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, 2000     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,  2001:  $38,289,936.

Number  of shares of registrant's Common Stock outstanding as of March 15, 2001:
16,709,368.  (If the Series B Preferred Stock had converted into Common Stock as
of  such  date,  there  would be 19,849,980 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 June 1, 2001 have
been  incorporated  by  reference  into  Part  III  hereof.


<PAGE>
<TABLE>
<CAPTION>
                                           TABLE OF CONTENTS

                                              DESCRIPTION

Item                                                                                               Page
----------  -------------------------------------------------------------------------------------  ----
<S>         <C>                                                                                    <C>
PART I
  Item 1.   Business                                                                                  3
            General                                                                                   3
            Technology                                                                                3
            Strategy                                                                                  4
            Products and Product Development Activities                                               6
            Marketing                                                                                10
            Sources of Materials                                                                     10
            Government Regulation                                                                    11
            Research and Development                                                                 15
            Competition                                                                              16
            Employees                                                                                16
            Risk Factors                                                                             16
            Special Note Regarding Forward-Looking Statements                                        25
  Item 2.   Properties                                                                               25
  Item 3.   Legal Proceedings                                                                        25
  Item 4    Submission of Matters to a Vote of Security Holders                                      26

PART II
  Item 5.   Market for the Registrant's Common Equity and Related Stockholder Matters                27
            Dividend Policy                                                                          27
  Item 6.   Selected Financial Data                                                                  28
  Item 7.   Management's Discussion and Analysis of Financial Condition and Results of Operations    29
            General and Background                                                                   29
            Results of Operations                                                                    29
            Liquidity and Capital Resources                                                          31
  Item 7A   Quantitative and Qualitative Disclosure About Market Risk                                32
  Item 8.   Financial Statements and Supplementary Data                                              32
  Item 9.   Changes and Disagreements with Accountants on Accounting and Financial Disclosure        32

PART III
  Item 10.  Directors and Executive Officers of the Registrant                                       33
  Item 11.  Executive Compensation                                                                   33
  Item 12.  Security Ownership of Certain Beneficial Owners and Management                           33
  Item 13.  Certain Relationships and Related Transactions                                           33

PART IV
  Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K                         34
</TABLE>


<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

     LifeCell  Corporation  develops  and  markets  biologic  solutions  for the
repair,  replacement  and  preservation  of  human  tissue.  Our core 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  three  human tissue products based on this
technology:  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; and Repliform(TM), a version of
AlloDerm(R)  for  urology  and  gynecology procedures.  Our development programs
include the application of our technology to process small diameter blood vessel
grafts  as  an  alternative  to  blood  vessel  grafts  taken  from the patient,
investigation  of  potential  orthopedic  applications  of  our  technology,
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

     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  PROCESSING  TECHNOLOGY

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

     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,


                                        3
<PAGE>
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 processing technology offers the following important
     benefits:

          Natural  Tissue  Regeneration.  Tissue grafts produced with our tissue
     processing technology retain the structural and biochemical properties that
     stimulate  normal cell repopulation and normal soft tissue regeneration. In
     addition,  our  clinical studies with dermis and preliminary animal studies
     with  heart  valve  leaflets,  nerve connective tissue grafts, and vascular
     grafts  processed  with  our  technology  indicate 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 processing
     technologies  have  the  potential  to  generate  additional  products with
     multiple  applications.  In addition to the current commercial applications
     of  AlloDerm,  Repliform  and Cymetra, we believe that our acellular tissue
     matrix  may  provide  additional  benefits  in  neurosurgery and orthopedic
     surgery.  We  also  are evaluating the applicability of our technologies to
     other  tissues  and  are  conducting  animal  studies  with  blood  vessels
     processed  with  our  technology.

          Safety.  Our  tissue  processing  technology  is  designed  to produce
     products that will revascularize and integrate into the body's own tissues.
     The patient's immune cells also are able 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 eight
     years  and  over  150,000  tissue  grafts  distributed  to  date.

          Prolonged  Shelf  Life.  Our  proprietary tissue processing 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.

          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 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 activation.  When blood cells are
removed  from  the body for storage, these stabilizing influences are absent and
result  in  the  destabilization  and/or  irreversible  activation 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.

     Our cell preservation technology mimics the stabilizing influences that are
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.

STRATEGY

     Our  vision  is  to  be  a  leader  in  the  emerging field of regenerative
medicine,  by  developing  and  marketing  biologic  solutions  for  the repair,
replacement  and  preservation  of  human  tissue.  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 and reconstructive procedures.  We see great opportunity for
sales  growth  in  this area, in which AlloDerm is used as an alternative to the


                                        4
<PAGE>
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 expanded sales and marketing staff 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 plastic reconstructive and burn
surgery  in  domestic  markets  through  our  own  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
Obagi Medical Products, Inc., initiated the full commercial launch of Cymetra to
office-based  plastic  surgeons  and  dermatologists.  In August 2000, our sales
force  launched  Cymetra  to  hospital-based  reconstructive  plastic  surgeons.

     LEVERAGING  TECHNOLOGY  PLATFORMS  TO  DEVELOP  NEW  PRODUCTS

     We  continue  to  research  uses  of  our technology in vascular grafts and
orthopedics.  Our  vascular  graft  research  has  shown promise in pre-clinical
feasibility  studies.  We  intend  to  seek  a corporate partner for the further
development  and  commercialization  of  vascular  graft  products  using  our
technology.

     Pre-clinical  studies  suggest  that  our  acellular tissue matrix may also
remodel  into  tendons, cartilage and bone.  In 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 investigate the application
of  our  technology  to  the  regeneration of orthopedic tissues.  We retain all
rights  to  commercialize  products  resulting  from  this  collaboration.

     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.  Both  of  these  development  programs  are  also  funded  by the
Department  of  Defense.  We  plan  to  establish  collaborative  out-licensing
arrangements  with  appropriate  partners  to  fund  the  development  and
commercialization  of  certain  of  these  products.


                                        5
<PAGE>
PRODUCTS  AND  PRODUCT  DEVELOPMENT  ACTIVITIES

     ACELLULAR  TISSUE  PRODUCTS

     ALLODERM

     AlloDerm  is  acellular  tissue  processed  with  our  proprietary  tissue
processing  technology  using  donated  human (cadaveric) skin.  We believe that
AlloDerm is the only transplant tissue product on the market today that promotes
the  regeneration  of  normal  human  soft  tissue.  Following  transplant,  the
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, burn and periodontal
surgery.

     We  receive  donated human skin from tissue banks 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 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 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 skin will be sufficient to meet our demand
for  such  materials.

     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 primarily in the following
types  of  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.

     Based  on industry sources, we estimate there are approximately one million
reconstructive  surgical  procedures  performed annually in the United States in
which  AlloDerm  could  be  used.  We  estimate that our target market for sheet
AlloDerm  is  approximately  240,000  procedures  performed  annually.  These
procedures  include  various  head and neck and reconstructive surgeries, cancer
reconstruction,  scar  revision  and  oral  cavity  reconstruction.  In  these
procedures,  the  greatest competitive pressures to AlloDerm are from autologous
tissue  and  synthetic  and  biosynthetic materials.  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.  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.

     BURNS.  During  1994,  we began commercial sales 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


                                        6
<PAGE>
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  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.

     Based on industry sources, we estimate that approximately 80,000 people are
hospitalized  each  year  in  the  United States due to burns and that more than
20,000  of such patients are admitted with major burns requiring skin grafts. We
believe  AlloDerm  could  be  used  effectively  with  all  of  these  patients.

     PERIODONTAL  SURGERY.  We  began  marketing  AlloDerm  to  periodontists in
September  1995.  BioHorizons Implant Systems, Inc. is our exclusive distributor
in  the  United  States  and select international markets of AlloDerm for use in
periodontal  applications.  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 have
indicated  that AlloDerm may have the potential to remodel into certain types of
connective  tissues.  Based  on these preliminary results, a product development
program  has  been  implemented  for  orthopedic  applications of AlloDerm.   We
intend  to  conduct  pre-clinical  studies  investigating  the  potential of our
acellular  tissue  matrix  to  remodel  into  orthopedic tissues such as tendon,
ligament,  cartilage,  meniscus  and  bone.

     If  successfully  developed,  an  acellular  tissue product for orthopedics
could  be  used  in  more  than  620,000  procedures.

     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.

     Urinary  incontinence  affects  approximately  13 million Americans, 85% of
whom  are women.  Fewer than half of these individuals seek treatment due to the
combined  factors  of embarrassment and a lack of acceptable therapeutic options
for  some  types  of  incontinence.  Some  forms  of 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


                                        7
<PAGE>
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.  Cadaveric fascia commonly is used with
minimal  complications  but  currently  is  undergoing  supply  constraints.  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.

     Annually  in  the United States, there are approximately 190,000 retropubic
suspensions,  bladder  neck suspensions, and sling procedures performed of which
approximately  95,000  are  bladder slings that could use Repliform as the sling
material.  Also,  there  are  approximately  240,000  pelvic prolapse procedures
performed annually in the United States of which 200,000 could use Repliform for
the soft tissue repair.  Repliform has already been used in over 14,000 patients
for  the  treatment  of  incontinence  and various pelvic floor repair surgeries

     MICRONIZED  ALLODERM(TM)  PRODUCTS

     CYMETRA

     Cymetra,  the brand name for Micronized AlloDerm(TM), is made from AlloDerm
sheets that are micronized 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.   Cymetra has been clinically
evaluated  in  300  patients.

     In  June  2000,  we,  in  conjunction  with  Obagi  Medical Products, Inc.,
initiated the full commercial launch of Cymetra to office-based plastic surgeons
and  dermatologists.  In  August  2000,  our  sales  force  launched  Cymetra to
hospital-based  reconstructive  plastic  surgeons.

     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  transplanted  human tissue to be commercially
distributed  without  obtaining  prior  FDA  approval.  AlloDerm  was previously
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  urological and gynecological surgery.  Cymetra is Alloderm that has been
micronized  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


                                        8
<PAGE>
biochemically  identical  to  AlloDerm.   We  believe that Repliform and Cymetra
meet  the FDA's definition of human tissue for transplantation and have not been
manipulated in such a way that would require regulation as a medical device.  As
a  result,  we  did not seek approval from the FDA to market these products.  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 are human tissue for
transplantation.  In February 2001, we provided a detailed submission responding
to  the  FDA's  request.  Our  understanding  is  that the FDA is reviewing this
information  to  determine  whether  they  agree  that  these products are human
tissue.  No  assurance  can  be given that the FDA will agree that Repliform and
Cymetra  are  each  human  tissue.  If  the  FDA does not agree, they may impose
medical device regulation upon Repliform and/or Cymetra.  FDA also could require
us  to  cease marketing and/or recall product already sold until FDA approval is
obtained  and  could  seek  to  impose enforcement sanctions for marketing these
products  without  FDA  approval.

     CARDIOVASCULAR  TISSUE  PRODUCTS

     We  are conducting pre-clinical studies to evaluate small-diameter vascular
graft  products  for  potential  use in cardiovascular surgery.  If successfully
developed,  a  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, replacement vascular conduits are required
for the 320,000 coronary artery bypass surgeries and 250,000 peripheral vascular
reconstructions  that  are  performed  annually in the United States.  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 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, 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.

