<PAGE>

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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------

                                  FORM 10-Q/A

(MARK ONE)

[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
        THE SECURITIES EXCHANGE ACT OF 1934

                      For the quarter ended June 30, 2002

                                       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 000-20805
                            ------------------------

                                AROS CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<Table>
        <S>                                        <C>
                         DELAWARE                                  23-2476415
             (State or other jurisdiction of                    (I.R.S. Employer
              incorporation or organization)                  Identification No.)
</Table>

              1290 BAY DALE DRIVE, PMB 351, ARNOLD, MARYLAND 21012
              (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (410) 349-2431
                            ------------------------

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes [X]     No [ ]
                            ------------------------

                                   17,045,131
          (Number of shares of common stock, $.01 par value per share,
                        outstanding as of July 31, 2002)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

                                AROS CORPORATION

                                     INDEX

Introduction

PART I -- FINANCIAL INFORMATION

Item 1.  Financial Statements

     Consolidated Balance Sheets as of June 30, 2002 (unaudited) and December
     31, 2001

     Consolidated Statements of Operations (unaudited) for the Three Months
     Ended June 30, 2002 and 2001, Six Months Ended June 30, 2002 and 2001, and
     the Period from December 21, 1989 to June 30, 2002

     Consolidated Statements of Changes in Stockholders' Equity (Deficit) for
     the Six Months Ended June 30, 2002 (unaudited) and Year Ended December 31,
     2001

     Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended
     June 30, 2002 and 2001 and the Period from December 21, 1989 to June 30,
     2002

     Notes to Consolidated Financial Statements (unaudited)

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

PART II -- OTHER INFORMATION

Item 1.  Legal Proceedings

Item 2.  Changes in Securities and Use of Proceeds

Item 3.  Defaults upon Senior Securities

Item 4.  Submission of Matters to a Vote of Security Holders

Item 5.  Other Information

Item 6.  Exhibits and Reports on Form 8-K

Signatures
<PAGE>

                                  INTRODUCTION

     This Amendment No. 1 to the Company's quarterly report on Form 10-Q for the
quarter ended June 30, 2002 is being refiled in its entirety solely because the
signature page in the original filing was inadvertently undated and to correct
other clerical issues.
<PAGE>

                          PART 1-FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                                AROS CORPORATION
                         (A DEVELOPMENT STATE COMPANY)

                          CONSOLIDATED BALANCE SHEETS
                        (in thousands except share data)

<Table>
<Caption>
                                                              JUNE 30, 2002   DECEMBER 31, 2001
                                                              -------------   -----------------
                                                               (UNAUDITED)
<S>                                                           <C>             <C>
ASSETS
CURRENT ASSETS:
Cash........................................................    $      1          $      1
Short-term investments......................................       6,253               319
Receivables.................................................          31               136
Receivables from related parties............................          58                 2
Interest receivable.........................................           3                --
Inventory...................................................         239               293
Prepaid expenses and other..................................         241                29
                                                                --------          --------
     TOTAL CURRENT ASSETS...................................       6,826               780
                                                                --------          --------
Property and equipment, net.................................         229               351
Other assets................................................          50                50
                                                                --------          --------
     TOTAL ASSETS...........................................    $  7,105          $  1,181
                                                                ========          ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank overdraft..............................................    $     --          $     34
Accounts payable............................................         502               270
Accrued expenses............................................         805               241
Current portion of notes payable and capital leases.........           5                 5
                                                                --------          --------
     TOTAL CURRENT LIABILITIES..............................       1,312               550
                                                                --------          --------
Pension liability...........................................         120                --
Other liabilities...........................................          41                41
Long-term portion of notes payable and capital leases,
  including accrued interest of $632 and $606 at June 30,
  2002 and December 31, 2001, respectively..................       6,687             8,331
Series A redeemable convertible preferred stock, $.01 par
  value; 30,000,000 shares authorized, liquidation
  preference of $6,855; and 15,298,350 shares issued and
  outstanding as of June 30, 2002...........................       6,855                --
STOCKHOLDERS' EQUITY:
Common stock prior to reverse merger and recapitalization...          --                 1
Series A through F preferred stock prior to reverse merger
  and recapitalization......................................          --                 1
Common stock, $.01 par value; 30,000,000 authorized shares;
  17,063,246 shares issued and 17,045,131 shares outstanding
  as of June 30, 2002.......................................         171                --
Series B convertible preferred stock, $.01 par value;
  30,000,000 authorized shares; 12,025,656 shares issued and
  outstanding as of June 30, 2002...........................         120                --
Deferred stock compensation.................................          --            (2,930)
Accumulated other comprehensive loss........................         (34)               --
Additional paid-in capital..................................      31,373            27,058
Accumulated deficit.........................................     (39,540)          (31,871)
                                                                --------          --------
     TOTAL STOCKHOLDERS' EQUITY.............................      (7,910)           (7,741)
                                                                --------          --------
     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.............    $  7,105          $  1,181
                                                                ========          ========
</Table>

          See accompanying Notes to Consolidated Financial Statements.
                                        1
<PAGE>

                                AROS CORPORATION
                         (A DEVELOPMENT STATE COMPANY)

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (unaudited)
                     (in thousands, except per share data)

<Table>
<Caption>
                                         THREE MONTHS ENDED    SIX MONTHS ENDED       PERIOD FROM
                                              JUNE 30,             JUNE 30,        DECEMBER 21, 1989
                                         -------------------   -----------------    (INCEPTION) TO
                                           2002       2001      2002      2001       JUNE 30, 2002
                                         --------   --------   -------   -------   -----------------
<S>                                      <C>        <C>        <C>       <C>       <C>
Revenues:
       Sales...........................  $   173    $    43    $   316   $   218       $  1,712
       Royalties.......................        3         --         31        14             97
       Grant and other revenue.........       --         --         --                      433
                                         -------    -------    -------   -------       --------
          Total revenues...............      176         43        347       232          2,242
Expenses:
          Costs of goods sold..........      304         69        579       344          2,122
          Research and development.....      715        512      1,289       940         24,023
          Selling, general and
            administrative.............      373        393        722       828          9,818
          Compensation expense
            associated with stock
            options and warrants.......    3,029        240      3,300       472          5,975
                                         -------    -------    -------   -------       --------
          Total expenses...............    4,421      1,214      5,890     2,584         41,938
                                         -------    -------    -------   -------       --------
Operating loss.........................   (4,245)    (1,171)    (5,543)   (2,352)       (39,696)
       Merger cost.....................     (402)        --       (402)       --           (402)
       Interest income.................        4          2          5         8          1,150
       Interest expense................   (1,618)       (59)    (1,729)     (137)        (2,643)
       License fees....................       --         --         --        --          2,050
                                         -------    -------    -------   -------       --------
Net loss...............................  $(6,261)   $(1,228)   $(7,669)  $(2,481)      $(39,541)
                                         =======    =======    =======   =======       ========
Basic and diluted net income (loss) per
  share:
  Continuing operations................  $ (0.37)   $ (0.07)   $ (0.45)  $ (0.15)      $  (2.32)
                                         =======    =======    =======   =======       ========
Weighted average number of shares used
  for calculation of net loss per share
  based on shares outstanding after
  reverse merger and recapitalization
  for all periods presented............   17,045     17,045     17,045    17,045         17,045
                                         =======    =======    =======   =======       ========
</Table>

          See accompanying Notes to Consolidated Financial Statements.
                                        2
<PAGE>

                                AROS CORPORATION
                         (A DEVELOPMENT STATE COMPANY)

      CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
                     (in thousands, except for share data)
<Table>
<Caption>
                                         REDEEMABLE
                                         CONVERTIBLE           CONVERTIBLE           CONVERTIBLE
                                     PREFERRED SERIES A      PREFERRED STOCK     PREFERRED SERIES B       COMMON STOCK
                                     -------------------   -------------------   -------------------   -------------------
                                       SHARES     AMOUNT     SHARES     AMOUNT     SHARES     AMOUNT     SHARES     AMOUNT
                                     ----------   ------   ----------   ------   ----------   ------   ----------   ------
<S>                                  <C>          <C>      <C>          <C>      <C>          <C>      <C>          <C>
Balance at December 31, 2001.......                         4,481,835    $ 1                            2,528,044    $  1
Issuance of Common Stock...........                                                                       301,930       1
Issuance of Convertible Preferred
 Stock for cash and conversion of
 bridge financing net of issuance
 costs of $138,070.................                         5,564,047      1
Deferred stock compensation
 associated with stock option
 grants in 2002....................
Compensation expense associated
 with stock options outstanding....
Effect of reverse merger and
 recapitalization:
Valuation of warrants associated
 with stock options outstanding....
Valuation of beneficial conversion
 associated with bridge
 financing.........................
Compensation expense associated
 with stock options outstanding
 recognized as a result of the
 reverse merger....................
Conversion of convertible preferred
 shares to Redeemable Convertible
 Preferred Series A at liquidation
 / redemption value................  15,298,350   $6,855   (5,564,047)    (1)
Conversion of convertible preferred
 shares to Common Stock and Series
 B Preferred Shares................                        (4,481,835)    (1)    12,025,656    $120       297,146       3
Conversion of Subsidiary Common
 Stock into Company Common Stock
 and Series B Preferred Shares:
Elimination of Subsidiary Common
 Stock.............................                                                                    (2,829,974)     (1)
Issuance of Company Common Stock...                                                                     7,781,019      78
Company Common Stock and related
 equity held by existing
 shareholders (net of 18,115 shares
 held treasury)....................                                                                     8,966,966      89
Net (loss).........................
                                     ----------   ------   ----------    ---     ----------    ----    ----------    ----
Balance at June 30, 2002...........  15,298,350   $6,855            0    $ 0     12,025,656    $120    17,045,131    $171
                                     ==========   ======   ==========    ===     ==========    ====    ==========    ====

<Caption>
                                                                                                    TOTAL
                                                                                 ACCUMULATED    SHAREHOLDERS'
                                     ADDITIONAL                                     OTHER       (NET CAPITAL
                                       PAID IN       DEFERRED     ACCUMULATED   COMPREHENSIVE    DEFICIENCY)
                                       CAPITAL     COMPENSATION     DEFICIT         LOSS           EQUITY
                                     -----------   ------------   -----------   -------------   -------------
<S>                                  <C>           <C>            <C>           <C>             <C>
Balance at December 31, 2001.......  $    27,058      $  (30)      $(31,871)                       $(7,741)
Issuance of Common Stock...........          104                                                       105
Issuance of Convertible Preferred
 Stock for cash and conversion of
 bridge financing net of issuance
 costs of $138,070.................        6,716                                                     6,717
Deferred stock compensation
 associated with stock option
 grants in 2002....................          370        (370)
Compensation expense associated
 with stock options outstanding....                      452                                           452
Effect of reverse merger and
 recapitalization:
Valuation of warrants associated
 with stock options outstanding....          657                                                       657
Valuation of beneficial conversion
 associated with bridge
 financing.........................          843                                                       843
Compensation expense associated
 with stock options outstanding
 recognized as a result of the
 reverse merger....................                    2,848                                         2,848
Conversion of convertible preferred
 shares to Redeemable Convertible
 Preferred Series A at liquidation
 / redemption value................   (6,854,906)                                                   (6,855)
Conversion of convertible preferred
 shares to Common Stock and Series
 B Preferred Shares................         (122)
Conversion of Subsidiary Common
 Stock into Company Common Stock
 and Series B Preferred Shares:
Elimination of Subsidiary Common
 Stock.............................            1
Issuance of Company Common Stock...          (78)
Company Common Stock and related
 equity held by existing
 shareholders (net of 18,115 shares
 held treasury)....................        2,678                                    $(34)            2,733
Net (loss).........................                                  (7,669)                        (7,669)
                                     -----------      ------       --------         ----           -------
Balance at June 30, 2002...........  $    31,373      $    0       $(39,540)        $(34)          $(7,910)
                                     ===========      ======       ========         ====           =======
</Table>

