | - | ------- |  |  | - | ---------- | 
|                                   |  |                       
|                                   |  | Payments Due by Period
|                                   |  | Total as of            |           |           |  | Total as of
|Contractual                        |  | December 31,           |           | Less than |  | 1-3         |        | 4-5   |  | After   |         | December 31,
|Obligations                        |  | 2001                   |           | 1 Year    |  | Years       |        | Years |  | 5 Years |         | 2000        
|                                   |  |                        |           |           |  |             |        |       |  |         |         |             
|Long-Term Debt                     |  | $                      | 1,194,000 |           |  | $           | 40,000 |       |  | $       | 91,000  |              |  | $ | 109,000 |  |  | $ | 954,000 |  |  | $ | 17,801,000 | 
|Capital Lease Obligations          |  |                        | 65,000    |           |  |             | 20,000 |       |  |         | 38,000  |              |  |   | 7,000   |  |  |   |        |  |  |   | 57,000     | 
|Operating Leases                   |  |                        | 69,000    |           |  |             | 30,000 |       |  |         | 29,000  |              |  |   | 10,000  |  |  |   |        |  |  |   | 84,000     | 
|Unconditional Purchase Obligations |  |                        | 9,000     |           |  |             | 9,000  |       |  |         |        |              |  |   |        |  |  |   |         |  |  |   | 1,301,000  | 
|Other Long-Term Obligations        |  |                        |          |           |  |             |       |       |  |         |        |              |  |   |        |  |  |   |        |  |  |   |           | 
|                                   |  |                        |           |           |  |             |        |       |  |         |         |              |  |   |         |  |  |   |         |  |  |   |            | 
|Total Contractual Cash Obligations |  | $                      | 1,337,000 |           |  | $           | 99,000 |       |  | $       | 158,000 |              |  | $ | 126,000 |  |  | $ | 954,000 |  |  | $ | 19,243,000 | 
|                                   |  |                        |           |           |  |             |        |       |  |         |         |              |  |   |         |  |  |   |         |  |  |   |            | 

|                               |  |                                            |   |           |  |       |   |       |  |        |   |  |  |   |   |  |  |   |   | 
|------------------------------ |  | ------------------------------------------ | - | --------- |  | ----- | - | ----- |  | ------ | - |  |  | - | - |  |  | - | - | 
|                               |  |                                           
|                               |  | Amount of Commitment Expiration Per Period
|                               |  | Total                                      |   |          
|                               |  | Amounts                                    |   |          
|                               |  | Committed                                  |   |          
|                               |  | December 31,                               |   | Less than |  | 1-3   |   | 4-5   |  | Over 5
|Other Commercial Commitments   |  | 2001                                       |   | 1 Year    |  | Years |   | Years |  | Years 
|                               |  |                                            |   |           |  |       |   |       |  |       
|Lines of Credit                |  | $                                          |  |           |  | $     |  |       |  | $      |  |  |  | $ |  |  |  | $ |  | 
|Standby Letters of Credit      |  |                                            |  |           |  |       |  |       |  |        |  |  |  |   |  |  |  |   |  | 
|Guarantees                     |  |                                            |  |           |  |       |  |       |  |        |  |  |  |   |  |  |  |   |  | 
|Standby Repurchase Obligations |  |                                            |  |           |  |       |  |       |  |        |  |  |  |   |  |  |  |   |  | 
|Other Commercial Commitments   |  |                                            |  |           |  |       |  |       |  |        |  |  |  |   |  |  |  |   |  | 
|                               |  |                                            |   |           |  |       |   |       |  |        |   |  |  |   |   |  |  |   |   | 
|Total Commercial Commitments   |  | $                                          |  |           |  | $     |  |       |  | $      |  |  |  | $ |  |  |  | $ |  | 
|                               |  |                                            |   |           |  |       |   |       |  |        |   |  |  |   |   |  |  |   |   | 

Rent expense was $62,000 in 1999, $54,000 in 2000
and $65,000 in 2001.

The December 31, 2000 long-term debt balance
of $17,801,000 shown above was net of $1,902,000 of unamortized
discount. During 2001, this amount was written off as part of
the Companys total reorganization costs of $3,377,000
reflected in the accompanying statements of operations.

