<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

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

For the fiscal year ended December 31, 1998

                           Commission File No. 0-21595

                                 ENAMELON, INC.
           (Name of small business issuer as specified in its charter)

                                    Delaware
                            (State of Incorporation)

                                15 Kimball Avenue
                             Yonkers, New York 10704
                    (Address of principal executive offices)

                                   13-3669775
                      (I.R.S. Employer Identification No.)

       Registrant's telephone number, including area code: (914) 237-1308

     Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  Common Stock, 
$.001 par value

     Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes X No    .
            --   --
     Check if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-B is not contained herein, and will not be contained to the best of
Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10- KSB [ ]

     Revenues for the fiscal year ended December 31, 1998:  $14,302,137

     As of the close of business on March 17, 1999, there were outstanding
10,285,253 shares of registrant's Common Stock. The approximate aggregate market
value (based upon the closing sale price of such stock) of these shares held by
non-affiliates of the registrant as of March 17, 1999 was $42,354,731.

         Transitional Small Business Disclosure Format (check one) Yes   No X
                                                                      --   --
                       Documents Incorporated By Reference

         Part III of the Annual Report on Form 10-KSB is herein incorporated by
reference from the definitive Proxy Statement to be filed with the Securities
and Exchange Commission with respect to the Registrant's Annual Meeting of
Stockholders scheduled to be held on May 18, 1999.


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ENAMELON, INC.
FORM 10-KSB ANNUAL REPORT--1998
TABLE OF CONTENTS



PART I                                                                                                PAGE
------                                                                                                ----

<S>                  <C>                                                                              <C>
Item    1.           Description of Business...................................................          1
Item    2.           Description of Property...................................................         15
Item    3.           Legal Proceedings.........................................................         15
Item    4.           Submission of Matters to a Vote of Security Holders.......................         15

PART II

Item    5.           Market for Common Equity and Related Stockholder Matters..................         16
Item    6.           Management's Discussion and Analysis or Plan  of Operations...............         17
Item    7.           Financial Statements .....................................................         21
Item    8.           Changes in and Disagreements with Accountants on Accounting and
                       Financial Disclosure....................................................         21

PART III

Item    9.           Directors, Executive Officers, Promoters and Control Persons;
                       Compliance with Section 16(a) of the Exchange Act.......................         22
Item   10.           Executive Compensation....................................................         22
Item   11.           Security Ownership of Certain Beneficial Owners and Management............         22
Item   12.           Certain Relationships and Related Transactions............................         22
Item   13.           Exhibits and Reports on Form 8-K..........................................         23

</TABLE>


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                                     PART I



ITEM  1.          DESCRIPTION OF BUSINESS

General

       Enamelon, Inc. (the "Company") develops and markets over-the-counter oral
care products that help stop cavities before they begin. The Company's products
are based on proprietary formulations and technologies that have been shown in
laboratory and human studies to enhance remineralization of tooth enamel and to
prevent early stage tooth decay. The Company's toothpastes contain the active
ingredient sodium fluoride in a formulation with calcium and phosphate ions, to
enhance the remineralization of tooth enamel. The Company launched its initial
product, Enamelon(R) all-family toothpaste, in test markets in March 1997 and
began the product's national introduction in the first quarter of 1998. The
Company expects to launch Enamelon(R) Calcium Whitening System toothpaste, its
second product, nationally in the second quarter of 1999.

       The Company holds licenses from the American Dental Association Health
Foundation to use patented technology relating to a method for oral use of
various amorphous calcium phosphate compounds that enhance the natural activity
of fluoride to prevent tooth decay. The ADAHF has granted the Company the
following licenses:

o      exclusive United States and foreign licenses to develop, manufacture and
       market toothpaste and chewing gum and other food and confectionery
       products using the ADAHF's patented technology and

o      a non-exclusive international license covering oral spray, mouth rinse,
       professional gel products and all other products not covered by the
       Company's exclusive licenses using the ADAHF's patented technology.

The ADAHF has also granted SmithKline Beecham Corp. a non-exclusive
international license of the ADAHF's patented technology covering the same
products as the Company's non-exclusive international license. SmithKline also
obtained from the ADAHF an exclusive United States license covering oral spray,
mouth rinse, professional gel products, and all other products not covered by
the Company's exclusive United States license. The Company is required to pay
the ADAHF royalties under its license agreements.

       The Company itself has developed patented and other proprietary
technologies relating to the prevention of tooth decay before it begins. Through
February 1999, it had been granted eleven patents, nine United States patents
for methods and materials that supply soluble calcium and phosphate salts to
teeth to enhance remineralization, and two patents for its dual-chamber tube,
which is used to dispense Enamelon(R) toothpastes. In addition, the Company has
patent applications pending in the United States with respect to additional
aspects of its proprietary technology and has filed similar patent applications
that are also pending in foreign jurisdictions.

       The Company's objective is to become a leading marketer of a variety of
oral care products based on the ADAHF's patented technology and the Company's
own proprietary technology (together, the "Enamelon Licensed and Proprietary
Technologies").



<PAGE>

The significant events in the Company's progress to date include the following:

o    In 1992, the Company was organized and received from the ADAHF
     exclusive United States and foreign licenses for toothpaste and chewing gum
     and other food and confectionery products, and a non-exclusive
     international license for products not covered by the exclusive licenses.
     See "ADAHF Patents and Licenses."

o    In January 1995, the Company conducted successful laboratory tests
     of a prototype formulation using the Enamelon Licensed and Proprietary
     Technologies at the Oral Health Research Institute of Indiana University.

o    In June 1996, the Company commenced preliminary intra-oral and
     clinical studies of its toothpaste intended to establish additional
     advertising claims.

o    In October 1996, the Company completed its initial public offering
     of 1,700,000 shares of its common stock at $7.00 per share, receiving net
     cash proceeds of approximately $10.4 million.

o    In November 1996, the Company was granted its first patent and has been
     granted 10 additional patents through February 1999, all of which
     relate to its proprietary technology. See "Patents, Trademarks and
     Other Proprietary Information."

o    In March 1997, the Company initiated marketing activities for
     Enamelon(R) all-family toothpaste in selected United States markets.

o    In June 1997, the Company completed a private placement of
     1,080,000 shares of common stock at $13.00 per share, receiving net cash
     proceeds of approximately $13.1 million.

o    In October 1997, the Company completed a public offering of
     1,725,000 shares of common stock at $16.50 per share, receiving net cash
     proceeds of approximately $26.3 million.

o    During the first quarter of 1998, the Company began to introduce
     Enamelon(R) all-family toothpaste nationally. In April 1998, it launched a
     nationwide television and print advertising campaign.

o    In September 1998, the Company received approval to market Enamelon(R)
     all-family toothpaste in Canada.

o    In December 1998, the Company completed the private placement of
     500 shares of series B convertible preferred stock, receiving gross cash
     proceeds of $5,000,000.

o    In February 1999, the Company hired Kim Hardingham as its President
     and Chief Operating Officer, and in July 1998, it hired Louis Machin as its
     Vice President-Sales.

         During the second quarter of 1999, the Company expects to launch
Enamelon(R) Calcium Whitening System toothpaste to supermarkets, drug chains and
mass merchandisers. In addition, the Company is continuing to conduct laboratory
and intra-oral and human clinical studies to establish support for additional
advertising claims directed to both consumers and the dental community.


                                        2

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         The worldwide toothpaste market is estimated to exceed $5.0 billion in
annual retail sales. Annual United States toothpaste sales in 1998 have been
estimated at $1.6 billion and are projected to reach $2.0 billion by 2003. Over
the last five years, the toothpaste market has become segmented, as new,
premium-priced products offering benefits such as tartar control or whitening or
containing ingredients such as baking soda have steadily attracted consumers
away from older, more mature products.

Technology

         Every time people eat, their teeth lose small amounts of calcium and
phosphate, the major structural ingredients of tooth enamel. This
demineralization process begins with the formation of plaque on and between
teeth. Plaque is a soft, sticky film that contains a high concentration of
bacteria that causes an oral disease called caries, which causes tooth decay.
Demineralization continues when acids produced by the cariogenic bacteria in
plaque dissolve and remove small amounts calcium and phosphate from the enamel
on the outside of the tooth and, often, from the tooth's dentin, which is under
the enamel.

         Saliva naturally contains microscopic, electrically-charged calcium and
phosphate particles called ions that fight this demineralization process.
Remineralization occurs when the calcium and phosphate lost during
demineralization are replaced with the calcium and phosphate ions dissolved in
saliva. The presence of fluoride in the saliva is also known to facilitate
remineralization of calcium and phosphate. In the 1950's, scientists determined
that adding fluoride as the active ingredient to toothpaste improves
remineralization. As an active ingredient, fluoride is responsible for the
therapeutic remineralizing activity of fluoride toothpaste. However,
remineralization by fluoride toothpastes is limited by the amounts of calcium
and phosphate ions normally present in the saliva. If the daily amount of
demineralization is not balanced by the daily amount of remineralization, there
will be a net mineral loss from the tooth. If this process continues, the tooth
structure will collapse and a cavity will form. Only a dentist can repair a
cavity.

         The Company's toothpastes simultaneously supply the active ingredient,
sodium fluoride, and assured concentrations of ions of the inactive ingredients
calcium and phosphate in a dissolved, or soluble, form during brushing. The
Company's research studies have demonstrated that Enamelon(R) toothpaste
enhances remineralization with a high level of fluoride, calcium and phosphate
uptake and that the tooth structure has been strengthened and hardened. This
makes the tooth less porous and more resistant to attacks by acids from
decay-causing bacteria.

Strategy

         The Company's objective is to develop a variety of oral care, chewing
gum and other food and confectionery products that are based on the Enamelon
Licensed and Proprietary Technologies and help prevent tooth decay at its
earliest stage. The Company has developed a strategic plan to accomplish this
goal. The Company's primary strategies are to:

o    Continue Marketing and Expand Distribution of Enamelon(R)
     toothpaste. The Company intends to continue executing its marketing and
     distribution programs to expand distribution of Enamelon(R) all- family
     toothpaste to drugstores, mass merchandisers, and supermarkets.

o    Launch Enamelon(R) Calcium Whitening System Toothpaste and Other
     New Products. The Company is currently focusing on the launch of its
     Enamelon(R) Calcium Whitening System toothpaste in the second quarter of
     1999. The Company has an aggressive new products program underway and
     expects to introduce several line extensions that are consistent with
     market trends and exploit the

                                        3

<PAGE>

     Company's remineralization technology. These new products include a
     toothpaste for sensitive teeth and a gel toothpaste.

o    Continue Marketing to Dental Professionals. The Company's
     goal is to continue to build awareness of the Enamelon
     Licensed and Proprietary Technologies and its products in
     the dental community. The Company will continue its
     efforts in educating the dental community regarding the
     proven therapeutic benefits of Enamelon(R) toothpaste.

o    Broaden Product Claims. The Company believes that a broadened and
     heightened understanding of the technology required for effective
     remineralization of tooth enamel will lead to a stronger competitive
     position. It is conducting intra-oral and human clinical studies to
     establish additional promotional claims to be directed to both consumers
     and the dental community.

o    Obtain the ADA Seal of Approval. The Company expects to file an
     application for the American Dental Association Seal of Approval for
     Enamelon(R) all-family toothpaste in the second quarter of 1999. It
     believes that the ADA Seal of Approval will enhance the standing of
     Enamelon(R) all-family toothpaste with both the dental community and
     consumers.

o    Collaborate with Corporate Partners in Certain Product Areas and
     International Markets. The Company intends to seek domestic and
     international strategic alliances with consumer product companies that will
     assist in the marketing and manufacturing of oral care products outside of
     the United States.

o    Capitalize on Additional Commercial Applications. The Company
     believes that products such as chewing gum, mouthwash, dental floss,
     lozenges, mints and professional products may provide benefits similar to
     those of its toothpastes and represent large potential markets for the
     application of the Enamelon Licensed and Proprietary Technologies.

Products

         The Company has introduced toothpaste as its initial product line. The
Company also is exploring application of the Enamelon Licensed and Proprietary
Technologies to food and confectionery products, which it intends to develop
after the national introduction of Enamelon(R) all-family toothpaste,
Enamelon(R) Calcium Whitening System toothpaste and various line extensions.

 Toothpastes

         All-Family Toothpaste. The Company's introductory product, Enamelon(R)
all-family fluoride toothpaste, provides the active ingredient sodium fluoride
and is formulated to help stop cavities before they begin and to enhance
remineralization of tooth enamel. Product development activities for the
Company's all-family toothpaste were completed at the end of 1996. The Company
introduced this toothpaste into test markets consisting of approximately 5% of
United States households in early 1997. During 1998, the Company successfully
launched Enamelon(R) all-family toothpaste nationally.