                                        3
<PAGE>

                                AROS CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (unaudited)
                                 (in thousands)

<Table>
<Caption>
                                                              SIX MONTHS ENDED       PERIOD FROM
                                                                  JUNE 30,        DECEMBER 21, 1989
                                                              -----------------    (INCEPTION) TO
                                                               2002      2001       JUNE 30, 2002
                                                              -------   -------   -----------------
<S>                                                           <C>       <C>       <C>
OPERATING ACTIVITIES
Net loss....................................................  $(7,669)  $(2,481)      $(39,541)
Adjustments to reconcile net loss to net cash used in
  operating activities:
  Issuance of common stock to consultant for services.......       --        --              2
  Issuance of common stock to founders for contributed
    patents.................................................       --        --             42
  Issuance of Series B preferred stock upon conversion of
    interest payable........................................       --        --              6
  Compensation expense associated with stock options........    3,300       472          5,975
  Amortization of debt discount for warrant and beneficial
    conversion feature......................................    1,500        --          1,500
  Reduction in payable to stockholder.......................       --        --            (76)
  Depreciation and amortization.............................      122       145          1,917
  Loss on disposal of property and equipment................       --        --              9
  Interest expense converted to principal...................      140       137            752
  Interest expense converted to equity......................       89        --             89
  Changes in operating assets and liabilities:
    Other current assets and accounts receivables...........       46        78           (229)
    Inventory...............................................       54      (176)          (239)
    Other assets............................................       --        --            (50)
    Accounts payable, accrued liabilities and bank
      overdraft.............................................      452        10            997
    Other liabilities.......................................       --        41             41
                                                              -------   -------       --------
Net cash provided by (used in) operating activities.........   (1,966)   (1,774)       (28,805)
INVESTING ACTIVITIES
Purchases of property and equipment.........................       --       (10)        (1,933)
Changes in short-term investments...........................   (2,982)      231         (3,308)
                                                              -------   -------       --------
Net cash provided by (used in) investing activities.........   (2,982)      221         (5,241)
FINANCING ACTIVITIES
Proceeds from issuance of convertible preferred stock, net
  of offering costs.........................................    3,857        --         24,767
Proceeds from issuance of common stock......................      105        --            301
Repayment on capital lease obligations......................       (2)       --           (108)
Proceeds from notes payable.................................      988     1,550         11,410
Payments on notes payable...................................       --        --         (2,323)
                                                              -------   -------       --------
Net cash provided by (used in) financing activities.........    4,948     1,550         34,047
                                                              -------   -------       --------
Net (decrease) increase in cash.............................       --        (3)             1
Cash at beginning of period.................................        1         4             --
                                                              -------   -------       --------
Cash at end of period.......................................  $     1   $     1       $      1
                                                              =======   =======       ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Non-cash disclosure:
  Issuance of Series B convertible preferred stock upon
    conversion of notes payable.............................  $    --   $    --       $    300
  Equipment purchased pursuant to capital leases............       --        10            114
  Cancellation of stock options with deferred stock
    compensation associated.................................       --        --          1,250
  Net assets assumed in merger..............................    2,733        --          2,733
  Conversion of bridge financing to equity..................    2,860        --          2,860
Cash disclosure:
  Cash paid for interest....................................       --        --            310
</Table>

          See accompanying Notes to Consolidated Financial Statements.
                                        4
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                         (A DEVELOPMENT STATE COMPANY)
                                  (UNAUDITED)

1.  NATURE OF BUSINESS

     Aros Corporation, a Delaware corporation, was incorporated as APACHE
Medical Systems, Inc. ("APACHE") on September 1, 1987. APACHE was a provider of
clinically based decision support information systems and consulting services to
the healthcare industry offering a comprehensive line of outcomes-based products
and services, encompassing software, hardware, and related consulting and
disease management information services. The Company sold or discontinued all
APACHE business and changed its name to Aros Corporation in 2001.

     On June 21, 2002 Aros Corporation ("Aros" or the "Company") acquired ReGen
Biologics, Inc. ("ReGen" or the "Subsidiary"), a privately held tissue
engineering company that designs, develops, manufactures and markets minimally
invasive human implants and medical devices for the repair and regeneration of
damaged human tissue, which merged with the Company on June 21, 2002. The merger
included all of ReGen's business and operating activities and employees. The
Company continues ReGen's business out of ReGen's current headquarters in
Franklin Lakes, New Jersey. ReGen's business will comprise substantially all of
the business conducted by Aros for the foreseeable future. Accordingly,
discussions of the Company's business is, in effect, a discussion of ReGen's
operations. Hereinafter, the merged entity is referred to as the Company.

     Pursuant to the merger, Aros has issued approximately 35.4 million shares
of its capital stock to former ReGen stockholders in exchange for all of the
issued and outstanding stock of ReGen. In addition, Aros has assumed ReGen's
outstanding stock options and warrants to purchase up to an aggregate of
approximately 11 million shares of Aros Common Stock and 1.2 million shares of
Aros Series B Convertible Preferred Stock on a post merger basis. Following the
merger, former ReGen stockholders own approximately 80% of Aros outstanding
capital stock.

     ReGen Biologics, Inc., a Delaware corporation, was incorporated in
California on December 21, 1989 and reincorporated in Delaware on June 28, 1990
for the purpose of research and development and, ultimately, the sale of
collagen-based technologies and products to stimulate re-growth of tissues that,
under natural conditions, do not regenerate adequately in humans.

     ReGen has two products currently being marketed, the Sharp Shooter Tissue
Repair System ("SharpShooter") and the Collagen Meniscus Implant ("CMI").
ReGen's activities to date have consisted principally of raising capital,
conducting research and development activities, developing and marketing and
obtaining regulatory approval for its products. The CMI and Sharp Shooter in
2000 each received the CE Mark for distribution in the European Economic
Community. The Sharp Shooter in 2000 received marketing clearance for sale in
the United States by the United States Food and Drug Administration ("FDA").
ReGen is in the final stages of enrollment for its CMI clinical trial in the
United States. ReGen will continue to require additional capital to complete the
U.S. CMI clinical trial, further develop its products and further develop sales
and distribution channels for its products around the world. Accordingly, ReGen
is still considered a development stage enterprise. Management believes that
ReGen will emerge from development stage when the CMI product is available for
sale in the U.S. and/or sales of all of its products have reached a volume that
will provide for positive gross margin.

2.  BASIS OF PRESENTATION

     The accompanying consolidated financial statements were prepared by the
Company in accordance with accounting principles generally accepted in the
United States and pursuant to the rules and regulations of the Securities and
Exchange Commission. The financial information included herein is unaudited.
However, in the opinion of the Company's management, all adjustments (which
include normal recurring adjustments) considered necessary for a fair
presentation have been made. Certain information

                                        5
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

and footnote disclosures normally included in annual financial statements
prepared in accordance with accounting principles generally accepted in the
United States have been condensed or omitted pursuant to such rules and
regulations, but the Company believes that the disclosures made are adequate to
make the information presented not misleading. For more complete financial
information, these financial statements should be read in conjunction with the
audited financial statements and notes thereto of the Subsidiary for the year
ended December 31, 2001 included in the Form 8-K amendment, to be filed with the
Commission on or before September 4, 2002. Results for interim periods are not
necessarily indicative of the results for any other interim period or for the
full fiscal year.

     The acquisition of the Subsidiary, completed as of June 21, 2002 has been
recorded for accounting purposes as a reverse merger and recapitalization,
whereby the Subsidiary is assumed to be the accounting acquirer of the Company.
For purposes of this filing and future filings, the historical financial
statements of the Subsidiary including related notes have replaced the prior
historical financial statements of the Company. The historical financial
statements as of June 30, 2001 of the subsidiary reflect a recapitalization for
the equivalent number of shares received in the merger for all equity
securities. On the date of the merger between the Subsidiary and the Company,
the assets and liabilities of the Company are merged into the historical balance
sheet of the Subsidiary for consolidated financial statement purposes as if the
Subsidiary had acquired the Company. The common and preferred stock of the
Subsidiary that was outstanding at the date of the merger is replaced with the
common and preferred stock (along with additional paid in capital) of the
Company including those shares issued to consummate the merger. The historical
retained earnings deficits of the Subsidiary carry forward into the merged
company. See Note 16 for a further discussion of the terms of the merger.

3.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH AND SHORT-TERM INVESTMENTS

     The Company considers all highly liquid investments purchased with a
maturity of 90 days or less at the date of acquisition to be cash equivalents.
The Company places its cash and short-term investments with two financial
institutions and invests primarily in overnight investments, which may include
U.S. government agency notes, commercial paper, and money market accounts. To
date, the Company has not experienced losses on investments in these
instruments.

     Management determines the appropriate classification of securities at the
time of purchase and reevaluates such designation as of each balance sheet date.
Estimated fair value amounts are determined by the Company using available
market information and appropriate valuation methodologies. However, judgment is
required in interpreting market data to develop the estimates of fair value.

     Bank overdrafts represent net outstanding checks.

INVENTORIES

     Inventories are valued at the lower of actual cost or market, using the
first-in, first-out (FIFO) method.

PROPERTY AND EQUIPMENT

     Property and equipment are stated at cost. Depreciation of computer,
office, laboratory, and manufacturing equipment is calculated using the
straight-line method over the estimated useful lives (three to five years), and
leasehold improvements are amortized on a straight-line basis over the shorter
of their estimated useful lives or the lease term.

                                        6
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

INCOME TAXES

     The Company provides for income taxes in accordance with the asset and
liability method, prescribed by Statement of Financial Accounting Standards
(SFAS) No. 109, Accounting for Income Taxes. Under this method, deferred tax
assets and liabilities are determined based on differences between financial
reporting and tax basis of assets and liabilities and are measured using the
enacted tax rates and laws that will be in effect when the differences are
expected to reverse.

STOCK BASED COMPENSATION

     The Company accounts for its stock-based compensation in accordance with
the Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees, (APB 25) using the intrinsic value method. The Company has made pro
forma disclosures required by SFAS No. 123, Accounting for Stock Based
Compensation, (SFAS 123) using the fair value method.

REVENUE RECOGNITION

     Revenues from sales of products are recognized when goods are shipped.
Amounts billed to customers for shipping and handling are included in revenues.
Shipping and handling costs are included in costs of goods sold.

     If determinable at the time results are published by the Company, royalties
are recognized when the licensee has sold the product to the end user and the
Company has fulfilled its obligations under the applicable agreement. If not
determinable at the time results are published, royalties are recognized in the
period they become determinable.

     License fees represent payments received from distributors for exclusive
perpetual licenses to sell the Company's products in various geographic areas
(see Note 8). These fees are recognized as other income when all performance
criteria in the underlying agreement have been met.

RESEARCH AND DEVELOPMENT COSTS

     All research and development costs are charged to expense as incurred.

PATENT AND LICENSING COSTS

     The Company records costs incurred to obtain patents and licenses as
research and development expense.

ADVERTISING COSTS

     All advertising costs are expensed as incurred. During the three months
ended June, 2002 and 2001, the Company expensed approximately $41,650 and
$4,263, respectively, as advertising costs.

COMPREHENSIVE INCOME (LOSS)

     Comprehensive income includes all changes in stockholders' equity during a
period except those resulting from investments by owners and distributions to
owners. The Company's other comprehensive income comprises a minimum pension
liability and unrealized gains and losses on short-term investments, which have
been immaterial to date, and total comprehensive loss closely approximated net
loss in each fiscal period presented.

                                        7
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

FAIR VALUE OF FINANCIAL INSTRUMENTS AND CONCENTRATIONS

     The carrying amount of the Company's notes payable approximates fair value.
The carrying amount of the Company's cash, short-term investments, receivables,
receivables from related parties, accounts payables and accrued expenses
approximates fair value due to their short-term nature.