Facility
Mortgage

On October 28, 1994, the Company acquired a
manufacturing and warehouse facility for $1,500,000. The seller
in the form of a note, which bears interest at 9% per annum,
provided financing of $1,350,000 of the purchase price. Interest
only was payable for the first two years of the note. Principal
and interest payments began in October 1996, and are based
on a twenty-year amortization schedule with a balloon payment
due on November 1, 2009. The note is secured by a first
mortgage on the facility.

Financing
Transactions with the Appaloosa Entities

The following section details the Companys
financing and reorganization activities covering the period from
1999 to the effective reorganization date of July 18, 2001.
During this timeframe, the Company

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##### Table of Contents



BIO-PLEXUS, INC.


NOTES TO FINANCIAL STATEMENTS 
(Continued)

completed a series of financings with the
Appaloosa Entities. In accordance with the Company
reorganization on July 18, 2001, all Appaloosa
Entities debt was subsequently converted to Company common
stock and Appaloosa Entities common stock warrants and
stock options were canceled and deemed extinguished as part of
the Plan of Reorganization. All references to the Company
before, during, and after the reorganization, and after the
reincorporation in Delaware, will be as the Company,
unless otherwise indicated.

Convertible Note
Financing

On September 21, 1999, the Company received
a commitment from Appaloosa Management L.P. for a total
financing package of $17.5 million, comprised of
(i) $16.75 million of zero-coupon, secured convertible
notes due 2005 (the Convertible Notes),
(ii) 25,000 shares of common stock issued at a purchase
price of $30 per share (the Permanent Financing
Shares) and (iii) nine-year warrants to purchase up
to 150,000 shares of common stock at an initial exercise price
of $70 per share (the $70 Warrants, and
collectively with the Convertible Notes and the Permanent
Financing Shares, the Permanent Financing). The
Permanent Financing was consummated on April 28, 2000 after
receipt of stockholder approval of the terms of the Permanent
Financing and certain related matters. All Convertible Notes
were converted into Company common stock on July 18, 2001,
as part of the consummation of the Plan of Reorganization (see
Note 1).

Bridge
Transactions

Pending consummation of the Permanent Financing,
on October 21, 1999, the Company issued to certain funds
for which Appaloosa Management L.P. acts as investment adviser
(collectively, the Appaloosa Entities) a 7.5%
non-convertible secured note in the aggregate principal amount
of $3 million (the First Bridge Note). In
January 2000, the interest rate on the First Bridge Note
was increased to 12% per annum. In connection with the issuance
of the First Bridge Note, the Company also issued to the
Appaloosa Entities (i) a five-year warrant to purchase up
to 100,000 shares of common stock, at an initial exercise price
of $30 per share (the $30 Warrants) and
(ii) a nine-year warrant to purchase up to 150,000 shares
of common stock at an initial exercise price of $50 per share
(the $50 Warrants) (the $30 Warrants and
$50 Warrants are collectively referred to herein as the
First Bridge Warrants). At the election of the
Appaloosa Entities and upon the closing of the Permanent
Financing, the exercise price of the $30 Warrants increased
to $40 per share of common stock. The exercise price of the
$50 Warrants increased to $70 per share of common
stock upon the closing of the Permanent Financing. The
$50 Warrants contained a net-exercise provision. The fair
value of the warrants at the date of issuance was recorded as a
discount on the debt and was amortized over the term of the
First Bridge Note.

On January 5, 2000, the Company issued to
the Appaloosa Entities a 15% non-convertible secured note in the
aggregate principal amount of $1.65 million (the
Second Bridge Note). In connection with the issuance
of the Second Bridge Note, the Company also agreed to issue and
sell on the earlier of (i) April 30, 2000 and
(ii) the closing of the Permanent Financing, five-year
warrants to acquire up to 20,000 shares of common stock at an
initial exercise price of $30 per share (the Second
Bridge Warrants). The Second Bridge Warrants contained a
net-exercise provision.

On April 3, 2000, the Company issued to the
Appaloosa Entities a 15% non-convertible secured note in the
aggregate principal amount of $2.2 million (the Third
Bridge Note). No warrants or convertible securities were
issued in connection with the Third Bridge Note. The First
Bridge Note, the Second Bridge Note and the Third Bridge Note
are collectively referred to as the Bridge Notes.
The Bridge Notes were not convertible into shares of common
stock and were paid-in-full at the closing of the Permanent
Financing on April 28, 2000.