         Toothpaste Line Extensions. An integral part of building the
Enamelon(R) brand involves product line extensions, which help create a greater
retail shelf presence. The Company chose Enamelon(R) Calcium Whitening System
toothpaste, which both whitens and strengthens tooth enamel, for its first line
extension. It expects to launch this product through a national media campaign
in the second quarter of

                                        4

<PAGE>

1999. Other toothpaste line extensions, such as a toothpaste for sensitive teeth
and a gel toothpaste, are expected to be introduced as product development is
completed.

Dual-Chamber Tube

         In order to dispense its toothpaste products, the Company has developed
a patented dual- chamber toothpaste tube that simultaneously dispenses two
formulations. The tube's dual chambers maintain separation between the two
component formulations until they are dispensed onto a toothbrush. Unlike
presently used dual-chamber toothpaste dispensing systems, which employ
expensive pumps, the Company's tube was designed to be filled with conventional
high-speed tube filling equipment, thus making the cost lower than other
dual-chamber toothpaste dispensing systems. The dual-chamber tube may also have
commercial applications outside of the toothpaste field.

Additional Potential Products

         The Company has initiated product development activities for a range of
new products based on the Enamelon Licensed and Proprietary Technologies. In
particular, the Company has targeted the chewing gum market, because it believes
that chewing gum represents an attractive delivery system for the Enamelon
Licensed and Proprietary Technologies in a market that has been estimated to
exceed $2.0 billion of United States retail sales in 1998. The Company is
developing a prototype chewing gum and is exploring strategic alliances with
major confectionery manufacturers for marketing, sales and distribution of a
chewing gum in the United States and international markets. The Company believes
that a chewing gum formulated using the Enamelon Licensed and Proprietary
Technologies may reduce the demineralizing effects of plaque acids through the
increased stimulation of saliva and by adding calcium and phosphate ions to
saliva. Accordingly, the Company believes that its proposed chewing gum may be a
beneficial supplement to brushing. FDA regulations, however, may limit claims
that the Company can make for its proposed chewing gum.

         The Company also believes that the use of the Enamelon Licensed and
Proprietary Technologies in other food and confectionery products, such as
lozenges or mints, can provide benefits similar to those in the Company's
toothpaste and other proposed oral care products. The Company has begun to
evaluate the possible uses of the Enamelon Licensed and Proprietary Technologies
in these products and intends to explore such applications following the
commercialization of its toothpastes.

         The Company is also pursuing the development of other oral care
products, including mouthwash and professional gels for foreign markets and
professional dentifrices for both the domestic and foreign markets. The Company
believes that these products will compliment its existing products and broaden
its position in the oral care category.

Marketing

         The Company's national marketing strategy aims to create brand
awareness and generate trial among consumers by promoting its proprietary
technology and the therapeutic benefits of its products. To differentiate its
products from other competing toothpaste and oral care products, the Company has
positioned them to emphasize their advanced technologies and remineralizing and
whitening qualities. The Company uses daytime and primetime television
advertising, national spot radio, consumer sampling programs and distribution of
coupons by mail and Sunday newspaper supplements to educate consumers and create
demand.


                                        5

<PAGE>

         The Company is also targeting the dental profession to create awareness
of its remineralization technology and products. To implement this strategy, the
Company frequently places technical articles in professional journals, attends
professional conventions and develops direct response programs directed to
dentists and dental hygienists for distribution of patient samples. The Company
believes that these programs have been well received and that the long-term
benefits of professional endorsements for its products are significant. One
independent awareness and usage study showed that awareness of Enamelon(R)
toothpaste among dental professionals is positive. Over 80% of all dentists
surveyed were aware of Enamelon(R) toothpaste, and over 70% rated Enamelon(R)
toothpaste as a good, very good or excellent dentifrice.

Markets and Customers

         Toothpaste is generally sold to consumers by supermarkets and other
food stores, mass merchandisers and drug stores. Supermarkets accounted for
approximately 47% of all U.S. toothpaste sales in 1998, while mass merchandisers
accounted for 34% and drug stores accounted for 19%. The Company uses
independent brokers to make sales of Enamelon(R) toothpastes to these retailers.
In 1998 and early 1999, the Company hired a Vice President-Sales and three
regional sales managers to coordinate and manage the activities of the brokers
that sell Enamelon(R) toothpastes. In the four weeks ended January 3, 1999, the
Company had distribution of Enamelon(R) all-family toothpaste in 89% of all drug
stores, 63% of all supermarkets, and 67% of all mass merchandisers.
Representative customers are set forth below.

                            Representative Customers

Mass Merchandisers           Drug Chains          Super Markets          
------------------           -----------          -------------          
                                                                         
Wal-Mart                     CVS                  Kroger                 
                                                                         
K-Mart                       Rite-Aid             Safeway                
                                                                         
Target                       Duane Reade          Albertson's Inc.       
                                                                         
BJ's Wholesale Club          Eckerd Drug          Publix Supermarket Inc.

No customer accounted for more than 10% of the Company's sales in 1998.

Research and Development

         The Company operates a research and development facility in Cranbury,
New Jersey. The Company's research and development relate to technology,
formulation, flavor, packaging and process development, and stability and safety
evaluations. In addition, the Company sponsors research related to efficacy
testing at leading universities and outside research facilities.

         Before the market introduction of Enamelon Licensed and Proprietary
toothpaste, the Company conducted laboratory studies to assess the effectiveness
of the Enamelon Licensed and Proprietary Technologies. The studies generally
demonstrated that prototype toothpaste formulations using the Enamelon Licensed
and Proprietary Technologies resulted in increased hardness and fluoride uptake
over that obtained by the prevailing industry standard. One laboratory study
demonstrated that daily treatment with a prototype formulation of Enamelon(R)
toothpaste over a two-week period reduced interproximal

                                        6

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lesions, spots between teeth where tooth decay was beginning. While the
formulations used in the foregoing tests differ from the final formulation of
Enamelon(R) toothpaste, similar ingredients are used in the final formulation,
and the Company believes that the results of similar laboratory studies with the
final formulation would not differ significantly from those described above.

         The Company has additional research supporting the current formulation
of Enamelon(R) all-family toothpaste. Dental research scientists have published
24 studies on Enamelon(R) toothpaste at international dental research meetings.
The Company believes that approximately ten peer-reviewed articles will also be
published in a special edition of the Journal of Clinical Dentistry. This
research serves as a source of information that demonstrates to the dental
profession the therapeutic benefits of Enamelon(R) toothpaste. The Company also
expects to use the results of these studies to expand advertising claims for its
products directed to consumers.

         The Company's research team is preparing an application to the ADA for
its Seal of Approval for Enamelon(R) all-family toothpaste, which it expects to
submit in the second quarter of 1999. The Company believes that the ADA Seal of
Approval will enhance the standing of Enamelon(R) all-family toothpaste among
the dental community as well as consumers. There can be no assurance, however,
that the ADA will approve the Company's application and award its Seal of
Approval to Enamelon(R) all-family toothpaste.

         Notwithstanding the foregoing, the results of the Company's studies to
date are not necessarily indicative of the results that will be obtained in
future studies. Some human studies are being conducted under substantially
different conditions from those of the prior tests, and there can be no
assurance that these studies will support additional advertising claims,
including comparative claims. While studies to date support the claims being
made for Enamelon(R) toothpaste, there can be no assurance that additional
studies will be supportive, that additional claims can be made for the product,
or that the Enamelon Licensed and Proprietary Technologies can be applied in
other oral care products. Furthermore, the Company may not be able to sell some
of its other proposed products to the public in compliance with the U.S. Food
and Drug Administration Monograph described below under "Government Regulation".
Products not covered by the Anticaries Monograph may be subject to other FDA
requirements, which could require additional testing and could limit the claims
that could be made for those products.

         The current focus of the Company's toothpaste development program is on
innovative toothpaste line extensions, such as Enamelon(R) Calcium Whitening
System toothpaste. The Company has also begun to conduct research on methods for
employing the Enamelon Licensed and Proprietary Technologies in other oral care
products, such as chewing gum, that it will seek to market. However, the
formulations of the Company's toothpaste products and other proposed products
constantly change as dictated by consumer testing and research and development.

         From the Company's inception to December 31, 1998, the Company spent
approximately $8,691,329 on its research and development activities, including
$3,215,831 for the year ended December 31, 1998. The Company expects the level
of its research and development expenses to increase in the future.

Manufacturing

         The Company's present strategy is to outsource the manufacture of its
toothpastes to experienced, FDA-registered contract manufacturers. The Company
believes that outsourcing provides greater long-term flexibility, requires a
lower initial capital investment in facilities, and avoids recruiting, training
and supervising a large manufacturing staff. The current contract manufacturer
for the Company's toothpaste is West Pharmaceutical Services, Inc.

                                        7

<PAGE>

         The Company's patented dual-chamber system required the design of
specialized assembly and filling equipment. Working closely with equipment
manufacturers, the Company modified existing commercial equipment and completed
new designs where required. The Company's tooling is currently used to produce
the tube shoulders and the plastic divider that separates the two formulations
in the Company's toothpastes. The Company owns all of the manufacturing
equipment and tooling, which is used by its contract manufacturers at their
facilities.

         The Company purchases conventional toothpaste tubes, decorated with the
Enamelon(R) design, and converts them into the dual-chamber system by inserting
the custom-designed divider into the tube. This sub-assembly work is performed
by several contract manufacturers, other than West, on high speed insertion and
sealing equipment specifically designed for this task. The tubes, ready for
filling, are then shipped to West.

         The Company and West have developed a dedicated, state-of-the-art
production line in West's Lakewood, N.J. facility. West receives raw materials
ordered by the Company and is responsible for compounding these ingredients and
filling them on Company-owned, high-speed tube filling and cartoning production
lines. In addition to West's quality control inspections, raw materials and
finished product are closely monitored by Company quality assurance personnel to
insure the finished product meets all required specifications.

         The Company currently has three manufacturing lines available for
operation, which have a total annual capacity of approximately 30 million tubes.
In addition, West has installed blending and storage facilities and has created
a filling area to support the Company's packaging and filling equipment. The
Company believes that the new blending equipment will provide sufficient
capacity, in a highly cost effective manner, to meet anticipated current and
future needs.

         The Company believes that its ownership of manufacturing equipment and
tooling will provide greater long-term flexibility, permitting it to change
manufacturers or even to commence its own manufacturing operations. The Company
has identified other FDA-registered manufacturers that it can use if West's
capacity becomes insufficient to satisfy demand or if West otherwise becomes
unavailable to manufacture the product.

         The Company uses one principal supplier for toothpaste tubes, cartons
and each of the ingredients used in formulating Enamelon(R) toothpastes. Those
products, however, are generally available from a number of other suppliers. The
Company has identified several other suppliers of those items, which it can use
if its principal suppliers become unavailable or their capacity is insufficient
to satisfy the Company's demand. Although the Company maintains inventories of
the supplies required to manufacture Enamelon(R) toothpastes, shortages of
materials or changing suppliers could result in delays in manufacturing,
increased costs and shortages of the Company's products.

         In connection with the foreign marketing of its toothpaste products, as
well as domestic and foreign marketing of its other proposed products, the
Company may seek to sublicense the Enamelon Licensed and Proprietary
Technologies to, or enter into joint ventures or strategic partnerships with,
major consumer product companies or other third parties. Manufacturing
arrangements for those products are likely to be reflected in any agreements
establishing the relationships and may place primary manufacturing
responsibilities on others.

         The Company operates a pilot plant facility in Cranbury, New Jersey,
that has limited blending and filling capacity. Its purpose is to develop
manufacturing and filling methods and procedures, prior to full

                                        8

<PAGE>

scale manufacturing. In addition, the pilot plant will be used to produce
products for research studies and develop new products using the Enamelon
Licensed and Proprietary Technologies.

Competition

The United States toothpaste industry is dominated by the following brands:

o         Procter & Gamble Co.'s Crest

o         Colgate-Palmolive Company's Colgate

o         SmithKline's Aquafresh

o         Chesebrough-Ponds USA Co.'s Mentadent

o         Church & Dwight Co., Inc.'s Arm & Hammer Dental Care

o         Block Drug Co., Inc.'s Sensodyne

The industry is led by Colgate-Palmolive Co., which established its position as
the market leader during 1998.

         Although the toothpaste market is mature, in recent years new products
have captured market share from established brands. Market share gains have been
achieved by higher priced, more therapeutically oriented new products with
unique marketing positions. Consequently, the Company believes that its focus on
remineralization of tooth enamel and its proprietary technology will capture
consumer and professional interest.

