<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
                                    OF 1934
                   For the fiscal year ended December 31, 1999
                                       or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

          For the Transition period from ___________ to _______________

         Commission file number 0-21595

                                 ENAMELON, INC.
             (Exact Name of Registrant as Specified in Its Charter)

             Delaware                                  13-3669775
   (State or Other Jurisdiction            (I.R.S. Employer Identification No.)
of Incorporation or Organization)

7 Cedar Brook Drive, Cranbury, New Jersey                08512
(Address of Principal Executive Offices)               (Zip Code)

                                 (609) 395-6900
              (Registrant's Telephone Number, Including Area Code)

    Securities registered under Section 12(b) of the Act:

                                               Name of Each Exchange on Which
         Title of Each Class                   Each Class is Registered
         -------------------                   ------------------------------
         None

         Securities registered under Section 12(g) of the Act: Common Stock,
         $0.001 par value.

         Indicate by check mark whether the Registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 past 90 days. Yes /X/  No/ /

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. /X/

         The aggregate market value of the Registrant's Common Stock held by
non-affiliates of the Registrant as of March 31, 2000 was approximately
$9,892,059. On such date, the closing price of the Registrant's Common
Stock, as quoted on the OTC Bulletin Board, was $0.6875.

         The Registrant had 17,086,216 shares of Common Stock outstanding as of
March 31, 2000.

                       DOCUMENTS INCORPORATED BY REFERENCE

         Part III of the Annual Report on Form 10-K is herein incorporated by
reference from the Registrant's Definitive Proxy Statement to be filed with the
Securities and Exchange Commission with respect to the Registrant's Meeting of
Stockholders scheduled to be held within 120 days after the filing of this form.


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ITEM 1.   DESCRIPTION OF BUSINESS.

General Development of Business

         At Enamelon, Inc., we develop over-the-counter oral care products that
help stop cavities before they begin. Our 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. Our toothpaste contains the active ingredient sodium fluoride in a
formulation with calcium and phosphate ions, to enhance the remineralization of
tooth enamel. We launched our 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. We launched Enamelon(R) Calcium
Whitening System toothpaste, our second product, nationally in the second
quarter of 1999. In February 2000, we announced plans to focus on technology
development and licensing with the goal of licensing the current Enamelon(R)
toothpaste brand and future products to a major oral care company.

         As of March 31, 2000, we had cash of approximately $160,000, and a
working capital deficit of more that $3 million. We continue to sustain
operating losses and do not expect to operate profitably for at least 12 months,
if at all. Accordingly, if we do not immediately obtain additional financing for
our operations, we will be forced to cease operations or seek protection under
federal bankruptcy laws. We do not have any firm commitment for such additional
financing and are prepared to seek protection under the federal bankruptcy laws
before we exhaust our remaining cash resources.

         We hold 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 us the following
licenses:

o        exclusive United States and foreign licenses to develop, manufacture,
         and market toothpaste, chewing gum and 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 our's
         exclusive licenses using the ADAHF's patented technology.

         We have a right to grant sublicenses under our domestic license.

         The ADAHF also granted SmithKline Beecham Corp. a non-exclusive
international license of the ADAHF's patented technology covering the same
products as our 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 our
exclusive United States license. SmithKline recently elected not to continue
licenses, and the rights have reverted to the ADAHF. We believe that the ADAHF
is now offering to license the technology to other potential licensees in the
fields in which we do not hold the exclusive license.

         We have developed patented and other proprietary technologies relating
to the prevention of tooth decay before it begins. Through March 2000, we have
been granted fourteen (14) patents, twelve (12) United States patents for
methods and materials that supply soluble calcium and phosphate salts to teeth
to enhance remineralization, and two (2) patents for our dual-chamber tube,
which is used to dispense Enamelon(R) toothpaste. In addition, we have patent
applications pending in the United States with respect to additional aspects of
our proprietary technology and has filed similar patent applications that are
also pending in foreign jurisdictions.

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

                                       2


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The significant events in our progress to date include the following:

o        In 1992, we were 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, we 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, we commenced preliminary intra-oral and clinical studies
         of our toothpaste intended to establish additional advertising claims.

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

o        In November 1996, we were granted our first patent and we have been
         granted 13 additional patents through March 2000, all of which relate
         to our proprietary technology. See "Patents, Trademarks and Other
         Proprietary Information."

o        In March 1997, we initiated marketing activities for Enamelon(R)
         All-Family toothpaste in selected United States markets.

o        In June 1997, we 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, we 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, we began to introduce Enamelon(R)
         All-Family toothpaste nationally. In April 1998, we launched a
         nationwide television and print advertising campaign.

o        In September 1998, we received approval to market Enamelon(R)
         All-Family toothpaste in Canada.

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

o        In February 1999, we hired Kim Hardingham as our President and Chief
         Operating Officer.

o        In June 1999, we announced a restructuring and strategic re-focusing
         plan. Under the plan, we reduced expenses, including a 40% reduction in
         staff, and we re-directed our marketing focus from the consumer to the
         dental community.

o        In July 1999, we entered into a three-year, $7,500,000 million credit
         facility from a finance company.

o        In October 1999, our common stock was delisted from trading on the
         Nasdaq National Market, and it is now being quoted on the OTC Bulletin
         Board.

o        In December 1999, we obtained approximately $1.5 million from the New
         Jersey Tax Certificate Transfer Program in connection with the sale of
         our New Jersey tax loss carryforward.

o        In February 2000, we announced our plan to pursue brand and technology
         licensing agreements with major oral care companies.

                                        3

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Our 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 toothpaste 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.

         Our toothpaste simultaneously supplies 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. Our 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.

Our Strategy

         Our 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 Propriety Technologies and help prevent tooth decay at its earliest stage.
Our strategic plan calls for us to market our toothpastes to dental
professionals while we seek to license our technology to major oral care
companies, both in the U.S. and internationally.

         We intend to continue to support our toothpaste brand in the
marketplace until we enter into acceptable licenses for the Enamelon Licensed
and Proprietary Technologies. We believe that the Enamelon(R) brand has
developed a loyal user base and continues to have widespread retail
distribution. We will try to continue to support our retailers and will attempt
to grow the brand through marketing to dental professionals. We believe that
their professional training will enable them to recognize the additional
benefits of using Enamelon(R) toothpaste better than the average consumer.
Furthermore, we believe that once dental professionals have a widespread
understanding of our products' additional benefits, they will recommend
Enamelon(R) toothpaste to their patients.

         We have recently retained a licensing consultant to assist us in
licensing the Enamelon Licensed and Proprietary Technologies to major oral care
companies. Rather than marketing Enamelon(R) toothpastes ourselves, we are
attempting to license the brand as well as use of the technology in other oral
care products, chewing gum, and confectionary items. We believe that revenues
from licensing will enable us to focus on developing applications for the
Enamelon Licensed and Proprietary Technologies to categories other than
dentifrices.

         Even if we are able to license our technology for all of its expected
uses, we intend to continue to promote the technology to enhance value for our
licensees. We expect these efforts to increase their sales and our royalties.

                                        4
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Our Products

         We have introduced toothpaste as our initial product line. We also are
exploring applications of the Enamelon Licensed and Proprietary Technologies to
food and confectionery products, which we intend to develop for licensing.

Toothpaste

         All-Family Toothpaste. Our 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 our
All-Family toothpaste were completed at the end of 1996. We introduced this
toothpaste into test markets consisting of approximately 5% of United States
households in early 1997. During 1998, we successfully launched Enamelon(R)
All-Family toothpaste nationally.

         Enamelon(R) Calcium Whitening System toothpaste. An integral part of
building any brand involves product line extensions, which help create a greater
retail shelf presence and broaden appeal among consumers. We chose Enamelon(R)
Calcium Whitening System toothpaste, which both whitens and strengthens tooth
enamel, for our first line extension. We launched Enamelon(R) Calcium Whitening
System toothpaste nationally in the second quarter of 1999.

Dual-Chamber Tube

         In order to dispense our toothpaste products, we have 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 pumps, our tube was designed to be low
cost and be filled with conventional high-speed tube filling equipment. This
design makes the overall cost of manufacturing and filling the tubes 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

         We have done exploratory and initial development work on chewing gum,
desensitizing toothpaste and other related oral care products where we believe
that the Enamelon Licensed and Proprietary Technologies could provide a consumer
benefit and competitive advantage in the marketplace. As part of our licensing
strategy, we intend to continue to develop these products with the goal of
licensing them to other companies.

Marketing

         Although implementation has been limited by financial constraints,
since June 1999 our strategy has been to target the dental profession to create
awareness of our remineralization technology and products. To implement this
strategy, we have engaged in the following activities:

o        published articles in professional journals

o        attended professional conventions

o        developed direct response programs directed to dentists and dental
         hygienists for distribution of patient samples

o        broadly distributed professional personal use tubes of the Enamelon(R)
         Calcium Whitening System toothpaste

o        fielded a limited professional journal advertising campaign

We believe that these programs have been well received and that the long-term
benefits of professional endorsements for our products are significant. A 1998
independent attitude and usage study showed that dental professional attitude
toward Enamelon(R) toothpaste 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.