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BIO-PLEXUS, INC.


NOTES TO FINANCIAL STATEMENTS 
(Continued)

Permanent
Financing

In order to consummate the Permanent Financing,
the Company was required by the rules of the NASDAQ Stock Market
to obtain the approval of a majority of the Companys
stockholders of the terms and conditions of the Permanent
Financing. In addition, the Connecticut Business Corporation Act
required that the Company obtain stockholder approval of
(i) an amendment to the Companys certificate of
incorporation (the Charter Amendment) and
(ii) an amendment to the Companys 1991 Long-Term
Incentive Plan (the Incentive Plan Amendment). The
Charter Amendment and the Incentive Plan Amendment were required
by the terms of the Permanent Financing. The approval of the
Companys stockholders of the terms of the Permanent
Financing, the Charter Amendment and the Incentive Plan
Amendment is collectively referred to as Stockholder
Approval. Coinciding with Stockholder Approval obtained on
April 28, 2000, the Company issued to the Appaloosa
Entities the Convertible Notes, the Permanent Financing Shares
and the $70 Warrants. The Convertible Notes were
convertible into shares of common stock at an initial conversion
price of $30. The $70 Warrants contained a net-exercise
provision. The fair value of the warrants at the date of
issuance was recorded as a discount on the debt, which was to be
amortized over the term of the debt.

The Permanent Financing generated aggregate
proceeds to the Company of $17.5 million. After repayment of the
Bridge Notes and costs and expenses associated with the
financing, the Company realized net proceeds of approximately
$9.6 million, which was available along with existing resources
for general working capital purposes, subject to the terms and
conditions of the Permanent Financing transaction agreements.

The Convertible Notes contained certain
restrictive covenants, including, but not limited to, minimum
(maximum) operating profit (loss), minimum product sales
revenues, and maximum permitted capital expenditures, all as
defined. Prior to the effectiveness of the Plan of
Reorganization, the Company was in violation of the operating
profit (loss) and minimum product sales revenues covenants.
Under the terms of the agreement, the Appaloosa Entities were
entitled to call the Convertible Notes if the Company was in
violation of any restrictive covenant. The covenant violations
were not waived by the Appaloosa Entities; however, such notes
were converted under the provisions of the Plan of
Reorganization (see above). Accordingly, the full amount of the
convertible debt was classified as a current liability as of
March 31, 2001, up until July 18, 2001, when the debt
was converted to equity.

Convertible
Debentures

On April 27, 1999, the Company sold an
aggregate principal amount of $2,500,000 of its 6% Convertible
Debentures due June 30, 2004 (the 6%
Debentures) to several purchasers (the Debenture
Holders) (the Convertible Debenture
Financing). The 6% Debentures were convertible at any time
at the option of the Debenture Holders into shares of the
Companys common stock at the lesser of a fixed conversion
price of $30.60 per share (as may have been adjusted from time
to time) or a floating conversion price at the time of the
conversion if the floating conversion price was less than $30.60
per share (as may have been adjusted from time to time). The 6%
Debentures could have been wholly or partially redeemed at the
option of the Company for an amount not to exceed 130% of the
face value thereof plus accrued and unpaid interest at any time
after the date of issuance. As of September 30, 2000, the
Debenture Holders had converted all of the $2,500,000
outstanding principal balance of the 6% Debentures into 88,073
shares of common stock. The Company and the Debenture Holders
had limited put and call options, respectively, for additional
6% Debentures. In connection with the subsequent financing by
the Appaloosa Entities, the Company agreed not to exercise its
put right under the 6% Debentures. As of July 26, 2000, the
Debenture Holders call options expired and were not
exercised. In connection with the Convertible Debenture
Financing, the Company issued a warrant to purchase up to 50,000
shares of the Companys common stock at an exercise price
of $33.80 per share. Such warrant was canceled and deemed
extinguished as part of the Plan of Reorganization explained
above.

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##### Table of Contents



BIO-PLEXUS, INC.