         If the Company attempts to market a chewing gum using the Enamelon
Licensed and Proprietary Technologies, then it will be entering another highly
competitive industry. The chewing gum market in the United States is dominated
by several major competitors, including Wm. Wrigley Jr. Co., Warner-Lambert
Company and RJR Nabisco, Inc. In addition, Church & Dwight recently introduced
Arm & Hammer Baking Soda Chewing Gum, which it claims will aid in removing
plaque from teeth. This chewing gum is being displayed on retailers' shelves
with oral care products rather than other chewing gums. The Company believes
that its other competitors will also introduce chewing gums that make oral-care
claims. Accordingly, competition in this category should become even stronger in
the future.

         The Company also intends to compete in other food and confectionery
categories. If the Company sublicenses the Enamelon Licensed and Proprietary
Technologies to or enters into joint ventures or strategic partnerships with
major consumer products companies for any of those products, it may be aligning
itself with one or more of its major competitors instead of competing with them.
The Company will also be required to comply with applicable FDA regulations,
which may limit the claims that may be made for those products and restrict the
Company's ability to compete effectively.

         Additionally, the Company is pursuing the development of its rights to
manufacture and market products using the Enamelon Licensed and Proprietary
Technologies, including mouth rinses and professional gels, outside of the
United States. The international markets for these products are in many ways
similar to the United States markets in that consumers are becoming increasingly
aware of the importance of oral hygiene. Product innovation with emphasis on
therapeutic benefits is continuous. The Company's competition in markets outside
the United States will vary by product and from country to

                                        9

<PAGE>

country. However, in general, such markets tend to be highly competitive and
dominated by large multinational and domestic corporations. The Company does not
presently have the resources necessary to compete on a global scale and intends
to seek corporate partners and/or negotiate license agreements with companies
that have the resources to compete effectively in foreign markets. Although the
Company will attempt to form strategic alliances with global companies, it may
also seek to negotiate on a country-by-country basis with major regional
companies, as necessary or appropriate.

ADAHF Patents and Licenses

         The patent rights licensed to the Company by the ADAHF together with
the Company's own patents are material to the Company's business. The ADAHF
patent rights licensed to the Company relate to five United States patents.
Three of the issued patents relate to formulations, applicable to toothpastes,
chewing gums, mouth rinses and professional gels, containing or capable of
producing Amorphous Calcium Phosphate, Amorphous Calcium Carbonate Phosphate and
Amorphous Calcium Phosphate Fluoride, as well as the application of these
formulations to teeth. The other two patents relate to Amorphous Calcium
Phosphate Carbonate Fluoride and Amorphous Calcium Fluoride compounds and other
technology not covered in the first three United States patents.

United States License Agreement

         In April 1998, the Company entered into an amendment to its License
Agreement with the ADAHF, which was originally signed in June 1992 and was
subsequently restated and amended and further amended in June 1995. The License
Agreement, as amended, grants the Company a fully-paid, exclusive United States
license to manufacture and sell toothpastes and chewing gum and other food and
confectionery products ("Exclusive Products") using the ADAHF's patented
technology. Under the License Agreement, the Company is required to pay a fixed
annual royalty of $400,000 through 2008 with respect to all Company sales of
Exclusive Products up to $100 million in that year and an additional fixed
royalty of $200,000 with respect to all Company sales of Exclusive Products
exceeding $100 million in that year. Company sales of all Exclusive Products are
included in calculating the royalty, regardless of whether they use the ADAHF's
patented technology. The Company has the right to sublicense or assign all or
any part of its rights under the License Agreement, but will continue to be
liable for payment of the fixed royalties regardless of such sublicense or
assignment. The term of the License Agreement expires upon the last to expire of
the ADAHF's patents, including any continuations, divisions, reexaminations,
extensions or releases thereof.

         The License Agreement provides that improvements that are used with or
that require use of Exclusive Products that embody material claimed in the
ADAHF's patents, as well as any improvements and inventions that are made
jointly by the Company and the ADAHF that do not relate to remineralization or
commercialization of Exclusive Products or of the subject matter of the ADAHF's
patents, will be owned by the ADAHF and licensed to the Company at no additional
cost. The Company has the right to veto the ADAHF's grant to third parties of
licenses relating to improvements and inventions that are developed in part by
the Company.

         The ADAHF's patents may claim the effectiveness of ingredients that do
not fall under the FDA's toothpaste Monograph. However, Enamelon(R) toothpaste
does not rely on those ingredients as active ingredients, but relies only on
sodium fluoride as the sole active ingredient.

 Foreign License Agreement

         In April 1998, the Company entered into an amendment to its Foreign
License Agreement with the

                                       10

<PAGE>

ADAHF, which was originally signed in November 1992 and subsequently restated
and amended and further amended in June 1995. The Foreign License Agreement
grants the Company an exclusive license to manufacture and sell Exclusive
Products using technology that is the subject matter of foreign patent
applications filed by the ADAHF in specified foreign countries. It also grants
the Company the non-exclusive right to manufacture and sell in those countries
other products using that technology, including oral sprays, mouth rinses and
professional gels ("Non-Exclusive Products"). The Company's payment of royalties
under the License Agreement described above will also constitute a fully-paid
license under the Foreign License Agreement with respect to the Exclusive
Products. Under the Foreign License Agreement, the Company is required to pay a
royalty of 7% of net sales of Non-Exclusive Products using the licensed
technology. The royalty for Non-Exclusive Products will be reduced to 4% if
sales are made by an entity that enters into a joint venture with the Company
and bears the costs of prosecution of foreign patent applications. The Foreign
License Agreement expires upon the earlier of the termination of the License
Agreement or the expiration of the last to expire of any foreign patent licensed
under the Foreign License Agreement or the abandonment or lapse of all foreign
patents and applications. The ADAHF may abandon or permit the lapse of all
foreign patent applications and foreign patents and retains the authority to
make all final decisions controlling patent prosecution and maintenance. If the
ADAHF abandons or permits the foreign patent applications or foreign patents to
lapse, competitors would be free to manufacture and sell products using the
ADAHF's patented technology that could compete with the Company's toothpaste or
other proposed products in those countries.

         During the term of the Foreign License Agreement, the Company has an
option and right of first refusal to license future patent applications made and
patents issued with respect to ADAHF's patent rights in those jurisdictions not
presently covered by the License Agreement or the Foreign License Agreement. If
the Company exercises its rights, the license will be exclusive with respect to
the Exclusive products. Before granting a license to a third party for those
products in a new jurisdiction, the ADAHF must first notify the Company, which
will then have the right to obtain a license for that jurisdiction on terms
consistent with the Foreign License Agreement. If the Company does not exercise
its option and the ADAHF does not license its patent rights in that jurisdiction
to a third party, the Company will have a continuing option to license the
ADAHF's patent rights in that jurisdiction on terms consistent with the Foreign
License Agreement until the ADAHF licenses those rights to a third party.

         The Company presently is the licensee under the Foreign License
Agreement of certain ADAHF Patent Rights under patent applications pending in
six foreign jurisdictions. Patent applications made in certain other foreign
jurisdictions, however, have been abandoned, and the other pending foreign
patent applications with respect to the ADAHF's patent rights may also be
abandoned. Nevertheless, the Company believes that its filing of patent
applications with respect to the Company's own patent rights in any foreign
jurisdictions in which patent applications have been abandoned and the
subsequent issuance of patents to the Company in those jurisdictions will be
adequate to preclude other manufacturers from using the Company's remineralizing
technologies to manufacture and sell oral care products in those jurisdictions.
It is possible, however, that patents will not issue in those jurisdictions or
that manufacturers outside of the United States will infringe the Company's
patent rights or challenge their validity.

         The License Agreement and the Foreign License Agreement provides that
the Company may assign or sublicense its rights under its licenses with respect
to the Exclusive Products without the consent of the ADAHF, provided that the
Company will continue to remain liable for payment of royalties under the
License Agreement. In addition, the ADAHF has waived any claim to ownership
rights in any of the Company's patents, and the Company has agreed not to sue
the ADAHF or any licensee of the ADAHF licensed to use the ADAHF patents for
infringement of the Company's patents, unless the infringement constitutes a
beach of the Company's exclusive license under the two license agreements.
Finally, the License Agreement and Foreign License Agreement are both subject to

                                       11

<PAGE>



o        licenses granted to the United States government, which are not 
         transferable for non-commercial purposes and

o        rights retained by the ADAHF to make and use its inventions for
         research and testing, but not to sell or use them commercially in
         fields licensed exclusively to the Company.

         The ADAHF has made no representation or warranty, express or implied,
with respect to the efficacy or possible commercial exploitation of the
Company's proposed products.

ADAHF Licenses to SmithKline

         The Company was notified in July 1995 that the ADAHF had entered into a
license agreement with SmithKline for exclusive rights in the United States for
oral sprays, mouth rinse, professional gels and all other products using the
ADAHF's patented technology, except toothpastes, chewing gum and other food and
confectionery products. The ADAHF also granted SmithKline a non-exclusive
license to manufacture and sell those products in foreign jurisdictions where
the ADAHF had filed patent applications for its patented technology.
SmithKline's rights under that license are co-extensive with the non-exclusive
rights granted to the Company under the Foreign License Agreement.

         Since SmithKline has substantially greater financial and other
resources than those of the Company, the Company may be limited in its ability
to compete effectively with SmithKline outside of the United States, unless the
Company enters into a strategic alliance with another company having financial
and other resources comparable to those of SmithKline.

Patents, Trademarks and Other Proprietary Information

Patents

         The Company has been granted nine United States patents relating to
methods and materials that supply soluble calcium and phosphate salts to teeth
to enhance remineralization, and two patents relating to its dual-chamber
toothpaste tube, which is used to dispense Enamelon(R) toothpaste. In addition,
the Company has 10 patent applications pending in the United States with respect
to various aspects of its proprietary technologies. it also has patent
applications pending in foreign jurisdictions such as the PCT countries, which
include Canada, Japan, Belgium, France, Germany, the United Kingdom, the
Netherlands, Australia, and Sweden, among others, and India. The issued patents
and the patent applications relate to the Company's remineralization technology
as it could be applied to a broad range of oral care and food products,
including toothpaste, mouth rinse, chewing gum, lozenges, and professional
treatments. The Company can give no assurance that patents will issue on the
pending patent applications. It is also possible that if patents do issue, the
claims will not be of sufficient scope to prevent competitors from marketing
products that are similar to the Company's toothpaste or other proposed
products.

         The Company is not aware of the existence of any challenges to the
validity of its patents or of any claim made by a third party of patent
infringement with respect to Enamelon(R) toothpaste. The Company cannot
accurately predict, however, whether such challenges or claims will be asserted
in the future.


                                       12

<PAGE>

Trademarks

         The Company intends to protect the names of certain of its products and
formulations by registration of its trademarks, where appropriate, both in the
United States and in foreign countries.

         The Company has filed applications in the United States Patent and
Trademark Office to register the word mark Enamelon(R) on the Principal Register
for toothpaste, chewing gum, certain confection products, and various oral care
products, such as medicated mouth washes and professional dental gels. The
registration covering toothpaste was issued in late August 1997. The
applications covering chewing gum, confection and oral care products have been
allowed, subject to use of the mark. The Company has also registered or applied
to register the Enamelon(R) mark for toothpaste, chewing gum, certain
confectionery products and various oral care products in certain foreign
countries. It is possible that prior registrations and/or uses of the mark (or a
confusingly similar mark) may exist in one or more countries, in which case the
Company might thereby be precluded from registering and/or using the Enamelon(R)
mark in such countries.

         The Company has also filed applications to register the trademarks
FLUOREMIN and LIQUID CALCIUM and its stylized "E" logo in the United States and
Canada. The United States registration for FLUOREMIN was issued in late July
1997. In addition, the Company is using or considering other trademarks and has
registered or filed applications to register certain of those marks in the
United States and for Canada.

         The Company is not aware of any third-party challenges to the validity
of its trademarks, trademark registrations, or trademark applications (other
than through pending foreign office actions), or of any claim by a third party
of trademark infringement with respect to its products, marks, registrations or
applications. No assurance can be given, however, that such challenges or claims
will not be asserted in the future.

Proprietary Information

         Much of the Company's technology is dependent upon the knowledge,
experience and skills of key scientific and technical personnel. To protect
rights to its proprietary know-how and technology, Company policy requires all
employees and consultants to execute confidentiality agreements that prohibit
the disclosure of confidential information to anyone outside the Company. These
agreements also require disclosure and assignment to the Company of discoveries
and inventions made by such persons while devoted to Company activities. There
can be no assurance that these agreements will adequately protect the company's
proprietary information since:

o         employees or others may breach their confidentiality agreements

o         the Company may not have adequate remedies for any such breach

o         the Company's trade secrets may otherwise become known or be 
          independently developed by competitors.