     The Company currently has two principal customers (see Note 8), which
market and sell the Company's two current products. Customer A has the license
to sell the Sharp Shooter product. Customer B, which is also a shareholder of
the Company, has the license to sell the CMI product outside of the United
States. Concentrations of receivables and revenues by customer as of and for the
three and six months ended June 30, 2002 and 2001 are as follows:

<Table>
<Caption>
                           THREE MONTHS ENDED   THREE MONTHS ENDED   SIX MONTHS ENDED   SIX MONTHS ENDED
                             JUNE 30, 2002        JUNE 30, 2001       JUNE 30, 2002      JUNE 30, 2001
                           ------------------   ------------------   ----------------   ----------------
<S>                        <C>                  <C>                  <C>                <C>
Accounts receivable:
  Customer A.............          33%                 100%                 33%               100%
  Customer B.............          67%                  --%                 67%                --%
Sales revenues:
  Customer A.............          58%                  67%                 67%                44%
  Customer B.............          42%                  33%                 33%                66%
Royalties:
  Customer A.............         100%                 100%                100%               100%
</Table>

USE OF ESTIMATES

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS

     In June 2001, the Financial Accounting Standards Board issued SFAS No. 141,
entitled, Business Combinations. This statement prohibits the use of the
pooling-of-interests method of accounting for business combinations initiated
after June 30, 2001 and applies to all business combinations accounted for under
the purchase method that are completed after June 30, 2001. This statement was
adopted on January 1, 2002, and did not have an impact on the Company's
consolidated financial statements.

     Also in June 2001, the FASB issued SFAS No. 142, entitled, Goodwill and
Other Intangible Assets. This statement eliminates the amortization of goodwill,
and requires goodwill to be reviewed periodically for impairment. This statement
also requires the useful lives of previously recognized intangible assets to be
reassessed and the remaining amortization periods to be adjusted accordingly.

     This statement is effective for fiscal years beginning after December 15,
2001, for all goodwill and other intangible assets recognized on the Company's
consolidated balance sheets at that date, regardless of when the assets were
initially recognized. This statement was adopted on January 1, 2002, and did not
have an impact on the Company's consolidated financial statements.

     In August 2001, the FASB issued SFAS No. 144, entitled, Accounting for the
Impairment or Disposal of Long-Lived Assets. SFAS No. 144 supersedes SFAS No.
121, entitled, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of, but retains its fundamental provisions for
recognizing and measuring impairment of long-lived assets to be held and used.
This statement also requires that all long-lived assets to be disposed of by
sale are carried at the lower of carrying amount or fair value less cost to
sell, and that depreciation should cease to be recorded on such

                                        8
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

assets. SFAS No. 144 standardizes the accounting and presentation requirements
for all long-lived assets to be disposed of by sale, superceding previous
guidance for discontinued operations of business segments. This statement is
effective for fiscal years beginning after December 15, 2001. This statement was
adopted on January 1, 2002, and did not have an impact on the Company's
consolidated financial statements.

ACCOUNTING PRINCIPLES ISSUED BUT NOT YET ADOPTED

     In August 2001, FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations." This statement is effective for fiscal years beginning after June
15, 2002. SFAS No. 143 provides accounting requirements for obligations
associated with the retirement of tangible long-lived assets and the associated
asset retirement costs. Under the statement, the asset retirement obligation is
recorded at fair value in the period in which it is incurred by increasing the
carrying amount of the related long-lived asset. The liability is accreted to
its present value in each subsequent period and the capitalized cost is
depreciated over the useful life of the related asset. The Company does not
expect that implementation of this statement will have a significant impact on
its consolidated financial statements.

     In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." This statement eliminates the current requirement that gains and
losses on debt extinguishment must be classified as extraordinary items in the
income statement. Instead, such gains and losses will be classified as
extraordinary items only if they are deemed to be unusual and infrequent, in
accordance with the current GAAP criteria for extraordinary classification. In
addition, SFAS 145 eliminates an inconsistency in lease accounting by requiring
that modifications of capital leases that result in reclassification as
operating leases be accounted for consistent with sale-leaseback accounting
rules. The statement also contains other 46 nonsubstantive corrections to
authoritative accounting literature. The changes related to debt extinguishment
will be effective for fiscal years beginning after May 15, 2002, and the changes
related to lease accounting will be effective for transactions occurring after
May 15, 2002. The Company does not expect that implementation of this statement
will have a significant impact on its consolidated financial statements.

     In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities," which addresses accounting for
restructuring and similar costs. SFAS No. 146 supersedes previous accounting
guidance, principally Emerging Issues Task Force ("EITF") Issue No. 94-3. This
statement is to be applied prospectively to exit or disposal activities
initiated after December 31, 2002. SFAS No. 146 requires that the liability for
costs associated with an exit or disposal activity be recognized when the
liability is incurred. Under EITF No. 94-3, a liability for an exit cost was
recognized at the date of a company's commitment to an exit plan. SFAS No. 146
also establishes that the liability should initially be measured and recorded at
fair value. The Company does not expect that implementation of this statement
will have a significant impact on its consolidated financial statements.

RECLASSIFICATIONS

     Certain fiscal 2001 and inception to December 31, 2001 balances have been
reclassified to conform to the current year's presentation.

3.  SHORT-TERM INVESTMENTS

     At June 30, 2002 and December 31, 2001, all investments are debt securities
classified as available-for-sale, and, accordingly, are carried at fair value,
which approximates amortized cost. The cost of securities sold is based on the
specific identification method, when applicable. The Company had $6,253,906 and
$319,452 of short-term investments invested in U.S. government agency notes as
of June 30, 2002 and December 31, 2001, respectively. The Company did not have
any material realized or unrealized gains or losses at June 30, 2002 and
December 31, 2001 and for the periods then ended.

                                        9
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4.  PROPERTY AND EQUIPMENT

     Property and equipment consist of the following:

<Table>
<Caption>
                                                          JUNE 30, 2002   DECEMBER 31, 2001
                                                          -------------   -----------------
<S>                                                       <C>             <C>
Computer equipment......................................   $   214,582       $   214,582
Office equipment........................................       101,326           101,326
Laboratory equipment....................................       374,203           374,203
Manufacturing equipment.................................       241,412           241,412
Leasehold improvements..................................     1,198,404         1,198,404
                                                           -----------       -----------
                                                             2,129,927         2,129,927
Less accumulated depreciation and amortization..........    (1,900,703)       (1,778,703)
                                                           -----------       -----------
                                                           $   229,224       $   351,224
                                                           ===========       ===========
</Table>

5.  INVENTORY

     Inventory consists of the following:

<Table>
<Caption>
                                                          JUNE 30, 2002   DECEMBER 31, 2001
                                                          -------------   -----------------
<S>                                                       <C>             <C>
Raw material............................................    $ 66,178          $ 63,989
Work in process.........................................      83,982            65,116
Finished goods..........................................      88,879           163,431
                                                            --------          --------
                                                            $239,039          $292,536
                                                            ========          ========
</Table>

6.  NOTES PAYABLE

CREDIT AGREEMENT AND 2000 CREDIT AGREEMENT

     On November 30, 1998, the Subsidiary entered into a Credit Facility (Credit
Agreement) with a shareholder. The Credit Agreement provided for financing up to
$2,042,600. As of June 30, 2002, the Subsidiary has drawn the entire amount
available. This facility originally was scheduled to mature on December 1, 2003
and bears interest that compounds annually, at LIBOR, adjusted annually, ranging
from 2.39% - 6.67% through the fiscal period June 30, 2002. Accrued interest on
this note is due upon maturity of the underlying principal. During 2002, this
Credit Agreement was amended to extend the maturity date of the facility to the
earlier of 36 months from the date the Subsidiary receives FDA approval for its
CMI product, or December 31, 2009. On the due date, the Subsidiary may, at its
option and subject to certain conditions, require any unpaid debt be converted
to equity.

     On March 15, 2000 the Subsidiary entered into another Credit Facility (2000
Credit Agreement) with the same shareholder as the Credit Agreement. The 2000
Credit Agreement provided for financing up to $4,000,000. As of June 30, 2002,
the Subsidiary has drawn the entire amount available. This facility originally
was scheduled to mature on March 14, 2005, and bears interest, that compounds
annually, at LIBOR, adjusted annually, ranging from 2.06% - 7.21% through the
fiscal period June 30, 2002. Accrued interest on this note is due upon maturity
of the underlying principal. During 2002, this 2000 Credit Agreement was amended
to extend the maturity date of the facility to the earlier of 36 months from the
date the Company receives FDA approval for its CMI product, or December 31,
2009. On the due date, the Company may, at its option and subject to certain
conditions, require any unpaid debt be converted to equity.

     In connection with the Credit Agreement and the 2000 Credit Agreement, the
lender has obtained a security interest in certain of the Company's intellectual
properties.

                                        10
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     As of June 30, 2002, the Credit Agreement and 2000 Credit Agreement, with
combined principal of $6,042,600 and accrued interest of approximately $6632,000
mature on the earlier to occur of 36 months from the date the Company receives
FDA approval for its CMI product, or December 2009.

BRIDGE LOAN AGREEMENT AND 2002 BRIDGE LOAN AGREEMENT

     On April 13, 2001 the Subsidiary entered into a bridge loan agreement
(Bridge Loan Agreement) with existing shareholders and a third party, whereby
the lenders were committed to make available up to $3,000,000, dependent upon
terms outlined in the Bridge Loan Agreement, in exchange for convertible
subordinated notes. Based on the outcome of these terms, $1,673,591 became
available under the Bridge Loan Agreement and was deposited into an escrow
account. In addition to the principal, the Subsidiary was able to borrow
interest accrued on the principal while the proceeds were held in escrow. As of
June 21, 2001, the Company had borrowed $1,680,687 under the Bridge Loan
Agreement. Interest compounded annually at Prime plus one percent, or 9.0% and
was due upon maturity of the underlying principal. In accordance with the terms
of these notes, the outstanding principal and accrued interest were converted
into Series G Convertible Preferred Stock of the Subsidiary and ultimately into
Series A Convertible Preferred Stock of Aros (see further discussion below). In
addition, upon conversion of the notes, the terms of warrants attached to the
notes became fixed (see further discussion below).

     In March 2002 the Subsidiary entered into $1 million of convertible
subordinated promissory notes (Notes) with related parties. The Notes mature in
March 2003 and accrued interest at Prime plus 1%, or 5.75%. In accordance with
the terms of these notes, the outstanding principal and accrued interest were
converted into Series G Convertible Preferred Stock of the Subsidiary and
ultimately into Series A Convertible Preferred Stock of Aros (see further
discussion below). In addition, upon conversion of the notes, the terms of
warrants attached to the notes became fixed (see further discussions below).

     On June 21, 2002, the Subsidiary issued 5,564,048 shares of Series G
Convertible Preferred Stock (Series G Stock) to existing shareholders of the
Subsidiary for $1.2321 per share. Cash of $4,000,000 was received for 3,246,490
of the shares issued. The remaining 2,317,558 shares were issued upon conversion
of the borrowings under the Bridge Loan Agreement and Notes, principle and
accrued interest from 2001 and 2002 financings with a value of approximately
$2,860,000. Subsequent to the conversion of these notes payable into Series G
Stock, and also on June 21, 2002, in connection with the merger of ReGen and
Aros, the Series G Stock was exchanged for Series A Convertible Preferred Stock
of Aros Corporation at a rate of 2.7495 Aros Series A Stock for each share of
ReGen Series G Stock, resulting in 6,372,126 shares of Aros Series A Stock.