     Our  processed  grafts are decellularized to circumvent an immune response,
and  they  are  freeze-dried to allow shelf storage for immediate use.  Handling
characteristics  and physical properties are equivalent to the native vessel.  A
pre-clinical  study  has  demonstrated  our  processed  graft  has 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.


     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 is currently being performed which involves a
"standard  of  care"  transfusion  of  ThromboSol  cryopreserved  platelets into
oncology  patients.  This  study  should  be  completed  in  2001.  Any  product
developed  will require extensive regulatory approvals prior to marketing in the
United States.  We intend to license this product to major pharmaceutical and/or
other  companies  for  commercial  development.  Our development efforts to date
have  primarily  been funded through research grant funds from the Department of
Defense.


                                        9
<PAGE>
     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.

     Approximately 13 million units of blood are donated each year in the United
States.  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.

     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  and  burn  surgical  applications  through our network of direct
technical  sales  representatives.  In  March 1999, we entered into an exclusive
agreement  with  Boston  Scientific  Corporation  for  the  worldwide  sales and
marketing  of Repliform for use in urology and gynecology.  In February 2000, we
entered  into  an  exclusive  agreement  with  Obagi  Medical Products, 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 regional 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
regional  distributors in favor of using distributors only on an exclusive field
of  use  basis.  We  currently  intend  to  develop and commercialize additional
tissue products processed from cardiovascular, neurological and other tissues in
conjunction  with  corporate  marketing  partners.

     As  of  March  1,  2001,  we  had  sales and marketing staff of 40 persons,
including  27  domestic  sales  personnel,  and  13 domestic marketing and other
personnel.  Our  sales representatives are responsible for interacting with ear,
nose  and throat surgeons, plastic surgeons and burn 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  2000,  we  obtained all of our human tissue from 19 tissue banks in the
United  States.  We  estimate  that  there  are at least 100 tissue banks in the
United  States. 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  supplies  of  allograft  skin  tissue,  there  is risk that the future
availability of donated human skin will not be sufficient to meet our demand for
such  materials.  We  compete with burn centers, tissue banks and 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  allograft  skin  as  a  temporary  wound  dressing.


                                       10
<PAGE>
     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.

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, biologics or medical
devices.  A  fundamental  difference  in  the  treatment of products under these
various  classifications  is  that  the FDA generally permits transplanted human
tissue  to be commercially distributed without premarket approval.  In contrast,
products  regulated  as devices or biologics usually require such approval.  The
process  of  obtaining  premarket  approval  for  a  device or biologic is often
expensive,  lengthy  and  uncertain.

     Once  on  the  market,  all  of  our  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  of  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.


                                       11
<PAGE>
     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 sold for these
indications.  Therefore,  we continue to believe that AlloDerm for these uses is
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.  After  the  initial  1996  letter,  additional  FDA
correspondence  stated  that  we  would  need  to  seek  a  regulatory  status
determination  on  AlloDerm  for  any  other  uses.

     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  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.

     We  believe  that  Repliform and Cymetra meet the FDA's definition of human
tissue  for  transplantation.  As a result, we did not seek a determination from
the  FDA  prior  to  marketing as to whether these products were human tissue or
medical  devices.  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.  Our  understanding  is  that  the FDA is reviewing this information to
determine  whether  they  agree that each of these products is human tissue.  No
assurance can be given that the FDA will agree.  If the FDA does not, they could
choose  to  regulate  any  or  all  of  these uses under the device regulations,
requiring  us  to  cease  marketing and/or recall product already sold until FDA
approval  is  obtained.  The FDA also could seek to impose enforcement sanctions
for  marketing  these  products  without  FDA  approval.

     In  January  2001,  the  FDA  issued a final rule requiring registration of
tissue  banking  establishments  and  the  listing  of  tissue  products.  These
requirements  become  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.


                                       12
<PAGE>
     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 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 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
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.  In March 1999, we withdrew this 510(k) submission
with  the  intent  to  submit  a new 510(k) notification after we have addressed


                                       13
<PAGE>
several  issues  raised  by the FDA.  We cannot assure you that we will submit a
new  510(k)  notice  for  NeoDura  or  that  it  will  ultimately receive 510(k)
clearance.

     Based  upon  relevant  precedents,  it  is  not  clear whether the FDA will
regulate  our  vascular products now in development as medical devices requiring
510(k)  clearance  or PMA approval or as human tissue.  However, we will seek to
persuade  the FDA that our vascular products should be regulated as human tissue
similar  to  other  vascular  products  previously  marketed  as  human  tissue.

     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
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,  we 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 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.

     AlloDerm  currently  is  being distributed in Brazil, Italy, Korea, Mexico,
Taiwan,  the Netherlands and the United Kingdom and we are pursuing clearance to
distribute  Cymetra  in Brazil and Korea.  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


                                       14
<PAGE>
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 tissue products and
blood cell preservation products primarily through external sources, including a
corporate  alliance  and government grants and contracts, as well as through the
proceeds from equity offerings. Our research and development costs in 1998, 1999
and 2000 for all programs, including those programs funded through corporate and
government  support,  were  approximately  $3.4  million,  $3.9 million and $4.5
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
approximately  $8.5  million  through  16  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.

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,


                                       15
<PAGE>
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 conduct a cursory review of issued patents prior to engaging in research
or  development activities.  Accordingly, we may be required to obtain a license
from  others  to commercialize any of our products under development.  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,
and  AlloDerm(R),  which concerns our commercial acellular dermal graft product.
We  have  filed  trademark  applications  for  the  protection  of  the  phrases
Micronized AlloDerm(TM), the particulate form of AlloDerm, Cymetra(TM) the brand
name  for  Micronized  AlloDerm, 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., Collagenesis, 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,  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, 2001, we had 157 employees of which 40 were employed in sales
and  marketing,  71  in  production  and  quality  assurance, 25 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.


                                       16
<PAGE>
     Since  our  inception in 1986, we have generated only limited revenues from
product  sales  and  have  incurred  substantial  net  losses  of approximately:

     -    $7.3  million  for  the  year  ended  December  31,  1998;

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

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

     At  December 31, 2000, we had an accumulated deficit of approximately $62.2
million.  We  expect  to  incur  additional operating losses as well as negative
cash  flow  from  operations  in  the  short  term  as we continue to expand our
marketing  efforts  with  respect  to  our  current products and to continue our
product  development  programs.  Our  ability  to  increase revenues and achieve
profitability  and  positive  cash  flows  from  operations  will  depend  on:

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

     -    commercialization  of  products  under  development.

We  may  not  achieve  profitability  and  positive  cash flows from operations.

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.


                                       17
<PAGE>
     We  expect  that  our  current resources will satisfy our cash needs for at
least  the  next  12  months. We are currently incurring negative cash flow from
operations  but  we  expect  such  amounts  to  continue to decrease in the near
future.  However,  operating  and  other  expenses incurred by us could increase
because  of  the  factors  set  forth above. As a result, we may need additional
funding  to  operate our business. 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 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  transplanted  human tissue to be commercially
distributed  without  obtaining prior FDA approval of the product.  In contrast,
products  regulated  as medical devices usually require such approval.  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.

     In  1999,  we  began  marketing:

     -    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. We believe that Repliform and Cymetra meet
the  FDA's  definition  of human tissue for transplantation. As a result, we did
not  seek  a  determination  from the FDA prior to marketing as to whether these
products  were  human tissue or medical devices. 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. Our understanding is that the FDA is
reviewing  this  information  to determine whether they agree that each of these
products  is human tissue. No assurance can be given that the FDA will agree. If
the  FDA  does not, they could choose to regulate any or all of these uses under
the  device  regulations,  requiring  us  to:

     -    cease  marketing  and/or  recall  product  already  sold  until 510(k)
          clearance  or  PMA  approval  is  obtained;  and/or

     -    seek  to  impose  enforcement  sanctions  for marketing these products
          without  FDA  approval.

     The  process  of  obtaining  FDA  approval,  if required, may be expensive,
lengthy  and  unpredictable.  We anticipate that it could take from one to three
years to obtain such approval. We do not know if such approval could be obtained
in a timely fashion, or at all, or if the FDA would require extensive supporting
clinical  data.

     In  the  United  States,  devices  and  biologics  must  be:


                                       18
<PAGE>
     -    manufactured  in  registered  establishments;  and

     -    produced  in accordance with the Quality System Regulation for medical
          devices  or  Good  Manufacturing  Practice  regulation  for biologics.

     If  any  of  our products are regulated as devices or biologics, we will be
required to comply with Quality System Regulation or Good Manufacturing Practice
regulation.  We  anticipate  that it could take us up to one year, or longer, to
achieve  compliance  with  these  regulations  during  which  time the FDA could
require  us to cease marketing and/or recall product already sold.  In addition,
our  manufacturing  facility:

     -    would  need  to  be  registered as a medical device manufacturing site
          with  the  FDA;  and

     -    would  be  subject  to  inspection  by  the  FDA.

     As  a result, our manufacturing and compliance costs would increase and our
products would be subject to more comprehensive development, testing, monitoring
and  validation  standards.

     The  FDA  requires  producers  of biologic products to obtain FDA licensing
prior  to  commercialization  in the United States. To obtain licensing approval
for  these  products,  we must submit proof of their safety, purity and potency.
Testing,  preparation  of  necessary  applications  and  the processing of those
applications  by  the FDA is expensive and time consuming. We do not know if the
FDA  will  act  favorably  or  quickly  in  making such reviews, and significant
difficulties  or  costs  may  be  encountered by us in our efforts to obtain FDA
licenses.  The  FDA  may  also  place conditions on licenses that could restrict
commercial  applications of such products. Product approvals may be withdrawn if
compliance  with  regulatory  standards  is  not maintained or if problems occur
following  initial  marketing.  Delays  imposed by the FDA licensing process may
materially  reduce  the  period  during  which  we  have  the exclusive right to
commercialize  patented  products.

     In addition, 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 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:

     -    infectious  disease  testing;  and

     -    stringent  record  keeping.

     As  a  result,  our involvement in the processing and distribution of human
tissue  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.
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.

NOTA  COULD  BE  INTERPRETED  IN  A  WAY  THAT  COULD  REDUCE  OUR  REVENUES AND
PROFITABILITY.

     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


                                       19
<PAGE>
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 procurement and
transportation.  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  ARE SUBJECT TO VARYING AND EXTENSIVE REGULATION BY FOREIGN GOVERNMENTS WHICH
CAN  BE  COSTLY,  TIME  CONSUMING  AND  SUBJECT  US  TO  UNANTICIPATED  DELAYS.

     The regulation of our products outside the United States varies by country.
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.
AlloDerm currently is being distributed in Brazil, Italy, Korea, Mexico, Taiwan,
the  Netherlands  and  the  United  Kingdom  and  we  are  pursuing clearance to
distribute  Cymetra  in Brazil and Korea.  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.

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 achieve profitability 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.

     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:


                                       20
<PAGE>
     -    unanticipated  technical  or  other  problems;

     -    manufacturing  difficulties;  and

     -    the  possible  insufficiency of the funds allocated for the completion
          of  such  development.