                                       13

<PAGE>

Government Regulation

         The FDA regulates the Company's toothpastes as non-prescription drugs,
also known as over-the-counter drugs. The Federal Food, Drug, and Cosmetic Act
and the FDA's regulations permit a manufacturer to sell a non-prescription drug
if it is formulated, labeled and tested in accordance with an FDA monograph or
if the FDA has approved a New Drug Application for the drug. FDA monographs
establish those active ingredients that are generally recognized as safe and
effective at specified levels for specified uses and prescribe labeling
requirements. Any non-prescription drug that does not comply with an applicable
FDA monograph may lawfully be marketed if the FDA has approved an NDA. Because
it is time consuming and costly to obtain FDA approval of an NDA, most
manufacturers of non-prescription drugs attempt to market them under an FDA
monograph.

         The FDA has published a final Monograph, Anticaries Drug Products for
Over-the-Counter Human Use, the category of over-the-counter drug products
covering the Company's toothpastes. The Monograph establishes conditions under
which non-prescription drug products that aid in the prevention of dental caries
or cavities are generally recognized as safe and effective and not misbranded.
The Company has conducted the studies required by the Monograph and is relying
on it to sell Enamelon(R) toothpastes to the public. Notwithstanding that
reliance, the FDA could claim that the Company's toothpastes do not satisfy the
conditions of the Monograph. In that case, the Company could be required to
modify the formulation or labeling or to submit an NDA.

         Although the Company intends to make only such labeling claims as the
Monograph permits in order to avoid the substantial expense and time required to
receive FDA approval of an NDA, it may decide to submit an NDA with the FDA in
order to make further claims not covered by the Monograph. If the Company
decides to make such additional claims, it may seek strategic partners to assist
in the financing of the NDA process. Further, the Company may not have
sufficient financing or other resources available to complete the NDA process,
and even assuming that such financing and resources are available, the FDA may
not approve the NDA. Future drug products with intended uses other than or in
addition to caries prevention, such as a toothpaste for sensitive teeth, may be
subject to different FDA monographs or may require an NDA.

         The FDA also regulates manufacturing of oral care drug products. Each
domestic drug product manufacturing facility must be registered with the FDA.
Each manufacturer must inform the FDA of every drug product it has in commercial
distribution and keep its list updated. Domestic manufacturing facilities are
required to comply with the FDA's Good Manufacturing Practices regulations and
are subject to at least biennial FDA inspection. Accordingly, to the extent that
the Company uses contract manufacturers, such manufacturers must be in
compliance with all FDA requirements.

         The Company is also subject to regulation under various federal and
state laws regarding, among other things, occupational safety, environmental
protection, hazardous substance control and product advertising and promotion.
In connection with its research and development activities, the Company is
subject to federal, state and local laws, and rules, governing the use,
generation, storage, discharge, handling and disposal of hazardous materials and
wastes. The Company believes that it has complied with these laws and rules in
all material respects, and it has not been required to take any action to
correct any material noncompliance. The Company does not currently anticipate
that any it will have to make any material capital expenditures in order to
comply with environmental laws or that compliance with such laws will have a
material effect on the financial condition or competitive position of the
Company. The Company may also be subject to foreign government regulations
regarding over-the-counter drug products. Accordingly, the Company intends to
submit applications to foreign regulatory agencies, if necessary, to make
therapeutic health claims for its products to be marketed abroad.

                                       14

<PAGE>

Liability Insurance

         The Company's business involves exposure to potential product liability
risks that are inherent in manufacturing and marketing of pharmaceutical
products. The Company currently has general liability insurance with coverage
limits of $1,000,000 per occurrence and $2,000,000 as a general aggregate limit.
The coverage also includes product liability insurance subject to an aggregate
limit of $1,000,000. In addition, the Company has an umbrella policy providing
limits of $15,000,000 in excess of the general liability and the product
liability insurance. The Company's insurance policies provide coverage on a "per
occurrence" basis and a general aggregate basis, and are subject to annual
renewal. There can be no assurance that

o         the Company will be able to maintain such insurance on acceptable 
          terms

o         the Company will be able to secure increased coverage

o         or any insurance will provide adequate protection against potential 
          liabilities

Personnel

         The Company had as of March 1, 1999, 48 full-time employees and one
part-time employee. None of the Company's employees is represented by a union,
and the Company believes that its relationship with its employees is good.

ITEM  2.          DESCRIPTION OF PROPERTY

Properties

         The Company currently leases approximately 21,000 square feet of office
and laboratory space located at 7 Cedar Brook Drive, Cranbury, New Jersey for
approximately $36,400 per month. The lease began in September 1998 after the
Company's relocation from its previous facility in East Brunswick, New Jersey,
and expires in August 2008.

         The Company also leases office facilities located at 15 Kimball Avenue,
Yonkers, New York from an employee and one of his relatives for a total of
$3,100 per month.

         The Company leases an additional 5,000 square feet for its
manufacturing needs in East Brunswick, New Jersey for $3,950 per month, which
expires August 30, 2002.

         The Company believes that these properties are sufficient for its
administrative and research and development needs for the foreseeable future.
Since the Company presently intends to rely on outside manufacturers to
manufacture its products, it does not have a manufacturing facility.

ITEM  3.          LEGAL PROCEEDINGS

         The Company is not a party to any material pending legal or
administrative proceedings.

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

         None.

                                       15

<PAGE>

                                     PART II



ITEM  5.          MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Data

         The Company's common stock has been quoted on the Nasdaq National
Market under the symbol ENML since the Company's initial public offering on
October 24, 1996. The following table sets forth the high and low sale prices
for the common stock as reported on the Nasdaq National Market for the periods
indicated.


Fiscal 1998:


Quarter Ended:                                   High              Low
--------------                                   ----              ---
March 31, 1998                                  $15.50           $10.00
June 30, 1998                                   $14.13           $ 4.75
September 30, 1998                              $ 8.38           $ 3.25
December 31, 1998                               $10.25           $ 3.50


Fiscal 1997:


Quarter Ended:                                   High              Low
--------------                                   ----              ---
March 31, 1997                                  $25.50           $ 6.00
June 30, 1997                                   $27.50           $13.00
September 30, 1997                              $19.00           $13.75
December 31, 1997                               $17.19           $ 9.75


Nasdaq Trading

         As of December 31, 1998, the Company complied with all of the
requirements of the National Association of Securities Dealers, Inc. ("NASD")
for continued listing of the Common Stock on the Nasdaq Stock Market.

Holders

         The Company had approximately 408 of holders of record of its common 
stock, as of March 17, 1999.

Dividends

         The Company has not paid any dividends on its common stock since its
inception and for the foreseeable future intends to follow a policy of retaining
all of its earnings, if any, to finance the development and continued expansion
of its business. There can be no assurance that dividends will ever be paid by
the Company. Any future determination as to payment of dividends will depend
upon the

                                       16

<PAGE>

Company's financial condition, results of operations and such other factors as
the Board of Directors deems relevant.

Recent Sales of Unregistered Securities

         In December 1998, the Company issued 1,959 shares of common stock and
granted warrants to purchase 392 shares of common stock exercisable at $6.125
per share from January 1, 2000 through December 31, 2004, to a corporation in
consideration for certain advertising run in its publication in December 1998.
The corporation represented that each of its stockholders was an accredited
investor. The Company relied on Section 4(2) and (6) of the Securities Act of
1933 and Rule 506 under Regulation D of the Securities Act for the exemption
from registration in connection with the issuance of those shares and warrants. 

         In December 1998, the Company issued 500 shares of its series B
convertible preferred stock to three accredited investors for a purchase price
of $10,000 per share. The series B convertible preferred stock is convertible at
a conversion price equal to the lower of the Variable Conversion Price of the
Company's common stock on the date of conversion or the Maximum Conversion Price
of the series B convertible preferred stock. The Variable Conversion Price is
equal to the average of the five lowest closing sale prices of the Company's
common stock on the Nasdaq National Market in the 40 trading days immediately
preceding the conversion. The Maximum Conversion Price is equal to 120% of the
average of the closing prices of the Company's common stock on the last five
trading days of February 1999. The Maximum Conversion Price is approximately
$7.19. The number of shares of the Company's common stock issuable on conversion
of each share of series B convertible preferred stock is equal to the sum of
$10,000 plus an accrual amount equal to 6% per annum divided by the conversion
price. The Company relied on Section 4(2) and 4(6) of the Securities Act and 
Rule 506 under Regulation D of the Securities Act for the exemption from 
registration in connection with the issuance of those shares.


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

         The following discussion and analysis should be read in conjunction
with the Financial Statements and Notes thereto included in Item 7 to this
report. Except for the historical information contained herein the foregoing
discussion contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
projected in the forward-looking statements discussed herein.

General

         The Company was founded in June 1992 to develop and market
over-the-counter oral care products that prevent tooth decay at its earliest
stage and are based on proprietary formulations and technologies. The Company
had not commenced any product commercialization or realized any operating
revenues as of December 31, 1996. In March 1997, the Company initiated marketing
activities for Enamelon(R) all-family toothpaste in selected United States
markets. The national distribution of Enamelon(R) all-family fluoride toothpaste
began in the first quarter of 1998, and the Company emerged from the development
stage at that time.



                                       17

<PAGE>



          The Company's strategic plan for accomplishing its objectives is to

o         continue marketing and expand distribution of Enamelon(R) toothpaste 
          products,

o         launch Enamelon(R) Calcium Whitening System toothpaste and other new 
          products,

o         continue marketing to dental professionals,

o         broaden product claims by conducting further product testing in 
          humans,

o         obtain the ADA Seal of Approval,

o         collaborate with corporate partners in certain other product areas and
          international markets, and

o         capitalize on additional commercial applications of both the Enamelon 
          Licensed and Proprietary Technologies.

          The Company expects to continue to incur operating losses through 
2000 and will require additional financing by mid-year 1999. Thereafter, or
sooner if conditions necessitate, the Company will need to raise additional
funds through public or private financings. The Company has retained an
investment banking firm to assist it in obtaining additional financing to meet
its future cash requirements. There can be no assurance that the Company will be
able to obtain additional financing to fund its operations. If adequate funds
are not available, then the Company may be required to reduce the scope of
proposed operations.

Results of Operations

     Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

         Net sales for the year ended December 31, 1998 were approximately
$14,302,000 compared with $1,042,000 for the year ended December 31, 1997. The
increase in net sales is the result of the national distribution and growing
consumer acceptance of the Company's toothpaste as a result of coordinated
marketing efforts, including television and radio advertising, successful coupon
events as well as other promotional programs. While the Company will continue
its marketing efforts and anticipates further revenue growth as it adds new
product lines and markets, there can be no assurance that the increased sales
levels will be sustained.

         Gross profit earned in 1998 was $7,597,000 compared with a negative
gross margin of $426,000 in 1997. The improved gross profit was the result of
higher sales, increased production levels, and reduced raw material and
packaging costs due to increased volume. Negative gross margin in 1997 was a
result of costs associated with low production levels, high material costs,
manufacturing inefficiencies and product design changes during test marketing of
the Company's product. The Company anticipates the gross margin to improve as
production levels increase as a result of manufacturing efficiencies.

         Total operating expenses were approximately $38,308,000 for the year
ended December 31, 1998, compared with $10,906,000 in the prior year, an
increase of $27,402,000. This increase was primarily the result of higher
marketing and selling expenses of $25,546,000, research and testing expenses of
$372,000 and administrative and other expenses of $1,484,000. Additionally, the
Company

                                       18

<PAGE>

anticipates that total expenses will increase over the next few years as the
Company increases its product development, manufacturing and marketing
activities. Such increased business activities will require additional personnel
and payments to third parties.

         Marketing and selling expenses increased from $5,723,000 to
$31,269,000. This increase is primarily the result of increases in television,
print and media, and other promotion expenses in 1998 to launch the Company's
toothpaste product into national markets. The 1997 expenses reflected marketing
efforts in test markets that represented approximately 5% of all U.S.
households.

         Research and testing expenses increased from $2,844,000 to $3,216,000
primarily as a result of studies performed at universities and various
independent oral care research facilities in the United States to broaden
additional marketing claims for consumers and dentists and for personnel costs
associated with the Company's new product development. The Company intends to
continue expanding its clinical testing.

         Administrative and other expenses increased from $2,339,000 to
$3,823,000 primarily attributable to increased payroll and benefits, consulting,
and other administrative office expenses which resulted from the Company's
expanded operations.

         Interest and dividend income increased from $988,000 in 1997 to
$1,620,000 in 1998, primarily due to the increase in cash and cash equivalents
from a private placement and a second public offering of the Company's common
stock in 1997.