NOTES TO FINANCIAL STATEMENTS 
(Continued)

The
Appaloosa Private Placement

On July 18, 2001, the Company completed a
private placement of 1,314,060 shares of its common stock to
certain funds for which Appaloosa Management L.P. acts as
investment adviser (collectively referred to herein as the
Purchasers). The purchase price paid for the stock
was $3 million, which was reduced in an amount equal to the
Purchasers costs incurred in connection with the
transaction and the amount of the Companys outstanding
indebtedness for borrowings pursuant to the financing provided
by the Purchasers during the Chapter 11 case. The private
placement was made pursuant to a Stock Purchase Agreement, which
contained customary provisions, including representations and
warranties.

6. Income Taxes

Net deferred tax assets are as follows:

|                                        |                         |              |            |      |  |   |            |   | 
|--------------------------------------- | ----------------------- | ------------ | ---------- | ---- |  | - | ---------- | - | 
|                                        |                         |             
|                                        |                         | December 31,
|                                        |                         |             
|                                        |                         | 2001         |            | 2000
|                                        |                         |              |            |     
|Costs capitalized for tax purposes      |                         | $            | 30,000     |      |  | $ | 14,000     |  
|Research tax credits                    |                         |              |           |      |  |   | 770,000    |  
|Net operating losses                    |                         |              | 9,210,000  |      |  |   | 27,116,000 |  
|                                        |                         |              |            |      |  |   |            |  
|Gross deferred tax assets               |                         |              | 9,240,000  |      |  |   | 27,900,000 |  
|Deferred tax liabilities  depreciation |                         |              | (1,305,000 | )    |  |   | (1,050,000 | )
|                                        |                         |              |            |      |  |   |            |  
|                                        |                         |              | 7,935,000  |      |  |   | 26,850,000 |  
|Less: valuation allowance               |                         |              | 7,935,000  |      |  |   | 26,850,000 |  
|                                        |                         |              |            |      |  |   |            |  
|                                        | Net deferred tax assets |              | $          |     |  |   | $          |  | 
|                                        |                         |              |            |      |  |   |            |  

The Company has provided a valuation allowance
for the full amount of net deferred tax assets since the
realization of these future benefits cannot be reasonably
assured as of the end of each related year. If the Company
achieves profitability, the net deferred tax assets would be
available to offset future income taxes.

At December 31, 2001, the Company has
available federal net operating loss (NOL) carryforwards of
approximately $89,000,000. However, because of the ownership
change described in footnote 1, the federal NOLs are
subject to certain annual limitations. This is because, as
defined in the Internal Revenue Code section 382, certain
substantial ownership changes limit the utilization of the
available net operating loss and tax credit carryforwards (the
Section 382 Limitation). The Section 382 Limitation is
calculated by multiplying the fair market value of the loss
corporation immediately preceding the change of ownership, by
the long-term, tax-exempt rate prescribed by the IRS. Because of
the change in ownership in July 2001, and based on the
Section 382 Limitation calculation, the Company will be
allowed to use approximately $1,300,000 of its federal NOLs per
year, for those federal NOLs generated prior to July 2001. In
addition, there were approximately $5,000,000 of federal net
operating loss carryforwards generated after the change of
ownership (from July 2001 to December 2001). There are
no limitations associated with the Companys ability to
utilize the $5,000,000 of additional federal NOLs.

The federal carryforwards expire in years 2002
through 2021. State of Connecticut net operating loss
carryforwards of approximately $38,000,000 expire in years 2002
through 2006.

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##### Table of Contents



BIO-PLEXUS, INC.


NOTES TO FINANCIAL STATEMENTS 
(Continued)

7. Shareholders Equity

Capital
Stock Transactions

Effective July 18, 2001, the Reorganized
Company reincorporated in the State of Delaware. The
reorganization was effected pursuant to a merger agreement
entered into pursuant to the Plan of Reorganization (the
Merger Agreement). Immediately prior to the
reincorporation, the Reorganized Company affected a reverse
stock split pursuant to the Plan of Reorganization. As a result
of the reverse stock split, each ten shares of the Reorganized
Companys common stock was converted into one share of
Reorganized Company common stock. Thereafter, the
reincorporation was effected in accordance with the Merger
Agreement by merging the Reorganized Company with and into the
Company. As a result of that merger, the separate corporate
existence of the Reorganized Company ceased, and the certificate
of incorporation and bylaws of the Company became and continue
in effect as the registrants certificate of incorporation
and bylaws. All share and per share information has been
restated to reflect the effect of the reverse split. All
warrants and options issued prior to the Company reorganization
on July 18, 2001 were canceled and deemed extinguished.