                                       5

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Markets and Customers

         Toothpaste is generally sold to consumers by supermarkets and other
food stores, mass merchandisers and drug stores. Supermarkets account for
approximately 47% of all U.S. toothpaste sales, while mass merchandisers account
for 34% and drug stores account for 19%. We use independent brokers to make
sales of Enamelon(R) toothpaste to these retailers. In mid-1999, we reduced our
internal sales management from a vice president and three regional directors to
two regional directors. In March 2000, we hired a third regional director. In
the four weeks ended February 27, 2000, sales of Enamelon(R) toothpaste were
recorded in food, drug and mass merchandise stores representing 56% of the All
Commodities Volume. This is down from a peak prior 12- month level of 64%.
Representative customers are set forth below.

                            Representative Customers


     Mass Merchandisers     Drug Chains     Supermarkets
     ------------------     -----------     ------------


     Wal-Mart               Rite-Aid        Kroger
     K-Mart                 Eckerd Drug     Safeway
     Target                 CVS             Albertsons
                            Walgreens       Publix Supermarkets

No customer accounted for more than 10% of our net sales in 1999.

Research and Development

         We operate a research and development facility at our Cranbury, New
Jersey, facility. Our research and development relate to technology,
formulation, flavor, packaging and process development, and stability and safety
evaluations. In addition, we have sponsored research related to efficacy at
leading universities and outside research facilities.

         Before the market introduction of Enamelon(R) toothpaste, we 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 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 we believe that the results of similar laboratory studies
with the final formulation would not differ significantly from those described
above.

         We have additional research supporting the current formulation of
Enamelon(R) All-Family toothpaste. To date more than 30 studies on Enamelon(R)
toothpaste have been published at international dental research meetings. Ten
peer- reviewed articles have also been published in a special edition of the
Journal of Clinical Dentistry. One peer reviewed article has been published in
the July 1999, edition of Gerondontology. Additional articles are in preparation
for submission to dental journals. This research serves as a source of
information that demonstrates to the dental profession the therapeutic benefits
of Enamelon(R) toothpaste.

         Notwithstanding the foregoing, the results of our 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

                                       6

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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, we may not be able to sell or license some of our other
proposed products and be in compliance with the U.S. Food and Drug
Administration Anticaries 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.

         Our research team has submitted an application to the ADA for its Seal
of Approval for Enamelon(R) All-Family toothpaste. There can be no assurance,
however, that the ADA will approve our application. Furthermore, if the ADA
seeks to limit our claims to those allowed for other fluoride toothpaste brands,
we may elect not to participate in the ADA seal program.

         From our inception to December 31, 1999, we spent approximately
$10,726,533 on research and development activities, including $2,035,204 for the
year ended December 31, 1999. We expect the level of our research and
development expenses to be reduced in the future.

Manufacturing

         Our strategy has been to outsource the manufacture of our toothpaste to
experienced, FDA-registered contract manufacturers. We believe 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.

         Our manufacturing requirements may change, depending upon the degree to
which we are able to implement our strategy of becoming a technology development
and licensing company. Even if this strategy is successful, however, we may
still be involved in the manufacturing of toothpaste for our licensees, for both
the U.S. and foreign markets.

         Our principal suppliers are aware of our change in strategic direction
and have indicated to us that they are agreeable to working directly with our
future licensees, should that be the preference of the licensees.

         Until such time as it is no longer necessary for us to manufacture
toothpaste due to licensing arrangements, we will continue to manufacture
toothpaste as we have in recent years.

         Our patented dual-chamber system required the design of specialized
assembly and filling equipment. Working closely with equipment manufacturers, We
modified existing commercial equipment and completed new designs where required.
Our tooling is currently used to produce the tube shoulders and the plastic
divider that separates the two formulations in our toothpaste. We own all of the
manufacturing equipment and tooling, which is used by our vendors at their
facilities.

         We purchase conventional toothpaste tubes, decorated with the
Enamelon(R) design, and convert 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, on high speed insertion and sealing equipment
specifically designed for this task. The tubes, ready for filling, are then
shipped to the contract manufacturer.

         The current contract manufacturer for our toothpaste is West
Pharmaceutical Services, Inc. Enamelon 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 us and is responsible for compounding these
ingredients and filling them on Enamelon 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 our quality assurance
personnel to insure the finished product meets all required specifications.


                                       7

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         We currently have 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 our packaging and filling equipment. We believe that
the new blending equipment will provide sufficient capacity, in a highly cost
effective manner, to meet anticipated current and future needs of both Enamelon
and our licensees.

         We believe that our ownership of manufacturing equipment and tooling
will provide greater long-term flexibility, permitting us to change
manufacturers or even to commence our own manufacturing operations. We have
identified other FDA-registered manufacturers that we can use if West's capacity
becomes insufficient to satisfy demand or if West otherwise becomes unavailable
to manufacture the product.

         Depending upon the intentions of future licensees, we have the
opportunity to sell one or more of our three specialized filling lines to
licensees to enable them to produce toothpaste in their own facility.

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

         We operate a pilot plant at our facility in Cranbury, New Jersey, that
has limited blending and filling capacity. Our purpose is to develop
manufacturing and filling methods and procedures, prior to full 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.

Backlog

         Our total backlog of orders at December 31, 1999 was approximately
$86,654 as compared with $221,881 at December 31, 1998. As of March 31, 2000,
100% of our year-end backlog had been shipped.

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 Beecham'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

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         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
and line extensions have captured market share from established items. Market
share gains have been achieved by higher priced, more therapeutically oriented
new products with unique marketing positions. Consequently, we believe that our
focus on remineralization of tooth enamel and our proprietary technology can
capture consumer and professional interest.

         We also intend to develop products for license in other oral care, food
and confectionery categories. If we sublicenses the Enamelon Licensed and
Proprietary Technologies to or enter into joint ventures or strategic
partnerships with major consumer product companies for any of those products, we
may be aligning ourself with one or more of our major competitors instead of
competing with them. Enamelon and our licensees will also be required to comply
with applicable FDA regulations, which may limit the claims that may be made for
those products and diminish potential royalties.

         Additionally, we are pursuing the development of our rights to license
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. In
general, such markets tend to be highly competitive and dominated by large
multinational and domestic corporations.

         Although we will attempt to form strategic alliances with global
companies, we 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 us by the ADAHF together with our own
patents are material to our business. The ADAHF patent rights licensed to us
relate to five United States patents. Three of the issued patents relate to
formulations, applicable to toothpaste, 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, we entered into an amendment to our 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 us a fully-paid, exclusive United States license to manufacture
and sell toothpaste and chewing gum and other food and confectionery products
("Exclusive Products") using the ADAHF's patented technology. Under the License
Agreement, we are required to pay a fixed annual royalty of $400,000 through
2008 with respect to all our sales of Exclusive Products up to $100 million in
that year and an additional fixed royalty of $200,000 with respect to all our
sales of Exclusive Products exceeding $100 million in that year. Our sales of
all Exclusive Products are included in calculating the royalty, regardless of
whether they use the ADAHF's patented technology. We have the right to
sublicense or assign all or any part of our 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 us 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 us at no additional cost. We
have the
                                        9
<PAGE>

right to veto the ADAHF's grant to third parties of licenses relating
to improvements and inventions that are developed in part by us.

         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, we entered into an amendment to our Foreign License
Agreement with the ADAHF, which was originally signed in November 1992 and
subsequently restated, amended and further amended in June 1995. The Foreign
License Agreement grants us 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
us 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"). Our 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, we are 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 us 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 our toothpaste or other proposed products in those
countries.

         During the term of the Foreign License Agreement, we have 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
we exercise our 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 us, which will then
have the right to obtain a license for that jurisdiction on terms consistent
with the Foreign License Agreement. If we do not exercise our option and the
ADAHF does not license our patent rights in that jurisdiction to a third party,
we 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.

         We presently are the licensee under the Foreign License Agreement of
certain ADAHF Patent Rights under patent applications pending in three 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,
we believe that our filing of patent applications with respect to our own patent
rights in any foreign jurisdictions in which patent applications have been
abandoned and the subsequent issuance of patents to us in those jurisdictions
will be adequate to preclude other manufacturers from using our 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 our patent rights
or challenge their validity.

         The License Agreement and the Foreign License Agreement provide that we
may assign or sublicense our rights under our licenses with respect to the
Exclusive Products without the consent of the ADAHF, provided that we 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 our
patents, and we have agreed not to sue the ADAHF or any licensee of the ADAHF
licensed to use the ADAHF patents for infringement of our patents, unless the
infringement constitutes a breach

                                       10

<PAGE>

of our exclusive license under the two license agreements. Finally, the
License Agreement and Foreign License Agreement are both subject to:

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

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 us.

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

ADAHF Licenses to SmithKline Beecham

         We were notified in July 1995 that the ADAHF had entered into a license
agreement with SmithKline Beecham 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 toothpaste, chewing gum and other food and
confectionery products. The ADAHF also granted SmithKline Beecham 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 Beecham's rights under that license were co-extensive
with the non-exclusive rights granted to us under the Foreign License Agreement.