Liquidity and Capital Resources

         Since its inception in June 1992, the Company has financed its
operations primarily through private placements of Series A Preferred Stock, 
Common Stock and public offerings of Common Stock totaling approximately $56.9
million, net of expenses, and a private placement of Series B Convertible
Preferred Stock totaling $5,000,000. At December 31, 1998, the Company had cash
and cash equivalents and marketable securities of approximately $18.2 million
and working capital of $13.4 million. The Company had no outstanding debt (other
than accounts payable and accrued expenses) or available lines of credit as of
December 31, 1998.

         Since its inception and through December 31, 1998, the Company has
incurred losses aggregating approximately $44.6 million and had available net
operating loss carryforwards as of December 31, 1998 of approximately $44.3
million. The net operating loss carryforwards will expire if not used by the
period from 2007 through 2018 and may be limited by United States federal tax
law as a result of changes in ownership. The Company expects to continue to
incur operating losses at least through 2000 while it continues clinical testing
and toothpaste marketing efforts. The Company began a national roll-out of
Enamelon(R) toothpaste in 1998, which generated $14.3 million of net sales
during 1998. The Company believes that the national roll-out has been successful
and during the first quarter of 1999 will launch its Enamelon(R) Calcium
Whitening System toothpaste.

         The Company intends to use approximately $1.2 million of its cash
during 1999 to purchase additional manufacturing equipment for the production of
the Company's patented, dual-chamber toothpaste tube and for high-speed filling
equipment.

         In June 1997, the Company completed a private placement of 1,080,000
shares of common stock at $13.00 per share. Cash proceeds, net of costs, were
approximately $13,077,000.

                                       19

<PAGE>

         In October 1997, the Company sold 1,725,000 shares of Common Stock in a
secondary public offering at $16.50 per share, which resulted in cash proceeds,
net costs, of approximately $26,295,000.

         In December 1998, the Company completed a private placement of 500
shares of Series B Convertible Preferred Stock, $.01 par value, to three
purchasers for an aggregate purchase price of $5,000,000. Each share has a
stated value of $10,000, and each stockholder is entitled to a 6% return per
annum, payable on conversion in cash or the Company's Common Stock at the
Company's option. After February 28, 1999, holders of the Series B Convertible
Preferred Stock can convert it into Common Stock at the lower of (I) the average
of the five lowest closing sales prices in the 40 trading days immediately
preceding the conversion or (ii) 120% of the average of the closing prices of
the last five trading days of February 1999. The Company can require holders of
the Series B Convertible Preferred Stock to convert it into Common Stock at any
time between March 1, 1999 and August 28, 1999 if the closing price of the
Company's Common Stock exceeds 200% of the maximum conversion price for 20
consecutive trading days. After August 28,1999, the Company can require holders
of the Series B Convertible Preferred Stock to convert to Common Stock if the
closing price of the Company's Common Stock exceeds 150% of the maximum
conversion price for 20 consecutive days. Holders of the Series B Convertible
Preferred Stock will be required to convert their shares on December 17, 2001,
if they have not converted prior to that time.

         The Company's cash requirements may vary materially from those now
planned depending on numerous factors, including the status of the Company's
marketing efforts, the Company's business development activities, the
availability of alternative financing for the acquisition of manufacturing
equipment, the results of clinical trials, the regulatory process and
competition. Under the Company's current plan, management estimates that cash
and cash equivalents on hand, together with its projected cash flow from
operations, if any, will be sufficient to finance its working capital and other
requirements through mid-1999. Thereafter, or sooner if conditions necessitate,
the Company will need to raise additional funds through public or private
financings. The Company has retained an investment banking firm to assist it in
obtaining additional financing to meet its future cash requirements. Should such
additional financing not be obtained, management believes that the Company can
obtain additional financing through other sources to continue its operations.
There can be no assurance that the Company will be able to obtain additional
financing to fund its operations. If adequate funds are not available, then the
Company may be required to reduce the scope of proposed operations.

Forward-Looking Statements

         This Management's Discussion and Analysis or Plan of Operations and
other sections of this report contain forward-looking statements that are based
on current expectations, estimates, forecasts and projections about the industry
in which the Company operates, management's beliefs and assumptions made by
management. These statements are not guarantees of future performance and
involve certain risks, uncertainties and assumptions which are difficult to
predict. Therefore, actual outcomes and results may differ materially from what
is expressed or forecasted in such forward-looking statements. The Company
undertakes no obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or otherwise.

Readiness for Year 2000

         The information provided below constitutes a "Year 2000 Readiness
Disclosure" for purposes of the Year 2000 Information and Readiness Disclosure
Act.

         The Year 2000 ("Y2K" ) issue refers to possible events resulting
directly or indirectly from the inability of digital computer equipment or
software to accurately and without interruption handle dates both before and
after January 1, 2000 and to process the year 2000 as a leap year.

                                       20

<PAGE>

         The Company has reviewed its manufacturing and resource planning
software and current operating system and believes that they are Y2K compliant.
The Company primarily utilizes operating systems obtained from Microsoft, which
the Company believes, based on information provided by Microsoft, are Y2K
compliant. The Company believes that none of the Company's equipment is date
sensitive or otherwise uses imbedded computer chips. Accordingly, the Company
does not believe that embedded chip technology will present any Y2K issues.
However, the Company is also checking its equipment to verify this as part of
its overall Y2K program. The Company expects that the costs of achieving
internal Y2K compliance will not have a material adverse impact on results of
operations, liquidity or capital resources.

         The Company is in the process of formally contacting its suppliers to
identify any potential disruption in the supply of raw materials. The Company
expects to resolve any significant Y2K issues before the occurrence of any
business disruptions, although the Company has limited or no control over the
actions of the suppliers. However, the Company believes that the supply of
chemicals and raw materials used in its manufacturing processes is unlikely to
be significantly disrupted. In addition, the Company, in the normal course of
business, maintains adequate inventories of such raw materials to protect
against short-term delivery interruptions.

         The risk to the Company resulting from the failure of customers and
other third parties to attain Y2K readiness is the same as other companies in
its industry or other business enterprises generally. The Company expects to
resolve any significant Y2K issues with customers before the occurrence of any
business disruptions, although the Company has limited or no control over the
actions of these customers. The Company expects to maintain adequate finished
goods inventories to protect customers against the possibility of temporary
service disruptions, if any.

         The Company expects to find and adequately prepare for all significant
internal Y2K issues that could adversely affect its business operations. The
Company does not anticipate that the cost of resolving such issues will have a
material impact on its financial position, results of operations or liquidity.
While the Company believes its efforts are adequate to address the Y2K concerns,
there can be no guarantee that all internal systems, as well as those of third
parties on which the Company relies will be converted on a timely basis and will
not have a material adverse affect on the Company's operations. However, the
Company does not believe that it is possible to identify, with complete
certainty, all potential Y2K issues that may affect the Company, its suppliers,
or its customers. The Company expects that any disputes arising as a result of
such identified Y2K issues will be resolved in the normal course of business.

     Recently issued accounting standards may affect the Company's Financial
Statements in the future. See the section "Financial Statements" in Item 7 of
this report.


ITEM 7.           FINANCIAL STATEMENTS

         The Company's Financial Statements appear beginning on page F-1
         following Item 13 of this report.

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

                 None.


                                       21

<PAGE>

                                    PART III



ITEM 9.           DIRECTORS, EXECUTIVE OFFICERS, PROMOTORS AND CONTROL PERSONS;
                  COMPLIANCE WITH SECTION 16 (A) OF THE EXCHANGE ACT.

         Incorporated herein by reference to the Company's Definitive Proxy
Statement with respect to the Company's Annual Meeting of Stockholders scheduled
to be held on May 18, 1999.


ITEM 10.          EXECUTIVE COMPENSATION

         Incorporated herein by reference to the Company's Definitive Proxy
Statement with respect to the Company's Annual Meeting of Stockholders scheduled
to be held on May 18, 1999.


ITEM 11.          SECURITY BY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND 
                  MANAGERS

         Incorporated herein by reference to the Company's Definitive Proxy
Statement with respect to the Company's Annual Meeting of Stockholders scheduled
to be held on May 18, 1999.

ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Incorporated herein by reference to the Company's Definitive Proxy
Statement with respect to the Company's Annual Meeting of Stockholders scheduled
to be held on May 18, 1999.



                                       22

<PAGE>


ITEM 13.          EXHIBITS AND REPORTS ON FORM 8-K


(a) Exhibits

<TABLE>
<S>               <C>                                                                    
      3.1         Certificate of Incorporation of the Registrant, as amended. (1)
      3.2         Certificate of Amendment to the Certificate of Incorporation. (7)
      3.3         Certificate Eliminating Series A Preferred Stock from the Certificate of Incorporation. (7)
      3.4         Amended and Restated By-Laws of the Registrant. (7)
      3.5         Certificate of Designations, Preferences and Rights of Series B Convertible Preferred
                  Stock of the Registrant. (8)
      4.1         Specimen Copy of Stock Certificate for shares of Common Stock. (1)
      4.2         Form of Registration Rights Agreement between the Registrant and certain purchasers of
                  units. (1)
     10.1         Restated Patent License Agreement by and between the Registrant and the American
                  Dental Association Health Foundation dated as of June 24, 1995. (1)
     10.2         Amendment Agreement by and between the Registrant and the American Dental
                  Association Health Foundation dated as of June 12, 1995. (1)
     10.3         Amendment to Restated Patent License Agreement between the
                  Registrant and the American Dental Association Health Foundation dated as of 
                  January 1, 1998 (5)
     10.4         Restated Foreign Patent License Agreement by and between the Registrant and the
                  American Dental Association Health Foundation dated as of November 18, 1992. (1)
     10.5         Foreign License Amendment Agreement by and between the Registrant and the
                  American Dental Association Health Foundation dated as of June 14, 1995. (1)
     10.6         Amendment to Restated Foreign Patent License between the Registrant and the
                  American Dental Association Health Foundation dated as of January 1, 1998. (5)
     10.7         The Registrants' 1997 Incentive Stock Option Plan.(3)
     10.8         The Registrant's 1993 Stock Option Plan. (1)
     10.9         The Registrant's Incentive Compensation Plan. (1)
    10.10         Employment Agreement between the registrant and Dr. Steven R. Fox, as amended as of
                  June 15, 1996. (1)
    10.11         Employment Agreement between the Registrant and Norman Usen and Nu-Products
                  dated as of May 1, 1995. (1)
    10.12         Employment Agreement between the Registrant and Anthony E. Winston dated as of
                  January 17, 1995. (1)
    10.13         Employment Agreement between the Registrant and Edwin Diaz dated July 29, 1996. (1)
    10.14         Amendment, dated January 16, 1997, to Employment Agreement between the Registrant
                  and Anthony Winston.(2)
    10.15         Amendment, dated July 1, 1997, to Employment Agreement between the Registrant and
                  Norman Usen.(4)
    10.16         Employment Agreement between the Registrant and Dr. Steven R.
                  Fox dated December 17, 1998.
    10.17         Employment Agreement between the Registrant and Kim Hardingham
                  dated February 18, 1999.
    10.18         Lease Agreement with Elaine Fox dated December 19, 1995. (1)
    10.19         Lease Agreement with Unum Life Insurance Company of America dated December 27,
</TABLE>

                                                        23

<PAGE>

<TABLE>
<S>               <C>                                                                    
                  1993.(1)
    10.20         Lease Agreement with East Brunswick Woods Associates, L.P. dated November 1995. (1)
    10.21         Lease Agreement with Cedar Brook Corporate Center, L.P. dated February 24, 1998. (6)
    10.22         Amended Lease Agreement with Cedar Brook Corporate Center, L.P. dated April 24,
                  1998.(6)
    10.23         Securities Purchase Agreement, dated as of December 17, 1998,
                  by and among the Registrant, HFTP Investments LLC, Fisher
                  Capital Ltd., and Wingate Capital Ltd. (6)
    10.24         Registration Rights Agreement, dated as of December 17, 1998,
                  by and among the Registrant and HFTP Investments LLC, Fisher
                  Capital Ltd., and Wingate Capital Ltd. (6)
     21.1         Subsidiaries of the Registrant (1)
     23.1         Consent of Independent Public Accountants.
     27.1         Financial Data Schedule
           (1)    Incorporated herein by reference from Exhibits to Registrant's
                  Registration Statement on Form S-1 (File No. 333-06455),
                  declared effective on October 24, 1996.
           (2)    Incorporated herein by reference from Exhibits to Registrant's
                  Annual Report on Form 10-K for the year ended December 31,
                  1996.
           (3)    Incorporated herein by reference from Exhibits to Registrant's
                  Registration Statement on Form S-1 (File No. 333-31163),
                  declared effective on August 11, 1997.
           (4)    Incorporated herein by reference from Exhibits to Registrant's
                  Registration Statement on Form S-1 (File No. 333-35187),
                  declared effective on October 16, 1997.
           (5)    Incorporated herein by reference from Exhibits to Registrant's
                  Current Report on Form 8-K dated April 6, 1998.
           (6)    Incorporated herein by reference from Exhibits to Registrant's
                  Quarterly Report on Form 10-Q for the quarter ended March 31,
                  1998.
           (7)    Incorporated herein by reference from Exhibits to Registrants'
                  Quarterly Report on Form 10-Q for the quarter ended June 30,
                  1998. 
           (8)    Incorporated herein by reference from Exhibits to Registrant's
                  Current Report on Form 8-K dated December 18, 1998.
</TABLE>

     (b)      Reports on Form 8-K

     The Registrant filed a current report on Form 8-K dated December 18, 1998.