     In accordance with the terms of the Bridge Loan Agreement and the Notes, on
June 21, 2002, the Subsidiary issued 782,602 five year warrants for common stock
exercisable for $1.2321 per share, calculated based upon 25% of the principal
and interest outstanding on the 2001 notes and 50% of the principal and interest
outstanding on the 2002 notes payable as of June 21, 2002, divided by $1.2321
per share (the purchase price per share paid for the Series G Stock). In
connection with the Merger of ReGen and Aros, these warrants were assumed by
Aros. Subsequent to the merger, the warrants became exercisable for 2,151,765
shares of Aros Common Stock at a price of $0.43 per share. In accordance with
the terms of the Bridge Loan Agreement and the Notes, the exercise price and
number of shares exercisable under the warrants was not known until the
consummation of the Series G financing. Therefore, no value had previously been
assigned to the warrants or the beneficial conversion feature of the Bridge Loan
Agreement and the Notes. At June 21, 2002 the value of the warrants issues was
established as $656,788 and the value of the beneficial conversion was
established as $843,566. The sum of these amounts was recorded as a reduction of
the borrowings outstanding (debt discount) and an increase in additional paid in
capital on June 21, 2002. The warrants and beneficial conversion are fully
vested, therefore the entire amount of the debt discount was recorded as
interest expense on June 21, 2002.

                                        11
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7.  CAPITAL LEASES

     Future payments under capital lease obligations at June 30, 2002 and
December 31, 2001 are as follows:

<Table>
<Caption>
                                                         JUNE 30, 2002    DECEMBER 31, 2002
                                                         CAPITAL LEASES    CAPITAL LEASES
                                                         --------------   -----------------
<S>                                                      <C>              <C>
2002...................................................     $ 5,006            $ 5,245
2003...................................................          --              2,714
                                                            -------            -------
                                                              5,006              7,959
Amounts representing interest..........................      (1,544)            (2,292)
                                                            -------            -------
                                                            $ 3,462            $ 5,667
                                                            =======            =======
</Table>

     Included in property and equipment at June 30, 2002 and December 31, 2001
is $10,489 related to the capital lease. This lease has a 2-year term and an
imputed interest rate of 8.3%.

8.  LICENSE AGREEMENTS

PRODUCT DISTRIBUTION LICENSE AGREEMENTS

     In February 1996, the Subsidiary entered into a perpetual product
distribution agreement (1996 Product Distribution Agreement) for the Collagen
Meniscus Implant (CMI) with a shareholder of the Subsidiary, who is also the
holder of the majority of the Subsidiary's long-term debt. The Subsidiary
received a nonrefundable, non-creditable $750,000 licensing fee in February 1996
in exchange for the granting of exclusive distribution and marketing rights
outside the United States of America for the product under development.

     An additional $1,000,000 was recognized as revenue during 2001 under the
milestone provisions as adjusted by a new agreement between the parties during
2001. This payment is also nonrefundable and non-creditable. The Subsidiary may
be due additional milestone fees in future years based on the achievement of
future sale volumes by the shareholder/creditor under this agreement. Also,
under this agreement, the Subsidiary will be reimbursed by the
shareholder/creditor for all expenses it incurs in connection with obtaining
regulatory approval for the CMI outside the United States of America. At June
30, 2002 and December 31, 2001, the Subsidiary had a receivable from the
shareholder of approximately $0 and $0, respectively.

     In January 2002, the Subsidiary entered into an amendment to its 1996
Product Distribution Agreement. The amendment provides for (i) further
definition and certain changes to the 1996 Product Distribution Agreement,
including marketing activities and annual sales minimums and (ii) restructure of
its Credit Agreement and 2000 Credit Agreement, calling for repayment of such
credit agreements to occur at the earlier of 36 months from the date the
Subsidiary receives FDA approval for its CMI product, or December 31, 2009. On
the due date, the Subsidiary may, at its option and subject to certain
conditions, require any unpaid debt be converted to equity.

     During 2000, the Subsidiary entered into an exclusive distribution
agreement with a distributor granting the distributor exclusive rights to sell
the Sharp Shooter product throughout the world. The Company received and
recognized as license fee income a $300,000 nonrefundable, non-creditable
license fee in 2000. This agreement continues in force so long as the
distributor meets certain minimum sales volume quotas. The distributor is
obligated to pay the Subsidiary a royalty on net sales of products sold at a
rate of between 10% and 12%. For the six month period ended June 30, 2002 and
year ended December 31, 2001, the amount of royalty income under this agreement
was $31,041 and $56,030, respectively. The distributor is also required to pay a
minimum royalty in order to maintain the exclusive distributor status. To meet
the minimum royalty's requirement, the distributor would have owed an

                                        12
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

additional $98,500 through June 30, 2002. Management has determined that based
on the current status of negotiations with the distributor over possible
modifications to the agreement, that these amounts do not meet the criteria for
revenue recognition and have therefore not been included in revenue in either
year.

TECHNOLOGY LICENSE AGREEMENTS

     In April 1997, the Subsidiary entered into an agreement with a member of
its Board of Directors and Modified Polymer Components, Inc. (MPC) to obtain an
exclusive license to certain patent rights used in connection with the Sharp
Shooter. The Subsidiary paid $100,000 in 1997 in license fees ($80,000 to the
member of the Board of Directors and $20,000 to MPC). Such fees were charged to
research and development expense as the related technology was considered by the
Subsidiary to be in the development stage, and such technology had no
alternative future use. The Subsidiary is required to pay a royalty of up to 6%,
consisting of a royalty of up to 4.8% to the member of the Board of Directors
and up to 1.2% to an assignee of MPC of net sales on products sold incorporating
the licensed technology. In 2000, MPC assigned its rights to this royalty
contract to a third-party. For the period and year ended June 30, 2002 and
December 31, 2001, $8,398 and $14,814, respectively was charged to expense under
this agreement. At June 30, 2002 and December 31, 2001, $964 and $9,656,
respectively, was accrued under this agreement.

     In 1995, the Subsidiary entered into an exclusive license agreement with an
employee pursuant to which the employee granted the Subsidiary an exclusive
worldwide right and license to certain technology considered by the Subsidiary
to be a candidate for use in products of the Subsidiary, including the rights to
certain patents and to any products resulting from the use of such technology
and/or patents. Under the exclusive license agreement, the Subsidiary agreed to
pay the employee a license issue fee of $250,000 in five equal installments of
$50,000 per year. The Subsidiary is also required to pay a royalty of: (a) 6% on
products covered by a valid patent claim; (b) 3% on products not covered by a
valid patent claim; and (c) 50% of royalties actually received by the Subsidiary
from sublicensees who are not affiliates. The Subsidiary completed its payments
under this license agreement during fiscal 2000. In addition, the Subsidiary
paid all costs incurred by the employee prior to August 24, 1995 for filing,
prosecuting and maintenance of licensed patents, in the amount of $50,000. The
exclusive license agreement will expire on the later to occur of ten years from
the commercial sale of any licensed product (as defined in the agreement) or the
date of expiration of the last to expire patent covered in the agreement.

     In 1990, the Subsidiary entered into an agreement with the Massachusetts
Institute of Technology (MIT) to obtain an exclusive license to certain patent
rights relating to the use of biodegradable materials for regeneration of
tissue. The Subsidiary paid $25,000 to MIT in 1990 as license fees. The
Subsidiary is required to pay MIT a royalty of the lesser of 6% of net sales or
10% of the gross margin, as defined, on sales of products covered under the
agreement, except that no amounts will be due MIT for products that are also
covered under the agreement with Neomorphics, Inc. (Neomorphics) discussed
below.

     In 1990, the Subsidiary entered into a sublicense agreement with
Neomorphics for certain products previously licensed to Neomorphics by MIT (and
also in the MIT agreement discussed above). The Subsidiary was required to pay
an annual maintenance fee of $10,000 per year in connection with the sublicense.
The Subsidiary was also required to pay Neomorphics a royalty of 4% of its net
sales of the sublicensed products. The annual license maintenance fees were
creditable against royalties due. The amounts paid to MIT and Neomorphics were
included as part of research and development expense in the periods in which
such payments were made. The related patent expired in 2001 and, accordingly, no
royalty payments will be due under this agreement or the MIT agreement after
2001.

9.  COMMITMENTS AND CONTINGENCIES

     The Company leases its corporate headquarters in Franklin Lakes, New Jersey
under a non-cancelable operating lease that expires on March 31, 2003, has a
month-to-month operating lease agreement for office

                                        13
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

space in Vail, Colorado and leases space in Redwood City, California for its
manufacturing operations under a non-cancelable operating lease that expires in
May 2003. In January 2002, the Company signed a one-year lease for the office
space in Vail, Colorado at a rate of $2,801 per month. The Company sub-leases a
portion of the manufacturing facility at a rate of $41,290 per month, which was
recorded as an offset to rent expense. The sub-lease expires in May 2003. Total
net rent expense was approximately $97,090 for 2001.

     Future minimum lease payments are as follows at December 31, 2001:

<Table>
<S>                                                            <C>
2002........................................................   $331,517
2003........................................................    153,929
2004........................................................         --
2005........................................................         --
                                                               --------
                                                               $485,446
                                                               ========
</Table>

     The Company has employment agreements with an officer of the Company
providing for minimum aggregate annual compensation of approximately $275,000
per annum. The contract can be terminated by either party upon a ninety-day
notification. Additionally, such employment agreement provides for various
incentive compensation payments as determined by the Company's Board of
Directors.

     During 2001 and 2002, the Company shipped certain components of the Sharp
Shooter that were later identified to have the potential to become non-sterile.
These items are being returned to the Company in 2002. Also during 2002, the
Company detected residue from its packaging vendor on certain of its CMI
packaging materials. The Company identified and discarded all CMI product with
the potential for the presence of this material. The Company has estimated the
cost related to these items to be approximately $55,000 for the 2001 shipments
and $75,398 for the 2002 shipments and the cost of discarded CMI product. These
amounts were accrued in the period that the product shipped.

10.  EMPLOYEE BENEFIT PLANS

     The Company sponsors a profit sharing plan ("Plan") intended to qualify
under Section 401(k) of the Internal Revenue Code. All employees are eligible to
participate in the Plan after three months of service. Employees may contribute
a portion of their salary to the Plan, subject to annual limitations imposed by
the Internal Revenue Code. The Company may make matching or discretionary
contributions to the Plan at the discretion of the Board of Directors, but has
made no such contribution to date. Employer contributions generally vest over
seven years.

     Aros sponsors a defined benefit pension plan ("Pension Plan") covering all
former employees of National Health Advisors, a subsidiary of Aros acquired in
1997. The Pension Plan was amended to freeze benefit accruals and the entry of
new participants effective October 31, 1997. The sale of the Company's APACHE
business in 2001 resulted in the termination of all remaining participants in
the Pension Plan. Because this plan was part of Aros and is now frozen no
expense associated with the plan is included in the accompanying financial
statements. The Company does not anticipate that any expense will be recognized
for this plan in future years.

     The benefits under the Pension Plan are based on final average compensation
and are offset by each employee's interest in the Company's profit sharing plan.
The Company's funding policy is to contribute annually an amount that can be
deducted for federal income tax purposes and meets minimum-funding standards,
using an actuarial cost method and assumptions, which are different from those
used for financial reporting.

                                        14
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Roll forwards of the benefit obligation, fair value of plan assets and a
reconciliation of the pension plan's funded status at November 30, 2001, the
measurement date, and significant assumptions follow (in thousands):

<Table>
<Caption>
                                                                 2001
                                                               ---------
<S>                                                            <C>
CHANGE IN BENEFIT OBLIGATION
  Beginning of the year.....................................   $ 190,000
     Service cost...........................................          --
     Interest cost..........................................      12,000
     Plan changes and other.................................          --
     Curtailment............................................      (8,000)
     Actuarial loss (gain)..................................     143,000
                                                               ---------
  End of the year...........................................   $ 337,000
                                                               =========
CHANGE IN FAIR VALUE OF ASSETS
  Beginning of the year.....................................   $ 315,000
     Actual return on plan assets...........................    (100,000)
     Employer contributions.................................       2,000
                                                               ---------
  End of the year...........................................   $ 217,000
                                                               =========
RECONCILIATION OF FUNDED STATUS
  (Under)/over funded status................................   $(120,000)
  Unrecognized net actuarial loss (gain)....................          --
                                                               ---------
  Accrued pension cost......................................   $(120,000)
                                                               =========
SIGNIFICANT ASSUMPTIONS:
  Discount rate.............................................        6.26%
  Expected return on plan assets............................        6.26%
  Rate of compensation increase.............................        5.00%
</Table>

     Because the Pension Plan is frozen, accrued pension costs at June 30, 2002
remains $120,000.