         In 1999, the ADAFH informed us that SmithKline relinquished its ADAHF
license rights and that the ADAHF intended to offer those rights to other
potential licensees.

Patents, Trademarks and Other Proprietary Information

Patents

         We have been granted twelve (12) United States patents relating to
methods and materials that supply soluble calcium and phosphate salts to teeth
to enhance remineralization, and two (2) patents relating to our dual-chamber
toothpaste tube, which is used to dispense Enamelon(R) toothpaste.

         In addition, we have has seven (7) patent applications pending in the
United States with respect to various aspects of our proprietary technologies.
We also have 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 our 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. We 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 our toothpaste or other proposed products.

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

Trademarks

         We intend to protect the names of certain of our products and
formulations by registration of our trademarks, where appropriate, both in the
United States and in foreign countries.

         We have 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 confectionary products, and various oral care
products, such as medicated mouth washes and professional dental gels. The
registration covering toothpaste was issued

                                       11

<PAGE>


in late August 1997. The applications covering chewing gum, confection and oral
care products have been allowed, subject to use of the mark. We have 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 we might thereby be precluded from registering and/or using the
Enamelon(R) mark in such countries.

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

         We also received registration for the trademark FLUOREMIN in July 1997.
Additional applications have been filed for LIQUID CALCIUM and our stylized "E"
logo in the United States and Canada. We are aware that our application for
LIQUID CALCIUM has been challenged, but have not yet determined a course of
action regarding this challenge.

         We are not aware of any other third-party challenges to the validity of
our 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 our 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 our technology is dependent upon the knowledge, experience and
skills of key scientific and technical personnel. To protect our rights to
proprietary know-how and technology, our policy requires all employees and
consultants to execute confidentiality agreements that prohibit their use or
disclosure of confidential information. These agreements also require disclosure
and assignment to us of discoveries and inventions made by such persons while
devoted to company activities. There can be no assurance that these agreements
will adequately protect our proprietary information since:

o        employees or others may breach their confidentiality agreements

o        we may not have adequate remedies for any such breach

o        our trade secrets may otherwise become known or be independently
         developed by competitors

                                       12

<PAGE>

Government Regulation

         The FDA regulates our toothpaste as a non-prescription drug, also known
as an over-the-counter drug. 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 ("NDA") 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 our toothpaste. 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. We
have conducted studies required by the Monograph and are relying on it to sell
Enamelon(R) toothpaste to the public. Notwithstanding that reliance, the FDA
could claim that the toothpaste does not satisfy the conditions of the
Monograph. In that case, we could be required to modify the formulation or
labeling or to submit an NDA.

         Although we intend 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, we could decide to submit an NDA with the FDA in order
to make further claims not covered by the Monograph. If we decide to pursue an
NDA, we may not have sufficient financing or other resources available to
complete the NDA process. Even if we complete the process, the FDA may not
approve our 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
we use contract manufacturers, such manufacturers must be in compliance with all
FDA requirements.

         If we license the Enamelon(R) Licensed and Proprietary Technologies to
other companies for the manufacture and sale of toothpaste or other drug
products in the United States, our licensees will be subject to the same
regulation by the FDA as described above.

         We are 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 our research and development activities, we are subject to federal, state
and local laws, and rules, governing the use, generation, storage, discharge,
handling and disposal of hazardous materials and wastes. We believe that we have
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. We do not
currently anticipate that we 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 us. We or our licensees may also be subject to foreign government regulations
regarding over-the-counter drug products. Accordingly, we or our licensees may
be required to submit applications to foreign regulatory agencies, if necessary,
to make therapeutic health claims for products to be marketed abroad.

                                       13

<PAGE>

Liability Insurance

         Our business involves exposure to potential product liability risks
that are inherent in manufacturing and marketing of pharmaceutical products. We
have currently have 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, we have an umbrella policy providing limits of
$15,000,000 in excess of the general liability and the product liability
insurance. Our 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        we will be able to maintain such insurance on acceptable terms

o        we will be able to secure increased coverage

o        or any insurance will provide adequate protection against potential
         liabilities

Personnel

         We had as of March 31, 2000, 22 full-time employees. None of our
employees is represented by a union, and we believe that our relationship with
our employees is good.

ITEM 2.   PROPERTIES.

         We currently lease 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 our
relocation from our previous facility in East Brunswick, New Jersey, and expires
in August 2008.

         We believe that these properties exceed what is required for our
administrative and research and development needs for the foreseeable future.
Therefore, we are seeking to reduce our leased space, either through sub-lease
of a significant portion of the space or relocation.

ITEM 3.   LEGAL PROCEEDINGS.

         In December 1999, Yes Group, Inc. d/b/a the Journal of Clinical
Dentistry, commenced a lawsuit in the United States District Court for the
Eastern District of Pennsylvania demanding a judgment in the amount of $147,000.
In January 2000, we consented to an entry of judgment and agreed to pay Yes
Group, Inc. $20,000 per month for four months commencing on February 1, 2000
and, thereafter, to pay $7,500 per month until the debt, including 6% annual
interest, is paid in full.

         In February 2000, Compendium Systems Corporation commenced a lawsuit in
the Stamford/Norwalk District Court of the State of Connecticut demanding a
judgment in the amount of $13,600, which was later reduced to $9,600. We are
currently in settlement negotiations with Compendium Systems Corporation.

         On March 27, 2000, we were advised by counsel to Kane Kessler, P.C.,
our former trademark counsel, that unless a definitive settlement agreement is
entered into by April 10, 2000 regarding payment of their outstanding legal
fees, Kane Kessler, P.C. would commence a lawsuit against us. Kane Kessler, P.C.
claims we owe them $81,000 in legal fees.

                                       14

<PAGE>

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS.

         No matter was submitted to a vote of Stockholders, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year ended December 31, 1999.


                                     PART II

ITEM  5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Data

         Our common stock was quoted on the Nasdaq National Market under the
symbol ENML from the time of the our initial public offering on October 24, 1996
until the stock was delisted by the Nasdaq National Market on October 14, 1999.
Since that time our common stock has been quoted on the OTC Bulletin Board. The
following table sets forth the high and low closing sale prices for the common
stock as reported on the Nasdaq National Market or OTC Bulletin Board during
their respective periods of listing, for the periods indicated.

Fiscal 1999:

Quarter Ended:                                   High              Low
--------------                                   ----              ---
March 31, 1999                                  $ 8.38           $ 4.13
June 30, 1999                                   $ 5.19           $ 1.13
September 30, 1999                              $ 2.34           $ 0.69
December 31, 1999                               $ 1.22           $ 0.20

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

Common Stock Trading

         On October 14, 1999, we announced that we no longer satisfied the net
tangible assets requirement for continued listing of our common stock on the
National Association of Securities Dealers, Inc. ("NASD") National Market System
(Nasdaq) Stock Market. Since that time, our shares have been traded on the
NASD's "OTC Bulletin Board".

Holders

         As of March 31, 2000, we had approximately 391 holders of record of our
common stock.

                                       15

<PAGE>

Dividends

         We have not paid any dividends on our common stock since our inception.
For the foreseeable future we intend to follow a policy of retaining all of our
earnings, if any, to finance the development and continued expansion of our
business. There can be no assurance that we will ever pay dividends.

Recent Sales of Unregistered Securities.

         In December 1998, we 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 our
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 our common stock 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 our common stock on the
last five trading days of February 1999. The Maximum Conversion Price is
approximately $7.19. The Variable Conversion Price and Maximum Conversion Price
are subject to reduction under certain circumstances. The number of shares of
our 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. We relied on Sections 4(2) and
4(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 issue
of such shares.

         In 1999, we issued 5,533,475 shares of common stock to the holders of
our Series B Convertible Preferred stock upon the conversion of 455 shares of
Series B Convertible Preferred stock plus the 6% accrual amount on such shares.
We relied on Section 3(a)(9) of the Securities Act for the exemption from
registration in connection with the issuance of such shares.

         From January 1, through March 31, 2000 we issued 1,256,848 shares of
common stock to the holders of our Series B Convertible Preferred stock upon the
conversion of 23 shares of Series B Convertible Preferred stock plus the 6%
accrual amount on such shares. We relied on Section 3(a)(9) of the Securities
Act for the exemption from registration in connection with the issuance of such
shares.

         In 1999, we issued 19,590 shares of common stock to a corporation in
consideration for certain advertising run in its publication in 1999. The
corporation represented that each of its stockholders was an accredited
investor. We relied on Sections 4(2) and 4(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 such shares.

         During 1999, we issued 1,541 shares of common stock to an individual
consultant in consideration for services rendered during 1999. The consultant
represented that he was an accredited investor. We relied on Sections 4(2) and
4(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 such shares.