                                                        24

<PAGE>

                                ENAMELON, INC.

                   TABLE OF CONTENTS TO FINANCIAL STATEMENTS

Report of Independent Certified Public Accountants................. F-2
Financial Statements:
         Balance Sheets............................................ F-3
         Statements of Operations.................................. F-4
         Statements of Stockholders' Equity........................ F-5
         Statements of Cash Flow................................... F-6
         Notes to Financial Statements............................. F-7 to F-14

                                      F-1


<PAGE>


Report of Independent Certified Public Accountants

Enamelon, Inc.
Yonkers, New York

         We have audited the accompanying balance sheets of Enamelon, Inc. as
of December 31, 1998 and 1997, and the related statements of operations,
stockholders' equity, and cash flows for the years then ended. 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 financial statements referred to above present
fairly, in all material respects, the financial position of Enamelon, Inc., as
of December 31, 1998 and 1997, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted
accounting principles.

Woodbridge, New Jersey                                BDO Seidman, LLP
January 29, 1999

                                      F-2

<PAGE>

                                ENAMELON, INC.
                                Balance Sheets


<TABLE>
<CAPTION>

                                                                                        December 31,
                                                                                    1998            1997
                                                                                    ----            ----
<S>                                                                             <C>           <C>  
Assets
Current:

  Cash and cash equivalents..............................................       $ 13,146,989  $  21,624,954
  Investments............................................................          5,028,805     17,895,107
  Inventory..............................................................          2,980,252      1,252,207
  Accounts receivable, less allowance of $69,800 and $10,163.............          3,076,595        244,606
  Prepaid expenses and other assets......................................            520,205        242,749
                                                                                ------------- -------------
    Total current assets.................................................          24,752,846    41,259,623

Equipment, net...........................................................           2,783,334     2,466,099
Intangible assets, net...................................................             827,263       474,636
Other assets.............................................................             158,670        15,231
                                                                                ------------- -------------
     Total assets                                                                $ 28,522,113  $ 44,215,589
                                                                                ============= =============

Liabilities and Stockholders' Equity                                            
Current liabilities:
  Accounts payable.......................................................         $ 3,497,888   $ 1,760,107
  Accrued expenses.......................................................           7,832,903     1,649,149
                                                                                ------------- -------------
    Total current liabilities............................................          11,330,791     3,409,256
                                                                                ------------- -------------

Commitments .............................................................

Stockholders' equity:
  Preferred stock, $0.01 par value - shares
    authorized 5,000,000; none issued or outstanding.....................                   -             -
  Series B Convertible Preferred stock, $.01 par value -
    shares authorized 500 and none; issued and
    outstanding 500 and none.............................................           4,833,324             -
  Common stock, $0.001 par value - shares
    authorized 20,000,000; issued
    and outstanding 10,241,739 and 9,965,996.............................              10,242         9,966
  Additional paid-in capital.............................................          56,923,114    56,259,052
  Accumulated deficit....................................................         (44,575,358)  (15,462,685)
                                                                                ------------- -------------
    Total stockholders' equity...........................................          17,191,322    40,806,333
                                                                                ------------- -------------
    Total liabilities and stockholders' equity                                   $ 28,522,113  $ 44,215,589
                                                                                ============= =============

</TABLE>

               See accompanying notes to financial statements.

                                     F-3
<PAGE>

                                ENAMELON, INC.
                           Statements of Operations


<TABLE>
<CAPTION>
                                                                Year ended December 31,
                                                                 1998             1997
                                                                 ----             ----
  <S>                                                      <C>             <C> 
  Net sales..........................................      $  14,302,137   $    1,041,838
  Cost of sales......................................          6,704,911        1,468,080
                                                          ---------------  --------------
     Gross profit(loss)..............................          7,597,226         (426,242)
                                                          ---------------  --------------

Operating expenses:
  Marketing and selling..............................         31,269,294        5,722,565
  Research and testing...............................          3,215,831        2,844,193
  Administrative and other...........................          3,822,892        2,338,821
                                                          ---------------  --------------
    Total operating expenses.........................         38,308,017       10,905,579

                                                          ---------------  --------------
Operating loss.......................................        (30,710,791)     (11,331,821)

Interest and dividend income.........................          1,608,951          987,549

                                                          ---------------- --------------
Net loss.............................................        (29,101,840)     (10,344,272)

  Accrued dividends on preferred stock...............             10,833                -
                                                          ---------------  --------------

Net loss applicable to common stockholders...........      $ (29,112,673)   $ (10,344,272)
                                                          ===============  ==============


Net loss per common share, basic.....................      $       (2.86)   $       (1.31)
                                                          ===============  ==============

Weighted average common shares outstanding, basic....         10,165,362        7,875,504
                                                          ===============  ==============

</TABLE>


                See accompanying notes to financial statements

                                     F-4
<PAGE>

                                ENAMELON, INC.
                      Statements of Stockholders' Equity


<TABLE>
<CAPTION>
                                                                                      Series B Convertible
                                                                                         Preferred Stock                     
                                                                                         ----------------                    
                                                                                 Shares             Amount         
                                                                                 ------             ------         
<S>                                                                              <C>                <C> 
Balance, December 31, 1996.....................................................           -                  -     
Issuance of common stock at $13.00 per share in private placement net, 
of costs.......................................................................           -                  -     
Issuance of common stock at $16.50 per share in public offering, net of costs..           -                  -     
Warrants exercised.............................................................           -                  -     
Options exercised..............................................................           -                  -     
Net loss.......................................................................           -                  -     
                                                                                -----------  -----------------    

Balance, December 31, 1997.....................................................           -                  -     
Issuance of common stock for  services rendered................................           -                  -     
Issuance of preferred stock, net of costs......................................         500          4,833,324
Accrued preferred stock dividends..............................................           -                  -
Warrants exercised.............................................................           -                  -     
Options exercised..............................................................           -                  -     
Net loss.......................................................................           -                  -     
                                                                                -----------  ------------------   

Balance, December 31, 1998.....................................................         500        $ 4,833,324    
                                                                                ============ ==================    

<CAPTION>
                                                                                           Common Stock            
                                                                                           -------------            
                                                                                   Shares            Par value   
                                                                                   ------            ----------  
<S>                                                                                <C>               <C>                          
Balance, December 31, 1996.....................................................       6,900,378       $ 6,900                      
Issuance of common stock at $13.00 per share in private placement net,
 of costs......................................................................       1,080,000         1,080     
Issuance of common stock at $16.50 per share in public offering, net of costs..       1,725,000         1,725     
Warrants exercised.............................................................         122,868           123     
Options exercised..............................................................         137,750           138     
Net loss.......................................................................               -             -     
                                                                                ---------------  ------------- 
                                                                                                               
Balance, December 31, 1997.....................................................       9,965,996         9,966  
Issuance of common stock for  services rendered................................           1,959             2  
Issuance of preferred stock, net of costs......................................               -             -  
Accrued preferred stock dividends..............................................               -             -  
Warrants exercised.............................................................          81,469            82  
Options exercised..............................................................         192,315           192  
Net loss.......................................................................               -             -  
                                                                                ---------------  ------------- 
                                                                                                               
Balance, December 31, 1998.....................................................      10,241,739      $ 10,242  
                                                                                ===============  ============= 

<CAPTION>
                                                                                    Additional   Accumulated        Total      
                                                                                     paid-in                    stockholders'  
                                                                                     capital       deficit         equity 
                                                                                 ------------- -------------- ---------------  
<S>                                                                              <C>             <C>             <C>             
Balance, December 31, 1996.....................................................  $ 16,409,926    $ (5,118,413)   $ 11,298,413    
Issuance of common stock at $13.00 per share in private placement net,
of costs.......................................................................    13,075,843               -      13,076,923    
Issuance of common stock at $16.50 per share in public offering, net of costs..    26,293,025               -      26,294,750    
Warrants exercised.............................................................       178,311               -         178,434    
Options exercised..............................................................       301,947               -         302,085    

Net loss.......................................................................             -     (10,344,272)    (10,344,272)   
                                                                                --------------  -------------- ---------------  
                                                                                                                                 
Balance, December 31, 1997.....................................................    56,259,052     (15,462,685)     40,806,333    
Issuance of common stock for  services rendered................................        10,088               -          10,090    
Issuance of preferred stock, net of costs......................................             -               -       4,833,324
Accrued preferred stock dividends..............................................             -         (10,833)        (10,833)
Warrants exercised.............................................................       124,518               -         124,600    
Options exercised..............................................................       529,456               -         529,648    
Net loss.......................................................................             -     (29,101,840)    (29,101,840)     
                                                                                --------------  -------------- ---------------  
                                                                                                                                 
Balance, December 31, 1998.....................................................  $ 56,923,114   $ (44,575,358)   $ 17,191,322    
                                                                                ==============  ============== ===============  
</TABLE>

                See accompanying notes to financial statements

                                     F-5
<PAGE>

                                ENAMELON, INC.
                           Statements of Cash Flow

<TABLE>
<CAPTION>
                                                                                 Year Ended December 31,
                                                                     
Cash flows from operating activities:                                          1998                  1997
                                                                               ----                  ----
  <S>                                                                           <C>             <C>           
  Net loss...........................................................           $(29,101,840)   $ (10,344,272)
  Adjustments to reconcile net loss to net cash used in operating
    activities:
    Stock issued for services........................................               10,090                  -
    Depreciation and amortization....................................              491,115            170,460
    Loss on disposal of furniture....................................               44,392                  -
    Changes in assets and liabilities:
      Decrease (increase) in investments.............................            12,866,302       (17,895,107)
      Increase in accounts receivable................................           (2,831,989)          (244,606)
      Increase in prepaid expenses and other assets..................             (420,895)           (55,751)
      Increase in inventory..........................................           (1,728,045)        (1,199,024)
      Increase in accrued expenses and account payable...............            7,804,385          2,553,058
                                                                              -------------      ------------
      Net cash used in operating activities..........................          (12,866,485)       (27,015,242)
                                                                              -------------      ------------

Cash flows from investing activities:
    Purchases of equipment...........................................             (802,106)        (2,176,129)
    Investments in intangible assets.................................             (403,263)          (188,688)
                                                                              -------------      ------------
      Net cash used in investing activities..........................           (1,205,369)        (2,364,817)
                                                                              -------------      ------------

Cash flows from financing activities:
    Proceeds from issuances of common stock..........................              654,248         42,983,019
    Proceeds from issuances of preferred stock.......................            5,000,000                  -
    Offering costs...................................................              (60,359)        (3,367,900)
                                                                              -------------      ------------
      Net cash provided by financing activities......................            5,593,889         39,615,119
                                                                              -------------      ------------

Net increase (decrease) in cash and cash equivalents.................           (8,477,965)        10,235,060
Cash and cash equivalents, beginning of year.........................           21,624,954         11,389,894
                                                                              -------------      ------------
Cash and cash equivalents, end of year...............................         $ 13,146,989       $ 21,624,954
                                                                              =============      ============

Supplemental disclosures of noncash financing activities:

      Accrued offering costs.........................................         $    162,500       $     65,350
                                                                              =============      ============
     Preferred stock dividends accrued...............................         $     10,833       $          -
                                                                              =============      ============

</TABLE>

                See accompanying notes to financial statements

                                     F-6
<PAGE>


                                ENAMELON, INC.
                         Notes to Financial Statements

1.    Organization and Summary of Accounting Policies

       Organization

         Enamelon, Inc. (the "Company") develops and markets over-the-counter
oral care products that help stop cavities before they begin. The Company's
products are based on proprietary formulations and technologies that have been
shown in laboratory and human studies to enhance remineralization of tooth
enamel and to prevent early stage tooth decay. The Company's toothpastes
contain the active ingredient sodium fluoride in a formulation with calcium
and phosphate ions, to enhance the remineralization of tooth enamel. The
Company launched its initial product, Enamelon(R) all-family toothpaste, in
test markets in March 1997 and began the product's national introduction in
the first quarter of 1998. The Company emerged from the development stage upon
launch of its initial product. The Company expects to launch Enamelon(R) Calcium
Whitening System toothpaste, its second product, nationally in the second
quarter of 1999. The Company expects to continue to incur operating losses
through 2000 and will require additional financing by mid-year 1999, to continue
its operations until that time and possibly thereafter. The Company has 
retained an investment banking firm to assist it in obtaining additional
financing to meet its future cash requirements.