11.  RELATED PARTY TRANSACTIONS

     The Company has a cost reimbursement agreement with a shareholder of the
Company. For the period and year ended June 30, 2002 and December 31, 2001, the
Company is entitled to reimbursement of approximately $0 and $74,000,
respectively, in developmental costs, all of which has been received year to
date.

     For the fiscal periods ended June 30, 2002 and December 31, 2001 33% and
77%, respectively of the Company's revenues were from sales to Sulzer Medica USA
Holding Company, a related party.

     At June 30, 2002 and December 31, 2001, approximately $8,000 and $21,000 of
accounts payables were due to related parties. In addition, as of December 31,
2001 and June 30, 2002 the Company had approximately $30,000 and $45,000 payable
to Umidi & Company, Inc. of which Brion Umidi is the principal stockholder. Mr.
Umidi was hired by the Company as the Company's Senior Vice President and Chief
Financial Officer on July 15, 2002.

                                        15
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

12.  STOCKHOLDERS' EQUITY

CONVERTIBLE PREFERRED STOCK

     Convertible preferred stock at December 31, 2001 and 2000 is as follows:

<Table>
<Caption>
                                                                SHARES ISSUED AND OUTSTANDING
                                   LIQUIDATION   DESIGNATED   ---------------------------------
SERIES                             PREFERENCE      SHARES     JUNE 30, 2002   DECEMBER 31, 2001
------                             -----------   ----------   -------------   -----------------
<S>                                <C>           <C>          <C>             <C>
A................................    $0.4481     15,309,822    15,298,350            --
B................................    $0.4592     13,232,798    12,025,656            --
                                                 ----------    ----------             --
Total preferred stock............                28,542,620    27,324,006            --
                                                 ==========    ==========             ==
</Table>

     The holders of Series A, and B convertible preferred stock (the "Series A
Stock" and "Series B Stock") are entitled to non-cumulative dividends if and
when such dividends are declared by the Board of Directors. No dividends have
been declared to date. In the event of any liquidation, dissolution, or winding
up of the Company, the holders of Series A and B Stock are entitled to receive
an amount per share equal to their liquidation preference, equal the purchase
price of Series A and B Stock, plus any declared but unpaid dividends and
subject to adjustment for stock splits and similar adjustments.

     The holders of Series A and B Stock each have one vote for each full share
of common stock into which their respective shares of preferred stock are
convertible on the record date for the vote.

     At the option of the holder, the Series A Stock are convertible into common
stock on a one-for-one basis, subject to adjustment for stock splits and similar
adjustments of the Series A Stock, and will automatically convert into common
stock concurrent with the closing of an underwritten public offering of common
stock under the Securities Act of 1933 in which the Company receives at least
$5,000,000 in gross proceeds at a valuation of at least $25,000,000.

     At the option of the holder, the Series B Stock is convertible into common
stock on a one-for-one basis, subject to adjustment for stock splits and similar
adjustments of the Series B Stock, and will automatically convert into common
stock concurrent with the earlier to occur of (i) the closing of an underwritten
public offering of common stock under the Securities Act of 1933 in which the
Company receives at least $5,000,000 in gross proceeds at a valuation of at
least $25,000,000, and (ii) at such time as the Company's certificate of
incorporation is amended to increase the number of authorized shares of Common
Stock of the Company sufficient to permit the issuance of that number of shares
of Common Stock into which all issued and outstanding shares of Series B Stock
are convertible.

     Beginning on the 7th anniversary of the issuance and delivery of the Series
A Stock, or June 21, 2009, the Series A Stock shall be subject to redemption at
option of the holders of not less than a majority of the Series A Stock at a per
share redemption price equal to the liquidation value of the Series A Stock at
the time of redemption. The liquidation value will equal the purchase price of
the Series A Stock plus any declared, but unpaid dividends and taking into
account any stock splits or similar adjustments to the Series A Stock. The
Company shall redeem not less than all of the Series A Stock at the Redemption
Price, pro-rata among all of the holders of the Series A Stock, in one-third
(1/3) increments on each of the 7th, 8th and 9th anniversaries of the issuance
and delivery of the Series A Stock.

     The Company has agreed to reserve sufficient shares of its common stock for
the conversion of its outstanding Series A and B Stock, once such common shares
have been authorized at the next annual meeting of the Company's stockholders.

STOCK OPTIONS

     The Company has elected to follow Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employees (APB 25), and related
interpretations in accounting for its employee stock

                                        16
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

options because, as discussed below, the alternative fair value accounting
provided for under SFAS 123 requires use of option valuation models that were
not developed for use in valuing employee stock options. Under APB 25, when the
exercise price of the Company's employee stock options equals or exceeds the
market price of the underlying stock on the date of grant, no compensation
expense is recognized.

     The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions, including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.

     The effect of applying the FASB statement's minimum-value method to the
Company's stock option grants resulted in pro forma net loss of $9,045,429 and a
pro forma net loss per share of $(.53) for the year ended June 30, 2002. This
pro forma net loss includes the impact of immediate vesting of all outstanding
options and warrants on June 21, 2002 in connection with the reverse merger and
recapitalization. Future pro forma operating results may be materially different
from actual amounts reported.

     The fair value of the Company's stock-based awards to employees was
estimated assuming the following weighted-average assumptions:

<Table>
<Caption>
                                                               6 MONTHS ENDED
                                                               JUNE 30, 2002
                                                               --------------
<S>                                                            <C>
Expected volatility.........................................           83%
Expected life of options in years...........................      10 Years
Risk-free interest rate.....................................            4%
Expected dividend yield.....................................            --
</Table>

     The Company has an Employee Stock Option Plan (the Plan) that provides up
to 2,700,000 options to be issued to employees, and non-employees (other than
non-employee directors) of the Company. No option grants were made to employees
during 2002. All options are subject to forfeiture until vested and unexercised
options expire on the tenth anniversary of the year granted. Vesting is
generally over five years. All employee stock options issued by the Company have
been granted with exercise prices equal to or greater than the fair market value
of the common stock on the date of grant; accordingly, the Company has recorded
no compensation expense related to such grants. At June 30, 2002, options for
2,551,888 shares were available for grant under the Plan. The Company has
reserved 2,700,000 shares of common stock for issuance under the Plan.

     In April 1996, the Company adopted its Non-Employee Director Option Plan
(the Director Option Plan), pursuant to which non-employee directors of the
Company will be granted an option to purchase 2,500 shares of common stock on
January 1, of each calendar year for each year of service. The exercise price of
such options shall be at the fair market value of the Company's common stock on
the date of grant. Options become fully vested and exercisable on the December
31, immediately following the date on which the option is granted. Stock options
granted under the Director Option Plan may not be transferred other than by will
or by the laws of descent and distribution. The Board of Directors may terminate
the Director Option Plan at any time. Upon the occurrence of a Change of
Control, as defined in the Director Option Plan, all outstanding unvested
options under the Director Option Plan immediately vest. As of June 30, 2002,
17,500 shares were outstanding and 52,500 were available for grant under the
Director Option Plan. The Company has reserved 70,000 shares of common stock for
issuance under the Director Option Plan.

                                        17
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     In May 1999, the Company adopted its Non-Employee Director Supplemental
Stock Option Plan (the Director Supplemental Option Plan) that provides up to
500,000 options to be issued to the Directors of the Company as amended. The
exercise price of such options shall not be less than the fair market value of
the Company's common stock on the date of grant. The Board of Directors may
terminate the Director Supplemental Option Plan at any time. Upon occurrence of
a Change in Control as defined in the Director Supplemental Option Plan, all
outstanding unvested options under the Director Supplemental Option Plan vest
immediately. As of June 30, 2002, options for 175,400 shares were outstanding
and 324,600 shares were available for grant under the Director Supplemental
Option Plan. The Company has reserved 500,000 shares of common stock for
issuance under the Director Supplemental Option Plan.

     During the six months ended June 30, 2002 the Company granted options to
purchase 5,000 common shares at exercise prices of $0.0825, which was considered
to be equal to the fair market value at the date of grant.

     In accordance with the merger between the Company and the Subsidiary, the
Company assumed all outstanding options of the Subsidiary, such that immediately
after the merger, options for the stock of the Subsidiary became options for the
stock of the Company. As of June 30, 2002, options assumed from the Subsidiary
included options for 8,165,957 shares of the Company's common stock, at an
average exercise price of $0.38 and exercise prices ranging from $0.13 to $0.53.

     During the six months ended June 30, 2002, the Subsidiary granted the
equivalent of 1,787,175 shares of the Company's common stock at an exercise
price of $0.13 per share, which was considered to be below the fair market value
of the common stock on the date of grant.

     All options assumed from the Subsidiary were fully vested upon the
effective date of the merger, June 21, 2002.

     In accordance with APB 25, compensation expense has been recognized as the
difference between the exercise prices of these options at their respective
grant dates and management's estimate of fair value for financial reporting
purposes of common stock based on the vesting schedules of the options. Prior to
the merger, the Subsidiary recorded $451,684 of compensation expense during the
six months ended June 21, 2002. In connection with the merger, all options
vested thus the Subsidiary recorded an additional $2,8487,320 of compensation
expense on the day of the merger, all of which is attributable to the options
assumed from the Subsidiary.

     A summary of activity under the Company's stock option plans is as follows:

<Table>
<Caption>
                                                            OPTIONS OUTSTANDING
                                                -------------------------------------------
                                                                                WEIGHTED-
                                                NUMBER OF                     AVERAGE PRICE
                                                 SHARES     PRICE PER SHARE     PER SHARE
                                                ---------   ---------------   -------------
<S>                                             <C>         <C>               <C>
Balance at December 31, 2001..................  2,255,943   $0.45 - $ 1.45        $1.34
                                                ---------   --------------        -----
  Conversion of ReGen December 31, 2001 to
     Aros Options.............................  6,202,715   $0.16 - $ 0.53        $0.49
  Aros balance at December 31, 2001...........  1,146,268   $0.08 - $13.00        $4.26
  Aros options granted........................      5,000            $0.08        $0.08
  ReGen options granted.......................  2,788,092   $0.13 - $ 0.53        $0.15
  ReGen options exercised.....................   (824,850)           $0.13        $0.13
  Aros options canceled.......................   (388,968)  $0.08 - $13.00        $2.24
                                                ---------   --------------        -----
Balance at June 30, 2002......................  8,928,257   $0.08 - $13.00        $0.82
                                                =========   ==============        =====
</Table>

                                        18
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     As of June 30, 2002, all outstanding options of the Company were fully
exercisable. The weighted average fair value of options granted during 2002 was
$409,322, estimated using the Black-Scholes option valuation model under the
assumptions outlined earlier in this footnote.

     The following table summarizes information about outstanding options at
June 30, 2002:

<Table>
<Caption>
                                             WEIGHTED-AVERAGE
                                                 REMAINING
                                             CONTRACTUAL LIFE
        PRICE PER SHARE           SHARES         IN YEARS
        ---------------          ---------   -----------------
<S>                              <C>         <C>
        $0.00 - $ 0.50           2,780,793         7.37
        $0.51 - $ 1.00           5,672,664         6.79
        $1.01 - $ 2.00              46,694         6.77
        $2.01 - $13.00             428,106         4.04
                                 ---------
                                 8,928,257
                                 =========
</Table>

WARRANTS

     In August 1997 and September 1997, the Subsidiary issued in connection with
the Series E financing, warrants to purchase the equivalent of 249,350 shares of
the Company's common stock at $0.53 per share. These warrants were extended for
an additional 5 years to August 2007 by the Aros Board on August 8, 2002 and
were fully exercisable as of June 30, 2002.