ITEM 6.   SELECTED CONSOLIDATED FINANCIAL DATA

<TABLE>
<CAPTION>

                                                                                  Years ended December 31,
                                                                  --------------------------------------------------------------
                                                                  1999         1998           1997           1996           1995
                                                                  ----         ----           ----           ----           ----
                                                                           (In Thousand, except per share amounts)
<S>                                                        <C>            <C>             <C>             <C>             <C>

     Statement of Operations Data:

     Sales                                                      16,649         14,302          1,042           --
     Gross Profit                                                9,641          7,597           (426)          --
     Selling, general and administrative expenses               25,363         35,092          8,388          1,358            534
     Research and testing                                        2,035          3,216          2,844          1,762            547
     Other Expenses                                              2,000
     Operating income (loss)                                   (19,757)       (30,711)       (11,658)        (3,120)        (1,081)
     Net income (loss)                                         (18,043)       (29,102)       (10,344)        (2,925)        (1,060)
      Dividends on preferred stock                                (791)            11           --             --
     Net income (loss) applicable to common stockholders       (18,834)       (29,113)          --             --
     Net income (loss) per basic share                           (1.57)         (2.86)         (1.31)         (0.52)         (0.20)
     Weighted average basic shares outstanding              12,027,746     10,165,362      7,875,504      5,062,722       5,234,289
     Net income (loss) per diluted share
     Weighted average diluted shares outstanding

<CAPTION>
     Balance Sheet
                                                                  1999         1998           1997           1996            1995
                                                                  ----         ----           ----           ----            ----
                                                                           (In Thousands)
<S>                                                             <C>            <C>            <C>            <C>             <C>
     Working Capital                                            (2,402)        13,422         37,850         10,543          1,974
     Total Assets                                                7,419         28,522         44,216         12,392          2,041
     Long term debt (less current portion)                         733           --             --             --
     Stockholders' equity                                         (640)        17,191         40,806         11,298          1,867
</TABLE>


Note: Enamelon was a developmental stage company in 1995 & 1996

                                       16

<PAGE>

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

         The following discussion and analysis should be read in conjunction
with the Financial Statements and Notes thereto included in Item 8 of this
report. Except for the historical information contained herein the foregoing
discussion contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those projected
in the forward-looking statements discussed herein.

General

         We were 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 national distribution of Enamelon(R) All-Family toothpaste began in
the first quarter of 1998, and we emerged from the development stage at that
time. During the second quarter of 1999, a line extension, Enamelon(R) Calcium
Whitening System toothpaste, was launched. On June 4, 1999, we announced
organizational changes to refocus marketing efforts and reduce overhead with the
intention of lowering operating costs. We changed the balance of our marketing
efforts intending, if additional financing became available, to substantially
increase focus on dental professionals to increase their awareness of our
products. Consistent with this reorganization, staff was reduced from 50
employees to approximately 29 employees. Through attrition, the number has been
reduced to approximately 22 employees.

         In February 2000 we announced that we would change strategic focus to
concentrate on technology development and licensing, and that we would seek to
license our current and future products to larger, established companies that
could maximize the marketplace potential of our technology. This strategy was
adopted in recognition of the fact that we were incurring operating losses and
that we did not have the resources to implement even the revised,
professionally-oriented strategy.

         We believe that if the licensing strategy is successful it will help us
to approach breakeven on a cash basis, which should provide the basis for
funding of future development efforts. We are also actively seeking financing
from a variety of sources to sustain our efforts until the licensing strategy
can be implemented. Accordingly, if we do not immediately obtain additional
financing for our operations, we will be forced to cease operations or seek
protection under federal bankruptcy laws. We do not have any firm commitment for
such additional financing and are prepared to seek protection under the federal
bankruptcy laws before we exhaust our remaining cash resources.

Results of Operations

Year Ended December 31, 1999 Compared with Year Ended December 31, 1998

         Net sales for the year ended December 31, 1999 were approximately
$16,649,000 compared with $14,302,000 for the year ended December 31, 1998. The
increase in net sales is the result of a full year of national operations plus
the launch of the Enamelon(R) Calcium Whitening System toothpaste. It should be
noted that sales for second half of 1999 were significantly lower than those of
the first half, as we were forced by financial circumstances to significantly
curtail our level of advertising and promotion. There can be no assurance that
without increased support, we will be able to sustain our current reduced sales
levels.

         Gross profit earned in 1999 was $9,641,000 compared with $7,597,000 in
1998. The improved gross profit was the result of higher sales, increased
production levels, and reduced raw material and packaging costs due to increased
volume. We anticipate that the gross margin will be maintained, as higher costs
associated with lower ongoing volume will likely be offset by an 11% price
increase that we implemented in January 2000.

         Total operating expenses were approximately $29,398,000 for the year
ended December 31, 1999, compared with $38,355,000 in the prior year, a decrease
of $8,957,000. This decrease was primarily the result of lower marketing and
selling expenses of approximately$10,083,000 and lower research and testing
expenses of approximately $1,081,000, offset by increased administrative and
other expenses of approximately $306,000 and a restructuring charge of
$1,000,000.

         Marketing and selling expenses decreased from approximately $31,269,000
to $21,186,000. This decrease is primarily the result of decreases in consumer
advertising media and other promotion expenses following the June 1999
restructuring.

                                       17
<PAGE>

         Research and testing decreased from approximately $3,216,000 to
$2,035,000, primarily as a result of fewer new studies being initiated at
universities and various independent oral care research facilities, and a
reduction in personnel costs associated with our new product development
efforts.

         Administrative and other expenses increased from $3,870,000 to
$4,176,000 primarily due to increased payroll and benefits, rent, consulting,
and other administrative office expenses which resulted from our expansion of
operations in late 1998 and early 1999.

         Interest and dividend income decreased to approximately $271,400 from
$1,618,000 in 1998, primarily due to the decrease in cash and cash equivalents.
Interest expense increased from $0 in 1998 to $114,000 in 1999 due to borrowing
against a finance company credit facility.

Year Ended December 31, 1998 Compared with 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 our toothpaste as a result of coordinated marketing
efforts, including television and radio advertising, successful coupon events as
well as other promotional programs. While we will continue our marketing
efforts and anticipate 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
our product. We anticipate 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, we
anticipate that total expenses will increase over the next few years as we
increase our 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 our 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 our new product development. We intend 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 our expanded
operations.

        Interest and dividend income increased from $988,000 in 1997 to
$1,609,000 in 1998, primarily due to the increase in cash and cash equivalents
from a private placement and a second public offering of our common stock in
1997.

<PAGE>

Liquidity and Capital Resources

         Since our inception in June 1992, we have financed our operations
primarily through private placements of Series A Preferred Stock Series B
Preferred Stock and Common Stock. Our initial public offering totaled
approximately $16.2 million, net of expenses. A second public offering totaled
approximately $26.3 million, net of expenses and a private placement of Series B
Convertible Preferred Stock totaled approximately $4.8 million, net of expenses.
At December 31, 1999, we had cash, cash equivalents and marketable securities of
approximately $1.3 million and working a capital deficit of approximately
$2,400,000 million. On March 31, 2000, we had cash of approximately $160,000,
and a working capital deficit of more than $3 million.

         On July 29, 1999, we entered into a three-year, $7,500,000 million
credit facility (the "Facility") from a finance company. The Facility consists
of a $1,000,000 term loan (the "Initial Term Loan"), a $2,500,000 line to be
used for future capital expenditures (the "Additional Term Loans"), and
$4,000,000 (plus any unused portion of the Term Loan) as a revolving line of
credit (the "Revolver") based upon eligible accounts receivable and inventory.
Availability of the Additional Term Loans, as well as availability under the
Revolver based upon eligible inventory, are conditioned upon our securing equity
financing of at least $5,000,000. All borrowings under the Facility bear
interest at the prime rate (8.5% as of December 31, 1999) plus 2.0%, subject to
a minimum borrowing level of $2,000,000. Since we did not secure equity
financing of at least $5,000,000 by November 26, 1999, the lender has increased
the interest rate from the prime rate plus 1.5% to the prime rate plus 2.0%. The
Facility is secured by a lien on our assets. As of March 31, 2000, there were no
available borrowings, and actual borrowings, under the Facility totaled
approximately $1,098,000.

         Since our inception and through December 31, 1999, we have incurred
losses aggregating approximately $63.4 million and had available net operating
loss carryforwards as of December 31, 1999 of approximately $65,951,000 million.
The net operating loss carryforwards will expire if not used by the period from
2007 through 2019 and may be limited by United States federal tax law as a
result of changes in ownership. We expect to continue to incur operating losses
at least through 2000.

         Our cash requirements may vary materially from those now planned,
depending on numerous factors, including the status of our efforts to become a
licensing company, our marketing efforts, our ability to maintain retail
distribution of our products, and the availability of short and long term
financing. Management estimates that cash and cash equivalents on hand, together
with our projected cash flow from operations, if any, will be insufficient to
finance our short-term working capital and other requirements. As a result, if
we do not immediately obtain additional financing for our operations, we will be
required either to cease operations or to seek protection under federal
bankruptcy laws. we do not have any firm commitments for such additional
financing and are prepared to seek protection under the federal bankruptcy laws
before we exhaust our existing resources. Additional equity financing, if
available, will involve substantial dilution to existing stockholders.

