U.S. SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-KSB/A

                         AMENDMENT NO. 1 TO ANNUAL REPORT
                     PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

            For the Fiscal Year Ended   Commission File Number: 0-18109
                  December 31, 1999

         Exact name of small business issuer as specified in its charter

                            BCAM INTERNATIONAL, INC.

   State or other jurisdiction of                IRS Employer
   incorporation or organization:                Identification No.: 13-3228375
   New York

                     Address of principal executive offices:

                             1800 Walt Whitman Road,
                            Melville, New York 11747
                                 (516) 752-3550

     Securities  registered  under  Section  Name  of  each  exchange  on  which
registered:  12(b) of the  Exchange  Act:  The Over the Counter  Bulletin  Board
Common Stock, $.01 par value

         Securities registered under Section 12(g) of the Exchange Act:
         --------------------------------------------------------------
                          Common Stock, $.01 par value

Check whether the  registrant (1) filed all reports to be filed by Section 13 or
15 (d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes |X| No |_|

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

Registrant's  revenues  for its  most  recent  fiscal  year  were  approximately
$44,000.

The  aggregate   market  value  of  the   registrant's   common  stock  held  by
non-affiliates  as of April 6, 2000, was  approximately  $5,116,210 based on the
average  closing  price of such stock on April 6, 2000,  as reported by the Over
the Counter Bulletin Board.

The number of shares  outstanding of the  registrant's  common stock as of April
11, 2000, was 40,680,153.

                    DOCUMENTS INCORPORATED BY REFERENCE: None

   Transitional Small Business Disclosure Format (check one): Yes |_|; No |X|


<PAGE>


                                     PART I

ITEM 1. BUSINESS

                                  Introduction

     BCAM  International,  Inc.,  ("BCAM") a New York corporation,  is a medical
technology  company that will supply a cost effective  system of cell and tissue
analysis to provide  physicians and other health care professionals a method for
the early detection of cancer.  We will produce revenues through direct sales to
medical  providers,  corporations  and other  groups  who can  benefit  from our
products.  Additional  revenue  sources  include  a fee  for  services  paid  by
laboratories for marketing  efforts related to our system.  In addition,  we are
exploring business combinations that will provide:

o        Additional technology
o        Prospective Customers
o        Distribution Channels


                                 Our Background

     On September 23, 1999, BCAM, through its wholly-owned subsidiary, LungCheck
Health,  Inc.,  a Delaware  corporation,  pursuant to an  Agreement  and Plan of
Merger  dated  September  15,  1999,  acquired   LungCheck,   Inc.,  a  Delaware
corporation,  in a statutory  merger of LungCheck,  Inc. into LungCheck  Health,
Inc. ("LungCheck")

     Immediately  prior to the Merger,  we transferred to ISTX, Inc., a Delaware
corporation,  which was then a 90% owned subsidiary, and our prior business, all
of our then technology holdings, including:

o        intelligence surface technology
o        microvalve technology
o        all of  our licensing agreements with Textron and Reebok

     In consideration of the technology transfer and assignment,  ISTX agreed to
assume  substantially all of our trade debt upon which we agreed to pay ISTX Two
Hundred Twenty Five Thousand  ($225,000)  Dollars  immediately after the Merger,
which transfer was made.

     In  addition  to the  foregoing,  immediately  prior  to the  Merger,  BCAM
transferred its 90% interest in ISTX to its  stockholders of record on September
22, 1999 by way of a declared  stock  dividend on the basis of one share of ISTX
for one  share of BCAM  common  stock  held of  record on  September  22,  1999.
Certificates  of ISTX common  stock  issuable as a result will not be  delivered
until ISTX has filed a  registration  statement with the Securities and Exchange
Commission  pursuant  to the  Securities  Exchange  Act of  1934,  and  ISTX has
prepared a disclosure  statement to accompany  the delivery of the  certificates
representing the shares.

     The terms of the Plan of Merger  provided  that each  outstanding  share of
LungCheck  common stock,  par value $.001,  immediately  prior to the Merger was
converted  into  0.0032958 of a share of BCAM Series B  convertible  acquisition
preferred  stock,  par value  $.01 per share,  and that each share of  LungCheck
preferred  stock,  par value $.001 per share was  converted  into  0.098884 of a
share of BCAM Series A convertible  acquisition  preferred stock, par value $.01
per share.  After the completion of the exchange and upon conversion of the BCAM
Series A and B preferred  stock into common stock of BCAM, the  shareholders  of
LungCheck  became  the  holders  of  approximately  80% of the total  issued and
outstanding  common  stock  of  BCAM.  Therefore,  as a  result  of the  Merger,
effective control of the Company passed to the former shareholders of LungCheck.
Michael Strauss,  Chairman,  Chief Executive Officer and President of BCAM, will
continue in that capacity.

     Since BCAM had no business operations  immediately prior to the Merger, and
since the security holders of LungCheck own  approximately  80% of the equity of
the combined  Companies  upon  conversion of the BCAM Series A and B convertible
acquisition  preferred  stock,  the  transaction is being treated as a "purchase
business  combination" and a "reverse  acquisition"  for accounting  purposes in
which BCAM is the legal acquirer,  LungCheck is the accounting  acquirer and the
assets  and  liabilities  of  LungCheck  and  BCAM  will be  recorded  at  their
historical carrying values as of the date of consummation.

     As a result of the ISTX  Transaction and Merger,  the Company had virtually
no business  operations,  making the business of LungCheck  the sole business of
the Company.

                                   Our Company

     Our  company is engaged in the  development  and sale of  clinical  testing
applications and automated  laboratory systems that together allow for the early
detection, diagnosis, characterization,  treatment and monitoring of significant
human diseases.  The Company is currently focused on developing clinical testing
applications for lung cancer and has already fully developed and begun marketing
its first  clinical  application  called  LungCheck(R)  to  targeted  healthcare
providers who treat people that are `at-risk' for lung disease.

     The Company plans to fully develop  laboratory  systems that provide highly
sensitive (using genetic and molecular marker technology)  testing  capabilities
through automated  screening  technology and to simultaneously  develop numerous
clinical  applications that test for cancer or other serious medical  conditions
and are able to be run on the  Company's  laboratory  systems.  The Company will
market the use of its testing applications to medical providers who in turn will
order the tests that are then run on the  laboratory  systems  that the  Company
provides to certain  large  reference  and  hospital  laboratories.  The Company
believes  that  the  placement  of  its  systems   coupled  with  the  increased
utilization of its testing  applications by providers will result in significant
recurring  revenue to the  laboratories  that use its  systems as well as to the
Company and the physicians that collect specimens for testing. The Company plans
to charge the laboratory on a per-test or per-user basis and it is  contemplated
that the Company  will place its systems and receive  on-going  leasing  revenue
from these systems as well as from fees associated with its proprietary  testing
kits.

     Management  has spent the last several months  assembling key  intellectual
property assets that represent a significant foundation upon which we will build
a series of  high-value  products for the early  detection  of lung cancer.  The
technologies  and systems being  developed  will be broadly  enabling and can be
readily  applied to other diseases and will establish  barriers that will secure
our competitive position.

     We are well positioned  with a number of strategic  assets already in place
including:

o    Intellectual Property.  Covering  instrumentation and methods for automated
     cell and tissue image analysis.


o    Products.
-        Sputum Cytology plus TrendCytogram(R);
-        Sputum Collection Device;
-        Cell Analyzer;
-        Cell Differential Counter

o    Instrument Platforms.
-        Computer-Aided Microscopes;
-        DNA Stains;
-        Preparation Devices;
-        DNA Analyzer;

o    Software. Image Analysis Software

o    Databases. Specimen Database

     We will utilize our internal  research and  development  group,  as well as
licenses and strategic alliances to gain access to other  technologies,  assays,
and molecular  markers that will add  significant  value to the systems  thereby
preserving its competitive advantage.

     Some of these licenses and strategic alliances include:

o    AccuMed International, Inc. a public company founded in 1987, has agreed to
     license their  intellectual  property  patent  portfolio and core expertise
     (i.e.,  scientific  and  technical  know-how)  for use in the field of lung
     cancer.  Included  are  AccuMed's  computer-aided  (AcCell,  TracCell)  and
     quantitative (Savant) optical microscopy;  automated electronic imaging and
     screening  systems;  analytical  instruments  and  algorithms  for cell and
     tissue  image  analysis  and  methods to measure  intracellular  malignancy
     associated  changes.  Our vision is to build an integrated system that will
     enable the early  detection  of lung  cancer.  We believe that our existing
     technology added to the AccuMed technology will provide a strong foundation
     by which to further build a strong leadership position in the marketplace.

o    We have  partnered  with EMSI, a leading  provider of  paramedical  testing
     services as well as Wellness and Occupational  Health Screening Programs to
     Fortune  500  Companies.  Our  LungCheck(R)  product  and  service  will be
     represented as part of EMSI's portfolio of products and included within the
     programs  that it sells to its  corporate  clients  and other  occupational
     health  programs,  as a single source solution for  "Wellness".  We believe
     that EMSI's  reputation as a quality provider of services will only enhance
     the  reputation  of our product  over time and will  provide  pre-qualified
     sales opportunities.

o    Last year, we developed a partnership with a highly credentialed  pathology
     laboratory,   Schumann  Cytology   Laboratories   (SCL)  who  is  providing
     laboratory services for the current LungCheck Test. We anticipate expanding
     its network of laboratory partners in order to position us for the increase
     in  testing  volume  that is  expected  to  result  from the new  sales and
     marketing  efforts.   These  partnerships  will  provide  a  mechanism  for
     laboratory cost  containment  and as well as a network of referral  sources
     around the world that will use our screening technologies.

                              Products and Services

The  Company  will  continue  to  market  its  LungCheck(R)  test  for  use as a
`stratifying'  and  monitoring  tool for those who are  engaged  in  "high-risk"
activities but are not classified as being  "at-risk.  The Company also plans to
engage in the  development  of a fully  integrated  sputum  cytology  diagnostic
system that will initially  incorporate  proprietary  technologies licensed from
AccuMed  and  eventually  followed  by  assays to  evaluate  the  expression  of
molecular markers. The system will also incorporate proprietary  technologies in
sample  collection  and image  analysis to produce a system  with the  requisite
sensitivity and specificity to qualify for use as a population-based screen. The
Company  anticipates  that it will conduct  clinical trials on an on-going basis
starting  in Year 2 in order to  demonstrate  clinical  value and  ensure  rapid
regulatory  approval.  The Company will also develop a series of tests that will
be launched in 2003 that will be  targeted to patients  who have been  diagnosed
with lung cancer. These products will run on the Company's proprietary automated
platform  technology  and  will  utilize  quantitative   histology  technologies
licensed  from  strategic  partners to  characterize  the tumor at the molecular
level and monitoring patients for therapeutic efficacy and disease progression.

LungCheck(TM) System
Management  believes  that  this  product  will add  specific  value in terms of
individuals who may be reclassified as being "at-risk" due to their duration and
intensity of exposure to harmful breathing contaminants. The product may also be
used to monitor the pulmonary  health in individuals who take specific action to
reduce their exposure (e.g. smoking cessation,  use of protective equipment,  or
other changes that decrease the level of exposure).

o    Patented  Collection  Device. In order to initiate the test, the patient or
     physician  collects a  specimen  either in the  physician's  office or over
     three consecutive  mornings at home. The specimen  container is then mailed
     to the Company's laboratory for processing,  evaluation and interpretation.
     This proprietary container has several important attributes: (i) it is easy
     to use; (ii) it is designed for typical mail delivery;  and (iii) it can be
     administered at home.

o    Database.  The  Company has  compiled a  proprietary  database  and archive
     system that consists of approximately 30,000 slides and 15,000 patient lung
     pathology cases; complete with highly valuable demographic and medical data
     on  each  patient.  This  clinical  archive  serves  as the  basis  for the
     proprietary  algorithms  that can be used to produce the  Company's  unique
     pathology report.

o    Algorithm.  The  Company  has  developed  rules for  analysis  whereby  (7)
     categories  of cells are  measured per case and are compared to the patient
     information that is contained in the comprehensive  database of slides. The
     computer  algorithm enables bench marked results for each category of cells
     for each patient that receives the LungCheck(TM)  test.  Further,  the test
     enables a baseline for monitoring a patient's subsequent exposure.

o    TrendCytogram(TM).  Following  review by a  Pathologist,  the  results  are
     displayed  on  the  Company's   proprietary  pathology  report  called  the
     TrendCytogram(TM). This report provides physicians with:

-    A range of patient classifications from "negative" to carcinoma

-    A graphic, quantitative representation of the level of (8) components found
     in the patient's sputum

-    A monitoring tool that will allow comparisons with up to four previous test
     results, thereby enabling the recognition of trends

-    Pathologist commentary on the test results

-    Convenient inclusion of important historical and demographic patient data

-    Digitized images of suspicious and/or definitively diseased cells

Next  Generations  - Enhanced  Sputum  Cytology and  Population-based  Screening
Systems The Company  intends to leverage the proprietary  technologies  acquired
from AccuMed International and other partners to develop its next generations of
cell and tissue  analytical  systems.  The  Company  anticipates  that the tests
developed  for  these  systems  will  meet  the   sensitivity   and  specificity
requirements  necessary  for  use  in a  population-based  screen.  The  Company
believes  that its systems will  contribute  to a reduction in  disease-specific
morbidity and mortality and the cost of healthcare while significantly improving
the patient's quality of life. The high value of the information provided by the
Company's systems will drive acceptance by physicians,  patients and third-party
payers, reimbursement levels, and the generation of significant revenues.

o    Automation  of  the  LungCheck(TM)Test  -  Enhanced  Sputum  Cytology.  The
     Company's  current   LungCheck(TM)test  will  be  fully  leveraged  through
     integration  with  technology  provided  by  AccuMed,  which has  automated
     microscopy  platforms and intelligent cellular analysis systems that can be
     used  for  sputum  analysis.   Further   improvements  in  sensitivity  and
     specificity  are  expected  through  enhancements  provided  by the AccuMed
     systems that utilize  proprietary DNA stains to examine nuclear content and
     other Malignant  Associated  Changes (MAC). The automated  LungCheck(R)test
     will be used  as a  `tool'  for the  surveillance  of  populations  who are
     exposed to agents that can potentially damage the lung. Management believes
     that additional regulatory approval will not be required as the Micro21 has
     already receive several 510K clearances and the product will be labeled for
     `Research  Use Only' and will be only one of  several  tools used to assist
     physicians  in  assessing  the  pulmonary  health of their  patients.  This
     product is expected to be operational  and in place in select  laboratories
     within six (6) to twelve (12) months.

o    Second-Generation  Automated  Platform  Technology:  The Company intends to
     utilize  advancements  in sample  collection  and processing in conjunction
     with highly specific  molecular markers to develop  diagnostic  systems and
     tests that are  cost-effective  and will allow the early  detection of lung
     cancer.  Clinical  research at major medical  centers  throughout the world
     will be used to demonstrate that the tests have sufficient  sensitivity and
     specificity to justify their use as population-based screens. The Company's
     advanced  diagnostic  system  will be  based on the  AccuMed  AcCell-Savant
     platform  that  is  currently  being  utilized  by  various  major  medical
     facilities around the world for cell and tissue analysis  including sputum.
     Management  expects that this product will require  regulatory  approval in
     order to be utilized as a fully integrated and standalone diagnostic system
     within the clinical  laboratory.  Key market  opportunities for the systems
     exist in the US, Western Europe and Japan with  significant  upside derived
     from markets in Eastern Europe and China.  AccuMed has already  conducted a
     large  field  study  demonstrating  the  efficacy  of  the  current  Savant
     technology that Management  believes will facilitate the approval  process.
     Management  anticipates  initiating  worldwide clinical trials beginning in
     year 2 of  operations.  Furthermore,  additional  tests can be added to the
     system that will enable  characterization of tumors based on the expression
     of specific molecular  markers.  Once this data is linked to the outcome of
     patients  treated  with  specific  therapeutic  modalities,  it  should  be
     possible  to  utilize  the  information  to  select  the  optimal  and most
     cost-effective  treatment for the lung cancer patient. Based on the quality
     of the information  provided by the systems,  Management  anticipates broad
     acceptance by healthcare providers,  patients,  and third-party payers. The
     Company  also  believes  that  its  should  also  be  possible  to  develop
     additional high-value tests for the system:


SYSTEM DESCRIPTION: AUTOMATED SCREENING TECHNOLOGIES:

o    TracCell(R)Slide  Mapping System.  As part of its licensing  agreement with
     AccuMed,  the Company has access to AccuMed's  computerized  slide  mapping
     technology.  The FDA has granted its  approval  for use of the  TracCell(R)
     System for pap smears prepared using Cytyc's  ThinPrep(R)liquid-based slide
     preparation  system  (LBSP).  A similar  LBSP  system  will be used for the
     preparation of sputum slides. The TracCell(R)stand-alone slide preprocessor
     produces electronic "maps" of slide-based  cytological samples.  These maps
     are designed to reduce the time required to review a sample and  associated
     labor costs.  By processing  slides with a TracCell  before the  cytologist
     screens the slides at an AcCell review  station,  the  cytologist  can save
     time by being automatically routed past "empty" fields-of-view. An indirect
     benefit  of the  TracCell  tool is  that  screeners  can  spend  more  time
     analyzing   difficult-to-interpret  cells  or  regions-of-interest  without
     sacrificing overall productivity.

o    AcCell-Savant.  The  Company  will also gain access to  AccuMed's  cell and
     sample analysis instrument platform. The AcCell-Savant,  an integrated cell
     analysis platform  incorporating  several core  technologies  including DNA
     cytochemistry,  computer-assisted  microscopy,  electronic imaging, digital
     image processing and analysis, and medical informatics.  These technologies
     facilitate  the direct  measurement  of cellular  changes  (e.g.,  "MAC" or
     Malignant-Associated  Changes)  associated with early disease  progression.
     Analyses can be performed, with the production-oriented  AcCell-Savant with
     greater  sensitively,  accuracy,  and reproducibly  than is possible by the
     human  eye-brain   combination   alone.  The  AcCell  technology   utilizes
     specialized photodetectors and electro-mechanical precision, to selectively
     focus on the most  informative  cell population  using image processing and
     analysis  algorithms,  and statistical  methods. The AcCell-Savant can also
     quantitate  the DNA  content  of each  cell  and  determine  how the DNA is
     arranged  within normal and abnormal cell nuclei.  The instrument  also has
     the  capacity  evaluate  the levels of  expression  of  multiple  molecular
     markers simultaneously.  When taken together, these features can be used to
     objectively  classify  patient  samples  with  increased   sensitivity  and
     specificity allowing earlier and more specific diagnoses. The AcCell-Savant
     is  designed to enable the  Pathologist  to more  rapidly  and  effectively
     identify  patients who should be followed  more  closely and could  benefit
     from early intervention.  Furthermore, for patients who have no evidence of
     disease, use of the Company System should significantly reduce the need for
     more costly and invasive testing where no benefit would be derived.

o    Follow-on   System   Enhancements.   Management  will  consider   licensing
     additional  proprietary  technology to augment the capabilities of its test
     including:

-        Molecular markers,
-        Staining technologies,
-        Sputum induction technologies,
-        Cell preservation reagents,
-        Automated slide preparation technologies and
-        Disease management software that complement and increase the value
         of the existing system

                                   The Markets

     According to the World Health  Organization  (WHO),  lung cancer has become
the most common fatal  malignancy  in both men and women with an  estimated  1.0
million new cases each year. In the U.S. alone, the National Cancer reports that
there are  approximately  180,000 new cases of lung cancer and each year 160,000
people die of the disease  accounting for 25% of all  cancer-related  deaths. In
the U.S., overall 1-year survival for patients with lung cancer is 40%, however,
only 14% live 5 years. In other parts of the world,  5-year survival is only 5%.
The  high  mortality  of lung  cancer  can be  attributed  to the  fact the most
patients  (85%) are diagnosed with advanced  disease when treatment  options are
limited  and the  disease is likely to have  metastasized.  Even if a patient is
diagnosed early and is presumably  cured by surgery,  they remain at significant
risk, as there is a high probability that they will develop a second malignancy.