     In conjunction with the 2000 credit agreement, the Subsidiary issued
warrants to purchase the equivalent of 412,425 shares of the Company's common
stock at $1.64 per share. The warrants expire on August 7, 2005. These warrants
can be exercised by the holder to the extent that the Holder's ownership of the
Company on a fully diluted basis does not exceed 19.9%. At June 30, 2002, the
holders of the warrants owned approximately 12.5% of the Company on a fully
diluted basis and were fully exercisable.

     In March 2001, Aros issued 1,000,000 warrants for the Company's common
stock to the stockholders of MetaContent, Inc. at an exercise price of $0.50 per
share. The warrants expire March 19, 2011. At June 30, 2002, the warrants were
fully exercisable.

     In connection with the 2001 and 2002 Bridge Loans, and subsequent Series G
Convertible Preferred financing, entered into between the Subsidiary and certain
of its shareholders, the Subsidiary issued the equivalent of 2,151,765 warrants
for the Company's common shares at an exercise price of $0.45 per share.

     In accordance with the terms of the Bridge Loan Agreement and the Notes,
the exercise price and number of shares exercisable under the warrants was not
known until the consummation of the Series G financing. Therefore, no value had
previously been assigned to the warrants or the beneficial conversion feature of
the Bridge Loan Agreement and the Notes. At June 21, 2002 the value of the
warrants issues was established as $656,788 and the value of the beneficial
conversion was established as $843,566. The sum of these amounts was recorded as
a reduction of the borrowings outstanding (debt discount) and an increase in
additional paid in capital on June 21, 2002. The warrants and beneficial
conversion are fully vested, therefore the entire amount of the debt discount
was recorded as interest expense on June 21, 2002.

                                        19
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

13.  INCOME TAXES

     The Company had differences in reporting expenses for financial statement
purposes and income tax purposes. The provision for income taxes consists of:

<Table>
<Caption>
                                                                  YEAR ENDED
                                                               DECEMBER 31, 2001
                                                               -----------------
<S>                                                            <C>
Current.....................................................      $        --
Deferred....................................................       (1,663,321)
Valuation allowance.........................................        1,663,321
                                                                  -----------
                                                                  $        --
                                                                  ===========
</Table>

     The provision for income taxes can be reconciled to the income tax that
would result from applying the statutory rate to the net loss before income
taxes as follows:

<Table>
<Caption>
                                                                  YEAR ENDED
                                                               DECEMBER 31, 2001
                                                               -----------------
<S>                                                            <C>
Tax at statutory rate.......................................      $(1,472,506)
State taxes.................................................         (198,978)
Permanent items.............................................            8,163
Increase in valuation allowance.............................        1,663,321
                                                                  -----------
                                                                  $        --
                                                                  ===========
</Table>

     The significant components of the Company's deferred income tax assets and
liabilities are as follows:

<Table>
<Caption>
                                                               DECEMBER 31, 2001
                                                               -----------------
<S>                                                            <C>
Deferred tax assets:
  Net operating loss carryforward...........................     $ 12,090,721
  R&D credit carryforward...................................          401,782
                                                                 ------------
                                                                   12,492,503
Valuation allowances........................................      (12,492,503)
                                                                 ------------
                                                                 $         --
                                                                 ============
</Table>

     The net operating loss carryforward at December 31, 2001 was approximately
$31.3 million and the research and development tax credit was approximately
$402,000. The federal net operating loss and credit carryforwards will begin to
expire in 2006, if not utilized. The state net operating loss and credit
carryforwards started to expire in 2000, and will continue to expire if not
utilized. The utilization of net operating loss carryforwards may be limited due
to changes in the ownership of the Company, and the effect of the merger
completed on June 21, 2002 may further impair the Company's ability to use the
net operating loss carryforwards.

14.  BASIC AND DILUTED LOSS PER SHARE

     The Company implemented SFAS No. 128, "Earnings Per Share," which requires
dual presentation of basic and diluted earnings per share. Basic loss per share
includes no dilution and is computed by dividing net loss available to common
stockholders, by the weighted average number of common shares outstanding for
the period. Diluted loss per share includes the potential dilution that could
occur if securities or other contracts were exercised or converted into common
stock. Options and warrants outstanding were not included in the computation of
diluted loss per share, as their effect would be anti-dilutive. Diluted loss per
share and basic loss per share are identical for all periods presented.

                                        20
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     For all periods presented, basic and diluted loss per share is calculated
using the number of shares outstanding after the reverse merger and
recapitalization.

15.  FINANCINGS AND CAPITAL TRANSACTIONS

     On June 21, 2002, the Subsidiary amended and restated its Certificate of
Incorporation to provide for the following:

     The creation of Series G Convertible Preferred Stock (Series G Stock) with
19,200,000 shares authorized.

     The rights of the Subsidiary's existing Series A Convertible Preferred
Stock, Series B Convertible Preferred Stock, Series C Preferred Convertible
Stock, Series D Convertible Preferred Stock, Series E Convertible Preferred
Stock, Series F Convertible Preferred Stock and Series G Convertible Preferred
Stock (collectively referred to as the "Preferred Stock") were amended and
established as follows:

     DIVIDEND RIGHTS:  If the Subsidiary shall at any time declare and pay any
dividend in the form of cash, stock or property on the outstanding Common Stock,
it shall at the same time and on the same terms declare and pay a dividend in
the same form on the outstanding Preferred Stock at a rate assuming all
Preferred Stock were converted into Common Stock immediately prior to the
dividend declaration.

     LIQUIDATION RIGHTS:  In the event of any liquidation, dissolution or
winding up of the Subsidiary, holders of the Preferred Stock shall be entitled
to receive, before any amount shall be paid to holders of Common Stock, an
amount per share equal to $1.00 for Series A, $3.00 for Series B, $4.50 for
Series C, $7.25 for Series D, $7.25 for Series E, $8.73 for Series F and $1.23
for Series G plus all accrued and unpaid dividends, if any.

     VOTING RIGHTS:  The holders of Preferred Stock are entitled to vote upon
any matter submitted to the stockholders for a vote. Such holders shall each
have one vote for each full share of Common Stock into which their respective
shares of Preferred Stock are convertible on the record date for the vote.
Holders of Preferred Stock shall vote as a single class.

     CONVERSION RIGHTS:  Shares of Preferred Stock can be converted into shares
of Common Stock at the option of the holder and automatically upon the
occurrences of the closing of an offering pursuant to an effective registration
statement pursuant to which Common Stock is sold to the public by the Subsidiary
in a public offering registered under the Securities Act of 1933 at a per share
public offering price of not less than $10 and a aggregate public offering price
of at least $7,500,000. In addition, in the event of a merger or sale of the
Subsidiary, the holders of Preferred Stock may elect to have their shares
treated as converted. Each share of Preferred Stock is converted into the number
of Common Shares that results from dividing the Conversion Price as defined, by
the liquidation value per share (see above). Initially, the Conversion Price is
equal to the liquidation value per share and can never exceed the liquidation
value per share. Adjustments to the Conversion Price are required in the event
of the issuance of additional shares of stock of the Subsidiary, stock splits,
dividends and recapitalizations.

     On June 21, 2002, the Subsidiary issued 5,564,047 shares of Series G
Convertible Preferred Stock (Series G Stock) to existing shareholders of the
Subsidiary for $1.2321 per share. Cash of $4,000,000 was received for 3,246,490
of the shares issued. The remaining 2,317,557 shares were issued upon conversion
of notes payable and accrued interest from 2001 and 2002 financings with a value
of $2,855,465.

16.  MERGER WITH REGEN CORPORATION

     On June 21, 2002, the Company approved a merger of the Subsidiary into Aros
Acquisition Corporation, a wholly owned subsidiary of Aros. Aros discontinued
its operations in 2001 and has been evaluating alternatives to best utilize its
assets.

                                        21
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The outstanding shares of Common Stock, Preferred Stock and options and
warrants to acquire Common Stock and Preferred Stock of the Subsidiary have been
converted into equity instruments of Aros as follows:

     COMMON STOCK:  Each share of the Subsidiary's Common Stock has been
converted into 2.7495 shares of unregistered common stock of Aros.

     SERIES A, SERIES B, SERIES C, SERIES D, SERIES E AND SERIES F PREFERRED
STOCK:  Each share of the Subsidiary's Series A, Series B, Series C, Series D,
Series E and Series F Convertible Preferred Stock has been converted into 0.0663
shares of unregistered, fully paid, non-assessable Aros Common Stock (Aros
Common Stock) plus 2.6832 shares of unregistered, fully paid, non-assessable
Aros Series B Convertible Preferred Stock (Aros Series B Stock).

     SERIES G PREFERRED STOCK:  Each share of the Subsidiary's Series G
Preferred Stock has been converted to 2.7495 shares of unregistered, fully paid,
non-assessable shares of Aros Series A Convertible Preferred Stock (Aros Series
A Stock).

     STOCK OPTIONS AND WARRANTS:  Immediately prior to the merger, the
Subsidiary accelerated the vesting of all options such that at the time of the
merger, all stock options and warrants were fully vested. Each option and each
warrant to purchase the Subsidiary's Common Stock has been assumed by Aros and
converted into options and warrants, respectively, to acquire Aros Common Stock.
Each option and warrant shall be exercisable for that number of shares of Aros
Common Stock equal to the product of the number of shares of the Subsidiary's
Common Stock that were purchasable under such Subsidiary option multiplied by
2.7495, and rounded to the nearest whole number of shares of Aros Common Stock.
Each warrant to purchase the Company's Series C Convertible Preferred Stock was
assumed by Aros and converted into warrants to purchase 0.0663 shares of Aros
Common Stock and 2.6832 shares of Aros Series B Stock. The per share exercise
price for shares of Aros Common Stock or Aros Series B Stock issuable upon
exercise of such assumed Company options and warrants shall be equal to the
quotient determined by dividing the exercise price per share of Subsidiary
Common Stock or Series C Convertible Preferred Stock, as applicable, at which
such Subsidiary options and warrants were exercisable by 2.7495.

     All shares issued to holders of Subsidiary Common Stock and Preferred Stock
and issued under the Company stock options and warrants assumed by Aros are
unregistered.

     Aros and the receiving shareholders have entered into a Registration Rights
Agreement under which Aros, at its option, can register the unregistered shares
in whole or part. Holders of unregistered shares can request, subject to certain
limitations, and Aros is required to make a best commercial efforts to, register
blocks of unregistered shares beginning 90 days after the Form 10-K for the year
ending December 31, 2002 of Aros is filed. Aros is required to bear the cost of
all such registrations except that in an underwritten offering, the holder of
the shares will bear any underwriting discounts and commissions, if any, and
transfer taxes relating to the registration.

     Upon completion of this merger, holders of the Subsidiary's Common Stock
and Preferred Stock control approximately 80% of the voting rights of the
combined company. As such, the Subsidiary is the deemed acquirer for purposes of
accounting for this merger.

     The Aros Series A Stock has rights and terms that provide for certain
preferences in the event of liquidation to the Aros Series B Stock and Aros
Common Stock. Additionally, the Aros Series A Stock has mandatory conversion
features upon certain circumstances including but not limited to a qualified
offering that results in cash proceeds to Aros of at least $5,000,000 and
assumes a minimum valuation of the Subsidiary of at least $25,000,000 and the
Aros Series A Stock is redeemable at the option of the holder subject to certain
conditions at any date from and after the date of the seventh anniversary of the
issuance and delivery of the Aros Series A Stock at the liquidation value.

                                        22
<PAGE>
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The Aros Series B Stock has rights and terms that provide for certain
preferences in the event of liquidation to the Aros Common Stock. Additionally,
the Aros Series B Stock has mandatory conversion features upon certain
circumstances including but not limited to a qualified offering that results in
cash proceeds to Aros of at least $5,000,000 and assumes a minimum valuation of
the Subsidiary of at least $25,000,000 or at such time as Aros's certificate of
incorporation is amended to increase the number of authorized shares of Aros
Common Stock sufficient to permit for the issuance of that number of shares of
Aros Common Stock into which all issued and outstanding shares of Aros Series B
Stock are convertible.

     On June 20, 2002, the closing price for Aros Common Stock was $0.28 per
share.