                                       18

<PAGE>

Forward-Looking Statements

         This Management Discussion and Analysis of Financial condition and
Results 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 we operate, management's beliefs, and
assumptions made by management. These statements are not guarantees of future
performance and involve certain risks, uncertainties and assumptions that are
difficult to predict. Therefore, actual outcomes and results may differ
materially from what is expressed or forecasted in such forward-looking
statements. We undertake no obligation to update publicly any forward-looking
statements, whether as a result of new information, future events or otherwise.


ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         The information that appears following Item 14 of this report and is
incorporated herein by reference.

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

         We did not have any changes in or disagreements with our accountants on
accounting and financial disclosure.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         Incorporated herein by reference to our Definitive Proxy Statement with
respect to our Annual Meeting of Stockholders scheduled to be held within 120
days after the filing of this form.

ITEM 11.  EXECUTIVE COMPENSATION.

         Incorporated herein by reference to our Definitive Proxy Statement with
respect to our Annual Meeting of Stockholders scheduled to be held within 120
days after the filing of this form.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         Incorporated herein by reference to our Definitive Proxy Statement with
respect to our Annual Meeting of Stockholders scheduled to be held within 120
days after the filing of this form.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         Incorporated herein by reference to our Definitive Proxy Statement with
respect to our Annual Meeting of Stockholders scheduled to be held within 120
days after the filing of this form.

                                       19

<PAGE>

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

(a)   Documents

1.    Financial Statements -

Independent Accountants' Report......................................F-1
Consolidated Balance Sheets December 31, 1999 and 1998...............F-2
Consolidated Statements of Operations Years ended December 31, 1999,
  1998 and 1997......................................................F-3
Consolidated Statements of Stockholders' Equity Years ended
  December 31, 1999, 1998 and 1997...................................F-4
Consolidated Statements of Cash Flows Years ended December 31,
  1999, 1998 and 1997................................................F-5
Notes to Consolidated Financial Statements...........................F-6 to F-24

2.    Financial Statement Schedule -

Schedule II - Valuation and Qualifying Accounts......................F-26

All other schedules called for under Regulation S-X are not submitted because
they are not applicable or not required, or because the required information is
included in the financial statements or notes thereto.

Separate financial statements of the Registrant have been omitted because the
Registrant is primarily an operating company.

<PAGE>

3.    Exhibits


Exhibit No.                Description

   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 of 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.(7)

   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

<PAGE>

            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.(8)

  10.17     Employment Agreement between the Registrant and Kim Hardingham
            dated February 18, 1999.(8)

  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, 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)

<PAGE>

  10.25     Loan and Security Agreement dated July 29, 1999 between the
            Registrant and the CIT Group/Credit Finance, Inc.(9)

  21.1      Subsidiaries of the Registrant(1)

  23.2      Consent of BDO Siedman, LLP

  27.1      Financial Data Schedule.

<PAGE>

(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 Registrant's Current
Report on Form 8-K dated December 18, 1998.

(8) Incorporated herein by reference from Exhibits to Registrant's Annual Report
on Form 10-K for the year ended December 31, 1998.

(9) Incorporated herein by reference from Exhibits to Registrant's Current
Report on Form 8-K dated July 29, 1999.

(b)  Reports on Form 8-K

     None.

<PAGE>

{Last printed on April 14, 2000}



Independent Accountants' Report



Enamelon, Inc.
Cranbury, New Jersey

We have audited the accompanying balance sheets of Enamelon, Inc. (the
"Company") as of December 31, 1999 and 1998, and the related statements of
operations, stockholders' equity (deficit) and cash flows for each of the three
years in the period ended December 31, 1999. 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. These 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, 1999 and 1998, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1999, in conformity
with generally accepted accounting principles.

The accompanying financial statements have been prepared on the assumption that
the Company will continue as a going concern. As discussed in Note 1, the
Company has suffered recurring cash flow deficiencies and losses from operations
and has negative working capital, all of which raise substantial doubt about its
ability to continue as a going concern. Management's plans with regard to these
matters are also discussed in Note 1. The financial statements do not include
any adjustments that may result from the outcome of this uncertainty.

BDO SEIDMAN, LLP
Woodbridge, NJ

March 10, 2000


                                      F-1
<PAGE>

                                                                  Enamelon, Inc.

{Last printed on April 14, 2000}

                                                                  Balance Sheets

<TABLE>
<CAPTION>
========================================================================================================
December 31,                                                                     1999             1998
--------------------------------------------------------------------------------------------------------
<S>                                                                     <C>                <C>
Assets
Current:
   Cash and cash equivalents                                            $   1,284,322      $13,146,989
   Short-term investments                                                           -        5,028,805
   Accounts receivable, less allowance of $51,017 and $69,800               1,418,758        3,076,595
   Inventory                                                                1,752,117        2,980,252
   Prepaid expenses and other current assets                                  469,775          520,205
--------------------------------------------------------------------------------------------------------
              Total current assets                                          4,924,972       24,752,846
Equipment, less accumulated depreciation of $2,255,130 and $630,370         1,247,204        2,783,334
Intangible assets, less accumulated amortization of $169,221 and
   $103,515                                                                 1,036,966          827,263
Other assets                                                                  210,296          158,670
--------------------------------------------------------------------------------------------------------
              Total assets                                              $   7,419,438      $28,522,113
========================================================================================================
Liabilities and Stockholders' (Deficit) Equity
Current liabilities:
   Current portion of long-term debt                                   $      615,931      $         -
   Accounts payable                                                         3,189,517        3,497,888
   Accrued expenses                                                         3,520,718        7,832,903
--------------------------------------------------------------------------------------------------------
              Total current liabilities                                     7,326,166       11,330,791
--------------------------------------------------------------------------------------------------------
Long-term debt, less current portion                                          733,332                -
--------------------------------------------------------------------------------------------------------
Commitments
Stockholders' (deficit) equity:
   Preferred stock, $.01 par value - shares authorized 5,000,000;
      none issued or outstanding.                                                   -                -
   Series B Convertible Preferred stock, $.01 par value - shares
      authorized 500; issued and outstanding 45 and 500                       383,625        4,833,324
   Common stock, $.001 par value - shares authorized 50,000,000;
      issued and outstanding 15,835,245 and 10,241,739                         15,835           10,242
   Additional paid-in capital                                              62,369,727       56,923,114
   Accumulated deficit                                                    (63,409,247)     (44,575,358)
--------------------------------------------------------------------------------------------------------
              Total stockholders' (deficit) equity                           (640,060)      17,191,322
--------------------------------------------------------------------------------------------------------
              Total liabilities and stockholders' (deficit) equity      $   7,419,438      $28,522,113
========================================================================================================
</TABLE>
                                 See accompanying notes to financial statements.


                                      F-2
<PAGE>

                                                                  Enamelon, Inc.

{Last printed on April 14, 2000}

                                                        Statements of Operations

<TABLE>
<CAPTION>
Years ended December 31,                                      1999            1998            1997
----------------------------------------------------------------------------------------------------
<S>                                                    <C>             <C>              <C>
Net sales                                              $16,648,916     $14,302,137      $1,041,838
Cost of sales                                            7,008,362       6,704,911       1,468,080
----------------------------------------------------------------------------------------------------
              Gross profit                               9,640,554       7,597,226        (426,242)
----------------------------------------------------------------------------------------------------
Operating expenses:
   Marketing and selling                                21,186,299      31,269,294       5,722,565
   Research and testing                                  2,035,204       3,215,831       2,844,193
   Administrative and other                              4,176,451       3,870,020       2,338,821
   Write-down of equipment                               1,000,000               -               -
   Restructuring charge                                  1,000,000               -               -
----------------------------------------------------------------------------------------------------
              Total operating expenses                  29,397,954      38,355,145      10,905,579
----------------------------------------------------------------------------------------------------
Operating loss                                         (19,757,400)    (30,757,919)    (11,331,821)
Interest and dividend income                               271,463       1,618,422         987,549
Interest expense                                          (113,669)              -               -
Other income, net                                           71,250          37,657               -
----------------------------------------------------------------------------------------------------
              Net loss before income tax benefit       (19,528,356)    (29,101,840)    (10,344,272)
Income tax benefit                                       1,485,734               -               -
----------------------------------------------------------------------------------------------------
              Net loss                                 (18,042,622)    (29,101,840)    (10,344,272)
Accrued dividends on preferred stock                      (205,424)        (10,833)              -
Dividends deemed applicable to preferred stock            (585,843)              -               -
----------------------------------------------------------------------------------------------------
Net loss applicable to common stockholders            $(18,833,889)   $(29,112,673)   $(10,344,272)
====================================================================================================
Net loss per common share - basic                     $     (1.57)    $     (2.86)    $     (1.31)
====================================================================================================
Weighted average common shares outstanding - basic      12,027,746      10,165,362       7,875,504
====================================================================================================
</TABLE>
                                 See accompanying notes to financial statements.


                                      F-3
<PAGE>


                                                                  Enamelon, Inc.

