UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                            ------------------------
                                    FORM 10-K

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001     COMMISSION FILE NUMBER:  0-19890

                              LIFECELL CORPORATION
             (Exact name of registrant as specified in its charter)

             DELAWARE                                         76-0172936
 (State or other jurisdiction of                           (I.R.S. employer
  Incorporation or organization)                          identification no.)

                               ONE MILLENNIUM WAY
                          BRANCHBURG, NEW JERSEY  08876
          (Address of principal executive offices, including zip code)

                                 (908) 947-1100
              (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:

                     COMMON STOCK, PAR VALUE $.001 PER SHARE

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
                            ---

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  the  voting  stock (Common Stock and Series B
Preferred  Stock,  assuming conversion of such Preferred Stock into Common Stock
at the current conversion rate) held by non-affiliates of registrant as of March
15,  2002:  $67,613,000.

Number  of shares of registrant's Common Stock outstanding as of March 15, 2002:
21,042,868.  (If the Series B Preferred Stock had converted into Common Stock as
of  such  date,  there  would be 23,998,240 shares of Common Stock outstanding.)

                      DOCUMENTS INCORPORATED BY REFERENCE:

Portions  of registrant's definitive proxy statement to be issued in conjunction
with  registrant's  annual stockholders' meeting to be held on May 31, 2002 have
been  incorporated  by  reference  into  Part  III  hereof.


<PAGE>
                                TABLE OF CONTENTS

                                   DESCRIPTION

Item                                                                       Page
--------------------------------------------------------------------------------

PART I
Item 1.   Business                                                             3
          General                                                              3
          Technology                                                           3
          Strategy                                                             5
          Products and Product Development Activities                          6
          Marketing                                                           10
          Sources of Materials                                                10
          Government Regulation                                               11
          Research and Development                                            14
          Patents, Proprietary Information & Trademarks                       15
          Competition                                                         15
          Employees                                                           16
          Risk Factors                                                        16
          Special Note Regarding Forward-Looking Statements                   23
Item 2.   Properties                                                          24
Item 3.   Legal Proceedings                                                   24
Item 4    Submission of Matters to a Vote of Security Holders                 24

PART II
Item 5.   Market for the Registrant's Common Equity and Related
          Stockholder Matters                                                 25
          Dividend Policy                                                     25
Item 6.   Selected Financial Data                                             26
Item 7.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations                                 27
          General and Background                                              27
          Critical Accounting Policies                                        27
          Results of Operations                                               27
          Liquidity and Capital Resources                                     29
Item 7A   Quantitative and Qualitative Disclosure About Market Risk           31
Item 8.   Financial Statements and Supplementary Data                         31
Item 9.   Changes and Disagreements with Accountants on Accounting
          and Financial Disclosure                                            31

PART III
Item 10.  Directors and Executive Officers of the Registrant                  32
Item 11.  Executive Compensation                                              32
Item 12.  Security Ownership of Certain Beneficial Owners and Management      32
Item 13.  Certain Relationships and Related Transactions                      32

PART IV
Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K    33


<PAGE>
PART I

     This  Annual  Report  on  Form  10-K  contains,  in  addition to historical
information,  "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) that involve risks and uncertainties. See
"Business-Special  Note  Regarding  Forward-Looking  Statements."

ITEM 1.      BUSINESS

GENERAL

     We  develop  and  market  biologically  based  solutions for the repair and
replacement of damaged or inadequate human tissue in numerous different clinical
applications.  Our  core  tissue  matrix  technology  removes all cells from the
tissue  and  preserves the tissue without damaging the essential biochemical and
structural  components  necessary  for normal tissue regeneration.  We currently
market four human tissue based products: AlloDerm(R) for plastic reconstructive,
burn  and  periodontal  procedures;  Cymetra(TM),  a  version  of AlloDerm(R) in
particulate  form  for  non-surgical  correction  of  soft  tissue  defects;
Repliform(TM),  a  version of AlloDerm(R) for urology and gynecology procedures;
and  cryopreserved  allograft  skin for use as a temporary wound dressing in the
treatment  of burns.  Our development programs include the potential application
of  our  tissue  matrix  technology  to  vascular, nerve and orthopedic tissues;
investigation  of  human tissues as carriers for therapeutics; ThromboSol(TM), a
formulation  for  extended  storage of platelets and technologies to enhance the
storage  of  red  blood  cells  for  transfusion.

     We were incorporated in the State of Delaware in 1992 as the successor to a
Delaware corporation that was incorporated in 1986.  Our address is 1 Millennium
Way,  Branchburg,  New  Jersey  08876  and  our  phone number is (908) 947-1100.

TECHNOLOGY

     To  date  our  product  development  programs  have been generated from the
following  proprietary  technologies:

     -    methods  for  producing  an  extracellular  tissue  matrix by removing
          antigenic  cellular  elements  while  stabilizing  the  matrix against
          damage;

     -    methods  for  cell  preservation  by manipulating cells through signal
          transduction  (i.e.,  manipulation  of cellular metabolism) to protect
          cells  during  prolonged  storage;  and

     -    methods  for  freeze-drying  biological  cells and tissues without the
          damaging  effects  of  ice  crystals.

     TISSUE  MATRIX  TECHNOLOGY

     Our tissue matrix technology removes antigenic cells from the tissue matrix
to  eliminate  the  potential for specific rejection of the transplanted tissue.
Our  tissue  matrix  technology  also:

     -    stabilizes  the  tissue matrix by preserving its natural structure and
          biochemical  properties  that  promote  cell  repopulation;  and

     -    allows for extended storage by freeze-drying the tissue matrix without
          significant  ice  crystal  damage  thus avoiding a non-specific immune
          response  upon  transplantation.

     Soft  tissue  contains a complex, three-dimensional structure consisting of
multiple  forms  of  collagen,  elastin,  proteoglycans,  other proteins, growth
factors  and  blood  vessels (the "tissue matrix").  Together, the tissue matrix
and  the  cells  that  populate  it  form  the soft tissues of the body, such as
dermis,  heart  valves, blood vessels, nerve connective tissue, and other tissue
types.  As  part of the body's natural remodeling process, cells within a tissue
continuously  degrade  and, in the process, replace the tissue matrix.  However,
in  the  event  that  a  large portion of the tissue matrix is destroyed or lost
because  of  trauma  or surgery, the body cannot regenerate the damaged portion.
The  only  method  of  replacing  large sections of the tissue matrix is through
transplantation.


                                        3
<PAGE>
     Soft  tissue  transplants  from  one  part of the patient's body to another
("autograft")  generally  are  successful; however, the procedure results in the
creation  of  an  additional wound site. Historically, the ability to transplant
tissue  from  one  person  to another ("allograft") has been limited because the
donor's  cells  within  the  transplanted tissue may trigger an immune response,
resulting  in  rejection  of  the  transplanted tissue. We believe that previous
attempts  to remove cells from soft tissue grafts before performing an allograft
transplant  have  resulted in disruption or damage of the tissue matrix, causing
an  inflammatory response and rejection of the tissue following transplantation.

     We  believe  our  tissue  matrix  technology offers the following important
benefits:

          Natural  Tissue  Regeneration.  Tissue grafts produced with our tissue
     matrix  technology  retain  the  structural and biochemical properties that
     stimulate  normal cell repopulation and normal soft tissue regeneration. In
     addition,  in  our  clinical  studies  with  dermis  and preliminary animal
     studies  with  heart  valve  leaflets,  nerve connective tissue grafts, and
     vascular  grafts  processed  using  our  technology we have shown that such
     tissues can be remodeled by the recipient's own cells and eventually become
     the  recipient's  own  tissue.

          Multiple  Potential  Applications.  We  believe that our tissue matrix
     technology  has the potential to generate additional products with multiple
     applications.  In  addition  to  the  current  commercial  applications  of
     AlloDerm, Repliform and Cymetra, we believe that these products may provide
     additional  benefits in other clinical applications. We also are evaluating
     the  applicability of our technology to process other human tissues and are
     conducting  pre-clinical  studies  with  vascular  and  orthopedic tissues.

          Safety.  Our  tissue  matrix  technology  yields  products  that  can
     revascularize  and  integrate  into the body's own tissues thereby allowing
     the  patient's  immune  cells to penetrate into the transplanted tissue and
     thus  aid in preventing infections. In contrast, certain synthetic implants
     do  not  allow  penetration  of  the  patient's  immune  cells,  thereby
     compromising  the body's natural ability to fight infections. Our processed
     human  tissue  products  have a proven safety record of over nine years and
     over  200,000  tissue  grafts  processed  and  distributed  to  date.

          Prolonged  Shelf  Life.  Our  tissue matrix technology allows extended
     storage and ease of transportation of products. AlloDerm and Repliform have
     been  tested  for storage at normal refrigerated temperatures for up to two
     years.  In  contrast,  traditionally  processed skin allografts require low
     temperature (-80 C) storage and shipping with dry ice. Cymetra is stored at
     normal  refrigerated  temperatures  for  up  to  one  year.

          Compatibility  with  Other  Technologies. Human tissues processed with
     our  technology  retain  important  biochemical  components,  such  as
     proteoglycans  including hyaluronic acid. These biochemical components bind
     growth  factors and cells that stimulate tissue regeneration. Therefore, we
     believe  it  may  be possible to use our technology to develop tissue-based
     delivery  vehicles  for  these  factors  and  cells.

     CELL  PRESERVATION  TECHNOLOGY

     Blood  cells  circulating  within  the body are exposed to multiple factors
that  maintain  their stability and/or prevent spontaneous clotting.  When blood
cells  are  removed  from the body for storage, these stabilizing influences are
absent  and  result  in  the  destabilization  and/or  irreversible  spontaneous
clotting  of the cells.  These damaging events currently limit the shelf life of
transfusable  red blood cells to 42 days under refrigeration and blood platelets
to  five  days  at  room  temperature.

     Through  our  research  efforts,  we  have  developed  cell  preservation
technology  mimics  the  stabilizing  influences  present  in  the  body through
manipulation of signal transduction mechanisms that control cellular metabolism,
combined  with  either  low  temperature  storage  or our patented freeze-drying
technology.  If successfully implemented, our cell preservation technology could
result  in multiple products for the preservation of directly transfusable blood
cells  with  extended  shelf  life, which could be stored in a manner consistent
with  current  blood  banking  practices.


                                        4
<PAGE>
STRATEGY

     Our  strategy  is  to  be a leader in developing and marketing biologically
based  solutions  for  the repair and replacement of damaged or inadequate human
tissue  in  numerous clinical applications.  Our strategy includes the following
principal  elements:

     EXPANDING  PENETRATION  OF  ALLODERM  INTO  CURRENT  TARGET  MARKETS

     Our direct marketing effort focuses on the use of AlloDerm in head and neck
and  plastic  reconstructive  procedures  and  general  surgery.  We  see  great
opportunity  for  revenue  growth  in this area, in which AlloDerm is used as an
alternative  to  the  current  standard  of care, autografts.  We have initiated
numerous  programs  to  achieve  this  goal.  These  include:

     -    conducting  additional clinical studies to demonstrate the benefits of
          AlloDerm  compared  to  autografts;

     -    supporting  publications in leading scientific journals describing the
          uses  and  benefits  of  AlloDerm;

     -    utilizing  our  direct  sales  and marketing organization to call on a
          broader  audience  of  hospital-based  surgeons;

     -    sponsoring  educational  and surgical training workshops on the use of
          AlloDerm;  and

     -    participating  at  trade  shows.

     We  currently  market  AlloDerm  for  use  in  head  and  neck  and plastic
reconstructive  procedures, burn surgery and general surgery in domestic markets
through  our  own direct sales force.  For periodontal applications and selected
international  markets,  we  market  through  distributors.

     EXPANDING  PENETRATION  OF  REPLIFORM  IN  UROGYNECOLOGY  MARKET

     Repliform, introduced in 1999, is a version of AlloDerm for applications in
the  urology  and  gynecology  markets.  We  market  Repliform  through  Boston
Scientific  Corporation,  a  worldwide  developer,  manufacturer and marketer of
medical devices with a well-established marketing presence in the urology field.

     In  February  2000,  we, in conjunction with Boston Scientific Corporation,
initiated  the full launch of Repliform following the successful completion of a
targeted introduction of the product to thought leaders in the United States. We
intend  to increase the penetration of Repliform in this market by demonstrating
the  benefits  of  Repliform  compared  to other products when used as a bladder
sling  for  the  treatment  of urinary incontinence and for the repair of pelvic
floor  defects.

     EXPANDING  PENETRATION OF CYMETRA IN RECONSTRUCTIVE PLASTIC AND DERMATOLOGY
MARKETS

     In  December  1999,  we  introduced  Cymetra,  a  version  of AlloDerm in a
particulate form for non-surgical correction of soft tissue defects, to selected
plastic and reconstructive surgeons.  In June 2000, we, in conjunction with OMP,
Inc.,  initiated  the  full commercial launch of Cymetra to office-based plastic
surgeons  and  dermatologists.

     LEVERAGING  OUR  TECHNOLOGY  PLATFORMS  TO  DEVELOP  NEW  PRODUCTS

     We  continue to investigate the application of our matrix technology to the
regeneration  of  other  human  tissues including vascular, orthopedic and nerve
tissues.

     The  application  of  our  tissue matrix technology to vascular tissues has
shown  promise in pre-clinical feasibility studies. In October 2001, we received
final approval for a $2.1 million research grant from the Department of Defense,
through  the U.S. Army Medical Research Acquisition Activity, to investigate the
application of our technology to the regeneration of vascular and nerve tissues.
We  retain  all  rights  to  commercialize  products  resulting  from  this
collaboration. We are commencing pre-clinical studies focused on using umbilical
vessels  as  the  source  graft. Upon successful completion of these studies, we
plan  to  commence  our  first  clinical  evaluation  using a human tissue based
vascular  graft.

     Pre-clinical  studies  conducted  by  us  suggest that our acellular tissue
matrix  may  also  remodel into tendons, cartilage and bone. In October 2000, we
received final approval for a $2.3 million research grant from the Department of
Defense,  through  the  U.S.  Army  Medical  Research  Acquisition  Activity, to


                                        5
<PAGE>
investigate  the application of our technology to the regeneration of orthopedic
tissues.  We  retain  all  rights  to commercialize products resulting from this
collaboration.  In  2001,  we  commenced pre-clinical studies to investigate the
ability  of  acellular  tissue  matricies  to  remodel  into  various orthopedic
tissues.  Upon  successful  completion of these studies, we plan to commence our
first  clinical  evaluation  using  human  tissue  based  grafts.


     We  are  also  using  our  proprietary  cell preservation technology in the
development  of  solutions that would extend the shelf life of platelets and red
blood  cells.  In  February  2002,  we  received  final  approval of an $824,000
research grant from the Office of Naval Research to investigate the potential to
preserve  red  blood  cells  through  freeze  drying.  We  retain  all rights to
commercialize  products  resulting from this collaboration. Additionally, we may
decide  to  establish  collaborative out-licensing arrangements with appropriate
partners  to  fund  the  development  and  commercialization of certain of these
products.

PRODUCTS  AND  PRODUCT  DEVELOPMENT  ACTIVITIES

     ACELLULAR  TISSUE  PRODUCTS

     ALLODERM

     AlloDerm  is  acellular  tissue processed with our tissue matrix technology
using  donated human cadaveric skin.  We believe that AlloDerm is the only human
tissue  product  on  the  market  today that supports the regeneration of normal
human soft tissue.  Following transplant, our AlloDerm graft becomes repopulated
with  the  patient's  own  cells  and  is  revascularized (i.e., blood supply is
restored),  becoming  engrafted into the patient. AlloDerm is a versatile tissue
and  has  multiple  surgical  applications.  AlloDerm  is  predominately used in
plastic reconstructive procedures, burn surgery, periodontal surgery and general
surgery.

     We  receive  donated  human  cadaveric  skin  from  tissue  banks and organ
procurement  organizations  in  the  United  States  that comply with the United
States  Food  and  Drug  Administration (the "FDA") human tissue regulations. In
addition,  we require supplying tissue banks and organ procurement organizations
to  comply  with  procedural  guidelines outlined by the American Association of
Tissue  Banks.  We  conduct microbiological and other rigorous quality assurance
testing  before  our  acellular human tissue products are released for shipment.
AlloDerm  is  shipped  at ambient temperature by overnight delivery services and
has  a  two-year  refrigerated  shelf  life.

     We  have established what we believe to be adequate sources of donated skin
tissue  at  acceptable  costs  to  satisfy the foreseeable demand for all of our
commercialized  tissue  products.  However,  there  can be no assurance that the
future  availability  of donated human cadaveric skin will be sufficient to meet
our  demand.

     PLASTIC  RECONSTRUCTIVE  SURGERY.  AlloDerm  is  marketed  to  plastic
reconstructive  surgeons  as an "off-the-shelf" alternative to autograft. Within
plastic  reconstructive  surgery,  AlloDerm is used in various head and neck and
reconstructive  surgeries,  cancer reconstruction, scar revision and oral cavity
reconstruction  surgical  procedures:

     -    as  an  implant  for  soft  tissue  reconstruction  or  tissue deficit
          correction;

     -    as  an  interpositional  graft  for  tissue  coverage  or  closure;

     -    as  a  graft or implant for scar revision or the dermal component of a
          skin  graft;

     -    as  a  sling  to  support tissue following nerve or muscle damage; and

     -    as  a  tissue  patch  to  restore  closure.

     In  these procedures, the greatest competitive pressures to AlloDerm are
from autologous tissue and synthetic and biosynthetic materials.  We believe the
disadvantages  of  using  autologous  tissue is the creation of a separate donor
site  wound  and the associated pain, healing, and scarring from this additional
wound.  Additionally,  we believe the disadvantages of using synthetic materials
are  the  susceptibility  of synthetics to infection, the graft moving away from
the  transplanted  area  (mobility),  and  erosion of the graft through the skin
(extrusion).  Some  biosynthetic  materials  may  include bovine collagen, which
requires  patient  sensitivity  testing.


                                        6
<PAGE>
     BURNS.  During  1994,  we  commenced  marketing  of AlloDerm for use in the
treatment  of third-degree and deep second-degree burns requiring skin grafting.
Skin  is  the  body's  largest  organ  and  is the first line of defense against
invasion  of  foreign  substances.  It contains two functional layers, the upper
surface consisting primarily of cells (epidermis) and an underlying foundational
layer  consisting  primarily  of  extracellular  matrix  proteins  and  collagen
(dermis).  The  epidermis  functions as a water barrier and maintains hydration.
The  dermis provides other important skin properties including tensile strength,
durability  and  elasticity. Dermis, like many other tissues of the body, is not
capable  of  de  novo  regeneration.  The  most conservative and common surgical
treatment  of third-degree and deep second-degree burns use split-thickness skin
autografts  (the  epidermal  layer  and  a  portion  of  the  dermis) taken from
uninjured  areas  of  the  patient's  body.  The  surgical  procedure when using
AlloDerm  in  treating  these patients is to place AlloDerm where the patient is
missing  dermis  and  cover the AlloDerm with an ultra-thin split-thickness skin
autograft  (the  epidermal layer and a much thinner portion of the dermis). This
procedure  has  produced comparable results to normal thickness autografts while
significantly  reducing  donor  site  trauma.

     The  use  of  AlloDerm  in  burn  grafting has clinically shown performance
equivalent  to  autograft  in  reducing  the  occurrence  and  effects  of  scar
contracture.  Scar  contracture  is a progressive tightening of scar tissue that
can  cause  joint  immobility.  Severe  scar  contracture  can limit the use and
function  of  all  mobile  joints, such as the arms, legs, feet, hands and neck.
Burn  patients  commonly  need  repetitive  reconstructive  surgeries  for  scar
contracture.  We  believe  that  AlloDerm provides significant therapeutic value
when  used  in  burn  grafting  over  a  patient's  mobile  joints.

     PERIODONTAL  SURGERY.  We  began  marketing  AlloDerm  to  periodontists in
September  1995.  BioHorizons Implant Systems, Inc. is our exclusive distributor
of AlloDerm for use in periodontal applications in the United States and certain
international  markets. Periodontal surgeons use AlloDerm to increase the amount
of  attached gum tissue supporting the teeth. Until the development of AlloDerm,
these  procedures were predominately performed with autologous connective tissue
grafts excised from the roof of the patient's mouth and then transplanted to the
gum.

     Multiple  independent  prospective  clinical  trials have demonstrated that
AlloDerm is equivalent to autologous connective tissue grafts for root coverage.
This  procedure  involves  placing AlloDerm underneath gum tissue, which is then
lifted  up  to  cover  the  exposed  root.  AlloDerm  allows for the coverage of
multiple  exposed  roots  in  a  single  surgery  without  being  limited by the
availability  of  autologous  palatal  tissue.

     AlloDerm  tissue products also are used as barrier membranes in guided bone
regeneration.  In  this  function,  the AlloDerm tissue serves as a barrier over
allograft bone grafts or bone substitutes, which are used to restore degenerated
alveolar  bone.

     Competitive procedures use autologous tissue as well as synthetic material.
We  believe  that  AlloDerm has advantages over autologous tissue because of the
reduced  trauma  to  the  patient,  and  over  certain  non-resorbable synthetic
materials because it integrates into the patient's tissue and does not require a
separate  procedure  for  removal.

     POTENTIAL  ORTHOPEDIC  APPLICATIONS  OF  ALLODERM.  Pre-clinical  studies
conducted  by us have indicated that AlloDerm and Cymetra may have the potential
to  remodel into certain types of orthopedic tissues. Based on these preliminary
results,  we commenced a product development program for orthopedic applications
of  AlloDerm  and  Cymetra  and  we  intend  to  conduct  additional  studies
investigating  the potential of these tissue products to remodel into orthopedic
tissues  such  as  tendon,  ligament,  cartilage, meniscus and bone. We are also
investigating  the potential of applying our tissue matrix technology to certain
orthopedic  tissues  such  as  tendons  and  ligaments.

     REPLIFORM

     UROLOGY  AND  GYNECOLOGY  SURGERY.  Repliform  is  the  trade name given to
AlloDerm  when  it  is  labeled  for  the  intended  use of repairing damaged or
inadequate  integumental  connective  tissue  in urology and gynecology surgical
procedures.  Since  1997,  surgeons have used AlloDerm in urology and gynecology
procedures  as  a bladder sling in the treatment of urinary incontinence and for
the  repair  of  pelvic  floor  defects.  Boston  Scientific  Corporation is our
exclusive  worldwide sales and marketing representative for Repliform for use in
urology  and  gynecology.

     Fewer  than  half  of the individuals affected by urinary incontinence seek
treatment  due to the combined factors of embarrassment and a lack of acceptable
therapeutic  options for some types of incontinence. Some forms of female stress


                                        7
<PAGE>
urinary  incontinence  can  be  treated  with  a sling procedure, which involves
lifting  and  supporting  the  bladder  neck  to  provide  urethral  support and
compression.

     Cystocele,  rectocele  and  other  pelvic  floor  conditions  also  occur
frequently  in  women  and require soft tissue surgical repair. These conditions
are  particularly  common  after  multiple  vaginal births and cause significant
discomfort  to  the  patient.  It  is common that these conditions exist with or
cause  urinary  incontinence.  Therefore, it is becoming the current standard of
care  to  correct  pelvic  floor  conditions  at  the  same  time  as a sling or
suspension  procedure  to ensure that there are no conditions that can adversely
affect  patient  outcome.