     The merger was accounted for as a reverse merger with the Subsidiary being
the deemed accounting acquirer. The assets and liabilities of the Company at the
acquisition date comprised $2.95 million in cash, $211,846 in prepaid and other
assets and $430,165 in accounts payable, accrued expenses and other liabilities.
The fair values of these assets and liabilities approximate their book values at
the acquisition date. Because the Company was essentially a non-operating entity
at the time of the merger, the merger was considered a capital transaction in
substance and no goodwill was recorded. The assets and liabilities of the
Company were merged with the assets and liabilities of the Subsidiary as of the
merger date. As the Subsidiary is the deemed accounting acquirer, its assets and
liabilities remain at historical costs. The accompanying financial statements
reflect the historical financial statements of the Subsidiary and the results of
operations and assets and liabilities of the Company from the merger date.

     Costs associated with the merger include estimated legal and accounting
fees and an estimate of the costs to be incurred to register the unregistered
shares distributed to the former shareholders of the Subsidiary in connection
with the merger. Management's estimate of these costs totaling $402,000 has been
expensed in the period ended June 30, 2002.

                                        23
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

BUSINESS DEVELOPMENTS

     On June 21, 2002, Aros Corporation ("Aros", the "Company") acquired ReGen
Biologics, Inc. ("ReGen", the "Subsidiary"), a privately held tissue engineering
company that designs, develops, manufactures and markets minimally invasive
human implants and medical devices for the repair and regeneration of damaged
human tissue, which merged with the Company on June 21, 2002. The merger
included all of ReGen's business and operating activities and employees. The
Company will continue ReGen's business out of ReGen's current headquarters in
Franklin Lakes, New Jersey.

     Pursuant to the merger, Aros has issued approximately 35.4 million shares
of its capital stock to former ReGen stockholders in exchange for all of the
issued and outstanding stock of ReGen. In addition, Aros will assume ReGen's
outstanding stock options and warrants to purchase up to an aggregate of
approximately 11 million shares of Aros Common Stock and 1.2 million shares of
Aros Preferred Series B Convertible Preferred Stock on a post merger basis.
Following the merger, former ReGen stockholders will own approximately 80% of
Aros outstanding capital stock.

     Aros Corporation, a Delaware corporation, was incorporated as APACHE
Medical Systems, Inc. ("APACHE") on September 1, 1987. APACHE was a provider of
clinically based decision support information systems and consulting services to
the healthcare industry offering a comprehensive line of outcomes-based products
and services, encompassing software, hardware, and related consulting and
disease management information services. The Company sold or discontinued all
APACHE business and changed its name to Aros Corporation in 2001.

     ReGen Biologics, Inc., a Delaware corporation, was incorporated in
California on December 21, 1989 and reincorporated in Delaware on June 28, 1990
for the purpose of research and development and, ultimately, the sale of
collagen-based technologies and products to stimulate re-growth of tissues that,
under natural conditions, do not regenerate adequately in humans.

     ReGen has two products currently being marketed, the Sharp Shooter Tissue
Repair System ("SharpShooter") and the Collagen Meniscus Implant ("CMI").
ReGen's activities to date have consisted principally of raising capital,
conducting research and development activities, developing and marketing and
obtaining regulatory approval for its products. The CMI and Sharp Shooter in
2000 each received the CE Mark for distribution in the European Economic
Community. The Sharp Shooter in 2000 received marketing clearance for sale in
the United States by the United States Food and Drug Administration (FDA). ReGen
is in the final stages of enrollment for its CMI clinical trial in the United
States. ReGen will continue to require additional capital to complete the U.S.
CMI clinical trial, further develop its products and further develop sales and
distribution channels for its products around the world. Accordingly, ReGen is
still considered a development stage enterprise. Management believes that ReGen
will emerge from development stage when the CMI product is available for sale in
the U.S. and/or sales of all of its products have reached a volume that will
provide for positive gross margin.

     The Company's two current products, the SharpShooter and CMI, are marketed
and distributed by two companies. Centerpulse (formerly Sulzer Medica) is the
exclusive distributor of the CMI outside the United State, and Linvatec, a
division of Conmed, Inc. is currently the exclusive worldwide distributor of the
SharpShooter.

CRITICAL ACCOUNTING POLICIES

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States 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.

                                        24
<PAGE>

     We have identified below some of our more significant accounting policies
followed by the Company in preparing the accompanying consolidated financial
statements. For further discussion of our accounting policies see Footnote 3
"Summary of Significant Accounting Policies" in the Notes to Consolidated
Financial Statements.

REVENUE RECOGNITION

     We recognize revenue in accordance with the provisions of Staff Accounting
Bulletin No. 101, Revenue Recognition in Financial Statements, whereby revenue
is not recognized until it is realized or realizable and earned. Revenue is
recognized when all of the following criteria are met: persuasive evidence of an
arrangement exists, delivery has occurred or services have been rendered, the
seller's price to the buyer is fixed or determinable and collectibility is
reasonably assured.

     The Company receives royalties from its licensees. Royalties are generally
due under the license agreements when the licensee sells the product to a third
party. If determinable at the time results are published by the Company,
royalties are recognized when the licensee has sold the product to the end user
and the Company has fulfilled its obligations under the applicable agreement. If
not determinable at the time results are published, royalties are recognized in
the period they become determinable.

     License fees represent payments received from distributors for exclusive
perpetual licenses to sell the Company's products in various geographic areas.
These fees are recognized as other income when all performance criteria in the
underlying agreement have been met. Generally, license fees for existing license
arrangements are not recurring.

     The Company's history of product returns has been insignificant, therefore
no reserve for returns and allowances has been provided. Reserves for product
recalls in 2001 and 2002 were estimated based on the costs to be incurred to
recall and rework the product.

INVENTORY VALUATION

     Inventory is valued at the lower of cost or market. Market is based on
current sales of product to existing customers reduced by an estimate of cost to
dispose.

RESEARCH AND DEVELOPMENT COSTS

     Research and development costs are expensed as incurred. We will continue
to incur research and development costs as we continue our product development
activities and pursue regulatory approval to market our products. Research and
development costs have, and will continue to include expenses for internal
development personnel, supplies and facilities, clinical trials, regulatory
compliance and filings, validation of processes and start up costs to establish
commercial manufacturing capabilities.

STOCK BASED COMPENSATION

     The Company has accounted for its stock-based compensation in accordance
with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees. No expense is recognized for options issued to employees where the
exercise price is equal to or greater than the market value of the underlying
security. Expense is recognized in the financial statements for options issued
to employees where the option price is below the fair value of the underlying
security, for options issued to non-employees and for options and warrants
issued in connection with financing and equity transactions (collectively
revered to as "compensatory options"). For periods prior to the merger of the
Company with the Subsidiary, expense associated with compensatory options and
warrants has been measured based on management's estimate of the fair value of
the underlying security (which in turn is based on management's estimate of the
fair value of the Subsidiary).

                                        25
<PAGE>

MERGER AND RELATED COSTS

     The merger of the Company and the Subsidiary on June 21, 2002 has been
accounted for as a reverse merger whereby the Subsidiary is the deemed
accounting acquirer. The historical financial statements of the Subsidiary
replace the financial statements of the Company in this filing and future
filings. As the Subsidiary is the deemed accounting acquirer, its assets and
liabilities remain at historical costs. The assets and liabilities of the
Company comprised only cash, prepaid expenses and accrued liabilities. The fair
value of these assets was equal to their historical cost. Because the Company
was essentially a non-operating entity at the time of the merger, the merger was
considered a capital transaction in substance and no goodwill was recorded. The
assets and liabilities of the Company were merged with the assets and
liabilities of the Subsidiary as of the acquisition date.

     Costs associated with the merger include estimated legal and accounting
fees and an estimate of the costs to be incurred to register the unregistered
shares distributed to the former shareholders of the Subsidiary in connection
with the merger. Management's estimate of these costs has been expensed in the
period ended June 30, 2002.

RESULTS OF OPERATIONS

THREE AND SIX MONTHS ENDED JUNE 30, 2002 AND JUNE 30, 2001

     REVENUE.  Revenues increased $133,000 or 310% to approximately $176,000
during the three months ended June 30, 2002 from approximately $43,000 for the
same period 2001. Revenues increased $115,000 or 50% to $347,000 during the six
months ended June 30, 2002 from $232,000 for the same period 2001. The increase
in revenues resulted primarily from a significant increase in sales of the
SharpShooter product to Linvatec Corporation and the royalties associated with
the sales of the SharpShooter by Linvatec to its customers. Linvatec accounted
for greater than 50% of revenue for the three and six months ended June 30, 2002
and CenterPulse (formerly Sulzer Medica) accounted for greater than 60% of
revenue for the three and six months ended June 30, 2001.

     COST OF GOODS SOLD.  Cost of goods sold increased by approximately $235,000
for the three and six months ended June 30, 2002. This increase is related to
the increase sales of the SharpShooter for the same period, together with the
impact of a warranty reserve recorded during the first quarter of 2002.
SharpShooter costs accounted for $204,651 and $142,663 and the warranty accrual
accounted for $0 and $75,398 in the three and six month periods.

     RESEARCH AND DEVELOPMENT.  Research and development expenses for the three
and six months ended June 30, 2002 increased to $715,000 and $1.3 million, from
approximately $512,000 and $940,000 for the same periods in 2001. Research and
development expenses have increased due to several factors, including (i) an
increase in the costs associated with the enrollment stage of the CMI clinical
trial currently being conducted in the United States, (ii) an increase in the
manufacturing costs unassociated with the production of products for resale, and
(iii) an increase in the cost of patent development and maintenance costs.

     SELLING, GENERAL AND ADMINISTRATIVE.  Selling, general and administrative
expenses were $373,000 and $722,000 for the three and six months ended June 30,
2002, respectively, compared with from $393,000 and $828,000 for the same
periods in 2001. These costs include the costs of marketing, business
development, corporate operations, finance and accounting, and other general
expenses.

     COMPENSATION EXPENSE.  Compensation expense associated with stock options
and warrants increased significantly from $240,000 for the three months ended
June 30, 2001 to $3.0 million for the same period in 2002. The 2002 amount
includes the impact of the accelerated vesting of all outstanding stock options
of ReGen at the time of the merger with Aros.

     OTHER INCOME.  Other income increased to $4,000 for the three months ended
June 30, 2002 from $2,000 for the same period in 2001. We recognized this
increase due to an increase in interest income resulting from an increase in
short-term investments.

                                        26
<PAGE>

     INTEREST EXPENSE.  Interest expense increased from $59,000 to $1.6 million
for the three months ended and $137,000 to $1.7 million for the six months ended
June 30, 2001 to the same period in 2002 due to the accrual of interest payable
and related beneficial conversion of bridge loans into Series G Convertible
Preferred stock of ReGen, and the valuation of warrants issued in connection
with the conversion of the ReGen bridge loans to preferred stock. See note 6 of
the notes to consolidated financial statements for a full description of the
bridge loans and associated warrants and beneficial conversion.

LIQUIDITY AND CAPITAL RESOURCES

     Cash and short-term investment were $6.25 million as of June 30, 2002
compared with $320,000 as of December 31, 2001. The increase in cash and short
term investments is the result of approximately $4.95 million in cash proceeds
from Bridge Financings and the issuance of equity securities and approximately
$2.95 million in cash and short-term investment from the reverse merger and
recapitalization transaction between ReGen and Aros. The cash proceeds from
Bridge Financings includes approximately $1 million from debt issued in March of
2002. This debt along with existing Bridge Financing and accrued interest which
in the aggregate approximated $2.86 million was converted to Series G
Convertible Preferred Stock of ReGen on June 21, 2002 and subsequently into
Series A Redeemable Convertible Preferred Stock of the Company. The cash
proceeds from the issuance of equity securities includes $105,000 in cash
received from the issuance of ReGen Common Stock and $3.86 received from the
issuance of additional Series G Convertible Preferred Stock of ReGen.