     Lung  cancer  can  be  categorized  into  two  general   histologic  types;
small-cell  (SCLC) which accounts for 25-35% of lung cancer,  and non-small cell
(NSCLC) which accounts for the remaining 65-75% of cases. In most cases, SCLC is
disseminated  at the  time  of  diagnosis  and  while  generally  responsive  to
chemotherapy  and radiation,  only 10% of patients remain  disease-free  for two
years and only 10% of  patients  will  live for five  years.  In  NSCLC,  85% of
patients are diagnosed with late stage disease where 5-year  survival is between
2-30%.  This is in sharp  contrast to patients who are  diagnosed  early,  where
5-year  survival can exceed 75% (Table 1). While it is true that a number of new
chemotherapeutic  agents have been  introduced  into  clinical  practice for the
treatment of advanced  lung  cancer,  to date,  none have yielded a  significant
improvement  in long-term  survival.  Thus, for the lung cancer  patient,  early
detection  and  treatment  provides  the best  chance of  achieving  significant
improvements in long-term survival.


Smoking and Lung Cancer
Lung cancer is probably the most  preventable of all  malignancies  with greater
than 90% occurring in smokers and former smokers.  Recent estimates suggest that
there are  approximately  54 MM smokers and former smokers in the US and perhaps
as many as 128MM in the Western Europe and Japan. While only 15% of smokers will
eventually  develop  lung cancer,  the relative  risk of a smoker dying from the
disease is 20 times that seen in nonsmokers.

The likelihood of developing  lung cancer appears to be a function of the number
of  cigarettes  smoked  and the  number  of  years as a smoker  as  measured  in
"pack-years".   Most  experts  agree,  that  an  individual  with  greater  than
30-pack-years  is at significant  risk for developing  lung cancer.  Many people
believe that by quitting smoking they will reduce, if not eliminate,  their risk
of  developing  lung  cancer.  While  quitting  generally  reduces  the  risk of
developing  lung  cancer,  tobacco-induced  damage to the lung occurs  early and
persists long after an individual stops smoking.  Thus,  former smokers continue
to be at  significantly  greater risk of developing  lung cancer than nonsmokers
and recent estimates suggest that 52% of lung cancers occur in former smokers.

According to the National Cancer Institute,  the direct medical costs attributed
to lung cancer will exceed $5 billion with additional costs related to increased
morbidity and mortality.


     Individuals at-risk for developing lung cancer fall into three (3) distinct
categories:

o    'High-Risk'   Populations.   Groups  of  individuals  who  are  exposed  to
     carcinogens  because they engage in  high-risk  activities  (e.g.  smoking,
     occupational exposure).

o    'At-Risk' Individuals. Those individuals who are a-symptomatic but, because
     of their history of exposure, are defined as being "at-risk".

o    Patients with Cancer.  Those who, for one reason or another,  are suspected
     of having lung cancer.

     For the first group, a cost-effective test that would monitor damage to the
lung,  identify  individuals who are at-risk,  or support  programs that seek to
reduce  exposure  would  provide  significant  benefit.  Since  early  detection
provides the best opportunity for reducing the morbidity, mortality, and cost of
lung cancer,  individuals  who are  "at-risk" for  developing  lung cancer would
benefit from the  availability  of an annual  screening test that could identify
patients  with early stage  disease.  We believe  this market to be estimated in
excess of 182 million tests per year in the U.S,  Western Europe and Japan.  For
those who are suspected of having lung cancer,  the  availability of a test that
could better  characterize  the disease and monitor the effects of therapy would
allow patients to receive the most effective therapy.

     For a lung cancer-screening program to be successful and gain acceptance by
patients, physicians, and third party payers, a screening test must be developed
that:

o        Has implied benefit (changes outcome)
o        Is widely available and be able to be carried out in the framework
         of general health care
o        Is relatively noninvasive leading to adequate compliance
o        Has high sensitivity
o        Has reasonable specificity
o        Has reasonable predictive value
o        Has a relatively low cost, and
o        Is covered by insurance

Even  though a number of tests exist that can detect lung  cancer,  to date,  no
single test or combination of tests has successfully met these criteria.

                               Our Target Markets

     According  to the  American  Cancer  Society,  lung  cancer is the  leading
cancer-related cause of death among men and women in the United States;  killing
more people  annually than prostate and breast cancer  combined.  Likewise,  the
increase in  cigarette  smoking  has been  particularly  dramatic in  developing
countries resulting in similar prevalence of lung cancer and has been associated
with substantial  mortality and economic costs.  Considering this, there clearly
exists a significant  worldwide  market for our services in early  detection and
prevention.  By the close of 1997,  approximately  two million  deaths  occurred
worldwide from lung cancer,  with cigarette  smoking being directly  responsible
for  almost  90% of these  cases.  Unfortunately,  most  lung  cancer  cases are
detected utilizing conventional diagnostic methods - methods that often diagnose
the  disease  when  it  has  already   progressed  to  Stage  III  or  IV,  when
survivability rates are less than 87% over five years.

     Estimates  of the  population  who  are  "at  risk"  for  lung  cancer  are
approximately  180,000,000  in the US,  Western  Europe and Japan.  Patients are
considered  to be  "at-risk" by virtue of the fact that they exhibit one or more
of the following :

o    have  previously  been  treated  for lung  cancer  and are at high risk for
     recurrence;

o    have in excess of a 30-pack-year smoking history;

o    are former  smokers  who,  although  they have  stopped  smoking  remain at
     significant risk for developing lung cancer;

o    can be  classified  at being "at risk" due to  factors  relating  to family
     history,  environmental  exposure to  mutagens  and  carcinogens,  or other
     occupational risks; and

o    exhibit chronic obstructive  pulmonary disease (COPD),  emphysema,  chronic
     bronchitis, or asthma.

     Another  market  includes  those patients who have been diagnosed with lung
cancer.  These  patients  could benefit  through the  characterization  of their
disease by the  selection of a  therapeutic  regime that would be most likely to
produce a cure. In addition,  these patients could be monitored to determine the
positive  results  of  a  particular   therapy.   We  estimate  that  worldwide,
approximately 1,000,000 patients would fall into this category.

     Screening  patients  with lung  cancer  and those at risk due to the use of
tobacco  products  is  only  one of  several  areas  where  our  technology  has
significant  market  potential.  Monitoring  those at risk  due to  occupational
exposures  or those with a family  history of  pulmonary  disease and cancer are
equally  viable and  critical to our  continued  success.  Accordingly,  we have
identified the following market segments:


                                    Marketing

     Our  strategy  is to deliver  its  products  and  services  to  "high-risk"
populations, individuals who are "at-risk" for developing lung cancer as well as
to lung cancer  patients.  Given the sheer size and complexity of reaching these
groups, we have developed an innovative approach to marketing the products.

o    Web-Based  Information  and Support.  We will use the Internet to provide a
     broad spectrum of  educational  and  promotional  materials to patients and
     healthcare providers.  Patients will be provided with information regarding
     lung cancer,  the effects of smoking,  and the benefits of early detection.
     We will provide  Pathologists with teaching sets that will facilitate their
     interpretation  of sputum  samples in  conjunction  with our cell  analysis
     systems.  Pathologists  will also be able to post  slides on our website in
     order to solicit  consultation from other Pathologists.  The site will also
     provide  functional  links between the Company's sales and Customer Support
     Network to ensure that the systems are  operating  properly  and the system
     reagents and supplies are readily available.

o    Enlisting  Primary Care Physicians.  Our goal is to assist the physician in
     providing  quality  care and to help them build their  practice  and derive
     additional  revenues.  To reach the broadest number of physicians,  we will
     conduct  regional  seminars and attend  scientific  meetings  where it will
     document the benefits of early  detection and treatment and to  demonstrate
     how our tests will be used in to context of their practice.  Physicians who
     wish to participate in screening programs will be provided with training in
     sample collection and processing. Physicians will also be able to establish
     an account that will allow them to order collection devices and educational
     materials over the Internet. Participating physicians will generate revenue
     for  their  practice  through  reimbursements  for  sample  collection  and
     mark-ups for the collection kit that the Company manufactures.

o    Placement of Our Systems.  Success of this business model is dependent upon
     gaining  acceptance by Pathologist and Laboratory  Directors in the medical
     centers  that are  capable of high  volume  testing.  As in the case of the
     Primary Care Physician,  we will provide  seminars and will utilize opinion
     leaders  to  train  Pathologists  on the  use  and  interpretation  of data
     generated  by the system.  Additional  training  and  support  will be made
     available through our website. We also plan to establish  partnerships with
     pulmonary  health  testing  companies  and large  regional  and  commercial
     laboratories and pulmonary  medicine `centers of excellence'.  We intend to
     provide the  screening  system  either free of charge or on a limited  cost
     schedule  to medical  centers  that will  provide  revenues  on a `per-use'
     basis.

o    Marketing  Support.  We will support the  placement  of our  products  with
     customer  services'  online  technical and system  diagnostics that will be
     used by our technical  support groups to maximize  operational  efficiency.
     System acceptance will also be driven by an aggressive education,  training
     and marketing campaign via our Website.


                               Sources of Revenue

o    Traditional  Laboratory Test  Reimbursement.  Medicare and most other third
     party payers provide  reimbursement  for sputum cytology  testing.  For the
     current generation  LungCheck  product,  the Company contracts with outside
     laboratories  where a  Pathologist  analyzes  the sample.  These  pathology
     laboratories  are paid a  fair-market  value  for these  services.  We will
     derive revenues through  arrangements with  laboratories  covering services
     related to marketing the test; use of the proprietary collection container;
     use of the TrendCytogram;  along with access to our proprietary  algorithms
     and other intellectual property.

o    `Per-User'  Screening  Fees.  We  are  contemplating   commercializing  our
     automated cell and tissue analysis  systems for lung cancer  screening,  by
     placing  units in large  regional  labs and medical  centers of  excellence
     throughout the US, Western Europe and Japan. Manufacturing and placement of
     units will follow from the projected  volume of testing that is expected in
     the  marketplace.  This  program  will be either be funded  entirely by the
     Company or subsidized by an equipment  lender/distributor  that will enable
     placement  of  units  at  limited  or no  cost to the  medical  institution
     conducting  the test.  Judgments  as to  placement of units will be made on
     criteria  of which  medical  institutions  can support  the  investment  by
     generating a positive return within a reasonable timeframe.

o    System Leasing Fees. The Company will place its automated  systems in large
     reference and hospital  laboratories and will charge leasing fees either to
     a third party leasing  company or to the laboratory  that uses its systems.
     The Company  contemplates  that leasing  revenue will  represent  recurring
     revenue to the Company.

o    Fees for Testing  Kits.  The Company  will  charge  physicians  modest fees
     associated  with the use of its testing kits that aid in the  collection of
     specimens.  Physicians  in turn are  reimbursed at a higher amount by third
     party payors for these specimen collections.


COMPETITION

     We  believe  that the  Company's  products  must  compete  on the  basis of
functionality,  cost-effectiveness,  product  features and  effectiveness of the
product in standard medical practice.

     The Company's  technology  and products  could face  competition  from both
private  and  public  companies   including  Bayer  Diagnostics,   Morphometrix,
ChromaVision,  TriPath Imaging,  Applied  Imaging,  Roche  Diagnostics,  Beckman
Dickenson,  Compucyte  and  Abbot  Diagnostics,  that have  developed  or may be
developing   competing  or  alternative  systems.  Our  existing  and  potential
competitors  possess   substantially   greater  financial,   marketing,   sales,
distribution  and  technical  resources,  and more  experience  in research  and
development, clinical trials, regulatory matters, manufacturing and marketing.



GOVERNMENTAL REGULATION

     As long as the Company's  sputum tests are  prescribed by a physician,  FDA
approval is not required for its distribution and use. Further, if the report is
returned to the prescribing  physician for review,  our reporting  format called
the TrendCytogram(TM) is not a product subject to FDA regulation.  If Management
decides to sell the Company's products without doctor prescription,  approval by
the FDA for the  specimen  collection  containers  will be  required.  It is our
intention  to  evaluate  seeking  such  approval.  LungCheck  slides and patient
reports are retained seven years in accordance with regulatory guidelines.

     With regard to emerging  regulations  regarding patient consent, we can use
the information and slides from previous patient cases without obtaining consent
retroactively,  as long as the patient's name and/or other  identifying  factors
are not revealed. For future specimens, we will request patient's consent to use
their test results for research purposes on an uncompensated basis.

     Since  we do not make the  final  diagnosis  with  respect  to a  patient's
condition,  but rather only  provide  tools by which  physicians  make  clinical
judgments,  we are not  deemed to be in the  practice  of  medicine.  All of the
allowed comments on the Company's reports have been carefully reviewed to ensure
that:

o    a final diagnosis is not communicated by the Company, and

o    that predictions as to the patient's future health are not communicated.

     Each state also may have regulations that may impact  operations but to our
knowledge, we are in compliance with all applicable state regulations.


PATENTS AND TRADEMARKS

     We have purchased all of the intellectual  property and accompanying assets
relating to the LungCheck(R)  Test. The intellectual  property includes a patent
on the specimen collection container (U.S. Patent No. 4,915,225, issued on April
10, 1990 for "Transportable  Specimen Container Including  Removable  Centrifuge
Tube"), a registered  trademark on the name "LungCheck" (U.S.  Trademark/Service
Mark  Registration  No.  1,433,430,  for  the  mark  "LungCheck),  a  registered
trademark on the  "TrendCytogram"  (U.S.  Trademark No. 1,530,848,  for the mark
"TrendCytogram(TM)"),  and  a  copyright  on  the  software  that  produces  the
reporting form, molds to make the plastic specimen collection  container and all
related data and slide archives  related to the development of LungCheck,  and a
trademark  application  for the  name  "LungCheck"  with the  accompanying  logo
(Serial  No.  75-111,859,   based  on  a  prior  trademark  U.S.  Trademark  No.
1,565,728).  As part of the License Agreement signed with AccuMed  International
during March of 2000, the Company  gained  exclusive  world-wide  rights to more
than 50 separate  technology  patents,  as well as numerous other trademarks and
intellectual property within the field of lung cancer.


RESEARCH AND DEVELOPMENT

     In order to  maintain  this  technological  lead,  investments  in emerging
technologies will be necessary;  such investments could be in the form of direct
purchases or in  participation  in academic or  commercial  scientific  studies,
where the costs are shared  with other  parties.  We will  concentrate  on three
centers of interest:

o    the development of biological,  genetic or molecular  "markers",  which are
     substances  which,  when  mixed  with  patient  sputum,  highlight  to  the
     pathologist cells which have abnormalities for further analysis;

o    the  development  of equipment  that automates the analysis of sputum cells
     through  sophisticated  image  analysis  techniques;  this is  referred  to
     "automated  microscopy"  and  like the  markers  described  above,  improve
     accuracy and reduce pathology analysis time; and

o    the further  development of  "tele-pathology"  and web-enabled data systems
     which allow human  pathological  analysis at a location  different from the
     patient  specimen;  this will have the effect of  allowing  the  Company to
     assist  many  laboratories  and  medical  providers  to carry  out  testing
     analyses via on-line data transmission techniques.


EMPLOYEES

     As of April 14, 2000 we employed  three  full-time  employees.  None of our
employees are  represented  by a labor union,  and we consider our  relationship
with out employees to be good.

RISK FACTORS

     Going  Concern.  Our report of independent  public  accountants on our 1999
consolidated  financial  statements is modified for a going concern  uncertainty
due to our  substantial  working  capital  deficiencies  and lack of significant
revenues on a sustained  basis from the  LungCheck(R)  Sputum  Cytology Test. In
addition, the report of our independent public accountants on our 1999 financial
statements  contains  an  explanatory  paragraph  as to  whether  we are a going
concern.

     Need for additional capital. If we fail to generate revenues in the amounts
we have projected,  or receive those revenues later than we have  projected,  we
will need to  obtain  additional  financing  to fund our  operations;  if we are
unable to obtain this  financing we may need to delay our research  programs and
scale back, or even cease, our operations.