WE  ARE  HIGHLY  DEPENDENT UPON SALES OF OUR PRODUCTS THROUGH BOSTON SCIENTIFIC,
OBAGI  MEDICAL  PRODUCTS  AND  OUR  OTHER  INDEPENDENT  AGENTS  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

     -    Obagi  Medical  Products  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.  During 2000, sales
of  our  products  through Boston Scientific Corporation, Obagi Medical Products
and  our  other  distributors  represented  approximately  28%,  13%  and  6%,
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  Obagi  Medical  Products, 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 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 tissue.  In
2000,  we received human tissue from 19 United States tissue banks.  We estimate
that there are at least 100 tissue banks 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  products in the foreseeable future, we
cannot  be  sure  that  donated  human  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 tissue or our requirements for human tissue exceed
their  current  capacity,  we  may  not  be  able  to locate other sources.  Any
significant  interruption in the availability of human tissue would likely cause
us  to  slow  down  the  processing  and  distribution  of  our  products.

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  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., Collagenesis, Inc., Cook,
Inc.  and  its affiliates,  Cryolife, Inc.,  Organogenesis, Inc., Advance Tissue


                                       21
<PAGE>
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,  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.

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 transplanted human tissue to
be commercially distributed without obtaining prior FDA approval of the product.
In  contrast,  products  regulated  as  medical  devices  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.

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


                                       22
<PAGE>
     -    have  seven  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.

     Although  we  generally conduct a cursory review of issued patents prior to
engaging  in  research or development activities, we may be required to obtain a
license  from others to commercialize any of our new products under development.
If  patents  that  cover  our  existing  or  new  products  are  issued to other
companies,  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.

     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 assure
that:

     -    our  insurance  will  provide  adequate  coverage  against  potential
          liabilities;

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


                                       23
<PAGE>
     -    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.

WE  ARE  A  PARTY  TO  PENDING  LITIGATION AND THE COST OF DEFENSE OR AN ADVERSE
OUTCOME  COULD  NEGATIVELY  IMPACT  OUR  RESULTS  OF OPERATIONS OR LIQUIDITY AND
FINANCIAL  RESOURCES.

     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  us,  make  profits  from the storing, processing, and distribution of
human  tissue  in  contravention  of  California  law.  We  are  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 Renger complaint.  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. The plaintiffs in each of the actions are seeking
injunctive  relief,  disgorgement  of  illegal  profits,  restitution, statutory
penalties,  fines  and  attorney's  fees.  We  intend  to vigorously defend such
actions,  which  we  believe  are  without  merit.

     We  are  a  party to litigation 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. and Prudential Securities,
Inc.  The  complaint  alleges  that  LifeCell,  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 seeks damages in an unspecified amount.
Gruntal  and  Prudential's  Vector Healthcare Group acted as placement agents in
LifeCell's  private  placement which closed in October, 2000.  On March 15, 2001
we  filed  our  motion  for  dismissal  which  is  pending.  We believe that the
complaint  has  no  merit  and  intend  to  vigorously  defend  such  action.


                                       24
<PAGE>
     Litigation  is  subject  to  many uncertainties and management is unable to
predict  the outcome of the pending actions.  It is possible that the results of
operations  or liquidity and capital resources of the Company could be adversely
affected by the ultimate outcome of the pending litigation or as a result of the
costs  of  contesting  such  actions.

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.

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.

ITEM  3.  LEGAL  PROCEEDINGS
     In May 2000, a complaint was filed in the Superior Court of California, San
Bernardino  County, Central District, captioned Ann Regner et. al., on behalf of
themselves  and  others  similarly  situated,  v.  Inland  Eye  & Tissue Bank of
Redlands,  et  al.  The complaint was brought as a class action on behalf of all
close  family  members  of  those deceased persons whose tissues were collected,
processed,  stored  or  distributed  in  California.  The complaint alleged that
tissue  banks  routinely  fail  to  obtain  proper  informed consent from family
members  when  soliciting  the  donation  of  human  tissue for transplant.  The
complaint  also alleged that the defendants, including us, make profits from the
storing,  processing  and  distribution  of  human  tissue  in  contravention of
California law.  Plaintiffs' application for a preliminary injunction seeking to
enjoin  the  defendants,  including  us,  from  doing business in California was
denied  in  June  2000.  In  September  2000,  a  new complaint was filed in the
Superior  Court of Los Angeles captioned Regner, et al., on behalf of themselves
and  others  similarly situated, v. Inland Eye & Tissue Bank of Redlands, et al.
The  new  complaint  alleges  among other things, defendants, including us, make
profits  from  the  storing,  processing,  and  distribution  of human tissue in
contravention  of  California  law.  The  new  complaint is not denominated as a
class action and does not involve tort theories.  The action was brought under a
statute  which  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.  The  plaintiffs  seek  injunctive  relief,  disgorgement  of illegal
profits,  restitution,  statutory  penalties,  fines  and  attorney's  fees.  In
January  2001,  the  May  2000  complaint  was dismissed without prejudice.  The
September  2000  complaint is still pending.  We believe that the claims against
us  in  the  new  complaint  are  without  merit and intend to vigorously defend
against  such  action.

     In  June  2000,  a complaint was filed in the United States District Court,
District  of New Jersey, entitled Inamed Corporation, McGhan Medical Corporation
and  Collagen  Aesthetics,  Inc.  vs.  LifeCell  Corporation  and  Obagi Medical
Products,  Inc.  The  complaint  alleged that we and Obagi, our marketing agent,
disseminated  false  advertisements with respect to the marketing of our Cymetra
product  that  misleadingly  compared it to and unlawfully disparaged the bovine
collagen  products  of  Inamed  Corporation  and its subsidiaries.  In September
2000, we entered into a settlement agreement with Inamed Corporation.  Under the
settlement  agreement,  we  and  Obagi agreed to discontinue certain comparative
marketing  and promotion statements on the use of Cymetra for the reconstruction
of  soft  tissue  deficits.  We and Obagi also agreed to jointly make settlement
payments  to Inamed Corporation totaling $300,000 over an eighteen-month period.


                                       25
<PAGE>
We  recorded a charge of $150,000 in the third quarter of 2000, representing our
share  of  the  settlement.  The  settlement  allows  us and Obagi to revise the
marketing  and promotional statements for Cymetra commencing in January 2001, as
additional  scientific  data  on  the  use  of  Cymetra  is  accumulated.

     In  December  2000,  a  complaint  was  filed  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 Renger
complaint.  This  action  is  not  denominated class action and does not involve
tort  theories.  The  action was 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.  The  plaintiffs  are  seeking
injunctive  relief,  disgorgement  of  illegal  profits,  restitution, statutory
penalties,  fines and attorney's fees.  We believe that the claims against us in
this  complaint  are  without merit and intend to vigorously defend against such
action.

     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. and Prudential
Securities,  Inc.  The  complaint  alleges that LifeCell, 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 seeks damages in an unspecified
amount.  Gruntal  and  Prudential's  Vector  Healthcare Group acted as placement
agents  in  LifeCell's private placement which closed in October 2000.  On March
15,  2001,  we filed our motion for dismissal which is pending.  We believe that
the  claims  against  us  in  this  complaint  are  without  merit and intend to
vigorously  defend  against  such  action.

     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.


                                       26
<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, 2001, the last reported sale price for our Common Stock on
the  Nasdaq  National Market was $2.25 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.

                         High    Low
                        ------  -----

1999    First Quarter.  $ 4.63  $3.38
        Second Quarter    5.50   3.81
        Third Quarter.    7.25   4.00
        Fourth Quarter    6.94   4.19
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


     As  of February 28, 2001, there were approximately 368 holders of record of
shares  of Common Stock and 31 holders of record of shares of Series B Preferred
Stock.  We  estimate  that  there  are  in excess of 4,000 beneficial holders of
Common  Stock.

     In  October  2000, we issued 2,500,000 shares of Common Stock pursuant to a
private  placement  transaction  without  an  underwriter.  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.

     Our  Series  B Preferred Stock bears dividends per share at the 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  may be paid, 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.  Dividends on the Series B Preferred Stock accrue and are paid
quarterly.  The  Series  B Preferred Stock ceases bearing dividends on September
30, 2001.  On February 15th, May 15th, August 15th  and November 15, 1999 and on
February  15th and May 15, 2000 we  paid a $1.51, $1.49, $1.50, $1.51, $1.51 and
$1.49, respectively,  per  share  dividend  in  cash to the holders of shares of
Series  B Preferred Stock. On August 15th and November 15, 2000 and February 15,
2001, we paid a dividend in shares of our Series B Preferred Stock equivalent to
$1.49,  $1.51  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.


                                       27
<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, 2000, 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,
                                          -------------------------------------------------------------------------
                                              1996           1997           1998           1999           2000
                                          -------------  -------------  -------------  -------------  -------------
<S>                                       <C>            <C>            <C>            <C>            <C>
Operations Statement Data:
--------------------------
Revenues:
  Product revenues                        $  2,012,000   $  4,905,000   $  7,245,000   $ 11,912,000   $ 21,330,000
  Research grant revenues                      933,000      1,075,000        747,000        764,000      1,442,000
                                          -------------  -------------  -------------  -------------  -------------
     Total revenues                          2,945,000      5,980,000      7,992,000     12,676,000     22,772,000
                                          -------------  -------------  -------------  -------------  -------------
Costs and expenses:
  Costs of products sold                     1,281,000      2,541,000      2,837,000      3,452,000      6,949,000
  Research and development                   1,588,000      2,007,000      3,376,000      3,871,000      4,523,000
  General and administrative                 1,911,000      3,081,000      3,484,000      4,840,000      6,180,000
  Selling and marketing                      2,390,000      4,956,000      6,500,000      7,236,000     11,779,000
  Relocation costs                                  --             --             --      2,937,000             --
                                          -------------  -------------  -------------  -------------  -------------
    Total costs and expenses                 7,170,000     12,585,000     16,197,000     22,336,000     29,431,000
Loss from operations                        (4,225,000)    (6,605,000)    (8,205,000)    (9,660,000)    (6,659,000)

Interest and other income (expense), net       135,000        466,000        864,000        468,000       (479,000)
                                          -------------  -------------  -------------  -------------  -------------
Net loss                                  $ (4,090,000)  $ (6,139,000)  $ (7,341,000)  $ (9,192,000)  $ (7,138,000)
                                          =============  =============  =============  =============  =============
Loss per share(1)- basic and
  diluted                                 $      (1.14)  $      (1.04)  $      (0.72)  $      (0.83)  $      (0.54)
                                          =============  =============  =============  =============  =============
Shares used in computing loss
  per share-basic and diluted                4,543,000      6,820,000     11,229,000     11,938,000     14,372,000
                                          =============  =============  =============  =============  =============


                                                                      As of December 31,
                                          -------------------------------------------------------------------------
                                              1996           1997           1998           1999           2000
                                          -------------  -------------  -------------  -------------  -------------
Balance Sheet Data:
-------------------
Cash and cash equivalents                 $ 10,748,000   $ 20,781,000   $  8,025,000   $  4,737,000   $  5,220,000
Short-term investments                              --             --      4,001,000        315,000        315,000
Working capital                             10,885,000     20,516,000     12,597,000      2,542,000      5,330,000
Total assets                                12,890,000     24,156,000     17,031,000     18,083,000     25,410,000
Accumulated deficit                        (29,311,000)   (36,411,000)   (44,476,000)   (54,378,000)   (62,153,000)
Total stockholders' equity                  10,197,000     20,260,000     14,261,000      9,249,000     12,789,000
<FN>
(1)  Includes  effect  of  preferred  stock dividends of  $0.24, $0.14, $0.07, $0.06 and $0.04 in 1996, 1997, 1998,
1999  and  2000,  respectively.
</TABLE>


                                       28
<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."