The Company has an authorized class of 5,000,000
shares of preferred stock, none of which are issued and
outstanding as of December 31, 2001. The Board of Directors
has the authority, without shareholder approval, to issue
preferred stock in one or more series and to fix the relative
rights and preferences of the preferred stock, including their
redemption, dividend and conversion rights. The preferred stock
could have the effect of delaying, deterring or preventing a
change of control. At December 31, 2000, the Company had
3,000,000 shares of convertible preferred stock authorized, none
of which were issued and outstanding.

In conjunction with the Appaloosa Private
Placement described in Note 5, the Company also issued to
the Appaloosa Entities (Purchasers) warrants to
purchase 1,314,060 shares of its common stock (the
Warrants). The Warrants have an exercise price of
$2.283 per share. The Warrants contain customary provisions,
including anti-dilution protection. Upon the Company achieving
certain performance targets, (a) the Company shall have the
right to redeem these Warrants at a price of $.01 per share at
any time 45 days after the Purchasers receive notice of the
achievement of the performance target by the Company and
(b) the Warrants shall be exercisable by the Purchasers for
30 days after the Purchasers receive notice of the
achievement of the performance target by the Company. The
exercise of these Warrants, assuming they are exercised in full,
would yield proceeds of approximately $3 million to the
Company.

8. 2001 Stock Incentive Plan

On July 19, 2001 the Company adopted a new
employee stock option plan and a restricted stock plan
(collectively, the 2001 Stock Incentive Plan). The
total number of stock options and restricted stock shares
reserved under the 2001 Stock Incentive Plan is 2,000,000, of
which a total of 1,135,500 were issued and outstanding as of
December 31, 2001. The total outstanding at
December 31, 2001 consisted of 873,100 stock options and
262,400 restricted stock shares. All grants were made on
July 19, 2001 and the vesting period for both stock options
(except for the two-year vesting period associated with 100,000
stock options issued to Scott Tepper, a director of the Company)
and restricted stock shares is three years with one third
vesting on each grant date anniversary. The exercise strike
price for the stock options as well as the fair market value on
the date of grant of the restricted stock issuances was $2.283
per option/share. The stock options are exercisable over a
period of 10 years from the grant date.

With regard to the restricted stock issuances,
compensation expense, determined at the date of grant, is being
recognized ratably in accordance with the vesting schedule.
Compensation expense recognized was $92,000 for the six months
ended December 31, 2001. At December 31, 2001,
$508,000 of future compensation expense associated with the
restricted stock shares has been deferred and is included in
deferred compensation in the accompanying balance sheets.

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##### Table of Contents



BIO-PLEXUS, INC.


NOTES TO FINANCIAL STATEMENTS 
(Continued)

A summary of stock option activity under the 2001
Stock Incentive Plan is as follows:

|                                 |  |           |          |          |  |                
|-------------------------------- |  | --------- | -------- | -------- |  | ---------------
|                                 |  | Number of |          | Exercise
|                                 |  | Options   |          | Price   
|                                 |  |           |          |         
|Outstanding at December 31, 1998 |  |           | 42,890   |          |  |                
|Granted  1999                   |  |           | 15,300   |          |  | $21.60 - $25.60
|Canceled  1999                  |  |           | (683     | )        |  | $27.50 - $92.50
|Exercised  1999                 |  |           | (3,292   | )        |  | $27.50         
|                                 |  |           |          |          |  |                
|Outstanding at December 31, 1999 |  |           | 54,215   |          |  |                
|Granted  2000                   |  |           | 78,406   |          |  | $13.80 - $40.60
|Canceled  2000                  |  |           | (20,870  | )        |  | $13.80 - $27.50
|Exercised  2000                 |  |           | (6,250   | )        |  | $21.60 - $27.50
|                                 |  |           |          |          |  |                
|Outstanding at December 31, 2000 |  |           | 105,501  |          |  |                
|Canceled July 18, 2001           |  |           | (105,501 | )        |  |                
|                                 |  |           |          |          |  |                
|Outstanding at July 19, 2001     |  |           | 0        |          |  |                
|Granted  2001                   |  |           | 873,100  |          |  | $2.283         
|Exercised  2001                 |  |           |         |          |  |                
|                                 |  |           |          |          |  |                
|Outstanding at December 31, 2001 |  |           | 873,100  |          |  |                
|                                 |  |           |          |          |  |                

There are no stock options exercisable under the
2001 Stock Incentive Plan at December 31, 2001.