     Currently,  materials  used  for  slings  and pelvic floor repair surgeries
include  autologous  tissue,  synthetic  materials  and  cadaveric  fascia.  The
autologous  tissue  often is taken from the patient's thigh or abdomen resulting
in  a  painful donor site. The greatest drawback of using synthetic materials is
the  occurrence  of erosion through the urethra or vaginal wall causing pain and
infection,  necessitating  repeat  surgery.  We believe that Repliform used as a
sling  provides  a safe and effective alternative that eliminates the need for a
donor  site,  will  repopulate  as  the  patient's own tissue and will not erode
through  the  soft  pelvic  tissues.

     MICRONIZED  ALLODERM(R)  PRODUCTS

     CYMETRA

     Cymetra,  the  brand  name for Micronized AlloDerm(R) is made from AlloDerm
sheets  that are micronized at a low temperature to create a particulate form of
AlloDerm suitable for injection.  This form allows a non-surgical alternative in
reconstructive  plastic  and  dermatological  procedures  to  replace damaged or
inadequate  skin tissue, such as correction of soft tissue defects and depressed
scars  or  to  replace  integumental  tissue  lost  through  atrophy.

     In  June  2000,  we,  in  conjunction  with  OMP,  Inc., initiated the full
commercial  launch  of  Cymetra  to  office-based  plastic  surgeons  and
dermatologists.

     We  believe  that  Cymetra  offers  a  new  non-surgical  alternative  in
reconstructive  and  plastic  dermatological  procedures.  This  represents  a
significant  market  opportunity  for Cymetra as it does not require sensitivity
testing  and  similar to AlloDerm promotes the regeneration of normal human soft
tissue.

     We  also  believe that Micronized AlloDerm may have urological uses such as
for  the  treatment  of urethral sphincter deficiency, a common cause of urinary
incontinence, and vesicoureteric reflux, which is the most common cause of renal
failure  in  children.  One  treatment  for  these conditions has been injecting
bovine  collagen to bulk the sphincter muscle or to recreate the proper angle of
the  urethra  or  the  ureter.  We  currently  are  testing  the  persistence of
micronized  acellular  tissue  in  animals  for  the  treatment  of  urological
disorders.

     FDA  STATUS  OF  ALLODERM,  REPLIFORM  AND  CYMETRA

     The  FDA  generally  permits  tissue  classified  as  human  tissue  for
transplantation  to  be  commercially  distributed  without  obtaining prior FDA
approval. In 1996, AlloDerm was reviewed by the FDA and found to be human tissue
for  transplantation  when  intended for the replacement or repair of damaged or
inadequate  integumental  tissue,  including  gingival dermis. On that basis, we
continued  commercial distribution of AlloDerm for plastic reconstructive, burn,
and  periodontal  surgery. Repliform is the trade name given to AlloDerm when it
is  labeled for the intended use of repairing damaged or inadequate integumental
connective  tissue  in urological and gynecological surgery. Cymetra is Alloderm
that  has been micronized at a low temperature into injectable powder form. This
form  of AlloDerm permits delivery to subcutaneous locations by injection rather
than  open  surgery  to  repair  damaged  or inadequate integumental tissue. The
micronized  particles are biochemically identical to AlloDerm. In November 2000,
the  FDA  wrote  to  us  and  requested detailed information about Repliform and
Cymetra, including copies of existing labeling and advertising, a description of
product  composition and processing, and other information supporting LifeCell's
belief  that each of these products satisfy the requirements of human tissue for
transplantation.  In February 2001, we provided a detailed submission responding
to the FDA's request. In June 2001, we received a letter from the FDA indicating
that  Repliform  and  Cymetra,  as  currently  marketed,  meet the definition of
human  tissue for transplantation.


                                        8
<PAGE>
     CARDIOVASCULAR  TISSUE  PRODUCTS

     We  are  commencing  pre-clinical  studies  to  evaluate human tissue based
small-diameter  vascular  graft  products  for  potential  use in cardiovascular
surgery.  If  successfully  developed, a human tissue based vascular graft could
be used in coronary artery bypass procedures or used to restore peripheral blood
circulation  in  patients  with  peripheral vascular disease, such as below-knee
bypass  procedures.  According  to  an  independent  market  research report and
published  articles, annually in the United States replacement vascular conduits
are  required  for  375,000  coronary  artery  bypass  surgeries  and  230,000
peripheral  vascular  reconstructions.  There  are  additional  requirements for
construction  of  arterio-venous  (A-V)  fistulas  for  vascular  access  in
hemodialysis,  patches  for  closure  following  carotid  endarterectomy  and
microvascular  conduits  for  microsurgical  repair  techniques.

     Veins  and  arteries  harvested  from  the patient for use as a replacement
graft  continue  to be the mainstay of therapy, yet these vessels are frequently
donor  site limited as a result of the condition of the patient. When available,
autologous  vessel  harvest  leads  to  significant  patient  discomfort  and an
increase in risk for complications. To address these drawbacks, we believe there
is  a  severe  requirement for an "off-the-shelf" small diameter vascular graft,
which  is non-immunogenic, non-thrombotic and has compliance characteristics and
handling  properties  equivalent  to  native  vessels.

     We  have  demonstrated in a pre-clinical study that a graft processed by us
had an equivalent patency to the animal's fresh autologous vein. This study also
showed  the  graft  was  repopulated  with  the  animal's  own  cells and hence,
remodeled  into  the animal's own tissue. We are currently conducting additional
pre-clinical  studies.

     BLOOD  CELL  PRESERVATION

     We  are developing ThromboSol platelet storage solution to extend the shelf
life of transfusable platelets and other methods to extend the shelf life of red
blood  cells,  white  blood  cells  and  stem  cells.

     THROMBOSOL We are developing ThromboSol; a patented biochemical formulation
designed  to  protect  transfusable  platelets from damage during storage at low
temperatures.  The  expected  use  of  the  product  would  be by blood banks to
increase the safety and extend the shelf-life of transfusable platelets, thereby
increasing  the  supply  of  available platelets, as well as to store autologous
platelets  in  advance  for  individuals  expecting  to  undergo  surgery  or
chemotherapy.

     Platelets  are  blood cells that initiate clotting. Untreated platelets are
sensitive to storage at low temperatures and cannot be refrigerated effectively.
Presently,  platelets  are  stored  at  room temperature and, due to the risk of
microbial  contamination,  have a limited shelf life of five days. We have shown
in  laboratory  tests  that the addition of ThromboSol solution preserves the in
vitro  functional  aspects  of  refrigerated  platelets  for up to nine days and
frozen platelets for more than two years. During 1999, we successfully completed
biocompatability  testing  on  the  ThromboSol solutions. A pilot clinical study
under  a  physician-sponsored  Investigational  New Drug Application ("IND") was
conducted  during 1998 and the study found that ThromboSol treated cryopreserved
platelets  performed  better  than  standard  cryopreserved  platelets. A second
physician-sponsored  IND  was  performed  which  involved  a  "standard of care"
transfusion  of  ThromboSol cryopreserved platelets into oncology patients. This
study was completed in 2001 and demonstrated that Thrombosol preserved platelets
performed  equivalent  to  fresh  platelets.  Further  clinical  evaluation  is
continuing.  Any  product  developed will require extensive regulatory approvals
prior  to  marketing  in the United States. Our development efforts to date have
primarily  been  funded  through  research  grant  funds  from the Department of
Defense.

     RED  BLOOD CELLS We are conducting research to develop procedures to freeze
and freeze-dry red blood cells. Such technology would be used by blood banks for
long-term  storage  of donated units of red blood cells, extending the available
blood  supply,  and  for  storage  of autologous red blood cells for individuals
expecting  to  require  blood  transfusions  as  part  of  planned  surgery.

     Red  blood cells currently may be stored up to 42 days under refrigeration.
Current  procedures  to freeze red blood cells require the use of cryoprotectant
solutions  that  are  toxic  to the recipient and must be removed by washing the
cells  prior  to  transfusion.  This  removal  procedure  is labor-intensive and
requires  the  immediate  transfusion of the thawed and washed blood. We believe
that  the successful development of non-toxic low temperature methods of storage
could  simplify the use of frozen blood and potentially allow widespread storage
of  autologous  blood.


                                        9
<PAGE>
     Any  product  developed  will  require  extensive  regulatory  approvals,
including  approval  of  an  IND  by  the  FDA  to conduct clinical trials.  Our
development  efforts  to  date have primarily been funded through research grant
funds  from  the  Department  of  Defense.

MARKETING

     We  currently  distribute  AlloDerm  in  the  United  States  for  plastic
reconstructive,  burn  and  general surgical applications through our network of
direct  technical  marketing representatives.  In March 1999, we entered into an
exclusive  agreement  with  Boston  Scientific  Corporation  for  the  worldwide
marketing  of Repliform for use in urology and gynecology.  In February 2000, we
entered  into  an exclusive agreement with OMP, Inc. for promotion of Cymetra to
office-based  dermatologists  and  plastic  surgeons  in  the  United States and
certain  international  markets.  In  August  2000, we entered into an exclusive
agreement  with  BioHorizons  Implant  Systems,  Inc., granting them distributor
rights in the United States and select international markets of AlloDerm for use
in  periodontal  applications.

     Prior to 1999, we used a network of domestic and international distributors
to  augment  our sales efforts. We currently maintain a network of international
distributors,  but  during  the  first quarter of 1999, we eliminated the use of
domestic  distributors  except  for the distribution of AlloDerm for periodontal
applications.

     As  of  March  1,  2002,  we  had  sales and marketing staff of 37 persons,
including  28  domestic  sales  personnel,  and  9  domestic marketing and other
personnel.  Our  sales representatives are responsible for interacting with ear,
nose  and  throat surgeons, plastic surgeons, burn surgeons and general surgeons
and  educating  them  regarding the use and anticipated benefits of AlloDerm and
Cymetra.  We also participate in numerous national fellowship programs, national
and  international  conferences  and  trade  shows  and  participate in, or fund
certain  educational  symposia.

SOURCES  OF  MATERIALS

     In  2001,  we  obtained  all  of our donated human cadaveric tissue from 23
tissue  banks  and  organ  procurement  organizations  in  the United States. We
estimate  that  there  are  at  least  100  tissue  banks  and organ procurement
organizations  in  the  United  States.  In  January  2002,  we  entered into an
agreement  with  LifeNet, the largest organ procurement based tissue bank in the
United  States.  Under  the  terms of the agreement, LifeNet will supply donated
human  cadaveric  skin  tissue  to us for processing into cryopreserved skin and
AlloDerm  tissue  products  on  a  priority  basis  for  burn  victims.

     We  believe we have established adequate sources of donated human tissue to
satisfy the expected demand for our products in the foreseeable future. Although
we  have  not  experienced any material difficulty in procuring adequate donated
cadaveric  skin  tissue,  there  is risk that the future availability of donated
human  skin  will  not  be  sufficient to meet our demand. We compete with other
entities  that process and or distribute allograft skin and other human tissues.

     Procurement  of  certain  human  organs  and  tissue for transplantation is
subject to the restrictions of the National Organ Transplant Act ("NOTA"), which
prohibits  the  acquisition  of certain human organs, including skin and related
tissue  for  valuable  consideration,  but  permits  the  payment  of reasonable
expenses  associated  with  the  procurement,  transportation,  processing,
preservation, quality control and storage of human tissue and skin. We reimburse
tissue  banks  for expenses incurred that are associated with the recovering and
transportation  of  donated human skin that we process into AlloDerm, Repliform,
Cymetra  and  cryopreserved  skin  as  a  temporary  wound  dressing.

     We currently do not have procurement arrangements for other tissues related
to  products  under  development, and do not intend to develop such arrangements
until  the  products  approach  commercialization.

     We are accredited by the American Association of Tissue Banks ("AATB"). The
AATB  is recognized for the development of industry standards and its program of
inspection  and  accreditation.  The  AATB provides a standards-setting function
similar  to  the  FDA's quality system regulations for medical device companies,
and  has  procedures  for  accreditation  similar to the International Standards
Organization  ("ISO")  standards.  Our initial accreditation was granted in 1997
following  a  detailed  audit  by the AATB of our operations and procedures. The
accreditation,  which was renewed in 2000, must be renewed every three years and
is  for  the  processing,  storage  and distribution of tissue used in AlloDerm,
Repliform,  Cymetra  and  allograft  skin.


                                       10
<PAGE>
GOVERNMENT  REGULATION

     Overview

     Government  regulation,  both domestic and foreign, is a significant factor
in  the  manufacturing and marketing of our current and developing products.  In
the  United  States,  our human tissue products are subject to regulation by the
FDA.  The  FDA applies the Federal Food, Drug, and Cosmetics Act (the "FDC Act")
and  the  Public  Health  Service  Act (the "PHS Act").  These rules provide the
regulations which apply to the testing, manufacturing, labeling, storage, record
keeping,  approval,  advertising  and  promotion  of  our  products.

     The  FDA  does  not  apply  a single regulatory scheme to human tissues and
products  derived from human tissue. On a case-by-case basis, the FDA may choose
to  regulate  such  products  as  transplanted  human tissue, medical devices or
biologics.  A  fundamental  difference  in the treatment of products under these
various  classifications  is  that  the  FDA  generally permits human tissue for
transplantation  to  be  commercially distributed without premarket approval. In
contrast,  products  regulated  as  medical devices or biologics usually require
such  approval. The process of obtaining premarket approval for a medical device
or  biologic  is  often  expensive,  lengthy  and  uncertain.

     Once  on  the  market,  all  of  our  human  tissue products are subject to
pervasive  and continuing regulation by the FDA. We are subject to inspection at
any  time  by  the  FDA  and  state  agencies  for  compliance  with  regulatory
requirements.  The  FDA  may  impose a wide range of enforcement sanctions if we
fail  to  comply,  including:

     -    fines,

     -    injunctions,

     -    civil  penalties,

     -    recall  or  seizure  of  our  products,

     -    total  or  partial  suspension  of  production,

     -    refusal  of  the government to authorize the marketing of new products
          or  to  allow  us  to  enter  into  supply  contracts,  and

     -    criminal  prosecution.

     Tissue  Regulation

     In  1996,  correspondence  from  the  FDA stated that AlloDerm used for the
replacement  or  repair  of  damaged  or inadequate integumental tissue would be
regulated as human tissue under an interim regulation governing human tissue for
transplantation  then in effect. This letter reversed the FDA's initial position
that  AlloDerm for these indications should be regulated as a medical device. In
1997, the FDA issued a final regulation that became effective in 1998 regulating
"human tissue." The rule defines human tissue as any tissue derived from a human
body  which  is  (i)  intended  for  administration  to  another  human  for the
diagnosis, cure, mitigation, treatment or prevention of any condition or disease
and  (ii) recovered, processed, stored or distributed by methods not intended to
change  tissue  function  or characteristics. The FDA definition excludes, among
other  things,  tissue  that  currently is regulated as a human drug, biological
product  or  medical  device  and  excludes  vascularized  human  organs.

     The  final  tissue rule requires establishments engaged in the procurement,
processing,  and  distribution  of  human  tissue to conduct donor screening and
infectious  disease testing and to maintain records available for FDA inspection
documenting  that  the  procedures were followed. The rule also provides the FDA
with  authority  to  conduct inspections of tissue establishments and to detain,
recall,  or destroy tissue where the procedures were not followed or appropriate
documentation  of  the  procedures  is  not  available.

     Relying  on  the  1996  letter, we have not obtained prior FDA approval for
commercial  distribution  of AlloDerm for use in the treatment of burns, plastic
reconstructive  surgery procedures (such as atrophic lip reconstruction and scar
revision)  and  periodontal  surgical procedures (such as free-gingival grafting
and guided tissue regeneration). We believe that the final tissue regulation did
not  alter  the  provisions of the interim regulation that was the foundation of
the  FDA's  decision  not  to  regulate AlloDerm as a device when used for these
indications.  Therefore,  we continue to believe that AlloDerm for these uses is


                                       11
<PAGE>
regulated  as  human  tissue.  However,  because  the  FDA's  approach to tissue
regulation  is  evolving,  we  cannot  assure  you  that FDA will adhere to this
position.  In  the  future,  the FDA could choose to impose device regulation on
AlloDerm  for  these  indications.

     The  FDA also stated in the 1996 letter that their decision applied only to
AlloDerm  when  intended for use in transplantation to repair or replace damaged
or  inadequate integumental tissue and that the regulatory status of the product
when  it  is promoted for other uses, such as a void filler for soft tissue, for
cosmetic  augmentation  or  as  a  wound healing agent, would be determined on a
case-by-case  basis.

     In  1999,  we began marketing two additional tissue products, Repliform and
Cymetra.  Repliform  is  the trade name given to AlloDerm when it is labeled for
the  intended  use  of  repairing  damaged or inadequate integumental connective
tissue  in  urological  and  gynecological surgery. Cymetra is Alloderm that has
been  micronized  at  low  temperature  to create a particulate form of AlloDerm
suitable  for  injection. This form of AlloDerm permits delivery to subcutaneous
locations  by injection rather than open surgery to repair damaged or inadequate
integumental  tissue.  The  micronized  particles are biochemically identical to
AlloDerm.

     In  November  2000,  the FDA wrote to us and requested detailed information
about  Repliform  and  Cymetra,  including  copies  of  existing  labeling  and
advertising,  a  description  of  product  composition and processing, and other
information  supporting  our belief that each of these products is human tissue.
In  February  2001,  we  provided  a detailed submission responding to the FDA's
request.  In  June  2001,  we  received  a  letter  from the FDA indicating that
Repliform  and  Cymetra,  as  currently  marketed,  meet  the  definition  of
human tissue for transplantation.

     In  January  2001,  the  FDA  issued a final rule requiring registration of
tissue  banking  establishments  and  the  listing  of  tissue  products.  These
requirements  became  effective  on April 4, 2001. A proposed regulation pending
since  September  1999  would  require  that  most tissue donors be screened for
relevant  communicable  diseases.  Another proposed regulation issued in January
2001  would  require manufacturers of tissue products to follow proposed current
good  tissue  practices.  These  final and pending regulations demonstrate FDA's
increasingly  proactive  regulation  of  human  tissue,  which  may  lead to the
imposition  of  significant  additional  regulatory  requirements  upon  tissue
products.  Such  requirements  could  cause  us  to incur significant additional
costs.

     Procurement  of  certain  human  organs  and  tissue for transplantation is
subject  to  the  restrictions  of  the NOTA, which prohibits the acquisition of
certain  human  organs,  including  skin  and  related  tissue  for  valuable
consideration,  but  permits  the payment of reasonable expenses associated with
the  procurement,  transportation  processing, preservation, quality control and
storage  of  human  tissue  and  skin.  We  reimburse  tissue banks for expenses
incurred  that  are associated with the recovering and transportation of donated
human  skin that we process into AlloDerm, Repliform, Cymetra and allograft skin
as  a  temporary  wound  dressing.  We  include in our pricing structure certain
costs  associated  with processing, preservation, quality control and storage of
the  tissue, and marketing and medical education expenses in addition to amounts
paid  to  tissue  banks to reimburse them for their expenses associated with the
removal  and  transportation.

     Medical  Device  Regulation

     A  medical  device generally may be marketed in the United States only with
the  FDA's  prior  authorization.  Devices  classified by the FDA as posing less
risk  are  placed  in  class  I or class II.  Class II devices (and some class I
devices)  generally require the manufacturer to seek "510(k) clearance" from the
FDA  prior to marketing through the filing of a "premarket notification," unless
exempted  from  this  requirement  by  regulation.  Such  clearance generally is
granted  based  upon  a  finding  that  a  proposed  device  is  "substantially
equivalent"  in  intended  use  and  safety  and  effectiveness  to a "predicate
device,"  which  is  a  legally  marketed  class I or II device that already has
510(k)  clearance  or  a  "pre-amendment"  class  III  device  (in  commercial
distribution  prior  to  May  28, 1976) for which the FDA has not called for PMA
applications  (defined  below).  We  believe  that it usually takes from 4 to 12
months  from  the date of submission to obtain 510(k) clearance, but it may take
longer.  No  assurance can be given that any 510(k) submission will ever receive
clearance.  After  a  device  receives  510(k)  clearance, any modification that
could significantly affect its safety or effectiveness, or that would constitute
a  major  change  in  the  intended use of the device, will require a new 510(k)
submission.

     A  medical  device  that does not qualify for 510(k) clearance is placed in
class  III,  which  is  reserved for devices classified by the FDA as posing the
greatest risk (e.g., life-sustaining, life-supporting or implantable devices, or
devices  that  are  not substantially equivalent to a predicate device). A class
III  device generally must undergo the premarket approval ("PMA") process, which
requires the manufacturer to prove the safety and effectiveness of the device to


                                       12
<PAGE>
the FDA's satisfaction. A PMA application must provide extensive preclinical and
clinical  trial  data  and  information  about  the  device  and  its components
regarding, manufacturing, labeling and promotion. As part of the PMA review, the
FDA  will  inspect the manufacturer's facilities for compliance with the Quality
System  Regulation  ("QSR"),  which  includes  elaborate  testing,  control,
documentation  and  other quality assurance procedures. Upon submission, the FDA
determines  if the PMA application is sufficient to permit a substantive review,
and,  if  so,  the application is accepted for filing. The FDA then commences an
in-depth  review of the PMA application, which we believe typically takes one to
three  years,  but  may  take  longer.

     If  the  FDA's  evaluation  of  the  PMA  application is favorable, the FDA
typically  issues  an  "approval  letter" requiring the applicant's agreement to
comply  with  specific  conditions  (e.g.,  changes  in  labeling)  or to supply
specific  additional data (e.g., longer patient follow up) or information (e.g.,
submission  of  final  labeling)  in  order  to secure final approval of the PMA
application.  Once  the  approval  letter is satisfied, the FDA will issue a PMA
order  for  the  approved  indications,  which  can  be  more limited than those
originally  sought  by the manufacturer. The PMA order can include post approval
conditions  that  the  FDA  believes  necessary  to  ensure  the  safety  and
effectiveness of the device including, restrictions on labeling, promotion, sale
and  distribution.  Failure to comply with the conditions of approval can result
in enforcement action, including withdrawal of the approval. The PMA process can
be expensive and lengthy, and no assurance can be given that any PMA application
will  ever be approved for marketing. Even after approval of a PMA, a new PMA or
PMA  supplement  is  required  in  the  event  of  a modification to the device.

     A clinical study in support of a PMA application or 510(k) submission for a
"significant  risk"  device requires an Investigational Device Exemption ("IDE")
application approved in advance by the FDA for a limited number of patients. The
IDE  application  must  be  supported  by  appropriate  data, such as animal and
laboratory  testing  results.  The  clinical  study may begin if the FDA and the
appropriate  Institutional  Review  Board  ("IRB")  at  each clinical study site
approve  the IDE application. If the device presents a "non-significant risk" to
the patient, a sponsor may begin the clinical study after obtaining IRB approval
without  the  need  for  FDA  approval. In all cases, the clinical study must be
conducted under the auspices of an IRB pursuant to FDA's regulatory requirements
intended for the protection of subjects and to assure the integrity and validity
of  the  data.

     If  we  market medical device products, we will be subject to pervasive and
continuing regulation. We will have to comply with these requirements, including
the  FDA's  labeling  regulations, the QSR, the Medical Device Reporting ("MDR")
regulations  (which  require that a manufacturer report to the FDA certain types
of  adverse  events  involving its products), and the FDA's general prohibitions
against  promoting  products  for  unapproved  or "off-label" uses. In addition,
class  II  devices  can  be  subject  to  additional  special  controls  (e.g.,
performance  standards,  post  market  surveillance, patient registries, and FDA
guidelines)  that  do  not  apply  to  class  I  devices.