GENERAL  AND  BACKGROUND

     We  develop  and  market biologic solutions for the repair, replacement and
preservation  of  human  tissue.  Our core 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  three  products  based  on  this  technology:  AlloDerm(R)  for  plastic
reconstructive,  burn  and  periodontal  procedures;  Cymetra(TM),  a version of
AlloDerm  in  particulate  form  for  the correction of soft tissue defects; and
Repliform(TM),  a version of AlloDerm for urology and gynecology procedures. Our
development  programs include the application of our technology to process small
diameter blood vessel grafts as an alternative to blood vessel grafts taken from
the  patient,  investigation  of  potential  orthopedic  applications  of  our
technology,  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.

RESULTS  OF  OPERATIONS

     YEARS  ENDED  DECEMBER  31,  2000  AND  1999

     Total  revenues  for  the  year  ended  December  31, 2000 increased 80% to
approximately  $22.8  million  compared  to approximately $12.7 million in 1999.
The increase was primarily attributable to a 79% increase in product revenues to
approximately  $21.3  million  in  the current year as compared to approximately
$11.9  million  in the prior year.  The increase in product revenues was largely
due  to  the full commercial launch of two new products; Repliform, a version of
AlloDerm  for urology and gynecology surgical procedures, and Cymetra, a version
of  AlloDerm  in  particulate  form  for  non-surgical  plastic  reconstructive
procedures.  We  initiated  the  full  commercial launch of Repliform in January
2000  and  Cymetra in June 2000. Repliform and Cymetra product sales contributed
approximately  $5.9  million  and  approximately  $4.1 million, respectively, in
2000.  Total  revenue was further impacted by an 89% increase in funded research
grant  revenues  of  approximately  $1.4  million  from  $764,000  in 1999. This
increase  was  primarily due to an increase in research grant funding available.

     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 Obagi Medical Products, Inc. as the exclusive sales and
marketing  representative of Cymetra for office-based dermatologists and plastic
surgeons.  During  2000,  sales  of  our  products  through  Boston  Scientific
Corporation and Obagi Medical Products represented 28% and 13%, respectively, of
our  total  product  revenues.  We  expect  sales  of  our products through such
marketing agents to continue to increase as a percentage of total revenues. Both
Boston  Scientific  and Obagi Medical Products are paid fees based on the amount
of  product revenues they generate for us. Such fees are recorded as selling and
marketing  expenses.

     Cost  of  products  sold  for  the  year  ended  December  31,  2000  was
approximately  $6.9  million,  or  33%  of product revenues, compared to cost of
goods  sold  of  approximately $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 this year related
to  the  scale-up  of  Cymetra  production.

     Total research and development expenses increased 17% to approximately $4.5
million  for  the  year  ended  December 31, 2000 compared to approximately $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 approximately $6.2
million  for  the  year  ended  December 31, 2000 compared to approximately $4.8
million in 1999.  The increase was principally due to a combination of increased


                                       29
<PAGE>
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 approximately $11.8 million
for  the  year ended December 31, 2000 compared to approximately $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  Obagi  Medical  Products.

     During  the year ended December 31, 1999, in connection with the relocation
of  our  operations  from  Texas  to  New Jersey, we incurred approximately $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
approximately  $7.1  million compared to approximately $9.2 million in 1999.  As
discussed  above,  the  net  loss  in the prior year included approximately $2.9
million  of  expenses  associated  with our relocation from Texas to New Jersey.


     YEARS  ENDED  DECEMBER  31,  1999  AND  1998

     Total  revenues  for  the  year  ended  December  31, 1999 increased 59% to
approximately  $12.7  million  compared  to  approximately $8.0 million in 1998.
Product  revenues  increased  approximately $4.7 million as a result of expanded
sales  and marketing activities and increased distribution activities during the
year.  Funded  research  grant  revenues remained consistent at $764,000 in 1999
compared  to  $747,000  in  1998.

     Cost  of  products  sold  for  the  year  ended  December  31,  1999,  was
approximately  $3.5  million,  resulting in a gross margin of approximately 71%.
The  gross  margin  for the year ended December 31, 1998, was approximately 61%.
The  increase  in  gross  margin  was principally attributable to an increase in
sales of certain higher-margin AlloDerm products and an increase in the price of
certain  AlloDerm  products  in  1999.

     Research  and  development  expenses  for the year ended December 31, 1999,
increased  15%  to  approximately  $3.9  million  compared to approximately $3.4
million in 1998.  The increase in research and development expense was primarily
attributable to increased animal and clinical studies for the expanding uses for
AlloDerm.  In  addition, we dedicated increased resources to product development
programs  such  as  Micronized  AlloDerm(TM).

     General  and  administrative expenses for the year ended December 31, 1999,
increased  39%  to  approximately $4.8 million compared to approximately $3.5 in
1998.  The  increase  was attributable to recruiting and staffing costs incurred
in  connection  with the recruitment of new key members of senior management and
professional  fees incurred in relation to a distribution agreement entered into
during  1999.

     Selling  and marketing expenses increased 11% to approximately $7.2 million
for  the year ended December 31, 1999, compared to approximately $6.5 million in
1998.  The increase was primarily attributable to the addition of domestic sales
and  marketing  personnel and the expansion of marketing activities during 1999.

     In  June  1999, we commenced relocation of our 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.  We  commenced  processing  operations in New Jersey during the first
quarter  of  2000.  Relocation  costs  of  approximately $2.9 million charged to
operations  for  the  year  ended  December  31,  1999,  included  the  cost  of
non-relocating  employee benefits, asset abandonment and lease termination costs


                                       30
<PAGE>
related  to  our 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 continued their employment until various
targeted  dates  during 1999.  If the employee 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 we 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.  In June 1999, we recorded a
charge  of approximately $335,000 representing the net book value of assets that
were  abandoned in the second quarter of 1999 when we vacated our administrative
offices  located  in Texas. In Texas we occupied rented office and manufacturing
space pursuant to a lease that extended through January 2001.  During the fourth
quarter  of  1999,  we  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 we
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.  We  also  incurred  approximately  $78,000  of non-employee
related  moving  costs.

     Interest  income and other, net decreased 46% to approximately $468,000 for
the  year  ended  December 31, 1999, compared to approximately $864,000 in 1998.
The decrease was principally attributable to a reduction of  funds available for
investing  activities  during  1999.

     The  net  loss  for  the  year  ended  December  31, 1999, increased 25% to
approximately  $9.2 million compared to approximately $7.3 million for 1998.  As
discussed  above,  the  net  loss in 1999 included approximately $2.9 million of
expenses  associated  with  our  relocation  from  Texas  to  New  Jersey.

LIQUIDITY  AND  CAPITAL  RESOURCES

     As  of  December  31, 2000, we had cash and cash equivalents and short-term
investments  of  approximately $5.5 million compared to $5.1 million at December
31,  1999.  The  increase  resulted  principally from cash provided by a private
placement  of  2.5  million shares of our Common Stock, debt financing and stock
option  and warrant exercises offset by cash required to fund the operating loss
for  the  year  ended  December  31,  2000, increases in accounts receivable and
inventories and capital expenditures.  Working capital increased to $5.3 million
at  December  31,  2000  from  $2.5  million at December 31, 1999.  The increase
resulted principally from increases in cash and increases in accounts receivable
and  inventories net of an increase in current maturities of long-term debt.  In
October  2000,  we  completed  a  private placement of 2.5 million shares of our
common  stock  with selected accredited investors at a price of $4.00 per share.
The net proceeds of the private placement were approximately $9.0 million, after
deducting  placement  agent  fees  and  offering  costs.

     Our  operating  activities  used  cash  of  $8.8 million for the year ended
December  31,  2000  to  fund our operating loss for the period, net of non-cash
charges,  and increases in inventories and accounts receivable.  The increase in
inventories was primarily associated with the launch of Cymetra. The increase in
accounts  receivable  was  related  to  the  increase  in  revenues.

     For the year ended December 31, 2000, our investing activities used cash of
approximately  $4.8  million for the purchase of capital equipment and leasehold
improvements  relating  to  the  completion  of  the  New  Jersey  facility.

     Our financing activities provided $14.1 million for the year ended December
31,  2000, primarily from net proceeds of the private placement of approximately
$9.0 million, after deducting placement agent fees and offering costs, long-term
debt  proceeds of $3.7 million and $2.0 million in proceeds from the exercise of
stock  options  and  warrants.  Such  proceeds  were  partially  offset  by cash
dividends  paid  on the Series B Preferred Stock during the period and principal
payments  on  long-term  debt.  At  December  31,  2000,  we had an aggregate of
approximately  $6.3  million  outstanding  under  our  borrowing  arrangements,
including approximately $3.0 million outstanding under a revolving loan facility
which  is  due  in  January  2002.  The  term  loans require aggregate principal
payments  over  the  next 12 months of approximately $1.2 million.  We currently
have  no  additional  borrowing  availability  through  our  existing  credit
facilities.

     We  expect  to  incur  additional operating losses as well as negative cash
flow  from  operations  in  the  short  term  as we continue to expand marketing
efforts  with  respect  to  our  current  products  and  to continue our product
development  programs.  Our  ability  to  increase  revenues  and  achieve
profitability  and  positive cash flows from operations will depend on increased
market  acceptance  of  our  current  products  and our ability to commercialize
products  currently  under  development.  We  expect that our current resources,
together  with  anticipated  product revenues and research and development grant
funding,  will  satisfy  our  cash  needs  for  at least the next twelve months.
However, there can be no assurance that such sources of funds will be sufficient


                                       31
<PAGE>
to meet our needs and as a result, we may need additional funding to operate our
business.  We  have  no  commitments  for any future funding and 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  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.

     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".

     We  have  incurred  losses  since our inception and therefore have not been
subject  to federal income taxes.  As of December 31, 2000, we had net operating
loss  ("NOL")  and research and development tax credit carryforwards for federal
income  tax  purposes of approximately $55.0 million and $614,000, 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  approximately  $31.1  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 $7.6
million,  available  to  reduce  future  state  income  taxes.

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,  2000.

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


                                       32
<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 June 1, 2001, 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  June  1,  2001,  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 June 1, 2001, 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 June 1, 2001, under the caption "Certain Relationships
and  Related  Transactions,"  and  such  information  is  incorporated herein by
reference.