{Last printed on April 14, 2000}

                                     Statement of Stockholders' (Deficit) Equity

<TABLE>
<CAPTION>
=============================================================================================================

                                               Preferred Stock                       Common Stock
                                       --------------------------------    ---------------------------------
                                          Shares           Amount               Shares           Par value
-------------------------------------------------------------------------------------------------------------
<S>                                       <C>              <C>                 <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 preferred stock, net of
   costs                                      500           4,833,324                   -                -
Issuance of common stock for services
   rendered                                     -                   -               1,959                2
Options exercised                               -                   -             192,315              192
Warrants exercised                              -                   -              81,469               82
Accrued preferred stock dividends               -                   -                   -                -
Net loss                                        -                   -                   -                -
-------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998                    500           4,833,324          10,241,739           10,242
Conversion of preferred stock                (455)         (4,449,699)          5,533,475            5,533
Issuance of common stock for services
   rendered                                     -                   -              21,131               21
Options exercised                               -                   -              38,900               39
Accrued preferred stock dividends               -                   -                   -                -
Deemed dividends applicable to
   preferred stock                              -                   -                   -                -
Net loss                                        -                   -                   -                -
-------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999                     45        $    383,625          15,835,245          $15,835
=============================================================================================================


<CAPTION>
=============================================================================================

                                                                                  Total
                                         Additional paid in  Accumulated      stockholders'
                                               capital         deficit       equity (deficit)
--------------------------------------------------------------------------------------------
<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 preferred stock, net of
   costs                                              -                -         4,833,324
Issuance of common stock for services
   rendered                                      10,088                -            10,090
Options exercised                               529,456                -           529,648
Warrants exercised                              124,518                -           124,600
Accrued preferred stock dividends                     -          (10,833)          (10,833)
Net loss                                              -      (29,101,840)      (29,101,840)
--------------------------------------------------------------------------------------------
Balance, December 31, 1998                   56,923,114      (44,575,358)       17,191,322
Conversion of preferred stock                 4,621,628                -           177,462
Issuance of common stock for services
   rendered                                     122,481                -           122,502
Options exercised                               116,661                -           116,700
Accrued preferred stock dividends                     -         (205,424)         (205,424)
Deemed dividends applicable to
   preferred stock                              585,843         (585,843)                -
Net loss                                              -      (18,042,622)      (18,042,622)
--------------------------------------------------------------------------------------------
Balance, December 31, 1999                  $62,369,727     $(63,409,247)     $   (640,060)
============================================================================================
</TABLE>
                                 See accompanying notes to financial statements.


                                      F-4
<PAGE>

                                                                  Enamelon, Inc.

{Last printed on April 14, 2000}

                                                        Statements of Cash Flows
================================================================================

<TABLE>
<CAPTION>
Years ended December 31,                                     1999             1998            1997
----------------------------------------------------------------------------------------------------
<S>                                                  <C>              <C>             <C>
Cash flows from operating activities:
   Net loss                                          $(18,042,622)    $(29,101,840)   $(10,344,272)
   Adjustments to reconcile net loss to net cash
      used in operating activities:
        Write-down of fixed assets                      1,000,000                -               -
        Stock issued for services rendered                122,502           10,090               -
        Depreciation and amortization                     690,466          491,115         170,460
        Loss on disposal of furniture and
           fixtures                                             -           44,392               -
        Changes in operating assets and
           liabilities:
           Decrease in investments                      5,028,805       12,866,302     (17,895,107)
           Decrease (increase) in accounts
              receivable                                1,657,837       (2,831,989)       (244,606)
           Decrease (increase) in inventory             1,228,135       (1,728,045)     (1,199,024)
           Decrease (increase) in prepaids and
              other assets                                 (1,196)        (420,895)        (55,751)
           (Decrease) increase in accounts
              payable and accrued expenses             (4,486,018)       7,804,385       2,553,058
----------------------------------------------------------------------------------------------------
                Net cash used in operating
                   activities                         (12,802,091)     (12,866,485)    (27,015,242)
----------------------------------------------------------------------------------------------------
Cash flows from investing activities:
   Purchases of equipment                                 (88,630)        (802,106)     (2,176,129)
   Investments in intangible assets                      (275,409)        (403,263)       (188,688)
----------------------------------------------------------------------------------------------------
                Net cash used in investing
                   activities                            (364,039)      (1,205,369)     (2,364,817)
----------------------------------------------------------------------------------------------------
Cash flows from financing activities:
   Proceeds from notes payable                          3,168,644                -               -
   Repayment of notes payable                          (1,819,381)               -               -
   Proceeds from issuances of preferred stock                   -        5,000,000               -
   Proceeds from issuances of common stock                116,700          654,248      42,983,019
   Offering costs                                        (162,500)         (60,359)     (3,367,900)
----------------------------------------------------------------------------------------------------
                Net cash provided by financing
                   activities                           1,303,463        5,593,889      39,615,119
----------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents             (11,862,667)      (8,477,965)     10,235,060
Cash and cash equivalents, beginning of period         13,146,989       21,624,954      11,389,894
----------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period             $  1,284,322     $ 13,146,989    $ 21,624,954
====================================================================================================
Supplemental disclosure of non-cash transactions:
   Accrued offering costs                            $          -     $    162,500    $     65,350
   Accrual of preferred stock dividends                   205,424           10,833               -
   Issuance of common stock                               177,462                -               -
   Deemed dividends applicable to preferred stock         585,843                -               -
====================================================================================================
</TABLE>
                                 See accompanying notes to financial statements.


                                      F-5
<PAGE>

                                                                  Enamelon, Inc.

{Last printed on April 14, 2000}

                                                   Notes to Financial Statements

================================================================================

 1.  Organization and     Organization and Basis of Presentation
     Summary of
     Accounting           Enamelon, Inc. (the "Company") develops and markets
     Policies             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 financial statements have been prepared on the
                          assumption that the Company will continue as a going
                          concern. The Company has incurred cash flow
                          deficiencies from operations of $12,802,091,
                          $12,866,485 and $27,015,242, and net losses of
                          $18,042,622, $29,101,840 and $10,344,272, in 1999,
                          1998 and 1997, respectively. These factors raise
                          substantial doubt about the ability of the Company to
                          continue as a going concern. The ability of the
                          Company to continue as a going concern is dependent
                          upon obtaining additional funding. There are no
                          assurances that the Company will be successful in
                          these efforts.

                          Management has announced their plan to restructure the
                          Company as a licensing company and is currently
                          seeking interested parties to license the technology
                          to manufacture the toothpaste. It is hoped that
                          through the sale of licensing rights, the Company can
                          repay its liabilities and become profitable. There are
                          no assurances that the Company will be successful in
                          these efforts.


                                      F-6
<PAGE>

                                                                  Enamelon, Inc.

{Last printed on April 14, 2000}

                                                   Notes to Financial Statements

================================================================================

                          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 consisted 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 were classified as trading securities and
                          were 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
                          was 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.

{Last printed on April 14, 2000}

                                                   Notes to Financial Statements

================================================================================

                          Impairment of Long-Lived Assets

                          The Company accounts for impairment of long-lived
                          assets in accordance with Statement of Financial
                          Accounting Standards No. 121 ("SFAS 121"), "Accounting
                          for the Impairment of Long-Lived Assets and for
                          Long-Lived Assets to be Disposed of." The recurring
                          losses and the decision to become a licensor of
                          technology resulted in the Company determining its
                          assets were impaired. This evaluation indicated that
                          the cost of fixed assets were impaired, and an
                          evaluation of recoverability was performed by
                          comparing the estimated future undiscounted pre-tax
                          cash flows associated with the assets to the assets
                          carrying value and determined that a write-down of
                          $1,000,000 to market value was required.

                          Intangible Assets

                          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

                          Certain items have been reclassified to conform to the
                          current year presentation.

                          Advertising Expenses

                          Advertising costs are expensed as of the first date
                          the advertise-ment takes place. Expenses, which
                          consist primarily of television, print and media, and
                          other promotional costs, were $5,814,195 in 1999,
                          $13,256,016 in 1998, and $4,427,665 in 1997.

                          Research and Development

                          Costs for research and development are expensed as
                          incurred.


                                      F-8
<PAGE>

                                                                  Enamelon, Inc.

{Last printed on April 14, 2000}

                                                   Notes to Financial Statements

================================================================================

                          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 valuation allowance to amounts expected to
                          be realized.

                          Earnings Per Share

                          Basic loss per share is calculated by dividing net
                          loss by the weighted average number of common shares
                          outstanding, which amounted to 12,072,746, 10,165,362
                          and 7,875,504 in 1999, 1998, and 1997 respectively.
                          Diluted loss per share would be calculated by
                          including the dilutive effect, if any, of the assumed
                          exercise of stock options and warrants and the
                          conversion of preferred stock. 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 as amended by SFAS No. 137
                          is effective in the year 2001, but is not expected to
                          affect the Company.


                                      F-9
<PAGE>

                                                                  Enamelon, Inc.