The Company follows Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to
Employees (APB 25) and related Interpretations in
accounting for its employee stock options. Under APB 25,
because the exercise price of the Company employee stock options
equals the market price of the underlying stock on the date of
grant, no compensation expense is recognized. The Company has
reviewed provisions of FASB 123, Accounting for Stock
Based Compensation, and determined that the effects on the
financial statements for the years ended December 31, 2001
and 2000 are immaterial. Therefore, no pro forma information has
been presented.

9. Disclosures About Fair Value of
Financial Instruments

The carrying amount for cash and cash equivalents
approximates fair value because of the short-term nature of
these instruments. The carrying amount for accounts receivable,
note payable, accounts payable, and accrued expenses, are deemed
reasonable because of the short-term nature of these items.

The following table represents the fair value of
the Companys long-term debt. Such values are estimated
based upon the current rates that would be offered to the
Company on similar debt.

|                  |  |                   |  |             |  |           
|----------------- |  | ----------------- |  | ----------- |  | ----------
|                  |  |                  
|December 31, 2001 |  | December 31, 2000
|                  |  |                  
|Carrying          |  | Fair              |  | Carrying    |  | Fair      
|Amount            |  | Value             |  | Amount      |  | Value     
|                  |  |                   |  |             |  |           
|$1,194,000        |  | $1,194,000        |  | $17,801,000 |  | $9,600,000

10. Licensing and Distribution
Agreements

On January 28, 1997 the Company entered into
a Development and License Agreement and a Supply Agreement with
Johnson & Johnson Medical, Inc. (JJM) of
Arlington, Texas. Under the terms of the agreements, the Company
would develop and manufacture safety needle assemblies for JJM
utilizing its self-blunting technology, which would be used by
JJM, under an exclusive worldwide license granted by the

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##### Table of Contents



BIO-PLEXUS, INC.


NOTES TO FINANCIAL STATEMENTS 
(Continued)

Company, to manufacture and sell a new safety
I.V. catheter. The Company received $2,900,000 in service fees
to complete the development of the safety needle assemblies and
for the development of the manufacturing equipment and tooling.
JJM agreed to acquire initial production equipment and tooling
which was completed in 1998.

On April 9, 1998 the Company amended the
Development and License Agreement and canceled the Supply
Agreement with JJM. The amended terms include certain changes in
the licensing and royalty agreements as well as the transfer of
manufacturing of the safety needle assemblies to JJM, in
exchange for an initial milestone payment of $3,500,000, with an
additional $500,000 payable upon the completion of certain
milestones. The $3,500,000 payment was recorded as deferred
revenue and $875,000 and $2,625,000 were recognized into income
during 1999 and 1998, respectively. The revised agreement also
provided for an additional $300,000 payable to the Company for
initial capital equipment purchases, which were paid in 2000 and
2001. This agreement also stipulates the payment of royalties
based on unit volume sales of the licensed product. There are
minimum royalties stipulated in this agreement. The royalties
under this agreement began in the calendar year 2001. The
minimum royalties for the first year were $184,000. However,
because the actual unit sales by JJM exceeded the minimums, the
actual royalties earned in 2001 were $393,000.

In October 1998, the Company entered into a
distribution agreement with Fisher HealthCare of Houston, Texas,
the second largest operating unit of Fisher Scientific. Fisher
Scientific is one of the world leaders in serving science,
providing more than 245,000 products and services to research,
healthcare, industrial, educational and government customers in
145 countries. The distribution agreement allows Fisher
HealthCare to purchase and distribute all of the Bio-Plexus
blood collection products.

On October 23, 1998, the Company entered
into an exclusive License Agreement and Design, Development and
Asset Transfer Agreement for a safety Peripherally Inserted
Central Catheter (PICC) introducer with TFX Medical
(TFX), a division of Teleflex Incorporated, the
industrys dominant supplier of PICC introducers. The
License Agreement includes certain minimum annual volume
requirements and ongoing royalties on the sale of PICC
introducer catheters featuring Punctur-Guard® technology.
In the first quarter of 2000, the Company completed its
obligations under the Design, Development and Asset Transfer
Agreement. The Company earned $91,000 in royalties from TFX in
fiscal year 2001, compared to $68,000 in fiscal 2000.