                                       33
<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, 1999 and 2000. . . . . . . . . . . . . .  F-2

Statements of Operations for the years ended
December 31, 1998, 1999 and 2000 . . . . . . . . . . . . . . . . . . . . .  F-3

Statements of Stockholders' Equity for the years ended
December 31, 1998, 1999 and 2000 . . . . . . . . . . . . . . . . . . . . .  F-4

Statements of Cash Flows for the years ended
December 31, 1998, 1999 and 2000 . . . . . . . . . . . . . . . . . . . . .  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:

          On July 7, 2000, we filed a Current Report on Form 8-K to report that:
     (i)  a  complaint  was  filed  in  alleging  that  tissue  banks, including
     LifeCell,  routinely fail to obtain proper informed consent when soliciting
     the  donation  of  human  tissue  for  transplant and make profits from the
     storing,  processing  and  distributing of human tissue in contravention of
     California  law, and (ii) a complaint was filed in New Jersey alleging that
     LifeCell  and Obagi, its marketing agent, disseminated false advertisements
     with  respect  to  the  marketing  of  LifeCell's  Cymetra  product.

          On  September 6, 2000, we filed a Current Report on Form 8-K to report
     that  we  had entered into purchase agreements for the private placement of
     2,500,000  shares of our Common Stock with selected accredited investors at
     a  price  of  $4.00  per  share.

          On September 26, 2000, we filed a Current Report on Form 8-K to report
     that  we  entered  into  a  settlement agreement for a previously announced
     lawsuit  filed  by Inamed Corporation against LifeCell and its co-promotion
     partner,  Obagi  Medical  Products.

          On  October  31, 2000, we filed a Current Report on Form 8-K to report
     that  we  completed  the  private  placement  of  2,500,000  shares  of our
     Common  Stock  with  selected  accredited investors at a price of $4.00 per
     share.

          On  January  5,  2001, we filed a Current Report on Form 8-K to report
     that  a  complaint  was filed in New York alleging that LifeCell, Gruntal &
     Co.,  L.L.C.  and Prudential Securities, Inc. violated Section 10(b) of the
     Securities  Exchange Act of 1934 by making purportedly false and misleading
     statements  in connection with LifeCell's private placement of Common Stock
     in  October  2000.

(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.


                                       34
<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.

<TABLE>
<CAPTION>
<C>      <S>
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     Form of Confidentiality/Non-Compete Agreement (incorporated by reference to Exhibit 10.28 to the
         Company's Registration Statement on Form S-1, Registration No. 33-44969, filed with the Commission
         on January 9, 1992).

10.4     Lease Agreement dated December 10, 1986, between the Registrant and The Woodlands Corporation,
         Modification and Ratification of Lease Agreement dated April 11, 1988, between the Registration and
         The Woodlands Corporation Modification and Ratification of Lease dated August 1, 1992, between the
         Company and The Woodlands Corporation and Modification, Extension and Ratification of Lease dated
         March 5, 1993, between the Registrant and The Woodlands Corporation, and Modification and
         Ratification of Lease Agreement dated December 21, 1995, between the Company and The Woodlands
         Office Equities -- '95 Limited (incorporated by reference to Exhibit 10.1 to the Company's Quarterly
         Report on Form 10-Q for the period ended March 31, 1996).

10.5     Lease Agreement dated September 1, 1988, between the Registrant and The Woodlands Corporation, and
         Modification of Lease Agreement dated March 5, 1993, between the Registrant and The Woodlands
         Corporation (incorporated by reference to Exhibit 10.22 to the Company's Annual Report on Form 10-K
         for the fiscal year ended December 31, 1992).

10.6     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).

10.7     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).

10.8     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).

10.9     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).

10.10    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).


                                       35
<PAGE>
10.11+   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).

10.12+   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).

10.13+   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.)

10.14+   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.)

10.15    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.)

10.16*   Amendment dated September 21, 1999 to Lease Agreement by and between Maurice M. Weill, Trustee
         for Branchburg Property and LifeCell Corporation.

10.17*   Amendment dated April 7, 2000 to Lease Agreement by and between Maurice M. Weill, Trustee for
         Branchburg Property and LifeCell Corporation.

10.18    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.)

10.19    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).

10.20    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).

10.21    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).

10.22    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).

10.23    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).

10.24    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).

10.25    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).


                                       36
<PAGE>
10.26*+  Form of Change in Control Agreement

10.27*   Stock Purchase Warrant dated October 31, 2000, issued to Prudential Securities Incorporated

10.28*   Stock Purchase Warrant dated October 31, 2000, issued to Gruntal & Co., L.L.C.

23.1*    Consent of Arthur Andersen LLP.
</TABLE>


                                       37
<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 29, 2001.

     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 29, 2001
-----------------------  Officer (Principal Executive Officer)
Paul G. Thomas


/s/ Steven T. Sobieski   Sr. Vice President and Chief Financial   March 29, 2001
-----------------------  Officer (Principal Financial Officer)
Steven T. Sobieski


/s/ Bradly C. Tyler      Controller                               March 29, 2001
-----------------------  (Principal Accounting Officer)
Bradly C. Tyler


/s/ Michael A. Cahr      Director                                 March 29, 2001
-----------------------
Michael A. Cahr


/s/ Peter D. Costantino  Director                                 March 29, 2001
-----------------------
Peter D. Costantino


/s/ James G. Foster      Director                                 March 29, 2001
-----------------------
James G. Foster


/s/ Stephen A. Livesey   Director                                 March 29, 2001
-----------------------
Stephen A. Livesey


/s/ David A. Thompson    Director                                 March 29, 2001
-----------------------
David A. Thompson
</TABLE>


                                       38
<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,  1999  and  2000,  and the related
statements  of  operations,  stockholders' equity and cash flows for each of the
three  years  in  the period ended December 31, 2000. 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.

     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, 1999 and 2000, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2000, in conformity
with  accounting  principles  generally  accepted  in  the  United  States.


                                     /s/ ARTHUR  ANDERSEN  LLP

Philadelphia, Pennsylvania
March 27, 2001


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

                                           BALANCE SHEETS

                                                                              DECEMBER 31,
                                                                     ----------------------------
                                                                         1999           2000
                                                                     -------------  -------------
<S>                                                                  <C>            <C>
                           Assets

Current assets
  Cash and cash equivalents                                          $  4,737,000   $  5,220,000
  Short-term investments                                                  315,000        315,000
  Accounts and other receivables, net of allowance for doubtful
    accounts of  $175,000 in 1999 and $170,000 in 2000                  2,557,000      4,287,000
  Inventories                                                           3,202,000      4,711,000
  Prepayments and other                                                   160,000        269,000
                                                                     -------------  -------------
          Total current assets                                         10,971,000     14,802,000

Fixed assets, net                                                       6,548,000      9,991,000
Other assets, net                                                         564,000        617,000
                                                                     -------------  -------------
Total assets                                                         $ 18,083,000   $ 25,410,000
                                                                     =============  =============

              Liabilities and Stockholders' Equity

Current liabilities
  Accounts payable                                                   $    741,000   $  2,434,000
  Accrued liabilities                                                   4,896,000      3,025,000
  Notes payable                                                         2,792,000      2,859,000
  Current portion of long-term debt                                             -      1,154,000
                                                                     -------------  -------------
          Total current liabilities                                     8,429,000      9,472,000
                                                                     -------------  -------------

Deferred revenue                                                          405,000        794,000
                                                                     -------------  -------------
Long-term debt                                                                  -      2,272,000
                                                                     -------------  -------------
Other long-term liabilities                                                     -         83,000
                                                                     -------------  -------------

Commitments and contingencies (Note 12)

Stockholders' equity
  Series B preferred stock, $.001 par value, 182,205 shares
    authorized; shares issued and outstanding 118,016 in 1999 and
    95,931 in 2000 (liquidation preference at December 31, 2000 of
    $ 9,593,000)                                                                -              -
  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 12,899,643 in 1999 and 16,709,368
    in 2000                                                                13,000         17,000
  Warrants outstanding to purchase 3,466,399 and 3,370,298
  shares of common stock, respectively                                    888,000      1,269,000
  Additional paid-in capital                                           62,726,000     73,612,000
  Accumulated deficit                                                 (54,378,000)   (62,109,000)
                                                                     -------------  -------------
          Total stockholders' equity                                    9,249,000     12,789,000
                                                                     -------------  -------------
Total liabilities and stockholders' equity                           $ 18,083,000   $ 25,410,000
                                                                     =============  =============
</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,
                                            ----------------------------------------
                                                1998          1999          2000
                                            ------------  ------------  ------------
<S>                                         <C>           <C>           <C>
Revenues:

  Product revenues                          $ 7,245,000   $11,912,000   $21,330,000
  Research grant revenues                       747,000       764,000     1,442,000
                                            ------------  ------------  ------------
     Total revenues                           7,992,000    12,676,000    22,772,000
                                            ------------  ------------  ------------
Costs and Expenses:

  Cost of products sold                       2,837,000     3,452,000     6,949,000
  Research and development                    3,376,000     3,871,000     4,523,000
  General and administrative                  3,484,000     4,840,000     6,180,000
  Selling and marketing                       6,500,000     7,236,000    11,779,000
  Relocation costs                                    -     2,937,000             -
                                            ------------  ------------  ------------
     Total costs and expenses                16,197,000    22,336,000    29,431,000
                                            ------------  ------------  ------------
Loss From Operations                         (8,205,000)   (9,660,000)   (6,659,000)

  Interest and other income (expense), net      864,000       468,000      (479,000)
                                            ------------  ------------  ------------

Net Loss                                     (7,341,000)   (9,192,000)   (7,138,000)