{Last printed on April 14, 2000}

                                                   Notes to Financial Statements

================================================================================

 2.  Inventory            Inventory is summarized as follows:

                          December 31,                     1999          1998
                          ------------------------------------------------------
                          Raw materials                $  809,302    $1,296,842
                          Work in progress                614,551       624,843
                          Finished goods                  328,264     1,058,567
                          ------------------------------------------------------
                                                       $1,752,117    $2,980,252
                          ======================================================

 3.  Equipment            Equipment is summarized as follows:

<TABLE>
<CAPTION>
                          December 31,                          1999          1998
                          -----------------------------------------------------------
                          <S>                               <C>           <C>
                          Furniture and fixtures            $   62,126    $   26,466
                          Equipment                          3,440,208     3,387,238
                          -----------------------------------------------------------
                                                             3,502,334     3,413,704
                          Less: Accumulated depreciation     2,255,130       630,370
                          -----------------------------------------------------------
                                                            $1,247,204    $2,783,334
                          ===========================================================
</TABLE>

                          Furnitures and fixtures are depreciated using
                          estimated useful lives between 5 and 7 years.
                          Equipment is depreciated using estimated useful lives
                          between 3 and 10 years.

                          Impaired equipment was written down by $1,000,000
                          during 1999 to its market value. The assets impaired
                          consists of machinery and equipment, which is idle due
                          to sealed back production of current products.


                                      F-11
<PAGE>

                                                                  Enamelon, Inc.

{Last printed on April 14, 2000}

                                                   Notes to Financial Statements

================================================================================

 4.  Intangible Assets    Intangible expenses are summarized as follows:

<TABLE>
<CAPTION>
                          December 31,                          1999        1998
                          ---------------------------------------------------------
                          <S>                               <C>          <C>
                          Patent rights                     $  958,220   $ 703,353
                          Trademarks                           213,202     192,660
                          Licensing costs                       18,962      18,962
                          Other                                 15,803      15,803
                          ---------------------------------------------------------
                                                             1,206,187     930,778
                          Less: Accumulated amortization       169,221     103,515
                          ---------------------------------------------------------
                                                            $1,036,966   $ 827,263
                          =========================================================
</TABLE>

 5.  Accrued Expenses     Accrued expenses are summarized as follows:

<TABLE>
<CAPTION>
                          December 31,                             1999          1998
                          --------------------------------------------------------------
                          <S>                                  <C>           <C>
                          Accrued marketing and promotion
                           cost                                $1,605,348    $6,308,368
                          Research and development                 36,581       417,990
                          Accrued restructuring                   704,479             -
                          Other accrued expenses                1,174,310     1,106,545
                          --------------------------------------------------------------
                                                               $3,520,718    $7,832,903
                          ==============================================================
</TABLE>

                          The Company recorded a restructuring charge on June 4,
                          1999 authorizing and announcing organizational changes
                          to refocus the Company's marketing efforts and reduce
                          overhead to lower its operating costs. In connection
                          with these organizational changes, the Company
                          recorded a $1 million restructuring charge. This
                          charge includes approximately $782,000 for anticipated
                          costs related to ceasing operations in leased
                          facilities which are not currently being fully used,
                          $166,000 for penalty costs related to the early
                          termination of contractual obligations, and $52,000
                          for costs incurred in connection with the termination
                          of approximately 20 employees. The Company anticipates
                          the restructuring plan to be completed by the end of
                          2000. The remaining reserve at December 31, 1999 is
                          $704,480, which is included in accrued expenses and
                          consists mainly of lease costs extending over the next
                          two years.


                                      F-12
<PAGE>

                                                                  Enamelon, Inc.

{Last printed on April 14, 2000}

                                                   Notes to Financial Statements

================================================================================

 6.  Long-Term Debt       Long-term debt is comprised of the following:

                          December 31,                      1999        1998
                          -----------------------------------------------------
                          Revolver                        $329,495   $       -
                          Initial term loan                933,332           -
                          Financial insurance premiums      86,436           -
                          -----------------------------------------------------
                                        Total debt       1,349,263           -
                          Less: current portion            615,931           -
                          -----------------------------------------------------
                                                          $733,332   $       -
                          =====================================================

                          On July 29, 1999, the Company entered into a
                          three-year, $7,500,000 credit facility (the
                          "Facility") from a finance company. The Facility
                          consists of a $1,000,000 term loan (the "Initial Term
                          Loan"), a $2,500,000 line to be used for future
                          capital expenditures (the "Additional Term Loans"),
                          and $4,000,000 (plus any unused portion of the Initial
                          Term Loan and the Additional Term Loans) as a
                          revolving line of credit (the "Revolver") based upon
                          eligible accounts receivable and inventory.
                          Availability of the Additional Term Loans, as well as
                          availability under the Revolver based upon eligible
                          inventory, are conditioned upon the Company securing
                          equity financing of at least $5,000,000. Since the
                          Company did not secure additional equity, the Revolver
                          was reduced to $2,500,000 and the Additional Term
                          Loans are no longer available. All borrowings under
                          the Facility bear interest at the prime rate (8.5% at
                          December 31, 1999) plus 2%, subject to a minimum
                          borrowing level of $2,000,000.

                          On October 18, 1999, the Company entered into a twelve
                          month, $112,478 financing agreement with a financing
                          company. The agreement was to finance the company's
                          insurance premiums at an interest rate of 5.35%.


                                      F-13
<PAGE>

                                                                  Enamelon, Inc.

{Last printed on April 14, 2000}

                                                   Notes to Financial Statements

================================================================================

 7.  Stockholders'        Redeemable Preferred Stock
     Equity
                          In January and April 1996, the Company issued 506,250
                          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. The Company
                          received proceeds of $2,025,000 for these issuances.
                          In October 1996, the 558,399 shares of Series A
                          stock were converted into common stock and retired
                          Preferred upon the consummation of the initial public
                          offering.

                          In connection with the placement 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 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.

                          As a result of the 40 day look back in calculating
                          the conversion price at 92.84%, conversions of the
                          Preferred Stock were at amount less than the market
                          value of the common stock on June 18, 1999. The
                          amount by which the market value exceeded the
                          conversion price, $585,000, has been reflected as a
                          deemed dividend in the accompanying financial
                          statements in accordance with Emerging Issue Task
                          Force Release No. 98-5.

                          Common Stock


                                      F-14
<PAGE>

                                                                  Enamelon, Inc.

{Last printed on April 14, 2000}

                                                   Notes to Financial Statements

================================================================================

                          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 were approximately $10,425,000.

                          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. No warrants were exercised
                          during 1999. 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 1999, 1998, and 1997. At
                          December 31, 1999, 753,508 warrants remained
                          outstanding at an average exercise price of $6.04.


                                      F-15
<PAGE>

                                                                  Enamelon, Inc.

{Last printed on April 14, 2000}

                                                   Notes to Financial Statements

================================================================================

                          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 (the "Compensation Committee")
                          whose members are 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.


                                      F-16
<PAGE>

                                                                  Enamelon, Inc.

{Last printed on April 14, 2000}

                                                   Notes to Financial Statements

================================================================================

                          During 1999, our Board of Directors adopted the
                          Enamelon, Inc. 1999 and 2000 Stock Option Plans. The
                          1999 and 2000 Plans provide for the grant to qualified
                          employees, including officers and directors, of
                          options to purchase common stock. A total of 500,000
                          shares and 2,500,000 were reserved for issuance upon
                          exercise of stock options granted under the 1999 Plan
                          and 2000 Plan, respectively. The 1999 and 2000 Plans
                          are administered by the Board of Directors or a
                          committee of the Board of Directors (either, the
                          "Committee") whose members are not entitled to receive
                          options under the 1999 and 2000 Plan (excluding
                          options granted exclusively for directors fees). The
                          Committee may grant "incentive stock options" or
                          "non-qualified stock options" under the Internal
                          Revenue Code. The exercise price of both ISO's and
                          NQSO's granted may not be less than 100% of the fair
                          market value of the Common Stock as of the date of
                          grant except that ISO's granted to an employee who
                          owns more than 10% of the outstanding common stock
                          must have an exercise price of not less than 110% of
                          the fair market value of common stock on the date of
                          grant. Options may not have a term of more than 10
                          years, except that ISO's (five years if the grant is
                          an Incentive Option to any employee who owns more than
                          120% of the 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 market 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, 1998, and 1999,
                          respectively ; no dividend yield expected volatility
                          of 37, 35, and 46 percent; risk-free interest rates
                          of 5.9, 5.3, and 5.9 percent, and expected lives of
                          6.9, 7.3, and 8.4 years for the options.


                                      F-17
<PAGE>

                                                                  Enamelon, Inc.

{Last printed on April 14, 2000}

                                                   Notes to Financial Statements

================================================================================

                          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:

<TABLE>
<CAPTION>
                          December 31,                     1999           1998          1997
                          -----------------------------------------------------------------------
                          <S>                        <C>            <C>           <C>
                          Net loss applicable to
                           common stockholders
                             As reported             $18,042,621    $29,112,673   $10,344,272
                             Pro forma                19,127,562     30,274,620    10,630,749
                          Loss per share - basic
                             As reported             $     (1.57)   $     (2.86)  $     (1.31)
                             Pro forma                     (1.59)         (2.97)        (1.35)
                          -----------------------------------------------------------------------
                          =======================================================================
</TABLE>


                                      F-18
<PAGE>

                                                                  Enamelon, Inc.