     If we need to seek additional financing, we may seek to raise funds through
public or private financings, collaborative relationships or other arrangements.
Presently,  we do not have any  commitments  for additional  funds.  If we raise
additional  funds by selling  common stock and/or  securities  convertible  into
common  stock,  the  then-existing  stockholders  may  experience a  substantial
decrease in the value of their investment in our common stock.

     Operating  Losses.  We expect to continue to  experience  operating  losses
through December 31, 2001 and may never become profitable,  which could cause us
to cease our operations.

     Absence of Operating History. We have had no significant  operating history
since inception.  We have been engaged almost exclusively in sales and marketing
activities and raising capital.  Our viability,  profitability and growth depend
upon successful  completion of marketing and  commercialization of the Company's
laboratory testing systems and clinical applications  including the LungCheck(R)
Test.  There can be no assurance that we will be successful in implementing  our
strategy.

     Lack of Revenue;  Accumulated  Deficit; No Assurance of Revenue Generation.
Since  inception,  we have not generated  any  significant  revenue.  We have no
significant  firm orders for the  laboratory  systems or clinical  applications,
including the LungCheck(R)  Test.  Therefore,  there can be no assurance that we
will be able to meet our anticipated  sales schedules or that we will be able to
compete  successfully in the marketplace  and/or generate  significant  revenue.
Because we anticipate  incurring  significant costs in connection with marketing
of the laboratory systems and clinical  applications,  there can be no assurance
that we will achieve sufficient revenues to offset anticipated  operating costs.
As of December 31, 1999, our  accumulated  deficit was  ($8,976,000).  If we are
unable to generate revenues from operations  sufficient to offset our losses, we
will have to arrange for additional  financing to continue  operations and there
can be no assurances  that such financing will be available on acceptable  terms
or at all.

     Uncertainty of Market Acceptance;  Lack of Marketing Experience. We believe
that the laboratory  systems and clinical  applications that have been developed
and that will be developed in the future represent significant  advancements and
cost  benefits  over   currently   existing   early   detection  and  monitoring
technologies. Nonetheless, our prospect for success will therefore depend on its
ability to market successfully the entire product line that includes the current
LungCheck(R)  Test.  Marketing and sales will be  significantly  affected by our
ability to develop  relationships with established  companies that sell directly
to the  appropriate  physicians  and  institutions,  the  ability  to  establish
strategic alliances in the fields of pulmonary medicine, laboratory medicine and
oncology.  The demand and market acceptance of the Company's products is subject
to a high level of uncertainty.  We currently have limited financial,  personnel
and other resources to undertake the extensive marketing activities that will be
necessary to market the Company's technology and current products.  There can be
no  assurance  that  any  of  our  potential   customers  will  enter  into  any
economically  significant  arrangements  with us. There can be no assurance that
our marketing efforts will be successful.

     Reimbursement  by Medicare and  Third-party  Payors.  In both  domestic and
foreign markets,  sales of the Company's products and clinical applications will
depend in part on the availability of reimbursement from third-party payors such
as government health administration authorities (Medicare/Medicaid in the United
States),   private  health  insurers  and  other  organizations.   Domestically,
third-party  payors are increasingly  challenging the price, cost  effectiveness
and necessity of medical products and services.  Significant  uncertainty exists
as to the  reimbursement  status of a newly approved health care product.  There
can be no  assurance  that  the  Company's  products  will  be  considered  cost
effective and medically necessary,  or that adequate  third-party  reimbursement
will be available to enable us to maintain price levels sufficient to realize an
appropriate return on its investments in product development.  If for any reason
we are not adequately  reimbursed under insurance  reimbursement  programs,  its
ability to sell the Company's products may be materially adversely affected.

     Product  Liability and  Insurance.  We may be exposed to potential  product
liability claims by consumers.  Therefore, marketing the Company's products will
entail a certain  risk of product  liability.  We have  obtained  and  currently
maintain  product  liability  insurance  coverage.  Although  we  maintain  such
insurance,  there can be no assurance that any such insurance will be sufficient
to cover  all  possible  liabilities.  Inability  to  maintain  insurance  at an
acceptable cost or to otherwise  protect  against  potential  product  liability
could prevent or inhibit the  commercialization  of the Company's  products.  In
addition,  a product  liability  claim or recall  could have a material  adverse
effect on our business or financial condition.

     Dependence on Key  Personnel.  Our success is largely  dependent on Michael
Strauss, the Chairman, CEO and President.  The loss of his services would have a
material  adverse  effect on our ability to maximize the use of the LungCheck or
to develop  related  technologies  to enhance it. We are also  dependent  on our
ability  to hire and  retain  additional  qualified  executive,  scientific  and
marketing  personnel.  There can be no assurance that we will be able to hire or
retain such necessary personnel.

     Patents and Proprietary Information. There is no assurance that any patents
will afford  commercially  significant  protection of our  technology or that we
will have  adequate  resources  to enforce  our  patents.  In  addition,  patent
disputes  are common in the medical  industry,  and the  assertion of a claim of
infringements,  regardless  of the  outcome,  could  significantly  inhibit  our
ability to market successfully.  Because of our developmental stage, claims that
the Company's technologies infringe on the proprietary rights of others are more
likely to be  asserted  after  commencement  of  significant  commercial  sales.
Competitors  in the  United  States,  who may have  greater  resources  and have
substantial  investments  in  competing  technologies,  may have  applied for or
obtained, or may in the future apply for and obtain,  patents that will prevent,
limit or interfere with our ability to make and sell the Company's products.  We
have not conducted an  independent  review of patents  issued to third  parties.
Although we believe that the Company's  technology does not infringe the patents
or other  proprietary  rights of third  parties,  there can be no assurance that
other third parties will not assert infringement claims or that such claims will
not be  successful.  There can also be no assurance  that  competitors  will not
infringe upon our patents.  Even  successful  defense and  prosecution of patent
suits are both costly and time consuming. An adverse outcome in the defense of a
patent  suit could  cause  significant  liabilities  to third  parties,  require
disputed rights to be licensed from third parties or require us to cease selling
our products. We have completed protective  registration of these trademarks and
patents in Mexico and are in the process of completing  these  registrations  in
Columbia.  It is our  intention to complete such  registrations  in each country
where we conduct significant operations.

         Listing.  If the common stock  cannot be listed on the Nasdaq  SmallCap
Market,  trading,  if  any,  in the  common  stock  would  be  conducted  on the
non-Nasdaq  over-the-counter market in the so-called "pink sheets" or the NASD's
"Electronic  Bulletin  Board."  Consequently,  the liquidity of our common stock
could be  impaired.  This might result in a reduction in the number of shares be
bought and sold, as well as delays in the timing of transactions.  It might also
lead to reduction in security analyst coverage,  and lower prices for the common
stock than might otherwise be attained. Consequently, it might be more difficult
for investors to dispose of, or to obtain  accurate  quotations as to the market
value of our common stock.

     Market Price. The market price of our common stock, like that of many other
medical  products and high  technology  companies,  has in the past been, and is
likely in the future to  continue  to be,  highly  volatile.  Factors  effecting
potential  volatility  including:  announcements  of  mergers,  acquisitions  or
dispositions of assets;  fluctuations  in operating  results;  announcements  of
technological  innovations or new commercial  products by us or our competitors;
announcements of private  placements of securities;  operating losses;  economic
and other external factors.

     No Dividends.  We have paid no cash dividends to date. Payment of dividends
on the Common Stock is within the  discretion of the Board of Directors and will
depend upon our earnings,  capital requirements and financial condition, as well
as other relevant  factors.  We do not currently intend to declare any dividends
on our Common Stock in the foreseeable future.  Currently, we plan to retain any
earnings for development of its business operations.

     Special Required Preferred Stock Directors'  Approval.  So long as at least
one-third our Series A Convertible  Preferred Stock is  outstanding,  we cannot,
without the  affirmative  vote of a majority  of the  Required  Preferred  Stock
Directors (which Directors constitute a minority of the Board of Directors), (i)
pay certain cash  dividends;  (ii) dispose of  substantially  all of the assets;
(iii) incur  indebtedness in excess of thirty percent of capital;  (iv) issue or
purchase  certain  securities;  (v)  engage  in  certain  transactions  with  an
affiliate;  (vi)  amend its  organizational  documents  to alter  the  number of
Directors required;  (vii) appoint,  reappoint,  or change the auditors;  (viii)
adopt certain employee incentive plans; or (ix) engage in unrelated business.


     We must devote  significant  resources toward  attracting users in order to
grow our business.

     Recognition  and positive  perception  of our brand names in the  specialty
medical  products  industries  and in general are  important to our success.  We
intend to significantly expand our advertising and publicity efforts in the near
future. However, we may not achieve our desired goal or increasing the awareness
of our brand  names.  In addition,  as part of our brand  building  efforts,  we
intend  to  undertake  a number of  promotional  programs  that  will  result in
increased marketing expenses and these programs may not be successful.

     We have a  significant  amount of debt that we may be unable to  service or
repay.

     If we do not have sufficient cash to repay our debts as they become due, we
may be unable to refinance our debt on reasonable  terms or at all. If we cannot
meet out debt obligations from the cash generated by our business, we may not be
able to develop and sell new products,  respond to changing business or economic
conditions adequately, make acquisitions or otherwise fund our business.

     You  should  not  rely  on  forward-looking  statements  because  they  are
inherently uncertain.

     We  use  such  words  as  "anticipates,"  "believes,"  "plans,"  "expects,"
"future,"  "intends," and similar expressions to identify these  forward-looking
statements.  There are also  forward-looking  statements  attributed  to certain
third parties relating to their estimates  regarding growth of the number of Web
users  and   e-commerce.   You  should  not  place   undue   reliance  on  these
forward-looking  statements.  Our actual  results could differ  materially  from
those  anticipated  in  these  forward-looking   statements  for  many  reasons,
including the risks faced by us described above and elsewhere.

     Officers  and  directors  and  their   affiliates  will  continue  to  have
substantial control over us.

     Our executive officers and directors and their affiliates  beneficially own
approximately  31% of the  outstanding  shares of our common stock. As a result,
our officers,  directors and their affiliates will have the ability to influence
the  election of our board of  directors  and the outcome of  corporate  actions
requiring  stockholder  approval.  This  concentration of ownership may have the
effect of delaying or preventing a change in control.

     We expect the price of our common stock to continue to be volatile.

     The market price of our common stock has fluctuated  significantly recently
and may continue to fluctuate  significantly in response to a number of factors,
some which are beyond our control, including:

o    quarterly variations in our operating results;

o    changes in estimates of our financial performance by securities analysts;

o    announcements  by  us of  significant  contracts,  acquisitions,  strategic
     partnerships, joint ventures or capital commitments;

o    loss of a major  customer,  supplier or  strategic  partner,  or failure to
     complete a sale of our technology and products to a significant customer;

o    additions or departures of any of our key personnel;

o    future sales of our common stock; and

o    stock market price and volume  fluctuations,  which are particularly common
     among highly volatile securities of medical technology companies.

     We have limited operating  history and might face difficulties  encountered
by early stage companies in new and rapidly evolving markets.

     We have limited  operating  history upon which to base an evaluation of our
business and prospects. In assessing our prospects,  you must consider the risks
and  difficulties  frequently  encountered  by early stage  companies in new and
rapidly evolving  markets,  particularly  companies in the  business-to-business
market. These risks include our ability to:

o    manage rapidly changing and expanding operations;

o    maintain our current, and develop new, strategic partnerships;

o    reliably process transactions;

o    establish  and  increase  awareness  of our brand and  strengthen  customer
     loyalty;

o    implement and successfully execute our business and marketing strategy;

o    provide superior customer service;

o    respond effectively to competitive pressures and developments;

o    continue to develop and enhance our technology and systems; and

o    attract, retain and motivate qualified personnel.


         Our business model is unproven.

     The potential  profitability of our business model is unproven,  and, to be
successful,  we must,  among  other  things,  develop  and market  products  and
services that achieve broad market  acceptance by its users.  Our model has been
developed  recently,  and, as a result,  is relatively  unproven.  Our business,
financial condition, results of operations and prospects might be materially and
adversely  affected if customers  and  suppliers  become  dissatisfied  with out
products and services.  Accordingly,  our business model might not be successful
or sustain revenue growth or generate significant profits.

         Customers might not accept our products.

     If we do not  attract  and retain a large  number of  customers  to use our
products,  our  business and  operating  results  will be  negatively  affected.
Specific factors that could prevent widespread  acceptance of our solution,  and
our ability to generate or grow revenues, include:

o    pricing that does not meet customer expectations;

o    delays in responding to customer inquiries or in deliveries to customers;

o    difficulties in returning or exchanging orders;

o    inaccurate deliveries of products; and

o    technical difficulties.

     We face risks associated with acquisitions.

     We  have  acquired,  and  expect  in  the  future  to  acquire  businesses,
technologies,  services or products that we believe are a strategic fit with our
business. The process of integrating an acquired business,  technology,  service
or product might result in unforeseen  operating  difficulties  and expenditures
and  may  absorb  significant  management  attention  that  would  otherwise  be
available for ongoing development of our business. In addition,  the anticipated
benefits of any acquisition  might not be realized.  Future  acquisitions  could
result in potentially dilutive issuances of equity securities, the incurrence of
debt, contingent liabilities and/or amortization expenses related to goodwill.

     We might not be able to determine or design the features and  functionality
that our customers require or prefer.

     Our success  depends upon our ability to accurately  determine the features
and functionality tat our customers require or prefer in an e-commerce solution,
and our ability to  successfully  design and  implement  solutions  that include
these features and functionality. If we are unable to determine or design in the
features and  functionality  that  customers  require or prefer in an e-commerce
solution,  our business will be negatively  affected.  We cannot be certain that
the  features  and  functionality  that  we  plan  to  offer  will  satisfy  the
requirements or preferences of our current or potential customers.

     We depend on our business partnership with others.

     The usefulness of our product will be dependent upon the number and quality
of our  relationships  with  other  partners.  To the extent  that we  establish
relationships  with  customers and  suppliers,  we anticipate  that many of such
relationships  will be nonexclusive or terminable at will.  Consequently,  these
partners  might  transfer  their  business  to our  competitors  quickly  and at
relatively  low costs.  Our  success  will  depend on our  ability  to  convince
customers  and  suppliers of the benefits of our solutions and on our ability to
retain, broaden and diversify our future base of customers.  If we are unable to
attract  and  retain  a large  number  of  customers,  our  business,  financial
condition,  results of operations and prospects will be materially and adversely
affected.

     We might not be able to establish and strengthen our brand.

     We believe that  establishing  and  strengthening  our brand is critical to
achieving  widespread  acceptance  of our  products and  services,  particularly
because of the early stage of the online  market for our products and  services.
Promoting and  positioning  our brand will depend  largely on the success of our
marketing efforts and our ability to provide consistent,  high-quality  customer
experiences.  We will need to spend a lot of money to promote our brand, both on
marketing and on customer service.  Our brand promotion  activities might not be
successful  or result in  enough  increased  revenues  to  offset  the  expenses
incurred.


     Our markets are competitive.

     Our markets are  intensely  competitive.  In our  marketplace,  competitive
pressures are likely to result in price reduction, reduced margins, and possible
reduced  market  share,  any one of  which  factors  could  seriously  harm  our
business. Such competitors might be able to spend more aggressively on marketing
and advertising for their brands. The business-to-business marketplace is highly
competitive  and several  companies are  positioned to emerge as  competitors in
this marketplace.  Many of our competitors and potential competitors have longer
operating histories,  significantly greater financial,  technical, marketing and
other  resources than us,  significantly  greater name  recognition and a larger
installed  base of  potential  customers,  and have  extensive  knowledge of our
industry. Such competitors might be able to spend more aggressively on marketing
and advertising for their brands,  products and services.  They also might adopt
more aggressive  pricing policies and make more attractive  offers to employees.
In  addition,  current  and  potential  competitors  may  establish  cooperative
relationships  among themselves or with third parties to increase the ability of
their products to address customer needs.  Accordingly,  it is possible that new
competitors  or alliances  among  competitors  might emerge and rapidly  acquire
significant  market share.  We also expect that  competition  will increase as a
result of industry consolidations.


     We depend on third  parties  to  provide  reliable  software,  systems  and
related services to us.

     We  currently   license  from  third  parties  certain   technologies   and
information  incorporated  into our  products  and  services.  As we continue to
introduce new services that incorporate new  technologies  and  information,  we
might be required to license additional  technology and information from others.
These third-party  technology and information  licenses might not continue to be
available to us on  commercially  reasonable  terms,  if any all.  Additionally,
third parties form which we currently  license  technology and information might
not be able to defend their proprietary  rights  successfully  against claims of
infringement.  Any  failure to obtain any of these  technology  and  information
licenses  could  result in  delays  or  reductions  in the  introduction  of new
features,  functions,  products or services. It could also negatively affect the
performance of our existing products and services until equivalent technology or
information can be identified, obtained and integrated.

     We plan to rely substantially upon third-party service providers to help us
build,  maintain and house key  components  of our  products and systems.  These
services might not be available in a timely manner or at commercially reasonable
terms,  if at all. Any failure to obtain the necessary  services to enable us to
build,  maintain  and house our  products  and  systems,  could  have a material
adverse effect on our business,  financial condition,  results of operations and
prospects.

     Several of the  third-parties  upon whom we depend have a limited operating
history,  have relatively  immature  technology and are themselves  dependent on
reliable delivery of services from others.  As a result,  our ability to deliver
various  services  to our users  might be  adversely  affected by the failure of
these third parties to provide reliable  software,  systems and related services
to us.

     We need to expand our direct sales  operations if we are to increase market
awareness and sales of our products and services.

     We need to  substantially  expand our direct sales  operations if we are to
increase market awareness and sales of our products and services.  If we fail to
increase our direct sales capabilities,  our business,  financial conditions and
results of operations would be materially  adversely  affected.  Competition for
qualified sales personnel is intense,  and we might not be able to hire the kind
and  number  of sales  personnel  we are  targeting.  New  hires  often  require
extensive training and typically take several months to achieve productivity.