     In  1997, the FDA told us that NeoDura(TM) (an acellular tissue matrix) for
use in dura mater replacement procedures would be classified as a medical device
requiring 510(k) clearance and we submitted a 510(k) application. In March 1999,
we  withdrew  this  510(k)  submission  with  the  intent to submit a new 510(k)
submission after we have addressed several issues raised by the FDA. We have not
determined  if  we  will  submit  a  new  510(k)  submission  for  NeoDura.

     Based  upon  relevant  precedents,  it  is  not  clear whether the FDA will
regulate  our  vascular  and  orthopedic  products now in development as medical
devices  requiring  510(k)  clearance  or  PMA  approval  or as human tissue for
transplantation.

     Biologics  Regulation

     Biologic products are regulated under the FDC Act and the Section 351(a) of
the  PHS  Act.  The  PHS Act imposes a special additional licensing requirement,
known  as  a  Biologic License.  This license imposes very specific requirements
upon  the  facility  and the manufacturing and marketing of licensed products to
assure their safety, purity, and potency.  Some licensed biological products are
also  subject  to  batch release by the FDA.  That is, the products from a newly
manufactured batch cannot be shipped until the FDA has evaluated either a sample
or the specific batch records and given permission to ship the batch of product.
The  PHS  Act  also grants the FDA authority to impose mandatory product recalls
and  provides  for  civil  and  criminal  penalties  for  violations.

     Before conducting the required clinical testing of a biological product, an
applicant  must  submit  an  IND  to  the  FDA,  containing  preclinical  data
demonstrating  the  safety  of  the  product  for  human  investigational  use,
information  about  the  manufacturing processes and procedures and the proposed
clinical  protocol.  Clinical  trials  of  biological  products  typically  are


                                       13
<PAGE>
conducted  in  three sequential phases, but may overlap. Phase 1 trials test the
product in a small number of healthy subjects, primarily to determine its safety
and  tolerance  at  one  or  more  doses. In Phase 2, in addition to safety, the
efficacy,  optimal  dose  and  side  effects  of  the product are evaluated in a
patient  population  somewhat  larger  than  the Phase 1 trial. Phase 3 involves
further  safety  and  efficacy  testing  on  an  expanded  patient population at
geographically  dispersed  test  sites.

     All  clinical  studies  must  be  conducted in accordance with FDA approved
protocols  and  are  subject  to  the  approval  and  monitoring  of one or more
Institutional  Review Boards. In addition, clinical investigators must adhere to
good  clinical practices. Completion of all three phases of clinical studies may
take  several  years,  and  the  FDA  may  temporarily  or permanently suspend a
clinical  study  at  any  time.

     Upon  completion  and  analysis of clinical trials, the applicant assembles
and  submits  a  Biologic  License Application containing, among other things, a
complete  description  of  the manufacturing process. Before the licenses can be
granted,  the  applicant must undergo a successful establishment inspection. FDA
review  and  approval  of a biological product can take several years. We cannot
assure  you  that  we  will obtain the required approval for ThromboSol platelet
storage  solution  or  any  other  proposed  biological  products.

     Other  Regulation

     We  are  subject  to various federal, state and local laws, regulations and
requirements relating to such matters as safe working conditions, laboratory and
manufacturing  practices,  and  the  use,  handling and disposal of hazardous or
potentially  hazardous  substances  used  and  produced  in  connection with our
research  and  development  work.  We  cannot  assure you that we will not incur
significant  additional  costs  to  comply with these laws or regulations in the
future.

     International  Regulation

     The regulation of our products outside the United States varies by country.
Certain  countries  regulate  our  human  tissue  products  as  a pharmaceutical
product,  requiring us to make extensive filings and obtain regulatory approvals
before  selling  our  product.  Certain countries classify our products as human
tissue for transplantation but may restrict its import or sale.  Other countries
have  no applicable regulations regarding the import or sale of products similar
to our products, creating uncertainty as to what standards we may be required to
meet.

     AlloDerm  and  Cymetra  are  currently  distributed  in  several  countries
internationally.  Additionally, we are pursuing clearance to distribute AlloDerm
and  Cymetra  in  certain other countries. The uncertainty of the regulations in
each  country may delay or impede the marketing of AlloDerm or Cymetra and other
products  in  the  future  or  impede  our  ability  to  negotiate  distribution
arrangements  on favorable terms. Certain foreign countries have laws similar to
NOTA. These laws may restrict the amount that we can charge for our products and
may  restrict  our  ability  to  export  or  distribute our products to licensed
not-for-profit  organizations  in  those  countries.  Noncompliance with foreign
country  requirements  may  include  some  or  all  of the risks associated with
noncompliance  with  FDA  regulation  as  well  as  other  risks.

RESEARCH  AND  DEVELOPMENT

     We  have  historically  funded the development of our human tissue products
and  blood  cell  preservation  products  primarily  through  external  sources,
including  a  corporate  alliance  and government grants, as well as through the
proceeds from equity offerings. Our research and development costs in 1999, 2000
and  2001  for  all  programs were approximately  $3.9 million, $4.5 million and
$4.4  million,  respectively.  See  "Management's  Discussion  and  Analysis  of
Financial  Condition and Results of Operations-Liquidity and Capital Resources."

     We have received a substantial portion of our government grant funding from
the  United  States  government's  Small  Business  Innovation Research ("SBIR")
program.  The SBIR grant program provides funding to evaluate the scientific and
technical  merit  and  feasibility  of an idea. To date, we have been awarded in
excess  of  $10  million  through approved SBIR program awards and Department of
Defense  contracts.  We  intend  to  continue  to  seek funding through the SBIR
programs,  as  well  as  to  pursue  additional  government  grant  and contract
programs. Generally, we have the right to patent any technologies developed from
government  grants  and  contract  funding,  subject  to  the  United  States
government's  right to receive a royalty-free license for federal government use
and  to  require  licensing  to  others  in  certain  circumstances.


                                       14
<PAGE>
PATENTS,  PROPRIETARY  INFORMATION  AND  TRADEMARKS

     Our  ability  to  compete  effectively  with  other  companies is dependent
materially  upon  the proprietary nature of our technologies.  We rely primarily
on  patents,  trade  secrets  and  confidentiality  agreements  to  protect  our
technologies.  We  currently  license  the exclusive right to nine United States
patents  and  related  foreign  patents and the non-exclusive right to 14 United
States  patents.  In  addition,  we  have been issued five United States utility
patents,  one  United  States design patent and have seven pending United States
patent  applications.

     Our technology is protected by three primary families of patents and patent
applications.  One  United  States  patent  covers  methods  of  producing  our
tissue-based  products.  Nine  additional  United States patents supplement this
patent  and  cover  methods of freeze-drying without the damaging effects of ice
crystal formation. Two United States patents and two pending patent applications
cover  methods  of  extending  the  shelf-life of platelets, red blood cells and
other  blood  cells.

     We  also  have  applied for patent protection in several foreign countries.
Because  of  the  differences  in  patent  laws  and laws concerning proprietary
rights,  the  extent  of  protection  provided  by  United  States  patents  or
proprietary  rights  owned  by  or  licensed to us may differ from that of their
foreign  counterparts.

     In  general, the patent position of biotechnology and medical product firms
is  highly  uncertain  and  involves  complex  legal,  scientific  and  factual
questions.  There  is risk that other patents may not be granted with respect to
the patent applications filed by us. Furthermore, there is risk that one or more
patents  issued  or  licensed to us will not provide commercial benefit to us or
will  be  infringed,  invalidated  or  circumvented by others. The United States
Patent  and  Trademark  Office  currently  has  a  significant backlog of patent
applications,  and  the approval or rejection of patents may take several years.

     Prior to actual issuance, the contents of United States patent applications
are  generally not made public. Once issued, a patent would constitute prior art
from  its  filing  date, which might predate the date of a patent application on
which  we  rely.  Conceivably,  the  issuance of such a prior art patent, or the
discovery  of  "prior art" of which we are currently unaware, could invalidate a
patent  of  ours  or  our  licensor or discourage commercialization of a product
claimed  within  such  patent.

     No assurances may be given that our products or planned products may not be
the  subject of additional infringement actions by third parties. Any successful
patent  infringement  claim  relating  to any products or planned products could
have  a  material  adverse  effect  on  our  financial  condition and results of
operations.  Further,  there can be no assurance that any patents or proprietary
rights  owned  by  or  licensed  to  us  will  not  be  challenged, invalidated,
circumvented,  or  rendered  unenforceable  based  on,  among  other  things,
subsequently  discovered  prior  art,  lack of entitlement to the priority of an
earlier,  related application or failure to comply with the written description,
best  mode,  enablement  or  other  applicable  requirements.

     We  generally  conduct a cursory review of issued patents prior to engaging
in  research  or  development  activities. If others already have issued patents
covering  new  products  that we develop, we may be required to obtain a license
from  others  to  commercialize  such future products. There can be no assurance
that  any such license that may be required could be obtained on favorable terms
or  at  all.

     We  may  decide  for  business  reasons to retain certain knowledge that we
consider  proprietary as confidential and elect to protect such information as a
trade  secret,  as  business  confidential  information, or as know-how. In that
event,  we  must  rely upon trade secrets, know-how and continuing technological
innovation  to maintain our competitive position. There can be no assurance that
others  will  not  independently  develop  substantially  equivalent proprietary
information  or  otherwise  gain  access  to  or  disclose  such  information.

     We  have  federal trademark or service mark registrations that we currently
use  for  LifeCell(R),  which concerns processing and preserving tissue samples,
AlloDerm(R),  which  concerns  our commercial acellular dermal graft product and
Micronized  AlloDerm(R),  the  particulate  form  of  AlloDerm.  We  have  filed
trademark  applications for the protection of the phrases, Cymetra(TM) the brand
name  for Micronized AlloDerm(R), and Repliform(TM), the version of AlloDerm for
urology  and  gynecology.

COMPETITION

     The  biomedical  field  is  undergoing  rapid and significant technological
change.  Our  success  depends  upon  our  ability  to develop and commercialize
efficient  and  effective  products  based  on our technologies.  There are many
companies,  including  Regeneration  Technologies,  Inc.,  Cook,  Inc.  and  its
affiliates,  Cryolife,  Inc., Organogenesis, Inc., Advance Tissue Sciences, Inc.
and  Integra  Life  Sciences  Holdings  Corporation,  and academic institutions,


                                       15
<PAGE>
including Rice University, The University of Pittsburgh and Georgia Institute of
Technology, that are capable of developing products based on similar technology,
and  that  have  developed and are capable of developing products based on other
technologies,  which are or may be competitive with our products.  Many of these
companies and academic institutions are well-established, and have substantially
greater financial and other resources, research and development capabilities and
more  experience  in conducting clinical trials, obtaining regulatory approvals,
manufacturing  and  marketing  than  we  do.  These  companies  and  academic
institutions  may  succeed  in  developing  competing  products  that  are  more
effective  than  our products, or that receive government approvals more quickly
than  our  products,  which may render our products or technology uncompetitive,
uneconomical  or  obsolete.

     For  most  current  applications  of  our  products,  the principal form of
competition  is  with  the use of the patient's autologous tissue. We anticipate
direct  competition  for  AlloDerm  tissue  products  and  all  of  our proposed
transplantable tissue products, as well as indirect competition from advances in
therapeutic agents, such as growth factors now used to enhance wound healing. We
believe  that  therapeutic  growth  factors  may be used in conjunction with our
proposed  products and may potentially enhance the products' efficacy. There can
be  no  assurance  that  we  will  be  able  to  compete  effectively with other
commercially  available  products or that development of other technologies will
not  detrimentally affect our commercial opportunities or competitive advantage.

EMPLOYEES

     At  March  1, 2002, we had 138 employees of which 37 were employed in sales
and  marketing,  58  in  production  and  quality  assurance, 22 in research and
development  and  clinical  studies,  and  21  in administration and accounting.
Also,  at  such  date,  we  employed, full-time, one M.D. and 9 individuals with
Ph.D.  degrees.

RISK FACTORS

     You  should  carefully  consider  these  risk  factors  in  addition to our
financial  statements.  In  addition  to  the following risks, there may also be
risks  that we do not yet know of or that we currently think are immaterial that
may  also  impair our business operations.  If any of the following risks occur,
our  business,  financial  condition  or  operating  results  could be adversely
affected.


WE  HAVE  A  HISTORY  OF OPERATING LOSSES AND A SUBSTANTIAL ACCUMULATED EARNINGS
DEFICIT  AND  WE  MAY  CONTINUE  TO  INCUR  LOSSES.

     Since  our  inception in 1986, we have generated only limited revenues from
product  sales  and  have  incurred  substantial  net  losses  of approximately:

     -    $9.2  million  for  the  year  ended  December  31,  1999;

     -    $7.1  million  for  the  year  ended  December  31,  2000;  and

     -    $2.1  million  for  the  year  ended  December  31,  2001.

     At  December 31, 2001, we had an accumulated deficit of approximately $65.8
million.  In  the  fourth  quarter  of  2001  we  had  net  income  of $102,000.
Additionally,  we  generated positive cash flow from operations in the third and
fourth  quarter  of  2001.  Our  ability  to maintain profitability and generate
positive  cash  flows  from  operations  in  the  future  will  depend  on:

     -    continued  market  acceptance  and  sales  of  AlloDerm, Repliform and
          Cymetra;  and

     -    commercialization  of  products  under  development.

     We may not be profitable and generate positive cash flows from operations
in the future.


                                       16
<PAGE>
WE MAY NEED ADDITIONAL CAPITAL TO MARKET OUR CURRENT PRODUCTS AND TO DEVELOP AND
COMMERCIALIZE  NEW  PRODUCTS  AND  IT  IS UNCERTAIN WHETHER SUCH CAPITAL WILL BE
AVAILABLE.

     We  intend  to  expend  funds  for:

          -    product  research  and  development;

          -    expansion  of  sales  and  marketing  activities;

          -    product  education  efforts;  and

          -    other  working  capital and general corporate purposes, including
               potential acquisitions of complementary technologies or products.

     We  may  need  additional  capital,  depending  on:

          -    the  costs  and progress of our research and development efforts;

          -    the  number and types of product development programs undertaken;

          -    the  costs  and  timing  of  expansion  of  sales  and  marketing
               activities;

          -    the  costs  and  timing  of  expansion of manufacturing capacity;

          -    the  amount  of  revenues  from  our  existing  and new products;

          -    changes  in,  termination of, and the success of existing and new
               distribution  arrangements;

          -    the  cost  of  maintaining,  enforcing  and defending patents and
               other  intellectual  property  rights;

          -    competing  technological  and  market  developments;  and

          -    developments  related to regulatory and third party reimbursement
               matters.

     We have no commitments for any future funding and there can be no assurance
that  we  will  be able to obtain additional financing in the future from either
debt  or  equity  financings,  bank  loans,  collaborative arrangements or other
sources  on  terms  acceptable  to  us,  or  at  all.  If adequate funds are not
available,  we expect that we will be required to delay, scale back or eliminate
one  or  more  of  our  product  development  programs.  Any  additional  equity
financing may be dilutive to stockholders, and debt financing, if available, may
involve  significant  restrictive  covenants.  Collaborative  arrangements,  if
necessary  to raise additional funds, may require us to relinquish our rights to
certain  of  our  technologies,  products  or  marketing  territories.

IF THE UNITED STATED FDA IMPOSES MEDICAL DEVICE OR OTHER REGULATIONS THAT AFFECT
OUR  PRODUCTS, THE COSTS OF DEVELOPING, MANUFACTURING AND MARKETING OUR PRODUCTS
WILL  BE  INCREASED.

     The  FDA  generally  permits  human  tissue  for  transplantation  to  be
commercially  distributed  without  obtaining prior FDA approval of the product.
In  contrast,  products  regulated  as medical devices or biologics usually must
undergo  a  lengthy, uncertain and expensive approval process.  In 1996, the FDA
determined  that  AlloDerm  used  for  the  repair  or replacement of damaged or
inadequate integumental tissue (i.e. "tissue lining the surface of the body or a
body  cavity")  would be regulated as transplanted human tissue.  On that basis,
we continued commercial distribution of this product for plastic reconstructive,
burn and periodontal surgery.  In its decision with respect to the regulation of
AlloDerm,  the FDA stated that the regulatory status of any different uses, such
as  a  void filler for soft tissue, for cosmetic augmentation procedures or as a
wound  healing  agent,  would  need  to  be  determined on a case-by-case basis.


                                       17
<PAGE>
     In  1999,  we  began  marketing  the  following  products  as human tissue:

     -    Repliform,  a  version  of  AlloDerm, for urological and gynecological
          surgical  procedures;  and
     -    Cymetra, a version of AlloDerm in a particulate form, for non-surgical
          correction  of  soft  tissue  defects.
Repliform  is  used as a bladder sling for the treatment of urinary incontinence
and  for the repair of pelvic floor defects.  Cymetra is used for the correction
of  soft  tissue deficits, such as acne or other depressed scars, and to restore
tissue  loss  from disease.  In November 2000, the FDA wrote to us and requested
detailed  information  about Repliform and Cymetra, including copies of existing
labeling  and  advertising, a description of product composition and processing,
and other information supporting our belief that each of these products is human
tissue.  In  February  2001, we provided a detailed submission responding to the
FDA's  request.  In June 2001, we received a letter from the FDA indicating that
each  of  these  products,  as  currently  marketed,  meet  the  definition  of
transplanted  human  tissue.

     We  cannot  assure that products we develop in the future will similarly be
regulated  as  human tissue.  The regulation of each new product we develop will
be  decided  by the FDA on a case-by-case basis.  If the FDA chooses to regulate
any  of  our  future  products  as  a medical device or biologic, the process of
obtaining  FDA  approval  would  be  expensive,  lengthy  and unpredictable.  We
anticipate  that  it could take from one to three years or longer to obtain such
approval.  We  do  not  know  if  such  approval  could  be obtained in a timely
fashion,  or  at  all.  Such  approval  process would almost certainly include a
requirement  to  provide  extensive  supporting  clinical  data.

     In  addition,  the  FDA  requires that devices and biologics be produced in
accordance  with  the  Quality  System  Regulation  for  medical devices or Good
Manufacturing  Practice regulation for biologics. As a result, our manufacturing
and  compliance  costs  would  increase  and any such future device and biologic
products would be subject to more comprehensive development, testing, monitoring
and  validation  standards.

     A few states impose their own regulatory requirements on transplanted human
tissue.  We  believe that we are in compliance with such regulations.  There can
be  no assurance that the various states in which our products are sold will not
impose  additional  regulatory  requirements  or  marketing  impediments  on our
products.

THE FDA CAN IMPOSE CIVIL AND CRIMINAL ENFORCEMENT ACTIONS AND OTHER PENALTIES ON
US  IF  WE  FAIL  TO  COMPLY  WITH  THE  STRINGENT FDA REGULATIONS AT OUR TISSUE
FACILITIES.

     Failure  to  comply  with  any  applicable FDA requirements could result in
civil  and criminal enforcement actions and other fines and penalties that would
increase  our  expenses  and  adversely  affect  our  cash  flows.  Tissue
establishments  must  engage  in:

     -    Donor  screening  and  infectious  disease  testing;  and

     -    Stringent  record  keeping.

As  a result, our involvement in the processing and distribution of human tissue
for  transplantation  requires  us  to  ensure  that  proper donor screening and
infectious  disease  testing  are  done appropriately and conducted under strict
procedures.  In  addition, we must maintain records, which are available for FDA
inspectors documenting that the procedures were followed.  The FDA has authority
to  conduct  inspections  of  tissue  establishments  and  to detain, recall, or
destroy  tissue if the procedures were not followed or appropriate documentation
is  not  available.

     The  FDA  has  issued  proposed  rules  that  would impose additional donor
suitability  and  Current  Good Tissue Practice requirements on manufacturers of
tissue-based products.  If these or similar requirements actually become law, we
will  likely  incur  additional  manufacturing  and  compliance  costs  for  our
tissue-based  products,  including  AlloDerm,  Repliform  and  Cymetra.

     Labeling and promotional activities are also subject to scrutiny by the FDA
and,  in  certain instances, by the Federal Trade Commission. From time to time,
the  FDA  may  modify  such  requirements,  imposing  additional  or  different
requirements  which  may  require  us  to  alter  our  business  methods.


                                       18
<PAGE>
THE  NATIONAL  ORGAN  TRANSPLANT ACT ("NOTA") COULD BE INTERPRETED IN A WAY THAT
COULD  REDUCE  OUR  REVENUES  AND  INCOME  IN  THE  FUTURE.

     Procurement  of  certain  human  organs  and  tissue for transplantation is
subject  to the restrictions of NOTA, which prohibits the acquisition of certain
human  organs, including skin and related tissue for valuable consideration, but
permits  the  payment  of  reasonable  expenses associated with the procurement,
transportation,  processing,  preservation, quality control and storage of human

tissue,  including  skin.  We  reimburse tissue banks for expenses incurred that
are associated with the recovering and transportation of donated cadaveric human
skin that we process into AlloDerm, Repliform, Cymetra and cryopreserved skin as
a  temporary  wound  dressing.  In  addition  to amounts paid to tissue banks to
reimburse  them  for  their  expenses  associated  with  the  procurement  and
transportation  of human skin, we include in our pricing structure certain costs
associated  with:

          -    processing;

          -    preservation;

          -    quality  control  and  storage  of  the  tissue;  and

          -    marketing  and  medical  education  expenses.

     NOTA payment allowances may be interpreted to limit the amount of costs and
expenses  that we may recover in our pricing for our products thereby negatively
impacting  our  revenues  and  profitability. We also are potentially subject to
enforcement sanctions if we are found to have violated NOTA's prohibition on the
sale  of  human  tissue.

WE  ARE SUBJECT TO VARYING AND EXTENSIVE REGULATION BY FOREIGN GOVERNMENTS WHICH
CAN  BE  COSTLY,  TIME  CONSUMING  AND  SUBJECT  US  TO  UNANTICIPATED  DELAYS.

     We  distribute some of our products in countries outside the United States.
The  regulation  of  our  products in these countries varies.  Certain countries
regulate  our  products  as  a  pharmaceutical  product,  requiring  us  to make
extensive  filings  and  obtain regulatory approvals before selling our product.
Certain  countries  classify  our products as transplant tissue but may restrict
its  import  or  sale.  Other countries have no applicable regulations regarding
the  import or sale of products similar to our products, creating uncertainty as
to  what  standards  we  may  be  required  to  meet.

     The  uncertainty of the regulations in each country may delay or impede the
marketing of our products in these countries in the future or impede our ability
to  negotiate  distribution  arrangements  on  favorable  terms. Certain foreign
countries  have  laws  similar  to National Organ Transplant Act. These laws may
restrict  the  amount  that  we can charge for our products and may restrict our
ability  to  export  or  distribute  our  products  to  licensed  not-for-profit
organizations  in  those  countries.  Noncompliance  with  foreign  country
requirements  may include some or all of the risks associated with noncompliance
with  FDA  regulation  as  well  as  other  risks.

INCREASING  OUR  REVENUES AND ACHIEVING PROFITABILITY WILL DEPEND ON OUR ABILITY
TO  INCREASE  MARKET  PENETRATION  OF  OUR  CURRENT  PRODUCTS AND TO DEVELOP AND
COMMERCIALIZE  NEW  PRODUCTS.

     Much  of  our  ability  to increase revenues and to generate net income and
positive  cash  flows  from  operations  will  depend  on:

          -    expanding the use and market penetration of our current products;
               and

          -    the  successful  introduction  of  our  products  in development.