Preferred Stock Dividends                      (723,000)     (710,000)     (636,000)
                                            ------------  ------------  ------------
Net Loss Applicable to Common Stockholders  $(8,064,000)  $(9,902,000)  $(7,774,000)
                                            ============  ============  ============
Loss Per Common Share-Basic and Diluted     $     (0.72)  $     (0.83)  $     (0.54)
                                            ============  ============  ============
Shares Used in Computing Loss Per
  Common Share-Basic and Diluted             11,228,912    11,937,532    14,372,083
                                            ============  ============  ============
</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          ADDITIONAL
                                                  ------------------------------------------------------------     PAID-IN
                                                  SHARES   AMOUNT     SHARES    AMOUNT     SHARES      AMOUNT       CAPITAL
                                                 -----------------------------------------------------------------------------
<S>                                              <C>       <C>      <C>         <C>      <C>         <C>          <C>
Balance at December 31, 1997                     125,441   $     -  11,012,906  $11,000  3,163,478   $  299,000   $56,361,000
  Stock options exercised                              -         -      12,550        -          -            -        43,000
  Warrants exercised                                   -         -       4,965        -    (11,290)      (1,000)        1,000
  Expiration of warrants                               -         -           -        -    (20,000)           -             -
  Warrants issued to purchase Common Stock             -         -           -        -     50,000            -             -
  Conversion of Series B preferred stock          (6,357)        -     205,060        -          -            -             -
  Common Stock issued for cash, and
    conversion of license fee                          -         -     376,371    1,000          -            -     2,000,000
  Stock options issued for services                    -         -           -        -          -            -        22,000
  Dividends paid on Series B preferred stock           -         -           -        -          -            -             -
  Dividends accrued on Series B preferred stock        -         -           -        -          -            -             -
  Net Loss                                             -         -           -        -          -            -             -
                                                 -----------------------------------------------------------------------------
Balance at December 31, 1998                     119,084         -  11,611,852   12,000  3,182,188      298,000    58,427,000
  Stock options exercised                              -         -     219,764        -          -            -       670,000
  Warrants issued to purchase Common Stock             -         -           -        -    284,211      590,000      (382,000)
  Conversion of Series B preferred stock          (1,068)        -      34,450        -          -            -             -
  Common Stock issued for cash                         -         -   1,033,577    1,000          -            -     4,011,000
  Dividends paid on Series B preferred stock           -         -           -        -          -            -             -
  Dividends accrued on Series B preferred stock        -         -           -        -          -            -             -
  Net Loss                                             -         -           -        -          -            -             -
                                                 -----------------------------------------------------------------------------
Balance at December 31, 1999                     118,016         -  12,899,643   13,000  3,466,399      888,000    62,726,000
  Stock options exercised                              -         -     206,311        -          -            -       726,000
  Warrants exercised                                   -         -     299,324        -   (327,896)     (26,000)    1,227,000
  Expiration of warrants                               -         -           -        -    (60,000)           -             -
  Warrants issued to purchase Common Stock             -         -           -        -    291,795      407,000      (407,000)
  Conversion of Series B Preferred               (24,927)        -     804,090    1,000          -            -         1,000
  Common Stock issued for cash                         -         -   2,500,000    3,000          -            -     9,055,000
  Dividends paid on Series B preferred stock       2,842         -           -        -          -            -       284,000
  Dividends accrued on Series B preferred stock        -         -           -        -          -            -             -
  Net Loss                                             -         -           -        -          -            -             -
                                                 -----------------------------------------------------------------------------
Balance at December 31, 2000                      95,931   $     -  16,709,368  $17,000  3,370,298   $1,269,000   $73,612,000
                                                 =============================================================================

                                                                   TOTAL
                                                  ACCUMULATED   STOCKHOLDERS'
                                                    DEFICIT        EQUITY
                                                 ----------------------------
<S>                                              <C>            <C>
Balance at December 31, 1997                     $(36,412,000)  $20,259,000
  Stock options exercised                                   -        43,000
  Warrants exercised                                        -             -
  Expiration of warrants                                    -             -
  Warrants issued to purchase Common Stock                  -             -
  Conversion of Series B preferred stock                    -             -
  Common Stock issued for cash, and
    conversion of license fee                               -     2,001,000
  Stock options issued for services                         -        22,000
  Dividends paid on Series B preferred stock         (543,000)     (543,000)
  Dividends accrued on Series B preferred stock      (180,000)     (180,000)
  Net Loss                                         (7,341,000)   (7,341,000)
                                                 ---------------------------
Balance at December 31, 1998                      (44,476,000)   14,261,000
  Stock options exercised                                   -       670,000
  Warrants issued to purchase Common Stock                  -       208,000
  Conversion of Series B preferred stock                    -             -
  Common Stock issued for cash                              -     4,012,000
  Dividends paid on Series B preferred stock         (531,000)     (531,000)
  Dividends accrued on Series B preferred stock      (179,000)     (179,000)
  Net Loss                                         (9,192,000)   (9,192,000)
                                                 ---------------------------
Balance at December 31, 1999                      (54,378,000)    9,249,000
  Stock options exercised                                   -       726,000
  Warrants exercised                                        -     1,201,000
  Expiration of warrants                                    -             -
  Warrants issued to purchase Common Stock                  -             -
  Conversion of Series B Preferred                          -         2,000
  Common Stock issued for cash                              -     9,058,000
  Dividends paid on Series B preferred stock         (449,000)     (165,000)
  Dividends accrued on Series B preferred stock      (144,000)     (144,000)
  Net Loss                                         (7,138,000)   (7,138,000)
                                                 ---------------------------
Balance at December 31, 2000                     $(62,109,000)  $12,789,000
                                                 ===========================
</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,
                                                           -----------------------------------------
                                                               1998           1999          2000
                                                           -------------  ------------  ------------
<S>                                                        <C>            <C>           <C>
Cash Flows from Operating Activities:
  Net loss                                                 $ (7,341,000)  $(9,192,000)  $(7,138,000)
  Adjustments to reconcile net loss to net cash
    used in operating activities:
    Depreciation and amortization                               495,000       411,000     1,290,000
    Provision for bad debts                                       6,000       175,000       155,000
    Stock and warrant compensation expense                       22,000             -             -
    Loss on asset disposals                                           -       335,000             -
    Accretion of debt discount                                        -             -        69,000
  Change in assets and liabilities:
    Increase in accounts and other receivables                 (294,000)   (1,348,000)   (1,885,000)
    Increase in inventories                                    (813,000)   (1,453,000)   (1,509,000)
    Increase in prepayments and other                          (109,000)     (152,000)     (115,000)
    (Decrease) increase in accounts payable and
      accrued liabilities                                       253,000     2,688,000      (141,000)
  Increase (decrease) in deferred revenues                      (60,000)      405,000       389,000
  Increase in other liabilities                                       -             -        83,000
                                                           -------------  ------------  ------------
    Net cash used in operating activities                    (7,841,000)   (8,131,000)   (8,802,000)
                                                           -------------  ------------  ------------
Cash Flows from Investing Activities:
  Capital expenditures                                         (832,000)   (5,885,000)   (4,681,000)
  Additions to patents                                          (83,000)     (109,000)      (99,000)
  Purchase of short-term investments                         (4,001,000)     (315,000)            -
  Sales of short-term investments                                     -     4,001,000             -
                                                           -------------  ------------  ------------
     Net cash used in investing activities                   (4,916,000)   (2,308,000)   (4,780,000)
                                                           -------------  ------------  ------------
Cash Flows from Financing Activities
  Proceeds from issuance of stock and warrants                  544,000     4,682,000    10,987,000
  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)
  Payments on notes payable                                           -             -        (2,000)
  Cash dividends paid                                          (543,000)     (531,000)     (346,000)
                                                           -------------  ------------  ------------
    Net cash provided by financing activities                     1,000     7,151,000    14,065,000
                                                           -------------  ------------  ------------
Net increase (decrease) in cash and cash equivalents        (12,756,000)   (3,288,000)      483,000
Cash and cash equivalents at beginning of period             20,781,000     8,025,000     4,737,000
                                                           -------------  ------------  ------------
Cash and cash equivalents at end of period                 $  8,025,000   $ 4,737,000   $ 5,220,000
                                                           =============  ============  ============


Supplemental Disclosure of Cash Flow Information:
  Cash paid during the year for interest                   $      2,000   $         -   $   683,000
                                                           =============  ============  ============
Supplemental Disclosure of Non-cash Financing Activities:
  Series B preferred stock dividends                       $          -   $         -   $   284,000
                                                           =============  ============  ============
  Common stock issued in exchange for deferred credit      $  1,500,000   $         -   $         -
                                                           =============  ============  ============
  Fair value of warrants issued in connection with:
    Notes payable                                          $          -   $   208,000   $         -
                                                           =============  ============  ============
    Common stock                                           $          -   $         -   $   407,000
                                                           =============  ============  ============
</TABLE>

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


                                      F-5
<PAGE>
                              LIFECELL CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


1.     ORGANIZATION

          LifeCell  Corporation  ("LifeCell"  or  "the  Company")  develops  and
markets biologic solutions for the repair, replacement and preservation of human
tissue.  The  Company's  tissue products are subject to regulation by the United
States  Food  and  Drug Administration. 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.

          LifeCell  expects  to  incur operating losses as well as negative cash
flow from operations in the short-term in connection with expansion of its sales
and  marketing  efforts  with  respect  to  current products and to continue its
product  development  programs.  The  Company's ability to increase revenues and
achieve  profitability  and  positive  cash flows from operations will depend on
increased  market  acceptance  of  its  current  products  and  its  ability  to
commercialize products currently under development. The Company expects that its
current  resources,  together with anticipated product revenues and research and
development  grant  funding, will satisfy its cash requirements for at least the
next  twelve  months.  However,  there  can be no assurance that such sources of
funds  will  be  sufficient to meet its needs and as a result, LifeCell may need
additional  funding  to operate its business. The Company has no commitments for
any  future funding and there can be no assurance that it will be able to obtain
additional  funding  from  either  debt  or  equity  financing,  bank  loans,
collaborative  arrangements  or other sources on acceptable terms, or at all. If
adequate  funds  are  not  available, the Company expects it will be required to
delay,  scale back or eliminate one or more of its product development programs.


2.   ACCOUNTING  POLICIES

     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.

     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.

          Whenever  events  and circumstances indicate that the value of a fixed
asset  may  not  be recoverable, the Company reviews the recorded carrying value
for  impairment. As of December 31, 2000, management believes that no reductions
to  the remaining useful lives or write-downs of long-lived assets are required.


                                      F-6
<PAGE>
                              LIFECELL CORPORATION
                  NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
                                DECEMBER 31, 2000


     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.

     Revenue  Recognition
          Product  revenues  are  recognized when the product is shipped to fill
customer orders. 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  Common  Share
          Loss  per  Common  share  has  been  computed  by  dividing  net loss,
increased  by  stated  dividends  on  Series  B Preferred Stock, 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  Common  share is the same as basic loss per Common
share  in all years due to the antidilutive nature of the Company's common stock
equivalents.

     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.

     Fair  Value  of  Financial  Instruments
          Financial  instruments  consist of cash and cash equivalents, accounts
receivable, accounts payable, debt and certain current liabilities. 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.

     Concentrations  of  Credit  Risk
          Financial  instruments  which  potentially  subject  the  Company  to
concentrations  of  credit  risk consist primarily of cash and cash equivalents,
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.


                                      F-7
<PAGE>
                              LIFECELL CORPORATION
                  NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
                                DECEMBER 31, 2000


     New  Accounting  Pronouncements
          In  December 1999, the Securities and Exchange Commission issued Staff
Accounting  Bulletin No. 101, "Revenue Recognition in Financial Statements". The
bulletin  is based upon existing accounting rules and provides specific guidance
on  how  those  accounting  rules should be applied. SAB No. 101 is effective no
later than the fourth quarter of fiscal years beginning after December 15, 1999.
Management believes that its revenue recognition policies are in compliance with
the  provisions  of  SAB  No.  101, and therefore the adoption of SAB No. 101 on
January  1,  2000  had  no  impact  on  the  Company's  financial  statements.