     Government  regulation  and  legal  uncertainties  could add costs to doing
business on the Internet.

     There are  currently few laws or  regulations  that  specifically  regulate
medical diagnostic products and companies.  However,  laws and regulations might
be adopted in the future  that  address  issues such as user  privacy,  pricing,
taxes and the characteristics and quality o products and services.  Any new laws
or regulations relating to the Internet could adversely affect our business.


     Our projected financial  information is based on assumptions that might not
be accurate.

     The  operating  and  financial   information  contained  in  our  projected
financial  data have  been  prepared  by  management  and  reflect  its  current
estimates of our future performance.  The projected results are dependent on the
successful  implementation  of management's  growth  strategies and are based on
assumptions  and events  over  which we have only  partial  or no  control.  The
assumptions  underlying  such  projected  information  require  the  exercise of
judgment, and the projections are subject to uncertainty due to the effects that
economic, business, competitive,  legislative,  political or other changes might
have on future events.  Changes in the facts or  circumstances  underlying  such
assumptions could materially affect the projections.  To the extent that assumed
events do not  materialize,  actual  results might vary  substantially  from the
projected results.  As a result, we might not achieve the operating or financial
results set forth in our financial projections.

     Our products and  services may contain  defects,  which could result in the
rejection  of our  products  and  damage  to our  reputation,  as  well  as lost
revenues,  diverted  development  resources  and  increased  service  costs  and
warranty claims.

     Products  and  services  as  sophisticated  as ours are  likely to  contain
undetected  errors or  defects,  especially  when first  introduced  or when new
models or versions  are  released.  Our  products may not be free from errors or
defects  after  commercial  shipments  have  begun,  which  could  result in the
rejection of our products,  damage to our  reputation,  lost revenues,  diverted
development  resources  and  increased  customer  service and support  costs and
warranty claims. Any of these results could harm our business.


     Our future results could be harmed by economic,  political,  regulatory and
other risks associated with international sales and operations.

     Since we intend to sell our products worldwide,  our business is subject to
risks associated with doing business internationally. We anticipate that revenue
from international  operations will represent an increasing portion of our total
revenue.  Accordingly,  our  future  results  could be harmed  by a  variety  of
factors, including:

o    changes in foreign currency exchange rates;

o    changes  in  a  specific   country's  or  region's  political  or  economic
     conditions, particularly in emerging markets;

o    trade protection measures and import or export licensing requirements;

o    potentially negative consequences from changes in tax laws;

o    difficulty in managing widespread sales and manufacturing operations; and

o    less effective protection of intellectual property.


     We may not be able to acquire or maintain easily identifiable Web addresses
or prevent third parties from acquiring Web addresses similar to ours.

     We may not be able to prevent  third  parties from  acquiring Web addresses
that are similar to our addresses,  which could materially  adversely affect our
business,  financial  condition  and  operating  results.  The  acquisition  and
maintenance  of the website  addresses  generally is  regulated by  governmental
agencies and their designees.


OUR BUSINESS MAY FACE ADDITIONAL RISKS AND  UNCERTAINTIES NOT PRESENTLY KNOWN TO
US WHICH COULD CAUSE OUR BUSINESS TO SUFFER.


     In  addition  to the risks  specifically  identified  in this Risk  Factors
section  or  elsewhere  in  this  filing\,  we may  face  additional  risks  and
uncertainties  not presently  known to us or that we currently  deem  immaterial
which  ultimately  may impair our business,  results of operations and financial
condition.






ITEM 2.  PROPERTY

     Since  1990,  we have  leased  office  space  at 1800  Walt  Whitman  Road,
Melville,  New York.  Our lease,  as  amended,  expires on March 31,  2001.  The
current annualized lease rate for this space is approximately  $75,000, which is
subject to annual increases.  The facility contains  approximately  4,200 square
feet of office space.

ITEM 3.  LEGAL PROCEEDINGS

     On or about February 22, 1999, a shareholder derivative action was filed in
United States District Court for the Eastern  District of New York in connection
with certain transactions culminating in the sale to Impleo, LLC of our interest
in a then  subsidiary  Drew Shoe Corp.  The  complaint  names all of our current
directors  and  several  former  members of the Board as  defendants  as well as
Impleo,  LLC and certain  related  entities  and  individuals.  The  allegations
contained in the complaint  challenge the Defendants' actions in connection with
certain  transactions,  including  but not  limited  to, (i) the April 14,  1998
restructuring of certain  convertible notes; (ii) the October 1998 sale of 56.7%
of Drew to  Impleo,  LLC;  and (iii) the  proposed  sale to  Impleo,  LLC of our
remaining  33.3%  interest  in the Drew.  In addition  to seeking  recovery  for
certain  allegedly  wrongful acts on the part of the  Defendants,  the complaint
seeks,  among  other  things,  to enjoin or set  aside any  shareholder  vote in
connection  with a proxy  statement  filed with the SEC on or about  February 1,
1999  pursuant to which we received  shareholder  approval to sell our remaining
33.3% interest in Drew and to block or rescind the sale of any interests in Drew
to Impleo,  LLC. The Company and the plaintiff  have reached a settlement  and a
settlement  hearing is  scheduled  for June 16,  2000 to confirm and approve the
settlement.


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

                                      NONE

PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS

     Our Common Stock was quoted  primarily on the NASDAQ  SmallCap Market under
the symbol BCAM until October 15, 1998.  Subsequent to October 15, 1998, we have
been traded  primarily  on the Over the Counter  Bulletin  Board ("OTC  Bulletin
Board").  The Common  Stock has also been  traded on the Boston  Stock  Exchange
under the symbol BAM. In November  1998,  the Boston Stock  Exchange  advised us
that it would  commence a process of delisting  the Common Stock from the Boston
Stock Exchange.

      The following table sets forth the high and low closing bid quotations for
the Common Stock as reported by the OTC Bulletin  Board  through  April 6, 2000.
The OTC Bulletin Board  quotations  reflect  inter-dealer  prices without retail
markup,   markdown  or  commission  and  do  not  necessarily  represent  actual
transactions.

                               OTC Bulletin Board

_______                              High Bid                           Low Bid
                                     --------                           -------
First Quarter                         $.23                               $.09
Second Quarter                        $.20                               $.06
Third Quarter                         $.18                               $.06
Fourth Quarter                        $.09                               $.01

Holders

There were  approximately  320 record holders of our Common Stock as of April 6,
2000.

We have paid no cash  dividends on its Common Stock since its inception and does
not  anticipate  paying cash  dividends on its Common  Stock in the  foreseeable
future.

Recent Sales of Unregistered Securities

     On or about September 23, 1999 and January 12, 2000 , we have,  pursuant to
exemption from registration  under the Securities Act of 1933,  Section 4(2), as
amended,  offered and sold a total of 103,330 shares of Series C Preferred Stock
and a total of 103,330 Warrants for a total of $310,000.

     Between  February 1, 2000 and March 1, 2000 we have,  pursuant to exemption
from  registration  under the Securities Act of 1933,  Section 4(2), as amended,
offered  and sold a total of 120,000  shares of Series D  Preferred  Stock and a
total of 30,000,000 warrants for a total of $1,200,000.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS


EXCEPT FOR THE  HISTORICAL  INFORMATION  CONTAINED  HEREIN,  THIS REPORT AND THE
FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING  STATEMENTS WITHIN THE MEANINGS OF
SECTION 27A OF THE  SECURITIES  ACT OF 1933 AND  SECTION  21E OF THE  SECURITIES
EXCHANGE ACT OF 1934. SUCH STATEMENTS  INVOLVE RISKS AND  UNCERTAINTIES  AND THE
COMPANY'S  ACTUAL RESULTS COULD DIFFER  MATERIALLY FROM THOSE DISCUSSED  HEREIN.
FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES  INCLUDE, BUT ARE NOT
LIMITED TO, THOSE DISCUSSED BELOW IN FACTORS THAT MAY AFFECT FUTURE RESULTS.

Overview:

BCAM  International,  Inc. and Subsidiaries (the "Company") has been primarily a
technology  pioneer  in the field of  Intelligent  Surface  Technology  blending
biomechanics and ergonomics with innovative  electronic systems and software. On
September  23, 1999,  the Company  completed a merger and  recapitalization  and
acquired  LungCheck,  Inc.  ("LungCheck") (see Item 1, Description of Business).
Since BCAM had no  business  operations  immediately  prior to the  merger,  the
business of  LungCheck is now the sole  business of the Company.  The merger has
been treated as a "purchase  business  combination" and a "reverse  acquisition"
for accounting purposes in which BCAM is the legal acquirer and LungCheck is the
accounting acquirer.

Since the merger,  the Company has been engaged in the  development and the sale
of clinical testing  applications and automated laboratory systems that together
allow  for the  early  detection,  diagnosis,  characterization,  treatment  and
monitoring of significant  human diseases.  The Company is currently  focused on
developing  clinical testing  applications for lung cancer and has already fully
developed  and  begun   marketing   its  first   clinical   application   called
LungCheck(R),  a  quantitative  sputum  cytology  test,  to targeted  healthcare
providers who treat people that are `at-risk' for lung disease.

The Company  plans to fully  develop  laboratory  systems  that  provide  highly
sensitive (using genetic and molecular marker technology)  testing  capabilities
through automated  screening  technology and to simultaneously  develop numerous
clinical  applications that test for cancer or other serious medical  conditions
and are able to be run on the  Company's  laboratory  systems.  The Company will
market the use of its testing applications to medical providers who in turn will
order the tests that are then run on the  laboratory  systems  that the  Company
provides to certain  large  reference  and  hospital  laboratories.  The Company
believes  that  the  placement  of  its  systems   coupled  with  the  increased
utilization of its testing  applications by providers will result in significant
recurring  revenue to the  laboratories  that use its  systems as well as to the
Company and possibly to the physicians that collect  specimens for testing.  The
Company plans to charge the laboratory on a per-test or per-user basis and it is
contemplated  that the  Company  will place its  systems  and  receive  on-going
leasing revenue from these systems as well as from fees associated with the sale
of its proprietary testing kits.

Management will create market  awareness of the Company's  products by educating
physicians  about  the  use  of the  Company's  applications  and  by  initially
marketing to the `high-risk'  breathing  environments  and groups of individuals
that include industrial  workers and people who smoke.  Management also plans to
actively  explore  entering into business  combinations  with other  entities to
expand the Company's  product line to include other  synergistic early detection
tools  that  are of  particular  medical  significance.  To  date,  sales of the
Company's  products have not been  significant  due to the fact that the Company
has been actively  developing  its product line and  completing  its  management
infrastructure.


Results of Operations

Results  of  operations  for the years  ended  December  31,  1999 and 1998 were
impacted by  limitations  on resources,  primarily  financial,  which  inhibited
marketing  activities.  In particular,  the Company was in negotiations to raise
additional  capital from  approximately  June 1998  through  December  1999.  In
September  1999  it  consummated  a  series  of  transactions   resulting  in  a
recapitalization   and  merger.   Through   September   1999,  the  Company  was
periodically  advanced  funds by a major  stockholder,  a  portion  of which was
converted into capital stock in connection with the recapitalization.

Revenues decreased from $94,000 to $44,000 for the years ended December 31, 1998
and 1999. This decrease arose from two research  programs that were conducted on
behalf of  organizations  in 1998 that were  absent in 1999,  and the decline in
revenues from a significant  multi-specialty  clinic. In addition, the Company's
limited  cash  resources  did not  allow  for  aggressive  marketing  and  sales
activities.

Costs of revenues declined from $346,000 to $50,000 for the years ended December
31, 1998 and 1999 due to the closing, in March 1999, of the Company's laboratory
facility. In conjunction with the laboratory's closure, the Company entered into
an agreement  whereby a medical  provider of  laboratory  services is processing
LungCheck(R)  tests and reporting on their  results,  thereby  reducing the high
fixed costs of lab personnel and other lab expenditures.

Selling,  general and  administrative  expenses  increased  from  $1,900,000  to
$3,174,000  for the years ended  December  31, 1998 and 1999.  This  increase is
mainly due to consulting  and  compensation  charges  related to the issuance of
stock  options,  offset by  reductions in certain  medical,  sales and marketing
expenses.

LIQUIDITY AND CAPITAL RESOURCES

As  indicated  in the  accompanying  consolidated  financial  statements,  as of
December 31, 1999, the Company had not generated any  significant  revenues from
the LungCheck(R) technology that is its principal asset, and its operations have
generated  losses and cash flow  deficiencies  from its inception on January 30,
1997. Although the losses reflect substantial noncash charges resulting from the
issuance of shares of preferred and common stock,  stock options and warrants to
pay  for  service,   compensation  and  interest  expense,  the  Company  had  a
substantial  working  capital  deficiency and was in violation of certain of the
covenants in its loan agreement as of December 31, 1999. Management expects that
such losses and cash flow  deficiencies  will continue through at least December
31, 2001 while the Company  continues to develop its  technology and the markets
for its  services.  Such matters  raise  substantial  doubts about the Company's
ability to continue as a going  concern  and realize the  carrying  value of its
technology  and other  assets  unless the  Company is able to obtain  additional
financing and, ultimately, increase revenues and generate sufficient profits and
cash flows to sustain its operations.

From January 1 through  April 4, 2000,  the Company  raised  $1,510,000,  net of
expenses of $163,000,  through two private  placements.  The Company anticipates
that, in addition, it will need to raise approximately $3,000,000 to satisfy its
cash  requirements  (including the requirements  under the new license agreement
described  below)  through  December 31, 2000. On February 1, 2000,  the Company
signed an  Investment  Advisory  Agreement  with Burnham  Securities,  Inc.,  an
investment  banking  institution,  to assist the Company in raising capital over
the  next  12  months  and  to  advise  it  with  respect  to  certain  business
combinations.  To date,  the Company has  received  indications  of interest for
certain  amounts and it believes that the remaining  capital will be forthcoming
within the next 30 to 60 days.

The Company  signed a multi-year  patent and technology  license  agreement with
AccuMed International, Inc. ("AccuMed") on April 4, 2000. This agreement enables
the  Company  to  gain  exclusive  use of  AccuMed  automated  and  quantitative
microscope  technologies,  products and patent rights in the field of early lung
cancer  detection,  and will speed the Company's  efforts to become the industry
leader.  The agreement  requires a license fee of $1,000,000  payable in various
installments through December 1, 2000, royalty fees based on specified terms and
$1,000,000  in cash  or  shares  of the  Company's  common  stock  on the  first
anniversary of the agreement.

Management is  continuing  its efforts to obtain  additional  debt and/or equity
financing for the Company from financial  institutions,  other private investors
and potential strategic  partnerships.  However,  there can be no assurance that
the  additional  financing  will be available  to the Company  when  needed,  on
commercially  reasonable  terms, or at all, which could have a material  adverse
effect on the Company's long-term viability,  and thus, as to the continuance of
the Company.



ITEM 7.  FINANCIAL STATEMENTS

The  information  required  by this item is  incorporated  by  reference  to the
Company's financial statements.

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

NONE

Part III


ITEM 10. EXECUTIVE COMPENSATION

Executive Compensation

     The following table shows all the cash and other compensation paid or to be
paid by BCAM, as well as certain other compensation paid or accrued,  during the
last three fiscal years indicated,  to the Chief Executive Officer and the other
most highly  compensated  executive  officers whose aggregate cash  compensation
exceeds $100,000.
<TABLE>
<CAPTION>

                               Annual Compensation

Name and Principal Position                 Year              Salary($)        Bonus($)
---------------------------                 ----              ---------        --------

<S>                                         <C>               <C>              <C>
Michael Strauss, Chairman,                  1999 1,3,5        $130,737
President and CEO                           1998 2,4          $231,972         -0-
                                            1997              $216,318         $75,000
<FN>

1 1999 Salary - Does not include compensation received from Drew Shoe Corp. in the amount of $179,569.
2 1998 Salary- Does not include compensation received from Drew Shoe Corp. in the amount of $23,017.
3 Does not include accrued but unpaid salary from ISTX, Inc. in the amount of $63,013.28.
4 Does not include accrued but unpaid salary from ISTX, Inc. in the amount of $63,013.28.
5 Mr. Strauss' salary was increased to $200,000 effective February, 2000.
</FN>
</TABLE>


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Security Ownership of Management

The  information  below  shows,  as of January  31,  2000,  the number of common
equivalent shares  beneficially owned by each director and the Chairman and CEO,
and by the  directors  and officer of the company as a group.  No officer  other
than the Chairman and CEO has any beneficial ownership. The options and warrants
include those which are currently  vested or which can be exercised within sixty
days and excludes  those for which the exercise  price is above  current  market
value of $0.14 per common equivalent share.

                   Common Equivalent       Acquirable within    % of Common
                   Shares Owned or            Sixty Days      Equivalent Shares
    Name           Controlled (1)                                  Owned
-------------     ----------------          --------------    ---------------

Michael Strauss,
  Chairman & CEO                               8,079,960           3.65%

Richard M. Wisely,
  Director (2)         49,268,890              5,000,000          24.84%


Lynn M. Taussig, M.D.
  Director                                       741,555           0.35%

Randall Stern
  Director (3)            185,389                      0           0.09%

             All Officers and Directors as a Group                28.92%
             -------------------------------------                ------

Notes:
(1)  The Company  has issued four  classes of stock,  as follows:  Common  Stock
     -40,680,153  shares  outstanding;  Series A  Preferred  Stock,  each  share
     convertible   in  150  shares  of  Common  Stock  -   262,884.3126   shares
     outstanding;  Series B Preferred  Stock,  each share  convertible  in 1,500
     shares of Common  Stock -  81,743.0875  shares  outstanding;  and  Series C
     Preferred Stock,  each share  convertible into 100 shares of Common Stock -
     107,667 shares outstanding.
(2)  Mr.  Wisely  owns  or  controls  shares  of the  following  Classes  of the
     Company's  stock,  with percent of the Class owned or  controlled  shown in
     parentheses: 988.744 shares of Series A Preferred Stock (0.38%); 31,080.386
     shares of Series B Preferred Stock (38.02%);  and 25,000 shares of Series C
     Preferred Stock (23.20%).
(3)  Mr. Stern owns shares of the following Class of the Company's  stock,  with
     percent of the Class owned shown in parentheses: 1,235.925 shares of Series
     A Preferred Stock (0.47%).