     Products  based  on  our  technologies  represent new methods of treatment.
Physicians  will  not  use  our products unless they determine that the clinical
benefits to the patient are greater than those available from competing products
or  therapies.  Even  if  the  advantage  of  our  products  is  established  as
clinically  significant,  physicians  may not elect to use such products for any
number  of  reasons.


                                       19
<PAGE>
     Consequently,  physicians,  health  care payers and patients may not accept
our  current  products or products under development. Broad market acceptance of
our  products may require the training of numerous physicians and clinicians, as
well as conducting or sponsoring clinical studies to demonstrate the benefits of
such products. The amount of time required to complete such training and studies
could result in a delay or dampening of such market acceptance. Moreover, health
care payers' approval of reimbursement for our products in development may be an
important  factor  in  establishing  market  acceptance.

     We  may  be  required  to  undertake  time-consuming and costly development
activities  and seek regulatory clearance or approval for new products. Although
we have conducted animal studies on many of our products under development which
indicate  that the product may be feasible for a particular application, results
obtained  from expanded studies may not be consistent with earlier trial results
or  be  sufficient  for  us  to  obtain  any  required  regulatory  approvals or
clearances.  The  completion  of  the  development  of any of our products under
development  remains  subject  to  all  the  risks  associated  with  the
commercialization  of  new products based on innovative technologies, including:

          -    unanticipated  technical  or  other  problems;

          -    manufacturing  difficulties;  and

          -    the  possibility of insufficient funds for the completion of such
               development.

WE  ARE  HIGHLY  DEPENDENT UPON SALES OF OUR PRODUCTS THROUGH BOSTON SCIENTIFIC,
OMP  INC.  AND  DISTRIBUTORS  TO  GENERATE  OUR  REVENUES.

     We  have  engaged:

          -    Boston  Scientific  Corporation  as our exclusive worldwide sales
               and marketing representative for Repliform for use in the urology
               and  gynecology  markets;  and

          -    OMP  Inc.  as the exclusive sales and marketing representative of
               Cymetra  for  office-based  dermatologists  and plastic surgeons.

     Additionally,  we  have  granted distributors exclusive distribution rights
and  may grant additional distribution rights in the future.  For the year ended
December  31, 2001, sales of our products through Boston Scientific Corporation,
OMP  Inc.  and  our  distributors  represented  approximately  35%,  9% and 10%,
respectively,  of  our  total product revenues.  We expect sales of our products
through  our  marketing  agents  and  distributors  to continue to increase as a
percentage  of  total revenues.  If an exclusive marketing agent, such as Boston
Scientific  Corporation  or  OMP  Inc.,  or  a  distributor  fails to adequately
promote,  market and sell our products, our revenues could be adversely affected
until  a  replacement  agent  or  distributor  could be retained by us.  Finding
replacement  agents  and  distributors  could be a time consuming process during
which  our  revenues  could  be  negatively  impacted.

WE DEPEND HEAVILY UPON A LIMITED NUMBER OF SOURCES OF HUMAN CADAVERIC TISSUE AND
ANY  INTERRUPTION  IN  THE AVAILABILITY OF HUMAN TISSUE WOULD INTERFERE WITH OUR
ABILITY  TO  PROCESS  AND  DISTRIBUTE  OUR  PRODUCTS.

     Our  business  is  dependent on the availability of donated human cadaveric
tissue.  We  currently  receive human tissue from approximately 23 United States
tissue  banks  / organ procurement organizations.  We estimate that there are at
least  100  tissue banks / organ procurement organizations in the United States.
Although  we  have established what we believe to be adequate sources of donated
human tissue to satisfy the expected demand for our human tissue products in the
foreseeable  future,  we cannot be sure that donated human cadaveric tissue will
continue  to  be  available  at current levels or will be sufficient to meet our
needs.  If  our  current  sources can no longer supply human cadaveric tissue or
our  requirements  for  human cadaveric tissue exceed their current capacity, we
may  not  be  able to locate other sources.  Any significant interruption in the
availability  of  human  cadaveric tissue would likely cause us to slow down the
processing  and  distribution  of  our  human  tissue  products.


                                       20
<PAGE>
NEGATIVE  PUBLICITY CONCERNING THE USE OF DONATED HUMAN TISSUE IN RECONSTRUCTIVE
COSMETIC  PROCEDURES COULD REDUCE THE DEMAND FOR OUR PRODUCTS AND MAY NEGATIVELY
IMPACT  THE  SUPPLY  OF  AVAILABLE  DONOR  TISSUE.

     Although  we  do  not  promote  the  use  of  our human tissue products for
cosmetic  applications,  clinicians  may  use  our  products  in applications or
procedures that may be considered "cosmetic."  Negative publicity concerning the
use  of  donated human tissue in cosmetic procedures could reduce the demand for
our  products  or  negatively  impact  the  willingness of families of potential
donors  to  agree  to  donate tissue or tissue banks to provide tissue to us for
processing.

THE  BIOMEDICAL  FIELD  WHICH WE ARE IN IS HIGHLY COMPETITIVE AND SUSCEPTIBLE TO
RAPID  CHANGE  AND  SUCH  CHANGES  COULD  RENDER  OUR  PRODUCTS  OBSOLETE.

     The  biomedical  field  is  undergoing  rapid and significant technological
change.  Our  success  depends  upon  our  ability  to develop and commercialize
efficient  and  effective  products  based  on our technologies.  There are many
companies,  including  Regeneration  Technologies,  Inc.,  Cook,  Inc.  and  its
affiliates,  Cryolife,  Inc., Organogenesis, Inc., Advance Tissue Sciences, Inc.
and  Integra  Life  Sciences  Holdings  Corporation,  and academic institutions,
including Rice University, The University of Pittsburgh and Georgia Institute of
Technology, that are capable of developing products based on similar technology.
Some  or  all  of these competitors have developed and are capable of developing
products  based  on other technologies, which are or may be competitive with our
products.  Many  of  these  companies  and  academic  institutions  are
well-established,  and have substantially greater financial and other resources,
research and development capabilities and more experience in conducting clinical
trials,  obtaining regulatory approvals, manufacturing and marketing than we do.
These  companies  and  academic institutions may succeed in developing competing
products  that  are more effective than our products, or that receive government
approvals  more  quickly  than  our  products,  which may render our products or
technology  uncompetitive,  uneconomical  or  obsolete.

THE  ABILITY  TO  OBTAIN  THIRD-PARTY REIMBURSEMENT FOR THE COSTS OF NEW MEDICAL
TECHNOLOGIES  IS  LIMITED.

     Generally,  hospitals,  physicians and other health care providers purchase
products,  such  as  the  products  being  sold  or  developed by us, for use in
providing  care  to their patients.  These parties typically rely on third-party
payers,  including:

          -    Medicare;

          -    Medicaid;

          -    private  health  insurance;  and

          -    managed  care  plans

to  reimburse  all  or  part  of the costs of acquiring those products and costs
associated  with  the  medical  procedures  performed  with  those  products.
Third-party  payers have adopted cost control measures in recent years that have
had and may continue to have a significant effect on the purchasing practices of
many  health  care providers, generally causing them to be more selective in the
purchase  of  medical  products.  Significant  uncertainty  exists  as  to  the
reimbursement  status  of  newly approved health care products.  We believe that
certain  third-party  payers  provide  reimbursement for medical procedures at a
specified  rate  without  additional  reimbursement  for products, such as those
being  sold  or  developed by us, used in such procedures.  Adequate third-party
payer  reimbursement  may  not  be  available  for  us  to maintain price levels
sufficient  for  realization  of  an  appropriate  return  on  our investment in
developing  new  products.  The  FDA  generally  permits  human  tissue  for
transplantation  to  be  commercially  distributed  without  obtaining prior FDA
approval  of the product.  In contrast, products regulated as medical devices or
biologics  usually  require  such  approval.  Certain  government  and  other
third-party  payers  refuse,  in some cases, to provide any coverage for uses of
products  for  indications for which the FDA has not granted marketing approval.
Further,  certain  of our products are used in medical procedures that typically
are  not  covered  by  third-party payers or for which patients sometimes do not
obtain  coverage.  These  and  future changes in third-party payer reimbursement
practices  regarding  the procedures performed with our products could adversely
affect  the  market  acceptance  of  our  products.


                                       21
<PAGE>
OUR  SUCCESS  DEPENDS  ON  THE SCOPE OF OUR INTELLECTUAL PROPERTY RIGHTS AND NOT
INFRINGING  THE  INTELLECTUAL  PROPERTY  RIGHTS  OF  OTHERS.  THE  VALIDITY,
ENFORCEABILITY  AND  COMMERCIAL  VALUE  OF  THESE  RIGHTS  ARE HIGHLY UNCERTAIN.

     Our  ability  to  compete  effectively  with  other companies is materially
dependent upon the proprietary nature of our technologies.  We rely primarily on
patents  and  trade  secrets to protect our technologies.  We currently license:

          -    the  exclusive  right  to  nine United States patents and related
               foreign  patents;  and

          -    non-exclusive  rights  to  14  patents.

     In  addition,  we:

          -    have  been issued one United States design patent and five United
               States  utility  patents;  and

          -    have  several United  States  patent  applications  pending.

     Third  parties  may  seek  to  challenge,  invalidate, circumvent or render
unenforceable any patents or proprietary rights owned by or licensed to us based
on,  among  other  things:

          -    subsequently  discovered  prior  art;

          -    lack  of  entitlement  to  the  priority  of  an earlier, related
               application;  or

          -    failure  to  comply  with  the  written  description,  best mode,
               enablement  or  other  applicable  requirements.

     In  general, the patent position of biotechnology and medical product firms
is  highly  uncertain, still evolving and involves complex legal, scientific and
factual  questions.  We  are  at  risk  that:

          -    other  patents  may  be  granted  with  respect  to  the  patent
               applications  filed  by  us;  and

          -    any  patents  issued or licensed to us may not provide commercial
               benefit  to  us or will be infringed, invalidated or circumvented
               by  others.

     The  United  States Patent and Trademark Office currently has a significant
backlog  of  patent  applications,  and the approval or rejection of patents may
take  several  years.  Prior  to  actual issuance, the contents of United States
patent  applications  are generally not made public.  Once issued, such a patent
would constitute prior art from its filing date, which might predate the date of
a  patent  application  on  which  we rely.  Conceivably, the issuance of such a
prior  art  patent,  or  the  discovery of "prior art" of which we are currently
unaware,  could  invalidate  a  patent  of  ours  or  our  licensor  or  prevent
commercialization  of  a  product  claimed  thereby.

     We  generally  conduct a cursory review of issued patents prior to engaging
in  research  or  development  activities. If others already have issued patents
covering  new  products  that we develop, we may be required to obtain a license
from them to commercialize such new products. There can be no assurance that any
necessary  license  could  be  obtained  on  favorable  terms  or  at  all.

     There  can  be  no  assurance  that  we  will  not be required to resort to
litigation  to  protect our patented technologies or other proprietary rights or
that  we  will  not be the subject of additional patent litigation to defend our
existing or proposed products or processes against claims of patent infringement
or  other  intellectual property claims.  Any of such litigation could result in
substantial  costs  and  diversion  of  our  resources.

     We  also  have  applied for patent protection in several foreign countries.
Because  of  the  differences  in  patent  laws  and laws concerning proprietary
rights,  the  extent  of  protection  provided  by  United  States  patents  or
proprietary  rights  owned  by  or  licensed to us may differ from that of their
foreign  counterparts.


                                       22
<PAGE>
     We  may  decide  for  business  reasons to retain certain knowledge that we
consider  proprietary as confidential and elect to protect such information as a
trade  secret,  as  business  confidential  information or as know-how.  In that
event,  we  must  rely upon trade secrets, know-how and continuing technological
innovation to maintain our competitive position.  There can be no assurance that
others  will  not  independently  develop  substantially  equivalent proprietary
information  or  otherwise  gain  access  to  or  disclose  such  information.

WE ARE EXPOSED TO PRODUCT LIABILITY CLAIMS FOR WHICH OUR PRODUCT LIABILITY
INSURANCE MAY BE INADEQUATE.

     Our  business  exposes  us to potential product liability risks inherent in
the  testing,  manufacturing  and  marketing  of medical products.  We cannot be
certain  that:

          -    our  insurance  will  provide adequate coverage against potential
               liabilities;

          -    adequate  product  liability  insurance  will  continue  to  be
               available  in  the  future;  or

          -    our  insurance  can  be  maintained  on  acceptable  terms.

The  obligation  to  pay  any  product  liability  claim  in  excess of whatever
insurance  we  are  able  to  acquire  would  increase  our  expenses.

     We  use  donated  human  tissue  as the raw material for our products.  The
non-profit  organizations  that  supply  such  tissue are required to follow FDA
regulations  for  screening  donors  for  potential  disease transmission.  Such
procedures  include  donor  testing  for  certain  viruses,  including  HIV. Our
manufacturing  process  also  has  been  demonstrated to inactivate concentrated
suspensions of HIV.  While we believe such procedures are adequate to reduce the
threat  of  disease  transmission,  there  can  be  no  assurance  that:

          -    our products will not be associated with transmission of disease;
               or

          -    a  patient  otherwise infected with disease would not erroneously
               assert  a  claim  that  the  use  of our products resulted in the
               disease  transmission.

Any  such  transmission  or  alleged  transmission could have a material adverse
effect  on our ability to manufacture or market our products and could result in
litigation.

     OUR  FAILURE  TO  COMPLY  WITH  REGULATIONS REGARDING DISPOSAL OF HAZARDOUS
MATERIALS  COULD  RESULT  IN  THE  IMPOSITION  OF PENALTIES, FINES OR SANCTIONS.

     Our  research and development and processing techniques generate waste that
is  classified as hazardous by the United States Environmental Protection Agency
and  the  New  Jersey  Natural Resources Commission. We segregate such waste and
dispose of it through licensed hazardous waste transporters. Although we believe
we  are  currently  in  compliance  in  all  material  respects  with applicable
environmental regulations, our failure to comply fully with any such regulations
could  result  in  the  imposition  of  penalties,  fines  or  sanctions.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     This  Annual  Report  on Form 10-K contains forward-looking statements made
pursuant  to  the  safe  harbor  provisions of the Private Securities Litigation
Reform  Act of 1995.  Forward-looking statements typically are identified by use
of  terms  such  as  "may,"  "will,"  "should,"  "plan," "expect," "anticipate,"
"estimate"  and  similar  words,  although  some  forward-looking statements are
expressed  differently.  Forward-looking  statements  represent our management's
judgment  regarding  future  events.  Although  we believe that the expectations
reflected  in  such  forward-looking  statements  are reasonable, we can give no
assurance that such expectations will prove to be correct.  All statements other
than  statements  of  historical  fact included in this prospectus regarding our
financial  position, business strategy, products, products under development and
clinical  trials,  markets,  budgets, plans, or objectives for future operations
are  forward-looking  statements.  We  cannot  guarantee  the  accuracy  of  the
forward-looking  statements,  and  you  should  be aware that our actual results
could  differ  materially from those contained in the forward-looking statements
due  to  a  number of factors, including the statements under "Risk Factors" set
forth  above  and  "Critical Accounting Policies" in "Managements Discussion and
Analysis  of  Financial  Condition  and  Results  of  Operations".


                                       23
<PAGE>
ITEM  2.     PROPERTIES

     We  lease  approximately  90,000  square feet of laboratory, production and
office  space  in one building in Branchburg, New Jersey under a lease agreement
that expires in November 2010.  The current monthly rental obligation under this
lease  is  approximately  $69,000.  We  believe  that  our  current  laboratory,
production and office space will be sufficient to meet our anticipated needs for
the  next  several  years.

ITEM  3.     LEGAL  PROCEEDINGS

     We  are  a  party  to  litigation  in the Superior Court of California, Los
Angeles  County,  Central  District,  captioned  Regner,  et  al.,  on behalf of
themselves  and  others  similarly  situated,  v.  Inland  Eye  & Tissue Bank of
Redlands,  et  al.  The  complaint  alleges  among  other  things,  defendants,
including  LifeCell, make profits from the storing, processing, and distribution
of human tissue in contravention of California law.  The Company is also a party
to  litigation  in the Superior Court of California, Los Angeles County, Central
District,  captioned  Thacker,  et  al.,  on  behalf  of  themselves  and others
similarly  situated,  v.  Inland  Eye  &  Tissue  Bank of Redlands, et al.  This
complaint  contains  similar  allegations  to  the Regner complaint, and the two
cases  have  been combined.  These actions are not denominated class actions and
do  not  involve  tort theories.  Both actions were brought under a statute that
allows  individuals  to  sue  on  behalf  of the people of California for unfair
business  practices,  with the court having the power to award injunctive relief
and  disgorgement  of  all  profits  from the alleged illegal practices.  During
2001,  the  plaintiffs  in the combined action have agreed to dismiss all claims
against  LifeCell,  while  we  promise  not  to  sue  plaintiffs  for  malicious
prosecution.  A  court  order  embodying  this  settlement,  consented to by all
parties of the suit, is currently before the Court, but has not yet been signed.

     Litigation  is  subject  to many uncertainties and we are unable to predict
the  outcome  of  the  pending  actions.  It  is  possible  that  our results of
operations or liquidity and capital resources could be adversely affected by the
ultimate  outcome  of  the  pending  litigation  or  as a result of the costs of
contesting  such  actions.  From  time  to  time  we  are party to various legal
proceedings incident to operating a company of our size, which we do not deem to
be  material  to  our  business  operations  or  financial  condition.


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

None.


                                       24
<PAGE>
PART II

ITEM 5.       MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

     Our  Common  Stock is listed on the Nasdaq National Market under the symbol
"LIFC."  On March 15, 2002, the last reported sale price for our Common Stock on
the  Nasdaq National Market was $3.60 per share.  The following table sets forth
the  high  and  low  sales  information  for  our  Common  Stock for the periods
indicated,  as  reported  by  the  Nasdaq  Stock  Market.

<TABLE>
<CAPTION>
                                       Price Range
                                   --------------------
                                     High        Low
                                   ---------  ---------
<S>                                <C>        <C>
           2000    First Quarter   $   11.88  $    4.63
                   Second Quarter       7.13       4.88
                   Third Quarter        6.44       4.50
                   Fourth Quarter       4.75       1.50

           2001    First Quarter   $    2.81  $    1.47
                   Second Quarter       2.57       1.25
                   Third Quarter        2.64       1.54
                   Fourth Quarter       2.66       1.64
</TABLE>

     As  of February 28, 2002, there were approximately 372 holders of record of
shares  of Common Stock and 39 holders of record of shares of Series B Preferred
Stock.  We  estimate  that  there  are  in excess of 8,000 beneficial holders of
Common  Stock.

     In November 2001, we issued an additional 478,001 shares of Common Stock to
an  investor,  without  additional  consideration,  pursuant  to the terms of an
investment  made  in  November  1999.  We consider these securities to have been
offered and sold in transactions not involving a public offering and, therefore,
to  be  exempted  from  registration under Section 4(2) of the Securities Act of
1933,  as  amended.

DIVIDEND  POLICY

     We  have  not paid a cash dividend to holders of shares of Common Stock and
do  not  anticipate  paying cash dividends to the holders of our Common Stock in
the  foreseeable future.  Pursuant to the terms of one of our debt agreements we
are  restricted  from  paying  dividends  on  our  Common  Stock.

     Holders  of  Series  B  Preferred  Stock were entitled to receive dividends
through  September  30,  2001 at the per share annual rate of the greater of (i)
$6.00  (subject  to adjustment in certain events) and (ii) the per annum rate of
dividends  per  share  paid,  if  applicable,  by  us, on the Common Stock.  The
dividends  were  payable quarterly, at our option, in cash or shares of Series B
Preferred  Stock  or  in  a combination of cash and shares of Series B Preferred
Stock.  On  February  15 and May 15, 2000 we paid $1.51 and $1.49, respectively,
per share dividend in cash to the holders of shares of Series B Preferred Stock.
On  August 15 and November 15, 2000, February 15, May 15, August 15 and November
15, 2001, we paid dividends in additional shares of our Series B Preferred Stock
equivalent  to  $1.49,  $1.51,  $1.51,  $1.48, $1.50 and $1.51 respectively, per
share  to  the holders of shares of Series B Preferred Stock.  Under the General
Corporation Law of the State of Delaware, a corporation's board of directors may
declare  and  pay  dividends  only  out of surplus, including additional paid-in
capital,  or  current  net  profits.


                                       25
<PAGE>
ITEM 6.   SELECTED FINANCIAL DATA.

     The  following table sets forth certain selected financial data of LifeCell
for  each  of the years in the five-year period ended December 31, 2001, derived
from  the  audited  financial  statements.  This  information  should be read in
conjunction  with  "Management's  Discussion and Analysis of Financial Condition
and  Results  of  Operations"  and  the  Financial  Statements and notes thereto
included  elsewhere  in  this  Annual  Report  on  Form  10-K.

<TABLE>
<CAPTION>
                                                           Year Ended December 31,
                                  -------------------------------------------------------------------------
                                      1997           1998           1999           2000           2001
                                  -------------  -------------  -------------  -------------  -------------
<S>                               <C>            <C>            <C>            <C>            <C>
Operations Statement Data:
-------------------------

Revenues:
  Product revenues                $  4,905,000   $  7,245,000   $ 11,912,000   $ 21,330,000   $ 26,560,000
  Research grant revenues            1,075,000        747,000        764,000      1,442,000      1,209,000
                                  -------------  -------------  -------------  -------------  -------------
    Total revenues                   5,980,000      7,992,000     12,676,000     22,772,000     27,769,000
                                  -------------  -------------  -------------  -------------  -------------
Costs and expenses:
  Costs of products sold             2,541,000      2,837,000      3,452,000      6,949,000      8,862,000
  Research and development           2,007,000      3,376,000      3,871,000      4,523,000      4,351,000
  General and administrative         3,081,000      3,484,000      4,840,000      6,180,000      4,098,000
  Selling and marketing              4,956,000      6,500,000      7,236,000     11,779,000     11,978,000
  Relocation costs                          --             --      2,937,000             --             --
                                  -------------  -------------  -------------  -------------  -------------
    Total costs and expenses        12,585,000     16,197,000     22,336,000     29,431,000     29,289,000
Loss from operations                (6,605,000)    (8,205,000)    (9,660,000)    (6,659,000)    (1,520,000)
Interest and other income
     (expense), net                    466,000        864,000        468,000       (479,000)      (550,000)
                                  -------------  -------------  -------------  -------------  -------------
Net loss                            (6,139,000)    (7,341,000)    (9,192,000)    (7,138,000)    (2,070,000)
Preferred stock and deemed
     dividends(1)                     (962,000)      (723,000)      (710,000)      (593,000)    (1,591,000)
                                  -------------  -------------  -------------  -------------  -------------
Net loss to common
     shareholders                 $ (7,101,000)  $ (8,064,000)  $ (9,902,000)  $ (7,731,000)  $ (3,661,000)
                                  =============  =============  =============  =============  =============

Loss per share- basic and
    diluted                       $      (1.04)  $      (0.72)  $      (0.83)  $      (0.54)  $      (0.20)
                                  =============  =============  =============  =============  =============
Shares used in computing loss
    per share-basic and diluted      6,820,000     11,229,000     11,938,000     14,372,000     18,240,000
                                  =============  =============  =============  =============  =============

                                                              As of December 31,
                                  -------------------------------------------------------------------------
                                      1997           1998           1999           2000           2001
                                  -------------  -------------  -------------  -------------  -------------
Balance Sheet Data:
------------------

Cash, cash equivalents and
      short-term investments      $ 20,781,000   $ 12,026,000   $  5,052,000   $  5,535,000   $  4,900,000
Working capital                     20,516,000     12,597,000      2,542,000      5,330,000      8,851,000
Total assets                        24,156,000     17,031,000     18,083,000     25,410,000     23,131,000
Notes payable and term debt                 --             --      2,792,000      6,285,000      2,197,000
Accumulated deficit                (36,411,000)   (44,476,000)   (54,378,000)   (62,109,000)   (65,770,000)
Common Stock, subject to
      redemption(2)                         --             --      3,885,000      3,885,000      1,935,000
Total stockholders' equity(2)       20,260,000     14,261,000      5,364,000      8,904,000     14,833,000

<FN>
(1)   Includes preferred stock dividends in each year and a deemed dividend of $1,151,000 in 2001 resulting
from the issuance of additional shares of common stock in November 2001 to an investor pursuant to the
terms of an investment in 1999.
(2)   Revised to reflect the reclassification of certain shares from stockholders' equity to common stock,
subject to redemption.
</TABLE>


                                       26
<PAGE>
ITEM 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

     The  following discussion of operations and financial condition of LifeCell
should  be  read  in conjunction with the Financial Statements and Notes thereto
included  elsewhere  in  this  Annual  Report  on  Form  10-K.