3.   INVENTORIES

          Inventories  consist  of  the  following  at  December  31,:

<TABLE>
<CAPTION>
                           1999        2000
                        ----------  ----------
<S>                     <C>         <C>
Raw materials           $1,081,000  $  929,000
In-process               1,215,000   2,259,000
Finished goods             906,000   1,523,000
                        ----------  ----------
     Total inventories  $3,202,000  $4,711,000
                        ==========  ==========
</TABLE>

4.   FIXED  ASSETS

          Fixed  assets  consist  of  the  following  at  December  31,:

<TABLE>
<CAPTION>
                                               1999          2000
                                           ------------  ------------
<S>                                        <C>           <C>

Machinery and equipment                    $ 2,303,000   $ 3,540,000
Leasehold improvements                       4,967,000     7,368,000
Office furniture and fixtures                  869,000     1,912,000
                                           ------------  ------------
                                             8,139,000    12,820,000
Accumulated depreciation and amortization   (1,591,000)   (2,829,000)
                                           ------------  ------------
    Net fixed assets                       $ 6,548,000   $ 9,991,000
                                           ============  ============
</TABLE>

5.   ACCRUED  LIABILITIES

          Accrued  liabilities  consist  of  the  following  at  December  31,:

<TABLE>
<CAPTION>
                                       1999        2000
                                    ----------  ----------
<S>                                 <C>         <C>
Operating expenses and other        $2,484,000  $1,925,000
Agency Fees                                  -     777,000
Employee compensation and benefits   1,095,000     301,000
Relocation costs                     1,079,000           -
Severance expense                      238,000      22,000
                                    ----------  ----------
     Total accrued liabilities      $4,896,000  $3,025,000
                                    ==========  ==========
</TABLE>


                                      F-8
<PAGE>
                              LIFECELL CORPORATION
                  NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
                                DECEMBER 31, 2000


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 million less offering costs of $100,000 (see Note
8).

          In  February  2000,  the Company entered into a co-promotion agreement
with  Obagi Medical Products, Inc. relating to the marketing and distribution of
the Company's Cymetra(TM) product. Pursuant to the terms of the agreement, Obagi
Medical  Products Inc. 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 provides for a revolving loan of $3
million  and a term loan of $2.5 million. In December 1999, the Company borrowed
$3 million on the revolving loan and in February 2000, the Company borrowed $2.5
million  under  the  term  loan.  The  revolving  loan requires monthly interest
payments  based  on  an  annual  interest  rate  of  prime  rate  plus 3%, which
approximated  12.5%  during  2000. At December 31, 2000 the interest rate on the
revolving  loan  was  12.5%.  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, intangibles 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  will  be  accreted  over  the  term of the loan agreement as additional
interest  expense. In March 2001, the financial institution agreed to extend the
maturity  date  of the revolving loan through January 31, 2002. In consideration
for  the  one-year  extension,  the  Company re-priced the exercise price on the
previously issued warrants to $2.00 per share. This change resulted in a $43,000
increase to the previously recorded value of the warrants which will be accreted
over  the  remaining  term of the revolving loan as additional interest expense.

          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, inventory and
fixed  assets.


                                      F-9
<PAGE>
                              LIFECELL CORPORATION
                  NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
                                DECEMBER 31, 2000


          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.


          Long  term  borrowings  have  the  following  scheduled  maturities:

<TABLE>
<CAPTION>
<S>              <C>
2001             $1,154,000
2002              1,378,000
2003                505,000
2004                106,000
2005 and beyond     283,000
                 ----------
     Total       $3,426,000
                 ==========
</TABLE>


8.   CAPITAL  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 initially convertible at any time at
the  option  of  the  holder  into  approximately  32.26  shares of Common Stock
(3,094,734  shares  of Common Stock at December 31, 2000), subject to adjustment
for  dilutive  issuances  of  securities.  The  Series  B  Preferred Stock has a
liquidation preference of $100 per share, or $9,593,100 as of December 31, 2000,
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.

          The  Series  B  Preferred  Stock  bears  cumulative dividends, payable
quarterly,  for  five years at the greater of the annual rate of $6.00 per share
or  the  rate  of  any dividends paid on other series of stock. Dividends may be
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. 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. 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 and 2000, the Company paid cash
dividends  on  the  Series  B  Preferred  Stock  of  $531,000  and  $346,000,
respectively.  Additionally,  in  2000  the Company paid dividends equivalent to
$284,000  through  the issuance of 2,842 shares of Series B Preferred Stock. The
Company  accrued  dividends  of  $144,000  at  December  31,  2000.


                                      F-10
<PAGE>
                              LIFECELL CORPORATION
                  NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
                                DECEMBER 31, 2000


Common  Stock
          During  1998, the Company issued 4,965 shares of Common Stock upon the
net  exercise  of warrants to acquire 11,290 shares of Common Stock, the Company
issued 65,600 shares of Common Stock to an unaffiliated party in connection with
the  settlement  of  prior  litigation  and the Company issued 310,771 shares of
Common  Stock as a result of the mutually agreed upon termination of the license
and  development  agreement  relating  to  heart  valves.

          In December 1998, as a result of terminating a license and development
agreement,  the  $1.5  million  up-front licensing fee paid by Medtronic Inc. to
LifeCell  in  1994 converted into 310,771 shares of newly issued LifeCell 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 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 before deducting offering costs of approximately
$267,000.  Pursuant  to the terms of the purchase agreement, the Company will be
required  to  issue additional shares to the investor if the market price of the
Company's  Common  Stock  is  below  $4.00  per share on the second and/or third
anniversary  of  the  date  of  issuance  of  the  Common  Stock.

          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.

     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 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.


                                      F-11
<PAGE>
                              LIFECELL CORPORATION
                  NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
                                DECEMBER 31, 2000


          A  summary  of stock option activity for the years 1998, 1999 and 2000
is  as  follows:

<TABLE>
<CAPTION>
                                                                                     Weighted
                                      1992          2000       Director     Total    Average
                                      Stock         Stock        Stock      Stock    Exercise
                                   Option Plan   Option Plan  Option Plan  Options   Price ($)
                                  ------------  ------------  ---------  ----------  --------
<S>                               <C>           <C>           <C>        <C>         <C>
Balance at December 31, 1997        1,037,320            --    145,000   1,182,320   $   3.67
  Granted                             946,700            --     30,000     976,700       5.09
  Exercised                           (12,550)           --         --     (12,550)      3.49
  Forfeited                          (141,767)           --         --    (141,767)      5.65
                                  ------------  ------------  ---------  ----------
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
                                  ============  ============  =========  ==========
Exercisable at December 31, 1998      701,528            --    145,000     846,528   $   3.45
Exercisable at December 31, 1999      940,958            --    110,000   1,050,958       3.98
Exercisable at December 31, 2000    1,258,348        31,250    115,000   1,404,598       4.04

Available for grant at
  December 31, 2000                    11,053       982,450    505,000   1,498,503
</TABLE>
<TABLE>
<CAPTION>
                                Options Outstanding            Options Exercisable
                      -------------------------------------  -----------------------
                                       Weighted                  Number
                         Number        Average      Weighted  Exercisable   Weighted
                      Outstanding at   Remaining    Average       at        Average
      Range of         December 31,   Contractual   Exercise  December 31,  Exercise
   Exercise Prices        2000        Life (Years)   Price        2000       Price
--------------------  --------------  ------------  --------  ------------  --------
<S>                   <C>             <C>           <C>       <C>           <C>
$  0.73  to  $  1.99           1,041           5.3  $   1.23           541  $  0.73
   2.00  to     2.99         453,850           8.0      2.26       198,850     2.44
   3.00  to     3.99       1,054,119           4.6      3.76       745,719     3.73
   4.00  to     4.99         669,763           4.3      4.19       225,301     4.17
   5.00  to     5.99         414,750           8.6      5.37        89,063     5.25
   6.00  to     6.99         245,750           7.5      6.62       135,125     6.63
   7.00  to    11.00          28,150           6.5     10.30        10,000    11.00
                      --------------  ------------             -----------
$  0.73  to  $ 11.00       2,867,423           5.9  $   4.16     1,404,598  $  4.04
                      ==============  ============            ============
</TABLE>


                                      F-12
<PAGE>
                              LIFECELL CORPORATION
                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
                                DECEMBER 31, 2000


          In  addition  to the amounts set forth in the table 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. At December 31, 2000, 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  4.4  years  as  of  December  31,  2000.

          The  Company accounts for its employee stock-based compensation plans
under  APB  No.  25  and  its  related  interpretations.  Accordingly,  deferred
compensation  expense  is  recorded for stock options based on the excess of the
market  value  of the common stock on the date the options were granted over the
aggregate exercise price of the options. This deferred compensation is amortized
over the vesting period of each option. As the exercise price of options granted
under  the  1992  Plan, the 2000 Plan and the Director Plan has been equal to or
greater  than  the  market price of the Company's stock on the date of grant, no
compensation  expense related to these plans has been recorded. Had compensation
expense  for  its  1992  Plan,  2000  Plan  and  Director  Plan  been determined
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>
                                         1998          1999           2000
                                     ------------  -------------  ------------
<S>                                  <C>           <C>            <C>
Net Loss:
As reported                          $(7,341,000)  $ (9,192,000)  $(7,138,000)
Pro forma                             (9,105,000)   (11,158,000)   (8,921,000)
Loss Per Share (Basic and Diluted):
As reported                                (0.72)         (0.83)        (0.54)
Pro forma                                  (0.88)         (0.99)        (0.67)
</TABLE>

          Because the Statement 123  method  of accounting has not been applied
to  options  granted  prior  to  January  1,  1995,  the  resulting  pro  forma
compensation  cost  may  not  be representative of that to be expected in future
years.

          Under the provisions  of SFAS No. 123, the weighted average fair value
of options granted in 1998, 1999, and 2000 was $3.99, $2.64 and $2.62 per share,
respectively,  under  the  1992 Plan. The weighted average fair value of options
granted  in  2000  was $2.68 per share under the 2000 Plan. The weighted average
fair value of options granted in 1998, 1999, and 2000 was $5.33, $2.76 and $3.71
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 1998,
1999  and  2000,  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.

     Warrants

          As of December  31, 2000,  warrants  to  acquire a total of 3,370,298
shares  of  Common  Stock  were  outstanding  as  set  forth  below.

          During  1996,  the Company issued warrants, with an exercise price of
$4.13 per share, to acquire 2,803,530 shares of Common Stock in conjunction with
the  sale  of  the  Series B Preferred Stock (the "1996 Warrants"). The warrants
expire  in  November  2001,  are  callable  if  the average closing price of the
Company's  Common  Stock  for  any 30 consecutive trading days equals or exceeds
three  times  the  then-exercise  price  and  allow  cashless exercise. The 1996
Warrants also have provisions for adjustment of the exercise price and number of
shares  for  below-exercise price issuance of securities. In 2000, in connection
with  the  sale of its Common Stock at $4.00 per share, the Company adjusted the
exercise  price of the 1996 Warrants to $4.07 per share and increased the number
of  shares  by  37,026.  As of December 31, 2000, the  1996  Warrants to acquire
2,614,278  shares  of  Common  Stock  were  outstanding.


                                      F-13
<PAGE>
                              LIFECELL CORPORATION
                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
                                DECEMBER 31, 2000


          Additionally,  in  1996 the Company issued warrants, with an exercise
price  of  $4.50  per  share,  to  acquire 354,734 shares of Common Stock to the
placement  agent  for  the  Series  B  Preferred  Stock  ("Agent Warrants"). The
warrants expire in November 2001 and allow cashless exercise. The Agent Warrants
also  have  provisions for adjustment of the exercise price and number of shares
for below-exercise price issuance of securities. In 2000, in connection with the
sale  of  its Common Stock at $4.00 per share, the Company adjusted the exercise
price  of  the  Agent  Warrants  to  $4.36 per share and increased the number of
shares  by  4,769.  As  of  December 31, 2000, Agent Warrants to acquire 196,809
shares  of  Common  Stock  were  outstanding.