In January 2000, the Company entered into a
distribution agreement with Owens & Minor, a major
distributor of medical products to hospitals throughout the
United States. Owens & Minor, a Fortune 500
company headquartered in Richmond, Virginia, is one of the
nations largest distributors of national brand medical and
surgical supplies. The companys distribution centers serve
hospitals, integrated healthcare systems and group purchasing
organizations nationwide. The distribution agreement allows
Owens & Minor to purchase and distribute all of the
Bio-Plexus blood collection products.

On February 21, 2000, the Company entered
into a distribution agreement with McKessonHBOC Medical Group of
Richmond, Virginia. McKessonHBOCs Supply Management
Business is a leading distributor of medical-surgical supplies
to more than 5,000 hospitals nationwide. The agreement
allows McKessonHBOC to purchase and distribute the
Companys products on a non-exclusive basis without
territorial limitations or restrictions. The agreement is in
effect for a period of five years and shall continue
automatically in effect for successive terms of five years each
until terminated by either party.

On December 19, 2000, the Company entered
into a Development and Manufacturing and Distribution Agreement
with Fresenius. Pursuant to this agreement, during the first
phase, the Company and Fresenius will develop Extracorporeal
Therapy Needles, and the Company will deliver
5,000 finished needle assemblies for evaluation by
Fresenius. The Company anticipates that it will complete these
obligations under the contract in the second quarter of 2002.
Fresenius then has a four-month option period to decide whether
or not to proceed

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BIO-PLEXUS, INC.


NOTES TO FINANCIAL STATEMENTS 
(Continued)

with the second phase. If it elects to exercise
the option for phase two, Fresenius will manufacture, market,
and distribute the needles. In connection with this agreement,
the Company also granted to Fresenius, contingent on its
exercise of the phase two option, an exclusive worldwide license
to manufacture, have manufactured, use, sell, have sold or offer
for sale such needles utilized in dialysis applications covered
by the Punctur-Guard® technology. The Fresenius agreement
provides for the payment of royalties to the Company within
twelve months after the election by Fresenius to proceed with
phase two.

The Company has been successful in negotiating a
number of GPO supply agreements that represent the majority of
hospitals in the U.S. Having these agreements in place is an
added incentive for a member healthcare organization to purchase
the Companys products. In 2001 the Company entered into
multiple year agreements with three of the leading
GPOs  Amerinet, Broadlane and Consorta 
and the Department of Veteran Affairs for supplying the
Companys products to V.A. hospitals. The Company also has
an evaluation agreement with Premier, which is one of the
largest GPOs in the country. This agreement, entered into in the
fourth quarter of 2000, is for 18 months. The Company is
currently in the process of negotiating a new multi-year
agreement, which it expects to successfully conclude in 2002.

11. Segment Financial Data

The Companys operations consist of two
worldwide business segments: Safety Medical Products and
Accessories and Joint Venture Design & Development. The
Safety Medical Products and Accessories segment includes
operations associated with the manufacture of blood collection
needles, needle holders and needle disposal containers. Starting
in 2000, this segment also began to include royalty revenues.
The Joint Venture Design & Development segment includes
operations associated with product design and development,
product licensing, and the design, development and construction
for machinery and tooling in connection with joint venture
partners.

Distinct reporting by such segments was deemed
necessary by management based on the significance of reported
revenues and expenses and the Companys intention to focus
operating resources in both of these areas. For the periods
presented, there were no intersegment revenues.