     Special Note: Certain statements set forth below constitute forward-looking
statements made pursuant to the safe harbor provisions of the Private Securities
Litigation  Reform  Act  of  1995.  See  "Business-Special  Note  Regarding
Forward-Looking  Statements"  and  "Business-Risk  Factors."  In  the  following
discussions,  most  percentages  and dollar amounts have been rounded to aid the
presentation.  As  a  result,  all  such  figures  are  approximations.

GENERAL  AND  BACKGROUND

     We  develop  and  market  biologically  based  solutions for the repair and
replacement of damaged or inadequate human tissue in numerous different clinical
applications.  Our  core  tissue  matrix  technology  removes all cells from the
tissue  and  preserves the tissue without damaging the essential biochemical and
structural  components  necessary  for normal tissue regeneration.  We currently
market four human tissue based products: AlloDerm(R) for plastic reconstructive,
burn  and  periodontal  procedures;  Cymetra(TM),  a  version  of AlloDerm(R) in
particulate  form  for  non-surgical  correction  of  soft  tissue  defects;
Repliform(TM),  a  version of AlloDerm(R) for urology and gynecology procedures;
and  cryopreserved  allograft  skin  for  use  as  a  temporary  dressing in the
treatment  of burns.  Our development programs include the potential application
of  our  tissue  matrix  technology  to  vascular,  nerve and orthopedic tissue;
investigation  of  human tissues as carriers for therapeutics; ThromboSol(TM), a
formulation  for  extended  storage of platelets and technologies to enhance the
storage  of  red  blood  cells  for  transfusion.

CRITCAL  ACCOUNTING  POLICIES

     We  have  identified the policies below as critical to the understanding of
our  financial  statements. The application of these polices requires management
to  make  estimates  and  assumptions  that  affect  the valuation of assets and
expenses  during  the  reporting  period.  There can be no assurance that actual
results  will  not  differ  from  these estimates. The impact and any associated
risks  related to these policies on our business operations are discussed below.
For  a  detailed  discussion  on  the  application of these and other accounting
policies, see Note 2 in the Notes to the Financial Statements in Item 14 of this
Annual  Report  on  Form  10-K,  beginning  on  page  F-6.

     Accounts  receivable. We maintain a provision for estimated bad debt losses
on  our  accounts  receivables  based  upon  our  historical  experience and any
specific  customer  collection  issues  that we have identified. In addition, we
perform ongoing credit evaluations and monitor collections and payments from our
customers.  Since  our  accounts  receivable  are  not  concentrated  within  a
relatively  few  number  of  customers, a significant change in the liquidity or
financial  position  of  any  one  of  these  customers will not have a material
adverse  impact on the collectability of our accounts receivables and our future
operating  results.  While  losses  depend  to a large degree on future economic
conditions,  management  does  not forecast significant bad debt losses in 2002.

     Inventories.  We  value  our inventory at the lower of cost or market, with
cost  being determined on a first-in, first-out basis. We record a provision for
excess  and  obsolete inventory based primarily on inventory quantities on hand,
our  historical  product  sales,  estimated  forecast  of  product  demand  and
production  requirements.  Although  we  believe  current inventory reserves are
adequate,  any  significant  unanticipated  changes  in  demand or technological
developments  could  have a significant impact on the value of our inventory and
our  future  operating  results.


RESULTS  OF  OPERATIONS

     YEARS  ENDED  DECEMBER  31,  2001  AND  2000

     Total  revenues for the year ended December 31, 2001 increased 22% to $27.8
million  compared  to  $22.8  million  in  2000.  The  increase  was principally
attributable  to  a  25%  increase  in  product revenues to $26.6 million in the
current  year  as  compared to $21.3 million in the prior year.  The increase in
product revenues was largely due to increased demand for Repliform and AlloDerm.


                                       27
<PAGE>
Repliform  revenues increased 56% to $9.3 million in the year ended December 31,
2001  compared  to  $5.9 million for the same period in 2000.  AlloDerm revenues
increased  21%  to $12.7 million in the year ended December 31, 2001 compared to
$10.5  million  in  the  same period in 2000.  Cymetra revenues contributed $4.0
million in 2001 compared to $4.1 million in 2000.  Cymetra unit demand increased
slightly,  however revenues decreased due to a reduction in the average per unit
selling  price.

     Boston  Scientific  Corporation  is  our  exclusive  worldwide  sales  and
marketing  representative  for  Repliform  for use in the urology and gynecology
markets  and  OMP,  Inc.  is the exclusive sales and marketing representative of
Cymetra for office-based dermatologists and plastic surgeons. During 2001, sales
of  our  products  through Boston Scientific Corporation and OMP represented 35%
and  9%,  respectively,  of  our total product revenues compared to 28% and 13%,
respectively, in 2000. Both Boston Scientific and OMP are paid agency fees based
on  the  amount of product revenues they generate for us. Such fees are recorded
as  selling  and  marketing  expenses.

     Total  revenue was also impacted by a 16% decrease in funded research grant
revenues  which  totaled  $1.2 million in 2001 compared to $1.4 million in 2000.
This  decrease  was primarily due to a decrease in research spending on projects
funded  by  research  grants,  since  research  grant revenues are recognized as
qualified  expenses  are  incurred. During 2001, we were awarded two grants from
the  Department  of Defense totaling $4.4 million to investigate the application
of  our  acellular  tissue  matrix technology to the regeneration of orthopedic,
vascular  and nerve tissues. As of December 31, 2001, approximately $3.7 million
of approved grant funding was available to fund further research and development
expenses  through  2003.

     Cost  of  products  sold  for  the  year  ended  December 31, 2001 was $8.9
million,  or  33% of product revenues, compared to cost of products sold of $6.9
million,  or  33%  for  the  same period in 2000. The cost of products sold as a
percentage  of  sales  remained  unchanged  for  the  year. Certain efficiencies
realized  in  manufacturing  cost,  as  a result of volume increases and process
improvements,  were  offset  by  a  reduction  in  the  average selling price of
Cymetra.

     Total  research  and  development expenses decreased 4% to $4.4 million for
the  year ended December 31, 2001 compared to $4.5 million in 2000. The decrease
was due primarily to a reduction in expenditures for Cymetra product development
related  to  the  product  launch  in  2000.

     General  and  Administrative expenses decreased 34% to $4.1 million for the
year  ended  December  31,  2001  compared  to $6.2 million in 2000. General and
administrative  expenses  were  higher  in 2000 because they included recruiting
expenses  and  other employee related costs associated with hiring new employees
in conjunction with our relocation from Texas to New Jersey and settlement costs
and  legal  fees  associated  with  the  settlement  of  litigation  with Inamed
Corporation.

     Selling  and  marketing expenses increased 2% to $12.0 million for the year
ended  December  31,  2001 compared to $11.8 million in the same period in 2000.
The  increase in 2001 compared to 2000 was primarily attributable to an increase
in  agency  fees earned by our independent marketing agents for the distribution
of Repliform and Cymetra, partially offset by a reduction in promotion expenses.

     Interest  and  other  income  (expense), net increased $71,000 for the year
ended  December 31, 2001 compared to 2000. The net increase was due to a $14,000
increase  in interest expense and a $57,000 decline in interest income resulting
from  lower  average  interest  rates  during  the  period.

     The  net  loss  for  the year ended December 31, 2001 decreased 71% to $2.1
million  compared  to  $7.1  million  in 2000.  The decrease in net loss in 2001
compared to 2000 was principally due to higher product revenues and the decrease
in  general  and  administrative  expenses  discussed  above.

     Preferred stock and deemed dividends increased 150% to $1.6 million for the
year  ended December 31, 2001 compared to $0.6 million in 2000.  Preferred stock
dividends  decreased  in  2001  to  $440,000 from $636,000 as Series B Preferred
Stockholders  were entitled to receive dividends through September 30, 2001.  In
2001,  the  Company  recorded  a  non-cash  deemed  dividend  of $1.2 million in
connection  with  issuance  of additional shares and repricing of warrants to an
investor  pursuant  to  the  terms  of  an  investment  in  1999.


     YEARS  ENDED  DECEMBER  31,  2000  AND  1999

     Total  revenues for the year ended December 31, 2000 increased 80% to $22.8
million  compared  to  $12.7  million  in  1999.  The  increase  was  primarily
attributable  to  a 79% increase in product revenues to $21.3 million in 2000 as
compared to $11.9 million in 1999.  The increase in product revenues was largely
due  to  the  full commercial launch of Repliform in January 2000 and Cymetra in


                                       28
<PAGE>
June  2000.  Repliform  and  Cymetra  product sales contributed $5.9 million and
$4.1  million,  respectively, in 2000.  Total revenue was further impacted by an
89%  increase in funded research grant revenues of $1.4 million from $764,000 in
1999.  This  increase was primarily due to an increase in research grant funding
available.

     Cost  of  products  sold  for  the  year  ended  December 31, 2000 was $6.9
million,  or  33%  of  product  revenues, compared to cost of goods sold of $3.5
million,  or  29%  for  the  same  period  in  1999.  The increase in costs as a
percentage  of  product  revenue was principally attributable to increased costs
associated  with the expansion of tissue processing capacity in our new facility
and  costs  incurred  in  2000  related  to  the scale-up of Cymetra production.

     Total  research  and development expenses increased 17% to $4.5 million for
the  year ended December 31, 2000 compared to $3.9 million in 1999. The increase
was  due  primarily  to  higher expenditures for Cymetra product development and
technology  transfer  to  commercial  production  and  increased  spending  on
orthopedic  program  research,  which  is  funded  through  a  research  grant.

     General  and  administrative expenses increased 28% to $6.2 million for the
year  ended December 31, 2000 compared to $4.8 million in 1999. The increase was
principally  due  to a combination of increased professional fees, higher salary
costs  relating  to the hiring of management personnel during the second half of
1999  which  continued  for the full year 2000, and $355,000 of settlement costs
and  legal  fees  associated  with  the  settlement  of  the lawsuit with Inamed
Corporation,  all  of  which  were  incurred  in  2000.

     Selling  and marketing expenses increased 63% to $11.8 million for the year
ended  December  31,  2000  compared  to  $7.2 million in 1999. The increase was
primarily attributable to the hiring of additional sales and marketing personnel
during the second half of 1999 which continued for the full year 2000, increased
promotion  expenses  associated  with  the  expansion  of  marketing  activities
including  the  commercial  launch  of  two  new  products  and  the agency fees
associated  with  the  sales and marketing agreements with Boston Scientific and
OMP.

     During  the year ended December 31, 1999, in connection with the relocation
of  our  operations  from  Texas  to  New  Jersey,  we  incurred $2.9 million of
relocation  costs  consisting  principally  of non-relocating employee benefits,
asset  abandonment  costs and costs to relocate key employees.  Relocation costs
for  the  year  ended December 31, 2000, were $140,000, consisting of $60,000 of
retention  bonus and $80,000 of relocation costs, which were included in cost of
goods  sold  and  general  and  administrative  expenses,  respectively.  The
relocation  from  Texas  to  New  Jersey  was  completed  in  June  2000.

     Interest  and  other  income (expense), net decreased $947,000 for the year
ended December 31, 2000 compared to 1999. The net decrease was due to a $283,000
decline  in  interest  income  resulting from a lower cash balance available for
investment  and  a  $664,000  increase  in  interest  expense  resulting from an
increase  in  revolving  and  long-term  debt.

     The  net  loss  for  the year ended December 31, 2000 decreased 22% to $7.1
million  compared  to $9.2 million in 1999.  As discussed above, the net loss in
the  prior year included $2.9 million of expenses associated with our relocation
from  Texas  to  New  Jersey.


LIQUIDITY  AND  CAPITAL  RESOURCES

     As  of  December  31, 2001, we had cash and cash equivalents and short-term
investments  of  $4.9  million  compared to $5.5 million at the end of 2000.  In
July  2001,  we received $5.9 million in net proceeds from the private placement
of  3,125,000  shares  of  our  common  stock and warrants to purchase 1,750,000
shares  of  our  common  stock.   Approximately $3.0 million of the net proceeds
were  used  to  satisfy  the  entire  outstanding  balance on our revolving loan
facility.  In  addition,  a  portion  of  the  proceeds  were  used  to fund the
operating loss for the year ended December 31, 2001, reduce accounts payable and
accrued  liabilities,  acquire capital assets and service debt.  Working capital
increased to $8.9 million at December 31, 2001 from $5.3 million at December 31,
2000.  The  increase  resulted  principally  from  decreases  in  notes payable,
accounts  payable, and accrued liabilities net of decreases in cash and accounts
receivable.

     Our  operating  activities used net cash of $1.7 million for the year ended
December  31,  2001  to  fund our operating loss for the period, net of non-cash
charges,  and  decreases  in  accounts  payable  and  accrued  liabilities.

     Our  investing  activities  used  net  cash  of $629,000 for the year ended
December  31,  2001  for  the  purchase  of  capital  equipment and additions to
patents.


                                       29
<PAGE>
     Our  financing  activities  provided  net cash of $1.7 million for the year
ended  December  31,  2001.  In July 2001, we completed the private placement of
3,125,000  shares  of our common stock and warrants to purchase 1,750,000 shares

of  our  common stock. Net proceeds from the offering were $5.9 million. We used
$3.0  million  of  the proceeds to satisfy the entire outstanding balance on our
revolving  loan  facility.  During  2001,  we  also used $1.2 million in cash to
reduce  the  principal  balance on our term debt. The following table reflects a
summary  of  our  contractual  cash  obligations  as  of  December  31,  2001:

<TABLE>
<CAPTION>
                                                     Payments Due by Period
                         -----------------------------------------------------------------------------
                                          Less than one
                             Total            year       1 to 3 years    4 to 5 years   After 5 years
                         --------------  --------------  -------------  --------------  --------------
<S>                      <C>             <C>             <C>            <C>             <C>
Long-term debt(1)        $    2,197,000  $    1,334,000  $     394,000  $      129,000  $      340,000
Operating leases              6,498,000         833,000      1,666,000       1,778,000       2,221,000
                         --------------  --------------  -------------  --------------  --------------
Total contractual
   cash obligations      $    8,695,000  $    2,167,000  $   2,060,000  $    1,907,000  $    2,561,000
                         ==============  ==============  =============  ==============  ==============

<FN>
 (1) Under our debt agreements, the maturity of our outstanding debt could be accelerated if we do not
maintain certain covenants.
</TABLE>


     We  believe  that  our  current  cash  resources  together with anticipated
product  revenues  and  committed research and development grant funding will be
sufficient  to finance our planned operations, research and development programs
and  fixed  asset  requirements through 2002. However, there can be no assurance
that such sources of funds will be sufficient to meet our needs and as a result,
we  may  need  additional funding. In August 2001, we voluntarily terminated our
$3.0  million  revolving  loan  facility  and  currently  we  have no additional
borrowing availability through our existing credit facilities or commitments for
any  future  funding.  There  can be no assurance that we will be able to obtain
additional  funding  from  either  debt  or  equity  financing,  bank  loans,
collaborative  arrangements  or  other  sources on terms acceptable to us, or at
all.  If adequate funds are not available, we expect that we will be required to
delay,  scale  back  or  eliminate  one  or more of our research and development
programs.  Any  additional equity financing may be dilutive to stockholders, and
debt  financing,  if  available,  may involve significant restrictive covenants.
Collaborative  arrangements, if necessary to raise additional funds, may require
us  to  relinquish  our  rights  to  certain  of  our  technologies, products or
marketing  territories.

     It  is  possible  that  our  results of operations or liquidity and capital
resources  could  be  adversely  affected  by  the  ultimate  outcome of pending
litigation  or  as  a result of the cost of contesting such legal actions. For a
discussion  of  these matters see Note 12 of "Notes to Financial Statements" and
Part  I.,  Item  3.  "Legal  Proceedings".

     At December 31, 2001, there were 460,636 shares of common stock outstanding
that are subject to redemption by us under certain conditions. These shares were
issued  to one investor in a private placement in November 1999. Pursuant to the
terms of the purchase agreement, if we do not maintain a listing on or quotation
of  our shares of common stock on a U.S. stock exchange or market system we will
be  required  to  redeem  such  shares at $4.20 per share or $1.9 million in the
aggregate.

     We  have  incurred  losses  since our inception and therefore have not been
subject  to  federal income taxes. As of December 31, 2001, we had net operating
loss  ("NOL")  and research and development tax credit carryforwards for federal
income  tax  purposes  of $57.4 million and $747,000, respectively, available to
reduce future federal income taxes. Federal tax laws provide for a limitation on
the use of NOL and tax credit carryforwards generated prior to certain ownership
changes  that  could  limit our ability to use NOL and tax credit carryforwards.
Our  public offering of Common Stock in 1997 resulted in an ownership change for
federal  income  tax  purposes. We estimate that the amount of NOL carryforwards
and  the  credits  available  to offset federal taxable income subsequent to the
ownership  change  are  $36.6  million on a cumulative basis. Accordingly, if we
generate taxable income in any year in excess of the then cumulative limitation,
we may be required to pay federal income taxes even though we have unexpired NOL
carryforwards.  In  addition,  we  have  NOL's  available  for  state income tax
purposes  of approximately $7.0 million, available to reduce future state income
taxes.  In  March  2002,  the  Company  realized  $248,000  through the sale and
transfer  of  $3.2  million  of  state  tax  net  operating losses. The sale and
transfer  was  made  through  the  Technology  Business  Tax Certificate Program
sponsored  by  the  New  Jersey  Economic  Development  Authority.


                                       30
<PAGE>
ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     We  are  exposed  to  changes  in  interest  rates  primarily from our debt
arrangements  and,  secondarily,  from  our  investments  in certain securities.
Although  our  short-term  investments are available for sale, we generally hold
such  investments  until  maturity.  We do not utilize derivative instruments or
other  market  risk  sensitive  instruments  to manage exposure to interest rate
changes.  We  believe  that  a  hypothetical  100  basis  point  adverse move in
interest  rates  along the entire interest rate yield curve would not materially
affect  the  fair  value  of  our  interest  sensitive  financial instruments at
December  31,  2001.

ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The  financial  statements and supplementary financial information required
to  be  filed under this Item are presented commencing on page F-1 of the Annual
Report  on  Form  10-K,  and  are  incorporated  herein  by  reference.

ITEM 9.     CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

     None


                                       31
<PAGE>
PART III

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information required by this Item will be set forth in the Registrant's
Proxy  Statement relating to the annual meeting of the Registrant's stockholders
scheduled to be held on May 31, 2002, under the captions "Election of Directors"
and  "Executive  Compensation,"  and  such information is incorporated herein by
reference.


ITEM 11.    EXECUTIVE COMPENSATION

     The information required by this Item will be set forth in the Registrant's
Proxy  Statement relating to the annual meeting of the Registrant's stockholders
scheduled  to  be  held  on  May  31,  2002,  under  the  caption  "Executive
Compensation,"  and  such  information  is  incorporated  herein  by  reference.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information required by this Item will be set forth in the Registrant's
Proxy  Statement relating to the annual meeting of the Registrant's stockholders
scheduled  to  be held on May 31, 2002, under the caption "Security Ownership of
Certain  Beneficial Owners and Management," and such information is incorporated
herein  by  reference.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information required by this Item will be set forth in the Registrant's
Proxy  Statement relating to the annual meeting of the Registrant's stockholders
scheduled  to  be held on May 31, 2002, under the caption "Certain Relationships
and  Related  Transactions,"  and  such  information  is  incorporated herein by
reference.


                                       32
<PAGE>
PART IV

ITEM 14.     EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)       DOCUMENTS  INCLUDED  IN  THIS  REPORT:
1.     FINANCIAL  STATEMENTS

                                                                            PAGE
                                                                            ----
Report of Independent Public Accountants. . . . . . . . . . . . . . . . . . .F-1

Balance Sheets as of December 31, 2000 and 2001 . . . . . . . . . . . . . . .F-2

Statements of Operations for the years ended
  December 31, 1999, 2000 and 2001. . . . . . . . . . . . . . . . . . . . . .F-3

Statements of Stockholders' Equity for the years
  ended December 31, 1999, 2000 and 2001. . . . . . . . . . . . . . . . . . .F-4

Statements of Cash Flows for the years ended
  December 31, 1999, 2000 and 2001. . . . . . . . . . . . . . . . . . . . . .F-5

Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . .F-6

2.   FINANCIAL  STATEMENT  SCHEDULES
          All  other  schedules are omitted because they are not applicable, not
     required, or because the required information is contained in the Company's
     financial  statements  and  the  notes  thereto.

(b)  REPORTS  ON  FORM  8-K:

None

(c)  EXHIBITS:

          Exhibits  designated by the symbol * are filed with this Annual Report
     on  Form 10-K. All exhibits not so designated are incorporated by reference
     to  a  prior  filing  as  indicated.

          Exhibits  designated  by  the  symbol  are  management  contracts  or
     compensatory  plans or arrangements that are required to be filed with this
     report  pursuant  to  this  Item  14.


                                       33
<PAGE>
     LifeCell  undertakes  to furnish to any stockholder so requesting a copy of
any  of  the  following  exhibits  upon payment to the Company of the reasonable
costs  incurred  by  Company  in  furnishing  any  such  exhibit.

3.1         Restated  Certificate  of Incorporation, as amended (incorporated by
            reference  to  Exhibit 3.1 to the Company's Quarterly Report on Form
            10-Q  for  the period ended June 30, 1998, filed with the Securities
            and  Exchange  Commission  ("the  Commission")  on August 10, 1998).

3.2         Amended  and  Restated By-laws (incorporated by reference to Exhibit
            3.2  to  the  Company's Quarterly Report on Form 10-Q for the period
            ended  June 30, 1996, filed with the Commission on August 14, 1996.)

10.1+       LifeCell Corporation Amended and Restated 1992 Stock Option Plan, as
            amended  (incorporated by reference to Exhibit 10.1 to the Company's
            Quarterly  Report  on  Form 10-Q for the period ended June 30, 1998,
            filed  with  the  Commission  on  August  10,  1998).

10.2+       LifeCell  Corporation  Second Amended and Restated 1993 Non-Employee
            Director Stock Option Plan, as amended (incorporated by reference to
            Exhibit  10.4  to  the  Company's Annual Report on Form 10-K for the
            fiscal  year  ended  December  31,  1996).

10.3        Securities  Purchase  Agreement  dated  November  18,  1996, between
            LifeCell  Corporation  and the Investors named therein (incorporated
            by reference to Exhibit 10.15 to the Company's Annual Report on Form
            10-K  for  the  fiscal  year  ended  December  31,  1996).