This  information is reported in accordance with the beneficial  ownership rules
of the United States Securities and Exchange Commission (the "SEC"), under which
a person is deemed to be the  beneficial  owner of a security if that person has
or shares the voting power or investment  power with respect to such security or
has the right to acquire such ownership within sixty (60) days. Unless otherwise
indicated  in  footnotes  to the table,  each person  listed has sole voting and
dispositive power with respect to the securities owned by such person.

The business  address for each of the persons  listed above is 1800 Walt Whitman
Road, Melville, New York 11747.

Security Ownership of Certain Beneficial Owners

The table  below is based on  information  available  to the  Company  and shows
beneficial  ownership of more than 5% of any class of the Company's stock by any
shareholder other than holdings shown in the table above.

                     Common Equivalent    Acquirable within    % of Common
                      Shares Owned or        Sixty Days       Equivalent Shares
     Name             Controlled (1)                              Owned
 -------------        ----------------     --------------    ---------------

Worldwide Special Fund
 (managed by Solomon-
   Smith Barney)(2)      35,029,766                               16.41%

Balmore Fund, S.A. (3)   16,585,649           8,666,534           11.37%

InterEquity Capital
   Partners, LLP (4)      7,185,980                                3.37%

Notes:
(1)  The Company has issued four  classes of stock,  as follows:  Common Stock -
     40,680,153  shares  outstanding;  Series  A  Preferred  Stock,  each  share
     convertible   in  150  shares  of  Common  Stock  -   262,884.3126   shares
     outstanding;  Series B Preferred  Stock,  each share  convertible  in 1,500
     shares of Common  Stock -  81,743.0875  shares  outstanding;  and  Series C
     Preferred Stock,  each share  convertible into 100 shares of Common Stock -
     107,667 shares outstanding.
(2)  Worldwide  Special  Fund  owns  shares  of  the  following  Classes  of the
     Company's  stock,  with  percent of the Class owned  shown in  parentheses:
     52,461.3579  shares of Series A Preferred Stock  (19.96%);  and 18,107.0411
     shares of Series B Preferred Stock (22.15%).
(3)  Balmore Fund,  S.A.  owns shares of the following  Classes of the Company's
     stock,  with  percent of the Class owned shown in  parentheses:  14,418,949
     shares of Common Stock  (35.44%);  and 21,667  shares of Series C Preferred
     Stock (20.11%).
(4)  InterEquity  Capital Partners,  LLP owns shares of the following Classes of
     the Company's stock,  with percent of the Class owned shown in parentheses:
     4,790.653 shares of Series B Preferred (5.86%)

This  information is reported in accordance with the beneficial  ownership rules
of the United States Securities and Exchange Commission (the "SEC"), under which
a person is deemed to be the  beneficial  owner of a security if that person has
or shares the voting power or investment  power with respect to such security or
has the right to acquire such ownership within sixty (60) days. Unless otherwise
indicated  in  footnotes  to the table,  each person  listed has sole voting and
dispositive power with respect to the securities owned by such person.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     At December 31, 1999,  accounts payable included $152,000 that arose during
1999 from  noninterest  bearing  advances from Richard M. Wisely, a director and
stockholder of the Company. The amount payable to Mr. Wisely has no specific due
date.  In addition,  Mr.  Wisely had,  effectively,  made other  advances to the
Company by paying  consulting  fees of $127,000 on its behalf  during 1999 which
were repaid  through the issuance of the  equivalent of 2,803 shares of Series B
Stock in connection with the Merger (see Note 7).

     During 1998, the Company was charged fees totaling  approximately  $198,000
by Jon V. Eylands  M.D.,  Chief  Pathologist  and  co-founder  of Lungcheck  for
pathology services.

     On January 31, 2000,  the Company  entered  into an  agreement  pursuant to
which Burnham  Securities,  Inc.,  an investment  banking firm, of which Randall
Stern is the  Managing  Director  of  Corporate  Finance,  will  provide it with
financial  advisory  services.  The  agreement  requires  the Company to pay the
investment banker $5,000 per month through January 31, 2001, with 50% payable in
cash and 50% payable in shares of common stock of the Company with an equivalent
fair value.  In addition,  the investment  banker will receive certain fees upon
the consummation of certain mergers and acquisitions. The investment banker will
also receive warrants to purchase 1,000,000 shares of the Company's common stock
that will be exercisable  over a five year period at an exercise price that will
be  determined  based  on the  selling  price  of  the  Company's  common  stock
consummated through a future private placement.


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

Exhibits

27.1      Financial Data Schedule

AVAILABLE INFORMATION

     Registrant will furnish any exhibits listed but not contained herein to any
beneficial  owner of its securities  upon receipt of a written request from such
person.  Requests should be directed to Shareholder Relations  Department,  BCAM
International, Inc., 1800 Walt Whitman Road, Melville, New York 11747.


SIGNATURES

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

                              BCAM International, Inc.


                              By: /s/ Michael Strauss
                                   -----------------------
                                   Michael Strauss
                                   Chairman of the Board of Directors
                                   Chief Executive Officer
                                   (Principal Executive Officer)
                                   Date: May 4, 2000


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


/s/ Michael Strauss
-----------------------
Michael Strauss                      Chairman of the Board       May 4, 2000
                                     of Directors and
                                     Chief Executive Officer
                                     (Principal Executive Officer)


/s/ Joel L. Gold
----------------                     Director                     May 4, 2000
Joel L. Gold



/s/ Mark L. Plaumann
--------------------                 Director                     May 4, 2000
Mark L. Plaumann



<PAGE>

                    BCAM INTERNATIONAL, INC. AND SUBSIDIARIES




                                    I N D E X
                                    ---------
<TABLE>
<CAPTION>


                                                                                                                     PAGE
                                                                                                                     ----

<S>                                                                                                                     <C>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS                                                                              F-2

CONSOLIDATED BALANCE SHEET
     DECEMBER 31, 1999                                                                                                F-3

CONSOLIDATED STATEMENTS OF OPERATIONS
     YEARS ENDED DECEMBER 31, 1999 AND 1998                                                                           F-4

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
     YEARS ENDED DECEMBER 31, 1999 AND 1998                                                                         F-5/6

CONSOLIDATED STATEMENTS OF CASH FLOWS
     YEARS ENDED DECEMBER 31, 1999 AND 1998                                                                           F-7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                                                          F-8/26
</TABLE>




                                      F-1
<PAGE>


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                    ----------------------------------------

To the Board of Directors and Stockholders
BCAM International, Inc.


We  have  audited  the   accompanying   consolidated   balance   sheet  of  BCAM
INTERNATIONAL,  INC. AND  SUBSIDIARIES  as of December 31, 1999, and the related
consolidated  statements of operations,  stockholders'  equity  (deficiency) and
cash flows for the years  ended  December  31,  1999 and 1998.  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  generally   accepted  auditing
standards.  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 consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of BCAM International,
Inc. and  Subsidiaries  as of December 31, 1999, and their results of operations
and cash flows for the years ended  December  31, 1999 and 1998,  in  conformity
with generally accepted accounting principles.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern.  As further discussed in Note
2 to the consolidated  financial  statements,  the Company has not generated any
significant revenues on a sustained basis from the LungCheck(R)  technology that
is its principal  operating  asset, and its operations have generated losses and
cash flow deficiencies from its inception.  As of December 31, 1999, the Company
had a substantial working capital deficiency, and it was in violation of certain
of the covenants in its loan agreements.  Such matters raise  substantial  doubt
about the  Company's  ability to  continue  as a going  concern  and realize the
carrying value of the  LungCheck(R)  technology.  Management's  plans concerning
these  matters  are  also  described  in  Note  2.  The  consolidated  financial
statements do not include any adjustments  that might result from the outcome of
these uncertainties.




Roseland, New Jersey
April 4, 2000

                                      F-2
<PAGE>


                    BCAM INTERNATIONAL, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 1999



                                                         ASSETS
                                                         ------
<TABLE>
<CAPTION>

Current assets:
<S>                                                                                                          <C>
     Cash                                                                                                    $       68,000
     Accounts receivable, less allowance for contractual discounts
         and doubtful accounts of $15,000                                                                            18,000
     Other current assets                                                                                            47,000
                                                                                                              -------------
              Total current assets                                                                                  133,000
Equipment, net of accumulated depreciation of $7,000                                                                 21,000
Technology costs, net of accumulated amortization of $336,000                                                       841,000
Debt issuance costs, net of accumulated amortization of $212,000                                                  1,970,000
                                                                                                              -------------

              Total                                                                                            $  2,965,000
                                                                                                               ============

                                           LIABILITIES AND STOCKHOLDERS' EQUITY
                                           ------------------------------------

Current liabilities:
     Notes payable (including obligations in default)                                                         $     945,000
     Payments received for preferred stock prior to issuance                                                        220,000
     Accounts payable                                                                                               291,000
     Accrued expenses                                                                                               142,000
                                                                                                              -------------
              Total current liabilities                                                                           1,598,000
Note payable                                                                                                        350,000
Other liabilities                                                                                                    70,000
                                                                                                              -------------
              Total liabilities                                                                                   2,018,000
                                                                                                              -------------
Commitments and contingencies
Stockholders' equity:
     Preferred stock; 2,000,000 shares authorized:
         Series A Acquisition  Convertible  Preferred  Stock, par value $.01 per
              share;  750,000  shares  authorized;  262,884  shares  issued  and
              outstanding; liquidation preference $4,521,605
              ($17.20 per share)                                                                                      3,000
         Series B Acquisition Convertible Preferred Stock, par value $.01
              per share; 750,000 shares authorized; 81,743 shares
              issued and outstanding                                                                                  1,000
     Common stock, par value $.01 per share; 65,000,000 shares
         authorized; 40,680,153 shares issued                                                                       407,000
     Additional paid-in capital                                                                                  13,229,000
     Unearned compensation                                                                                       (2,818,000)
     Accumulated deficit                                                                                         (8,976,000)
     Less treasury stock - 763,182 shares of common stock at cost                                                  (899,000)
                                                                                                               ------------
              Total stockholders' equity                                                                            947,000
                                                                                                               ------------
              Total                                                                                            $  2,965,000
                                                                                                               ============


</TABLE>

See Notes to Consolidated Financial Statements.

                                      F-3
<PAGE>


                    BCAM INTERNATIONAL, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     YEARS ENDED DECEMBER 31, 1999 AND 1998



<TABLE>
<CAPTION>

                                                                                                1999                1998
                                                                                                ----                ----

<S>                                                                                        <C>                <C>
Net revenues                                                                               $      44,000      $      94,000
                                                                                           -------------      -------------

Operating expenses:
    Cost of revenues                                                                              50,000            346,000
    Selling, general and administrative expenses                                               3,174,000          1,900,000
                                                                                            ------------       ------------
       Totals                                                                                  3,224,000          2,246,000
                                                                                            ------------       ------------

Loss from operations                                                                          (3,180,000)        (2,152,000)
                                                                                            ------------       ------------

Interest expense                                                                              (1,188,000)          (249,000)
Interest income                                                                                                      36,000
                                                                                            ------------       ------------
       Totals                                                                                 (1,188,000)          (213,000)
                                                                                            ------------       ------------

Net loss                                                                                     $(4,368,000)       $(2,365,000)
                                                                                             ===========        ===========


Basic net loss per common share                                                                    $(.08)             $(.16)
                                                                                                   =====              =====


Basic weighted average number of common shares outstanding                                    55,630,146         14,831,100
                                                                                              ==========         ==========
</TABLE>

See Notes to Consolidated Financial Statements.

                                      F-4
<PAGE>
                   BCAM INTERNATIONAL, INC. AND SUBSIDIARIES

          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                     YEARS ENDED DECEMBER 31, 1999 AND 1998


<TABLE>
<CAPTION>


                            Series A    Series B
                          Acquisition Acquisition   Series A
                          Convertible Convertible Convertible                        Stock Sub-
                           Preferred   Preferred   Preferred     Common Stock        scriptions
                             Stock       Stock       Stock     Shares      Amount    Receivable
                             -----       -----       -----     ------      ------    ----------

<S>                          <C>         <C>        <C>      <C>            <C>      <C>
Balance, January 1, 1998 .....                      $3,000   3,000,000     $3,000    $(100,000)
Proceeds from payments of
   subscriptions receivable ..                                                         100,000
Proceeds from sale of
   113,722 shares of Series
   A convertible  preferred
   stock  and  warrants  to
   purchase common stock
   through private placement
   in March and April 1998 ...
Costs related to private
   placement .................
Net loss .....................
                                                     -----   ---------      -----     --------
Balance, December 31, 1998 ...                       3,000   3,000,000      3,000         -
Issuance of shares to note-
   holder for deferral of
   monthly principal payments                                  231,846
Effects of reverse acquisition
   and other concurrent
   transactions:
   Conversion of senior
     subordinated secured
     promissory notes into
     common stock, net of
     unamortized debt issuance
     costs of $56,000 ........                               8,333,333      8,000
   Conversion of note payable
     to stockholder and re-
     lated accrued interest
     into common stock .......                               4,792,324      5,000
   Conversion of advances pay-
     able to stockholder .....                                 850,476      1,000
   Proceeds from issuance of
     common stock through pri-
     vate placement ..........                               5,400,000      5,000
   Issuance of common stock
     to consultants ..........                               1,239,167      1,000
   Issuance of common stock
     and warrants to note-
     holder for consent to
     reverse acquisition .....                                 905,845      1,000
</TABLE>

                                      F-5
<PAGE>
<TABLE>
<CAPTION>
                              Additional    Unearned     Accum-
                               Paid-in      Compen-     ulated     Treasury Stock
                               Capital      sation      Deficit   Shares    Amount   Total
                               -------      ------      -------   ------    ------   -----


<S>                            <C>           <C>     <C>          <C>       <C>     <C>
Balance, January 1, 1998 ..... $ 3,226,000           $(2,243,000)                   $889,000
Proceeds from payments of
   subscriptions receivable ..                                                       100,000
Proceeds from sale of
  113,722  shares of Series
   A  convertible  preferred
   stock  and  warrants  to
   purchase common stock
   through private placement
   in March and April 1998 ...     193,000                                           193,000
Costs related to private
   placement .................     (41,000)                                          (41,000)
Net loss .....................                        (2,365,000)                 (2,365,000)
                                ----------             ---------                   ---------

Balance, December 31, 1998 ...   3,378,000            (4,608,000)                 (1,224,000)

Issuance of shares to note-
   holder for deferral of
   monthly principal payments       35,000                                            35,000
Effects of reverse acquisition
   and other concurrent
   transactions:
   Conversion of senior
     subordinated secured
     promissory notes into
     common stock, net of
     unamortized debt issuance
     costs of $56,000 ........   1,186,000                                         1,194,000
   Conversion of note payable
     to stockholder and re-
     lated accrued interest
     into common stock .......     714,000                                           719,000
   Conversion of advances pay-
     able to stockholder .....     126,000                                           127,000
   Proceeds from issuance of
     common stock through pri-
     vate placement ..........     805,000                                           810,000
   Issuance of common stock
     to consultants ..........     179,000                                           180,000
   Issuance of common stock
     and warrants to note-
     holder for consent to
     reverse acquisition .....   2,043,000                                         2,044,000
</TABLE>

                                F-5 (Continued)
<PAGE>


                    BCAM INTERNATIONAL, INC. AND SUBSIDIARIES

          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                     YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>




                            Series A    Series B
                          Acquisition Acquisition   Series A
                          Convertible Convertible Convertible                        Stock Sub-
                           Preferred   Preferred   Preferred     Common Stock        scriptions
                             Stock       Stock       Stock     Shares      Amount    Receivable
                             -----       -----       -----     ------      ------    ----------

<S>                           <C>        <C>         <C>       <C>         <C>       <C>
Effects of reverse acquisition
   and other concurrent
   transactions (concluded):
   Net issuances of preferred
      stock (including  issu-
      ance of 262,884 shares
      of Series A and 81,581
      shares of Series B
      Acquisition Preferred
      Stock and repurchase
      of 2,658,511 shares of
      Series A  Convertible
      Preferred  Stock) and
      common stock in
      connection with business
      combination, net of re-
      lated expenses of
      $190,000                $3,000     $1,000    $(3,000)  15,927,162   $383,000
Issuance of 162 shares of
   Series B preferred stock
   to noteholder as fee for de-
   ferral of monthly principal
   payments
Issuance of stock options to
   consultants
Issuance of stock options to
   employees
Amortization of unearned com-
   pensation
Net loss
                              ------   ------   ----------   ----------   --------  -------
Balance, December 31, 1999    $3,000   $1,000   $   -        40,680,153   $407,000  $  -
                              ======   ======   ==========   ==========   ========  =======
</TABLE>

                                      F-6
<PAGE>
<TABLE>
<CAPTION>

                              Additional    Unearned     Accum-
                               Paid-in      Compen-     ulated      Treasury Stock
                               Capital      sation      Deficit    Shares    Amount      Total
                               -------      ------      -------    ------    ------      -----

<S>                            <C>          <C>         <C>        <C>       <C>         <C>
Effects of reverse acquisition
   and other concurrent
   transactions (concluded):
   Net issuances of preferred
      stock (including  issu-
      ance of 262,884 shares
      of Series A and 81,581
      shares of Series B
      Acquisition Preferred
      Stock and repurchase
      of 2,658,511 shares of
      Series A  Convertible
      Preferred  Stock) and
      common stock in
      connection with business
      combination, net of re-
      lated expenses of
      $190,000               $   325,000                            763,182  $(899,000)    $(190,000)
Issuance of 162 shares of
   Series B preferred stock
   to noteholder as fee for de-
   ferral of monthly principal
   payments                        7,000                                                       7,000
Issuance of stock options to
   consultants                 1,056,000                                                   1,056,000
Issuance of stock options to
   employees                   3,375,000  $(2,966,000)                                       409,000
Amortization of unearned com-
   pensation                                  148,000                                        148,000
Net loss                                               $(4,368,000)                       (4,368,000)
                             -----------  -----------  -----------   -------  ---------  -----------

Balance, December 31, 1999   $13,229,000  $(2,818,000) $(8,976,000)  763,182  $(899,000) $   947,000
                             ===========  ===========  ===========   =======  =========  ===========

</TABLE>


See Notes to Consolidated Financial Statements.