     The reverse merger and recapitalization between ReGen and Aros resulted in
the conversion of all ReGen equity securities into equity securities of the
Company and provided the Company with access to the existing cash balance of
Aros of approximately $2.95 million. Net monetary assets of Aros approximated
$2.73 million.

     The increases in cash and short-term investments discussed above is offset
by cash used in operating activities during the six months ended June 30, 2002
of approximately $1.96 million.

     The Company anticipates that its cash and short-term investments will be
sufficient to meet its planned ongoing operating and working capital
requirements for the next twelve months. Through June 30, 2002, the Company has
incurred cumulative net operating losses of approximately $39.5 million. The
Company anticipates that it will continue to incur net operating losses that
will require additional financing to fund operation at the earliest until the
Company receives FDA approval for its CMI product and is able to market the CMI
product in the United States. The Company is currently nearing completion of
enrollment for the clinical trial of its CMI product. There can be no assurance
that such financing can be obtained, or obtained on terms acceptable to the
Company.

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS

Cautionary Note Regarding Forward-Looking Statements

     Such statements are based on the current expectations and beliefs of the
managements of Aros and ReGen and are subject to a number of factors and
uncertainties that could cause actual results to differ materially from those
described in the forward-looking statements, including those discussed in the
Risk Factors section of Aros' most recent annual report on Form 10K, as amended,
on file with the Securities and Exchange Commission. Aros' filings with the SEC
are available to the public from commercial document-retrieval services and at
the Web site maintained by the SEC at http://www.sec.gov.

     Statements in this filing, which are not historical facts, are
forward-looking statements under provisions of the Private Securities Litigation
Reform Act of 1995. All forward-looking statements involve risks and
uncertainties. We wish to caution readers that the following important factors,
among others, in some cases have affected, and in the future could affect our
actual results and could cause our actual results in fiscal 2002 and beyond to
differ materially from those expressed in any forward-looking statements made by
us or on our behalf.

                                        27
<PAGE>

     Important factors that could cause actual results to differ materially
include but are not limited to our ability to complete the CMI clinical trial
and obtain FDA approval, our ability to raise obtain additional financing, the
ability of our distribution partners to effectively market and sell our
products, the timely collection of our accounts receivable, our ability to
attract and retain key employees, our ability to timely develop new products and
enhance existing products, the occurrence of certain operating hazards and
uninsured risks, our ability to protect proprietary information and to obtain
necessary licenses on commercially reasonable terms, the impact of governmental
regulations, changes in technology, marketing risks and one time events on our
business and our ability to adapt to economic, political and regulatory
conditions affecting the healthcare industry.

     Our quarterly revenues and operating results have varied significantly in
the past and are likely to vary from quarter to quarter in the future. Quarterly
revenues and operating results may fluctuate as a result of a variety of
factors, including the ability of our distribution partners to market and sell
our products, variable customer demand for our products and services, our
investments in research and development or other corporate resources, our
ability to effectively and consistently manufacture our products, the ability of
our vendors to effectively and timely delivery necessary materials and product
components, acquisitions of other companies or assets, the timing of new product
introductions, changes in distribution channels, sales and marketing promotional
activities and trade shows and general economic conditions. Further, due to the
relatively fixed nature of most of our costs, which primarily include personnel
costs as well as facilities costs, any unanticipated shortfall in revenue in any
fiscal quarter would have an adverse effect on our results of operations in that
quarter. Accordingly, our operating results for any particular quarterly period
may not necessarily be indicative of results for future periods.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company's obligations as of June 30, 2002 include debt instruments
equal to (i) $350,000 in principal with fixed rate interest payable at a rate
equal to 7%, which the Company believes approximates fair value, and (ii)
approximately $5.7 million in principle with variable rate interest payable at
rates ranging from 2.06% to 7.21%, adjusted annually based upon 1% over the 1
year LIBOR at the anniversary of the loans. All principal and accrued interest
under these loans mature on the earlier of 36 months from the date the Company
receives FDA approval for its CMI product, or December 31, 2009.

                                        28
<PAGE>

                          PART II -- OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

     The Company is a defendant from time to time in lawsuits incidental to its
business. The Company is not currently subject to, and none of its properties
are subject to, any material legal proceedings.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

     None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

     None.

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

     None.

ITEM 5.  OTHER INFORMATION

     None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits.

     The following Exhibits are filed herewith and made a part hereof:

<Table>
<Caption>
EXHIBIT NO.                           DESCRIPTION
-----------                           -----------
<C>           <S>
    2.1       Agreement and Plan of Merger by and among ReGen Biologics,
              Inc., Aros Corporation and Aros Acquisition Corporation
              dated as of June 7, 2002
    2.2       Agreement and Plan of Merger among the Company, NHA
              Acquisition Corporation, National Health Advisors, Ltd.,
              Scott A. Mason and Donald W. Seymour dated as of June 2,
              1997(5)
    2.3       Agreement and Plan of Merger among the Company and
              MetaContent, Inc. dated as of March 21, 2001(2)
    2.4       Asset Purchase Agreement between Cerner Corporation and the
              Company dated as of April 7, 2001(3)
    2.5       Amendment No. 1 to Asset Purchase Agreement by and between
              Cerner Corporation and the Company dated as of June 11,
              2001(3)
    3.1       Amended and Restated Certificate of Incorporation(1)
    3.2       Certificate of Amendment to the Certificate of
              Incorporation(5)
    3.3       Amended and Restated By-Laws(4)
    4.1       Specimen Common Stock Certificate(6)
    4.2       Rights Agreement between the Company and First Chicago Trust
              Company of New York, dated as of May 6, 1997(7)
    4.3       APACHE Medical Systems, Inc. Employee Stock Option Plan(1)
    4.4       APACHE Medical Systems, Inc. Employee Stock Option Plan,
              Amended and Restated Effective May 12, 1999(8)
    4.5       APACHE Medical Systems, Inc. Non-Employee Director Option
              Plan(1)
    4.6       Registration Agreement between the Company and Certain
              Stockholders, dated December 28, 1995(6)
    4.7       Amendment No. 1 to Rights Agreement between the Company and
              Equiserve Trust Company, N.A., dated as of June 7, 2002
    4.8       Nonqualified Stock Option Agreement between the Company and
              The Cleveland Clinic Foundation, dated August 19, 1994(6)
    4.9       Registration Agreement between the Company and each of Iowa
              Health Centers, P.C. d/b/a Iowa Heart Center, P.C., Mercy
              Hospital Medical Center, Mark A. Tannenbaum, M.D. and Iowa
              Heart Institute dated January 7, 1997(9)
</Table>

                                        29
<PAGE>

<Table>
<Caption>
EXHIBIT NO.                           DESCRIPTION
-----------                           -----------
<C>           <S>
    4.10      Nonqualified Stock Option Agreements between the Company and
              each of Iowa Health Centers, P.C. d/b/a Iowa Heart Center,
              P.C., Mercy Hospital Medical Center and Mark A. Tannenbaum,
              M.D., dated January 7, 1997(10)
    4.11      Form of Nonqualified Director Stock Option Agreement(11)
    4.12      APACHE Medical Systems, Inc. Employee Stock Option Plan,
              Amended and Restated February 23, 1998, including forms of
              Incentive Stock Option Agreement and Nonqualified Stock
              Option Agreement(11)
    4.13      APACHE Medical Systems, Inc. Non-Employee Director
              Supplemental Stock Option Plan, Amended and Restated
              effective May 12, 1999(8)
    4.14      APACHE Medical Systems, Inc. Non-Employee Director
              Supplemental Stock Option Plan, Amended and Restated
              effective January 1, 2000(7)
    4.15      APACHE Medical Systems, Inc. Non-Employee Director
              Supplemental Stock Option Plan, Amended and Restated
              effective December 9, 2000(4)
    4.16      APACHE Medical Systems, Inc. Non-Employee Director
              Supplemental Stock Option Plan, Amended and Restated
              effective December 9, 2000(4)
   21         Subsidiaries of the registrant
   99.1       Certification of Chief Executive Officer
   99.2       Certification of Chief Financial Officer
</Table>

---------------

 **  Confidential portions omitted and supplied separately to the Securities and
     Exchange Commission staff

 (1) Incorporated herein by reference to the Company's Report on Form 10-Q for
     the quarter ended June 30, 1997 (File No. 0-20805)

 (2) Incorporated herein by reference to the Company's Report on Form 10-Q/A for
     the quarter ended March 31, 2001 (File No. 0-20805)

 (3) Incorporated herein by reference to the Company's Report on Form 8-K dated
     April 12, 2001 (File No. 0-20805)

 (4) Incorporated herein by reference to the Company's Report on Form 10-K for
     the year ended December 31, 2000 (File No. 0-20805)

 (5) Incorporated herein by reference to the Company's Report on Form 10-Q for
     the quarter ended June 30, 2001 (File No. 000-20805)

 (6) Incorporated herein by reference to the Company's Registration Statement on
     Form S-1 (File No. 333-04106)

 (7) Incorporated herein by reference to the Company's Current Report on Form
     8-K filed on June 4, 1997 (File No. 0-20805)

 (8) Incorporated herein by reference to the Company's Report on Form 10-Q for
     the quarter ended March 31, 1999 (File No. 0-20805)

 (9) Incorporated herein by reference to the Company's Current Report on Form
     8-K filed on January 14, 1997 (File No. 0-20805)

(10) Incorporated herein by reference to the Company's Report on Form 10-Q for
     the quarter ended March 31, 1997 (File No. 0-20805)

(11) Incorporated herein by reference to the Company's Report on Form 10-K for
     the year ended December 31, 1997 (File No. 0-20805)

                                        30
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                          AROS CORPORATION

                                                 /s/ G. E. BISBEE, JR.

                                          --------------------------------------
                                                  Gerald E. Bisbee, Jr.
                                           President, Authorized signatory and
                                                 Chief Accounting Officer

Date: September 9, 2002

                                        31
<PAGE>

                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER

     I, Gerald E. Bisbee, Jr., certify that:

          1.  I have reviewed this quarterly report on Form 10-Q/A of Aros
     Corporation;

          2.  Based on my knowledge, this quarterly report does not contain any
     untrue statement of a material fact or omit to state a material fact
     necessary to make the statements made, in light of the circumstances under
     which such statements were made, not misleading with respect to the period
     covered by this quarterly report; and

          3.  Based on my knowledge, the financial statements, and other
     financial information included in this quarterly report, fairly present in
     all material respects the financial condition, results of operations and
     cash flows of the registrant as of, and for, the periods presented in this
     quarterly report.(1)

                                          /s/  GERALD E. BISBEE, JR.
                                          --------------------------------------
                                          Name: Gerald E. Bisbee, Jr.
                                          Title:  Chief Executive Officer

Date: September 9, 2002

---------------
     1 Portions of the certifications required by Section 302 are omitted herein
pursuant to the transition rule released by the Securities and Exchange
Commission in Release No. 34-46427.
                                        32
<PAGE>

                    CERTIFICATION OF CHIEF FINANCIAL OFFICER

     I, Brion Umidi, certify that:

          1.  I have reviewed this quarterly report on Form 10-Q/A of Aros
     Corporation;

          2.  Based on my knowledge, this quarterly report does not contain any
     untrue statement of a material fact or omit to state a material fact
     necessary to make the statements made, in light of the circumstances under
     which such statements were made, not misleading with respect to the period
     covered by this quarterly report; and

          3.  Based on my knowledge, the financial statements, and other
     financial information included in this quarterly report, fairly present in
     all material respects the financial condition, results of operations and
     cash flows of the registrant as of, and for, the periods presented in this
     quarterly report.(1)

                                          /s/  BRION UMIDI
                                          --------------------------------------
                                          Name: Brion Umidi
                                          Title:  Chief Financial Officer

Date: September 9, 2002

---------------
     1 Portions of the certifications required by Section 302 are omitted herein
pursuant to the transition rule released by the Securities and Exchange
Commission in Release No. 34-46427.
                                        33