10.4        Voting Agreement dated November 18, 1996, as amended as of April 15,
            1999  among  LifeCell  Corporation  and  certain  stockholders named
            therein  (incorporated by reference to Exhibit 10.1 to the Company's
            Quarterly  Report  on Form 10-Q filed with the Commission on May 17,
            1999).

10.5        Registration  Rights  Agreement  dated  November  18,  1996, between
            LifeCell  Corporation  and  certain  stockholders  named  therein
            (incorporated  by reference to Exhibit 10.17 to the Company's Annual
            Report  on  Form  10-K for the fiscal year ended December 31, 1996).

10.6        Form  of  Stock  Purchase Warrant dated November 18, 1996, issued to
            each of the warrant holders named on Schedule 10.18 attached thereto
            (incorporated  by reference to Exhibit 10.18 to the Company's Annual
            Report  on  Form  10-K for the fiscal year ended December 31, 1996).

10.7        Stock  Purchase Warrant dated November 18, 1996, issued to Gruntal &
            Co.,  Incorporated  (incorporated  by  reference to Exhibit 10.19 to
            Amendment  No. 1 to the Company's Annual Report on Form 10-K for the
            fiscal  year  ended  December  31,  1996  on  Form  10-K/A).

10.8+       Agreement  dated  August  19, 1998, between LifeCell Corporation and
            Paul  M.  Frison  (incorporated  by reference to Exhibit 10.1 to the
            Company's  Quarterly  Report  on  Form  10-Q  for  the  period ended
            September  30, 1998 filed with the Commission on November 13, 1998).

10.9+       Agreement  dated  July  1,  1997,  between  LifeCell Corporation and
            Stephen  A.  Livesey  (incorporated by reference to Exhibit 10.20 to
            the Company's Registration Statement No. 333-37123 on Form S-2 filed
            with  the  Commission  on  October  3,  1997).

10.10+      Agreement  dated  October 5, 1998 between LifeCell Corporation and
            Paul  G.  Thomas  (incorporated  by reference to Exhibit 10.2 to the
            Company's Quarterly Report on Form 10-Q filed with the Commission on
            November  13,  1998.)

10.11+      Letter  agreement  dated  September  8,  1998  between  LifeCell
            Corporation  and  Paul  G.  Thomas,  as amended by letter agreements
            dated  September  9,  1998  and  September 29, 1998 (incorporated by
            reference  to Exhibit 10.3 to the Company's Quarterly Report on Form
            10-Q  filed  with  the  Commission  on  November  13,  1998.)


                                       34
<PAGE>
10.12       Lease  Agreement  by  and  between  Maurice  M.  Weill,  Trustee for
            Branchburg  Property  and  LifeCell  Corporation dated June 17, 1999
            (incorporated  by  reference  to  Exhibit  10.1  of  the  Company's
            Quarterly  Report on Form 10-Q filed with the Commission on November
            15,  1999.)

10.13       Amendment dated September 21, 1999 to Lease Agreement by and between
            Maurice  M.  Weill,  Trustee  for  Branchburg  Property and LifeCell
            Corporation  (incorporated  by  reference  to  Exhibit  10.16 to the
            Company's  Annual  Report  on  Form  10-K  for the fiscal year ended
            December  31,  2000).

10.14       Amendment  dated  April  7,  2000  to Lease Agreement by and between
            Maurice  M.  Weill,  Trustee  for  Branchburg  Property and LifeCell
            Corporation  (incorporated  by  reference  to  Exhibit  10.17 to the
            Company's  Annual  Report  on  Form  10-K  for the fiscal year ended
            December  31,  2000).

10.15       Stock Purchase and Registration Rights Agreements dated November 17,
            1999  between  LifeCell  Corporation  and  The  Tail Wind Fund, Ltd.
            (incorporated  by reference to Exhibit 10.18 to the Company's Annual
            Report  on  Form  10-K for the fiscal year ended December 31, 1999).

10.16       Stock  Purchase  Warrant dated November 17, 1999, issued to The Tail
            Wind  Fund,  Ltd.  (incorporated  by reference to Exhibit 4.4 to the
            Company's  Registration  Statement  on  Form  S-3  (Registration No.
            333-94715)  filed  with  the  Commission  on  January  14,  2000.)

10.17       Loan  Agreement  dated December 6, 1999 between LifeCell Corporation
            and  Transamerica  Business  Credit  Corporation  (incorporated  by
            reference  to  Exhibit  10.17 to the Company's Annual Report on Form
            10-K  for  the  fiscal  year  ended  December  31,  1999).

10.18       Second  Amended  and Restated Voting Agreement dated as of April 13,
            2000  among  the  Company  and  the  Series B Preferred Shareholders
            (incorporated  by  reference  to  Exhibit  10.1  of  the  Company's
            Quarterly  Report  on Form 10-Q filed with the Commission on May 12,
            2000).

10.19       LifeCell  Corporation  Year  2000 Stock Option Plan (incorporated by
            reference  to Exhibit 10.1 of the Company's Quarterly Report on Form
            10-Q  filed  with  the  Commission  on  July  28,  2000).

10.20       Loan  Agreement  dated May 31, 2000 between LifeCell Corporation and
            Public  Service  Millennium  Economic  Development  Fund  L.L.C.
            (incorporated  by  reference  to  Exhibit  10.2  of  the  Company's
            Quarterly  Report on Form 10-Q filed with the Commission on July 28,
            2000).

10.21       Loan  Agreement  dated June 9, 2000 between LifeCell Corporation and
            The  New  Jersey  Economic  Development  Authority  (incorporated by
            reference  to Exhibit 10.3 of the Company's Quarterly Report on Form
            10-Q  filed  with  the  Commission  on  July  28,  2000).

10.22       Form  of Purchase Agreement dated September 1, 2000 between LifeCell
            Corporation  and  Certain  Investors  (incorporated  by reference to
            Exhibit  10.1  of  the Company's Quarterly Report on Form 10-Q filed
            with  the  Commission  on  November  13,  2000).

10.23+      Form  of Change in Control Agreement (incorporated by reference to
            Exhibit  10.26  to  the Company's Annual Report on Form 10-K for the
            fiscal  year  ended  December  31,  2000).

10.24       Stock  Purchase Warrant dated October 31, 2000, issued to Prudential
            Securities  Incorporated (incorporated by reference to Exhibit 10.27
            to  the  Company's  Annual  Report  on Form 10-K for the fiscal year
            ended  December  31,  2000).

10.25       Stock  Purchase  Warrant dated October 31, 2000, issued to Gruntal &
            Co.,  L.L.C.  (incorporated  by  reference  to  Exhibit 10.28 to the
            Company's  Annual  Report  on  Form  10-K  for the fiscal year ended
            December  31,  2000).

10.26       Form  of  Purchase  Agreement  dated  June 29, 2001 between LifeCell
            Corporation  and  Certain  Investors  (incorporated  by reference to
            Exhibit 10.29 of the Company's Form 8-K filed with the Commission on
            July  11,  2001).


                                       35
<PAGE>
10.27       Form  of  Purchase  Agreement  dated  June 29, 2001 between LifeCell
            Corporation  and  Certain  Investors  (incorporated  by reference to
            Exhibit 10.30 of the Company's Form 8-K filed with the Commission on
            July  11,  2001).

10.28       Form  of  Warrants  dated July 10, 2001 between LifeCell Corporation
            and Certain Investors (incorporated by reference to Exhibit 10.31 of
            the  Company's Form 8-K filed with the Commission on July 11, 2001).

10.29*      Amendment  dated as of May 1, 2001 to the Loan Agreement dated May
            31,  2000 between LifeCell Corporation and Public Service Millennium
            Economic  Development  Fund  L.L.C.

10.30*      Amendment  (Second)  dated  as  of  February  15, 2002 to the Loan
            Agreement dated May 31, 2000 between LifeCell Corporation and Public
            Service  Millennium  Economic  Development  Fund  L.L.C.

10.31*      Waiver  Agreement dated as of March 11, 2002 among the Company and
            certain  holders  of  the  Series  B  preferred  stock

23.1*       Consent  of  Arthur  Andersen  LLP.

99.1*       Representation letter dated March 22, 2002 regarding audit performed
            by Arthur Andersen.


                                       36
<PAGE>
                                   SIGNATURES

     In  accordance  with  Section 13 or 15(d) of the Securities Exchange Act of
1934,  the  registrant  caused  this  report  to  be signed on its behalf by the
undersigned,  thereunto  duly  authorized.

                                     LIFECELL CORPORATION
                                        (Registrant)


                                     By:  /s/ Paul G. Thomas
                                        -------------------------------------
                                         Paul G. Thomas
                                         President, Chief Executive Officer and
                                         Chairman of the Board of Directors

Dated:  March 22, 2002.


     In  accordance  with  the  Securities Exchange Act of 1934, this report has
been  signed  by  the  following  persons on behalf of the registrant and in the
capacities  and  on  the  dates  indicated:

<TABLE>
<CAPTION>
    SIGNATURE                         TITLE                         DATE
    ----------                        -----                        -----
<S>                      <C>                                    <C>

/s/ Paul G. Thomas       President and Chief Executive          March 22, 2002
-----------------------  Officer (Principal Executive Officer)
Paul G. Thomas


/s/ Steven T. Sobieski   Vice President and Chief Financial     March 22, 2002
-----------------------  Officer (Principal Financial Officer)
Steven T. Sobieski )


/s/ Bradly C. Tyler      Controller                             March 22, 2002
-----------------------  (Principal Accounting Officer)
Bradly C. Tyler


/s/ Michael A. Cahr      Director                               March 22, 2002
-----------------------
Michael A. Cahr

/s/ Peter D. Costantino  Director                               March 22, 2002
-----------------------
Peter D. Costantino

/s/ James G. Foster      Director                               March 22, 2002
-----------------------
James G. Foster

/s/ David Fitzgerald     Director                               March 22, 2002
-----------------------
David Fitzgerald

/s/ Stephen A. Livesey   Director                               March 22, 2002
-----------------------
Stephen A. Livesey
</TABLE>


                                       37
<PAGE>
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To  LifeCell  Corporation:


     We  have audited the accompanying balance sheets of LifeCell Corporation (a
Delaware  corporation)  as  of  December  31,  2000  and  2001,  and the related
statements  of  operations,  stockholders' equity and cash flows for each of the
three  years  in  the period 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.  Those standards require that we plan and perform
the  audit to obtain reasonable assurance about whether the financial statements
are  free  of  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,  as well as evaluating the overall
financial  statement  presentation.  We  believe  that  our  audits  provide  a
reasonable  basis  for  our  opinion.

     As  more fully described in Note 8 to the financial statements, the Company
has  revised  the  balance  sheet  as  of December 31, 2000 and the statement of
stockholders'  equity  for the years ended December 31, 1999 and 2000 to reflect
the  reclassification  of common stock, subject to redemption from stockholders'
equity.

     In  our opinion, the financial statements referred to above present fairly,
in  all  material respects, the financial position of LifeCell Corporation as of
December 31, 2000 and 2001, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2001, in conformity
with  accounting  principles  generally  accepted  in  the  United  States.

                                           ARTHUR  ANDERSEN  LLP


Philadelphia,  Pennsylvania
February  25,  2002


                                       F-1
<PAGE>
<TABLE>
<CAPTION>
                                       LIFECELL CORPORATION

                                           BALANCE SHEETS

                                                                             DECEMBER 31,
                                                                     ----------------------------
                                                                         2000           2001
                                                                     -------------  -------------
<S>                                                                  <C>            <C>
                                     Assets
Current assets
  Cash and cash equivalents                                          $  5,220,000   $  4,650,000
  Short-term investments                                                  315,000        250,000
  Accounts and other receivables, net of allowance for doubtful
    accounts of  $170,000 in 2000 and $114,000 in 2001                  4,287,000      3,799,000
  Inventories                                                           4,711,000      4,691,000
  Prepayments and other                                                   269,000        319,000
                                                                     -------------  -------------
      Total current assets                                             14,802,000     13,709,000

Fixed assets, net                                                       9,991,000      8,728,000
Other assets, net                                                         617,000        694,000
                                                                     -------------  -------------
Total assets                                                         $ 25,410,000   $ 23,131,000
                                                                     =============  =============
                      Liabilities and Stockholders' Equity
Current liabilities
  Accounts payable                                                   $  2,434,000   $    792,000
  Accrued liabilities                                                   3,025,000      2,732,000
  Notes payable                                                         2,859,000              -
  Current portion of long-term debt                                     1,154,000      1,334,000
                                                                     -------------  -------------
      Total current liabilities                                         9,472,000      4,858,000
                                                                     -------------  -------------

Deferred revenue                                                          794,000        572,000
                                                                     -------------  -------------
Long-term debt                                                          2,272,000        863,000
                                                                     -------------  -------------
Other long-term liabilities                                                83,000         70,000
                                                                     -------------  -------------

Commitments and contingencies

Temporary equity
  Common stock, subject to redemption, $.001 par value, shares
    issued and outstanding 925,000 in 2000 and 460,636 in 2001          3,885,000      1,935,000

Stockholders' equity
  Series B preferred stock, $.001 par value, 182,205 shares
    authorized; shares issued and outstanding 95,931 in 2000 and
    101,726 in 2001 (liquidation preference at December 31, 2001 of
    $ 10,173,000)                                                               -              -
  Undesignated preferred stock, $.001 par value 1,817,795
    shares authorized, none issued and outstanding                              -              -
  Common stock, $.001 par value, 48,000,000 shares authorized;
    shares issued and oustanding 15,784,368 in 2000 and 19,851,868
    in 2001                                                                16,000         20,000
  Warrants outstanding to purchase shares of common stock
    3,370,298 in 2000 and 2,284,211 in 2001                             1,269,000      4,002,000
  Additional paid-in capital                                           69,728,000     76,581,000
  Accumulated deficit                                                 (62,109,000)   (65,770,000)
                                                                     -------------  -------------
      Total stockholders' equity                                        8,904,000     14,833,000
                                                                     -------------  -------------
Total liabilities and stockholders' equity                           $ 25,410,000   $ 23,131,000
                                                                     =============  =============
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       F-2
<PAGE>
<TABLE>
<CAPTION>
                                   LIFECELL CORPORATION
                                 STATEMENTS OF OPERATIONS

                                                       For the Year Ended December 31,
                                                  ----------------------------------------
                                                      1999          2000          2001
                                                  ------------  ------------  ------------
<S>                                               <C>           <C>           <C>
Revenues:

  Product revenues                                $11,912,000   $21,330,000   $26,560,000
  Research grant revenues                             764,000     1,442,000     1,209,000
                                                  ------------  ------------  ------------

    Total revenues                                 12,676,000    22,772,000    27,769,000
                                                  ------------  ------------  ------------

Costs and Expenses:

  Cost of products sold                             3,452,000     6,949,000     8,862,000
  Research and development                          3,871,000     4,523,000     4,351,000
  General and administrative                        4,840,000     6,180,000     4,098,000
  Selling and marketing                             7,236,000    11,779,000    11,978,000
  Relocation costs                                  2,937,000             -             -
                                                  ------------  ------------  ------------

    Total costs and expenses                       22,336,000    29,431,000    29,289,000
                                                  ------------  ------------  ------------

Loss From Operations                               (9,660,000)   (6,659,000)   (1,520,000)

  Interest and other income (expense), net            468,000      (479,000)     (550,000)
                                                  ------------  ------------  ------------

Net Loss                                           (9,192,000)   (7,138,000)   (2,070,000)

Preferred Stock and Deemed Dividends                 (710,000)     (593,000)   (1,591,000)
                                                  ------------  ------------  ------------

Net Loss Applicable to Common Stockholders        $(9,902,000)  $(7,731,000)  $(3,661,000)
                                                  ============  ============  ============

Loss Per Share of Common Stock-Basic and Diluted  $     (0.83)  $     (0.54)  $     (0.20)
                                                  ============  ============  ============

Shares Used in Computing Loss Per
  Common Share-Basic and Diluted                   11,937,532    14,372,083    18,240,431
                                                  ============  ============  ============
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                      F-3
<PAGE>
<TABLE>
<CAPTION>
                                                    LIFECELL CORPORATION

                                           STATEMENTS OF STOCKHOLDERS' EQUITY

                                                         SERIES B                                WARRANTS TO PURCHASE
                                                      PREFERRED STOCK       COMMON STOCK              COMMON STOCK
                                                     -------------------------------------------------------------------
                                                      SHARES   AMOUNT     SHARES      AMOUNT     SHARES        AMOUNT
                                                     -------------------------------------------------------------------
<S>                                                  <C>       <C>      <C>          <C>       <C>          <C>
Balance at December 31, 1998                         119,084   $     -  11,611,852   $12,000    3,182,188   $   298,000
  Stock options exercised                                  -         -     219,764         -            -             -
  Warrants issued                                          -         -           -         -      284,211       590,000
  Conversion of Series B preferred stock              (1,068)        -      34,450         -            -             -
  Common Stock issued                                      -         -   1,033,577     1,000            -             -
  Dividends on Series B preferred stock                    -         -           -         -            -             -
  Net Loss                                                 -         -           -         -            -             -
                                                     -------------------------------------------------------------------
  Balance at December 31, 1999, as previously
     reported                                        118,016         -  12,899,643    13,000    3,466,399       888,000
  Reclassification of common stock, subject to
     redemption to temporary equity (See Note 8)           -         -    (925,000)   (1,000)           -             -
                                                     -------------------------------------------------------------------

Balance at December 31, 1999, revised                118,016         -  11,974,643    12,000    3,466,399       888,000
  Stock options exercised                                  -         -     206,311         -            -             -
  Warrants exercised                                       -         -     299,324         -     (327,896)      (26,000)
  Warrants expired                                         -         -           -         -      (60,000)            -
  Warrants issued                                          -         -           -         -      291,795       407,000
  Conversion of Series B preferred stock             (24,927)        -     804,090     1,000            -             -
  Common stock issued                                      -         -   2,500,000     3,000            -             -
  Dividends on Series B preferred stock                2,842         -           -         -            -             -
  Net Loss                                                 -         -           -         -            -             -
                                                     -------------------------------------------------------------------

Balance at December 31, 2000                          95,931         -  15,784,368    16,000    3,370,298     1,269,000
  Stock options exercised                                  -         -         135         -            -             -
  Warrants issued                                          -         -           -         -    2,224,030     3,231,000
  Warrants expired                                         -         -           -         -   (3,310,117)     (498,000)
  Common stock issued                                      -         -   3,125,000     4,000            -             -
  Reclassification of common stock, subject to
     redemption                                            -         -     464,364         -            -             -
  Dividends on Series B preferred stock                5,795         -           -         -            -             -
  Deemed dividend recorded in connection with
     issuance of additional shares of common stock
     and warrant re-pricing                                -         -     478,001         -            -             -
  Net Loss                                                 -         -           -         -            -             -
                                                     -------------------------------------------------------------------

Balance at December 31, 2001                         101,726   $     -  19,851,868   $20,000    2,284,211   $ 4,002,000
                                                     ===================================================================

                                                      ADDITIONAL                        TOTAL
                                                       PAID-IN      ACCUMULATED     STOCKHOLDERS'
                                                       CAPITAL        DEFICIT          EQUITY
                                                     --------------------------------------------
<S>                                                  <C>           <C>            <C>
Balance at December 31, 1998                         $58,427,000   $(44,476,000)  $   14,261,000
  Stock options exercised                                670,000              -          670,000
  Warrants issued                                       (382,000)             -          208,000
  Conversion of Series B preferred stock                       -              -                -
  Common Stock issued                                  4,011,000              -        4,012,000
  Dividends on Series B preferred stock                        -       (710,000)        (710,000)
  Net Loss                                                     -     (9,192,000)      (9,192,000)
                                                     --------------------------------------------
Balance at December 31, 1999, as previously
     reported                                         62,726,000    (54,378,000)       9,249,000
  Reclassification of common stock, subject to
     redemption to temporary equity (See Note 8)      (3,884,000)             -       (3,885,000)
                                                     --------------------------------------------

Balance at December 31, 1999, revised                 58,842,000    (54,378,000)       5,364,000
  Stock options exercised                                726,000              -          726,000
  Warrants exercised                                   1,227,000              -        1,201,000
  Warrants expired                                             -              -                -
  Warrants issued                                       (407,000)             -                -
  Conversion of Series B preferred stock                   1,000              -            2,000
  Common stock issued                                  9,055,000              -        9,058,000
  Dividends on Series B preferred stock                  284,000       (593,000)        (309,000)
  Net Loss                                                     -     (7,138,000)      (7,138,000)
                                                     --------------------------------------------

Balance at December 31, 2000                          69,728,000    (62,109,000)       8,904,000
  Stock options exercised                                      -              -                -
  Warrants issued                                     (3,231,000)             -                -
  Warrants expired                                       498,000              -                -
  Common stock issued                                  5,906,000              -        5,910,000
  Reclassification of common stock, subject to
     redemption                                        1,950,000              -        1,950,000
  Dividends on Series B preferred stock                  579,000       (440,000)         139,000
  Deemed dividend recorded in connection with
     issuance of additional shares of common stock
     and warrant re-pricing                            1,151,000     (1,151,000)               -
  Net Loss                                                     -     (2,070,000)      (2,070,000)
                                                     --------------------------------------------

Balance at December 31, 2001                         $76,581,000   $(65,770,000)  $   14,833,000
                                                     ============================================
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       F-4
<PAGE>
<TABLE>
<CAPTION>
                                        LIFECELL CORPORATION

                                      STATEMENTS OF CASH FLOWS

                                                                FOR THE YEAR ENDED DECEMBER 31,
                                                           ----------------------------------------
                                                               1999          2000          2001
                                                           ------------  ------------  ------------
<S>                                                        <C>           <C>           <C>
Cash Flows from Operating Activities:
  Net loss                                                 $(9,192,000)  $(7,138,000)  $(2,070,000)
  Adjustments to reconcile net loss to net cash
    used in operating activities:
    Depreciation and amortization                              411,000     1,290,000     1,761,000
    Provision for bad debts                                    344,000       150,000       (15,000)
    Loss on asset disposals                                    335,000             -             -
    Accretion of debt discount and financing cost                    -        69,000       192,000
  Change in assets and liabilities:
    (Increase) decrease in accounts and other receivables   (1,517,000)   (1,880,000)      503,000
    (Increase) decrease in inventories                      (1,453,000)   (1,509,000)       20,000
    Increase in prepayments and other                         (152,000)     (115,000)      (50,000)
    Increase (decrease) in accounts payable and
      accrued liabilities                                    2,688,000      (141,000)   (1,791,000)
    Increase (decrease) in deferred revenues                   405,000       389,000      (222,000)
    Increase (decrease) increase in other liabilities                -        83,000       (13,000)
                                                           ------------  ------------  ------------
       Net cash used in operating activities                (8,131,000)   (8,802,000)   (1,685,000)
                                                           ------------  ------------  ------------
Cash Flows from Investing Activities:
  Capital expenditures                                      (5,885,000)   (4,681,000)     (458,000)
  Additions to patents                                        (109,000)      (99,000)     (171,000)
  Purchase of short-term investments                          (315,000)            -             -
  Sales of short-term investments                            4,001,000             -        65,000
                                                           ------------  ------------  ------------
      Net cash used in investing activities                 (2,308,000)   (4,780,000)     (564,000)
                                                           ------------  ------------  ------------
Cash Flows from Financing Activities:
  Proceeds from issuance of stock and warrants               4,682,000    10,987,000     5,910,000
  Proceeds from issuance of notes payable                    3,000,000             -             -
  Proceeds from issuance of long-term debt                           -     3,653,000             -
  Principal payments on long-term debt                               -      (227,000)   (1,229,000)
  Payments on notes payable                                          -        (2,000)   (2,998,000)
  Cash dividends paid                                         (531,000)     (346,000)       (4,000)
                                                           ------------  ------------  ------------
      Net cash provided by financing activities              7,151,000    14,065,000     1,679,000
                                                           ------------  ------------  ------------
Net increase (decrease) in cash and cash equivalents        (3,288,000)      483,000      (570,000)
Cash and cash equivalents at beginning of period             8,025,000     4,737,000     5,220,000
                                                           ------------  ------------  ------------
Cash and cash equivalents at end of period                 $ 4,737,000   $ 5,220,000   $ 4,650,000
                                                           ============  ============  ============

Supplemental Disclosure of Cash Flow Information:
  Cash paid during the year for interest                   $         -   $   683,000   $   581,000
                                                           ============  ============  ============
Supplemental Disclosure of Non-cash Financing Activities:
  Series B preferred stock issued as payment of dividends  $         -   $   284,000   $   579,000
                                                           ============  ============  ============
  Deemed dividends                                         $         -   $         -   $ 1,151,000
                                                           ============  ============  ============
  Fair value of warrants issued in connection with:
    Notes payable                                          $   208,000   $         -   $         -
                                                           ============  ============  ============
    Common stock                                           $         -   $   407,000   $ 3,231,000
                                                           ============  ============  ============
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                      F-5
<PAGE>
                              LIFECELL CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2001


1.   ORGANIZATION

          LifeCell  Corporation  ("LifeCell"  or  "the  Company")  develops  and
markets  biologically  based solutions for the repair and replacement of damaged
or  inadequate  human tissue. The Company's tissue based products are subject to
regulation by the United States Food and Drug Administration as human tissue for
transplantation.  LifeCell  was incorporated in Delaware in 1992 for the purpose
of  merging  with  its predecessor entity, which was formed in 1986. The Company
began  commercial  sales  of  its  first  tissue  product  during  1994.