                                F-6 (Continued)

<PAGE>


                    BCAM INTERNATIONAL, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>

                                                                                                 1999                1998
                                                                                                 ----                ----
<S>                                                                                          <C>                <C>
Operating activities:
    Net loss                                                                                 $(4,368,000)       $(2,365,000)
    Adjustments to reconcile net loss to net cash
       used in operating activities:
       Depreciation of equipment                                                                  14,000             20,000
       Write-off of equipment                                                                     34,000
       Amortization of technology costs                                                          168,000            168,000
       Amortization of debt issuance costs and debt discount                                     192,000             33,000
       Amortization of unearned compensation                                                     148,000
       Deferred interest expense                                                                  35,000             96,000
       Service, compensation and interest expense
          paid through issuance of preferred and
          common stock and stock options                                                       2,610,000
       Provision for bad debts                                                                   (41,000)            21,000
       Changes in operating assets and liabilities:
          Accounts receivable                                                                     50,000            (33,000)
          Other current assets                                                                   (46,000)            35,000
          Accounts payable                                                                       241,000             14,000
          Accrued expenses                                                                      (184,000)            (8,000)
          Liability under agreement for purchase of technology                                                   (1,025,000)
                                                                                            ------------       ------------
              Net cash used in operating activities                                           (1,147,000)        (3,044,000)
                                                                                            ------------       ------------

Investing activities - purchases of equipment                                                                       (50,000)
                                                                                                               ------------

Financing activities:
    Proceeds from issuances of notes payable                                                     445,000            100,000
    Repayments of notes payable                                                                  (14,000)           (72,000)
    Debt issuance and conversion costs                                                           (45,000)           (13,000)
    Repayments of capital lease obligations                                                      (11,000)           (13,000)
    Payments received for preferred stock prior to issuance                                      220,000
    Proceeds from issuances of preferred and common stock,
       net of expenses of $41,000 in 1998                                                        810,000            152,000
    Proceeds from stock subscriptions                                                                               100,000
    Costs related to reverse acquisition and other concurrent
       transactions                                                                             (190,000)
                                                                                            ------------      -------------
              Net cash provided by financing activities                                        1,215,000            254,000
                                                                                            ------------      -------------

Net increase (decrease) in cash                                                                   68,000         (2,840,000)
Cash, beginning of year                                                                             -             2,840,000
                                                                                            ------------      -------------

Cash, end of year                                                                           $     68,000       $       -
                                                                                            ============       ============

Supplemental disclosures of cash flow data:
    Interest paid                                                                          $     124,000      $     120,000
                                                                                           =============      =============
</TABLE>

See Notes to Consolidated Financial Statements.

                                      F-7
<PAGE>


                    BCAM INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Business and reverse acquisition and basis of presentation:

     Business and reverse acquisition:

          BCAM International,  Inc., which was organized in 1984 in the State of
          New York, and its subsidiaries ("BCAM") had been primarily a software,
          technology and consulting company  specializing in providing ergonomic
          solutions (human factors engineering) to individuals, corporations and
          governments.  BCAM's revenues had historically  been derived primarily
          from ergonomic consulting  services.  Through a series of transactions
          effective as of September 22, 1999:  (i) BCAM  transferred  all of its
          technology  holdings,  assigned all of its  licensing  agreements  and
          transferred $225,000 to ISTX, Inc. ("ISTX"), its 90%-owned subsidiary;
          (ii) ISTX agreed to assume  substantially  all of BCAM's  liabilities;
          and (iii) BCAM spun off its 90%  interest in ISTX  through the payment
          of a dividend  whereby it issued  one share of ISTX  common  stock for
          each  share of common  stock of BCAM held of record on  September  22,
          1999 (the "Spinoff").  As a result of the Spinoff,  BCAM had virtually
          no business operations on September 23, 1999, the time of the exchange
          of shares based on a merger  agreement,  further described below, that
          had been executed on an earlier date.

          LungCheck Inc.  ("LungCheck")  was incorporated on January 30, 1997 in
          the State of Delaware  for the  purpose of  acquiring,  enhancing  and
          marketing LungCheck(R) technology. The technology is used to provide a
          specialized sputum cytology laboratory service. The service includes a
          quantitative assessment of the pulmonary health of lung cells based on
          a   comprehensive   review  of  different   cellular  and  noncellular
          indicators,  as well as the early  identification  of cancer and other
          abnormal  cells in the fluids found in the lungs known as sputum.  The
          results of the assessment  are included in a cytology  report which is
          produced  from  a  database  and   specialized   software   containing
          comparative pulmonary health information.

          As of September 23, 1999, BCAM had, effectively,  40,680,153 shares of
          common  stock  outstanding,  with  a par  value  of  $.01  per  share,
          including  13,125,000  shares  issued,  effectively,  on that  date in
          connection with the settlement of rights held by certain purchasers of
          its common shares through a private  placement in April 1998 (see Note
          7).

          As of September 23, 1999,  LungCheck had 2,658,511  shares of Series A
          Convertible  Preferred Stock  outstanding  (the "Old Series A Stock"),
          with a par  value of $.001  per  share  and,  effectively,  24,752,991
          shares  of  common  stock  outstanding,  with a par value of $.001 per
          share,  including  shares  issued,  effectively,  as of  that  date as
          follows: (i) 8,333,333 shares issued in connection with the conversion
          of  senior  subordinated  secured  promissory  notes in the  principal
          amount of $1,250,000;  (ii) 4,792,324 shares issued in connection with
          the  conversion  of a note  payable  and  its  liability  for  accrued
          interest thereon aggregating $719,000;  (iii) 850,476 shares issued in
          connection  with the conversion of advances  payable to a stockholder;
          (iv) 5,400,000  shares sold through a private  placement from which it
          received  net  proceeds of $810,000;  (v) 905,845  shares  issued to a
          noteholder in  consideration  for  consenting to the merger;  and (vi)
          1,239,167 shares issued to consultants for services in connection with
          the  conversions  and  sales  of  shares  described  above  and of the
          exchange of shares described below.

                                      F-8
<PAGE>


                    BCAM INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 1 - Business and reverse acquisition and basis of presentation (continued):

     Business and reverse acquisition (concluded):

          As of  September  23, 1999,  BCAM was  authorized  to issue  2,000,000
          shares  of  preferred  stock.  On  September  23,  1999,  BCAM  became
          authorized  to issue up to  1,500,000  shares  of  preferred  stock as
          acquisition  preferred  stock  with a par  value of $.01 per  share of
          which up to 750,000  shares were  designated  as Series A  Acquisition
          Convertible  Preferred Stock (the "Series A Stock") and 750,000 shares
          were  designated as Series B Acquisition  Convertible  Preferred Stock
          (the "Series B Stock").  As further explained in Note 6, each share of
          Series A Stock is convertible into 150 shares of common stock, subject
          to certain  conditions,  and has a preference in liquidation of $17.20
          per share,  and each share of Series B Stock is convertible into 1,500
          shares of common  stock,  but has no  preference  in  liquidation.  In
          addition,  the  holders  of  Series A Stock  and  Series  B Stock  are
          entitled to cast that number of votes equal to the number of shares of
          common  stock  into  which a share of  Series  A Stock  and a share of
          Series B Stock is  convertible  on each  matter  submitted  to  BCAM's
          stockholders for voting.

          On September 23, 1999, the merger  agreement became effective and BCAM
          became  obligated  to issue  262,884  shares  of Series A Stock to the
          holders of LungCheck's  Old Series A Stock and 81,581 shares of Series
          B Stock to the  holders  of  LungCheck's  24,752,991  shares of common
          stock that,  effectively,  were then outstanding (the "Merger").  As a
          result of the Merger,  (i) LungCheck became a wholly-owned  subsidiary
          of BCAM; and (ii) BCAM had the equivalent of 202,727,378 voting shares
          outstanding,  of which 162,047,225  shares, or approximately 80%, were
          held by the  owners of the  preferred  and common  stock of  LungCheck
          prior to the Merger and 40,680,153  shares, or approximately 20%, were
          held by the owners of the common stock of BCAM prior to the Merger.

          Since BCAM had no business operations  immediately prior to the Merger
          as a result of the  Spinoff  described  above,  and  since the  former
          stockholders  of LungCheck  owned 80% of the voting stock of BCAM, the
          Merger  has been  treated  effective  as of  September  23,  1999 as a
          "purchase  business  combination"  and  a  "reverse  acquisition"  for
          accounting purposes in which BCAM was the legal acquirer and LungCheck
          was the accounting  acquirer.  As a result, the assets and liabilities
          of the  accounting  acquirer,  LungCheck,  continued to be recorded at
          their  historical  carrying values as of September 23, 1999;  however,
          common  stock and  additional  paid-in  capital  were  adjusted  as of
          September  23,  1999 to  reflect  the $.01 per  share par value of the
          shares of the legal  acquirer,  BCAM.  In addition,  the  accompanying
          consolidated  financial  statements for the periods prior to September
          23,  1999 are  comprised,  effectively,  of the  historical  financial
          statements of LungCheck.

          As used herein,  the "Company" refers to LungCheck prior to the Merger
          and LungCheck together with BCAM subsequent to the Merger.

                                      F-9
<PAGE>

                    BCAM INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Business and reverse acquisition and basis of presentation (continued):

     Basis of presentation:

          The accompanying  consolidated financial statements have been prepared
          assuming  that the  Company  will  continue  as a going  concern.  The
          Company has not generated  significant  revenues on a sustained  basis
          from  the  LungCheck(R)  technology  that is its  principal  operating
          asset,  and  its  operations  have  generated  losses  and  cash  flow
          deficiencies  from its  inception  on January 30,  1997.  Although the
          losses reflect substantial noncash charges resulting from the issuance
          of shares of preferred and common stock, stock options and warrants to
          pay for service,  compensation and interest expense, the Company had a
          substantial working capital deficiency and was in violation of certain
          of its  covenants  in its loan  agreement  as of  December  31,  1999.
          Management  expects that such losses and cash flow  deficiencies  will
          continue  through  at  least  December  31,  2001  while  the  Company
          continues to develop its  technology and the markets for its services.
          Such matters raise  substantial  doubts about the Company's ability to
          continue as a going  concern and  realize  the  carrying  value of its
          technology  and other  assets  unless  the  Company  is able to obtain
          additional financing and,  ultimately,  increase revenues and generate
          sufficient profits and cash flows to sustain its operations.

          From its inception  through  December 31, 1999,  the Company  obtained
          financing  primarily  from loans  from  InterEquity  Capital  Partners
          ("InterEquity"),  a small  business  investment  company;  loans  from
          stockholders  and other  related  parties;  the private  placement  of
          convertible  bridge  notes  (which were  subsequently  converted  into
          preferred  and common  stock) and secured  promissory  notes;  and the
          private  placement of units of shares of preferred  stock and warrants
          to purchase preferred and common stock.

          During the period from  January 1 through  April 4, 2000,  the Company
          raised $1,510,000, net of expenses, through two private placements and
          entered  into a patent and license  agreement  for certain  technology
          whereby it will be  required  to pay a license  fee of  $1,000,000  in
          various  installments  through  December  1, 2000  (see  Note 11).  In
          addition  to  the  $1,510,000  already  raised  in  2000,   management
          anticipates  that  the  Company  will  need  to  raise   approximately
          $3,000,000 to satisfy its cash requirements through December 31, 2000.
          Management is continuing its efforts to obtain  additional debt and/or
          equity  financing for the Company from financial  institutions,  other
          private investors and potential strategic partnerships. On February 1,
          2000, the Company entered into an agreement with an investment banking
          institution  which will act as its investment  advisor with respect to
          its efforts to raise capital.  However, there is no assurance that the
          Company  will be able to obtain the  financing it will require for its
          operations through the remainder of the year ending December 31, 2000.

          During the year ended December 31, 1999, the Company  consummated  the
          Merger and management  began to reorganize  the Company's  operations.
          The Company  has engaged a  consulting  firm  specializing  in medical
          sales and marketing  strategies to prepare a business plan and explore
          strategic  alternatives which include,  among other things,  potential
          business combinations, strategic alliances and other potential sources
          of financing. Cash payments for expenses have been reduced through the
          outsourcing of certain laboratory,  sales and marketing positions. The
          Company has also  reduced  expenses by  eliminating  certain  internal
          personnel  costs and other  costs of  services  through  an  agreement
          whereby a medical diagnostic company is processing  LungCheck(R) tests
          and reporting on their results.

          In  addition,  management  believes  the Company has  developed a more
          viable  marketing   strategy.   This  strategy  focuses  on  providing
          healthcare  professionals  with  systems  that  allow  for  the  early
          detection,  diagnosis,  treatment and monitoring of significant  human
          diseases  utilizing  advances in  molecular  diagnostics  coupled with
          automatic  quantitative screening  technologies.  The Company plans to
          direct its initial  focus  towards  developing  products for the early
          detection  and  characterization  of  lung  cancer  with  the  goal of
          improving disease management and patient outcomes.

                                      F-10
<PAGE>


                    BCAM INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 1 - Business and reverse acquisition and basis of presentation (concluded):

     Basis of presentation (concluded):

          In order to  implement  its new  marketing  strategy  and  enable  the
          Company to become commercially  successful,  the Company has commenced
          negotiations with several parties which, if successful,  would add key
          technologies for development of the aforementioned laboratory systems.

          Management  cannot  assure that the Company  will be able to develop a
          successful  marketing  strategy  or  obtain  the  financing  needed to
          develop  commercially  successful  operations through any other means.
          The accompanying  consolidated financial statements do not include any
          adjustments related to the recoverability and classification of assets
          or the  amounts  and  classification  of  liabilities  that  might  be
          necessary should the Company be unable to continue its operations as a
          going concern.




                                      F-11

<PAGE>


                    BCAM INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2 - Summary of significant accounting policies:

     Principles of consolidation:

          As a result  of  accounting  for the  Merger  as a  purchase  business
          combination and a reverse  acquisition  (see Note 1), the accompanying
          consolidated financial statements include the accounts of LungCheck as
          of December  31, 1999 and for the years  ended  December  31, 1999 and
          1998 and the accounts of BCAM and its wholly-owned  subsidiaries as of
          December 31, 1999 and for the period from its acquisition on September
          23, 1999 to December 31, 1999. All significant  intercompany  accounts
          and transactions have been eliminated in consolidation.

     Use of estimates:

          The  preparation of financial  statements in conformity with generally
          accepted  accounting  principles requires management to make estimates
          and assumptions  that affect certain reported amounts and disclosures.
          Accordingly, actual results could differ from those estimates.

     Revenue recognition:

          Revenues are recognized upon the completion of the cytology report.

     Equipment:

          Equipment  is  stated  at  cost,  net  of  accumulated   depreciation.
          Depreciation  is  computed  using the  straight-line  method  over the
          estimated  useful lives of the related assets which range from five to
          seven years.

     Technology costs:

          Technology costs are capitalized and are amortized
          using the straight-line  method over an estimated useful life of seven
          years.

     Debt issuance costs:

          Debt  issuance  costs are deferred and  amortized to interest  expense
          over the term of the related loan using the interest method.


     Impairment of long-lived assets:

          The Company  has adopted the  provisions  of  Statement  of  Financial
          Accounting  Standards  No.  121,  "Accounting  for the  Impairment  of
          Long-Lived  Assets and for Long-Lived Assets to be Disposed of" ("SFAS
          121"). Under SFAS 121, impairment losses on long-lived assets, such as
          equipment and technology  costs, are recognized when events or changes
          in circumstances  indicate that the undiscounted  cash flows estimated
          to be generated by such assets are less than their carrying value and,
          accordingly,  all or a  portion  of  such  carrying  value  may not be
          recoverable. Impairment losses are then measured by comparing the fair
          value of the assets to their carrying amounts.

     Advertising:

          The  Company  expenses  the  cost of  advertising  and  promotions  as
          incurred.  Advertising  costs charged to operations were immaterial in
          1999 and 1998.

                                      F-12
<PAGE>


                    BCAM INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 2 - Summary of significant accounting policies (continued):

     Stock options:

          In  accordance  with the  provisions of  Accounting  Principles  Board
          Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"),
          the Company will only recognize  compensation costs as a result of the
          issuance of stock options to employees based on the excess, if any, of
          the fair value of the  underlying  stock at the date of grant or award
          (or at an appropriate subsequent measurement date) over the amount the
          employee  must pay to acquire the stock.  Therefore,  the Company will
          not be required to recognize  compensation  expense as a result of any
          grants to employees  at an exercise  price that is equal to or greater
          than fair value. The Company will also make pro forma disclosures,  in
          accordance  with the  provisions of Statement of Financial  Accounting
          Standards No. 123,  "Accounting for Stock-Based  Compensation"  ("SFAS
          123"),  of net  income  or loss as if a fair  value  based  method  of
          accounting for stock options had been applied  instead if such amounts
          differ materially from the historical amounts.

     Income taxes:

          The  Company  accounts  for  income  taxes  pursuant  to the asset and
          liability  method  which  requires  deferred  income  tax  assets  and
          liabilities to be computed annually for temporary  differences between
          the financial  statement and tax bases of assets and liabilities  that
          will result in taxable or  deductible  amounts in the future  based on
          enacted  tax laws and rates  applicable  to the  periods  in which the
          differences   are  expected  to  affect  taxable   income.   Valuation
          allowances  are  established  when  necessary  to reduce  deferred tax
          assets to the amount expected to be realized. The income tax provision
          or credit is the tax  payable or  refundable  for the  period  plus or
          minus  the  change  during  the  period in  deferred  tax  assets  and
          liabilities.