Information with respect to each of the
Companys business segments is as follows:

Segment
Revenue

|                                        |  |      |           |      |  |      |           |  |  |   |           | 
|--------------------------------------- |  | ---- | --------- | ---- |  | ---- | --------- |  |  | - | --------- | 
|                                        |  | 2001 |           | 2000 |  | 1999
|                                        |  |      |           |      |  |     
|Safety Medical Products and Accessories |  | $    | 6,049,000 |      |  | $    | 4,761,000 |  |  | $ | 5,498,000 | 
|Joint Venture Design & Development      |  |      | 322,000   |      |  |      | 234,000   |  |  |   | 1,526,000 | 
|                                        |  |      |           |      |  |      |           |  |  |   |           | 
|Total Revenue                           |  | $    | 6,371,000 |      |  | $    | 4,995,000 |  |  | $ | 7,024,000 | 
|                                        |  |      |           |      |  |      |           |  |  |   |           | 

Major
Customers

The Company had one customer in the Safety
Medical Products and Accessories segment, a domestic distributor
of product, which accounted for approximately 38%, 49%, and 52%
of revenues for 2001, 2000, and 1999, respectively. Another
domestic distributor of product in this segment accounted for
approximately 23%, 26%, and 13% of revenues for 2001, 2000, and
1999, respectively. If the Company lost one of these
distributors, the hospitals and other users could still purchase
the Companys products from other distributors. However,
the loss of business of any of the foregoing distributors could
disrupt the Companys business and possibly have a material
adverse effect on the business and prospects of the Company. The
Company had export sales in this segment of approximately
$51,000 in 2001, $0 in 2000, and $548,000 in 1999.

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##### Table of Contents



BIO-PLEXUS, INC.


NOTES TO FINANCIAL STATEMENTS 
(Continued)

Segment
Profit (Loss)

|                                             |  |      |             |      |  |      |             |   |  |   |            |  
|-------------------------------------------- |  | ---- | ----------- | ---- |  | ---- | ----------- | - |  | - | ---------- | -
|                                             |  | 2001 |             | 2000 |  | 1999
|                                             |  |      |             |      |  |     
|Safety Medical Products and Accessories      |  | $    | 2,409,000   |      |  | $    | 2,311,000   |   |  | $ | 1,744,000  |  
|Joint Venture Design & Development           |  |      | 159,000     |      |  |      | 199,000     |   |  |   | 1,439,000  |  
|                                             |  |      |             |      |  |      |             |   |  |   |            |  
|Total Gross Margin                           |  |      | 2,568,000   |      |  |      | 2,510,000   |   |  |   | 3,183,000  |  
|                                             |  |      |             |      |  |      |             |   |  |   |            |  
|Selling, general and administrative expenses |  |      | 6,323,000   |      |  |      | 7,404,000   |   |  |   | 4,670,000  |  
|Pre-production manufacturing                 |  |      | 540,000     |      |  |      |            |   |  |   |           |  
|Research and development                     |  |      | 1,538,000   |      |  |      | 1,453,000   |   |  |   | 1,379,000  |  
|Reorganization costs                         |  |      | 3,377,000   |      |  |      |            |   |  |   |           |  
|Financing expenses                           |  |      | 851,000     |      |  |      | 4,379,000   |   |  |   | 2,367,000  |  
|                                             |  |      |             |      |  |      |             |   |  |   |            |  
|Net Loss                                     |  | $    | (10,061,000 | )    |  | $    | (10,726,000 | ) |  | $ | (5,233,000 | )
|                                             |  |      |             |      |  |      |             |   |  |   |            |  

Segment
Capital Expenditures

|                                        |  |      |         |      |  |      |           |  |  |   |         | 
|--------------------------------------- |  | ---- | ------- | ---- |  | ---- | --------- |  |  | - | ------- | 
|                                        |  | 2001 |         | 2000 |  | 1999
|                                        |  |      |         |      |  |     
|Safety Medical Products and Accessories |  | $    | 868,000 |      |  | $    | 4,040,000 |  |  | $ | 536,000 | 
|Joint Venture Design & Development      |  |      |        |      |  |      |          |  |  |   |        | 
|                                        |  |      |         |      |  |      |           |  |  |   |         | 
|Total Capital Expenditures              |  | $    | 868,000 |      |  | $    | 4,040,000 |  |  |   | 536,000 | 
|                                        |  |      |         |      |  |      |           |  |  |   |         | 

Net identifiable assets related to Safety Medical
Products and Accessories were $5,700,000, $5,561,000, and
$2,198,000, at December 31, 2001, 2000, and 1999,
respectively. Depreciation expense related to these assets was
$729,000, $391,000, and $269,000 for the years ended
December 31, 2001, 2000, and 1999, respectively. Due to the
service nature of the Joint Venture Design and Development
segment, identifiable assets were not material for the periods
presented.

F-19