2.   ACCOUNTING POLICIES

     Use of 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 and Short-term Investments
          The  Company  considers all highly liquid investments with an original
maturity  of  three  months  or  less,  when  purchased, to be cash equivalents.
Investments with maturities in excess of three months but less than one year are
classified  as  short-term  investments  and  are  stated  at  cost,  net of any
unamortized  premiums  or  discounts,  which  approximates  fair  value.

     Inventories
          Inventories are stated at the lower of cost or market, with cost being
determined  on a first-in, first-out basis. Inventories on hand include the cost
of  materials,  freight,  direct  labor  and  manufacturing  overhead.

     Fixed Assets
          Fixed  assets  are stated at cost less accumulated depreciation. Major
expenditures  that  improve  or  extend  the  life of the assets are capitalized
whereas  maintenance  and  repairs  are expensed as incurred. The cost of assets
retired  and  the related accumulated depreciation are removed from the accounts
and  any  gain or loss is included in the results of operations. Depreciation of
office equipment, furniture and fixtures is computed on the straight-line method
based on the estimated useful lives of the assets of five years. Depreciation of
machinery  and  equipment  is  computed on the straight-line method based on the
estimated useful lives of the assets of five to ten years. The cost of leasehold
improvements  is depreciated over the shorter of the lease term or the estimated
useful  life  of  the  asset.

          The  Company  evaluates  the  recoverability  of its long-lived assets
which  include  property and equipment and deferred patent costs whenever events
or  changes  in  circumstance  indicate  that  the  carrying  amount  may not be
recoverable.  If  indications  are  that the carrying amount of the asset is not
recoverable,  the Company will estimate the future cash flows expected to result
from  use  of the asset and its eventual disposition. If the sum of the expected
future cash flows (non-discounted and without interest charges) is less than the
carrying  amount  of  the asset, the Company would recognize an impairment loss.
The  impairment  loss  recognized  would  be measured as the amount by which the
carrying  amount  of  the asset exceeds its fair value. As of December 31, 2001,
management  believes  that  no  impairment  losses  are  required.


                                       F-6
<PAGE>
                              LIFECELL CORPORATION
                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
                                DECEMBER 31, 2001

     Deferred Patent Costs
          The Company capitalizes external legal costs associated with obtaining
patents.  Such  costs are amortized to expense on a straight-line basis over the
legal  life  of  the  patent.  Net  deferred  patent costs are included in other
assets,  net in the accompanying balance sheet. For the years ended December 31,
1999,  2000 and 2001, amortization expense relating to deferred patent costs was
$20,000,  $52,000  and  $40,000,  respectively.

     Revenue Recognition
          Product  revenues  are  recognized  when the product is shipped to the
customer. Research grant revenues are recognized as the work is performed unless
the  Company  has  continuing performance obligations, in which case, revenue is
recognized  upon the satisfaction of such obligations. Revenue received, but not
yet  earned,  is  recorded  as  deferred  revenue.

     Research and Development Expense
          Research  and  development  costs  are  expensed  when  incurred.

     Loss Per Share of Common Stock
          Loss per share of common stock has been computed by dividing net loss,
increased  by  stated dividends on Series B preferred stock and deemed dividends
(see  Note  8),  by  the  weighted  average  number  of  shares  of common stock
outstanding  during each year. In all years, common stock equivalents, including
stock options, warrants and the Series B preferred stock, were antidilutive and,
accordingly,  were  not  included  in  the  computation.

          Diluted  loss  per share of common stock is the same as basic loss per
share  of common stock in all years. The Company's common stock equivalents were
not  included  in  the  loss  per  share  calculation  as  the  impact  would be
antidilutive.  At  December  31,  2001,  common  stock  equivalents  which could
potentially  dilute earnings per share in the future consisted of 101,726 shares
of  issued  and  outstanding Series B preferred stock which are convertible into
3,685,736  shares  of  common  stock, outstanding warrants to purchase 2,284,211
shares  of  common  stock  at  exercise  prices  ranging from $1.92 to $5.00 and
outstanding  options  to  purchase  3,280,269 shares of common stock at exercise
prices  ranging  from  $1.64  to  $11.00.

     Fair Value of Financial Instruments
          Financial instruments consist of cash and cash equivalents, short-term
investment,  accounts  receivable,  accounts  payable,  debt and certain current
liabilities.  Management  believes  the carrying amounts reported in the balance
sheet  for  these items approximate fair value. The carrying amount of long-term
debt  obligations  approximates  fair  value  at  the  balance  sheet  date.

     Income Taxes
          The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting  for Income Taxes." Under the asset-and-liability method of SFAS No.
109,  deferred  tax  assets  and  liabilities  are recognized for the future tax
consequences  attributable  to  differences  between  the  financial  statement
carrying  amounts  of  existing  assets and liabilities and their respective tax
bases.  Deferred tax assets and liabilities are measured using enacted tax rates
expected  to  apply  to  taxable  income  in  the years in which those temporary
differences  are  expected  to  be recovered or settled. Under SFAS No. 109, the
effect  on  deferred  tax  assets  and  liabilities  of a change in tax rates is
recognized  in  income  in  the  period  that  includes  the  enactment  date.


                                       F-7
<PAGE>
                              LIFECELL CORPORATION
                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
                                DECEMBER 31, 2001

     Stock-based Compensation
          The  Company follows Accounting Principles Board (APB) Opinion No. 25,
"Accounting  for  Stock  Issued  to  Employees,"  and related interpretations in
accounting  for equity-based awards issued to employees and directors. Under APB
No.  25,  if the exercise price of the award equals or exceeds the fair value of
the  underlying  stock  on  the  measurement  date,  no  compensation expense is
recognized. The measurement date is the date on which the final number of shares
and  exercise  price  are  known  and  is generally the grant date for awards to
employees  and  directors.  If the exercise price of the award is below the fair
value  of  the underlying stock on the measurement date, compensation expense is
recorded,  using  the intrinsic value method, and is recognized in the statement
of operations over the vesting period of the award. The Company also follows the
disclosure  requirement  of  SFAS  No.  123,  "Accounting  for  Stock-based
Compensation."

          The  Company accounts for stock-based compensation to non-employees in
accordance  with  SFAS  No.  123  and  EITF  Issue 96-18, "Accounting for Equity
Instruments  That  Are  Issued  to  Other  Than  Employees  for Acquiring, or in
Conjunction  With  Selling,  Goods  and  Services."  Under SFAS No. 123 and EITF
96-18,  the  Company accounts for equity awards issued to non-employees based on
the  fair  value  of  the  award  on  the  measurement  date.

     Concentrations of Credit Risk
          Financial  instruments  which  potentially  subject  the  Company  to
concentrations  of  credit  risk consist primarily of cash and cash equivalents,
short-term  investments  and  accounts  receivable.  The  Company has investment
policies  that  limit investments of excess cash to investment grade securities.
The  Company  provides  credit,  in  the normal course of business to hospitals,
medical  professionals  and  distributors.  The  Company performs ongoing credit
evaluations  of its customers' financial condition to minimize risk of loss. The
Company  maintains  an allowance for doubtful accounts and charges actual losses
to  the  allowance  when  incurred.

<TABLE>
<CAPTION>
                                                 Additions
                                  Balance at     Charged to    Deductions   Balance at
                                 Beginning of    Costs and        From        End of
Allowance for Doubtful Accounts     Period        Expenses     Allowance      Period
                                 -------------  ------------  ------------  -----------
<S>                              <C>            <C>           <C>           <C>
      December 31, 1999          $       6,000  $   344,000   $  (175,000)  $   175,000
      December 31, 2000                175,000      150,000      (155,000)      170,000
      December 31, 2001                170,000      (15,000)      (41,000)      114,000
</TABLE>

     New Accounting Pronouncements
          In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statements  of  Financial  Accounting  Standards No. 141 "Business Combinations"
("SFAS  141")  and  SFAS  No.  142 "Goodwill and Other Intangible Assets" ("SFAS
142").  These  pronouncements  change  the accounting for business combinations,
goodwill  and  intangible  assets.  SFAS 141 eliminates the pooling-of-interests
method  of  accounting  for  business  combinations  and  further  clarifies the
criteria  to  recognize  intangible  assets  separately  from  goodwill.  The
requirement  of SFAS 141 is effective for any business combination accounted for
by  the  purchase  method that is completed after June 30, 2001. SFAS 142 states
that  goodwill  and  indefinite lived intangible assets are no longer amortized,
but  are  reviewed  for  impairment  annually  (or more frequently if impairment
indicators arise). The amortization provisions of SFAS 142 apply to goodwill and
intangible  assets  acquired  after  June 30, 2001. With respect to goodwill and
intangible  assets  acquired  prior  to  July 1, 2001, companies are required to
adopt  the pronouncement in their fiscal year beginning after December 15, 2001.
Management  believes  that  the  adoption  of these statements will not have any
effect  on  the  Company's  financial  statements.


                                      F-8
<PAGE>
                              LIFECELL CORPORATION
                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
                                DECEMBER 31, 2001

          In  June  2001,  the  FASB  issued SFAS No. 143, "Accounting for Asset
Retirement  Obligations"  that  applies to legal obligations associated with the
retirement  of  a  tangible  long-lived asset that results from the acquisition,
construction,  or development and/or the normal operation of a long-lived asset.
Companies are required to adopt the pronouncement in their fiscal year beginning
after  June  15,  2002. Management believes that adoption of this Statement will
not  have  any impact on the Company's financial statements.

          In  August  2001,  the  FASB  issued SFAS No. 144, "Accounting for the
Impairment  or  Disposal  of  Long-Lived Assets." This statement supersedes FASB
Statement  No.  121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived  Assets  to  be  Disposed  Of,"  and  the  accounting  and  reporting
provisions of APB Opinion No. 30, "Reporting the Results of Operations-Reporting
the  Effects  of Disposal of a Segment of a Business, and Extraordinary, Unusual
and  Infrequently  Occurring  Events  and  Transactions"  for  the disposal of a
segment  of  a business. This Statement also amends Accounting Research Bulletin
No.  51,  "Consolidated  Financial  Statements,"  to  eliminate the exception to
consolidation for a subsidiary for which control is likely to be temporary. This
Statement  provides  guidance  on  financial  accounting  and  reporting for the
impairment or disposal of long-lived assets. Companies are required to adopt the
pronouncement in their fiscal year beginning after December 15, 2001. Management
believes  that  adoption  of  this  Statement  will  not  have any impact on the
Company's  financial  statements.


3.   INVENTORIES

          Inventories  consist  of  the  following  at  December  31,:

<TABLE>
<CAPTION>
                                                         2000          2001
                                                     ------------  ------------
<S>                                                  <C>           <C>
          Tissue and materials                       $   929,000   $ 1,314,000
          Tissue products in-process                   2,259,000     1,307,000
          Finished tissue products                     1,523,000     2,070,000
                                                     ------------  ------------
            Total inventories                        $ 4,711,000   $ 4,691,000
                                                     ============  ============
</TABLE>

4.   FIXED  ASSETS

          Fixed  assets  consist  of  the  following  at  December  31,:

<TABLE>
<CAPTION>
                                                         2000          2001
                                                     ------------  ------------
<S>                                                  <C>           <C>
          Machinery and equipment                    $ 3,540,000   $ 3,668,000
          Leasehold improvements                       7,368,000     7,446,000
          Office equipment, furniture and fixtures     1,912,000     2,165,000
                                                     ------------  ------------
                                                      12,820,000    13,279,000
          Accumulated depreciation and amortization   (2,829,000)   (4,551,000)
                                                     ------------  ------------
            Fixed assets, net                        $ 9,991,000   $ 8,728,000
                                                     ============  ============
</TABLE>

          For  the years ended December 31, 1999, 2000 and 2001 the depreciation
and  amortization  expense  related to fixed assets was $391,000, $1,238,000 and
$1,722,000,  respectively.


                                      F-9
<PAGE>
                              LIFECELL CORPORATION
                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
                                DECEMBER 31, 2001

5.   ACCRUED  LIABILITIES

          Accrued  liabilities  consist  of  the  following  at  December  31,:

<TABLE>
<CAPTION>
                                                         2000          2001
                                                     ------------  ------------
<S>                                                  <C>           <C>
          Tissue inventory purchases                 $   748,000   $   922,000
          Employee compensation and benefits             323,000       911,000
          Marketing and distribution fees                777,000       777,000
          Operating expenses and other                 1,177,000       122,000
                                                     ------------  ------------
            Total accrued liabilities                $ 3,025,000   $ 2,732,000
                                                     ============  ============
</TABLE>

6.   DEFERRED  REVENUE

          In  March  1999,  in  conjunction  with  the  signing  of  a sales and
marketing  agreement  with  Boston  Scientific  Corporation,  the Company issued
108,577  shares of common stock at a premium of $506,000 over the closing market
price of the Company's common stock on the date of issuance. This premium, which
was recorded as deferred revenue and is being recognized over the five-year term
of  the  agreement, represented a payment for marketing rights. The total equity
investment  was valued at $1.0 million less offering costs of $100,000 (see Note
8).

          In  February  2000,  the Company entered into a co-promotion agreement
with  OMP,  Inc.  relating  to  the  marketing and distribution of the Company's
Cymetra(TM)  product. Pursuant to the terms of the agreement, OMP agreed to make
a  $600,000 payment in exchange for product marketing rights. The payment, which
was  received  in  September  2000, has been recorded as deferred revenue and is
being  recognized  over  the  five-year  term  of  the  agreement.


7.   FINANCING ARRANGEMENTS AND LONG-TERM DEBT

          In  December  1999,  the  Company  entered  into  a  loan and security
agreement  with  a  financial  institution that provided for a revolving loan of
$3.0  million  and  a  term  loan of $2.5 million. In December 1999, the Company
borrowed  $3.0  million  on the revolving loan and in February 2000, the Company
borrowed $2.5 million under the term loan. In August 2001, the Company satisfied
the  entire  outstanding  balance  on the revolving loan facility using proceeds
from  a  private  placement  of common stock and warrants completed in July 2001
(see  Note  8)  and  voluntarily  terminated  this  revolving loan facility. The
revolving  loan  required  monthly interest payments based on an annual interest
rate  of  prime  rate  plus  3%,  which approximated 11.0% during 2001 and 12.5%
during  2000.  The term loan bears interest at an annual rate of 14.2%. Interest
only  was  payable  monthly through and including September 1, 2000. Thereafter,
the  term  loan  is  repayable  in  equal  monthly installments of principal and
interest  of  $100,000,  commencing  October 1, 2000, and continuing through and
including  March  1,  2003.  This  credit  facility  is secured by the Company's
accounts  receivable,  inventory,  intellectual  property,  intangible and fixed
assets  and  is  guaranteed by the New Jersey Economic Development Authority. In
conjunction  with  this  credit  facility,  the  Company also issued warrants to
purchase  84,211  shares  of  the Company's common stock at a price of $4.75 per
share  (see Note 8). The warrants, which expire in December 2004, were valued at
$208,000  and  recorded  as  a  reduction  of debt outstanding. The value of the
warrant  is  accreted over the term of the loan agreement as additional interest
expense. The balance outstanding on the term loan was $1,278,000 at December 31,
2001.


                                      F-10
<PAGE>
                              LIFECELL CORPORATION
                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
                                DECEMBER 31, 2001

          In  June 2000, the Company entered into a term loan agreement with the
New  Jersey Economic Development Authority to borrow $500,000. The loan bears an
interest  rate  of 6.5%. Interest only was payable monthly commencing on July 1,
2000 and continuing through and including December 1, 2000. Thereafter, the loan
is repayable in equal monthly installments of principal and interest of $18,000,
commencing  January  1,  2001  and continuing through and including September 1,
2003.  The loan is secured by the Company's accounts receivable, inventories and
fixed  assets. The balance outstanding on this loan was $294,000 at December 31,
2001.

          In  June  2000,  the Company entered into a term loan agreement with a
financial  institution to borrow $653,000. The loan bears an interest rate of 9%
and  is  repayable in ten equal annual installments of principal and interest of
$106,000,  commencing August 1, 2001 and continuing through and including August
1,  2010.  This  loan  is  secured  by  payments that the Company is entitled to
receive  through a New Jersey Business Employment Incentive Grant. Such payments
have  been  assigned  to  the  lender  and will be used to satisfy the Company's
obligations  under  the  loan  agreement  as  they  are  received.  The  balance
outstanding  on  the  note  was  $625,000  at  December  31,  2001.

          Interest  expense for the years ended December 31, 1999, 2000 and 2001
was  $15,000,  $683,000  and  $697,000,  respectively.

          Long-term  borrowings  have  the  following  scheduled  maturities:

<TABLE>
<CAPTION>
          Years ended December 31:
<S>                                                               <C>
           2002                                                   $1,334,000
           2003                                                      337,000
           2004                                                       57,000
           2005                                                       62,000
           2006 and beyond                                           407,000
                                                                  ----------
                 Total                                            $2,197,000
                                                                  ==========
</TABLE>

8.   CAPITAL  STOCK,  OPTIONS  AND  WARRANTS

     Common stock, subject to redemption
          In November 1999, the Company issued 925,000 shares of common stock in
a  private placement at a price of $4.20 per share. The proceeds of the offering
were  approximately  $3.9  million.  Pursuant  to  the  terms  of  the  purchase
agreement, the Company is required to issue additional shares to the investor if
the market price of the Company's common stock is below a fixed amount per share
on  the  first,  second  and/or third anniversary of the date of issuance of the
common  stock.  If  sufficient  additional  shares  are  not  available for such
issuance, a cash payment may be required at 105 percent of the fair value of the
additional  shares  to  be  issued. In November 2000, the first anniversary, the
market  price  was  above  the fixed amount and accordingly no additional shares
were  issued.  In November 2001, the Company issued 478,001 additional shares of
common  stock to the investor, without additional consideration, pursuant to the
terms of this agreement. In connection with the issuance, the Company recorded a
deemed  dividend  of  $1,037,000  equal  to  the fair value of shares issued. An
additional  deemed  dividend of $114,000 was recorded in 2001 in connection with
the  repricing  of  certain  warrants  that  were  issued as part of the private
placement.  The  Company will be required to issue additional shares in November
2002  if  the  market  price of the Company's common stock is below $1.96 on the
third  anniversary.


                                      F-11
<PAGE>
                              LIFECELL CORPORATION
                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
                                DECEMBER 31, 2001

          The shares of common stock originally issued in 1999 are redeemable at
$4.20  per share by the Company if it does not maintain a listing or a quotation
of  its  shares of common stock on a U.S. stock exchange or market system. Given
this  requirement  is  beyond  the  Company's control, the remaining outstanding
shares  held by this investor are considered to be temporary equity. Such shares
were originally recorded in 1999 as common stock within stockholders' equity. In
connection  with  the  preparation of the Company's financial statements for the
year  ended December 31, 2001, the Company deemed it more appropriate to reflect
such  shares  as  temporary  equity  -  common stock, subject to redemption. The
balance  sheet  as of December 31, 1999 and 2000 has been revised to reflect the
reclassification of the $3.9 million of common stock, subject to redemption from
stockholders'  equity.  The  reclassification  had  no  impact  on the Company's
previously  reported  results  of operations. In the fourth quarter of 2001, the
Company  received  notification  that  the  investor  sold 464,364 shares of the
original  925,000  shares  and  accordingly,  $1.9  million  of  the  amount was
reclassified  to  stockholders'  equity  -  common  stock.

     Series B Preferred Stock
          During  November  1996,  the Company issued 124,157 shares of Series B
preferred  stock  and  warrants  to acquire 2,803,530 shares of common stock for
gross proceeds of approximately $12.4 million in a private placement. Each share
of  Series  B  preferred  stock  is convertible at any time at the option of the
holder  into  approximately  36.232  shares of common stock (3,685,736 shares of
common stock at December 31, 2001), subject to adjustment for dilutive issuances
of securities. The Series B preferred stock has a liquidation preference of $100
per  share,  or  $10,173,000  as of December 31, 2001, and shares ratably in any
residual  assets  after  payment  of  such  liquidation preference. The Series B
preferred stock will be automatically converted into common stock if the closing
price  of  the Company's common stock averages or exceeds $9.30 per share for 30
consecutive  trading  days.  On all matters for which the Company's stockholders
are  entitled  to  vote, each share of Series B preferred stock will entitle the
holder to one vote for each share of common stock into which the share of Series
B  preferred  stock  is  then convertible. Additionally, the holders of Series B
preferred  stock  have  the  right  to elect up to two directors to the Board of
Directors  of  the  Company.

          The  Series  B  preferred  stock  paid cumulative dividends quarterly,
through September 30, 2001, at an annual rate of $6.00 per share. Dividends were
paid  in  cash,  in  additional  shares of Series B preferred stock based on the
liquidation  value  of  $100  per share, or any combination of cash and Series B
preferred  stock  at  the  Company's  option.  While  the  preferred  shares are
outstanding  or  any dividends are owned thereon, the Company may not declare or
pay  cash dividends on its common stock. During 1999, 2000 and 2001, the Company
paid  cash  dividends  on the Series B preferred stock of $531,000, $346,000 and
$4,000,  respectively.  Additionally,  the  Company paid dividends equivalent to
$284,000  through  the  issuance  of 2,842 shares of Series B preferred stock in
2000  and  $579,000  through  the issuance of 5,795 shares of Series B preferred
stock  in  2001.

     Common Stock
          In  March  1999,  the Company issued 108,577 shares of common stock in
connection  with the signing of a distribution agreement at a price of $9.21 per
share  representing  a  154%  premium over the then-prevailing market price. The
premium  was  recorded as deferred revenue and is being recognized over the term
of  the  agreement  (see  Note 6). The proceeds of this offering were $1,000,000
before  deducting  offering  costs  of  approximately  $100,000.