     Net earnings (loss) per common share:

          The Company  presents "basic" earnings (loss) per common share and, if
          applicable,  "diluted"  earnings  per  common  share  pursuant  to the
          provisions  of Statement of Financial  Accounting  Standards  No. 128,
          "Earnings  per  Share".  Basic  earnings  (loss) per  common  share is
          calculated  by dividing net income or loss  applicable to common stock
          (net income or loss adjusted for preferred dividend  requirements,  if
          any) by the  weighted  average  number  of common  shares  outstanding
          during each period.  The  calculation  of diluted  earnings per common
          share is similar to that of basic  earnings per common  share,  except
          that the  denominator is increased to include the number of additional
          common  shares  that would have been  outstanding  if all  potentially
          dilutive  common  shares,  such as those issuable upon the exercise of
          stock options and warrants and the conversion of preferred stock, were
          issued during the period.



                                      F-13
<PAGE>


                    BCAM INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 2 - Summary of significant accounting policies (concluded):

     Net earnings (loss) per common share (concluded):

          As explained in Note 1, the  24,752,991  shares of common stock issued
          by  LungCheck  (the  accounting  acquirer in the reverse  acquisition)
          prior to or  concurrent  with the Merger on  September  23,  1999 were
          converted  into 81,581 shares of Series B Stock at a conversion  ratio
          of  .0032958  shares  of Series B Stock  for each  share of  LungCheck
          common  stock that had been  outstanding.  As explained in Note 6, the
          shares of Series B Stock do not have any  liquidation  preference  and
          have rights to dividends  that are  equivalent  to those of a share of
          common stock of BCAM (the legal acquirer in the reverse  acquisition).
          In addition,  each share of Series B Stock is  convertible  into 1,500
          shares of BCAM common stock. Accordingly, the Company has computed the
          weighted  average  number of common shares  outstanding  for the years
          ended  December  31, 1999 and 1998 as if a share of  LungCheck  common
          stock  outstanding prior to the Merger was equivalent to 4.9437 shares
          of  BCAM  common  stock  and a share  of  Series  B Stock  outstanding
          subsequent to the Merger was  equivalent to 1,500 common  shares.  The
          shares  held by the  common  stockholders  of BCAM prior to the Merger
          have been included in the  computation of the weighted  average number
          of common shares outstanding for the year ended December 31, 1999 from
          September 23, 1999, the effective date of the Merger.

          No diluted per share amounts have been  presented in the  accompanying
          consolidated  statements of operations  because the assumed effects of
          the exercise of options and warrants  outstanding at December 31, 1999
          and 1998,  the assumed  exercise of the Series A Stock  outstanding at
          December 31, 1999 and the Old Series A Stock  outstanding  at December
          31, 1998 would have been anti-dilutive.

     Recent accounting pronouncements:

          The Financial  Accounting Standards Board and the Accounting Standards
          Executive  Committee  of the American  Institute  of Certified  Public
          Accountants  had  issued  certain  accounting   pronouncements  as  of
          December 31, 1999 that will become  effective in  subsequent  periods;
          however,  management of the Company does not believe that any of those
          pronouncements   would  have  significantly   affected  the  Company's
          financial  accounting  measurements  or  disclosures  had they been in
          effect during 1999 and 1998.


Note 3 - Equipment:

               Equipment consisted of the following at December 31, 1999:

                  Furniture and fixtures                        $  4,000
                  Computer equipment                              24,000
                                                                --------
                                                                  28,000
                  Less accumulated depreciation                    7,000
                                                                --------
                     Total                                       $21,000
                                                                ========
                                      F-14
<PAGE>


                    BCAM INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>

Note 4 - Long-term debt:

     Long-term debt was comprised of the following at December 31, 1999:

<S>                                                                                       <C>
          Note  originally  payable to  InterEquity in monthly  installments  of
          $24,057  including  interest at 12% through  December 31, 2002; net of
          unamortized   discount  of  $14,634;   secured  by  a  first  lien  on
          substantially  all  of  the  Company's  assets.  The  Company  was  in
          violation of certain loan  covenants as of December 31, 1999 and, as a
          result,  payments totaling $625,000 originally due in years subsequent
          to December 31, 1999 have been reclassified as current liabilities (A)          $ 913,000

          Note payable to LungCheck  Ltd.  for the purchase of  technology  with
          interest  at  10%;  payable  on  December  30,  2002;  secured  by the
          Company's technology (B)                                                          350,000

                  Other                                                                      32,000
                                                                                          ---------
                                                                                          1,295,000
                  Less current portion                                                      945,000
                                                                                          ---------
                  Long-term debt                                                         $  350,000
                                                                                         ==========
</TABLE>

     (A)  On January  15,  1999,  the loan  agreement  was  amended to allow the
          Company to defer any monthly  principal payment due in 1999 by issuing
          a specified number of shares of Series B stock (or common shares prior
          to the Merger) based on the  principal  amount  deferred.  The Company
          issued the equivalent of a total of 926 Series B shares (including 764
          shares of Series B stock issued upon the  conversion of 231,846 shares
          of LungCheck common stock as a result of the Merger) with an aggregate
          fair  value of  $42,000  as  deferral  fees in 1999.  Effective  as of
          September  23,  1999,  the Company  issued  shares of common stock and
          warrants  to purchase  common  stock to  InterEquity,  and reduced the
          exercise  price of warrants  issued to InterEquity at the inception of
          the loan, to obtain InterEquity's  consent to the Merger (see Note 7).
          In addition, the Company is obligated to issue additional warrants for
          the purchase of common stock to InterEquity if it has not  consummated
          an initial public offering as of a specified date (see Note 9).

     (B)  The rights to payments  and the  interests  in the pledged  assets are
          subordinated to the rights of InterEquity.  LungCheck Ltd. is owned by
          a stockholder of the Company.

     Interest  expense  on loans  from  related  parties  totaled  approximately
     $830,000  and  $96,000  for the year  ended  December  31,  1999 and  1998,
     respectively.

     Management  believes that the fair value of the  Company's  note payable to
     InterEquity does not differ materially from their aggregate  carrying value
     at December 31, 1999 because the note is a short-term obligation with terms
     that were recently  renegotiated.  Because of the relationship  between the
     Company  and its  related  parties,  management  believes  that there is no
     practical method that can be used to determine the fair values of notes and
     loans payable to related parties.


                                      F-15
<PAGE>


                    BCAM INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 5 - Income taxes:

          As  of  December  31,  1999,   the  Company  had  net  operating  loss
          carryforwards of approximately  $7,493,000  available to reduce future
          Federal  taxable  income  which,  if not used,  will expire at various
          dates  through  2019.  The  Company  had no other  material  temporary
          differences  as of that date.  Due to the  uncertainties  related  to,
          among  other  things,  the extent  and  timing of its  future  taxable
          income, the Company offset the deferred tax assets attributable to the
          potential benefits of approximately $2,548,000 from the utilization of
          those net operating  loss  carryforwards  by an  equivalent  valuation
          allowance as of December 31, 1999.

          The Company had also offset the potential  benefits of $2,548,000  and
          $2,000,000  from  net  operating  loss   carryforwards  by  equivalent
          valuation  allowances as of December 31, 1999 and 1998,  respectively.
          As a result of the  increases in the  valuation  allowance of $566,000
          and  $656,000  during  the years  ended  December  31,  1999 and 1998,
          respectively,  there are no credits for income taxes  reflected in the
          accompanying  consolidated  statements of operations to offset pre-tax
          losses.


Note 6 - Preferred stock:

          As of December 31,  1999,  the Company was  authorized  to issue up to
          2,000,000  shares  of  preferred  stock,  of  which  750,000  had been
          authorized  for  issuance  as  Series  A Stock  and  750,000  had been
          authorized  for issuance as Series B Stock.  A total of 262,884 shares
          of  Series  A  Stock  and  81,743   shares  of  Series  B  Stock  were
          outstanding. Subsequent to December 31, 1999, shares of two new series
          of preferred  stock were  authorized  and sold by the Company  through
          private placements (see Note 12).

          Each  share of  Series A Stock has a par value of $.01 per share and a
          preference  in  liquidation  of (i)  $17.20  per  share  plus (ii) all
          declared  but  unpaid  dividends,  or if  greater,  a  portion  of the
          remaining assets of the Company which are distributable to the holders
          of  the  common  stock  equal  to an  amount  which  would  have  been
          distributed if the Series A Stock had been converted into common stock
          immediately  prior  to the  date of such  liquidation.  Each  share of
          Series A Stock is convertible into 150 shares of common stock, subject
          to certain conditions. Each share of Series B Stock has a par value of
          $.01 per share,  no preference  in  liquidation  and is  automatically
          convertible  into 1,500 shares of common stock  immediately  after the
          Company  effectuates a 1-for-15  reverse split of its common stock. In
          addition,  the  holders  of  Series A Stock  and  Series  B Stock  are
          entitled  (i) to cast  that  number  of votes  equal to the  number of
          shares  of  common  stock  into  which a share of Series A Stock and a
          share of Series B Stock is convertible on each matter submitted to the
          Company's  stockholders  for voting and (ii) to dividends  (whether in
          cash or property or securities, other than dividends which are paid or
          intended to be paid in connection with  distributions of the Company's
          assets upon the voluntary or involuntary  liquidation,  dissolution or
          winding up of the Company)  when  declared by the  Company's  Board of
          Directors on the common stock,  on an as converted  basis,  and before
          any payment is made to the holders of the common stock.

                                      F-16
<PAGE>


                    BCAM INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 7 - Stockholders' equity (deficiency):

          Prior to September  23,  1999,  BCAM had  27,555,153  shares of common
          stock  outstanding.  During 1998, BCAM sold shares of common stock and
          warrants through a private placement that was exempt from registration
          under the Securities Act of 1933 (the "Act").  However,  the number of
          shares of common  stock sold was  subject to  "repricing  adjustments"
          based on the market value of the shares at specified dates.  Effective
          as of September 23, 1999, the  stockholders of BCAM that had purchased
          shares  through the private  placement  received a total of 13,125,000
          shares of common  stock  pursuant  to  agreements  that  canceled  its
          obligations with respect to the issuance of any additional shares as a
          result of repricing adjustments.  Accordingly, as explained in Note 1,
          the stockholders of BCAM owned 40,680,153 shares of common stock prior
          to the Merger.  Such shares  represent  100% of the  Company's  common
          shares  outstanding as of December 31, 1999 and  approximately  20% of
          the Company's outstanding voting shares.

          Prior to September 23, 1999,  LungCheck had 3,231,846 shares of common
          stock  outstanding  that were converted into 10,652 shares of Series B
          Stock upon  consummation of the Merger.  Effective as of September 23,
          1999,  LungCheck issued 21,521,145 shares of common stock,  which were
          converted  into  70,929  shares of Series B Stock,  as a result of the
          Merger  and  the  purchase  business   combination  (see  Note  1)  in
          connection  with  repayments  of notes,  repayments of advances from a
          stockholder,  sales for cash through a private placement, a payment to
          obtain a consent to the Merger and payments for various consulting and
          other services as more fully described below.

          Effective as of September 23, 1999,  LungCheck issued 8,333,333 shares
          of common stock,  which were  converted into 27,465 shares of Series B
          Stock, to repay senior subordinated secured promissory notes that were
          payable to certain of its  stockholders and directors in the aggregate
          principal amount of $1,250,000,  including  subordinated  notes in the
          aggregate  principal amount of $1,000,000 that had been sold through a
          private  placement in January  1999 that was exempt from  registration
          under the Act. The Company had received net proceeds of $400,000  from
          that sale.  The discount on the notes of $600,000  (60%) was amortized
          to expense over the period from the date of issuance to September  23,
          1999. The Company also charged the remaining  deferred  issuance costs
          related to these notes of approximately  $56,000 to additional paid-in
          capital in  connection  with the  conversion.  LungCheck  also  issued
          4,792,324  shares of common stock,  which were  converted  into 15,795
          shares of Series B Stock,  to repay the principal  balance of $613,000
          of, and the related  accrued  interest of $106,000 on, a 10% note that
          had been  payable to a  stockholder.  LungCheck  also  issued  850,476
          shares of common  stock,  which were  converted  into 2,803  shares of
          Series B Stock, to repay advances of $127,000 that had been payable to
          a stockholder (see Note 10). The issuances of the shares as repayments
          of notes, advances and accrued interest were noncash transactions that
          are not reflected in the accompanying 1999  consolidated  statement of
          cash flows.

                                      F-17

<PAGE>


                    BCAM INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 7 - Stockholders' equity (deficiency) (continued):

          Effective as of September 23, 1999, LungCheck sold 5,400,000 shares of
          common  stock,  which were  converted  into 17,797  shares of Series B
          Stock,  through a private  placement that was exempt from registration
          under the Act and received total cash proceeds of $810,000.

          Effective as of September 23, 1999, LungCheck issued 905,845 shares of
          common  stock,  which were  converted  into  2,985  shares of Series B
          Stock,  to obtain a consent from  InterEquity  to the Merger (see Note
          4). The shares issued had an approximate fair value of $582,000, which
          has been included in debt issuance  costs and is being  amortized over
          the remaining term of the note. LungCheck also issued 1,239,167 shares
          of common stock,  which were  converted  into 4,084 shares of Series B
          Stock,  to consultants for services in connection with the conversions
          of the notes and the sales of shares described above and certain other
          transactions   related  to  the  Merger.  The  shares  issued  had  an
          approximate  fair value of  $180,000  which was  charged  to  selling,
          general and administrative expenses in 1999.

          The Company incurred total costs of $1,866,000 related to professional
          and consulting fees and other related  expenses in connection with the
          Merger  and  the  purchase  business  combination  comprised  of  cash
          payments of $190,000 and payments through grants of stock options with
          a fair value of  approximately  $1,676,000  (see Note 8). The  Company
          allocated  $810,000  of the  total  costs  as a charge  to  additional
          paid-in  capital,  which was the amount of the net cash  proceeds  the
          Company  received  from the private  placement  of the  equivalent  of
          17,797  shares of Series B Stock  sold in  connection  with the Merger
          described above. The remaining  portion of the costs attributed to the
          options of $1,056,000 was charged to operating expenses and additional
          paid-in capital was increased by an equivalent amount.

          During 1999,  the Company also issued the equivalent of a total of 926
          Series B shares as fees for the  deferral of payments to a  noteholder
          (see Note 4).

          On December  30,  1997,  LungCheck  issued  warrants  to purchase  the
          equivalent  of 7,098,336  shares of common  stock that were  initially
          exercisable through December 29, 2002 at $.11 per share as part of the
          consideration  for the loan from  InterEquity  (all  numbers of common
          shares and per share  exercise  prices  related to warrants  issued by
          LungCheck  and/or  BCAM set forth below have been  converted  to post-
          Merger equivalent  amounts).  In addition to issuing the equivalent of
          2,985  shares  of  Series B Stock  described  above,  effective  as of
          September  23,  1999,  LungCheck  reduced  the  exercise  price of the
          warrants  issued in 1997 from $.11 to $.05 and issued new  warrants to
          purchase  5,100,000  shares of common  stock  exercisable  at $.05 per
          share through  September 23, 2004 to obtain a consent from InterEquity
          to the  Merger.  The  adjustments  to the  exercise  price and the new
          warrants issued had an approximate fair value of $1,462,000, which has
          been included in debt issuance  costs and is being  amortized over the
          remaining term of the note. These were noncash  transactions  that are
          not reflected in the accompanying 1999 consolidated  statement of cash
          flows.


                                      F-18
<PAGE>


                    BCAM INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 7 - Stockholders' equity (deficiency) (concluded):

          During March and April 1998, the Company sold the equivalent of 11,245
          shares of Series A Stock and 1,023,660  warrants to purchase shares of
          common  stock  pursuant to a private  placement of units of shares and
          warrants  exempt  from  registration  under the Act.  Each  warrant is
          exercisable  for the purchase of one share of common stock at $.11 per
          share through March 22, 2003. The Company received  proceeds from this
          private  placement of $152,000,  net of related  costs and expenses of
          $41,000.  In connection with the private  placement,  the Company also
          issued  8,070,000  warrants to purchase  shares of common  stock as an
          additional fee for the services of the placement  agent.  Each warrant
          is  exercisable  for the purchase of one share of common stock at $.11
          per share through December 31, 2002.

          The number of common shares  reserved for issuance upon exercise,  the
          exercise  prices  and the  expiration  dates  of all of the  Company's
          outstanding  warrants as of December  31, 1999 are  summarized  in the
          table below:
<TABLE>
<CAPTION>

                    Shares Subject
                      to Warrants                    Exercise Price                   Expiration Date
                      -----------                    --------------                   ---------------

                    <S>                                     <C>                    <C>
                       11,236,500                           $.06                    August 14, 2002
                       15,973,932                            .11                    December 29, 2002
                        7,098,336                            .05                    December 29, 2002
                        8,070,000                            .11                    December 31, 2002
                        1,023,636                            .11                    March 22, 2003
                        5,100,000                            .05                    September 15, 2004

</TABLE>

Note 8 - Stock options:

          LungCheck and BCAM have granted  options for the purchase of shares of
          common  stock  to  key  executives,  other  employees,  directors  and
          consultants and other nonemployees.  The table that follows summarizes
          the  status  of the  shares of the  Company's  common  stock  that are
          subject to issuance upon the exercise of stock options  outstanding as
          of  December  31,  1999 and 1998 and  changes in  outstanding  options
          during the years then ended. Since the Merger was treated effective as
          of  September  23, 1999 as a  "purchase  business  combination"  and a
          "reverse  acquisition"  for accounting  purposes in which BCAM was the
          legal acquirer and LungCheck was the accounting acquirer,  the options
          and the related changes  reflected in the table prior to September 23,
          1999 are those granted by LungCheck. All options granted by BCAM prior
          to and  outstanding as of September 23, 1999 are reflected  separately
          as options  attributable  to the Merger.  In addition,  all numbers of
          common shares and per share exercise prices related to options granted
          by either  LungCheck  or BCAM set forth below have been  converted  to
          post-Merger equivalent amounts.