{Last printed on April 14, 2000}

                                                   Notes to Financial Statements

================================================================================

                          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:

<TABLE>
<CAPTION>
                                                                            Weighted average
                                                          Option shares      exercise price
                          -----------------------------------------------------------------
                          <S>                             <C>               <C>
                          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
                             Granted                        2,262,667          $   .55
                             Exercised                        (38,900)         $  3.00
                             Canceled                        (189,399)         $  7.74
                          -----------------------------------------------------------------
                          Balance, December 31, 1999        3,892,288          $  2.78
                          -----------------------------------------------------------------
</TABLE>

                          At December 31, 1999, 1998 and 1997, there were
                          737,333, 62,015 and 609,929 shares of Common Stock
                          reserved for the granting of additional options,
                          respectively.

<TABLE>
<CAPTION>
                          December 31,                       1999        1998        1997
                          -----------------------------------------------------------------
                          <S>                             <C>        <C>         <C>
                          Options exercisable             1,414,085  1,219,993   1,144,355
                          -----------------------------------------------------------------
                          Weighted average exercise
                            price of options

                            exercisable                       $4.52     $4.70       $2.86
                          -----------------------------------------------------------------
                          Weighted average fair value
                            per share of options
                            granted during the year            $.33     $2.40       $7.33
                          -----------------------------------------------------------------
</TABLE>


                                      F-19
<PAGE>

                                                                  Enamelon, Inc.

{Last printed on April 14, 2000}

                                                   Notes to Financial Statements

================================================================================

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

<TABLE>
<CAPTION>
                                                                               Options Outstanding
                                                          --------------------------------------------------------
                                                                Number       Weighted average
                                                            outstanding at       remaining        Weighted-average
                           Range of exercise prices       December 31, 1999  con-tractual life     exercise price
                           ---------------------------------------------------------------------------------------
                           <S>                            <C>                <C>               <C>
                           $  .38 to $2.50                     2,547,533                9.1             $ .63
                           $ 3.00 to $4.13                       477,607                 .7              3.04
                           $ 4.25 to $7.00                       181,136                4.4              6.37
                           $ 8.00 to $11.00                      575,796                8.7              8.94
                           $12.75 to $17.50                      110,216                7.9             13.32
                           ---------------------------------------------------------------------------------------
                           $  .38 to $17.50                    3,892,288                7.8             $2.78
                           =======================================================================================

<CAPTION>
                                                                    Options Exercisable
                                                          ------------------------------------
                                                               Number
                                                           exercisable at     Weighted-average
                           Range of exercise prices       December 31, 1999    exercise price
                           -------------------------------------------------------------------
                           <S>                            <C>                 <C>
                           $  .38 to $2.50                    409,625              $1.32
                           $ 3.00 to $4.13                    541,807               3.03
                           $ 4.25 to $7.00                     93,499               6.55
                           $ 8.00 to $11.00                   297,546               8.94
                           $12.75 to $17.50                    71,608              13.20
                           -------------------------------------------------------------------
                           $  .38 to $17.50                 1,414,085              $4.52
                           ===================================================================
</TABLE>


 8.  Income Taxes         In December 1999, the Company sold $17,433,000 of its
                          New Jersey net operating loss and research and
                          development tax credit carryforwards, for net proceeds
                          of $1,486,868 which amount has been reflected as an
                          income tax benefit. At December 31, 1999, the Company
                          has approximately $48,645,000 of remaining New Jersey
                          net operating loss carryforwards. The related
                          deferred tax asset of approximately $4,378,000 has
                          been fully reserved by a valuation of the same
                          amount.

                          At December 31, 1999, the Company had a deferred tax
                          asset of approximately $20,935,000 primarily
                          attributable to federal net operating loss
                          carryforwards. The deferred tax asset has been fully
                          reserved by a valuation of the same amount.


                                      F-20
<PAGE>

                                                                  Enamelon, Inc.

{Last printed on April 14, 2000}

                                                   Notes to Financial Statements

================================================================================

                          The federal net operating loss carryforwards at
                          December 31, 1999 totaling approximately $65,951,000
                          will expire if not used by the period from 2007
                          through 2019 and may be limited by United States
                          federal tax law as a result of changes in ownership.

 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, 1999:

                          Year ending December 31,
                          -----------------------------------------------------
                          2000                                      $  620,607
                          2001                                         596,542
                          2002                                         493,187
                          2003                                         474,060
                          2004                                         474,060
                          2005 and thereafter                        1,715,010
                          -----------------------------------------------------
                                                                    $4,373,466
                          =====================================================

                          Rent expense for the years ended December 31, 1997,
                          1998 and 1999 was $129,089, $380,831 and $488,291,
                          respectively.


                                      F-21
<PAGE>

                                                                  Enamelon, Inc.

{Last printed on April 14, 2000}

                                                   Notes to Financial Statements

================================================================================

                          Patent License Agreement

                          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 toothpaste 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.


                                      F-22
<PAGE>

                                                                  Enamelon, Inc.

{Last printed on April 14, 2000}

                                                   Notes to Financial Statements

================================================================================

                          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
                          been required under this agreement.

 10. Employment           The Company currently has employment agreements with
     Agreements           four 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 $701,500, $580,000, $465,850 and
                          $512,425 in the years ended December 31, 2000, 2001,
                          2002 and 2003, respectively. In addition, the 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, 2000)
                          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-23
<PAGE>

                                                                  Enamelon, Inc.

{Last printed on April 14, 2000}

                                                   Notes to Financial Statements

================================================================================

                          The Company has an employment agreement with an
                          executive of the company for an unspecified term,
                          which can be terminated by either executive or company
                          at their sole discretion. Under the terms of the
                          agreement, the executive is entitled to a salary of
                          $200,000 per year, subject to adjustment by the board
                          of directors. The company shall also grant 100,000
                          options under the 1997 Incentive Stock Option Plan,
                          25,000 options exercisable on first, second, third and
                          fourth anniversary hereof. The agreement also includes
                          benefits and expenses.


                                      F-24

<PAGE>

Independent Auditors' Report
  on Supplemental Schedule

Board of Directors
Enamelon, Inc.
Cranbury, New Jersey

The audits referred to in our report dated March 10, 2000 relating to the
financial statements of Enamelon, Inc., which is contained in this Form 10-K,
included the audits of the financial statement schedule for the years ended
December 31, 1999, 1998 and 1997 listed in the accompanying index. This
financial statement schedule is the responsibility of the Company's manaagement.
Our responsibility is to express an opinion on the financial statement schedule
based upon our audits.

In our opinion, such financial statement schedule presents fairly, in all
material respects, the information set forth therein.

/s/ BDO Seidman, LLP

Woodbridge, New Jersey

March 10, 2000


                                      F-25

<PAGE>

                                                                  Enamelon, Inc.



<TABLE>
<CAPTION>
                 Valuation and Qualifying Accounts and Reserves
=======================================================================================
                                  Balance at    Charged to                   Balance at
                                 Beginning of   Costs and                      End of
                                   Period       Expenses(1)   Deductions(2)    Period
---------------------------------------------------------------------------------------
<S>                              <C>            <C>           <C>            <C>
Year ended December 31, 1997
Accounts receivable allowance      $     0       $10,163        $     --       $10,163
=======================================================================================
Year ended December 31, 1998
Accounts receivable allowance      $10,163       $61,374        $  1,737       $69,800
=======================================================================================
Year ended December 31, 1999
Accounts receivable allowance      $69,800       $90,478        $109,261       $51,017
=======================================================================================
</TABLE>
(1)  To increase accounts receivable allowance.
(2)  Uncollectible accounts written off, net of recoveries.



                                      F-26

<PAGE>

                                   SIGNATURES


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

Dated: April 14, 2000                  ENAMELON, INC.


                                       By: /s/ Steven R. Fox
                                           ------------------------------------
                                           Dr. Steven R. Fox
                                           Chief Executive Officer and Chairman

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


<TABLE>
<CAPTION>

          Signature                            Title                                   Date
<S>                                   <C>                                          <C>

 /s/ Dr. Steven R. Fox                 Chairman of the Board of Directors           April 14, 2000
 ----------------------------          and Chief Executive Officer
     Dr. Steven R. Fox                 (Principal Executive Officer and
                                       Principal Financial Officer)


 /s/ Dr. Bert D. Gaster                Director                                     April 14, 2000
 ----------------------------
     Dr. Bert D. Gaster

 /s/ Richard A. Gotterer               Director                                     April 14, 2000
 ----------------------------
     Richard A. Gotterer

 /s/ Eric D. Horodas                   Director                                     April 14, 2000
 ----------------------------
     Eric D. Horodas

 /s/ Dr. S.N. Bhaskar                  Director                                     April 14, 2000
 ----------------------------
     Dr. S.N. Bhaskar

 /s/ Walter W. Williams                Director                                     April 14, 2000
 ----------------------------
     Walter W. Williams
</TABLE>