          In  October  2000, the Company issued 2,500,000 shares of common stock
in  a  private  placement  at  a  price  of $4.00 per share. The proceeds of the
offering  were approximately $10.0 million before deducting placement agent fees
and  offering  costs  of  $942,000.

          In July 2001, the Company issued 3,125,000 shares of common stock in a
private  placement  at  a price of $1.92 per share. The proceeds of the offering
were  approximately  $6.0  million  before  deducting  placement  agent fees and
offering  costs  of  $90,000.


                                      F-12
<PAGE>
                              LIFECELL CORPORATION
                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
                                DECEMBER 31, 2001

     Options
          The  Company's  Amended and Restated 1992 Stock Option Plan (the "1992
Plan")  provides  for the grant of options to purchase up to 2,500,000 shares of
common  stock.  In  June 2000, the stockholders of the Company approved the Year
2000  Stock Option Plan (the "2000 Plan") which provides for grants of incentive
stock  options and non-qualified stock options. An aggregate of 1,500,000 shares
of common stock are authorized for issuance under the 2000 Plan, which amount is
subject  to  adjustment  in  the  event  of  certain  changes  in  the Company's
capitalization,  a merger, or a similar transaction. Such shares may be treasury
shares  or  newly  issued  shares  or  a  combination  of  both.

          Granted  options generally become exercisable over a four-year period,
25  percent per year beginning on the first anniversary of the date of grant. To
the  extent  not exercised, options generally expire on the tenth anniversary of
the  date of grant, except for employees who own more than 10 percent of all the
voting  shares  of  the Company, in which event the expiration date is the fifth
anniversary  of  the  date  of  grant.  All options granted under the plans have
exercise  prices  equal  to  the  fair  market  value  at  the  date  of  grant.

          The  Second  Amended  and  Restated  1993  Non-Employee Director Stock
Option  Plan  ("Director Plan") provides for the grant of options to purchase up
to  750,000  shares of common stock to non-employee directors. The provisions of
the  Director  Plan  provide  for an initial grant of options to purchase 25,000
shares  of  common  stock for newly elected non-employee directors and an annual
grant  of  an option to purchase 10,000 shares upon re-election to the Company's
Board.  Options  under  the Director Plan have exercise prices equal to the fair
market  value at the date of grant, vest one year after date of grant and expire
after  10  years.

          A  summary  of  stock option activity for the years ended December 31,
1999,  2000  and  2001  is  as  follows:

<TABLE>
<CAPTION>
                                  1992       2000      Director              Weighted
                                  Stock      Stock      Stock      Total     Average
                                 Option     Option     Option      Stock     Exercise
                                  Plan       Plan       Plan      Options   Price ($)
                               ----------  --------  ---------  ----------  ---------
<S>                            <C>         <C>       <C>        <C>         <C>
Balance at December 31, 1998   1,829,703        --    175,000   2,004,703        4.22
    Granted                      761,450        --     80,000     841,450        4.17
    Exercised                   (154,764)       --    (65,000)   (219,764)       3.05
    Forfeited                   (160,468)       --         --    (160,468)       5.21
                               ----------  --------  ---------  ----------
Balance at December 31, 1999   2,275,921        --    190,000   2,465,921        4.24
    Granted                      203,050   528,500     50,000     781,550        4.27
    Exercised                    (76,311)       --    (20,000)    (96,311)       4.15
    Forfeited                   (207,787)  (10,950)   (65,000)   (283,737)       5.16
                               ----------  --------  ---------  ----------
Balance at December 31, 2000   2,194,873   517,550    155,000   2,867,423        4.16
    Granted                      342,050   243,000     65,000     650,050        2.23
    Exercised                       (135)       --         --        (135)       0.73
    Forfeited                   (332,019)  (15,050)        --    (347,069)       4.16
                               ----------  --------  ---------  ----------
Balance at December 31, 2001   2,204,769   745,500    220,000   3,170,269        3.77
                               ==========  ========  =========  ==========

Available for future grant at
    December 31, 2001              1,022   754,500    440,000   1,195,522
</TABLE>


                                      F-13
<PAGE>
                              LIFECELL CORPORATION
                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
                                DECEMBER 31, 2001

     A  summary  of  stock options outstanding under the three plans combined at
December  31,  2001  is  as  follows:

<TABLE>
<CAPTION>
                              Options Outstanding                       Options Exercisable
                    ---------------------------------------          -------------------------
                                      Weighted
                        Number        Average     Weighted               Number      Weighted
                    Outstanding at   Remaining    Average            Exercisable at   Average
     Range of        December 31,   Contractual   Exercise            December 31,   Exercise
  Exercise Prices       2001        Life (Years)    Price                 2001         Price
------------------  --------------  ------------  ---------          --------------  ---------
<S>                 <C>             <C>           <C>                <C>             <C>
$1.64  to $   1.99          43,000           7.2  $    1.73                     125  $    1.78
 2.00  to     2.99       1,023,400           8.7       2.27                 223,850       2.39
 3.00  to     3.99       1,034,969           5.7       3.76                 871,969       3.75
 4.00  to     4.99         436,050           7.2       4.26                 245,600       4.26
 5.00  to     5.99         385,700           7.0       5.39                 170,738       5.45
 6.00  to     6.99         221,400           6.2       6.62                 166,725       6.63
 7.00  to    11.00          25,750           5.2      10.32                  13,938      10.69
                    --------------  ------------                     --------------
$1.64  to $  11.00       3,170,269           7.1  $    3.77               1,692,944  $    4.15
                    ==============  ============                     ==============
</TABLE>

          In  addition to the amounts set forth in the tables above, during 1996
the  Company  granted  options  to  purchase  220,000 shares of common stock not
pursuant  to  a  plan, to directors who resigned upon the closing of the sale of
the  Series  B  preferred  stock.  During  2000,  directors exercised options to
purchase  110,000  shares  of common stock pursuant to these grants. At December
31, 2001, options to acquire 110,000 shares of common stock remained outstanding
with  a weighted average exercise price of $5.30. The weighted average remaining
contractual  life  of the outstanding option grants was 3.4 years as of December
31,  2001.

          The  Company  accounts for its employee stock-based compensation plans
under  APB No. 25 and its related interpretations. Had compensation expense been
determined  by  the  Company  based  on the fair value as of the grant dates for
awards  in  1999,  2000 and 2001 consistent with SFAS No. 123, the Company's net
loss  and  loss  per  share would have been increased to the following pro forma
amounts:

<TABLE>
<CAPTION>
                                                1999           2000          2001
                                            -------------  ------------  ------------
<S>                                         <C>            <C>           <C>
         Net Loss:
         As reported                        $ (9,192,000)  $(7,138,000)  $(2,070,000)
                                            =============  ============  ============
         Pro forma                          $(11,158,000)  $(8,921,000)  $(4,012,000)
                                            =============  ============  ============

         Loss Per Share of Common Stock-
           (Basic and Diluted):
         As reported                        $      (0.83)  $     (0.54)  $     (0.20)
                                            =============  ============  ============
         Pro forma                          $      (0.99)  $     (0.67)  $     (0.31)
                                            =============  ============  ============
</TABLE>

          Under  the provisions of SFAS No. 123, the weighted average fair value
of options granted in 1999, 2000, and 2001 was $2.64, $2.62 and $1.57 per share,
respectively,  under  the  1992 Plan. The weighted average fair value of options
granted  in 2000 and 2001 was $2.68 and $1.57 per share, respectively, under the
2000 Plan. The weighted average fair value of options granted in 1999, 2000, and
2001  was  $2.76,  $3.71  and  $1.47 per share, respectively, under the Director
Plan.  The  fair  value  of  each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted average
assumptions  used  for  grants  in 1999, 2000 and 2001, respectively: a weighted
average  risk-free interest rate of approximately 4% - 7% percent for all years;
no  expected  dividend  yield  during  the expected life of the option; expected
lives  of 5 to 6 years for each grant and expected volatility between 64 and 112
percent.


                                      F-14
<PAGE>
                              LIFECELL CORPORATION
                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
                                DECEMBER 31, 2001

     Warrants
          As  of  December  31,  2000  and  2001, warrants to acquire a total of
3,370,298  and  2,284,211 shares, respectively, of common stock were outstanding
as  set  forth  below.

          During  1996,  in  conjunction with the sale of the Series B preferred
stock,  the Company issued warrants to acquire 3,158,264 shares of common stock.
During  November  2001,  all  of  the  warrants  expired.

          During  November  1999,  in conjunction with the sale of common stock,
the  Company issued warrants, with an initial exercise price of $5.46 per share,
to  acquire  200,000  shares  of common stock. These warrants expire in November
2004.  These warrants have provisions for adjustment of the exercise price under
certain  conditions.  In  November  2001, the exercise price of the warrants was
adjusted  to  $1.96.  In  connection  with the re-pricing adjustment the Company
recorded  a  deemed dividend of $114,000. Subsequent adjustments will only occur
if  the  market  price  of  the  common  stock  is below $1.96 in November 2003.

          During  December  1999  the  Company issued warrants to acquire 84,211
shares  of  common  stock at an exercise price of $4.75 per share in conjunction
with  the  issuance  of  notes  payable. These warrants expire in December 2004.

          During  October 2000, in connection with the sale of common stock, the
Company  issued  warrants,  at  an exercise price of $5.00 per share, to acquire
250,000  shares  of  its  common  stock  to the placement agents. These warrants
expire  in  October  2005.

          During  July  2001,  in  connection with the sale of common stock, the
Company  issued  warrants  to  the  investors, at an exercise price of $1.92 per
share, to acquire 1,750,000 shares of its common stock. These warrants expire in
July  2006.


9.   RELOCATION  COSTS

          In  June 1999, the Company commenced relocation of its operations from
Texas  to  New  Jersey  and  at  June  30,  1999, had approximately 18 employees
operating  from  temporary offices in New Jersey. The original target completion
date  for  the  relocation  was  December 31, 1999. All administrative functions
including  accounting,  customer  service,  information  services,  regulatory,
marketing  and research and development functions were moved to New Jersey prior
to  December 31, 1999. The Company commenced processing operations in New Jersey
during  the first quarter of 2000. A small manufacturing and quality assurance /
control  group  remained  in  Texas  through  June  2000.

          Relocation costs charged to operations for the year ended December 31,
1999,  included  the cost of non-relocating employee benefits, asset abandonment
and  lease termination costs related to the Company's Texas facility, as well as
the  cost  of  relocating  key  employees  to  New  Jersey.  In  order to induce
non-relocating  employees  to  continue  their  employment during the relocation
process,  employees  were  offered  a retention bonus, which was only payable if
they  stayed  with  the  Company  until  various  targeted dates during 1999. If
employees  resigned  prior  to  such date, they forfeited their retention bonus.
Such  bonus  payments  were expensed at the time that they were paid. During the
fourth quarter of 1999, because all remaining employees had continued employment
through their targeted termination date, the continuing employment condition was
waived and the Company recorded a bonus accrual of approximately $174,000 due to
these  employees  as  of  December 31, 1999. Such amounts were paid out in 2000.
Additional retention bonuses of approximately $60,000 paid in 2000 were expensed
when  incurred.


                                      F-15
<PAGE>
                              LIFECELL CORPORATION
                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
                                DECEMBER 31, 2001


          In June 1999, the Company recorded  a charge of approximately $335,000
representing  the  net  book  value  of  assets that Texas. The Company occupied
rented office and manufacturing space in Texas pursuant to a lease that extended
through  January 2001. During the fourth quarter of 1999, the Company recorded a
charge  of  approximately$617,000  representing  rent and other facility related
expenses  related  to the termination of the Texas lease. No charge was recorded
prior  to the fourth quarter of 1999, because the Company had not committed to a
specific  course  of  action  for  exiting  the  lease of the Texas facility and
accordingly,  such  costs  were  not  quantifiable.  The costs of relocating key
employees to New Jersey were approximately $1.4 million in 1999 and consisted of
home sale and purchase assistance, moving expense, travel and temporary housing.
The  Company  also incurred approximately $78,000 of non-employee related moving
costs.



10.  EMPLOYEE  BENEFIT  PLANS

          The  Company  maintains  a 401(k) retirement savings plan which covers
all  full-time employees. The Company may, at its discretion, contribute amounts
not  to  exceed each employee's contribution. Participants contributions may not
exceed  15% of their annual compensation, subject to annual dollar limits set by
the  Internal  Revenue  Service.  Participants  are  always 100% vested in their
contributions.  Company  contributions  are  fully  vested  after  one  year  of
employment. Total Company contributions during 1999, 2000 and 2001 were $23,000,
$31,000  and  $34,000,  respectively.

          The  Company  also  maintains an Employee Stock Purchase Plan to allow
all  full-time  employees  to  purchase  the  Company's common stock on the open
market  using  employee  and  Company  matching  contributions.  Total  Company
contributions  during  1999,  2000,  and  2001 were $14,000, $7,000 and $13,000,
respectively.


11.  INCOME TAXES

          As  of  December  31,  2001,  the  Company  has  a  net operating loss
carryforward  ("NOL")  for  federal  income  tax purposes of approximately $57.4
million,  subject  to  the  limitations  described  below,  expiring as follows:

<TABLE>
<CAPTION>
                     Year Expires
<S>                                                     <C>
                         2002                           $ 1,500,000
                         2003                             2,800,000
                         2004                             2,200,000
                         2005                             1,700,000
                         2006                             1,400,000
                         2007                             2,400,000
                         2008                             3,000,000
                         2009                             2,500,000
                         2010                             4,000,000
                         2011                             4,000,000
                         2012                             5,700,000
                         2013                             8,200,000
                         2019                             7,700,000
                         2020                             7,700,000
                         2021                             2,600,000
                                                        -----------
                                                        $57,400,000
                                                        ===========
</TABLE>


                                      F-16
<PAGE>
                              LIFECELL CORPORATION
                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
                                DECEMBER 31, 2001


          Additionally,  the  Company  has  approximately  $747,000  of  and
development  tax credit carryforwards for federal income tax purposes which will
expire  in  varying  amounts  commencing in 2002. Federal tax laws provide for a
limitation  on  the  use  of NOL and tax credit carryforwards generated prior to
certain ownership changes that could limit LifeCell's ability to use its NOL and
tax  credit  carryforwards.  The  sale of common stock in the public offering in
December  1997  resulted in an ownership change for federal income tax purposes.
The  Company  estimates  that  the  amount  of NOL carryforwards and the credits
available  to offset taxable income at December 31, 2001, is approximately $36.6
million on a cumulative basis. Accordingly, if LifeCell generates taxable income
in  any  year  in  excess  of its then cumulative limitation, the Company may be
required  to  pay  federal  income  taxes  even  though  it  has  unexpired  NOL
carryforwards.

          At  December  31,  2001,  the  Company  also  had a net operating loss
carryforward  for state income tax purposes of approximately $10.2 million which
expire  in  varying  amounts  commencing  in  2006.

          For financial reporting purposes, a valuation allowance of $21,646,000
has  been  recorded  as  of  December 31, 2001, to fully offset the deferred tax
asset  related  to these carryforwards. The principal components of the deferred
tax asset as of December 31, 2000 and 2001, assuming a 34% federal tax rate, are
as  follows:

<TABLE>
<CAPTION>
                                                                  2000           2001
                                                              -------------  -------------
<S>                                                           <C>            <C>
Temporary differences:
     Deferred revenue                                         $    270,000   $    190,000
     Uniform capitalization of inventory costs                     160,000         90,000
     Other items                                                   210,000        160,000
                                                              -------------  -------------
     Total temporary differences                                   640,000        440,000
     Federal tax losses and credits not currently utilizable    19,320,000     20,290,000
     State tax losses and credits not currently utilizable         685,000        916,000
                                                              -------------  -------------
Total deferred tax assets                                       20,645,000     21,646,000
     Less valuation allowance                                  (20,645,000)   (21,646,000)
                                                              -------------  -------------
Net deferred tax asset                                        $         --   $         --
                                                              =============  =============
</TABLE>

          The  net increase in the deferred tax valuation allowance for 2000 and
2001  was  $3,022,000  and  $715,000, respectively. Other than the net operating
loss  and  tax  credit carryforwards, there is no significant difference between
the  statutory  federal  income  tax  rate  and the Company's effective tax rate
during  1999,  2000  and  2001.


12.  COMMITMENTS AND CONTINGENCIES

     Litigation
          The  Company  is  a  party  to  litigation  in  the  Superior Court of
California,  Los  Angeles County, Central District, captioned Regner, et al., on
behalf  of themselves and others similarly situated, v. Inland Eye & Tissue Bank
of  Redlands,  et  al.  The  complaint  alleges  among other things, defendants,
including  the  Company,  make  profits  from  the  storing,  processing,  and
distribution  of human tissue in contravention of California law. The Company is
also  a  party  to  litigation  in the Superior Court of California, Los Angeles
County, Central District, captioned Thacker, et al., on behalf of themselves and
others  similarly situated, v. Inland Eye & Tissue Bank of Redlands, et al. This
complaint  contains  similar  allegations  to  the Regner complaint, and the two
cases have been combined. These actions are not denominated class actions and do
not involve tort theories. Both actions were brought under a statute that allows
individuals  to  sue  on  behalf of the people of California for unfair business
practices,  with  the  court


                                      F-17
<PAGE>
                              LIFECELL CORPORATION
                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
                                DECEMBER 31, 2001

having the power to award injunctive relief and disgorgement of all profits from
the  alleged  illegal  practices.  As  of December 31, 2001, the plaintiffs have
agreed to dismiss all claims against the Company, while the Company promises not
to  sue  plaintiffs  for  malicious  prosecution.  A  court order embodying this
settlement,  consented  to  by  all parties of the suit, is currently before the
Court,  but  has  not  yet  been  signed.

          In  January  2001, a complaint was filed in the United States District
Court  for  the  Southern District of New York captioned Special Situations Fund
III,  L.P.,  et  al., v. LifeCell Corporation, Gruntal & Co., L.L.C. ("Gruntal")
and  Prudential  Securities, Inc. ("Prudential"). The complaint alleged that the
Company,  Gruntal  and  Prudential  violated  Section  10(b)  of  the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and were liable under
New York common law by making purportedly false and misleading statements to the
plaintiffs  in  connection with LifeCell's private placement of common stock and
sought  damages  in  an  unspecified  amount.  Gruntal  and  Prudential's Vector
Healthcare  Group  acted  as placement agents in the Company's private placement
that  closed  in  October  2000.  In  March 2001, the Company filed a motion for
dismissal.  In  July  2001, the plaintiffs withdrew their complaint and released
the  Company  and  the other defendants from all claims related to the Company's
October  2000  private  placement.

          From  time  to  time the Company is party to various legal proceedings
incident  to operating a company of its size which are not deemed to be material
to  its  business  operations  or  financial  condition.  The  Company maintains
insurance  coverage  for  events and in amounts that it deems appropriate. There
can be no assurance that the level of insurance maintained will be sufficient to
cover  any  claims  incurred  by  the Company or that the type of claims will be
covered  by  the  terms  of  insurance  coverage.

     Marketing Agreements
          The Company has engaged Boston Scientific Corporation as its exclusive
worldwide  sales  and  marketing  representative  for  Repliform  for use in the
urology  and  gynecology  markets  and  OMP,  Inc.  as  its  exclusive sales and
marketing  representative of Cymetra for office-based dermatologists and plastic
surgeons.  During  1999,  2000  and  2001,  sales  of  products  through  Boston
Scientific  Corporation represented approximately 4%, 28% and 35%, respectively,
of  total  product  revenues.  During 1999, 2000 and 2001, sales of products OMP
represented  approximately  0%,  13%  and  9%,  respectively,  of  total product
revenues. The Company expects sales of products through such marketing agents to
continue  to  increase as a percentage of total revenues. Both Boston Scientific
and  OMP  are  paid  agent  fees  based  on  the amount of product revenues they
generate  for  the  Company.

     Leases
          The  Company  leases  approximately  90,000 square feet for office and
laboratory  space  and  has  various  other operating leases. The future minimum
lease  payments  under  noncancelable  lease  terms  in excess of one year as of
December  31,  2001,  were  as  follows:

<TABLE>
<CAPTION>
<S>                                               <C>
           2002                                   $  833,000
           2003                                      833,000
           2004                                      833,000
           2005                                      889,000
           2006 and beyond                         3,110,000
                                                  ----------
                Total                             $6,498,000
                                                  ==========
</TABLE>

          Rental expense was $501,000, $565,000 and $872,000 for the years ended
December  31,  1999,  2000,  and  2001,  respectively.


                                      F-18
<PAGE>
                              LIFECELL CORPORATION
                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
                                DECEMBER 31, 2001

13.  SEGMENT  AND  MAJOR  CUSTOMER  DATA

          The  Company  has  one  reportable  business  operating  segment - the
processing  and  distribution  of  human  tissue  intended  for transplantation.
Product  revenues by geographic area for the years ended December 31, 1999. 2000
and  2001,  are  summarized  as  follows:

<TABLE>
<CAPTION>
                                         1999         2000         2001
                                      -----------  -----------  -----------
<S>                                   <C>          <C>          <C>
          United States               $11,065,000  $20,219,000  $24,939,000
          Other countries                 847,000    1,111,000    1,621,000
                                      -----------  -----------  -----------
              Total Product Revenues  $11,912,000  $21,330,000  $26,560,000
                                      ===========  ===========  ===========
</TABLE>

          During  1999, LifeCell had one customer who comprised greater than 10%
of  the  Company's  net revenues. Revenues from this customer were $1,238,000 in
1999.


14.  QUARTERLY  FINANCIAL  DATA  (UNAUDITED)

          The  following is a summary of the unaudited quarterly results for the
years  ended  December  31,  2000  and  2001:

<TABLE>
<CAPTION>
                                                            First     Second      Third       Fourth
(In thousands except per share amounts)                    Quarter    Quarter    Quarter     Quarter
                                                          ---------  ---------  ---------  -----------
<S>                                                       <C>        <C>        <C>        <C>

2000
     Total Revenues. . . . . . . . . . . . . . . . . . .  $  4,816   $  5,862   $  6,235   $    5,859
     Product Revenues. . . . . . . . . . . . . . . . . .     4,438      5,387      5,919        5,586
     Cost of Products Sold . . . . . . . . . . . . . . .     1,188      1,912      1,693        2,156
     Net Loss. . . . . . . . . . . . . . . . . . . . . .    (1,156)    (2,149)    (1,649)      (2,184)
     Net Loss to Common Shareholders . . . . . . . . . .    (1,318)    (2,294)    (1,791)      (2,328)
     Loss Per Share of Common Stock - Basic and Diluted.     (0.10)     (0.16)     (0.13)       (0.15)
2001
     Total Revenues. . . . . . . . . . . . . . . . . . .  $  6,771   $  7,451   $  6,654   $    6,893
     Product Revenues. . . . . . . . . . . . . . . . . .     6,424      7,011      6,454        6,671
     Cost of Products Sold . . . . . . . . . . . . . . .     2,495      2,358      1,949        2,060
     Net Income (Loss) . . . . . . . . . . . . . . . . .    (1,316)      (657)      (199)         102
     Net Loss to Common Shareholders . . . . . . . . . .    (1,459)      (804)      (349)      (1,049)(1)
     Loss Per Share of Common Stock - Basic and Diluted.     (0.09)     (0.05)     (0.02)       (0.05)

<FN>
(1)  Includes a deemed dividend of $1,151,000 resulting from the issuance of additional shares of common
stock in November 2001 to an investor pursuant to the terms of an investment in 1999.
</TABLE>


                                      F-19
<PAGE>