          During November 1999, the Company  issued warrants, with  an  exercise
price  of  $5.46  per  share,  to  acquire  200,000  shares  of  Common Stock in
conjunction  with  the  sale  of Common Stock. These warrants expire in November
2004. These warrants have provisions for adjustment of the exercise price if the
market  price  of  the  Company's  Common  Stock is below $4.00 per share on the
second and/or third anniversary of the date of grant. Also, 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.  In  January  2001,  in
consideration  for  a  one-year  extension of the maturity date of the revolving
loan,  the Company adjusted the exercise price on the previously issued warrants
to  $2.00  per  share  (see  Note  7).

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

          As  of December 31, 2000, additional warrants to acquire 25,000 shares
of Common Stock were outstanding with an exercise price of $8.00 per share. Such
warrants  expired  in  February  2001.


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.  In  June 1999, the Company recorded a charge of
approximately  $335,000  representing  the  net  book  value of assets that were
abandoned  in  the  second  quarter  of  1999  when  the  Company  vacated  its
administrative  offices located in Texas. The Company occupied rented office and
manufacturing  space  in  Texas  pursuant  to  a  lease  that  extended


                                      F-14
<PAGE>
                              LIFECELL CORPORATION
                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
                                DECEMBER 31, 2000


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.

          At  December  31,  1999,  accrued  relocation costs were approximately
$1.1  million  consisting of approximately $617,000 for lease termination costs,
approximately  $288,000  for  home  sale  assistance  and  moving  costs  and
approximately  $174,000  for  retention  payments  payable  to  non-relocating
employees.


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 vest on a graduated basis over five years.
Total Company contributions during 1998, 1999 and 2000 were $21,000, $23,000 and
$31,000,  respectively.

          During  1996,  the Company established 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  1998,  1999,  and  2000 were $14,000, $14,000 and $7,000,
respectively.

11.     INCOME  TAXES

          As  of December 31,  2000,  the  Company  has  a  net  operating  loss
carryforward  ("NOL")  for  federal  income  tax purposes of approximately $55.0
million,  subject  to  the  limitations  described  below,  expiring as follows:

<TABLE>
<CAPTION>
Year Expires
<S>            <C>
2001           $  500,000
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
2018            8,200,000
2019            7,700,000
2020            7,400,000
               ----------
               55,000,000
               ==========
</TABLE>


                                      F-15
<PAGE>
                              LIFECELL CORPORATION
                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
                                DECEMBER 31, 2000


          Additionally,  the  Company  has  approximately  $614,000  of  federal
research  and  development tax credit carryforwards which will expire in varying
amounts commencing in 2001. 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,  2000,  is  approximately $31.1 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.

          The Company also has a  net  operating  loss  carryforward  for  state
income  tax  purposes  of  approximately  $7.6  million  which expire in varying
amounts  commencing  in  2006.

          For financial reporting purposes, a valuation allowance of $19,960,000
has  been  recorded  as  of  December 31, 2000, to fully offset the deferred tax
asset  related  to these carryforwards. The principal components of the deferred
tax asset as of December 31, 1999 and 2000, assuming a 34% federal tax rate, are
as  follows:

<TABLE>
<CAPTION>
                                                               1999           2000
                                                           -------------  -------------
<S>                                                        <C>            <C>
Temporary differences:
  Deferred revenue                                         $    138,000   $    270,000
  Uniform capitalization of inventory costs                     147,000        160,000
  Other items                                                   140,000        210,000
                                                           -------------  -------------
  Total temporary differences                                   425,000        640,000
  Federal tax losses and credits not currently utilizable    16,513,000     19,320,000
  State tax losses and credits not currently utilizable              --        685,000
                                                           -------------  -------------
Total deferred tax assets                                    16,938,000     20,645,000
                                                           -------------  -------------
  Less valuation allowance                                  (16,938,000)   (20,645,000)
Net deferred tax asset                                     $         --   $         --
                                                           =============  =============
</TABLE>

          The  net increase in the deferred tax valuation allowance for 1999 and
2000  was  $2,551,000 and $3,022,000, 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  1998,  1999  and  2000.


12.  COMMITMENTS  AND  CONTINGENCIES

     Litigation

          In May  2000,  a  complaint  was  filed  in  the  Superior  Court  of
California,  San  Bernardino  County, Central District, captioned Ann Regner et.
al.,  on  behalf  of  themselves  and others similarly situated, v. Inland Eye &
Tissue  Bank  of Redlands, et al. The complaint was brought as a class action on
behalf  of all close family members of those deceased persons whose tissues were
collected, processed, stored or distributed in California. The complaint alleged
that  tissue  banks routinely fail to obtain proper informed consent from family
members  when  soliciting  the  donation  of  human  tissue  for transplant. The
complaint  also alleged that the defendants, including the Company, make profits
from  the  storing, processing and distribution of human tissue in contravention



                                      F-16
<PAGE>
                              LIFECELL CORPORATION
                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
                                DECEMBER 31, 2000


of  California law. Plaintiffs' application for a preliminary injunction seeking
to  enjoin  the  defendants,  including  the  Company,  from  doing  business in
California was denied in June 2000. In September 2000, a new complaint was filed
in  the  Superior  Court  of  Los Angeles 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  complaint  is  not
denominated as a class action and does not involve tort theories. The action was
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.  The  plaintiffs  seek  injunctive  relief,  disgorgement  of illegal
profits,  restitution,  statutory  penalties, fines and attorney's fees. The May
2000  complaint  was  dismissed without prejudice in January 2001. The September
2000 complaint is still pending. The Company believes that the claims against it
in  the new complaint are without merit and intends to vigorously defend against
such  action.

          In  June  2000,  a complaint was filed in the United  States  District
Court,  District  of  New  Jersey,  entitled  Inamed Corporation, McGhan Medical
Corporation  and  Collagen  Aesthetics,  Inc. vs. LifeCell Corporation and Obagi
Medical  Products,  Inc.  The  complaint alleged that the Company and Obagi, its
marketing agent, disseminated false advertisements with respect to the marketing
of  the  Company's  Cymetra  product  that  misleadingly  compared  it  to,  and
unlawfully  disparaged,  the  bovine collagen products of Inamed Corporation and
its  subsidiaries.  In  September  2000,  the  Company entered into a settlement
agreement  with  Inamed Corporation. Under the settlement agreement, the Company
and  Obagi  agreed  to  discontinue  certain comparative marketing and promotion
statements on the use of Cymetra for the reconstruction of soft tissue deficits.
The  Company and Obagi also agreed to jointly make settlement payments to Inamed
Corporation  totaling  $300,000  over  an  eighteen-month  period.  The  Company
recorded  a  charge  of  $150,000 in the third quarter of 2000, representing its
share  of  the settlement. The settlement allows the Company and Obagi to revise
the marketing and promotional statements for Cymetra commencing in January 2001,
as  additional  scientific  data  on  the  use  of  Cymetra  is  accumulated.

          In  December  2000,  a  complaint  was  filed  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
Renger  complaint. This action is not denominated as a class action and does not
involve  tort  theories.  The  action  was  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. The plaintiffs
are  seeking  injunctive  relief,  disgorgement of illegal profits, restitution,
statutory  penalties,  fines  and attorney's fees. The Company believes that the
claims  against it in this complaint are without merit and intends to vigorously
defend  against  such  action.

          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. and Prudential
Securities,  Inc.  The  complaint  alleges that LifeCell, 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 seeks damages in an unspecified
amount.  Gruntal  and  Prudential's  Vector  Healthcare Group acted as placement
agents  in  LifeCell's private placement which closed in October, 2000. On March
15, 2001, the Company filed a motion for dismissal which is pending. The Company
believes  that  the  claims  against  it in this complaint are without merit and
intends  to  vigorously  defend  against  such  action.


                                      F-17
<PAGE>
                              LIFECELL CORPORATION
                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
                                DECEMBER 31, 2000


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

          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.

     License  Agreements

          The  Company  has  entered  into  several  license  agreements,  both
exclusive  and  nonexclusive  in  conjunction  with its business. The Company is
required  to  pay  royalties  on net sales of products encompassing the licensed
technologies.  For  the  years ended December 31, 1998, 1999, and 2000, $10,000,
$17,000  and  $0 of expenses were incurred under these agreements, respectively.

     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 Obagi Medical Products, Inc. as its exclusive
sales  and  marketing  representative of Cymetra for office-based dermatologists
and  plastic  surgeons.  During  1998,  1999 and 2000, sales of products through
Boston  Scientific  Corporation  represented  approximately  0%,  4%  and  28%,
respectively,  of  our total product revenues. During 1998, 1999 and 2000, sales
of  products through Obagi Medical Products represented approximately 0%, 0% and
13%,  respectively, of our total product revenues.  The Company expects sales of
its  products  through  such  marketing  agents  to  continue  to  increase as a
percentage of total revenues.  Both Boston Scientific and Obagi Medical Products
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,  2000,  were  as  follows:

<TABLE>
<CAPTION>
<S>              <C>
2001             $  833,000
2002                833,000
2003                833,000
2004                833,000
2005 and beyond   3,999,000
                 ----------
     Total       $7,331,000
                 ==========
</TABLE>

Rental  expense was $376,000, $501,000 and $565,000 for the years ended December
31,  1998,  1999,  and  2000,  respectively.


                                      F-18
<PAGE>
                              LIFECELL CORPORATION
                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
                                DECEMBER 31, 2000


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  are  summarized  as  follows:

<TABLE>
<CAPTION>
                                1998        1999         2000
                             ----------  -----------  -----------
<S>                          <C>         <C>          <C>
United States                $6,575,000  $11,065,000  $20,219,000
Other foreign countries         670,000      847,000    1,111,000
                             ----------  -----------  -----------
     Total Product Revenues  $7,245,000  $11,912,000  $21,330,000
                             ==========  ===========  ===========
</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,  1999  and  2000:

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

1999
  Product Revenues . . . . . . . . . . . .  $  2,319   $  2,956   $  3,220   $  3,417
  Total Revenues . . . . . . . . . . . . .     2,606      3,245      3,346      3,479
  Cost of Products Sold. . . . . . . . . .       807        764        886        995
  Net Loss . . . . . . . . . . . . . . . .    (2,084)    (2,101)    (1,521)    (3,486)
  Loss Per Common Share-Basic and Diluted.     (0.19)     (0.19)     (0.14)     (0.30)

2000
  Product Revenues . . . . . . . . . . . .  $  4,438   $  5,387   $  5,919   $  5,586
  Total Revenues . . . . . . . . . . . . .     4,816      5,862      6,235      5,859
  Cost of Products Sold. . . . . . . . . .     1,188      1,912      1,693      2,156
  Net Loss . . . . . . . . . . . . . . . .    (1,156)    (2,149)    (1,649)    (2,184)
  Loss Per Common Share-Basic and Diluted.     (0.10)     (0.16)     (0.13)     (0.15)
</TABLE>


                                      F-19
<PAGE>