     Use of Estimates

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

     Fair Value of Financial Instruments

         The carrying amounts of cash, accounts receivable, accounts payable
and accrued expenses approximate fair value because of the short maturity of
these items.

     Cash and Cash Equivalents

         Cash and cash equivalents consist of highly liquid debt instruments
with original maturities of three months or less, principally commercial paper
and money market accounts.

     Investments

         Investments consist of certificates of deposit and corporate and
government bonds that mature in more than 91 days, but not more than one year,
or securities with maturities beyond one year that management intends to sell
within one year. The investments are classified as trading securities and are
recorded at fair market value with the related gain or loss, which was not
material, reflected in the Company's statement of operations. Fair market
value is determined based upon quoted market values as reported by a national
securities exchange.

     Inventory

         Inventory is stated at the lower of cost, determined by the first-in,
first-out (FIFO) method, or market.

     Equipment

         Equipment is stated at cost. Depreciation is computed over the
estimated useful lives of the assets using the straight-line method.

                                      F-7


<PAGE>


                                ENAMELON, INC.
                   Notes to Financial Statements - Continued

     Intangible Assets

         Organization costs are amortized using the straight-line method over
a sixty-month period. Licensing costs and patent rights are amortized using
the straight-line method over seventeen years, which is the term of the
licensing agreements and the estimated useful lives of the patents,
respectively. Trademarks are being amortized using the straight-line method
over seventeen years.

     Revenue Recognition

         Revenue from product sales is generally recognized at the time the
product is shipped to the customer. Upon shipment, the Company also provides
for the estimated cost that may be incurred for returned product.

     Reclassification of prior year amounts

     Net revenues from 1997 test market sales of $1,041,838 and the costs
associated with such sales of $1,468,080 were previously netted and presented
as a component of marketing and selling expenses. These amounts have been
reclassified to revenues and cost of sales, respectively, in the accompanying
statement of operations.

     Advertising Expenses

         Advertising costs are expensed as of the first date the advertisement
takes place. Expenses, which consist primarily of television, print and media,
and other promotional costs, were $13,256,016 in 1998 and $4,427,665 in 1997.

     Research and Development

         Costs for research and development are expensed as incurred.

     Income Taxes

         Income taxes are computed in accordance with the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS 109"), which requires, among other things, a liability approach
to calculating deferred income taxes. SFAS 109 requires a company to recognize
deferred tax liabilities and assets for the expected future tax consequences
of temporary differences between the carrying amount of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes.
Deferred tax assets must be reduced by a valuation allowance to amounts
expected to be realized.

     Earnings Per Share

         Effective December 15, 1997, the Company adopted Statement of
Financial Accounting Standards No. 128, "Earnings Per Share", which provides
for the calculation of "Basic" and "Diluted" earnings (loss) per share. In
accordance with this statement, basic loss per share for the years ended
December 31, 1998 and 1997 was calculated by dividing net loss by the weighted
average number of common shares outstanding, which amounted to 10,165,362 and
7,875,504, respectively. Diluted loss per share for the years ended December
31, 1998 and 1997 was calculated by dividing net loss by the weighted average
number of common shares and all dilutive potential common shares (comprising
outstanding options and warrants) which amounted to 10,853,796 and 9,283,959,
respectively. Diluted loss per share has not been presented since the effect
of dilutive common shares is antidilutive in all periods.

     Recent Accounting Standards

         In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement is effective in
the year 2000 but is not expected to affect the Company.


                                     F-8
<PAGE>


                                ENAMELON, INC.
                   Notes to Financial Statements - Continued

2.    Inventory

           Inventory is summarized as follows:                 December 31,
                                                               ------------
                                                            1998           1997
                                                            ----           ----
           Raw materials                              $1,296,842     $  412,786
           Work in progress                              624,843        134,107
           Finished goods                              1,058,567        705,314
                                                      ----------     ----------
                                                      $2,980,252     $1,252,207
                                                      ==========     ==========

<TABLE>
<CAPTION>


3.   Equipment

           Equipment is summarized as follows:               December 31,          Estimated Useful Life
                                                             ------------          ---------------------
                                                        1998                1997
                                                        ----                ----
           <S>                                   <C>                 <C>            <C>    
           Furniture and fixtures                 $   26,466         $    52,866     5 -  7 years
           Equipment                               3,387,238           2,612,941     3 - 10 years
                                                  ----------          ----------
                                                   3,413,704           2,665,807
           Less: Accumulated depreciation            630,370             199,708
                                                  ----------          ----------
                                                 $ 2,783,334         $ 2,466,099
                                                 ===========         ===========

</TABLE>

4.   Intangible Assets

          Intangible Assets are summarized as                    December 31,
          follows:                                               -----------
                                                                      
                                                             1998           1997
                                                             ----           ----
          Patent rights                                $  703,353     $  376,749
          Trademarks                                      192,660        123,133
          Licensing costs                                  18,962         18,962
          Organization cost                                15,803         15,803
                                                       ----------     ----------
                                                          930,778        534,647
          Less: Accumulated amortization                  103,515         60,011
                                                       ----------     ----------
                                                       $  827,263     $  474,636
                                                       ==========     ==========
                                              
5.    Accrued Expenses                        
                                              
          Accrued expenses are summarized as follows:         December 31,
                                                              ------------
                                                          1998             1997
                                                          ----             ----
          Accrued marketing and promotion cost    $  6,308,368     $    666,845
          Research and development                     417,990          378,530
          Other accrued expenses                     1,106,545          603,774
                                                  ------------     ------------
                                                  $  7,832,903     $  1,649,149
                                                  ============     ============

6.   Stockholders' Equity

     Redeemable Preferred Stock

         In January 1996, the Company issued 500,000 units at $4.00 per unit,
each consisting of 1.103 shares of 5% convertible Series A preferred stock and
1 common stock purchase warrant, exercisable at $5.75 per share expiring
January 23, 2003. In April 1996, the Company issued an additional 6,250 units
at $4.00 per unit expiring January 23, 2003. The Company received proceeds of
$2,025,000 for these issuances. In October 1996, the 558,399 shares of Series
A Preferred Stock were converted into common stock and retired upon the
consummation of the initial public offering.


                                     F-9
<PAGE>
                                    

                                ENAMELON, INC.
                   Notes to Financial Statements - Continued

In connection with the placement of the transaction, the Company issued
warrants to purchase 100,000 shares at an exercise price of $4.80 and 23,750
shares at $3.60 per share, which expire January 23, 2003.

Series B Convertible Preferred Stock

         In December 1998, the Company completed a private placement of 500
shares of Series B Convertible Preferred Stock, $.01 par value, to three
purchasers for an aggregate purchase price of $5,000,000. Each share has a
stated value of $10,000, and each shareholder is entitled to a 6% return per
annum, which is being accounted for as a cumulative dividend and will be 
payable on conversion in cash or the Company's common stock at the
Company's option. After February 28, 1999, holders of the Series B
Convertible Preferred stock can convert it into Common Stock at the
lower of (i) the average of the five lowest closing sales prices in the
40 trading days immediately preceding the conversion or (ii) 120% of the
average of the closing prices of the last five trading days of February
1999. The Company can require holders of the Series B Convertible
Preferred Stock to convert it into Common Stock at any time between
March 1, 1999 and August 28, 1999 if the closing price of the Company's
Common Stock exceeds 200% of the maximum conversion price for 20
consecutive trading days. After August 28,1999, the Company can require
holders of the Series B Convertible Preferred Stock to convert to Common
Stock if the closing price of the Company's Common Stock exceeds 150% of
the maximum conversion price for 20 consecutive days. Holders of the
Series B Convertible Preferred Stock will be required to convert their
shares on December 17, 2001, if they have not converted prior to that
time.

Common Stock

         In October 1996, the Company completed the initial public offering of
1,700,000 shares of common stock at $7.00 per share and issued to the
underwriter warrants to purchase 170,000 shares of common stock at $8.40 which
expire October 29, 2002. Cash proceeds net of costs was approximately
$10,425,000. Concurrent with the public offering, 558,399 shares of redeemable
preferred stock were automatically converted into an equal number of shares of
common stock.

         In June 1997, the Company completed a private placement of 1,080,000
shares of common stock at $13.00 per share. Cash proceeds, net of costs, were
approximately $13,077,000.

         In October 1997, the Company sold 1,725,000 shares of Common Stock in
a secondary public offering at $16.50 per share which resulted in cash
proceeds, net of costs, of approximately $26,295,000.

         During 1998 and 1997, 81,469 and 122,868 warrants were exercised, at
an average exercise price of $2.21 and $1.64 respectively. Warrants canceled
in 1998 and 1997 were 27,154 and 1,051, respectively, at an average exercise
price of $6.20 and $3.60, respectively. No warrants were granted in 1998 or
1997. At December 31, 1998, 753,508 warrants remained outstanding at an
average exercise price of $6.04.

         During 1997, the Board of Directors amended the Company's Certificate
of Incorporation to increase the Company's authorized shares of common stock
from 3,000,000 to 20,000,000.

         
                                     F-10
<PAGE>

                                ENAMELON, INC.
                   Notes to Financial Statements - Continued

         Stock Option Plans

         The Company has two stock Option Plans, adopted in 1993 and 1997 (the
"Option Plans"). The Option Plans provide for the grant of options to
qualified employees (including officers and directors) of the Company to
purchase an aggregate of 2,250,000 shares of common stock. The Option Plans
are administered by the Board of Directors or a committee of the Board of
Directors (the "Compensation Committee") whose members are not entitled to
receive options under the Option Plans (excluding options granted exclusively
for directors' fees). Options granted under the Plans may or may not be
"incentive stock options" as defined in the Internal Revenue Code ("Incentive
Options") depending upon the terms established by the Compensation Committee
at the time of grant. The exercise price shall not be less than the fair
market value of the Company's common stock as of the date of grant (110% of
the fair market value if the grant is an Incentive Option to an employee who
owns more than 10% of the Company's outstanding common stock). Options granted
under the Plans are subject to a maximum term of 10 years, 5 years for an
employee who also owns more than 10% of the Company's outstanding common stock.

         SFAS No. 123, Accounting for Stock-Based Compensation, requires the
Company to provide pro forma information regarding net income(loss) and
earnings(loss) per share as if compensation cost for the Company's stock
option plans had been determined in accordance with the fair value based
method prescribed in SFAS No. 123. The Company estimates the fair value of
each stock option at the grant date by using the Black-Scholes option-pricing
model with the following weighted-average assumptions used for grants during
the years ended December 31, 1997 and 1998, respectively; no dividend yield
for either period; expected volatility of 37 and 35 percent; risk-free
interest rates of 5.9 and 5.3 percent, and expected lives of 6.9 and 7.3
years for the options.

         Under the accounting provisions of SFAS No. 123, the Company's net
loss and loss per share would have been increased to the pro forma amounts
indicated below:

                                           1998           1997
                                           ----           ----
      Net loss applicable to
      common stockholders
        As reported                     $ 29,112,673    $10,344,272
        Pro forma                       $ 30,274,620    $10,630,749
      Loss per share - basic
        As reported                      $(2.86)         $(1.31)
        Pro forma                        $(2.97)         $(1.35)
 
         A summary of activity for the Company's Option Plans, including those
options granted pursuant to the terms of certain employment and other
agreements (see note 10), is as follows:

                                                                Weighted average
                                              Option shares      exercise price
                                              -------------      --------------

      Balance, December 31, 1996                 1,368,806        $      2.97
      Granted                                      271,716        $     12.90
      Exercised                                  (137,750)        $      2.19
      Canceled                                       (451)        $      4.33
                                                ----------
      Balance, December 31, 1997                 1,502,321        $      4.82
      Granted                                      565,123        $      8.83
      Exercised                                  (192,315)        $      3.42
      Canceled                                    (17,209)        $      3.22
                                                ----------
      Balance, December 31, 1998                 1,857,920        $      5.91
                                                ==========


                                     F-11
<PAGE>

                                ENAMELON, INC.
                   Notes to Financial Statements - Continued

         At December 31, 1998 and 1997, there were 62,015 and 609,929 shares
of Common Stock reserved for the granting of additional options respectively.