                                      F-19
<PAGE>


                    BCAM INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 8 - Stock options (continued):
<TABLE>
<CAPTION>


                                                                     1999                             1998
                                                                     ----                             ----
                                                             Shares        Weighted            Shares        Weighted
                                                            or Price        Average           or Price        Average
                                                            Per Share   Exercise Price        Per Share    Exercise Price
                                                            ---------   --------------        ---------    --------------

                  <S>                                      <C>              <C>                <C>             <C>
                  Outstanding, at beginning of
                     year                                   9,622,877       $ .08              6,022,877       $.06
                  Granted                                  49,296,378         .03              3,600,000        .11
                  Options attributable to Merger            4,286,375        1.01
                  Canceled                                 (3,756,180)        .10
                                                          -----------                        -----------

                  Outstanding, at end of year              59,449,450         .10              9,622,877        .08
                                                           ==========                          =========

                  Options exercisable at end of year       36,183,385                          5,467,864
                                                           ==========                          =========

                  Weighted average fair value
                     of options granted during
                     the year                                    .13                               .08
                                                                 ===                               ===
</TABLE>

          The Company  granted  options to purchase  4,286,188  shares of common
          stock for services  provided by  employees  during 1999 at an exercise
          price of $.03 per share which was less than the fair  market  value of
          the shares on the dates of the  respective  grants.  Accordingly,  the
          Company  charged  $409,000  to  compensation  expense  and  additional
          paid-in  capital in 1999 based on the number of shares  subject to the
          options  granted  and the  excess of the fair  market  value  over the
          exercise price for each share.

          The Company  also  granted  options to purchase  29,662,200  shares of
          common  stock to an  executive  officer  during  1999  pursuant  to an
          employment  agreement that expires on September 15, 2003 (see Note 9).
          The options were granted at an exercise  price of $.03 per share which
          was less  than  the fair  market  value of the  shares  on the date of
          grant.  Accordingly,   the  Company  charged  $2,966,000  to  unearned
          compensation  and  additional  paid-in  capital  in 1999  based on the
          number of shares that are subject to the options and the excess of the
          fair market value over the exercise price for each share. The unearned
          compensation is being amortized on a straight-line basis over the term
          of the  employment  contract.  A total  of  $148,000  of the  unearned
          compensation was amortized in 1999 and the balance is shown separately
          as  a  reduction   of   stockholders'   equity  in  the   accompanying
          consolidated balance sheet as of December 31, 1999.

          The Company  also  granted  options to purchase  13,347,990  shares of
          common stock at an exercise price of $.03 per share to consultants and
          other  nonemployees  during 1999 as part of consideration for services
          in connection with the Merger and the reverse acquisition. The Company
          valued the costs of the services at $1,676,000  based on the estimated
          fair value of the options  determined  using methods  required by SFAS
          123. A portion of the total  costs was charged to  additional  paid-in
          capital  and the  remainder  was  charged to  operating  expenses,  as
          further explained in Note 7.

                                      F-20
<PAGE>


                    BCAM INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 8 - Stock options (concluded):

     The  following  table  summarizes  information  about fixed  stock  options
outstanding at December 31, 1999:
<TABLE>
<CAPTION>

                            Options Outstanding                                                     Options Exercisable
                            -------------------                                                     -------------------
                                                           Weighted
                                                            Average
                                                           Years of          Weighted                            Weighted
                                          Number           Remaining          Average           Number            Average
                  Exercise Price       Outstanding       Contract Life     Exercise Price      Exercisable     Exercise Price
                  --------------       -----------       -------------     --------------      -----------     --------------

<S>               <C>     <C>           <C>                  <C>               <C>             <C>                <C>
                  $.0002- .07           54,863,075           4.38              $ .03           32,609,010         $.03
                     .08- .23            1,100,000           4.14                .14            1,100,000          .14
                     .75-1.69            3,486,375           6.67               1.10            2,474,375          .93
                                       -----------                                            -----------

                  $.0002-$1.69          59,449,450           4.51                .10           36,183,385          .10
                  ============          ==========           ====                ===           ==========          ===
</TABLE>

          Since the Company has elected to continue to use the provisions of APB
          25 in accounting for stock options granted to employees,  no earned or
          unearned   compensation   cost  was  recognized  in  the  accompanying
          consolidated   financial  statements  for  stock  options  granted  to
          employees  at exercise  prices that were equal to or greater  than the
          fair market value of the Company's  common stock on the date of grant.
          The pro forma  amounts  computed  as if the  Company  had  elected  to
          recognize  compensation cost for options granted to employees based on
          the estimated fair value of the options at the date of grant, computed
          as described below, and the related historical amounts reported in the
          accompanying consolidated statements of operations follow:
<TABLE>
<CAPTION>

                                                                                         1999                   1998
                                                                                    ---------------        ---------------

<S>                                                                                  <C>                    <C>
                   Net loss - as reported                                            $(4,368,000)           $(2,365,000)
                                                                                     ===========            ===========
                   Net loss - pro forma                                              $(5,313,000)           $(2,545,000)
                                                                                     ===========            ===========
                   Basic loss per share - as reported                                  $(.08)                  $(.16)
                                                                                       =====                   =====
                   Basic loss per share - pro forma                                    $(.10)                  $(.17)
                                                                                       =====                   =====
</TABLE>

          The fair value of each option  granted was estimated as of the date of
          grant using the "Black-Scholes" method in 1999 and the "minimum value"
          method   in  1998   pursuant   to  SFAS   123,   with  the   following
          weighted-average assumptions:


                                                      1999                  1998
                                                      ----                  ----

                   Expected volatility                105%                   0%
                   Risk-free interest rate           4.65%                5.85%
                   Expected years of option life        5                    5
                   Expected dividends                   0%                   0%


                                      F-21
<PAGE>


                    BCAM INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 9 - Commitments and contingencies:

     Operating leases:

          The  Company  leases  its  facilities  under an  operating  lease that
          expires  in March  2001.  The lease  requires  the  payment of minimum
          annual  rentals  plus real  estate  taxes,  insurance,  utilities  and
          maintenance  costs.  Rent expense  totaled  approximately  $62,000 and
          $94,000 for the years ended December 31, 1999 and 1998,  respectively.
          The Company was originally  leasing one of its facilities  from one of
          its stockholders. In April 1999, the stockholder sold the premises and
          assigned the lease to the new, unrelated owner.

          Future minimum rental payments under the noncancelable operating lease
          aggregated  $104,500  at December  31,  1999,  of which  approximately
          $83,500 is payable in 2000 and $21,000 is payable in 2001.

     Employment agreement:

          The Company has an employment  agreement with its Chairman,  President
          and Chief  Executive  Officer that expires in September  2003.  Future
          minimum payments under the employment agreement aggregated $814,000 at
          December 31, 1999, of which approximately $185,000 is payable in 2000,
          $210,000 is payable in 2001,  $235,000 is payable in 2002 and $184,000
          is payable in 2003. In addition, the employment agreement requires the
          Company to pay the officer  299% of his then base salary  should there
          be a  change  in  control  of  the  Company.  Should  the  officer  be
          terminated  without cause,  the agreement  requires the Company to pay
          the officer one year's salary.

     Commitment to issue warrants:

          If the Company has not  completed  an initial  public  offering of its
          common stock, or a majority of its common stock has not been acquired,
          at a price of at least $5.00 per share,  and the loan from InterEquity
          (see Note 4) has not been repaid at any time prior to January 1, 2002,
          the  Company  will be  required  to issue  warrants  to purchase up to
          1,730,295  shares  of its  common  stock to  InterEquity  as  follows:
          247,185  warrants on January 1, 2000,  494,370  warrants on January 1,
          2001 and 988,740  warrants on January 1, 2002.  Each  warrant  will be
          exercisable  for the purchase of one share of common stock at $.45 per
          share for a period of five years from the date of issuance.

     Concentrations of credit risk:

          The Company  maintains its cash in bank deposit  accounts the balances
          of which, at times, may exceed Federal insurance  limits.  Exposure to
          credit risk is reduced by placing such deposits  with major  financial
          institutions and monitoring their credit ratings.


                                      F-22
<PAGE>


                    BCAM INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 9 - Commitments and contingencies (continued):

     Litigation:

          On or about  February  22, 1999,  a purported  stockholder  derivative
          action  was  filed in United  States  District  Court for the  Eastern
          District of New York in connection with certain  transactions prior to
          the Merger  culminating  in the sale by BCAM of its interest in one of
          its former subsidiaries, Drew Shoe Corporation ("Drew") to Impleo, LLC
          ("Impleo").  The complaint named all of BCAM's then current  directors
          and several former directors as defendants (the "BCAM  Defendants") as
          well  as  Impleo  and  certain   related   entities  and   individuals
          (collectively,  the "Defendants"). The complaint alleged violations of
          the  Federal   securities  laws  and  state  law  and  challenged  the
          Defendants' actions in connection with certain transactions  including
          but not  limited to (i) the April 14,  1998  restructuring  of certain
          convertible  notes;  (ii) the October 1998 sale of a 56.7% interest in
          Drew to Impleo and (iii) the sale of BCAM's  remaining  33.3% interest
          in Drew to Impleo on March 4, 1999. In addition to seeking recovery on
          behalf of BCAM for certain allegedly  wrongful acts on the part of the
          Defendants, the complaint sought, among other things, to enjoin or set
          aside any stockholder  vote in connection with a proxy statement filed
          with the  Securities  and Exchange  Commission on or about February 1,
          1999  (pursuant to which BCAM  received  approval of over 66.7% of its
          stockholders  to sell its  remaining  33.3%  interest  in Drew) and to
          block or rescind the sale of any  interests in Drew to Impleo.  BCAM's
          directors  denied the  allegations  concerning any allegedly  wrongful
          actions.

          In May 1999,  the  Defendants  filed motions to dismiss the complaint.
          Instead of responding to these motions,  plaintiff filed and served an
          amended  complaint in July 1999. The amended complaint dropped certain
          parties as Defendants and raised several new  allegations,  including,
          but not limited to, the alleged failure to make adequate disclosure of
          the advice rendered by a consultant to BCAM and the alleged failure to
          seek  separate  stockholder  approval for the October  1998 sale.  The
          Company and its directors denied that they engaged in wrongful conduct
          and on September 13, 1999 the Defendants served motions to dismiss the
          amended complaint.

          After further  motions,  the parties agreed to settle the case and, on
          February 19,  2000,  executed a settlement  agreement  which  requires
          court approval. The principal terms of the settlement require the BCAM
          Defendants to pay $229,500 plus legal fees not to exceed $85,000,  and
          the remaining  Defendants to pay $25,000 plus legal fees not to exceed
          $7,500. The Company's insurer has agreed to pay the obligations of the
          BCAM Defendants arising from the settlement.


                                      F-23
<PAGE>


                    BCAM INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 9 - Commitments and contingencies (concluded):

     Litigation (concluded):

          In connection with the Merger described above,  BCAM's  liabilities as
          of September 23, 1999 were assumed by ISTX (see Note 1). However,  the
          assumption of such  liabilities  was completed  "with  recourse." As a
          result,  if ISTX should default on the liabilities of BCAM it assumed,
          the Company would be liable for payment.  As of December 31, 1999, the
          Company was  contingently  liable for  liabilities  assumed by ISTX of
          approximately  $492,000.  Management  cannot determine what amount, if
          any,  the Company may have to pay, and the Company had not accrued any
          liability for payments, in connection with this matter.


Note 10- Other related party transactions:

          At December 31, 1999,  accounts payable  included  $152,000 that arose
          during 1999 from noninterest bearing advances from a stockholder.  The
          amount  payable  to the  stockholder  has no  specific  due  date.  In
          addition, the stockholder had, effectively, made other advances to the
          Company by paying  consulting  fees of $127,000  on its behalf  during
          1999 which were repaid through the issuance of the equivalent of 2,803
          shares of Series B Stock in connection with the Merger (see Note 7).

          During  1998,  the  Company was charged  fees  totaling  approximately
          $198,000 by a stockholder for pathology services.


Note 11- Subsequent events:

     Private placements of shares of new series of preferred stock:

          Subsequent  to December 31, 1999,  the Company  became  authorized  to
          issue up to 120,000  shares of Series C  Convertible  Preferred  Stock
          (the  "Series C Stock")  and  150,000  shares of Series D  Convertible
          Preferred  Stock (the "Series D Stock").  Each share of Series C Stock
          has a par value of $.01 per share and a preference in  liquidation  of
          (i) $100 per share plus (ii) all declared but unpaid dividends,  or if
          greater,  a portion of the  remaining  assets of the Company which are
          distributable  to the  holders of the common  stock equal to an amount
          which  would  have  been  distributed  if the  Series C Stock had been
          converted  into  common  stock  immediately  prior to the date of such
          liquidation.  Each share of Series C Stock is convertible into 3,333.4
          shares of common stock,  subject to certain conditions.  Each share of
          Series D Stock has a par value of $.01 per share and a  preference  in
          liquidation  of (i) $10 per share  plus (ii) all  declared  but unpaid
          dividends,  or if greater,  a portion of the  remaining  assets of the
          Company  which are  distributable  to the holders of the common  stock
          equal to an amount which would have been  distributed  if the Series D
          Stock had been  converted into common stock  immediately  prior to the
          date of such liquidation.  Each share of Series D Stock is convertible
          into 250 shares of common stock, subject to certain conditions.

                                      F-24
<PAGE>


                    BCAM INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 11- Subsequent events (continued):

     Private placements of shares of new series of preferred stock (concluded):

          In  addition,  the holders of Series C Stock are entitled to cast that
          number of votes  equal to the  number of shares of common  stock  into
          which  a share  of  Series  C  Stock  is  convertible  on each  matter
          submitted to the  Company's  stockholders  for voting.  The holders of
          Series D Stock have no voting  rights.  The  holders of Series C Stock
          and  Series D Stock are  entitled  to  dividends  (whether  in cash or
          property  or  securities,  other  than  dividends  which  are  paid or
          intended to be paid in connection with  distributions of the Company's
          assets upon the voluntary or involuntary  liquidation,  dissolution or
          winding up of the Company)  when  declared by the  Company's  Board of
          Directors on the common stock,  on an as converted  basis,  and before
          any payment is made to the holders of the common stock.

          During January 2000, the Company sold 103,330 shares of Series C Stock
          and 103,330  warrants to purchase shares of common stock pursuant to a
          private placement exempt from registration under the Act. Each warrant
          is  exercisable  for the purchase of one share of common stock at $.33
          per share through January 12, 2005. The Company received proceeds from
          this private placement of $310,000,  net of related costs and expenses
          of $31,000.  Proceeds of $220,000  received prior to December 31, 1999
          are  reflected  as  payments  received  for  preferred  stock prior to
          issuance in the accompanying consolidated balance sheet as of December
          31, 1999.

          During  February and March 2000,  the Company  sold 120,000  shares of
          Series D Stock and  30,000,000  warrants to purchase  shares of common
          stock pursuant to a private placement exempt from  registration  under
          the Act. Each warrant is exercisable  for the purchase of one share of
          common  stock  at $.08 per  share  through  March  2005.  The  Company
          received  proceeds from this private  placement of $1,200,000,  net of
          related costs and expenses of $132,000.

     License agreement:

          On April 4,  2000,  the  Company  entered  into a patent  and  license
          agreement with AccuMed  International,  Inc. ("AccuMed") for AccuMed's
          technology in the field of  morphological,  cytochemical,  cytogenetic
          and quantitative  sputum cytology which is used in laboratory analyses
          for early lung cancer detection,  screening,  diagnosis,  prognosis or
          therapeutic monitoring.  The Company will be required to pay AccuMed a
          license fee of $1,000,000 in various  installments through December 1,
          2000;  royalty fees based on specified terms; and either $1,000,000 in
          cash,  or shares of the  Company's  common  stock  with an  equivalent
          value, on the first  anniversary of the agreement based on an election
          made by  AccuMed.  The  agreement  will expire on April 4, 2020 except
          under certain conditions.

                                      F-25
<PAGE>


                    BCAM INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 11- Subsequent events (concluded):

     Investment in debentures:

          On March 31,  2000,  the  Company  purchased  secured  claims  against
          Intelligent Medical Imaging,  Inc. ("IMI") with a principal balance of
          $500,000  from  one  of  IMI's  creditors  for  $370,000.   IMI  is  a
          manufacturer  of  automated   microscopy  systems  used  worldwide  in
          hospitals and large  clinical  laboratories  that filed for Chapter 11
          Bankruptcy Protection in November 1999.

     Consulting agreements:

          The Company has entered  into an  agreement  that became  effective on
          January 1, 2000  pursuant to which a  consultant  will provide it with
          business  development and management advisory services.  The agreement
          requires the Company to pay the consultant from $21,000 to $25,000 per
          month from  January 1, 2000  through  February 1, 2001 and grant stock
          options to the  consultant.  In addition,  the consultant will receive
          certain   fees  upon  the   consummation   of  certain   mergers   and
          acquisitions.

          On January 31, 2000, the Company entered into an agreement pursuant to
          which an  investment  banker will provide it with  financial  advisory
          services.  The  agreement  requires the Company to pay the  investment
          banker $5,000 per month through  January 31, 2001, with 50% payable in
          cash and 50% payable in shares of common  stock of the Company with an
          equivalent fair value. In addition, the investment banker will receive
          certain   fees  upon  the   consummation   of  certain   mergers   and
          acquisitions.  The  investment  banker will also  receive  warrants to
          purchase  1,000,000  shares of the Company's common stock that will be
          exercisable  over a five year period at an exercise price that will be
          determined  based on the selling price of the  Company's  common stock
          consummated through a future private placement.

     Matters subject to stockholder approval:

          At the next annual meeting,  the Company's  stockholders will be asked
          to approve, among other matters: (i) a change in the Company's name to
          CellMetrics, Inc.; (ii) an increase in the number of authorized shares
          of the Company's  preferred  stock from 2,000,000  shares to 5,000,000
          shares;  (iii) an increase in the number of  authorized  shares of the
          Company's common stock from 65,000,000  shares to 200,000,000  shares;
          and (iv) a 1 for 15 reverse split of the Company's common stock.




                                      * * *
                                      F-26