                                                        December 31,
                                                        ------------
                                                    1998             1997
                                                    ----             ----

  Options exercisable                          1,219,993        1,144,355

  Weighted average exercise
  price of options exercisable                $     4.70       $     2.86

  Weighted average fair value per share
  of options granted during the year          $     2.40       $     7.33




The following table summarizes information about fixed stock options
outstanding at December 31, 1998:

<TABLE>
<CAPTION>

                                            Options Outstanding                                          Options Exercisable
                 --------------------------------------------------------------------------   --------------------------------------
                                        Number      Weighted-Average                                 Number
                      Range of        Outstanding      Remaining        Weighted-Average          Exercisable       Weighted-Average
                  Exercise Prices     at 12/31/98   Contractual Life     Exercise Price           at 12/31/98        Exercise Price
                  ---------------     -----------   ----------------    ----------------          -----------        --------------

<S>               <C>                 <C>           <C>                 <C>                       <C>                <C>  
                  $ 1.33                   325,762        4.6                $ 1.33                   258,822           $ 1.33
                  $ 3.00 to $ 4.00         544,980        1.8                $ 3.03                   543,730           $ 3.03
                  $ 4.25 to $ 7.00         169,716        5.9                $ 6.33                    87,716           $ 6.41
                  $ 8.00 to $11.00         697,246        9.8                $ 8.93                   271,921           $ 8.93
                  $12.75 to $17.50         120,216        9.0                $13.28                    57,804           $13.07
                                       -----------       ----               -------                 ---------          -------
                  $ 1.33 to $17.50       1,857,920        6.1                $ 5.91                 1,219,993           $ 4.70
                                       ===========       ====               =======                 =========          =======

</TABLE>


8.    Income Taxes

         At December 31, 1998, the Company had a deferred tax asset of
approximately $17,760,000 primarily attributable to net operating loss
carryforwards. The deferred tax asset has been fully reserved by a valuation
allowance of the same amount.

         The net operating loss carryforwards at December 31, 1998 totaling
approximately $44,400,000 will expire if not used by the period from 2007
through 2018 and may be limited by United States federal tax law as a result
of changes in ownership.

                                     F-12

<PAGE>

                                ENAMELON, INC.
                   Notes to Financial Statements - Continued

9.   Commitments

     Leases

         The Company leases office facilities in New York from a related
party. During 1998, the Company entered into a ten-year lease agreement for
office and laboratory facilities in Cranbury, New Jersey and relocated to
these facilities in September 1998. The Company also leases equipment and
automobiles at locations in New York and New Jersey.

         The following is a schedule of future minimum lease payments for
operating leases that had initial or remaining non-cancelable lease terms in
excess of one year as of December 31, 1998:

                  Year ending December 31,
                  ------------------------
                  1999                                $  649,224
                  2000                                   640,599
                  2001                                   606,324
                  2002                                   512,381
                  2003                                   474,053
                  2004 and beyond                      2,151,840
                                                     -----------
                                                      $5,034,421
                                                     ===========

         Rent expense for the years ended December 31, 1997 and 1998 was
$129,089 and $380,831, respectively.

     Patent License Agreements

         In April 1998, the Company entered into an amendment to its license
agreement with the American Dental Association Health Foundation ("the ADAHF")
which was originally signed in June 1992 and which was subsequently restated
and amended and further amended in June 1995 (as amended, the "License
Agreement"). The License Agreement grants the Company a fully-paid exclusive
United States license to manufacture and sell toothpastes and chewing gum and
other food and confectionery products ("Exclusive Products") using the ADAHF
Patented Technology. Under the License Agreement, beginning in 1998 the
Company is required to pay a fixed annual royalty of $400,000 through 2008
with respect to all Company sales of Exclusive Products (whether or not they
rely upon the ADAHF Patented Technology) up to $100 million in that year and
an additional fixed royalty of $200,000 with respect to all Company sales of
Exclusive Products exceeding $100 million in that year. The Company has made
the required payments under this agreement. The Company has the right to
sublicense or assign all or any part of its rights under the License
Agreement, but will continue to be liable for payment of the fixed royalties
regardless of such sublicense or assignment. The term of the License Agreement
expires upon the last to expire of the ADAHF Patent Rights, including any
continuations, divisions, reexaminations, extensions or releases thereof.

         In April 1998, the Company entered into an amendment to its foreign
license agreement with the ADAHF, which was originally signed in November 1992
and subsequently restated and amended and further amended in June 1995 (as
amended, the "Foreign License Agreement"). The Foreign License Agreement
grants the Company an exclusive license to manufacture and sell Exclusive
Products using technology that is the subject matter of foreign patent
applications filed by the ADAHF in certain foreign countries. In addition, the
Foreign License Agreement grants the Company the non-exclusive right to
manufacture and sell other products in such countries using the technology
that is the subject of such foreign patent applications, including oral
sprays, mouth rinses and professional gels (collectively, "Non-Exclusive
Products"). The Company's payment of royalties under the License Agreement
will constitute a fully-paid license under the Foreign License Agreement with
respect to the Exclusive Products. Under the Foreign License Agreement, the
Company is required to pay 7% of net sales of Non-Exclusive products (4% if
such sales are made by an entity that enters into a joint venture with the
Company and bears the costs of prosecution of foreign patent applications).
Since the Company has no current foreign sales, no payments have required
under this agreement.

                                     F-13
<PAGE>

                                ENAMELON, INC.
                   Notes to Financial Statements - Continued

10.  Employment Agreements

         The Company currently has employment agreements with five officers.
Such agreements vary in length from one to five years and expire at various
dates through 2003. Annual salaries (subject to adjustment) committed under
the terms of existing employment contracts total $733,000, $701,500, $580,000,
$465,850 and $512,425 in the years ended December 31, 1999, 2000, 2001, 2002,
and 2003, respectively. In addition, the four officers receive options under
the Company's stock option plans and share in an annual bonus pool, equal to
5% of the Company's net income before expenses (as defined), established under
the terms of the Company's Incentive Compensation Program.

         Under the terms of the employment agreement with the Company's
Chairman and Chief Executive Officer (the "CEO"), if the CEO opposes a change
in control of the Company (as defined) and thereafter elects to terminate his
employment with the Company, he is entitled to receive 2.9 times the sum of
his current base annual salary ($350,000 as of January 1, 1999) plus any
amounts due him under the Company's Incentive Compensation Plan. The CEO is
entitled to 50% of the amounts allocated to the Company's Incentive
Compensation Plan.

                                     F-14
<PAGE>

                                  SIGNATURES

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

         March 29, 1999                ENAMELON, INC.

                                       By:    /s/ DR. STEVEN R. FOX
                                            --------------------------
                                                  Dr. Steven R. Fox,
                                            Chairman of the Board of Directors
                                                 Chief Executive Officer
                                             (Principal Executive Officer)


         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.

<TABLE>
<CAPTION>
                  Signature                                    Title                                 Date
        <S>                                          <C>                                        <C> 

           /s/ DR. STEVEN R. FOX                     Chairman of the Board of                    March 29, 1999
         -----------------------------                Directors and Chief Executive
               Dr. Steven R. Fox                      Officer (Principal Executive
                                                      Officer)


           /s/ EDWIN DIAZ                            Treasurer, Vice President -                 March 29, 1999
         -----------------------------                Finance and Chief Financial
               Edwin Diaz                             Officer (Principal Financial Officer)


            /s/ RICHARD A. GOTTERER                  Director                                    March 29, 1999
         -----------------------------                
                Richard A. Gotterer


            /s/ ERIC D. HORODAS                      Director                                    March 29, 1999
         -----------------------------
                 Eric D. Horodas


            /s/ DR. S.N. BHASKAR                     Director                                    March 29, 1999
         -----------------------------                
                Dr. S.N. Bhaskar


            /s/ DR. BERT GASTER                      Director                                    March 29, 1999
         -----------------------------                
                Dr. Bert Gaster


            /s/ WALTER WILLIAMS                      Director                                    March 29, 1999
         -----------------------------                
                Walter Williams

</TABLE>

<PAGE>

                                  Exhibit Index

<TABLE>
<CAPTION>

(a) Exhibits
<S>          <C>
      3.1    Certificate of Incorporation of the Registrant, as amended. (1)
      3.2    Certificate of Amendment to the Certificate of Incorporation. (7)
      3.3    Certificate Eliminating Series A Preferred Stock from the Certificate of Incorporation. (7)
      3.4    Amended and Restated By-Laws of the Registrant. (7)
      3.5    Certificate of Designations, Preferences and Rights of Series B Convertible Preferred
             Stock of the Registrant. (8)
      4.1    Specimen Copy of Stock Certificate for shares of Common Stock. (1)
      4.2    Form of Registration Rights Agreement between the Registrant and certain purchasers of
             units. (1)
     10.1    Restated Patent License Agreement by and between the Registrant and the American
             Dental Association Health Foundation dated as of June 24, 1995. (1)
     10.2    Amendment Agreement by and between the Registrant and the American Dental
             Association Health Foundation dated as of June 12, 1995. (1)
     10.3    Amendment to Restated Patent License Agreement between the
             Registrant and the American Dental Association Health Foundation dated as of 
             January 1, 1998 (5)
     10.4    Restated Foreign Patent License Agreement by and between the Registrant and the
             American Dental Association Health Foundation dated as of November 18, 1992. (1)
     10.5    Foreign License Amendment Agreement by and between the Registrant and the
             American Dental Association Health Foundation dated as of June 14, 1995. (1)
     10.6    Amendment to Restated Foreign Patent License between the Registrant and the
             American Dental Association Health Foundation dated as of January 1, 1998. (5)
     10.7    The Registrants' 1997 Incentive Stock Option Plan.(3)
     10.8    The Registrant's 1993 Stock Option Plan. (1)
     10.9    The Registrant's Incentive Compensation Plan. (1)
    10.10    Employment Agreement between the registrant and Dr. Steven R. Fox, as amended as of
             June 15, 1996. (1)
    10.11    Employment Agreement between the Registrant and Norman Usen and Nu-Products
             dated as of May 1, 1995. (1)
    10.12    Employment Agreement between the Registrant and Anthony E. Winston dated as of
             January 17, 1995. (1)
    10.13    Employment Agreement between the Registrant and Edwin Diaz dated July 29, 1996. (1)
    10.14    Amendment, dated January 16, 1997, to Employment Agreement between the Registrant
             and Anthony Winston.(2)
    10.15    Amendment, dated July 1, 1997, to Employment Agreement between the Registrant and
             Norman Usen.(4)
    10.16    Employment Agreement between the Registrant and Dr. Steven R.
             Fox dated December 17, 1998.
    10.17    Employment Agreement between the Registrant and Kim Hardingham
             dated February 18, 1999.
    10.18    Lease Agreement with Elaine Fox dated December 19, 1995. (1)
    10.19    Lease Agreement with Unum Life Insurance Company of America dated December 27,
    10.20    Lease Agreement with East Brunswick Woods Associates. L.P. dated November 1995. (1)              
    10.21    Lease Agreement with Cedar Brook Corporate Center, L.P. dated February 24, 1998. (6)
    10.22    Amended Lease Agreement with Cedar Brook Corporate Center, L.P. dated April 24, 1998. (6)
    10.23    Securities Purchase Agreement, dated as of December 17, 1998, by and among the Registrant, 
             HFTP Investments LLC, Fisher Capital Ltd., and Wingate Capital Ltd. (6)
    10.24    Registration Rights Agreement, dated as of December 17, 1998, by and among the Registrant 
             and HFTP Investments LLC, Fisher Capital Ltd., and Wingate Capital Ltd. (6)

    21.1     Subsidiaries of the Registrant. (1)
  
    23.1     Consent of Independent Purblic Accountants.

    27.1     Financial Data Schedule

         (1) Incorporated herein by reference from Exhibits to
             Registrant's Registration Statement on Form S-1 (File No.
             333-06455), declared effective on October 24, 1996.

         (2) Incorporated herein by reference from Exhibits to
             Registrant's Annual Report on Form 10-K for the year ended
             December 31, 1996. 

         (3) Incorporated herein by reference from Exhibits to
             Registrant's Registration Statement on Form S-1 (File No.
             333-31163), declared effective on August 11, 1997. 

         (4) Incorporated herein by reference from Exhibits to
             Registrant's Registration Statement on Form S-1 (File No.
             333-35187), declared effective on October 16, 1997.

         (5) Incorporated herein by reference from Exhibits to Registrant's 
             Current Report on Form 8-K dated April 6, 1998.

         (6) Incorporated herein by reference from Exhibits to Registrant's 
             Quarterly Report on Form 10-Q for the quarter ended March 31,
             1998.         

         (7) Incorporated herein by reference from Exhibits to Registrants'
             Quarterly Report on Form 10-Q for the quarter ended June 30,
             1998. 

         (8) Incorporated herein by reference from Exhibits to Registrant's 
             Current Report on Form 8-K dated December 18, 1998. 

</TABLE>